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[G.R. No. 122191. October 8, 1998]
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS,
MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his capacity as
Presiding Judge of Branch 89, Regional Trial Court of Quezon City,
respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul
and set aside the Resolution[1] dated September 27, 1995 and the Decision[2] dated
April 10, 1996 of the Court of Appeals[3] in CA-G.R. SP No. 36533,[4] and the
Orders[5] dated August 29, 1994[6] and February 2, 1995[7] 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 Al-Gazzawi 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 again put in service by defendant SAUDI (sic). In
September 1990, 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.
COL
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 SAUDIAs 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,[12] she was terminated from the service by SAUDIA, without her being
informed of the cause.
On November 23, 1993, Morada filed a Complaint[13] for damages against SAUDIA,
and Khaled Al-Balawi (Al- Balawi), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss[14] 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 reply[16] thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint[17] 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 Order[19] dated August 29, 1994 denying the Motion to
Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge[20] denying the Motion to Dismiss, SAUDIA
filed on September 20, 1994, its Motion for Reconsideration[21] of the Order dated
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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
Opposition[22] (To Defendants Motion for Reconsideration).
In the Reply[23] 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 Order[24] dated February 2, 1995,
denying SAUDIAs 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 plaintiffs Amended Complaint, which is one for the recovery of actual, moral
and exemplary damages plus attorneys 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
Order[27] dated February 23, 1995, prohibiting the respondent Judge from further
conducting any proceeding, unless otherwise directed, in the interim.
In another Resolution[28] promulgated on September 27, 1995, now assailed, the
appellate court denied SAUDIAs 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., 100335, April 7, 1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the instant
Petition[29] 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 Complaints 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.
COL
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for
Temporary Restraining Order[31] dated 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
petitioners 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. 36533 has 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
THE 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 respondents 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 19[35] and 21[36] 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 Complaint[38] dated June 23, 1994:
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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.
xxxxxxxxx
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 SAUDIAs 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]
COL
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 respondents assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of jurisdiction[43]
confronts the court a quo.
After a careful study of the private respondents 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 respondents assertion that violations of
Articles 19 and 21 are actionable, with judicially enforceable remedies in the
municipal forum.
Based on the allegations[46] in the Amended Complaint, read in the light of the Rules
of Court on jurisdiction[47] we find that the Regional Trial Court (RTC) of Quezon
City possesses jurisdiction over the subject matter of the suit.[48] Its 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:
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SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
jurisdiction:
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(8) In all other cases in which demand, exclusive of interest, damages of whatever
kind, attorneys fees, litigation expenses, and costs 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)
xxxxxxxxx
And following Section 2 (b), Rule 4 of the Revised Rules of Courtthe venue, Quezon
City, is appropriate:
SEC. 2 Venue in Courts of First Instance. [Now Regional Trial Court]
(a) x x x x x x x x x
(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 plaintiffs 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 voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions[50] praying for
the dismissal of Moradas 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 courts
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 courts jurisdiction over defendants person, prayed for dismissal of the
complaint on the ground that plaintiffs 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
COL
necessarily had to acquire jurisdiction upon the latters 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.[57] An 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;
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(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 forithe law of the forumis 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] (Underscoring ours.)
After a careful study of the pleadings on record, including allegations in the
Amended Complaint deemed submitted for purposes of the motion to dismiss, we are
convinced that there is reasonable basis for private respondents 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. Petitioners 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 petitioners 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 fatality 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.
COL
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability[61] 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 over-all 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 complaint 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 Philippine law. Moreover, we find untenable
petitioners 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, thus 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 courts denial of defendants (herein petitioners) motion to dismiss the case. Not
only was jurisdiction in order and venue properly laid, but appeal after trial was
obviously available, and the 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 countrys 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.
 Page ! 6 of 36
!

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.

COL
 Page ! 7 of 36
!
THIRD DIVISION
KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS
CO., LTD., Petitioners,
- versus -
MINORU KITAMURA, Respondent. G.R. No. 149177
Present:
YNARES-SANTIAGO, J.,
Chairperson, AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ. Promulgated: November 23, 2007
x------------------------------------------------------------------------------------x
DECISION
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 Decision[1] of the Court of Appeals (CA) in CA-
G.R. SP No. 60827, and the July 25, 2001 Resolution[2] 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.[5]
Nippon 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) Project.[7] Respondent was named as
the project manager in the contract's Appendix 3.1.[8]
COL
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 respondents 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 first Petition 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 groundsfor 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 appellate 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[22] finding 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]
 Page ! 8 of 36
!
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 Certiorari[25] 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 verification[28] and in the other requirement in
Rule 46 of the Rules of Court on the statement of the material dates.[29] The dismissal
being without prejudice, petitioners can re-file the petition, or file a second petition
attaching thereto the appropriate verification and certificationas they, in fact didand
stating therein the material dates, within the prescribed period[30] 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]
COL
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,[33] petitioners 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 Authorization[35] 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 scopeits 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 appellate 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 Reply[38] an updated Authorization[39] 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.[42] While 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
 Page ! 9 of 36
!
appeal in due course.[44] While there are recognized exceptions to this rule,[45]
petitioners' 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 parties[46] 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 Dismiss[48] 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.[49] While 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.[52]
We 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 issuejurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy,
COL
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 assailing 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
contractus means the law of the place where a contract is executed or to be
performed.[65] It controls the nature, construction, and validity of the contract[66] 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.[68] This 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
 Page ! 10 of !36

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 courts 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.

COL
 Page ! 11 of ! 36
SECOND DIVISION
G.R. No. 198587, January 14, 2015
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners,
v. MA. JOPETTE M. REBESENCIO, MONTASSAH B. SACAR-ADIONG,
ROUEN RUTH A. CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ,
Respondents.
DECISION LEONEN, J.: All Filipinos are entitled to the protection
of the rights guaranteed in the Constitution.
This is a Petition for Review on Certiorari with application for the issuance of a
temporary restraining order and/or writ of preliminary injunction under Rule 45 of
the 1997 Rules of Civil Procedure praying that judgment be rendered reversing and
setting aside the June 16, 2011 Decision1 and September 13, 2011 Resolution2 of the
Court of Appeals in CA-G.R. SP. No. 113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and
existing under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine
office located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati City.3
In its Petition filed with this court, Saudia identified itself as follows:
1. Petitioner SAUDIA is a foreign corporation established and existing under the
Royal Decree No. M/24 of 18.07.1385H (10.02.1962G) in Jeddah, Kingdom of
Saudi Arabia ("KSA"). Its Philippine Office is located at 4/F Metro House Building,
Sen, Gil J. Puyat Avenue, Makati City (Philippine Office). It may be served with
orders of this Honorable Court through undersigned counsel at 4th and 6th Floors,
Citibank Center Bldg., 8741 Paseo de Roxas, Makati City.4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited and hired by
Saudia as Temporary Flight Attendants with the accreditation and approval of the
Philippine Overseas Employment Administration.5 After undergoing seminars
required by the Philippine Overseas Employment Administration for deployment
overseas, as well as training modules offered by Saudia (e.g., initial flight attendant/
training course and transition training), and after working as Temporary Flight
Attendants, respondents became Permanent Flight Attendants. They then entered into
Cabin Attendant contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on
May 16, 1990;6 Montassah B. Sacar-Adiong (Montassah) and Rouen Ruth A.
Cristobal (Rouen Ruth) on May 22, 1993;7 and Loraine Schneider-Cruz (Loraine) on
August 27, 1995.8
Respondents continued their employment with Saudia until they were separated from
service on various dates in 2006.9
Respondents contended that the termination of their employment was illegal. They
alleged that the termination was made solely because they were pregnant.10
As respondents alleged, they had informed Saudia of their respective pregnancies
and had gone through the necessary procedures to process their maternity leaves.
Initially, Saudia had given its approval but later on informed respondents that its
management in Jeddah, Saudi Arabia had disapproved their maternity leaves. In
addition, it required respondents to file their resignation letters.11
COL
Respondents were told that if they did not resign, Saudia would terminate them all
the same. The threat of termination entailed the loss of benefits, such as separation
pay and ticket discount entitlements.12
Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base
Manager, Abdulmalik Saddik (Abdulmalik).13 Montassah was informed personally
by Abdulmalik and a certain Faisal Hussein on October 20, 2006 after being required
to report to the office one (1) month into her maternity leave.14 Rouen Ruth was also
personally informed by Abdulmalik on October 17, 2006 after being required to
report to the office by her Group Supervisor.15 Loraine received a call on October 12,
2006 from her Group Supervisor, Dakila Salvador.16
Saudia anchored its disapproval of respondents' maternity leaves and demand for
their resignation on its "Unified Employment Contract for Female Cabin Attendants"
(Unified Contract).17 Under the Unified Contract, the employment of a Flight
Attendant who becomes pregnant is rendered void. It provides:
(H) Due to the essential nature of the Air Hostess functions to be physically fit on
board to provide various services required in normal or emergency cases on both
domestic/international flights beside her role in maintaining continuous safety and
security of passengers, and since she will not be able to maintain the required
medical fitness while at work in case of pregnancy, accordingly, if the Air Hostess
becomes pregnant at any time during the term of this contract, this shall render
her employment contract as void and she will be terminated due to lack of medical
fitness.18 (Emphasis supplied)
In their Comment on the present Petition,19 respondents emphasized that the Unified
Contract took effect on September 23, 2006 (the first day of Ramadan),20 well after
they had filed and had 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
 Page ! 12 of !36
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 Jambaro-Franco. It explained that
"[considering 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 respondents-
appellees 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
COL
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 the Court of Appeals
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.chanRoblesvirtualLawlibrary
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."43 Referring 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
 Page ! 13 of !36
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.chanRoblesvirtualLawlibrary
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 dees not necessarily imply forum non conveniens. 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.
COL
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 V'hich 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 Q 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.
 Page ! 14 of !36
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 allowing 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,"61 i.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.
COL
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.63 Thus, 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 non-resident plaintiff sought the forum[,] a practice known
as forum shopping[,] merely to secure procedural advantages or to convey or harass
the defendant;
 Page ! 15 of !36
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.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 offorum 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,76 this court stated that forum non conveniens is
not a ground for a motion to dismiss. 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 & 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.
COL
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 o 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 W e
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.
Thai 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
 Page ! 16 of !36
commenced in another jurisdiction and that a foieign 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 the 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 Civ:l 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 inta 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
COL
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:
 Page ! 17 of !36
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,85 this 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.
COL
In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations
Commission91 that the National Labor Relations Q 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
non-residents or aliens."93 That Saudia has managed to bring the present controversy
all the way to this court proves this.
 Page ! 18 of !36
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.chanRoblesvirtualLawlibrary
IV Respondents were illegally terminated.
COL
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
Rebesencio109) 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."111 This contract deemed void the employment of a flight
attendant who becomes pregnant and threatened termination due to lack of medical
 Page ! 19 of !36
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 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
COL
unfairly given an ultimatum to resign or be terminated (and forfeit their
benefits).chanRoblesvirtualLawlibrary
V 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 fmality 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,125 and lodging of a Complaint against the employer.126
Exemplary 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 equality between men and women.129
The award of exemplary damages 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.
 Page ! 20 of !36

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 solidarity 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 solidarity
liable with Saudia.cralawred
WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J.
Betia is not solidarity 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 CA-G.R. SP. 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.

COL
 Page ! 21 of !36

Republic of the Philippines Daisylyn, but was shocked to discover that his wife was having an affair with
Supreme Court another man. Hurt and disappointed, Gerbert returned to Canada and filed a petition
Manila for divorce. The Superior Court of Justice, Windsor, Ontario, Canada granted
Gerberts petition for divorce on December 8, 2005. The divorce decree took effect a
month later, on January 8, 2006.[5]
THIRD DIVISION
Two years after the divorce, Gerbert has moved on and has found another Filipina to
love. Desirous of marrying his new Filipina fiance in the Philippines, Gerbert went to
GERBERT R. CORPUZ, Petitioner, the Pasig City Civil Registry Office and registered the Canadian divorce decree on
his and Daisylyns marriage certificate. Despite the registration of the divorce decree,
an official of the National Statistics Office (NSO) informed Gerbert that the marriage
between him and Daisylyn still subsists under Philippine law; to be enforceable, the
foreign divorce decree must first be judicially recognized by a competent Philippine
- versus - court, pursuant to NSO Circular No. 4, series of 1982.[6]

Accordingly, Gerbert filed a petition for judicial recognition of foreign divorce

and/or declaration of marriage as dissolved (petition) with the RTC. Although
summoned, Daisylyn did not file any responsive pleading but submitted instead a
notarized letter/manifestation to the trial court. She offered no opposition to Gerberts
DAISYLYN TIROL STO. TOMAS and The SOLICITOR GENERAL, petition and, in fact, alleged her desire to file a similar case herself but was prevented
Respondents. -- - G.R. No. 186571 Present: by financial and personal circumstances. She, thus, requested that she be considered
CARPIO MORALES, J., Chairperson, as a party-in-interest with a similar prayer to Gerberts.
BRION,
BERSAMIN, In its October 30, 2008 decision,[7] the RTC denied Gerberts petition. The RTC
*ABAD, and concluded that Gerbert was not the proper party to institute the action for judicial
VILLARAMA, JR., JJ. recognition of the foreign divorce decree as he is a naturalized Canadian citizen. It
ruled that only the Filipino spouse can avail of the remedy, under the second
paragraph of Article 26 of the Family Code,[8] in order for him or her to be able to
remarry under Philippine law.[9] Article 26 of the Family Code reads:
Promulgated:
Art. 26. All marriages solemnized outside the Philippines, in accordance with the
August 11, 2010 laws in force in the country where they were solemnized, and valid there as such,
x----------------------------------------------------------------------------------------------------- shall also be valid in this country, except those prohibited under Articles 35(1), (4),
---------x (5) and (6), 36, 37 and 38.

DECISION Where a marriage between a Filipino citizen and a foreigner is validly

celebrated and a divorce is thereafter validly obtained abroad by the alien
BRION, J.: spouse capacitating him or her to remarry, the Filipino spouse shall likewise
have capacity to remarry under Philippine law.

Before the Court is a direct appeal from the decision[1] of the Regional Trial Court
(RTC) of Laoag City, Branch 11, elevated via a petition for review on certiorari[2]
under Rule 45 of the Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired Canadian
citizenship through naturalization on November 29, 2000.[3] On January 18, 2005,
Gerbert married respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig City.[4] Due
to work and other professional commitments, Gerbert left for Canada soon after the
wedding. He returned to the Philippines sometime in April 2005 to surprise
This conclusion, the RTC stated, is consistent with the legislative intent behind the
enactment of the second paragraph of Article 26 of the Family Code, as determined
by the Court in Republic v. Orbecido III;[10] the provision was enacted to avoid the
absurd situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse.[11]
THE PETITION
From the RTCs ruling,[12] Gerbert filed the present petition.[13]

COL
 Page ! 22 of !36
Gerbert asserts that his petition before the RTC is essentially for declaratory relief,
similar to that filed in Orbecido; he, thus, similarly asks for a determination of his
rights under the second paragraph of Article 26 of the Family Code. Taking into
account the rationale behind the second paragraph of Article 26 of the Family Code,
he contends that the provision applies as well to the benefit of the alien spouse. He
claims that the RTC ruling unduly stretched the doctrine in Orbecido by limiting the
standing to file the petition only to the Filipino spouse an interpretation he claims to
be contrary to the essence of the second paragraph of Article 26 of the Family Code.
He considers himself as a proper party, vested with sufficient legal interest, to
institute the case, as there is a possibility that he might be prosecuted for bigamy if
he marries his Filipina fiance in the Philippines since two marriage certificates,
involving him, would be on file with the Civil Registry Office. The Office of the
Solicitor General and Daisylyn, in their respective Comments,[14] both support
Gerberts position.
Essentially, the petition raises the issue of whether the second paragraph of Article
26 of the Family Code extends to aliens the right to petition a court of this
jurisdiction for the recognition of a foreign divorce decree.
THE COURTS RULING
The alien spouse can claim no right under the second paragraph of Article 26 of
the Family Code as the substantive right it establishes is in favor of the Filipino
spouse
The resolution of the issue requires a review of the legislative history and intent
behind the second paragraph of Article 26 of the Family Code.
The Family Code recognizes only two types of defective marriages void[15] and
voidable[16] marriages. In both cases, the basis for the judicial declaration of absolute
nullity or annulment of the marriage exists before or at the time of the marriage.
Divorce, on the other hand, contemplates the dissolution of the lawful union for
cause arising after the marriage.[17] Our family laws do not recognize absolute
divorce between Filipino citizens.[18]
Recognizing the reality that divorce is a possibility in marriages between a Filipino
and an alien, President Corazon C. Aquino, in the exercise of her legislative powers
under the Freedom Constitution,[19] enacted Executive Order No. (EO) 227,
amending Article 26 of the Family Code to its present wording, as follows:
Art. 26. All marriages solemnized outside the Philippines, in accordance with the
laws in force in the country where they were solemnized, and valid there as such,
shall also be valid in this country, except those prohibited under Articles 35(1), (4),
(5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien
COL
spouse capacitating him or her to remarry, the Filipino spouse shall likewise
have capacity to remarry under Philippine law.
Through the second paragraph of Article 26 of the Family Code, EO 227 effectively
incorporated into the law this Courts holding in Van Dorn v. Romillo, Jr.[20] and
Pilapil v. Ibay-Somera.[21] In both cases, the Court refused to acknowledge the alien
spouses assertion of marital rights after a foreign courts divorce decree between the
alien and the Filipino. The Court, thus, recognized that the foreign divorce had
already severed the marital bond between the spouses. The Court reasoned in Van
Dorn v. Romillo that:
To maintain x x x that, under our laws, [the Filipino spouse] has to be
considered still married to [the alien spouse] and still subject to a wife's
obligations x x x cannot be just. [The Filipino spouse] should not be obliged to live
together with, observe respect and fidelity, and render support to [the alien spouse].
The latter should not continue to be one of her heirs with possible rights to conjugal
property. She should not be discriminated against in her own country if the ends
of justice are to be served.[22]
As the RTC correctly stated, the provision was included in the law to avoid the
absurd situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse.[23] The
legislative intent is for the benefit of the Filipino spouse, by clarifying his or her
marital status, settling the doubts created by the divorce decree. Essentially, the
second paragraph of Article 26 of the Family Code provided the Filipino spouse
a substantive right to have his or her marriage to the alien spouse considered as
dissolved, capacitating him or her to remarry.[24] Without the second paragraph of
Article 26 of the Family Code, the judicial recognition of the foreign decree of
divorce, whether in a proceeding instituted precisely for that purpose or as a related
issue in another proceeding, would be of no significance to the Filipino spouse since
our laws do not recognize divorce as a mode of severing the marital bond;[25] Article
17 of the Civil Code provides that the policy against absolute divorces cannot be
subverted by judgments promulgated in a foreign country. The inclusion of the
second paragraph in Article 26 of the Family Code provides the direct exception to
this rule and serves as basis for recognizing the dissolution of the marriage between
the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of the Family
Code is not limited to the recognition of the foreign divorce decree. If the court finds
that the decree capacitated the alien spouse to remarry, the courts can declare that the
Filipino spouse is likewise capacitated to contract another marriage. No court in this
jurisdiction, however, can make a similar declaration for the alien spouse (other than
that already established by the decree), whose status and legal capacity are generally
governed by his national law.[26]
Given the rationale and intent behind the enactment, and the purpose of the second
paragraph of Article 26 of the Family Code, the RTC was correct in limiting the
applicability of the provision for the benefit of the Filipino spouse. In other words,
 Page ! 23 of !36
only the Filipino spouse can invoke the second paragraph of Article 26 of the Family
Code; the alien spouse can claim no right under this provision.
The foreign divorce decree is presumptive evidence of a right that clothes the party
with legal interest to petition for its recognition in this jurisdiction
We qualify our above conclusion i.e., that the second paragraph of Article 26 of the
Family Code bestows no rights in favor of aliens with the complementary statement
that this conclusion is not sufficient basis to dismiss Gerberts petition before the
RTC. In other words, the unavailability of the second paragraph of Article 26 of the
Family Code to aliens does not necessarily strip Gerbert of legal interest to petition
the RTC for the recognition of his foreign divorce decree. The foreign divorce decree
itself, after its authenticity and conformity with the aliens national law have been
duly proven according to our rules of evidence, serves as a presumptive evidence of
right in favor of Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which
provides for the effect of foreign judgments. This Section states:
SEC. 48. Effect of foreign judgments or final orders.The effect of a judgment or
final order of a tribunal of a foreign country, having jurisdiction to render the
judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment
or final order is conclusive upon the title of the thing; and
(b) In case of a judgment or final order against a person, the judgment
or final order is presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
To our mind, direct involvement or being the subject of the foreign judgment is
sufficient to clothe a party with the requisite interest to institute an action before our
courts for the recognition of the foreign judgment. In a divorce situation, we have
declared, no less, that the divorce obtained by an alien abroad may be recognized in
the Philippines, provided the divorce is valid according to his or her national law.[27]
The starting point in any recognition of a foreign divorce judgment is the
acknowledgment that our courts do not take judicial notice of foreign judgments and
laws. Justice Herrera explained that, as a rule, no sovereign is bound to give effect
within its dominion to a judgment rendered by a tribunal of another country.[28] This
means that the foreign judgment and its authenticity must be proven as facts under
our rules on evidence, together with the aliens applicable national law to show the
effect of the judgment on the alien himself or herself.[29] The recognition may be
made in an action instituted specifically for the purpose or in another action where a
party invokes the foreign decree as an integral aspect of his claim or defense.
COL
In Gerberts case, since both the foreign divorce decree and the national law of the
alien, recognizing his or her capacity to obtain a divorce, purport to be official acts of
a sovereign authority, Section 24, Rule 132 of the Rules of Court comes into play.
This Section requires proof, either by (1) official publications or (2) copies attested
by the officer having legal custody of the documents. If the copies of official records
are not kept in the Philippines, these must be (a) accompanied by a certificate issued
by the proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b) authenticated by
the seal of his office.
The records show that Gerbert attached to his petition a copy of the divorce decree,
as well as the required certificates proving its authenticity,[30] but failed to include a
copy of the Canadian law on divorce.[31] Under this situation, we can, at this point,
simply dismiss the petition for insufficiency of supporting evidence, unless we deem
it more appropriate to remand the case to the RTC to determine whether the divorce
decree is consistent with the Canadian divorce law.
We deem it more appropriate to take this latter course of action, given the Article 26
interests that will be served and the Filipina wifes (Daisylyns) obvious conformity
with the petition. A remand, at the same time, will allow other interested parties to
oppose the foreign judgment and overcome a petitioners presumptive evidence of a
right by proving want of jurisdiction, want of notice to a party, collusion, fraud, or
clear mistake of law or fact. Needless to state, every precaution must be taken to
ensure conformity with our laws before a recognition is made, as the foreign
judgment, once recognized, shall have the effect of res judicata[32] between the
parties, as provided in Section 48, Rule 39 of the Rules of Court.[33]
In fact, more than the principle of comity that is served by the practice of reciprocal
recognition of foreign judgments between nations, the res judicata effect of the
foreign judgments of divorce serves as the deeper basis for extending judicial
recognition and for considering the alien spouse bound by its terms. This same
effect, as discussed above, will not obtain for the Filipino spouse were it not for the
substantive rule that the second paragraph of Article 26 of the Family Code provides.
Considerations beyond the recognition of the foreign divorce decree
As a matter of housekeeping concern, we note that the Pasig City Civil Registry
Office has already recorded the divorce decree on Gerbert and Daisylyns
marriage certificate based on the mere presentation of the decree.[34] We
consider the recording to be legally improper; hence, the need to draw attention of
the bench and the bar to what had been done.
Article 407 of the Civil Code states that [a]cts, events and judicial decrees
concerning the civil status of persons shall be recorded in the civil register. The law
requires the entry in the civil registry of judicial decrees that produce legal
consequences touching upon a persons legal capacity and status, i.e., those affecting
all his personal qualities and relations, more or less permanent in nature, not
ordinarily terminable at his own will, such as his being legitimate or illegitimate, or
his being married or not.[35]
 Page ! 24 of !36

can be registered in the civil registry, but it, nonetheless, allowed the registration of
A judgment of divorce is a judicial decree, although a foreign one, affecting a the decree. For being contrary to law, the registration of the foreign divorce decree
persons legal capacity and status that must be recorded. In fact, Act No. 3753 or the without the requisite judicial recognition is patently void and cannot produce any
Law on Registry of Civil Status specifically requires the registration of divorce legal effect.
decrees in the civil registry:
Another point we wish to draw attention to is that the recognition that the RTC may
Sec. 1. Civil Register. A civil register is established for recording the civil status extend to the Canadian divorce decree does not, by itself, authorize the cancellation
of persons, in which shall be entered: of the entry in the civil registry. A petition for recognition of a foreign judgment is
not the proper proceeding, contemplated under the Rules of Court, for the
(a) births; cancellation of entries in the civil registry.
(b) deaths;
(c) marriages; Article 412 of the Civil Code declares that no entry in a civil register shall be
(d) annulments of marriages; changed or corrected, without judicial order. The Rules of Court supplements Article
(e) divorces; 412 of the Civil Code by specifically providing for a special remedial proceeding by
(f) legitimations; which entries in the civil registry may be judicially cancelled or corrected. Rule 108
(g) adoptions; of the Rules of Court sets in detail the jurisdictional and procedural requirements that
(h) acknowledgment of natural children; must be complied with before a judgment, authorizing the cancellation or correction,
(i) naturalization; and may be annotated in the civil registry. It also requires, among others, that the verified
(j) changes of name. petition must be filed with the RTC of the province where the corresponding civil
registry is located;[38] that the civil registrar and all persons who have or claim any
xxxx interest must be made parties to the proceedings;[39] and that the time and place for
hearing must be published in a newspaper of general circulation.[40] As these basic
Sec. 4. Civil Register Books. The local registrars shall keep and preserve in their jurisdictional requirements have not been met in the present case, we cannot consider
offices the following books, in which they shall, respectively make the proper entries the petition Gerbert filed with the RTC as one filed under Rule 108 of the Rules of
concerning the civil status of persons: Court.

(1) Birth and death register;
(2) Marriage register, in which shall be entered not only the marriages
solemnized but also divorces and dissolved marriages.
(3) Legitimation, acknowledgment, adoption, change of name and naturalization
register.
But while the law requires the entry of the divorce decree in the civil registry, the law
and the submission of the decree by themselves do not ipso facto authorize the
decrees registration. The law should be read in relation with the requirement of a
judicial recognition of the foreign judgment before it can be given res judicata effect.
In the context of the present case, no judicial order as yet exists recognizing the
foreign divorce decree. Thus, the Pasig City Civil Registry Office acted totally out of
turn and without authority of law when it annotated the Canadian divorce decree on
Gerbert and Daisylyns marriage certificate, on the strength alone of the foreign
decree presented by Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement of a
court recognition, as it cited NSO Circular No. 4, series of 1982,[36] and Department
of Justice Opinion No. 181, series of 1982[37] both of which required a final order
from a competent Philippine court before a foreign judgment, dissolving a marriage,
We hasten to point out, however, that this ruling should not be construed as requiring
two separate proceedings for the registration of a foreign divorce decree in the civil
registry one for recognition of the foreign decree and another specifically for
cancellation of the entry under Rule 108 of the Rules of Court. The recognition of the
foreign divorce decree may be made in a Rule 108 proceeding itself, as the object of
special proceedings (such as that in Rule 108 of the Rules of Court) is precisely to
establish the status or right of a party or a particular fact. Moreover, Rule 108 of the
Rules of Court can serve as the appropriate adversarial proceeding[41] by which the
applicability of the foreign judgment can be measured and tested in terms of
jurisdictional infirmities, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE
the October 30, 2008 decision of the Regional Trial Court of Laoag City, Branch 11,
as well as its February 17, 2009 order. We order the REMAND of the case to the
trial court for further proceedings in accordance with our ruling above. Let a copy of
this Decision be furnished the Civil Registrar General. No costs.
SO ORDERED.

COL
 Page ! 25 of !36
SECOND DIVISION
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure which seeks the reversal of the Decision1 and Resolution2
of the Court of Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case
filed by respondent against petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly
organized and existing under the laws of the State of Connecticut, United States of
America, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a
contract whereby BMSI hired respondent as its representative to negotiate the sale of
services in several government projects in the Philippines for an agreed remuneration
of 10% of the gross receipts. On 11 March 1992, respondent secured a service
contract with the Republic of the Philippines on behalf of BMSI for the dredging of
rivers affected by the Mt. Pinatubo eruption and mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch of the National
Labor Relations Commission (NLRC) a suit against BMSI and Rust International,
Inc. (RUST), Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of
commissions, illegal termination and breach of employment contract.4 On 28
September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering
BMSI and RUST to pay respondent’s money claims.5 Upon appeal by BMSI, the
NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s
complaint on the ground of lack of jurisdiction.6 Respondent elevated the case to this
Court but was dismissed in a Resolution dated 26 November 1997. The Resolution
became final and executory on 09 November 1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union. The
Complaint,7 docketed as Civil Case No. 1192-BG, named as defendants herein
petitioner Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. The complaint essentially reiterated
the allegations in the labor case that BMSI verbally employed respondent to
negotiate the sale of services in government projects and that respondent was not
paid the commissions due him from the Pinatubo dredging project which he secured
on behalf of BMSI. The complaint also averred that BMSI and RUST as well as
petitioner itself had combined and functioned as one company.
In its Answer,8 petitioner alleged that contrary to respondent’s claim, it was a foreign
corporation duly licensed to do business in the Philippines and denied entering into
any arrangement with respondent or paying the latter any sum of money. Petitioner
also denied combining with BMSI and RUST for the purpose of assuming the
alleged obligation of the said companies.9 Petitioner also referred to the NLRC
decision which disclosed that per the written agreement between respondent and
BMSI and RUST, denominated as "Special Sales Representative Agreement," the
rights and obligations of the parties shall be governed by the laws of the State of
Connecticut.10 Petitioner sought the dismissal of the complaint on grounds of failure
COL
to state a cause of action and forum non conveniens and prayed for damages by way
of compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based
on Affirmative Defenses and for Summary Judgment12 seeking the dismissal of the
complaint on grounds of forum non conveniens and failure to state a cause of action.
Respondent opposed the same. Pending the resolution of the omnibus motion, the
deposition of Walter Browning was taken before the Philippine Consulate General in
Chicago.13
In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus
motion. The trial court held that the factual allegations in the complaint, assuming
the same to be admitted, were sufficient for the trial court to render a valid judgment
thereon. It also ruled that the principle of forum non conveniens was inapplicable
because the trial court could enforce judgment on petitioner, it being a foreign
corporation licensed to do business in the Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order, which motion was
opposed by respondent.17 In an Order dated 31 July 2001,18 the trial court denied
petitioner’s motion. Thus, it filed a Rule 65 Petition19 with the Court of Appeals
praying for the issuance of a writ of certiorari and a writ of injunction to set aside the
twin orders of the trial court dated 13 September 2000 and 31 July 2001 and to
enjoin the trial court from conducting further proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying
the petition for certiorari for lack of merit. It also denied petitioner’s motion for
reconsideration in the assailed Resolution issued on 10 March 2004.22
The appellate court held that although the trial court should not have confined itself
to the allegations in the complaint and should have also considered evidence aliunde
in resolving petitioner’s omnibus motion, it found the evidence presented by
petitioner, that is, the deposition of Walter Browning, insufficient for purposes of
determining whether the complaint failed to state a cause of action. The appellate
court also stated that it could not rule one way or the other on the issue of whether
the corporations, including petitioner, named as defendants in the case had indeed
merged together based solely on the evidence presented by respondent. Thus, it held
that the issue should be threshed out during trial.23 Moreover, the appellate court
deferred to the discretion of the trial court when the latter decided not to desist from
assuming jurisdiction on the ground of the inapplicability of the principle of forum
non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION
AGAINST RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON
CONVENIENS.24
Incidentally, respondent failed to file a comment despite repeated notices. The
Ceferino Padua Law Office, counsel on record for respondent, manifested that the
lawyer handling the case, Atty. Rogelio Karagdag, had severed relations with the law
firm even before the filing of the instant petition and that it could no longer find the
whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a
Resolution25 dated 20 November 2006, the Court resolved to dispense with the filing
of a comment.
 Page ! 26 of !36
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent and BMSI
included a valid choice of law clause, that is, that the contract shall be governed by
the laws of the State of Connecticut. It also mentions the presence of foreign
elements in the dispute – namely, the parties and witnesses involved are American
corporations and citizens and the evidence to be presented is located outside the
Philippines – that renders our local courts inconvenient forums. Petitioner theorizes
that the foreign elements of the dispute necessitate the immediate application of the
doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases
involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction,
choice of law, and recognition and enforcement of judgments. Thus, in the
instances27 where the Court held that the local judicial machinery was adequate to
resolve controversies with a foreign element, the following requisites had to be
proved: (1) that the Philippine Court is one to which the parties may conveniently
resort; (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 the
power to enforce its decision.28
On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed
in a Philippine court and where the court has jurisdiction over the subject matter, the
parties and the res, it may or can proceed to try the case even if the rules of conflict-
of-laws or the convenience of the parties point to a foreign forum. This is an exercise
of sovereign prerogative of the country where the case is filed.29
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law30 and by the material allegations in the complaint,
irrespective of whether or not the plaintiff is entitled to recover all or some of the
claims or reliefs sought therein.31 Civil Case No. 1192-BG is an action for damages
arising from an alleged breach of contract. Undoubtedly, the nature of the action and
the amount of damages prayed are within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over
herein respondent (as party plaintiff) upon the filing of the complaint. On the other
hand, jurisdiction over the person of petitioner (as party defendant) was acquired by
its voluntary appearance in court.32
That the subject contract included a stipulation that the same shall be governed by
the laws of the State of Connecticut does not suggest that the Philippine courts, or
any other foreign tribunal for that matter, are precluded from hearing the civil action.
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.33 The choice of law stipulation will
become relevant only when the substantive issues of the instant case develop, that is,
after hearing on the merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws 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.34
Petitioner’s averments of the foreign elements in the instant case are not sufficient to
oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG and the
parties involved.
COL
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as
a matter of defense. While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court’s
desistance.35
Finding no grave abuse of discretion on the trial court, the Court of Appeals
respected its conclusion that it can assume jurisdiction over the dispute
notwithstanding its foreign elements. In the same manner, the Court defers to the
sound discretion of the lower courts because their findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state
a cause of action against petitioner. Failure to state a cause of action refers to the
insufficiency of allegation in the pleading.36 As a general rule, the elementary test for
failure to state a cause of action is whether the complaint alleges facts which if true
would justify the relief demanded.37
The complaint alleged that petitioner had combined with BMSI and RUST to
function as one company. Petitioner contends that the deposition of Walter Browning
rebutted this allegation. On this score, the resolution of the Court of Appeals is
instructive, thus:
x x x Our examination of the deposition of Mr. Walter Browning as well as other
documents produced in the hearing shows that these evidence aliunde are not quite
sufficient for us to mete a ruling that the complaint fails to state a cause of action.
Annexes "A" to "E" by themselves are not substantial, convincing and conclusive
proofs that Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty
obligations of defendant Rust International in the Makar Port Project in General
Santos City, after Rust International ceased to exist after being absorbed by REC.
Other documents already submitted in evidence are likewise meager to
preponderantly conclude that Raytheon International, Inc., Rust International[,] Inc.
and Brand Marine Service, Inc. have combined into one company, so much so that
Raytheon International, Inc., the surviving company (if at all) may be held liable for
the obligation of BMSI to respondent Rouzie for unpaid commissions. Neither these
documents clearly speak otherwise.38
As correctly pointed out by the Court of Appeals, the question of whether petitioner,
BMSI and RUST merged together requires the presentation of further evidence,
which only a full-blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The
Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
 Page ! 27 of !36
FIRST DIVISION
PEDRO T. SANTOS, JR., G.R. No. 170943
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- v e r s u s - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.
PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:
September 23, 2008
x---------------------------------------------------x
DECISION
CORONA, J.:
This is a petition for review[1] of the September 22, 2005 decision[2] and December
29, 2005 resolution[3] of the Court of Appeals in CA-G.R. SP No. 82482.
On December 23, 2002, respondent PNOC Exploration Corporation filed a
complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the Regional
Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No.
69262, sought to collect the amount of P698,502.10 representing petitioners unpaid
balance of the car loan[4] advanced to him by respondent when he was still a member
of its board of directors.
Personal service of summons to petitioner failed because he could not be located in
his last known address despite earnest efforts to do so. Subsequently, on respondents
motion, the trial court allowed service of summons by publication.
Respondent caused the publication of the summons in Remate, a newspaper of
general circulation in the Philippines, on May 20, 2003. Thereafter, respondent
submitted the affidavit of publication of the advertising manager of Remate[5] and an
affidavit of service of respondents employee[6] to the effect that he sent a copy of the
summons by registered mail to petitioners last known address.
When petitioner failed to file his answer within the prescribed period, respondent
moved that the case be set for the reception of its evidence ex parte. The trial court
granted the motion in an order dated September 11, 2003.
COL
Respondent proceeded with the ex parte presentation and formal offer of its
evidence. Thereafter, the case was deemed submitted for decision on October 15,
2003.
On October 28, 2003, petitioner filed an Omnibus Motion for Reconsideration and to
Admit Attached Answer. He sought reconsideration of the September 11, 2003 order,
alleging that the affidavit of service submitted by respondent failed to comply with
Section 19, Rule 14 of the Rules of Court as it was not executed by the clerk of
court. He also claimed that he was denied due process as he was not notified of the
September 11, 2003 order. He prayed that respondents evidence ex parte be stricken
off the records and that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it complied with the rules
on service by publication. Moreover, pursuant to the September 11, 2003 order,
petitioner was already deemed in default for failure to file an answer within the
prescribed period.
In an order dated February 6, 2004, the trial court denied petitioners motion for
reconsideration of the September 11, 2003 order. It held that the rules did not require
the affidavit of complementary service by registered mail to be executed by the clerk
of court. It also ruled that due process was observed as a copy of the September 11,
2003 order was actually mailed to petitioner at his last known address. It also denied
the motion to admit petitioners answer because the same was filed way beyond the
reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders
of the trial court in the Court of Appeals via a petition for certiorari. He contended
that the orders were issued with grave abuse of discretion. He imputed the following
errors to the trial court: taking cognizance of the case despite lack of jurisdiction due
to improper service of summons; failing to furnish him with copies of its orders and
processes, particularly the September 11, 2003 order, and upholding technicality over
equity and justice.
During the pendency of the petition in the Court of Appeals, the trial court rendered
its decision in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus
legal interest and costs of suit.[7]
Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision[8]
sustaining the September 11, 2003 and February 6, 2004 orders of the trial court and
dismissing the petition. It denied reconsideration.[9] Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court of Appeals,
namely, lack of jurisdiction over his person due to improper service of summons,
failure of the trial court to furnish him with copies of its orders and processes
including the September 11, 2003 order and preference for technicality rather than
justice and equity. In particular, he claims that the rule on service by publication
under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not
actions in personam like a complaint for a sum of money. He also contends that the
 Page ! 28 of !36
affidavit of service of a copy of the summons should have been prepared by the clerk
of court, not respondents messenger.
The petition lacks merit.
PROPRIETYOF
SERVICE BY PUBLICATION
Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or whereabouts are unknown. In
any action where the defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such times as the court
may order. (emphasis supplied)
Since petitioner could not be personally served with summons despite diligent efforts
to locate his whereabouts, respondent sought and was granted leave of court to effect
service of summons upon him by publication in a newspaper of general circulation.
Thus, petitioner was properly served with summons by publication.
Petitioner invokes the distinction between an action in rem and an action in
personam and claims that substituted service may be availed of only in an action in
rem. Petitioner is wrong. The in rem/in personam distinction was significant under
the old rule because it was silent as to the kind of action to which the rule was
applicable.[10] Because of this silence, the Court limited the application of the old
rule to in rem actions only.[11]
This has been changed. The present rule expressly states that it applies [i]n any
action where the defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi in
rem.[12]
Regarding the matter of the affidavit of service, the relevant portion of Section 19,[13]
Rule 14 of the Rules of Court simply speaks of the following:
an affidavit showing the deposit of a copy of the summons and order for publication
in the post office, postage prepaid, directed to the defendant by registered mail to his
last known address.
Service of summons by publication is proved by the affidavit of the printer, his
foreman or principal clerk, or of the editor, business or advertising manager of the
newspaper which published the summons. The service of summons by publication is
complemented by service of summons by registered mail to the defendants last
known address. This complementary service is evidenced by an affidavit showing the
COL
deposit of a copy of the summons and order for publication in the post office,
postage prepaid, directed to the defendant by registered mail to his last known
address.
The rules, however, do not require that the affidavit of complementary service be
executed by the clerk of court. While the trial court ordinarily does the mailing of
copies of its orders and processes, the duty to make the complementary service by
registered mail is imposed on the party who resorts to service by publication.
Moreover, even assuming that the service of summons was defective, the trial court
acquired jurisdiction over the person of petitioner by his own voluntary
appearance in the action against him. In this connection, Section 20, Rule 14 of the
Rules of Court states:
SEC. 20. Voluntary appearance. The defendants voluntary appearance in the
action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance. (emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the Omnibus Motion for
Reconsideration and to Admit Attached Answer.[14] This was equivalent to service of
summons and vested the trial court with jurisdiction over the person of petitioner.
ENTITLEMENTTO
NOTICE OF PROCEEDINGS
The trial court allowed respondent to present its evidence ex parte on account of
petitioners failure to file his answer within the prescribed period. Petitioner assails
this action on the part of the trial court as well as the said courts failure to furnish
him with copies of orders and processes issued in the course of the proceedings.
The effects of a defendants failure to file an answer within the time allowed therefor
are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules
of Court:
SEC. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefor, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending
party in default. Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in its discretion
requires the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.
SEC. 4. Effect of order of default. A party in default shall be entitled to notice of
subsequent proceedings but not to take part in the trial. (emphasis supplied)
 Page ! 29 of !36

If the defendant fails to file his answer on time, he may be declared in default upon copy of the September 11, 2003 order was nonetheless still mailed to petitioner at his
motion of the plaintiff with notice to the said defendant. In case he is declared in last known address but it was unclaimed.
default, the court shall proceed to render judgment granting the plaintiff such relief
as his pleading may warrant, unless the court in its discretion requires the plaintiff to
submit evidence. The defaulting defendant may not take part in the trial but shall be CORRECTNESSOF
entitled to notice of subsequent proceedings. NON-ADMISSION OF ANSWER

In this case, even petitioner himself does not dispute that he failed to file his answer
on time. That was in fact why he had to file an Omnibus Motion for Reconsideration
and to Admit Attached Answer. But respondent moved only for the ex parte
presentation of evidence, not for the declaration of petitioner in default. In its
February 6, 2004 order, the trial court stated:
Petitioner failed to file his answer within the required period. Indeed, he would not
have moved for the admission of his answer had he filed it on time. Considering that
the answer was belatedly filed, the trial court did not abuse its discretion in denying
its admission.

The disputed Order of September 11, 2003 allowing the presentation of evidence ex- Petitioners plea for equity must fail in the face of the clear and express language of
parte precisely ordered that despite and notwithstanding service of summons by the rules of procedure and of the September 11, 2003 order regarding the period for
publication, no answer has been filed with the Court within the required period and/ filing the answer. Equity is available only in the absence of law, not as its
or forthcoming.[] Effectively[,] that was a finding that the defendant [that is, replacement.[19] Equity may be applied only in the absence of rules of procedure,
herein petitioner] was in default for failure to file an answer or any responsive never in contravention thereof.
pleading within the period fixed in the publication as precisely the defendant
[could not] be found and for which reason, service of summons by publication was WHEREFORE, the petition is hereby DENIED.
ordered. It is simply illogical to notify the defendant of the Order of September 11, Costs against petitioner.
2003 simply on account of the reality that he was no longer residing and/or found on
his last known address and his whereabouts unknown thus the publication of the
summons. In other words, it was reasonable to expect that the defendant will not SO ORDERED.
receive any notice or order in his last known address. Hence, [it was] impractical to
send any notice or order to him. Nonetheless, the record[s] will bear out that a
copy of the order of September 11, 2003 was mailed to the defendant at his last
known address but it was not claimed. (emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to permitting
respondent to present its evidence ex parte but in effect issued an order of default.
But the trial court could not validly do that as an order of default can be made only
upon motion of the claiming party.[15] Since no motion to declare petitioner in default
was filed, no default order should have been issued.

To pursue the matter to its logical conclusion, if a party declared in default is entitled
to notice of subsequent proceedings, all the more should a party who has not been
declared in default be entitled to such notice. But what happens if the residence or
whereabouts of the defending party is not known or he cannot be located? In such a
case, there is obviously no way notice can be sent to him and the notice requirement
cannot apply to him. The law does not require that the impossible be done.[16] Nemo
tenetur ad impossibile. The law obliges no one to perform an impossibility.[17] Laws
and rules must be interpreted in a way that they are in accordance with logic,
common sense, reason and practicality.[18]

Hence, even if petitioner was not validly declared in default, he could not reasonably
demand that copies of orders and processes be furnished him. Be that as it may, a

COL
 Page ! 30 of !36
THIRD DIVISION
PACIFIC CONSULTANTS G.R. No. 166920
INTERNATIONAL ASIA,
INC. and JENS PETER Present:
HENRICHSEN,
Petitioners, YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR., and
CHICO-NAZARIO, JJ.
Promulgated:
KLAUS K. SCHONFELD,
Respondent. February 19, 2007
x--------------------------------------------------x
DECISION
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 76563.
The CA decision reversed the Resolution of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed
the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00
dismissing the complaint of respondent Klaus K. Schonfeld.
The antecedent facts are as follows:
Respondent is a Canadian citizen and was a resident of New Westminster, British
Columbia, Canada. He had been a consultant in the field of environmental
engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a
corporation duly established and incorporated in accordance with the laws of the
Philippines. The primary purpose of PPI was to engage in the business of providing
specialty and technical services both in and out of the Philippines.[2] It is a subsidiary
of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter
Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan.
Henrichsen commuted from Japan to Manila and vice versa, as well as in other
countries where PCIJ had business.
In 1997, PCIJ decided to engage in consultancy services for water and sanitation in
the Philippines. In October 1997, respondent was employed by PCIJ, through
Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department.
COL
However, PCIJ assigned him as PPI sector manager in the Philippines. His salary
was to be paid partly by PPI and PCIJ.
On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in
Canada, requesting him to accept the same and affix his conformity thereto.
Respondent made some revisions in the letter of employment and signed the
contract.[3] He then sent a copy to Henrichsen. The letter of employment reads:
Mr. Klaus K. Schonfeld
II-365 Ginger Drive
New Westminster, B.C.
Canada V3L 5L5
Tokyo 7 January 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment
constitutes the agreement under which you will be engaged by our Company on the
terms and conditions defined hereunder. In case of any discrepancies or
contradictions between this Letter of Employment and the General Conditions of
Employment, this Letter of Employment will prevail.
You will, from the date of commencement, be [seconded] to our subsidiary Pacicon
Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will provide
you with a separate contract, which will define that part of the present terms and
conditions for which Pacicon is responsible. In case of any discrepancies or
contradictions between the present Letter of Employment and the contract with
Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its
obligations, this Letter of Employment will prevail.
1. Project Country: The Philippines with possible short-term assignments in other
countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
4. Position: Sector Manager, Water and Sanitation.
5. Commencement: 1st October 1997.
6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a local
salary (US$2,100.00 per month) by Pacicon and partly as an offshore salary
(US$4,900.00) by PCI to bank accounts to be nominated by you.
A performance related component corresponding to 17.6% of the total annual
remuneration, subject to satisfactory performance against agreed tasks and targets,
paid offshore.
7. Accommodation: The company will provide partly furnished accommodation to a
rent including association fees, taxes and VAT not exceeding the Pesos equivalent of
US$2,900.00 per month.
 Page ! 31 of !36

8. Transportation: Included for in the remuneration.

9. Leave Travels: You are entitled to two leave travels per year. ALIEN EMPLOYMENT PERMIT
10. Shipment of Personal
Effects: The maximum allowance is US$4,000.00. ISSUED TO: SCHONFELD, KLAUS KURT
11. Mobilization DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian
Travel: Mobilization travel will be from New Westminster, B.C., Canada. POSITION: VP WATER & SANITATION
EMPLOYER: PACICON PHILIPPINES, INC.
ADDRESS: 27/F Rufino Pacific Towers Bldg.,
This letter is send (sic) to you in duplicate; we kindly request you to sign and return Ayala Ave., Makati City
one copy to us. PERMIT
ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:
Yours sincerely, VALID UNTIL: January 7, 2000 (Sgd.)
Pacific Consultants International APPROVED: BIENVENIDO S. LAGUESMA

Jens Peter Henrichsen By: MAXIMO B. ANITO

Above terms and conditions accepted
Date: 2 March 1998
(Sgd.)
Klaus Schonfeld
as annotated and initialed[4]
Section 21 of the General Conditions of Employment appended to the letter of
employment reads:
21 Arbitration
Any question of interpretation, understanding or fulfillment of the conditions of
employment, as well as any question arising between the Employee and the
Company which is in consequence of or connected with his employment with the
Company and which can not be settled amicably, is to be finally settled, binding to
both parties through written submissions, by the Court of Arbitration in London.[5]
Respondent arrived in the Philippines and assumed his position as PPI Sector
Manager. He was accorded the status of a resident alien.
As required by Rule XIV (Employment of Aliens) of the Omnibus Rules
Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit)
for respondent before the Department of Labor and Employment (DOLE). It
appended respondents contract of employment to the application.
On February 26, 1999, the DOLE granted the application and issued the Permit to
respondent. It reads:
Republic of the Philippines
Department of Labor & Employment
National Capital Region
REGIONAL DIRECTOR
(Emphasis supplied)[6]
Respondent received his compensation from PPI for the following periods: February
to June 1998, November to December 1998, and January to August 1999. He was
also reimbursed by PPI for the expenses he incurred in connection with his work as
sector manager. He reported for work in Manila except for occasional assignments
abroad, and received instructions from Henrichsen.[7]
On May 5, 1999, respondent received a letter from Henrichsen informing him that
his employment had been terminated effective August 4, 1999 for the reason that
PCIJ and PPI had not been successful in the water and sanitation sector in the
Philippines.[8] However, on July 24, 1999, Henrichsen, by electronic mail,[9]
requested respondent to stay put in his job after August 5, 1999, until such time that
he would be able to report on certain projects and discuss all the opportunities he had
developed.[10] Respondent continued his work with PPI until the end of business
hours on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary, leave pay,
air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI
partially settled some of his claims (US$5,635.99), but refused to pay the rest.
On December 5, 2000, respondent filed a Complaint[11] for Illegal Dismissal against
petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-
NCR Case No. 30-12-04787-00.
In his Complaint, respondent alleged that he was illegally dismissed; PPI had not
notified the DOLE of its decision to close one of its departments, which resulted in
his dismissal; and they failed to notify him that his employment was terminated after
August 4, 1999. Respondent also claimed for separation pay and other unpaid
benefits. He alleged that the company acted in bad faith and disregarded his rights.
He prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents to reinstate
complainant to his former position without loss of seniority and other privileges and

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 Page ! 32 of !36

benefits, and to pay his full backwages from the time compensation was with held Canada V3L 5L5
(sic) from him up to the time of his actual reinstatement. In the alternative, if
reinstatement is no longer feasible, respondents must pay the complainant full Manila 9 January, 1998
backwages, and separation pay equivalent to one month pay for every year of
service, or in the amount of US$16,400.00 as separation pay; Dear Mr. Schonfeld,

2. Judgment be rendered ordering the respondents to pay the outstanding monetary
obligation to complainant in the amount of US$10,131.76 representing the balance of
unpaid salaries, leave pay, cost of his air travel and shipment of goods from Manila
to Canada; and
3. Judgment be rendered ordering the respondent company to pay the complainant
damages in the amount of no less than US $10,000.00 and to pay 10% of the total
monetary award as attorneys fees, and costs.
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment
constitutes the agreement, under which you will be engaged by Pacicon Philippines,
Inc. on the terms and conditions defined hereunder.
1. Project Country: The Philippines with possible assignments
in other countries.

Other reliefs just and equitable under the premises are, likewise, prayed for.[12] 2. Duty Station: Manila, the Philippines.

3. Family Status: Married.

Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the
Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was 4. Position: Sector Manager Water and Sanitation
improperly laid. It averred that respondent was a Canadian citizen, a transient Sector.
expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a
foreign corporation with principal office in Tokyo, Japan. Since respondents cause of 5. Commencement: 1 January, 1998.
action was based on his letter of employment executed in Tokyo, Japan dated
January 7, 1998, under the principle of lex loci contractus, the complaint should have 6. Remuneration: US$3,100.00 per month payable to a bank
been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any account to be nominated by you.
justification for filing his complaint against PPI before the NLRC in the Philippines.
Moreover, under Section 12 of the General Conditions of Employment appended to 7. Accommodation: The company will provide partly furnished
the letter of employment dated January 7, 1998, complainant and PCIJ had agreed accommodation to a rent including
that any employment-related dispute should be brought before the London Court of association fees, taxes and VAT not
Arbitration. Since even the Supreme Court had already ruled that such an agreement exceeding the Pesos equivalent of
on venue is valid, Philippine courts have no jurisdiction.[13] US$2300.00 per month.

Respondent opposed the Motion, contending that he was employed by PPI to work in 8. Transportation: Included for in the remuneration.
the Philippines under contract separate from his January 7, 1998 contract of
employment with PCIJ. He insisted that his employer was PPI, a Philippine- 9. Shipment of Personal The maximum allowance is US$2500.00 in
registered corporation; it is inconsequential that PPI is a wholly-owned subsidiary of Effects: connection with initial shipment of personal
PCIJ because the two corporations have separate and distinct personalities; and he effects from Canada.
received orders and instructions from Henrichsen who was the president of PPI. He
further insisted that the principles of forum non conveniens and lex loci contractus do 10. Mobilization Travel: Mobilization travel will be from New
not apply, and that although he is a Canadian citizen, Philippine Labor Laws apply in Westminster, B.C., Canada.
this case.
This letter is send (sic) to you in duplicate; we kindly request you to sign and return
Respondent adduced in evidence the following contract of employment dated one copy to us.
January 9, 1998 which he had entered into with Henrichsen:
Yours sincerely,
Mr. Klaus K. Schonfeld Pacicon Philippines, Inc.
II-365 Ginger Drive
New Westminster, B.C.

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 Page ! 33 of !36
Jens Peter Henrichsen
President[14]
According to respondent, the material allegations of the complaint, not petitioners
defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the
Arbitration Clause in the General Conditions of Employment does not provide for an
exclusive venue where the complaint against PPI for violation of the Philippine
Labor Laws may be filed. Respondent pointed out that PPI had adopted two
inconsistent positions: it was first alleged that he should have filed his complaint in
Tokyo, Japan; and it later insisted that the complaint should have been filed in the
London Court of Arbitration.[15]
In their reply, petitioners claimed that respondents employer was PCIJ, which had
exercised supervision and control over him, and not PPI. Respondent was dismissed
by PPI via a letter of Henrichsen under the letterhead of PCIJ in Japan.[16] The letter
of employment dated January 9, 1998 which respondent relies upon did not bear his
(respondents) signature nor that of Henrichsen.
On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners
Motion to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents Motion to Dismiss, the same is hereby
granted. The instant complaint filed by the complainant is dismissed for lack of
merit.
SO ORDERED.[17]
The Labor Arbiter found, among others, that the January 7, 1998 contract of
employment between respondent and PCIJ was controlling; the Philippines was only
the duty station where Schonfeld was required to work under the General Conditions
of Employment. PCIJ remained respondents employer despite his having been sent
to the Philippines. Since the parties had agreed that any differences regarding
employer-employee 
 transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment
relationship should be submitted to the jurisdiction of the court of arbitration in
London, this agreement is controlling.
On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed
the latters decision in toto.[18]
Respondent then filed a petition for certiorari under Rule 65 with the CA where he
raised the following arguments:
I cannot be filed in any other forum other than in the Philippines.
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
AFFIRMED THE LABOR ARBITERS DECISION CONSIDERING THAT:
A. PETITIONERS TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS
INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND
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THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE
INSTANT CASE; AND
B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE
ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF
ARBITRATION IN LONDON.
II
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT
PETITIONERS TERMINATION FROM EMPLOYMENT IS ILLEGAL:
A. THE CLOSURE OF RESPONDENT COMPANYS WATER AND SANITATION
SECTOR WAS NOT BONA FIDE.
B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT
COMPANYS WATER AND SANITATION SECTOR WAS JUSTIFIABLE,
PETITIONERS DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT OF
LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT
NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.[19]
Respondent averred that the absence or existence of a written contract of
employment is not decisive of whether he is an employee of PPI. He maintained that
PPI, through its president Henrichsen, directed his work/duties as Sector Manager of
PPI; proof of this was his letter-proposal to the Development Bank of the Philippines
for PPI to provide consultancy services for the Construction Supervision of the Water
Supply and Sanitation component of the World Bank-Assisted LGU Urban Water
and Sanitation Project.[20] He emphasized that as gleaned from Alien Employment
Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he
is an employee of PPI. It was PPI president Henrichsen who terminated his
employment; PPI also paid his salary and reimbursed his expenses related to
because the two corporations have separate and distinct personalities.
The CA found the petition meritorious. Applying the four-fold test[21] of determining
an employer-employee relationship, the CA declared that respondent was an
employee of PPI. On the issue of venue, the appellate court declared that, even under
the January 7, 1998 contract of employment, the parties were not precluded from
bringing a case related thereto in other venues. While there was, indeed, an
agreement that issues between the parties were to be resolved in the London Court of
Arbitration, the venue is not exclusive, since there is no stipulation that the complaint
On November 25, 2004, the CA rendered its decision granting the petition, the
decretal portion of which reads:
WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the
NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to
the Labor Arbiter a quo for disposition of the case on the merits.
 Page ! 34 of !36
SO ORDERED.[22]
A motion for the reconsideration of the above decision was filed by PPI and
Henrichsen, which the appellate court denied for lack of merit.[23]
In the present recourse, PPI and Henrichsen, as petitioners, raise the following
issues:
I There being no evidence that petitioner PPI is the employer of respondent, the Labor
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN
EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND
RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A
F O R E I G N N AT I O N A L , WA S H I R E D A B R O A D B Y A F O R E I G N
CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD,
AND WAS MERELY SECONDED TO PETITIONERS SINCE HIS WORK
ASSIGNMENT WAS IN MANILA.
II
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR
ARBITER A QUO HAS JURISDICTION OVER RESPONDENTS CLAIM
DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN
NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION,
EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED
THAT ANY DISPUTE BETWEEN THEM SHALL BE FINALLY SETTLED BY
THE COURT OF ARBITRATION IN LONDON.[24]
Petitioners fault the CA for reversing the findings of the Labor Arbiter and the
NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the
NLRC, are conclusive on the CA. They maintain that it is not within the province of
the appellate court in a petition for certiorari to review the facts and evidence on
record since there was no conflict in the factual findings and conclusions of the
lower tribunals. Petitioners assert that such findings and conclusions, having been
made by agencies with expertise on the subject matter, should be deemed binding
and conclusive. They contend that it was the PCIJ which employed respondent as an
employee; it merely seconded him to petitioner PPI in the Philippines, and assigned
him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned
subsidiary of PCIJ, was never the employer of respondent.
Petitioners assert that the January 9, 1998 letter of employment which respondent
presented to prove his employment with petitioner PPI is of doubtful authenticity
since it was unsigned by the purported parties. They insist that PCIJ paid respondents
salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary,
had supervision and control over respondents work, and had the responsibilities of
monitoring the daily administration of respondent. Respondent cannot rely on the
pay slips, expenses claim forms, and reimbursement memoranda to prove that he was
an employee of petitioner PPI because these documents are of doubtful authenticity.
Petitioners further contend that, although Henrichsen was both a director of PCIJ and
president of PPI, it was he who signed the termination letter of respondent upon
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instructions of PCIJ. This is buttressed by the fact that PCIJs letterhead was used to
inform him that his employment was terminated. Petitioners further assert that all
work instructions came from PCIJ and that petitioner PPI only served as a conduit.
Respondents Alien Employment Permit stating that petitioner PPI was his employer
is but a necessary consequence of his being seconded thereto. It is not sufficient
proof that petitioner PPI is respondents employer. The entry was only made to
comply with the DOLE requirements.
Arbiter has no jurisdiction over respondents complaint.
Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring
their claim that the principlesof forum non conveniens and lex loci contractus are
applicable. They also point out that the principal office, officers and staff of PCIJ are
stationed in Tokyo, Japan; and the contract of employment of respondent was
executed in Tokyo, Japan.
Moreover, under Section 21 of the General Conditions for Employment incorporated
in respondents January 7, 1998 letter of employment, the dispute between respondent
and PCIJ should be settled by the court of arbitration of London. Petitioners claim
that the words used therein are sufficient to show the exclusive and restrictive nature
of the stipulation on venue.
Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers
and employers, while the Labor Code of the Philippines applies only to Filipino
employers and Philippine-based employers and their employees, not to PCIJ. In fine,
the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers
who executed employment agreements with foreign employers abroad, although
seconded to the Philippines.[25]
In his Comment,[26] respondent maintains that petitioners raised factual issues in their
petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The
finding of the CA that he had been an employee of petitioner PPI and not of PCIJ is
buttressed by his documentary evidence which both the Labor Arbiter and the NLRC
ignored; they erroneously opted to dismiss his complaint on the basis of the letter of
employment and Section 21 of the General Conditions of Employment. In contrast,
the CA took into account the evidence on record and applied case law correctly.
The petition is denied for lack of merit.
It must be stressed that in resolving a petition for certiorari, the CA is not proscribed
from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg.
129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence,
if and when necessary, to resolve factual issues.[27] If it appears that the Labor Arbiter
and the NLRC misappreciated the evidence to such an extent as to compel a contrary
conclusion if such evidence had been properly appreciated, the factual findings of
such tribunals cannot be given great respect and finality.[28]
 Page ! 35 of !36
Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence
which respondent appended to his pleadings showing that he was an employee of
petitioner PPI; they merely focused on the January 7, 1998 letter of employment and
Section 21 of the General Conditions of Employment.
Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In
said application, PPI averred that respondent is its employee. To show that this was
the case, PPI appended a copy of respondents employment contract. The DOLE then
granted the application of PPI and issued the permit.
It bears stressing that under the Omnibus Rules Implementing the Labor Code, one
of the requirements for the issuance of an employment permit is the employment
contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules
provides:
SECTION 1. Coverage. This rule shall apply to all aliens employed or seeking
employment in the Philippines and the present or prospective employers.
SECTION 2. Submission of list. All employers employing foreign nationals,
whether resident or non-resident, shall submit a list of nationals to the Bureau
indicating their names, citizenship, foreign and local address, nature of employment
and status of stay in the Philippines.
SECTION 3. Registration of resident aliens. All employed resident aliens shall
register with the Bureau under such guidelines as may be issued by it.
SECTION 4. Employment permit required for entry. No alien seeking
employment, whether as a resident or non-resident, may enter the Philippines
without first securing an employment permit from the Ministry. If an alien enters the
country under a non-working visa and wishes to be employed thereafter, he may only
be allowed to be employed upon presentation of a duly approved employment
permit.
SECTION 5. Requirements for employment permit applicants. The application
for an employment permit shall be accompanied by the following:
(a) Curriculum vitae duly signed by the applicant indicating his educational
background, his work experience and other data showing that he possesses technical
skills in his trade or profession.
(b) Contract of employment between the employer and the principal which shall
embody the following, among others:
1. That the non-resident alien worker shall comply with all applicable laws and rules
and regulations of the Philippines;
2. That the non-resident alien worker and the employer shall bind themselves to train
at least two (2) Filipino understudies for a period to be determined by the Minister;
and
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3. That he shall not engage in any gainful employment other than that for which he
was issued a permit.
(c) A designation by the employer of at least two (2) understudies for every alien
worker. Such understudies must be the most ranking regular employees in the section
or department for which the expatriates are being hired to insure the actual transfer
of technology.
Under Section 6 of the Rule, the DOLE may issue an alien employment permit based
only on the following:
(a) Compliance by the applicant and his employer with the requirements of Section 2
hereof;
(b) Report of the Bureau Director as to the availability or non-availability of any
person in the Philippines who is competent and willing to do the job for which the
services of the applicant are desired;
(c) His assessment as to whether or not the employment of the applicant will redound
to the national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and
Deportation;
(e) The recommendation of the Board of Investments or other appropriate
government agencies if the applicant will be employed in preferred areas of
investments or in accordance with the imperative of economic development.
Thus, as claimed by respondent, he had an employment contract with petitioner PPI;
otherwise, petitioner PPI would not have filed an application for a Permit with the
DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI,
had been the employer of respondent all along.
We agree with the conclusion of the CA that there was an employer-employee
relationship between petitioner PPI and respondent using the four-fold test.
Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control the employees conduct. It is the
so-called control test which constitutes the most important index of the existence of
the employer-employee relationshipthat is, whether the employer controls or has
reserved the right to control the employee not only as to the result of the work to be
done but also as to the means and methods by which the same is to be accomplished.
Stated otherwise, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the end to be
achieved but also the means to be used in reaching such end.[29] We quote with
approval the following ruling of the CA:
 Page ! 36 of !36

[T]here is, indeed, substantial evidence on record which would erase any doubt that
the respondent company is the true employer of petitioner. In the case at bar, the
power to control and supervise petitioners work performance devolved upon the
respondent company. Likewise, the power to terminate the employment relationship
was exercised by the President of the respondent company. It is not the letterhead
used by the company in the termination letter which controls, but the person who
exercised the power to terminate the employee. It is also inconsequential if the
second letter of employment executed in the Philippines was not signed by the
petitioner. An employer-employee relationship may indeed exist even in the absence
of a written contract, so long as the four elements mentioned in the Mafinco case are
all present.[30]
x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do
so; provided, that the following requisites are met: (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. x x x
Admittedly, all the foregoing requisites are present in this case.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in
CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor
Arbiter for disposition of the case on the merits. Cost against petitioners.

The settled rule on stipulations regarding venue, as held by this Court in the vintage SO ORDERED.
case of Philippine Banking Corporation v. Tensuan,[31] is that while they are
considered valid and enforceable, venue stipulations in a contract do not, as a rule,
supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the
absence of qualifying or restrictive words. They should be considered merely as an
agreement or additional forum, not as limiting venue to the specified place. They are
not exclusive but, rather permissive. If the intention of the parties were to restrict
venue, there must be accompanying language clearly and categorically expressing
their purpose and design that actions between them be litigated only at the place
named by them.[32]

In the instant case, no restrictive words like only, solely, exclusively in this court, in
no other court save , particularly, nowhere else but/except , or words of equal import
were stated in the contract.[33] It cannot be said that the court of arbitration in London
is an exclusive venue to bring forth any complaint arising out of the employment
contract.

Petitioners contend that respondent should have filed his Complaint in his place of
permanent residence, or where the PCIJ holds its principal office, at the place where
the contract of employment was signed, in London as stated in their contract. By
enumerating possible venues where respondent could have filed his complaint,
however, petitioners themselves admitted that the provision on venue in the
employment contract is indeed merely permissive.

Petitioners insistence on the application of the principle of forum non conveniens

must be rejected. The bare fact that respondent is a Canadian citizen and was a
repatriate does not warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as a
ground for the dismissal of the complaint.[34]

Second. The propriety of dismissing a case based on this principle requires a factual
determination; hence, it is properly considered as defense.[35]

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of

Appeals,[36] this Court held that:

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