VOL. 297, OCTOBER 8, 1998 469 again put in service by defendant SAUDIA (sic).
In September 1990,
Saudi Arabian Airlines vs. Court of Appeals
G.R. No. 122191. October 8, 1998.*
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court
seeks to annul and set aside the Resolution1 dated September 27, 1995
and the Decision2 dated April 10, 1996 of the Court of Appeals3 in CA-
G.R. SP No. 36533,4 and the Orders5 dated August 29, 19946 and
February 2, 19957 that were issued by the trial court in Civil Case No.
Q-93-18394.8
The pertinent antecedent facts which gave rise to the instant
petition, as stated in the questioned Decision,9 are as follows:
“On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight
Attendant for its airlines based in Jeddah, Saudi Arabia. x x x
On April 27, 1990, while on a lay-over in Jakarta, Indonesia,
plaintiff went to a disco dance with fellow crew members Thamer
AlGazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was
almost morning when they returned to their hotels, they agreed to have
breakfast together at the room of Thamer. When they were in te (sic)
room, Allah left on some pretext. Shortly after he did, Thamer
attempted to rape plaintiff. Fortunately, a roomboy and several
security personnel heard her cries for help and rescued her. Later, the
Indonesian police came and arrested Thamer and Allah Al-Gazzawi,
the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several
SAUDIA officials interrogated her about the Jakarta incident. They
then requested her to go back to Jakarta to help arrange the release of
Thamer and Allah. In Jakarta, SAUDIA Legal Officer Sirah Akkad and
base manager Baharini negotiated with the police for the immediate
release of the detained crew members but did not succeed because
plaintiff refused to cooperate. She was afraid that she might be tricked
into something she did not want because of her inability to understand
the local dialect. She also declined to sign a blank paper and a
document written in the local dialect. Eventually, SAUDIA allowed
plaintiff to return to Jeddah but barred her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of detention. Eventually, they were
defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors requested her to see Mr.
Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia.
When she saw him, he brought her to the police station where the police
took her passport and questioned her about the Jakarta incident.
Miniewy simply stood by as the police put pressure on her to make a
statement dropping the case against Thamer and Allah. Not until she
agreed to do so did the police return her passport and allowed her to
catch the afternoon flight out of Jeddah.
One year and a half later or on June 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila,
plaintiff was not allowed to board the plane and instead ordered to take
a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of
SAUDIA. When she did, a certain Khalid of the SAUDIA office brought
her to a Saudi court where she was asked to sign a document written
in Arabic. They told her that this was necessary to close the case
against Thamer and Allah. As it turned out, plaintiff signed a notice to
her to appear before the court on June 27, 1993. Plaintiff then returned
to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report
to Jeddah once again and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving assurance from SAUDIA’s
Manila manager, Aslam Saleemi, that the investigation was routinary
and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on June 28,
1993, a Saudi judge interrogated plaintiff through an interpreter about
the Jakarta incident. After one hour of interrogation, they let her go.
At the airport, however, just as her plane was about to take off, a
SAUDIA officer told her that the airline had forbidden her to take
flight. At the Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport and told her to
remain in Jeddah, at the crew quarters, until further orders.
On July 3, 1993, a SAUDIA legal officer again escorted plaintiff to
the same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing her to five
months imprisonment and to 286 lashes. Only then did she realize that
the Saudi court had tried her, together with Thamer and Allah, for
what happened in Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing with the male crew, in
contravention of Islamic tradition.”10
Facing conviction, private respondent sought the help of her employer,
petitioner SAUDIA. Unfortunately, she was denied any assistance. She
then asked the Philippine Embassy in Jeddah to help her while her
case is on appeal. Meanwhile, to pay for her upkeep, she worked on the
domestic flight of SAUDIA, while Thamer and Allah continued to serve
in the international flights.11
Because she was wrongfully convicted, the Prince of Makkah
dismissed the case against her and allowed her to leave Saudi Arabia.
Shortly before her return to Manila,12she was terminated from the
service by SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a Complaint13 for damages
against SAUDIA, and Khaled Al-Balawi (“Al-Balawi”), its country
manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To
Dismiss14 which raised the following grounds, to wit: (1) that the
Complaint states no cause of action against SAUDIA; (2) that
defendant Al-Balawi is not a real party in interest; (3) that the claim
or demand set forth in the Complaint has been waived, abandoned or
otherwise extinguished; and (4) that the trial court has no jurisdiction
to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to
Dismiss).15 SAUDIA filed a reply16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint17 wherein
Al-Balawi was dropped as party defendant. On August 11, 1994,
SAUDIA filed its Manifestation and Motion to Dismiss Amended
Complaint.18
The trial court issued an Order19 dated August 29, 1994 denying
the Motion to Dismiss Amended Complaint filed by SAUDIA.
From the Order of respondent Judge20 denying the Motion to
Dismiss, SAUDIA filed on September 20, 1994, its Motion for
Reconsideration21 of the Order dated August 29, 1994. It alleged that
the trial court has no jurisdiction to hear and try the case on the basis
of Article 21 of the Civil Code, since the proper law applicable is the
law of the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed
her Opposition22 (To Defendant’s Motion for Reconsideration).
In the Reply23 filed with the trial court on October 24, 1994,
SAUDIA alleged that since its Motion for Reconsideration raised lack
of jurisdiction as its cause of action, the Omnibus Motion Rule does not
apply, even if that ground is raised for the first time on appeal.
Additionally, SAUDIA alleged that the Philippines does not have any
substantial interest in the prosecution of the instant case, and hence,
without jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order24dated
February 2, 1995, denying SAUDIA’s Motion for Reconsideration. The
pertinent portion of the assailed Order reads as follows:
“Acting on the Motion for Reconsideration of defendant Saudi Arabian
Airlines filed, thru counsel, on September 20, 1994, and the Opposition
thereto of the plaintiff filed, thru counsel, on October 14, 1994, as well
as the Reply therewith of defendant Saudi Arabian Airlines filed, thru
counsel, on October 24, 1994, considering that a perusal of the
plaintiff’s Amended Complaint, which is one for the recovery of actual,
moral and exemplary damages plus attorney’s fees, upon the basis of
the applicable Philippine law, Article 21 of the New Civil Code of the
Philippines, is, clearly, within the jurisdiction of this Court as regards
the subject matter, and there being nothing new of substance which
might cause the reversal or modification of the order sought to be
reconsidered, the motion for reconsideration of the defendant, is
DENIED.
SO ORDERED.”25
Consequently, on February 20, 1995, SAUDIA filed its Petition for
Certiorari and Prohibition with Prayer for Issuance of Writ of
Preliminary Injunction and/or Temporary Restraining Order 26 with
the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with
Temporary Restraining Order27 dated February 23, 1995, prohibiting
the respondent Judge from further conducting any proceeding, unless
otherwise directed, in the interim.
In another Resolution28 promulgated on September 27, 1995, now
assailed, the appellate court denied SAUDIA’s Petition for the Issuance
of a Writ of Preliminary Injunction dated February 18, 1995, to wit:
“The Petition for the Issuance of a Writ of Preliminary Injunction is
hereby DENIED, after considering the Answer, with Prayer to Deny
Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder,
it appearing that herein petitioner is not clearly entitled thereto
(Unciano Paramedical College, et al. v. Court of Appeals, et al., G.R.
No. 100335, April 7, 1993, Second Division).
SO ORDERED.”
On October 20, 1995, SAUDIA filed with this Honorable Court the
instant Petition29 for Review with Prayer for Temporary Restraining
Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent
Court of Appeals rendered the Decision 30 dated April 10, 1996, now
also assailed. It ruled that the Philippines is an appropriate forum
considering that the Amended Complaint’s basis for recovery of
damages is Article 21 of the Civil Code, and thus, clearly within the
jurisdiction of respondent Court. It further held that certiorari is not
the proper remedy in a denial of a Motion to Dismiss, inasmuch as the
petitioner should have proceeded to trial, and in case of an adverse
ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review
with Prayer for Temporary Restraining Order 31dated April 30, 1996,
given due course by this Court. After both parties submitted their
Memoranda,32 the instant case is now deemed submitted for decision.
Petitioner SAUDIA raised the following issues:
“I.
The trial court has no jurisdiction to hear and try Civil Case No. Q-93-
18394 based on Article 21 of the New Civil Code since the proper law
applicable is the law of the Kingdom of Saudi Arabia inasmuch as this
case involves what is known in private international law as a ‘conflicts
problem.’ Otherwise, the Republic of the Philippines will sit in
judgment of the acts done by another sovereign state which is
abhorred.
II.
Leave of court before filing a supplemental pleading is not a
jurisdictional requirement. Besides, the matter as to absence of leave
of court is now moot and academic when this Honorable Court required
the respondents to comment on petitioner’s April 30, 1996
Supplemental Petition For Review With Prayer For A Temporary
Restraining Order Within Ten (10) Days From Notice Thereof. Further,
the Revised Rules of Court should be construed with liberality
pursuant to Section 2, Rule 1 thereof.
III.
Petitioner received on April 22, 1996 the April 10, 1996 decision
in CA-G.R. SP No. 36533 entitled ‘Saudi Arabian Airlines v. Hon.
Rodolfo A. Ortiz, et al.’ and filed its April 30, 1996 Supplemental
Petition For Review With Prayer For A Temporary Restraining Order
on May 7, 1996 at 10:29 a.m. or within the 15-day reglementary period
as provided for under Section 1, Rule 45 of the Revised Rules of Court.
Therefore, the decision in CA-G.R. SP No. 36533has not yet become
final and executory and this Honorable Court can take cognizance of
this case.”33
From the foregoing factual and procedural antecedents, the following
issues emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN
HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON
CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-
93-18394 ENTITLED “MILAGROS P. MORADA V. SAUDI ARABIAN
AIRLINES.”
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN
RULING THAT IN THIS CASE PHILIPPINE LAW SHOULD
GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must
be settled at the outset. It maintains that private respondent’s claim
for alleged abuse of rights occurred in the Kingdom of Saudi Arabia. It
alleges that the existence of a foreign element qualifies the instant case
for the application of the law of the Kingdom of Saudi Arabia, by virtue
of the lex loci delicti commissi rule.34
On the other hand, private respondent contends that since her
Amended Complaint is based on Articles 1935 and 2136 of the Civil
Code, then the instant case is properly a matter of domestic law. 37
Under the factual antecedents obtaining in this case, there is no
dispute that the interplay of events occurred in two states, the
Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint38 dated
June 23, 1994:
“2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a
foreign airlines corporation doing business in the Philippines. It
may be served with summons and other court processes at Travel
Wide Associated Sales (Phils.), Inc., 3rd Floor, Cougar Building,
114 Valero St., Salcedo Village, Makati, Metro Manila.x x x x
xx xxx
6.Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of detention. Eventually, they
were again put in service by defendant SAUDIA. In September
1990, defendant SAUDIA transferred plaintiff to Manila.
7.On January 14, 1992, just when plaintiff thought that the
Jakarta incident was already behind her, her superiors requested
her to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in
Jeddah, Saudi Arabia. When she saw him, he brought her to the
police station where the police took her passport and questioned
her about the Jakarta incident. Miniewy simply stood by as the
police put pressure on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to do so did the
police return her passport and allowed her to catch the afternoon
flight out of Jeddah.
8.One year and a half later or on June 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila,
plaintiff was not allowed to board the plane and instead ordered
to take a later flight to Jeddah to see Mr. Meniewy, the Chief
Legal Officer of SAUDIA. When she did, a certain Khalid of the
SAUDIA office brought her to a Saudi court where she was asked
to sign a document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it
turned out, plaintiff signed a notice to her to appear before the
court on June 27, 1993. Plaintiff then returned to Manila.
9.Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993 for
further investigation. Plaintiff did so after receiving assurance
from SAUDIA’s Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
10.In Jeddah, a SAUDIA legal officer brought plaintiff to the
same Saudi court on June 27, 1993. Nothing happened then but
on June 28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take that flight. At the Inflight
Service Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah,
at the crew quarters, until further orders.
11.On July 3, 1993 a SAUDIA legal officer again escorted plaintiff
to the same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing her
to five months imprisonment and to 286 lashes. Only then did she
realize that the Saudi court had tried her, together with Thamer
and Allah, for what happened in Jakarta. The court found
plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and
listening to the music in violation of Islamic laws; (3) socializing
with the male crew, in contravention of Islamic tradition.
12.Because SAUDIA refused to lend her a hand in the case,
plaintiff sought the help of the Philippine Embassy in Jeddah. The
latter helped her pursue an appeal from the decision of the court.
To pay for her upkeep, she worked on the domestic flights of
defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights.”39
Where the factual antecedents satisfactorily establish the existence of
a foreign element, we agree with petitioner that the problem herein
could present a “conflicts” case.
A factual situation that cuts across territorial lines and is affected
by the diverse laws of two or more states is said to contain a “foreign
element.” The presence of a foreign element is inevitable since social
and economic affairs of individuals and associations are rarely confined
to the geographic limits of their birth or conception.40
The forms in which this foreign element may appear are
many.41 The foreign element may simply consist in the fact that one of
the parties to a contract is an alien or has a foreign domicile, or that a
contract between nationals of one State involves properties situated in
another State. In other cases, the foreign element may assume a
complex form.42
In the instant case, the foreign element consisted in the fact that
private respondent Morada is a resident Philippine national, and that
petitioner SAUDIA is a resident foreign corporation. Also, by virtue of
the employment of Morada with the petitioner SAUDIA as a flight
stewardess, events did transpire during her many occasions of travel
across national borders, particularly from Manila, Philippines to
Jeddah, Saudi Arabia, and vice versa, that caused a “conflicts”
situation to arise.
We thus find private respondent’s assertion that the case is purely
domestic, imprecise. A conflicts problem presents itself here, and the
question of jurisdiction43confronts the court a quo.
After a careful study of the private respondent’s Amended
Complaint,44 and the Comment thereon, we note that she aptly
predicated her cause of action on Articles 19 and 21 of the New Civil
Code.
 On one hand, Article 19 of the New Civil Code provides:
“Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice give everyone his due and
observe honesty and good faith.”
On the other hand, Article 21 of the New Civil Code provides:
“Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for damages.”
Thus, in Philippine National Bank (PNB) vs. Court of Appeals,45 this
Court held that:
“The aforecited provisions on human relations were intended to expand
the concept of torts in this jurisdiction by granting adequate legal
remedy for the untold number of moral wrongs which is impossible for
human foresight to specifically provide in the statutes.”
Although Article 19 merely declares a principle of law, Article 21 gives
flesh to its provisions. Thus, we agree with private respondent’s
assertion that violations of Articles 19 and 21 are actionable, with
judicially enforceable remedies in the municipal forum.
Based on the allegations46 in the Amended Complaint, read in the
light of the Rules of Court on jurisdiction47 we find that the Regional
Trial Court (RTC) of Quezon City possesses jurisdiction over the
subject matter of the suit.48Its authority to try and hear the case is
provided for under Section 1 of Republic Act No. 7691, to wit:
“Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known
as the “Judiciary Reorganization Act of 1980,” is hereby amended to
read as follows:
SEC. 19. Jurisdiction in Civil Cases.—Regional Trial Courts shall
exercise exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorney’s fees, litigation expenses, and cost
or the value of the property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such other cases in Metro Manila,
where the demand, exclusive of the above-mentioned items exceeds
Two hundred thousand pesos (P200,000.00). (Emphasis ours)
xxx xxx xxx
And following Section 2(b), Rule 4 of the Revised Rules of Court—the
venue, Quezon City, is appropriate:
“SEC. 2. Venue in Courts of First Instance.—[Now Regional Trial
Court]
(a) x x x xxx xxx
(b) Personal actions.—All other actions may be commenced and
tried where the defendant or any of the defendants resides or may be
found, or where the plaintiff or any of the plaintiff resides, at the
election of the plaintiff.”
Pragmatic considerations, including the convenience of the parties,
also weigh heavily in favor of the RTC Quezon City assuming
jurisdiction. Paramount is the private interest of the litigant.
Enforceability of a judgment if one is obtained is quite obvious. Relative
advantages and obstacles to a fair trial are equally important. Plaintiff
may not, by choice of an inconvenient forum, ‘vex,’ ‘harass,’ or ‘oppress’
the defendant, e.g. by inflicting upon him needless expense or
disturbance.
But unless the balance is strongly in favor of the defendant, the
plaintiff’s choice of forum should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it
best to hear the case in the Philippines. Had it refused to take
cognizance of the case, it would be forcing plaintiff (private respondent
now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi
Arabia where she no longer maintains substantial connections. That
would have caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary
difficulties and inconvenience have been shown by either of the parties.
The choice of forum of the plaintiff (now private respondent) should be
upheld.
Similarly, the trial court also possesses jurisdiction over the
persons of the parties herein. By filing her Complaint and Amended
Complaint with the trial court, private respondent has voluntarily
submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several
motions50 praying for the dismissal of Morada’s Amended Complaint.
SAUDIA also filed an Answer In Ex Abundante Cautelam dated
February 20, 1995. What is very patent and explicit from the motions
filed, is that SAUDIA prayed for other reliefs under the premises.
Undeniably, petitioner SAUDIA has effectively submitted to the trial
court’s jurisdiction by praying for the dismissal of the Amended
Complaint on grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.:51
“We observe that the motion to dismiss filed on April 14, 1962, aside
from disputing the lower court’s jurisdiction over defendant’s person,
prayed for dismissal of the complaint on the ground that plaintiff’s
cause of action has prescribed. By interposing such second ground in
its motion to dismiss, Ker and Co., Ltd. availed of an affirmative
defense on the basis of which it prayed the court to resolve controversy
in its favor. For the court to validly decide the said plea of defendant
Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon the
latter’s person, who, being the proponent of the affirmative defense,
should be deemed to have abandoned its special appearance and
voluntarily submitted itself to the jurisdiction of the court.”
Similarly, the case of De Midgely vs. Ferandos, held that:
“When the appearance is by motion for the purpose of objecting to the
jurisdiction of the court over the person, it must be for the sole and
separate purpose of objecting to the jurisdiction of the court. If his
motion is for any other purpose than to object to the jurisdiction of the
court over his person, he thereby submits himself to the jurisdiction of
the court. A special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the person will be held to
be a general appearance, if the party in said motion should, for
example, ask for a dismissal of the action upon the further ground that
the court had no jurisdiction over the subject matter.”52
Clearly, petitioner had submitted to the jurisdiction of the Regional
Trial Court of Quezon City. Thus, we find that the trial court has
jurisdiction over the case and that its exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law
problems seek to answer two important questions: (1) What legal
system should control a given situation where some of the significant
facts occurred in two or more states; and (2) to what extent should the
chosen legal system regulate the situation.53
Several theories have been propounded in order to identify the legal
system that should ultimately control. Although ideally, all choice-of-
law theories should intrinsically advance both notions of justice and
predictability, they do not always do so. The forum is then faced with
the problem of deciding which of these two important values should be
stressed.54
Before a choice can be made, it is necessary for us to determine
under what category a certain set of facts or rules fall. This process is
known as “characterization,” or the “doctrine of qualification.” It is the
“process of deciding whether or not the facts relate to the kind of
question specified in a conflicts rule.”55 The purpose of
“characterization” is to enable the forum to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a
factual situation, event, or operative fact.57An essential element of
conflict rules is the indication of a “test” or “connecting factor” or “point
of contact.” Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a connecting
factor or point of contact, such as the situs of the res, the place of
celebration, the place of performance, or the place of wrongdoing. 58
Note that one or more circumstances may be present to serve as the
possible test for the determination of the applicable law. 59 These “test
factors” or “points of contact” or “connecting factors” could be any of the
following:
“(1)the nationality of a person, his domicile, his residence, his
place of sojourn, or his origin;
(2)the seat of a legal or juridical person, such as a corporation;
(3)the situs of a thing, that is, the place where a thing is, or is
deemed to be situated. In particular, the lex situs is decisive when
real rights are involved;
(4)the place where an act has been done, the locus actus, such as
the place where a contract has been made, a marriage celebrated,
a will signed or a tort committed. The lex loci actus is particularly
important in contracts and torts;
(5)the place where an act is intended to come into effect, e.g., the
place of performance of contractual duties, or the place where a
power of attorney is to be exercised;
(6)the intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;
(7)the place where judicial or administrative proceedings are
instituted or done. The lex fori—the law of the forum—is
particularly important because, as we have seen earlier, matters
of ‘procedure’ not going to the substance of the claim involved are
governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from
application in a given case for the reason that it falls under one of
the exceptions to the applications of foreign law; and
(8)the flag of a ship, which in many cases is decisive of practically
all legal relationships of the ship and of its master or owner as
such. It also covers contractual relationships particularly
contracts of affreightment.”60 (Italics ours.)
After a careful study of the pleadings on record, including allegations
in the Amended Complaint deemed admitted for purposes of the motion
to dismiss, we are convinced that there is reasonable basis for private
respondent’s assertion that although she was already working in
Manila, petitioner brought her to Jeddah on the pretense that she
would merely testify in an investigation of the charges she made
against the two SAUDIA crew members for the attack on her person
while they were in Jakarta. As it turned out, she was the one made to
face trial for very serious charges, including adultery and violation of
Islamic laws and tradition.
There is likewise logical basis on record for the claim that the
“handing over” or “turning over” of the person of private respondent to
Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioner’s purported act contributed to and amplified or
even proximately caused additional humiliation, misery and suffering
of private respondent. Petitioner thereby allegedly facilitated the
arrest, detention and prosecution of private respondent under the guise
of petitioner’s authority as employer, taking advantage of the trust,
confidence and faith she reposed upon it. As purportedly found by the
Prince of Makkah, the alleged conviction and imprisonment of private
respondent was wrongful. But these capped the injury or harm
allegedly inflicted upon her person and reputation, for which petitioner
could be liable as claimed, to provide compensation or redress for the
wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving
torts, the “connecting factor” or “point of contact” could be the place or
places where the tortious conduct or lex loci actus occurred. And
applying the torts principle in a conflicts case, we find that the
Philippines could be said as a situs of the tort (the place where the
alleged tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived private respondent, a
Filipina residing and working here. According to her, she had honestly
believed that petitioner would, in the exercise of its rights and in the
performance of its duties, “act with justice, give her her due and
observe honesty and good faith.” Instead, petitioner failed to protect
her, she claimed. That certain acts or parts of the injury allegedly
occurred in another country is of no moment. For in our view what is
important here is the place where the over-all harm or the totality of
the alleged injury to the person, reputation, social standing and human
rights of complainant, had lodged, according to the plaintiff below
(herein private respondent). All told, it is not without basis to identify
the Philippines as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule
of lex loci delicti commissi, modern theories and rules on tort
liability61 have been advanced to offer fresh judicial approaches to
arrive at just results. In keeping abreast with the modern theories on
tort liability, we find here an occasion to apply the “State of the most
significant relationship” rule, which in our view should be appropriate
to apply now, given the factual context of this case.
In applying said principle to determine the State which has the
most significant relationship, the following contacts are to be taken
into account and evaluated according to their relative importance with
respect to the particular issue: (a) the place where the injury occurred;
(b) the place where the conduct causing the injury occurred; (c) the
domicile, residence, nationality, place of incorporation and place of
business of the parties; and (d) the place where the relationship, if any,
between the parties is centered.62
As already discussed, there is basis for the claim that overall injury
occurred and lodged in the Philippines. There is likewise no question
that private respondent is a resident Filipina national, working with
petitioner, a resident foreign corporation engaged here in the business
of international air carriage. Thus, the “relationship” between the
parties was centered here, although it should be stressed that this suit
is not based on mere labor law violations. From the record, the claim
that the Philippines has the most significant contact with the matter
in this dispute,63 raised by private respondent as plaintiff below
against defendant (herein petitioner), in our view, has been properly
established.
Prescinding from this premise that the Philippines is the situs of
the tort complained of and the place “having the most interest in the
problem,” we find, by way of recapitulation, that the Philippine law on
tort liability should have paramount application to and control in the
resolution of the legal issues arising out of this case. Further, we hold
that the respondent Regional Trial Court has jurisdiction over the
parties and the subject matter of the complaint; the appropriate venue
is in Quezon City, which could properly apply Philip-pine law.
Moreover, we find untenable petitioner’s insistence that “[s]ince
private respondent instituted this suit, she has the burden of pleading
and proving the applicable Saudi law on the matter.” 64 As aptly said by
private respondent, she has “no obligation to plead and prove the law
of the Kingdom of Saudi Arabia since her cause of action is based on
Articles 19 and 21” of the Civil Code of the Philippines. In her Amended
Complaint and subsequent pleadings, she never alleged that Saudi law
should govern this case.65 And as correctly held by the respondent
appellate court, “considering that it was the petitioner who was
invoking the applicability of the law of Saudi Arabia, then the burden
was on it [petitioner] to plead and to establish what the law of Saudi
Arabia is.”66
 Lastly, no error could be imputed to the respondent appellate court
in upholding the trial court’s denial of defendant’s (herein petitioner’s)
motion to dismiss the case. Not only was jurisdiction in order and
venue properly laid, but appeal after trial was obviously available, and
expeditious trial itself indicated by the nature of the case at hand.
Indubitably, the Philippines is the state intimately concerned with the
ultimate outcome of the case below, not just for the benefit of all the
litigants, but also for the vindication of the country’s system of law and
justice in a transnational setting. With these guidelines in mind, the
trial court must proceed to try and adjudge the case in the light of
relevant Philippine law, with due consideration of the foreign element
or elements involved. Nothing said herein, of course, should be
construed as prejudging the results of the case in any manner
whatsoever.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED Civil Case No. Q-93-18394 entitled “Milagros P. Morada
vs. Saudi Arabia Airlines” is hereby REMANDED to Regional Trial
Court of Quezon City, Branch 89 for further proceedings.
SO ORDERED.
 VOL. 538, NOVEMBER 23, 2007 261
Hasegawa vs. Kitamura
G.R. No. 149177. November 23, 2007.*
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of
the Rules of Court assailing the April 18, 2001 Decision1 of the Court
of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001
Resolution2 denying the motion for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants
Co., Ltd. (Nippon), a Japanese consultancy firm providing technical
and management support in the infrastructure projects of foreign
governments,3 entered into an Independent Contractor Agreement
(ICA) with respondent Minoru Kitamura, a Japanese national
permanently residing in the Philippines.4 The agreement provides that
respondent was to extend professional services to Nippon for a year
starting on April 1, 1999.5Nippon then assigned respondent to work as
the project manager of the Southern Tagalog Access Road (STAR)
Project in the Philippines, following the company’s consultancy
contract with the Philippine Government.6
When the STAR Project was near completion, the Department of
Public Works and Highways (DPWH) engaged the consultancy services
of Nippon, on January 28, 2000, this time for the detailed engineering
and construction supervision of the Bongabon-Baler Road
Improvement (BBRI) Pro-ject.7 Respondent was named as the project
manager in the contract’s Appendix 3.1.8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon’s
general manager for its International Division, informed respondent
that the company had no more intention of automatically renewing his
ICA. His services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000, just in
time for the ICA’s expiry.9
Threatened with impending unemployment, respondent, through
his lawyer, requested a negotiation conference and demanded that he
be assigned to the BBRI project. Nippon insisted that respondent’s
contract was for a fixed term that had already expired, and refused to
negotiate for the renewal of the ICA.10
As he was not able to generate a positive response from the
petitioners, respondent consequently initiated on June 1, 2000 Civil
Case No. 00-0264 for specific performance and damages with the
Regional Trial Court of Lipa City.11
For their part, petitioners, contending that the ICA had been
perfected in Japan and executed by and between Japanese nationals,
moved to dismiss the complaint for lack of jurisdiction. They asserted
that the claim for improper pre-termination of respondent’s ICA could
only be heard and ventilated in the proper courts of Japan following
the principles of lex loci celebrationis and lex contractus.12
In the meantime, on June 20, 2000, the DPWH approved Nippon’s
request for the replacement of Kitamura by a certain Y. Kotake as
project manager of the BBRI Project.13
On June 29, 2000, the RTC, invoking our ruling in Insular
Government v. Frank 14 that matters connected with the performance
of contracts are regulated by the law prevailing at the place of
performance,15 denied the motion to dismiss.16 The trial court
subsequently denied petitioners’ motion for
reconsideration,17 prompting them to file with the appellate court, on
August 14, 2000, their firstPetition for Certiorari under Rule 65
[docketed as CA-G.R. SP No. 60205].18 On August 23, 2000, the CA
resolved to dismiss the petition on procedural grounds—for lack of
statement of material dates and for insufficient verification and
certification against forum shopping.19 An Entry of Judgment was later
issued by the appel-late court on September 20, 2000.20
Aggrieved by this development, petitioners filed with the CA, on
September 19, 2000, still within the reglementary period,
a second Petition for Certiorari under Rule 65 already stating therein
the material dates and attaching thereto the proper verification and
certification. This second petition, which substantially raised the same
issues as those in the first, was docketed as CA-G.R. SP No. 60827.21
Ruling on the merits of the second petition, the appellate court
rendered the assailed April 18, 2001 Decision 22finding no grave abuse
of discretion in the trial court’s denial of the motion to dismiss. The CA
ruled, among others, that the principle of lex loci celebrationis was not
applicable to the case, because nowhere in the pleadings was the
validity of the written agreement put in issue. The CA thus declared
that the trial court was correct in applying instead the principle of lex
loci solutionis.23
Petitioners’ motion for reconsideration was subsequently denied by
the CA in the assailed July 25, 2001 Resolution.24
 Remaining steadfast in their stance despite the series of denials,
petitioners instituted the instant Petition for Review
on Certiorari25 imputing the following errors to the appellate court:
A.THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN FINDING THAT THE TRIAL COURT VALIDLY
EXERCISED JURISDICTION OVER THE INSTANT
CONTROVERSY, DESPITE THE FACT THAT THE
CONTRACT SUBJECT MATTER OF THE PROCEEDINGS A
QUO WAS ENTERED INTO BY AND BETWEEN TWO
JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B.THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN OVERLOOKING THE NEED TO REVIEW OUR
ADHERENCE TO THE PRINCIPLE OF LEX LOCI
SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.26
The pivotal question that this Court is called upon to resolve is whether
the subject matter jurisdiction of Philippine courts in civil cases for
specific performance and damages involving contracts executed outside
the country by foreign nationals may be assailed on the principles of lex
loci celebrationis, lex contractus, the “state of the most significant
relationship rule,” or forum non conveniens.
However, before ruling on this issue, we must first dispose of the
procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court’s decision
in CA-G.R. SP No. 60205 has already barred the filing of the second
petition docketed as CA-G.R. SP No. 60827 (fundamentally raising the
same issues as those in the first one) and the instant petition for review
thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on
account of the petition’s defective certification of non-forum shopping,
it was a dismissal without prejudice.27 The same holds true in the CA’s
dismissal of the said case due to defects in the formal requirement of
verification28 and in the other requirement in Rule 46 of the Rules of
Court on the statement of the material dates. 29The dismissal being
without prejudice, petitioners can re-file the petition, or file a second
petition attaching thereto the appropriate verification and
certification—as they, in fact did—and stating therein the material
dates, within the prescribed period30 in Section 4, Rule 65 of the said
Rules.31
The dismissal of a case without prejudice signifies the absence of a
decision on the merits and leaves the parties free to litigate the matter
in a subsequent action as though the dismissed action had not been
commenced. In other words, the termination of a case not on the merits
does not bar another action involving the same parties, on the same
subject matter and theory.32
Necessarily, because the said dismissal is without prejudice and
has no res judicata effect, and even if petitioners still indicated in the
verification and certification of the second certiorari petition that the
first had already been dismissed on procedural grounds, 33petitioners
are no longer required by the Rules to indicate in their certification of
non-forum shopping in the instant petition for review of the second
certiorari petition, the status of the aforesaid first petition before the
CA. In any case, an omission in the certificate of non-forum shopping
about any event that will not constitute res judicata and litis
pendentia, as in the present case, is not a fatal defect. It will not
warrant the dismissal and nullification of the entire proceedings,
considering that the evils sought to be prevented by the said certificate
are no longer present.34
The Court also finds no merit in respondent’s contention that
petitioner Hasegawa is only authorized to verify and certify, on behalf
of Nippon, the certiorari petition filed with the CA and not the instant
petition. True, the Authorization35 dated September 4, 2000, which is
attached to the second certiorari petition and which is also attached to
the instant petition for review, is limited in scope—its wordings
indicate that Hasegawa is given the authority to sign for and act on
behalf of the company only in the petition filed with the ap-pellate
court, and that authority cannot extend to the instant petition for
review.36 In a plethora of cases, however, this Court has liberally
applied the Rules or even suspended its application whenever a
satisfactory explanation and a subsequent fulfillment of the
requirements have been made.37 Given that petitioners herein
sufficiently explained their misgivings on this point and appended to
their Reply38 an updated Authorization39 for Hasegawa to act on behalf
of the company in the instant petition, the Court finds the same as
sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the
defect in the verification and certification. As respondent pointed out,
and to which we agree, Hasegawa is truly not authorized to act on
behalf of Nippon in this case. The aforesaid September 4, 2000
Authorization and even the subsequent August 17, 2001 Authorization
were issued only by Nippon’s president and chief executive officer, not
by the company’s board of directors. In not a few cases, we have ruled
that corporate powers are exercised by the board of directors; thus, no
person, not even its officers, can bind the corporation, in the absence of
authority from the board.40 Considering that Hasegawa verified and
certified the petition only on his behalf and not on behalf of the other
petitioner, the petition has to be denied pursuant to Loquias v. Office
of the Ombudsman.41 Substantial compliance will not suffice in a
matter that demands strict observance of the Rules.42While
technical rules of procedure are designed not to frustrate the ends of
justice, nonetheless, they are intended to effect the proper and orderly
disposition of cases and effectively prevent the clogging of court
dockets.43
Further, the Court has observed that petitioners incorrectly filed a
Rule 65 petition to question the trial court’s denial of their motion to
dismiss. It is a well-established rule that an order denying a motion to
dismiss is interlocutory, and cannot be the subject of the extraordinary
petition for certiorari or mandamus. The appropriate recourse is to file
an answer and to interpose as defenses the objections raised in the
motion, to proceed to trial, and, in case of an adverse decision, to
elevate the entire case by appeal in due course. 44 While there are
recognized exceptions to this rule,45 petition-ers’ case does not fall
among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum,
petitioners question its jurisdiction to hear and resolve the civil case
for specific performance and damages filed by the respondent. The ICA
subject of the litigation was entered into and perfected in Tokyo, Japan,
by Japanese nationals, and written wholly in the Japanese language.
Thus, petitioners posit that local courts have no substantial
relationship to the parties46 following the [state of the] most significant
relationship rule in Private International Law.47
The Court notes that petitioners adopted an additional but different
theory when they elevated the case to the appellate court. In the
Motion to Dismiss48 filed with the trial court, petitioners never
contended that the RTC is an inconvenient forum. They merely argued
that the applicable law which will determine the validity or invalidity
of respondent’s claim is that of Japan, following the principles of lex
loci celebrationis and lex contractus.49While not abandoning this stance
in their petition before the appellate court, petitioners
on certiorari significantly invoked the defense of forum non
conveniens.50 On petition for review before this Court, petitioners
dropped their other arguments, maintained the forum non
conveniens defense, and introduced their new argument that the
applicable principle is the [state of the] most significant relationship
rule.51
Be that as it may, this Court is not inclined to deny this petition
merely on the basis of the change in theory, as explained in Philippine
Ports Authority v. City of Iloilo.52We only pointed out petitioners’
inconstancy in their arguments to emphasize their incorrect assertion
of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three
consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or should litigation
be initiated? (2) Which law will the court apply? and (3) Where can the
resulting judgment be enforced?53
Analytically, jurisdiction and choice of law are two distinct
concepts.54 Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further question
whether the application of a substantive law which will determine the
merits of the case is fair to both parties. The power to exercise
jurisdiction does not automatically give a state constitutional authority
to apply forum law. While jurisdiction and the choice of the lex fori will
often coincide, the “minimum contacts” for one do not always provide
the necessary “significant contacts” for the other. 55 The question of
whether the law of a state can be applied to a transaction is different
from the question of whether the courts of that state have jurisdiction
to enter a judgment.56
In this case, only the first phase is at issue—jurisdiction.
Jurisdiction, however, has various aspects. For a court to validly
exercise its power to adjudicate a controversy, it must have jurisdiction
over the plaintiff or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of the case and, in
cases involving property, over the res or the thing which is the subject
of the litigation.57 In as-sailing the trial court’s jurisdiction herein,
petitioners are actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which establishes and organizes
the court. It is given only by law and in the manner prescribed by
law.58 It is further determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the
claims asserted therein.59 To succeed in its motion for the dismissal of
an action for lack of jurisdiction over the subject matter of the
claim,60 the movant must show that the court or tribunal cannot act on
the matter submitted to it because no law grants it the power to
adjudicate the claims.61
In the instant case, petitioners, in their motion to dismiss, do not
claim that the trial court is not properly vested by law with jurisdiction
to hear the subject controversy for, indeed, Civil Case No. 00-0264 for
specific performance and damages is one not capable of pecuniary
estimation and is properly cognizable by the RTC of Lipa City. 62 What
they rather raise as grounds to question subject matter jurisdiction are
the principles of lex loci celebrationis and lex contractus, and the “state
of the most significant relationship rule.”
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the “law of the place of the
ceremony”63 or the law of the place where a contract is made.64 The
doctrine of lex contractus or lex loci contractusmeans the “law of the
place where a contract is executed or to be per-formed.”65 It controls the
nature, construction, and validity of the contract66 and it may pertain
to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly.67 Under the “state of the most
significant relationship rule,” to ascertain what state law to apply to a
dispute, the court should determine which state has the most
substantial connection to the occurrence and the parties. In a case
involving a contract, the court should consider where the contract was
made, was negotiated, was to be performed, and the domicile, place of
business, or place of incorporation of the parties. 68This rule takes into
account several contacts and evaluates them according to their relative
importance with respect to the particular issue to be resolved. 69
Since these three principles in conflict of laws make reference to the
law applicable to a dispute, they are rules proper for the second phase,
the choice of law.70 They determine which state’s law is to be applied
in resolving the substantive issues of a conflicts problem.71 Necessarily,
as the only issue in this case is that of jurisdiction, choice-of-law rules
are not only inapplicable but also not yet called for.
Further, petitioners’ premature invocation of choice-of-law rules is
exposed by the fact that they have not yet pointed out any conflict
between the laws of Japan and ours. Before determining which law
should apply, first there should exist a conflict of laws situation
requiring the application of the conflict of laws rules. 72 Also, when the
law of a foreign country is invoked to provide the proper rules for the
solution of a case, the existence of such law must be pleaded and
proved.73
It should be noted that when a conflicts case, one involving a foreign
element, is brought before a court or administrative agency, there are
three alternatives open to the latter in disposing of it: (1) dismiss the
case, either because of lack of jurisdiction or refusal to assume
jurisdiction over the case; (2) assume jurisdiction over the case and
apply the internal law of the forum; or (3) assume jurisdiction over the
case and take into account or apply the law of some other State or
States.74 The court’s power to hear cases and controversies is derived
from the Constitution and the laws. While it may choose to recognize
laws of foreign nations, the court is not limited by foreign sovereign law
short of treaties or other formal agreements, even in matters regarding
rights provided by foreign sovereigns.75
Neither can the other ground raised, forum non conveniens,76 be
used to deprive the trial court of its jurisdiction herein. First, it is not
a proper basis for a motion to dismiss because Section 1, Rule 16 of the
Rules of Court does not include it as a ground.77 Second, whether a suit
should be entertained or dismissed on the basis of the said doctrine
depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court.78 In this case, the RTC decided
to assume jurisdiction. Third, the propriety of dismissing a case based
on this principle requires a factual determination; hence, this conflicts
principle is more properly considered a matter of defense.79
Accordingly, since the RTC is vested by law with the power to
entertain and hear the civil case filed by respondent and the grounds
raised by petitioners to assail that jurisdiction are inappropriate, the
trial and appellate courts correctly denied the petitioners’ motion to
dismiss.
WHEREFORE, premises considered, the petition for review
on certiorari is DENIED.
SO ORDERED.
738 SUPREME COURT REPORTS ANNOTATED
Puyat vs. Zabarte
G.R. No. 141536. February 26, 2001.*
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is no genuine
issue as to any material fact, other than the amount of damages. If this
verity is evident from the pleadings and the supporting affidavits,
depositions and admissions on file with the court, the moving party is
entitled to such remedy as a matter of course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, challenging the August 31, 1999 Decision 1 of the Court
of Appeals (CA), which affirmed the Regional Trial Court (RTC) of
Pasig City, Branch 67 in Civil Case No. 64107; and the January 20,
2000 CA Resolution2 which denied reconsideration.
The assailed CA Decision disposed as follows:
“WHEREFORE, finding no error in the judgment appealed from, the
same is AFFIRMED.”3
The Facts
The facts of this case, as narrated by the Court of Appeals, are as
follows:4
“It appears that on 24 January 1994, [Respondent] Ron Zabarte
commenced [an action] to enforce the money judgment rendered by the
Superior Court for the State of California, County of Contra Costa,
U.S.A. On 18 March 1994, [petitioner] filed his Answer with the
following special and affirmative defenses:
xxx xxx xxx
‘8)The Superior Court for the State of California, County of
Contra Costa[,] did not properly acquire jurisdiction over the
subject matter of and over the persons involved in [C]ase #C21-
00265.
‘9)The Judgment on Stipulations for Entry in Judgment in se
#C21-00265 dated December 12, 1991 was obtained without the
assistance of counsel for [petitioner] and without sufficient notice
to him and therefore, was rendered in clear violation of
[petitioner’s] constitutional rights to substantial and procedural
due process.
‘10)The Judgment on Stipulation for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 was procured by means of
fraud or collusion or undue influence and/or based on a clear
mistake of fact and law.
‘11)The Judgment on Stipulation for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 is contrary to the laws,
public policy and canons of morality obtaining in the Philippines
and the enforcement of such judgment in the Philippines would
result in the unjust enrichment of [respondent] at the expense of
[petitioner] in this case.
‘12)The Judgment on Stipulation for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 is null and void and
unenforceable in the Philippines.
‘13)In the transaction, which is the subject matter in Case #C21-
00265, [petitioner] is not in any way liable, in fact and in law, to
[respondent] in this case, as contained in [petitioner’s] ‘Answer to
Complaint’ in Case #C21-00265 dated April 1, 1991, Annex ‘B’ of
[respondent’s] ‘Complaint’ dated December 6, 1993.
‘14)[Respondent] is guilty of misrepresentation or falsification in
the filing of his ‘Complaint’ in this case dated December 6, 1993.
Worse, [respondent] has no capacity to sue in the Philippines.
‘15)Venue has been improperly laid in this case.’
(Record, pp. 42-44)
“On 1 August 1994, [respondent] filed a [M]otion for [Summary
[J]udgment under Rule 34 of the Rules of Court alleging that the
[A]nswer filed by [petitioner] failed to tender any genuine issue as to
the material facts. In his [O]pposition to [respondent’s] motion,
[petitioner] demurred as follows:
‘2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to
mention that in his ‘Answer with Special and Affirmative Defenses’
dated March 16, 1994 [petitioner] has interposed that the ‘Judgment
on Stipulations for Entry in Judgment’ is null and void, fraudulent,
illegal and unenforceable, the same having been obtained by means of
fraud, collusion, undue influence and/or clear mistake of fact and law.
In addition, [he] has maintained that said ‘Judgment on Stipulations
for Entry in Judgment’ was obtained without the assistance of counsel
for [petitioner] and without sufficient notice to him and therefore, was
rendered in violation of his constitutional rights to substantial and
procedural due process.’
 The [M]otion for [S]ummary [J]udgment was set for hearing on 12
August 1994 during which [respondent] marked and submitted in
evidence the following:
Exhibit ‘A’—x x x Judgment on Stipulation For Entry In Judgment of
the Supreme Court of the State of California[,] County of Contra Costa
[J signed by Hon. Ellen James, Judge of the Superior Court.
Exhibit ‘B’—x x x Certificate of Authentication of the [O]rder signed
by the Hon. Ellen James, issued by the Consulate General of the
Republic of the Philippines.
Exhibit ‘C’—[R]eturn of the [W]rit of [E]xecution (writ unsatisfied)
issued by the sheriff/marshall, County of Santa Clara, State of
California.
Exhibit ‘D’—[W]rit of [E]xecution
Exhibit ‘E’—[P]roof of [S]ervice of copies of [W]rit of [E]xecution,
Notice of [L]evy, [M]emorandum of [G]arnishee, [E]xemptions from
[E]nforcement of [J]udgment.
Exhibit ‘F’—Certification issued by the Secretary of State, State of
California that Stephen Weir is the duly elected, qualified and acting
[c]ounty [c]lerk of the County of Contra Costa of the State of California.
Exhibit ‘G’—Certificate of [A]uthentication of the [W]rit of
[E]xecution.
“On 6 April 1995, the court a quo issued an [O]rder granting
[respondent’s] [M]otion for [S[ummary [J]udgment [and] likewise
granting [petitioner] ten (10) days to submit opposing affidavits, after
which the case would be deemed submitted for resolution (Record, pp.
152-153). [Petitioner] filed a [M]otion for [R]econsideration of the
aforesaid [O]rder and [respondent] filed [C]omment. On 30 June 1995,
[petitioner] filed a [M]otion to [D]ismiss on the ground of lack of
jurisdiction over the subject matter of the case and forum-non-
conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion
(Record, pp. 181-182) [respondent] contended that [petitioner could] no
longer question the jurisdiction of the lower court on the ground that
[the latter’s] Answer had failed to raise the issue of jurisdiction.
[Petitioner] countered by asserting in his Reply that jurisdiction [could]
not be fixed by agreement of the parties. The lower court dismissed
[his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss (Record,
pp. 196-198), x x x.”
The RTC5 eventually rendered its February 21, 1997 Decision, 6 which
disposed as follows:
“WHEREFORE, judgment is hereby rendered, ordering [petitioner] to
pay [respondent] the following amounts:
“1.The amount of U.S. dollars $241,991.33, with the interest of
legal rate from October 18, 1991, or its peso equivalent, pursuant
to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated
December 19, 1991;
“2.The amount of P30,000.00 as attorney’s fees;
“3.To pay the costs of suit.
“The claim for moral damages, not having been substantiated, it is
hereby denied.”7
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner was
estopped from assailing the judgment that had become final and had,
in fact, been partially executed. The CA also ruled that summary
judgment was proper, because petitioner had failed to tender any
genuine issue of fact and was merely maneuvering to delay the full
effects of the judgment.
Citing Ingenohl v. Olsen,8 the CA also rejected petitioner’s
argument that the RTC should have dismissed the action for the
enforcement of a foreign judgment, on the ground of forum non
conveniens. It reasoned out that the recognition of the foreign judgment
was based on comity, reciprocity and res judicata.
Hence, this Petition.9
Issue
In his Memorandum, petitioner submits this lone but allembracing
issue:
“Whether or not the Court of Appeals acted in a manner x x x contrary
to law when it affirmed the Order of the trial court granting
respondent’s Motion for Summary Judgment and rendering judgment
against the petitioner.”10
In his discussion, petitioner contends that the CA erred in ruling in
this wise:
1.That his Answer failed to tender a genuine issue of fact
regarding the following:
(a)the jurisdiction of a foreign court over the subject matter
(b)the validity of the foreign judgment
(c)the judgment’s conformity to Philippine laws, public policy,
canons of morality, and norms against unjust enrichment
2.That the principle of forum non conveniens was inapplicable to
the instant case.
This Court’s Ruling
The Petition has no merit.
 First Question:
Summary Judgment
Petitioner vehemently insists that summary judgment is inappropriate
to resolve the case at bar, arguing that his Answer allegedly raised
genuine and material factual matters which he should have been
allowed to prove during trial.
On the other hand, respondent argues that the alleged “genuine
issues of fact” raised by petitioner are mere conclusions of law or
“propositions arrived at not by any process of natural reasoning from a
fact or a combination of facts stated but by the application of the
artificial rules of law to the facts pleaded.”11
The RTC granted respondent’s Motion for Summary Judgment
because petitioner, in his Answer, admitted the existence of the
Judgment on Stipulation for Entry in Judgment. Besides, he had
already paid $5,000 to respondent, as provided in the foreign judgment
sought to be enforced.12 Hence, the trial court ruled that, there being
no genuine issue as to any material fact, the case should properly be
resolved through summary judgment. The CA affirmed this ruling.
We concur with the lower courts. Summary judgment is a procedural
device for the prompt disposition of actions in which the pleadings
raise only a legal issue, and not a genuine issue as to any material
fact. By genuine issue is meant a question of fact that calls for the
presentation of evidence. It should be distinguished from an issue
that is sham, contrived, set in bad faith and patently unsubstantial.13
Summary judgment is resorted to in order to avoid long drawn out
litigations and useless delays. When affidavits, depositions and
admissions on file show that there are no genuine issues of fact to be
tried, the Rules allow a party to pierce the allegations in the pleadings
and to obtain immediate relief by way of summary judgment. In short,
since the facts are not in dispute, the court is allowed to decide the case
summarily by applying the law to the material facts.
Petitioner contends that by allowing summary judgment, the two
courts a quo prevented him from presenting evidence to substantiate
his claims. We do not agree. Summary judgment is based on facts
directly proven by affidavits, depositions or admissions. 14 In this case,
the CA and the RTC both merely ruled that trial was not necessary to
resolve the case. Additionally and correctly, the RTC specifically
ordered petitioner to submit opposing affidavits to support his
contentions that (1) the Judgment on Stipulation for Entry in
Judgment was procured on the basis of fraud, collusion, undue
influence, or a clear mistake of law or fact; and (2) that it was contrary
to public policy or the canons of morality.15
Again, in its Order16 dated November 29, 1995, the trial court
clarified that the opposing affidavits were “for [petitioner] to spell out
the facts or circumstances [that] would constitute lack of jurisdiction
over the subject matter of and over the persons involved in Case No.
C21-00265,” and that would render the judgment therein null and void.
In this light, petitioner’s contention that he was not allowed to present
evidence to substantiate his claims is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules
of Court, requires (a) that there must be no genuine issue as to any
material fact, except for the amount of damages; and (b) that the party
presenting the motion for summary judgment must be entitled to a
judgment as a matter of law.17 As mentioned earlier, petitioner
admitted that a foreign judgment had been rendered against him and
in favor of respondent, and that he had paid $5,000 to the latter in
partial compliance therewith. Hence, respondent, as the party
presenting the Motion for Summary Judgment, was shown to be
entitled to the judgment.
The CA made short shrift of the first requirement. To show that
petitioner had raised no genuine issue, it relied instead on the finality
of the foreign judgment which was, in fact, partially executed. Hence,
we shall show in the following discussion how the defenses presented
by petitioner failed to tender any genuine issue of fact, and why a full-
blown trial was not necessary for the resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which
involved partnership interest, was vested in the Securities and
Exchange Commission, not in the Superior Court of California, County
of Contra Costa.
We disagree. In the absence of proof of California law on the
jurisdiction of courts, we presume that such law, if any, is similar to
Philippine law. We base this conclusion on the presumption of identity
or similarity, also known as processual presumption.18 The
Complaint,19 which respondent filed with the trial court, was for the
enforcement of a foreign judgment. He alleged therein that the action
of the foreign court was for the collection of a sum of money, breach of
promissory notes, and damages.20
In our jurisdiction, such a case falls under the jurisdiction of civil
courts, not of the Securities and Exchange Commission (SEC). The
jurisdiction of the latter is exclusively over matters enumerated in
Section 5, PD 902-A,21 prior to its latest amendment. If the foreign
court did not really have jurisdiction over the case, as petitioner claims,
it would have been very easy for him to show this. Since jurisdiction is
determined by the allegations in a complaint, he only had to submit a
copy of the complaint filed with the foreign court. Clearly, this issue
did not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the form
of a Compromise Agreement, cannot be executed without the parties
being assisted by their chosen lawyers. The reason for this, he points
out, is to eliminate collusion, undue influence and/or improper exertion
of ascendancy by one party over the other. He alleges that he
discharged his counsel during the proceedings, because he felt that the
latter was not properly attending to the case. The judge, however, did
not allow him to secure the services of another counsel. Insisting that
petitioner settle the case with respondent, the judge practically
imposed the settlement agreement on him. In his Opposing Affidavit,
petitioner states:
“It is true that I was initially represented by a counsel in the
proceedings in #C21-00625. I discharged him because I then felt that
he was not properly attending to my case or was not competent enough
to represent my interest. I asked the Judge for time to secure another
counsel but I was practically discouraged from engaging one as the
Judge was insistent that I settle the case at once with the [respondentl.
Being a foreigner and not a lawyer at that I did not know what to do. I
felt helpless and the Judge and [respondent’s] lawyer were the ones
telling me what to do. Under ordinary circumstances, their directives
should have been taken with a grain of salt especially so [since
respondent’s] counsel, who was telling me what to do, had an interest
adverse to mine. But [because] time constraints and undue influence
exerted by the Judge and [respondent’s] counsel on me disturbed and
seriously affected my freedom to act according to my best judgment and
belief. In point of fact, the terms of the settlement were practically
imposed on me by the Judge seconded all the time by [respondent’s]
counsel. I was then helpless as I had no counsel to assist me and the
collusion between the Judge and [respondent’s] counsel was becoming
more evident by the way I was treated in the Superior Court of [t]he
State of California. I signed the ‘Judgment on Stipulation for Entry in
Judgment’ without any lawyer assisting me at the time and without
being fully aware of its terms and stipulations.”22
The manifestation of petitioner that the judge and the counsel for the
opposing party had pressured him would gain credibility only if he had
not been given sufficient time to engage the services of a new lawyer.
Respondent’s Affidavit23 dated May 23, 1994, clarified, however, that
petitioner had sufficient time, but he failed to retain a counsel. Having
dismissed his lawyer as early as June 19, 1991, petitioner directly
handled his own defense and negotiated a settlement with respondent
and his counsel in December 1991. Respondent also stated that
petitioner, ignoring the judge’s reminder of the importance of having a
lawyer, argued that “he would be the one to settle the case and pay”
anyway. Eventually, the Compromise Agreement was presented in
court and signed before Judge Ellen James on January 3, 1992. Hence,
petitioner’s rights to counsel and to due process were not violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the norm
against unjust enrichment because the judge made him shoulder all
the liabilities in the case, even if there were two other defendants,
G.S.P. & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the
foreign judgment, even if there are other defendants who are not being
held liable together with him. First, the foreign judgment itself does
not mention these other defendants, their participation or their
liability to respondent. Second, petitioner’s undated Opposing
Affidavit states: “[A]lthough myself and these entities were initially
represented by Atty. Lawrence L. Severson of the Law Firm Kouns,
Quinlivan & Severson, x x x I discharged x x x said lawyer.
Subsequently, I assumed the representation for myself and these firms
and this was allowed by the Superior Court of the State of California
without any authorization from G.G.P. & Sons, Inc. and the Genesis
Group.”24 Clearly, it was petitioner who chose to represent the other
defendants; hence, he cannot now be allowed to impugn a decision
based on this ground.
In any event, contrary to petitioner’s contention, unjust enrichment
or solutio indebiti does not apply to this case. This doctrine
contemplates payment when there is no duty to pay, and the person
who receives the payment has no right to receive it.25 In this case,
petitioner merely argues that the other two defendants whom he
represented were liable together with him. This is not a case of unjust
enrichment.
We do not see, either, how the foreign judgment could be contrary
to law, morals, public policy or the canons of morality obtaining in the
country. Petitioner owed money, and the judgment required him to pay
it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court
reinforce our belief that his claims are unfounded. Instead of filing
opposing affidavits to support his affirmative defenses, he filed a
Motion for Reconsideration of the Order allowing summary judgment,
as well as a Motion to Dismiss the action on the ground of forum non
conveniens. His opposing affidavits were filed only after the Order of
November 29, 1995 had denied both Motions.26 Such actuation was
considered by the trial court as a dilatory ploy which justified the
resolution of the action by summary judgment. According to the CA,
petitioner’s allegations sought to delay the full effects of the judgment;
hence, summary judgment was proper. On this point, we concur with
both courts.
Second Question:
Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain the
Complaint for enforcement of the foreign judgment on the principle
of forum non conveniens. He claims that the trial court had no
jurisdiction, because the case involved partnership interest, and there
was difficulty in ascertaining the applicable law in California. All the
aspects of the transaction took place in a foreign country, and
respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if
the exercise of jurisdiction is authorized by law, courts may
nonetheless refuse to entertain a case for any of the following practical
reasons:
1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their residence
there;
2) The belief that the non-resident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-
residents or aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating
the right sought to be maintained: and
5) The difficulty of ascertaining foreign law.”27
None of the aforementioned reasons barred the RTC from exercising
its jurisdiction. In the present action, there was no more need for
material witnesses, no forum shopping or harassment of petitioner, no
inadequacy in the local machinery to enforce the foreign judgment, and
no question raised as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be
entertained or dismissed on the basis of the above-mentioned principle
depends largely upon the facts of each case and on the sound discretion
of the trial court.28 Since the present action lodged in the RTC was for
the enforcement of a foreign judgment, there was no need to ascertain
the rights and the obligations of the parties based on foreign laws or
contracts. The parties needed only to perform their obligations under
the Compromise Agreement they had entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a
judgment in an action in personam rendered by a foreign tribunal
clothed with jurisdiction is presumptive evidence of a right as between
the parties and their successors-in-interest by a subsequent title.29
Also, under Section 5(n) of Rule 131, a court—whether in the
Philippines or elsewhere—enjoys the presumption that it is acting in
the lawful exercise of its jurisdiction, and that it is regularly
performing its official duty,30 Its judgment may, however, be assailed
if there is evidence of want of jurisdiction, want of notice to the party,
collusion, fraud or clear mistake of law or fact. But precisely, this
possibility signals the need for a local trial court to exercise
jurisdiction. Clearly, the application of forum non conveniens is not
called for.
The grounds relied upon by the petitioner are contradictory. On the
one hand, he insists that the RTC take jurisdiction over the
enforcement case in order to invalidate the foreign judgment; yet, he
avers that the trial court should not exercise jurisdiction over the same
case on the basis of forum non conveniens. Not only do these defenses
weaken each other, but they bolster the finding of the lower courts that
he was merely maneuvering to avoid or delay payment of his
obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed
DECISION and Resolution AFFIRMED. Double costs against
petitioner.
SO ORDERED.
142 SUPREME COURT REPORTS ANNOTATED Respondents continued their employment with Saudia until they
were separated from service on various dates in 2006.9
Saudi Arabian Airlines (Saudia) vs. Rebesencio
Respondents contended that the termination of their employment
G.R. No. 198587. January 14, 2015.*
was illegal. They alleged that the termination was made solely because
they were pregnant.10
LEONEN, J.:
As respondents alleged, they had informed Saudia of their
respective pregnancies and had gone through the necessary procedures
All Filipinos are entitled to the protection of the rights guaranteed
to process their maternity leaves. Initially, Saudia had given its
in the Constitution.
approval put later on informed respondents that its management in
This is a Petition for Review on Certiorari with application for the
Jeddah, Saudi Arabia had disapproved their maternity leaves. In
issuance of a temporary restraining order and/or writ of preliminary
addition, it required respondents to file their resignation letters.11
injunction under Rule 45 of the 1997 Rules of Civil Procedure praying
Respondents were told that if they did not resign, Saudia would
that judgment be rendered reversing and setting aside the June 16,
terminate them all the same. The threat of termination entailed the
2011 Decision1 and September 13, 2011 Resolution2 of the Court of
loss of benefits, such as separation pay and ticket discount
Appeals in C.A.-G.R. S.P. No. 113006.
entitlements.12
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation
Specifically, Ma. Jopette received a call on October 16, 2006 from
established and existing under the laws of Jeddah, Kingdom of Saudi
Saudia’s Base Manager, Abdulmalik Saddik
Arabia. It has a Philippine office located at 4/F, Metro House Building,
(Abdulmalik).13 Montassah was informed personally by Abdulmalik
Sen. Gil J. Puyat Avenue, Makati City.3 In its Petition filed with this
and a certain Faisal Hussein on October 20, 2006 after being required
court, Saudia identified itself as follows:
to report to the office one (1) month into her maternity leave.14 Rouen
1. Petitioner SAUDIA is a foreign corporation established and
Ruth was also personally informed by Abdulmalik on October 17, 2006
existing under the Royal Decree No. M/24 of 18.07.1385H
after being required to report to the office by her Group
(10.02.1962G) in Jeddah, Kingdom of Saudi Arabia (“KSA”). Its
Supervisor.15 Loraine received a call on October 12, 2006 from her
Philippine Office is located at 4/F Metro House Building, Sen.
Group Supervisor, Dakila Salvador.16
Gil J. Puyat Avenue, Makati City (Philippine Office). It may be served
Saudia anchored its disapproval of respondents’ maternity leaves
with orders of this Honorable Court through undersigned counsel at
and demand for their resignation on its “Unified Employment Contract
4th and 6th Floors, Citibank Center Bldg., 8741 Paseo de Roxas,
for Female Cabin Attendants” (Unified Contract).17 Under the Unified
Makati City.4 (Emphasis supplied)
Contract, the employment of a Flight Attendant who becomes pregnant
is rendered void. It provides:
Respondents (complainants before the Labor Arbiter) were
(H) Due to the essential nature of the Air Hostess functions to be
recruited and hired by Saudia as Temporary Flight Attendants with
physically fit onboard to provide various services required in normal or
the accreditation and approval of the Philippine Overseas Employment
emergency cases on both domestic/international flights beside her role
Administration.5 After undergoing seminars required by the
in maintaining continuous safety and security of passengers, and
Philippine Overseas Employment Administration for deployment
since she will not be able to maintain the required medical fitness while
overseas, as well as training modules offered by Saudia (e.g., initial
at work in case of pregnancy, accordingly, if the Air Hostess becomes
flight attendant/training course and transition training), and after
pregnant at any time during the term of this contract, this shall
working as Temporary Flight Attendants, respondents became
render her employment contract as void and she will be
Permanent Flight Attendants. They then entered into Cabin Attendant
terminated due to lack of medical fitness.18 (Emphasis supplied)
contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on
In their Comment on the present Petition,19 respondents
May 16, 1990;6Montassah B. Sacar-Adiong (Montassah) and Rouen
emphasized that the Unified Contract took effect on September 23,
Ruth A. Cristobal (Rouen Ruth) on May 22, 1993; 7 and Loraine
2006 (the first day of Ramadan),20 well after they had filed and had
SchneiderCruz (Loraine) on August 27, 1995.8
their maternity leaves approved. Ma. Jopette filed her maternity leave
application on September 5, 2006.21 Montassah filed her maternity
leave application on August 29, 2006, and its approval was already
indicated in Saudia’s computer system by August 30, 2006. 22 Rouen
Ruth filed her maternity leave application on September 13,
2006,23 and Loraine filed her maternity leave application on August 22,
2006.24
Rather than comply and tender resignation letters, respondents
filed separate appeal letters that were all rejected.25
Despite these initial rejections, respondents each received calls on
the morning of November 6, 2006 from Saudia’s office secretary
informing them that their maternity leaves had been approved.
Saudia, however, was quick to renege on its approval. On the evening
of November 6, 2006, respondents again received calls informing them
that it had received notification from Jeddah, Saudi Arabia that their
maternity leaves had been disapproved.26
Faced with the dilemma of resigning or totally losing their benefits,
respondents executed handwritten resignation letters. In Montassah’s
and Rouen Ruth’s cases, their resignations were executed on Saudia’s
blank letterheads that Saudia had provided. These letterheads already
had the word “RESIGNATION” typed on the subject portions of their
headings when these were handed to respondents. 27
On November 8, 2007, respondents filed a Complaint against
Saudia and its officers for illegal dismissal and for underpayment of
salary, overtime pay, premium pay for holiday, rest day, premium,
service incentive leave pay, 13th month pay, separation pay, night shift
differentials, medical expense reimbursements, retirement benefits,
illegal deduction, lay-over expense and allowances, moral and
exemplary damages, and attorney’s fees.28 The case was initially
assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC
NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter.29 It claimed
that all the determining points of contact referred to foreign law and
insisted that the Complaint ought to be dismissed on the ground
of forum non conveniens.30 It added that respondents had no cause of
action as they resigned voluntarily.31
On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-
Franco rendered the Decision32 dismissing respondents’ Complaint.
The dispositive portion of this Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered DISMISSING the instant complaint for lack of
jurisdiction/merit.33
On respondents’ appeal, the National Labor Relations
Commission’s Sixth Division reversed the ruling of Executive Labor
Arbiter JambaroFranco. It explained that “[c]onsidering that
complainants-appellants are OFWs, the Labor Arbiters and the NLRC
has [sic] jurisdiction to hear and decide their complaint for illegal
termination.”34 On the matter of forum non conveniens, it noted that
there were no special circumstances that warranted its abstention from
exercising jurisdiction.35 On the issue of whether respondents were
validly dismissed, it held that there was nothing on record to support
Saudia’s claim that respondents resigned voluntarily.
The dispositive portion of the November 19, 2009 National Labor
Relations Commission Decision36 reads:
WHEREFORE, premises considered, judgment is hereby rendered
finding the appeal impressed with merit. The respondentsappellees are
hereby directed to pay complainants-appellants the aggregate amount
of SR614,001.24 corresponding to their backwages and separation pay
plus ten (10%) percent thereof as attorney’s fees. The decision of the
Labor Arbiter dated December 12, 2008 is hereby VACATED and SET
ASIDE. Attached is the computation prepared by this Commission and
made an integral part of this Decision.37
In the Resolution dated February 11, 2010,38 the National Labor
Relations Commission denied petitioners’ Motion for Reconsideration.
In the June 16, 2011 Decision,39 the Court of Appeals denied
petitioners’ Rule 65 Petition and modified the Decision of the National
Labor Relations Commission with respect to the award of separation
pay and backwages.
The dispositive portion of the Court of Appeals’ Decision reads:
WHEREFORE, the instant petition is hereby DENIED. The
Decision dated November 19, 2009 issued by public respondent, Sixth
Division of the National Labor Relations Commission-National Capital
Region is MODIFIED only insofar as the computation of the award of
separation pay and backwages. For greater clarity, petitioners are
ordered to pay private respondents separation pay which shall be
computed from private respondents’ first day of employment up to the
finality of this decision, at the rate of one month per year of service and
backwages which shall be computed from the date the private
respondents were illegally terminated until finality of this decision.
Consequently, the ten percent (10%) attorney’s fees shall be based on
the total amount of the award. The assailed Decision is affirmed in all
other respects.
The labor arbiter is hereby DIRECTED to make a recomputation
based on the foregoing.40
In the Resolution dated September 13, 2011,41 denied petitioners’
Motion for Reconsideration.
Hence, this Appeal was filed.
The issues for resolution are the following:
First, whether the Labor Arbiter and the National Labor Relations
Commission may exercise jurisdiction over Saudi Arabian Airlines and
apply Philippine law in adjudicating the present dispute;
Second, whether respondents voluntarily resigned or were illegally
terminated; and
Lastly, whether Brenda J. Betia may be held personally liable along
with Saudi Arabian Airlines.
I
Summons were validly served on Saudia and jurisdiction over it
validly acquired.
There is no doubt that the pleadings and summons were served on
Saudia through its counsel.42 Saudia, however, claims that the Labor
Arbiter and the National Labor Relations Commission had no
jurisdiction over it because summons were never served on it but on
“Saudia Manila.”43Referring to itself as “Saudia Jeddah,” it claims that
“Saudia Jeddah” and not “Saudia Manila” was the employer of
respondents because:
First, “Saudia Manila” was never a party to the Cabin Attendant
contracts entered into by respondents;
Second, it was “Saudia Jeddah” that provided the funds to pay for
respondents’ salaries and benefits; and
Lastly, it was with “Saudia Jeddah” that respondents filed their
resignations.44
Saudia posits that respondents’ Complaint was brought against the
wrong party because “Saudia Manila,” upon which summons was
served, was never the employer of respondents.45
Saudia is vainly splitting hairs in its effort to absolve itself of
liability. Other than its bare allegation, there is no basis for concluding
that “Saudia Jeddah” is distinct from “Saudia Manila.”
What is clear is Saudia’s statement in its own Petition that what it
has is a “Philippine Office . . . located at 4/F Metro House Building,
Sen. Gil J. Puyat Avenue, Makati City.”46 Even in the position paper
that Saudia submitted to the Labor Arbiter,47 what Saudia now refers
to as “Saudia Jeddah” was then only referred to as “Saudia Head Office
at Jeddah, KSA,”48 while what Saudia now refers to as “Saudia Manila”
was then only referred to as “Saudia’s office in Manila.”49
By its own admission, Saudia, while a foreign corporation, has a
Philippine office.
Section 3(d) of Republic Act No. 7042, otherwise known as the
Foreign Investments Act of 1991, provides the following:
The phrase “doing business” shall include . . . opening
offices, whether called “liaison” offices or branches; . . . and any
other act or acts that imply a continuity of commercial dealings or
arrangements and contemplate to that extent the performance of acts
or works, or the exercise of some of the functions normally incident to,
and in progressive prosecution of commercial gain or of the purpose
and object of the business organization. (Emphasis supplied)
A plain application of Section 3(d) of the Foreign Investments Act
leads to no other conclusion than that Saudia is a foreign corporation
doing business in the Philippines. As such, Saudia may be sued in the
Philippines and is subject to the jurisdiction of Philippine tribunals.
Moreover, since there is no real distinction between “Saudia
Jeddah” and “Saudia Manila” — the latter being nothing more than
Saudia’s local office — service of summons to Saudia’s office in Manila
sufficed to vest jurisdiction over Saudia’s person in Philippine
tribunals.
II
Saudia asserts that Philippine courts and/or tribunals are not in a
position to make an intelligent decision as to the law and the facts. This
is because respondents’ Cabin Attendant contracts require the
application of the laws of Saudi Arabia, rather than those of the
Philippines.50 It claims that the difficulty of ascertaining foreign law
calls into operation the principle of forum non conveniens, thereby
rendering improper the exercise of jurisdiction by Philippine
tribunals.51
A choice of law governing the validity of contracts or the
interpretation of its provisions does not necessarily imply forum non
convenzens. Choice of law and forum non conveniens are entirely
different matters.
Choice of law provisions are an offshoot of the fundamental
principle of autonomy of contracts. Article 1306 of the Civil Code firmly
ensconces this:
Article 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule
against forum shopping. It is designed to frustrate illicit means for
securing advantages and vexing litigants that would otherwise be
possible if the venue of litigation (or dispute resolution) were left
entirely to the whim of either party.
Contractual choice of law provisions factor into transnational
litigation and dispute resolution in one of or in a combination of four
ways: (1) procedures for settling disputes, e.g., arbitration; (2)
forum, i.e., venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is not subsumed
by, the second of these.
Likewise, contractual choice of law is not determinative of
jurisdiction. Stipulating on the laws of a given jurisdiction as the
governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is equally true: The
assumption of jurisdiction by tribunals does not ipso facto mean that it
cannot apply and rule on the basis of the parties’ stipulation.
In Hasegawa v. Kitamura:52
Analytically, jurisdiction and choice of law are two distinct
concepts. Jurisdiction considers whether it is fair to cause a defendant
to travel to this state; choice of law asks the further question whether
the application of a substantive law which will determine the merits of
the case is fair to both parties. The power to exercise jurisdiction does
not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex fori will often coincide,
the “minimum contacts” for one do not always provide the necessary
“significant contacts” for the other. The question of whether the law of
a state can be applied to a transaction is different from the question of
whether the courts of that state have jurisdiction to enter a judgment. 53
As various dealings, commercial or otherwise, are facilitated by the
progressive ease of communication and travel, persons from various
jurisdictions find themselves transacting with each other. Contracts
involving foreign elements are, however, nothing new. Conflict of laws
situations precipitated by disputes and litigation anchored on these
contracts are not totally novel.
Transnational transactions entail differing laws on the
requirements for the validity of the formalities and substantive
provisions of contracts and their interpretation. These transactions
inevitably lend themselves to the possibility of various fora for
litigation and dispute resolution. As observed by an eminent expert on
transnational law:
The more jurisdictions having an interest in, or merely even a point
of contact with, a transaction or relationship, the greater the number
of potential fora for the resolution of disputes arising out of or related
to that transaction or relationship. In a world of increased mobility,
where business and personal transactions transcend national
boundaries, the jurisdiction of a number of different fora may easily be
invoked in a single or a set of related disputes.54
Philippine law is definite as to what governs the formal or extrinsic
validity of contracts. The first paragraph of Article 17 of the Civil Code
provides that “[t]he forms and solemnities of contracts . . . shall be
governed by the laws of the country in which they are
executed”55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established mode of settling
conflict of laws situations on matters pertaining to substantive content
of contracts. It has been noted that three (3) modes have emerged:
(1) lex loci contractus or the law of the place of the making; (2) lex loci
solutionis or the law of the place of performance; and (3) lex loci
intentionis or the law intended by the parties.56
Given Saudia’s assertions, of particular relevance to resolving the
present dispute is lex loci intentionis.
An author observed that Spanish jurists and commentators
“favor lex loci intentionis.”57 These jurists and commentators proceed
from the Civil Code of Spain, which, like our Civil Code, is silent on
what governs the intrinsic validity of contracts, and the same civil law
traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign
Loan Guarantee v. V.P. Eusebio Construction, Inc.,58 manifested
preference for “allow[ing] the parties to select the law applicable to
their contract”:
No conflicts rule on essential validity of contracts is expressly
provided for in our laws. The rule followed by most legal systems,
however, is that the intrinsic validity of a contract must be governed
by the lex contractus or “proper law of the contract.” This is the law
voluntarily agreed upon by the parties (the lex loci voluntatis) or the
law intended by them either expressly or implicitly (the lex loci
intentionis). The law selected may be implied from such factors as
substantial connection with the transaction, or the nationality or
domicile of the parties. Philippine courts would do well to adopt the
first and most basic rule in most legal systems, namely, to allow the
parties to select the law applicable to their contract, subject to the
limitation that it is not against the law, morals, or public policy of the
forum and that the chosen law must bear a substantive relationship to
the transaction.59(Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant
contracts require the application of the laws of Saudi Arabia. It insists
that the need to comply with these stipulations calls into operation the
doctrine of forum non conveniens and, in turn, makes it necessary for
Philippine tribunals to refrain from exercising jurisdiction.
As mentioned, contractual choice of laws factors into transnational
litigation in any or a combination of four (4) ways. Moreover, forum non
conveniens relates to one of these: choosing between multiple possible
fora.
Nevertheless, the possibility of parallel litigation in multiple fora
— along with the host of difficulties it poses — is not unique to
transnational litigation. It is a difficulty that similarly arises in
disputes well within the bounds of a singe jurisdiction.
When parallel litigation arises strictly within the context of a single
jurisdiction, such rules as those on forum shopping, litis pendentia,
and res judicata come into operation. Thus, in the Philippines, the
1997 Rules on Civil Procedure provide for willful and deliberate forum
shopping as a ground not only for summary dismissal with prejudice
but also for citing parties and counsels in direct contempt, as well as
for the imposition of administrative sanctions.60 Likewise, the same
rules expressly provide that a party may seek the dismissal of a
Complaint or another pleading asserting a claim on the ground “[t]hat
there is another action pending between the same parties for the same
cause,” i.e, litis pendentia, or “[t]hat the cause of action is barred by a
prior judgment,”61i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis
pendentia, and res judicata, is a means of addressing the problem of
parallel litigation. While the rules of forum shopping, litis pendentia,
and res judicata are designed to address the problem of parallel
litigation within a single jurisdiction, forum non conveniens is a means
devised to address parallel litigation arising in multiple jurisdictions.
Forum non conveniens literally translates to “the forum is
inconvenient.”62 It is a concept in private international law and was
devised to combat the “less than honorable” reasons and excuses that
litigants use to secure procedural advantages, annoy and harass
defendants, avoid overcrowded dockets, and select a “friendlier”
venue.63Thus, the doctrine of forum non conveniens addresses the same
rationale that the rule against forum shopping does, albeit on a
multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a concept originating
in common law.65 However, unlike the rule on res judicata, as well as
those on litis pendentia and forum shopping, forum non
conveniens finds no textual anchor, whether in statute or in procedural
rules, in our civil law system. Nevertheless, jurisprudence has
applied forum non conveniens as basis for a court to decline its exercise
of jurisdiction.66
Forum non conveniens is soundly applied not only to address
parallel litigation and undermine a litigant’s capacity to vex and secure
undue advantages by engaging in forum shopping on an international
scale. It is also grounded on principles of comity and judicial efficiency.
Consistent with the principle of comity, a tribunal’s desistance in
exercising jurisdiction on account of forum non conveniens is a
deferential gesture to the tribunals of another sovereign. It is a
measure that prevents the former’s having to interfere in affairs which
are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that
tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense justice. Forum non
conveniens prevents the embarrassment of an awkward situation
where a tribunal is rendered incompetent in the face of the greater
capability — both analytical and practical of a tribunal in another
jurisdiction.
 The wisdom of avoiding conflicting and unenforceable judgments is
as much a matter of efficiency and economy as it is a matter of
international courtesy. A court would effectively be neutering itself if
it insists on adjudicating a controversy when it knows full well that it
is in no position to enforce its judgment. Doing so is not only an exercise
in futility; it is an act of frivolity. It clogs the dockets of a tribunal and
leaves it to waste its efforts on affairs, which, given transnational
exigencies, will be reduced to mere academic, if not trivial, exercises.
Accordingly, under the doctrine of forum non conveniens, “a court,
in conflicts of law cases, may refuse impositions on its jurisdiction
where it is “not the most ‘convenient’ or available forum and the parties
are not precluded from seeking remedies elsewhere.” 67 In Puyat v.
Zabarte,68 this court recognized the following situations as among
those that may warrant a court’s desistance from exercising
jurisdiction:
1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their residence
there;
2) The belief that the nonresident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to
nonresidents or aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating
the right sought to be maintained; and
5) The difficulty of ascertaining foreign law.69
In Bank of America NT & SA, Bank of America International, Ltd.
v. Court of Appeals,70 this court underscored that a Philippine court
may properly assume jurisdiction over a case if it chooses to do so to
the extent: “(1) that the Philippine Court is one to which the parties
may conveniently resort to; (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the facts; and (3) that
the Philippine Court has or is likely to have power to enforce its
decision.”71
The use of the word “may” (i.e., “may refuse impositions on its
jurisdiction”)72 in the decisions shows that the matter of jurisdiction
rests on the sound discretion of a court. Neither the mere invocation
of forum non conveniens nor the averment of foreign elements operates
to automatically divest a court of jurisdiction. Rather, a court should
renounce jurisdiction only “after ‘vital facts are established, to
determine whether special circumstances’ require the court’s
desistance.”73 As the propriety of applying forum non conveniens is
contingent on a factual determination, it is, therefore, a matter of
defense.74
The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil
Procedure is exclusive in its recital of the grounds for dismissal that
are exempt from the omnibus motion rule: (1) lack of jurisdiction over
the subject matter; (2) litis pendentia; (3) res judicata; and (4)
prescription. Moreover, dismissal on account of forum non
conveniens is a fundamentally discretionary matter. It is, therefore, not
a matter for a defendant to foist upon the court at his or her own
convenience; rather, it must be pleaded at the earliest possible
opportunity.
On the matter of pleading forum non conveniens, we state the rule,
thus: Forum non conveniens must not only be clearly pleaded as a
ground for dismissal; it must be pleaded as such at the earliest possible
opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa,75 this court stated that forum
non conveniens is not a ground for a motion to dismiss.76 The factual
ambience of this case however does not squarely raise the viability of
this doctrine. Until the opportunity comes to review the use of motions
to dismiss for parallel litigation, Hasegawa remains existing doctrine.
Consistent with forum non conveniens as fundamentally a factual
matter, it is imperative that it proceed from a factually established
basis. It would be improper to dismiss an action pursuant to forum non
conveniens based merely on a perceived, likely, or hypothetical
multiplicity of fora. Thus, a defendant must also plead and show that
a prior suit has, in fact, been brought in another jurisdiction.
The existence of a prior suit makes real the vexation engendered by
duplicitous litigation, the embarrassment of intruding into the affairs
of another sovereign, and the squandering of judicial efforts in
resolving a dispute already lodged and better resolved elsewhere. As
has been noted:
A case will not be stayed or dismissed on [forum] non
conveniens grounds unless the plaintiff is shown to have an available
alternative forum elsewhere. On this, the moving party bears the
burden of proof.
A number of factors affect the assessment of an alternative forum’s
adequacy. The statute of limitations abroad may have run, of the
foreign court may lack either subject matter or personal jurisdiction
over the defendant. . . . Occasionally, doubts will be raised as to the
integrity or impartiality of the foreign court (based, for example, on
suspicions of corruption or bias in favor of local nationals), as to the
fairness of its judicial procedures, or as to is operational efficiency (due,
for example, to lack of resources, congestion and delay, or interfering
circumstances such as a civil unrest). In one noted case, [it was found]
that delays of ‘up to a quarter of a century’ rendered the foreign forum
... inadequate for these purposes.77
We deem it more appropriate and in the greater interest of prudence
that a defendant not only allege supposed dangerous tendencies in
litigating in this jurisdiction; the defendant must also show that such
danger is real and present in that litigation or dispute resolution has
commenced in another jurisdiction and that a foreign tribunal has
chosen to exercise jurisdiction.
III
Forum non conveniens finds no application and does not operate to
divest Philippine tribunals of jurisdiction and to require the
application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the
stipulations of the Cabin Attendant contracts that require the
application of the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of
governing law. That forum non conveniens may ultimately result in the
application of foreign law is merely an incident of its application. In
this strict sense, forum non conveniens is not applicable. It is not the
primarily pivotal consideration in this case.
In any case, even a further consideration of the applicability
of forum non conveniens on the incidental matter of the law governing
respondents’ relation with Saudia leads to the conclusion that it is
improper for Philippine tribunals to divest themselves of jurisdiction.
Any evaluation of the propriety of contracting parties’ choice of a
forum and its incidents must grapple with two (2) considerations: first,
the availability and adequacy of recourse to a foreign tribunal; and
second, the question of where, as between the forum court and a foreign
court, the balance of interests inhering in a dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of ceding
jurisdiction to a foreign tribunal and can be resolved by juxtaposing the
competencies and practical circumstances of the tribunals in
alternative fora. Exigencies, like the statute of limitations, capacity to
enforce orders and judgments, access to records, requirements for the
acquisition of jurisdiction, and even questions relating to the integrity
of foreign courts, may render undesirable or even totally unfeasible
recourse to a foreign court. As mentioned, we consider it in the greater
interest of prudence that a defendant show, in pleading forum non
conveniens, that litigation has commenced in another jurisdiction and
that a foreign tribunal has, in fact, chosen to exercise jurisdiction.
Two (2) factors weigh into a court’s appraisal of the balance of
interests inhering in a dispute: first, the vinculum which the parties
and their relation have to a given jurisdiction; and second, the public
interest that must animate a tribunal, in its capacity as an agent of the
sovereign, in choosing to assume or decline jurisdiction. The first is
more concerned with the parties, their personal circumstances, and
private interests; the second concerns itself with the state and the
greater social order.
In considering the vinculum, a court must look into the
preponderance of linkages which the parties and their transaction may
have to either jurisdiction. In this respect, factors, such as the parties’
respective nationalities and places of negotiation, execution,
performance, engagement or deployment, come into play.
In considering public interest, a court proceeds with a
consciousness that it is an organ of the state. It must, thus, determine
if he interests of the sovereign (which acts through it) are outweighed
by those of the alternative jurisdiction. In this respect, the court delves
into a consideration of public policy. Should it find that public interest
weighs more heavily in favor of its assumption of jurisdiction, it should
proceed in adjudicating the dispute, any doubt or contrary view arising
from the preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of contractual choice of
law provisions. Where such provisions exist, Philippine tribunals,
acting as the forum court, generally defer to the parties’ articulated
choice.
This is consistent with the fundamental principle of autonomy of
contracts. Article 1306 of the Civil Code expressly provides that “[t]he
contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient.”78 Nevertheless, while a
Philippine tribunal (acting as the forum court) is called upon to respect
the parties’ choice of governing law, such respect must not be so
permissive as to lose sight of considerations of law, morals, good
customs, public order, or public policy that underlie the contract
central to the controversy.
Specifically with respect to public policy, in Pakistan International
Airlines Corporation v. Ople,79 this court explained that:
counter-balancing the principle of autonomy of contracting parties
is the equally general rule that provisions of applicable law,
especially provisions relating to matters affected with public policy, are
deemed written into the contract. Put a little differently, the governing
principle is that parties may not contract away applicable provisions of
law especially peremptory provisions dealing with matters heavily
impressed with public interest.80 (Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that “[t]he
State . . . shall ensure the fundamental equality before the law of
women and men.” Contrasted with Article II, Section 1 of the 1987
Constitution’s statement that “[n]o person shall . . . be denied the equal
protection of the laws,” Article II, Section 14 exhorts the State to
“ensure.” This does not only mean that the Philippines shall not
countenance nor lend legal recognition and approbation to measures
that discriminate on the basis of one’s being male or female. It imposes
an obligation to actively engage in securing the fundamental equality
of men and women.
The Convention on the Elimination of all Forms of Discrimination
against Women (CEDAW), signed and ratified by the Philippines on
July 15, 1980, and on August 5, 1981, respectively, 81 is part of the law
of the land. In view of the widespread signing and ratification of, as
well as adherence (in practice) to it by states, it may even be said that
many provisions of the CEDAW may have become customary
international law. The CEDAW gives effect to the Constitution’s policy
statement in Article II, Section 14. Article I of the CEDAW defines
“discrimination against women” as:
any distinction, exclusion or restriction made on the basis of sex
which has the effect or purpose of impairing or nullifying the
recognition, enjoyment or exercise by women, irrespective of their
marital status, on a basis of equality of men and women, of human
rights and fundamental freedoms in the political, economic, social,
cultural, civil or any other field.82
The constitutional exhortation to ensure fundamental equality, as
illumined by its enabling law, the CEDAW, must inform and animate
all the actions of all personalities acting on behalf of the State. It is,
therefore, the bounden duty of this court, in rendering judgment on the
disputes brought before it, to ensure that no discrimination is heaped
upon women on the mere basis of their being women. This is a point so
basic and central that all our discussions and pronouncements —
regardless of whatever averments there may be of foreign law — must
proceed from this premise.
So informed and animated, we emphasize the glaringly
discriminatory nature of Saudia’s policy. As argued by respondents,
Saudia’s policy entails the termination of employment of flight
attendants who become pregnant. At the risk of stating the
obvious, pregnancy is an occurrence that pertains specifically to women.
Saudia’s policy excludes from and restricts employment on the basis of
no other consideration but sex.
We do not lose sight of the reality that pregnancy does present
physical limitations that may render difficult the performance of
functions associated with being a flight attendant. Nevertheless, it
would be the height of iniquity to view pregnancy as a disability so
permanent and immutable that it must entail the termination of one’s
employment. It is clear to us that any individual, regardless of gender,
may be subject to exigencies that limit the performance of functions.
However, we fail to appreciate how pregnancy could be such an
impairing occurrence that it leaves no other recourse but the complete
termination of the means through which a woman earns a living.
Apart from the constitutional policy on the fundamental equality
before the law of men and women, it is settled that contracts relating
to labor and employment are impressed with public interest. Article
1700 of the Civil Code provides that “[t]he relation between capital and
labor are not merely contractual. They are so impressed with public
interest that labor contracts must yield to the common good.”
Consistent with this, this court’s pronouncements in Pakistan
International Airlines Corporation83 are clear and unmistakable:
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.” The first clause of
paragraph 10 cannot be invoked to prevent the application of
Philippine labor laws and regulations to the subject matter of this
case, i.e., the employer-employee relationship between petitioner PIA
and private respondents. 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. . . . 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.84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to
be) the illegal termination of respondents’ employment, this case is
immutably a matter of public interest and public policy. Consistent
with clear pronouncements in law and jurisprudence, Philippine laws
properly find application in and govern this case. Moreover, as this
premise for Saudia’s insistence on the application forum non
conveniens has been shattered, it follows that Philippine tribunals may
properly assume jurisdiction over the present controversy.
Philippine jurisprudence provides ample illustrations of when a
court’s renunciation of jurisdiction on account of forum non
conveniens is proper or improper.
In Philsec Investment Corporation v. Court of Appeals,85this court
noted that the trial court failed to consider that one of the plaintiffs
was a domestic corporation, that one of the defendants was a Filipino,
and that it was the extinguishment of the latter’s debt that was the
object of the transaction subject of the litigation. Thus, this court held,
among others, that the trial court’s refusal to assume jurisdiction was
not justified by forum non conveniens and remanded the case to the
trial court.
In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained
the trial court’s assumption of jurisdiction considering that the trial
court could properly enforce judgment on the petitioner which was a
foreign corporation licensed to do business in the Philippines.
In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no
reason to disturb the trial court’s assumption of jurisdiction over a case
in which, as noted by the trial court, “it is more convenient to hear and
decide the case in the Philippines because Todaro [the plaintiff] resides
in the Philippines and the contract allegedly breached involve[d]
employment in the Philippines.”88
In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this
court held that the fact that the complainant in an illegal dismissal
case was a Canadian citizen and a repatriate did not warrant the
application of forum non conveniens considering that: (1) the Labor
Code does not include forum non conveniens as a ground for the
dismissal of a complaint for illegal dismissal; (2) the propriety of
dismissing a case based on forum non conveniens requires a factual
determination; and (3) the requisites for assumption of jurisdiction as
laid out in Bank of America NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National
Labor Relations Commission91 that the National Labor Relations
Commission was a seriously inconvenient forum. In that case, private
respondent Marcelo G. Santos was working in the Sultanate of Oman
when he received a letter from Palace Hotel recruiting him for
employment in Beijing, China. Santos accepted the offer.
Subsequently, however, he was released from employment supposedly
due to business reverses arising from political upheavals in China (i.e.,
the Tiananmen Square incidents of 1989). Santos later filed a
Complaint for illegal dismissal impleading Palace Hotel’s General
Manager, Mr. Gerhard Schmidt, the Manila Hotel International
Company Ltd. (which was responsible for training Palace Hotel’s
personnel and staff), and the Manila Hotel Corporation (which owned
50% of Manila Hotel International Company Ltd.’s capital stock).
In ruling against the National Labor Relations Commission’s
exercise of jurisdiction, this court noted that the main aspects of the
case transpired in two (2) foreign jurisdictions, Oman and China, and
that the case involved purely foreign elements. Specifically, Santos was
directly hired by a foreign employer through correspondence sent to
Oman. Also, the proper defendants were neither Philippine nationals
nor engaged in business in the Philippines, while the main witnesses
were not residents of the Philippines. Likewise, this court noted that
the National Labor Relations Commission was in no position to conduct
the following: first, determine the law governing the employment
contract, as it was entered into in foreign soil; second, determine the
facts, as Santos’ employment was terminated in Beijing; and third,
enforce its judgment, since Santos’ employer, Palace Hotel, was
incorporated under the laws of China and was not even served with
summons.
Contrary to Manila Hotel, the case now before us does not entail a
preponderance of linkages that favor a foreign jurisdiction.
Here, the circumstances of the parties and their relation do not
approximate the circumstances enumerated in Puyat,92 which this
court recognized as possibly justifying the desistance of Philippine
tribunals from exercising jurisdiction.
First, there is no basis for concluding that the case can be more
conveniently tried elsewhere. As established earlier, Saudia is doing
business in the Philippines. For their part, all four (4) respondents are
Filipino citizens maintaining residence in the Philippines and, apart
from their previous employment with Saudia, have no other connection
to the Kingdom of Saudi Arabia. It would even be to respondents’
inconvenience if this case were to be tried elsewhere.
Second, the records are bereft of any indication that respondents
filed their Complaint in an effort to engage in forum shopping or to vex
and inconvenience Saudia.
Third, there is no indication of “unwillingness to extend local
judicial facilities to nonresidents or aliens.”93 That Saudia has
managed to bring the present controversy all the way to this court
proves this.
Fourth, it cannot be said that the local judicial machinery is
inadequate for effectuating the right sought to be maintained.
Summons was properly served on Saudia and jurisdiction over its
person was validly acquired.
Lastly, there is not even room for considering foreign law.
Philippine law properly governs the present dispute.
As the question of applicable law has been settled, the supposed
difficulty of ascertaining foreign law (which requires the application
of forum non conveniens) provides no insurmountable inconvenience or
special circumstance that will justify depriving Philippine tribunals of
jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the
laws of Saudi Arabia which should apply, it does not follow that
Philippine tribunals should refrain from exercising jurisdiction. To
recall our pronouncements in Puyat,94 as well as in Bank of America
NT&SA,95 it is not so much the mere applicability of foreign law which
calls into operation forum non conveniens. Rather, what justifies a
court’s desistance from exercising jurisdiction is “[t]he difficulty of
ascertaining foreign law”96 or the inability of a “Philippine Court . . . to
make an intelligent decision as to the law[.]”97
Consistent with lex loci intentionis, to the extent that it is proper
and practicable (i.e., “to make an intelligent decision”),98 Philippine
tribunals may apply the foreign law selected by the parties. In fact,
(albeit without meaning to make a pronouncement on the accuracy and
reliability of respondents’ citation) in this case, respondents
themselves have made averments as to the laws of Saudi Arabia. In
their Comment, respondents write:
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is
illegal and unlawful to terminate the employment of any woman by
virtue of pregnancy. The law in Saudi Arabia is even more harsh and
strict [sic] in that no employer can terminate the employment of a
female worker or give her a warning of the same while on Maternity
Leave, the specific provision of Saudi Labor Laws on the matter is
hereto quoted as follows:
“An employer may not terminate the employment of a female
worker or give her a warning of the same while on maternity leave.”
(Article 155, Labor Law of the Kingdom of Saudi Arabia, Royal Decree
No. M/51)99
All told, the considerations for assumption of jurisdiction by
Philippine tribunals as outlined in Bank of America NT&SA100 have
been satisfied. First, all the parties are based in the Philippines and all
the material incidents transpired in this jurisdiction. Thus, the parties
may conveniently seek relief from Philippine tribunals. Second,
Philippine tribunals are in a position to make an intelligent decision
as to the law and the facts. Third, Philippine tribunals are in a position
to enforce their decisions. There is no compelling basis for ceding
jurisdiction to a foreign tribunal. Quite the contrary, the immense
public policy considerations attendant to this case behoove Philippine
tribunals to not shy away from their duty to rule on the case.
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary
resignation as “the voluntary act of an employee who is in a situation
where one believes that personal reasons cannot be sacrificed in favor
of the exigency of the service, and one has no other choice but to
dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the
office accompanied by the act of relinquishment.”102 Thus, essential to
the act of resignation is voluntariness. It must be the result of an
employee’s exercise of his or her own will.
In the same case of Bilbao, this court advanced a means for
determining whether an employee resigned voluntarily:
As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged
resignation must be considered in determining whether he or she, in
fact, intended, to sever his or her employment.103 (Emphasis supplied)
 On the other hand, constructive dismissal has been defined as
“cessation of work because ‘continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion
in rank or a diminution in pay’ and other benefits.”104
In Penaflor v. Outdoor Clothing Manufacturing
Corporation,105 constructive dismissal has been described as
tantamount to “involuntarily [sic] resignation due to the harsh, hostile,
and unfavorable conditions set by the employer.” 106 In the same case,
it was noted that “[t]he gauge for constructive dismissal is whether a
reasonable person in the employee’s position would feel compelled to
give up his employment under the prevailing circumstances.”107
Applying the cited standards on resignation and constructive
dismissal, it is clear that respondents were constructively dismissed.
Hence, their termination was illegal.
The termination of respondents’ employment happened when they
were pregnant and expecting to incur costs on account of child delivery
and infant rearing. As noted by the Court of Appeals, pregnancy is a
time when they need employment to sustain their families. 108 Indeed,
it goes against normal and reasonable human behavior to abandon
one’s livelihood in a time of great financial need.
It is clear that respondents intended to remain employed with
Saudia. All they did was avail of their maternity leaves. Evidently, the
very nature of a maternity leave means that a pregnant employee will
not report for work only temporarily and that she will resume the
performance of her duties as soon as the leave allowance expires.
It is also clear that respondents exerted all efforts to remain
employed with Saudia. Each of them repeatedly filed appeal letters (as
much as five [5] letters in the case of Rebesencio) 109 asking Saudia to
reconsider the ultimatum that they resign or be terminated along with
the forfeiture of their benefits. Some of them even went to Saudia’s
office to personally seek reconsideration.110
Respondents also adduced a copy of the “Unified Employment
Contract for Female Cabin Attendants.”111This contract deemed void
the employment of a flight attendant who becomes pregnant and
threatened termination due to lack of medical fitness. 112 The threat of
termination (and the forfeiture of benefits that it entailed) is enough to
compel a reasonable person in respondents’ position to give up his or
her employment.
Saudia draws attention to how respondents’ resignation letters
were supposedly made in their own handwriting. This minutia fails to
surmount all the other indications negating any voluntariness on
respondents’ part. If at all, these same resignation letters are proof of
how any supposed resignation did not arise from respondents’ own
initiative. As earlier pointed out, respondents’ resignations were
executed on Saudia’s blank letterheads that Saudia had provided.
These letterheads already had the word “RESIGNATION” typed on the
subject portion of their respective headings when these were handed to
respondents.113
“In termination of cases, the burden of proving just or valid cause
for dismissing an employee rests on the employer.”114 In this case,
Saudia makes much of how respondents supposedly completed their
exit interviews, executed quitclaims, received their separation pay, and
took more than a year to file their Complaint. 115 If at all, however,
these circumstances prove only the fact of their occurrence, nothing
more. The voluntariness of respondents’ departure from Saudia is non
sequitur.
Mere compliance with standard procedures or processes, such as
the completion of their exit interviews, neither negates compulsion nor
indicates voluntariness.
As with respondent’s resignation letters, their exit interview forms
even support their claim of illegal dismissal and militates against
Saudia’s arguments. These exit interview forms, as reproduced by
Saudia in its own Petition, confirms the unfavorable conditions as
regards respondents’ maternity leaves. Ma. Jopette’s and Loraine’s exit
interview forms are particularly telling:
a. From Ma. Jopette’s exit interview form:
3. In what respects has the job met or failed to meet your
expectations?
THE SUDDEN TWIST OF DECISION REGARDING THE
MATERNITY LEAVE.116
b. From Loraine’s exit interview form:
1. What are your main reasons for leaving Saudia? What company
are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY LEAVE
(PREGNANCY)117
As to respondents’ quitclaims, in Phil. Employ Services and
Resources, Inc. v. Paramio,118 this court noted that “[i]f (a) there is clear
proof that the waiver was wangled from an unsuspecting or gullible
person; or (b) the terms of the settlement are unconscionable, and on
their face invalid, such quitclaims must be struck down as invalid or
illegal.”119 Respondents executed their quitclaims after having been
unfairly given an ultimatum to resign or be terminated (and forfeit
their benefits).
V equality between men and women.129 The award of exemplary damages
Having been illegally and unjustly dismissed, respondents are
entitled to full backwages and benefits from the time of their
termination until the finality of this Decision. They are likewise
entitled to separation pay in the amount of one (1) month’s salary for
every year of service until the finality of this Decision, with a fraction
of a year of at least six (6) months being counted as one (1) whole year.
Moreover, “[m]oral damages are awarded in termination cases
where the employee’s dismissal was attended by bad faith, malice or
fraud, or where it constitutes an act oppressive to labor, or where it
was done in a manner contrary to morals, good customs or public
policy.”120 In this case, Saudia terminated respondents’ employment in
a manner that is patently discriminatory and running afoul of the
public interest that underlies employer-employee relationships. As
such, respondents are entitled to moral damages.
To provide an “example or correction for the public good” 121 as
against such discriminatory and callous schemes, respondents are
likewise entitled to exemplary damages.
In a long line of cases, this court awarded exemplary damages to
illegally dismissed employees whose “dismissal[s were] effected in a
wanton, oppressive or malevolent manner.”122 This court has awarded
exemplary damages to employees who were terminated on such
frivolous, arbitrary, and unjust grounds as membership in or
involvement with labor unions,123 injuries sustained in the course of
employment,124 development of a medical condition due to the
employer’s own violation of the employment contract, 125and lodging of
a Complaint against the employer.126Exemplary damages were also
awarded to employees who were deemed illegally dismissed by an
employer in an attempt to evade compliance with statutorily
established employee benefits.127 Likewise, employees dismissed for
supposedly just causes, but in violation of due process requirements,
were awarded exemplary damages.128
These examples pale in comparison to the present controversy.
Stripped of all unnecessary complexities, respondents were dismissed
for no other reason than simply that they were pregnant. This is as
wanton, oppressive, and tainted with bad faith as any reason for
termination of employment can be. This is no ordinary case of illegal
dismissal. This is a case of manifest gender discrimination. It is an
affront not only to our statutes and policies on employees’ security of
tenure, but more so, to the Constitution’s dictum of fundamental
is, therefore, warranted, not only to remind employers of the need to
adhere to the requirements of procedural and substantive due process
in termination of employment, but more importantly, to demonstrate
that gender discrimination should in no case be countenanced.
Having been compelled to litigate to seek reliefs for their illegal and
unjust dismissal, respondents are likewise entitled to attorney’s fees in
the amount of 10% of the total monetary award. 130
VI
Petitioner Brenda J. Betia may not be held liable.
A corporation has a personality separate and distinct from those of
the persons composing it. Thus, as a rule, corporate directors and
officers are not liable for the illegal termination of a corporation’s
employees. It is only when they acted in bad faith or with malice that
they become solidarily liable with the corporation.131
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang
Manggagawa ng Ever Electrical,132 this court clarified that “[b]ad faith
does not connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing of wrong; it means
breach of a known duty through some motive or interest or ill will; it
partakes of the nature of fraud.”133
Respondents have not produced proof to show that Brenda J. Betia
acted in bad faith or with malice as regards their termination. Thus,
she may not be held solidarily liable with Saudia.
WHEREFORE, with the MODIFICATIONS that first, petitioner
Brenda J. Betia is not solidarily liable with petitioner Saudi Arabian
Airlines, and second, that petitioner Saudi Arabian Airlines is liable
for moral and exemplary damages. The June 16, 2011 Decision and the
September 13, 2011 Resolution of the Court of Appeals in C.A.-G.R.
S.P. No. 113006 are hereby AFFIRMED in all other respects.
Accordingly, petitioner Saudi Arabian Airlines is ordered to pay
respondents:
 (1) Full backwages and all other benefits computed from the
respective dates in which each of the respondents were illegally
terminated until the finality of this Decision;
(2) Separation pay computed from the respective dates in which
each of the respondents commenced employment until the finality of
this Decision at the rate of one (1) month’s salary for every year of
service, with a fraction of a year of at least six (6) months being counted
as one (1) whole year;
(3) Moral damages in the amount of P100,000.00 per respondent;
(4) Exemplary damages in the amount of P200,000.00 per
respondent; and
(5) Attorney’s fees equivalent to 10% of the total award.
Interest of 6% per annum shall likewise be imposed on the total
judgment award from the finality of this Decision until full satisfaction
thereof.
This case is REMANDED to the Labor Arbiter to make a detailed
computation of the amounts due to respondents which petitioner Saudi
Arabian Airlines should pay without delay.
SO ORDERED.
 2 SUPREME COURT REPORTS ANNOTATED MHICL is a corporation duly organized and existing under the laws
of Hong Kong.7 MHC is an “incorporator” of MHICL, owning 50% of its
Manila Hotel Corp. vs. National Labor Relations Commission
capital stock.8
G.R. No. 120077. October 13, 2000.*
By virtue of a “management agreement”9 with the Palace Hotel
(Wang Fu Company Limited), MHICL10trained the personnel and staff
of the Palace Hotel at Beijing, China.
PARDO, J.:
Now the facts.
During his employment with the Mazoon Printing Press in the
The case before the Court is a petition for certiorari 1 to annul the
Sultanate of Oman, respondent Santos received a letter dated May 2,
following orders of the National Labor Relations Commission
1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel,
(hereinafter referred to as “NLRC”) for having been issued without or
Beijing, China. Mr. Schmidt informed respondent Santos that he was
with excess jurisdiction and with grave abuse of discretion: 2
recommended by one Nestor Buenio, a friend of his.
1. (1)Order of May 31, 1993.3 Reversing and setting aside its
Mr. Shmidt offered respondent Santos the same position as printer,
earlier resolution of August 28, 1992.4 The questioned
but with a higher monthly salary and increased benefits. The position
order declared that the NLRC, not the Philippine
was slated to open on October 1, 1988.11
Overseas Employment Administration (hereinafter
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and
referred to as “POEA”), had jurisdiction over private
signified his acceptance of the offer.
respondent’s complaint;
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk
2. (2)Decision of December 15, 1994.5 Directing petitioners to
mailed a ready to sign employment contract to respondent Santos. Mr.
jointly and severally pay private respondent twelve
Henk advised respondent Santos that if the contract was acceptable, to
thousand and six hundred dollars (US$12,600.00)
return the same to Mr. Henk in Manila, together with his passport and
representing salaries for the unexpired portion of his
two additional pictures for his visa to China.
contract; three thousand six hundred dollars
On May 30, 1988, respondent Santos resigned from the Mazoon
(US$3,600.00) as extra four months salary for the two (2)
Printing Press, effective June 30, 1988, under the pretext that he was
year period of his contract, three thousand six hundred
needed at home to help with the family’s piggery and poultry business.
dollars (US$3,600.00) as “14th month pay” or a total of
On June 4, 1988, respondent Santos wrote the Palace Hotel and
nineteen thousand and eight hundred dollars
acknowledged Mr. Henk’s letter. Respondent Santos enclosed four (4)
(US$19,800.00) or its peso equivalent and attorney’s fees
signed copies of the employment contract (dated June 4, 1988) and
amounting to ten percent (10%) of the total award; and
notified them that he was going to arrive in Manila during the first
3. (3)Order of March 30, 1995.6 Denying the motion for
week of July 1988.
reconsideration of the petitioners.
The employment contract of June 4, 1988 stated that his
In May, 1988, private respondent Marcelo Santos (hereinafter referred
employment would commence September 1, 1988 for a period of two
to as “Santos”) was an overseas worker employed as a printer at the
years.12 It provided for a monthly salary of nine hundred dollars
Mazoon Printing Press, Sultanate of Oman. Subsequently, in June
(US$900.00) net of taxes, payable fourteen (14) times a year. 13
1988, he was directly hired by the Palace Hotel, Beijing, People’s
On June 30, 1988, respondent Santos was deemed resigned from
Republic of China and later terminated due to retrenchment.
the Mazoon Printing Press.
Petitioners are the Manila Hotel Corporation (hereinafter referred
On July 1, 1988, respondent Santos arrived in Manila.
to as “MHC”) and the Manila Hotel International Company, Limited
On November 5, 1988, respondent Santos left for Beijing, China. He
(hereinafter referred to as “MHICL”).
started to work at the Palace Hotel.14
When the case was filed in 1990, MHC was still a government-
Subsequently, respondent Santos signed an amended “employment
owned and controlled corporation duly organized and existing under
agreement” with the Palace Hotel, effective November 5, 1988. In the
the laws of the Philippines.
contract, Mr. Shmidt represented the Palace Hotel. The Vice President
(Operations and Development) of petitioner MHICL Miguel D.
Cergueda signed the employment agreement under the word “noted.”
From June 8 to 29, 1989, respondent Santos was in the Philippines
on vacation leave. He returned to China and reassumed his post on
July 17, 1989.
On July 22, 1989, Mr. Shmidt’s Executive Secretary, a certain
Joanna suggested in a handwritten note that respondent Santos be
given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos
by letter signed by Mr. Shmidt that his employment at the Palace Hotel
print shop would be terminated due to business reverses brought about
by the political upheaval in China.15 We quote the letter:16
“After the unfortunate happenings in China and especially Beijing
(referring to Tiannamen Square incidents), our business has been
severely affected. To reduce expenses, we will not open/operate
printshop for the time being.
“We sincerely regret that a decision like this has to be made, but
rest assured this does in no way reflect your past performance which
we found up to our expectations.”
“Should a turnaround in the business happen, we will contact you
directly and give you priority on future assignment.”
On September 5, 1989, the Palace Hotel terminated the employment of
respondent Santos and paid all benefits due him, including his plane
fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the
Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty.
Ednave wrote Mr. Shmidt, demanding full compensation pursuant to
the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:17
“His service with the Palace Hotel, Beijing was not abruptly
terminated but we followed the one-month notice clause and Mr.
Santos received all benefits due him.
“For your information, the Print Shop at the Palace Hotel is still
not operational and with a low business outlook, retrenchment in
various departments of the hotel is going on which is a normal
management practice to control costs.
“When going through the latest performance ratings, please also be
advised that his performance was below average and a Chinese
National who is doing his job now shows a better approach.
“In closing, when Mr. Santos received the letter of notice, he hardly
showed up for work but still enjoyed free
accommodation/laundry/meals up to the day of his departure.”
On February 20, 1990, respondent Santos filed a complaint for illegal
dismissal with the Arbitration Branch, National Capital Region,
National Labor Relations Commission (NLRC). He prayed for an
award of nineteen thousand nine hundred and twenty three dollars
(US$19,923.00) as actual damages, forty thousand pesos (P40,000.00)
as exemplary damages and attorney’s fees equivalent to 20% of the
damages prayed for. The complaint named MHC, MHICL, the Palace
Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons
and neither participated in the proceedings before the Labor Arbiter. 18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the
case against petitioners, thus:19
“WHEREFORE, judgment is hereby rendered:
“1.directing all the respondents to pay complainant jointly and
severally;
“a)$20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
“b)P50,000.00 as moral damages;
“c)P40,000.00 as exemplary damages; and
“d)Ten (10) percent of the total award as attorney’s fees.
“SO ORDERED.”
On July 23, 1991, petitioners appealed to the NLRC, arguing that the
POEA, not the NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:20
“WHEREFORE, let the appealed Decision be, as it is hereby, declared
null and void for want of jurisdiction. Complainant is hereby enjoined
to file his complaint with the POEA.
“SO ORDERED.”
On September 18, 1992, respondent Santos moved for reconsideration
of the afore-quoted resolution. He argued that the case was not
cognizable by the POEA as he was not an “overseas contract worker.”21
On May 31, 1993, the NLRC granted the motion and reversed itself.
The NLRC directed Labor Arbiter Emerson Tumanon to hear the case
on the question of whether private respondent was retrenched or
dismissed.22
On January 13, 1994, Labor Arbiter Tumanon completed the
proceedings based on the testimonial and documentary evidence
presented to and heard by him.23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial arbiter
of the National Capital Region, Arbitration Branch, and the case was
transferred to Labor Arbiter Jose C. de Vera.24
On November 25, 1994, Labor Arbiter de Vera submitted his
report.25 He found that respondent Santos was illegally dismissed from
employment and recommended that he be paid actual damages
equivalent to his salaries for the unexpired portion of his contract.26
On December 15, 1994, the NLRC ruled in favor of private
respondent, to wit:27
“WHEREFORE, finding that the report and recommendations of
Arbiter de Vera are supported by substantial evidence, judgment is
hereby rendered, directing the respondents to jointly and severally pay
complainant the following computed contractual benefits: (1)
US$12,600.00 as salaries for the unexpired portion of the parties’
contract; (2) US$3,600.00 as extra four (4) months salary for the two
(2) years period (sic) of the parties’ contract; (3) US$3,600.00 as “14th
month pay” for the aforesaid two (2) years contract stipulated by the
parties or a total of US$19,800.00 or its peso equivalent, plus (4)
attorney’s fees of 10% of complainant’s total award.
“SO ORDERED.”
On February 2, 1995, petitioners filed a motion for reconsideration
arguing that Labor Arbiter de Vera’s recommendation had no basis in
law and in fact.28
On March 30, 1995, the NLRC denied the motion for
reconsideration.29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion
for the issuance of a temporary restraining order and/or writ of
preliminary injunction and a motion for the annulment of the entry of
judgment of the NLRC dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner’s urgent
motion. The Court required respondents to file their respective
comments, without giving due course to the petition. 32
On March 8, 1996, the Solicitor General filed a manifestation
stating that after going over the petition and its annexes, they can not
defend and sustain the position taken by the NLRC in its assailed
decision and orders. The Solicitor General prayed that he be excused
from filing a comment on behalf of the NLRC.33
On April 30, 1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the
Solicitor General and required the NLRC to file its own comment to the
petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only
link that the Philippines has with the case is that respondent Santos
is a Filipino citizen. The Palace Hotel and MHICL are tions of law;
thus, we except this case from the ruling in St. Martin Funeral Home
vs. NLRC, 295 SCRA 494 [1998]. Rather than refer the case to the
Court of Appeals, whose decision would be appealable to the Supreme
Court, our ruling would finally put an end to the litigation.
foreign corporations. Not all cases involving our citizens can be
tried here.
The employment contract.—Respondent Santos was hired directly
by the Palace Hotel, a foreign employer, through correspondence sent
to the Sultanate of Oman, where respondent Santos was then
employed. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government.36
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do
so provided: (1) that the Philippine court is one to which the parties
may conveniently resort to; (2) that the Philippine court is in a position
to make an intelligent decision as to the law and the facts; and (3) that
the Philippine court has or is likely to have power to enforce its
decision.37 The conditions are unavailing in the case at bar.
Not Convenient.—We fail to see how the NLRC is a convenient
forum given that all the incidents of the case—from the time of
recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the
proper defendants, the Palace Hotel and MHICL are not nationals of
the Philippines. Neither are they “doing business in the Philippines.”
Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-
residents of the Philippines.
No power to determine applicable law.—Neither can an intelligent
decision be made as to the law governing the employment contract as
such was perfected in foreign soil. This calls to fore the application of
the principle of lex loci contractus (the law of the place where the
contract was made).38
The employment contract was not perfected in the Philippines.
Respondent Santos signified his acceptance by writing a letter while
he was in the Republic of Oman. This letter was sent to the Palace
Hotel in the People’s Republic of China.
No power to determine the facts.—Neither can the NLRC determine
the facts surrounding the alleged illegal dismissal as all acts
complained of took place in Beijing, People’s Republic of China. The
NLRC was not in a position to determine whether the Tiannamen
Square incident truly adversely affected operations of the Palace Hotel
as to justify respondent Santos’ retrenchment.
Principle of effectiveness, no power to execute decision.—Even
assuming that a proper decision could be reached by the NLRC, such
would not have any binding effect against the employer, the Palace
Hotel. The Palace Hotel is a corporation incorporated under the laws
of China and was not even served with summons. Jurisdiction over its
person was not acquired.
This is not to say that Philippine courts and agencies have no power
to solve controversies involving foreign employers. Neither are we
saying that we do not have power over an employment contract
executed in a foreign country. If Santos were an “overseas contract
worker,” a Philippine forum, specifically the POEA, not the NLRC,
would protect him.39 He is not an “overseas contract worker” a fact
which he admits with conviction.40
Even assuming that the NLRC was the proper forum, even on the
merits, the NLRC’s decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over
the case, and (2) that MHICL was liable for Santos’ retrenchment, still
MHC, as a separate and distinct juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%)
of its capital stock. However, this is not enough to pierce the veil of
corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is
resorted to when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend a crime. 41 It is done
only when a corporation is a mere alter ego or business conduit of a
person or another corporation.
In Traders Royal Bank v. Court of Appeals,42 we held that “the mere
ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself a sufficient
reason for disregarding the fiction of separate corporate personalities.”
The tests in determining whether the corporate veil may be pierced
are: First, the defendant must have control or complete domination of
the other corporation’s finances, policy and business practices with
regard to the transaction attacked. There must be proof that the other
corporation had no separate mind, will or existence with respect the
act complained of. Second, control must be used by the defendant to
commit fraud or wrong. Third, the aforesaid control or breach of duty
must be the proximate cause of the injury or loss complained of. The
absence of any of the elements prevents the piercing of the corporate
veil.43
It is basic that a corporation has a personality separate and distinct
from those composing it as well as from that of any other legal entity
to which it may be related.44 Clear and convincing evidence is needed
to pierce the veil of corporate fiction.45 In this case, we find no evidence
to show that MHICL and MHC are one and the same entity.
III. MHICL not liable
Respondent Santos predicates MHICL’s liability on the fact that
MHICL “signed” his employment contract with the Palace Hotel. This
fact fails to persuade us.
First, we note that the Vice President (Operations and
Development) of MHICL, Miguel D. Cergueda signed the employment
contract as a mere witness. He merely signed under the word “noted.”
When one “notes” a contract, one is not expressing his agreement
or approval, as a party would.46 In Sichangco v. Board of
Commissioners of Immigration,47 the Court recognized that the term
“noted” means that the person so noting has merely taken cognizance
of the existence of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter.
Mr. Cergueda merely signed the “witnessing part” of the document.
The “witnessing part” of the document is that which, “in a deed or other
formal instrument is that part which comes after the recitals, or where
there are no recitals, after the parties (emphasis ours).”48 As opposed to
a party to a contract, a witness is simply one who, “being present,
personally sees or perceives a thing; a beholder, a spectator, or
eyewitness.”49 One who “notes” something just makes a “brief written
statement”50 a memorandum or observation.
Second, and more importantly, there was no existing employer-
employee relationship between Santos and MHICL. In determining the
existence of an employer-employee relationship, the following elements
are considered:51
“(1)the selection and engagement of the employee;
“(2)the payment of wages;
“(3)the power to dismiss; and
“(4)the power to control employee’s conduct.”
MHICL did not have and did not exercise any of the aforementioned
powers. It did not select respondent Santos as an employee for the
Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor
Buenio. MHICL did notengage respondent Santos to work. The terms
of employment were negotiated and finalized through correspondence
between respondent Santos, Mr. Schmidt and Mr. Henk, who were
officers and representatives of the Palace Hotel and not MHICL.
Neither did respondent Santos adduce any proof that MHICL had the
power to control his conduct. Finally, it was the Palace Hotel, through
Mr. Schmidt and not MHICL that terminated respondent Santos’
services.
Neither is there evidence to suggest that MHICL was a “labor-only
contractor.”52 There is no proof that MHICL “supplied” respondent
Santos or even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and
MHICL are one and the same entity. The fact that the Palace Hotel is
a member of the “Manila Hotel Group” is not enough to pierce the
corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering
further that no employer-employee relationship existed between
MHICL, MHC and respondent Santos, Labor Arbiter Ceferina J.
Diosana clearly had no jurisdiction over respondent’s claim in NLRC
NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over
the following:53
“1.Unfair labor practice cases;
“2.Termination disputes;
“3.If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
“4.Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
“5.Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts; and
“6.Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.”
In all these cases, an employer-employee relationship is an
indispensable jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217
of the Labor Code is limited to disputes arising from an employer-
employee relationship which can be resolved by reference to the Labor
Code, or other labor statutes, or their collective bargaining
agreements.54
“To determine which body has jurisdiction over the present
controversy, we rely on the sound judicial principle that jurisdiction
over the subject matter is conferred by law and is determined by the
allegations of the complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein.”55
The lack of jurisdiction of the Labor Arbiter was obvious from the
allegations of the complaint. His failure to dismiss the case amounts to
grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari
and ANNULS the orders and resolutions of the National Labor
Relations Commission dated May 31, 1993, December 15, 1994 and
March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case
No. 00-02-01058-90).
No costs.
SO ORDERED.