SAUDI ARABIAN AIRLINES VS.

COURT OF APPEALS,

297 SCRA 469

1998

FACTS:

Herein private respondent Milagros P. Morada is a flight attendant for petitioner SAUDIA airlines, where the
former was tried to be raped by Thamer and Allah AlGazzawi, both Sauidi nationals and fellow crew
member, after a night of dancing in their hotel while in Jakarta, Indonesia. She was rescued. After two
weeks of detention the accused were both deported to Saudi and they were reinstated by Saudia. She was
pressured by police officers to make a statement and to drop the case against the accused; in return she
will then be allowed to return to Manila and retrieved her passport. For the second time, she was asked by
her superiors to again appear before the Saudi court. Without her knowledge, she was already tried by
Saudi court together with the accused and was sentenced to five months imprisonment and to 286 lashes
in connection with Jakarta rape incident. The court found her 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.

ISSUE/S: WHETHER OR NOT the QC Regional Trial Court has jurisdiction to hear and try the civil
case based on Article 21 of the New Civil Code or the Kingdom of Saudi Arabia court though there is the
existence of foreign element.

RULING:

The forms in which a foreign element may appear are many, such as the fact that one party is a resident
Philippine national, and that the other is a resident foreign corporation. The forms in which this foreign
element may appear are many. 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. 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.

The forms in which a foreign element may appear are many, such as the fact that one party is a resident
Philippine national, and that the other is a resident foreign corporation. The forms in which this foreign
element may appear are many. 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. 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.

Where the factual antecedents satisfactorily establish the existence of a foreign element, the problem could
present a “conflicts” case. 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.

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD.,

vs
MINORU KITAMURA

G.R. No. 149177

November 23, 2007

FACTS:

Nippon Engineering Consultants (Nippon), a Japanese consultancy firm providing technical and
management support in the infrastructure projects national permanently residing in the Philippines. The
agreement provides that Kitamaru was to extend professional services to Nippon for a year. Nippon
assigned Kitamaru to work as the project manager of the Southern Tagalog Access Road (STAR) project.
When the STAR project was near completion, DPWH engaged the consultancy services of Nippon, this
time for the detailed engineering & construction supervision of the Bongabon-Baler Road Improvement
(BBRI) Project. Kitamaru was named as the project manger in the contract.

Hasegawa, Nippon’s general manager for its International Division, informed Kitamaru 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.

Kitamaru demanded that he be assigned to the BBRI project. Nippon insisted that Kitamaru’s contract was
for a fixed term that had expired. Kitamaru then filed for specific performance & damages w/ the RTC of
Lipa City. Nippon filed a MTD.
Nippon’s contention: The ICA had been perfected in Japan & executed by & between Japanese nationals.
Thus, the RTC of Lipa City has no jurisdiction. The claim for improper pre-termination of Kitamaru’s ICA
could only be heard & ventilated in the proper courts of Japan following the principles of lex loci
celebrationis & lex contractus.

The RTC denied the motion to dismiss. The CA ruled hat 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. It held that the RTC was correct in applying the principle of lex loci solutionis.

ISSUE:

Whether or not the subject matter jurisdiction of Philippine courts in civil cases for specific performance &
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.

HELD:

NO. In the judicial resolution of conflicts problems, 3 consecutive phases are involved: jurisdiction, choice
of law, and recognition and enforcement of judgments. Jurisdiction & choice of law are 2 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 w/c will determine the merits of the
case is fair to both parties. The power to exercise jurisdiction does notautomatically give a
state constitutional authority to apply forum law. While jurisdiction and the choice of the lex foriwill 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.

In this case, only the 1st phase is at issue—jurisdiction. Jurisdiction, however, has various aspects. For a
court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the
plaintiff/petitioner, over the defendant/respondent, over the subject matter, over the issues of the case and,
in cases involving property, over the res or the thing w/c is the subject of the litigation.In assailing the trial
court's jurisdiction herein, Nippon is actually referring to subject matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority w/c
establishes and organizes the court. It is given only by law and in the manner prescribed by law. It is further
determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some
of the claims asserted therein. To succeed in its motion for the dismissal of an action for lack of jurisdiction
over the subject matter of the claim, the movant must show that the court or tribunal cannot act on the
matter submitted to it because no lawgrants it the power to adjudicate the claims.

In the instant case, Nippon, in its MTD, does not claim that the RTC is not properly vested by law w/
jurisdiction to hear the subject controversy for a civil case for specific performance & damages is one not
capable of pecuniary estimation & is properly cognizable by the RTC of Lipa City.What they rather raise as
grounds to question subject matter jurisdiction are the principles of lex loci celebrationis and lex
contractus, and the “state of the most significant relationship rule.” The Court finds the invocation of these
grounds unsound.

Lex loci celebrationis relates to the “law of the place of the ceremony” or the law of the place where a
contract is made. The doctrine of lex contractus or lex loci contractusmeans the “law of the place where a
contract is executed or to be performed.” It controls the nature, construction, and validity of the contract and
it may pertain to the law voluntarily agreed upon by the parties or the law intended by them either expressly
or implicitly. 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.This rule takes into account several contacts and evaluates them according to their relative
importance with respect to the particular issue to be resolved.

Since these 3 principles in conflict of laws make reference to the law applicable to a dispute, they are rules
proper for the 2nd phase, the choice of law. They determine which state's law is to be applied in resolving
the substantive issues of a conflicts problem. 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, Nippon’s premature invocation of choice-of-law rules is exposed by the fact that they have not yet
pointed out any conflict between the laws of Japan and ours. Before determining which law should apply,
1st there should exist a conflict of laws situation requiring theapplication of the conflict of laws rules. Also,
when the law of a foreign country is invoked to provide the proper rules for the solution of a case, the
existence of such law must be pleaded and proved.

It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or
administrative agency, there are 3 alternatives open to the latter in disposing of it: (1) dismiss the case,
either because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction
over the case and apply the internal law of the forum; or (3) assume jurisdiction over the case and take into
account or apply the law of some other State or States. The court’s power to hear cases and controversies
is derived from the Constitution and the laws. While it may choose to recognize laws of foreign nations, the
court is not limited by foreign sovereign law short of treaties or other formalagreements, even in matters
regarding rights provided by foreign sovereigns.

Neither can the other ground raised, forum non conveniens, be used to deprive the RTC of its jurisdiction.
1st, it is not a proper basis for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not
include it as a ground. 2nd, whether a suit should be entertained or dismissed on the basis of the said
doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of
the RTC. In this case, the RTC decided to assume jurisdiction. 3rd, the propriety of dismissing a case
based on this principle requires a factual determination; hence, this conflicts principle is more properly
considered a matter of defense.