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Conflict of Laws

1. G.R. No. 112573 February 9, 1995


NORTHWEST ORIENT AIRLINES, INC. petitioner,
vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.:


This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming
the dismissal of the petitioner's complaint to enforce the judgment of a Japanese court. The principal
issue here is whether a Japanese court can acquire jurisdiction over a Philippine corporation doing
business in Japan by serving summons through diplomatic channels on the Philippine corporation at
its principal office in Manila after prior attempts to serve summons in Japan had failed.
Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under
the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the
Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a Japanese court
against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a corporation
incorporated under Philippine laws.
As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the following are
the factual and procedural antecedents of this controversy:
On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company,
through its Japan branch, entered into an International Passenger Sales Agency
Agreement, whereby the former authorized the latter to sell its air transportation
tickets. Unable to remit the proceeds of the ticket sales made by defendant on behalf
of the plaintiff under the said agreement, plaintiff on March 25, 1980 sued defendant
in Tokyo, Japan, for collection of the unremitted proceeds of the ticket sales, with
claim for damages.
On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo
District Court of Japan against defendant at its office at the Taiheiyo Building, 3rd
floor, 132, Yamashita-cho, Naka-ku, Yokohoma, Kanagawa Prefecture. The attempt
to serve the summons was unsuccessful because the bailiff was advised by a person
in the office that Mr. Dinozo, the person believed to be authorized to receive court
processes was in Manila and would be back on April 24, 1980.
On April 24, 1980, bailiff returned to the defendant's office to serve the summons. Mr.
Dinozo refused to accept the same claiming that he was no longer an employee of
the defendant.
After the two attempts of service were unsuccessful, the judge of the Tokyo District
Court decided to have the complaint and the writs of summons served at the head
office of the defendant in Manila. On July 11, 1980, the Director of the Tokyo District

Court requested the Supreme Court of Japan to serve the summons through
diplomatic channels upon the defendant's head office in Manila.
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the
writ of summons (p. 276, Records). Despite receipt of the same, defendant failed to
appear at the scheduled hearing. Thus, the Tokyo Court proceeded to hear the
plaintiff's complaint and on [January 29, 1981], rendered judgment ordering the
defendant to pay the plaintiff the sum of 83,158,195 Yen and damages for delay at
the rate of 6% per annum from August 28, 1980 up to and until payment is completed
(pp. 12-14, Records).
On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the
judgment. Defendant not having appealed the judgment, the same became final and
executory.
Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit
for enforcement of the judgment was filed by plaintiff before the Regional Trial Court
of Manila Branch 54. 2
On July 16, 1983, defendant filed its answer averring that the judgment of the Japanese
Court sought to be enforced is null and void and unenforceable in this jurisdiction having
been rendered without due and proper notice to the defendant and/or with collusion or
fraud and/or upon a clear mistake of law and fact (pp. 41-45, Rec.).

Unable to settle the case amicably, the case was tried on the merits. After the plaintiff
rested its case, defendant on April 21, 1989, filed a Motion for Judgment on a
Demurrer to Evidence based on two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of jurisdiction
and (2) the said judgment is contrary to Philippine law and public policy and rendered
without due process of law. Plaintiff filed its opposition after which the court a
quo rendered the now assailed decision dated June 21, 1989 granting the demurrer
motion and dismissing the complaint (Decision, pp. 376-378, Records). In granting
the demurrer motion, the trial court held that:
The foreign judgment in the Japanese Court sought in this action is
null and void for want of jurisdiction over the person of the defendant
considering that this is an action in personam; the Japanese Court
did not acquire jurisdiction over the person of the defendant because
jurisprudence requires that the defendant be served with summons in
Japan in order for the Japanese Court to acquire jurisdiction over it,
the process of the Court in Japan sent to the Philippines which is
outside Japanese jurisdiction cannot confer jurisdiction over the
defendant in the case before the Japanese Court of the case at
bar.Boudard versus Tait 67 Phil. 170. The plaintiff contends that the
Japanese Court acquired jurisdiction because the defendant is a
resident of Japan, having four (4) branches doing business therein
and in fact had a permit from the Japanese government to conduct
business in Japan (citing the exhibits presented by the plaintiff); if this
is so then service of summons should have been made upon the

defendant in Japan in any of these alleged four branches; as


admitted by the plaintiff the service of the summons issued by the
Japanese Court was made in the Philippines thru a Philippine Sheriff.
This Court agrees that if the defendant in a foreign court is a resident
in the court of that foreign court such court could acquire jurisdiction
over the person of the defendant but it must be served upon the
defendant in the territorial jurisdiction of the foreign court. Such is not
the case here because the defendant was served with summons in
the Philippines and not in Japan.
Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional Notice of Appeal,
asking the court to treat the said notice of appeal "as in effect after and upon
issuance of the court's denial of the motion for reconsideration."
Defendant opposed the motion for reconsideration to which a Reply dated August 28,
1989 was filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for Reconsideration
and gave due course to the plaintiff's Notice of Appeal. 3
In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance
upon Boudard vs.Tait 4 wherein it was held that "the process of the court has no extraterritorial effect and
no jurisdiction is acquired over the person of the defendant by serving him beyond the boundaries of the
state." To support its position, the Court of Appeals further stated:
In an action strictly in personam, such as the instant case, personal service of
summons within the forum is required for the court to acquire jurisdiction over the
defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To confer jurisdiction
on the court, personal or substituted service of summons on the defendant not
extraterritorial service is necessary (Dial Corp vs. Soriano, 161 SCRA 739).
But while plaintiff-appellant concedes that the collection suit filed is an action in
personam, it is its theory that a distinction must be made between an action in
personam against a resident defendant and an action in personam against a nonresident defendant. Jurisdiction is acquired over a non-resident defendant only if he
is served personally within the jurisdiction of the court and over a resident defendant
if by personal, substituted or constructive service conformably to statutory
authorization. Plaintiff-appellant argues that since the defendant-appellee maintains
branches in Japan it is considered a resident defendant. Corollarily, personal,
substituted or constructive service of summons when made in compliance with the
procedural rules is sufficient to give the court jurisdiction to render judgment in
personam.
Such an argument does not persuade.
It is a general rule that processes of the court cannot lawfully be served outside the
territorial limits of the jurisdiction of the court from which it issues (Carter vs. Carter;
41 S.E. 2d 532, 201) and this isregardless of the residence or citizenship of the party

thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa 511, 35 LRC, NS, 292, Am.
Case 1912 D680). There must be actual service within the proper territorial limits on
defendant or someone authorized to accept service for him. Thus, a defendant,
whether a resident or not in the forum where the action is filed, must be served with
summons within that forum.
But even assuming a distinction between a resident defendant and non-resident
defendant were to be adopted, such distinction applies only to natural persons and
not in the corporations. This finds support in the concept that "a corporation has no
home or residence in the sense in which those terms are applied to natural persons"
(Claude Neon Lights vs. Phil. Advertising Corp., 57 Phil. 607). Thus, as cited by the
defendant-appellee in its brief:
Residence is said to be an attribute of a natural person, and can be predicated on an
artificial being only by more or less imperfect analogy. Strictly speaking, therefore, a
corporation can have no local residence or habitation. It has been said that a
corporation is a mere ideal existence, subsisting only in contemplation of law an
invisible being which can have, in fact, no locality and can occupy no space, and
therefore cannot have a dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle v.
Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)
Jurisprudence so holds that the foreign or domestic character of a corporation is to
be determined by the place of its origin where its charter was granted and not by the
location of its business activities (Jennings v. Idaho Rail Light & P. Co., 26 Idaho 703,
146 p. 101), A corporation is a "resident" and an inhabitant of the state in which it is
incorporated and no other (36 Am. Jur. 2d, p. 49).
Defendant-appellee is a Philippine Corporation duly organized under the Philippine
laws. Clearly, its residence is the Philippines, the place of its incorporation, and not
Japan. While defendant-appellee maintains branches in Japan, this will not make it a
resident of Japan. A corporation does not become a resident of another by engaging
in business there even though licensed by that state and in terms given all the rights
and privileges of a domestic corporation (Galveston H. & S.A.R. Co. vs. Gonzales,
151 US 496, 38 L ed. 248, 4 S Ct. 401).
On this premise, defendant appellee is a non-resident corporation. As such, court
processes must be served upon it at a place within the state in which the action is
brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct.
354). 5
It then concluded that the service of summons effected in Manila or beyond the territorial boundaries
of Japan was null and did not confer jurisdiction upon the Tokyo District Court over the person of
SHARP; hence, its decision was void.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court
contending that the respondent court erred in holding that SHARP was not a resident of Japan and
that summons on SHARP could only be validly served within that country.

A foreign judgment is presumed to be valid and binding in the country from which it comes, until the
contrary is shown. It is also proper to presume the regularity of the proceedings and the giving of
due notice therein. 6
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of
a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as
between the parties and their successors-in-interest by a subsequent title. The judgment may,
however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of the Philippines
or elsewhere, enjoys the presumption that it was acting in the lawful exercise of jurisdiction and has
regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption
of its validity. 7Being the party challenging the judgment rendered by the Japanese court, SHARP had the
duty to demonstrate the invalidity of such judgment. In an attempt to discharge that burden, it contends
that the extraterritorial service of summons effected at its home office in the Philippines was not only
ineffectual but also void, and the Japanese Court did not, therefore acquire jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to the service of process
upon a defendant are governed by the lex fori or the internal law of the forum. 8 In this case, it is the
procedural law of Japan where the judgment was rendered that determines the validity of the
extraterritorial service of process on SHARP. As to what this law is is a question of fact, not of law. It may
not be taken judicial notice of and must be pleaded and proved like any other fact. 9Sections 24 and 25,
Rule 132 of the Rules of Court provide that it may be evidenced by an official publication or by a duly
attested or authenticated copy thereof. It was then incumbent upon SHARP to present evidence as to
what that Japanese procedural law is and to show that under it, the assailed extraterritorial service is
invalid. It did not. Accordingly, the presumption of validity and regularity of the service of summons and
the decision thereafter rendered by the Japanese court must stand.
Alternatively in the light of the absence of proof regarding Japanese
law, the presumption of identity or similarity or the so-called processual presumption 10 may be
invoked. Applying it, the Japanese law on the matter is presumed to be similar with the Philippine law on
service of summons on a private foreign corporation doing business in the Philippines. Section 14, Rule
14 of the Rules of Court provides that if the defendant is a foreign corporation doing business in the
Philippines, service may be made: (1) on its resident agent designated in accordance with law for that
purpose, or, (2) if there is no such resident agent, on the government official designated by law to that
effect; or (3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the designation is exclusive,
and service of summons is without force and gives the court no jurisdiction unless made upon him. 11
Where the corporation has no such agent, service shall be made on the government official
designated by law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance
company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and (c) the
Securities and Exchange Commission, in the case of other foreign corporations duly licensed to do
business in the Philippines. Whenever service of process is so made, the government office or
official served shall transmit by mail a copy of the summons or other legal proccess to the
corporation at its home or principal office. The sending of such copy is a necessary part of the
service. 12

SHARP contends that the laws authorizing service of process upon the Securities and Exchange
Commission, the Superintendent of Banks, and the Insurance Commissioner, as the case may be,
presuppose a situation wherein the foreign corporation doing business in the country no longer has
any branches or offices within the Philippines. Such contention is belied by the pertinent provisions
of the said laws. Thus, Section 128 of the Corporation Code 13 and Section 190 of the Insurance
Code 14 clearly contemplate two situations: (1) if the corporation had left the Philippines or had ceased to
transact business therein, and (2) if the corporation has no designated agent. Section 17 of the General
Banking Act 15 does not even speak a corporation which had ceased to transact business in the
Philippines.
Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive
court processes in Japan. This silence could only mean, or least create an impression, that it had
none. Hence, service on the designated government official or on any of SHARP's officers or agents
in Japan could be availed of. The respondent, however, insists that only service of any of its officers
or employees in its branches in Japan could be resorted to. We do not agree. As found by the
respondent court, two attempts at service were made at SHARP's Yokohama branch. Both were
unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the person authorized to
accept court process, was in Manila. On the second, Mr. Dinozo was present, but to accept the
summons because, according to him, he was no longer an employee of SHARP. While it may be
true that service could have been made upon any of the officers or agents of SHARP at its three
other branches in Japan, the availability of such a recourse would not preclude service upon the
proper government official, as stated above.
As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons for
SHARP be served at its head office in the Philippine's after the two attempts of service had
failed. 16 The Tokyo District Court requested the Supreme Court of Japan to cause the delivery of the
summons and other legal documents to the Philippines. Acting on that request, the Supreme Court of
Japan sent the summons together with the other legal documents to the Ministry of Foreign Affairs of
Japan which, in turn, forwarded the same to the Japanese Embassy in Manila . Thereafter, the court
processes were delivered to the Ministry (now Department) of Foreign Affairs of the Philippines, then to
the Executive Judge of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith
ordered Deputy Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila. This
service is equivalent to service on the proper government official under Section 14, Rule 14 of the Rules
of Court, in relation to Section 128 of the Corporation Code. Hence, SHARP's contention that such
manner of service is not valid under Philippine laws holds no water. 17
In deciding against the petitioner, the respondent court sustained the trial court's reliance
on Boudard vs. Tait 18where this Court held:
The fundamental rule is that jurisdiction in personam over nonresidents, so as to
sustain a money judgment, must be based upon personal service within the state
which renders the judgment.
xxx xxx xxx
The process of a court, has no extraterritorial effect, and no jurisdiction is acquired
over the person of the defendant by serving him beyond the boundaries of the state.
Nor has a judgment of a court of a foreign country against a resident of this country

having no property in such foreign country based on process served here, any effect
here against either the defendant personally or his property situated here.
Process issuing from the courts of one state or country cannot run into another, and
although a nonresident defendant may have been personally served with such
process in the state or country of his domicile, it will not give such jurisdiction as to
authorize a personal judgment against him.
It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial Corp. vs. Soriano, 20 as
well as the principle laid down by the Iowa Supreme Court in the 1911 case of Raher vs. Raher. 21
The first three cases are, however, inapplicable. Boudard involved the enforcement of a judgment of
the civil division of the Court of First Instance of Hanoi, French Indo-China. The trial court dismissed
the case because the Hanoi court never acquired jurisdiction over the person of the defendant
considering that "[t]he, evidence adduced at the trial conclusively proves that neither the appellee
[the defendant] nor his agent or employees were ever in Hanoi, French Indo-China; and that the
deceased Marie Theodore Jerome Boudard had never, at any time, been his employee."
In Magdalena Estate, what was declared invalid resulting in the failure of the court to acquire
jurisdiction over the person of the defendants in an action in personam was the service of summons
through publication against non-appearing resident defendants. It was claimed that the latter
concealed themselves to avoid personal service of summons upon them. In Dial, the defendants
were foreign corporations which were not, domiciled and licensed to engage in business in the
Philippines and which did not have officers or agents, places of business, or properties here. On the
other hand, in the instant case, SHARP was doing business in Japan and was maintaining four
branches therein.
Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided
Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court of a
territory to render a personal judgment against anyone upon service made outside its limits was
applicable alike to cases of residents and non-residents. The principle was put at rest by the United
States Supreme Court when it ruled in the 1940 case ofMilliken vs. Meyer 22 that domicile in the state
is alone sufficient to bring an absent defendant within the reach of the state's jurisdiction for purposes of a
personal judgment by means of appropriate substituted service or personal service without the state. This
principle is embodied in section 18, Rule 14 of the Rules of Court which allows service of summons on
residents temporarily out of the Philippines to be made out of the country. The rationale for this rule was
explained in Milliken as follows:
[T]he authority of a state over one of its citizens is not terminated by the mere fact of
his absence from the state. The state which accords him privileges and affords
protection to him and his property by virtue of his domicile may also exact reciprocal
duties. "Enjoyment of the privileges of residence within the state, and the attendant
right to invoke the protection of its laws, are inseparable" from the various incidences
of state citizenship. The responsibilities of that citizenship arise out of the relationship
to the state which domicile creates. That relationship is not dissolved by mere
absence from the state. The attendant duties, like the rights and privileges incident to
domicile, are not dependent on continuous presence in the state. One such incident
of domicile is amenability to suit within the state even during sojourns without the
state, where the state has provided and employed a reasonable method for apprising
such an absent party of the proceedings against him. 23

The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict technical
sense, such domicile as a corporation may have is single in its essence and a corporation can have only
one domicile which is the state of its creation. 25
Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a resident in
another state in which it has offices and transacts business. This is the rule in our jurisdiction
and apropos thereto, it may be necessery to quote what we stated in State Investment House,
Inc, vs. Citibank, N.A., 26 to wit:
The issue is whether these Philippine branches or units may be considered
"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they were
respectively incorporated. The answer cannot be found in the Insolvency Law itself,
which contains no definition of the term, resident, or any clear indication of its
meaning. There are however other statutes, albeit of subsequent enactment and
effectivity, from which enlightening notions of the term may be derived.
The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business within the
Philippines," as distinguished from a "'non-resident foreign corporation' . . . (which is
one) not engaged in trade or bussiness within the Philippines." [Sec. 20, pars. (h)
and (i)].
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches,
subsidiaries, affiliation, extension offices or any other units of corporation or juridical
person organized under the laws of any foreign country operating in the Philippines
shall be considered residents of the Philippines. [Sec. 1(e)].
The General Banking Act, Republic Act No. 337, places "branches and agencies in
the Philippines of foreign banks . . . (which are) called Philippine branches," in the
same category as "commercial banks, savings associations, mortgage banks,
development banks, rural banks, stock savings and loan associations" (which have
been formed and organized under Philippine laws), making no distinction between
the former and the latter in so far as the terms "banking institutions" and "bank" are
used in the Act [Sec. 2], declaring on the contrary that in "all matters not specifically
covered by special provisions applicable only to foreign banks, or their branches and
agencies in the Philippines, said foreign banks or their branches and agencies
lawfully doing business in the Philippines "shall be bound by all laws, rules, and
regulations applicable to domestic banking corporations of the same class, except
such laws, rules and regulations as provided for the creation, formation, organization,
or dissolution of corporations or as fix the relation, liabilities, responsibilities, or duties
of members, stockholders or officers of corporation. [Sec. 18].
This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs.
Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation licitly doing
business in the Philippines, which is a defendant in a civil suit, may not be
considered a non-resident within the scope of the legal provision authorizing
attachment against a defendant not residing in the Philippine Islands; [Sec. 424, in
relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of

the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary
attachment may not be applied for and granted solely on the asserted fact that the
defendant is a foreign corporation authorized to do business in the Philippines and
is consequently and necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may not be considered as a party not residing in the Philippines,
or as a party who resides out of the country, then, logically, it must be considered a
party who does reside in the Philippines, who is a resident of the country. Be this as it
may, this Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate
foreign corporations, duly licensed to do business here, to the status
of domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall
Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng vs.
Trinidad, 47 Phil. 385, 411) We think it would be entirely out of line
with this policy should we make a discrimination against a foreign
corporation, like the petitioner, and subject its property to the harsh
writ of seizure by attachment when it has complied not only with
every requirement of law made specially of foreign corporations, but
in addition with every requirement of law made of domestic
corporations. . . .
Obviously, the assimilation of foreign corporations authorized to do business in the
Philippines "to the status of domestic corporations, subsumes their being found and
operating as corporations, hence,residing, in the country.
The same principle is recognized in American law: that the residence of a
corporation, if it can be said to have a residence, is necessarily where it exercises
corporate functions . . .;" that it is considered as dwelling "in the place where its
business is done . . .," as being "located where its franchises are exercised . . .," and
as being "present where it is engaged in the prosecution of the corporate enterprise;"
that a "foreign corporation licensed to do business in a state is a resident of any
country where it maintains an office or agent for transaction of its usual and
customary business for venue purposes;" and that the "necessary element in its
signification is locality of existence." [Words and Phrases, Permanent Ed., vol. 37,
pp. 394, 412, 493].
In as much as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts' lawful
methods of serving process. 27
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only
under the processual presumption but also because of the presumption of regularity of performance
of official duty.
We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to be
without merit. We find no evidence that would justify an award for attorney's fees and litigation
expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for exemplary

damages warranted. Under Article 2234 of the Civil Code, before the court may consider the
question of whether or not exemplary damages should be awarded, the plaintiff must show that he is
entitled to moral, temperate, or compensatory damaged. There being no such proof presented by
NORTHWEST, no exemplary damages may be adjudged in its favor.
WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary
damages but REVERSED insofar as in sustained the trial court's dismissal of NORTHWEST's
complaint in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and another
in its stead is hereby rendered ORDERING private respondent C.F. SHARP L COMPANY, INC. to
pay to NORTHWEST the amounts adjudged in the foreign judgment subject of said case, with
interest thereon at the legal rate from the filing of the complaint therein until the said foreign
judgment is fully satisfied.
Costs against the private respondent.
SO ORDERED.

2. G.R. No. 108538

January 22, 1996

LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners,


vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA
DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for partition
filed against her and her husband, who is also her attorney, summons intended for her may be
served on her husband, who has a law office in the Philippines. The Regional Trial Court of Manila,
Branch 48, said no and refused to declare Lourdes A. Valmonte in default, but the Court of Appeals
said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:

Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both
residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte,
who is a member of the Philippine bar, however, practices his profession in the Philippines.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A.
Valmonte, filed a complaint for partition of real property and accounting of rentals against petitioners
Lourdes A. Valmonte and Alfredo D. Valmonte.. The subject of the action is a three-door apartment
located in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road,
Chesterfield, Missouri, U.S.A., while the defendants are spouses, of legal age and at present
residents of 90222 Carkeek Drive, South Seattle, Washington, U.S.A., but, for purposes of
this complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St.,
Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola
Valmonte's spouse holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter previously sent by petitioner
Lourdes A. Valmonte to private respondent's counsel in which, in regard to the partition of the
property in question, she referred private respondent's counsel to her husband as the party to whom
all communications intended for her should be sent. The letter reads:
July 4, 1991c
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I received on 3 July 1991.
Please address all communications to my lawyer, Atty. Alfredo D. Valmonte, whose address,
telephone and fax numbers appear below.
c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at his
office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was
concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on the ground that
he was not authorized to accept the process on her behalf. Accordingly the process server left
without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A.
Valmonte, however, did not file her Answer. For this reason private respondent moved to declare her
in default. Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his wife and
opposed the private respondent's motion.

In its Order dated July 3, 1992, the trial court, denied private respondent's motion to declare
petitioner Lourdes A. Valmonte in default. A motion for reconsideration was similarly denied on
September 23, 1992. Whereupon, private respondent filed a petition for certiorari, prohibition
and mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the petition and declaring
Lourdes A. Valmonte in default. A copy of the appellate court's decision was received by petitioner
Alfredo D. Valmonte on January 15, 1993 at his Manila office and on January 21, 1993 in Seattle,
Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was
validly served with summons. In holding that she had been, the Court of Appeals stated: 1
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned
counsel of Dimalanta to address all communications (evidently referring to her controversy with her
sister Mrs. Dimalanta over the Paco property, now the subject of the instant case) to her lawyer who
happens also to be her husband. Such directive was made without any qualification just as was her
choice/designation of her husband Atty. Valmonte as her lawyer likewise made without any
qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being his
wife's attorney (at least with regard to the dispute vis-a-vis (sic) the Paco property) would appear to
be feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged special appearance made on behalf of
his wife. Whereas Mrs. Valmonte had manifestly authorized her husband to serve as her lawyer
relative to her dispute with her sister over the Paco property and to receive all communications
regarding the same and subsequently to appear on her behalf by way of a so-called special
appearance, she would nonetheless now insist that the same husband would nonetheless had
absolutely no authority to receive summons on her behalf. In effect, she is asserting that
representation by her lawyer (who is also her husband) as far as the Paco property controversy is
concerned, should only be made by him when such representation would be favorable to her but not
otherwise. It would obviously be inequitable for this Court to allow private respondent Lourdes A.
Valmonte to hold that her husband has the authority to represent her when an advantage is to be
obtained by her and to deny such authority when it would turn out to be her disadvantage. If this be
allowed, Our Rules of Court, instead of being an instrument to promote justice would be made use of
to thwart or frustrate the same.
xxx

xxx

xxx

Turning to another point, it would not do for Us to overlook the fact that the disputed
summons was served not upon just an ordinary lawyer of private respondent Lourdes A.
Valmonte, but upon her lawyer husband. But that is not all, the same lawyer/husband
happens to be also her co-defendant in the instant case which involves real property which,
according to her lawyer/husband/co-defendant, belongs to the conjugal partnership of the
defendants (the spouses Valmonte). It is highly inconceivable and certainly it would be
contrary to human nature for the lawyer/husband/co-defendant to keep to himself the fact
that they (the spouses Valmonte) had been sued with regard to a property which, he claims
to be conjugal. Parenthetically, there is nothing in the records of the case before Us
regarding any manifestation by private respondent Lourdes A. Valmonte about her lack of

knowledge about the case instituted against her and her lawyer/husband/co-defendant by
her sister Rosita. . . .
PREMISES CONSIDERED, the instant petition for certiorari, prohibition and mandamus is
given due course. This Court hereby Resolves to nullify the orders of the court a quo dated
July 3, 1992 and September 23, 1992 and further declares private respondent Lourdes
Arreola Valmonte as having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in refusing to
apply the provisions of Rule 14, 17 of the Revised Rules of Court and applying instead Rule 14, 8
when the fact is that petitioner Lourdes A. Valmonte is a nonresident defendant; and (2) because
even if Rule 14, 8 is the applicable provision, there was no valid substituted service as there was
no strict compliance with the requirement by leaving a copy of the summons and complaint with
petitioner Alfredo D. Valmonte. Private respondent, upon the other hand, asserts that petitioners are
invoking a technicality and that strict adherence to the rules would only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an
action in personam, in rem or quasi in rem. This is because the rules on service of summons
embodied in Rule 14 apply according to whether an action is one or the other of these actions.
In an action in personam, personal service of summons or, if this is not possible and he cannot be
personally served, substituted service, as provided in Rule 14, 7-82 is essential for the acquisition
by the court of jurisdiction over the person of a defendant who does not voluntarily submit himself to
the authority of the court.3 If defendant cannot be served with summons because he is temporarily
abroad, but otherwise he is a Philippine resident, service of summons may, by leave of court, be
made by publication.4 Otherwise stated, a resident defendant in an action in personam, who cannot
be personally served with summons, may be summoned either by means of substituted service in
accordance with Rule 14, 8 or by publication as provided in 17 and 18 of the same Rule. 5
In all of these cases, it should be noted, defendant must be a resident of the Philippines, otherwise
an action in personam cannot be brought because jurisdiction over his person is essential to make a
binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction
over the res. If the defendant is a nonresident and he is not found in the country, summons may be
served exterritorially in accordance with Rule 14, 17, which provides:
17. Extraterritorial service. - When the defendant does not reside and is not found in the
Philippines and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant
has been attached within the Philippines, service may, by leave of court, be effected out of
the Philippines by personal service as under section 7; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a

copy of the summons and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer..
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has
jurisdiction over theres, i.e. the personal status of the plaintiff who is domiciled in the Philippines or
the property litigated or attached.
Service of summons in the manner provided in 17 is not for the purpose of vesting it with
jurisdiction but for complying with the requirements of fair play or due process, so that he will be
informed of the pendency of the action against him and the possibility that property in the Philippines
belonging to him or in which he has an interest may be subjected to a judgment in favor of the
plaintiff and he can thereby take steps to protect his interest if he is so minded. 6
Applying the foregoing rules to the case at bar, private respondent's action, which is for partition and
accounting under Rule 69, is in the nature of an action quasi in rem. Such an action is essentially for
the purpose of affecting the defendant's interest in a specific property and not to render a judgment
against him. As explained in the leading case of Banco Espaol Filipino v. Palanca :7
[An action quasi in rem is] an action which while not strictly speaking an action in rem partakes of
that nature and is substantially such. . . . The action quasi in rem differs from the true action in rem in
the circumstance that in the former an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the property. All
proceedings having for their sole object the sale or other disposition of the property of the defendant,
whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated.
The judgment entered in these proceedings is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of
summons on her must be in accordance with Rule 14, 17. Such service, to be effective outside the
Philippines, must be made either (1) by personal service; (2) by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a copy of
the summons and order of the court should be sent by registered mail to the last known address of
the defendant; or (3) in any other manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done
by means of any of the first two modes, the question is whether the service on her attorney,
petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in any . . . manner the
court may deem sufficient."
We hold it cannot. This mode of service, like the first two, must be made outside the Philippines,
such as through the Philippine Embassy in the foreign country where the defendant
resides.8 Moreover, there are several reasons why the service of summons on Atty. Alfredo D.
Valmonte cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte. In
the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order
of the court as required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court
which in fact refused to consider the service to be valid and on that basis declare petitioner Lourdes
A. Valmonte in default for her failure to file an answer.

In the second place, service in the attempted manner on petitioner was not made upon prior leave of
the trial court as required also in Rule 14, 17. As provided in 19, such leave must be applied for by
motion in writing, supported by affidavit of the plaintiff or some person on his behalf and setting forth
the grounds for the application.
Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes A.
Valmonte was not given ample time to file her Answer which, according to the rules, shall be not less
than sixty (60) days after notice. It must be noted that the period to file an Answer in an action
against a resident defendant differs from the period given in an action filed against a nonresident
defendant who is not found in the Philippines. In the former, the period is fifteen (15) days from
service of summons, while in the latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance of due process. That is why
in one case,9although the Court considered publication in the Philippines of the summons (against
the contention that it should be made in the foreign state where defendant was residing) sufficient,
nonetheless the service was considered insufficient because no copy of the summons was sent to
the last known correct address in the Philippines..
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in
which it was held that service of summons upon the defendant's husband was binding on her. But
the ruling in that case is justified because summons were served upon defendant's husband in their
conjugal home in Cebu City and the wife was only temporarily absent, having gone to Dumaguete
City for a vacation. The action was for collection of a sum of money. In accordance with Rule 14, 8,
substituted service could be made on any person of sufficient discretion in the dwelling place of the
defendant, and certainly defendant's husband, who was there, was competent to receive the
summons on her behalf. In any event, it appears that defendant in that case submitted to the
jurisdiction of the court by instructing her husband to move for the dissolution of the writ of
attachment issued in that case.
On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife of a
nonresident defendant was found sufficient because the defendant had appointed his wife as his
attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss citizen and resident
of Switzerland, service of summons upon his wife Helen Schenker who was in the Philippines was
sufficient because she was her husband's representative and attorney-in-fact in a civil case, which
he had earlier filed against William Gemperle. In fact Gemperle's action was for damages arising
from allegedly derogatory statements contained in the complaint filed in the first case. As this Court
said, "[i]n other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her
husband, so that she was, also, empowered to represent him in suits filed against him, particularly in
a case, like the one at bar, which is a consequence of the action brought by her on his
behalf" 11 Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the
action brought by Mr. Schenker against him, there would have been no doubt that the trial court
could have acquired jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs.
Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her
attorney-in-fact. Although she wrote private res- pondent's attorney that "all communications"
intended for her should be addressed to her husband who is also her lawyer at the latter's address in
Manila, no power of attorney to receive summons for her can be inferred therefrom. In fact the letter
was written seven months before the filing of this case below, and it appears that it was written in

connection with the negotiations between her and her sister, respondent Rosita Dimalanta,
concerning the partition of the property in question. As is usual in negotiations of this kind, the
exchange of correspondence was carried on by counsel for the parties. But the authority given to
petitioner's husband in these negotiations certainly cannot be construed as also including an
authority to represent her in any litigation.
For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A. Valmonte
in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and
September 23, 1992 of the Regional Trial Court of Manila, Branch 48 are REINSTATED.
SO ORDERED.

3. G.R. No. 77085 April 26, 1989


PHILIPPINE INTERNATIONAL SHIPPING CORPORATION (PISC), GEORGE LIM, MARCOS
BAUTISTA, CARLOS LAUDE, TAN SING LIM, ANTONIO LIU LAO, ONG TEH, PHILIPPINE
CONSORTIUM CONSTRUCTION CORPORATION, PACIFIC MILLS, INC., and UNIVERSAL

STEEL SMELTING CO., INC., petitioners,


vs.
THE HON. COURT OF APPEALS, HON. JOSE C. DE GUZMAN, as Judge presiding Branch 93
of the Regional Trial Court of Quezon City, INTERPOOL, LTD. and SHERIFF NORBERTO V.
DOBLADA JR., respondents.
RESOLUTION

FELICIANO, J.:
The subject of the present Petition is the Decision of the Court of Appeals dated 12 December 1986,
in CA-G.R. SP No. 10614. The appellate court upheld the Order of Branch 93 of the Regional Trial
Court of Quezon City granting the issuance of a writ of execution, in Civil Case No. Q-39927.
The undisputed facts are stated in the appealed decision:
Plaintiff [respondent Interpool, Ltd.] is a foreign corporation, duly organized and
existing under the laws of Bahamas Islands with office and business address at 630,
3rd Avenue, New York, New York, and not licensed to do, and not doing business, in
the Philippines.
Defendants Philippine International Shipping Corporation, Philippine Construction
Consortium Corporation, Pacific Mills Inc., and Universal Steel Smelting Company,
Inc., are corporations duly organized and existing under and by virtue of the laws of
the Philippines. The other defendants, George Lim Marcos Bautista, Carlos Laude,
Tan Sing Lim, Antonio Liu Lao and Ong Teh are Philippine residents.
In 1979 to 1981, the defendant, Philippine International Shipping Corporation (PISC)
leased from the plaintiff and its wholly owned subsidiary, the Container Trading
Corporation, several containers pursuant to the Membership Agreement and Hiring
Conditions (Exhibit B) 1 and the Master Equipment Leasing Agreement (Exhibit C ), 2 both dated June 8,
1979.

Defendants Philippine Construction Consortium Corporation, Pacific Mills Inc. and


Universal Steel Smelting Company, guaranteed to pay (sic) all monies due, or to
become due, to the plaintiff from (PISC) and any liability of the latter arising out of the
leasing or purchasing of equipment from the plaintiff or any of its subsidiaries,
affiliates and/or agents of I.S.C. dry cargo containers and/or chassis, including but
not limited, to per diem leasing charges, damages protection plan charges, damages
charge and/or replacement costs of constructively and/or totally lost containers as
well as handling and drop-off charges (Exhibit J). 3
The other defendants, namely: 1) George Lim; 2) Marcos Bautista; 3) Carlos Laude 4) Tan Sing Lim; 5) Antonio Liu Lao
and 6) Ong Teh, unconditionally and irrevocably guaranteed to pay (sic) plaintiff all payments due to it under the Master
Equipment Leasing Agreement (Exhibit C) and Membership Agreement and Hiring Conditions (Exhibit B) dated June 8,
1979, in the amounts at the time and in the manner set out in the said agreements and to indemnify plaintiff against all
claims, liabilities, costs, damages and expenses (including legal fees) suffered or incurred by plaintiff, arising out of or
in connection with any failure by defendant Philippine International Shipping Corporation to perform any of its
obligations under the aforesaid Agreements (Exhibit D, E, F, G, H, and I). 4

In 1979 to 1981, defendant Philippine International Shipping Corporation incurred outstanding and unpaid obligations
with the plaintiff, in the amount of $94,456.28, representing unpaid per diems, drop-off charges, interest and other
agreed charges.

The plaintiff sent letters to the defendants (Exhibit K, L, M, N 0, P, Q, R, S and


T ), 5 demanding payment of their outstanding and unpaid obligations, but to no avail, so plaintiff was constrained to
file a case against the principal defendant, (PISC) before the United States District Court, Southern District of New
York, which was docketed as 83 Civil 290 (EW) Plaintiff obtained a Default Judgment on July 3, 1983 against (PISC)
ordering it to pay the plaintiff the sum of $80,779.33, as liquidated damages, together with interest in the amount of
$13,676.95 and costs in the amount of $80.00. or for a total judgment of $94,456.28 (Exhibit A). 6
Because of the unjustifiable failure and refusal of PISC and its guarantors to jointly and severally pay their obligations
to the plaintiff, the latter filed on November 16, 1983 a complaint [docketed as Civil Case No. Q-39927, Branch 93,
Regional Trial Court of Quezon City] (Annex A) 7 to enforce the default judgment of the U.S. District Court against the
defendant PISC and also to enforce the individually executed Continuing Guaranties of the other defendants (Annexes
D, E, F, G, H, I, and J of the Complaint).

The defendants (herein petitioners) were duly summoned, but they failed to answer
the complaint. On motion of the plaintiff, they were declared in default 8 and the plaintiff
(herein private respondent) was allowed to present its evidence ex parte.

On April 11, 1985 the court rendered judgment for the plaintiff,

9 the dispositive part reading as

follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants, ordering:
1) The defendant, Philippine International Shipping Corporation, and the defendantsGuarantors, to jointly and severally pay plaintiff the liquidated amount of $80,779.33,
together with interest in the amount of $13,676.95 and costs in the amount of $80.00
or a total of $94,456.28, pursuant to the Default Judgment rendered by the United
States District Court, Southern District of New York, or in the Philippine currency
equivalent of the aforesaid amount of $94,456.28, computed at the time of payment,
with interest for late payment at the rate of 18% per annum from July 4, 1983, until
fully paid;
2) The defendant, Philippine International Shipping Corporation, and the defendantsGuarantors, to jointly and severally pay plaintiff the sum equivalent to twenty (20%)
percent of the total amount due from the defendants by way of attorney's fees; and
3) To pay the costs.
On May 17, 1985, the defendants appealed the decision to this Appellate Court (ACG.R. UDK No. 7383) which dismissed the appeal on November 13, 1985 for failure of
the appellants to pay the docketing fee despite their receipt of the notice to do so on
August 26, 1985. 10 Entry of that final resolution was made on December 6,1985.
In view of the finality of the decision, the plaintiff filed on July 23, 1986 a motion for
execution and for appointment of a special sheriff to enforce it. 11
Over the defendants' opposition, the trial court issued an order of execution on October 15, 1986 and appointed
Norberto V. Doblado, Jr., of the office of the Makati Sheriff, as special sheriff for the purpose (Annex D). 12

On 20 November 1986, petitioners (defendants below) filed with the Court of Appeals a Petition to
Annul Judgment (docketed as C.A.-GR SP No. 10614) 13 directed at the 15 October 1986 Order of the Regional Trial
Court. On 12 December 1986, the appellate court rendered a Decision 14 denying that petition for lack of merit. A Motion for Reconsideration
was likewise denied for lack of merit.15

In the instant Petition for Review, filed with this Court on 27 February 1987, petitioners allege that
both the Default Judgment rendered by the U.S. District Court, Southern District of New York, in 83
Civil 290 (EW), and the Decision of the Regional Trial Court of Quezon City, in Civil Case No. Q39927, are null and void essentially on jurisdictional grounds. In the first instance, petitioners
contend that the U.S. District Court never acquired jurisdiction over their persons as they had not
been served with summons and a copy of the Complaint in 83 Civil 290 (EW). In the second
instance, petitioners contend that such jurisdictional ty effectively prevented the Regional Trial Court
of Quezon City from taking cognizance of the Complaint in Civil Case No. Q-39927 and from
enforcing the U.S. District Court's Default Judgment against them. Petitioners contend, finally, that
assuming the validity of the disputed Default Judgment, the same may be enforced only against
petitioner Philippine International Shipping Corporation (PISC) the other nine (9) petitioners not
having been impleaded originally in the case filed in New York, U.S.A.
The Petition must fail.
1. To begin with, the evidence of record clearly shows that the U.S. District Court had
validly acquired jurisdiction over petitioner (PISC) under the procedural law
applicable in that forum i.e., the U.S. Federal Rules on Civil Procedure. Copies of the
Summons and Complaint 16 in 83 Civil 290 (EW) which were in fact attached to the Petition for Review filed
with this Court, were stamped "Received, 18 Jan 1983, PISC Manila." indicating that service thereof had been made
upon and acknowledged by the (PISC) office in Manila on, 18 January 1983, and that (PISC) had actual notice of such
Complaint and Summons. Moreover, copies of said Summons and Complaint had likewise been served upon PrenticeHall Corporation System, Inc. (New York), petitioner PISCs agent, expressly designated by it in the Master Equipment
Leasing Agreement with respondent Interpool. "for the purpose of accepting service of any process within the State of
New York, USA with respect to any claim or controversy arising out of or relating to directly or indirectly, this
Lease." 17 The record also shows that petitioner PISC, without, however, assailing the jurisdiction of the U.S. District
Court over the person of petitioner, had filed a Motion to Dismiss 18 the Complaint in 83 Civil 290 (EW) which Motion
was denied. All of the foregoing matters, which were stated specifically in the U.S. District Court's disputed Default
Judgement, 19 have not been disproven or otherwise overcome by petitioners, whose bare and unsubstantiated
allegations cannot prevail over clear and convincing evidence of record to the contrary.

That foreign judgment-which had become final and executory, no appeal having been taken
therefrom and perfected by petitioner PISC-is thus "presumptive evidence of a right as between the
parties [i.e., PISC and Interpool] and their successors in interest by a subsequent title." 20 We note,
further that there has been in this case no showing by petitioners that the Default Judgment rendered by the U.S. District Court in 83 Civil
290 (EW) was vitiated by "want of notice to the party, collusion, fraud, or clear mistake of law or fact. " 21 In other words, the Default
Judgment imposing upon petitioner PISC a liability of U.S.$94,456.28 in favor of respondent Interpool, is valid and may be enforced in this
jurisdiction.

2. The existence of liability (i.e., in the amount of U.S.$94,456.28) on the part of


petitioner PISC having been duly established in the U.S. case, it was not improper for
respondent Interpool, in seeking enforcement in this jurisdiction of the foreign
judgment imposing such liability, to have included the other nine (9) petitioners herein
(i.e., George Lim, Marcos Bautista, Carlos Laude,Tan Sing Lim, Antonio Liu Lao, Ong
Teh Philippine Consortium Construction Corporation, Pacific Mills, Inc. and Universal
Steel Smelting Co., Inc.) as defendants in Civil Case No. Q- 39927, filed with Branch
93 of the Regional Trial Court of Quezon City. With respect to the latter, Section 6,
Rule 3 of the Revised Rules of Court expressly provides:

Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right
to relief in respect to or arising out of the same transaction or series of transactions
is alleged to exist, whether jointly, severally, or in the alternative, may, except as
otherwise provided in these rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all
such defendants may arise in the action; but the court may make such orders as may
be just to prevent any plaintiff or defendant from being embarrassed or put to
expense in connection with any proceedings in which he may have no interest.
(Emphasis supplied)
The record shows that said nine (9) petitioners had executed continuing guarantees" to secure
performance by petitioner PISC of its contractual obligations, under the Membership Agreement and
Hiring Conditions and Master Equipment Leasing Agreement with respondent Interpool. As
guarantors, they had held themselves out as liable. "whether jointly, severally, or in the alternative,"
to respondent Interpool under their separate "continuing guarantees" executed in the Philippines, for
any breach of those Agreements on the part of (PISC) The liability of the nine (9) other petitioners
was, in other words, not based upon the Membership Agreement and the Master Equipment Leasing
Agreement to which they were not parties. The New York award of U.S.$94,456.28 is precisely
premised upon a breach by PISC of its own obligations under those Agreements. We, therefore,
consider the nine (9) other petitioners as persons 44 against whom [a] right to relief in respect to or
arising out of the same transaction or series of transactions [has been] alleged to exist." as
contemplated in the Rule quoted above and, consequently, properly impleaded as defendants in
Civil Case No. Q-39927. There was, in other words, no need at all, in order that Civil Case No. Q39927 would prosper, for respondent Interpool to have first impleaded the nine (9) other petitioners
in the New York case and there obtain judgment against all ten (10) petitioners.
3. Petitioners' argument of lack or absence of jurisdiction on the part of the Quezon
City Regional Trial Court, on the alleged ground of non-service of notice or summons
in Civil Case No. Q-39927, does not persuade. But we do not need to address this
specific argument. For even assuming (though merelyarguendo) that none of the ten
(10) petitioner herein had been served with notice or summons below, the record
shows, however, that they did in fact file with the Regional Trial Court a Motion for
Extension of Time to file Answer 22 (dated 9 December 1983) as well as Motion for Bill of
Particulars 23 (dated 15 December 1983), both addressing respondent Interpool's .Complaint in Civil Case No. Q39927. In those pleadings, petitioners not only manifested their intention to controvert the allegations in the Complaint,
but they neither questioned nor assailed the jurisdiction of the trial court, either over the case filed against them or over
their individual persons, as defendants therein. There was here, in effect, voluntary submission to the jurisdiction of the
Quezon City trial court by petitioners, who are thereby estopped from asserting otherwise before this Court. 24

ACCORDINGLY, the Petition for Review is DENIED and the Decision dated 12 December 1986 of
the Court of Appeals in C.A.-G.R. SP No. 10614, is hereby AFFIRMED. This Resolution is
immediately executory. Costs against petitioners.
SO ORDERED.

4. 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
respondents contract was for a fixed term that had already expired, and refused to negotiate for the
renewal of the ICA.10
As he was not able to generate a positive response from the petitioners, respondent consequently
initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with the
Regional Trial Court of Lipa City.11

For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and
between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They asserted
that the claim for improper pre-termination of respondent's ICA could only be heard and ventilated in
the proper courts of Japan following the principles of lex loci celebrationis and lex contractus.12
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of
Kitamura by a certain Y. Kotake as project manager of the BBRI Project. 13
On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank14 that matters
connected with the performance of contracts are regulated by the law prevailing at the place of
performance,15 denied the motion to dismiss.16 The trial court subsequently denied petitioners' motion
for reconsideration,17 prompting them to file with the appellate court, on August 14, 2000,
their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205]. 18 On August 23,
2000, the CA resolved to dismiss the petition on procedural groundsfor lack of statement of
material dates and for insufficient verification and certification against forum shopping. 19 An Entry of
Judgment was later issued by the appellate court on September 20, 2000. 20
Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the
reglementary period, a second Petition for Certiorari under Rule 65 already stating therein the
material dates and attaching thereto the proper verification and certification. This second petition,
which substantially raised the same issues as those in the first, was docketed as CA-G.R. SP
No. 60827.21
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001
Decision22finding no grave abuse of discretion in the trial court's denial of the motion to dismiss. The
CA ruled, among others, that the principle of lex loci celebrationis was not applicable to the case,
because nowhere in the pleadings was the validity of the written agreement put in issue. The CA
thus declared that the trial court was correct in applying instead the principle of lex loci solutionis.23
Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25,
2001 Resolution.24
Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant
Petition for Review on Certiorari25 imputing the following errors to the appellate court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE
TRIAL COURT VALIDLY EXERCISED JURISDICTION OVER THE INSTANT
CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER OF
THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO JAPANESE
NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN
TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE
NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN
THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.26
The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction
of Philippine courts in civil cases for specific performance and damages involving contracts executed
outside the country by foreign nationals may be assailed on the principles of lex loci

celebrationis, lex contractus, the "state of the most significant relationship rule," or forum non
conveniens.
However, before ruling on this issue, we must first dispose of the procedural matters raised by the
respondent.
Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has
already barred the filing of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally
raising the same issues as those in the first one) and the instant petition for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's
defective certification of non-forum shopping, it was a dismissal without prejudice. 27 The same holds
true in the CA's dismissal of the said case due to defects in the formal requirement of
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 certificationas 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
scopeits wordings indicate that Hasegawa is given the authority to sign for and act on behalf of the
company only in the petition filed with the appellate court, and that authority cannot extend to the
instant petition for review.36 In a plethora of cases, however, this Court has liberally applied the Rules
or even suspended its application whenever a satisfactory explanation and a subsequent fulfillment
of the requirements have been made.37 Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply38 an updated Authorization39 for Hasegawa to
act on behalf of the company in the instant petition, the Court finds the same as sufficient
compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the verification and
certification. As respondent pointed out, and to which we agree, Hasegawa is truly not authorized to

act on behalf of Nippon in this case. The aforesaid September 4, 2000 Authorization and even the
subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief
executive officer, not by the company's board of directors. In not a few cases, we have ruled that
corporate powers are exercised by the board of directors; thus, no person, not even its officers, can
bind the corporation, in the absence of authority from the board. 40 Considering that Hasegawa
verified and certified the petition only on his behalf and not on behalf of the other petitioner, the
petition has to be denied pursuant to Loquias v. Office 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 contacts"
for one do not always provide the necessary "significant contacts" for the other.55 The question of
whether the law of a state can be applied to a transaction is different from the question of whether
the courts of that state have jurisdiction to enter a judgment.56
In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has various aspects.
For a court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the
plaintiff or the petitioner, over the defendant or the respondent, over the subject matter, over the
issues of the case and, in cases involving property, over the res or the thing which is the subject of
the litigation.57 In assailing the trial court's jurisdiction herein, petitioners are actually referring to
subject matter jurisdiction.
1wphi1

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority
which establishes and organizes the court. It is given only by law and in the manner prescribed by
law.58 It is further determined by the allegations of the complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein. 59 To succeed in its motion for the dismissal of
an action for lack of jurisdiction over the subject matter of the claim,60 the movant must show that the
court or tribunal cannot act on the matter submitted to it because no law grants it the power to
adjudicate the claims.61
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not
properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No. 000264 for specific performance and damages is one not capable of pecuniary estimation and is
properly cognizable by the RTC of Lipa City.62 What they rather raise as grounds to question subject
matter jurisdiction are the principles of lex loci celebrationis and lex contractus, and the "state of the
most significant relationship rule."
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the "law of the place of the ceremony"63 or the law of the place where
a contract is made.64 The doctrine of lex contractus or lex loci contractus means the "law of the place
where a contract is executed or to be performed."65 It controls the nature, construction, and validity of
the contract66 and it may pertain to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly.67 Under the "state of the most significant relationship rule," to
ascertain what state law to apply to a dispute, the court should determine which state has the most
substantial connection to the occurrence and the parties. In a case involving a contract, the court
should consider where the contract was made, was negotiated, was to be performed, and the
domicile, place of business, or place of incorporation of the parties.68 This rule takes into account
several contacts and evaluates them according to their relative importance with respect to the
particular issue to be resolved.69
Since these three principles in conflict of laws make reference to the law applicable to a dispute,
they are rules proper for the second phase, the choice of law.70 They determine which state's law is
to be applied in resolving the substantive issues of a conflicts problem. 71 Necessarily, as the only
issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet
called for.

Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have
not yet pointed out any conflict between the laws of Japan and ours. Before determining which law
should apply, first there should exist a conflict of laws situation requiring the application of the conflict
of laws rules.72 Also, when the law of a foreign country is invoked to provide the proper rules for the
solution of a case, the existence of such law must be pleaded and proved. 73
It should be noted that when a conflicts case, one involving a foreign element, is brought before a
court or administrative agency, there are three alternatives open to the latter in disposing of it: (1)
dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the
case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume
jurisdiction over the case and take into account or apply the law of some other State or States. 74 The
courts power to hear cases and controversies is derived from the Constitution and the laws. While it
may choose to recognize laws of foreign nations, the court is not limited by foreign sovereign law
short of treaties or other formal agreements, even in matters regarding rights provided by foreign
sovereigns.75
Neither can the other ground raised, forum non conveniens,76 be used to deprive the trial court of its
jurisdiction herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of
the Rules of Court does not include it as a ground. 77 Second, whether a suit should be entertained or
dismissed on the basis of the said doctrine depends largely upon the facts of the particular case and
is addressed to the sound discretion of the trial court. 78 In this case, the RTC decided to assume
jurisdiction. Third, the propriety of dismissing a case based on this principle requires a factual
determination; hence, this conflicts principle is more properly considered a matter of defense. 79
Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed
by respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate, the
trial and appellate courts correctly denied the petitioners motion to dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
SO ORDERED.

5. 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 CAG.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 respondents money claims. 5 Upon appeal by BMSI, the
NLRC reversed the decision of the Labor Arbiter and dismissed respondents 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 respondents claim, it was a foreign corporation duly
licensed to do business in the Philippines and denied entering into any arrangement with respondent
or paying the latter any sum of money. Petitioner also denied combining with BMSI and RUST for the
purpose of assuming the alleged obligation of the said companies.9 Petitioner also referred to the
NLRC decision which disclosed that per the written agreement between respondent and BMSI and
RUST, denominated as "Special Sales Representative Agreement," the rights and obligations of the
parties shall be governed by the laws of the State of Connecticut.10 Petitioner sought the dismissal of
the complaint on grounds of failure to state a cause of action and forum non conveniens and prayed
for damages by way of compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative
Defenses and for Summary 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 petitioners 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 petitioners motion. Thus, it filed
a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of certiorari and a writ
of injunction to set aside the twin orders of the trial court dated 13 September 2000 and 31 July 2001
and to enjoin the trial court from conducting further proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed Decision 21 denying the petition for
certiorari for lack of merit. It also denied petitioners 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 petitioners 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 elsewhere. 34 Petitioners 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 courts 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

6. G.R. No. 122191 October 8, 1998


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

QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the
Resolution 1dated September 27, 1995 and the Decision 2 dated April 10, 1996 of the Court of Appeals 3 in
CA-G.R. SP No. 36533, 4and the Orders 5 dated August 29, 1994 6 and February 2, 1995 7 that were issued
by the trial court in Civil Case No. Q-93-18394. 8
The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned
Decision 9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its
airlines based in Jeddah, Saudi Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco
dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both
Saudi nationals. Because it was almost morning when they returned to their hotels,
they agreed to have breakfast together at the room of Thamer. When they were in te
(sic) room, Allah left on some pretext. Shortly after he did, Thamer attempted to rape
plaintiff. Fortunately, a roomboy and several security personnel heard her cries for
help and rescued her. Later, the Indonesian police came and arrested Thamer and
Allah Al-Gazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA officials
interrogated her about the Jakarta incident. They then requested her to go back to
Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA Legal
Officer Sirah Akkad and base manager Baharini negotiated with the police for the
immediate release of the detained crew members but did not succeed because
plaintiff refused to cooperate. She was afraid that she might be tricked into
something she did not want because of her inability to understand the local dialect.
She also declined to sign a blank paper and a document written in the local dialect.
Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her from the
Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi Arabian government, the
Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention. Eventually, they were again put in service by defendant SAUDI (sic). In
September 1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was already
behind her, her superiors requested her to see Mr. Ali Meniewy, Chief Legal Officer of
SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he brought her to the police
station where the police took her passport and questioned her about the Jakarta
incident. Miniewy simply stood by as the police put pressure on her to make a
statement dropping the case against Thamer and Allah. Not until she agreed to do so
did the police return her passport and allowed her to catch the afternoon flight out of
Jeddah.

One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a few minutes
before the departure of her flight to Manila, plaintiff was not allowed to board the
plane and instead ordered to take a later flight to Jeddah to see Mr. Miniewy, the
Chief Legal Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA office
brought her to a Saudi court where she was asked to sign a document written in
Arabic. They told her that this was necessary to close the case against Thamer and
Allah. As it turned out, plaintiff signed a notice to her to appear before the court on
June 27, 1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once
again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after
receiving assurance from SAUDIA's Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June
27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated
plaintiff through an interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her plane was about to
take off, a SAUDIA officer told her that the airline had forbidden her to take flight. At
the Inflight Service Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah, at the crew
quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court
where the judge, to her astonishment and shock, rendered a decision, translated to
her in English, sentencing her to five months imprisonment and to 286 lashes. Only
then did she realize that the Saudi court had tried her, together with Thamer and
Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2)
going to a disco, dancing and listening to the music in violation of Islamic laws; and
(3) socializing with the male crew, in contravention of Islamic tradition. 10
Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA.
Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah to
help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic
flight of SAUDIA, while Thamer and Allah continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and
allowed her to leave Saudi Arabia. Shortly before her return to Manila, 12 she was terminated from the
service by SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and Khaled AlBalawi ("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 AlBalawi 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
Prayer for Temporary Restraining Order dated October 13, 1995.

29

for Review with

However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision 30 dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum
considering that the Amended Complaint's basis for recovery of damages is Article 21 of the Civil Code,
and thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the proper
remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and
in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary
Restraining Order 31dated 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.
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 substantial connections. That would have caused a fundamental unfairness to
her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have
been shown by either of the parties. The choice of forum of the plaintiff (now private respondent)
should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing
her Complaint and Amended Complaint with the trial court, private respondent has voluntary
submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the dismissal of
Morada's Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February
20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs

under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial court's jurisdiction
by praying for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction.

As held by this Court in Republic vs. Ker and Company, Ltd.: 51


We observe that the motion to dismiss filed on April 14, 1962, aside from disputing
the lower court's jurisdiction over defendant's person, prayed for dismissal of the
complaint on the ground that plaintiff's cause of action has prescribed. By interposing
such second ground in its motion to dismiss, Ker and Co., Ltd. availed of an
affirmative defense on the basis of which it prayed the court to resolve controversy in
its favor. For the court to validly decide the said plea of defendant Ker & Co., Ltd., it
necessarily had to acquire jurisdiction upon the latter's person, who, being the
proponent of the affirmative defense, should be deemed to have abandoned its
special appearance and voluntarily submitted itself to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of objecting to the jurisdiction of
the court over the person, it must be for the sole and separate purpose of objecting
to the jurisdiction of the court. If his motion is for any other purpose than to object to
the jurisdiction of the court over his person, he thereby submits himself to the
jurisdiction of the court. A special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the person will be held to be a general
appearance, if the party in said motion should, for example, ask for a dismissal of the
action upon the further ground that the court had no jurisdiction over the subject
matter. 52
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus,
we find that the trial court has jurisdiction over the case and that its exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law problems seek to answer two
important questions: (1) What legal system should control a given situation where some of the
significant facts occurred in two or more states; and (2) to what extent should the chosen legal
system regulate the situation. 53
Several theories have been propounded in order to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice
and predictability, they do not always do so. The forum is then faced with the problem of deciding
which of these two important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what category a certain set
of facts or rules fall. This process is known as "characterization", or the "doctrine of qualification". It
is the "process of deciding whether or not the facts relate to the kind of question specified in a
conflicts rule." 55 The purpose of "characterization" is to enable the forum to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative
fact. 57 An essential element of conflict rules is the indication of a "test" or "connecting factor" or "point of
contact". Choice-of-law rules invariably consist of a factual relationship (such as property right, contract

claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration,
the place of performance, or the place of wrongdoing. 58

Note that one or more circumstances may be present to serve as the possible test for the
determination of the applicable law. 59 These "test factors" or "points of contact" or "connecting factors"
could be any of the following:
(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his
origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated.
In particular, thelex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the place where
a contract has been made, a marriage celebrated, a will signed or a tort committed.
The lex loci actus is particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is to be
exercised;
(6) the intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done.
The lex fori the law of the forum is particularly important because, as we have
seen earlier, matters of "procedure" not going to the substance of the claim involved
are governed by it; and because the lex fori applies whenever the content of the
otherwise applicable foreign law is excluded from application in a given case for the
reason that it falls under one of the exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its master or owner as such. It also covers contractual
relationships particularly contracts of affreightment. 60 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the Amended Complaint
deemed admitted for purposes of the motion to dismiss, we are convinced that there is reasonable
basis for private respondent's assertion that although she was already working in Manila, petitioner
brought her to Jeddah on the pretense that she would merely testify in an investigation of the
charges she made against the two SAUDIA crew members for the attack on her person while they
were in Jakarta. As it turned out, she was the one made to face trial for very serious charges,
including adultery and violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that the "handing over" or "turning over" of the
person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioner's purported act contributed to and amplified or even proximately caused
additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly

facilitated the arrest, detention and prosecution of private respondent under the guise of petitioner's
authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As
purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private
respondent was wrongful. But these capped the injury or harm allegedly inflicted upon her person
and reputation, for which petitioner could be liable as claimed, to provide compensation or redress
for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or
"point of contact" could be the place or places where the tortious conduct or lex loci actus occurred.
And applying the torts principle in a conflicts case, we find that the Philippines could be said as a
situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived private respondent, a Filipina residing and working
here. According to her, she had honestly believed that petitioner would, in the exercise of its rights
and in the performance of its duties, "act with justice, give her due and observe honesty and good
faith." Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury
allegedly occurred in another country is of no moment. For in our view what is important here is the
place where the over-all harm or the totality of the alleged injury to the person, reputation, social
standing and human rights of complainant, had lodged, according to the plaintiff below (herein
private respondent). All told, it is not without basis to identify the Philippines as the situs of the
alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability 61 have been advanced to offer fresh judicial approaches to arrive at
just results. In keeping abreast with the modern theories on tort liability, we find here an occasion to apply
the "State of the most significant relationship" rule, which in our view should be appropriate to apply now,
given the factual context of this case.
In applying said principle to determine the State which has the most significant relationship, the
following contacts are to be taken into account and evaluated according to their relative importance
with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the
conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation
and place of business of the parties, and (d) the place where the relationship, if any, between the
parties is centered. 62
As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina national,
working with petitioner, a resident foreign corporation engaged here in the business of international
air carriage. Thus, the "relationship" between the parties was centered here, although it should be
stressed that this suit is not based on mere labor law violations. From the record, the claim that the
Philippines has the most significant contact with the matter in this dispute, 63 raised by private
respondent as plaintiff below against defendant (herein petitioner), in our view, has been properly
established.
Prescinding from this premise that the Philippines is the situs of the tort complained of and the place
"having the most interest in the problem", we find, by way of recapitulation, that the Philippine law on
tort liability should have paramount application to and control in the resolution of the legal issues
arising out of this case. Further, we hold that the respondent Regional Trial Court has jurisdiction
over the parties and the subject matter of the complaint; the appropriate venue is in Quezon City,
which could properly apply Philippine law. Moreover, we find untenable petitioner's insistence that

"[s]ince private respondent instituted this suit, she has the burden of pleading and proving the
applicable Saudi law on the matter." 64 As aptly said by private respondent, she has "no obligation to
plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19
and 21" of the Civil Code of the Philippines. In her Amended Complaint and subsequent pleadings, she
never alleged that Saudi law should govern this case. 65 And as correctly held by the respondent appellate
court, "considering that it was the petitioner who was invoking the applicability of the law of Saudi Arabia,
then the burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia is". 66
Lastly, no error could be imputed to the respondent appellate court in upholding the trial court's
denial of defendant's (herein petitioner's) motion to dismiss the case. Not only was jurisdiction in
order and venue properly laid, but appeal after trial was obviously available, and expeditious trial
itself indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately
concerned with the ultimate outcome of the case below, not just for the benefit of all the litigants, but
also for the vindication of the country's system of law and justice in a transnational setting. With
these guidelines in mind, the trial court must proceed to try and adjudge the case in the light of
relevant Philippine law, with due consideration of the foreign element or elements involved. Nothing
said herein, of course, should be construed as prejudging the results of the case in any manner
whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394
entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to Regional Trial Court
of Quezon City, Branch 89 for further proceedings.
SO ORDERED.