Cadalin vs.

POEA

G.R. No. L-104776, Dec. 5, 1994

o GENERAL RULE: A foreign procedural law will not be applied in the forum.
o EXCEPTION: When the country of the forum has a "borrowing statute," the country of the forum will apply the
foreign statute of limitations.
o EXCEPTION TO THE EXCEPTION: The court of the forum will not enforce any foreign claim obnoxious to the
forum's public policy.

FACTS:

Cadalin et al. are overseas contract workers recruited by respondent-appellant AIBC for its accredited foreign
principal, Brown & Root, on various dates from 1975 to 1983. As such, they were all deployed at various projects in
several countries in the Middle East as well as in Southeast Asia, in Indonesia and Malaysia. The case arose when
their overseas employment contracts were terminated even before their expiration. Under Bahrain law, where some
of the complainants were deployed, the prescriptive period for claims arising out of a contract of employment is one
year.

ISSUE:

o Whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine
law on prescription that shall be the governing law

HELD:

As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of
process, joinder of actions, period and requisites for appeal, and so forth, are governed by teh laws of the forum.
This is true even if the action is based upon a foreign substantive law.

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as
procedural or substantive, depending on the characterization given such a law.

However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country
of the forum has a “borrowing statute.” Said statute has the practical effect of treating the foreign statute of
limitation as one of substance. A “borrowing statute” directs the state of the forum to apply the foreign statute of
limitations to the pending claims based on a foreign law. While there are several kinds of “borrowing statutes,” one
form provides that an action barred by the laws of the place where it accrued, will not be enforced in the forum even
though the local statute has not run against it. Section 48 of our Code of Civil Procedure is of this kind. Said Section
provides:

“If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the
Philippine Islands.”

In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex propio vigore insofar as it ordains
the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claims obnoxious to the forum’s public policy. To enforce the
one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene
the public policy on the protection to labor.
BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and the rest of 1,767
NAMED-COMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL MUNDOvs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION’S ADMINISTRATOR, NLRC, BROWN
& ROOT INTERNATIONAL, INC. AND/OR ASIA INTERNATIONAL BUILDERS CORPORATION
GRN 104776, December 5,1994.
FACTS:
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the Supreme Court for Certiorari.

On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on behalf of 728 other OCWs instituted a
class suit by filing an “Amended Complaint” with the POEA for money claims arising from their recruitment by
ASIA INTERNATIONAL BUILDERS CORPORATION (AIBC) and employment by BROWN & ROOT
INTERNATIONAL, INC (BRI) which is a foreign corporation with headquarters in Houston, Texas, and is engaged
in construction; while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and
deploy Filipino workers for overseas employment on behalf of its foreign principals.

The amended complaint sought the payment of the unexpired portion of the employment contracts, which was
terminated prematurely, and secondarily, the payment of the interest of the earnings of the Travel and Reserved
Fund; interest on all the unpaid benefits; area wage and salary differential pay; fringe benefits; reimbursement of
SSS and premium not remitted to the SSS; refund of withholding tax not remitted to the BIR; penalties for
committing prohibited practices; as well as the suspension of the license of AIBC and the accreditation of BRII

On October 2, 1984, the POEA Administrator denied the “Motion to Strike Out of the Records” filed by AIBC but
required the claimants to correct the deficiencies in the complaint pointed out.

AIB and BRII kept on filing Motion for Extension of Time to file their answer. The POEA kept on granting such
motions.

On November 14, 1984, claimants filed an opposition to the motions for extension of time and asked that AIBC and
BRII declared in default for failure to file their answers.

On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file their answers
within ten days from receipt of the order.

(at madami pang motions ang na-file, new complainants joined the case, ang daming inavail na remedies ng both
parties)
On June 19, 1987, AIBC finally submitted its answer to the complaint. At the same hearing, the parties were given a
period of 15 days from said date within which to submit their respective position papers. On February 24, 1988,
AIBC and BRII submitted position paper. On October 27, 1988, AIBC and BRII filed a “Consolidated Reply,”
POEA Adminitartor rendered his decision which awarded the amount of $824, 652.44 in favor of only 324
complainants. Claimants submitted their “Appeal Memorandum For Partial Appeal” from the decision of the POEA.
AIBC also filed its MR and/or appeal in addition to the “Notice of Appeal” filed earlier.

NLRC promulgated its Resolution, modifying the decision of the POEA. The resolution removed some of the
benefits awarded in favor of the claimants. NLRC denied all the MRs. Hence, these petitions filed by the claimants
and by AlBC and BRII.

The case rooted from the Labor Law enacted by Bahrain where most of the complainants were deployed. His
Majesty Ise Bin Selman Al Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on June 16, 1176, otherwise
known re the Labour Law for the Private Sector. Some of the provision of Amiri Decree No. 23 that are relevant to
the claims of the complainants-appellants are as follows:
“Art. 79: x x x A worker shall receive payment for each extra hour equivalent to his wage entitlement increased by a
minimum of twenty-rive per centurn thereof for hours worked during the day; and by a minimum off fifty per
centurn thereof for hours worked during the night which shall be deemed to being from seven o’clock in the evening
until seven o’clock in the morning .”

Art. 80: Friday shall be deemed to be a weekly day of rest on full pay.
If employee worked, 150% of his normal wage shall be paid to him x x x.”

Art. 81; x x x When conditions of work require the worker to work on any official holiday, he shall be paid an
additional sum equivalent to 150% of his normal wage.”

Art. 84: Every worker who has completed one year’s continuous service with his employer shall be entitled to Laos
on full pay for a period of not less than 21 days for each year increased to a period not less than 28 days after five
continuous years of service.”

A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his service in that
year.”

Art. 107: A contract of employment made for a period of indefinite duration may be terminated by either party
thereto after giving the other party prior notice before such termination, in writing, in respect of monthly paid
workers and fifteen days’ notice in respect of other workers. The party terminating a contract without the required
notice shall pay to the other party compensation equivalent to the amount of wages payable to the worker for the
period of such notice or the unexpired portion thereof.”

Art. Ill: x x x the employer concerned shall pay to such worker, upon termination of employment, a leaving
indemnity for the period of his employment calculated on the basis of fifteen days’ wages for each year of the first
three years of service and of one month’s wages for each year of service thereafter. Such worker shall be entitled to
payment of leaving indemnity upon a quantum meruit in proportion to the period of his service completed within a
year.”

ISSUE:
1. WON the foreign law should govern or the contract of the parties.(WON the complainants who have worked in
Bahrain are entitled to the above-mentioned benefits provided by Amiri Decree No. 23 of Bahrain).

2. WON the Bahrain Law should apply in the case. (Assuming it is applicable WON complainants’ claim for the
benefits provided therein have prescribed.)

3. Whether or not the instant cases qualify as; a class suit (siningit ko nalang)
(the rest of the issues in the full text of the case refer to Labor Law)

RULING:
1. NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence governing the pleading and proof of
a foreign law and admitted in evidence a simple copy of the Bahrain’s Amiri Decree No. 23 of 1976 (Labour Law
for the Private Sector).

NLRC applied the Amiri Deere, No. 23 of 1976, which provides for greater benefits than those stipulated in the
overseas-employment contracts of the claimants. It was of the belief that where the laws of the host country are
more favorable and beneficial to the workers, then the laws of the host country shall form part of the overseas
employment contract. It approved the observation of the POEA Administrator that in labor proceedings, all doubts
in the implementation of the provisions of the Labor Code and its implementing regulations shall be resolved in
favor of labor.

The overseas-employment contracts, which were prepared by AIBC and BRII themselves, provided that the laws of
the host country became applicable to said contracts if they offer terms and conditions more favorable than those
stipulated therein. However there was a part of the employment contract which provides that the compensation of
the employee may be “adjusted downward so that the total computation plus the non-waivable benefits shall be
equivalent to the compensation” therein agree,’ another part of the same provision categorically states “that total
remuneration and benefits do not fall below that of the host country regulation and custom.”

Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and BRII, the parties that
drafted it. Article 1377 of the Civil Code of the Philippines provides:
‘The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.”

Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared form containing
the stipulations of the employment contract and the employees merely “take it or leave it.” The presumption is that
there was an imposition by one party against the other and that the employees signed the contracts out of necessity
that reduced their bargaining power.
We read the overseas employment contracts in question as adopting the provisions of the Amiri Decree No. 23 of
1976 as part and parcel thereof. The parties to a contract may select the law by which it is to be governed. In such a
case, the foreign law is adopted as a “system” to regulate the relations of the parties, including questions of their
capacity to enter into the contract, the formalities to be observed by them, matters of performance, and so forth.
Instead of adopting the entire mass of the foreign law, the parties may just agree that specific provisions of a foreign
statute shall be deemed incorporated into their contract “as a set of terms.” By such reference to the provisions of the
foreign law, the contract does not become a foreign contract to be governed by the foreign law. The said law does
not operate as a statute but as a set of contractual terms deemed written in the contract.

A basic policy of contract is to protect the expectation of the parties. Such party expectation is protected by giving
effect to the parties’ own choice of the applicable law. The choice of law must, however, bear some relationship the
parties or their transaction. There is no question that the contracts sought to be enforced by claimants have a direct
connection with the Bahrain law because the services were rendered in that country.

2. NLRC ruled that the prescriptive period for the filing of the claims of the complainants was 3 years, as provided
in Article 291 of the Labor Code of the Philippines, and not ten years as provided in Article 1144 of the Civil Code
of the Philippines nor one year as provided in the Amiri Decree No. 23 of 1976.

Article 156 of the Amiri Decree No. 23 of 1976 provides:

“A claim arising out of a contract of employment shall not actionable after the lapse of one year from the date of the
expiry of the Contract”.

As a general rule, a foreign procedural law will not be applied in the forum (local court), Procedural matters, such as
service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the
forum. This is true even if the action is based upon a foreign substantive law.

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as
procedural or substantive, depending on the characterization given such a law. In Bournias v. Atlantic Maritime
Company (220 F. 2d. 152, 2d Cir. [1955]), where the issue was the applicability of the Panama Labor Code in a case
filed in the State of New York for claims arising from said Code, the claims would have prescribed under the
Panamanian Law but not under the Statute of Limitations of New York. The U.S. Circuit Court of Appeals held that
the Panamanian Law was procedural as it was not “specifically intended to be substantive,” hence, the prescriptive
period provided in the law of the forum should apply. The Court observed: “. . . we are dealing with a statute of
limitations of a foreign country, and it is not clear on the face of the statute that its purpose was to limit the
enforceability, outside as well as within the foreign country concerned, of the substantive rights to which the statute
pertains. We think that as a yardstick for determining whether that was the purpose, this test is the most satisfactory
one.

The Court further noted: “Applying that test here it appears to us that the libellant is entitled to succeed, for the
respondents have failed to satisfy us that the Panamanian period of limitation in question was specifically aimed
against the particular rights which the libellant seeks to enforce. The Panama Labor Code is a statute having broad
objectives.” The American court applied the statute of limitations of New York, instead of the Panamanian law, after
finding that there was no showing that the Panamanian law on prescription was intended to be substantive. Being
considered merely a procedural law even in Panama, it has to give way to the law of the forum (local Court) on
prescription of actions.

However the characterization of a statute into a procedural or substantive law becomes irrelevant when the country
of the forum (local Court) has a “borrowing statute.” Said statute has the practical effect of treating the foreign
statute of limitation as one of substance. A “borrowing statute” directs the state of the forum (local Court) to apply
the foreign statute of limitations to the pending claims based on a foreign law. While there are several kinds of
“borrowing statutes,” one form provides that an action barred by the laws of the place where it accrued will not be
enforced in the forum even though the local statute was not run against it.

Section 48 of Code of Civil Procedure is of this kind. It provides: “If by the laws of the state or country where the
cause of action arose, the action is barred, it is also barred in the Philippine Islands.”

Section 48 has not been repealed or amended by the Civil Code of the Philippines. In the light of the 1987
Constitution, however, Section 48 cannot be enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum (local Court) will not enforce any foreign claim obnoxious to the forum’s public policy. To
enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor.

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:“The state shall promote
social justice in all phases of national development” (Sec. 10).
‘The state affirms labor as a primary social economic force. It shall protect the rights of workers and promote their
welfare” (Sec. 18).

In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
“Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all.”

Thus, the applicable law on prescription is the Philippine law.

The next question is whether the prescriptive period governing the filing of the claims is 3 years, as provided by the
Labor Code or 10 years, as provided by the Civil Code of the Philippines.

Article 1144 of the Civil Code of the Philippines provides:

“The following actions must be brought within ten years from the time the right of action accross:
(1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment”
In this case, the claim for pay differentials is primarily anchored on the written contracts between the litigants, the
ten-year prescriptive period provided by Art. 1144(l) of the New Civil Code should govern.

3. NO. A class suit is proper where the subject matter of the controversy is one of common or general interest to
many and the parties are so numerous that it is impracticable to bring them all before the court. When all the claims
are for benefits granted under the Bahrain law many of the claimants worked outside Bahrain. Some of the claimants
were deployed in Indonesia under different terms and condition of employment.

Inasmuch as the First requirement of a class suit is not present (common or general interest based on the Amiri
Decree of the State of Bahrain), it is only logical that only those who worked in Bahrain shall be entitled to rile their
claims in a class suit.

While there are common defendants (AIBC and BRII) and the nature of the claims is the same (for employee’s
benefits), there is no common question of law or fact. While some claims are based on the Amiri Law of Bahrain,
many of the claimants never worked in that country, but were deployed elsewhere. Thus, each claimant is interested
only in his own demand and not in the claims of the other employees of defendants. A claimant has no concern in
protecting the interests of the other claimants as shown by the fact, that hundreds of them have abandoned their co-
claimants and have entered into separate compromise settlements of their respective claims. The claimants who
worked in Bahrain can not be allowed to sue in a class suit in a judicial proceeding.

WHEREFORE, all the three petitioners are DISMISSED.

G.R. No. L-104776 December 5, 1994

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, andthe rest of 1,767

NAMED-COMPLAINANTS, thru and by their Attorney-in-fact, Atty.GERARDO A. DEL MUNDO,

petitioners,vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR,NATIONAL
LABOR RELATIONS COMMISSION, BROWN & ROOTINTERNATIONAL, INC. AND/OR ASIA
INTERNATIONAL BUILDERSCORPORATION,
respondents.
(In summary, some hundreds of workers brought a labor case against an agent of their employer in thePhilippines. In
Bahrain, the amir there provided for additional labor benefits, but the prescriptive periodis within 1 year only. In the
Philippines however, our labor laws says that the prescriptive period is 3years whilst a civil code provision says that
actions based on written contracts prescribe only after 10years (Art 1144 of CC). POEA and NLRC for the
companies. Complainants brought case under Rule 65alleging grave abuse of discretion.Issue: on whether the
Bahrain prescriptive period will work in the Philippines?SC ruling: No.Prescriptive period may be substantive or
procedural depending upon the characterization of the law of
the forum. This would have been immaterial if we had utilized a “borrowing” statute. But we aren’t
using a borrowing statute. More so, a jurisprudential authority in US stipulates that unless the foreign
country’s prescriptive
period
is expressly made to apply to foreign cases, it wouldn’t be made to apply in
the foreign forum. Also, the 1 year prescriptive period by the Bahrain law would be against public policyas there is a
constitutional provision protecting the rights of labor.)
CADALIN vs POEA ADMINISTRATOR 238 SCRA 721

“Borrowing Statute” –
Ex: Sec. 48, Rule on Civil Procedure – “if by the laws of the State or country where the cause of action arose the
action is barred, it is also barred in the Philippines.”

Facts:

Cadalin et al. are Filipino workers recruited by Asia Int’l Builders Co. (AIBC), a domestic recruitment corporation,
for employment in Bahrain to work for Brown & Root Int’l Inc. (BRII) which is a foreign corporation with
headquarters in Texas. Plaintiff instituted a class suit with the POEA for money claims arising from the unexpired
portion of their employment contract which was prematurely terminated. They worked in Bahrain for BRII and they
filed the suit after 1 yr. from the termination of their employment contract.

As provided by Art. 156 of the Amiri Decree aka as the Labor Law of the Private Sector of Bahrain: “a claim arising
out of a contract of employment shall not be actionable after the lapse of 1 year from the date of the expiry of the
contract,” it appears that their suit has prescribed.

Plaintiff contends that the prescription period should be 10 years as provided by Art. 1144 of the Civil Code as their
claim arise from a violation of a contract.

The POEA Administrator holds that the 10 year period of prescription should be applied but the NLRC provides a
different view asserting that Art 291 of the Labor Code of the Phils with a 3 years prescription period should be
applied. The Solicitor General expressed his personal point of view that the 1 yr period provided by the Amiri
Decree should be applied.

Ruling:

The Supreme Court held that as a general rule a foreign procedural law will not be applied in our country as we must
adopt our own procedural laws.

EXCEPTION:

Philippines may adopt foreign procedural law under the Borrowing Statute such as Sec. 48 of the Civil Procedure
Rule stating “if by the laws of the State or country where the cause of action arose the action is barred, it is also
barred in the Philippines.” Thus, Bahrain law must be applied. However, the court contends that Bahrain’s law on
prescription cannot be applied because the court will not enforce any foreign claim that is obnoxious to the forum’s
public policy and the 1 yr. rule on prescription is against public policy on labor as enshrined in the Phils.
Constitution.

The court ruled that the prescription period applicable to the case should be Art 291 of the Labor Code of the Phils
with a 3 years prescription period since the claim arose from labor employment.

CADALIN v. POEA, 238 SCRA 721

 As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as
service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the
forum. This is true even if the action is based upon a foreign substantive law.
 A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either
as procedural or substantive, depending on the characterization given such a law. Thus in Bournias v. Atlantic
Maritime Company, supra, the American court applied the statute of limitations of New York, instead of the
Panamanian law, after finding that there was no showing that the Panamanian law on prescription was intended to be
substantive. Being considered merely a procedural law even in Panama, it has to give way to the law of the forum on
prescription of actions.
 However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the
country of the forum has a "borrowing statute." Said statute has the practical effect of treating the foreign statute
of limitation as one of substance. A "borrowing statute" directs the state of the forum to apply the foreign statute of
limitations to the pending claims based on a foreign law. While there are several kinds of "borrowing statutes," one
form provides that an action barred by the laws of the place where it accrued, will not be enforced in the forum even
though the local statute has not run against it. Section 48 of our Code of Civil Procedure is of this kind. Said Section
provides: If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred
in the Philippines Islands.
 Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said
Code repealed only those provisions of the Code of Civil Procedures as to which were inconsistent with it. There is
no provision in the Civil Code of the Philippines, which is inconsistent with or contradictory to Section 48 of the
Code of Civil Procedure.
 EXCEPTION: In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio
vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of
1976. The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy. To enforce
the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor.
 Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing "actions to enforce any
cause of action under said law." On the other hand, Article 291 of the Labor Code of the Philippines provides the
prescriptive period for filing "money claims arising from employer-employee relations." The claims in the cases at
bench all arose from the employer-employee relations, which is broader in scope than claims arising from a specific
law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period under Article 291 of the Labor
Code of the Philippines applies only to money claims specifically recoverable under said Code, does not find
support in the plain language of the provision. Neither is the contention of the claimants in G.R. Nos. 104911-14 that
said Article refers only to claims "arising from the employer's violation of the employee's right," as provided by the
Labor Code supported by the facial reading of the provision.
 Where the claims are for benefits granted under the Bahrain law, only the claimants who worked in Bahrain
shall be entitled to file their claims in a class suit, excluding those who worked elsewhere.
 An official document from a foreign government can be admitted in evidence in proceedings before an
administrative body even without observing the rule provided in Section 24, Rule 132 of the 1989 ROC on Evidence.
 The parties to a contract may select the law by which it is to be governed. In such a case, the foreign law is
adopted as a "system" to regulate the relations of the parties, including questions of their capacity to enter into the
contract, the formalities to be observed by them, matters of performance, and so forth.
Instead of adopting the entire mass of the foreign law, the parties may just agree that specific provisions of a foreign
statute shall be deemed incorporated into their contract "as a set of terms." By such reference to the provisions of the
foreign law, the contract does not become a foreign contract to be governed by the foreign law. The said law does
not operate as a statute but as a set of contractual terms deemed written in the contract.
 A basic policy of contract is to protect the expectation of the parties. Such party expectation is protected by
giving effect to the parties' own choice of the applicable law. The choice of law must, however, bear some
relationship to the parties or their transaction. There is no question that the contracts sought to be enforced by
claimants have a direct connection with the Bahrain law because the services were rendered in that country.
 WHAT LAW SHALL GOVERN: (based on the contract adhesion) If the foreign law is more beneficial,
then it shall be applied. But in the contract it also provides that the salaries will be lowered as it will be same as
provided in the contract.
 The intent of the parties will be given effect, then the foreign is deemed incorporated in the contract. The
foreign law does not operate as a statute but is merely a contractual term.
 PRESCRIPTION: either as procedural (law of the forum will prevail) or substantive (foreign law); it is not
relevant if a local court has a borrowing statute. Even if there is a borrowing statute, it will not apply if it is contrary
to public policy.