G.R. No.

112573 February 9, 1995

NORTHWEST ORIENT AIRLINES, INC. petitioner,

vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.:

This petition for review on certiorari  seeks to set aside the decision of the Court of Appeals
affirming the dismissal of the petitioner's complaint to enforce the judgment of a Japanese
court. The principal issue here is whether a Japanese court can acquire jurisdiction over a
Philippine corporation doing business in Japan by serving summons through diplomatic channels
on the Philippine corporation at its principal office in Manila after prior attempts to serve
summons in Japan had failed.

Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized

under the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of
the Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a Japanese
court against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a corporation
incorporated under Philippine laws.

As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the

following are the factual and procedural antecedents of this controversy:

On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp &
Company, through its Japan branch, entered into an International Passenger
Sales Agency Agreement, whereby the former authorized the latter to sell its air
transportation tickets. Unable to remit the proceeds of the ticket sales made by
defendant on behalf of the plaintiff under the said agreement, plaintiff on
March 25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted
proceeds of the ticket sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th Civil Department,
Tokyo District Court of Japan against defendant at its office at the Taiheiyo
Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma, Kanagawa
Prefecture. The attempt to serve the summons was unsuccessful because the
bailiff was advised by a person in the office that Mr. Dinozo, the person believed
to be authorized to receive court processes was in Manila and would be back on
April 24, 1980.

On April 24, 1980, bailiff returned to the defendant's office to serve the
summons. Mr. Dinozo refused to accept the same claiming that he was no
longer an employee of the defendant.

After the two attempts of service were unsuccessful, the judge of the Tokyo
District Court decided to have the complaint and the writs of summons served
at the head office of the defendant in Manila. On July 11, 1980, the Director of
the Tokyo District Court requested the Supreme Court of Japan to serve the
summons through diplomatic channels upon the defendant's head office in
Manila.

On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit
the writ of summons (p. 276, Records). Despite receipt of the same, defendant
failed to appear at the scheduled hearing. Thus, the Tokyo Court proceeded to
hear the plaintiff's complaint and on [January 29, 1981], rendered judgment
ordering the defendant to pay the plaintiff the sum of 83,158,195 Yen and
damages for delay at the rate of 6% per annum from August 28, 1980 up to and
until payment is completed (pp. 12-14, Records).

On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the
judgment. Defendant not having appealed the judgment, the same became final
and executory.

Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a
suit for enforcement of the judgment was filed by plaintiff before the Regional
Trial Court of Manila Branch 54.2

On July 16, 1983, defendant filed its answer averring that the judgment of the
Japanese Court sought to be enforced is null and void and unenforceable in this
jurisdiction having been rendered without due and proper notice to the
defendant and/or with collusion or fraud and/or upon a clear mistake of law
and fact (pp. 41-45, Rec.).

Unable to settle the case amicably, the case was tried on the merits. After the
plaintiff rested its case, defendant on April 21, 1989, filed a Motion for
Judgment on a Demurrer to Evidence based on two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of
jurisdiction and (2) the said judgment is contrary to Philippine law and public
policy and rendered without due process of law. Plaintiff filed its opposition
after which the court a quo  rendered the now assailed decision dated June 21,
1989 granting the demurrer motion and dismissing the complaint (Decision, pp.
376-378, Records). In granting the demurrer motion, the trial court held that:

The foreign judgment in the Japanese Court sought in this

action is null and void for want of jurisdiction over the person of
the defendant considering that this is an action in personam;
the Japanese Court did not acquire jurisdiction over the person
of the defendant because jurisprudence requires that the
defendant be served with summons in Japan in order for the
Japanese Court to acquire jurisdiction over it, the process of the
Court in Japan sent to the Philippines which is outside Japanese
jurisdiction cannot confer jurisdiction over the defendant in the
case before the Japanese Court of the case at bar. Boudard
versus Tait 67 Phil. 170. The plaintiff contends that the Japanese
Court acquired jurisdiction because the defendant is a resident
of Japan, having four (4) branches doing business therein and in
fact had a permit from the Japanese government to conduct
business in Japan (citing the exhibits presented by the plaintiff);
if this is so then service of summons should have been made
upon the defendant in Japan in any of these alleged four
branches; as admitted by the plaintiff the service of the
summons issued by the Japanese Court was made in the
Philippines thru a Philippine Sheriff. This Court agrees that if the
defendant in a foreign court is a resident in the court of that
foreign court such court could acquire jurisdiction over the
person of the defendant but it must be served upon the
defendant in the territorial jurisdiction of the foreign court.
Such is not the case here because the defendant was served
with summons in the Philippines and not in Japan.

Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional Notice of
 Appeal, asking the court to treat the said notice of appeal "as in effect after and
upon issuance of the court's denial of the motion for reconsideration."

Defendant opposed the motion for reconsideration to which a Reply dated

August 28, 1989 was filed by the plaintiff.

On October 16, 1989, the lower court disregarded the Motion for
Reconsideration and gave due course to the plaintiff's Notice of Appeal. 3

In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its
reliance upon Boudard vs.  Tait  4 wherein it was held that "the process of the court has no
extraterritorial effect and no jurisdiction is acquired over the person of the defendant by serving
him beyond the boundaries of the state." To support its position, the Court of Appeals further
stated:

In an action strictly in personam, such as the instant case, personal service of

summons within the forum is required for the court to acquire jurisdiction over
the defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To confer
jurisdiction on the court, personal or substituted service of summons on the
defendant not extraterritorial service is necessary (Dial Corp vs. Soriano, 161
SCRA 739).

But while plaintiff-appellant concedes that the collection suit filed is an action in
personam, it is its theory that a distinction must be made between an action in
personam against a resident defendant and an action in personam  against a
non-resident defendant. Jurisdiction is acquired over a non-resident defendant
only if he is served personally within the jurisdiction of the court and over a
resident defendant if by personal, substituted or constructive service
conformably to statutory authorization. Plaintiff-appellant argues that since the
defendant-appellee maintains branches in Japan it is considered a resident
defendant. Corollarily, personal, substituted or constructive service of summons
when made in compliance with the procedural rules is sufficient to give the
court jurisdiction to render judgment in personam.

Such an argument does not persuade.

It is a general rule that processes of the court cannot lawfully be served outside
the territorial limits of the jurisdiction of the court from which it issues (Carter
vs. Carter; 41 S.E. 2d 532, 201) and this is regardless of the residence or
citizenship  of the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa
511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual service within
the proper territorial limits on defendant or someone authorized to accept
service for him. Thus, a defendant, whether a resident or not in the forum
where the action is filed, must be served with summons within that forum.

But even assuming a distinction between a resident defendant and non-resident

defendant were to be adopted, such distinction applies only to natural persons
and not in the corporations. This finds support in the concept that "a
corporation has no home or residence in the sense in which those terms are
applied to natural persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57
Phil. 607). Thus, as cited by the defendant-appellee in its brief:

Residence is said to be an attribute of a natural person, and can be predicated

on an artificial being only by more or less imperfect analogy. Strictly speaking,
therefore, a corporation can have no local residence or habitation. It has been
said that a corporation is a mere ideal existence, subsisting only in
contemplation of law — an invisible being which can have, in fact, no locality
 and can occupy no space, and therefore cannot have a dwelling place. (18 Am.
Jur. 2d, p. 693 citing Kimmerle v. Topeka, 88 370, 128 p. 367; Wood v. Hartfold
F. Ins. Co., 13 Conn 202)

Jurisprudence so holds that the foreign or domestic character of a corporation is

to be determined by the place of its origin where its charter was granted and
not by the location of its business activities (Jennings v. Idaho Rail Light & P. Co.,
26 Idaho 703, 146 p. 101), A corporation is a "resident" and an inhabitant of the
state in which it is incorporated and no other (36 Am. Jur. 2d, p. 49).

Defendant-appellee is a Philippine Corporation duly organized under the

Philippine laws. Clearly, its residence is the Philippines, the place of its
incorporation, and not Japan. While defendant-appellee maintains branches in
Japan, this will not make it a resident of Japan. A corporation does not become a
resident of another by engaging in business there even though licensed by that
state and in terms given all the rights and privileges of a domestic corporation
(Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).

On this premise, defendant appellee is a non-resident corporation. As such,

court processes must be served upon it at a place within the state in which the
action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222,
1 S. Ct. 354).5

It then concluded that the service of summons effected in Manila or beyond the territorial
boundaries of Japan was null and did not confer jurisdiction upon the Tokyo District Court over
the person of SHARP; hence, its decision was void.

Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court
contending that the respondent court erred in holding that SHARP was not a resident of Japan
and that summons on SHARP could only be validly served within that country.

A foreign judgment is presumed to be valid and binding in the country from which it comes, until
the contrary is shown. It is also proper to presume the regularity of the proceedings and the
giving of due notice therein.6

Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam  of a
tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence
of a right as between the parties and their successors-in-interest by a subsequent title. The
judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court,
whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of jurisdiction and has regularly performed its official duty.

Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.7 Being the party challenging the judgment rendered by the Japanese
court, SHARP had the duty to demonstrate the invalidity of such judgment. In an attempt to
discharge that burden, it contends that the extraterritorial service of summons effected at its
home office in the Philippines was not only ineffectual but also void, and the Japanese Court did
not, therefore acquire jurisdiction over it.

It is settled that matters of remedy and procedure such as those relating to the service of
process upon a defendant are governed by the lex fori  or the internal law of the forum.8 In this
case, it is the procedural law of Japan where the judgment was rendered that determines the
validity of the extraterritorial service of process on SHARP. As to what this law is is a question of
fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any
other fact.9 Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced
by an official publication or by a duly attested or authenticated copy thereof. It was then
incumbent upon SHARP to present evidence as to what that Japanese procedural law is and to
show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly, the
presumption of validity and regularity of the service of summons and the decision thereafter
rendered by the Japanese court must stand.

Alternatively in the light of the absence of proof regarding Japanese

law, the presumption of identity or similarity or the so-called processual presumption 10 may be
invoked. Applying it, the Japanese law on the matter is presumed to be similar with the
Philippine law on service of summons on a private foreign corporation doing business in the
Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a foreign
corporation doing business in the Philippines, service may be made: (1) on its resident agent
designated in accordance with law for that purpose, or, (2) if there is no such resident agent, on
the government official designated by law to that effect; or (3) on any of its officers or agents
within the Philippines.

If the foreign corporation has designated an agent to receive summons, the designation is
exclusive, and service of summons is without force and gives the court no jurisdiction unless
made upon him. 11

Where the corporation has no such agent, service shall be made on the government official
designated by law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance
company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and (c)
the Securities and Exchange Commission, in the case of other foreign corporations duly licensed
to do business in the Philippines. Whenever service of process is so made, the government office
or official served shall transmit by mail a copy of the summons or other legal proccess to the
corporation at its home or principal office. The sending of such copy is a necessary part of the
service. 12

SHARP contends that the laws authorizing service of process upon the Securities and Exchange
Commission, the Superintendent of Banks, and the Insurance Commissioner, as the case may be,
presuppose a situation wherein the foreign corporation doing business in the country no longer
has any branches or offices within the Philippines. Such contention is belied by the pertinent
provisions of the said laws. Thus, Section 128 of the Corporation Code 13 and Section 190 of the
Insurance Code 14 clearly contemplate two situations: (1) if the corporation had left the
Philippines or had ceased to transact business therein, and (2) if the corporation has no
designated agent. Section 17 of the General Banking Act 15 does not even speak a corporation
which had ceased to transact business in the Philippines.

Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive
court processes in Japan. This silence could only mean, or least create an impression, that it had
none. Hence, service on the designated government official or on any of SHARP's officers or
agents in Japan could be availed of. The respondent, however, insists that only service of any of
its officers or employees in its branches in Japan could be resorted to. We do not agree. As
found by the respondent court, two attempts at service were made at SHARP's Yokohama
branch. Both were unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the
person authorized to accept court process, was in Manila. On the second, Mr. Dinozo was
present, but to accept the summons because, according to him, he was no longer an employee
of SHARP. While it may be true that service could have been made upon any of the officers or
agents of SHARP at its three other branches in Japan, the availability of such a recourse would
not preclude service upon the proper government official, as stated above.

As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons
for SHARP be served at its head office in the Philippine's after the two attempts of service had
failed. 16 The Tokyo District Court requested the Supreme Court of Japan to cause the delivery of
the summons and other legal documents to the Philippines. Acting on that request, the Supreme
Court of Japan sent the summons together with the other legal documents to the Ministry of
Foreign Affairs of Japan which, in turn, forwarded the same to the Japanese Embassy in Manila .
Thereafter, the court processes were delivered to the Ministry (now Department) of Foreign
Affairs of the Philippines, then to the Executive Judge of the Court of First Instance (now
Regional Trial Court) of Manila, who forthwith ordered Deputy Sheriff Rolando Balingit to serve
the same on SHARP at its principal office in Manila. This service is equivalent to service on the
proper government official under Section 14, Rule 14 of the Rules of Court, in relation to Section
128 of the Corporation Code. Hence, SHARP's contention that such manner of service is not valid
under Philippine laws holds no water.17

In deciding against the petitioner, the respondent court sustained the trial court's reliance
on Boudard vs.  Tait  18 where this Court held:

The fundamental rule is that jurisdiction in personam over nonresidents, so as to

sustain a money judgment, must be based upon personal service within the
state which renders the judgment.

xxx xxx xxx

The process of a court, has no extraterritorial effect, and no jurisdiction is

acquired over the person of the defendant by serving him beyond the
boundaries of the state. Nor has a judgment of a court of a foreign country
against a resident of this country having no property in such foreign country
based on process served here, any effect here against either the defendant
personally or his property situated here.

Process issuing from the courts of one state or country cannot run into another,
and although a nonresident defendant may have been personally served with
such process in the state or country of his domicile, it will not give such
jurisdiction as to authorize a personal judgment against him.

It further availed of the ruling in Magdalena Estate, Inc.  vs.  Nieto 19 and Dial

Corp.  vs.  Soriano, 20 as well as the principle laid down by the Iowa Supreme Court in the 1911
case of Raher vs.  Raher. 21

The first three cases are, however, inapplicable. Boudard  involved the enforcement of a
judgment of the civil division of the Court of First Instance of Hanoi, French Indo-China. The trial
court dismissed the case because the Hanoi court never acquired jurisdiction over the person of
the defendant considering that "[t]he, evidence adduced at the trial conclusively proves that
neither the appellee [the defendant] nor his agent or employees were ever in Hanoi, French
Indo-China; and that the deceased Marie Theodore Jerome Boudard had never, at any time,
been his employee." In Magdalena Estate, what was declared invalid resulting in the failure of
the court to acquire jurisdiction over the person of the defendants in an action in personam was
the service of summons through publication against non-appearing resident defendants. It was
claimed that the latter concealed themselves to avoid personal service of summons upon them.
In Dial, the defendants were foreign corporations which were not, domiciled and licensed to
engage in business in the Philippines and which did not have officers or agents, places of
business, or properties here. On the other hand, in the instant case, SHARP was doing business
in Japan and was maintaining four branches therein.

Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided
Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court of
a territory to render a personal judgment against anyone upon service made outside its limits
was applicable alike to cases of residents and non-residents. The principle was put at rest by the
United States Supreme Court when it ruled in the 1940 case of Milliken vs.  Meyer  22 that
domicile in the state is alone sufficient to bring an absent defendant within the reach of the
state's jurisdiction for purposes of a personal judgment by means of appropriate substituted
service or personal service without the state. This principle is embodied in section 18, Rule 14 of
the Rules of Court which allows service of summons on residents temporarily out of the
Philippines to be made out of the country. The rationale for this rule was explained
in Milliken  as follows:

[T]he authority of a state over one of its citizens is not terminated by the mere
fact of his absence from the state. The state which accords him privileges and
affords protection to him and his property by virtue of his domicile may also
exact reciprocal duties. "Enjoyment of the privileges of residence within the
state, and the attendant right to invoke the protection of its laws, are
inseparable" from the various incidences of state citizenship. The
responsibilities of that citizenship arise out of the relationship to the state which
domicile creates. That relationship is not dissolved by mere absence from the
state. The attendant duties, like the rights and privileges incident to domicile,
are not dependent on continuous presence in the state. One such incident of
domicile is amenability to suit within the state even during sojourns without the
state, where the state has provided and employed a reasonable method for
apprising such an absent party of the proceedings against him. 23

The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict
technical sense, such domicile as a corporation may have is single in its essence and a
corporation can have only one domicile which is the state of its creation. 25

Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a

resident in another state in which it has offices and transacts business. This is the rule in our
jurisdiction and apropos thereto, it may be necessery to quote what we stated in State
Investment House, Inc, vs. Citibank, N.A., 26 to wit:

The issue is whether these Philippine branches or units may be considered

"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they were
respectively incorporated. The answer cannot be found in the Insolvency Law
itself, which contains no definition of the term, resident, or any clear indication
of its meaning. There are however other statutes, albeit of subsequent
enactment and effectivity, from which enlightening notions of the term may be
derived.

The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business within
the Philippines," as distinguished from a "'non-resident foreign corporation' . . .
(which is one) not engaged in trade or bussiness within the Philippines." [Sec.
20, pars. (h) and (i)].

The Offshore Banking Law, Presidential Decree No. 1034, states "that branches,
subsidiaries, affiliation, extension offices or any other units of corporation or
juridical person organized under the laws of any foreign country operating in the
Philippines shall be considered residents of the Philippines. [Sec. 1(e)].

The General Banking Act, Republic Act No. 337, places "branches and agencies
in the Philippines of foreign banks . . . (which are) called Philippine branches," in
the same category as "commercial banks, savings associations, mortgage banks,
development banks, rural banks, stock savings and loan associations" (which
have been formed and organized under Philippine laws), making no distinction
between the former and the latter in so far as the terms "banking institutions"
and "bank" are used in the Act [Sec. 2], declaring on the contrary that in "all
matters not specifically covered by special provisions applicable only to foreign
banks, or their branches and agencies in the Philippines, said foreign banks or
their branches and agencies lawfully doing business in the Philippines "shall be
bound by all laws, rules, and regulations applicable to domestic banking
 corporations of the same class, except such laws, rules and regulations as
provided for the creation, formation, organization, or dissolution of
corporations or as fix the relation, liabilities, responsibilities, or duties of
members, stockholders or officers of corporation. [Sec. 18].

This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc.
vs. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation licitly
doing business in the Philippines, which is a defendant in a civil suit, may not be
considered a non-resident  within the scope of the legal provision authorizing
attachment against a defendant not residing in the Philippine Islands; [Sec. 424,
in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule
59 of the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a
preliminary attachment may not be applied for and granted solely on the
asserted fact that the defendant is a foreign corporation authorized to do
business in the Philippines — and is consequently and necessarily, "a party who
resides out of the Philippines." Parenthetically, if it may not be considered as a
party not residing in the Philippines, or as a party who resides out of the
country, then, logically, it must be considered a party who does reside in the
Philippines, who is a resident of the country. Be this as it may, this Court pointed
out that:

. . . Our laws and jurisprudence indicate a purpose to assimilate

foreign corporations, duly licensed to do business here, to the
status of domestic corporations. (Cf. Section 73, Act No. 1459,
and Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76;
Yu Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it would be
entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner,
and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every
requirement of law made specially of foreign corporations, but
in addition with every requirement of law made of domestic
corporations. . . .

Obviously, the assimilation of foreign corporations authorized to do business in

the Philippines "to the status of domestic  corporations, subsumes their being
found and operating as corporations, hence, residing, in the country.

The same principle is recognized in American law: that the residence of a

corporation, if it can be said to have a residence, is necessarily where it
exercises corporate functions . . .;" that it is considered as dwelling "in the place
where its business is done . . .," as being "located where its franchises are
exercised . . .," and as being "present where it is engaged in the prosecution of
the corporate enterprise;" that a "foreign corporation licensed to do business in
a state is a resident of any country where it maintains an office or agent for
transaction of its usual and customary business for venue purposes;" and that
the "necessary element in its signification is locality of existence." [Words and
Phrases, Permanent Ed., vol. 37, pp. 394, 412, 493].

In as much as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts' lawful
methods of serving process. 27
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not
only under the processual presumption but also because of the presumption of regularity of
performance of official duty.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to
be without merit. We find no evidence that would justify an award for attorney's fees and
litigation expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for
exemplary damages warranted. Under Article 2234 of the Civil Code, before the court may
consider the question of whether or not exemplary damages should be awarded, the plaintiff
must show that he is entitled to moral, temperate, or compensatory damaged. There being no
such proof presented by NORTHWEST, no exemplary damages may be adjudged in its favor.

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary
damages but REVERSED insofar as in sustained the trial court's dismissal of NORTHWEST's
complaint in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and
another in its stead is hereby rendered ORDERING private respondent C.F. SHARP L COMPANY,
INC. to pay to NORTHWEST the amounts adjudged in the foreign judgment subject of said case,
with interest thereon at the legal rate from the filing of the complaint therein until the said
foreign judgment is fully satisfied.

Costs against the private respondent.

SO ORDERED.

G.R. No. 122191 October 8, 1998

SAUDI ARABIAN AIRLINES, petitioner,

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

QUISUMBING, J.:

This petition for  certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside
the Resolution1 dated September 27, 1995 and the Decision 2 dated April 10, 1996 of the Court
of Appeals3 in CA-G.R. SP No. 36533,4 and the Orders5 dated August 29, 1994 6 and February 2,
19957 that were issued by the trial court in Civil Case No. Q-93-18394. 8

The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision9, are as follows:

On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for
its airlines based in Jeddah, Saudi Arabia. . . .

On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a

disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-
Gazzawi, both Saudi nationals. Because it was almost morning when they
returned to their hotels, they agreed to have breakfast together at the room
of Thamer. When they were in te (sic) room, Allah left on some pretext.
Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a
roomboy and several security personnel heard her cries for help and rescued
her. Later, the Indonesian police came and arrested Thamer and Allah Al-
Gazzawi, the latter as an accomplice.

When plaintiff returned to Jeddah a few days later, several SAUDIA officials
interrogated her about the Jakarta incident. They then requested her to go
back to Jakarta to help arrange the release of Thamer and Allah. In Jakarta,
SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated with
the police for the immediate release of the detained crew members but did
not succeed because plaintiff refused to cooperate. She was afraid that she
might be tricked into something she did not want because of her inability to
understand the local dialect. She also declined to sign a blank paper and a
document written in the local dialect. Eventually, SAUDIA allowed plaintiff to
return to Jeddah but barred her from the Jakarta flights.

Plaintiff learned that, through the intercession of the Saudi Arabian

government, the Indonesian authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were again put in service by
defendant SAUDI (sic). In September 1990, defendant SAUDIA transferred
plaintiff to Manila.

On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors requested her to see Mr. Ali Meniewy, Chief
Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the
police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of Jeddah.

One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed
to board the plane and instead ordered to take a later flight to Jeddah to see
Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid
of the SAUDIA office brought her to a Saudi court where she was asked to sign
a document written in Arabic. They told her that this was necessary to close
the case against Thamer and Allah. As it turned out, plaintiff signed a notice to
her to appear before the court on June 27, 1993. Plaintiff then returned to
Manila.

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah

once again and see Miniewy on June 27, 1993 for further investigation.
Plaintiff did so after receiving assurance from SAUDIA's Manila manager,
Aslam Saleemi, that the investigation was routinary and that it posed no
danger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After
one hour of interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the airline had
forbidden her to take flight. At the Inflight Service Office where she was told
to go, the secretary of Mr. Yahya Saddick took away her passport and told her
to remain in Jeddah, at the crew quarters, until further orders.

On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and
 to 286 lashes. Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta. The court
found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening
to the music in violation of Islamic laws; and (3) socializing with the male crew,
in contravention of Islamic tradition. 10

Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA.
Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in
Jeddah to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked
on the domestic flight of SAUDIA, while Thamer and Allah continued to serve in the
international
flights. 11

Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her
and allowed her to leave Saudi Arabia. Shortly before her return to Manila, 12 she was
terminated from the service by SAUDIA, without her being informed of the cause.

On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and Khaled
Al-Balawi ("Al-Balawi"), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the
following grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2)
that defendant Al-Balawi is not a real party in interest; (3) that the claim or demand set forth
in the Complaint has been waived, abandoned or otherwise extinguished; and (4) that the trial
court has no jurisdiction to try the case.

On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15. Saudia filed a
reply 16 thereto on March 3, 1994.

On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was dropped as
party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss
Amended Complaint 18.

The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss
Amended Complaint filed by Saudia.

From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed on
September 20, 1994, its Motion for Reconsideration 21 of the Order dated August 29, 1994. It
alleged that the trial court has no jurisdiction to hear and try the case on the basis of Article
21 of the Civil Code, since the proper law applicable is the law of the Kingdom of Saudi Arabia.
On October 14, 1994, Morada filed her Opposition 22 (To Defendant's Motion for
Reconsideration).

In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that since its
Motion for Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus
Motion Rule does not apply, even if that ground is raised for the first time on appeal.
Additionally, SAUDIA alleged that the Philippines does not have any substantial interest in the
prosecution of the instant case, and hence, without jurisdiction to adjudicate the same.

Respondent Judge subsequently issued another Order 24 dated February 2, 1995, denying

SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed Order reads as
follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines

filed, thru counsel, on September 20, 1994, and the Opposition thereto of the
plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply
therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October
 24, 1994, considering that a perusal of the plaintiffs Amended Complaint,
which is one for the recovery of actual, moral and exemplary damages plus
attorney's fees, upon the basis of the applicable Philippine law, Article 21 of
the New Civil Code of the Philippines, is, clearly, within the jurisdiction of this
Court as regards the subject matter, and there being nothing new of substance
which might cause the reversal or modification of the order sought to be
reconsidered, the motion for reconsideration of the defendant, is DENIED.

SO ORDERED. 25

Consequently, on February 20, 1995, SAUDIA filed its Petition for  Certiorari and Prohibition
with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining
Order 26 with the Court of Appeals.

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining

Order 27 dated February 23, 1995, prohibiting the respondent Judge from further conducting
any proceeding, unless otherwise directed, in the interim.

In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate

court denied SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated
February 18, 1995, to wit:

The Petition for the Issuance of a Writ of Preliminary Injunction is hereby

DENIED, after considering the Answer, with Prayer to Deny Writ of Preliminary
Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein
petitioner is not clearly entitled thereto (Unciano Paramedical College,
et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second Division).

SO ORDERED.

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

However, during the pendency of the instant Petition, respondent Court of Appeals rendered
the Decision 30 dated April 10, 1996, now also assailed. It ruled that the Philippines is an
appropriate forum considering that the Amended Complaint's basis for recovery of damages is
Article 21 of the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It
further held that  certiorari is not the proper remedy in a denial of a Motion to Dismiss,
inasmuch as the petitioner should have proceeded to trial, and in case of an adverse ruling,
find recourse in an appeal.

On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary
Restraining Order 31 dated April 30, 1996, given due course by this Court. After both parties
submitted their Memoranda, 32 the instant case is now deemed submitted for decision.

Petitioner SAUDIA raised the following issues:

The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394
based on Article 21 of the New Civil Code since the proper law applicable is
the law of the Kingdom of Saudi Arabia inasmuch as this case involves what is
known in private international law as a "conflicts problem". Otherwise, the
Republic of the Philippines will sit in judgment of the acts done by another
sovereign state which is abhorred.

II
 Leave of court before filing a supplemental pleading is not a jurisdictional
requirement. Besides, the matter as to absence of leave of court is now moot
and academic when this Honorable Court required the respondents to
comment on petitioner's April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order Within Ten (10) Days From
Notice Thereof. Further, the Revised Rules of Court should be construed with
liberality pursuant to Section 2, Rule 1 thereof.

III

Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP
NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al." and
filed its April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-
day reglementary period as provided for under Section 1, Rule 45 of the
Revised Rules of Court. Therefore, the decision in CA-G.R. SP NO. 36533 has
not yet become final and executory and this Honorable Court can take
cognizance of this case. 33

From the foregoing factual and procedural antecedents, the following issues emerge for our
resolution:

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE

REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO HEAR AND
TRY CIVIL CASE NO. Q-93-18394 ENTITLED "MILAGROS P. MORADA V. SAUDI
ARABIAN AIRLINES".

II.

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THIS

CASE PHILIPPINE LAW SHOULD GOVERN.

Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset.
It maintains that private respondent's claim for alleged abuse of rights occurred in the
Kingdom of Saudi Arabia. It alleges that the existence of a foreign element qualifies the
instant case for the application of the law of the Kingdom of Saudi Arabia, by virtue of the  lex
loci delicti commissi rule. 34

On the other hand, private respondent contends that since her Amended Complaint is based
on Articles 19 35 and 21 36 of the Civil Code, then the instant case is properly a matter of
domestic law. 37

Under the factual antecedents obtaining in this case, there is no dispute that the interplay of
events occurred in two states, the Philippines and Saudi Arabia.

As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines

corporation doing business in the Philippines. It may be served with summons
and other court processes at Travel Wide Associated Sales (Phils.). Inc., 3rd
Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.

x x x           x x x          x x x
 6. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were again put in service by
defendant SAUDIA. In September 1990, defendant SAUDIA transferred
plaintiff to Manila.

7. On January 14, 1992, just when plaintiff thought that the Jakarta incident
was already behind her, her superiors reauested her to see MR. Ali Meniewy,
Chief Legal Officer of SAUDIA in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the
police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of Jeddah.

8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed
to board the plane and instead ordered to take a later flight to Jeddah to see
Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain
Khalid of the SAUDIA office brought her to a Saudi court where she was asked
to sigh a document written in Arabic. They told her that this was necessary to
close the case against Thamer and Allah. As it turned out, plaintiff signed a
notice to her to appear before the court on June 27, 1993. Plaintiff then
returned to Manila.

9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to

Jeddah once again and see Miniewy on June 27, 1993 for further investigation.
Plaintiff did so after receiving assurance from SAUDIA's Manila manger, Aslam
Saleemi, that the investigation was routinary and that it posed no danger to
her.

10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court
on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After
one hour of interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the airline had
forbidden her to take that flight. At the Inflight Service Office where she was
told to go, the secretary of Mr. Yahya Saddick took away her passport and told
her to remain in Jeddah, at the crew quarters, until further orders.

11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and
to 286 lashes. Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta. The court
found plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and listening
to the music in violation of Islamic laws; (3) socializing with the male crew, in
contravention of Islamic tradition.

12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the
help of the Philippines Embassy in Jeddah. The latter helped her pursue an
appeal from the decision of the court. To pay for her upkeep, she worked on
the domestic flights of defendant SAUDIA while, ironically, Thamer and Allah
freely served the international flights. 39

Where the factual antecedents satisfactorily establish the existence of a foreign element, we
agree with petitioner that the problem herein could present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected by the diverse laws of two or
more states is said to contain a "foreign element". The presence of a foreign element is
inevitable since social and economic affairs of individuals and associations are rarely confined
to the geographic limits of their birth or conception. 40

The forms in which this foreign element may appear are many. 41 The foreign element may
simply consist in the fact that one of the parties to a contract is an alien or has a foreign
domicile, or that a contract between nationals of one State involves properties situated in
another State. In other cases, the foreign element may assume a complex form. 42

In the instant case, the foreign element consisted in the fact that private respondent Morada
is a resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation.
Also, by virtue of the employment of Morada with the petitioner Saudia as a flight
stewardess, events did transpire during her many occasions of travel across national borders,
particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a
"conflicts" situation to arise.

We thus find private respondent's assertion that the case is purely domestic, imprecise.
A  conflicts problem presents itself here, and the question of jurisdiction 43 confronts the
court  a quo.

After a careful study of the private respondent's Amended Complaint, 44 and the Comment
thereon, we note that she aptly predicated her cause of action on Articles 19 and 21 of the
New Civil Code.

On one hand, Article 19 of the New Civil Code provides:

Art. 19. Every person must, in the exercise of his rights and in the performance
of his duties, act with justice give everyone his due and observe honesty and
good faith.

On the other hand, Article 21 of the New Civil Code provides:

Art. 21. Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:

The aforecited provisions on human relations were intended to expand the

concept of torts in this jurisdiction by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to
specifically provide in the statutes.

Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions.
Thus, we agree with private respondent's assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal forum.

Based on the allegations 46 in the Amended Complaint, read in the light of the Rules of Court
on jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City possesses
jurisdiction over the subject matter of the suit. 48 Its authority to try and hear the case is
provided for under Section 1 of Republic Act No. 7691, to wit:

Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the

"Judiciary Reorganization Act of 1980", is hereby amended to read as follows:
 Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise
exclusive jurisdiction:

x x x           x x x          x x x

(8) In all other cases in which demand, exclusive of interest,

damages of whatever kind, attorney's fees, litigation
expenses, and cots or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in
such other cases in Metro Manila, where the demand,
exclusive of the above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00). (Emphasis ours)

x x x           x x x          x x x

And following Section 2 (b), Rule 4 of the Revised Rules of Court — the venue, Quezon City, is
appropriate:

Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial Court]

(a) xxx xxx xxx

(b) Personal actions. — All other actions may be commenced and tried where
the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiff resides, at the election of the plaintiff.

Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor
of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant.
Enforceability of a judgment if one is obtained is quite obvious. Relative advantages and
obstacles to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient
forum, "vex", "harass", or "oppress" the defendant, e.g.  by inflicting upon him needless
expense or disturbance. But unless the balance is strongly in favor of the defendant, the
plaintiffs choice of forum should rarely be disturbed. 49

Weighing the relative claims of the parties, the court  a quo found it best to hear the case in
the Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff
(private respondent now) to seek remedial action elsewhere,  i.e. in the Kingdom of Saudi
Arabia where she no longer maintains substantial connections. That would have caused a
fundamental unfairness to her.

Moreover, by hearing the case in the Philippines no unnecessary difficulties and

inconvenience have been shown by either of the parties. The choice of forum of the plaintiff
(now private respondent) should be upheld.

Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By
filing her Complaint and Amended Complaint with the trial court, private respondent has
voluntary submitted herself to the jurisdiction of the court.

The records show that petitioner SAUDIA has filed several motions 50 praying for the dismissal
of Morada's Amended Complaint. SAUDIA also filed an Answer In  Ex Abundante
Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed, is
that SAUDIA prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA has
effectively submitted to the trial court's jurisdiction by praying for the dismissal of the
Amended Complaint on grounds other than lack of jurisdiction.

As held by this Court in  Republic vs. Ker and Company, Ltd.: 51
 We observe that the motion to dismiss filed on April 14, 1962, aside from
disputing the lower court's jurisdiction over defendant's person, prayed for
dismissal of the complaint on the ground that plaintiff's cause of action has
prescribed. By interposing such second ground in its motion to dismiss, Ker
and Co., Ltd. availed of an affirmative defense on the basis of which it prayed
the court to resolve controversy in its favor. For the court to validly decide the
said plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction
upon the latter's person, who, being the proponent of the affirmative defense,
should be deemed to have abandoned its special appearance and voluntarily
submitted itself to the jurisdiction of the court.

Similarly, the case of  De Midgely vs. Ferandos, held that;

When the appearance is by motion for the purpose of objecting to the

jurisdiction of the court over the person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court. If his motion is for any
other purpose than to object to the jurisdiction of the court over his person,
he thereby submits himself to the jurisdiction of the court. A special
appearance by motion made for the purpose of objecting to the jurisdiction of
the court over the person will be held to be a general appearance, if the party
in said motion should, for example, ask for a dismissal of the action upon the
further ground that the court had no jurisdiction over the subject matter. 52

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City.
Thus, we find that the trial court has jurisdiction over the case and that its exercise thereof,
justified.

As to the choice of applicable law, we note that choice-of-law problems seek to answer two
important questions: (1) What legal system should control a given situation where some of
the significant facts occurred in two or more states; and (2) to what extent should the chosen
legal system regulate the situation. 53

Several theories have been propounded in order to identify the legal system that should
ultimately control. Although ideally, all choice-of-law theories should intrinsically advance
both notions of justice and predictability, they do not always do so. The forum is then faced
with the problem of deciding which of these two important values should be stressed. 54

Before a choice can be made, it is necessary for us to determine under what category a certain
set of facts or rules fall. This process is known as "characterization", or the "doctrine of
qualification". It is the "process of deciding whether or not the facts relate to the kind of
question specified in a conflicts rule." 55 The purpose of "characterization" is to enable the
forum to select the proper law. 56

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

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

(1) The nationality of a person, his domicile, his residence, his place of sojourn,
or his origin;
 (2) the seat of a legal or juridical person, such as a corporation;

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

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

(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is
to be exercised;

(6) the intention of the contracting parties as to the law that should govern
their agreement, the  lex loci intentionis;

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

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

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

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

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

Considering that the complaint in the court  a quo is one involving torts, the "connecting
factor" or "point of contact" could be the place or places where the tortious conduct or  lex
loci actus occurred. And applying the torts principle in a conflicts case, we find that the
Philippines could be said as a situs of the tort (the place where the alleged tortious conduct
took place). This is because it is in the Philippines where petitioner allegedly deceived private
respondent, a Filipina residing and working here. According to her, she had honestly believed
that petitioner would, in the exercise of its rights and in the performance of its duties, "act
with justice, give her due and observe honesty and good faith." Instead, petitioner failed to
protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another
country is of no moment. For in our view what is important here is the place where the over-
all harm or the totality of the alleged injury to the person, reputation, social standing and
human rights of complainant, had lodged, according to the plaintiff below (herein private
respondent). All told, it is not without basis to identify the Philippines as the situs of the
alleged tort.

Moreover, with the widespread criticism of the traditional rule of  lex loci delicti commissi,
modern theories and rules on tort liability 61 have been advanced to offer fresh judicial
approaches to arrive at just results. In keeping abreast with the modern theories on tort
liability, we find here an occasion to apply the "State of the most significant relationship" rule,
which in our view should be appropriate to apply now, given the factual context of this case.

In applying said principle to determine the State which has the most significant relationship,
the following contacts are to be taken into account and evaluated according to their relative
importance with respect to the particular issue: (a) the place where the injury occurred; (b)
the place where the conduct causing the injury occurred; (c) the domicile, residence,
nationality, place of incorporation and place of business of the parties, and (d) the place
where the relationship, if any, between the parties is centered. 62

As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina
national, working with petitioner, a resident foreign corporation engaged here in the business
of international air carriage. Thus, the "relationship" between the parties was centered here,
although it should be stressed that this suit is not based on mere labor law violations. From
the record, the claim that the Philippines has the most significant contact with the matter in
this dispute, 63 raised by private respondent as plaintiff below against defendant (herein
petitioner), in our view, has been properly established.

Prescinding from this premise that the Philippines is the situs of the tort complained of and
the place "having the most interest in the problem", we find, by way of recapitulation, that
the Philippine law on tort liability should have paramount application to and control in the
resolution of the legal issues arising out of this case. Further, we hold that the respondent
Regional Trial Court has jurisdiction over the parties and the subject matter of the complaint;
the appropriate venue is in Quezon City, which could properly apply Philippine law. Moreover,
we find untenable petitioner's insistence that "[s]ince private respondent instituted this suit,
she has the burden of pleading and proving the applicable Saudi law on the matter." 64 As
aptly said by private respondent, she has "no obligation to plead and prove the law of the
Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21" of the Civil
Code of the Philippines. In her Amended Complaint and subsequent pleadings, she never
alleged that Saudi law should govern this case. 65 And as correctly held by the respondent
appellate court, "considering that it was the petitioner who was invoking the applicability of
the law of Saudi Arabia, then the burden was on it [petitioner] to plead and to establish what
the law of Saudi Arabia is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the trial
court's denial of defendant's (herein petitioner's) motion to dismiss the case. Not only was
jurisdiction in order and venue properly laid, but appeal after trial was obviously available,
and expeditious trial itself indicated by the nature of the case at hand. Indubitably, the
Philippines is the state intimately concerned with the ultimate outcome of the case below, not
just for the benefit of all the litigants, but also for the vindication of the country's system of
law and justice in a transnational setting. With these guidelines in mind, the trial court must
proceed to try and adjudge the case in the light of relevant Philippine law, with due
consideration of the foreign element or elements involved. Nothing said herein, of course,
should be construed as prejudging the results of the case in any manner whatsoever.
WHEREFORE, the instant petition for  certiorari is hereby DISMISSED. Civil Case No. Q-93-
18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further proceedings.

SO ORDERED.