[G.R. No. 122191.
October 8, 1998] When plaintiff returned to Jeddah a few days later, several SAUDIA
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS,
MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his
capacity as Presiding Judge of Branch 89, Regional Trial Court of
Quezon City, respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of
Court seeks to annul and set aside the Resolution[1] dated
September 27, 1995 and the Decision[2] dated April 10, 1996 of
the Court of Appeals[3] in CA-G.R. SP No. 36533,[4] and 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. x x x
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.
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 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. 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 SAUDIAs Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on June
28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take flight. At the Inflight Service
Office where she was told to go, the secretary of Mr. Yahya Saddick
took away her passport and told her to remain in Jeddah, at the
crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to
the same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing her to
five months imprisonment and to 286 lashes. Only then did she
realize that the Saudi court had tried her, together with Thamer
and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing and listening to
the music in violation of Islamic laws; and (3) socializing with the
male crew, in contravention of Islamic tradition.[10]
Facing conviction, private respondent sought the help of her
employer, petitioner SAUDIA. Unfortunately, she was denied any
assistance. She then asked the Philippine Embassy in Jeddah to
help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while
Thamer and Allah continued to serve in the international
flights.[11]
Because she was wrongfully convicted, the Prince of Makkah
dismissed the case against her and allowed her to leave Saudi
Arabia. Shortly before her return to Manila,[12] she was
terminated from the service by SAUDIA, without her being
informed of the cause.
On November 23, 1993, Morada filed a Complaint[13] for damages
against SAUDIA, and Khaled Al-Balawi (Al- Balawi), its country
manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To
Dismiss[14] which raised the following grounds, to wit: (1) that
the Complaint states no cause of action against Saudia; (2) that
defendant Al-Balawi is not a real party in interest; (3) that the
claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court
has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to
Dismiss)[15] Saudia filed a reply[16] thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint[17]
wherein Al-Balawi was dropped as party defendant. On August 11,
1994, Saudia filed its Manifestation and Motion to Dismiss
Amended Complaint[18].
The trial court issued an Order[19] dated August 29, 1994 denying
the Motion to Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge[20] denying the Motion to
Dismiss, SAUDIA filed on September 20, 1994, its Motion for
Reconsideration[21] of the Order dated August 29, 1994. It alleged
that the trial court has no jurisdiction to hear and try the case on
the basis of Article 21 of the Civil Code, since the proper law
applicable is the law of the Kingdom of Saudi Arabia. On October
14, 1994, Morada filed her Opposition[22] (To Defendants 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 SAUDIAs 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 attorneys 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 SAUDIAs Petition for the
Issuance of a Writ of Preliminary Injunction dated February 18,
1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is
hereby DENIED, after considering the Answer, with Prayer to Deny
Writ of Preliminary Injunction (Rollo, p. 135) the Reply and
Rejoinder, it appearing that herein petitioner is not clearly entitled
thereto (Unciano Paramedical College, et. Al., v. Court of Appeals,
et. Al., 100335, April 7, 1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the
instant Petition[29] for Review with Prayer for Temporary
Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent
Court of Appeals rendered the Decision[30] dated April 10, 1996,
now also assailed. It ruled that the Philippines is an appropriate
forum considering that the Amended Complaints basis for
recovery of damages is Article 21 of the Civil Code, and thus,
clearly within the jurisdiction of respondent Court. It further held
that certiorari is not the proper remedy in a denial of a Motion to
Dismiss, inasmuch as the petitioner should have proceeded to
trial, and in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review
with Prayer for Temporary Restraining Order[31] dated April 30,
1996, given due course by this Court. After both parties submitted
their Memoranda,[32] the instant case is now deemed submitted
for decision.
Petitioner SAUDIA raised the following issues:
I following issues emerge for our resolution:
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 petitioners 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
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 THE 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 respondents
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.
xxxxxxxxx
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 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.
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 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.
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 SAUDIAs Manila manager, 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 Philippine 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 respondents 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 respondents 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
respondents 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:
Section 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:
xxxxxxxxx
(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorneys fees, litigation expenses, and
costs 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)
xxxxxxxxx
And following Section 2 (b), Rule 4 of the Revised Rules of
Courtthe venue, Quezon City, is appropriate:
SEC. 2 Venue in Courts of First Instance. [Now Regional Trial
Court]
(a) x x x x x x x x x
(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 Moradas 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 courts 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 courts jurisdiction over defendants
person, prayed for dismissal of the complaint on the ground that
plaintiffs 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 latters person, who, being the proponent of
the affirmative defense, should be deemed to have abandoned its
special appearance and voluntarily submitted itself to the
jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that:
When the appearance is by motion for the purpose of objecting to
the jurisdiction of the court over the person, it must be for the sole
and separate purpose of objecting to the jurisdiction of the court. If
his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits
himself to the jurisdiction of the court. A special appearance by
motion made for the purpose of objecting to the jurisdiction of the
court over the person will be held to be a general appearance, if
the party in said motion should, for example, ask for a dismissal of
the action upon the further ground that the court had no
jurisdiction over the subject matter.[52]
Clearly, petitioner had submitted to the jurisdiction of the
Regional Trial Court of Quezon City. Thus, we find that the trial
court has jurisdiction over the case and that its exercise thereof,
justified.
As to the choice of applicable law, we note that choice-of-law
problems seek to answer two important questions: (1) What legal
system should control a given situation where some of the
significant facts occurred in two or more states; and (2) to what
extent should the chosen legal system regulate the situation.[53]
Several theories have been propounded in order to identify the
legal system that should ultimately control. Although ideally, all
choice-of-law theories should intrinsically advance both notions of
justice and predictability, they do not always do so. The forum is
then faced with the problem of deciding which of these two
important values should be stressed.[54]
Before a choice can be made, it is necessary for us to determine
under what category a certain set of facts or rules fall. This process
is known as characterization, or the doctrine of qualification. It is
the process of deciding whether or not the facts relate to the kind
of question specified in a conflicts rule.[55] The purpose of
characterization is to enable the forum to select the proper
law.[56]
Our starting point of analysis here is not a legal relation, but a
factual situation, event, or operative fact.[57] An essential element
of conflict rules is the indication of a test or connecting factor or
point of contact. Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a
connecting factor or point of contact, such as the situs of the res,
the place of celebration, the place of performance, or the place of
wrongdoing.[58]
Note that one or more circumstances may be present to serve as
the possible test for the determination of the applicable law.[59]
These test factors or points of contact or connecting factors could
be any of the following:
(1) The nationality of a person, his domicile, his residence, his
place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is
deemed to be situated. In particular, the lex situs is decisive when
real rights are involved;
(4) the place where an act has been done, the locus actus, such as
the place where a contract has been made, a marriage celebrated,
a will signed or a tort committed. The lex loci actus is particularly
important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the
place of performance of contractual duties, or the place where a
power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are
instituted or done. The lex forithe law of the forumis 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] (Underscoring ours.)
After a careful study of the pleadings on record, including
allegations in the Amended Complaint deemed submitted for
purposes of the motion to dismiss, we are convinced that there is
reasonable basis for private respondents 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. Petitioners 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 petitioners 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 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 fatality 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 complaint 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 petitioners 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, thus 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 courts denial of defendants (herein
petitioners) motion to dismiss the case. Not only was jurisdiction
in order and venue properly laid, but appeal after trial was
obviously available, and the 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 countrys 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. November 23, 2007

WHEREFORE, the instant petition for certiorari is hereby DECISION

DISMISSED. Civil Case No. Q-93-18394 entitled Milagros P. Morada
vs. Saudi Arabia Airlines is hereby REMANDED to Regional Trial NACHURA, J.:
Court of Quezon City, Branch 89 for further proceedings.
Before the Court is a petition for review on certiorari under Rule
SO ORDERED. 45 of the Rules of Court assailing the April 18, 2001 Decision[1] of
the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25,
THIRD DIVISION 2001 Resolution[2] denying the motion for reconsideration
thereof.
KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., On March 30, 1999, petitioner Nippon Engineering Consultants
Petitioners, Co., Ltd. (Nippon), a Japanese consultancy firm providing technical
and management support in the infrastructure projects of foreign
- versus - governments,[3] entered into an Independent Contractor
Agreement (ICA) with respondent Minoru Kitamura, a Japanese
MINORU KITAMURA, national permanently residing in the Philippines.[4] The
Respondent. agreement provides that respondent was to extend professional
services to Nippon for a year starting on April 1, 1999.[5] Nippon
G.R. No. 149177 then assigned respondent to work as the project manager of the
Southern Tagalog Access Road (STAR) Project in the Philippines,
Present: following the company's consultancy contract with the Philippine
Government.[6]
YNARES-SANTIAGO, J.,
Chairperson, When the STAR Project was near completion, the Department of
AUSTRIA-MARTINEZ, Public Works and Highways (DPWH) engaged the consultancy
CHICO-NAZARIO, services of Nippon, on January 28, 2000, this time for the detailed
NACHURA, and engineering and construction supervision of the Bongabon-Baler
REYES, JJ. Road Improvement (BBRI) Project.[7] Respondent was named as
the project manager in the contract's Appendix 3.1.[8]
Promulgated:
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. Frank[14] 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 Decision[22] finding 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
Certiorari[25] imputing the following errors to the appellate court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE
FACT THAT THE CONTRACT SUBJECT MATTER OF THE
PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN
TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE
PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.[26]
The pivotal question that this Court is called upon to resolve is
whether the subject matter jurisdiction of Philippine courts in civil
cases for specific performance and damages involving contracts
executed outside the country by foreign nationals may be assailed
on the principles of lex loci celebrationis, lex contractus, the state
of the most significant relationship rule, or forum non conveniens.
However, before ruling on this issue, we must first dispose of the
procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court's
decision in CA-G.R. SP No. 60205 has already barred the filing of
the second petition docketed as CA-G.R. SP No. 60827
(fundamentally raising the same issues as those in the first one)
and the instant petition for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on
account of the petition's defective certification of non-forum
shopping, it was a dismissal without prejudice.[27] The same
holds true in the CA's dismissal of the said case due to defects in
the formal requirement of verification[28] and in the other
requirement in Rule 46 of the Rules of Court on the statement of
the material dates.[29] The dismissal being without prejudice,
petitioners can re-file the petition, or file a second petition
attaching thereto the appropriate verification and certificationas
they, in fact didand stating therein the material dates, within the
prescribed period[30] in Section 4, Rule 65 of the said Rules.[31]
The dismissal of a case without prejudice signifies the absence of a
decision on the merits and leaves the parties free to litigate the
matter in a subsequent action as though the dismissed action had
not been commenced. In other words, the termination of a case not
on the merits does not bar another action involving the same
parties, on the same subject matter and theory.[32]
Necessarily, because the said dismissal is without prejudice and
has no res judicata effect, and even if petitioners still indicated in
the verification and certification of the second certiorari petition
that the first had already been dismissed on procedural
grounds,[33] petitioners are no longer required by the Rules to
indicate in their certification of non-forum shopping in the instant
petition for review of the second certiorari petition, the status of
the aforesaid first petition before the CA. In any case, an omission
in the certificate of non-forum shopping about any event that will
not constitute res judicata and litis pendentia, as in the present
case, is not a fatal defect. It will not warrant the dismissal and
nullification of the entire proceedings, considering that the evils
sought to be prevented by the said certificate are no longer
present.[34]
The Court also finds no merit in respondent's contention that
petitioner Hasegawa is only authorized to verify and certify, on
behalf of Nippon, the certiorari petition filed with the CA and not
the instant petition. True, the Authorization[35] dated September
4, 2000, which is attached to the second certiorari petition and
which is also attached to the instant petition for review, is limited
in 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 Reply[38] an updated
Authorization[39] 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 parties[46]
following the [state of the] most significant relationship rule in
Private International Law.[47]
The Court notes that petitioners adopted an additional but
different theory when they elevated the case to the appellate
court. In the Motion to Dismiss[48] filed with the trial court,
petitioners never contended that the RTC is an inconvenient
forum. They merely argued that the applicable law which will
determine the validity or invalidity of respondent's claim is that of
Japan, following the principles of lex loci celebrationis and lex
contractus.[49] While not abandoning this stance in their petition
before the appellate court, petitioners on certiorari significantly
invoked the defense of forum non conveniens.[50] On petition for
review before this Court, petitioners dropped their other
arguments, maintained the forum non conveniens defense, and
introduced their new argument that the applicable principle is the
[state of the] most significant relationship rule.[51]
Be that as it may, this Court is not inclined to deny this petition
merely on the basis of the change in theory, as explained in
Philippine Ports Authority v. City of Iloilo.[52] We only pointed out
petitioners' inconstancy in their arguments to emphasize their
incorrect assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three
consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. Corresponding to
these phases are the following questions: (1) Where can or should
litigation be initiated? (2) Which law will the court apply? and (3)
Where can the resulting judgment be enforced?[53]
Analytically, jurisdiction and choice of law are two distinct
concepts.[54] Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will
determine the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction and
the choice of the lex fori will often coincide, the minimum contacts
for one do not always provide the necessary significant contacts
for the other.[55] The question of whether the law of a state can be
applied to a transaction is different from the question of whether
the courts of that state have jurisdiction to enter a judgment.[56]
In this case, only the first phase is at 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.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which establishes and
organizes the court. It is given only by law and in the manner
prescribed by law.[58] It is further determined by the allegations
of the complaint irrespective of whether the plaintiff is entitled to
all or some of the claims asserted therein.[59] To succeed in its
motion for the dismissal of an action for lack of jurisdiction over
the subject matter of the claim,[60] the movant must show that the
court or tribunal cannot act on the matter submitted to it because
no law grants it the power to adjudicate the claims.[61]
In the instant case, petitioners, in their motion to dismiss, do not
claim that the trial court is not properly vested by law with
jurisdiction to hear the subject controversy for, indeed, Civil Case
No. 00-0264 for specific performance and damages is one not
capable of pecuniary estimation and is properly cognizable by the
RTC of Lipa City.[62] What they rather raise as grounds to
question subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the state of the most
significant relationship rule.
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the law of the place of the
ceremony[63] or the law of the place where a contract is
made.[64] The doctrine of lex contractus or lex loci contractus
means the law of the place where a contract is executed or to be
performed.[65] It controls the nature, construction, and validity of
the contract[66] 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.
[G.R. No. 141536. February 26, 2001]
GIL MIGUEL T. PUYAT, petitioner, vs. RON ZABARTE,
respondent.
DECISION
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is no
genuine issue as to any material fact, other than the amount of
damages. If this verity is evident from the pleadings and the
supporting affidavits, depositions and admissions on file with the
court, the moving party is entitled to such remedy as a matter of
course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, challenging the August 31, 1999 Decision[1] of
the Court of Appeals (CA), which affirmed the Regional Trial Court
(RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the
January 20, 2000 CA Resolution[2] which denied reconsideration.
The assailed CA Decision disposed as follows:
WHEREFORE, finding no error in the judgment appealed from, the
same is AFFIRMED."[3]
The Facts
The facts of this case, as narrated by the Court of Appeals, are as
follows: [4]
It appears that on 24 January 1994, [Respondent] Ron Zabarte
commenced [an action] to enforce the money judgment rendered
by the Superior Court for the State of California, County of Contra
Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with
the following special and affirmative defenses:
xxxxxxxxx
8) The Superior Court for the State of California, County of Contra
Costa[,] did not properly acquire jurisdiction over the subject
matter of and over the persons involved in [C]ase #C21-00265.
9) The Judgment on Stipulations for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 was obtained without the
assistance of counsel for [petitioner] and without sufficient notice
to him and therefore, was rendered in clear violation of
[petitioners] constitutional rights to substantial and procedural
due process.
10) The Judgment on Stipulation for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 was procured by means of
fraud or collusion or undue influence and/or based on a clear
mistake of fact and law.
11) The Judgment on Stipulation for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 is contrary to the laws,
public policy and canons of morality obtaining in the Philippines
and the enforcement of such judgment in the Philippines would
result in the unjust enrichment of [respondent] at the expense of
[petitioner] in this case.
12) The Judgment on Stipulation for Entry in Judgment in Case
#C21-00265 dated December 12, 1991 is null and void and
unenforceable in the Philippines.
13) In the transaction, which is the subject matter in Case #C21-
00265, [petitioner] is not in any way liable, in fact and in law, to
[respondent] in this case, as contained in [petitioners] Answer to
Complaint in Case #C21-00265 dated April 1, 1991, Annex B of
[respondents] Complaint dated December 6, 1993.
14) [Respondent] is guilty of misrepresentation or falsification in
the filing of his Complaint in this case dated December 6, 1993.
Worse, [respondent] has no capacity to sue in the Philippines.
15) Venue has been improperly laid in this case.
(Record, pp. 42-44)
On 1 August 1994, [respondent] filed a [M]otion for [S]ummary
[J]udgment under Rule 34 of the Rules of Court alleging that the
[A]nswer filed by [petitioner] failed to tender any genuine issue as
to the material facts. In his [O]pposition to [respondents] motion,
[petitioner] demurred as follows:
2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to
mention that in his Answer with Special and Affirmative Defenses
dated March 16, 1994 [petitioner] has interposed that the
Judgment on Stipulations for Entry in Judgment is null and void,
fraudulent, illegal and unenforceable, the same having been
obtained by means of fraud, collusion, undue influence and/or
clear mistake of fact and law. In addition, [he] has maintained that
said Judgment on Stipulations for Entry in Judgment was obtained
without the assistance of counsel for [petitioner] and without
sufficient notice to him and therefore, was rendered in violation of
his constitutional rights to substantial and procedural due process.
The [M]otion for [S]ummary [J]udgment was set for hearing on 12
August 1994 during which [respondent] marked and submitted in
evidence the following:
Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of
the Supreme Court of the State of California[,] County of Contra
Costa[,] signed by Hon. Ellen James, Judge of the Superior Court.
Exhibit B - x x x Certificate of Authentication of the [O]rder signed
by the Hon. Ellen James, issued by the Consulate General of the
Republic of the Philippines.
Exhibit C - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied)
issued by the sheriff/marshall, County of Santa Clara, State of
California.
Exhibit D - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution,
[N]otice of [L]evy, [M]emorandum of [G]arnishee, [E]xemptions
from [E]nforcement of [J]udgment.
Exhibit F - Certification issued by the Secretary of State, State of
California that Stephen Weir is the duly elected, qualified and
acting [c]ounty [c]lerk of the County of Contra Costa of the State of
California.
Exhibit G - Certificate of [A]uthentication of the [W]rit of
[E]xecution.
On 6 April 1995, the court a quo issued an [O]rder granting
[respondents] [M]otion for [S]ummary [J]udgment [and] likewise
granting [petitioner] ten (10) days to submit opposing affidavits,
after which the case would be deemed submitted for resolution
(Record, pp. 152-153). [Petitioner] filed a [M]otion for
[R]econsideration of the aforesaid [O]rder and [respondent] filed
[C]omment. On 30 June 1995, [petitioner] filed a [M]otion to
[D]ismiss on the ground of lack of jurisdiction over the subject
matter of the case and forum-non-conveniens (Record, pp. 166-
170). In his [O]pposition to the [M]otion (Record, pp. 181-182)
[respondent] contended that [petitioner could] no longer question
the jurisdiction of the lower court on the ground that [the latters]
Answer had failed to raise the issue of jurisdiction. [Petitioner]
countered by asserting in his Reply that jurisdiction [could] not be
fixed by agreement of the parties. The lower court dismissed [his]
[M]otion for [R]econsideration and [M]otion [to] [D]ismiss
(Record, pp. 196-198), x x x.
The RTC[5] eventually rendered its February 21, 1997 Decision,[6]
which disposed as follows:
WHEREFORE, judgment is hereby rendered, ordering [petitioner]
to pay [respondent] the following amounts:
1. The amount of U.S. dollars $241,991.33, with the interest of
legal rate from October 18, 1991, or its peso equivalent, pursuant
to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated
December 19, 1991;
2. The amount of P30,000.00 as attorneys fees;
3. To pay the costs of suit.
The claim for moral damages, not having been substantiated, it is
hereby denied.[7]
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner
was estopped from assailing the judgment that had become final
and had, in fact, been partially executed. The CA also ruled that
summary judgment was proper, because petitioner had failed to
tender any genuine issue of fact and was merely maneuvering to
delay the full effects of the judgment.
Citing Ingenohl v. Olsen,[8] the CA also rejected petitioners
argument that the RTC should have dismissed the action for the
enforcement of a foreign judgment, on the ground of forum non
conveniens. It reasoned out that the recognition of the foreign
judgment was based on comity, reciprocity and res judicata.
Hence, this Petition.[9]
Issue

In his Memorandum, petitioner submits this lone but all-
embracing issue:
Whether or not the Court of Appeals acted in a manner x x x
contrary to law when it affirmed the Order of the trial court
granting respondents Motion for Summary Judgment and
rendering judgment against the petitioner.[10]
In his discussion, petitioner contends that the CA erred in ruling in
this wise:
1. That his Answer failed to tender a genuine issue of fact
regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
(b) the validity of the foreign judgment
(c) the judgments conformity to Philippine laws, public policy,
canons of morality, and norms against unjust enrichment
2. That the principle of forum non conveniens was inapplicable to
the instant case.
This Courts Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is
inappropriate to resolve the case at bar, arguing that his Answer
allegedly raised genuine and material factual matters which he
should have been allowed to prove during trial.
On the other hand, respondent argues that the alleged genuine
issues of fact raised by petitioner are mere conclusions of law, or
propositions arrived at not by any process of natural reasoning
from a fact or a combination of facts stated but by the application
of the artificial rules of law to the facts pleaded.[11]
The RTC granted respondents Motion for Summary Judgment
because petitioner, in his Answer, admitted the existence of the
Judgment on Stipulation for Entry in Judgment. Besides, he had
already paid $5,000 to respondent, as provided in the foreign
judgment sought to be enforced.[12] Hence, the trial court ruled
that, there being no genuine issue as to any material fact, the case
should properly be resolved through summary judgment. The CA
affirmed this ruling.
We concur with the lower courts. Summary judgment is a
procedural device for the prompt disposition of actions in which
the pleadings raise only a legal issue, and not a genuine issue as to
any material fact. By genuine issue is meant a question of fact that
calls for the presentation of evidence. It should be distinguished
from an issue that is sham, contrived, set in bad faith and patently
unsubstantial.[13]
Summary judgment is resorted to in order to avoid long drawn out
litigations and useless delays. When affidavits, depositions and
admissions on file show that there are no genuine issues of fact to
be tried, the Rules allow a party to pierce the allegations in the
pleadings and to obtain immediate relief by way of summary
judgment. In short, since the facts are not in dispute, the court is
allowed to decide the case summarily by applying the law to the
material facts.
Petitioner contends that by allowing summary judgment, the two
courts a quo prevented him from presenting evidence to
substantiate his claims. We do not agree. Summary judgment is
based on facts directly proven by affidavits, depositions or
admissions.[14] In this case, the CA and the RTC both merely ruled
that trial was not necessary to resolve the case. Additionally and
correctly, the RTC specifically ordered petitioner to submit
opposing affidavits to support his contentions that (1) the
Judgment on Stipulation for Entry in Judgment was procured on
the basis of fraud, collusion, undue influence, or a clear mistake of
law or fact; and (2) that it was contrary to public policy or the
canons of morality.[15]
Again, in its Order[16] dated November 29, 1995, the trial court
clarified that the opposing affidavits were for [petitioner] to spell
out the facts or circumstances [that] would constitute lack of
jurisdiction over the subject matter of and over the persons
involved in Case No. C21-00265, and that would render the
judgment therein null and void. In this light, petitioners contention
that he was not allowed to present evidence to substantiate his
claims is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules
of Court, requires (a) that there must be no genuine issue as to any
material fact, except for the amount of damages; and (b) that the
party presenting the motion for summary judgment must be
entitled to a judgment as a matter of law.[17] As mentioned
earlier, petitioner admitted that a foreign judgment had been
rendered against him and in favor of respondent, and that he had
paid $5,000 to the latter in partial compliance therewith. Hence,
respondent, as the party presenting the Motion for Summary
Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that
petitioner had raised no genuine issue, it relied instead on the
finality of the foreign judgment which was, in fact, partially
executed. Hence, we shall show in the following discussion how
the defenses presented by petitioner failed to tender any genuine
issue of fact, and why a full-blown trial was not necessary for the
resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which
involved partnership interest, was vested in the Securities and
Exchange Commission, not in the Superior Court of California,
County of Contra Costa.
We disagree. In the absence of proof of California law on the
jurisdiction of courts, we presume that such law, if any, is similar
to Philippine law. We base this conclusion on the presumption of
identity or similarity, also known as processual presumption.[18]
The Complaint,[19] which respondent filed with the trial court,
was for the enforcement of a foreign judgment. He alleged therein
that the action of the foreign court was for the collection of a sum
of money, breach of promissory notes, and damages.[20]
In our jurisdiction, such a case falls under the jurisdiction of civil
courts, not of the Securities and Exchange Commission (SEC). The
jurisdiction of the latter is exclusively over matters enumerated in
Section 5, PD 902-A,[21] prior to its latest amendment. If the
foreign court did not really have jurisdiction over the case, as
petitioner claims, it would have been very easy for him to show
this. Since jurisdiction is determined by the allegations in a
complaint, he only had to submit a copy of the complaint filed with
the foreign court. Clearly, this issue did not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the
form of a Compromise Agreement, cannot be executed without the
parties being assisted by their chosen lawyers. The reason for this,
he points out, is to eliminate collusion, undue influence and/or
improper exertion of ascendancy by one party over the other. He
alleges that he discharged his counsel during the proceedings,
because he felt that the latter was not properly attending to the
case. The judge, however, did not allow him to secure the services
of another counsel. Insisting that petitioner settle the case with
respondent, the judge practically imposed the settlement
agreement on him. In his Opposing Affidavit, petitioner states:
It is true that I was initially represented by a counsel in the
proceedings in #C21-00625. I discharged him because I then felt
that he was not properly attending to my case or was not
competent enough to represent my interest. I asked the Judge for
time to secure another counsel but I was practically discouraged
from engaging one as the Judge was insistent that I settle the case
at once with the [respondent]. Being a foreigner and not a lawyer
at that I did not know what to do. I felt helpless and the Judge and
[respondents] lawyer were the ones telling me what to do. Under
ordinary circumstances, their directives should have been taken
with a grain of salt especially so [since respondents] counsel, who
was telling me what to do, had an interest adverse to mine. But
[because] time constraints and undue influence exerted by the
Judge and [respondents] counsel on me disturbed and seriously
affected my freedom to act according to my best judgment and
belief. In point of fact, the terms of the settlement were practically
imposed on me by the Judge seconded all the time by
[respondents] counsel. I was then helpless as I had no counsel to
assist me and the collusion between the Judge and [respondents]
counsel was becoming more evident by the way I was treated in
the Superior Court of [t]he State of California. I signed the
Judgment on Stipulation for Entry in Judgment without any lawyer
assisting me at the time and without being fully aware of its terms
and stipulations.[22]
The manifestation of petitioner that the judge and the counsel for
the opposing party had pressured him would gain credibility only
if he had not been given sufficient time to engage the services of a
new lawyer. Respondents Affidavit[23] dated May 23, 1994,
clarified, however, that petitioner had sufficient time, but he failed
to retain a counsel. Having dismissed his lawyer as early as June
19, 1991, petitioner directly handled his own defense and
negotiated a settlement with respondent and his counsel in
December 1991. Respondent also stated that petitioner, ignoring
the judges reminder of the importance of having a lawyer, argued
that he would be the one to settle the case and pay anyway.
Eventually, the Compromise Agreement was presented in court
and signed before Judge Ellen James on January 3, 1992. Hence,
petitioners rights to counsel and to due process were not violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the
norm against unjust enrichment because the judge made him
shoulder all the liabilities in the case, even if there were two other
defendants, G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the
foreign judgment, even if there are other defendants who are not
being held liable together with him. First, the foreign judgment
itself does not mention these other defendants, their participation
or their liability to respondent. Second, petitioners undated
Opposing Affidavit states: [A]lthough myself and these entities
were initially represented by Atty. Lawrence L. Severson of the
Law Firm Kouns, Quinlivan & Severson, x x x I discharged x x x said
lawyer. Subsequently, I assumed the representation for myself and
these firms and this was allowed by the Superior Court of the State
of California without any authorization from G.G.P. & Sons, Inc. and
the Genesis Group.[24] Clearly, it was petitioner who chose to
represent the other defendants; hence, he cannot now be allowed
to impugn a decision based on this ground.
In any event, contrary to petitioners contention, unjust enrichment
or solutio indebiti does not apply to this case. This doctrine
contemplates payment when there is no duty to pay, and the
person who receives the payment has no right to receive it.[25] In
this case, petitioner merely argues that the other two defendants
whom he represented were liable together with him. This is not a
case of unjust enrichment.
We do not see, either, how the foreign judgment could be contrary
to law, morals, public policy or the canons of morality obtaining in
the country. Petitioner owed money, and the judgment required
him to pay it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court
reinforce our belief that his claims are unfounded. Instead of filing
opposing affidavits to support his affirmative defenses, he filed a
Motion for Reconsideration of the Order allowing summary
judgment, as well as a Motion to Dismiss the action on the ground
of forum non conveniens. His opposing affidavits were filed only
after the Order of November 29, 1995 had denied both
Motions.[26] Such actuation was considered by the trial court as a
dilatory ploy which justified the resolution of the action by
summary judgment. According to the CA, petitioners allegations
sought to delay the full effects of the judgment; hence, summary
judgment was proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain
the Complaint for enforcement of the foreign judgment on the
principle of forum non conveniens. He claims that the trial court
had no jurisdiction, because the case involved partnership
interest, and there was difficulty in ascertaining the applicable law
in California. All the aspects of the transaction took place in a
foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if
the exercise of jurisdiction is authorized by law, courts may
nonetheless refuse to entertain a case for any of the following
practical reasons:
1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired
in a foreign jurisdiction or the material witnesses have their
residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-
residents or aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating
the right sought to be maintained; and
The difficulty of ascertaining foreign law.[27]
None of the aforementioned reasons barred the RTC from
exercising its jurisdiction. In the present action, there was no more
need for material witnesses, no forum shopping or harassment of
petitioner, no inadequacy in the local machinery to enforce the
foreign judgment, and no question raised as to the application of
any foreign law.
Authorities agree that the issue of whether a suit should be
entertained or dismissed on the basis of the above-mentioned
principle depends largely upon the facts of each case and on the
sound discretion of the trial court.[28] Since the present action
lodged in the RTC was for the enforcement of a foreign judgment,
there was no need to ascertain the rights and the obligations of the
parties based on foreign laws or contracts. The parties needed
only to perform their obligations under the Compromise
Agreement they had entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a
judgment in an action in personam rendered by a foreign tribunal
clothed with jurisdiction is presumptive evidence of a right as
between the parties and their successors-in-interest by a
subsequent title.[29]
Also, under Section 5(n) of Rule 131, a court -- whether in the
Philippines or elsewhere -- enjoys the presumption that it is acting
in the lawful exercise of its jurisdiction, and that it is regularly
performing its official duty.[30] Its judgment may, however, be
assailed if there is evidence of want of jurisdiction, want of notice
to the party, collusion, fraud or clear mistake of law or fact. But
precisely, this possibility signals the need for a local trial court to
exercise jurisdiction. Clearly, the application of forum non
coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the
one hand, he insists that the RTC take jurisdiction over the
enforcement case in order to invalidate the foreign judgment; yet,
he avers that the trial court should not exercise jurisdiction over
the same case on the basis of forum non conveniens. Not only do
these defenses weaken each other, but they bolster the finding of
the lower courts that he was merely maneuvering to avoid or
delay payment of his obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision and Resolution AFFIRMED. Double costs against
petitioner.
SO ORDERED.
G.R. No. 198587, January 14, 2015
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA,
Petitioners, v. MA. JOPETTE M. REBESENCIO, MONTASSAH B.
SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL AND LORAINE S.
SCHNEIDER-CRUZ, Respondents.
DECISION
LEONEN, J.:
All Filipinos are entitled to the protection of the rights guaranteed
in the Constitution.
This is a Petition for Review on Certiorari with application for the
issuance of a temporary restraining order and/or writ of
preliminary injunction under Rule 45 of the 1997 Rules of Civil
Procedure praying that judgment be rendered reversing and
setting aside the June 16, 2011 Decision1 and September 13, 2011
Resolution2 of the Court of Appeals in CA-G.R. SP. No. 113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation
established and existing under the laws of Jeddah, Kingdom of
Saudi Arabia. It has a Philippine office located at 4/F, Metro House
Building, Sen. Gil J. Puyat Avenue, Makati City.3 In its Petition filed
with this court, Saudia identified itself as
follows:chanroblesvirtuallawlibrary
1. Petitioner SAUDIA is a foreign corporation established and
existing under the Royal Decree No. M/24 of 18.07.1385H
(10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its
Philippine Office is located at 4/F Metro House Building, Sen, Gil J.
Puyat Avenue, Makati City (Philippine Office). It may be served
with orders of this Honorable Court through undersigned counsel
at 4th and 6th Floors, Citibank Center Bldg., 8741 Paseo de Roxas,
Makati City.4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were
recruited and hired by Saudia as Temporary Flight Attendants
with the accreditation and approval of the Philippine Overseas
Employment Administration.5 After undergoing seminars
required by the Philippine Overseas Employment Administration
for deployment overseas, as well as training modules offered by
Saudia (e.g., initial flight attendant/training course and transition
training), and after working as Temporary Flight Attendants,
respondents became Permanent Flight Attendants. They then
entered into Cabin Attendant contracts with Saudia: Ma. Jopette M.
Rebesencio (Ma. Jopette) on May 16, 1990;6 Montassah B. Sacar-
Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen Ruth) on
May 22, 1993;7 and Loraine Schneider-Cruz (Loraine) on August
27, 1995.8
Respondents continued their employment with Saudia until they
were separated from service on various dates in 2006.9
Respondents contended that the termination of their employment
was illegal. They alleged that the termination was made solely
because they were pregnant.10
As respondents alleged, they had informed Saudia of their
respective pregnancies and had gone through the necessary
procedures to process their maternity leaves. Initially, Saudia had
given its approval but later on informed respondents that its
management in Jeddah, Saudi Arabia had disapproved their
maternity leaves. In addition, it required respondents to file their
resignation letters.11
Respondents were told that if they did not resign, Saudia would
terminate them all the same. The threat of termination entailed
the loss of benefits, such as separation pay and ticket discount
entitlements.12
Specifically, Ma. Jopette received a call on October 16, 2006 from
Saudia's Base Manager, Abdulmalik Saddik (Abdulmalik).13
Montassah was informed personally by Abdulmalik and a certain
Faisal Hussein on October 20, 2006 after being required to report
to the office one (1) month into her maternity leave.14 Rouen Ruth
was also personally informed by Abdulmalik on October 17, 2006
after being required to report to the office by her Group
Supervisor.15 Loraine received a call on October 12, 2006 from
her Group Supervisor, Dakila Salvador.16
Saudia anchored its disapproval of respondents' maternity leaves
and demand for their resignation on its "Unified Employment
Contract for Female Cabin Attendants" (Unified Contract).17
Under the Unified Contract, the employment of a Flight Attendant
who becomes pregnant is rendered void. It
provides:chanroblesvirtuallawlibrary
(H) Due to the essential nature of the Air Hostess functions to be
physically fit on board to provide various services required in
normal or emergency cases on both domestic/international flights
beside her role in maintaining continuous safety and security of
passengers, and since she will not be able to maintain the required
medical fitness while at work in case of pregnancy, accordingly, if
the Air Hostess becomes pregnant at any time during the term of
this contract, this shall render her employment contract as void
and she will be terminated due to lack of medical fitness.18
(Emphasis supplied)
In their Comment on the present Petition,19 respondents
emphasized that the Unified Contract took effect on September 23,
2006 (the first day of Ramadan),20 well after they had filed and
had their maternity leaves approved. Ma. Jopette filed her
maternity leave application on September 5, 2006.21 Montassah
filed her maternity leave application on August 29, 2006, and its
approval was already indicated in Saudia's computer system by
August 30, 2006.22 Rouen Ruth filed her maternity leave
application on September 13, 2006,23 and Loraine filed her
maternity leave application on August 22, 2006.24
Rather than comply and tender resignation letters, respondents
filed separate appeal letters that were all rejected.25
Despite these initial rejections, respondents each received calls on
the morning of November 6, 2006 from Saudia's office secretary
informing them that their maternity leaves had been approved.
Saudia, however, was quick to renege on its approval. On the
evening of November 6, 2006, respondents again received calls
informing them that it had received notification from Jeddah,
Saudi Arabia that their maternity leaves had been disapproved.26
Faced with the dilemma of resigning or totally losing their
benefits, respondents executed handwritten resignation letters. In
Montassah's and Rouen Ruth's cases, their resignations were
executed on Saudia's blank letterheads that Saudia had provided.
These letterheads already had the word "RESIGNATION" typed on
the subject portions of their headings when these were handed to
respondents.27
On November 8, 2007, respondents filed a Complaint against
Saudia and its officers for illegal dismissal and for underpayment
of salary, overtime pay, premium pay for holiday, rest day,
premium, service incentive leave pay, 13th month pay, separation
pay, night shift differentials, medical expense reimbursements,
retirement benefits, illegal deduction, lay-over expense and
allowances, moral and exemplary damages, and attorney's fees.28
The case was initially assigned to Labor Arbiter Hermino V. Suelo
and docketed as NLRC NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter.29 It claimed
that all the determining points of contact referred to foreign law
and insisted that the Complaint ought to be dismissed on the
ground of forum non conveniens.30 It added that respondents had
no cause of action as they resigned voluntarily.31
On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-
Franco rendered the Decision32 dismissing respondents'
Complaint. The dispositive portion of this Decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises' considered, judgment is hereby rendered
DISMISSING the instant complaint for lack of
jurisdiction/merit.33cralawlawlibrary
On respondents' appeal, the National Labor Relations
Commission's Sixth Division reversed the ruling of Executive
Labor Arbiter Jambaro-Franco. It explained that "[considering that
complainants-appellants are OFWs, the Labor Arbiters and the
NLRC has [sic] jurisdiction to hear and decide their complaint for
illegal termination."34 On the matter of forum non conveniens, it
noted that there were no special circumstances that warranted its
abstention from exercising jurisdiction.35 On the issue of whether
respondents were validly dismissed, it held that there was nothing
on record to support Saudia's claim that respondents resigned
voluntarily.
The dispositive portion of the November 19, 2009 National Labor
Relations Commission Decision36
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered
finding the appeal impressed with merit. The respondents-
appellees are hereby directed to pay complainants-appellants the
aggregate amount of SR614,001.24 corresponding to their
backwages and separation pay plus ten (10%) percent thereof as
attorney's fees. The decision of the Labor Arbiter dated December
12, 2008 is hereby VACATED and SET ASIDE. Attached is the
computation prepared by this Commission and made an integral
part of this Decision.37cralawlawlibrary
In the Resolution dated February 11, 2010,38 the National Labor
Relations Commission denied petitioners' Motion for
Reconsideration.
In the June 16, 2011 Decision,39 the Court of Appeals denied
petitioners' Rule 65 Petition and modified the Decision of the
National Labor Relations Commission with respect to the award of
separation pay and backwages.
The dispositive portion of the Court of Appeals Decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, the instant petition is hereby DENIED. The Decision
dated November 19, 2009 issued by public respondent, Sixth
Division of the National Labor Relations Commission - National
Capital Region is MODIFIED only insofar as the computation of the
award of separation pay and backwages. For greater clarity,
petitioners are ordered to pay private respondents separation pay
which shall be computed from private respondents' first day of
employment up to the finality of this decision, at the rate of one
month per year of service and backwages which shall be computed
from the date the private respondents were illegally terminated
until finality of this decision. Consequently, the ten percent (10%)
attorney's fees shall be based on the total amount of the award.
The assailed Decision is affirmed in all other respects.
The labor arbiter is hereby DIRECTED to make a recomputation
based on the foregoing.40cralawlawlibrary
In the Resolution dated September 13, 2011,41 the Court of
Appeals denied petitioners' Motion for Reconsideration.
Hence, this Appeal was filed.
The issues for resolution are the following:

First, whether the Labor Arbiter and the National Labor Relations
Commission may exercise jurisdiction over Saudi Arabian Airlines
and apply Philippine law in adjudicating the present dispute;
Second, whether respondents' voluntarily resigned or were
illegally terminated; and
Lastly, whether Brenda J. Betia may be held personally liable along
with Saudi Arabian Airlines.chanRoblesvirtualLawlibrary
I that Saudia submitted to the Labor Arbiter,47 what Saudia now
Summons were validly served on Saudia and jurisdiction over it
validly acquired.
There is no doubt that the pleadings and summons were served on
Saudia through its counsel.42 Saudia, however, claims that the
Labor Arbiter and the National Labor Relations Commission had
no jurisdiction over it because summons were never served on it
but on "Saudia Manila."43 Referring to itself as "Saudia Jeddah," it
claims that "Saudia Jeddah" and not "Saudia Manila" was the
employer of respondents because:
First, "Saudia Manila" was never a party to the Cabin Attendant
contracts entered into by respondents;
Second, it was "Saudia Jeddah" that provided the funds to pay for
respondents' salaries and benefits; and
Lastly, it was with "Saudia Jeddah" that respondents filed their
resignations.44
Saudia posits that respondents' Complaint was brought against the
wrong party because "Saudia Manila," upon which summons was
served, was never the employer of respondents.45
Saudia is vainly splitting hairs in its effort to absolve itself of
liability. Other than its bare allegation, there is no basis for
concluding that "Saudia Jeddah" is distinct from "Saudia Manila."
What is clear is Saudia's statement in its own Petition that what it
has is a "Philippine Office . . . located at 4/F Metro House Building,
Sen. Gil J. Puyat Avenue, Makati City."46 Even in the position paper
refers to as "Saudia Jeddah" was then only referred to as "Saudia
Head Office at Jeddah, KSA,"48 while what Saudia now refers to as
"Saudia Manila" was then only referred to as "Saudia's office in
Manila."49
By its own admission, Saudia, while a foreign corporation, has a
Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise known as the
Foreign Investments Act of 1991, provides the
following:chanroblesvirtuallawlibrary
The phrase "doing business" shall include . . . opening offices,
whether called "liaison" offices or branches; . . . and any other act
or acts that imply a continuity of commercial dealings or
arrangements and contemplate to that extent the performance of
acts or works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of commercial gain or
of the purpose and object of the business organization. (Emphasis
supplied)
A plain application of Section 3(d) of the Foreign Investments Act
leads to no other conclusion than that Saudia is a foreign
corporation doing business in the Philippines. As such, Saudia may
be sued in the Philippines and is subject to the jurisdiction of
Philippine tribunals.
Moreover, since there is no real distinction between "Saudia
Jeddah" and "Saudia Manila" — the latter being nothing more than
Saudia's local office — service of summons to Saudia's office in
Manila sufficed to vest jurisdiction over Saudia's person in
Philippine tribunals.chanRoblesvirtualLawlibrary
II
Saudia asserts that Philippine courts and/or tribunals are not in a
position to make an intelligent decision as to the law and the facts.
This is because respondents' Cabin Attendant contracts require
the application of the laws of Saudi Arabia, rather than those of the
Philippines.50 It claims that the difficulty of ascertaining foreign
law calls into operation the principle of forum non conveniens,
thereby rendering improper the exercise of jurisdiction by
Philippine tribunals.51
A choice of law governing the validity of contracts or the
interpretation of its provisions dees not necessarily imply forum
non conveniens. Choice of law and forum non conveniens are
entirely different matters.
Choice of law provisions are an offshoot of the fundamental
principle of autonomy of contracts. Article 1306 of the Civil Code
firmly ensconces this:chanroblesvirtuallawlibrary
Article 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule
against forum shopping. It is designed to frustrate illicit means for
securing advantages and vexing litigants that would otherwise be
possible if the venue of litigation (or dispute resolution) were left
entirely to the whim of either party.
Contractual choice of law provisions factor into transnational
litigation and dispute resolution in one of or in a combination of
four ways: (1) procedures for settling disputes, e.g., arbitration;
(2) forum, i.e., venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is not
subsumed by, the second of these.
Likewise, contractual choice of law is not determinative of
jurisdiction. Stipulating on the laws of a given jurisdiction as the
governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is equally true:
The assumption of jurisdiction by tribunals does not ipso facto
mean that it cannot apply and rule on the basis of the parties'
stipulation. In Hasegawa v.
Kitamura:52ChanRoblesVirtualawlibrary
Analytically, jurisdiction and choice of law are two distinct
concepts. Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law V'hich will
determine the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction and
the choice of the lex fori will often, coincide, the "minimum
contacts" for one do not always provide the necessary "significant
contacts" for the other. The question of whether the law of a state
can be applied to a transaction is different from the question of
whether the courts of that state have jurisdiction to enter a
judgment.53cralawlawlibrary
As various dealings, commercial or otherwise, are facilitated by
the progressive ease of communication and travel, persons from
various jurisdictions find themselves transacting with each other.
Contracts involving foreign elements are, however, nothing new.
Conflict of laws situations precipitated by disputes and litigation
anchored on these contracts are not totally novel.
Transnational transactions entail differing laws on the
requirements Q for the validity of the formalities and substantive
provisions of contracts and their interpretation. These
transactions inevitably lend themselves to the possibility of
various fora for litigation and dispute resolution. As observed by
an eminent expert on transnational
law:chanroblesvirtuallawlibrary
The more jurisdictions having an interest in, or merely even a
point of contact with, a transaction or relationship, the greater the
number of potential fora for the resolution of disputes arising out
of or related to that transaction or relationship. In a world of
increased mobility, where business and personal transactions
transcend national boundaries, the jurisdiction of a number of
different fora may easily be invoked in a single or a set of related
disputes.54cralawlawlibrary
Philippine law is definite as to what governs the formal or
extrinsic validity of contracts. The first paragraph of Article 17 of
the Civil Code provides that "[t]he forms and solemnities of
contracts . . . shall be governed by the laws of the country in which
they are executed"55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established mode of settling
conflict of laws situations on matters pertaining to substantive
content of contracts. It has been noted that three (3) modes have
emerged: (1) lex loci contractus or the law of the place of the
making; (2) lex loci solutionis or the law of the place of
performance; and (3) lex loci intentionis or the law intended by
the parties.56
Given Saudia's assertions, of particular relevance to resolving the
present dispute is lex loci intentionis.
An author observed that Spanish jurists and commentators "favor
lex loci intentionis."57 These jurists and commentators proceed
from the Civil Code of Spain, which, like our Civil Code, is silent on
what governs the intrinsic validity of contracts, and the same civil
law traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign
Loan Guarantee v. V.P. Eusebio Construction, Inc.,58 manifested
preference for allowing the parties to select the law applicable to
their contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of contracts is expressly
provided for in our laws. The rule followed by most legal systems,
however, is that the intrinsic validity of a contract must be
governed by the lex contractus or "proper law of the contract."
This is the law voluntarily agreed upon by the parties (the lex loci
voluntatis) or the law intended by them either expressly or
implicitly (the lex loci intentionis). The law selected may be
implied from such factors as substantial connection with the
transaction, or the nationality or domicile of the parties. Philippine
courts would do well to adopt the first and most basic rule in most
legal systems, namely, to allow the parties to select the law
applicable to their contract, subject to the limitation that it is not
against the law, morals, or public policy of the forum and that the
chosen law must bear a substantive relationship to the
transaction.59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant
contracts require the application of the laws of Saudi Arabia. It
insists that the need to comply with these stipulations calls into
operation the doctrine of forum non conveniens and, in turn,
makes it necessary for Philippine tribunals to refrain from
exercising jurisdiction.
As mentioned, contractual choice of laws factors into transnational
litigation in any or a combination of four (4) ways. Moreover,
forum non conveniens relates to one of these: choosing between
multiple possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora
— along with the host of difficulties it poses — is not unique to
transnational litigation. It is a difficulty that similarly arises in
disputes well within the bounds of a singe jurisdiction.
When parallel litigation arises strictly within the context of a
single jurisdiction, such rules as those on forum shopping, litis
pendentia, and res judicata come into operation. Thus, in the
Philippines, the 1997 Rules on Civil Procedure provide for willful
and deliberate forum shopping as a ground not only for summary
dismissal with prejudice but also for citing parties and counsels in
direct contempt, as well as for the imposition of administrative
sanctions.60 Likewise, the same rules expressly provide that a
party may seek the dismissal of a Complaint or another pleading
asserting a claim on the ground "[t]hat there is another action
pending between the same parties for the same cause," i.e., litis
pendentia, or "[t]hat the cause of action is barred by a prior
judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis
pendentia, and res judicata, is a means of addressing the problem
of parallel litigation. While the rules of forum shopping, litis
pendentia, and res judicata are designed to address the problem of
parallel litigation within a single jurisdiction, forum non
conveniens is a means devised to address parallel litigation arising
in multiple jurisdictions.
Forum non conveniens literally translates to "the forum is
inconvenient."62 It is a concept in private international law and
was devised to combat the "less than honorable" reasons and
excuses that litigants use to secure procedural advantages, annoy
and harass defendants, avoid overcrowded dockets, and select a
"friendlier" venue.63 Thus, the doctrine of forum non conveniens
addresses the same rationale that the rule against forum shopping
does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a concept originating
in common law.65 However, unlike the rule on res judicata, as well
as those on litis pendentia and forum shopping, forum non
conveniens finds no textual anchor, whether in statute or in
procedural rules, in our civil law system. Nevertheless,
jurisprudence has applied forum non conveniens as basis for a
court to decline its exercise of jurisdiction.66
Forum non conveniens is soundly applied not only to address
parallel litigation and undermine a litigant's capacity to vex and
secure undue advantages by engaging in forum shopping on an
international scale. It is also grounded on principles of comity and
judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance in
exercising jurisdiction on account of forum non conveniens is a
deferential gesture to the tribunals of another sovereign. It is a
measure that prevents the former's having to interfere in affairs
which are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that
tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense justice. Forum non
conveniens prevents the embarrassment of an awkward situation
where a tribunal is rendered incompetent in the face of the greater
capability — both analytical and practical — of a tribunal in
another jurisdiction.
The wisdom of avoiding conflicting and unenforceable judgments
is as much a matter of efficiency and economy as it is a matter of
international courtesy. A court would effectively be neutering
itself if it insists on adjudicating a controversy when it knows full
well that it is in no position to enforce its judgment. Doing so is not
only an exercise in futility; it is an act of frivolity. It clogs the
dockets of a.tribunal and leaves it to waste its efforts on affairs,
which, given transnational exigencies, will be reduced to mere
academic, if not trivial, exercises.
Accordingly, under the doctrine of forum non conveniens, "a court,
in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most 'convenient' or available forum and the
parties are not precluded from seeking remedies elsewhere."67 In
Puyat v. Zabarte,68 this court recognized the following situations
as among those that may warrant a court's desistance from
exercising jurisdiction:chanroblesvirtuallawlibrary
1)
The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired
in a foreign jurisdiction or the material witnesses have their
residence there;
2)
The belief that the non-resident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3)
The unwillingness to extend local judicial facilities to non-
residents or aliens when the docket may already be overcrowded;
4)
The inadequacy of the local judicial machinery for effectuating the
right sought to be maintained; and
5)
The difficulty of ascertaining foreign law.69
In Bank of America, NT&SA, Bank of America International, Ltd. v.
Court of Appeals,70 this court underscored that a Philippine court
may properly assume jurisdiction over a case if it chooses to do so
to the extent: "(1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is
in a position to make an intelligent decision as to the law and the
facts; and (3) that the Philippine Court has or is likely to have
power to enforce its decision."71
The use of the word "may" (i.e., "may refuse impositions on its
jurisdiction"72) in the decisions shows that the matter of
jurisdiction rests on the sound discretion of a court. Neither the
mere invocation of forum non conveniens nor the averment of
foreign elements operates to automatically divest a court of
jurisdiction. Rather, a court should renounce jurisdiction only
"after 'vital facts are established, to determine whether special
circumstances' require the court's desistance."73 As the propriety
of applying forum non conveniens is contingent on a factual
determination, it is, therefore, a matter of defense.74
The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil
Procedure is exclusive in its recital of the grounds for dismissal
that are exempt from the omnibus motion rule: (1) lack of
jurisdiction over the subject matter; (2) litis pendentia; (3) res
judicata; and (4) prescription. Moreover, dismissal on account
offorum non conveniens is a fundamentally discretionary matter.
It is, therefore, not a matter for a defendant to foist upon the court
at his or her own convenience; rather, it must be pleaded at the
earliest possible opportunity.
On the matter of pleading forum non conveniens, we state the rule,
thus: Forum non conveniens must not only be clearly pleaded as a
ground for dismissal; it must be pleaded as such at the earliest
possible opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa,76 this court stated that forum
non conveniens is not a ground for a motion to dismiss. The factual
ambience of this case however does not squarely raise the viability
of this doctrine. Until the opportunity comes to review the use of
motions to dismiss for parallel litigation, Hasegawa remains
existing doctrine.
Consistent with forum non conveniens as fundamentally a factual
matter, it is imperative that it proceed from & factually established
basis. It would be improper to dismiss an action pursuant to forum
non conveniens based merely on a perceived, likely, or
hypothetical multiplicity of fora. Thus, a defendant must also plead
and show that a prior suit has, in fact, been brought in another
jurisdiction.
The existence of a prior suit makes real the vexation engendered
by duplicitous litigation, the embarrassment of intruding into the
affairs of another sovereign, and the squandering of judicial efforts
in resolving a dispute already lodged and better resolved
elsewhere. As has been noted:chanroblesvirtuallawlibrary
A case will not be stayed o dismissed on [forum] non conveniens
grounds unless the plaintiff is shown to have an available
alternative forum elsewhere. On this, the moving party bears the
burden of proof.
A number of factors affect the assessment of an alternative forum's
adequacy. The statute of limitations abroad may have run, of the
foreign court may lack either subject matter or personal
jurisdiction over the defendant. . . . Occasionally, doubts will be
raised as to the integrity or impartiality of the foreign court
(based, for example, on suspicions of corruption or bias in favor of
local nationals), as to the fairness of its judicial procedures, or as
to is operational efficiency (due, for example, to lack of resources,
congestion and delay, or interfering circumstances such as a civil
unrest). In one noted case, [it was found] that delays of 'up to a
quarter of a century' rendered the foreign forum... inadequate for
these purposes.77cralawlawlibrary
We deem it more appropriate and in the greater interest of
prudence that a defendant not only allege supposed dangerous
tendencies in litigating in this jurisdiction; the defendant must also
show that such danger is real and present in that litigation or
dispute resolution has commenced in another jurisdiction and that
a foreign tribunal has chosen to exercise jurisdiction.
III
Forum non conveniens finds no application and does not operate
to divest Philippine tribunals of jurisdiction and to require the
application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the
stipulations of the Cabin Attendant contracts that require the
application of the laws of Saudi Arabia.

Forum non conveniens relates to forum, not to the choice of
governing law. Thai forum non conveniens may ultimately result
in the application of foreign law is merely an incident of its
application. In this strict sense, forum non conveniens is not
applicable. It is not the primarily pivotal consideration in this case.
In any case, even a further consideration of the applicability of
forum non conveniens on the incidental matter of the law
governing respondents' relation with Saudia leads to the
conclusion that it is improper for Philippine tribunals to divest
themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a
forum and'its incidents must grapple with two (2) considerations:
first, the availability and adequacy of recourse to a foreign
tribunal; and second, the question of where, as between the forum
court and a foreign court, the balance of interests inhering in a
dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of ceding
jurisdiction to a foreign tribunal and can be resolved by
juxtaposing the competencies and practical circumstances of the
tribunals in alternative fora. Exigencies, like the statute of
limitations, capacity to enforce orders and judgments, access to
records, requirements for the acquisition of jurisdiction, and even
questions relating to the integrity of foreign courts, may render
undesirable or even totally unfeasible recourse to a foreign court.
As mentioned, we consider it in the greater interest of prudence
that a defendant show, in pleading forum non conveniens, that
litigation has commenced in another jurisdiction and that a foieign
tribunal has, in fact, chosen to exercise jurisdiction.
Two (2) factors weigh into a court's appraisal of the balance of
interests inhering in a dispute: first, the vinculum which the
parties and their relation have to a given jurisdiction; and second,
the public interest that must animate a tribunal, in its capacity as
an agent of the sovereign, in choosing to assume or decline
jurisdiction. The first is more concerned with the parties, their
personal circumstances, and private interests; the second
concerns itself with the state and the greater social order.
In considering the vinculum, a court must look into the
preponderance of linkages which the parties and their transaction
may have to either jurisdiction. In this respect, factors, such as the
parties' respective nationalities and places of negotiation,
execution, performance, engagement or deployment, come into
play.
In considering public interest, a court proceeds with a
consciousness that it is an organ of the state. It must, thus,
determine if the interests of the sovereign (which acts through it)
are outweighed by those of the alternative jurisdiction. In this
respect, the court delves into a consideration of public policy.
Should it find that public interest weighs more heavily in favor of
its assumption of jurisdiction, it should proceed in adjudicating the
dispute, any doubt or .contrary view arising from the
preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of contractual choice
of law provisions. Where such provisions exist, Philippine
tribunals, acting as the forum court, generally defer to the parties'
articulated choice.
This is consistent with the fundamental principle of autonomy of
contracts. Article 1306 of the Civ:l Code expressly provides that
"[t]he contracting parties may establish 'such stipulations, clauses,
terms and conditions as they may deem convenient."78
Nevertheless, while a Philippine tribunal (acting as the forum
court) is called upon to respect the parties' choice of governing
law, such respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public order, or
public policy that underlie the contract central to the controversy.
Specifically with respect to public policy, in Pakistan International
Airlines Corporation v. Ople,79 this court explained
that:chanroblesvirtuallawlibrary
counter-balancing the principle of autonomy of contracting parties
is the equally general rule that provisions of applicable law,
especially provisions relating to matters affected with public
policy, are deemed written inta the contract. Put a little differently,
the governing principle is that parties may not contract away
applicable provisions of law especially peremptory provisions
dealing with matters heavily impressed with public interest.80
(Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he
State ... shall ensure the fundamental equality before the law of
women and men." Contrasted with Article II, Section 1 of the 1987
Constitution's statement that "[n]o person shall ... be denied the
equal protection of the laws," Article II, Section 14 exhorts the
State to "ensure." This does not only mean that the Philippines
shall not countenance nor lend legal recognition and approbation
to measures that discriminate on the basis of one's being male or
female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.
The Convention on the Elimination of all Forms of Discrimination
against Women (CEDAW), signed and ratified by the Philippines
on July 15, 1980, and on August 5, 1981, respectively,81 is part of
the law of the land. In view of the widespread signing and
ratification of, as well as adherence (in practice) to it by states, it
may even be said that many provisions of the CEDAW may have
become customary international law. The CEDAW gives effect to
the Constitution's policy statement in Article II, Section 14. Article
I of the CEDAW defines "discrimination against women"
as:chanroblesvirtuallawlibrary
any distinction, exclusion or restriction made on the basis of sex
which has the effect or purpose of impairing or nullifying the
recognition, enjoyment or exercise by women, irrespective of their
marital status, on a basis of equality of men and women, of human
rights and fundamental freedoms in the political, economic, social,
cultural, civil or any other field.82cralawlawlibrary
The constitutional exhortation to ensure fundamental equality, as
illumined by its enabling law, the CEDAW, must inform and
animate all the actions of all personalities acting on behalf of the
State. It is, therefore, the bounden duty of this court, in rendering
judgment on the disputes brought before it, to ensure that no
discrimination is heaped upon women on the mere basis of their
being women. This is a point so basic and central that all our
discussions and pronouncements — regardless of whatever
averments there may be of foreign law — must proceed from this
premise.
So informed and animated, we emphasize the glaringly
discriminatory nature of Saudia's policy. As argued by
respondents, Saudia's policy entails the termination of
employment of flight attendants who become pregnant. At the risk
of stating the obvious, pregnancy is an occurrence that pertains
specifically to women. Saudia's policy excludes from and restricts
employment on the basis of no other consideration but sex.
We do not lose sight of the reality that pregnancy does present
physical limitations that may render difficult the performance of
functions associated with being a flight attendant. Nevertheless, it
would be the height of iniquity to view pregnancy as a disability so
permanent and immutable that, it must entail the termination of
one's employment. It is clear to us that any individual, regardless
of gender, may be subject to exigencies that limit the performance
of functions. However, we fail to appreciate how pregnancy could
be such an impairing occurrence that it leaves no other recourse
but the complete termination of the means through which a
woman earns a living.
Apart from the constitutional policy on the fundamental equality
before the law of men and women, it is settled that contracts
relating to labor and employment are impressed with public
interest. Article 1700 of the Civil Code provides that "[t]he relation
between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to
the common good."
Consistent with this, this court's pronouncements in Pakistan
International Airlines Corporation83 are clear and
unmistakable:chanroblesvirtuallawlibrary
Petitioner PIA cannot take refuge in paragraph 10 of its
employment agreement which specifies, firstly, the law of Pakistan
as the applicable law of the agreement, and, secondly, lays the
venue for settlement of any dispute arising out of or in connection
with the agreement "only [in] courts of Karachi, Pakistan". The
first clause of paragraph 10 cannot be invoked to prevent the
application of Philippine labor laws and'regulations to the subject
matter of this case, i.e., the employer-employee relationship
between petitioner PIA and private respondents. We have already
pointed out that the relationship is much affected with public
interest and that the otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the parties agreeing
upon some other law to govern their relationship. . . . Under these
circumstances, paragraph 10 of the employment agreement
cannot be given effect so as to oust Philippine agencies and courts
of the jurisdiction vested upon them by Philippine law.84
(Emphasis supplied)
As the present dispute relates to (what the respondents allege to
be) the illegal termination of respondents' employment, this case
is immutably a matter of public interest and public policy.
Consistent with clear pronouncements in law and jurisprudence,
Philippine laws properly find application in and govern this case.
'Moreover, as this premise for Saudia's insistence on the
application forum non conveniens has been shattered, it follows
that Philippine tribunals may properly assume jurisdiction over
the present controversy. Philippine jurisprudence provides ample
illustrations of when a court's renunciation of jurisdiction on
account of forum non conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of Appeals,85 this court
noted that the trial court failed to consider that one of the
plaintiffs was a domestic corporation, that one of the defendants
was a Filipino, and that it was the extinguishment of the latter's
debt that was the object of the transaction subject of the litigation.
Thus, this court held, among others, that the trial court's refusal to
assume jurisdiction was not justified by forum non conveniens and
remanded the case to the trial court.
In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained
the trial court's assumption of jurisdiction considering that the
trial court could properly enforce judgment on the petitioner
which was a foreign corporation licensed to do business in the
Philippines.

In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no
reason to disturb the trial court's assumption of jurisdiction over a
case in which, as noted by the trial court, "it is more convenient to
hear and decide the case in the Philippines because Todaro [the
plaintiff] resides in the Philippines and the contract allegedly
breached involve[d] employment in the Philippines."88
In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this
court held that the fact that the complainant in an illegal dismissal
case was a Canadian citizen and a repatriate did not warrant the
application of forum non conveniens considering that: (1) the
Labor Code does not include forum non conveniens as a ground
for the dismissal of a complaint for illegal dismissal; (2) the
propriety of dismissing a case based on forum non conveniens
requires a factual determination; and (3) the requisites for
assumption of jurisdiction as laid out in Bank of America,
NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National
Labor Relations Commission91 that the National Labor Relations
Q Commission was a seriously inconvenient forum. In that case,
private respondent Marcelo G. Santos was working in the
Sultanate of Oman when he received a letter from Palace Hotel
recruiting him for employment in Beijing, China. Santos accepted
the offer. Subsequently, however, he was released from
employment supposedly due to business reverses arising from
political upheavals in China (i.e., the Tiananmen Square incidents
of 1989). Santos later filed a Complaint for illegal dismissal
impleading Palace Hotel's General Manager, Mr. Gerhard Schmidt,
the Manila Hotel International Company Ltd. (which was,
responsible for training Palace Hotel's personnel and staff), and
the Manila Hotel Corporation (which owned 50% of Manila Hotel
International Company Ltd.'s capital stock).
In ruling against the National Labor Relations Commission's
exercise of jurisdiction, this court noted that the main aspects of
the case transpired in two (2) foreign jurisdictions, Oman and
China, and that the case involved purely foreign elements.
Specifically, Santos was directly hired by a foreign employer
through correspondence sent to Oman. Also, the proper
defendants were neither Philippine nationals nor engaged in
business in the Philippines, while the main witnesses were not
residents of the Philippines. Likewise, this court noted that the
National Labor Relations Commission was in no position to
conduct the following: first, determine the law governing the
employment contract, as it was entered into in foreign soil; second,
determine the facts, as Santos' employment was terminated in
Beijing; and third, enforce its judgment, since Santos' employer,
Palace Hotel, was incorporated under the laws of China and was
not even served with summons.
Contrary to Manila Hotel, the case now before us does not entail a
preponderance of linkages that favor a foreign jurisdiction.
Here, the circumstances of the parties and their relation do not
approximate the circumstances enumerated in Puyat,92 which this
court recognized as possibly justifying the desistance of Philippine
tribunals from exercising jurisdiction.
First, there is no basis for concluding that the case can be more
conveniently tried elsewhere. As established earlier, Saudia is
doing business in the Philippines. For their part, all four (4)
respondents are Filipino citizens maintaining residence in the
Philippines and, apart from their previous employment with
Saudia, have no other connection to the Kingdom of Saudi Arabia.
It would even be to respondents' inconvenience if this case were
to be tried elsewhere.
Second, the records are bereft of any indication that respondents
filed their Complaint in an effort to engage in forum shopping or to
vex and inconvenience Saudia.
Third, there is no indication of "unwillingness to extend local
judicial facilities to non-residents or aliens."93 That Saudia has
managed to bring the present controversy all the way to this court
proves this.
Fourth, it cannot be said that the local judicial machinery is
inadequate for effectuating the right sought to be maintained.
Summons was properly served on Saudia and jurisdiction over its
person was validly acquired.
Lastly, there is not even room for considering foreign law.
Philippine law properly governs the present dispute.
As the question of applicable law has been settled, the supposed
difficulty of ascertaining foreign law (which requires the
application of forum non conveniens) provides no insurmountable
inconvenience or special circumstance that will justify depriving
Philippine tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the
laws of Saudi Arabia which should apply, it does not follow that
Philippine tribunals should refrain from exercising jurisdiction.
To. recall our pronouncements in Puyat,94 as well as in Bank of
America, NT&SA,95 it is not so much the mere applicability of
foreign law which calls into operation forum non conveniens.
Rather, what justifies a court's desistance from exercising
jurisdiction is "[t]he difficulty of ascertaining foreign law"96 or the
inability of a "Philippine Court to make an intelligent decision as to
the law[.]"97
Consistent with lex loci intentionis, to the extent that it is proper
and practicable (i.e., "to make an intelligent decision"98),
Philippine tribunals may apply the foreign law selected by the
parties. In fact, (albeit without meaning to make a pronouncement
on the accuracy and reliability of respondents' citation) in this
case, respondents themselves have made averments as to the laws
of Saudi Arabia. In their Comment, respondents write:
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is
illegal and unlawful to terminate the employment of any woman
by virtue of pregnancy. The law in Saudi Arabia is even more harsh
and strict [sic] in that no employer can terminate the employment
of a female worker or give her a warning of the same while on
Maternity Leave, the specific provision of Saudi Labor Laws on the
matter is hereto quoted as follows:
"An employer may not terminate the employment of a female
worker or give her a warning of the same while on maternity
leave." (Article 155, Labor Law of the Kingdom of Saudi Arabia,
Royal Decree No. M/51.)99cralawlawlibrary
All told, the considerations for assumption of jurisdiction by
Philippine tribunals as outlined in Bank of America, NT&SA100
have been satisfied. First, all the parties are based in the
Philippines and all the material incidents transpired in this
jurisdiction. Thus, the parties may conveniently seek relief from
Philippine tribunals. Second, Philippine tribunals are in a position
to make an intelligent decision as to the law and the facts. Third,
Philippine tribunals are in a position to enforce their decisions.
There is no compelling basis for ceding jurisdiction to a foreign
tribunal. Quite the contrary, the immense public policy
considerations attendant to this case behoove Philippine tribunals
to not shy away from their duty to rule on the case.
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court defined
voluntary resignation as "the voluntary act of an employee who is
in a situation where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of
relinquishment."102 Thus, essential to the act of resignation is
voluntariness. It must be the result of an employee's exercise of his
or her own will.
In the same case of Bilbao, this court advanced a means for
determining whether an employee resigned voluntarily:
As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the
alleged resignation must be considered in determining whether he
or she, in fact, intended, to sever his or her employment.103
(Emphasis supplied)
On the other hand, constructive dismissal has been defined as
"cessation of work because 'continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay' and other benefits."104
In Penaflor v. Outdoor Clothing Manufacturing Corporation,105
constructive dismissal has been described as tantamount to
"involuntarily [sic] resignation due to the harsh, hostile, and
unfavorable conditions set by the employer."106 In the same case,
it was noted that "[t]he gauge for constructive dismissal is
whether a reasonable person in the employee's position would
feel compelled to give up his employment under the prevailing
circumstances."107
Applying the cited standards on resignation and constructive
dismissal, it is clear that respondents were constructively
dismissed. Hence, their termination was illegal.
The termination of respondents' employment happened when
they were pregnant and expecting to incur costs on account of
child delivery and infant rearing. As noted by the Court of Appeals,
pregnancy is a time when they need employment to sustain their
families.108 Indeed, it goes against normal and reasonable human
behavior to abandon one's livelihood in a time of great financial
need.
It is clear that respondents intended to remain employed with
Saudia. All they did was avail of their maternity leaves. Evidently,
the very nature of a maternity leave means that a pregnant
employee will not report for work only temporarily and that she
will resume the performance of her duties as soon as the leave
allowance expires.
It is also clear that respondents exerted all efforts to' remain
employed with Saudia. Each of them repeatedly filed appeal letters
(as much as five [5] letters in the case of Rebesencio109) asking
Saudia to reconsider the ultimatum that they resign or be
terminated along with the forfeiture of their benefits. Some of
them even went to Saudia's office to personally seek
reconsideration.110
Respondents also adduced a copy of the "Unified Employment
Contract for Female Cabin Attendants."111 This contract deemed
void the employment of a flight attendant who becomes pregnant
and threatened termination due to lack of medical fitness.112 The
threat of termination (and the forfeiture of benefits that it
entailed) is enough to compel a reasonable person in respondents'
position to give up his or her employment.
Saudia draws attention to how respondents' resignation letters
were supposedly made in their own handwriting. This minutia
fails to surmount all the other indications negating any
voluntariness on respondents' part. If at all, these same
resignation letters are proof of how any supposed resignation did
not arise from respondents' own initiative. As earlier pointed out,
respondents' resignations were executed on Saudia's blank
letterheads that Saudia had provided. These letterheads already
had the word "RESIGNATION" typed on the subject portion of their
respective headings when these were handed to
respondents.113ChanRoblesVirtualawlibrary
"In termination cases, the burden of proving just or valid cause for
dismissing an employee rests on the employer."114 In this case,
Saudia makes much of how respondents supposedly completed
their exit interviews, executed quitclaims, received their
separation pay, and took more than a year to file their
Complaint.115 If at all, however, these circumstances prove only
the fact of their occurrence, nothing more. The voluntariness of
respondents' departure from Saudia is non sequitur.
Mere compliance with standard procedures or processes, such as
the completion of their exit interviews, neither negates
compulsion nor indicates voluntariness.
As with respondent's resignation letters, their exit interview forms
even support their claim of illegal dismissal and militates against
Saudia's arguments. These exit interview forms, as reproduced by
Saudia in its own Petition, confirms the unfavorable conditions as
regards respondents' maternity leaves. Ma. Jopette's and Loraine's
exit interview forms are particularly telling:
a. From Ma. Jopette's exit interview form:
3. In what respects has the job met or failed to meet your
expectations?
THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY
LEAVE.116
b. From Loraine's exit interview form:
1. What are your main reasons for leaving Saudia? What
company are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY LEAVE
(PREGNANCY)117
As to respondents' quitclaims, in Phil. Employ Services and
Resources, Inc. v. Paramio,118 this court noted that "[i]f (a) there
is clear proof that the waiver was wangled from an unsuspecting
or gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be
struck down as invalid or illegal."119 Respondents executed their
quitclaims after having been unfairly given an ultimatum to resign
or be terminated (and forfeit their benefits).

V Exemplary damages were also awarded to employees who were
Having been illegally and unjustly dismissed, respondents are
entitled to full backwages and benefits from the time of their
termination until the finality of this Decision. They are likewise
entitled to separation pay in the amount of one (1) month's salary
for every year of service until the fmality of this Decision, with a
fraction of a year of at least six (6) months being counted as one
(1) whole year.
Moreover, "[m]oral damages are awarded in termination cases
where the employee's dismissal was attended by bad faith, malice
or fraud, or where it constitutes an act oppressive to labor, or
where it was done in a manner contrary to morals, good customs
or public policy."120 In this case, Saudia terminated respondents'
employment in a manner that is patently discriminatory and
running afoul of the public interest that underlies employer-
employee relationships. As such, respondents are entitled to moral
damages.
To provide an "example or correction for the public good"121 as
against such discriminatory and callous schemes, respondents are
likewise entitled to exemplary damages.
In a long line of cases, this court awarded exemplary damages to
illegally dismissed employees whose "dismissal[s were] effected in
a wanton, oppressive or malevolent manner."122 This court has
awarded exemplary damages to employees who were terminated
on such frivolous, arbitrary, and unjust grounds as membership in
or involvement with labor unions,123 injuries sustained in the
course of employment,124 development of a medical condition
due to the employer's own violation of the employment
contract,125 and lodging of a Complaint against the employer.126
deemed illegally dismissed by an employer in an attempt to evade
compliance with statutorily established employee benefits.127
Likewise, employees dismissed for supposedly just causes, but in
violation of due process requirements, were awarded exemplary
damages.128
These examples pale in comparison to the present controversy.
Stripped of all unnecessary complexities, respondents were
dismissed for no other reason than simply that they were
pregnant. This is as wanton, oppressive, and tainted with bad faith
as any reason for termination of employment can be. This is no
ordinary case of illegal dismissal. This is a case of manifest gender
discrimination. It is an affront not only to our statutes and policies
on employees' security of tenure, but more so, to the
Constitution's dictum of fundamental equality between men and
women.129
The award of exemplary damages is, therefore, warranted, not
only to remind employers of the need to adhere to the
requirements of procedural and substantive due process in
termination of employment, but more importantly, to demonstrate
that gender discrimination should in no case be countenanced.
Having been compelled to litigate to seek reliefs for their illegal
and unjust dismissal, respondents are likewise entitled to
attorney's fees in the amount of 10% of the total monetary
award.130
VI
Petitioner Brenda J. Betia may not be held liable.

A corporation has a personality separate and distinct from those of
the persons composing it. Thus, as a rule, corporate directors and
officers are not liable for the illegal termination of a corporation's
employees. It is only when they acted in bad faith or with malice
that they become solidarity liable with the corporation.131
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang
Manggagawa ng Ever Electrical,132 this court clarified that "[b]ad
faith does not connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of
wrong; it means breach of a known duty through some motive or
interest or ill will; it partakes of the nature of fraud."133
Respondents have not produced proof to show that Brenda J. Betia
acted in bad faith or with malice as regards their termination.
Thus, she may not be held solidarity liable with Saudia.
WHEREFORE, with the MODIFICATIONS that first, petitioner
Brenda J. Betia is not solidarity liable with petitioner Saudi
Arabian Airlines, and second, that petitioner Saudi Arabian
Airlines is liable for moral and exemplary damages. The June 16,
2011 Decision and the September 13, 2011 Resolution of the Court
of Appeals in CA-G.R. SP. No. 113006 are hereby AFFIRMED in all
other respects. Accordingly, petitioner Saudi Arabian Airlines is
ordered to pay respondents:
(1)
Full backwages and all other benefits computed from the
respective dates in which each of the respondents were illegally
terminated until the finality of this Decision;
(2)
Separation pay computed from the respective dates in which each
of the respondents commenced employment until the finality of
this Decision at the rate of one (1) month's salary for every year of
service, with a fraction of a year of at least six (6) months being
counted as one (1) whole year;
(3)
Moral damages in the amount of P100,000.00 per respondent;
(4)
Exemplary damages in the amount of P200,000.00 per
respondent; and
(5)
Attorney's fees equivalent to 10% of the total award.
Interest of 6% per annum shall likewise be imposed on the total
judgment award from the finality of this Decision until full
satisfaction thereof.
This case is REMANDED to the Labor Arbiter to make a detailed
computation of the amounts due to respondents which petitioner
Saudi Arabian Airlines should pay without delay.
SO ORDERED.
[G. R. No. 120077. October 13, 2000]
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD.
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
ARBITER CEFERINA J. DIOSANA AND MARCELO G. SANTOS,
respondents.
DECISION
PARDO, J.:
The case before the Court is a petition for certiorari[1] to annul the
following orders of the National Labor Relations Commission
(hereinafter referred to as NLRC) for having been issued without
or with excess jurisdiction and with grave abuse of discretion:[2]
(1) Order of May 31, 1993.[3] Reversing and setting aside its
earlier resolution of August 28, 1992.[4] The questioned order
declared that the NLRC, not the Philippine Overseas Employment
Administration (hereinafter referred to as POEA), had jurisdiction
over private respondents complaint;
(2) Decision of December 15, 1994.[5] Directing petitioners to
jointly and severally pay private respondent twelve thousand and
six hundred dollars (US$12,600.00) representing salaries for the
unexpired portion of his contract; three thousand six hundred
dollars (US$3,600.00) as extra four months salary for the two (2)
year period of his contract, three thousand six hundred dollars
(US$3,600.00) as 14th month pay or a total of nineteen thousand
and eight hundred dollars (US$19,800.00) or its peso equivalent
and attorneys fees amounting to ten percent (10%) of the total
award; and
(3) Order of March 30, 1995.[6] Denying the motion for
reconsideration of the petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter
referred to as Santos) was an overseas worker employed as a
printer at the Mazoon Printing Press, Sultanate of Oman.
Subsequently, in June 1988, he was directly hired by the Palace
Hotel, Beijing, Peoples Republic of China and later terminated due
to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred
to as MHC) and the Manila Hotel International Company, Limited
(hereinafter referred to as MHICL).
When the case was filed in 1990, MHC was still a government-
owned and controlled corporation duly organized and existing
under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws
of Hong Kong.[7] MHC is an incorporator of MHICL, owning 50% of
its capital stock.[8]
By virtue of a management agreement[9] with the Palace Hotel
(Wang Fu Company Limited), MHICL[10] trained the personnel
and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the
Sultanate of Oman, respondent Santos received a letter dated May
2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace
Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that
he was recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as
printer, but with a higher monthly salary and increased benefits.
The position was slated to open on October 1, 1988.[11]
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and
signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk
mailed a ready to sign employment contract to respondent Santos.
Mr. Henk advised respondent Santos that if the contract was
acceptable, to return the same to Mr. Henk in Manila, together
with his passport and two additional pictures for his visa to China.

On May 30, 1988, respondent Santos resigned from the Mazoon
Printing Press, effective June 30, 1988, under the pretext that he
was needed at home to help with the familys piggery and poultry
business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and
acknowledged Mr. Henks letter. Respondent Santos enclosed four
(4) signed copies of the employment contract (dated June 4, 1988)
and notified them that he was going to arrive in Manila during the
first week of July 1988.
The employment contract of June 4, 1988 stated that his
employment would commence September 1, 1988 for a period of
two years.[12] It provided for a monthly salary of nine hundred
dollars (US$900.00) net of taxes, payable fourteen (14) times a
year.[13]
On June 30, 1988, respondent Santos was deemed resigned from
the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He
started to work at the Palace Hotel.[14]
Subsequently, respondent Santos signed an amended employment
agreement with the Palace Hotel, effective November 5, 1988. In
the contract, Mr. Shmidt represented the Palace Hotel. The Vice
President (Operations and Development) of petitioner MHICL
Miguel D. Cergueda signed the employment agreement under the
word noted.
From June 8 to 29, 1989, respondent Santos was in the Philippines
on vacation leave. He returned to China and reassumed his post on
July 17, 1989.
On July 22, 1989, Mr. Shmidts Executive Secretary, a certain
Joanna suggested in a handwritten note that respondent Santos be
given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos
by letter signed by Mr. Shmidt that his employment at the Palace
Hotel print shop would be terminated due to business reverses
brought about by the political upheaval in China.[15] We quote the
letter:[16]
After the unfortunate happenings in China and especially Beijing
(referring to Tiannamen Square incidents), our business has been
severely affected. To reduce expenses, we will not open/operate
printshop for the time being.
We sincerely regret that a decision like this has to be made, but
rest assured this does in no way reflect your past performance
which we found up to our expectations.
Should a turnaround in the business happen, we will contact you
directly and give you priority on future assignment.
On September 5, 1989, the Palace Hotel terminated the
employment of respondent Santos and paid all benefits due him,
including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the
Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty.
Ednave wrote Mr. Shmidt, demanding full compensation pursuant
to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:[17]
His service with the Palace Hotel, Beijing was not abruptly
terminated but we followed the one-month notice clause and Mr.
Santos received all benefits due him.
For your information, the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in
various departments of the hotel is going on which is a normal
management practice to control costs.
When going through the latest performance ratings, please also be
advised that his performance was below average and a Chinese
National who is doing his job now shows a better approach.
In closing, when Mr. Santos received the letter of notice, he hardly
showed up for work but still enjoyed free
accommodation/laundry/meals up to the day of his departure.
On February 20, 1990, respondent Santos filed a complaint for
illegal dismissal with the Arbitration Branch, National Capital
Region, National Labor Relations Commission (NLRC). He prayed
for an award of nineteen thousand nine hundred and twenty three
dollars (US$19,923.00) as actual damages, forty thousand pesos
(P40,000.00) as exemplary damages and attorneys fees equivalent
to 20% of the damages prayed for. The complaint named MHC,
MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons
and neither participated in the proceedings before the Labor
Arbiter.[18]
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the
case against petitioners, thus:[19]
WHEREFORE, judgment is hereby rendered:
1. directing all the respondents to pay complainant jointly and
severally;
a) $20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
b) P50,000.00 as moral damages;
c) P40,000.00 as exemplary damages; and
d) Ten (10) percent of the total award as attorneys fees.
SO ORDERED.
On July 23, 1991, petitioners appealed to the NLRC, arguing that
the POEA, not the NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution,
stating:[20]
WHEREFORE, let the appealed Decision be, as it is hereby,
declared null and void for want of jurisdiction. Complainant is
hereby enjoined to file his complaint with the POEA.
SO ORDERED.
On September 18, 1992, respondent Santos moved for
reconsideration of the afore-quoted resolution. He argued that the
case was not cognizable by the POEA as he was not an overseas
contract worker.[21]
On May 31, 1993, the NLRC granted the motion and reversed itself.
The NLRC directed Labor Arbiter Emerson Tumanon to hear the
case on the question of whether private respondent was
retrenched or dismissed.[22]
On January 13, 1994, Labor Arbiter Tumanon completed the
proceedings based on the testimonial and documentary evidence
presented to and heard by him.[23]
Subsequently, Labor Arbiter Tumanon was re-assigned as trial
arbiter of the National Capital Region, Arbitration Branch, and the
case was transferred to Labor Arbiter Jose G. de Vera.[24]
On November 25, 1994, Labor Arbiter de Vera submitted his
report.[25] He found that respondent Santos was illegally
dismissed from employment and recommended that he be paid
actual damages equivalent to his salaries for the unexpired portion
of his contract.[26]
On December 15, 1994, the NLRC ruled in favor of private
respondent, to wit:[27]
WHEREFORE, finding that the report and recommendations of
Arbiter de Vera are supported by substantial evidence, judgment is
hereby rendered, directing the respondents to jointly and
severally pay complainant the following computed contractual
benefits: (1) US$12,600.00 as salaries for the un-expired portion
of the parties contract; (2) US$3,600.00 as extra four (4) months
salary for the two (2) years period (sic) of the parties contract; (3)
US$3,600.00 as 14th month pay for the aforesaid two (2) years
contract stipulated by the parties or a total of US$19,800.00 or its
peso equivalent, plus (4) attorneys fees of 10% of complainants
total award.
SO ORDERED.
On February 2, 1995, petitioners filed a motion for reconsideration
arguing that Labor Arbiter de Veras recommendation had no basis
in law and in fact.[28]
On March 30, 1995, the NLRC denied the motion for
reconsideration.[29]
Hence, this petition.[30]
On October 9, 1995, petitioners filed with this Court an urgent
motion for the issuance of a temporary restraining order and/or
writ of preliminary injunction and a motion for the annulment of
the entry of judgment of the NLRC dated July 31, 1995.[31]
On November 20, 1995, the Court denied petitioners urgent
motion. The Court required respondents to file their respective
comments, without giving due course to the petition.[32]
On March 8, 1996, the Solicitor General filed a manifestation
stating that after going over the petition and its annexes, they can
not defend and sustain the position taken by the NLRC in its
assailed decision and orders. The Solicitor General prayed that he
be excused from filing a comment on behalf of the NLRC[33]

On April 30,1996, private respondent Santos filed his
comment.[34]
On June 26, 1996, the Court granted the manifestation of the
Solicitor General and required the NLRC to file its own comment to
the petition.[35]
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two
foreign jurisdictions and the case involves purely foreign
elements. The only link that the Philippines has with the case is
that respondent Santos is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Not all cases involving our
citizens can be tried here.
The employment contract.-- Respondent Santos was hired directly
by the Palace Hotel, a foreign employer, through correspondence
sent to the Sultanate of Oman, where respondent Santos was then
employed. He was hired without the intervention of the POEA or
any authorized recruitment agency of the government.[36]
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do so
provided: (1) that the Philippine court is one to which the parties
may conveniently resort to; (2) that the Philippine court is in a
position to make an intelligent decision as to the law and the facts;
and (3) that the Philippine court has or is likely to have power to
enforce its decision.[37] The conditions are unavailing in the case
at bar.
Not Convenient.-- We fail to see how the NLRC is a convenient
forum given that all the incidents of the case - from the time of
recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the
proper defendants, the Palace Hotel and MHICL are not nationals
of the Philippines. Neither are they doing business in the
Philippines. Likewise, the main witnesses, Mr. Shmidt and Mr.
Henk are non-residents of the Philippines.
No power to determine applicable law.-- Neither can an intelligent
decision be made as to the law governing the employment
contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex loci contractus (the law of the
place where the contract was made).[38]
The employment contract was not perfected in the Philippines.
Respondent Santos signified his acceptance by writing a letter
while he was in the Republic of Oman. This letter was sent to the
Palace Hotel in the Peoples Republic of China.
No power to determine the facts.-- Neither can the NLRC
determine the facts surrounding the alleged illegal dismissal as all
acts complained of took place in Beijing, Peoples Republic of China.
The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of
the Palace Hotel as to justify respondent Santos retrenchment.
Principle of effectiveness, no power to execute decision.-- Even
assuming that a proper decision could be reached by the NLRC,
such would not have any binding effect against the employer, the
Palace Hotel. The Palace Hotel is a corporation incorporated under
the laws of China and was not even served with summons.
Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no
power to solve controversies involving foreign employers. Neither
are we saying that we do not have power over an employment
contract executed in a foreign country. If Santos were an overseas
contract worker, a Philippine forum, specifically the POEA, not the
NLRC, would protect him.[39] He is not an overseas contract
worker a fact which he admits with conviction.[40]
Even assuming that the NLRC was the proper forum, even on the
merits, the NLRCs decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction
over the case, and (2) that MHICL was liable for Santos
retrenchment, still MHC, as a separate and distinct juridical entity
cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent
(50%) of its capital stock. However, this is not enough to pierce
the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is
resorted to when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend a crime.[41] It
is done only when a corporation is a mere alter ego or business
conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,[42] we held that the
mere ownership by a single stockholder or by another corporation
of all or nearly all of the capital stock of a corporation is not of
itself a sufficient reason for disregarding the fiction of separate
corporate personalities.
The tests in determining whether the corporate veil may be
pierced are: First, the defendant must have control or complete
domination of the other corporations finances, policy and business
practices with regard to the transaction attacked. There must be
proof that the other corporation had no separate mind, will or
existence with respect the act complained of. Second, control must
be used by the defendant to commit fraud or wrong. Third, the
aforesaid control or breach of duty must be the proximate cause of
the injury or loss complained of. The absence of any of the
elements prevents the piercing of the corporate veil.[43]
It is basic that a corporation has a personality separate and
distinct from those composing it as well as from that of any other
legal entity to which it may be related.[44] Clear and convincing
evidence is needed to pierce the veil of corporate fiction.[45] In
this case, we find no evidence to show that MHICL and MHC are
one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICLs liability on the fact that
MHICL signed his employment contract with the Palace Hotel. This
fact fails to persuade us.
First, we note that the Vice President (Operations and
Development) of MHICL, Miguel D. Cergueda signed the
employment contract as a mere witness. He merely signed under
the word noted.
When one notes a contract, one is not expressing his agreement or
approval, as a party would.[46] In Sichangco v. Board of
Commissioners of Immigration,[47] the Court recognized that the
term noted means that the person so noting has merely taken
cognizance of the existence of an act or declaration, without
exercising a judicious deliberation or rendering a decision on the
matter.
Mr. Cergueda merely signed the witnessing part of the document.
The witnessing part of the document is that which, in a deed or
other formal instrument is that part which comes after the recitals,
or where there are no recitals, after the parties (emphasis
ours).[48] As opposed to a party to a contract, a witness is simply
one who, being present, personally sees or perceives a thing; a
beholder, a spectator, or eyewitness.[49] One who notes
something just makes a brief written statement[50] a
memorandum or observation.
Second, and more importantly, there was no existing employer-
employee relationship between Santos and MHICL. In determining
the existence of an employer-employee relationship, the following
elements are considered:[51]
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power to dismiss; and
(4) the power to control employees conduct.
MHICL did not have and did not exercise any of the
aforementioned powers. It did not select respondent Santos as an
employee for the Palace Hotel. He was referred to the Palace Hotel
by his friend, Nestor Buenio. MHICL did not engage respondent
Santos to work. The terms of employment were negotiated and
finalized through correspondence between respondent Santos, Mr.
Schmidt and Mr. Henk, who were officers and representatives of
the Palace Hotel and not MHICL. Neither did respondent Santos
adduce any proof that MHICL had the power to control his
conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and
not MHICL that terminated respondent Santos services.
Neither is there evidence to suggest that MHICL was a labor-only
contractor.[52] There is no proof that MHICL supplied respondent
Santos or even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and
MHICL are one and the same entity. The fact that the Palace Hotel
is a member of the Manila Hotel Group is not enough to pierce the
corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and
considering further that no employer-employee relationship
existed between MHICL, MHC and respondent Santos, Labor
Arbiter Ceferina J. Diosana clearly had no jurisdiction over
respondents claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over
the following:[53]
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
In all these cases, an employer-employee relationship is an
indispensable jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217
of the Labor Code is limited to disputes arising from an employer-
employee relationship which can be resolved by reference to the
Labor Code, or other labor statutes, or their collective bargaining
agreements.[54]
To determine which body has jurisdiction over the present
controversy, we rely on the sound judicial principle that
jurisdiction over the subject matter is conferred by law and is
determined by the allegations of the complaint irrespective of
whether the plaintiff is entitled to all or some of the claims
asserted therein.[55]
The lack of jurisdiction of the Labor Arbiter was obvious from the
allegations of the complaint. His failure to dismiss the case
amounts to grave abuse of discretion.[56]
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari
and ANNULS the orders and resolutions of the National Labor
Relations Commission dated May 31, 1993, December 15, 1994
and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR
Case No. 00-02-01058-90).
No costs.
SO ORDERED.
FIRST DIVISION
[G. R. No. 120077. October 13, 2000]
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD.
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
ARBITER CEFERINA J. DIOSANA AND MARCELO G. SANTOS,
respondents.
DECISION
PARDO, J.:
The case before the Court is a petition for certiorari[1] to annul the
following orders of the National Labor Relations Commission
(hereinafter referred to as NLRC) for having been issued without
or with excess jurisdiction and with grave abuse of discretion:[2]
(1) Order of May 31, 1993.[3] Reversing and setting aside its
earlier resolution of August 28, 1992.[4] The questioned order
declared that the NLRC, not the Philippine Overseas Employment
Administration (hereinafter referred to as POEA), had jurisdiction
over private respondents complaint;
(2) Decision of December 15, 1994.[5] Directing petitioners to
jointly and severally pay private respondent twelve thousand and
six hundred dollars (US$12,600.00) representing salaries for the
unexpired portion of his contract; three thousand six hundred
dollars (US$3,600.00) as extra four months salary for the two (2)
year period of his contract, three thousand six hundred dollars
(US$3,600.00) as 14th month pay or a total of nineteen thousand
and eight hundred dollars (US$19,800.00) or its peso equivalent
and attorneys fees amounting to ten percent (10%) of the total
award; and
(3) Order of March 30, 1995.[6] Denying the motion for
reconsideration of the petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter
referred to as Santos) was an overseas worker employed as a
printer at the Mazoon Printing Press, Sultanate of Oman.
Subsequently, in June 1988, he was directly hired by the Palace
Hotel, Beijing, Peoples Republic of China and later terminated due
to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred
to as MHC) and the Manila Hotel International Company, Limited
(hereinafter referred to as MHICL).
When the case was filed in 1990, MHC was still a government-
owned and controlled corporation duly organized and existing
under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws
of Hong Kong.[7] MHC is an incorporator of MHICL, owning 50% of
its capital stock.[8]
By virtue of a management agreement[9] with the Palace Hotel
(Wang Fu Company Limited), MHICL[10] trained the personnel
and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the
Sultanate of Oman, respondent Santos received a letter dated May
2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace
Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that
he was recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as
printer, but with a higher monthly salary and increased benefits.
The position was slated to open on October 1, 1988.[11]
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and
signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk
mailed a ready to sign employment contract to respondent Santos.
Mr. Henk advised respondent Santos that if the contract was
acceptable, to return the same to Mr. Henk in Manila, together
with his passport and two additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon
Printing Press, effective June 30, 1988, under the pretext that he
was needed at home to help with the familys piggery and poultry
business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and
acknowledged Mr. Henks letter. Respondent Santos enclosed four
(4) signed copies of the employment contract (dated June 4, 1988)
and notified them that he was going to arrive in Manila during the
first week of July 1988.
The employment contract of June 4, 1988 stated that his
employment would commence September 1, 1988 for a period of
two years.[12] It provided for a monthly salary of nine hundred
dollars (US$900.00) net of taxes, payable fourteen (14) times a
year.[13]
On June 30, 1988, respondent Santos was deemed resigned from
the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He
started to work at the Palace Hotel.[14]
Subsequently, respondent Santos signed an amended employment
agreement with the Palace Hotel, effective November 5, 1988. In
the contract, Mr. Shmidt represented the Palace Hotel. The Vice
President (Operations and Development) of petitioner MHICL
Miguel D. Cergueda signed the employment agreement under the
word noted.
From June 8 to 29, 1989, respondent Santos was in the Philippines
on vacation leave. He returned to China and reassumed his post on
July 17, 1989.
On July 22, 1989, Mr. Shmidts Executive Secretary, a certain
Joanna suggested in a handwritten note that respondent Santos be
given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos
by letter signed by Mr. Shmidt that his employment at the Palace
Hotel print shop would be terminated due to business reverses
brought about by the political upheaval in China.[15] We quote the
letter:[16]
After the unfortunate happenings in China and especially Beijing
(referring to Tiannamen Square incidents), our business has been
severely affected. To reduce expenses, we will not open/operate
printshop for the time being.
We sincerely regret that a decision like this has to be made, but
rest assured this does in no way reflect your past performance
which we found up to our expectations.
Should a turnaround in the business happen, we will contact you
directly and give you priority on future assignment.
On September 5, 1989, the Palace Hotel terminated the
employment of respondent Santos and paid all benefits due him,
including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the
Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty.
Ednave wrote Mr. Shmidt, demanding full compensation pursuant
to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:[17]
His service with the Palace Hotel, Beijing was not abruptly
terminated but we followed the one-month notice clause and Mr.
Santos received all benefits due him.
For your information, the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in
various departments of the hotel is going on which is a normal
management practice to control costs.
When going through the latest performance ratings, please also be
advised that his performance was below average and a Chinese
National who is doing his job now shows a better approach.
In closing, when Mr. Santos received the letter of notice, he hardly
showed up for work but still enjoyed free
accommodation/laundry/meals up to the day of his departure.
On February 20, 1990, respondent Santos filed a complaint for
illegal dismissal with the Arbitration Branch, National Capital
Region, National Labor Relations Commission (NLRC). He prayed
for an award of nineteen thousand nine hundred and twenty three
dollars (US$19,923.00) as actual damages, forty thousand pesos
(P40,000.00) as exemplary damages and attorneys fees equivalent
to 20% of the damages prayed for. The complaint named MHC,
MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons
and neither participated in the proceedings before the Labor
Arbiter.[18]
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the
case against petitioners, thus:[19]
WHEREFORE, judgment is hereby rendered:
1. directing all the respondents to pay complainant jointly and
severally;
a) $20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
b) P50,000.00 as moral damages;
c) P40,000.00 as exemplary damages; and
d) Ten (10) percent of the total award as attorneys fees.
SO ORDERED.
On July 23, 1991, petitioners appealed to the NLRC, arguing that
the POEA, not the NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution,
stating:[20]
WHEREFORE, let the appealed Decision be, as it is hereby,
declared null and void for want of jurisdiction. Complainant is
hereby enjoined to file his complaint with the POEA.
SO ORDERED.
On September 18, 1992, respondent Santos moved for
reconsideration of the afore-quoted resolution. He argued that the
case was not cognizable by the POEA as he was not an overseas
contract worker.[21]
On May 31, 1993, the NLRC granted the motion and reversed itself.
The NLRC directed Labor Arbiter Emerson Tumanon to hear the
case on the question of whether private respondent was
retrenched or dismissed.[22]
On January 13, 1994, Labor Arbiter Tumanon completed the
proceedings based on the testimonial and documentary evidence
presented to and heard by him.[23]
Subsequently, Labor Arbiter Tumanon was re-assigned as trial
arbiter of the National Capital Region, Arbitration Branch, and the
case was transferred to Labor Arbiter Jose G. de Vera.[24]
On November 25, 1994, Labor Arbiter de Vera submitted his
report.[25] He found that respondent Santos was illegally
dismissed from employment and recommended that he be paid
actual damages equivalent to his salaries for the unexpired portion
of his contract.[26]
On December 15, 1994, the NLRC ruled in favor of private
respondent, to wit:[27]
WHEREFORE, finding that the report and recommendations of
Arbiter de Vera are supported by substantial evidence, judgment is
hereby rendered, directing the respondents to jointly and
severally pay complainant the following computed contractual
benefits: (1) US$12,600.00 as salaries for the un-expired portion
of the parties contract; (2) US$3,600.00 as extra four (4) months
salary for the two (2) years period (sic) of the parties contract; (3)
US$3,600.00 as 14th month pay for the aforesaid two (2) years
contract stipulated by the parties or a total of US$19,800.00 or its
peso equivalent, plus (4) attorneys fees of 10% of complainants
total award.
SO ORDERED.
On February 2, 1995, petitioners filed a motion for reconsideration
arguing that Labor Arbiter de Veras recommendation had no basis
in law and in fact.[28]
On March 30, 1995, the NLRC denied the motion for
reconsideration.[29]
Hence, this petition.[30]
On October 9, 1995, petitioners filed with this Court an urgent
motion for the issuance of a temporary restraining order and/or
writ of preliminary injunction and a motion for the annulment of
the entry of judgment of the NLRC dated July 31, 1995.[31]
On November 20, 1995, the Court denied petitioners urgent
motion. The Court required respondents to file their respective
comments, without giving due course to the petition.[32]
On March 8, 1996, the Solicitor General filed a manifestation
stating that after going over the petition and its annexes, they can
not defend and sustain the position taken by the NLRC in its
assailed decision and orders. The Solicitor General prayed that he
be excused from filing a comment on behalf of the NLRC[33]
On April 30,1996, private respondent Santos filed his
comment.[34]
On June 26, 1996, the Court granted the manifestation of the
Solicitor General and required the NLRC to file its own comment to
the petition.[35]
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two
foreign jurisdictions and the case involves purely foreign
elements. The only link that the Philippines has with the case is
that respondent Santos is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Not all cases involving our
citizens can be tried here.
The employment contract.-- Respondent Santos was hired directly
by the Palace Hotel, a foreign employer, through correspondence
sent to the Sultanate of Oman, where respondent Santos was then
employed. He was hired without the intervention of the POEA or
any authorized recruitment agency of the government.[36]
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do so
provided: (1) that the Philippine court is one to which the parties
may conveniently resort to; (2) that the Philippine court is in a
position to make an intelligent decision as to the law and the facts;
and (3) that the Philippine court has or is likely to have power to
enforce its decision.[37] The conditions are unavailing in the case
at bar.
Not Convenient.-- We fail to see how the NLRC is a convenient
forum given that all the incidents of the case - from the time of
recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the
proper defendants, the Palace Hotel and MHICL are not nationals
of the Philippines. Neither are they doing business in the
Philippines. Likewise, the main witnesses, Mr. Shmidt and Mr.
Henk are non-residents of the Philippines.
No power to determine applicable law.-- Neither can an intelligent
decision be made as to the law governing the employment
contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex loci contractus (the law of the
place where the contract was made).[38]
The employment contract was not perfected in the Philippines.
Respondent Santos signified his acceptance by writing a letter
while he was in the Republic of Oman. This letter was sent to the
Palace Hotel in the Peoples Republic of China.
No power to determine the facts.-- Neither can the NLRC
determine the facts surrounding the alleged illegal dismissal as all
acts complained of took place in Beijing, Peoples Republic of China.
The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of
the Palace Hotel as to justify respondent Santos retrenchment.
Principle of effectiveness, no power to execute decision.-- Even
assuming that a proper decision could be reached by the NLRC,
such would not have any binding effect against the employer, the
Palace Hotel. The Palace Hotel is a corporation incorporated under
the laws of China and was not even served with summons.
Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no
power to solve controversies involving foreign employers. Neither
are we saying that we do not have power over an employment
contract executed in a foreign country. If Santos were an overseas
contract worker, a Philippine forum, specifically the POEA, not the
NLRC, would protect him.[39] He is not an overseas contract
worker a fact which he admits with conviction.[40]
Even assuming that the NLRC was the proper forum, even on the
merits, the NLRCs decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction
over the case, and (2) that MHICL was liable for Santos
retrenchment, still MHC, as a separate and distinct juridical entity
cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent
(50%) of its capital stock. However, this is not enough to pierce
the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is
resorted to when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend a crime.[41] It
is done only when a corporation is a mere alter ego or business
conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,[42] we held that the
mere ownership by a single stockholder or by another corporation
of all or nearly all of the capital stock of a corporation is not of
itself a sufficient reason for disregarding the fiction of separate
corporate personalities.
The tests in determining whether the corporate veil may be
pierced are: First, the defendant must have control or complete
domination of the other corporations finances, policy and business
practices with regard to the transaction attacked. There must be
proof that the other corporation had no separate mind, will or
existence with respect the act complained of. Second, control must
be used by the defendant to commit fraud or wrong. Third, the
aforesaid control or breach of duty must be the proximate cause of
the injury or loss complained of. The absence of any of the
elements prevents the piercing of the corporate veil.[43]
It is basic that a corporation has a personality separate and
distinct from those composing it as well as from that of any other
legal entity to which it may be related.[44] Clear and convincing
evidence is needed to pierce the veil of corporate fiction.[45] In
this case, we find no evidence to show that MHICL and MHC are
one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICLs liability on the fact that
MHICL signed his employment contract with the Palace Hotel. This
fact fails to persuade us.
First, we note that the Vice President (Operations and
Development) of MHICL, Miguel D. Cergueda signed the
employment contract as a mere witness. He merely signed under
the word noted.
When one notes a contract, one is not expressing his agreement or
approval, as a party would.[46] In Sichangco v. Board of
Commissioners of Immigration,[47] the Court recognized that the
term noted means that the person so noting has merely taken
cognizance of the existence of an act or declaration, without
exercising a judicious deliberation or rendering a decision on the
matter.
Mr. Cergueda merely signed the witnessing part of the document.
The witnessing part of the document is that which, in a deed or
other formal instrument is that part which comes after the recitals,
or where there are no recitals, after the parties (emphasis
ours).[48] As opposed to a party to a contract, a witness is simply
one who, being present, personally sees or perceives a thing; a
beholder, a spectator, or eyewitness.[49] One who notes
something just makes a brief written statement[50] a
memorandum or observation.
Second, and more importantly, there was no existing employer-
employee relationship between Santos and MHICL. In determining
the existence of an employer-employee relationship, the following
elements are considered:[51]
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power to dismiss; and
(4) the power to control employees conduct.
MHICL did not have and did not exercise any of the
aforementioned powers. It did not select respondent Santos as an
employee for the Palace Hotel. He was referred to the Palace Hotel
by his friend, Nestor Buenio. MHICL did not engage respondent
Santos to work. The terms of employment were negotiated and
finalized through correspondence between respondent Santos, Mr.
Schmidt and Mr. Henk, who were officers and representatives of
the Palace Hotel and not MHICL. Neither did respondent Santos
adduce any proof that MHICL had the power to control his
conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and
not MHICL that terminated respondent Santos services.
Neither is there evidence to suggest that MHICL was a labor-only
contractor.[52] There is no proof that MHICL supplied respondent
Santos or even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and
MHICL are one and the same entity. The fact that the Palace Hotel
is a member of the Manila Hotel Group is not enough to pierce the
corporate veil between MHICL and the Palace Hotel.

IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and
considering further that no employer-employee relationship
existed between MHICL, MHC and respondent Santos, Labor
Arbiter Ceferina J. Diosana clearly had no jurisdiction over
respondents claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over
the following:[53]
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
In all these cases, an employer-employee relationship is an
indispensable jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217
of the Labor Code is limited to disputes arising from an employer-
employee relationship which can be resolved by reference to the
Labor Code, or other labor statutes, or their collective bargaining
agreements.[54]
To determine which body has jurisdiction over the present
controversy, we rely on the sound judicial principle that
jurisdiction over the subject matter is conferred by law and is
determined by the allegations of the complaint irrespective of
whether the plaintiff is entitled to all or some of the claims
asserted therein.[55]
The lack of jurisdiction of the Labor Arbiter was obvious from the
allegations of the complaint. His failure to dismiss the case
amounts to grave abuse of discretion.[56]
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari
and ANNULS the orders and resolutions of the National Labor
Relations Commission dated May 31, 1993, December 15, 1994
and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR
Case No. 00-02-01058-90).
No costs.
SO ORDERED.