conflicts - september 11

8/11/2019 Conflicts - September 11

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Crisostomo vs SEC

Crisostomo is a minority stockholder of the United Doctors

Medical Center. He is also the director and legal counsel of UDMC.

The said hospital was unable to pay its P55 million debt incurred

from the Development Bank of the Philippines hence it

faced foreclosure. In order to avoid foreclosure, Crisostomo and

some others were able to convince Japanese doctors to invest in

the hospital. Eventually, these Japanese doctors invested P57

million in said hospital. Pursuant to the Memorandum in lieu of

the investment, the Japanese doctors were promised to be part

of the hospitals board of directors. But then, instead of holding

an election for the new board of directors, Crisostomo opposed

the same citing constitutional grounds. The issue reached

theSecurities and Exchange Commission which ordered UDMC to

hold the election.

Meanwhile, Crisostomo filed an action to annul the Memorandum

agreed with the Japanese doctors before the Regional Trial Court

of Makati. The said RTC denied Crisostomos petition.

Crisostomo then appealed the two decisions (SECs and the RTCs)

before the Court of Appeals. Not only that, while the two cases

were pending appeal, he also filed a petition for certiorari directly

to the Supreme Court.

ISSUE: Whether or not Crisostomo is guilty of forum shopping.

HELD: Yes. All three actions he filed raise the same issues that he

raised in the different tribunals. There is forum-shopping

whenever, as a result of an adverse opinion in one forum, a party

seeks a favorable opinion (other than by appeal or certiorari) in

another. The principle applies not only with respect to suits filed

in the courts but also in connection with litigations commenced in

the courts while an administrative proceeding is pending, as in

this case, in order to defeat administrative processes and inanticipation of an unfavorable administrative ruling and a

favorable court ruling.

Forum-shopping makes the Crisostomo subject to disciplinary

action and renders his petitions in the Supreme Court and in the

Court of Appeals dismissible. He and his counsel are guilty of

contempt. Crisostomo is ordered by the Supreme Court to pay

double the costs of the suit.

Rule 4: VENUE OF ACTIONS

Q: Define venue.

A: VENUE is the place where the action must be instituted and

tried. (Ballentines Law Dict., 2nd Ed., p. 1132)

EXAMPLE: The venue of the action is in Davao, or the venue of the

action is in Manila. If you file the action in other places, that is

improper or wrong venue. In criminal cases, that is called

territorial jurisdiction the place where the crime was

committed. But in civil cases, venue is not the same with

jurisdiction. We do not call it territorial jurisdiction. We call it

venue.

This is where it is important to determine whether the action

real or personal for the purpose of venue. The venue of re

action is stated in Section 1 and the venue for personal action

stated in section 2.

VENUE OF REAL ACTIONS - Section 1. Venue of r

actions. Actions affecting title to or possession of real property,

interest therein, shall be commenced and tried in the prop

court which has jurisdiction over the area wherein the re

property involved, or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tri

in the municipal trial court of the municipality or city wherein t

real property involved, or a portion thereof, is situated. (1[

2[a]a)

While it is true that the rule on venue is new however, the rule

venue even before 1997 as earlier as August 1, 1995, Rule 4 of t

1964 Rules has already been amended by the administrati

Circular No. 13 95, but now it incorporated under the Rules

1997.

Now, when the action is real, we distinguish whether it is forcib

entry and unlawful detainer or action publiciana or acti

reinvidicatoria. If it is accion publiciana or reinvidicatoria, t

proper venue is the one which has jurisdiction over the ar

wherein the real property involved or a portion thereof

situated. Of course, the RTC is divided into areas. every bran

has its own designated area of responsibility.

Q: Why does the law say tried in theproper court?

A: It is because proper court will now be the MTC or the RT

depending on the assessed value of the property. If the assess

value is P20,000 or less, MTC yan. If it is over P20,000, it should

in the RTC.

Now in the case of forcible entry and unlawful detain

paragraph 2 will apply that is, MTC it is in the municipality

city wherein the real property involved or a portion thereof

situated. So, kung saan iyong real property, doon din ang venu

Now, it is possible that for a property be in the boundary of tw

towns. Example: one half is part of Davao City and the other h

is in the municipality of Panabo. So, if you would like to file a ca

for forcible entry against somebody, you have two choices. Y

can file it in the MTC of Panabo or in the MTC of Davao City.

Now, lets go to personal actions.

Sec. 2. Venue of personal actions. All other actions may

commenced and tried where the plaintiff or any of the princi

plaintiffs resides, or where the defendant or any of the princip

defendants resides, or in the case of a non-resident defenda

where he may be found, at the election of the plaintiff. (2[b]a)

Iyan ang tinatawag natin na TRANSITORY ACTION . The venue w

now depend on the residence of the parties. In the civil action, t

venue is (1) the place where the plaintiff resides or (2) where t

defendant resides, at the election of the plaintiff. So, puwe

kang pumili sa dalawa.


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Now, suppose, there are four (4) plaintiffs and 4 defendants and

the 4 plaintiffs reside in 4 different cities or municipalities. So ang

choice mo ng venue ay walo (8) becuae the law says, where the

plaintiff or any of the principal plaintiffs or where the defendant

or any of the principal defendants reside

So, kung maraming defendants at iba iba ang lugar at maraming

plaintiffs, the residence of each one could be the proper venue.

NOTE: PRINCIPAL PLAINTIFF, PRINCIPAL DEFENDANT. Because

there is such a thing as nominal defendant and nominal plaintiff iyun bang formal lang.

EXAMPLE of a nominal party: When a party wants to file a case to

annul an execution sale of to annul a levy, normally it pleads the

sheriff as party. But the sheriff is not the principal party but is only

a NOMINAL PARTY. So, the residence of the sheriff is not

considered the sheriff being a nominal party only. So, just imagine

if there are 4 plaintiffs and 4 defendants, iba ibang cities. There 8

choices of venue. That is the original concept of forum shopping. I

will cite the original case which traced the history of

forum shopping na kung saan ako convenient, doon sko mag-file.

That is the original concept which is legal and legitimate. The

trouble is, the concept of forum shopping degenerated into a

malpractice , where a lawyer, mag-file ng case, sabay sabay. Ayan!

That is why there is a SC case which I will later discuss

where Justice Panganiban cited the history of forum shopping.

(Dean is referring to the case of FIRST PHILIPPINE INTERNATIONAL

BANK vs. CA (252 SCRA 259), January 24, 1996)

Forum shopping is legitimate and valid but the trouble is, the

practice acquired another unsavory meaning, where a lawyer will

file simultaneous cases. Kaya nga nasira from a legitimate

practice to an act of malpractice. That is the history of forum

shopping. However, there are instances when it is easy to

distinguish whether the action is real or personal and there arealso instances when it is difficult.

EXAMPLE: An action for annulment of a contract of sale or

rescission of contract of sale of real property. Generally, an action

for annulment or rescission is a personal action. But suppose , I

will file a complaint to annul or rescind a contract of a deed of

sale over a parcel of land. Im from Davao and youre from Davao.

But I would like to annul the sale of a land which I made to you

one year ago which land is situated in Digos and the purpose of

my action is to recover the ownership of that land. Then, that is a

real action because the primary object of the suit is to recover the

ownership of real property, di ba? It seems to be personal but in

reality it is a real action. So the venue is governed by Section 2.

CLAVECILLA Radio System v. Hon. Agustin Antillon

Facts:

1. New Cagayan Grocery (NECAGRO) filed a complaint for

damages against Clavecilla Radio system. They alleged that

Clavecilla omitted the word NOT in the letter addressed to

NECAGRO for transmittal at Clavecilla Cagayande Oro Branch.

2. NECAGRO alleged that the omission of the word not betwe

the word WASHED and AVAILABLE altered the contents of t

same causing them to suffer from damages

3. Clavecilla filed a motion to dismiss on the ground of failure

state a cause of action and improper venue

4. City Judge of CDO denied the MTD. Clavecilla filed a petition f

prohibition with preliminary Injunction with the CFIpraying th

the City Judge be enjoined from further proceeding with the ca

because of improper venue.

5. CFI dismissed the case and held that Clavecilla may be su

either in Manila (principal office) or in CDO (branchoffice).

6. Clavecilla appealed to the SC contending that the suit against

should be filed in Manila where it holds its principaloffice.

Issue: WON the present case against Clavecilla should be fil

in Manila where it holds its principal office.

Held: YES. It is clear that the case from damages is based up

a written contract.Under par. (b)(3) Sec. 1 Rule 4 of the New Ru

of Court, when an action is not upon a written contract then tcase should be filed in the municipality where the defendant

any of the defendant resides or maybe served upon w

summons.In corpo. Law, the residence of the corporation is t

place where the principal office is established. Since Clavecill

principal office is in Manila, then the suit against it may prope

be file in the City of Manila. As stated in Evangelista v. Santos, t

laying of the venue of an action is not left to plaintiffs capri

because the matter is regulated by the Rules of Court.

NORTHWEST ORIENT AIRLINES, INC. vs. CA and C.F. SHARP

COMPANY INC.

FACTS: Petitioner Northwest Orient Airlines, Inc. (NORTHWEST)corporation organized under the laws of the State of Minneso

U.S.A., sought to enforce in the RTC- Manila, a judgment render

in its favor by a Japanese court against private respondent C

Sharp & Company, Inc., (SHARP), a corporation incorporat

under Philippine laws.

factual and procedural antecedents of this controversy:

On May 9, 1974, Northwest Airlines and Sharp, through its Jap

branch, entered into an International Passenger Sales Agen

Agreement, whereby the former authorized the latter to sell its

transportation tickets. Unable to remit the proceeds of the tick

sales made by defendant on behalf of the plaintiff under the saagreement, plaintiff on March 25, 1980 sued defendant in Toky

Japan, for collection of the unremitted proceeds of the tick

sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th C

Department, Tokyo District Court of Japan against defendant at

office at the Taiheiyo Building, 3rd floor, 132, Yamashita-ch

Naka-ku, Yokohoma, Kanagawa Prefecture. The attempt to ser

the summons was unsuccessful because the bailiff was advised

a person in the office that Mr. Dinozo, the person believed to


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authorized to receive court processes was in Manila and would be

back on April 24, 1980.

On April 24, 1980, bailiff returned to the defendants office to

serve the summons. Mr. Dinozo refused to accept the same

claiming that he was no longer an employee of the defendant.

After the two attempts of service were unsuccessful, the judge of

the Tokyo District Court decided to have the complaint and the

writs of summons served at the head office of the defendant in

Manila. On July 11, 1980, the Director of the Tokyo District Courtrequested the Supreme Court of Japan to serve the summons

through diplomatic channels upon the defendants head office in

Manila. On August 28, 1980, defendant received from Deputy

Sheriff Rolando Balingit the writ of summons (p. 276, Records).

Despite receipt of the same, defendant failed to appear at the

scheduled hearing. Thus, the Tokyo Court proceeded to hear the

plaintiffs complaint and on *January 29, 1981+, rendered

judgment ordering the defendant to pay the plaintiff the sum of

83,158,195 Yen and damages for delay at the rate of 6% per

annum from August 28, 1980 up to and until payment is

completed (pp. 12-14, Records).

On March 24, 1981, defendant received from Deputy Sheriff

Balingit copy of the judgment. Defendant not having appealed the

judgment, the same became final and executory.

Plaintiff was unable to execute the decision in Japan, hence, on

May 20, 1983, a suit for enforcement of the judgment was filed by

plaintiff before the Regional Trial Court of Manila Branch 54.

defendant filed its answer averring that the judgment of the

Japanese Court: (1) the foreign judgment sought to be enforced is

null and void for want of jurisdiction and (2) the said judgment is

contrary to Philippine law and public policy and rendered without

due process of law.

In its decision, the Court of Appeals sustained the trial court. It

agreed with the latter in its reliance upon Boudard vs. Tait

wherein it was held that the process of the cour t has no

extraterritorial effect and no jurisdiction is acquired over the

person of the defendant by serving him beyond the boundaries of

the state. To support its position, the Court of Appeals further

stated:

In an action strictly in personam, such as the instant case,

personal service of summons within the forum is required for the

court to acquire jurisdiction over the defendant (Magdalena

Estate Inc. vs. Nieto, 125 SCRA 230). To confer jurisdiction on the

court, personal or substituted service of summons on thedefendant not extraterritorial service is necessary.

ISSUE:whether a Japanese court can acquire jurisdiction over a

Philippine corporation doing business in Japan by serving

summons through diplomatic channels on the Philippine

corporation at its principal office in Manila after prior attempts to

serve summons in Japan had failed.

HELD:YES

A foreign judgment is presumed to be valid and binding in the

country from which it comes, until the contrary is shown. It is also

proper to presume the regularity of the proceedings and t

giving of due notice therein.

The judgment may, however, be assailed by evidence of want

jurisdiction, want of notice to the party, collusion, fraud, or cle

mistake of law or fact.(See Sec. 50, R 39)

Being the party challenging the judgment rendered by t

Japanese court, SHARP had the duty to demonstrate the invalid

of such judgment.

It is settled that matters of remedy and procedure such as thorelating to the service of process upon a defendant are govern

by the lex fori or the internal law of the forum. 8 In this case, it

the procedural law of Japan where the judgment was render

that determines the validity of the extraterritorial service

process on SHARP. As to what this law is is a question of fact, n

of law. It was then incumbent upon SHARP to present evidence

to what that Japanese procedural law is and to show that under

the assailed extraterritorial service is invalid. It did n

Accordingly, the presumption of validity and regularity of t

service of summons and the decision thereafter rendered by t

Japanese court must stan

Alternatively in the light of the absence of proof regardiJapanese law, the presumption of identity or similarity or the s

called processual presumption may be invoked. Applying it, t

Japanese law on the matter is presumed to be similar with t

Philippine law on service of summons on a private forei

corporation doing business in the Philippines.

Section 14, Rule 14 of the Rules of Court provides that if t

defendant is a foreign corporation doing business in t

Philippines, service may be made: (1) on its resident age

designated in accordance with law for that purpose, or, (2)

there is no such resident agent, on the government offic

designated by law to that effect; or (3) on any of its officers

agents within the Philippines.

Where the corporation has no such agent, service shall be ma

on the government official designated by law, to wit: (a) t

Insurance Commissioner in the case of a foreign insuran

company; (b) the Superintendent of Banks, in the case of a fore

banking corporation; and (c) the Securities and Exchan

Commission, in the case of other foreign corporations d

licensed to do business in the Philippines.

Nowhere in its pleadings did SHARP profess to having had

resident agent authorized to receive court processes in Japa

While it may be true that service could have been made upon a

of the officers or agents of SHARP at its three other branchesJapan, the availability of such a recourse would not preclu

service upon the proper government official, as stated abo

As found by the respondent court, two attempts at service we

made at SHARPs Yokohama branch. Both were unsuccessful. T

Tokyo District Court requested the Supreme Court of Japan

cause the delivery of the summons and other legal documents

the Philippines. Acting on that request, the Supreme Court

Japan sent the summons together with the other legal docume

to the Ministry of Foreign Affairs of Japan which, in tu


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forwarded the same to the Japanese Embassy in Manila .

Thereafter, the court processes were delivered to the Ministry

(now Department) of Foreign Affairs of the Philippines, then to

the Executive Judge of the Court of First Instance (now Regional

Trial Court) of Manila, who forthwith ordered Deputy Sheriff

Rolando Balingit to serve the same on SHARP at its principal office

in Manila. This service is equivalent to service on the proper

government official under Section 14, Rule 14 of the Rules of

Court, in relation to Section 128 of the Corporation Code. Hence,

SHARPs contention that such manner of service is not valid under

Philippine laws holds no water.

We find NORTHWESTs claim for attorneys fees, litigation

expenses, and exemplary damages to be without merit. We find

no evidence that would justify an award for attorneys fees and

litigation expenses under Article 2208 of the Civil Code of the

Philippines. Nor is an award for exemplary damages warranted.

FACTS:

Northwest Airlines (Northwest) and C.F. Sharp & Company (C.F.),

through its Japan branch, entered into an International Passenger

Sales Agency Agreement, whereby the Northwest authorized the

C.F. to sell its air transportation tickets

March 25, 1980: Unable to remit the proceeds of

the ticketsales, Northwest sued C.F. in Tokyo, Japan, for collection

of the unremitted proceeds of the ticket sales, with claim for

damages

April 11, 1980: writ of summons was issued by the 36th Civil

Department, Tokyo District Court of Japan

The attempt to serve the summons was unsuccessful because Mr.

Dinozo was in Manila and would be back on April 24, 1980

April 24, 1980: Mr. Dinozo returned to C.F. Office to serve thesummons but he refused to receive claiming that he no longer an

employee

After the 2 attempts of service were unsuccessful, Supreme Court

of Japan sent the summons together with the other legal

documents to the Ministry of Foreign Affairs of Japan> Japanese

Embassy in Manila>Ministry (now Department) of Foreign Affairs

of the Philippines>Executive Judge of the Court of First Instance

(now Regional Trial Court) of Manila who ordered Deputy Sheriff

Rolando Balingit>C.F. Main Office

August 28, 1980: C.F. received from Deputy Sheriff Rolando

Balingit the writ of summons but failed to appear at the scheduled

hearing.

January 29, 1981: Tokyo Court rendered judgment ordering

the C.F. to pay 83,158,195 Yen and damages for delay at the rate

of 6% per annum from August 28, 1980 up to and until payment is

completed

March 24, 1981: C.F. received from Deputy Sheriff Balingit copy of

the judgment. C.F. did not appeal so it became final and executory

May 20, 1983: Northwest filed a suit for enforcement of t

judgment a RTC

July 16, 1983: C.F. averred that the Japanese Court sought to

enforced is null and void and unenforceable in this jurisdicti

having been rendered without due and proper notice and/or w

collusion or fraud and/or upon a clear mistake of law a

fact. The foreign judgment in the Japanese Court sought in t

action is null and void for want of jurisdiction over the person

the defendant considering that this is an action in personam. T

process of the Court in Japan sent to the Philippines which

outside Japanese jurisdiction cannot confer jurisdiction over t

defendant in the case before the Japanese Court of the case

bar

CA sustained RTC: Court agrees that if the C.F. in a foreign court

a resident in the court of that foreign court such court cou

acquire jurisdiction over the person of C.F. but it must be serv

in the territorial jurisdiction of the foreign court

ISSUE: W/N the Japanese Court has jurisdiction over C.F.

HELD: YES. instant petition is partly GRANTED, and the challeng

decision is AFFIRMED insofar as it denied NORTHWEST's claims

attorneys fees, litigation expenses, and exemplary damages

Consequently, the party attacking (C.F.) a foreign judgment h

the burden of overcoming the presumption of its validity

Accordingly, the presumption of validity and regularity of t

service of summons and the decision thereafter rendered by t

Japanese court must stand.

Applying it, the Japanese law on the matter is presumed to

similar with the Philippine law on service of summons on a priva

foreign corporation doing business in the Philippines. Section 1

Rule 14 of the Rules of Court provides that if the defendant isforeign corporation doing business in the Philippines, service m

be made:

(1) on its resident agent designated in accordance with law

that purpose, or,

(2) if there is no such resident agent, on the government offic

designated by law to that effect; or

(3) on any of its officers or agents within the Philippines.

If the foreign corporation has designated an agent to recei

summons, the designation is exclusive, and service of summons

without force and gives the court no jurisdiction unless ma

upon him.

Where the corporation has no such agent, service shall be ma

on the government official designated by law, to wit:

(a) the Insurance Commissioner in the case of a foreign insuran

company

(b) the Superintendent of Banks, in the case of a foreign banki

corporation

(c) the Securities and Exchange Commission, in the case of oth

foreign corporations duly licensed to do business in t

Philippines. Whenever service of process is so made, t

government office or official served shall transmit by mail a co


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of the summons or other legal proccess to the corporation at its

home or principal office. The sending of such copy is a necessary

part of the service.

The service on the proper government official under Section 14,

Rule 14 of the Rules of Court, in relation to Section 128 of the

Corporation Code

Our laws and jurisprudence indicate a purpose to assimilate

foreign corporations, duly licensed to do business here, to the

status of domestic corporations

We think it would be entirely out of line with this policy should we

make a discrimination against a foreign corporation, like the

petitioner, and subject its property to the harsh writ of seizure by

attachment when it has complied not only with every

requirement of law made specially of foreign corporations, but in

addition with every requirement of law made of domestic

corporations

In as much as SHARP was admittedly doing business in Japan

through its four duly registered branches at the time the

collection suit against it was filed, then in the light of the

processual presumption, SHARP may be deemed a resident of

Japan, and, as such, was amenable to the jurisdiction of the courts

therein and may be deemed to have assented to the said courts'

lawful methods of serving process.

Accordingly, the extraterritorial service of summons on it by the

Japanese Court was valid not only under the processual

presumption but also because of the presumption of regularity of

performance of official duty.

STATE INVESTMENT HOUSE, INC. ANS STATE FINANCING

CENTER, INC. VS

CITIBANK, BANK OF AMERICA AND HONGKONG AND SHANGHAIBANK

ISSUE: Whether or Not foreign banks licensed to do business in

the Philippines, may be considered residents of the Philippine

Islands as contemplated in Sec. 20 of Insolvency Law

An adjudication of insolvency may be made on the petition of

three or more creditors, residents of the Philippine islands, whose

credits or demands accrued int hr Philippine Islands, and the

amount of which credits or demands are in the aggregate not less

than one thousand pesos.

FACTS: The foreign banks involved in the case are Bank ofAmerica, Citibank, and Hongkong and Shanghai Banking

Corporation, all of whom are creditors of Consolidated Mines, Inc.

(CMI).

On December 11, 1981, the three banks jointly filed with the RTC

of Rizal a petition for Involuntary Insolvency of CMI. Among the

grounds alleged by the foreign banks is CMIs commission of

specific acts of insolvency, i.e. that CMI suffered its property to

remain under attachment for three days for the purpose of

hindering or delaying or defrauding its creditors and that CMI has

defaulted in the payment of its current obligations for a period of

thirty days.

The petition for involuntary insolvency was opposed by here

petitioners State Investment House, Inc. (SIHI) and State Financ

Center, Inc. (SFCI). SIHI and SFCI claimed, among others, that t

court had no jurisdiction to take cognizance of the petition f

insolvency because the foreign banks are not resident creditors

CMI as required under the Insolvency Law.

The RTC rendered judgment in favour of SIHI and SFCI for lack

jurisdiction over the subject matter. The court ruled that t

insolvency court could not acquire jurisdiction to adjudicate t

debtor (CMI) as insolvent because the foreign banks are n

residents of the Philippines.

On petition for review, the CA rendered order reversing t

judgment of the RTC. The CA ruled that the three banks a

residents of the Philippines for the purpose of doing business

the Philippines, and that the Insolvency Law was designed for t

benefit of both the creditors and debtors. The CA also reiterat

that the authority granted to the three banks by the SEC cove

not only transacting banking business, but also maintaining su

for the recovery of any debt and claims. Hence, SIHI and SF

brought their appeal before the SC

RULING: The SC ruled that since the Insolvency Law did n

mention of the meaning of residents of the Philippine Island

the better approach would be to harmonize the provisions of t

Corporation Code, the General Banking Act, the Offshore Banki

Law and the NIRC.

Hence, the Court ruled that it is not really the grant of a license

a foreign corporation to do business in the Philippines that mak

it a resident. The license merely gives legitimacy to its doi

business in the country. What effectively makes such forei

corporation a resident corporation in the Philippines is its actua

being in the Philippines and licitly doing business here, or t

locality of existence, which is the necessary element.

SUABILITY OF FOREIGN CORPORATIONS

No foreign corporation transacting business in the Philippin

without a license, shall be permitted to maintain or intervene

any action, suit or proceeding in any court or administrat

agency in the Philippines.

METHODS OF CORPORATE DISSOLUTION:

Voluntary dissolutionby filing proper papers with SEC.

Involuntary dissolution upon verified complaint filed with S

on grounds authorized by law, i.e serious dissension /non-user

franchise, etc.

Expiration of the term of the corporation

Shortening of corporate term

Failure to organize and commence business within two years fro

date of issuance of certificate of incorporation, or

Legislative dissolution

GROUNDS FOR INVOLUNTARY DISSOLUTION


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Fraud or misrepresentation as to the paid-up capital of

the corporation

Misinterpretation

Ultra vires mala prohibita, but too numerous

infractions, which is persistent despite SEC warnings

Continuous inactivity of the corporation for at least 5

years

Refusal to adopt or approve by-laws

THE GOVT OF THE PHILIPPINE ISLANDS vs. FRANK

FACTS: In 1903, in the city of Chicago, Illinois, Frank entered into a

contract for a period of 2 years with the Plaintiff, by which Frank

was to receive a salary as a stenographer in the service of the said

Plaintiff, and in addition thereto was to be paid in advance the

expenses incurred in traveling from the said city of Chicago to

Manila, and one-half salary during said period of travel.

Said contract contained a provision that in case of a violation of its

terms on the part of Frank, he should become liable to the

Plaintiff for the amount expended by the Government by way of

expenses incurred in traveling from Chicago to Manila and the

one-half salary paid during such period.

Frank entered upon the performance of his contract and was paid

half-salary from the date until the date of his arrival in the

Philippine Islands.

Thereafter, Frank left the service of the Plaintiff and refused to

make a further compliance with the terms of the contract.

The Plaintiff commenced an action in the CFI-Manila to recover

from Frank the sum of money, which amount the Plaintiff claimed

had been paid to Frank as expenses incurred in traveling from

Chicago to Manila, and as half-salary for the period consumed in

travel.

It was expressly agreed between the parties to said contract that

Laws No. 80 and No. 224 should constitute a part of said contract.

The Defendant filed a general denial and a special defense,

alleging in his special defense that (1) the Government of the

Philippine Islands had amended Laws No. 80 and No. 224 and had

thereby materially altered the said contract, and also that (2) he

was a minor at the time the contract was entered into and was

therefore not responsible under the law.

the lower court rendered a judgment against Frank and in favor of

the Plaintiff for the sum of 265. 90 dollars

ISSUE:

1. Did the amendment of the laws altered the tenor of the

contract entered into between Plaintiff and Defendant?

2. Can the defendant allege minority/infancy?

HELD:the judgment of the lower court is affirmed

1. NO; It may be said that the mere fact that the legislative

department of the Government of the Philippine Islands had

amended said Acts No. 80 and No. 224 by Acts No. 643 and No.

1040 did not have the effect of changing the terms of the contract

made between the Plaintiff and the Defendant. The legislat

department of the Government is expressly prohibited by secti

5 of the Act of Congress of 1902 from altering or changing t

terms of a contract. The right which the Defendant had acquir

by virtue of Acts No. 80 and No. 224 had not been changed in a

respect by the fact that said laws had been amended. These ac

constituting the terms of the contract, still constituted a part

said contract and were enforceable in favor of the Defendant.

2. NO; The Defendant alleged in his special defense that he wa

minor and therefore the contract could not be enforced again

him. The record discloses that, at the time the contract w

entered into in the State of Illinois, he was an adult under the la

of that State and had full authority to contract. Frank claims th

by reason of the fact that, under that laws of the Philippi

Islands at the time the contract was made, made persons in sa

Islands did not reach their majority until they had attained the a

of 23 years, he was not liable under said contract, contending th

the laws of the Philippine Islands governed.

It is not disputed upon the contrary the fact is admitted th

at the time and place of the making of the contract in questi

the Defendant had full capacity to make the same. No rulebetter settled in law than that matters bearing upon t

execution, interpretation and validity of a contract a

determined b the law of the place where the contract is mad

Matters connected with its performance are regulated by the l

prevailing at the place of performance. Matters respecting

remedy, such as the bringing of suit, admissibility of evidence, a

statutes of limitations, depend upon the law of the place whe

the suit is brought.

Insular Government vs. Frank 13 Phil 236, G.R.No.2935. Mar

23, 1909.

FACTS: In 1903 in the state of Illinois, Mr. Frank, a US citizen andrepresentative of the Insular Government of the Philippin

entered into a contract whereby the former shall serve

stenographer in the Philippines for a period of 2 years. T

contract contained a provision that in case of violation of

terms, Mr. Frank shall be liable for the amount incurred by t

Philippine Government for his travel from Chicago to Manila a

one-half salary paid during such period. After serving f

6 months, defendant left the service and refused to ma

further compliance with the terms of the contract, therefore t

Government sued him to recover the amount of $269.23 p

damages. The lower court ruled in favor of the plaintiff, hence t

defendant appealed presenting minority as his special defense.

reason of the fact that under the laws of the Philippines, contra

made by person who did not reach majority age of 23 a

unenforceable. Defendant claim that he is an adult when he l

Chicago but was a minor when he arrived in Manila and at t

time the plaintiff attempted to enforce the contract.

ISSUE: Whether or not the contract is valid.

RULING: Mr. Frank being fully qualified to enter into a contract

the place and time the contract was made, he cannot therefo

plead infancy as a defense at the place where the contract

being enforced. Although Mr. Frank was still a minor und


7/11

Philippine laws, he was nevertheless considered an adult under

the laws of the state of Illinois, the place where the contract was

made. No rule is better settled in law than that matters bearing

upon the execution, interpretation and validity of a contract are

determined by the law of the place where the contract is made.

Matters connected to its performance are regulated by the law

prevailing at the place of its performance. Matters respecting a

remedy, such as bringing of a suit, admissibility of evidence, and

statutes of limitations, depend upon the law of the place where

the suit is brought. Although generally, capacity of the parties to

enter into a contract is governed by national law. This is one case

not involving real property which was decided by our Supreme

Court, where instead of national law, what should determine

capacity to enter into a contract is the lex loci celebrationis.

According to Conflict of Laws writer Edgardo Paras, Franks

capacity should be judged by his national law and not by the law

of the place where the contract was entered into. In the instant

case whether it is the place where the contract was made or

Franks nationality, the result would be the same. However, as

suggested by the mentioned author, for the conflicts rule in

capacity in general, national law of the parties is controlling.

Tolentino vs. Secretary of Finance

FACTS: RA 7716, otherwise known as the Expanded Value-Added

Tax Law, is an act that seeks to widen the tax base of the existing

VAT system and enhance its administration by amending the

National Internal Revenue Code. There are various suits

questioning and challenging the constitutionality of RA 7716 on

various grounds.

Tolentino contends that RA 7716 did not originate exclusively

from the House of Representatives but is a mere consolidation of

HB. No. 11197 and SB. No. 1630 and it did not pass three readings

on separate days on the Senate thus violating Article VI, Sections

24 and 26(2) of the Constitution, respectively.

Art. VI, Section 24: All appropriation, revenue or tariff bills, bills

authorizing increase of the public debt, bills of local application,

and private bills shall originate exclusively in the House of

Representatives, but the Senate may propose or concur with

amendments.

Art. VI, Section 26(2): No bill passed by either House shall

become a law unless it has passed three readings on separate

days, and printed copies thereof in its final form have been

distributed to its Members three days before its passage, except

when the President certifies to the necessity of its immediate

enactment to meet a public calamity or emergency. Upon the lastreading of a bill, no amendment thereto shall be allowed, and the

vote thereon shall be taken immediately thereafter, and the yeas

and nays entered in the Journal.

ISSUE: Whether or not RA 7716 violated Art. VI, Section 24 and

Art. VI, Section 26(2) of the Constitution.

HELD: No. The phrase originate exclusively refers to the revenue

bill and not to the revenue law. It is sufficient that the House of

Representatives initiated the passage of the bill which may

undergo extensive changes in the Senate.

SB. No. 1630, having been certified as urgent by the Preside

need not meet the requirement not only of printing but also

reading the bill on separate days.

Tolentino vs. Secretary of Finance

Arturo Tolentino et al are questioning the constitutionality of

7716 otherwise known as the Expanded Value Added Tax (EVA

Law. Tolentino averred that this revenue bill did not exclusiv

originate from the House of Representatives as required

Section 24, Article 6 of the Constitution. Even though RA 77originated as HB 11197 and that it passed the 3 readings in t

HoR, the same did not complete the 3 readings in Senate for aft

the 1st reading it was referred to the Senate Ways & Mea

Committee thereafter Senate passed its own version known

Senate Bill 1630. Tolentino averred that what Senate could ha

done is amend HB 11197 by striking out its text and substituting

with the text of SB 1630 in that way the bill remains a House B

and the Senate version just becomes the text (only the text) of t

HB. (Its ironichowever to note that Tolentino and co-petition

Raul Roco even signed the said Senate Bill.)

ISSUE:Whether or not the EVAT law is procedurally infirm.

HELD: No. By a 9-6 vote, the Supreme Court rejected t

challenge, holding that such consolidation was consistent with t

power of the Senate to propose or concur with amendments

the version originated in the HoR. What the Constitution sim

means, according to the 9 justices, is that the initiative must com

from the HoR. Note also that there were several instances befo

where Senate passed its own version rather than having the H

version as far as revenue and other such bills are concerned. T

practice of amendment by substitution has always been accepte

The proposition of Tolentino concerns a mere matter of for

There is no showing that it would make a significant difference

Senate were to adopt his over what has been done.

Held: The argument that RA 7716 did not originate exclusively

the House of Representatives as required by Art. VI, Sec. 24 of t

Constitution will not bear analysis. To begin with, it is not the la

but the revenue bill which is required by the Constitution

originate exclusively in the House of Representatives. To ins

that a revenue statute and not only the bill which initiated t

legislative process culminating in the enactment of the law mu

substantially be the same as the House bill would be to deny t

Senates power not only to concurwith amendments but also

propose amendments. Indeed, what the Constitution sim

means is that the initiative for filing revenue, tariff or tax bills, b

authorizing an increase of the public debt, private bills and billslocal application must come from the House of Representativ

on the theory that, elected as they are from the districts, t

members of the House can be expected to be more sensitive

the local needs and problems. Nor does the Constitutionprohi

the filing in the Senate of a substitute bill in anticipation of

receipt of the bill from the House, so long as action by the Sena

as a body is withheld pending receipt of the House bill.

The next argument of the petitioners was that S. No. 1630 did n

pass 3 readings on separate days as required by the Constituti

because the second and third readings were done on the sam


8/11

day. But this was because the President had certified S. No. 1630

as urgent. The presidential certification dispensed with the

requirement not only of printing but also that of reading the bill

on separate days. That upon the certification of a billby the

President the requirement of 3 readings on separate days and of

printing and distribution can be dispensed with is supported by

the weightof legislative practice.

BAGONG FILIPINAS OVERSEAS CORPORATION and GOLDEN STAR

SHIPPING, LTD.,Petitioners, v. NATIONAL LABOR RELATIONS

COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT

ADMINISTRATION, DIRECTOR PATRICIA SANTO TOMAS and

PROSERFINA PANCHO, Respondents.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SHIPBOARD

EMPLOYMENT CONTRACT, LAW BETWEEN THE PARTIES. We

hold that the shipboard employment contract is controlling in this

case. The contract provides that the beneficiaries of the seaman

are entitled to P20,000 "over and above the benefits" for which

the Philippine Government is liable under Philippine law.

2. ID.; ID.; ID.; NORSE CASE DISTINGUISHED FROM CASE AT BAR.

Hongkong law on workmens compensation is not the

applicable law. The case of Norse Management Co. v. National

Seamen Board, G. R. No. 54204, September 30, 1982, 117 SCRA

486 cannot be a precedent because it was expressly stipulated in

the employment contract in that case that the workmens

compensation payable to the employee should be in accordance

with Philippine Law or the Workmens Insurance Law of the

country where the vessel is registered "whichever is greater."

D E C I S I O N

The issue in this case is whether the shipboard employmentcontract or Hongkong law should govern the amount of death

compensation due to the wife of (Guillermo Pancho who was

employed by Golden Star Shipping, Ltd., a Hongkong based

firm.chanrobles.com : virtual law library

The shipboard employment contract dated June 1, 1978 was

executed in this country between Pancho and Bagong Filipinas

Overseas Corporation, the local agent of Golden Star Shipping. It

was approved by the defunct National Seamen Board. Pancho was

hired as an oiler in the M/V Olivine for 12 months with a gross

monthly wage of US $195.

In October, 1978, he had a cerebral stroke. He was rushed to thehospital while the vessel was docked at Gothenberg, Sweden. He

was repatriated to the Philippines and confined at the San Juan de

Dios Hospital. He died on December 13, 1979.

The National Seamen Board awarded his widow, Proserfina,

P20,000 as disability compensation benefits pursuant to the

above-mentioned employment contract plus P2,000 as attorneys

fees. Proserfina appealed to the National Labor Relations

Commission which awarded her $621 times 36 months or its

equivalent in Philippine currency plus 10% of the benefits as

attorneys fees. Golden Star Shipping assailed that decision

by certiorari.

We hold that the shipboard employment contract is controlling

this case. The contract provides that the beneficiaries of t

seaman are entitled to P20,000 "over and above the benefits"

which the Philippine Government is liable under Philippine la

Hongkong law on workmens compensation is not the applicab

law. The case of Norse Management Co. v. National Seam

Board, G. R. No. 54204, September 30, 1982, 117 SCRA 4

cannot be a precedent because it was expressly stipulated in t

employment contract in that case that the workme

compensation payable to the employee should be in accordan

with Philippine Law or the Workmens Insurance Law of t

country where the vessel is registered "whichever

greater." chanrobles law library : r

The Solicitor General opines that the employment contract shou

be applied. For that reason, he refused to uphold the decision

the NLR

WHEREFORE, the judgment of the National Labor Relatio

Commission is reversed and set aside. The decision of tNational Seamen Board dated February 26, 1981 is affirmed.

costs.

PAKISTAN INTERNATIONAL AIRLINES (PIA) CORPORATION

HON. BLAS F. OPLE, in his capacity as Minister of Labor; HO

VICENTE LEOGARDO, JR., in his capacity as Deputy Minist

ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMAS

G.R. No. 61594 September 28, 1990

FACTS: On 2 December 1978, petitioner Pakistan Internatio

Airlines Corporation (PIA), a foreign corporation licensed to

business in the Philippines, executed in Manila 2 separa

contracts of employment, one with private respondent Farraand the other with private respondent Mamasig. 1 The contrac

which became effective on 9 January 1979, provided in pertine

portion as follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of 3 years, but can be extended

the mutual consent of the parties.

6. TERMINATION: Notwithstanding anything to contrary as here

provided, PIA reserves the right to terminate this agreement

any time by giving the EMPLOYEE notice in writing in advance o

month before the intended termination or in lieu thereof, paying the EMPLOYEE wages equivalent to one months salary.

10. APPLICABLE LAW: This agreement shall be construed a

governed under and by the laws of Pakistan, and only the Cou

of Karachi, Pakistan shall have the jurisdiction to consider a

matter arising out of or under this agreement.

Farrales & Mamasig (employees) were hired as flight attendan

after undergoing training. Base station was in Manila and flyi

assignments to different parts of the Middle East and Europe.


9/11

roughly 1 year and 4 months prior to the expiration of the

contracts of employment, PIA through Mr. Oscar Benares, counsel

for and official of the local branch of PIA, sent separate letters,

informing them that they will be terminated effective September

1, 1980. Farrales and Mamasig jointly instituted a complaint, for

illegal dismissal and non-payment of company benefits and

bonuses, against PIA with the then Ministry of Labor and

Employment (MOLE).

PIAs Contention: The PIA submitted its position paper, but no

evidence, and there claimed that both private respondents were

habitual absentees; that both were in the habit of bringing in from

abroad sizeable quantities of personal effects; and that PIA

personnel at the Manila International Airport had been discreetly

warned by customs officials to advise private respondents to

discontinue that practice. PIA further claimed that the services of

both private respondents were terminated pursuant to the

provisions of the employment contract.

Favorable decision for the respondents. The Order stated that

private respondents had attained the status of regular employees

after they had rendered more than a year of continued service;

that the stipulation limiting the period of the employmentcontract to 3 years was null and void as violative of the provisions

of the Labor Code and its implementing rules and regulations on

regular and casual employment; and that the dismissal, having

been carried out without the requisite clearance from the MOLE,

was illegal and entitled private respondents to reinstatement with

full backwages.

Decision sustained on appeal. Hence, this petition for certiorari

ISSUE:(Relative to the subject) Which law should govern over the

case? Which court has jurisdiction?

HELD:Philippine Law and Philippine courts

Petitioner PIA cannot take refuge in paragraph 10 of its

employment agreement which specifies, firstly, the law of

Pakistan as the applicable law of the agreement and, secondly,

lays the venue for settlement of any dispute arising out of or in

connection with the agreement only *in+ courts of Karachi

Pakistan. We have already pointed out that the relationship is

much affected with public interest and that the otherwise

applicable Philippine laws and regulations cannot be rendered

illusory by the parties agreeing upon some other law to govern

their relationship.

the contract was not only executed in the Philippines, it was also

performed here, at least partially; private respondents are

Philippine citizens and respondents, while petitioner, although aforeign corporation, is licensed to do business (and actually doing

business) and hence resident in the Philippines; lastly, private

respondents were based in the Philippines in between their

assigned flights to the Middle East and Europe. All the above

contacts point to the Philippine courts and administrative

agencies as a proper forum for the resolution of contractual

disputes between the parties.

Under these circumstances, paragraph 10 of the employment

agreement cannot be given effect so as to oust Philippine

agencies and courts of the jurisdiction vested upon them by

Philippine law. Finally, and in any event, the petitioner PIA did not

undertake to plead and prove the contents of Pakistan law on t

matter; it must therefore be presumed that the applicab

provisions of the law of Pakistan are the same as the applicab

provisions of Philippine law. [DOCTRINE OF PROCESSU

PRESUMPTION, eh?] Petition denied.

NOTES:

Another Issue: petitioner PIA invokes paragraphs 5 and 6 of

contract of employment with private respondents Farrales aMamasig, arguing that its relationship with them was governed

the provisions of its contract rather than by the general provisio

of the Labor Cod

A contract freely entered into should, of course, be respected,

PIA argues, since a contract is the law between the parties. T

principle of party autonomy in contracts is not, however,

absolute principle. The rule in Article 1306, of our Civil Code

that the contracting parties may establish such stipulations

they may deem convenient, provided they are not contrary

law, morals, good customs, public order or public policy. Th

counter-balancing the principle of autonomy of contract

parties is the equally general rule that provisions of applicablaw, especially provisions relating to matters affected with pub

policy, are deemed written into the contract. Put a lit

differently, the governing principle is that parties may n

contract away applicable provisions of law especially perempto

provisions dealing with matters heavily impressed with pub

interest. The law relating to labor and employment is clearly su

an area and parties are not at liberty to insulate themselves a

their relationships from the impact of labor laws and regulatio

by simply contracting with each other. It is thus necessary

appraise the contractual provisions invoked by petitioner PIA

terms of their consistency with applicable Philippine law a

regulations.

Triple Eight Integrated Services, Inc. vs. NLRC

LABOR LAW: Disease as Ground for Dismissal, requisites: (1) t

disease must be such that employees continued employment

prohibited by law or prejudicial to his health as well as to t

health of his co-employees; and (2) there must b

certification by competent public authority that the disease is

such nature or at such a stage that it cannot be cured within

period of 6 months with proper medical treatment.

LABOR LAW: same; The requirement for a medi

certificate under Article 284 of the Labor Code cannot

dispensed with; otherwise, it would sanction the unilateral aarbitrary determination by the employer of the gravity or exte

of the employeesillness and thus defeat the public policy on t

protection of labor.

PRIVATE INTERNATIONAL LAW: Lex Loci Contractus: Established

the rule that lex loci contractus (the law of the place where t

contract is made) governs in this jurisdiction. There

no question that the contract of employment in this case w

perfected here in the Philippines.
http://scire-licet.blogspot.com/2010/07/triple-eight-integrated-services-inc-vs.htmlhttp://scire-licet.blogspot.com/2010/07/triple-eight-integrated-services-inc-vs.html


10/11

PRIVATE INTERNATIONAL LAW: Law of the Forum vis-a-vis Public

Policy: Settled is the rule that the courts of the forum will not

enforce any foreign claim obnoxious to the forums public policy.

Here in the Philippines, employment agreements are more than

contractual in nature. The Constitution itself, in Article XIII

Section 3, guarantees the special protection of workers.

FACTS:Osdana, a Filipino citizen, was recruited by Triple Eight for

employment with the latters principal, Gulf Catering Company

(GCC), a firm based in the Kingdom of Saudi Arabia. The

employment contract (originally as food server but later

changed to waitress) was executed in the Philippines but was to

be performed in Riyadh. Once in Riyadh, however, Osdana was

made to perform strenuous tasks (washing dishes, janitorial

work), which were not included in her designation as a waitress.

Because of the long hours and strenuous nature of her work, she

suffered from Carpal Tunnel Syndrome, for which she had to

undergo surgery. But during her weeks of confinement at the

hospital for her recovery, she was not given any salary. And after

she was discharged from the hospital, GCC suddenly dismissed her

from work, allegedly on the ground of illness. She was not given

any separation pay nor was she paid her salaries for the periodswhen she was not allowed to work. Thus, upon her return to the

Philippines, she filed a complaint against Triple Eight, praying for

unpaid and underpaid salaries, among others. The LA ruled in her

favour, which ruling NLRC affirmed. Hence, this petition for

certiorari.

ISSUE: Whether or not Osdana was illegally dismissed. If so,

whether or not she is entitled to award for salaries for the

unexpired portion of the contract

HELD: The petition must fail. Disease as a Ground for Dismissal

Under Article 284 of the Labor Code and the Omnibus Rules

Implementing the Labor Code, for disease to be a valid ground fortermination, the following requisites must be present: The

disease must be such that employees continued employment is

prohibited by law or prejudicial to his health as well as to the

health of his co-employees

There must be a certification by competent public authority

that the disease is of such nature or at such a stage that it cannot

be cured within a period of 6 months with proper medical

treatment.

In the first place, Osdanas continued employment despite

her illness was not prohibited by law nor was it prejudicial to

her health, as well as that of her co-employees. In fact, the

medical report issued after her second operation stated that she

had very good improvement of the symptoms. Besides, Carpal

Tunnel Syndrome is not a contagious disease.

On the medical certificate requirement, petitioner erroneously

argues that private respondent was employed in Saudi Arabia

and not here in the Philippines. Hence, there was a physical

impossibility to secure from a Philippine public health authority

the alluded medical certificate that public respondentsillness will

not be cured within a period of six months.

Petitioner entirely misses the point, as counsel for priva

respondent states in the Comment. The rule simply prescribes

certificationby a competent public health authority and no

Philippine public health authorit

If, indeed, Osdana was physically unfit to continue h

employment, her employer could have easily obtaine

certification to that effect from a competent public hea

authority in Saudi Arabia, thereby heading off any complaint f

illegal dismiss

The requirement for a medical certificate under Article 284 of t

Labor Code cannot be dispensed with; otherwise,

would sanction the unilateral and arbitrary determination by t

employer of the gravity or extent of the employ eesillnessa

thus defeat the public policy on the protection of labor. As t

Court observed in Prieto v. NLRC, The Court is not unaware

the many abuses suffered by our overseas workers in the forei

land where they have ventured, usually with heavy hearts,

pursuit of a more fulfilling future. Breach of contra

maltreatment, rape, insufficient nourishment, sub-hum

lodgings, insults and other forms of debasement, are only a few

the inhumane acts to which they are subjected by their foreiemployers, who probably feel they can do as they please in th

country. While these workers may indeed have relatively lit

defense against exploitation while they are abroad, th

disadvantage must not continue to burden them when th

return to their own territory to voice their mut

complaint. There is no reason why, in their own land, t

protection of our own laws cannot be extended to them in f

measure for the redress of their grievances.

Which law should apply: Lex Loci Contractus. Petitioner likew

attempts to sidestep the medical certificate requirement

contending that since Osdana was working in Saudi Arabia, h

employment was subject to the laws of the ho

country. Apparently, petitioner hopes to make it appear that t

labor laws of Saudi Arabia do not require any certification by

competent public health authority in the dismissal of employe

due to illne

Again, petitioners argument is without merit. First, established

the rule that lex loci contractus (the law of the place where t

contract is made) governs in this jurisdiction. There

no question that the contract of employment in this case w

perfected here in the Philippines. Therefore, the Labor Code,

implementing rules and regulations, and other laws affecti

labor apply in this case. Furthermore, settled is the rule that tcourts of the forum will not enforce any foreign claim obnoxio

to the forums public policy. Here in the Philippines, employme

agreements are more than contractual in nature. T

Constitution itself, in Article XIII Section 3, guarantees the spec

protection of worke

This public policy should be borne in mind in this case because

allow foreign employers to determine for and by themselv

whether an overseas contract worker may be dismissed on t

ground of illness would encourage illegal or arbitrary p

termination of employment contrac


11/11

Award of Salaries granted but reduced. In the case at bar, while it

would appear that the employment contract approved by the

POEA was only for a period of twelve months, Osdanas actual

stint with the foreign principal lasted for one year and seven-and-

a-half months. It may be inferred, therefore, that the employer

renewed her employment contract for another year. Thus, the

award for the unexpired portion of the contract should have been

US$1,260 (US$280 x 4 months) or its equivalent in Philippine

pesos, not US$2,499 as adjudged by the labor arbiter and

affirmed by the NLRC.

As for the award for unpaid salaries and differential amounting to

US$1,076 representing seven months unpaid salaries and one

month underpaid salary, the same is proper because, as correctly

pointed out by Osdana, the no work, no pay rule relied upon by

petitioner does not apply in this case. In the first place, the fact

that she had not worked from June 18 to August 22, 1993 and

then from January 24 to April 29, 1994, was due to

her illness which was clearly work-related. Second, from August

23 to October 5, 1993, Osdana actually worked as food server and

cook for seven days a week at the Hota Bani Tameem Hospital,

but was not paid any salary for the said period. Finally, fromOctober 6 to October 23, 1993, she was confined to quarters and

was not given any work for no reason at all.

Moral Damages granted but reduced. Now, with respect to the

award of moral and exemplary damages, the same is likewise

proper but should be reduced. Worth reiterating is the rule that

moral damages are recoverable where the dismissal of the

employee was attended by bad faith or fraud or constituted an

act oppressive to labor, or was done in a manner contrary to

morals, good customs, or public policy. Likewise, exemplary

damages may be awarded if the dismissal was effected in a

wanton, oppressive or malevolent manner.

According to the facts of the case as stated by public respondent,

Osdana was made to perform such menial chores, as dishwashing

and janitorial work, among others, contrary to her job designation

as waitress. She was also made to work long hours without

overtime pay. Because of such arduous working conditions, she

developed Carpal Tunnel Syndrome. Her illness was such that she

had to undergo surgery twice. Since her employer determined for

itself that she was no longer fit to continue working, they sent her

home posthaste without as much as separation pay or

compensation for the months when she was unable to work

because of her illness. Since the employer is deemed to have

acted in bad faith, the award for attorneys fees is likewise

upheld.In August 1992, the Gulf Catering Company, a foreign company

operating in Saudi Arabia, recruited, through its Philippine agent,

Triple Eight Integrated Services, Inc., the services of Erlinda

Osdana. Osdana was contracted to work as a waitress in Saudi

Arabia. Her employment contract was duly approved by the

POEA. She was also medically examined and was declared fit for

employment.

But when she was in Saudi, Osdana was instead forced to work as

a dishwasher with a brutal shift which starts from 6am until 6pm

and this was without overtime pay. Due to the heavy work she

was made to suffer, there were months when she was unable

work. Eventually, she was diagnosed to be suffering from car

tunnel syndrome. She then underwent two separate operatio

to fix her hands. She showed good signs and wasrecovering w

But four days after she was discharged from the hospital, h

employment was terminated an d was sent home to t

Philippines. The reason for the termination was illness. She w

not given any separation pay and apparently, her salaries we

not fully paid.

In the Philippines, she sought the help of Triple Eight but t

agency refused to help her hence she sued them.

In its defense, Triple Eight averred that Osdanas employment w

validly terminated due to her illness. Osdana however claim

that her carpal tunnel syndrome is not a ground for terminati

because it is not even a communicable disease and that under t

implementing rules of the Labor Code, there should be

certification from a competent public authority that her illness

such that she can be validly dismissed from employment.

On that point, Triple Eight averred that the Labor Code of t

Philippines does not apply because she works in Saudi Arabia; a

that considering that she works in Saudi, it was not possible

her Arabian employer to get a certification from a Philippi

public health authority.

The labor arbiter, as well as the NLRC, ruled in favor of Osdana.

ISSUE: Whether or not the arguments of Triple Eight are correct

HELD: No. The Labor Code, as well as its implementing rules app

The contract of employment was executed in the Philippin

Thus, following the principle of lex loci contractus, Philippine la

shall apply. Further, it is the States policy to afford maximu

protection to labor, domestic or overseas.

Anent the issue of securing a certification from a compete

public authority, the pertinent rules are as follows:

As a general rule, an employer may dismiss an employee found

be suffering from any disease and whose continued employme

is prohibited by law or prejudicial to his health as well as t

health of his co-employees (Art. 284, Labor Code). There must

a certification by competent public authority that the disease is

such nature or at such a stage that it cannot be cured within

period of six 6 months with proper medical treatment (Section

Rule 1, Book VI, Omnibus Rules Implementing the Labor Code);

Except: If the disease or ailment can be cured within 6 mont

the employer shall not terminate the employee but shall ask t

employee to take a leave. The employer shall reinstate su

employee to his former position immediately upon t

restoration of his normal health (Section 8, Rule 1, Bo

VI, Omnibus Rules Implementing the Labor Code).

Nowhere in the rule does it state that the term competent pub

authority must be a Philippine authority. Hence, it can be

foreign competent authority, as in this case, it could be

competent public authority in Saudi Arabia which Triple Eigh

principal (Gulf Catering) did not avail of.

conflicts - september 11

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