Additional Cases for 1981-1990

1. Royal Crown Internationale v. NLRC (178 SCRA 569, 16 October 1989)

2. Laurel v. Garcia (187 SCRA 797, 25 July 1990)

3. National Union Fire Insurance Company of Pittsburg, et al. V. Stolt-Nielsen Philippines, Inc., et al (184 SCRA 682, 26 April 1990)

4. Antam Consolidated v. CA (143 SCRA 288, 31 July 1986)

5. Garrison v. CA (187 SCRA 525, 19 July 1990)

6. CIR v. British Overseas Airways Corp (GR No L-65773, 4 Apr 1987)

7. KK Shell Sekiyu Osaka Hatsubaisho, et al. V. CA, et al. (188 SCRA 145, 30 July 1990)

8. Yao Kee, et al. V. Sy-Gonzales, et al.(GR No. 55960, 24 November 1988)

9. Pakistan International Airlines, Corporation v. Ople(190 SCRA 90)

10. Continental Airlines, Inc., et al. V. Santiago, et al. (172 SCRA 490, 18 April 1989]

ROYAL CROWN INTERNATIONALE v. NLRCGR No. 78085 October 16, 1989

Doctrine: A Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding.

FACTS: In 1983, Royal Crown, a duly licensed private employment agency, deployed Virgilio Nacionales for employment with ZAMEL as an architectural draftsman in Saudi Arabia. A service agreement was executed between him respondent and ZAMEL whereby the former was to receive per month a salary of US$500.00 plus US$100.00 as allowance for a period of one (1) year commencing from the date of his arrival in Saudi Arabia. Nacionales departed for Saudi Arabia on June 28,1983. On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground that his performance was below par. For three (3) successive days thereafter, he was detained at his quarters and was not allowed to report to work until his exit papers were ready. On February 16, 1984, he was made to board a plane bound for the Philippines. Thus, Private respondent then filed on April 23, 1984 a complaint for illegal termination against petitioner and ZAMEL with the POEA.

Attached in petitioners’ manifestation and joint reply was a purported photocopy of a statement executed in Saudi Arabia by private respondent claiming that the latter had settled the case with ZAMEL. Petitioner contends that pursuant to clause no. 13 of the service agreement, the laws of Saudi Arabia must govern the agreement and thus the stricter concept of morality there must be considered.

Lower Court Ruling: Both the POEA and the NLRC ruled that there was no valid and just cause for dismissal.

ISSUE:1. Whether or not the laws of Saudi Arabia should govern the service

agreement.

RATIO: Petitioner’s contention is patently erroneous. The provisions of the Labor Code of the Philippines, its implementing rules and regulations, and doctrines laid down in jurisprudence dealing with the principle of due process and the basic right of all Filipino workers to security of tenure, provide the standard by which the legality of the exercise by management of its prerogative to dismiss incompetent, dishonest or recalcitrant employees, is to be determined. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers.

Moreover, the laws of Saudi Arabia were neither pleaded nor proved by petitioner. Thus, they have no bearing at the case at bar.

LAUREL v. GARCIA

GR No. 92013 July 25, 1990

Doctrine: As to the validity of the Philippine Government’s disposal of its assets, Philippine law will govern wherever the property may be situated.

FACTS: The Roppongi property involved in these proceedings is among the properties acquired by the Philippines from the Japanese Government pursuant to the War Reparations Agreement. The property is where the Philippine Embassy in Japan was once located, before it transferred to another property of the Government in Japan. The Philippine Government decided to open up the property for sale or disposition. As a consequence, numerous from oppositions from different sectors arose. A number of government officials insisted that Japanese Law should govern.

Lower Court Ruling: Both the POEA and the NLRC ruled that there was no valid and just cause for dismissal.

ISSUE:1. Whether or not Japanese Law should govern – No.

RATIO: A conflict of law situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined; and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine which law should apply. In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to the State. And the validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PA/AMERICAN INTERNATIONAL UNDERWRITER (PHIL.) INC., v.

STOLT-NIELSEN PHILIPPINES, INC. and COURT OF APPEALSG.R. No. 87958 April 26, 1990

Doctrine: Arbitration, as an alternative mode of settling disputes, has long been recognized and accepted in our jurisdiction. Republic Act No. 876 (The Arbitration Law) also expressly authorizes arbitration of domestic disputes. Foreign arbitration as a system of settling commercial disputes of an international character was likewise recognized when the Philippines adhered to the United Nations "Convention on the Recognition and the Enforcement of Foreign Arbitral Awards of 1958," under the 10 May 1965 Resolution No. 71 of the Philippine Senate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state.

FACTS: On 9 January 1985, United Coconut Chemicals, Inc. (Shipper) shipped 404.774 metric tons of distilled C6-C18 fatty acid on board a tanker owned by Stolt-Nielsen Philippines Inc. (Carrier) from the Philippines and which was covered by a Tanker Bill of Lading. The shipment was insured with National Union Fire Insurance Company of Pittsburg (Insurer), a non-life American insurance corporation. The Bill of Lading issued by the carrier contained a general statement of incorporation of the terms of a Charter Party between the Shipper and Parcel Tankers, Inc., entered into in Greenwich, Connecticut, U.S.A.

Upon receipt of the cargo by the consignee in Netherlands, it was found to be discolored and totally contaminated. As the claim filed by the shipper-assured with the carrier was denied, the insurer indemnified the shipper. As subrogee of the shipper-assured, the insurer filed suit against the carrier, before RTC Makati for recovery of the amount it pad to the SHIPPER. The carrier moved to dismiss/suspend the proceedings on the ground that the RTC had no jurisdiction over the claim the same being an arbitrable one and that as subrogee, the insurer is subject to the provisions of the Bill of Lading, which includes a provision that the shipment is carried under and pursuant to the terms of the Charter Party providing for arbitration.

Lower Court Ruling: The insurer should refer its claims for arbitration.

ISSUE: 1. Whether or not the terms of the Charter Party, particularly the

provision on arbitration, is binding on the insurer.

RATIO: The Insurer is covered by the provision of the terms of the Charter Party. Referral to arbitration in New York pursuant to the arbitration clause is indeed called for.

As the subrogee of the shipper, the insurer is contractually bound by the terms of the Charter party. Arbitration, as an alternative mode of settling disputes, has long been recognized and accepted in our jurisdiction (Chapter 2, Title XIV, Book IV, Civil Code). Republic Act No. 876 (The Arbitration Law) also expressly authorizes arbitration of domestic disputes. Foreign arbitration as a system of settling commercial disputes of an international character was likewise recognized when the Philippines adhered to the United Nations "Convention on the Recognition and the Enforcement of Foreign Arbitral Awards of 1958," under the 10 May 1965 Resolution No. 71 of the Philippine

Senate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state. Thus, it pertinently provides:

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

2. The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

ANTAM CONSOLIDATED, INC., v. CAGR No. L-61523 July 31, 1986

Doctrine: A foreign corporation not doing business in the Philippines, does not need to obtain a license to do business in order to have the capacity to sue.

FACTS: Stokely is a It filed a complaint against Banahaw Milling Corporation (Banahaw), Antam Consolidated, Inc., Tambunting Trading Corporation (Tambunting), Aurora Consolidated Securities and Investment Corporation, and United Coconut Oil Mills, Inc. (Unicom) for collection of sum of money involving three transactions which Stokely ered into with the corporations.

Stokely is a foreign corporation organized and existing under the laws of Indiana, USA and is not licensed to do business in the Philippines. Stokely alleged that one of its subdivisions, Capital City, entered into a contract with Comphil wherein Comphil would senn and Capital City would buy 500 long tons of crude coconut oil. Comphil failed to deliver and Capital City was forced to source its requirement from the open market at a higher price. To settle Capital City's loss under the contract, the parties entered into a second contract wherein Comphil undertook to buy and Capital City agreed to sell 500 long tons of coconut crude oil and that Comphil was supposed to repurchase the undelivered coconut oil from Capital City in the same amount of loss that Capital City sustained under the first contract. Comphil again failed to pay the said amount. To settle Capital City's loss, it entered into a third contract with Comphil wherein the latter undertook to sell and deliver and Capital City agreed to buy the same quantity of crude coconut oil. Comphil again failed to deliver and despite repeated demands from Capital City, it refused to pay. Stokely subsequently filed a complaint against the subsidiaries of Comphil for collection of money and asked for a writ of attachment to be issued against all the properties of the petitioners/corporations. The petitioners filed a motion to dismiss the complaint on the ground that the respondent, being a foreign corporation not licensed to do business in the Philippines, has no personality to maintain the instant suit.

Lower Court Ruling: Denied the motion to dismiss filed by the respondent corporation.

ISSUE: 1. Whether or not Stokely, as a foreign corporation, is doing business in

the Philippines, and has personality to sue in the Philippines.

RATIO: There is no general rule or governing principle laid down as to what constitutes'doing'or'engaging in' or 'transacting business in the Philippines. Each case must be judged in the light of its peculiar circumstance. In the case at bar, the transactions entered into by the respondent with the petitioners are not a series of commercial dealings which signify an intent on the part of the respondent to do business in the Philippines but constitute an isolated one which does not fall under the category of "doing business." The only reason why the respondent entered into the second and third transactions with the petitioners was because it wanted to recover the loss it sustained from the failure of the petitioners to deliver the crude coconut oil under the first transaction and in order to give the latter a chance to make good on their obligation. The three seemingly different transactions were entered into by the parties only in an effort to fulfill the basic agreement and in no way indicate an intent on the part of the respondent to engage in a continuity of transactions with petitioners which will categorize it as a foreign corporation

doing business in the Philippines. Thus, the trial court, and the appellate court did not err in denying the petitioners' motion to dismiss not only because the ground thereof does not appear to be indubitable but because the respondent, being a foreign corporation not doing business in the Philippines, does not need to obtain a license to do business in order to have the capacity to sue.

It is a common ploy of defaulting local companies which are sued by unlicensed foreign companies not engaged in business in the Philippines to invoke lack of capacity to sue. The doctrine of lack of capacity to sue based on failure to first acquire a local license is based on considerations of sound public policy. It intended to favor domestic corporations who enter was never into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business in this country. The petitioners in this case are engaged in the exportation of coconut oil, an export item so vital in our country's economy. They filed this petition on the ground that Stokely is an unlicensed foreign corporation without a bare allegation or showing that their defenses in the collection case are valid and meritorious. We cannot fault the two courts below for acting as they did.

GARRISON v. CA87 SCRA 525 July 19, 1990

Doctrine: United States citizens employed in the United States Naval Base are exempt from paying income tax but are not excused from filing income tax returns.

FACTS: All the petitioners are United States citizens, entered this country under the Philippine Immigration Act of 1940 and presently employed in the United States Naval Base, Olongapo City. For the year 1969 John L. Garrison earned $15,288.00; Frank Robertson, $12,045.84; Robert H. Cathey, $9,855.20; James W. Robertson, $14,985.54; Felicitas de Guzman, $ 8,502.40; and Edward McGurk $12,407.99.

All said petitioners received separate notices from Ladislao Firmacion, District Revenue Officer, stationed at Olongapo City, informing them that they had not filed their respective income tax returns for the year 1969, as required by Section 45 of the National Internal Revenue Code, and directing them to file the said returns within ten days from receipt of the notice. But the accused refused to file their income tax returns, claiming that they are not resident aliens but only special temporary visitors, having entered this country under Section 9 (a) of the Philippine Immigration Act of 1940, as amended. The accused also claimed exemption from filing the return in the Philippines by virtue of the provisions of Article XII, paragraph 2 of the US-RP Military Bases Agreement.

The petitioners contend that given these facts, they may not under the law be deemed resident aliens required to file income tax returns.

Lower Court Ruling: Court of First Instance of Zambales at Olongapo City convicted the petitioners "of violation of Section 45 (a) (1) (b) of the National Internal Revenue Code, as amended, by not filing their respective income tax returns for the year 1969" and sentencing "each of them to pay a fine of Two Thousand (P2,000.00) Pesos.

Appellate Court Ruling: Each of the petitioners indeed fall within the letter of the codal precept that an "alien residing in the Philippines" is obliged "to file an income tax return." None of them may be considered a non-resident alien, "a mere transient or sojourner," who is not under any legal duty to file an income tax return under the Philippine Tax Code.

ISSUE:1. W/N American citizens exempt from paying income tax by virtue of the

US-RP Military Bases Agreement are also excused from filing income tax returns. – No

RATIO: The exemption granted to the petitioners by the Bases Agreement from payment of income tax is not absolute. By the explicit terms of the Bases Agreement, it exists only as regards income derived from their employment "in the Philippines in connection with construction, maintenance, operation or defense of the bases;" it does not exist in respect of other income, i.e., "income derived from Philippine sources or sources other than the US sources." With respect to the form of income that is obtained or proceeding from "Philippine sources or sources other than the US sources," the petitioners, and all other American nationals who are residents of the

Philippines, are legally bound to pay tax thereon. In other words, so that American nationals residing in the country may be relieved of the duty to pay income tax for any given year, it is incumbent on them to show the Bureau of Internal Revenue that in that year they had derived income exclusively from their employment in connection with the U.S. bases, and none whatever "from Philippine sources or sources other than the US sources." They have to make this known to the Government authorities. It is not in the first instance the latter's duty or burden to make unaided verification of the sources of income of American residents. The duty rests on the U.S. nationals concerned to invoke and prima facie establish their tax-exempt status. It cannot simply be presumed that they earned no income from any other sources than their employment in the American bases and are therefore totally exempt from income tax.

CIR V. BRITISH OVERSEAS AIRWAYS CORPGR No L-65773 April 4, 1987

.Doctrine: British Overseas Airways Corporation (BOAC), a foreign airline company which does not maintain any flight operations to and from the Philippines, is liable for Philippine income taxation in respect of "sales of air tickets" in the Philippines through a general sales agent.

FACTS: BOAC is a 100% British Government-owned corporation organized and existing under the laws of the United Kingdom It is engaged in the international airline business and is a member-signatory of the Interline Air Transport Association (IATA). As such it operates air transportation service and sells transportation tickets over the routes of the other airline members. During the periods covered by the disputed assessments, it is admitted that BOAC had no landing rights for traffic purposes in the Philippines, and was not granted a Certificate of public convenience and necessity to operate in the Philippines by the Civil Aeronautics Board (CAB). Consequently, it did not carry passengers and/or cargo to or from the Philippines, although during the period covered by the assessments, it maintained a general sales agent in the Philippines — Wamer Barnes and Company, Ltd., and later Qantas Airways — which was responsible for selling BOAC tickets covering passengers and cargoes.

Petitioner Commissioner of Internal Revenue (CIR, for brevity) assessed BOAC the aggregate amount of P2,498,358.56 for deficiency income taxes covering the years 1959 to 1963. This was protested by BOAC. Subsequent investigation resulted in the issuance of a new assessment, dated 16 January 1970 for the years 1959 to 1967 in the amount of P858,307.79. BOAC paid this new assessment under protest.

Commissioner of Internal Revenue Ruling: On 7 October 1970, BOAC filed a claim for refund of the amount of P858,307.79, which claim was denied by the CIR on 16 February 1972.

Court of Tax Appeals Ruling: Tax Court rendered the assailed joint Decision reversing the CIR. The Tax Court held that the proceeds of sales of BOAC passage tickets in the Philippines by Warner Barnes and Company, Ltd., and later by Qantas Airways, during the period in question, do not constitute BOAC income from Philippine sources "since no service of carriage of passengers or freight was performed by BOAC within the Philippines" and, therefore, said income is not subject to Philippine income tax.

ISSUE:1. W/N the revenue from sales of tickets by BOAC in the Philippines

constitutes income from Philippine sources and, accordingly, taxable under our income tax laws. – Yes

RATIO: The absence of flight operations to and from the Philippines is not determinative of the source of income or the site of income taxation. Admittedly, BOAC was an off-line international airline at the time pertinent to this case. The test of taxability is the "source"; and the source of an income is that activity ... which produced the income. Unquestionably, the passage documentations in these cases were sold in the Philippines and the revenue

therefrom was derived from a activity regularly pursued within the Philippines. business a And even if the BOAC tickets sold covered the "transport of passengers and cargo to and from foreign cities", it cannot alter the fact that income from the sale of tickets was derived from the Philippines. The word "source" conveys one essential idea, that of origin, and the origin of the income herein is the Philippines. Hence, British Overseas Airways Corporation (BOAC), is hereby ordered to pay the deficiency income tax.

K.K. Shell Sekiyu Osaka v. CAG.R. Nos. 90306-07 July 30, 1990

Doctrine: The party seeking to have a case dismissed on the ground of forum non conveniens must be able to establish the exact nature of the parties in the case, upon which, the trial court, in the exercise of its sound discretion, will determine whether the special circumstances require that his court desist from assuming jurisdiction over the suit.

FACTS: On January 7, 1987, Kumagai (a Japanese corporation) filed a complaint for the collection of a sum of money with preliminary attachment against Atlantic (a Panaman corporation), the vessel MV Estella and Crestamonte (a Philipine corporation).

Atlantic is the owner of MV Estella and Crestamonte is allegedly the bareboat charterer and operator of MV Estella. Crestamonte appointed NSS Corporation (a Japanese corporation) as its general agent in Japan under an Agency Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan. Kumagai supplied MV Estella with supplies and services, but despite repeated demands, Crestamonte failed to pay the amounts due.

NSS and Keihin Corporation filed complaints-in-intervention. On May 19, 1987, Fu Hing (a corporation organized in Hong Kong and not doing business in the Philippines) filed a complaint-in-intervention alleging that it supplied oil/fuel to the MV Estella and incurred barge expenses which have been remain unpaid despite demand and that such claim constitutes a maritime lien. On July 16, 1897, petitioner K.K. Shell (a Japanese corporation and not doing business in the Philippines) likewise filed a complaint-in-intervention alleging that upon request of NSS, Crestamonte’s general agent in Japan, K.K. Shell provided and supplied marine diesel oil/fuel to the MV Estella at the ports of Tokyo and Mutsure in Japan, and that despite previous demands, Crestamonte has failed to pay. In addition, it is alleged that K.K. Shell’s claim constitutes a lien on MV Estella.

Lower Court Ruling: The trial court allowed the intervention of Fu Hing and K.K. Shell. Writs of preliminary attachments were subsequently issued upon posting of the appropriate bonds. Upon posting of counterbonds, both writs of attachment were discharged. Subsequently, Atlantic and MV Estella moved to dismiss the complaints-in-intervention filed by Fu Hing and K.K. Shell.

In the meantime, Atlantic and MV Estella filed a petition for certiorari in the Court of Appeals against the trial court judge, Kumagai, NSS and Keihin, which sought the annulment of the orders of the trial judge. Among these orders is the omnibus order dated August 11, 1987 which denied the motion to reconsider the order allowing Fu Hing’s intervention and granted K.K. Shell’s motion to intervene.

Appellate Court Ruling: The Court of Appeals (CA) annulled the orders of the trial court and directed it to cease and desist from proceeding with the case. According to the CA Fu Hing and K.K. Shell were not suppliers but sub-agents of NSS hence they were bound by the Agency Agreement between Crestamonte and NSS, particularly, the choice of forum clause, which provides:

12.0-That this Agreement shall be governed by the Laws of Japan. Any matters, disputes, and/or differences arising between

the parties hereto concerned regarding this Agreement shall be subject exclusively to the jurisdiction of the District Courts of Japan.

Thus, the CA concluded that the trial court should have disallowed their motions to intervene.

ISSUE: 1. Whether or not the CA erred in disallowing K.K. Shell’s motion to

intervene.

RATIO: The CA committed reversible error insofar as it disallowed K.K. Shell’s intervention in the case before the trial court and its order for the latter to cease and desist from proceeding with the case.

A reading of the Agency Agreement fails to support the conclusion that K.K. Shell is a sub-agent of NSS since the Agreement does not make any express reference to the contracting of sub-agents or the applicability of the terms of the agreement (particularly the choice-of-forum clause) to sub-agents. The contract merely states NSS’s principal duties. Moreover, the complaint-in-intervention filed by K.K. Shell merely alleges that it provided and supplied MV Estella with marine diesel oil/fuel upon request of NSS who was acting for and as duly appointed agent of Crestamonte. Thus, there is no basis for the CA’s finding that K.K. Shell “admitted in their pleadings that they were appointed as local agent/sub-agent or representatives by NSS by virtue of the Agency Agreement.” K.K. Shell’s allegation in another case that it was one of the representatives of NSS for the supply of bunker fuel does not conclusively establish a sub-agency between NSS and K.K. Shell in the present case.

In view of the inconclusiveness of the Agency Agreement and the pleadings filed in the trial court, additional evidence, if there be any, would still have to be presented to establish the allegation that K.K. Shell is a sub-agent of NSS. In the same vein, as the choice-of-forum clause in the agreement has not been conclusively shown to be binding upon K.K. Shell, additional evidence would still have to be presented to establish this defense. K.K. shell cannot therefore, as of yet, be barred from instituting an action in the Philippines.

Respondent’s argument that the doctrine of forum non conveniens would be a valid ground to cause the dismissal of K.K. Shell’s complaint-in-intervention, the court is not ready to rule on the private respondent’s invocation of the doctrine as the exact nature of the relationship of the parties is still to be established. The Court leaves this matter to the sound discretion of the trial judge who is in the best position, after some vital facts are established, to determine whether special circumstances require that his court desist from assuming jurisdiction over the suit.

It was clearly reversible error on the part of the CA to annul the trial court’s orders, insofar as K.K. Shell is concerned as there are still numerous material facts to be established in order to arrive at a conclusion as to the true nature of the relationship between Crestamonte and K.K. Shell and between NSS and K.K. Shell. The best recourse is to allow the trial court to proceed with the civil case and consider whatever defenses that may be

raised by private respondents after they have filed their answer and evidence to support their conflicting claims has been presented.

YAO KEE v. SY-GONZALESG.R. No. L-55960 November 24, 1988

Doctrine: (A) Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact. (B) To establish a valid foreign marriage, two things must be proven, namely: (1) the existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence. Well-established in this jurisdiction is the principle that Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact.

FACTS: Sy Kiat, a Chinese national, died on January 17, 1977 in Caloocan City where he was residing, leaving behind real and personal properties in the Philippines worth more or less P300,000.00. Thereafter, Aida Sy-Gonzales, Manual Sy, Teresita Sy-Bernabe, and Rodolfo Sy (respondents) file a petition for the grant of letters of administration in the Court of First Instance of Rizal, Caloocan City. In the said petition, respondents alleged among others that (a) they are the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Kiat died intestate; (c) they do not recognize Sy Kiat’s marriage to Yao Kee nor the filiation of her children to him; and, (d) they nominate Aida Sy-Gonzales for appointment as administratix of the intestate estate of the deceased.

The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho, and Sy Yun Chen (petitioners) who alleged that (a) Yao Kee is the lawful wife of Sy Kiat whom he married on January 19, 1931 in China; (b) the other oppositors are the legitimate children of the deceased with Yao Kee; and, (c) Sze Sook Wah is the elsdes among them and is competent, willing, and desirous to become the administratix of the estate of Sy Kiat.

Lower Court Ruling: The lower court held in favor of the oppositors (petitioners) and appointed Sze Sook Wah as the administratix of the intestate estate of Sy Kiat.

Appellate Court Ruling: The Court of Appeals (CA) modified and set aside the probate court’s ruling. The CA found that the oppositors (petitioners) had not proven the legality/validity of the marriage between Sy Kiat to Yao Kee under the laws of the Chinese People’s Republic of China. However, the CA affirmed the appointment of Sze Sook Wah as the administratix of the estate.

ISSUES:1. Whether or not the CA erred in declaring that the marriage of Sy Kiat

to Yao Kee has not been proven valid in accordance with the laws of the People’s Republic of China.

2. Whether or not the CA erred in declaring petitioners as the natural children of Sy Kiat with Asuncion Gillego.

RATIO: (1) The evidence presented by the petitioners may very well prove the fact of marriage between Yao Kee and Sy Kiat but the same do not suffice to establish the validity of said marriage in accordance with Chinese law or custom. Custom is defined as “a rule of conduct formed by repetition of acts,

uniformly observed (practiced) as a social rule, legally binding and obligatory.” The law requires that “a custom must be proved as a fact, according to her rules of evidence” The same competent evidence, if not one of a higher degree, should be required of a foreign custom

The law on foreign marriages is provided by Article 71 of the Civil Code which states that: Art. 71. All marriages performed outside the Philippines in accordance with the laws in force in the country where they were performed and valid there as such, shall also be valid in this country, except bigamous, Polygamous, or incestuous marriages, as determined by Philippine law.

Construing this provision of law, the Court has held that to establish a valid foreign marriage, two things must be proven, namely: (1) the existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence. In proving a foreign law the procedure is provided in the Rules of Court. With respect to an unwritten foreign law Rule 130 section 45 applies. On the other hand, proof of a written foreign law is provided for under Rule 132 section 25, which includes competent evidence like the testimony of a witness to prove the existence of a written foreign law.

In the case at bar petitioners did not present any competent evidence relative to the law and custom of China on marriage. The testimonies of Yao and Gan Ching cannot be considered as proof of China's law or custom on marriage not only because they are self-serving evidence, but more importantly, there is no showing that they are competent to testify on the subject matter. For failure to prove the foreign law or custom, and consequently, the validity of the marriage in accordance with said law or custom, the marriage between Yao Kee and Sy Kiat cannot be recognized in this jurisdiction.

Petitioners also contend that they are not duty bound to prove the Chinese law on marriage as judicial notice thereof had been taken by this Court. This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact.

Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it is the same as ours. Since Yao Kee admitted in her testimony that there was no solemnizing officer as is known here in the Philippines when her alleged marriage to Sy Mat was celebrated it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction.

(2) Since petitioners failed to establish the marriage of Yao Kee with Sy Kiat according to the laws of China, they cannot be accorded the status of legitimate children but only that of acknowledged natural children. Petitioners are natural children, it appearing that at the time of their conception Yao Kee and Sy Kiat were not disqualified by any impediment to marry one another. And they are acknowledged children of the deceased because of Sy Kiat's recognition of Sze Sook Wah and its extension to Sze Lai Cho and Sy Chun Yen who are her sisters of the full blood.

Respondents, on the other hand, are also the deceased's acknowledged natural children with Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years without the benefit of marriage. They have in their favor their father's acknowledgment, evidenced by a compromise agreement

between their parents and approved by the Court of First Instance wherein Sy Kiat not only acknowleged them as his children by Asuncion Gillego but likewise made provisions for their support and future inheritance. This compromise agreement constitutes a statement before a court of record by which a child may be voluntarily acknowledged.

PAKISTAN INTERNATIONAL AIRLINES CORPORATION v. HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister; ETHELYNNE B. FARRALES and

MARIA MOONYEEN MAMASIG,G.R. No. 61594 September 28, 1990

Doctrine: The substantive contacts of a transaction is taken into consideration in determining a court’s jurisdiction.

FACTS: On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment, one with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. The contracts, which became effective on 9 January 1979. Under their contract, Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by agreement between the parties; while paragraph 6 provided that, notwithstanding any other provision in the Contract, PIA had the right to terminate the employment agreement at any time by giving one-month's notice to the employee or, in lieu of such notice, one-months salary. Also, the agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under the agreement.

On 2 August 1980, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both that their services as flight stewardesses would be terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment agreement they had executed with PIA. Thus, private respondents 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").

Petitioner PIA assails the award of the Regional Director and the Order of the Deputy Minister as having been rendered without jurisdiction and having issued an order in disregard and in violation of petitioner's rights under the employment contracts with private respondents.

Lower Court Ruling: Regional Director Francisco L. Estrella ordered the reinstatement of private respondents with full backwages or, in the alternative, the payment to them of the amounts equivalent to their salaries for the remainder of the fixed three-year period of their employment contracts. The Order stated that private respondents had attained the status of regular employees after they had rendered more than a year of continued service.

Appellate Court Ruling: Deputy Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award save for the portion thereof giving PIA the option.

ISSUES: 1. Whether the Regional Director has jurisdiction over the subject matter.

YES.2. Whether the relationship of the parties was governed by the provisions

of its contract rather than by the general provisions of the Labor Code. NO.

RATIO: It appears to us beyond dispute, however, that both at the time the complaint was initiated in September 1980 and at the time the Orders assailed were rendered on January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction over termination cases.

Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made clear that in case of a termination without the necessary clearance, the Regional Director was authorized to order the reinstatement of the employee concerned and the payment of backwages; necessarily, therefore, the Regional Director must have been given jurisdiction over cases of shutdown or dismissal without clearance.

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. Neither may petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship between the parties, upon the other: 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 a foreign 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 the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law.

CONTINENTAL AIRLINES, INC. and AIR MICRONESIA, INC. v. HON. CONSUELO Y. SANTIAGO, Judge, RTC, Makati, Br. 149, the

SECURITIES & EXCHANGE COMMISSION, ALBERTO P. ATAS etc., and ARPAN AIR, INC., represented by CUSTODIO A. PARLADE TRANS

PACIFIC AIR SERVICE CORPORATION]G.R. No. 84764 April 18, 1989

Doctrine: Parties are charged with knowledge of the existing law at the time they enter into the contract and at the time it is to become operative. Moreover, a person is presumed to be more knowledgeable about his own state law than his alien or foreign contemporary.

FACTS: The petitioners, Continental Airlines, Inc. (hereafter simply CONTINENTAL) and Air Micronesia, Inc. (hereafter, MICRONESIA), are foreign corporations licensed to do business in the Philippines. They both appointed private respondent Arpan Air, Inc. (ARPAN) their passenger and cargo sales agent in virtue of identical contracts. After the contracts had been in force for two years, CONTINENTAL and MICRONESIA gave notice of the termination of the agreements by letters dated May 31, 1988, following oral advice thereof about a week earlier. They did so in reliance on a provision in the agreements allowing termination thereof by any party in its "complete discretion" and "with or without cause," to which one director of ARPAN, Custodio Parlade., opted to contest the termination and filed a complaint with the SEC.

Some seven weeks after the filing of his complaint with SEC, as aforestated, or more precisely on July 21, 1988, Parlade in representation of ARPAN filed with the RTC a complaint against CONTINENTAL and MICRONESIA, basically on the theory that the stipulation allowing termination of the agency agreements at a party's "complete discretion" and "With or without cause" was violative of the omnibus Investments Act.

Lower Court Ruling: The Judge observed that while each of the contracts does indeed grant either of the parties the right to terminate it on 90-day notice, such a stipulation appears proscribed by Article 70, Presidential Decree No. 1789, now Article 49, Executive Order No. 226

ISSUE: 1. Whether or not the stipulation in the sales agreements between

petitioner airlines and ARPAN - giving to each airline and to ARPAN the reciprocal rights to unilaterally terminate their contracts by simply giving 90-day notice, in the entire discretion of the cancelling party and regardless of cause- is contrary to law and public policy and the airlines' undertakings. – YES, but ARPAN estopped.

RATIO: At the time that ARPAN signed its agency contracts with CONTINENTAL and MICRONESIA in May, 1986, it could not but have known of the provisions of PD 1789 above referred to. Its plea of ignorance thereof is unavailing. It is axiomatic that parties are charged with knowledge of the existing law at the time they enter into the contract and at the time it is to become operative. (Indeed), a person is presumed to be more knowledgeable about his own state law than his alien or foreign contemporary. Being thus aware of the requirement imposed on CONTINENTAL and MICRONESIA that, among others, it should "(n)ot .. terminate any franchise, licensing or other agreement that applicant may have with a resident of the Philippines,

authorizing the latter to assemble, manufucture or sell within the Philippines the products of the applicant, except for violation thereof or other just cause and upon payment of compensation and reimbursement of investment and other expenses incurred by the licensee in developing a market for the said products .. ARPANs execution of contracts with said firms which inter alia accorded to each of them - and to it (ARPAN) as well - the right to terminate said agreements by mere 90-day notice, "in the complete discretion of the terminating party and x x with or without cause," can only be construed either as a waiver or renunciation of the requirement, or as the constitution of an additional proper cause for the contracts' cancellation.

However, It is quite significant that the right of unilateral termination was a mutual one, conceded not only to CONTINENTAL and/or MICRONESIA but to ARPAN also, and was not challenged by ARPAN prior to the signing of the contracts. It is not unreasonable to assume that had it done so then, and the parties had not been able to agree on a satisfactory modification or clarification of the provision, the contracts would have been aborted.

ARPAN impugned the validity of the provision only after its principals sought to apply it. The impugnation comes too late in the day. After consenting to the stipulation with full knowledge of the relevant provisions of law, and accepting benefits under the contracts containing said stipulation for two (2) years, ARPAN in now estopped from invoking those legal provisions to deny validity or propriety to the stipulation.