THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD. petitioners, vs.

NATIONAL
LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND
MARCELO G. SANTOS, respondents.

DECISION
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
respondents 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 attorneys 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, Peoples
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), MHICL[10] 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
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 familys piggery
and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henks
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. Shmidts 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 attorneys 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 attorneys 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]
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 un-expired 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) attorneys fees of 10% of complainants total
award.

SO ORDERED.

On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor
Arbiter de Veras 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 petitioners urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition. [32]
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over
the petition and its annexes, they can not defend and sustain the position taken by the NLRC
in its assailed decision and orders. The Solicitor General prayed that he be excused from filing
a comment on behalf of the NLRC[33]
On April 30,1996, private respondent Santos filed his comment. [34]
On June 26, 1996, the Court granted the manifestation of the Solicitor General and
required the NLRC to file its own comment to the petition.[35]
 On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the
case involves purely foreign elements. The only link that the Philippines has with the case is
that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are 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 Peoples 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,
Peoples 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 NLRCs
decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2)
that MHICL was liable for Santos retrenchment, still MHC, as a separate and distinct juridical
entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital
stock. However, this is not enough to pierce the veil of corporate fiction between MHICL and
MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the
corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend a
crime.[41] It is done only when a corporation is a mere alter ego or business conduit of a person
or another corporation.
In Traders Royal Bank v. Court of Appeals,[42] we held that the mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is
not of itself a sufficient reason for disregarding the fiction of separate corporate personalities.
The tests in determining whether the corporate veil may be pierced are: First, the
defendant must have control or complete domination of the other corporations 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 MHICLs 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 employees 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 notenough 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 respondents 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.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.
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. CRAIG,respondents.

DECISION
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 Ducats obligation under an Agreement, dated January 27,
1983, whereby 1488, Inc. executed a Warranty Deed with Vendors 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, PHILSECs 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 excesspayment 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 Ducats 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 Daics 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.
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-IFLs 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 Ducats 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 of forum 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 COURTS 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. [6] Thus, 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 appellants 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 Philippine International Shipping Corp. v. Court of 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 plaintiffs 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 courts 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 courts 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
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 courts 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 latters 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
inpersonam 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 Guevarras 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.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.

\
PIONEER CONCRETE G.R. NO. 154830
PHILIPPINES, INC., PIONEER
PHILIPPINES HOLDINGS, and
PHILIP J. KLEPZIG,
Petitioners,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.

ANTONIO D. TODARO, Promulgated:

Respondent. June 8, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to annul and set aside
the Decision[1] of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155
and its Resolution[2] 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
ofBetonval 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 Motion[7] for the reconsideration of the trial court's Order of January 4, 1999 but the
trial court denied it via its Order[8] 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.

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.

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 thePhilippines, 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
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 respondents 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 Complaint[16] 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 Appeals[21]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
courts 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.
GIL MIGUEL T. PUYAT, petitioner, vs. RON ZABARTE, respondent.

DECISION
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:

xxxxxxxxx

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 [petitioners] 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 [petitioners]
Answer to Complaint in Case #C21-00265 dated April 1, 1991, Annex B of [respondents]
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 [respondents] 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 [respondents] [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
latters] 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:

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 attorneys 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 petitioners 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 respondents 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 judgments 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 Courts 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 respondents 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, petitioners
contention that he was not allowed to present evidence to substantiate his claims is clearly
untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a)
that there must be no genuine issue as to any material fact, except for the amount of damages;
and (b) that the party presenting the motion for summary judgment must be entitled to a
judgment as a matter of law.[17] As mentioned earlier, petitioner admitted that a foreign
judgment had been rendered against him and in favor of respondent, and that he had paid
$5,000 to the latter in partial compliance therewith. Hence, respondent, as the party presenting
the Motion for Summary Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised no
genuine issue, it relied instead on the finality of the foreign judgment which was, in fact,
partially executed. Hence, we shall show in the following discussion how the defenses
presented by petitioner failed to tender any genuine issue of fact, and why a full-blown trial was
not necessary for the resolution of the issues.

Jurisdiction

Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership
interest, was vested in the Securities and Exchange Commission, not in the Superior Court of
California, County of Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we
presume that such law, if any, is similar to Philippine law. We base this conclusion on the
presumption of identity or similarity, also known as processual presumption. [18] The
Complaint,[19] which respondent filed with the trial court, was for the enforcement of a foreign
judgment. He alleged therein that the action of the foreign court was for the collection of a sum
of money, breach of promissory notes, and damages.[20]
In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the
Securities and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over
matters enumerated in Section 5, PD 902-A,[21] prior to its latest amendment. If the foreign
court did not really have jurisdiction over the case, as petitioner claims, it would have been
very easy for him to show this. Since jurisdiction is determined by the allegations in a
complaint, he only had to submit a copy of the complaint filed with the foreign court. Clearly,
this issue did not warrant trial.

Rights to Counsel and to Due Process

Petitioner contends that the foreign judgment, which was in the form of a Compromise
Agreement, cannot be executed without the parties being assisted by their chosen
lawyers. The reason for this, he points out, is to eliminate collusion, undue influence and/or
improper exertion of ascendancy by one party over the other. He alleges that he discharged
his counsel during the proceedings, because he felt that the latter was not properly attending
to the case. The judge, however, did not allow him to secure the services of another
counsel. Insisting that petitioner settle the case with respondent, the judge practically imposed
the settlement agreement on him. In his Opposing Affidavit, petitioner states:

It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I

discharged him because I then felt that he was not properly attending to my case or was not
competent enough to represent my interest. I asked the Judge for time to secure another
counsel but I was practically discouraged from engaging one as the Judge was insistent that I
settle the case at once with the [respondent].Being a foreigner and not a lawyer at that I did not
know what to do. I felt helpless and the Judge and [respondents] 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 respondents] 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 [respondents] 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 [respondents] counsel. I was
then helpless as I had no counsel to assist me and the collusion between the Judge and
[respondents] 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. Respondents 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 judges 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,
petitioners 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, petitioners 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 petitioners 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, petitioners allegations sought to delay
the full effects of the judgment; hence, summary judgment was proper. On this point, we
concur with both courts.

Second Question: Forum Non Conveniens

Petitioner argues that the RTC should have refused to entertain the Complaint for
enforcement of the foreign judgment on the principle of forum non conveniens. He claims that
the trial court had no jurisdiction, because the case involved partnership interest, and there
was difficulty in ascertaining the applicable law in California. All the aspects of the transaction
took place in a foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if the exercise of
jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case for any of
the following practical reasons:

1) The belief that the matter can be better tried and decided elsewhere, either because the
main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum
shopping[,] merely to secure procedural advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non-residents or aliens when the
docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to be
maintained; and

The difficulty of ascertaining foreign law.[27]

None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the
present action, there was no more need for material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the local machinery to enforce the foreign
judgment, and no question raised as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed on
the basis of the above-mentioned principle depends largely upon the facts of each case and on
the sound discretion of the trial court.[28] Since the present action lodged in the RTC was for
the enforcement of a foreign judgment, there was no need to ascertain the rights and the
obligations of the parties based on foreign laws or contracts. The parties needed only to
perform their obligations under the Compromise Agreement they had entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in
personam rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of a
right as between the parties and their successors-in-interest by a subsequent title.[29]
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere --
enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it is
regularly performing its official duty.[30] Its judgment may, however, be assailed if there is
evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of
law or fact. But precisely, this possibility signals the need for a local trial court to exercise
jurisdiction. Clearly, the application of forum non 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.
Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.
 SECOND DIVISION

G.R. No. 198587, January 14, 2015

SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners, v. MA.

JOPETTE M. REBESENCIO, MONTASSAH B. SACAR-ADIONG, ROUEN RUTH A.
CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ, Respondents.

DECISION

LEONEN, J.:

All Filipinos are entitled to the protection of the rights guaranteed in the Constitution.

This is a Petition for Review on Certiorari with application for the issuance of a temporary
restraining order and/or writ of preliminary injunction under Rule 45 of the 1997 Rules of Civil
Procedure praying that judgment be rendered reversing and setting aside the June 16, 2011
Decision1 and September 13, 2011 Resolution2 of the Court of Appeals in CA-G.R. SP. No.
113006.

Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing
under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine office located at 4/F,
Metro House Building, Sen. Gil J. Puyat Avenue, Makati City.3 In its Petition filed with this
court, Saudia identified itself as follows:chanroblesvirtuallawlibrary

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;6Montassah B. Sacar-Adiong (Montassah) and Rouen Ruth A. Cristobal
(Rouen Ruth) on May 22, 1993;7and 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

Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base Manager,
Abdulmalik Saddik (Abdulmalik).13 Montassah was informed personally by Abdulmalik and a
certain Faisal Hussein on October 20, 2006 after being required to report to the office one (1)
month into her maternity leave.14 Rouen Ruth was also personally informed by Abdulmalik on
October 17, 2006 after being required to report to the office by her Group Supervisor. 15 Loraine
received a call on October 12, 2006 from her Group Supervisor, Dakila Salvador.16

Saudia anchored its disapproval of respondents' maternity leaves and demand for their
resignation on its "Unified Employment Contract for Female Cabin Attendants" (Unified
Contract).17 Under the Unified Contract, the employment of a Flight Attendant who becomes
pregnant is rendered void. It provides:chanroblesvirtuallawlibrary
(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, 2006.21Montassah filed her maternity leave application on August 29, 2006, and
its approval was already indicated in Saudia's computer system by August 30, 2006. 22 Rouen
Ruth filed her maternity leave application on September 13, 2006, 23 and Loraine filed her
maternity leave application on August 22, 2006.24

Rather than comply and tender resignation letters, respondents filed separate appeal letters
that were all rejected.25

Despite these initial rejections, respondents each received calls on the morning of November
6, 2006 from Saudia's office secretary informing them that their maternity leaves had been
approved. Saudia, however, was quick to renege on its approval. On the evening of November
6, 2006, respondents again received calls informing them that it had received notification from
Jeddah, Saudi Arabia that their maternity leaves had been disapproved. 26

Faced with the dilemma of resigning or totally losing their benefits, respondents executed
handwritten resignation letters. In Montassah's and Rouen Ruth's cases, their resignations
were executed on Saudia's blank letterheads that Saudia had provided. These letterheads
already had the word "RESIGNATION" typed on the subject portions of their headings when
these were handed to respondents.27

On November 8, 2007, respondents filed a Complaint against Saudia and its officers for illegal
dismissal and for underpayment of salary, overtime pay, premium pay for holiday, rest day,
premium, service incentive leave pay, 13th month pay, separation pay, night shift differentials,
medical expense reimbursements, retirement benefits, illegal deduction, lay-over expense and
allowances, moral and exemplary damages, and attorney's fees. 28 The case was initially
assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC NCR Case No. 00-11-
12342-07.

Saudia assailed the jurisdiction of the Labor Arbiter.29 It claimed that all the determining points
of contact referred to foreign law and insisted that the Complaint ought to be dismissed on the
ground offorum non conveniens.30 It added that respondents had no cause of action as they
resigned voluntarily.31

On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the
Decision32dismissing respondents' Complaint. The dispositive portion of this Decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises' considered, judgment is hereby rendered DISMISSING the instant
complaint for lack of jurisdiction/merit.33cralawlawlibrary
On respondents' appeal, the National Labor Relations Commission's Sixth Division reversed
the ruling of Executive Labor Arbiter Jambaro-Franco. It explained that "[considering that
complainants-appellants are OFWs, the Labor Arbiters and the NLRC has [sic] jurisdiction to
hear and decide their complaint for illegal termination." 34 On the matter of forum non
conveniens, it noted that there were no special circumstances that warranted its abstention
from exercising jurisdiction.35 On the issue of whether respondents were validly dismissed, it
held that there was nothing on record to support Saudia's claim that respondents resigned
voluntarily.

The dispositive portion of the November 19, 2009 National Labor Relations Commission
Decision36reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered finding the appeal
impressed with merit. The respondents-appellees are hereby directed to pay complainants-
appellants the aggregate amount of SR614,001.24 corresponding to their backwages and
separation pay plus ten (10%) percent thereof as attorney's fees. The decision of the Labor
Arbiter dated December 12, 2008 is hereby VACATED and SET ASIDE. Attached is the
computation prepared by this Commission and made an integral part of this
Decision.37cralawlawlibrary
In the Resolution dated February 11, 2010,38 the National Labor Relations Commission denied
petitioners' Motion for Reconsideration.

In the June 16, 2011 Decision,39 the Court of Appeals denied petitioners' Rule 65 Petition and
modified the Decision of the National Labor Relations Commission with respect to the award of
separation pay and backwages.

The dispositive portion of the Court of Appeals Decision reads:chanroblesvirtuallawlibrary

WHEREFORE, the instant petition is hereby DENIED. The Decision dated November 19, 2009
issued by public respondent, Sixth Division of the National Labor Relations Commission -
National Capital Region is MODIFIED only insofar as the computation of the award of
separation pay and backwages. For greater clarity, petitioners are ordered to pay private
respondents separation pay which shall be computed from private respondents' first day of
employment up to the finality of this decision, at the rate of one month per year of service and
backwages which shall be computed from the date the private respondents were illegally
terminated until finality of this decision. Consequently, the ten percent (10%) attorney's fees
shall be based on the total amount of the award. The assailed Decision is affirmed in all other
respects.

The labor arbiter is hereby DIRECTED to make a recomputation based on the

foregoing.40cralawlawlibrary
In the Resolution dated September 13, 2011, 41 the Court of Appeals denied petitioners' Motion
for Reconsideration.

Hence, this Appeal was filed.

The issues for resolution are the following:

First, whether the Labor Arbiter and the National Labor Relations Commission may exercise
jurisdiction over Saudi Arabian Airlines and apply Philippine law in adjudicating the present
dispute;

Second, whether respondents' voluntarily resigned or were illegally terminated; and

Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian
Airlines.chanRoblesvirtualLawlibrary

Summons were validly served on Saudia and jurisdiction over it validly acquired.

There is no doubt that the pleadings and summons were served on Saudia through its
counsel.42Saudia, however, claims that the Labor Arbiter and the National Labor Relations
Commission had no jurisdiction over it because summons were never served on it but on
"Saudia Manila."43 Referring to itself as "Saudia Jeddah," it claims that "Saudia Jeddah" and
not "Saudia Manila" was the employer of respondents because:

First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by
respondents;

Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and
benefits; and

Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. 44

Saudia posits that respondents' Complaint was brought against the wrong party because
"Saudia Manila," upon which summons was served, was never the employer of respondents. 45

Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare
allegation, there is no basis for concluding that "Saudia Jeddah" is distinct from "Saudia
Manila."

What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . . .
located at 4/F Metro House Building, Sen. Gil J. Puyat Avenue, Makati City." 46 Even in the
position paper that Saudia submitted to the Labor Arbiter,47 what Saudia now refers to as
"Saudia Jeddah" was then only referred to as "Saudia Head Office at Jeddah, KSA," 48 while
what Saudia now refers to as "Saudia Manila" was then only referred to as "Saudia's office in
Manila."49

By its own admission, Saudia, while a foreign corporation, has a Philippine office.

Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of
1991, provides the following:chanroblesvirtuallawlibrary
The phrase "doing business" shall include . . . opening offices, whether called "liaison"
offices or branches; . . . and any other act or acts that imply a continuity of commercial
dealings or arrangements and contemplate to that extent the performance of acts or works, or
the exercise of some of the functions normally incident to, and in progressive prosecution of
commercial gain or of the purpose and object of the business organization. (Emphasis
supplied)
A plain application of Section 3(d) of the Foreign Investments Act leads to no other conclusion
than that Saudia is a foreign corporation doing business in the Philippines. As such, Saudia
may be sued in the Philippines and is subject to the jurisdiction of Philippine tribunals.

Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" �
the latter being nothing more than Saudia's local office � service of summons to Saudia's
office in Manila sufficed to vest jurisdiction over Saudia's person in Philippine
tribunals.chanRoblesvirtualLawlibrary

II

Saudia asserts that Philippine courts and/or tribunals are not in a position to make an
intelligent decision as to the law and the facts. This is because respondents' Cabin Attendant
contracts require the application of the laws of Saudi Arabia, rather than those of the
Philippines.50 It claims that the difficulty of ascertaining foreign law calls into operation the
principle of forum non conveniens, thereby rendering improper the exercise of jurisdiction by
Philippine tribunals.51

A choice of law governing the validity of contracts or the interpretation of its provisions dees
not necessarily imply forum non conveniens. Choice of law and forum non conveniens are
entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of contracts.
Article 1306 of the Civil Code firmly ensconces this:chanroblesvirtuallawlibrary
Article 1306. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule against forum shopping. It is
designed to frustrate illicit means for securing advantages and vexing litigants that would
otherwise be possible if the venue of litigation (or dispute resolution) were left entirely to the
whim of either party.

Contractual choice of law provisions factor into transnational litigation and dispute resolution in
one of or in a combination of four ways: (1) procedures for settling disputes, e.g., arbitration;
(2) forum, i.e., venue; (3) governing law; and (4) basis for interpretation. Forum non
conveniens relates to, but is not subsumed by, the second of these.

Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws
of a given jurisdiction as the governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is equally true: The assumption of jurisdiction
by tribunals does notipso facto mean that it cannot apply and rule on the basis of the parties'
stipulation. In Hasegawa v. Kitamura:52ChanRoblesVirtualawlibrary
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:chanroblesvirtuallawlibrary
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
intentionis.

An author observed that Spanish jurists and commentators "favor lex loci intentionis."57 These
jurists and commentators proceed from the Civil Code of Spain, which, like our Civil Code, is
silent on what governs the intrinsic validity of contracts, and the same civil law traditions from
which we draw ours.

In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P. Eusebio
Construction, Inc.,58 manifested preference for allowing the parties to select the law applicable
to their contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule
followed by most legal systems, however, is that the intrinsic validity of a contract must be
governed by the lex contractus or "proper law of the contract." This is the law voluntarily
agreed upon by the parties (the lex loci voluntatis) or the law intended by them either expressly
or implicitly (the lex loci intentionis). The law selected may be implied from such factors as
substantial connection with the transaction, or the nationality or domicile of the parties.
Philippine courts would do well to adopt the first and most basic rule in most legal systems,
namely, to allow the parties to select the law applicable to their contract, subject to the
limitation that it is not against the law, morals, or public policy of the forum and that the chosen
law must bear a substantive relationship to the transaction.59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of
the laws of Saudi Arabia. It insists that the need to comply with these stipulations calls into
operation the doctrine of forum non conveniens and, in turn, makes it necessary for Philippine
tribunals to refrain from exercising jurisdiction.

As mentioned, contractual choice of laws factors into transnational litigation in any or a

combination of four (4) ways. Moreover, forum non conveniens relates to one of these:
choosing between multiple possible fora.

Nevertheless, the possibility of parallel litigation in multiple fora � along with the host of
difficulties it poses � is not unique to transnational litigation. It is a difficulty that similarly arises
in disputes well within the bounds of a singe jurisdiction.

When parallel litigation arises strictly within the context of a single jurisdiction, such rules as
those on forum shopping, litis pendentia, and res judicata come into operation. Thus, in the
Philippines, the 1997 Rules on Civil Procedure provide for willful and deliberate forum
shopping as a ground not only for summary dismissal with prejudice but also for citing parties
and counsels in direct contempt, as well as for the imposition of administrative
sanctions.60 Likewise, the same rules expressly provide that a party may seek the dismissal of
a Complaint or another pleading asserting a claim on the ground "[t]hat there is another action
pending between the same parties for the same cause," i.e., litis pendentia, or "[t]hat the cause
of action is barred by a prior judgment,"61 i.e., res judicata.

Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a
means of addressing the problem of parallel litigation. While the rules of forum shopping, litis
pendentia, and res judicata are designed to address the problem of parallel litigation within a
single jurisdiction, forum non conveniens is a means devised to address parallel litigation
arising in multiple jurisdictions.

Forum non conveniens literally translates to "the forum is inconvenient."62 It is a concept in

private international law and was devised to combat the "less than honorable" reasons and
excuses that litigants use to secure procedural advantages, annoy and harass defendants,
avoid overcrowded dockets, and select a "friendlier" venue. 63 Thus, the doctrine of forum non
conveniens addresses the same rationale that the rule against forum shopping does, albeit on
a multijurisdictional scale.

Forum non conveniens, like res judicata,64 is a concept originating in common law.65 However,
unlike the rule on res judicata, as well as those on litis pendentia and forum shopping, forum
non conveniensfinds no textual anchor, whether in statute or in procedural rules, in our civil law
system. Nevertheless, jurisprudence has applied forum non conveniens as basis for a court to
decline its exercise of jurisdiction.66

Forum non conveniens is soundly applied not only to address parallel litigation and undermine
a litigant's capacity to vex and secure undue advantages by engaging in forum shopping on an
international scale. It is also grounded on principles of comity and judicial efficiency.

Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on

account offorum non conveniens is a deferential gesture to the tribunals of another sovereign.
It is a measure that prevents the former's having to interfere in affairs which are better and
more competently addressed by the latter. Further, forum non conveniens entails a recognition
not only that tribunals elsewhere are better suited to rule on and resolve a controversy, but
also, that these tribunals arebetter positioned to enforce judgments and, ultimately, to dispense
justice. Forum non conveniensprevents the embarrassment of an awkward situation where a
tribunal is rendered incompetent in the face of the greater capability � both analytical and
practical � of a tribunal in another jurisdiction.

The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of

efficiency and economy as it is a matter of international courtesy. A court would effectively be
neutering itself if it insists on adjudicating a controversy when it knows full well that it is in no
position to enforce its judgment. Doing so is not only an exercise in futility; it is an act of
frivolity. It clogs the dockets of a.tribunal and leaves it to waste its efforts on affairs, which,
given transnational exigencies, will be reduced to mere academic, if not trivial, exercises.

Accordingly, under the doctrine of forum non conveniens, "a court, in conflicts of law
cases, may refuse impositions on its jurisdiction where it is not the most 'convenient' or
available forum and the parties are not precluded from seeking remedies
elsewhere."67 In Puyat v. Zabarte,68 this court recognized the following situations as among
those that may warrant a court's desistance from exercising
jurisdiction:chanroblesvirtuallawlibrary
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 asforum
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 offorum 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
toforum non conveniens based merely on a perceived, likely, or hypothetical multiplicity of fora.
Thus, a defendant must also plead and show that a prior suit has, in fact, been brought in
another jurisdiction.

The existence of a prior suit makes real the vexation engendered by duplicitous litigation, the
embarrassment of intruding into the affairs of another sovereign, and the squandering of
judicial efforts in resolving a dispute already lodged and better resolved elsewhere. As has
been noted:chanroblesvirtuallawlibrary
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 jurisdictionand 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
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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."
Consistent with this, this court's pronouncements in Pakistan International Airlines
Corporation83 are clear and unmistakable:chanroblesvirtuallawlibrary
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement, and, secondly,
lays the venue for settlement of any dispute arising out of or in connection with the agreement
"only [in] courts of Karachi, Pakistan". The first clause of paragraph 10 cannot be invoked to
prevent the application of Philippine labor laws and'regulations to the subject matter of this
case, i.e., the employer-employee relationship between petitioner PIA and private
respondents. We have already pointed out that the relationship is much affected with public
interest and that the otherwise applicable Philippine laws and regulations cannot be rendered
illusory by the parties agreeing upon some other law to govern their relationship. . . . Under
these circumstances, paragraph 10 of the employment agreement cannot be given effect so as
to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine
law.84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to be) the illegal termination of
respondents' employment, this case is immutably a matter of public interest and public policy.
Consistent with clear pronouncements in law and jurisprudence, Philippine laws properly find
application in and govern this case. 'Moreover, as this premise for Saudia's insistence on the
application forum non conveniens has been shattered, it follows that Philippine tribunals may
properly assume jurisdiction over the present controversy. Philippine jurisprudence provides
ample illustrations of when a court's renunciation of jurisdiction on account of forum non
conveniens is proper or improper.'

In Philsec Investment Corporation v. Court of Appeals,85 this court noted that the trial court
failed to consider that one of the plaintiffs was a domestic corporation, that one of the
defendants was a Filipino, and that it was the extinguishment of the latter's debt that was the
object of the transaction subject of the litigation. Thus, this court held, among others, that the
trial court's refusal to assume jurisdiction was not justified by forum non conveniens and
remanded the case to the trial court.

In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained the trial court's assumption
of jurisdiction considering that the trial court could properly enforce judgment on the petitioner
which was a foreign corporation licensed to do business in the Philippines.

In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no reason to disturb the trial
court's assumption of jurisdiction over a case in which, as noted by the trial court, "it is more
convenient to hear and decide the case in the Philippines because Todaro [the plaintiff] resides
in the Philippines and the contract allegedly breached involve[d] employment in the
Philippines."88

In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this court held that the fact that
the complainant in an illegal dismissal case was a Canadian citizen and a repatriate did not
warrant the application of forum non conveniens considering that: (1) the Labor Code does not
include forum non conveniens as a ground for the dismissal of a complaint for illegal dismissal;
(2) the propriety of dismissing a case based on forum non conveniens requires a factual
determination; and (3) the requisites for assumption of jurisdiction as laid out in Bank of
America, NT&SA90 were all satisfied.

In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations
Commission91 that the National Labor Relations Q Commission was a seriously inconvenient
forum. In that case, private respondent Marcelo G. Santos was working in the Sultanate of
Oman when he received a letter from Palace Hotel recruiting him for employment in Beijing,
China. Santos accepted the offer. Subsequently, however, he was released from employment
supposedly due to business reverses arising from political upheavals in China (i.e., the
Tiananmen Square incidents of 1989). Santos later filed a Complaint for illegal dismissal
impleading Palace Hotel's General Manager, Mr. Gerhard Schmidt, the Manila Hotel
International Company Ltd. (which was, responsible for training Palace Hotel's personnel and
staff), and the Manila Hotel Corporation (which owned 50% of Manila Hotel International
Company Ltd.'s capital stock).

In ruling against the National Labor Relations Commission's exercise of jurisdiction, this court
noted that the main aspects of the case transpired in two (2) foreign jurisdictions, Oman and
China, and that the case involved purely foreign elements. Specifically, Santos was directly
hired by a foreign employer through correspondence sent to Oman. Also, the proper
defendants were neither Philippine nationals nor engaged in business in the Philippines, while
the main witnesses were not residents of the Philippines. Likewise, this court noted that the
National Labor Relations Commission was in no position to conduct the following: first,
determine the law governing the employment contract, as it was entered into in foreign soil;
second, determine the facts, as Santos' employment was terminated in Beijing; and third,
enforce its judgment, since Santos' employer, Palace Hotel, was incorporated under the laws
of China and was not even served with summons.

Contrary to Manila Hotel, the case now before us does not entail a preponderance of linkages
that favor a foreign jurisdiction.

Here, the circumstances of the parties and their relation do not approximate the circumstances
enumerated in Puyat,92 which this court recognized as possibly justifying the desistance of
Philippine tribunals from exercising jurisdiction.

First, there is no basis for concluding that the case can be more conveniently tried elsewhere.
As established earlier, Saudia is doing business in the Philippines. For their part, all four (4)
respondents are Filipino citizens maintaining residence in the Philippines and, apart from their
previous employment with Saudia, have no other connection to the Kingdom of Saudi Arabia. It
would even be to respondents' inconvenience if this case were to be tried elsewhere.

Second, the records are bereft of any indication that respondents filed their Complaint in an
effort to engage in forum shopping or to vex and inconvenience Saudia.

Third, there is no indication of "unwillingness to extend local judicial facilities to non-residents

or aliens."93 That Saudia has managed to bring the present controversy all the way to this court
proves this.

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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
"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.chanRoblesvirtualLawlibrary

IV

Respondents were illegally terminated.

In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary resignation as "the voluntary
act of an employee who is in a situation where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate
oneself from employment. It is a formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of relinquishment." 102 Thus,
essential to the act of resignation is voluntariness. It must be the result of an employee's
exercise of his or her own will.

In the same case of Bilbao, this court advanced a means for determining whether an employee
resigned voluntarily:chanroblesvirtuallawlibrary
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."111 This contract deemed void the employment of a flight attendant who becomes
pregnant and threatened termination due to lack of medical fitness. 112 The threat of termination
(and the forfeiture of benefits that it entailed) is enough to compel a reasonable person in
respondents' position to give up his or her employment.

Saudia draws attention to how respondents' resignation letters were supposedly made in their
own handwriting. This minutia fails to surmount all the other indications negating any
voluntariness on respondents' part. If at all, these same resignation letters are proof of how
any supposed resignation did not arise from respondents' own initiative. As earlier pointed out,
respondents' resignations were executed on Saudia's blank letterheads that Saudia had
provided. These letterheads already had the word "RESIGNATION" typed on the subject
portion of their respective headings when these were handed to
respondents.113ChanRoblesVirtualawlibrary

"In termination cases, the burden of proving just or valid cause for dismissing an employee
rests on the employer."114 In this case, Saudia makes much of how respondents supposedly
completed their exit interviews, executed quitclaims, received their separation pay, and took
more than a year to file their Complaint.115 If at all, however, these circumstances prove only
the fact of their occurrence, nothing more. The voluntariness of respondents' departure from
Saudia is non sequitur.

Mere compliance with standard procedures or processes, such as the completion of their exit
interviews, neither negates compulsion nor indicates voluntariness.

As with respondent's resignation letters, their exit interview forms even support their claim of
illegal dismissal and militates against Saudia's arguments. These exit interview forms, as
reproduced by Saudia in its own Petition, confirms the unfavorable conditions as regards
respondents' maternity leaves. Ma. Jopette's and Loraine's exit interview forms are particularly
telling:chanroblesvirtuallawlibrary
a. From Ma. Jopette's exit interview form:

�� �3. In what respects has the job met or failed to meet your expectations?

THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE.116

b. From Loraine's exit interview form:

�� �1. What are your main reasons for leaving Saudia? What company are you joining?

�� ��� �xxx xxx xxx

�� ��� �Others

CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY)117

As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v. Paramio,118 this
court noted that "[i]f (a) there is clear proof that the waiver was wangled from an unsuspecting
or gullible person; or (b) the terms of the settlement are unconscionable, and on their face
invalid, such quitclaims must be struck down as invalid or illegal."119 Respondents executed
their quitclaims after having been unfairly given an ultimatum to resign or be terminated (and
forfeit their benefits).chanRoblesvirtualLawlibrary

Having been illegally and unjustly dismissed, respondents are entitled to full backwages and
benefits from the time of their termination until the finality of this Decision. They are likewise
entitled to separation pay in the amount of one (1) month's salary for every year of service until
the fmality of this Decision, with a fraction of a year of at least six (6) months being counted as
one (1) whole year.

Moreover, "[m]oral damages are awarded in termination cases where the employee's dismissal
was attended by bad faith, malice or fraud, or where it constitutes an act oppressive to labor,
or where it was done in a manner contrary to morals, good customs or public policy." 120 In this
case, Saudia terminated respondents' employment in a manner that is patently discriminatory
and running afoul of the public interest that underlies employer-employee relationships. As
such, respondents are entitled to moral damages.

To provide an "example or correction for the public good"121 as against such discriminatory and
callous schemes, respondents are likewise entitled to exemplary damages.

In a long line of cases, this court awarded exemplary damages to illegally dismissed
employees whose "dismissal[s were] effected in a wanton, oppressive or malevolent
manner."122 This court has awarded exemplary damages to employees who were terminated
on such frivolous, arbitrary, and unjust grounds as membership in or involvement with labor
unions,123 injuries sustained in the course of employment,124 development of a medical
condition due to the employer's own violation of the employment contract, 125 and lodging of a
Complaint against the employer.126 Exemplary damages were also awarded to employees who
were deemed illegally dismissed by an employer in an attempt to evade compliance with
statutorily established employee benefits.127 Likewise, employees dismissed for supposedly
just causes, but in violation of due process requirements, were awarded exemplary
damages.128

These examples pale in comparison to the present controversy. Stripped of all unnecessary
complexities, respondents were dismissed for no other reason than simply that they were
pregnant. This is as wanton, oppressive, and tainted with bad faith as any reason for
termination of employment can be. This is no ordinary case of illegal dismissal. This is a case
of manifest gender discrimination. It is an affront not only to our statutes and policies on
employees' security of tenure, but more so, to the Constitution's dictum of fundamental equality
between men and women.129

The award of exemplary damages is, therefore, warranted, not only to remind employers of the
need to adhere to the requirements of procedural and substantive due process in termination
of employment, but more importantly, to demonstrate that gender discrimination should in no
case be countenanced.

Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal,
respondents are likewise entitled to attorney's fees in the amount of 10% of the total monetary
award.130

VI

Petitioner Brenda J. Betia may not be held liable.

A corporation has a personality separate and distinct from those of the persons composing it.
Thus, as a rule, corporate directors and officers are not liable for the illegal termination of a
corporation's employees. It is only when they acted in bad faith or with malice that they
become solidarity liable with the corporation.131

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever

Electrical,132 this court clarified that "[b]ad faith does not connote bad judgment or negligence;
it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means
breach of a known duty through some motive or interest or ill will; it partakes of the nature of
fraud."133

Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or with
malice as regards their termination. Thus, she may not be held solidarity liable with
Saudia.cralawred

WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not solidarity
liable with petitioner Saudi Arabian Airlines, and second, that petitioner Saudi Arabian Airlines
is liable for moral and exemplary damages. The June 16, 2011 Decision and the September
13, 2011 Resolution of the Court of Appeals in CA-G.R. SP. No. 113006 are
hereby AFFIRMED in all other respects. Accordingly, petitioner Saudi Arabian Airlines is
ordered to pay respondents:

(1) Full backwages and all other benefits computed from the respective dates in which each
of the respondents were illegally terminated until the finality of this Decision;
(2) Separation pay computed from the respective dates in which each of the respondents
commenced employment until the finality of this Decision at the rate of one (1) month's
salary for every year of service, with a fraction of a year of at least six (6) months being
 counted as one (1) whole year;
(3) Moral damages in the amount of P100,000.00 per respondent;
(4) Exemplary damages in the amount of P200,000.00 per respondent; and
(5) Attorney's fees equivalent to 10% of the total award.

Interest of 6% per annum shall likewise be imposed on the total judgment award from the
finality of this Decision until full satisfaction thereof.

This case is REMANDED to the Labor Arbiter to make a detailed computation of the amounts
due to respondents which petitioner Saudi Arabian Airlines should pay without delay.

SO ORDERED.chanroblesvirtuallawlibrary

Carpio, (Chairperson), Velasco, Jr.,*Del Castillo, and Mendoza, JJ., concur.

G.R. No. 122191 October 8, 1998

SAUDI ARABIAN AIRLINES, petitioner,

vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his
capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon
City, respondents.

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 Decision2 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.

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 16thereto 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 herein petitioner is not clearly entitled thereto (Unciano Paramedical
College, et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second
Division).

SO ORDERED.

On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for
Review with Prayer for Temporary Restraining Order dated October 13, 1995.

However, during the pendency of the instant Petition, respondent Court of Appeals
rendered the Decision 30 dated April 10, 1996, now also assailed. It ruled that the
Philippines is an appropriate forum considering that the Amended 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:

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
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 conflictsproblem 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 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." 55 The purpose of
"characterization" is to enable the forum to select the proper law. 56

Our starting point of analysis here is not a legal relation, but a factual situation, event,
or operative fact. 57 An essential element of conflict rules is the indication of a "test" or
"connecting factor" or "point of contact". Choice-of-law rules invariably consist of a
factual relationship (such as property right, contract claim) and a connecting factor or
point of contact, such as the situs of the res, the place of celebration, the place of
performance, or the place of wrongdoing. 58

Note that one or more circumstances may be present to serve as the possible test for
the determination of the applicable law. 59 These "test factors" or "points of contact" or
"connecting factors" could be any of the following:

(1) The nationality of a person, his domicile, his residence, his place of
sojourn, or his origin;

(2) the seat of a legal or juridical person, such as a corporation;

(3) the situs of a thing, that is, the place where a thing is, or is deemed to
be situated. In particular, the lex situs is decisive when real rights are
involved;

(4) the place where an act has been done, the locus actus, such as the
place where a contract has been made, a marriage celebrated, a will signed
or a tort committed. The lex loci actus is particularly important in contracts
and torts;

(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney
is to be exercised;
 (6) the intention of the contracting parties as to the law that should govern
their agreement, the lex loci intentionis;

(7) the place where judicial or administrative proceedings are instituted or

done. The lex fori — the law of the forum — is particularly important
because, as we have seen earlier, matters of "procedure" not going to the
substance of the claim involved are governed by it; and because the lex
fori applies whenever the content of the otherwise applicable foreign law is
excluded from application in a given case for the reason that it falls under
one of the exceptions to the applications of foreign law; and

(8) the flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its master or owner as such. It also covers
contractual relationships particularly contracts of
affreightment. 60 (Emphasis ours.)

After a careful study of the pleadings on record, including allegations in the Amended
Complaint deemed admitted for purposes of the motion to dismiss, we are convinced
that there is reasonable basis for private respondent's assertion that although she was
already working in Manila, petitioner brought her to Jeddah on the pretense that she
would merely testify in an investigation of the charges she made against the two
SAUDIA crew members for the attack on her person while they were in Jakarta. As it
turned out, she was the one made to face trial for very serious charges, including
adultery and violation of Islamic laws and tradition.

There is likewise logical basis on record for the claim that the "handing over" or
"turning over" of the person of private respondent to Jeddah officials, petitioner may
have acted beyond its duties as employer. Petitioner's purported act contributed to and
amplified or even proximately caused additional humiliation, misery and suffering of
private respondent. Petitioner thereby allegedly facilitated the arrest, detention and
prosecution of private respondent under the guise of petitioner's authority as employer,
taking advantage of the trust, confidence and faith she reposed upon it. As purportedly
found by the Prince of Makkah, the alleged conviction and imprisonment of private
respondent was wrongful. But these capped the injury or harm allegedly inflicted upon
her person and reputation, for which petitioner could be liable as claimed, to provide
compensation or redress for the wrongs done, once duly proven.

Considering that the complaint in the court a quo is one involving torts, the "connecting
factor" or "point of contact" could be the place or places where the tortious conduct
or lex loci actus occurred. And applying the torts principle in a conflicts case, we find
that the Philippines could be said as a situs of the tort (the place where the alleged
tortious conduct took place). This is because it is in the Philippines where petitioner
allegedly deceived private respondent, a Filipina residing and working here. According
to her, she had honestly believed that petitioner would, in the exercise of its rights and
in the performance of its duties, "act with justice, give her 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." 64 As aptly said by private respondent,
she has "no obligation to plead and prove the law of the Kingdom of Saudi Arabia since
her cause of action is based on Articles 19 and 21" of the Civil Code of the Philippines.
In her Amended Complaint and subsequent pleadings, she never alleged that Saudi law
should govern this case. 65 And as correctly held by the respondent appellate court,
"considering that it was the petitioner who was invoking the applicability of the law of
Saudi Arabia, then the burden was on it [petitioner] to plead and to establish what the
law of Saudi Arabia is".66

Lastly, no error could be imputed to the respondent appellate court in upholding the
trial court's denial of defendant's (herein petitioner's) motion to dismiss the case. Not
only was jurisdiction in order and venue properly laid, but appeal after trial was
obviously available, and expeditious trial itself indicated by the nature of the case at
hand. Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below, not just for the benefit of all the litigants, but also for the
vindication of the country's system of law and justice in a transnational setting. With
these guidelines in mind, the trial court must proceed to try and adjudge the case in the
light of relevant Philippine law, with due consideration of the foreign element or
elements involved. Nothing said herein, of course, should be construed as prejudging
the results of the case in any manner whatsoever.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-
93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED
to Regional Trial Court of Quezon City, Branch 89 for further proceedings.

SO ORDERED.
G.R. No. 120135 March 31, 2003

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.

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 Appeals1 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 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 General5; (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 OFFORUM 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;

"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 bylitis 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 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

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.44 In the case of Communication Materials and Design, Inc. vs. Court of 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 offorum 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 defendants52, 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.

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioners.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing and Callejo, Sr., JJ., concur.