SAUDI ARABIAN AIRLINES (SAUDIA) vs. COURT OF APPEALS, MILAGROS P. MORADA and HON.

RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, RTC of Quezon City
 G.R.
No. 122191 October 8, 1998

FACTS:

Petitioner SAUDIA hired private respondent MORADA as a flight attendant in 1988, based in
Jeddah. On 1990, while on a lay-over in Jakarta, Indonesia, she went to party with 2 male
attendants, and on the following morning in their hotel, one of the male attendants attempted to
rape her. She was rescued by hotel attendants who heard her cry for help. The Indonesian police
arrested the 2.

MORADA returned to Jeddah, but was asked by the company to go back to Jakarta and help
arrange the release of the 2 male attendants. MORADA did not cooperate when she got to Jakarta.

What followed was a series of interrogations from the Saudi Courts which she did not understand
as this was in their language. In 1993, she was surprised, upon being ordered by SAUDIA to go
to the Saudi court, that she was being convicted 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, sentencing her to five months imprisonment and to 286 lashes.
Only then did she realize that the Saudi court had tried her, together with the 2, for what
happened in Jakarta.

SAUDIA denied her the assistance she requested, But because she was wrongfully convicted,
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.

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

SAUDIA ALLEGES: 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.

MORADA ALLEGES: Since her Amended Complaint is based on Articles 19 and 21 of the Civil
Code, then the instant case is properly a matter of domestic law.

ISSUE: WON the Philippine courts have jurisdiction to try the case

HELD: YES.

On the presence of a “Foreign Element” in the 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.

COURT disagrees with MORADA that his is purely a domestic case. However, the court finds that
the RTC of Quezon City possesses jurisdiction over the subject matter of the suit. Its authority to
try and hear the case is provided for under Section 1 of Republic Act No. 7691, to wit:

BP129 Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise exclusive
jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest, damages of whatever kind,
attorney`y’s fees, litigation expenses, and cots or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00). (Emphasis ours)
xxx xxx xxx
Section 2 (b), Rule 4 of the Revised Rules of Court — the venue, Quezon City, is
appropriate:
Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial Court]
(a) xxx xxx xxx
(b) Personal actions. — All other actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any
of the plaintiff resides, at the election of the plaintiff.

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.

The trial court also acquired jurisdiction over the parties. MORADA through her act of filing, and
SAUDIA by praying for the dismissal of the Amended Complaint on grounds other than lack of
jurisdiction.

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.

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.

In applying “State of the most significant relationship” rule, 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.

NOTE:

These “test factors” or “points of contact” or “connecting factors” could be any of the following:
(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In
particular, the lex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the place where a contract
has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is
particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of performance of
contractual duties, or the place where a power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should govern their agreement, the
lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done. The lex fori —
the law of the forum — is particularly important because, as we have seen earlier, matters of
“procedure” not going to the substance of the claim involved are governed by it; and because
the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from
application in a given case for the reason that it falls under one of the exceptions to the
applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the
ship and of its master or owner as such. It also covers contractual relationships particularly
contracts of affreightment.

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD.,

vs
MINORU KITAMURA

G.R. No. 149177

November 23, 2007

FACTS:

Nippon Engineering Consultants (Nippon), a Japanese consultancy firm providing technical and
management support in the infrastructure projects national permanently residing in the
Philippines. The agreement provides that Kitamaru was to extend professional services to Nippon
for a year. Nippon assigned Kitamaru to work as the project manager of the
Southern Tagalog Access Road (STAR) project. When the STAR project was near completion,
DPWH engaged the consultancy services of Nippon, this time for the detailed engineering &
construction supervision of the Bongabon-Baler Road Improvement (BBRI) Project. Kitamaru was
named as the project manger in the contract.

Hasegawa, Nippon’s general manager for its International Division, informed Kitamaru that the
company had no more intention of automatically renewing his ICA. His services would be engaged
by the company only up to the substantial completion of the STAR Project.

Kitamaru demanded that he be assigned to the BBRI project. Nippon insisted that Kitamaru’s
contract was for a fixed term that had expired. Kitamaru then filed for specific performance &
damages w/ the RTC of Lipa City. Nippon filed a MTD.

Nippon’s contention: The ICA had been perfected in Japan & executed by & between Japanese
nationals. Thus, the RTC of Lipa City has no jurisdiction. The claim for improper pre-termination
of Kitamaru’s ICA could only be heard & ventilated in the proper courts of Japan following the
principles of lex loci celebrationis & lex contractus.

The RTC denied the motion to dismiss. The CA ruled hat the principle of lex loci celebrationis was
not applicable to the case, because nowhere in the pleadings was the validity of the written
agreement put in issue. It held that the RTC was correct in applying the principle of lex loci
solutionis.

ISSUE:
Whether or not the subject matter jurisdiction of Philippine courts in civil cases for specific
performance & damages involving contracts executed outside the country by foreign nationals
may be assailed on the principles of lex loci celebrationis, lex contractus, “the state of the most
significant relationship rule,” or forum non conveniens.

HELD:

NO. In the judicial resolution of conflicts problems, 3 consecutive phases are involved:
jurisdiction, choice of law, and recognition and enforcement of judgments. Jurisdiction & choice
of law are 2 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 w/c will determine the merits of the case is fair to both parties. The power to
exercise jurisdiction does notautomatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex foriwill 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 1st 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/petitioner, over the defendant/respondent, over the subject matter, over the issues
of the case and, in cases involving property, over the res or the thing w/c is the subject of the
litigation.In assailing the trial court's jurisdiction herein, Nippon is actually referring to subject
matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign
authority w/c 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 lawgrants it the power to adjudicate the claims.

In the instant case, Nippon, in its MTD, does not claim that the RTC is not properly vested by law
w/ jurisdiction to hear the subject controversy for a civil case for specific performance & damages
is one not capable of pecuniary estimation & 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 contractusmeans 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 3 principles in conflict of laws make reference to the law applicable to a dispute, they
are rules proper for the 2nd 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, Nippon’s 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, 1st there should exist a conflict of laws situation requiring
theapplication 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 3 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 RTC of its
jurisdiction. 1st, it is not a proper basis for a motion to dismiss because Sec. 1, Rule 16 of the
Rules of Court does not include it as a ground. 2nd, 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 RTC. In this case, the RTC decided to assume
jurisdiction. 3rd, 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.

The Facts of the Case.

In this case, Respondents (complainants before the Labor Arbiter) were recruited and hired by
Saudia as Temporary Flight Attendants with the accreditation and approval of the Philippine
Overseas Employment Administration. After undergoing seminars required by the Philippine
Overseas Employment Administration for deployment overseas, as well as training modules
offered by Saudia (e.g., initial flight attendant/training course and transition training), and after
working as Temporary Flight Attendants, respondents became Permanent Flight Attendants. They
then entered into Cabin Attendant contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette)
on May 16, 1990; Montassah B. Sacar-Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen
Ruth) on May 22, 1993; and Loraine Schneider-Cruz (Loraine) on August 27, 1995.
Respondents continued their employment with Saudia until they were separated from service on
various dates in 2006. Respondents contended that the termination of their employment was
illegal. They alleged that the termination was made solely because they were pregnant.

Saudia anchored its disapproval of respondents’ maternity leaves and demand for their
resignation on its “Unified Employment Contract for Female Cabin Attendants” (Unified Contract).
Under the Unified Contract, the employment of a Flight Attendant who becomes pregnant is
rendered void. It provides:

(H) Due to the essential nature of the Air Hostess functions to be physically fit on board to provide
various services required in normal or emergency cases on both domestic/international flights
beside her role in maintaining continuous safety and security of passengers, and since she will
not be able to maintain the required medical fitness while at work in case of pregnancy,
accordingly, if the Air Hostess becomes pregnant at any time during the term of this
contract, this shall render her employment contract as void and she will be terminated
due to lack of medical fitness.(Emphasis supplied)

On November 8, 2007, respondents filed a Complaint against Saudia and its officers for illegal
dismissal and for underpayment of salary, overtime pay, premium pay for holiday, rest day,
premium, service incentive leave pay, 13th month pay, separation pay, night shift differentials,
medical expense reimbursements, retirement benefits, illegal deduction, lay-over expense and
allowances, moral and exemplary damages, and attorney’s fees.

The issue to be resolved in the instant case is whether or not there was an illegal dismissal of the
respondents?

The Supreme Court's Decision.

Yes, the respondents were illegally dismissed.

The initial issue here was whether or not the Philippine courts have jurisdiction over the case.
Petitioner Saudia states that the Philippine courts have no jurisdiction and that the law that should
be applied in the instant case is Saudi Arabia law. The Court stated that this is incorrect. The
Court has jurisdiction in this case.

The Court stated in the case;

Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of the
laws of Saudi Arabia. It insists that the need to comply with these stipulations calls into operation
the doctrine of forum non conveniens and, in turn, makes it necessary for Philippine tribunals to
refrain from exercising jurisdiction. Forum non conveniens, like the rules of forum shopping, litis
pendentia, and res judicata, is a means of addressing the problem of parallel litigation. While the
rules of forum shopping, litis pendentia, and res judicata are designed to address the problem of
parallel litigation within a single jurisdiction, forum non conveniens is a means devised to address
parallel litigation arising in multiple jurisdictions.

On the matter of pleading forum non conveniens, we state the rule, thus: Forum non conveniens
must not only be clearly pleaded as a ground for dismissal; it must be pleaded as such at the
earliest possible opportunity. Otherwise, it shall be deemed waived.
It further stated:
Forum non conveniens finds no application and does not operate to divest Philippine tribunals of
jurisdiction and to require the application of foreign law. Saudia invokes forum non conveniens
to supposedly effectuate the stipulations of the Cabin Attendant contracts that require the
application of the laws of Saudi Arabia.

xxx

So informed and animated, we emphasize the glaringly discriminatory nature of Saudia’s policy.
As argued by respondents, Saudia’s policy entails the termination of employment of flight
attendants who become pregnant. At the risk of stating the obvious, pregnancy is an occurrence
that pertains specifically to women. Saudia’s policy excludes from and restricts employment on
the basis of no other consideration but sex.

We do not lose sight of the reality that pregnancy does present physical limitations that may
render difficult the performance of functions associated with being a flight attendant.
Nevertheless, it would be the height of iniquity to view pregnancy as a disability so permanent
and immutable that it must entail the termination of one’s employment. It is clear to us that any
individual, regardless of gender, may be subject to exigencies that limit the performance of
functions. However, we fail to appreciate how pregnancy could be such an impairing occurrence
that it leaves no other recourse but the complete termination of the means through which a
woman earns a living.

Oddly enough, the petitioner Saudia themselves stated that the Saudi law does not allow the
termination of employment of women who take maternity leaves;

Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e., “to make
an intelligent decision”), Philippine tribunals may apply the foreign law selected by the parties. In
fact, (albeit without meaning to make a pronouncement on the accuracy and reliability of
respondents’ citation) in this case, respondents themselves have made averments as to the laws
of Saudi Arabia. In their Comment, respondents write:

Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and unlawful to terminate
the employment of any woman by virtue of pregnancy. The law in Saudi Arabia is even more
harsh and strict [sic] in that no employer can terminate the employment of a female worker or
give her a warning of the same while on Maternity Leave, the specific provision of Saudi Labor
Laws on the matter is hereto quoted as follows: “An employer may not terminate the employment
of a female worker or give her a warning of the same while on maternity leave.” (Article 155,
Labor Law of the Kingdom of Saudi Arabia, Royal Decree No. M/51.)

The Court then decided:

WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not solidarily
liable with petitioner Saudi Arabian Airlines, and second, that petitioner Saudi Arabian Airlines is
liable for moral and exemplary damages. The June 16, 2011 Decision and the September 13,
2011 Resolution of the Court of Appeals in CA-G.R. SP. No. 113006 are hereby AFFIRMED in all
other respects. Accordingly, petitioner Saudi Arabian Airlines is ordered to pay respondents:
( 1) Full backwages and all other benefits computed from the respective dates in which each of
the respondents were illegally terminated until the finality of this Decision;
(2) Separation pay computed from the respective dates in which each of the respondents
commenced employment until the finality of this Decision at the rate of one ( 1) month's salary
for every year of service, with a fraction of a year of at least six ( 6) months being counted as
one ( 1) whole year;
(3) Moral damages in the amount of Pl00,000.00 per respondent;
(4) Exemplary damages in th~ amount of P200,000.00 per
respondent; and
(5) Attorney's fees equivalent to 10% of the total award. Interest of 6% per annum shall likewise
be imposed on the total judgment award from the finality of this Decision until full satisfaction
thereof.

This. case is REMANDED. to the Labor Arbiter to make a detailed computation of the amounts
due to respondents which petitioner Saudi Arabian Airlines should pay without delay.