G.R. No. 122191 October 8, 1998
When she did, a certain Khalid of the SAUDIA
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
1
Officer of SAUDIA.
office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it turned
out, plaintiff signed a notice to her to appear before the court on
June 27, 1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993 for
further investigation. Plaintiff did so after receiving assurance
from SAUDIA's Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on June
28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take flight. At the Inflight Service
Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah,
at the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to
the same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing her
to five months imprisonment and to 286 lashes. Only then did she
realize that the Saudi court had tried her, together with Thamer
and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing and listening
to the music in violation of Islamic laws; and (3) socializing with
the male crew, in contravention of Islamic tradition. 10
Facing conviction, private respondent sought the help of her
employer, petitioner SAUDIA. Unfortunately, she was denied any
assistance. She then asked the Philippine Embassy in Jeddah to
help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while
Thamer and Allah continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah
dismissed the case against her and allowed her to leave Saudi
Arabia. Shortly before her return to Manila, 12 she was terminated
from the service by SAUDIA, without her being informed of the
cause.
On November 23, 1993, Morada filed a Complaint 13 for damages
against SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country
manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To
Dismiss 14 which raised the following grounds, to wit: (1) that the
Complaint states no cause of action against Saudia; (2) that
defendant Al-Balawi is not a real party in interest; (3) that the
claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court
has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to
Dismiss) 15. Saudia filed a reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended
Complaint 17 wherein Al-Balawi was dropped as party defendant.
On August 11, 1994, Saudia filed its Manifestation and Motion to
Dismiss Amended Complaint 18.
The trial court issued an Order 19 dated August 29, 1994 denying
the Motion to Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to
Dismiss, SAUDIA filed on September 20, 1994, its Motion for
Reconsideration 21 of the Order dated August 29, 1994. It alleged
that the trial court has no jurisdiction to hear and try the case on
the basis of Article 21 of the Civil Code, since the proper law
applicable is the law of the Kingdom of Saudi Arabia. On October
14, 1994, Morada filed her Opposition 22(To Defendant's Motion
for Reconsideration).
In the Reply 23 filed with the trial court on October 24, 1994,
SAUDIA alleged that since its Motion for Reconsideration raised
lack of jurisdiction as its cause of action, the Omnibus Motion
Rule does not apply, even if that ground is raised for the first time
on appeal. Additionally, SAUDIA alleged that the Philippines does
not have any substantial interest in the prosecution of the instant
case, and hence, without jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order 24 dated
February 2, 1995, denying SAUDIA's Motion for Reconsideration.
The pertinent portion of the assailed Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi
Arabian Airlines filed, thru counsel, on September 20, 1994, and
the Opposition thereto of the plaintiff filed, thru counsel, on
October 14, 1994, as well as the Reply therewith of defendant
Saudi Arabian Airlines filed, thru counsel, on October 24, 1994,
considering that a perusal of the plaintiffs Amended Complaint,
which is one for the recovery of actual, moral and exemplary
damages plus attorney's fees, upon the basis of the applicable
Philippine law, Article 21 of the New Civil Code of the Philippines,
is, clearly, within the jurisdiction of this Court as regards the
subject matter, and there being nothing new of substance which
might cause the reversal or modification of the order sought to be
reconsidered, the motion for reconsideration of the defendant, is
DENIED.
SO ORDERED. 25
Consequently, on February 20, 1995, SAUDIA filed its Petition
for Certiorari and Prohibition with Prayer for Issuance of Writ of
Preliminary Injunction and/or Temporary Restraining
Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with
Temporary Restraining Order 27 dated February 23, 1995,
prohibiting the respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.
In another Resolution 28 promulgated on September 27, 1995,
now assailed, the appellate court denied SAUDIA's Petition for
the Issuance of a Writ of Preliminary Injunction dated February
18, 1995, to wit:
The Petition for the Issuance of a Writ of
Preliminary Injunction is hereby DENIED,
after considering the Answer, with Prayer to
Deny Writ of Preliminary Injunction (Rollo, p.
135) the Reply and Rejoinder, it appearing
that 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.
2
However, during the pendency of the instant Petition, respondent
Court of Appeals rendered the Decision 30dated April 10, 1996,
now also assailed. It ruled that the Philippines is an appropriate
forum considering that the Amended Complaint's basis for
recovery of damages is Article 21 of the Civil Code, and thus,
clearly within the jurisdiction of respondent Court. It further held
that certiorari is not the proper remedy in a denial of a Motion to
Dismiss, inasmuch as the petitioner should have proceeded to
trial, and in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for
Review with Prayer for Temporary Restraining Order 31 dated
April 30, 1996, given due course by this Court. After both parties
submitted their Memoranda, 32 the instant case is now deemed
submitted for decision.
Petitioner SAUDIA raised the following issues:
I
The trial court has no jurisdiction to hear and try Civil Case No. Q-
93-18394 based on Article 21 of the New Civil Code since the
proper law applicable is the law of the Kingdom of Saudi Arabia
inasmuch as this case involves what is known in private
international law as a "conflicts problem". Otherwise, the
Republic of the Philippines will sit in judgment of the acts done
by another sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a
jurisdictional requirement. Besides, the matter as to absence of
leave of court is now moot and academic when this Honorable
Court required the respondents to comment on petitioner's April
30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order Within Ten (10) Days From Notice
Thereof. Further, the Revised Rules of Court should be construed
with liberality pursuant to Section 2, Rule 1 thereof.
III
Petitioner received on April 22, 1996 the April 10, 1996 decision
in CA-G.R. SP NO. 36533 entitled "Saudi Arabian Airlines v. Hon.
Rodolfo A. Ortiz, et al." and filed its April 30, 1996 Supplemental
Petition For Review With Prayer For A Temporary Restraining
Order on May 7, 1996 at 10:29 a.m. or within the 15-day
reglementary period as provided for under Section 1, Rule 45 of
the Revised Rules of Court. Therefore, the decision in CA-G.R. SP
NO. 36533 has not yet become final and executory and this
Honorable Court can take cognizance of this case. 33
From the foregoing factual and procedural antecedents, the
following issues emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN
HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON CITY
HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-
18394 ENTITLED "MILAGROS P. MORADA V. SAUDI ARABIAN
AIRLINES".
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING
THAT IN THIS CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that
must be settled at the outset. It maintains that private
respondent's claim for alleged abuse of rights occurred in the
Kingdom of Saudi Arabia. It alleges that the existence of a foreign
element qualifies the instant case for the application of the law of
the Kingdom of Saudi Arabia, by virtue of the lex loci delicti
commissi rule. 34
On the other hand, private respondent contends that since her
Amended Complaint is based on Articles 19 35 and 21 36 of the
Civil Code, then the instant case is properly a matter of domestic
law. 37
Under the factual antecedents obtaining in this case, there is no
dispute that the interplay of events occurred in two states, the
Philippines and Saudi Arabia.
As stated by private respondent in her Amended
Complaint 38 dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign
airlines corporation doing business in the Philippines. It may be
served with summons and other court processes at Travel Wide
Associated Sales (Phils.). Inc., 3rd Floor, Cougar Building, 114
Valero St., Salcedo Village, Makati, Metro Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of detention. Eventually, they
were again put in service by defendant SAUDIA. In September
1990, defendant SAUDIA transferred plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors reauested her to see
MR. Ali Meniewy, Chief Legal Officer of SAUDIA in Jeddah, Saudi
Arabia. When she saw him, he brought her to the police station
where the police took her passport and questioned her about the
Jakarta incident. Miniewy simply stood by as the police put
pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police
return her passport and allowed her to catch the afternoon flight
out of Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila,
plaintiff was not allowed to board the plane and instead ordered
to take a later flight to Jeddah to see Mr. Meniewy, the Chief Legal
Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA
office brought her to a Saudi court where she was asked to sigh a
document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it turned
out, plaintiff signed a notice to her to appear before the court on
June 27, 1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993 for
further 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.
3
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff
to the same court where the judge, to her astonishment and
shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286 lashes.
Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta.
The court found plaintiff guilty of (1) adultery; (2) going to a
disco, dancing, and listening to the music in violation of Islamic
laws; (3) socializing with the male crew, in contravention of
Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff
sought the help of the Philippines Embassy in Jeddah. The latter
helped her pursue an appeal from the decision of the court. To
pay for her upkeep, she worked on the domestic flights of
defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights. 39
Where the factual antecedents satisfactorily establish the
existence of a foreign element, we agree with petitioner that the
problem herein could present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected
by the diverse laws of two or more states is said to contain a
"foreign element". The presence of a foreign element is inevitable
since social and economic affairs of individuals and associations
are rarely confined to the geographic limits of their birth or
conception. 40
The forms in which this foreign element may appear are
many. 41 The foreign element may simply consist in the fact that
one of the parties to a contract is an alien or has a foreign
domicile, or that a contract between nationals of one State
involves properties situated in another State. In other cases, the
foreign element may assume a complex form. 42
In the instant case, the foreign element consisted in the fact that
private respondent Morada is a resident Philippine national, and
that petitioner SAUDIA is a resident foreign corporation. Also, by
virtue of the employment of Morada with the petitioner Saudia as
a flight stewardess, events did transpire during her many
occasions of travel across national borders, particularly from
Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that
caused a "conflicts" situation to arise.
We thus find private respondent's assertion that the case is
purely domestic, imprecise. A conflicts problem presents itself
here, and the question of jurisdiction 43 confronts the court a quo.
After a careful study of the private respondent's Amended
Complaint, 44 and the Comment thereon, we note that she aptly
predicated her cause of action on Articles 19 and 21 of the New
Civil Code.
On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of
his rights and in the performance of his duties,
act with justice give everyone his due and
observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss
or injury to another in a manner that is
contrary to morals, good customs or public
policy shall compensate the latter for
damages.
Thus, in Philippine National Bank (PNB) vs. Court of
Appeals, 45 this Court held that:
The aforecited provisions on human relations
were intended to expand the concept of torts
in this jurisdiction by granting adequate legal
remedy for the untold number of moral
wrongs which is impossible for human
foresight to specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21
gives flesh to its provisions. Thus, we agree with private
respondent's assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal
forum.
Based on the allegations 46 in the Amended Complaint, read in the
light of the Rules of Court on jurisdiction 47 we find that the
Regional Trial Court (RTC) of Quezon City possesses jurisdiction
over the subject matter of the suit. 48 Its authority to try and hear
the case is provided for under Section 1 of Republic Act No. 7691,
to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known
as the "Judiciary Reorganization Act of 1980", is hereby amended
to read as follows:
Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall
exercise exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses,
and cots or the value of the property in controversy exceeds One
hundred thousand pesos (P100,000.00) or, in such other cases in
Metro Manila, where the demand, exclusive of the above-
mentioned items exceeds Two hundred Thousand pesos
(P200,000.00). (Emphasis ours)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of Court
— the venue, Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial
Court]
(a) xxx xxx xxx
(b) Personal actions. — All other actions may be commenced and
tried where the defendant or any of the defendants resides or
may be found, or where the plaintiff or any of the plaintiff resides,
at the election of the plaintiff.
Pragmatic considerations, including the convenience of the
parties, also weigh heavily in favor of the RTC Quezon City
assuming jurisdiction. Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained is quite
obvious. Relative advantages and obstacles to a fair trial are
equally important. Plaintiff may not, by choice of an inconvenient
forum, "vex", "harass", or "oppress" the defendant, e.g. by
inflicting upon him needless 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
4
substantial connections. That would have caused a fundamental
unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary
difficulties and inconvenience have been shown by either of the
parties. The choice of forum of the plaintiff (now private
respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the
persons of the parties herein. By filing her Complaint and
Amended Complaint with the trial court, private respondent has
voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several
motions 50 praying for the dismissal of Morada's Amended
Complaint. SAUDIA also filed an Answer In Ex Abundante
Cautelam dated February 20, 1995. What is very patent and
explicit from the motions filed, is that SAUDIA prayed for other
reliefs under the premises. Undeniably, petitioner SAUDIA has
effectively submitted to the trial court's jurisdiction by praying
for the dismissal of the Amended Complaint on grounds other
than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.: 51
We observe that the motion to dismiss filed on April 14, 1962,
aside from disputing the lower court's jurisdiction over
defendant's person, prayed for dismissal of the complaint on the
ground that plaintiff's cause of action has prescribed. By
interposing such second ground in its motion to dismiss, Ker and
Co., Ltd. availed of an affirmative defense on the basis of which it
prayed the court to resolve controversy in its favor. For the court
to validly decide the said plea of defendant Ker & Co., Ltd., it
necessarily had to acquire jurisdiction upon the latter's person,
who, being the proponent of the affirmative defense, should be
deemed to have abandoned its special appearance and
voluntarily submitted itself to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of objecting to
the jurisdiction of the court over the person, it must be for the
sole and separate purpose of objecting to the jurisdiction of the
court. If his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits
himself to the jurisdiction of the court. A special appearance by
motion made for the purpose of objecting to the jurisdiction of
the court over the person will be held to be a general appearance,
if the party in said motion should, for example, ask for a dismissal
of the action upon the further ground that the court had no
jurisdiction over the subject matter. 52
Clearly, petitioner had submitted to the jurisdiction of the
Regional Trial Court of Quezon City. Thus, we find that the trial
court has jurisdiction over the case and that its exercise thereof,
justified.
As to the choice of applicable law, we note that choice-of-law
problems seek to answer two important questions: (1) What
legal system should control a given situation where some of the
significant facts occurred in two or more states; and (2) to what
extent should the chosen legal system regulate the situation. 53
Several theories have been propounded in order to identify the
legal system that should ultimately control. Although ideally, all
choice-of-law theories should intrinsically advance both notions
of justice and predictability, they do not always do so. The forum
is then faced with the problem of deciding which of these two
important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine
under what category a certain set of facts or rules fall. This
process is known as "characterization", or the "doctrine of
qualification". It is the "process of deciding whether or not the
facts relate to the kind of question specified in a conflicts
rule." 55The purpose of "characterization" is to enable the forum
to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a
factual situation, event, or operative fact. 57An essential element
of conflict rules is the indication of a "test" or "connecting factor"
or "point of contact". Choice-of-law rules invariably consist of a
factual relationship (such as property right, contract claim) and a
connecting factor or point of contact, such as the situs of the res,
the place of celebration, the place of performance, or the place of
wrongdoing. 58
Note that one or more circumstances may be present to serve as
the possible test for the determination of the applicable
law. 59 These "test factors" or "points of contact" or "connecting
factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence, his
place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is
deemed to be situated. In particular, the lex situs is decisive when
real rights are involved;
(4) the place where an act has been done, the locus actus, such as
the place where a contract has been made, a marriage celebrated,
a will signed or a tort committed. The lex loci actus is particularly
important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the
place of performance of contractual duties, or the place where a
power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that
should govern their agreement, thelex loci intentionis;
(7) the place where judicial or administrative proceedings are
instituted or done. The lex fori — the law of the forum — is
particularly important because, as we have seen earlier, matters
of "procedure" not going to the substance of the claim involved
are governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from
application in a given case for the reason that it falls under one of
the exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of
practically all legal relationships of the ship and of its master or
owner as such. It also covers contractual relationships
particularly contracts of affreightment. 60 (Emphasis ours.)
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.
5
There is likewise logical basis on record for the claim that the
"handing over" or "turning over" of the person of private
respondent to Jeddah officials, petitioner may have acted beyond
its duties as employer. Petitioner's purported act contributed to
and amplified or even proximately caused additional humiliation,
misery and suffering of private respondent. Petitioner thereby
allegedly facilitated the arrest, detention and prosecution of
private respondent under the guise of petitioner's authority as
employer, taking advantage of the trust, confidence and faith she
reposed upon it. As purportedly found by the Prince of Makkah,
the alleged conviction and imprisonment of private respondent
was wrongful. But these capped the injury or harm allegedly
inflicted upon her person and reputation, for which petitioner
could be liable as claimed, to provide compensation or redress
for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving
torts, the "connecting factor" or "point of contact" could be the
place or places where the tortious conduct or lex loci
actus occurred. And applying the torts principle in a conflicts
case, we find that the Philippines could be said as a situs of the
tort (the place where the alleged tortious conduct took place).
This is because it is in the Philippines where petitioner allegedly
deceived private respondent, a Filipina residing and working
here. According to her, she had honestly believed that petitioner
would, in the exercise of its rights and in the performance of its
duties, "act with justice, give her due and observe honesty and
good faith." Instead, petitioner failed to protect her, she claimed.
That certain acts or parts of the injury allegedly occurred in
another country is of no moment. For in our view what is
important here is the place where the over-all harm or the
totality of the alleged injury to the person, reputation, social
standing and human rights of complainant, had lodged, according
to the plaintiff below (herein private respondent). All told, it is
not without basis to identify the Philippines as the situs of the
alleged tort.
Moreover, with the widespread criticism of the traditional rule
of lex loci delicti commissi, modern theories and rules on tort
liability 61 have been advanced to offer fresh judicial approaches
to arrive at just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to apply the
"State of the most significant relationship" rule, which in our
view should be appropriate to apply now, given the factual
context of this case.
In applying said principle to determine the State which has the
most significant relationship, the following contacts are to be
taken into account and evaluated according to their relative
importance with respect to the particular issue: (a) the place
where the injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile, residence,
nationality, place of incorporation and place of business of the
parties, and (d) the place where the relationship, if any, between
the parties is centered. 62
As already discussed, there is basis for the claim that over-all
injury occurred and lodged in the Philippines. There is likewise
no question that private respondent is a resident Filipina
national, working with petitioner, a resident foreign corporation
engaged here in the business of international air carriage. Thus,
the "relationship" between the parties was centered here,
although it should be stressed that this suit is not based on mere
labor law violations. From the record, the claim that the
Philippines has the most significant contact with the matter in
this dispute, 63 raised by private respondent as plaintiff below
against defendant (herein petitioner), in our view, has been
properly established.
Prescinding from this premise that the Philippines is the situs of
the tort complained of and the place "having the most interest in
the problem", we find, by way of recapitulation, that the
Philippine law on tort liability should have paramount
application to and control in the resolution of the legal issues
arising out of this case. Further, we hold that the respondent
Regional Trial Court has jurisdiction over the parties and the
subject matter of the complaint; the appropriate venue is in
Quezon City, which could properly apply Philippine law.
Moreover, we find untenable petitioner's insistence that "[s]ince
private respondent instituted this suit, she has the burden of
pleading and proving the applicable Saudi law on the
matter." 64As aptly said by private respondent, she has "no
obligation to plead and prove the law of the Kingdom of Saudi
Arabia since her cause of action is based on Articles 19 and 21" of
the Civil Code of the Philippines. In her Amended Complaint and
subsequent pleadings, she never alleged that Saudi law should
govern this case. 65 And as correctly held by the respondent
appellate court, "considering that it was the petitioner who was
invoking the applicability of the law of Saudi Arabia, then the
burden was on it [petitioner] to plead and to establish what the
law of Saudi Arabia is". 66
Lastly, no error could be imputed to the respondent appellate
court in upholding the trial court's denial of defendant's (herein
petitioner's) motion to dismiss the case. Not only was jurisdiction
in order and venue properly laid, but appeal after trial was
obviously available, and expeditious trial itself indicated by the
nature of the case at hand. Indubitably, the Philippines is the
state intimately concerned with the ultimate outcome of the case
below, not just for the benefit of all the litigants, but also for the
vindication of the country's system of law and justice in a
transnational setting. With these guidelines in mind, the trial
court must proceed to try and adjudge the case in the light of
relevant Philippine law, with due consideration of the foreign
element or elements involved. Nothing said herein, of course,
should be construed as prejudging the results of the case in any
manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED. Civil Case No. Q-93-18394 entitled "Milagros P.
Morada vs. Saudi Arabia Airlines" is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further
proceedings.
SO ORDERED.

6
G.R. No. 149177 November 23, 2007
KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., Petitioners,
vs.
MINORU KITAMURA, Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule
45 of the Rules of Court assailing the April 18, 2001 Decision1 of
the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July
25, 2001 Resolution2 denying the motion for reconsideration
thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants
Co., Ltd. (Nippon), a Japanese consultancy firm providing
technical and management support in the infrastructure projects
of foreign governments,3 entered into an Independent Contractor
Agreement (ICA) with respondent Minoru Kitamura, a Japanese
national permanently residing in the Philippines.4 The agreement
provides that respondent was to extend professional services to
Nippon for a year starting on April 1, 1999.5 Nippon then
assigned respondent to work as the project manager of the
Southern Tagalog Access Road (STAR) Project in the Philippines,
following the company's consultancy contract with the Philippine
Government.6
When the STAR Project was near completion, the Department of
Public Works and Highways (DPWH) engaged the consultancy
services of Nippon, on January 28, 2000, this time for the detailed
engineering and construction supervision of the Bongabon-Baler
Road Improvement (BBRI) Project.7 Respondent was named as
the project manager in the contract's Appendix 3.1.8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's
general manager for its International Division, informed
respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged
by the company only up to the substantial completion of the
STAR Project on March 31, 2000, just in time for the ICA's
expiry.9
Threatened with impending unemployment, respondent, through
his lawyer, requested a negotiation conference and demanded
that he be assigned to the BBRI project. Nippon insisted that
respondent’s contract was for a fixed term that had already
expired, and refused to negotiate for the renewal of the ICA.10
As he was not able to generate a positive response from the
petitioners, respondent consequently initiated on June 1, 2000
Civil Case No. 00-0264 for specific performance and damages
with the Regional Trial Court of Lipa City.11
For their part, petitioners, contending that the ICA had been
perfected in Japan and executed by and between Japanese
nationals, moved to dismiss the complaint for lack of jurisdiction.
They asserted that the claim for improper pre-termination of
respondent's ICA could only be heard and ventilated in the
proper courts of Japan following the principles of lex loci
celebrationis and lex contractus.12
In the meantime, on June 20, 2000, the DPWH approved Nippon's
request for the replacement of Kitamura by a certain Y. Kotake as
project manager of the BBRI Project.13
On June 29, 2000, the RTC, invoking our ruling in Insular
Government v. Frank14 that matters connected with the
7
performance of contracts are regulated by the law prevailing at
the place of performance,15 denied the motion to dismiss.16 The
trial court subsequently denied petitioners' motion for
reconsideration,17 prompting them to file with the appellate
court, on August 14, 2000, their first Petition for Certiorari under
Rule 65 [docketed as CA-G.R. SP No. 60205].18 On August 23,
2000, the CA resolved to dismiss the petition on procedural
grounds—for lack of statement of material dates and for
insufficient verification and certification against forum
shopping.19 An Entry of Judgment was later issued by the
appellate court on September 20, 2000.20
Aggrieved by this development, petitioners filed with the CA, on
September 19, 2000, still within the reglementary period,
a second Petition for Certiorari under Rule 65 already stating
therein the material dates and attaching thereto the proper
verification and certification. This second petition, which
substantially raised the same issues as those in the first, was
docketed as CA-G.R. SP No. 60827.21
Ruling on the merits of the second petition, the appellate court
rendered the assailed April 18, 2001 Decision 22finding no grave
abuse of discretion in the trial court's denial of the motion to
dismiss. The CA ruled, among others, that the principle of lex loci
celebrationis was not applicable to the case, because nowhere in
the pleadings was the validity of the written agreement put in
issue. The CA thus declared that the trial court was correct in
applying instead the principle of lex loci solutionis.23
Petitioners' motion for reconsideration was subsequently denied
by the CA in the assailed July 25, 2001 Resolution.24
Remaining steadfast in their stance despite the series of denials,
petitioners instituted the instant Petition for Review
on Certiorari25 imputing the following errors to the appellate
court:
A. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FINDING THAT THE TRIAL COURT VALIDLY
EXERCISED JURISDICTION OVER THE INSTANT
CONTROVERSY, DESPITE THE FACT THAT THE
CONTRACT SUBJECT MATTER OF THE PROCEEDINGS A
QUO WAS ENTERED INTO BY AND BETWEEN TWO
JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO,
JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN OVERLOOKING THE NEED TO REVIEW OUR
ADHERENCE TO THE PRINCIPLE OF LEX LOCI
SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL
LAWS.26
The pivotal question that this Court is called upon to resolve is
whether the subject matter jurisdiction of Philippine courts in
civil cases for specific performance and damages involving
contracts executed outside the country by foreign nationals may
be assailed on the principles of lex loci celebrationis, lex
contractus, the "state of the most significant relationship rule,"
or forum non conveniens.
However, before ruling on this issue, we must first dispose of the
procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court's
decision in CA-G.R. SP No. 60205 has already barred the filing of
the second petition docketed as CA-G.R. SP No. 60827
(fundamentally raising the same issues as those in the first one)
and the instant petition for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on
account of the petition's defective certification of non-forum
shopping, it was a dismissal without prejudice.27 The same holds
true in the CA's dismissal of the said case due to defects in the
formal requirement of verification28 and in the other requirement
in Rule 46 of the Rules of Court on the statement of the material
dates.29 The dismissal being without prejudice, petitioners can
re-file the petition, or file a second petition attaching thereto the
appropriate verification and certification—as they, in fact did—
and stating therein the material dates, within the prescribed
period30 in Section 4, Rule 65 of the said Rules.31
The dismissal of a case without prejudice signifies the absence of
a decision on the merits and leaves the parties free to litigate the
matter in a subsequent action as though the dismissed action had
not been commenced. In other words, the termination of a case
not on the merits does not bar another action involving the same
parties, on the same subject matter and theory.32
Necessarily, because the said dismissal is without prejudice and
has no res judicata effect, and even if petitioners still indicated in
the verification and certification of the second certiorari petition
that the first had already been dismissed on procedural
grounds,33 petitioners are no longer required by the Rules to
indicate in their certification of non-forum shopping in the instant
petition for review of the second certiorari petition, the status of
the aforesaid first petition before the CA. In any case, an omission
in the certificate of non-forum shopping about any event that will
not constitute res judicata and litis pendentia, as in the present
case, is not a fatal defect. It will not warrant the dismissal and
nullification of the entire proceedings, considering that the evils
sought to be prevented by the said certificate are no longer
present.34
The Court also finds no merit in respondent's contention that
petitioner Hasegawa is only authorized to verify and certify, on
behalf of Nippon, the certiorari petition filed with the CA and not
the instant petition. True, the Authorization35 dated September 4,
2000, which is attached to the second certiorari petition and
which is also attached to the instant petition for review, is limited
in scope—its wordings indicate that Hasegawa is given the
authority to sign for and act on behalf of the company only in the
petition filed with the appellate court, and that authority cannot
extend to the instant petition for review.36 In a plethora of cases,
however, this Court has liberally applied the Rules or even
suspended its application whenever a satisfactory explanation
and a subsequent fulfillment of the requirements have been
made.37 Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply38 an
updated Authorization39 for Hasegawa to act on behalf of the
company in the instant petition, the Court finds the same as
sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to
the defect in the verification and certification. As respondent
pointed out, and to which we agree, Hasegawa is truly not
authorized to act on behalf of Nippon in this case. The aforesaid
September 4, 2000 Authorization and even the subsequent
August 17, 2001 Authorization were issued only by Nippon's
president and chief executive officer, not by the company's board
of directors. In not a few cases, we have ruled that corporate
powers are exercised by the board of directors; thus, no person,
not even its officers, can bind the corporation, in the absence of
authority from the board.40 Considering that Hasegawa verified
8
and certified the petition only on his behalf and not on behalf of
the other petitioner, the petition has to be denied pursuant
to Loquias v. Office of the Ombudsman.41 Substantial compliance
will not suffice in a matter that demands strict observance of the
Rules.42 While technical rules of procedure are designed not to
frustrate the ends of justice, nonetheless, they are intended to
effect the proper and orderly disposition of cases and effectively
prevent the clogging of court dockets.43
Further, the Court has observed that petitioners incorrectly filed
a Rule 65 petition to question the trial court's denial of their
motion to dismiss. It is a well-established rule that an order
denying a motion to dismiss is interlocutory, and cannot be the
subject of the extraordinary petition for certiorari or mandamus.
The appropriate recourse is to file an answer and to interpose as
defenses the objections raised in the motion, to proceed to trial,
and, in case of an adverse decision, to elevate the entire case by
appeal in due course.44 While there are recognized exceptions to
this rule,45 petitioners' case does not fall among them.
This brings us to the discussion of the substantive issue of the
case.
Asserting that the RTC of Lipa City is an inconvenient forum,
petitioners question its jurisdiction to hear and resolve the civil
case for specific performance and damages filed by the
respondent. The ICA subject of the litigation was entered into and
perfected in Tokyo, Japan, by Japanese nationals, and written
wholly in the Japanese language. Thus, petitioners posit that local
courts have no substantial relationship to the parties46 following
the [state of the] most significant relationship rule in Private
International Law.47
The Court notes that petitioners adopted an additional but
different theory when they elevated the case to the appellate
court. In the Motion to Dismiss48 filed with the trial court,
petitioners never contended that the RTC is an inconvenient
forum. They merely argued that the applicable law which will
determine the validity or invalidity of respondent's claim is that
of Japan, following the principles of lex loci celebrationis and lex
contractus.49 While not abandoning this stance in their petition
before the appellate court, petitioners on certiorari significantly
invoked the defense of forum non conveniens.50 On petition for
review before this Court, petitioners dropped their other
arguments, maintained the forum non conveniens defense, and
introduced their new argument that the applicable principle is
the [state of the] most significant relationship rule.51
Be that as it may, this Court is not inclined to deny this petition
merely on the basis of the change in theory, as explained
in Philippine Ports Authority v. City of Iloilo.52 We only pointed out
petitioners' inconstancy in their arguments to emphasize their
incorrect assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three
consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. Corresponding to
these phases are the following questions: (1) Where can or
should litigation be initiated? (2) Which law will the court apply?
and (3) Where can the resulting judgment be enforced?53
Analytically, jurisdiction and choice of law are two distinct
concepts.54 Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will
determine the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction
and the choice of the lex fori will often coincide, the "minimum conflict between the laws of Japan and ours. Before determining
contacts" for one do not always provide the necessary which law should apply, first there should exist a conflict of laws
"significant contacts" for the other.55 The question of whether the situation requiring the application of the conflict of laws
law of a state can be applied to a transaction is different from the rules.72 Also, when the law of a foreign country is invoked to
question of whether the courts of that state have jurisdiction to provide the proper rules for the solution of a case, the existence
enter a judgment.56 of such law must be pleaded and proved.73
In this case, only the first phase is at issue— It should be noted that when a conflicts case, one involving a
jurisdiction.1âwphi1 Jurisdiction, however, has various aspects. foreign element, is brought before a court or administrative
For a court to validly exercise its power to adjudicate a agency, there are three alternatives open to the latter in
controversy, it must have jurisdiction over the plaintiff or the disposing of it: (1) dismiss the case, either because of lack of
petitioner, over the defendant or the respondent, over the subject jurisdiction or refusal to assume jurisdiction over the case; (2)
matter, over the issues of the case and, in cases involving assume jurisdiction over the case and apply the internal law of
property, over the res or the thing which is the subject of the the forum; or (3) assume jurisdiction over the case and take into
litigation.57 In assailing the trial court's jurisdiction herein, account or apply the law of some other State or States.74 The
petitioners are actually referring to subject matter jurisdiction. court’s power to hear cases and controversies is derived from the
Constitution and the laws. While it may choose to recognize laws
Jurisdiction over the subject matter in a judicial proceeding is
of foreign nations, the court is not limited by foreign sovereign
conferred by the sovereign authority which establishes and
law short of treaties or other formal agreements, even in matters
organizes the court. It is given only by law and in the manner
regarding rights provided by foreign sovereigns.75
prescribed by law.58 It is further determined by the allegations of
the complaint irrespective of whether the plaintiff is entitled to Neither can the other ground raised, forum non conveniens,76 be
all or some of the claims asserted therein.59 To succeed in its used to deprive the trial court of its jurisdiction herein. First, it is
motion for the dismissal of an action for lack of jurisdiction over not a proper basis for a motion to dismiss because Section 1, Rule
the subject matter of the claim,60 the movant must show that the 16 of the Rules of Court does not include it as a ground.77 Second,
court or tribunal cannot act on the matter submitted to it because whether a suit should be entertained or dismissed on the basis of
no law grants it the power to adjudicate the claims.61 the said doctrine depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial
In the instant case, petitioners, in their motion to dismiss, do not
court.78 In this case, the RTC decided to assume jurisdiction.
claim that the trial court is not properly vested by law with
Third, the propriety of dismissing a case based on this principle
jurisdiction to hear the subject controversy for, indeed, Civil Case
requires a factual determination; hence, this conflicts principle is
No. 00-0264 for specific performance and damages is one not
more properly considered a matter of defense.79
capable of pecuniary estimation and is properly cognizable by the
RTC of Lipa City.62 What they rather raise as grounds to question Accordingly, since the RTC is vested by law with the power to
subject matter jurisdiction are the principles of lex loci entertain and hear the civil case filed by respondent and the
celebrationis and lex contractus, and the "state of the most grounds raised by petitioners to assail that jurisdiction are
significant relationship rule." inappropriate, the trial and appellate courts correctly denied the
petitioners’ motion to dismiss.
The Court finds the invocation of these grounds unsound.
WHEREFORE, premises considered, the petition for review
Lex loci celebrationis relates to the "law of the place of the
on certiorari is DENIED.
ceremony"63 or the law of the place where a contract is
made.64 The doctrine of lex contractus or lex loci SO ORDERED.
contractus means the "law of the place where a contract is
executed or to be performed."65 It controls the nature,
construction, and validity of the contract66 and it may pertain to
the law voluntarily agreed upon by the parties or the law
intended by them either expressly or implicitly.67 Under the
"state of the most significant relationship rule," to ascertain what
state law to apply to a dispute, the court should determine which
state has the most substantial connection to the occurrence and
the parties. In a case involving a contract, the court should
consider where the contract was made, was negotiated, was to be
performed, and the domicile, place of business, or place of
incorporation of the parties.68 This rule takes into account
several contacts and evaluates them according to their relative
importance with respect to the particular issue to be resolved.69
Since these three principles in conflict of laws make reference to
the law applicable to a dispute, they are rules proper for the
second phase, the choice of law.70 They determine which state's
law is to be applied in resolving the substantive issues of a
conflicts problem.71 Necessarily, as the only issue in this case is
that of jurisdiction, choice-of-law rules are not only inapplicable
but also not yet called for.
Further, petitioners' premature invocation of choice-of-law rules
is exposed by the fact that they have not yet pointed out any

9
10
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari under Rule
45 of the 1997 Rules of Civil Procedure which seeks the reversal
of the Decision1 and Resolution2 of the Court of Appeals in CA-
G.R. SP No. 67001 and the dismissal of the civil case filed by
respondent against petitioner with the trial court.
As culled from the records of the case, the following antecedents
appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a
corporation duly organized and existing under the laws of the
State of Connecticut, United States of America, and respondent
Stockton W. Rouzie, Jr., an American citizen, entered into a
contract whereby BMSI hired respondent as its representative to
negotiate the sale of services in several government projects in
the Philippines for an agreed remuneration of 10% of the gross
receipts. On 11 March 1992, respondent secured a service
contract with the Republic of the Philippines on behalf of BMSI
for the dredging of rivers affected by the Mt. Pinatubo eruption
and mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch
of the National Labor Relations Commission (NLRC) a suit against
BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and
Walter G. Browning for alleged nonpayment of commissions,
illegal termination and breach of employment contract.4 On 28
September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered
judgment ordering BMSI and RUST to pay respondent’s money
claims.5 Upon appeal by BMSI, the NLRC reversed the decision of
the Labor Arbiter and dismissed respondent’s complaint on the
ground of lack of jurisdiction.6 Respondent elevated the case to
this Court but was dismissed in a Resolution dated 26 November
1997. The Resolution became final and executory on 09
November 1998.
On 8 January 1999, respondent, then a resident of La Union,
instituted an action for damages before the Regional Trial Court
(RTC) of Bauang, La Union. The Complaint,7 docketed as Civil
Case No. 1192-BG, named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. The complaint
essentially reiterated the allegations in the labor case that BMSI
verbally employed respondent to negotiate the sale of services in
government projects and that respondent was not paid the
commissions due him from the Pinatubo dredging project which
he secured on behalf of BMSI. The complaint also averred that
BMSI and RUST as well as petitioner itself had combined and
functioned as one company.
In its Answer,8 petitioner alleged that contrary to respondent’s
claim, it was a foreign corporation duly licensed to do business in
the Philippines and denied entering into any arrangement with
respondent or paying the latter any sum of money. Petitioner also
denied combining with BMSI and RUST for the purpose of
assuming the alleged obligation of the said companies.9 Petitioner
also referred to the NLRC decision which disclosed that per the
written agreement between respondent and BMSI and RUST,
denominated as "Special Sales Representative Agreement," the
rights and obligations of the parties shall be governed by the laws
11
of the State of Connecticut.10 Petitioner sought the dismissal of
the complaint on grounds of failure to state a cause of action
and forum non conveniens and prayed for damages by way of
compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion for
Preliminary Hearing Based on Affirmative Defenses and for
Summary Judgment12 seeking the dismissal of the complaint on
grounds of forum non conveniens and failure to state a cause of
action. Respondent opposed the same. Pending the resolution of
the omnibus motion, the deposition of Walter Browning was
taken before the Philippine Consulate General in Chicago.13
In an Order14 dated 13 September 2000, the RTC denied
petitioner’s omnibus motion. The trial court held that the factual
allegations in the complaint, assuming the same to be admitted,
were sufficient for the trial court to render a valid judgment
thereon. It also ruled that the principle of forum non
conveniens was inapplicable because the trial court could enforce
judgment on petitioner, it being a foreign corporation licensed to
do business in the Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order,
which motion was opposed by respondent.17 In an Order dated
31 July 2001,18 the trial court denied petitioner’s motion. Thus, it
filed a Rule 65 Petition19 with the Court of Appeals praying for
the issuance of a writ of certiorari and a writ of injunction to set
aside the twin orders of the trial court dated 13 September 2000
and 31 July 2001 and to enjoin the trial court from conducting
further proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed
Decision21 denying the petition for certiorari for lack of merit. It
also denied petitioner’s motion for reconsideration in the
assailed Resolution issued on 10 March 2004.22
The appellate court held that although the trial court should not
have confined itself to the allegations in the complaint and should
have also considered evidence aliunde in resolving petitioner’s
omnibus motion, it found the evidence presented by petitioner,
that is, the deposition of Walter Browning, insufficient for
purposes of determining whether the complaint failed to state a
cause of action. The appellate court also stated that it could not
rule one way or the other on the issue of whether the
corporations, including petitioner, named as defendants in the
case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be
threshed out during trial.23 Moreover, the appellate court
deferred to the discretion of the trial court when the latter
decided not to desist from assuming jurisdiction on the ground of
the inapplicability of the principle of forum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REFUSING TO DISMISS THE COMPLAINT FOR FAILURE
TO STATE A CAUSE OF ACTION AGAINST RAYTHEON
INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REFUSING TO DISMISS THE COMPLAINT ON THE
GROUND OF FORUM NON CONVENIENS.24
Incidentally, respondent failed to file a comment despite
repeated notices. The Ceferino Padua Law Office, counsel on
record for respondent, manifested that the lawyer handling the
case, Atty. Rogelio Karagdag, had severed relations with the law
firm even before the filing of the instant petition and that it could
no longer find the whereabouts of Atty. Karagdag or of
respondent despite diligent efforts. In a Resolution25 dated 20
November 2006, the Court resolved to dispense with the filing of
a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between
respondent and BMSI included a valid choice of law clause, that
is, that the contract shall be governed by the laws of the State of
Connecticut. It also mentions the presence of foreign elements in
the dispute – namely, the parties and witnesses involved are
American corporations and citizens and the evidence to be
presented is located outside the Philippines – that renders our
local courts inconvenient forums. Petitioner theorizes that the
foreign elements of the dispute necessitate the immediate
application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined three
consecutive phases involved in judicial resolution of conflicts-of-
laws problems, namely: jurisdiction, choice of law, and
recognition and enforcement of judgments. Thus, in the
instances27 where the Court held that the local judicial machinery
was adequate to resolve controversies with a foreign element, the
following requisites had to be proved: (1) that the Philippine
Court is one to which the parties may conveniently resort; (2)
that the Philippine Court is in a position to make an intelligent
decision as to the law and the facts; and (3) that the Philippine
Court has or is likely to have the power to enforce its decision.28
On the matter of jurisdiction over a conflicts-of-laws problem
where the case is filed in a Philippine court and where the court
has jurisdiction over the subject matter, the parties and the res, it
may or can proceed to try the case even if the rules of conflict-of-
laws or the convenience of the parties point to a foreign forum.
This is an exercise of sovereign prerogative of the country where
the case is filed.29
Jurisdiction over the nature and subject matter of an action is
conferred by the Constitution and the law30 and by the material
allegations in the complaint, irrespective of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs
sought therein.31 Civil Case No. 1192-BG is an action for damages
arising from an alleged breach of contract. Undoubtedly, the
nature of the action and the amount of damages prayed are
within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired
jurisdiction over herein respondent (as party plaintiff) upon the
filing of the complaint. On the other hand, jurisdiction over the
person of petitioner (as party defendant) was acquired by its
voluntary appearance in court.32
That the subject contract included a stipulation that the same
shall be governed by the laws of the State of Connecticut does not
suggest that the Philippine courts, or any other foreign tribunal
for that matter, are precluded from hearing the civil action.
Jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to
travel to this state; choice of law asks the further question
whether the application of a substantive law which will
determine the merits of the case is fair to both parties. 33 The
choice of law stipulation will become relevant only when the
substantive issues of the instant case develop, that is, after
hearing on the merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-
of-laws cases, may refuse impositions on its jurisdiction where it
is not the most "convenient" or available forum and the parties
are not precluded from seeking remedies
12
elsewhere.34 Petitioner’s averments of the foreign elements in the
instant case are not sufficient to oust the trial court of its
jurisdiction over Civil Case No. No. 1192-BG and the parties
involved.
Moreover, the propriety of dismissing a case based on the
principle of forum non conveniens requires a factual
determination; hence, it is more properly considered as a matter
of defense. While it is within the discretion of the trial court to
abstain from assuming jurisdiction on this ground, it should do so
only after vital facts are established, to determine whether
special circumstances require the court’s desistance.35
Finding no grave abuse of discretion on the trial court, the Court
of Appeals respected its conclusion that it can assume
jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound
discretion of the lower courts because their findings are binding
on this Court.
Petitioner also contends that the complaint in Civil Case No.
1192-BG failed to state a cause of action against petitioner.
Failure to state a cause of action refers to the insufficiency of
allegation in the pleading.36 As a general rule, the elementary test
for failure to state a cause of action is whether the complaint
alleges facts which if true would justify the relief demanded.37
The complaint alleged that petitioner had combined with BMSI
and RUST to function as one company. Petitioner contends that
the deposition of Walter Browning rebutted this allegation. On
this score, the resolution of the Court of Appeals is instructive,
thus:
x x x Our examination of the deposition of Mr. Walter
Browning as well as other documents produced in the
hearing shows that these evidence aliunde are not quite
sufficient for us to mete a ruling that the complaint fails
to state a cause of action.
Annexes "A" to "E" by themselves are not substantial,
convincing and conclusive proofs that Raytheon
Engineers and Constructors, Inc. (REC) assumed the
warranty obligations of defendant Rust International in
the Makar Port Project in General Santos City, after Rust
International ceased to exist after being absorbed by
REC. Other documents already submitted in evidence
are likewise meager to preponderantly conclude that
Raytheon International, Inc., Rust International[,] Inc.
and Brand Marine Service, Inc. have combined into one
company, so much so that Raytheon International, Inc.,
the surviving company (if at all) may be held liable for
the obligation of BMSI to respondent Rouzie for unpaid
commissions. Neither these documents clearly speak
otherwise.38
As correctly pointed out by the Court of Appeals, the question of
whether petitioner, BMSI and RUST merged together requires the
presentation of further evidence, which only a full-blown trial on
the merits can afford.
WHEREFORE, the instant petition for review on certiorari
is DENIED. The Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs against
petitioner.
SO ORDERED.

G.R. No. 72494 August 11, 1989
HONGKONG AND SHANGHAI BANKING
CORPORATION, petitioner,
vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE
INTERMEDIATE APPELLATE COURT, respondents.
Quiason, Makalintal, Barot & Torres for petitioner.
Alejandro, Aranzaso & Associates for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the
Intermediate Appellate Court (now Court of Appeals) dated
August 2, 1985, which reversed the order of the Regional Trial
Court dated February 28,1985 denying the Motion to Dismiss
filed by private respondents Jack Robert Sherman and Deodato
Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo)
was filed by petitioner Hongkong and Shanghai Banking
Corporation (hereinafter referred to as petitioner BANK) against
private respondents Jack Robert Sherman and Deodato Reloj,
docketed as Civil Case No. Q-42850 before the Regional Trial
Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service
PTE, Ltd. (hereinafter referred to as COMPANY), a company
incorporated in Singapore applied with, and was granted by, the
Singapore branch of petitioner BANK an overdraft facility in the
maximum amount of Singapore dollars 200,000.00 (which
amount was subsequently increased to Singapore dollars
375,000.00) with interest at 3% over petitioner BANK prime rate,
payable monthly, on amounts due under said overdraft facility; as
a security for the repayment by the COMPANY of sums advanced
by petitioner BANK to it through the aforesaid overdraft facility,
on October 7, 1982, both private respondents and a certain Robin
de Clive Lowe, all of whom were directors of the COMPANY at
such time, executed a Joint and Several Guarantee (p. 53, Rollo) in
favor of petitioner BANK whereby private respondents and Lowe
agreed to pay, jointly and severally, on demand all sums owed by
the COMPANY to petitioner BANK under the aforestated
overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts of Singapore shall
have jurisdiction over all disputes arising under this guarantee. ...
(p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK
demanded payment of the obligation from private respondents,
conformably with the provisions of the Joint and Several
Guarantee. Inasmuch as the private respondents still failed to
pay, petitioner BANK filed the above-mentioned complaint.
On December 14,1984, private respondents filed a motion to
dismiss (pp 54-56, Rollo) which was opposed by petitioner BANK
(pp. 58-62, Rollo). Acting on the motion, the trial court issued an
order dated February 28, 1985 (pp, 64-65, Rollo), which read as
follows:
13
In a Motion to Dismiss filed on December 14, 1984, the
defendants seek the dismissal of the complaint on two grounds,
namely:
1. That the court has no jurisdiction over the subject matter of the
complaint; and
2. That the court has no jurisdiction over the persons of the
defendants.
In the light of the Opposition thereto filed by plaintiff, the Court
finds no merit in the motion. "On the first ground, defendants
claim that by virtue of the provision in the Guarantee (the
actionable document) which reads —
This guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the courts in Singapore shall
have jurisdiction over all disputes arising under this guarantee,
the Court has no jurisdiction over the subject matter of the case.
The Court finds and concludes otherwise. There is nothing in the
Guarantee which says that the courts of Singapore shall have
jurisdiction to the exclusion of the courts of other countries or
nations. Also, it has long been established in law and
jurisprudence that jurisdiction of courts is fixed by law; it cannot
be conferred by the will, submission or consent of the parties.
On the second ground, it is asserted that defendant Robert' ,
Sherman is not a citizen nor a resident of the Philippines. This
argument holds no water. Jurisdiction over the persons of
defendants is acquired by service of summons and copy of the
complaint on them. There has been a valid service of summons
on both defendants and in fact the same is admitted when said
defendants filed a 'Motion for Extension of Time to File
Responsive Pleading on December 5, 1984.
WHEREFORE, the Motion to Dismiss is hereby DENIED.
SO ORDERED.
A motion for reconsideration of the said order was filed by
private respondents which was, however, denied (p. 66,Rollo).
Private respondents then filed before the respondent
Intermediate Appellate Court (now Court of Appeals) a petition
for prohibition with preliminary injunction and/or prayer for a
restraining order (pp. 39-48, Rollo). On August 2, 1985, the
respondent Court rendered a decision (p. 37, Rollo), the
dispositive portion of which reads:
WHEREFORE, the petition for prohibition with preliminary
injuction is hereby GRANTED. The respondent Court is enjoined
from taking further cognizance of the case and to dismiss the
same for filing with the proper court of Singapore which is the
proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence,
the present petition.
The main issue is whether or not Philippine courts have
jurisdiction over the suit.
The controversy stems from the interpretation of a provision in
the Joint and Several Guarantee, to wit:
(14) This guarantee and all rights, obligations and liabilites
arising hereunder shall be construed and determined under and
may be enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts in Singapore shall
have jurisdiction over all disputes arising under this guarantee. ...
(p. 53-A, Rollo)
In rendering the decision in favor of private respondents, the
Court of Appeals made, the following observations (pp. 35-
36, Rollo):
There are significant aspects of the case to which our attention is
invited. The loan was obtained by Eastern Book Service PTE, Ltd.,
a company incorporated in Singapore. The loan was granted by
the Singapore Branch of Hongkong and Shanghai Banking
Corporation. The Joint and Several Guarantee was also concluded
in Singapore. The loan was in Singaporean dollars and the
repayment thereof also in the same currency. The transaction, to
say the least, took place in Singporean setting in which the law of
that country is the measure by which that relationship of the
parties will be governed.
xxx xxx xxx
Contrary to the position taken by respondents, the guarantee
agreement compliance that any litigation will be before the
courts of Singapore and that the rights and obligations of the
parties shall be construed and determined in accordance with the
laws of the Republic of Singapore. A closer examination of
paragraph 14 of the Guarantee Agreement upon which the
motion to dismiss is based, employs in clear and unmistakeable
(sic) terms the word 'shall' which under statutory construction is
mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating to impose a duty which
may be enforced (Dizon vs. Encarnacion, 9 SCRA 714).lâwphî1.ñèt
There is nothing more imperative and restrictive than what the
agreement categorically commands that 'all rights, obligations,
and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with
the laws of the Republic of Singapore.'
While it is true that "the transaction took place in Singaporean
setting" and that the Joint and Several Guarantee contains a
choice-of-forum clause, the very essence of due process dictates
that the stipulation that "[t]his guarantee and all rights,
obligations and liabilities arising hereunder shall be construed
and determined under and may be enforced in accordance with
the laws of the Republic of Singapore. We hereby agree that the
Courts in Singapore shall have jurisdiction over all disputes
arising under this guarantee" be liberally construed. One basic
principle underlies all rules of jurisdiction in International Law: a
State does not have jurisdiction in the absence of some
reasonable basis for exercising it, whether the proceedings are in
rem quasi in rem or in personam. To be reasonable, the
jurisdiction must be based on some minimum contacts that will
not offend traditional notions of fair play and substantial justice
(J. Salonga, Private International Law, 1981, p. 46). Indeed, as
pointed-out by petitioner BANK at the outset, the instant case
presents a very odd situation. In the ordinary habits of life,
anyone would be disinclined to litigate before a foreign tribunal,
with more reason as a defendant. However, in this case, private
respondents are Philippine residents (a fact which was not
disputed by them) who would rather face a complaint against
them before a foreign court and in the process incur considerable
expenses, not to mention inconvenience, than to have a
Philippine court try and resolve the case. Private respondents'
stance is hardly comprehensible, unless their ultimate intent is to
evade, or at least delay, the payment of a just obligation.
14
The defense of private respondents that the complaint should
have been filed in Singapore is based merely on technicality. They
did not even claim, much less prove, that the filing of the action
here will cause them any unnecessary trouble, damage, or
expense. On the other hand, there is no showing that petitioner
BANK filed the action here just to harass private respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033,
October 31, 1969, 30 SCRA 187, it was ruled:
... An accurate reading, however, of the stipulation, 'The parties
agree to sue and be sued in the Courts of Manila,' does not
preclude the filing of suits in the residence of plaintiff or
defendant. The plain meaning is that the parties merely
consented to be sued in Manila. Qualifying or restrictive words
which would indicate that Manila and Manila alone is the venue
are totally absent therefrom. We cannot read into that clause that
plaintiff and defendant bound themselves to file suits with
respect to the last two transactions in question only or
exclusively in Manila. For, that agreement did not change or
transfer venue. It simply is permissive. The parties solely agreed
to add the courts of Manila as tribunals to which they may resort.
They did not waive their right to pursue remedy in the courts
specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis Ents., et
al. v. Lagamon, etc., et al., G.R. No. 57250, October 30, 1981, 108
SCRA 740, where the stipulation was "[i]n case of litigation,
jurisdiction shall be vested in the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the venue,
suffice it to say that a stipulation as to venue does not preclude
the filing of suits in the residence of plaintiff or defendant under
Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying
or restrictive words in the agreement which would indicate that
the place named is the only venue agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not
thereby stipulate that only the courts of Singapore, to the
exclusion of all the rest, has jurisdiction. Neither did the clause in
question operate to divest Philippine courts of jurisdiction. In
International Law, jurisdiction is often defined as the light of a
State to exercise authority over persons and things within its
boundaries subject to certain exceptions. Thus, a State does not
assume jurisdiction over travelling sovereigns, ambassadors and
diplomatic representatives of other States, and foreign military
units stationed in or marching through State territory with the
permission of the latter's authorities. This authority, which finds
its source in the concept of sovereignty, is exclusive within and
throughout the domain of the State. A State is competent to take
hold of any judicial matter it sees fit by making its courts and
agencies assume jurisdiction over all kinds of cases brought
before them (J. Salonga, Private International Law, 1981, pp. 37-
38).lâwphî1.ñèt
As regards the issue on improper venue, petitioner BANK avers
that the objection to improper venue has been waived. However,
We agree with the ruling of the respondent Court that:
While in the main, the motion to dismiss fails to categorically use
with exactitude the words 'improper venue' it can be perceived
from the general thrust and context of the motion that what is
meant is improper venue, The use of the word 'jurisdiction' was
merely an attempt to copy-cat the same word employed in the
guarantee agreement but conveys the concept of venue. Brushing
aside all technicalities, it would appear that jurisdiction was used
loosely as to be synonymous with venue. It is in this spirit that
this Court must view the motion to dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that
venue here was properly laid for the same reasons discussed
above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):
... In a conflict problem, a court will simply refuse to entertain the
case if it is not authorized by law to exercise jurisdiction. And
even if it is so authorized, it may still refuse to entertain the case
by applying the principle of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on
the basis of the principle of forum non conveniensdepends largely
upon the facts of the particular case and is addressed to the
sound discretion of the trial court (J. Salonga, Private
International Law, 1981, p. 49).lâwphî1.ñèt Thus, the respondent
Court should not have relied on such principle.
Although the Joint and Several Guarantee prepared by petitioner
BANK is a contract of adhesion and that consequently, it cannot
be permitted to take a stand contrary to the stipulations of the
contract, substantial bases exist for petitioner Bank's choice of
forum, as discussed earlier.
Lastly, private respondents allege that neither the petitioner
based at Hongkong nor its Philippine branch is involved in the
transaction sued upon. This is a vain attempt on their part to
further thwart the proceedings below inasmuch as well-known is
the rule that a defendant cannot plead any defense that has not
been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby
REVERSED and the decision of the Regional Trial Court is
REINSTATED, with costs against private respondents. This
decision is immediately executory.
SO ORDERED.

15