Saudi Arabian Airlines vs CA

FACTS: Morada was hired by Saudi Arabian Airlines(SAUDIA) as a flight attendant or its airlines based in
Jeddah, Saudi Arabia. While on lay-over Morada went to a disco dance with fellow crew members
Thamer and Allah, 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 the room,
Allah left on some pretext. Shortly after he did, Thamer attempted to rape Morada. Fortunately, a
roomboy and several security personnel heard her cries for help and rescued her. Later, the Indonesian
police came and arrested Thamer and, the latter as an accomplice.

When Morada 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, SAUDI officials negotiated with the police for the immediate release of the
detained crew members but did not succeed because Morada 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. Eventually, SAUDIA allowed her to return to Jeddah but barred her from the Jakarta flights.

Eventually , through the intercession of the Saudi Arabian government, the Indonesian authorities
agreed to deport Thamer and Allah after two weeks of detention. They were again put in service by
defendant SAUDI. SAUDIA transferred Morada to Manila.

Eventually Morada was requested to see Mr. Meniewy, Chief Legal officer of SAUDIA. Upon seeing Mr.
Meniewy, she was brought to the police station where her passport was taken and was question about
the Jakarta Incident. They were pressuring her to drop the case against Thamer and Allah.

A year and a half later, Morada was brought to a Saudi court where she was asked to sign a document in
Arabic. She was told that it was necessary to close the case against Thamer and Allah. As it turned out,
she signed a notice to appear before the Arabic Court. Shortly after she was again summoned to report
to Jeddah to si Mr. Meniewy for further investigation. Eventually she was taken to the same Arabic
Court by a SAUDIA official where a judge, to Morada’s surprise, rendered a decision sentencing her o
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 Morada 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.

Facing conviction, Morada 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. 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, she was terminated from the
service by SAUDIA, without her being informed of the cause.

Morada filed a complaint against SAUDIA for damages on the basis of Article 21 of the civil code. 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.

ISSUE: Whether or not the trial court has jurisdiction to hear the case.

HELD: YES. 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.

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

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

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 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.

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, 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." 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. 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".

Hasegawa and Nippon vs. Kitamura

FACTS: Kitamura, a Japanese national permanently residing in the Philippines, entered into an
Independent Contract Agreement (ICA) with Nippon Engineering Consultants and was assigned to work
as the project manager of Southern Tagalog Access Road(STAR) project in the Philippines.

When the STAR project was nearing its completion, the DPWH engaged the consultancy of Nippon this
time for the engineering and construction supervision of the Bongabon-Baler Road Improvement (BBRI)
project. Nippons general manager informed Kitamura that the company had no more intention o
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.

Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation
conference and demanded that he be assigned to the BBRI project. Nippon insisted that respondent’s
contract was for a fixed term that had already expired, and refused to negotiate for the renewal of the
ICA.

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.

ISSUE: Whether or not RTC has jurisdiction over the case

HELD: YES. 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. 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. The question of whether the
law of a state can be applied to a transaction is different from the question of whether the courts of that
state have jurisdiction to enter a judgment.

In this case, only the first phase is at issue—jurisdiction. Jurisdiction, however, has various aspects. For a
court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff
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. 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.  It
is further determined by the allegations of the complaint irrespective of whether the plaintiff is entitled
to all or some of the claims asserted therein. To succeed in its motion for the dismissal of an action for
lack of jurisdiction over the subject matter of the claim, the movant must show that the court or tribunal
cannot act on the matter submitted to it because no law grants it the power to adjudicate the claims.

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. What they rather raise as grounds to question subject matter jurisdiction are the
principles of lex loci celebrationis and lex contractus,  and the "state of the most significant relationship
rule."

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the "law of the place of the ceremony" or the law of the place where a
contract is made. The doctrine of lex contractus or lex loci contractus  means the "law of the place where
a contract is executed or to be performed." It controls the nature, construction, and validity of the
contract and it may pertain to the law voluntarily agreed upon by the parties or the law intended by
them either expressly or implicitly. Under the "state of the most significant relationship rule," to
ascertain what state law to apply to a dispute, the court should determine which state has the most
substantial connection to the occurrence and the parties. In a case involving a contract, the court should
consider where the contract was made, was negotiated, was to be performed, and the domicile, place of
business, or place of incorporation of the parties. This rule takes into account several contacts and
evaluates them according to their relative importance with respect to the particular issue to be resolved.

Since these 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. They determine which state's law is to be
applied in resolving the substantive issues of a conflicts problem. Necessarily, as the only issue in this
case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for.

Further, 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. Also, when the law of a foreign country is invoked to provide the proper rules for the
solution of a case, the existence of such law must be pleaded and proved.

It should be noted that when a conflicts case, one involving a foreign element, is brought before a court
or administrative agency, there are 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.  The court’s power to hear
cases and controversies is derived from the Constitution and the laws. While it may choose to recognize
laws of foreign nations, the court is not limited by foreign sovereign law short of treaties or other formal
agreements, even in matters regarding rights provided by foreign sovereigns.

Neither can the other ground raised, forum non conveniens, 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. 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. 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.

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.

Continental Micronesia vs Joseph Basso

FACTS: Continental Micronesia(CMI) is a foreign corporation organized and existing under the law of and
domiciled in the USA. It is licensed to do business in the Philippines. Basso, is a US citien, resided in the
Philippines prior to his death.

Basso was offered the position of General Manager of the Philippine Branch of Continental by Mr.
Braden which he accepted. It was not until much later that Mr. Braden, who had since returned to the
US, sent Basso the employment contract, which Mr. Braden had already signed. Basso then signed the
employment contract and returned it to Mr. Braden as instructed. CMI took over the Philippine
operations of Continental, with Brasso retaining his position as General Manager.

Basso received a letter from Mr. Schulz, who was then CMI’s Vice President of Marketing and Sales,
informing Basso that he has agreed to work in CMI as a consultant on an "as needed basis". The letter
also informed Basso that: (1) he will not receive any monetary compensation but will continue being
covered by the insurance provided by CMI; (2) he will enjoy travel privileges; and (3) CMI will advance
Php1,140,000.00 for the payment of housing lease for 12 months.

Basso wrote a counter-proposal to Mr. Schulz regarding his employment status in CMI. On March 14,
1996, Basso wrote another letter addressed to Ms. Woodward of CMI’s Human Resources Department
inquiring about the status of his employment. On the same day, Ms. Woodward responded that
pursuant to the employment contract dated February 1, 1991, Basso could be terminated at will upon a
thirty-day notice. This notice was allegedly the letter Basso received from Mr. Schulz on December 20,
1995. Ms. Woodward also reminded Basso of the telephone conversation between him, Mr. Schulz and
Ms. Woodward on December 19, 1995, where they informed him of the company’s decision to relieve
him as General Manager. Basso, instead, was offered the position of consultant to CMI. Ms. Woodward
also informed Basso that CMI rejected his counter-proposal and, thus, terminated his employment
effective January 31, 1996. CMI offered Basso a severance pay, in consideration of the Php1,140,000.00
housing advance that CMI promised him Basso filed a Complaint for Illegal Dismissal with Moral and
Exemplary Damages against CMI on December 19, 1996. Alleging the presence of foreign elements, CMI
filed a Motion to Dismiss dated February 10, 1997 on the ground of lack of jurisdiction over the person
of CMI and the subject matter of the controversy. In an Order dated August 27, 1997, the Labor Arbiter
granted the Motion to Dismiss. Applying the doctrine of lex loci contractus, the Labor Arbiter held that
the terms and provisions of the employment contract show that the parties did not intend to apply our
Labor Code. The Labor Arbiter also held that no employer-employee relationship existed between Basso
and the branch office of CMI in the Philippines, but between Basso and the foreign corporation itself.

On appeal, the NLRC remanded the case to the Labor Arbiter for the determination of certain facts to
settle the issue on jurisdiction. NLRC ruled that the issue on whether the principle of lex loci contractus
or lex loci celebrationis should apply has to be further threshed out.

ISSUE: Whether or not the LA and NLRC had jurisdiction over the case

HELD: YES. CMI maintains that there is a conflict-of-laws issue that must be settled to determine proper
jurisdiction over the parties and the subject matter of the case. It also alleges that the existence of
foreign elements calls for the application of US laws and the doctrines of lex loci celebrationis (the law of
the place of the ceremony), lex loci contractus (law of the place where a contract is executed), and lex
loci intentionis (the intention of the parties as to the law that should govern their agreement). CMI also
invokes the application of the rule of forum non conveniens to determine the propriety of the
assumption of jurisdiction by the labor tribunals.

We agree with CMI that there is a conflict-of-laws issue that needs to be resolved first. Where the facts
establish the existence of foreign elements, the case presents a conflict-of-laws issue.The foreign
element in a case may appear in different forms, such as in this case, where one of the parties is an alien
and the other is domiciled in another state.

That the employment contract of Basso was replete with references to US laws, and that it originated
from and was returned to the US, do not automatically preclude our labor tribunals from exercising
jurisdiction to hear and try this case.

This case stemmed from an illegal dismissal complaint. The Labor Code, under Article 217, clearly vests
original and exclusive jurisdiction to hear and decide cases involving termination disputes to the Labor
Arbiter.

Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject matter of the case.

As regards jurisdiction over the parties, we agree with the Court of Appeals that the Labor Arbiter
acquired jurisdiction over the person of Basso, notwithstanding his citizenship, when he filed his
complaint against CMI. On the other hand, jurisdiction over the person of CMI was acquired through the
coercive process of service of summons. We note that CMI never denied that it was served with
summons. CMI has, in fact, voluntarily appeared and participated in the proceedings before the courts.
Though a foreign corporation, CMI is licensed to do business in the Philippines and has a local business
address here. The purpose of the law in requiring that foreign corporations doing business in the
country be licensed to do so, is to subject the foreign corporations to the jurisdiction of our courts.

Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and the subject
matter of this case, these tribunals may proceed to try the case even if the rules of conflict-of-laws or
the convenience of the parties point to a foreign forum, this being an exercise of sovereign prerogative
of the country where the case is filed.

Under the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may assume
jurisdiction if it chooses to do so, provided, that the following requisites are met: (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. All these requisites are present here.

Basso may conveniently resort to our labor tribunals as he and CMI had physical presence in the
Philippines during the duration of the trial. CMI has a Philippine branch, while Basso, before his death,
was residing here.

Thus, it could be reasonably expected that no extraordinary measures were needed for the parties to
make arrangements in advocating their respective cases.
The labor tribunals can make an intelligent decision as to the law and facts. The incident subject of this
case (i.e. dismissal of Basso) happened in the Philippines, the surrounding circumstances of which can be
ascertained without having to leave the Philippines. The acts that allegedly led to loss of trust and
confidence and Basso’s eventual dismissal were committed in the Philippines. As to the law, we hold
that Philippine law is the proper law of the forum, as we shall discuss shortly. Also, the labor tribunals
have the power to enforce their judgments because they acquired jurisdiction over the persons of both
parties.

The choice-of-law issue in a conflict-of-laws case seeks to answer the following 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. These
questions are entirely different from the question of jurisdiction that only seeks to answer whether the
courts of a state where the case is initiated have jurisdiction to enter a judgment. As such, the power to
exercise jurisdiction does not automatically give a state constitutional authority to apply forum law.

we emphasized that 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 fact or point of contact, such as the situs of the res, the
place of celebration, the place of performance, or the place of wrongdoing. Pursuant to Saudi Arabian
Airlines, we hold that the "test factors," "points of contact" or "connecting factors" in this case are the
following:

(1) The nationality, domicile or residence of Basso;

(2) The seat of CMI;

(3) The place where the employment contract has been made, the locus actus;

(4) The place where the act is intended to come into effect, e.g., the place of performance of contractual
duties;

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

(6) The place where judicial or administrative proceedings are instituted or done.

Applying the foregoing in this case, we conclude that Philippine law is the applicable law. Basso, though
a US citizen, was a resident here from the time he was hired by CMI until his death during the pendency
of the case. CMI, while a foreign corporation, has a license to do business in the Philippines and
maintains a branch here, where Basso was hired to work. The contract of employment was negotiated in
the Philippines. A purely consensual contract, it was also perfected in the Philippines when Basso
accepted the terms and conditions of his employment as offered by CMI. The place of performance
relative to Basso’s contractual duties was in the Philippines. The alleged prohibited acts of Basso that
warranted his dismissal were committed in the Philippines.
Moreover, foreign law should not be applied when its application would work undeniable injustice to
the citizens or residents of the forum. To give justice is the most important function of law; hence, a law,
or judgment or contract that is obviously unjust negates the fundamental principles of Conflict of Laws.

Termination-at-will is anathema to the public policies on labor protection espoused by our laws and
Constitution, which dictates that no worker shall be dismissed except for just and authorized causes
provided by law and after due process having been complied with. Hence, the US Railway Labor Act,
which sanctions termination-at-will, should not be applied in this case.

Additionally, the rule is that there is no judicial notice of any foreign law. As any other fact, it must be
alleged and proved.

Clearly, the Philippines is the state with the most significant relationship to the problem. Thus, we hold
that CMI and Basso intended Philippine law to govern, notwithstanding some references made to US
laws and the fact that this intention was not expressly stated in the contract.