G.R. No.

L-18164 January 23, 1967

WILLIAM F. GEMPERLE, plaintiff-appellant,

vs.
HELEN SCHENKER and PAUL SCHENKER as her husband, defendants-appellees.

Gamboa & Gamboa for plaintiff-appellant.

A. R. Narvasa for defendants-appellees.

CONCEPCION, C. J.:

Appeal, taken by plaintiff, William F. Gemperle, from a decision of the Court of First Instance of Rizal
dismissing this case for lack of jurisdiction over the person of defendant Paul Schenker and for want of
cause of action against his wife and co-defendant, Helen Schenker said Paul Schenker "being in no
position to be joined with her as party defendant, because he is beyond the reach of the magistracy of the
Philippine courts."

The record shows that sometime in 1952, Paul Schenker-hereinafter referred to as Schenker — acting
through his wife and attorney-in-fact, Helen Schenker — herein-after referred to as Mrs. Schenker — filed
with the Court of First Instance of Rizal, a complaint — which was docketed as Civil Case No. Q-2796
thereof — against herein plaintiff William F. Gemperle, for the enforcement of Schenker's allegedly initial
subscription to the shares of stock of the Philippines-Swiss Trading Co., Inc. and the exercise of his
alleged pre-emptive rights to the then unissued original capital stock of said corporation and the increase
thereof, as well as for an accounting and damages. Alleging that, in connection with said complaint, Mrs.
Schenker had caused to be published some allegations thereof and other matters, which were
impertinent, irrelevant and immaterial to said case No. Q-2796, aside from being false and derogatory to
the reputation, good name and credit of Gemperle, "with the only purpose of attacking" his" honesty,
integrity and reputation" and of bringing him "into public hatred, discredit, disrepute and contempt as a
man and a businessman", Gemperle commenced the present action against the Schenkers for the
recovery of P300,000 as damages, P30,000 as attorney's fees, and costs, in addition to praying for a
judgment ordering Mrs. Schenker "to retract in writing the said defamatory expressions". In due course,
thereafter, the lower court, rendered the decision above referred to. A reconsiderating thereof having
been denied, Gemperle interposed the present appeal.

The first question for determination therein is whether or not the lower court had acquired jurisdiction over
the person of Schenker. Admittedly, he, a Swiss citizen, residing in Zurich, Switzerland, has not been
actually served with summons in the Philippines, although the summons address to him and Mrs.
Schenker had been served personally upon her in the Philippines. It is urged by plaintiff that jurisdiction
over the person of Schenker has been secured through voluntary appearance on his part, he not having
made a special appearance to assail the jurisdiction over his person, and an answer having been filed in
this case, stating that "the defendants, by counsel, answering the plaintiff's complaint, respectfully aver",
which is allegedly a general appearance amounting to a submission to the jurisdiction of the court,
confirmed, according to plaintiff, by a P225,000 counterclaim for damages set up in said answer; but this
counterclaim was set up by Mrs. Schenker alone, not including her husband. Moreover, said answer
contained several affirmative defenses, one of which was lack of jurisdiction over the person of Schenker,
thus negating the alleged waiver of this defense. Nevertheless, We hold that the lower court had acquired
jurisdiction over said defendant, through service of the summons addressed to him upon Mrs. Schenker,
it appearing from said answer that she is the representative and attorney-in-fact of her husband
aforementioned civil case No. Q-2796, which apparently was filed at her behest, in her aforementioned
representative capacity. In other words, Mrs. Schenker had authority to sue, and had actually sued on
behalf of her husband, so that she was, also, empowered to represent him in suits filed against him,
particularly in a case, like the of the one at bar, which is consequence of the action brought by her on his
behalf.
Inasmuch as the alleged absence of a cause of action against Mrs. Schenker is premised upon the
alleged lack of jurisdiction over the person of Schenker, which cannot be sustained, it follows that the
conclusion drawn therefore from is, likewise, untenable.

Wherefore, the decision appealed from should be, is hereby, reversed, and the case remanded to the
lower court for proceedings, with the costs of this instance defendants-appellees. It is so ordered.
G.R. No. 46631 November 16, 1939

IDONAH SLADE PERKINS, petitioner,

vs.
ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and BENGUET
CONSOLIDATED MINING COMPANY, respondents.

Alva J. Hill for petitioner.

Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated Mining Company.
DeWitt, Perkins & Ponce Enrile for respondent Perkins.

MORAN, J.:

On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of
Manila against the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on
52,874 shares of stock registered in his name, payment of which was being withheld by the company;
and, for the recognition of his right to the control and disposal of said shares, to the exclusion of all
others. To the complaint, the company filed its answer alleging, by way of defense, that the withholding of
such dividends and the non-recognition of plaintiff's right to the disposal and control of the shares were
due to certain demands made with respect to said shares by the petitioner herein, Idonah Slade Perkins,
and by one George H. Engelhard. The answer prays that the adverse claimants be made parties to the
action and served with notice thereof by publication, and that thereafter all such parties be required to
interplead and settle the rights among themselves. On September 5, 1938, the trial court ordered
respondent Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah
Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in addition to the
relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins
and George Engelhard be adjudged without interest in the shares of stock in question and excluded from
any claim they assert thereon. Thereafter, summons by publication were served upon the non-resident
defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial court. On
December 9, 1938, Engelhard filed his answer to the amended complaint, and on December 10, 1938,
petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled "objection to venue, motion to
quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower court over her
person. Petitioner's objection, motion and demurrer having been overruled as well as her motion for
reconsideration of the order of denial, she now brought the present petition for certiorari, praying that the
summons by publication issued against her be declared null and void, and that, with respect to her,
respondent Judge be permanently prohibited from taking any action on the case.

The controlling issue here involved is whether or not the Court of First Instance of Manila has acquired
jurisdiction over the person of the present petitioner as a non-resident defendant, or, notwithstanding the
want of such jurisdiction, whether or not said court may validly try the case. The parties have filed lengthy
memorandums relying on numerous authorities, but the principles governing the question are well settled
in this jurisdiction.

Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in the
Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or
personal property within the Philippines in which said defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from any
interest therein, service of summons maybe made by publication.

We have fully explained the meaning of this provision in El Banco Español Filipino vs. Palanca, 37 Phil.,
921, wherein we laid down the following rules:
(1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter
and over the persons of the parties. Jurisdiction over the subject-matter is acquired by
concession of the sovereign authority which organizes a court and determines the nature and
extent of its powers in general and thus fixes its jurisdiction with reference to actions which it may
entertain and the relief it may grant. Jurisdiction over the persons of the parties is acquired by
their voluntary appearance in court and their submission to its authority, or by the coercive power
of legal process exerted over their persons.

(2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot
acquire jurisdiction over his person even if the summons be served by publication, for he is
beyond the reach of judicial process. No tribunal established by one State can extend its process
beyond its territory so as to subject to its decisions either persons or property located in another
State. "There are many expressions in the American reports from which it might be inferred that
the court acquires personal jurisdiction over the person of the defendant by publication and
notice; but such is not the case. In truth, the proposition that jurisdiction over the person of a non-
resident cannot be acquired by publication and notice was never clearly understood even in the
American courts until after the decision had been rendered by the Supreme Court of the United
States in the leading case of Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the light of that
decisions which have subsequently been rendered in that and other courts, the proposition that
jurisdiction over the person cannot be thus acquired by publication and notice is no longer open
to question; and it is now fully established that a personal judgment upon constructive or
substituted service against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by publication and
personal service outside of the jurisdiction in which the judgment is rendered; and the only
exception seems to be found in the case where the non-resident defendant has expressly or
impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292;
see also L.R.A. 585; 35 L.R.A. [N.S.], 312.)

(3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a
Philippine court. Where, however, the action is in rem or quasi in rem in connection with property
located in the Philippines, the court acquires jurisdiction over the res, and its jurisdiction over the
person of the non-resident is non-essential. In order that the court may exercise power over
the res, it is not necessary that the court should take actual custody of the property, potential
custody thereof being sufficient. There is potential custody when, from the nature of the action
brought, the power of the court over the property is impliedly recognized by law. "An illustration of
what we term potential jurisdiction over the res, is found in the proceeding to register the title of
land under our system for the registration of land. Here the court, without taking actual physical
control over the property , assumes, at the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner
against all the world."

(4) As before stated, in an action in rem or quasi in rem against a non-resident defendant,
jurisdiction over his person is non-essential, and if the law requires in such case that the
summons upon the defendant be served by publication, it is merely to satisfy the constitutional
requirement of due process. If any be said, in this connection, that "may reported cases can be
cited in which it is assumed that the question of the sufficiency of publication or notice in the case
of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to
acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally
adopted by the court because of the analogy between service by publication and personal service
of process upon the defendant; and, as has already been suggested, prior to the decision
of Pennoyer v. Neff (supra), the difference between the legal effects of the two forms of service
was obscure. It is accordingly not surprising that the modes of expression which had already
been moulded into legal tradition before that case was decided have been brought down to the
present day. But it is clear that the legal principle here involved is not affected by the peculiar
languages in which the courts have expounded their ideas."lawphi1.net
The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-
resident, as laid down by the Supreme Court of the United States in Pennoyer v. Neff, supra, may be
found in a recognized principle of public law to the effect that "no State can exercise direct jurisdiction and
authority over persons or property without its territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2.
The several States are of equal dignity and authority, and the independence of one implies the exclusion
of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one
State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal
established by it can extend its process beyond that territory so as to subject either persons or property to
its decisions. "Any exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and
incapable of binding such persons or property in any other tribunals." Story, Confl. L., sec. 539."
(Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.).

When, however, the action relates to property located in the Philippines, the Philippine courts may validly
try the case, upon the principle that a "State, through its tribunals, may subject property situated within its
limits owned by non-residents to the payment of the demand of its own citizens against them; and the
exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the owners are
domiciled. Every State owes protection to its citizens; and, when non-residents deal with them, it is a
legitimate and just exercise of authority to hold and appropriate any property owned by such non-
residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the
non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its
own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of
the property. If the non-resident has no property in the State, there is nothing upon which the tribunals
can adjudicate." (Pennoyer v. Neff, supra.)

In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his
amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest
in a property located in the Philippines. That property consists in certain shares of stocks of the Benguet
Consolidated Mining Company, a sociedad anonima, organized in the Philippines under the provisions of
the Spanish Code of Commerce, with its principal office in the City of Manila and which conducts its
mining activities therein. The situs of the shares is in the jurisdiction where the corporation is created,
whether the certificated evidencing the ownership of those shares are within or without that jurisdiction.
(Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold
that the action thus brought is quasi in rem, for while the judgement that may be rendered therein is not
strictly a judgment in rem, "it fixes and settles the title to the property in controversy and to that extent
partakes of the nature of the judgment in rem." (50 C.J., p 503). As held by the Supreme Court of the
United States in Pennoyer v. Neff (supra);

It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has
for its object the disposition of the property, without reference to the title of individual claimants;
but , in a large and more general sense, the terms are applied to actions between parties, where
the direct object is to reach and dispose of property owned by them, or of some interest therein.

The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of
the non-resident. In order to satisfy the constitutional requirement of due process, summons has been
served upon her by publication. There is no question as to the adequacy of publication made nor as to the
mailing of the order of publication to the petitioner's last known place of residence in the United States.
But, of course, the action being quasi in rem and notice having be made by publication, the relief that may
be granted by the Philippine court must be confined to the res, it having no jurisdiction to render a
personal judgment against the non-resident. In the amended complaint filed by Eugene Arthur Perkins, no
money judgment or other relief in personam is prayed for against the petitioner. The only relief sought
therein is that she be declared to be without any interest in the shares in controversy and that she be
excluded from any claim thereto.

Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an
action in personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims
are or may be made upon a person for or relating to personal property, or the performance of an
obligation or any portion thereof, so that he may be made subject to several actions by different persons,
such person may bring an action against the conflicting claimants, disclaiming personal interest in the
controversy, and the court may order them to interplead with one another and litigate their several claims
among themselves, there upon proceed to determine their several claims. Here, The Benguet
Consolidated Mining Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred that
in connection with the shares of stock in question, conflicting claims were being made upon it by said
plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard,
and prayed that these last two be made parties to the action and served with summons by publication, so
that the three claimants may litigate their conflicting claims and settle their rights among themselves. The
court has not issued an order compelling the conflicting claimants to interplead with one another and
litigate their several claims among themselves, but instead ordered the plaintiff to amend his complaint
including the other two claimants as parties defendant. The plaintiff did so, praying that the new
defendants thus joined be excluded fro any interest in the shares in question, and it is upon this amended
complaint that the court ordered the service of the summons by publication. It is therefore, clear that the
publication of the summons was ordered not in virtue of an interpleading, but upon the filing of the
amended complaint wherein an action quasi in rem is alleged.

Had not the complaint been amended, including the herein petitioner as an additional defendant, and had
the court, upon the filing of the answer of the Benguet Consolidated Mining Company, issued an order
under section 120 of the Code of Civil Procedure, calling the conflicting claimants into court and
compelling them to interplead with one another, such order could not perhaps have validly been served
by publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the proceeding would
be purely one of interpleading. Such proceeding is a personal action, for it merely seeks to call conflicting
claimants into court so that they may interplead and litigate their several claims among themselves, and
no specific relief is prayed for against them, as the interpleader have appeared in court, one of them
pleads ownership of the personal property located in the Philippines and seeks to exclude a non-resident
claimant from any interest therein, is a question which we do not decide not. Suffice it to say that here the
service of the summons by publication was ordered by the lower court by virtue of an action quasi in
rem against the non-resident defendant.

Respondents contend that, as the petitioner in the lower court has pleaded over the subject-matter, she
has submitted herself to its jurisdiction. We have noticed, however, that these pleas have been made not
as independent grounds for relief, but merely as additional arguments in support of her contention that the
lower court had no jurisdiction over the person. In other words, she claimed that the lower court had no
jurisdiction over her person not only because she is a non-resident, but also because the court had no
jurisdiction over the subject-matter of the action and that the issues therein involved have already been
decided by the New York court and are being relitigated in the California court. Although this argument is
obviously erroneous, as neither jurisdiction over the subject-matter nor res adjudicata nor lis pendens has
anything to do with the question of jurisdiction over her person, we believe and so hold that the petitioner
has not, by such erroneous argument, submitted herself to the jurisdiction of the court. Voluntary
appearance cannot be implied from either a mistaken or superflous reasoning but from the nature of the
relief prayed for.

For all the foregoing, petition is hereby denied, with costs against petitioner.
 [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.

DECISION
QUISUMBING, J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the
Resolution[1] dated September 27, 1995 and the Decision[2] dated April 10, 1996 of the Court of Appeals[3] in
CA-G.R. SP No. 36533,[4] and the Orders[5] dated August 29, 1994[6] and February 2, 1995[7] that were
issued by the trial court in Civil Case No. Q-93-18394.[8]
The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned
Decision[9], are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines
based in Jeddah, Saudi Arabia. x x x
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with
fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because
it was almost morning when they returned to their hotels, they agreed to have breakfast together
at the room of Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after
he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and several security
personnel heard her cries for help and rescued her. Later, the Indonesian police came and
arrested Thamer and Allah Al-Gazzawi, the latter as an accomplice.
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 June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before
the departure of her flight to Manila, plaintiff was not allowed to board the plane and instead
ordered to take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of
SAUDIA. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court
where she was asked to sign a document written in Arabic. They told her that this was
 necessary to close the case against Thamer and Allah. As it turned out, plaintiff signed a notice
to her to appear before the court on June 27, 1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and
see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance
from SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary and that it
posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27,
1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through
an interpreter about the Jakarta incident. After one hour of interrogation, they let her go. At the
airport, however, just as her plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take flight. At the Inflight Service Office where she was told to go,
the secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at
the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the
judge, to her astonishment and shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286 lashes.Only then did she realize that the
Saudi court had tried her, together with Thamer and Allah, for what happened in Jakarta.The
court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening to the music
in violation of Islamic laws; and (3) socializing with the male crew, in contravention of Islamic
tradition.[10]
Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah
to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic
flight of SAUDIA, while Thamer and Allah continued to serve in the international flights.[11]
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and
allowed her to leave Saudi Arabia. Shortly before her return to Manila,[12] she was terminated from the
service by SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a Complaint[13] for damages against SAUDIA, and Khaled Al-
Balawi (Al- Balawi), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss[14] which raised the following
grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant Al-
Balawi is not a real party in interest; (3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss)[15] Saudia filed a
reply[16] thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint[17] wherein Al-Balawi was dropped as party
defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss Amended
Complaint[18].
The trial court issued an Order[19] dated August 29, 1994 denying the Motion to Dismiss Amended
Complaint filed by Saudia.
From the Order of respondent Judge[20] denying the Motion to Dismiss, SAUDIA filed on September
20, 1994, its Motion for Reconsideration[21] of the Order dated August 29, 1994. It alleged that the trial court
has no jurisdiction to hear and try the case on the basis of Article 21 of the Civil Code, since the proper law
applicable is the law of the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed her
Opposition[22] (To Defendants Motion for Reconsideration).
In the Reply[23] filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion for
Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not apply,
even if that ground is raised for the first time on appeal. Additionally, SAUDIA alleged that the Philippines
does not have any substantial interest in the prosecution of the instant case, and hence, without jurisdiction
to adjudicate the same.
Respondent Judge subsequently issued another Order [24] dated February 2, 1995, denying SAUDIAs
Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru
counsel, on September 20, 1994, and the Opposition thereto of the plaintiff filed, thru counsel,
on October 14, 1994, as well as the Reply therewith of defendant Saudi Arabian Airlines filed,
thru counsel, on October 24, 1994, considering that a perusal of the plaintiffs Amended
Complaint, which is one for the recovery of actual, moral and exemplary damages plus
attorneys fees, upon the basis of the applicable Philippine law, Article 21 of the New Civil Code
of the Philippines, is, clearly, within the jurisdiction of this Court as regards the subject matter,
and there being nothing new of substance which might cause the reversal or modification of the
order sought to be reconsidered, the motion for reconsideration of the defendant, is DENIED.
SO ORDERED.[25]
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with
Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining Order [26] with the Court
of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining Order [27] dated
February 23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless
otherwise directed, in the interim.
In another Resolution[28] promulgated on September 27, 1995, now assailed, the appellate court
denied SAUDIAs Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995, to
wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after
considering the Answer, with Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the
Reply and Rejoinder, it appearing that herein petitioner is not clearly entitled thereto (Unciano
Paramedical College, et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second
Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition[29] for Review with
Prayer for Temporary Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision[30] dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum
considering that the Amended Complaints basis for recovery of damages is Article 21 of the Civil Code,
and thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the proper
remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and
in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary
Restraining Order[31] dated April 30, 1996, given due course by this Court. After both parties submitted their
Memoranda,[32] the instant case is now deemed submitted for decision.
Petitioner SAUDIA raised the following issues:
I

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

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

III.

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

From the foregoing factual and procedural antecedents, the 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 THE CASE
PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It
maintains that private respondents claim for alleged abuse of rights occurred in the Kingdom of Saudi
Arabia. It alleges that the existence of a foreign element qualifies the instant case for the application of the
law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule.[34]
On the other hand, private respondent contends that since her Amended Complaint is based on
Articles 19[35] and 21[36] of the Civil Code, then the instant case is properly a matter of domestic law. [37]
Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint[38] dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing
business in the Philippines. It may be served with summons and other court processes at
Travel Wide Associated Sales (Phils.), Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo
Village, Makati, Metro Manila.
xxxxxxxxx
6. Plaintiff learned that, through the intercession of the Saudi Arabian government, the
Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention. Eventually, they were again put in service by defendant SAUDIA. In September
1990, defendant SAUDIA transferred plaintiff to Manila.
 7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind
her, her superiors requested her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA, in
Jeddah, Saudi Arabia. When she saw him, he brought her to the police station where the police
took her passport and questioned her about the Jakarta incident. Miniewy simply stood by as
the police put pressure on her to make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her passport and allowed her to catch
the afternoon flight out of Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before
the departure of her flight to Manila, plaintiff was not allowed to board the plane and instead
ordered to take a later flight to Jeddah to see Mr. Meniewy, the Chief Legal Officer of
SAUDIA. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court
where she was asked to sign a document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it turned out, plaintiff signed a notice
to her to appear before the court on June 27, 1993.Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again
and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving
assurance from SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary
and that it posed no danger to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27,
1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated plaintiff
through an interpreter about the Jakarta incident. After one hour of interrogation, they let her
go. At the airport, however, just as her plane was about to take off, a SAUDIA officer told her
that the airline had forbidden her to take that flight. At the Inflight Service Office where she was
told to go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in
Jeddah, at the crew quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the
judge, to her astonishment and shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286 lashes. Only then did she realize that
the Saudi court had tried her, together with Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and
listening to the music in violation of Islamic laws; (3) socializing with the male crew, in
contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the help of the
Philippine Embassy in Jeddah.The latter helped her pursue an appeal from the decision of the
court. To pay for her upkeep, she worked on the domestic flights of defendant SAUDIA while,
ironically, Thamer and Allah freely served the international flights. [39]
Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree
with petitioner that the problem herein could present a conflicts case.
A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more
states is said to contain a foreign element. The presence of a foreign element is inevitable since social and
economic affairs of individuals and associations are rarely confined to the geographic limits of their birth or
conception.[40]
The forms in which this foreign element may appear are many. [41] The foreign element may simply
consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a contract
between nationals of one State involves properties situated in another State. In other cases, the foreign
element may assume a complex form.[42]
In the instant case, the foreign element consisted in the fact that private respondent Morada is a
resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue of
the employment of Morada with the petitioner Saudia as a flight stewardess, events did transpire during her
many occasions of travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi
Arabia, and vice versa, that caused a conflicts situation to arise.
We thus find private respondents assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of jurisdiction[43] confronts the court a
quo.
After a careful study of the private respondents Amended Complaint, [44] and the Comment thereon, we
note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides;
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice give everyone his due and observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of Appeals,[45] this Court held that:
The aforecited provisions on human relations were intended to expand the concept of torts in
this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs
which is impossible for human foresight to specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we
agree with private respondents assertion that violations of Articles 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.
Based on the allegations[46] in the Amended Complaint, read in the light of the Rules of Court on
jurisdiction[47] we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction over the
subject matter of the suit.[48] Its authority to try and hear the case is provided for under Section 1 of Republic
Act No. 7691, to wit:
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980, is hereby amended to read as follows:

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive jurisdiction:

xxxxxxxxx

(8) In all other cases in which demand, exclusive of interest, damages of whatever kind, attorneys fees,
litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand
pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above-
mentioned items exceeds Two hundred Thousand pesos (P200,000.00).(Emphasis ours)

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

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

(a) x x x x x x x x x
(b) Personal actions. All other actions may be commenced and tried where the defendant or
any of the defendants resides or may be found, or where the plaintiff or any of the plaintiff
resides, at the election of the plaintiff.
 Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the
RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a
judgment if one is obtained is quite obvious. Relative advantages and obstacles to a fair trial are equally
important. Plaintiff may not, by choice of an inconvenient forum, vex, harass, or oppress the defendant, e.g.
by inflicting upon him needless expense or disturbance. But unless the balance is strongly in favor of the
defendant, the plaintiffs choice of forum should rarely be disturbed. [49]
Weighing the relative claims of the parties, the court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private respondent
now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains
substantial connections. That would have caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have
been shown by either of the parties. The choice of forum of the plaintiff (now private respondent) should be
upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her
Complaint and Amended Complaint with the trial court, private respondent has voluntary submitted herself
to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions [50] praying for the dismissal of
Moradas Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February
20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs
under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial courts jurisdiction
by praying for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.:[51]
We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower
courts jurisdiction over defendants person, prayed for dismissal of the complaint on the ground
that plaintiffs cause of action has prescribed. By interposing such second ground in its motion
to dismiss, Ker and Co., Ltd. availed of an affirmative defense on the basis of which it prayed
the court to resolve controversy in its favor. For the court to validly decide the said plea of
defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon the latters person,
who, being the proponent of the affirmative defense, should be deemed to have abandoned its
special appearance and voluntarily submitted itself to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that:
When the appearance is by motion for the purpose of objecting to the jurisdiction of the court
over the person, it must be for the sole and separate purpose of objecting to the jurisdiction of
the court. If his motion is for any other purpose than to object to the jurisdiction of the court over
his person, he thereby submits himself to the jurisdiction of the court. A special appearance by
motion made for the purpose of objecting to the jurisdiction of the court over the person will be
held to be a general appearance, if the party in said motion should, for example, ask for a
dismissal of the action upon the further ground that the court had no jurisdiction over the
subject matter.[52]
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus,
we find that the trial court has jurisdiction over the case and that its exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law problems seek to answer two important
questions: (1) What legal system should control a given situation where some of the significant facts
occurred in two or more states; and (2) to what extent should the chosen legal system regulate the
situation.[53]
Several theories have been propounded in order to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and
predictability, they do not always do so. The forum is then faced with the problem of deciding which of these
two important values should be stressed. [54]
 Before a choice can be made, it is necessary for us to determine under what category a certain set of
facts or rules fall. This process is known as characterization, or the doctrine of qualification. It is the process
of deciding whether or not the facts relate to the kind of question specified in a conflicts rule.[55] The purpose
of characterization is to enable the forum to select the proper law.[56]
Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative
fact.[57] An essential element of conflict rules is the indication of a test or connecting factor or point of
contact. Choice-of-law rules invariably consist of a factual relationship (such as property right, contract
claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the
place of performance, or the place of wrongdoing.[58]
Note that one or more circumstances may be present to serve as the possible test for the determination
of the applicable law.[59]These test factors or points of contact or connecting factors could be any of the
following:
(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In
particular, the lex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the place where a
contract has been made, a marriage celebrated, a will signed or a tort
committed. The lex loci actus is particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of performance of
contractual duties, or the place where a power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should govern their agreement,
the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done. The lex forithe
law of the forumis particularly important because, as we have seen earlier, matters of
procedure not going to the substance of the claim involved are governed by it; and because
the lex fori applies whenever the content of the otherwise applicable foreign law is excluded
from application in a given case for the reason that it falls under one of the exceptions to the
applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the
ship and of its master or owner as such. It also covers contractual relationships particularly
contracts of affreightment.[60] (Underscoring ours.)
After a careful study of the pleadings on record, including allegations in the Amended Complaint
deemed submitted for purposes of the motion to dismiss, we are convinced that there is reasonable basis
for private respondents assertion that although she was already working in Manila, petitioner brought her
to Jeddah on the pretense that she would merely testify in an investigation of the charges she made against
the two SAUDIA crew members for the attack on her person while they were in Jakarta. As it turned out,
she was the one made to face trial for very serious charges, including adultery and violation of Islamic laws
and tradition.
There is likewise logical basis on record for the claim that the handing over or turning over of the
person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioners purported act contributed to and amplified or even proximately caused additional
humiliation, misery and suffering of private respondent. Petitioner thereby allegedly facilitated the arrest,
detention and prosecution of private respondent under the guise of petitioners authority as employer, taking
advantage of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of
Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But these capped
the injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as
claimed, to provide compensation or redress for the wrongs done, once duly proven.
 Considering that the complaint in the court a quo is one involving torts, the connecting factor or point
of contact could be the place or places where the tortious conduct or lex loci actus occurred. And applying
the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the
place where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner
allegedly deceived private respondent, a Filipina residing and working here. According to her, she had
honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, act
with justice, give her her due and observe honesty and good faith. Instead, petitioner failed to protect her,
she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no
moment. For in our view what is important here is the place where the over-all harm or the fatality of the
alleged injury to the person, reputation, social standing and human rights of complainant, had lodged,
according to the plaintiff below (herein private respondent). All told, it is not without basis to identify the
Philippines as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability[61] have been advanced to offer fresh judicial approaches to arrive at just
results. In keeping abreast with the modern theories on tort liability, we find here an occasion to apply the
State of the most significant relationship rule, which in our view should be appropriate to apply now, given
the factual context of this case.
In applying said principle to determine the State which has the most significant relationship, the
following contacts are to be taken into account and evaluated according to their relative importance with
respect to the particular issue: (a) the place where the injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of
business of the parties, and (d) the place where the relationship, if any, between the parties is centered.[62]
As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina national, working
with petitioner, a resident foreign corporation engaged here in the business of international air
carriage. Thus, the relationship between the parties was centered here, although it should be stressed that
this suit is not based on mere labor law violations. From the record, the claim that the Philippines has the
most significant contact with the matter in this dispute, [63] raised by private respondent as plaintiff below
against defendant (herein petitioner), in our view, has been properly established.
Prescinding from this premise that the Philippines is the situs of the tort complaint of and the place
having the most interest in the problem, we find, by way of recapitulation, that the Philippine law on tort
liability should have paramount application to and control in the resolution of the legal issues arising out of
this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over the parties and
the subject matter of the complaint; the appropriate venue is in Quezon City, which could properly apply
Philippine law. Moreover, we find untenable petitioners insistence that [s]ince private respondent instituted
this suit, she has the burden of pleading and proving the applicable Saudi law on the matter. [64] As aptly
said by private respondent, she has no obligation to plead and prove the law of the Kingdom of Saudi Arabia
since her cause of action is based on Articles 19 and 21 of the Civil Code of the Philippines. In her Amended
Complaint and subsequent pleadings she never alleged that Saudi law should govern this case. [65] And as
correctly held by the respondent appellate court, considering that it was the petitioner who was invoking the
applicability of the law of Saudi Arabia, thus the burden was on it [petitioner] to plead and to establish what
the law of Saudi Arabia is.[66]
Lastly, no error could be imputed to the respondent appellate court in upholding the trial courts denial
of defendants (herein petitioners) motion to dismiss the case. Not only was jurisdiction in order and venue
properly laid, but appeal after trial was obviously available, and the expeditious trial itself indicated by the
nature of the case at hand. Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below not just for the benefit of all the litigants, but also for the vindication of the
countrys system of law and justice in a transnational setting. With these guidelines in mind, the trial court
must proceed to try and adjudge the case in the light of relevant Philippine law, with due consideration of
the foreign element or elements involved. Nothing said herein, of course, should be construed as prejudging
the results of the case in any manner whatsoever.
 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.
G.R. No. 162894 February 26, 2008

RAYTHEON INTERNATIONAL, INC., petitioner,

vs.
STOCKTON W. ROUZIE, JR., respondent.

DECISION

TINGA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
which seeks the reversal of the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No.
67001 and the dismissal of the civil case filed by respondent against petitioner with the trial court.

As culled from the records of the case, the following antecedents appear:

Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under
the laws of the State of Connecticut, United States of America, and respondent Stockton W. Rouzie, Jr.,
an American citizen, entered into a contract whereby BMSI hired respondent as its representative to
negotiate the sale of services in several government projects in the Philippines for an agreed
remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured a service contract
with the Republic of the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt.
Pinatubo eruption and mudflows.3

On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and
Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach of
employment contract.4 On 28 September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment
ordering BMSI and RUST to pay respondent’s money claims.5 Upon appeal by BMSI, the NLRC reversed
the decision of the Labor Arbiter and dismissed respondent’s complaint on the ground of lack of
jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a Resolution dated 26
November 1997. The Resolution became final and executory on 09 November 1998.

On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the
Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil Case No. 1192-BG,
named as defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. The complaint essentially reiterated the allegations in
the labor case that BMSI verbally employed respondent to negotiate the sale of services in government
projects and that respondent was not paid the commissions due him from the Pinatubo dredging project
which he secured on behalf of BMSI. The complaint also averred that BMSI and RUST as well as
petitioner itself had combined and functioned as one company.

In its Answer,8 petitioner alleged that contrary to respondent’s claim, it was a foreign corporation duly
licensed to do business in the Philippines and denied entering into any arrangement with respondent or
paying the latter any sum of money. Petitioner also denied combining with BMSI and RUST for the
purpose of assuming the alleged obligation of the said companies. 9 Petitioner also referred to the NLRC
decision which disclosed that per the written agreement between respondent and BMSI and RUST,
denominated as "Special Sales Representative Agreement," the rights and obligations of the parties shall
be governed by the laws of the State of Connecticut.10 Petitioner sought the dismissal of the complaint on
grounds of failure to state a cause of action and forum non conveniens and prayed for damages by way
of compulsory counterclaim.11

On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative
Defenses and for Summary Judgment12 seeking the dismissal of the complaint on grounds of forum non
conveniens and failure to state a cause of action. Respondent opposed the same. Pending the resolution
of the omnibus motion, the deposition of Walter Browning was taken before the Philippine Consulate
General in Chicago.13

In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The trial court held
that the factual allegations in the complaint, assuming the same to be admitted, were sufficient for the trial
court to render a valid judgment thereon. It also ruled that the principle of forum non conveniens was
inapplicable because the trial court could enforce judgment on petitioner, it being a foreign corporation
licensed to do business in the Philippines.15

Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s motion. Thus, it filed a
Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of certiorari and a writ of
injunction to set aside the twin orders of the trial court dated 13 September 2000 and 31 July 2001 and to
enjoin the trial court from conducting further proceedings.20

On 28 August 2003, the Court of Appeals rendered the assailed Decision 21 denying the petition for
certiorari for lack of merit. It also denied petitioner’s motion for reconsideration in the assailed Resolution
issued on 10 March 2004.22

The appellate court held that although the trial court should not have confined itself to the allegations in
the complaint and should have also considered evidence aliunde in resolving petitioner’s omnibus motion,
it found the evidence presented by petitioner, that is, the deposition of Walter Browning, insufficient for
purposes of determining whether the complaint failed to state a cause of action. The appellate court also
stated that it could not rule one way or the other on the issue of whether the corporations, including
petitioner, named as defendants in the case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be threshed out during trial. 23 Moreover, the
appellate court deferred to the discretion of the trial court when the latter decided not to desist from
assuming jurisdiction on the ground of the inapplicability of the principle of forum non conveniens.

Hence, this petition raising the following issues:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE

COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST RAYTHEON
INTERNATIONAL, INC.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE

COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.24

Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua Law
Office, counsel on record for respondent, manifested that the lawyer handling the case, Atty. Rogelio
Karagdag, had severed relations with the law firm even before the filing of the instant petition and that it
could no longer find the whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a
Resolution25 dated 20 November 2006, the Court resolved to dispense with the filing of a comment.

The instant petition lacks merit.

Petitioner mainly asserts that the written contract between respondent and BMSI included a valid choice
of law clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also
mentions the presence of foreign elements in the dispute – namely, the parties and witnesses involved
are American corporations and citizens and the evidence to be presented is located outside the
Philippines – that renders our local courts inconvenient forums. Petitioner theorizes that the foreign
elements of the dispute necessitate the immediate application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases involved in judicial
resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and
enforcement of judgments. Thus, in the instances27 where the Court held that the local judicial machinery
was adequate to resolve controversies with a foreign element, the following requisites had to be proved:
(1) that the Philippine Court is one to which the parties may conveniently resort; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine
Court has or is likely to have the power to enforce its decision.28

On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine court
and where the court has jurisdiction over the subject matter, the parties and the res, it may or can
proceed to try the case even if the rules of conflict-of-laws or the convenience of the parties point to a
foreign forum. This is an exercise of sovereign prerogative of the country where the case is filed.29

Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the
law30 and by the material allegations in the complaint, irrespective of whether or not the plaintiff is entitled
to recover all or some of the claims or reliefs sought therein.31 Civil Case No. 1192-BG is an action for
damages arising from an alleged breach of contract. Undoubtedly, the nature of the action and the
amount of damages prayed are within the jurisdiction of the RTC.

As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as
party plaintiff) upon the filing of the complaint. On the other hand, jurisdiction over the person of petitioner
(as party defendant) was acquired by its voluntary appearance in court. 32

That the subject contract included a stipulation that the same shall be governed by the laws of the State
of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter,
are precluded from hearing the civil action. Jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the
further question whether the application of a substantive law which will determine the merits of the case is
fair to both parties.33 The choice of law stipulation will become relevant only when the substantive issues
of the instant case develop, that is, after hearing on the merits proceeds before the trial court.

Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse impositions
on its jurisdiction where it is not the most "convenient" or available forum and the parties are not
precluded from seeking remedies elsewhere.34 Petitioner’s averments of the foreign elements in the
instant case are not sufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG and
the parties involved.

Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a
factual determination; hence, it is more properly considered as a matter of defense. While it is within the
discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the court’s desistance. 35

Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion that
it can assume jurisdiction over the dispute notwithstanding its foreign elements. In the same manner, the
Court defers to the sound discretion of the lower courts because their findings are binding on this Court.

Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action
against petitioner. Failure to state a cause of action refers to the insufficiency of allegation in the
pleading.36 As a general rule, the elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded. 37

The complaint alleged that petitioner had combined with BMSI and RUST to function as one company.
Petitioner contends that the deposition of Walter Browning rebutted this allegation. On this score, the
resolution of the Court of Appeals is instructive, thus:
 x x x Our examination of the deposition of Mr. Walter Browning as well as other documents
produced in the hearing shows that these evidence aliunde are not quite sufficient for us to mete
a ruling that the complaint fails to state a cause of action.

Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs that
Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty obligations of defendant
Rust International in the Makar Port Project in General Santos City, after Rust International
ceased to exist after being absorbed by REC. Other documents already submitted in evidence
are likewise meager to preponderantly conclude that Raytheon International, Inc., Rust
International[,] Inc. and Brand Marine Service, Inc. have combined into one company, so much so
that Raytheon International, Inc., the surviving company (if at all) may be held liable for the
obligation of BMSI to respondent Rouzie for unpaid commissions. Neither these documents
clearly speak otherwise.38

As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST
merged together requires the presentation of further evidence, which only a full-blown trial on the merits
can afford.

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.