CONFLICT OF LAWS CASES 1
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner, vs. JACK
ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE
COURT, respondents
G.R. No. 72494 August 11, 1989
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Intermediate Appellate
Court (now Court of Appeals) dated August 2, 1985, which reversed the order of the Regional
Trial Court dated February 28,1985 denying the Motion to Dismiss filed by private respondents
Jack Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner
Hongkong and Shanghai Banking Corporation (hereinafter referred to as petitioner BANK)
against private respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case
No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter
referred to as COMPANY), a company incorporated in Singapore applied with, and was granted
by, the Singapore branch of petitioner BANK an overdraft facility in the maximum amount of
Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollars
375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts
due under said overdraft facility; as a security for the repayment by the COMPANY of sums
advanced by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982,
both private respondents and a certain Robin de Clive Lowe, all of whom were directors of the
COMPANY at such time, executed a Joint and Several Guarantee (p. 53, Rollo) in favor of
petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally,
on demand all sums owed by the COMPANY to petitioner BANK under the aforestated
overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree that
the Courts of Singapore shall have jurisdiction over all disputes arising under
this guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment
of the obligation from private respondents, conformably with the provisions of the Joint and
Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK
filed the above-mentioned complaint.
On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo)
which was opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court
issued an order dated February 28, 1985 (pp, 64-65, Rollo), which read as follows:
In a Motion to Dismiss filed on December 14, 1984, the defendants
seek the dismissal of the complaint on two grounds, namely:
1. That the court has no jurisdiction over the subject matter of the
complaint; and
2. That the court has no jurisdiction over the persons of the
defendants.
1
In the light of the Opposition thereto filed by plaintiff, the Court finds
no merit in the motion. "On the first ground, defendants claim that by virtue of
the provision in the Guarantee (the actionable document) which reads —
This guarantee and all rights, obligations and
liabilities arising hereunder shall be construed and determined
under and may be enforced in accordance with the laws of the
Republic of Singapore. We hereby agree that the courts in
Singapore shall have jurisdiction over all disputes arising
under this guarantee,
the Court has no jurisdiction over the subject matter of the case. The
Court finds and concludes otherwise. There is nothing in the Guarantee which
says that the courts of Singapore shall have jurisdiction to the exclusion of the
courts of other countries or nations. Also, it has long been established in law
and jurisprudence that jurisdiction of courts is fixed by law; it cannot be
conferred by the will, submission or consent of the parties.
On the second ground, it is asserted that defendant Robert' , Sherman
is not a citizen nor a resident of the Philippines. This argument holds no water.
Jurisdiction over the persons of defendants is acquired by service of summons
and copy of the complaint on them. There has been a valid service of
summons on both defendants and in fact the same is admitted when said
defendants filed a 'Motion for Extension of Time to File Responsive Pleading
on December 5, 1984.
WHEREFORE, the Motion to Dismiss is hereby DENIED.
SO ORDERED.
A motion for reconsideration of the said order was filed by private respondents which
was, however, denied (p. 66,Rollo).
Private respondents then filed before the respondent Intermediate Appellate Court
(now Court of Appeals) a petition for prohibition with preliminary injunction and/or prayer for a
restraining order (pp. 39-48, Rollo). On August 2, 1985, the respondent Court rendered a
decision (p. 37, Rollo), the dispositive portion of which reads:
WHEREFORE, the petition for prohibition with preliminary injuction is
hereby GRANTED. The respondent Court is enjoined from taking further
cognizance of the case and to dismiss the same for filing with the proper court
of Singapore which is the proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.
The main issue is whether or not Philippine courts have jurisdiction over the suit.
The controversy stems from the interpretation of a provision in the Joint and Several
Guarantee, to wit:
(14) This guarantee and all rights, obligations and liabilites arising
hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree that
the Courts in Singapore shall have jurisdiction over all disputes arising under
this guarantee. ... (p. 53-A, Rollo)
In rendering the decision in favor of private respondents, the Court of Appeals made,
the following observations (pp. 35-36, Rollo):

There are significant aspects of the case to which our attention is
invited. The loan was obtained by Eastern Book Service PTE, Ltd., a company
incorporated in Singapore. The loan was granted by the Singapore Branch of
Hongkong and Shanghai Banking Corporation. The Joint and Several
Guarantee was also concluded in Singapore. The loan was in Singaporean
dollars and the repayment thereof also in the same currency. The transaction,
to say the least, took place in Singporean setting in which the law of that
country is the measure by which that relationship of the parties will be
governed.
xxx xxx xxx
Contrary to the position taken by respondents, the guarantee
agreement compliance that any litigation will be before the courts of Singapore
and that the rights and obligations of the parties shall be construed and
determined in accordance with the laws of the Republic of Singapore. A closer
examination of paragraph 14 of the Guarantee Agreement upon which the
motion to dismiss is based, employs in clear and unmistakeable (sic) terms
the word 'shall' which under statutory construction is mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating to impose a duty which may
be enforced (Dizon vs. Encarnacion, 9 SCRA 714).lâwphî1.ñèt
There is nothing more imperative and restrictive than what the
agreement categorically commands that 'all rights, obligations, and liabilities
arising hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore.'
While it is true that "the transaction took place in Singaporean setting" and that the
Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due
process dictates that the stipulation that "[t]his guarantee and all rights, obligations and
liabilities arising hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally
construed. One basic principle underlies all rules of jurisdiction in International Law: a State
does not have jurisdiction in the absence of some reasonable basis for exercising it, whether
the proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction
must be based on some minimum contacts that will not offend traditional notions of fair play
and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-
out by petitioner BANK at the outset, the instant case presents a very odd situation. In the
ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with
more reason as a defendant. However, in this case, private respondents are Philippine
residents (a fact which was not disputed by them) who would rather face a complaint against
them before a foreign court and in the process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve the case. Private respondents'
stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the
payment of a just obligation.
The defense of private respondents that the complaint should have been filed in
Singapore is based merely on technicality. They did not even claim, much less prove, that the
filing of the action here will cause them any unnecessary trouble, damage, or expense. On the
2
CONFLICT OF LAWS CASES 1
other hand, there is no showing that petitioner BANK filed the action here just to harass private
respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969,
30 SCRA 187, it was ruled:
... An accurate reading, however, of the stipulation, 'The parties agree
to sue and be sued in the Courts of Manila,' does not preclude the filing of suits
in the residence of plaintiff or defendant. The plain meaning is that the parties
merely consented to be sued in Manila. Qualifying or restrictive words which
would indicate that Manila and Manila alone is the venue are totally absent
therefrom. We cannot read into that clause that plaintiff and defendant bound
themselves to file suits with respect to the last two transactions in question
only or exclusively in Manila. For, that agreement did not change or transfer
venue. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to
pursue remedy in the courts specifically mentioned in Section 2(b) of Rule
4. Renuntiatio non praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc.,
et al., G.R. No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case
of litigation, jurisdiction shall be vested in the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the venue,
suffice it to say that a stipulation as to venue does not preclude the filing of
suits in the residence of plaintiff or defendant under Section 2 (b), Rule 4,
Rules of Court, in the absence of qualifying or restrictive words in the
agreement which would indicate that the place named is the only venue agreed
upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only
the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause
in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction
is often defined as the light of a State to exercise authority over persons and things within its
boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over
travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign
military units stationed in or marching through State territory with the permission of the latter's
authorities. This authority, which finds its source in the concept of sovereignty, is exclusive
within and throughout the domain of the State. A State is competent to take hold of any judicial
matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases
brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).lâwphî1.ñèt
As regards the issue on improper venue, petitioner BANK avers that the objection to
improper venue has been waived. However, We agree with the ruling of the respondent Court
that:
While in the main, the motion to dismiss fails to categorically use with
exactitude the words 'improper venue' it can be perceived from the general
thrust and context of the motion that what is meant is improper venue, The use
of the word 'jurisdiction' was merely an attempt to copy-cat the same word
employed in the guarantee agreement but conveys the concept of venue.
Brushing aside all technicalities, it would appear that jurisdiction was used

loosely as to be synonymous with venue. It is in this spirit that this Court must
view the motion to dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that venue here was
properly laid for the same reasons discussed above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):
... In a conflict problem, a court will simply refuse to entertain the case
if it is not authorized by law to exercise jurisdiction. And even if it is so
authorized, it may still refuse to entertain the case by applying the principle
of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on the basis of the
principle of forum non conveniensdepends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court (J. Salonga, Private International Law, 1981,
p. 49).lâwphî1.ñèt Thus, the respondent Court should not have relied on such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract
of adhesion and that consequently, it cannot be permitted to take a stand contrary to the
stipulations of the contract, substantial bases exist for petitioner Bank's choice of forum, as
discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its
Philippine branch is involved in the transaction sued upon. This is a vain attempt on their part
to further thwart the proceedings below inasmuch as well-known is the rule that a defendant
cannot plead any defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the
decision of the Regional Trial Court is REINSTATED, with costs against private respondents.
This decision is immediately executory.
SO ORDERED.
RAYTHEON INTERNATIONAL, INC., petitioner, vs. STOCKTON W. ROUZIE,
JR., respondent.
G.R. No. 162894 February 26, 2008
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 Decision 1 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
3
CONFLICT OF LAWS CASES 1
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 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 Judgment 12 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 Decision 21 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 Resolution 25 dated 20 November 2006,
the Court resolved to dispense with the filing of a comment.
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 instances 27 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
4
CONFLICT OF LAWS CASES 1
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.
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.
KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO.,
LTD., Petitioners, vs. MINORU KITAMURA, Respondent.
G.R. No. 149177 November 23, 2007
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the April 18, 2001 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
60827, and the July 25, 2001 Resolution2 denying the motion for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a
Japanese consultancy firm providing technical and management support in the infrastructure
projects of foreign governments,3 entered into an Independent Contractor Agreement (ICA)
with respondent Minoru Kitamura, a Japanese national permanently residing in the
Philippines.4 The agreement provides that respondent was to extend professional services to
Nippon for a year starting on April 1, 1999. 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
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for
its International Division, informed respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's expiry. 9
Threatened with impending unemployment, respondent, through his lawyer, requested
a negotiation conference and demanded that he be assigned to the BBRI project. Nippon
insisted that respondent’s contract was for a fixed term that had already expired, and refused
to negotiate for the renewal of the ICA.10
As he was not able to generate a positive response from the petitioners, respondent
consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and
damages with the Regional Trial Court of Lipa City. 11
For their part, petitioners, contending that the ICA had been perfected in Japan and
executed by and between Japanese nationals, moved to dismiss the complaint for lack of
jurisdiction. They asserted that the claim for improper pre-termination of respondent's ICA could
only be heard and ventilated in the proper courts of Japan following the principles of lex loci
celebrationis and lex contractus.12
5
CONFLICT OF LAWS CASES 1
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. Frank14 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 grounds—
for lack of statement of material dates and for insufficient verification and certification against
forum shopping.19 An Entry of Judgment was later issued by the 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 Decision22finding no grave abuse of discretion in the trial court's denial of the
motion to dismiss. The CA ruled, among others, that the principle of lex loci celebrationis was
not applicable to the case, because nowhere in the pleadings was the validity of the written
agreement put in issue. The CA thus declared that the trial court was correct in applying instead
the principle of lex loci solutionis.23
Petitioners' motion for reconsideration was subsequently denied by the CA in the
assailed July 25, 2001 Resolution.24
Remaining steadfast in their stance despite the series of denials, petitioners instituted
the instant Petition for Review on Certiorari25 imputing the following errors to the appellate
court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT THE TRIAL COURT VALIDLY EXERCISED JURISDICTION OVER THE
INSTANT CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT
MATTER OF THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND
BETWEEN TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE
LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE
OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT DEVELOPMENT[S] IN
PRIVATE INTERNATIONAL LAWS.26
The pivotal question that this Court is called upon to resolve is whether the subject
matter jurisdiction of Philippine courts in civil cases for specific performance and damages
involving contracts executed outside the country by foreign nationals may be assailed on the
principles of lex loci celebrationis, lex contractus, the "state of the most significant relationship
rule," or forum non conveniens.
However, before ruling on this issue, we must first dispose of the procedural matters
raised by the respondent.
Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No.
60205 has already barred the filing of the second petition docketed as CA-G.R. SP No. 60827

(fundamentally raising the same issues as those in the first one) and the instant petition for
review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the
petition's defective certification of non-forum shopping, it was a dismissal without
prejudice.27 The same holds true in the CA's dismissal of the said case due to defects in the
formal requirement of 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 certification—as they, in fact did—and stating therein the material dates, within
the prescribed period30 in Section 4, Rule 65 of the said Rules.31
The dismissal of a case without prejudice signifies the absence of a decision on the
merits and leaves the parties free to litigate the matter in a subsequent action as though the
dismissed action had not been commenced. In other words, the termination of a case not on
the merits does not bar another action involving the same parties, on the same subject matter
and theory.32
Necessarily, because the said dismissal is without prejudice and has no res
judicata effect, and even if petitioners still indicated in the verification and certification of the
second certiorari petition that the first had already been dismissed on procedural
grounds,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 scope—its wordings indicate that Hasegawa is given the authority to sign
for and act on behalf of the company only in the petition filed with the 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
Reply38 an updated Authorization39 for Hasegawa to act on behalf of the company in the instant
petition, the Court finds the same as sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the
verification and certification. As respondent pointed out, and to which we agree, Hasegawa is
truly not authorized to act on behalf of Nippon in this case. The aforesaid September 4, 2000
Authorization and even the subsequent August 17, 2001 Authorization were issued only by
Nippon's president and chief executive officer, not by the company's board of directors. In not
a few cases, we have ruled that corporate powers are exercised by the board of directors; thus,
no person, not even its officers, can bind the corporation, in the absence of authority from the
board.40 Considering that Hasegawa verified and certified the petition only on his behalf and
not on behalf of the other petitioner, the petition has to be denied pursuant to Loquias v. Office
6
CONFLICT OF LAWS CASES 1
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 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 issue—jurisdiction.1âwphi1 Jurisdiction, however,
has various aspects. For a court to validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent,
over the subject matter, over the issues of the case and, in cases involving property, over
the res or the thing which is the subject of the litigation.57 In 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 contract66 and it may pertain to the law
voluntarily agreed upon by the parties or the law intended by them either expressly or
implicitly.67 Under the "state of the most significant relationship rule," to ascertain what state
law to apply to a dispute, the court should determine which state has the most substantial
connection to the occurrence and the parties. In a case involving a contract, the court should
consider where the contract was made, was negotiated, was to be performed, and the domicile,
place of business, or place of incorporation of the parties.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 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
7
CONFLICT OF LAWS CASES 1
jurisdiction over the case; (2) assume jurisdiction over the case and apply the internal law of
the forum; or (3) assume jurisdiction over the case and take into account or apply the law of
some other State or States.74 The court’s power to hear cases and controversies is derived
from the Constitution and the laws. While it may choose to recognize laws of foreign nations,
the court is not limited by foreign sovereign law short of treaties or other formal agreements,
even in matters regarding rights provided by foreign sovereigns.75
Neither can the other ground raised, forum non conveniens,76 be used to deprive the
trial court of its jurisdiction herein. First, it is not a proper basis for a motion to dismiss because
Section 1, Rule 16 of the Rules of Court does not include it as a ground. 77 Second, whether a
suit should be entertained or dismissed on the basis of the said doctrine depends largely upon
the facts of the particular case and is addressed to the sound discretion of the trial court.78 In
this case, the RTC decided to assume jurisdiction. Third, the propriety of dismissing a case
based on this principle requires a factual determination; hence, this conflicts principle is more
properly considered a matter of defense. 79
Accordingly, since the RTC is vested by law with the power to entertain and hear the
civil case filed by respondent and the grounds raised by petitioners to assail that jurisdiction
are inappropriate, the trial and appellate courts correctly denied the petitioners’ motion to
dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
SO ORDERED.
NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner, vs. LEPANTO
CONSOLIDATED MINING COMPANY, Respondent.
G.R. No. 175799 November 28, 2011
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Decision 1 of the Court of
Appeals dated September 8, 2006 in CA-G.R. SP No. 94382 and its Resolution 2 dated
December 12, 2006, denying the Motion for Reconsideration.
On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the
Regional Trial Court (RTC) of Makati City a Complaint3 against petitioner NM Rothschild &
Sons (Australia) Limited praying for a judgment declaring the loan and hedging contracts
between the parties void for being contrary to Article 2018 4 of the Civil Code of the Philippines
and for damages. The Complaint was docketed as Civil Case No. 05-782, and was raffled to
Branch 150. Upon respondent’s (plaintiff’s) motion, the trial court authorized respondent’s
counsel to personally bring the summons and Complaint to the Philippine Consulate General
in Sydney, Australia for the latter office to effect service of summons on petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With Motion to
Dismiss5 praying for the dismissal of the Complaint on the following grounds: (a) the court has
not acquired jurisdiction over the person of petitioner due to the defective and improper service
of summons; (b) the Complaint failed to state a cause of action and respondent does not have
any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come to
court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the
deposition of Mr. Paul Murray (Director, Risk Management of petitioner) before the Philippine
Consul General; and (2) a Motion for Leave to Serve Interrogatories on respondent.

On December 9, 2005, the trial court issued an Order 6 denying the Motion to Dismiss.
According to the trial court, there was a proper service of summons through the Department of
Foreign Affairs (DFA) on account of the fact that the defendant has neither applied for a license
to do business in the Philippines, nor filed with the Securities and Exchange Commission (SEC)
a Written Power of Attorney designating some person on whom summons and other legal
processes maybe served. The trial court also held that the Complaint sufficiently stated a cause
of action. The other allegations in the Motion to Dismiss were brushed aside as matters of
defense which can best be ventilated during the trial.
On December 27, 2005, petitioner filed a Motion for Reconsideration. 7 On March 6,
2006, the trial court issued an Order denying the December 27, 2005 Motion for
Reconsideration and disallowed the twin Motions for Leave to take deposition and serve written
interrogatories.8
On April 3, 2006, petitioner sought redress via a Petition for Certiorari 9 with the Court
of Appeals, alleging that the trial court committed grave abuse of discretion in denying its
Motion to Dismiss. The Petition was docketed as CA-G.R. SP No. 94382.
On September 8, 2006, the Court of Appeals rendered the assailed Decision
dismissing the Petition for Certiorari. The Court of Appeals ruled that since the denial of a
Motion to Dismiss is an interlocutory order, it cannot be the subject of a Petition for Certiorari,
and may only be reviewed in the ordinary course of law by an appeal from the judgment after
trial. On December 12, 2006, the Court of Appeals rendered the assailed Resolution denying
the petitioner’s Motion for Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent
to answer some of the questions in petitioner’s Interrogatories to Plaintiff dated September 7,
2006.
Notwithstanding the foregoing, petitioner filed the present petition assailing the
September 8, 2006 Decision and the December 12, 2006 Resolution of the Court of Appeals.
Arguing against the ruling of the appellate court, petitioner insists that (a) an order denying a
motion to dismiss may be the proper subject of a petition for certiorari; and (b) the trial court
committed grave abuse of discretion in not finding that it had not validly acquired jurisdiction
over petitioner and that the plaintiff had no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be
dismissed for not being filed by a real party in interest and for lack of a proper verification and
certificate of non-forum shopping; (b) the Court of Appeals correctly ruled that certiorari was
not the proper remedy; and (c) the trial court correctly denied petitioner’s motion to dismiss.
Our discussion of the issues raised by the parties follows:
Whether petitioner is a real party in interest
Respondent argues that the present Petition should be dismissed on the ground that
petitioner no longer existed as a corporation at the time said Petition was filed on February 1,
2007. Respondent points out that as of the date of the filing of the Petition, there is no such
corporation that goes by the name NM Rothschild and Sons (Australia) Limited. Thus,
according to respondent, the present Petition was not filed by a real party in interest, citing our
ruling in Philips Export B.V. v. Court of Appeals,10 wherein we held:
A name is peculiarly important as necessary to the very existence of a corporation
(American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs.
Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co., 40 W Va
530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to
8
CONFLICT OF LAWS CASES 1
its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each
corporation must have a name by which it is to sue and be sued and do all legal acts. The
name of a corporation in this respect designates the corporation in the same manner as the
name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356,
26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its
corporate name is as much a part of the corporate franchise as any other privilege granted
(Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino
vs. Portuguese Beneficial Association, 18 RI 165, 26 A 36). 11
In its Memorandum12 before this Court, petitioner started to refer to itself as Investec
Australia Limited (formerly "NM Rothschild & Sons [Australia] Limited") and captioned said
Memorandum accordingly. Petitioner claims that NM Rothschild and Sons (Australia) Limited
still exists as a corporation under the laws of Australia under said new name. It presented
before us documents evidencing the process in the Australian Securities & Investment
Commission on the change of petitioner’s company name from NM Rothschild and Sons
(Australia) Limited to Investec Australia Limited.13
We find the submissions of petitioner on the change of its corporate name satisfactory
and resolve not to dismiss the present Petition for Review on the ground of not being
prosecuted under the name of the real party in interest. While we stand by our pronouncement
in Philips Export on the importance of the corporate name to the very existence of corporations
and the significance thereof in the corporation’s right to sue, we shall not go so far as to dismiss
a case filed by the proper party using its former name when adequate identification is
presented. A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. 14 There is no doubt in our
minds that the party who filed the present Petition, having presented sufficient evidence of its
identity and being represented by the same counsel as that of the defendant in the case sought
to be dismissed, is the entity that will be benefited if this Court grants the dismissal prayed for.
Since the main objection of respondent to the verification and certification against
forum shopping likewise depends on the supposed inexistence of the corporation named
therein, we give no credit to said objection in light of the foregoing discussion.
Propriety of the Resort to a Petition for Certiorari with the Court of Appeals
We have held time and again that an order denying a Motion to Dismiss is an
interlocutory order which neither terminates nor finally disposes of a case as it leaves
something to be done by the court before the case is finally decided on the merits. The general
rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in a special civil
action for Certiorari which is a remedy designed to correct errors of jurisdiction and not errors
of judgment.15 However, we have likewise held that when the denial of the Motion to Dismiss
is tainted with grave abuse of discretion, the grant of the extraordinary remedy of Certiorari
may be justified. By "grave abuse of discretion" is meant:
[S]uch capricious and whimsical exercise of judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act all in contemplation of law. 16
The resolution of the present Petition therefore entails an inquiry into whether the Court
of Appeals correctly ruled that the trial court did not commit grave abuse of discretion in its

denial of petitioner’s Motion to Dismiss. A mere error in judgment on the part of the trial court
would undeniably be inadequate for us to reverse the disposition by the Court of Appeals.
Issues more properly ventilated during the trial of the case
As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the
following grounds: (a) lack of jurisdiction over the person of petitioner due to the defective and
improper service of summons; (b) failure of the Complaint to state a cause of action and
absence of a cause of action; (c) the action is barred by estoppel; and (d) respondent did not
come to court with clean hands.
As correctly ruled by both the trial court and the Court of Appeals, the alleged absence
of a cause of action (as opposed to the failure to state a cause of action), the alleged estoppel
on the part of petitioner, and the argument that respondent is in pari delicto in the execution of
the challenged contracts, are not grounds in a Motion to Dismiss as enumerated in Section 1,
Rule 1617 of the Rules of Court. Rather, such defenses raise evidentiary issues closely related
to the validity and/or existence of respondent’s alleged cause of action and should therefore
be threshed out during the trial.
As regards the allegation of failure to state a cause of action, while the same is usually
available as a ground in a Motion to Dismiss, said ground cannot be ruled upon in the present
Petition without going into the very merits of the main case.
It is basic that "[a] cause of action is the act or omission by which a party violates a
right of another."18 Its elements are the following: (1) a right existing in favor of the plaintiff, (2)
a duty on the part of the defendant to respect the plaintiff's right, and (3) an act or omission of
the defendant in violation of such right. 19 We have held that to sustain a Motion to Dismiss for
lack of cause of action, the complaint must show that the claim for relief does not exist and not
only that the claim was defectively stated or is ambiguous, indefinite or uncertain. 20
The trial court held that the Complaint in the case at bar contains all the three elements
of a cause of action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration of
nullity of the Hedging Contracts for being null and void and contrary to Article 2018 of the Civil
Code of the Philippines; (2) defendant has the corresponding obligation not to enforce the
Hedging Contracts because they are in the nature of wagering or gambling agreements and
therefore the transactions implementing those contracts are null and void under Philippine
laws; and (3) defendant ignored the advice and intends to enforce the Hedging Contracts by
demanding financial payments due therefrom. 21
The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of
the material allegations of the ultimate facts contained in the plaintiff's complaint. 22 However,
this principle of hypothetical admission admits of exceptions. Thus, in Tan v. Court of
Appeals, 23 we held:
The flaw in this conclusion is that, while conveniently echoing the general rule that
averments in the complaint are deemed hypothetically admitted upon the filing of a motion to
dismiss grounded on the failure to state a cause of action, it did not take into account the equally
established limitations to such rule, i.e., that a motion to dismiss does not admit the truth of
mere epithets of fraud; nor allegations of legal conclusions; nor an erroneous statement of
law; nor mere inferences or conclusions from facts not stated; nor mere conclusions of law;
nor allegations of fact the falsity of which is subject to judicial notice; nor matters of evidence;
nor surplusage and irrelevant matter; nor scandalous matter inserted merely to insult the
opposing party; nor to legally impossible facts; nor to facts which appear unfounded by a record
incorporated in the pleading, or by a document referred to; and, nor to general averments
9
CONFLICT OF LAWS CASES 1
contradicted by more specific averments. A more judicious resolution of a motion to dismiss,
therefore, necessitates that the court be not restricted to the consideration of the facts alleged
in the complaint and inferences fairly deducible therefrom. Courts may consider other facts
within the range of judicial notice as well as relevant laws and jurisprudence which the courts
are bound to take into account, and they are also fairly entitled to examine
records/documents duly incorporated into the complaint by the pleader himself in ruling
on the demurrer to the complaint.24 (Emphases supplied.)
In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are
void for being contrary to Article 2018 25 of the Civil Code. Respondent claims that under the
Hedging Contracts, despite the express stipulation for deliveries of gold, the intention of the
parties was allegedly merely to compel each other to pay the difference between the value of
the gold at the forward price stated in the contract and its market price at the supposed time of
delivery.
Whether such an agreement is void is a mere allegation of a conclusion of law, which
therefore cannot be hypothetically admitted. Quite properly, the relevant portions of the
contracts sought to be nullified, as well as a copy of the contract itself, are incorporated in the
Complaint. The determination of whether or not the Complaint stated a cause of action would
therefore involve an inquiry into whether or not the assailed contracts are void under Philippine
laws. This is, precisely, the very issue to be determined in Civil Case No. 05-782. Indeed,
petitioner’s defense against the charge of nullity of the Hedging Contracts is the purported
intent of the parties that actual deliveries of gold be made pursuant thereto. Such a defense
requires the presentation of evidence on the merits of the case. An issue that "requires the
contravention of the allegations of the complaint, as well as the full ventilation, in effect, of the
main merits of the case, should not be within the province of a mere Motion to Dismiss." 26 The
trial court, therefore, correctly denied the Motion to Dismiss on this ground.
It is also settled in jurisprudence that allegations of estoppel and bad faith require proof.
Thus, in Parañaque Kings Enterprises, Inc. v. Court of Appeals, 27 we ruled:
Having come to the conclusion that the complaint states a valid cause of action for
breach of the right of first refusal and that the trial court should thus not have dismissed the
complaint, we find no more need to pass upon the question of whether the complaint states a
cause of action for damages or whether the complaint is barred by estoppel or laches. As
these matters require presentation and/or determination of facts, they can be best
resolved after trial on the merits.28 (Emphases supplied.)
On the proposition in the Motion to Dismiss that respondent has come to court with
unclean hands, suffice it to state that the determination of whether one acted in bad faith and
whether damages may be awarded is evidentiary in nature. Thus, we have previously held that
"[a]s a matter of defense, it can be best passed upon after a full-blown trial on the merits."29
Jurisdiction over the person of petitioner
Petitioner alleges that the RTC has not acquired jurisdiction over its person on account
of the improper service of summons. Summons was served on petitioner through the DFA, with
respondent’s counsel personally bringing the summons and Complaint to the Philippine
Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into a lengthy
debate as to whether or not petitioner is doing business in the Philippines. However, such
discussion is completely irrelevant in the case at bar, for two reasons. Firstly, since the

Complaint was filed on August 30, 2005, the provisions of the 1997 Rules of Civil Procedure
govern the service of summons. Section 12, Rule 14 of said rules provides:
Sec. 12. Service upon foreign private juridical entity. – When the defendant is a foreign
private juridical entity which has transacted business in the Philippines, service may be
made on its resident agent designated in accordance with law for that purpose, or, if there be
no such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines. (Emphasis supplied.)
This is a significant amendment of the former Section 14 of said rule which previously
provided:
Sec. 14. Service upon private foreign corporations. — If the defendant is a foreign
corporation, or a nonresident joint stock company or association, doing business in the
Philippines, service may be made on its resident agent designated in accordance with law for
that purpose, or if there be no such agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.)
The coverage of the present rule is thus broader.30 Secondly, the service of summons
to petitioner through the DFA by the conveyance of the summons to the Philippine Consulate
General in Sydney, Australia was clearly made not through the above-quoted Section 12, but
pursuant to Section 15 of the same rule which provides:
Sec. 15. Extraterritorial service. – When the defendant does not reside and is not found
in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the
subject of which is property within the Philippines, in which the defendant has or claims a lien
or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court, be effected out of the Philippines
by personal service as under section 6; or by publication in a newspaper of general circulation
in such places and for such time as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last known address of the
defendant, or in any other manner the court may deem sufficient. Any order granting such leave
shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within
which the defendant must answer.
Respondent argues31 that extraterritorial service of summons upon foreign private
juridical entities is not proscribed under the Rules of Court, and is in fact within the authority of
the trial court to adopt, in accordance with Section 6, Rule 135:
Sec. 6. Means to carry jurisdiction into effect. – When by law jurisdiction is conferred
on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry
it into effect may be employed by such court or officer; and if the procedure to be followed in
the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any
suitable process or mode of proceeding may be adopted which appears comformable to the
spirit of said law or rules.
Section 15, Rule 14, however, is the specific provision dealing precisely with the
service of summons on a defendant which does not reside and is not found in the Philippines,
while Rule 135 (which is in Part V of the Rules of Court entitled Legal Ethics) concerns the
general powers and duties of courts and judicial officers.
Breaking down Section 15, Rule 14, it is apparent that there are only four instances
wherein a defendant who is a non-resident and is not found in the country may be served with
summons by extraterritorial service, to wit: (1) when the action affects the personal status of
10
CONFLICT OF LAWS CASES 1
the plaintiffs; (2) when the action relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when
the relief demanded in such action consists, wholly or in part, in excluding the defendant from
any interest in property located in the Philippines; and (4) when the defendant non-resident's
property has been attached within the Philippines. In these instances, service of summons may
be effected by (a) personal service out of the country, with leave of court; (b) publication, also
with leave of court; or (c) any other manner the court may deem sufficient. 32
Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v.
Dakila Trading Corporation33 that:
Undoubtedly, extraterritorial service of summons applies only where the action
is in rem or quasi in rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already
have jurisdiction to hear and decide the case because, in actions in rem and quasi in rem,
jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the
court, provided that the court acquires jurisdiction over the res. Thus, in such instance,
extraterritorial service of summons can be made upon the defendant. The said extraterritorial
service of summons is not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so that the defendant will be
informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff, and he can thereby take steps to protect his interest if he is so minded. On
the other hand, when the defendant or respondent does not reside and is not found in
the Philippines, and the action involved is in personam, Philippine courts cannot try any
case against him because of the impossibility of acquiring jurisdiction over his person
unless he voluntarily appears in court.34 (Emphases supplied.)
In Domagas v. Jensen,35 we held that:
[T]he aim and object of an action determine its character. Whether a proceeding is in
rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose,
and by these only. A proceeding in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the jurisdiction of the person, although
it may involve his right to, or the exercise of ownership of, specific property, or seek to compel
him to control or dispose of it in accordance with the mandate of the court. The purpose of a
proceeding in personam is to impose, through the judgment of a court, some responsibility or
liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him. 36
It is likewise settled that "[a]n action in personam is lodged against a person based on
personal liability; an action in rem is directed against the thing itself instead of the person; while
an action quasi in rem names a person as defendant, but its object is to subject that person’s
interest in a property to a corresponding lien or obligation."37
The Complaint in the case at bar is an action to declare the loan and Hedging
Contracts between the parties void with a prayer for damages. It is a suit in which the
plaintiff seeks to be freed from its obligations to the defendant under a contract and to hold said
defendant pecuniarily liable to the plaintiff for entering into such contract. It is therefore an
action in personam, unless and until the plaintiff attaches a property within the Philippines
belonging to the defendant, in which case the action will be converted to one quasi in rem.

Since the action involved in the case at bar is in personam and since the defendant,
petitioner Rothschild/Investec, does not reside and is not found in the Philippines, the Philippine
courts cannot try any case against it because of the impossibility of acquiring jurisdiction over
its person unless it voluntarily appears in court. 38
In this regard, respondent vigorously argues that petitioner should be held to have
voluntarily appeared before the trial court when it prayed for, and was actually afforded, specific
reliefs from the trial court.39 Respondent points out that while petitioner’s Motion to Dismiss
was still pending, petitioner prayed for and was able to avail of modes of discovery against
respondent, such as written interrogatories, requests for admission, deposition, and motions
for production of documents.40
Petitioner counters that under this Court’s ruling in the leading case of La Naval Drug
Corporation v. Court of Appeals,41 a party may file a Motion to Dismiss on the ground of lack
of jurisdiction over its person, and at the same time raise affirmative defenses and pray for
affirmative relief, without waiving its objection to the acquisition of jurisdiction over its person. 42
It appears, however, that petitioner misunderstood our ruling in La Naval. A close
reading of La Naval reveals that the Court intended a distinction between the raising of
affirmative defenses in an Answer (which would not amount to acceptance of the jurisdiction
of the court) and the prayer for affirmative reliefs (which would be considered acquiescence to
the jurisdiction of the court):
In the same manner that a plaintiff may assert two or more causes of action in a
court suit, a defendant is likewise expressly allowed, under Section 2, Rule 8, of the
Rules of Court, to put up his own defenses alternatively or even hypothetically. Indeed,
under Section 2, Rule 9, of the Rules of Court, defenses and objections not pleaded either in
a motion to dismiss or in an answer, except for the failure to state a cause of action, are deemed
waived. We take this to mean that a defendant may, in fact, feel enjoined to set up, along with
his objection to the court's jurisdiction over his person, all other possible defenses. It thus
appears that it is not the invocation of any of such defenses, but the failure to so raise them,
that can result in waiver or estoppel. By defenses, of course, we refer to the grounds
provided for in Rule 16 of the Rules of Court that must be asserted in a motion to dismiss
or by way of affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and
Freuhauf Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled:
"This is not to say, however, that the petitioner's right to question the jurisdiction
of the court over its person is now to be deemed a foreclosed matter. If it is true, as
Signetics claims, that its only involvement in the Philippines was through a passive investment
in Sigfil, which it even later disposed of, and that TEAM Pacific is not its agent, then it cannot
really be said to be doing business in the Philippines. It is a defense, however, that requires
the contravention of the allegations of the complaint, as well as a full ventilation, in effect, of
the main merits of the case, which should not thus be within the province of a mere motion to
dismiss. So, also, the issue posed by the petitioner as to whether a foreign corporation which
has done business in the country, but which has ceased to do business at the time of the filing
of a complaint, can still be made to answer for a cause of action which accrued while it was
doing business, is another matter that would yet have to await the reception and admission of
evidence. Since these points have seasonably been raised by the petitioner, there should
be no real cause for what may understandably be its apprehension, i.e., that by its
participation during the trial on the merits, it may, absent an invocation of separate or
11
CONFLICT OF LAWS CASES 1
independent reliefs of its own, be considered to have voluntarily submitted itself to the
court's jurisdiction."43 (Emphases supplied.)
In order to conform to the ruling in La Naval, which was decided by this Court in 1994,
the former Section 23, Rule 1444 concerning voluntary appearance was amended to include a
second sentence in its equivalent provision in the 1997 Rules of Civil Procedure:
SEC. 20. Voluntary appearance. – The defendant's 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.)
The new second sentence, it can be observed, merely mentions other grounds in a
Motion to Dismiss aside from lack of jurisdiction over the person of the defendant. This clearly
refers to affirmative defenses, rather than affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this
Court, in several cases, ruled that seeking affirmative relief in a court is tantamount to voluntary
appearance therein.45 Thus, in Philippine Commercial International Bank v. Dy Hong
Pi,46 wherein defendants filed a "Motion for Inhibition without submitting themselves to the
jurisdiction of this Honorable Court" subsequent to their filing of a "Motion to Dismiss (for Lack
of Jurisdiction)," we held:
Besides, any lingering doubts on the issue of voluntary appearance dissipate when the
respondents' motion for inhibition is considered. This motion seeks a sole relief: inhibition of
Judge Napoleon Inoturan from further hearing the case. Evidently, by seeking affirmative
relief other than dismissal of the case, respondents manifested their voluntary
submission to the court's jurisdiction. It is well-settled that the active participation of a party
in the proceedings is tantamount to an invocation of the court's jurisdiction and a willingness to
abide by the resolution of the case, and will bar said party from later on impugning the court's
jurisdiction.47 (Emphasis supplied.)1âwphi1
In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs
from the trial court, is deemed to have voluntarily submitted to the jurisdiction of said court. A
party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent
and after obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction.48 Consequently, the trial court cannot be considered to have committed grave
abuse of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to
Dismiss on account of failure to acquire jurisdiction over the person of the defendant.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the
Court of Appeals dated September 8, 2006 and its Resolution dated December 12, 2006 in
CA-G.R. SP No. 94382 are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND
MARCELO G. SANTOS, respondents.
G.R. No. 120077 October 13, 2000
PARDO, J.:
The case before the Court is a petition for certiorari 1 to annul the following orders of
the National Labor Relations Commission (hereinafter referred to as "NLRC") for having been
issued without or with excess jurisdiction and with grave abuse of discretion: 2
(1) Order of May 31, 1993.3 Reversing and setting aside its earlier resolution
of August 28, 1992.4 The questioned order declared that the NLRC, not the Philippine
Overseas Employment Administration (hereinafter referred to as "POEA"), had
jurisdiction over private respondent's complaint;
(2) Decision of December 15, 1994.5 Directing petitioners to jointly and
severally pay private respondent twelve thousand and six hundred dollars (US$
12,600.00) representing salaries for the unexpired portion of his contract; three
thousand six hundred dollars (US$3,600.00) as extra four months salary for the two
(2) year period of his contract, three thousand six hundred dollars (US$3,600.00) as
"14th month pay" or a total of nineteen thousand and eight hundred dollars
(US$19,800.00) or its peso equivalent and attorney's fees amounting to ten percent
(10%) of the total award; and
(3) Order of March 30, 1995.6 Denying the motion for reconsideration of the
petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos")
was an overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of
Oman. Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People's
Republic of China and later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the
Manila Hotel International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled
corporation duly organized and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong
Kong.7 MHC is an "incorporator" of MHICL, owning 50% of its capital stock.8
By virtue of a "management agreement" 9 with the Palace Hotel (Wang Fu Company
Limited), MHICL10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman,
respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General
Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was
recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher
monthly salary and increased benefits. The position was slated to open on October 1, 1988. 11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance
of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign
employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the
12
CONFLICT OF LAWS CASES 1
contract was acceptable, to return the same to Mr. Henk in Manila, together with his passport
and two additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press,
effective June 30, 1988, under the pretext that he was needed at home to help with the family's
piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr.
Henk's letter. Respondent Santos enclosed four (4) signed copies of the employment contract
(dated June 4, 1988) and notified them that he was going to arrive in Manila during the first
week of July 1988.
The employment contract of June 4, 1988 stated that his employment would
commence September 1, 1988 for a period of two years. 12 It provided for a monthly salary of
nine hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year.13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing
Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at
the Palace Hotel.14
Subsequently, respondent Santos signed an amended "employment agreement" with
the Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the
Palace Hotel. The Vice President (Operations and Development) of petitioner MHICL Miguel
D. Cergueda signed the employment agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave.
He returned to China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a
handwritten note that respondent Santos be given one (1) month notice of his release from
employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by
Mr. Shmidt that his employment at the Palace Hotel print shop would be terminated due to
business reverses brought about by the political upheaval in China. 15 We quote the letter:16
"After the unfortunate happenings in China and especially Beijing (referring to
Tiannamen Square incidents), our business has been severely affected. To reduce
expenses, we will not open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured
this does in no way reflect your past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will contact you directly and
give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent
Santos and paid all benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr.
Shmidt, demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17
His service with the Palace Hotel, Beijing was not abruptly terminated but we
followed the one-month notice clause and Mr. Santos received all benefits due him.

"For your information the Print Shop at the Palace Hotel is still not operational
and with a low business outlook, retrenchment in various departments of the hotel is
going on which is a normal management practice to control costs.
"When going through the latest performance ratings, please also be advised
that his performance was below average and a Chinese National who is doing his job
now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed
up for work but still enjoyed free accommodation/laundry/meals up to the day of his
departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with
the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC).
He prayed for an award of nineteen thousand nine hundred and twenty three dollars
(US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as exemplary
damages and attorney's fees equivalent to 20% of the damages prayed for. The complaint
named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither
participated in the proceedings before the Labor Arbiter. 18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against
petitioners, thus:19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the
NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating: 20
"WHEREFORE, let the appealed Decision be, as it is hereby, declared null
and void for want of jurisdiction. Complainant is hereby enjoined to file his complaint
with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-
quoted resolution. He argued that the case was not cognizable by the POEA as he was not an
"overseas contract worker."21
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC
directed Labor Arbiter Emerson Tumanon to hear the case on the question of whether private
respondent was retrenched or dismissed.22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on
the testimonial and documentary evidence presented to and heard by him. 23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National
Capital Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de
Vera.24
13
CONFLICT OF LAWS CASES 1
On November 25, 1994, Labor Arbiter de Vera submitted his report.25 He found that
respondent Santos was illegally dismissed from employment and recommended that he be
paid actual damages equivalent to his salaries for the unexpired portion of his contract. 26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit: 27
"WHEREFORE, finding that the report and recommendations of Arbiter de
Vera are supported by substantial evidence, judgment is hereby rendered, directing
the respondents to jointly and severally pay complainant the following computed
contractual benefits: (1) US$12,600.00 as salaries for the unexpired portion of the
parties' contract; (2) US$3,600.00 as extra four (4) months salary for the two (2) years
period (sic) of the parties' contract; (3) US$3,600.00 as "14th month pay" for the
aforesaid two (2) years contract stipulated by the parties or a total of US$19,800.00 or
its peso equivalent, plus (4) attorney's fees of 10% of complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor
Arbiter de Vera's recommendation had no basis in law and in fact. 28
On March 30, 1995, the NLRC denied the motion for reconsideration.29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance
of a temporary restraining order and/or writ of preliminary injunction and a motion for the
annulment of the entry of judgment of the NLRC dated July 31, 1995. 31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court
required respondents to file their respective comments, without giving due course to the
petition.32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going
over the petition and its annexes, they can not defend and sustain the position taken by the
NLRC in its assailed decision and orders. The Solicitor General prayed that he be excused
from filing a comment on behalf of the NLRC33
On April 30,1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and
required the NLRC to file its own comment to the petition. 35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and
the case involves purely foreign elements. The only link that the Philippines has with the case
is that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be tried here.
The employment contract. — Respondent Santos was hired directly by the Palace
Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman, where
respondent Santos was then employed. He was hired without the intervention of the POEA or
any authorized recruitment agency of the government. 36
Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is one to
which the parties may conveniently resort to; (2) that the Philippine court is in a position to
make an intelligent decision as to the law and the facts; and (3) that the Philippine court has or

is likely to have power to enforce its decision. 37 The conditions are unavailing in the case at
bar.
Not Convenient. — We fail to see how the NLRC is a convenient forum given that all
the incidents of the case — from the time of recruitment, to employment to dismissal occurred
outside the Philippines. The inconvenience is compounded by the fact that the proper
defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither .are they
"doing business in the Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk
are non-residents of the Philippines.
No power to determine applicable law. — Neither can an intelligent decision be made
as to the law governing the employment contract as such was perfected in foreign soil. This
calls to fore the application of the principle of lex loci contractus (the law of the place where the
contract was made).38
The employment contract was not perfected in the Philippines. Respondent Santos
signified his acceptance by writing a letter while he was in the Republic of Oman. This letter
was sent to the Palace Hotel in the People's Republic of China.
No power to determine the facts. — Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing,
People's Republic of China. The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to justify
respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. — Even assuming that a
proper decision could be reached by the NLRC, such would not have any binding effect against
the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the laws
of China and was not even served with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers. Neither are we saying that we do not have power
over an employment contract executed in a foreign country. If Santos were an "overseas
contract worker", a Philippine forum, specifically the POEA, not the NLRC, would protect
him.39 He is not an "overseas contract worker" a fact which he admits with conviction. 40
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's
decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and
(2) that MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct
juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock.
However, this is not enough to pierce the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the
corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend a
crime. 41 It is done only when a corporation is a mere alter ego or business conduit of a person
or another corporation.
In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a
single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate
personalities."
14
CONFLICT OF LAWS CASES 1
The tests in determining whether the corporate veil may be pierced are: First, the
defendant must have control or complete domination of the other corporation's finances, policy
and business practices with regard to the transaction attacked. There must be proof that the
other corporation had no separate mind, will or existence with respect the act complained
of. Second, control must be used by the defendant to commit fraud or wrong. Third, the
aforesaid control or breach of duty must be the proximate cause of the injury or loss complained
of. The absence of any of the elements prevents the piercing of the corporate veil. 43
It is basic that a corporation has a personality separate and distinct from those
composing it as well as from that of any other legal entity to which it may be related. 44 Clear
and convincing evidence is needed to pierce the veil of corporate fiction.45 In this case, we find
no evidence to show that MHICL and MHC are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his
employment contract with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel
D. Cergueda signed the employment contract as a mere witness. He merely signed under the
word "noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a
party would.46 In Sichangco v. Board of Commissioners of Immigration,47 the Court recognized
that the term "noted" means that the person so noting has merely taken cognizance of the
existence of an act or declaration, without exercising a judicious deliberation or rendering a
decision on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing
part" of the document is that which, "in a deed or other formal instrument is that part which
comes after the recitals, or where there are no recitals, after the parties (emphasis ours)."48 As
opposed to a party to a contract, a witness is simply one who, "being present, personally sees
or perceives a thing; a beholder, a spectator, or eyewitness."49 One who "notes" something just
makes a "brief written statement"50 a memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship
between Santos and MHICL. In determining the existence of an employer-employee
relationship, the following elements are considered: 51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It
did not select respondent Santos as an employee for the Palace Hotel. He was referred to the
Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos to work.
The terms of employment were negotiated and finalized through correspondence between
respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and representatives of the
Palace Hotel and not MHICL. Neither did respondent Santos adduce any proof that MHICL had
the power to control his conduct. Finally, it was the Palace Hotel, through Mr. Schmidt
and not MHICL that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There
is no proof that MHICL "supplied" respondent Santos or even referred him for employment to
the Palace Hotel.

Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and
the same entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not
enough to pierce the corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no
employer-employee relationship existed between MHICL, MHC and respondent Santos, Labor
Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR
Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following: 53
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can be resolved by
reference to the Labor Code, or other labor statutes, or their collective bargaining
agreements.54
"To determine which body has jurisdiction over the present controversy, we rely on the
sound judicial principle that jurisdiction over the subject matter is conferred by law and is
determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to
all or some of the claims asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the
complaint. His failure to dismiss the case amounts to grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the
orders and resolutions of the National Labor Relations Commission dated May 31, 1993,
December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case
No. 00-02-01058-90).
No costs.
SO ORDERED.
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and
ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE COURT OF APPEALS, 1488,
INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H.
15
CONFLICT OF LAWS CASES 1
CRAIG, respondents.
G.R. No. 103493 June 19, 1997
MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign judgment upon
the rights of the parties under the same cause of action asserted in a case in our local court.
Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view
of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground
of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals
affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans
from petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec
Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured
by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to facilitate
the payment of the loans, private respondent 1488, Inc., through its president, private
respondent Drago Daic, assumed Ducat's obligation under an Agreement, dated January 27,
1983, whereby 1488, Inc. executed a Warranty Deed with Vendor's Lien by which it sold to
petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County,
Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA
in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor
of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc.,
PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the
shares of stock in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire
amount covered by the note became due and demandable. Accordingly, on October 17, 1985,
private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United
States for payment of the balance of US$307,209.02 and for damages for breach of contract
and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the
shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United
States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-
57746, the venue of the action was later transferred to the United States District Court for the
Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its
allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading
private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly
appraised the property, was later dropped as counterdefendant. ATHONA sought the recovery
of damages and excess payment allegedly made to 1488, Inc. and, in the alternative, the
rescission of sale of the property. For their part, PHILSEC and AYALA filed a motion to dismiss
on the ground of lack of jurisdiction over their person, but, as their motion was denied, they
later filed a joint answer with counterclaim against private respondents and Edgardo V.
Guevarra, PHILSEC's own former president, for the rescission of the sale on the ground that
the property had been overvalued. On March 13, 1990, the United States District Court for the
Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the
ground that it was "frivolous and [was] brought against him simply to humiliate and embarrass

him." For this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and
AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
petitioners filed a complaint "For Sum of Money with Damages and Writ of Preliminary
Attachment" against private respondents in the Regional Trial Court of Makati, where it was
docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their
respective counterclaims in Civil Action No. H-86-440 of the United States District Court of
Southern Texas that private respondents committed fraud by selling the property at a price 400
percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of
private respondents' fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were
induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed
that private respondents be ordered to return to ATHONA the excess payment of
US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of
preliminary attachment against the real and personal properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of
(1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S.,
(2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause
of action. Ducat contended that the alleged overpricing of the property prejudiced only
petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale
and whose only participation was to extend financial accommodation to ATHONA under a
separate loan agreement. On the other hand, private respondents 1488, Inc. and its president
Daic filed a joint "Special Appearance and Qualified Motion to Dismiss," contending that the
action being in personam, extraterritorial service of summons by publication was ineffectual
and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the
evidentiary requirements of the controversy may be more suitably tried before the forum of
the litis pendentia in the U.S., under the principle in private international law of forum non
conveniens," even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss.
On March 9, 1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic
on the ground of litis pendentia considering that
the "main factual element" of the cause of action in this case which is
the validity of the sale of real property in the United States between defendant
1488 and plaintiff ATHONA is the subject matter of the pending case in the
United States District Court which, under the doctrine of forum non
conveniens, is the better (if not exclusive) forum to litigate matters needed to
determine the assessment and/or fluctuations of the fair market value of real
estate situated in Houston, Texas, U.S.A. from the date of the transaction in
1983 up to the present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic
because they were non-residents and the action was not an action in rem or quasi in
rem, so that extraterritorial service of summons was ineffective. The trial court
subsequently lifted the writ of attachment it had earlier issued against the shares of
stocks of 1488, Inc. and Daic.
16
CONFLICT OF LAWS CASES 1
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in
applying the principle of litis pendentia and forum non conveniens and in ruling that it had no
jurisdiction over the defendants, despite the previous attachment of shares of stocks belonging
to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No.
16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while
the defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL's
former name) and the Athona Holdings, NV. The case at bar involves the same
parties. The transaction sued upon by the parties, in both cases is the
Warranty Deed executed by and between Athona Holdings and 1488 Inc. In
the U.S. case, breach of contract and the promissory note are sued upon by
1488 Inc., which likewise alleges fraud employed by herein appellants, on the
marketability of Ducat's securities given in exchange for the Texas property.
The recovery of a sum of money and damages, for fraud purportedly
committed by appellees, in overpricing the Texas land, constitute the action
before the Philippine court, which likewise stems from the same Warranty
Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in
personam for the recovery of a sum of money for alleged tortious acts, so that service
of summons by publication did not vest the trial court with jurisdiction over 1488, Inc.
and Drago Daic. The dismissal of Civil Case No. 16563 on the ground offorum non
conveniens was likewise affirmed by the Court of Appeals on the ground that the case
can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main
transaction, and involve foreign elements, to wit: 1) the property subject matter
of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident
foreign corporation; 3) although the buyer, Athona Holdings, a foreign
corporation which does not claim to be doing business in the Philippines, is
wholly owned by Philsec, a domestic corporation, Athona Holdings is also
owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was
executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION
BETWEEN THE SAME PARTIES FOR THE SAME CAUSE (LITIS
PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING
THE TRIAL COURT'S DISMISSAL OF THE CIVIL ACTION IS NOT
APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED
UPON BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY
THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT
APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE
COURT OF APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE
PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE
RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL

JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO
PROTECT AND VINDICATE PETITIONERS' RIGHTS FOR TORTIOUS OR
WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE
MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case
was pending in the Court of Appeals, the United States District Court for the Southern District
of Texas rendered judgment 5 in the case before it. The judgment, which was in favor of private
respondents, was affirmed on appeal by the Circuit Court of Appeals. 6Thus, the principal issue
to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of the
U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata,
a judgment admitting the foreign decision is not necessary. On the other hand, petitioners argue
that the foreign judgment cannot be given the effect of res judicata without giving them an
opportunity to impeach it on grounds stated in Rule 39, §50 of the Rules of Court, to wit: "want
of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact."
Petitioners' contention is meritorious. While this Court has given the effect of res
judicata to foreign judgments in several cases, 7 it was after the parties opposed to the
judgment had been given ample opportunity to repel them on grounds allowed under the
law. 8 It is not necessary for this purpose to initiate a separate action or proceeding for
enforcement of the foreign judgment. What is essential is that there is opportunity to challenge
the foreign judgment, in order for the court to properly determine its efficacy. This is because
in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a
foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary. 9 Rule 39,
§50 provides:
Sec. 50. Effect of foreign judgments. — The effect of a judgment of a
tribunal of a foreign country, having jurisdiction to pronounce the judgment is
as follows:
(a) In case of a judgment upon a specific thing, the judgment is
conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their successors
in interest by a subsequent title; but the judgment 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.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society
of Canton, Ltd., 10 which private respondents invoke for claiming conclusive effect for the
foreign judgment in their favor, the foreign judgment was considered res judicata because this
Court found "from the evidence as well as from appellant's own pleadings" 11 that the foreign
court did not make a "clear mistake of law or fact" or that its judgment was void for want of
jurisdiction or because of fraud or collusion by the defendants. Trial had been previously held
in the lower court and only afterward was a decision rendered, declaring the judgment of the
Supreme Court of the State of Washington to have the effect of res judicata in the case before
the lower court. In the same vein, in Philippines International Shipping Corp. v. Court of
17
CONFLICT OF LAWS CASES 1
Appeals, 12 this Court held that the foreign judgment was valid and enforceable in the
Philippines there being no showing that it was vitiated by want of notice to the party, collusion,
fraud or clear mistake of law or fact. The prima facie presumption under the Rule had not been
rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to
challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive of
the rights of private respondents. The proceedings in the trial court were summary. Neither the
trial court nor the appellate court was even furnished copies of the pleadings in the U.S. court
or apprised of the evidence presented thereat, to assure a proper determination of whether the
issues then being litigated in the U.S. court were exactly the issues raised in this case such
that the judgment that might be rendered would constitute res judicata. As the trial court stated
in its disputed order dated March 9, 1988.
On the plaintiff's claim in its Opposition that the causes of action of this
case and the pending case in the United States are not identical, precisely the
Order of January 26, 1988 never found that the causes of action of this case
and the case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners'
action is barred by the principle of res judicata. Petitioners in fact questioned the
jurisdiction of the U.S. court over their persons, but their claim was brushed aside by
both the trial court and the Court of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition
for the enforcement of judgment in the Regional Trial Court of Makati, where it was docketed
as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were
suspended because of the pendency of this case. To sustain the appellate court's ruling that
the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would
effectively preclude petitioners from repelling the judgment in the case for enforcement. An
absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff against
whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by
the defendant if the foreign judgment is sought to be enforced against him in a separate
proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the
jurisdiction where affirmative relief is being sought. Hence, in the interest of
justice, the complaint should be considered as a petition for the recognition of
the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in
order that the defendant, private respondent herein, may present evidence of
lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if
applicable. 14
Accordingly, to insure the orderly administration of justice, this case and Civil Case No.
92-1070 should be consolidated. 15 After all, the two have been filed in the Regional Trial Court
of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V.
Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong.
In such proceedings, petitioners should have the burden of impeaching the foreign judgment
and only in the event they succeed in doing so may they proceed with their action against
private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case justifiable under
the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under
 CONFLICT OF LAWS CASES 1

Rule 16, §1, which does not include forum non conveniens. 16 The propriety of dismissing a
case based on this principle requires a factual determination, hence, it is more properly
considered a matter of defense. Second, 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. 17
In this case, the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to dismiss. It failed to
consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the
defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter's debt
which was the object of the transaction under litigation. The trial court arbitrarily dismissed the
case even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in
personam and summons were served by extraterritorial service. Rule 14, §17 on extraterritorial
service provides that service of summons on a non-resident defendant may be effected out of
the Philippines by leave of Court where, among others, "the property of the defendant has been
attached within the Philippines." 18 It is not disputed that the properties, real and personal, of
the private respondents had been attached prior to service of summons under the Order of the
trial court dated April 20, 1987. 19
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994,
to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce
so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that
the judgment sought to be enforced is severable from the main judgment under consideration
in Civil Case No. 16563. The separability of Guevara's claim is not only admitted by
petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded Guevarra
as defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted and Civil Case No.
92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No.
16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case
No. 92-1070 and for further proceedings in accordance with this decision. The temporary
restraining order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.

18

PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS,
and PHILIP J. KLEPZIG, petitioners, vs. ANTONIO D. TODARO, respondent.
G.R. No. 154830 June 8, 2007
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside
the Decision1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155
and its Resolution2 of August 21, 2002 denying petitioners’ Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the
Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money and Damages with
Preliminary Attachment against Pioneer International Limited (PIL), Pioneer Concrete
Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald
(McDonald) and Philip J. Klepzig (Klepzig).3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing
under the laws of Australia and is principally engaged in the ready-mix concrete and concrete
aggregates business; PPHI is the company established by PIL to own and hold the stocks of
its operating company in the Philippines; PCPI is the company established by PIL to undertake
its business of ready-mix concrete, concrete aggregates and quarrying operations in the
Philippines; McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the
President and Managing Director of PPHI and PCPI; Todaro has been the managing director
of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete and
concrete aggregate production; he resigned from Betonval in February 1996; in May 1996, PIL
contacted Todaro and asked him if he was available to join them in connection with their
intention to establish a ready-mix concrete plant and other related operations in the Philippines;
Todaro informed PIL of his availability and interest to join them; subsequently, PIL and Todaro
came to an agreement wherein the former consented to engage the services of the latter as a
consultant for two to three months, after which, he would be employed as the manager of PIL's
ready-mix concrete operations should the company decide to invest in the Philippines;
subsequently, PIL started its operations in the Philippines; however, it refused to comply with
its undertaking to employ Todaro on a permanent basis. 4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the
complaint on the grounds that the complaint states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction of the
NLRC, and that the complaint should be dismissed on the basis of the doctrine of forum non
conveniens.5
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein
petitioners' respective motions to dismiss. 6 Herein petitioners, as defendants, filed an Urgent
Omnibus Motion7 for the reconsideration of the trial court's Order of January 4, 1999 but the
trial court denied it via its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On
October 31, 2000, the CA rendered its presently assailed Decision denying herein petitioners'
Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the CA denied it in its
Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of
errors:
A.
19
CONFLICT OF LAWS CASES 1
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT
STATES A CAUSE OF ACTION AGAINST PETITIONERS IS WITHOUT ANY LEGAL
BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION
OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE
RESPONDENT AND PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THE
SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL COURT
DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS
AN ACTION FOR AN ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND
HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL
LABOR RELATIONS COMMISSION.
C
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER
THE PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND FOR
DISMISSING A COMPLAINT.10
In their first assigned error, petitioners contend that there was no perfected
employment contract between PIL and herein respondent. Petitioners assert that the annexes
to respondent's complaint show that PIL's offer was for respondent to be employed as the
manager only of its pre-mixed concrete operations and not as the company's managing director
or CEO. Petitioners argue that when respondent reiterated his intention to become the manager
of PIL's overall business venture in the Philippines, he, in effect did not accept PIL's offer of
employment and instead made a counter-offer, which, however, was not accepted by PIL.
Petitioners also contend that under Article 1318 of the Civil Code, one of the requisites for a
contract to be perfected is the consent of the contracting parties; that under Article 1319 of the
same Code, consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract; that the offer must be certain and the
acceptance absolute; that a qualified acceptance constitutes a counter-offer. Petitioners assert
that since PIL did not accept respondent's counter-offer, there never was any employment
contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions
of Articles 19 and 21 of the Civil Code is baseless because it was shown that there was no
perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of
employment contract, petitioners contend that PCPI and PPHI, may not also be held liable
because they are juridical entities with personalities which are separate and distinct from PIL,
even if they are subsidiary corporations of the latter. Petitioners also aver that the annexes to
respondent's complaint show that the negotiations on the alleged employment contract took
place between respondent and PIL through its office in Hongkong. In other words, PCPI and
PPHI were not privy to the negotiations between PIL and respondent for the possible
employment of the latter; and under Article 1311 of the Civil Code, a contract is not binding
upon and cannot be enforced against one who was not a party to it even if he be aware of such
contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is
simply acting in his capacity as president of PCPI and PPHI and settled is the rule that an

officer of a corporation is not personally liable for acts done in the performance of his duties
and within the bounds of the authority conferred on him. Furthermore, petitioners argue that
even if PCPI and PPHI are held liable, respondent still has no cause of action against Klepzig
because PCPI and PPHI have personalities which are separate and distinct from those acting
in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's
claims for actual, moral and exemplary damages are solely premised on the alleged breach of
employment contract, the present case should be considered as falling within the exclusive
jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum
non conveniens dictates that even where exercise of jurisidiction is authorized by law, courts
may refuse to entertain a case involving a foreign element where 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 and the plaintiff sought the
forum merely to secure procedural advantage or to annoy or harass the defendant. Petitioners
also argue that one of the factors in determining the most convenient forum for conflicts
problem is the power of the court to enforce its decision. Petitioners contend that since the
majority of the defendants in the present case are not residents of the Philippines, they are not
subject to compulsory processes of the Philippine court handling the case for purposes of
requiring their attendance during trial. Even assuming that they can be summoned, their
appearance would entail excessive costs. Petitioners further assert that there is no allegation
in the complaint from which one can conclude that the evidence to be presented during the trial
can be better obtained in the Philippines. Moreover, the events which led to the present
controversy occurred outside the Philippines. Petitioners conclude that based on the foregoing
factual circumstances, the case should be dismissed under the principle of forum non
conveniens.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining
that the factual allegations in the complaint determine whether or not the complaint states a
cause of action.
As to the question of jurisdiction, respondent contends that the complaint he filed was
not based on a contract of employment. Rather, it was based on petitioners' unwarranted
breach of their contractual obligation to employ respondent. This breach, respondent argues,
gave rise to an action for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for
the NLRC to acquire jurisdiction, the claim for damages must have a reasonable causal
connection with the employer-employee relationship of petitioners and respondent.
Respondent further argues that there is a perfected contract between him and
petitioners as they both agreed that the latter shall employ him to manage and operate their
ready-mix concrete operations in the Philippines. Even assuming that there was no perfected
contract, respondent contends that his complaint alleges an alternative cause of action which
is based on the provisions of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that
the question of whether a suit should be entertained or dismissed on the basis of the principle
of forum non conveniens depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial judge, who is in the best position to determine
20
CONFLICT OF LAWS CASES 1
whether special circumstances require that the court desist from assuming jurisdiction over the
suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the
act or omission by which a party violates a right of another. A cause of action exists if the
following elements are present: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and, (3) an act or omission on the part of such defendant
violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to
the plaintiff for which the latter may maintain an action for recovery of damages. 11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:
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. Stated
otherwise, may the court render a valid judgment upon the facts alleged therein? The
inquiry is into the sufficiency, not the veracity of the material allegations. If the
allegations in the complaint furnish sufficient basis on which it can be maintained, it
should not be dismissed regardless of the defense that may be presented by the
defendants.13
Moreover, the complaint does not have to establish or allege facts proving the
existence of a cause of action at the outset; this will have to be done at the trial on the merits
of the case.14 To sustain a motion to dismiss for lack of cause of action, the complaint must
show that the claim for relief does not exist, rather than that a claim has been defectively stated,
or is ambiguous, indefinite or uncertain.15
Hence, in resolving whether or not the Complaint in the present case states a cause of
action, the trial court correctly limited itself to examining the sufficiency of the allegations in the
Complaint as well as the annexes thereto. It is proscribed from inquiring into the truth of the
allegations in the Complaint or the authenticity of any of the documents referred or attached to
the Complaint, since these are deemed hypothetically admitted by the respondent.
This Court has reviewed respondent’s allegations in its Complaint. In a nutshell,
respondent alleged that herein petitioners reneged on their contractual obligation to employ
him on a permanent basis. This allegation is sufficient to constitute a cause of action for
damages.
The issue as to whether or not there was a perfected contract between petitioners and
respondent is a matter which is not ripe for determination in the present case; rather, this issue
must be taken up during trial, considering that its resolution would necessarily entail an
examination of the veracity of the allegations not only of herein respondent as plaintiff but also
of petitioners as defendants.
The Court does not agree with petitioners' contention that they were not privy to the
negotiations for respondent's possible employment. It is evident from paragraphs 24 to 28 of
the Complaint16 that, on various occasions, Klepzig conducted negotiations with respondent
regarding the latter's possible employment. In fact, Annex "H" 17 of the complaint shows that it
was Klepzig who informed respondent that his company was no longer interested in employing
respondent. Hence, based on the allegations in the Complaint and the annexes attached
thereto, respondent has a cause of action against herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no
employer-employee relationship exists between the parties and no issue is involved which may

be resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction. 18 In the present case, no
employer-employee relationship exists between petitioners and respondent. In fact, in his
complaint, private respondent is not seeking any relief under the Labor Code, but seeks
payment of damages on account of petitioners' alleged breach of their obligation under their
agreement to employ him. It is settled that an action for breach of contractual obligation is
intrinsically a civil dispute.19 In the alternative, respondent seeks redress on the basis of the
provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is
within the realm of civil law, and jurisdiction over it belongs to the regular courts.20
With respect to the applicability of the principle of forum non conveniens in the present
case, this Court's ruling in Bank of America NT & SA v. Court of Appeals21 is instructive, to wit:
The doctrine of forum non conveniens, literally meaning ‘the forum is
inconvenient’, emerged in private international law to deter the practice of global forum
shopping, that is to prevent non-resident litigants from choosing the forum or place
wherein to bring their suit for malicious reasons, such as to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to
select a more friendly venue. Under this doctrine, 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.
Whether a suit should be entertained or dismissed on the basis of said doctrine
depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial court. In the case of Communication Materials and Design, Inc.
vs. Court of Appeals, this Court held that "xxx [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."
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court
of Appeals, that the doctrine of forum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court
does not include said doctrine as a ground. This Court further ruled that 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; and that the
propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly
considered a matter of defense.22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would
allegedly justify the application of the doctrine of forum non conveniens are matters of defense,
the merits of which should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
21
CONFLICT OF LAWS CASES 1
GIL MIGUEL T. PUYAT, petitioner, vs. RON ZABARTE, respondent.
G.R. No. 141536. February 26, 2001
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is no genuine issue as to any
material fact, other than the amount of damages. If this verity is evident from the pleadings and
the supporting affidavits, depositions and admissions on file with the court, the moving party is
entitled to such remedy as a matter of course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
challenging the August 31, 1999 Decision 1 of the Court of Appeals (CA), which affirmed the
Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the January
20, 2000 CA Resolution 2 which denied reconsideration.
The assailed CA Decision disposed as follows:
“WHEREFORE, finding no error in the judgment appealed from, the same is
AFFIRMED." 3
The Facts
The facts of this case, as narrated by the Court of Appeals, are as follows: 4
“It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an
action] to enforce the money judgment rendered by the Superior Court for the State of
California, County of Contra Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with
the following special and affirmative defenses:
xxx xxx xxx
‘8) The Superior Court for the State of California, County of Contra Costa[,] did
not properly acquire jurisdiction over the subject matter of and over the persons
involved in [C]ase #C21-00265.
‘9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265
dated December 12, 1991 was obtained without the assistance of counsel for
[petitioner] and without sufficient notice to him and therefore, was rendered in clear
violation of [petitioner’s] constitutional rights to substantial and procedural due process.
‘10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
dated December 12, 1991 was procured by means of fraud or collusion or undue
influence and/or based on a clear mistake of fact and law.
‘11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
dated December 12, 1991 is contrary to the laws, public policy and canons of morality
obtaining in the Philippines and the enforcement of such judgment in the Philippines
would result in the unjust enrichment of [respondent] at the expense of [petitioner] in
this case.
‘12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
dated December 12, 1991 is null and void and unenforceable in the Philippines.
‘13) In the transaction, which is the subject matter in Case #C21-00265,
[petitioner] is not in any way liable, in fact and in law, to [respondent] in this case, as
contained in [petitioner’s] ‘Answer to Complaint’ in Case #C21-00265 dated April 1,
1991, Annex ‘B’ of [respondent’s] ‘Complaint’ dated December 6, 1993.
’14) [Respondent] is guilty of misrepresentation or falsification in the filing of
his ‘Complaint’ in this case dated December 6, 1993. Worse, [respondent] has no
capacity to sue in the Philippines.

’15) Venue has been improperly laid in this case.’
(Record, pp. 42-44)
“On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment
under Rule 34 of the Rules of Court alleging that the [A]nswer filed by [petitioner] failed
to tender any genuine issue as to the material facts. In his [O]pposition to
[respondent’s] motion, [petitioner] demurred as follows:
‘2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention
that in his ‘Answer with Special and Affirmative Defenses’ dated March 16, 1994
[petitioner] has interposed that the ‘Judgment on Stipulations for Entry in Judgment’ is
null and void, fraudulent, illegal and unenforceable, the same having been obtained by
means of fraud, collusion, undue influence and/or clear mistake of fact and law. In
addition, [he] has maintained that said ‘Judgment on Stipulations for Entry in Judgment’
was obtained without the assistance of counsel for [petitioner] and without sufficient
notice to him and therefore, was rendered in violation of his constitutional rights to
substantial and procedural due process.’
“The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August
1994 during which [respondent] marked and submitted in evidence the following:
Exhibit ‘A’ - x x x Judgment on Stipulation For Entry In Judgment of the
Supreme Court of the State of California[,] County of Contra Costa[,] signed by Hon.
Ellen James, Judge of the Superior Court.
Exhibit ‘B’ - x x x Certificate of Authentication of the [O]rder signed by the Hon.
Ellen James, issued by the Consulate General of the Republic of the Philippines.
Exhibit ‘C’ - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the
sheriff/marshall, County of Santa Clara, State of California.
Exhibit ‘D’ - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of
[L]evy, [M]emorandum of [G]arnishee, [E]xemptions from [E]nforcement of [J]udgment.
Exhibit ‘F’ - Certification issued by the Secretary of State, State of California
that Stephen Weir is the duly elected, qualified and acting [c]ounty [c]lerk of the County
of Contra Costa of the State of California.
Exhibit ‘G’ - Certificate of [A]uthentication of the [W]rit of [E]xecution.
“On 6 April 1995, the court a quo issued an [O]rder granting [respondent’s] [M]otion for
[S]ummary [J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing
affidavits, after which the case would be deemed submitted for resolution (Record, pp. 152-
153). [Petitioner] filed a [M]otion for [R]econsideration of the aforesaid [O]rder and [respondent]
filed [C]omment. On 30 June 1995, [petitioner] filed a [M]otion to [D]ismiss on the ground of
lack of jurisdiction over the subject matter of the case and forum-non-conveniens (Record, pp.
166-170). In his [O]pposition to the [M]otion (Record, pp. 181-182) [respondent] contended that
[petitioner could] no longer question the jurisdiction of the lower court on the ground that [the
latter’s] Answer had failed to raise the issue of jurisdiction. [Petitioner] countered by asserting
in his Reply that jurisdiction [could] not be fixed by agreement of the parties. The lower court
dismissed [his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198),
x x x.”
The RTC 5 eventually rendered its February 21, 1997 Decision, 6 which disposed as
follows:
22
CONFLICT OF LAWS CASES 1
“WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent]
the following amounts:
“1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October
18, 1991, or its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in
[J]udgment dated December 19, 1991;
“2. The amount of P30,000.00 as attorney’s fees;
“3. To pay the costs of suit.
“The claim for moral damages, not having been substantiated, it is hereby denied.” 7
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner was estopped from
assailing the judgment that had become final and had, in fact, been partially executed. The CA
also ruled that summary judgment was proper, because petitioner had failed to tender any
genuine issue of fact and was merely maneuvering to delay the full effects of the judgment.
Citing Ingenohl v. Olsen, 8 the CA also rejected petitioner’s argument that the RTC
should have dismissed the action for the enforcement of a foreign judgment, on the ground
of forum non conveniens. It reasoned out that the recognition of the foreign judgment was
based on comity, reciprocity and res judicata.
Hence, this Petition. 9
Issue
In his Memorandum, petitioner submits this lone but all-embracing issue:
“Whether or not the Court of Appeals acted in a manner x x x contrary to law when it
affirmed the Order of the trial court granting respondent’s Motion for Summary Judgment and
rendering judgment against the petitioner.” 10
In his discussion, petitioner contends that the CA erred in ruling in this wise:
1. That his Answer failed to tender a genuine issue of fact regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
(b) the validity of the foreign judgment
(c) the judgment’s conformity to Philippine laws, public policy, canons of morality, and
norms against unjust enrichment
2. That the principle of forum non conveniens was inapplicable to the instant case.
This Court’s Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is inappropriate to resolve the
case at bar, arguing that his Answer allegedly raised genuine and material factual matters
which he should have been allowed to prove during trial.
On the other hand, respondent argues that the alleged “genuine issues of fact” raised
by petitioner are mere conclusions of law, or “propositions arrived at not by any process of
natural reasoning from a fact or a combination of facts stated but by the application of the
artificial rules of law to the facts pleaded.” 11
The RTC granted respondent’s Motion for Summary Judgment because petitioner, in
his Answer, admitted the existence of the Judgment on Stipulation for Entry in Judgment.
Besides, he had already paid $5,000 to respondent, as provided in the foreign judgment sought
to be enforced. 12 Hence, the trial court ruled that, there being no genuine issue as to any
material fact, the case should properly be resolved through summary judgment. The CA
affirmed this ruling.

We concur with the lower courts. Summary judgment is a procedural device for the
prompt disposition of actions in which the pleadings raise only a legal issue, and not a genuine
issue as to any material fact. By genuine issue is meant a question of fact that calls for the
presentation of evidence. It should be distinguished from an issue that is sham, contrived, set
in bad faith and patently unsubstantial. 13
Summary judgment is resorted to in order to avoid long drawn out litigations and
useless delays. When affidavits, depositions and admissions on file show that there are no
genuine issues of fact to be tried, the Rules allow a party to pierce the allegations in the
pleadings and to obtain immediate relief by way of summary judgment. In short, since the facts
are not in dispute, the court is allowed to decide the case summarily by applying the law to the
material facts.
Petitioner contends that by allowing summary judgment, the two courts a
quo prevented him from presenting evidence to substantiate his claims. We do not agree.
Summary judgment is based on facts directly proven by affidavits, depositions or
admissions. 14 In this case, the CA and the RTC both merely ruled that trial was not necessary
to resolve the case. Additionally and correctly, the RTC specifically ordered petitioner to submit
opposing affidavits to support his contentions that (1) the Judgment on Stipulation for Entry in
Judgment was procured on the basis of fraud, collusion, undue influence, or a clear mistake of
law or fact; and (2) that it was contrary to public policy or the canons of morality. 15
Again, in its Order 16 dated November 29, 1995, the trial court clarified that the
opposing affidavits were “for [petitioner] to spell out the facts or circumstances [that] would
constitute lack of jurisdiction over the subject matter of and over the persons involved in Case
No. C21-00265,” and that would render the judgment therein null and void. In this light,
petitioner’s contention that he was not allowed to present evidence to substantiate his claims
is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires
(a) that there must be no genuine issue as to any material fact, except for the amount of
damages; and (b) that the party presenting the motion for summary judgment must be entitled
to a judgment as a matter of law. 17 As mentioned earlier, petitioner admitted that a foreign
judgment had been rendered against him and in favor of respondent, and that he had paid
$5,000 to the latter in partial compliance therewith. Hence, respondent, as the party presenting
the Motion for Summary Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised
no genuine issue, it relied instead on the finality of the foreign judgment which was, in fact,
partially executed. Hence, we shall show in the following discussion how the defenses
presented by petitioner failed to tender any genuine issue of fact, and why a full-blown trial was
not necessary for the resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which involved
partnership interest, was vested in the Securities and Exchange Commission, not in the
Superior Court of California, County of Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we
presume that such law, if any, is similar to Philippine law. We base this conclusion on the
presumption of identity or similarity, also known as processual presumption. 18 The
Complaint, 19 which respondent filed with the trial court, was for the enforcement of a foreign
23
CONFLICT OF LAWS CASES 1
judgment. He alleged therein that the action of the foreign court was for the collection of a sum
of money, breach of promissory notes, and damages. 20
In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the
Securities and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over
matters enumerated in Section 5, PD 902-A, 21prior to its latest amendment. If the foreign court
did not really have jurisdiction over the case, as petitioner claims, it would have been very easy
for him to show this. Since jurisdiction is determined by the allegations in a complaint, he only
had to submit a copy of the complaint filed with the foreign court. Clearly, this issue did not
warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the form of a Compromise
Agreement, cannot be executed without the parties being assisted by their chosen lawyers.
The reason for this, he points out, is to eliminate collusion, undue influence and/or improper
exertion of ascendancy by one party over the other. He alleges that he discharged his counsel
during the proceedings, because he felt that the latter was not properly attending to the case.
The judge, however, did not allow him to secure the services of another counsel. Insisting that
petitioner settle the case with respondent, the judge practically imposed the settlement
agreement on him. In his Opposing Affidavit, petitioner states:
“It is true that I was initially represented by a counsel in the proceedings in #C21-00625.
I discharged him because I then felt that he was not properly attending to my case or was not
competent enough to represent my interest. I asked the Judge for time to secure another
counsel but I was practically discouraged from engaging one as the Judge was insistent that I
settle the case at once with the [respondent]. Being a foreigner and not a lawyer at that I did
not know what to do. I felt helpless and the Judge and [respondent’s] lawyer were the ones
telling me what to do. Under ordinary circumstances, their directives should have been taken
with a grain of salt especially so [since respondent’s] counsel, who was telling me what to do,
had an interest adverse to mine. But [because] time constraints and undue influence exerted
by the Judge and [respondent’s] counsel on me disturbed and seriously affected my freedom
to act according to my best judgment and belief. In point of fact, the terms of the settlement
were practically imposed on me by the Judge seconded all the time by [respondent’s] counsel.
I was then helpless as I had no counsel to assist me and the collusion between the Judge and
[respondent’s] counsel was becoming more evident by the way I was treated in the Superior
Court of [t]he State of California. I signed the ‘Judgment on Stipulation for Entry in Judgment’
without any lawyer assisting me at the time and without being fully aware of its terms and
stipulations.” 22
The manifestation of petitioner that the judge and the counsel for the opposing party
had pressured him would gain credibility only if he had not been given sufficient time to engage
the services of a new lawyer. Respondent’s Affidavit 23 dated May 23, 1994, clarified, however,
that petitioner had sufficient time, but he failed to retain a counsel. Having dismissed his lawyer
as early as June 19, 1991, petitioner directly handled his own defense and negotiated a
settlement with respondent and his counsel in December 1991. Respondent also stated that
petitioner, ignoring the judge’s reminder of the importance of having a lawyer, argued that “he
would be the one to settle the case and pay” anyway. Eventually, the Compromise Agreement
was presented in court and signed before Judge Ellen James on January 3, 1992. Hence,
petitioner’s rights to counsel and to due process were not violated.
Unjust Enrichment

Petitioner avers that the Compromise Agreement violated the norm against unjust
enrichment because the judge made him shoulder all the liabilities in the case, even if there
were two other defendants, G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the foreign judgment, even if
there are other defendants who are not being held liable together with him. First, the foreign
judgment itself does not mention these other defendants, their participation or their liability to
respondent. Second, petitioner’s undated Opposing Affidavit states: “[A]lthough myself and
these entities were initially represented by Atty. Lawrence L. Severson of the Law Firm Kouns,
Quinlivan & Severson, x x x I discharged x x x said lawyer. Subsequently, I assumed the
representation for myself and these firms and this was allowed by the Superior Court of the
State of California without any authorization from G.G.P. & Sons, Inc. and the Genesis
Group.” 24 Clearly, it was petitioner who chose to represent the other defendants; hence, he
cannot now be allowed to impugn a decision based on this ground.
In any event, contrary to petitioner’s contention, unjust enrichment or solutio indebiti
does not apply to this case. This doctrine contemplates payment when there is no duty to pay,
and the person who receives the payment has no right to receive it. 25 In this case, petitioner
merely argues that the other two defendants whom he represented were liable together with
him. This is not a case of unjust enrichment.
We do not see, either, how the foreign judgment could be contrary to law, morals,
public policy or the canons of morality obtaining in the country. Petitioner owed money, and the
judgment required him to pay it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court reinforce our belief that
his claims are unfounded. Instead of filing opposing affidavits to support his affirmative
defenses, he filed a Motion for Reconsideration of the Order allowing summary judgment, as
well as a Motion to Dismiss the action on the ground of forum non conveniens. His opposing
affidavits were filed only after the Order of November 29, 1995 had denied both Motions. 26 Such
actuation was considered by the trial court as a dilatory ploy which justified the resolution of
the action by summary judgment. According to the CA, petitioner’s allegations sought to delay
the full effects of the judgment; hence, summary judgment was proper. On this point, we concur
with both courts.
Second Question: Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain the Complaint for
enforcement of the foreign judgment on the principle of forum non conveniens. He claims that
the trial court had no jurisdiction, because the case involved partnership interest, and there
was difficulty in ascertaining the applicable law in California. All the aspects of the transaction
took place in a foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if the exercise of
jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case for any of
the following practical reasons:
“1) The belief that the matter can be better tried and decided elsewhere, either because
the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known as
forum shopping[,] merely to secure procedural advantages or to convey or harass the
defendant;
24
CONFLICT OF LAWS CASES 1
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
The difficulty of ascertaining foreign law.” 27
None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In
the present action, there was no more need for material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the local machinery to enforce the foreign judgment,
and no question raised as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed
on the basis of the above-mentioned principle depends largely upon the facts of each case and
on the sound discretion of the trial court. 28Since the present action lodged in the RTC was for
the enforcement of a foreign judgment, there was no need to ascertain the rights and the
obligations of the parties based on foreign laws or contracts. The parties needed only to
perform their obligations under the Compromise Agreement they had entered into. 1âwphi1.nêt
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an
action in personam rendered by a foreign tribunal clothed with jurisdiction is presumptive
evidence of a right as between the parties and their successors-in-interest by a subsequent
title. 29
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere
-- enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it is
regularly performing its official duty. 30 Its judgment may, however, be assailed if there is
evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of
law or fact. But precisely, this possibility signals the need for a local trial court to exercise
jurisdiction. Clearly, the application of forum non coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the one hand, he insists
that the RTC take jurisdiction over the enforcement case in order to invalidate the foreign
judgment; yet, he avers that the trial court should not exercise jurisdiction over the same case
on the basis of forum non conveniens. Not only do these defenses weaken each other, but they
bolster the finding of the lower courts that he was merely maneuvering to avoid or delay
payment of his obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and
Resolution AFFIRMED. Double costs against petitioner.
SO ORDERED.
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
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
25
CONFLICT OF LAWS CASES 1
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.14Rouen 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
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, 13 th 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
 CONFLICT OF LAWS CASES 1

assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC NCR Case No. 00-11- shall be based on the total amount of the award. The assailed Decision is affirmed in all other
12342-07. respects.

Saudia assailed the jurisdiction of the Labor Arbiter. 29 It claimed that all the determining points The labor arbiter is hereby DIRECTED to make a recomputation based on the
of contact referred to foreign law and insisted that the Complaint ought to be dismissed on the foregoing.40cralawlawlibrary
ground of forum non conveniens.30 It added that respondents had no cause of action as they In the Resolution dated September 13, 2011,41 the Court of Appeals denied petitioners'
resigned voluntarily.31 Motion for Reconsideration.

On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the Hence, this Appeal was filed.
Decision32dismissing respondents' Complaint. The dispositive portion of this Decision reads:
WHEREFORE, premises' considered, judgment is hereby rendered DISMISSING the The issues for resolution are the following:
instant complaint for lack of jurisdiction/merit.33cralawlawlibrary
On respondents' appeal, the National Labor Relations Commission's Sixth Division First, whether the Labor Arbiter and the National Labor Relations Commission may exercise
reversed the ruling of Executive Labor Arbiter Jambaro-Franco. It explained that "[considering jurisdiction over Saudi Arabian Airlines and apply Philippine law in adjudicating the present
that complainants-appellants are OFWs, the Labor Arbiters and the NLRC has [sic] jurisdiction dispute;
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 Second, whether respondents' voluntarily resigned or were illegally terminated; and
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 Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian Airlines.
voluntarily. I

The dispositive portion of the November 19, 2009 National Labor Relations Commission Summons were validly served on Saudia and jurisdiction over it validly acquired.
Decision36reads:
WHEREFORE, premises considered, judgment is hereby rendered finding the appeal There is no doubt that the pleadings and summons were served on Saudia through its
impressed with merit. The respondents-appellees are hereby directed to pay complainants- counsel.42 Saudia, however, claims that the Labor Arbiter and the National Labor Relations
appellants the aggregate amount of SR614,001.24 corresponding to their backwages and Commission had no jurisdiction over it because summons were never served on it but on
separation pay plus ten (10%) percent thereof as attorney's fees. The decision of the Labor "Saudia Manila."43 Referring to itself as "Saudia Jeddah," it claims that "Saudia Jeddah" and
Arbiter dated December 12, 2008 is hereby VACATED and SET ASIDE. Attached is the not "Saudia Manila" was the employer of respondents because:
computation prepared by this Commission and made an integral part of this
Decision.37cralawlawlibrary First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by
In the Resolution dated February 11, 2010,38 the National Labor Relations Commission respondents;
denied petitioners' Motion for Reconsideration.
Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and
In the June 16, 2011 Decision,39 the Court of Appeals denied petitioners' Rule 65 Petition and benefits; and
modified the Decision of the National Labor Relations Commission with respect to the award
of separation pay and backwages. Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. 44

The dispositive portion of the Court of Appeals Decision reads:
WHEREFORE, the instant petition is hereby DENIED. The Decision dated November
19, 2009 issued by public respondent, Sixth Division of the National Labor Relations
Commission - National Capital Region is MODIFIED only insofar as the computation of the
award of separation pay and backwages. For greater clarity, petitioners are ordered to pay
private respondents separation pay which shall be computed from private respondents' first
day of employment up to the finality of this decision, at the rate of one month per year of service
and backwages which shall be computed from the date the private respondents were illegally
terminated until finality of this decision. Consequently, the ten percent (10%) attorney's fees
Saudia posits that respondents' Complaint was brought against the wrong party because
"Saudia Manila," upon which summons was served, was never the employer of respondents. 45
Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare
allegation, there is no basis for concluding that "Saudia Jeddah" is distinct from "Saudia
Manila."
What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . .
. located at 4/F Metro House Building, Sen. Gil J. Puyat Avenue, Makati City." 46 Even in the

26

position paper that Saudia submitted to the Labor Arbiter, 47 what Saudia now refers to as
"Saudia Jeddah" was then only referred to as "Saudia Head Office at Jeddah, KSA," 48 while
what Saudia now refers to as "Saudia Manila" was then only referred to as "Saudia's office in
Manila."49
By its own admission, Saudia, while a foreign corporation, has a Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of
1991, provides the following:
The phrase "doing business" shall include . . . opening offices, whether called
"liaison" offices or branches; . . . and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that extent the performance of acts
or works, or the exercise of some of the functions normally incident to, and in progressive
prosecution of commercial gain or of the purpose and object of the business organization.
(Emphasis supplied)
A plain application of Section 3(d) of the Foreign Investments Act leads to no other
conclusion than that Saudia is a foreign corporation doing business in the Philippines. As such,
Saudia may be sued in the Philippines and is subject to the jurisdiction of Philippine tribunals.
Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" �
the latter being nothing more than Saudia's local office � service of summons to Saudia's office
in Manila sufficed to vest jurisdiction over Saudia's person in Philippine tribunals.
II
Saudia asserts that Philippine courts and/or tribunals are not in a position to make an intelligent
decision as to the law and the facts. This is because respondents' Cabin Attendant contracts
require the application of the laws of Saudi Arabia, rather than those of the Philippines.50 It
claims that the difficulty of ascertaining foreign law calls into operation the principle of forum
non conveniens, thereby rendering improper the exercise of jurisdiction by Philippine
tribunals.51
A choice of law governing the validity of contracts or the interpretation of its provisions 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
27
CONFLICT OF LAWS CASES 1
one of or in a combination of four ways: (1) procedures for settling disputes, e.g., arbitration;
(2) forum, i.e., venue; (3) governing law; and (4) basis for interpretation. Forum non
conveniens relates to, but is not subsumed by, the second of these.
Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws
of a given jurisdiction as the governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is equally true: The assumption of jurisdiction
by tribunals does not ipso factomean 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.53cralawlawlibrary
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.54cralawlawlibrary
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
 CONFLICT OF LAWS CASES 1

intentionis. single jurisdiction, forum non conveniens is a means devised to address parallel litigation
arising in multiple jurisdictions.
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 Forum non conveniens literally translates to "the forum is inconvenient." 62 It is a concept in
silent on what governs the intrinsic validity of contracts, and the same civil law traditions from private international law and was devised to combat the "less than honorable" reasons and
which we draw ours. 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
In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P. Eusebio conveniens addresses the same rationale that the rule against forum shopping does, albeit on
Construction, Inc.,58 manifested preference for allowing the parties to select the law applicable a multijurisdictional scale.
to their contract":
No conflicts rule on essential validity of contracts is expressly provided for in our laws. Forum non conveniens, like res judicata,64 is a concept originating in common law.65 However,
The rule followed by most legal systems, however, is that the intrinsic validity of a contract must unlike the rule on res judicata, as well as those on litis pendentia and forum shopping, forum
be governed by the lex contractus or "proper law of the contract." This is the law voluntarily non conveniens finds no textual anchor, whether in statute or in procedural rules, in our civil
agreed upon by the parties (the lex loci voluntatis) or the law intended by them either expressly law system. Nevertheless, jurisprudence has applied forum non conveniens as basis for a court
or implicitly (the lex loci intentionis). The law selected may be implied from such factors as to decline its exercise of jurisdiction. 66
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, Forum non conveniens is soundly applied not only to address parallel litigation and undermine
namely, to allow the parties to select the law applicable to their contract, subject to the limitation a litigant's capacity to vex and secure undue advantages by engaging in forum shopping on an
that it is not against the law, morals, or public policy of the forum and that the chosen law must international scale. It is also grounded on principles of comity and judicial efficiency.
bear a substantive relationship to the transaction.59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant contracts require the Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on
application of the laws of Saudi Arabia. It insists that the need to comply with these stipulations account of forum non conveniens is a deferential gesture to the tribunals of another sovereign.
calls into operation the doctrine of forum non conveniens and, in turn, makes it necessary for It is a measure that prevents the former's having to interfere in affairs which are better and
Philippine tribunals to refrain from exercising jurisdiction. 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
As mentioned, contractual choice of laws factors into transnational litigation in any or a also, that these tribunals are better positioned to enforce judgments and, ultimately, to
combination of four (4) ways. Moreover, forum non conveniens relates to one of these: dispense justice. Forum non conveniens prevents the embarrassment of an awkward situation
choosing between multiple possible fora. where a tribunal is rendered incompetent in the face of the greater capability � both analytical
and practical � of a tribunal in another jurisdiction.
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 The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of
in disputes well within the bounds of a singe jurisdiction. 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
When parallel litigation arises strictly within the context of a single jurisdiction, such rules as position to enforce its judgment. Doing so is not only an exercise in futility; it is an act of frivolity.
those on forum shopping, litis pendentia, and res judicata come into operation. Thus, in the It clogs the dockets of a.tribunal and leaves it to waste its efforts on affairs, which, given
Philippines, the 1997 Rules on Civil Procedure provide for willful and deliberate forum shopping transnational exigencies, will be reduced to mere academic, if not trivial, exercises.
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 Accordingly, under the doctrine of forum non conveniens, "a court, in conflicts of law
sanctions.60 Likewise, the same rules expressly provide that a party may seek the dismissal of cases, may refuse impositions on its jurisdiction where it is not the most 'convenient' or
a Complaint or another pleading asserting a claim on the ground "[t]hat there is another action available forum and the parties are not precluded from seeking remedies
pending between the same parties for the same cause," i.e., litis pendentia, or "[t]hat the cause elsewhere."67 In Puyat v. Zabarte,68 this court recognized the following situations as among
of action is barred by a prior judgment," 61 i.e., res judicata. 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
Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a because the main aspects of the case transpired in a foreign jurisdiction or the
means of addressing the problem of parallel litigation. While the rules of forum shopping, litis material witnesses have their residence there;
pendentia, and res judicata are designed to address the problem of parallel litigation within a

28

2) The belief that the non-resident plaintiff sought the forum[,] a practice known
as forum shopping[,] merely to secure procedural advantages or to convey or harass
the defendant;
3) The unwillingness to extend local judicial facilities to non� residents or
aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right
sought to be maintained; and
5) The difficulty of ascertaining foreign law.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.
The existence of a prior suit makes real the vexation engendered by duplicitous litigation, the
29
CONFLICT OF LAWS CASES 1
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.77cralawlawlibrary
We deem it more appropriate and in the greater interest of prudence that a defendant
not only allege supposed dangerous tendencies in litigating in this jurisdiction; the defendant
must also show that such danger is real and present in that litigation or dispute resolution has
commenced in another jurisdiction and that a foreign tribunal has chosen to exercise
jurisdiction.
III
Forum non conveniens finds no application and does not operate to divest Philippine tribunals
of jurisdiction and to require the application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the Cabin
Attendant contracts that require the application of the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of governing law. Thai forum non
conveniensmay 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
 CONFLICT OF LAWS CASES 1

unfeasible recourse to a foreign court. As mentioned, we consider it in the greater interest of
prudence that a defendant show, in pleading forum non conveniens, that litigation has
commenced in another jurisdiction and that a 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 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.82cralawlawlibrary
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."

30

Consistent with this, this court's pronouncements in Pakistan International Airlines
Corporation83 are clear and unmistakable:
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement, and, secondly,
lays the venue for settlement of any dispute arising out of or in connection with the agreement
"only [in] courts of Karachi, Pakistan". The first clause of paragraph 10 cannot be invoked to
prevent the application of Philippine labor laws and'regulations to the subject matter of this
case, i.e., the employer-employee relationship between petitioner PIA and private
respondents. We have already pointed out that the relationship is much affected with public
interest and that the otherwise applicable Philippine laws and regulations cannot be rendered
illusory by the parties agreeing upon some other law to govern their relationship. . . . Under
these circumstances, paragraph 10 of the employment agreement cannot be given effect so
as to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine
law.84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to be) the illegal
termination of respondents' employment, this case is immutably a matter of public interest and
public policy. Consistent with clear pronouncements in law and jurisprudence, Philippine laws
properly find application in and govern this case. 'Moreover, as this premise for Saudia's
insistence on the application forum non conveniens has been shattered, it follows that
Philippine tribunals may properly assume jurisdiction over the present controversy. Philippine
jurisprudence provides ample illustrations of when a court's renunciation of jurisdiction on
account of forum non conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of Appeals,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
31
CONFLICT OF LAWS CASES 1
determination; and (3) the requisites for assumption of jurisdiction as laid out in Bank of
America, NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations
Commission91 that the National Labor Relations 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."93That Saudia has managed to bring the present controversy all the way to this court
proves this.

Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating the right
sought to be maintained. Summons was properly served on Saudia and jurisdiction over its
person was validly acquired.
Lastly, there is not even room for considering foreign law. Philippine law properly governs the
present dispute.
As the question of applicable law has been settled, the supposed difficulty of ascertaining
foreign law (which requires the application of forum non conveniens) provides no
insurmountable inconvenience or special circumstance that will justify depriving Philippine
tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia which
should apply, it does not follow that Philippine tribunals should refrain from exercising
jurisdiction. To. recall our pronouncements in Puyat, 94 as well as in Bank of America,
NT&SA,95 it is not so much the mere applicability of foreign law which calls into operation forum
non conveniens. Rather, what justifies a court's desistance from exercising jurisdiction is
"[t]he difficulty of ascertaining foreign law"96 or the inability of a "Philippine Court to make an
intelligent decision as to the law[.]" 97
Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e., "to make
an intelligent decision"98), Philippine tribunals may apply the foreign law selected by the parties.
In fact, (albeit without meaning to make a pronouncement on the accuracy and reliability of
respondents' citation) in this case, respondents themselves have made averments as to the
laws of Saudi Arabia. In their Comment, respondents write:
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and unlawful to
terminate the employment of any woman by virtue of pregnancy. The law in Saudi Arabia is
even more harsh and strict [sic] in that no employer can terminate the employment of a female
worker or give her a warning of the same while on Maternity Leave, the specific provision of
Saudi Labor Laws on the matter is hereto quoted as follows:
"An employer may not terminate the employment of a female worker or give her a
warning of the same while on maternity leave." (Article 155, Labor Law of the Kingdom of Saudi
Arabia, Royal Decree No. M/51.)99cralawlawlibrary
All told, the considerations for assumption of jurisdiction by Philippine tribunals as
outlined in Bank of America, NT&SA100 have been satisfied. First, all the parties are based in
the Philippines and all the material incidents transpired in this jurisdiction. Thus, the parties
may conveniently seek relief from Philippine tribunals. Second, Philippine tribunals are in a
position to make an intelligent decision as to the law and the facts. Third, Philippine tribunals
are in a position to enforce their decisions. There is no compelling basis for ceding jurisdiction
to a foreign tribunal. Quite the contrary, the immense public policy considerations attendant to
this case behoove Philippine tribunals to not shy away from their duty to rule on the case.
IV
Respondents were illegally terminated.
32
CONFLICT OF LAWS CASES 1
In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary resignation as "the voluntary
act of an employee who is in a situation where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate
oneself from employment. It is a formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of relinquishment." 102 Thus,
essential to the act of resignation is voluntariness. It must be the result of an employee's
exercise of his or her own will.
In the same case of Bilbao, this court advanced a means for determining whether an employee
resigned voluntarily:
As the intent to relinquish must concur with the overt act of relinquishment, the acts of
the employee before and after the alleged resignation must be considered in determining
whether he or she, in fact, intended, to sever his or her employment.103 (Emphasis supplied)
On the other hand, constructive dismissal has been defined as "cessation of work
because 'continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank or a diminution in pay' and other benefits." 104
In Penaflor v. Outdoor Clothing Manufacturing Corporation,105 constructive dismissal has been
described as tantamount to "involuntarily [sic] resignation due to the harsh, hostile, and
unfavorable conditions set by the employer." 106 In the same case, it was noted that "[t]he gauge
for constructive dismissal is whether a reasonable person in the employee's position would feel
compelled to give up his employment under the prevailing circumstances." 107
Applying the cited standards on resignation and constructive dismissal, it is clear that
respondents were constructively dismissed. Hence, their termination was illegal.
The termination of respondents' employment happened when they were pregnant and
expecting to incur costs on account of child delivery and infant rearing. As noted by the Court
of Appeals, pregnancy is a time when they need employment to sustain their
families.108 Indeed, it goes against normal and reasonable human behavior to abandon one's
livelihood in a time of great financial need.
It is clear that respondents intended to remain employed with Saudia. All they did was avail of
their maternity leaves. Evidently, the very nature of a maternity leave means that a pregnant
employee will not report for work only temporarily and that she will resume the performance of
her duties as soon as the leave allowance expires.
It is also clear that respondents exerted all efforts to' remain employed with Saudia. Each of
them repeatedly filed appeal letters (as much as five [5] letters in the case of Rebesencio 109)
asking Saudia to reconsider the ultimatum that they resign or be terminated along with the
forfeiture of their benefits. Some of them even went to Saudia's office to personally seek
reconsideration.110
Respondents also adduced a copy of the "Unified Employment Contract for Female Cabin
Attendants."111This contract deemed void the employment of a flight attendant who becomes
pregnant and threatened termination due to lack of medical fitness. 112 The threat of termination
 CONFLICT OF LAWS CASES 1

(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. 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
Saudia draws attention to how respondents' resignation letters were supposedly made in their entitled to separation pay in the amount of one (1) month's salary for every year of service until
own handwriting. This minutia fails to surmount all the other indications negating any the fmality of this Decision, with a fraction of a year of at least six (6) months being counted as
voluntariness on respondents' part. If at all, these same resignation letters are proof of how any one (1) whole year.
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 Moreover, "[m]oral damages are awarded in termination cases where the employee's dismissal
provided. These letterheads already had the word "RESIGNATION" typed on the subject was attended by bad faith, malice or fraud, or where it constitutes an act oppressive to labor,
portion of their respective headings when these were handed to respondents. 113 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
"In termination cases, the burden of proving just or valid cause for dismissing an employee and running afoul of the public interest that underlies employer-employee relationships. As
rests on the employer."114 In this case, Saudia makes much of how respondents supposedly such, respondents are entitled to moral damages.
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 To provide an "example or correction for the public good"121 as against such discriminatory and
the fact of their occurrence, nothing more. The voluntariness of respondents' departure from callous schemes, respondents are likewise entitled to exemplary damages.
Saudia is non sequitur.
In a long line of cases, this court awarded exemplary damages to illegally dismissed employees
Mere compliance with standard procedures or processes, such as the completion of their exit whose "dismissal[s were] effected in a wanton, oppressive or malevolent manner."122 This court
interviews, neither negates compulsion nor indicates voluntariness. 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
As with respondent's resignation letters, their exit interview forms even support their claim of sustained in the course of employment,124development of a medical condition due to the
illegal dismissal and militates against Saudia's arguments. These exit interview forms, as employer's own violation of the employment contract, 125and lodging of a Complaint against the
reproduced by Saudia in its own Petition, confirms the unfavorable conditions as regards employer.126 Exemplary damages were also awarded to employees who were deemed illegally
respondents' maternity leaves. Ma. Jopette's and Loraine's exit interview forms are particularly dismissed by an employer in an attempt to evade compliance with statutorily established
telling: employee benefits.127 Likewise, employees dismissed for supposedly just causes, but in
a. From Ma. Jopette's exit interview form: violation of due process requirements, were awarded exemplary damages. 128

�� �3. In what respects has the job met or failed to meet your expectations? These examples pale in comparison to the present controversy. Stripped of all unnecessary
THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE.116 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
b. From Loraine's exit interview form: 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
�� �1. What are your main reasons for leaving Saudia? What company are you joining? employees' security of tenure, but more so, to the Constitution's dictum of fundamental equality
�� ��� �xxx xxx xxx between men and women.129

�� ��� �Others The award of exemplary damages is, therefore, warranted, not only to remind employers of the
CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY)117 need to adhere to the requirements of procedural and substantive due process in termination
As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v. of employment, but more importantly, to demonstrate that gender discrimination should in no
Paramio,118 this court noted that "[i]f (a) there is clear proof that the waiver was wangled from case be countenanced.
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 Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal,
executed their quitclaims after having been unfairly given an ultimatum to resign or be respondents are likewise entitled to attorney's fees in the amount of 10% of the total monetary
terminated (and forfeit their benefits). award.130
V VI

33
 CONFLICT OF LAWS CASES 1

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.

34

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.
G.R. No. 122191 October 8, 1998
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and
set aside the Resolution1dated September 27, 1995 and the Decision 2 dated April 10, 1996 of
the Court of Appeals3 in CA-G.R. SP No. 36533,4 and the Orders5 dated August 29, 1994 6 and
February 2, 19957 that were issued by the trial court in Civil Case No. Q-93-18394.8
The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight
Attendant for its airlines based in Jeddah, Saudi Arabia. . . .
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.
35
CONFLICT OF LAWS CASES 1
One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia,
a few minutes before the departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to take a later flight to Jeddah
to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain
Khalid of the SAUDIA office brought her to a Saudi court where she was asked
to sign a document written in Arabic. They told her that this was necessary to
close the case against Thamer and Allah. As it turned out, plaintiff signed a
notice to her to appear before the court on June 27, 1993. Plaintiff then
returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to
Jeddah once again and see Miniewy on June 27, 1993 for further investigation.
Plaintiff did so after receiving assurance from SAUDIA's Manila manager,
Aslam Saleemi, that the investigation was routinary and that it posed no
danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi
court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi
judge interrogated plaintiff through an interpreter about the Jakarta incident.
After one hour of interrogation, they let her go. At the airport, however, just as
her plane was about to take off, a SAUDIA officer told her that the airline had
forbidden her to take flight. At the Inflight Service Office where she was told to
go, the secretary of Mr. Yahya Saddick took away her passport and told her to
remain in Jeddah, at the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the
same court where the judge, to her astonishment and shock, rendered a
decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi court
had tried her, together with Thamer and Allah, for what happened in Jakarta.
The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and
listening to the music in violation of Islamic laws; and (3) socializing with the
male crew, in contravention of Islamic tradition. 10
Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine
Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her upkeep,
she worked on the domestic flight of SAUDIA, while Thamer and Allah continued to serve in
the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, 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 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 Defendant's 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 SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed Order
reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi Arabian
Airlines filed, thru counsel, on September 20, 1994, and the Opposition thereto
of the plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply
therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October
24, 1994, considering that a perusal of the plaintiffs Amended Complaint,
which is one for the recovery of actual, moral and exemplary damages plus
attorney's fees, upon the basis of the applicable Philippine law, Article 21 of
the New Civil Code of the Philippines, is, clearly, within the jurisdiction of this
Court as regards the subject matter, and there being nothing new of substance
which might cause the reversal or modification of the order sought to be
reconsidered, the motion for reconsideration of the defendant, is DENIED.
SO ORDERED. 25
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary
Restraining Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining
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 SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction
dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is
hereby DENIED, after considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that
36
CONFLICT OF LAWS CASES 1
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 30dated April 10, 1996, now also assailed. It ruled that the Philippines is
an appropriate forum considering that the Amended Complaint's basis for recovery of damages
is Article 21 of the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It
further held that certiorari is not the proper remedy in a denial of a Motion to Dismiss, inasmuch
as the petitioner should have proceeded to trial, and in case of an adverse ruling, find recourse
in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for
Temporary Restraining Order 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 petitioner's April 30, 1996 Supplemental Petition
For Review With Prayer For A Temporary Restraining Order Within Ten (10)
Days From Notice Thereof. Further, the Revised Rules of Court should be
construed with liberality pursuant to Section 2, Rule 1 thereof.
III
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-
G.R. SP NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et
al." and filed its April 30, 1996 Supplemental Petition For Review With Prayer
For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the
15-day reglementary period as provided for under Section 1, Rule 45 of the
Revised Rules of Court. Therefore, the decision in CA-G.R. SP NO. 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 THIS CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the
outset. It maintains that private respondent's claim for alleged abuse of rights occurred in the
Kingdom of Saudi Arabia. It alleges that the existence of a foreign element qualifies the instant
case for the application of the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti
commissi rule. 34
On the other hand, private respondent contends that since her Amended Complaint is
based on Articles 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:
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.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were again put in service by
defendant SAUDIA. In September 1990, defendant SAUDIA transferred
plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors reauested 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 sigh 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
37
CONFLICT OF LAWS CASES 1
investigation. Plaintiff did so after receiving assurance from SAUDIA's Manila
manger, 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 Philippines Embassy in Jeddah. The latter helped her
pursue an appeal from the decision of the court. To pay for her upkeep, she
worked on the domestic flights of defendant SAUDIA while, ironically, Thamer
and Allah freely served the international flights. 39
Where the factual antecedents satisfactorily establish the existence of a foreign
element, we agree with petitioner that the problem herein could present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected by the diverse laws
of two or more states is said to contain a "foreign element". The presence of a foreign element
is inevitable since social and economic affairs of individuals and associations are rarely
confined to the geographic limits of their birth or conception. 40
The forms in which this foreign element may appear are many. 41 The foreign element
may simply consist in the fact that one of the parties to a contract is an alien or has a foreign
domicile, or that a contract between nationals of one State involves properties situated in
another State. In other cases, the foreign element may assume a complex form. 42
In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a flight
stewardess, events did transpire during her many occasions of travel across national borders,
particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a
"conflicts" situation to arise.
We thus find private respondent's assertion that the case is purely domestic, imprecise.
A conflicts problem presents itself here, and the question of jurisdiction 43 confronts the court a
quo.
After a careful study of the private respondent's Amended Complaint, 44 and the
Comment thereon, we note that she aptly predicated her cause of action on Articles 19 and 21
of the New Civil Code.

On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice give everyone his due and observe
honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:
The aforecited provisions on human relations were intended to expand
the concept of torts in this jurisdiction by granting adequate legal remedy for
the untold number of moral wrongs which is impossible for human foresight to
specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondent's assertion that violations of Articles 19 and
21 are actionable, with judicially enforceable remedies in the municipal forum.
Based on the 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:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as
the "Judiciary Reorganization Act of 1980", is hereby amended to read as
follows:
Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall
exercise exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of
interest, damages of whatever kind, attorney's fees, litigation
expenses, and cots or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in
such other cases in Metro Manila, where the demand,
exclusive of the above-mentioned items exceeds Two
hundred Thousand pesos (P200,000.00). (Emphasis ours)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of Court — the venue, Quezon
City, is appropriate:
Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial Court]
(a) xxx xxx xxx
(b) Personal actions. — All other actions may be commenced and tried
where the defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiff resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also weigh heavily
in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages
and obstacles to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient
forum, "vex", "harass", or "oppress" the defendant, e.g. by inflicting upon him needless
38
CONFLICT OF LAWS CASES 1
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 Morada's Amended Complaint. SAUDIA also filed an Answer In Ex Abundante
Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed, is
that SAUDIA prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA has
effectively submitted to the trial court's jurisdiction by praying for the dismissal of the Amended
Complaint on grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.: 51
We observe that the motion to dismiss filed on April 14, 1962, aside
from disputing the lower court's jurisdiction over defendant's person, prayed
for dismissal of the complaint on the ground that plaintiff's cause of action has
prescribed. By interposing such second ground in its motion to dismiss, Ker
and Co., Ltd. availed of an affirmative defense on the basis of which it prayed
the court to resolve controversy in its favor. For the court to validly decide the
said plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction
upon the latter's person, who, being the proponent of the affirmative defense,
should be deemed to have abandoned its special appearance and voluntarily
submitted itself to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of objecting to the
jurisdiction of the court over the person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court. If his motion is for any other
purpose than to object to the jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of the court. A special appearance
by motion made for the purpose of objecting to the jurisdiction of the court over
the person will be held to be a general appearance, if the party in said motion
should, for example, ask for a dismissal of the action upon the further ground
that the court had no jurisdiction over the subject matter. 52
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its exercise
thereof, justified.
As to the choice of applicable law, we note that choice-of-law problems seek to answer
two important questions: (1) What legal system should control a given situation where some of

the significant facts occurred in two or more states; and (2) to what extent should the chosen
legal system regulate the situation. 53
Several theories have been propounded in order to identify the legal system that should
ultimately control. Although ideally, all choice-of-law theories should intrinsically advance both
notions of justice and predictability, they do not always do so. The forum is then faced with the
problem of deciding which of these two important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what category
a certain set of facts or rules fall. This process is known as "characterization", or the "doctrine
of qualification". It is the "process of deciding whether or not the facts relate to the kind of
question specified in a conflicts rule." 55The purpose of "characterization" is to enable the forum
to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a factual situation, event,
or operative fact. 57An essential element of conflict rules is the indication of a "test" or
"connecting factor" or "point of contact". Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a connecting factor or point of contact,
such as the situs of the res, the place of celebration, the place of performance, or the place of
wrongdoing. 58
Note that one or more circumstances may be present to serve as the possible test for
the determination of the applicable law. 59 These "test factors" or "points of contact" or
"connecting factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence, his place
of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed
to be situated. In particular, the lex situs is decisive when real rights are
involved;
(4) the place where an act has been done, the locus actus, such as
the place where a contract has been made, a marriage celebrated, a will
signed or a tort committed. The lex loci actus is particularly important in
contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the
place of performance of contractual duties, or the place where a power of
attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should
govern their agreement, thelex loci intentionis;
(7) the place where judicial or administrative proceedings are
instituted or done. The lex fori — the law of the forum — is particularly
important because, as we have seen earlier, matters of "procedure" not going
to the substance of the claim involved are governed by it; and because the lex
fori applies whenever the content of the otherwise applicable foreign law is
excluded from application in a given case for the reason that it falls under one
of the exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all
legal relationships of the ship and of its master or owner as such. It also covers
contractual relationships particularly contracts of affreightment. 60 (Emphasis
ours.)
39
CONFLICT OF LAWS CASES 1
After a careful study of the pleadings on record, including allegations in the Amended
Complaint deemed admitted for purposes of the motion to dismiss, we are convinced that there
is reasonable basis for private respondent's assertion that although she was already working
in Manila, petitioner brought her to Jeddah on the pretense that she would merely testify in an
investigation of the charges she made against the two SAUDIA crew members for the attack
on her person while they were in Jakarta. As it turned out, she was the one made to face trial
for very serious charges, including adultery and violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that the "handing over" or "turning
over" of the person of private respondent to Jeddah officials, petitioner may have acted beyond
its duties as employer. Petitioner's purported act contributed to and amplified or even
proximately caused additional humiliation, misery and suffering of private respondent.
Petitioner thereby allegedly facilitated the arrest, detention and prosecution of private
respondent under the guise of petitioner's authority as employer, taking advantage of the trust,
confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the
alleged conviction and imprisonment of private respondent was wrongful. But these capped the
injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be
liable as claimed, to provide compensation or redress for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the "connecting
factor" or "point of contact" could be the place or places where the tortious conduct or lex loci
actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines
could be said as a situs of the tort (the place where the alleged tortious conduct took place).
This is because it is in the Philippines where petitioner allegedly deceived private respondent,
a Filipina residing and working here. According to her, she had honestly believed that petitioner
would, in the exercise of its rights and in the performance of its duties, "act with justice, give
her due and observe honesty and good faith." Instead, petitioner failed to protect her, she
claimed. That certain acts or parts of the injury allegedly occurred in another country is of no
moment. For in our view what is important here is the place where the over-all harm or the
totality of the alleged injury to the person, reputation, social standing and human rights of
complainant, had lodged, according to the plaintiff below (herein private respondent). All told,
it is not without basis to identify the Philippines as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort 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 complained of
and the place "having the most interest in the problem", we find, by way of recapitulation, that
the Philippine law on tort liability should have paramount application to and control in the
resolution of the legal issues arising out of this case. Further, we hold that the respondent
Regional Trial Court has jurisdiction over the parties and the subject matter of the complaint;
the appropriate venue is in Quezon City, which could properly apply Philippine law. Moreover,
we find untenable petitioner's insistence that "[s]ince private respondent instituted this suit, she
has the burden of pleading and proving the applicable Saudi law on the matter." 64As aptly said
by private respondent, she has "no obligation to plead and prove the law of the Kingdom of
Saudi Arabia since her cause of action is based on Articles 19 and 21" of the Civil Code of the
Philippines. In her Amended Complaint and subsequent pleadings, she never alleged that
Saudi law should govern this case. 65 And as correctly held by the respondent appellate court,
"considering that it was the petitioner who was invoking the applicability of the law of Saudi
Arabia, then the burden was on it [petitioner] to plead and to establish what the law of Saudi
Arabia is". 66
Lastly, no error could be imputed to the respondent appellate court in upholding the
trial court's denial of defendant's (herein petitioner's) motion to dismiss the case. Not only was
jurisdiction in order and venue properly laid, but appeal after trial was obviously available, and
expeditious trial itself indicated by the nature of the case at hand. Indubitably, the Philippines
is the state intimately concerned with the ultimate outcome of the case below, not just for the
benefit of all the litigants, but also for the vindication of the country's system of law and justice
in a transnational setting. With these guidelines in mind, the trial court must proceed to try and
adjudge the case in the light of relevant Philippine law, with due consideration of the foreign
element or elements involved. Nothing said herein, of course, should be construed as
prejudging the results of the case in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No.
Q-93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further proceedings.
SO ORDERED.
BANK OF AMERICA NT & SA, BANK OF AMERICA INTERNATIONAL, LTD., petitioners, vs.
COURT OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR., and
AURELIO K. LITONJUA, JR., respondents.
G.R. No. 120135 March 31, 2003
AUSTRIA-MARTINEZ, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the November 29, 1994 decision of the Court of Appeals 1 and the April 28, 1995 resolution
denying petitioners' motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for
brevity) filed a Complaint2 before the Regional Trial Court of Pasig against the Bank of America
NT&SA and Bank of America International, Ltd. (defendant banks for brevity) alleging that: they
were engaged in the shipping business; they owned two vessels: Don Aurelio and El
40
CONFLICT OF LAWS CASES 1
Champion, through their wholly-owned corporations; they deposited their revenues from said
business together with other funds with the branches of said banks in the United Kingdom and
Hongkong up to 1979; with their business doing well, the defendant banks induced them to
increase the number of their ships in operation, offering them easy loans to acquire said
vessels;3 thereafter, the defendant banks acquired, through their (Litonjuas') corporations as
the borrowers: (a) El Carrier4; (b) El General 5; (c) El Challenger6; and (d) El Conqueror7; the
vessels were registered in the names of their corporations; the operation and the funds derived
therefrom were placed under the complete and exclusive control and disposition of the
petitioners;8 and the possession the vessels was also placed by defendant banks in the hands
of persons selected and designated by them (defendant banks).9
The Litonjuas claimed that defendant banks as trustees did not fully render an account
of all the income derived from the operation of the vessels as well as of the proceeds of the
subsequent foreclosure sale;10 because of the breach of their fiduciary duties and/or
negligence of the petitioners and/or the persons designated by them in the operation of private
respondents' six vessels, the revenues derived from the operation of all the vessels declined
drastically; the loans acquired for the purchase of the four additional vessels then matured and
remained unpaid, prompting defendant banks to have all the six vessels, including the two
vessels originally owned by the private respondents, foreclosed and sold at public auction to
answer for the obligations incurred for and in behalf of the operation of the vessels; they
(Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten percent (10%)
of the acquisition cost of the four vessels and were left with the unpaid balance of their loans
with defendant banks.11 The Litonjuas prayed for the accounting of the revenues derived in the
operation of the six vessels and of the proceeds of the sale thereof at the foreclosure
proceedings instituted by petitioners; damages for breach of trust; exemplary damages and
attorney's fees.12
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and
lack of cause of action against them.13
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss,
thus:
"WHEREFORE, and in view of the foregoing consideration, the Motion to
Dismiss is hereby DENIED. The defendant is therefore, given a period of ten (10) days
to file its Answer to the complaint.
"SO ORDERED."14
Instead of filing an answer the defendant banks went to the Court of Appeals on a
"Petition for Review on Certiorari"15 which was aptly treated by the appellate court as a petition
for certiorari. They assailed the above-quoted order as well as the subsequent denial of their
Motion for Reconsideration.16 The appellate court dismissed the petition and denied petitioners'
Motion for Reconsideration.17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE
FACT THAT THE SEPARATE PERSONALITIES OF THE PRIVATE RESPONDENTS
(MERE STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL
BORROWERS) CLEARLY SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION
THAT THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT
WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT MANDATORY,

THERE ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING
WHETHER THE CHOICE OF FORUM SHOULD BE DISTURBED. UNDER THE
CIRCUMSTANCES SURROUNDING THE INSTANT CASE, DISMISSAL OF THE
COMPLAINT ON THE GROUND OF FORUM NON-CONVENIENS IS MORE
APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL
JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN
ACTION MAY BE THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT
FILED BY THE PRIVATE RESPONDENT. COROLLARY TO THIS, THE
RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT
PRIVATE RESPONDENTS ARE GUILTY OF FORUM SHOPPING." 18
As to the first assigned error: Petitioners argue that the borrowers and the registered
owners of the vessels are the foreign corporations and not private respondents Litonjuas who
are mere stockholders; and that the revenues derived from the operations of all the vessels are
deposited in the accounts of the corporations. Hence, petitioners maintain that these foreign
corporations are the legal entities that have the personalities to sue and not herein private
respondents; that private respondents, being mere shareholders, have no claim on the vessels
as owners since they merely have an inchoate right to whatever may remain upon the
dissolution of the said foreign corporations and after all creditors have been fully paid and
satisfied;19 and that while private respondents may have allegedly spent amounts equal to 10%
of the acquisition costs of the vessels in question, their 10% however represents their
investments as stockholders in the foreign corporations. 20
Anent the second assigned error, petitioners posit that while the application of the
principle of forum non conveniens is discretionary on the part of the Court, said discretion is
limited by the guidelines pertaining to the private as well as public interest factors in determining
whether plaintiffs' choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert21 and Piper Aircraft Co. vs. Reyno,22 to wit:
"Private interest factors include: (a) the relative ease of access to sources of
proof; (b) the availability of compulsory process for the attendance of unwilling
witnesses; (c) the cost of obtaining attendance of willing witnesses; or (d) all other
practical problems that make trial of a case easy, expeditious and inexpensive. Public
interest factors include: (a) the administrative difficulties flowing from court congestion;
(b) the local interest in having localized controversies decided at home; (c) the
avoidance of unnecessary problems in conflict of laws or in the application of foreign
law; or (d) the unfairness of burdening citizens in an unrelated forum with jury duty." 23
In support of their claim that the local court is not the proper forum, petitioners allege
the following:
"i) The Bank of America Branches involved, as clearly mentioned in the
Complaint, are based in Hongkong and England. As such, the evidence and the
witnesses are not readily available in the Philippines;
"ii) The loan transactions were obtained, perfected, performed, consummated
and partially paid outside the Philippines;
"iii) The monies were advanced outside the Philippines. Furthermore, the
mortgaged vessels were part of an offshore fleet, not based in the Philippines;
"iv) All the loans involved were granted to the Private Respondents'
foreign CORPORATIONS;
41
CONFLICT OF LAWS CASES 1
"v) The Restructuring Agreements were ALL governed by the laws of England;
"vi) The subsequent sales of the mortgaged vessels and the application of the
sales proceeds occurred and transpired outside the Philippines, and the deliveries of
the sold mortgaged vessels were likewise made outside the Philippines;
"vii) The revenues of the vessels and the proceeds of the sales of these
vessels were ALL deposited to the Accounts of the foreign CORPORATIONS abroad;
and
"viii) Bank of America International Ltd. is not licensed nor engaged in trade or
business in the Philippines."24
Petitioners argue further that the loan agreements, security documentation and all
subsequent restructuring agreements uniformly, unconditionally and expressly provided that
they will be governed by the laws of England; 25that Philippine Courts would then have to apply
English law in resolving whatever issues may be presented to it in the event it recognizes and
accepts herein case; that it would then be imposing a significant and unnecessary expense
and burden not only upon the parties to the transaction but also to the local court. Petitioners
insist that the inconvenience and difficulty of applying English law with respect to a wholly
foreign transaction in a case pending in the Philippines may be avoided by its dismissal on the
ground of forum non conveniens. 26
Finally, petitioners claim that private respondents have already waived their alleged
causes of action in the case at bar for their refusal to contest the foreign civil cases earlier filed
by the petitioners against them in Hongkong and England, to wit:
"1.) Civil action in England in its High Court of Justice, Queen's Bench Division
Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN TRANSPORT
NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER
SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC NAVIGATOS CORP. SA; (f)
EDDIE NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h) AURELIO K.
LITONJUA.
"2.) Civil action in England in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2245) against (a) EL CHALLENGER S.A., (b)
ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA and
(d) AURELIO KATIPUNAN LITONJUA.
"3.) Civil action in the Supreme Court of Hongkong High Court (Action No.
4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER
S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA
CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR., and
(h) EDUARDO KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court (Action No.
4040 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER
S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA
CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, RJ., and
(h) EDUARDO KATIPUNAN LITONJUA."
and that private respondents' alleged cause of action is already barred by the
pendency of another action or by litis pendentia as shown above.27

On the other hand, private respondents contend that certain material facts and
pleadings are omitted and/or misrepresented in the present petition for certiorari; that the
prefatory statement failed to state that part of the security of the foreign loans were mortgages
on a 39-hectare piece of real estate located in the Philippines; 28 that while the complaint was
filed only by the stockholders of the corporate borrowers, the latter are wholly-owned by the
private respondents who are Filipinos and therefore under Philippine laws, aside from the said
corporate borrowers being but their alter-egos, they have interests of their own in the
vessels.29 Private respondents also argue that the dismissal by the Court of Appeals of the
petition for certiorari was justified because there was neither allegation nor any showing
whatsoever by the petitioners that they had no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law from the Order of the trial judge denying their Motion to
Dismiss; that the remedy available to the petitioners after their Motion to Dismiss was denied
was to file an Answer to the complaint; 30 that as upheld by the Court of Appeals, the decision
of the trial court in not applying the principle of forum non conveniens is in the lawful exercise
of its discretion.31 Finally, private respondents aver that the statement of petitioners that the
doctrine of res judicata also applies to foreign judgment is merely an opinion advanced by them
and not based on a categorical ruling of this Court; 32 and that herein private respondents did
not actually participate in the proceedings in the foreign courts. 33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss cannot be the
subject of petition for certiorari. Petitioners should have filed an answer to the complaint,
proceed to trial and await judgment before making an appeal. As repeatedly held by this Court:
"An order denying a motion to dismiss is interlocutory and cannot be the
subject of the extraordinary petition for certiorari or mandamus. The remedy of the
aggrieved party is to file an answer and to interpose as defenses the objections raised
in his motion to dismiss, proceed to trial, and in case of an adverse decision, to elevate
the entire case by appeal in due course. xxx Under certain situations, recourse
to certiorari or mandamus is considered appropriate, i.e., (a) when the trial court issued
the order without or in excess of jurisdiction; (b) where there is patent grave abuse of
discretion by the trial court; or (c) appeal would not prove to be a speedy and adequate
remedy as when an appeal would not promptly relieve a defendant from the injurious
effects of the patently mistaken order maintaining the plaintiff's baseless action and
compelling the defendant needlessly to go through a protracted trial and clogging the
court dockets by another futile case."34
Records show that the trial court acted within its jurisdiction when it issued the assailed
Order denying petitioners' motion to dismiss. Does the denial of the motion to dismiss constitute
a patent grave abuse of discretion? Would appeal, under the circumstances, not prove to be a
speedy and adequate remedy? We will resolve said questions in conjunction with the issues
raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss
the complaint on the ground that plaintiffs have no cause of action against defendants since
plaintiffs are merely stockholders of the corporations which are the registered owners of the
vessels and the borrowers of petitioners?
No. Petitioners' argument that private respondents, being mere stockholders of the
foreign corporations, have no personalities to sue, and therefore, the complaint should be
dismissed, is untenable. A case is dismissible for lack of personality to sue upon proof that the
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CONFLICT OF LAWS CASES 1
plaintiff is not the real party-in-interest. Lack of personality to sue can be used as a ground for
a Motion to Dismiss based on the fact that the complaint, on the face thereof, evidently states
no cause of action.35 In San Lorenzo Village Association, Inc. vs. Court of Appeals,36 this Court
clarified that a complaint states a cause of action where it contains three essential elements of
a cause of action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the
defendant, and (3) the act or omission of the defendant in violation of said legal right. If these
elements are absent, the complaint becomes vulnerable to a motion to dismiss on the ground
of failure to state a cause of action.37 To emphasize, it is not the lack or absence of cause of
action that is a ground for dismissal of the complaint but rather the fact that the complaint states
no cause of action.38"Failure to state a cause of action" refers to the insufficiency of allegation
in the pleading, unlike "lack of cause of action" which refers to the insufficiency of factual basis
for the action. "Failure to state a cause of action" may be raised at the earliest stages of an
action through a motion to dismiss the complaint, while "lack of cause of action" may be raised
any time after the questions of fact have been resolved on the basis of stipulations, admissions
or evidence presented.39
In the case at bar, the complaint contains the three elements of a cause of action. It
alleges that: (1) plaintiffs, herein private respondents, have the right to demand for an
accounting from defendants (herein petitioners), as trustees by reason of the fiduciary
relationship that was created between the parties involving the vessels in question; (2)
petitioners have the obligation, as trustees, to render such an accounting; and (3) petitioners
failed to do the same.
Petitioners insist that they do not have any obligation to the private respondents as
they are mere stockholders of the corporation; that the corporate entities have juridical
personalities separate and distinct from those of the private respondents. Private respondents
maintain that the corporations are wholly owned by them and prior to the incorporation of such
entities, they were clients of petitioners which induced them to acquire loans from said
petitioners to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case,40
"xxx assuming that the allegation of facts constituting plaintiffs' cause of action
is not as clear and categorical as would otherwise be desired, any uncertainty thereby
arising should be so resolved as to enable a full inquiry into the merits of the action."
As this Court has explained in the San Lorenzo case, such a course, would preclude
multiplicity of suits which the law abhors, and conduce to the definitive determination and
termination of the dispute. To do otherwise, that is, to abort the action on account of the alleged
fatal flaws of the complaint would obviously be indecisive and would not end the controversy,
since the institution of another action upon a revised complaint would not be foreclosed. 41
Second Issue. Should the complaint be dismissed on the ground of forum non-
conveniens?
No. The doctrine of forum non-conveniens, literally meaning 'the forum is
inconvenient', emerged in private international law to deter the practice of global forum
shopping,42 that is to prevent non-resident litigants from choosing the forum or place wherein
to bring their suit for malicious reasons, such as to secure procedural advantages, to annoy
and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue.
Under this doctrine, 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.43
 CONFLICT OF LAWS CASES 1

Whether a suit should be entertained or dismissed on the basis of said doctrine WHEREFORE, the petition is DENIED for lack of merit.
depends largely upon the facts of the particular case and is addressed to the sound discretion Costs against petitioners.
of the trial court.44 In the case of Communication Materials and Design, Inc. vs. Court of SO ORDERED.
Appeals,45 this Court held that "xxx [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." 46 Evidently, all these requisites are
present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of
Appeals,47 that the doctrine of forum non conveniens should not be used as a ground for a
motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine
as a ground. This Court further ruled that 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; and
that the propriety of dismissing a case based on this principle of forum non conveniens requires
a factual determination, hence it is more properly considered a matter of defense. 48
Third issue. Are private respondents guilty of forum shopping because of the pendency
of foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and
where a final judgment in one case will amount to res judicata in the other.49 Parenthetically,
for litis pendentia to be a ground for the dismissal of an action there must be: (a) identity of the
parties or at least such as to represent the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity in
the two cases should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other.50
In case at bar, not all the requirements for litis pendentia are present. While there may
be identity of parties, notwithstanding the presence of other respondents, 51 as well as the
reversal in positions of plaintiffs and defendants 52, still the other requirements necessary for litis
pendentia were not shown by petitioner. It merely mentioned that civil cases were filed in
Hongkong and England without however showing the identity of rights asserted and the reliefs
sought for as well as the presence of the elements of res judicata should one of the cases be
adjudged.
As the Court of Appeals aptly observed:
"xxx [T]he petitioners, by simply enumerating the civil actions instituted abroad
involving the parties herein xxx, failed to provide this Court with relevant and clear
specifications that would show the presence of the above-quoted elements or
requisites for res judicata. While it is true that the petitioners in their motion for
reconsideration (CA Rollo, p. 72), after enumerating the various civil actions instituted
abroad, did aver that "Copies of the foreign judgments are hereto attached and made
integral parts hereof as Annexes 'B', 'C', 'D' and 'E'", they failed, wittingly or
inadvertently, to include a single foreign judgment in their pleadings submitted to this
Court as annexes to their petition. How then could We have been expected to rule on
this issue even if We were to hold that foreign judgments could be the basis for the
application of the aforementioned principle of res judicata?"53
Consequently, both courts correctly denied the dismissal of herein subject complaint.

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