SAUDI ARABIAN AIRLINES, Petitioner, vs. COURT OF APPEALS, MILAGROS P.

MORADA and
HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial
Court of Quezon City, Respondents.

QUISUMBING, J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the
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. . . .

On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow
crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost
morning when they returned to their hotels, they agreed to have breakfast together at the room of
Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer
attempted to rape plaintiff. Fortunately, a roomboy and several security personnel heard her cries for
help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah Al-Gazzawi,
the latter as an accomplice.

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

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

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

One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the case against Thamer
and Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see
Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from
SAUDIA's Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no
danger to her.

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

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

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

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

On November 23, 1993, Morada filed a Complaint 13

for damages against SAUDIA, and Khaled Al-
Balawi ("Al-Balawi"), its country manager.

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

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

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

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

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

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

Respondent Judge subsequently issued another Order 24 dated February 2, 1995, denying SAUDIA's
Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows:

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

SO ORDERED. 25

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

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining Order 27 dated
February 23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless
otherwise directed, in the interim.

In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate court
denied SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995,
to wit:

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

SO ORDERED.

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

However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision 30 dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate
forum considering that the Amended Complaint's basis for recovery of damages is Article 21 of the
Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held that certiorariis
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 petitioner's April 30, 1996 Supplemental Petition For Review With
Prayer For A Temporary Restraining Order Within Ten (10) Days From Notice Thereof. Further, the
Revised Rules of Court should be construed with liberality pursuant to Section 2, Rule 1 thereof.

III

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

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

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT
OF QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED
"MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES".

II.

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THIS CASE PHILIPPINE LAW
SHOULD GOVERN.

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

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

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

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

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing business in
the Philippines. It may be served with summons and other court processes at Travel Wide Associated
Sales (Phils.). Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.

xxx xxx xxx

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

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

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

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

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

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

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

Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree
with petitioner that the problem herein could present a "conflicts" case.

A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more
states is said to contain a "foreign element". The presence of a foreign element is inevitable since
social and economic affairs of individuals and associations are rarely confined to the geographic limits
of their birth or conception. 40

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

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

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

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

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

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

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

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

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

The aforecited provisions on human relations were intended to expand the concept of torts in this
jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is
impossible for human foresight to specifically provide in the statutes.

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

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

Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act
of 1980", is hereby amended to read as follows:

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

xxx xxx xxx

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

xxx xxx xxx

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

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

(a) xxx xxx xxx

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

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

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

Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have
been shown by either of the parties. The choice of forum of the plaintiff (now private respondent)
should be upheld.

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

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

As held by this Court in Republic vs. Ker and Company, Ltd.: 51

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

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

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

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

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

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

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

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

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

(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;

(2) the seat of a legal or juridical person, such as a corporation;

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

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

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

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

(7) the place where judicial or administrative proceedings are instituted or done. Thelex fori - the law
of the forum - is particularly important because, as we have seen earlier, matters of "procedure" not
going to the substance of the claim involved are governed by it; and because the lex fori applies
whenever the content of the otherwise applicable foreign law is excluded from application in a given
case for the reason that it falls under one of the exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship
and of its master or owner as such. It also covers contractual relationships particularly contracts of
affreightment. 60 (Emphasis ours.)

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

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

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

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

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

As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina national,
working with petitioner, a resident foreign corporation engaged here in the business of international
air carriage. Thus, the "relationship" between the parties was centered here, although it should be
stressed that this suit is not based on mere labor law violations. From the record, the claim that the
Philippines has the most significant contact with the matter in this dispute, 63 raised by private
respondent as plaintiff below against defendant (herein petitioner), in our view, has been properly
established.
Prescinding from this premise that the Philippines is the situs of the tort complained of and the place
"having the most interest in the problem", we find, by way of recapitulation, that the Philippine law on
tort liability should have paramount application to and control in the resolution of the legal issues
arising out of this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over
the parties and the subject matter of the complaint; the appropriate venue is in Quezon City, which
could properly apply Philippine law. Moreover, we find untenable petitioner's insistence that "[s]ince
private respondent instituted this suit, she has the burden of pleading and proving the applicable
Saudi law on the matter." 64 As aptly said by private respondent, she has "no obligation to plead and
prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21"
of the Civil Code of the Philippines. In her Amended Complaint and subsequent pleadings, she never
alleged that Saudi law should govern this case. 65 And as correctly held by the respondent appellate
court, "considering that it was the petitioner who was invoking the applicability of the law of Saudi
Arabia, then the burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia
is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the trial court's denial
of defendant's (herein petitioner's) motion to dismiss the case. Not only was jurisdiction in order and
venue properly laid, but appeal after trial was obviously available, and expeditious trial itself indicated
by the nature of the case at hand. Indubitably, the Philippines is the state intimately concerned with
the ultimate outcome of the case below, not just for the benefit of all the litigants, but also for the
vindication of the country's system of law and justice in a transnational setting. With these guidelines
in mind, the trial court must proceed to try and adjudge the case in the light of relevant Philippine law,
with due consideration of the foreign element or elements involved. Nothing said herein, of course,
should be construed as prejudging the results of the case in any manner whatsoever.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394
entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to Regional Trial Court of
Quezon City, Branch 89 for further proceedings.

SO ORDERED.

Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.

 KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., Petitioners, v. MINORU
KITAMURA, Respondent.

DECISION

NACHURA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45

of the Rules of Court assailing the April 18, 2001 Decision1 of the
Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25,
2001 Resolution2 denying the motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co.,

Ltd. (Nippon), a Japanese consultancy firm providing technical and
management support in the infrastructure projects of foreign
governments,3 entered into an Independent Contractor Agreement
(ICA) with respondent Minoru Kitamura, a Japanese national
permanently residing in the Philippines.4 The agreement provides
that respondent was to extend professional services to Nippon for a
year starting on April 1, 1999.5 Nippon then assigned respondent to
work as the project manager of the Southern Tagalog Access Road
(STAR) Project in the Philippines, following the company's
consultancy contract with the Philippine Government.6

When the STAR Project was near completion, the Department of

Public Works and Highways (DPWH) engaged the consultancy
services of Nippon, on January 28, 2000, this time for the detailed
engineering and construction supervision of the Bongabon-Baler
Road Improvement (BBRI) Project.7 Respondent was named as the
project manager in the contract's Appendix 3.1.8

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's

general manager for its International Division, informed respondent
that the company had no more intention of automatically renewing
his ICA. His services would be engaged by the company only up to
the substantial completion of the STAR Project on March 31, 2000,
just in time for the ICA's expiry.9

Threatened with impending unemployment, respondent, through his

lawyer, requested a negotiation conference and demanded that he
be assigned to the BBRI project. Nippon insisted that respondent's
contract was for a fixed term that had already expired, and refused
to negotiate for the renewal of the ICA.10

As he was not able to generate a positive response from the

petitioners, respondent consequently initiated on June 1, 2000 Civil
Case No. 00-0264 for specific performance and damages with the
Regional Trial Court of Lipa City.11

For their part, petitioners, contending that the ICA had been
perfected in Japan and executed by and between Japanese
nationals, moved to dismiss the complaint for lack of jurisdiction.
They asserted that the claim for improper pre-termination of
respondent's ICA could only be heard and ventilated in the proper
courts of Japan following the principles of lex loci celebrationis and
lex contractus.12

In the meantime, on June 20, 2000, the DPWH approved Nippon's

request for the replacement of Kitamura by a certain Y. Kotake as
project manager of the BBRI Project.13

On June 29, 2000, the RTC, invoking our ruling in Insular

Government v. Frank14 that matters connected with the
performance of contracts are regulated by the law prevailing at the
place of performance,15 denied the motion to dismiss.16 The trial
court subsequently denied petitioners' motion for
reconsideration,17 prompting them to file with the appellate court,
on August 14, 2000, their first Petition for Certiorari under Rule 65
[docketed as CA-G.R. SP No. 60205].18 On August 23, 2000, the CA
resolved to dismiss the petition on procedural grounds'for lack of
statement of material dates and for insufficient verification and
certification against forum shopping.19 An Entry of Judgment was
later issued by the appellate court on September 20, 2000.20
Aggrieved by this development, petitioners filed with the CA, on
September 19, 2000, still within the reglementary period,
a second Petition for Certiorari under Rule 65 already stating
therein the material dates and attaching thereto the proper
verification and certification. This second petition, which
substantially raised the same issues as those in the first, was
docketed as CA-G.R. SP No. 60827.21

Ruling on the merits of the second petition, the appellate court

rendered the assailed April 18, 2001 Decision22 finding no grave
abuse of discretion in the trial court's denial of the motion to
dismiss. The CA ruled, among others, that the principle of lex loci
celebrationis was not applicable to the case, because nowhere in the
pleadings was the validity of the written agreement put in issue.
The CA thus declared that the trial court was correct in applying
instead the principle of lex loci solutionis.23

Petitioners' motion for reconsideration was subsequently denied by

the CA in the assailed July 25, 2001 Resolution.24

Remaining steadfast in their stance despite the series of denials,

petitioners instituted the instant Petition for Review
on Certiorari25 imputing the following errors to the appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE
FACT THAT THE CONTRACT SUBJECT MATTER OF THE
PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO
JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE
LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE
PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.26

The pivotal question that this Court is called upon to resolve is

whether the subject matter jurisdiction of Philippine courts in civil
cases for specific performance and damages involving contracts
executed outside the country by foreign nationals may be assailed
on the principles of lex loci celebrationis, lex contractus, the "state
of the most significant relationship rule," or forum non conveniens.

However, before ruling on this issue, we must first dispose of the

procedural matters raised by the respondent.

Kitamura contends that the finality of the appellate court's decision

in CA-G.R. SP No. 60205 has already barred the filing of the second
petition docketed as CA-G.R. SP No. 60827 (fundamentally raising
the same issues as those in the first one) and the instant Petition
for Review thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on

account of the petition's defective certification of non-forum
shopping, it was a dismissal without prejudice.27 The same holds
true in the CA's dismissal of the said case due to defects in the
formal requirement of verification28 and in the other requirement in
Rule 46 of the Rules of Court on the statement of the material
dates.29 The dismissal being without prejudice, petitioners can re-
file the petition, or file a second petition attaching thereto the
appropriate verification and certification as they, in fact did and
stating therein the material dates, within the prescribed period30 in
Section 4, Rule 65 of the said Rules.31

The dismissal of a case without prejudice signifies the absence of a

decision on the merits and leaves the parties free to litigate the
matter in a subsequent action as though the dismissed action had
not been commenced. In other words, the termination of a case not
on the merits does not bar another action involving the same
parties, on the same subject matter and theory.32

Necessarily, because the said dismissal is without prejudice and has

no res judicataeffect, and even if petitioners still indicated in the
verification and certification of the second certiorari petition that the
first had already been dismissed on procedural
grounds,33 petitioners are no longer required by the Rules to
indicate in their certification of non-forum shopping in the instant
Petition for Review of the second certiorari petition, the status of the
aforesaid first petition before the CA. In any case, an omission in
the certificate of non-forum shopping about any event that will not
constitute res judicata and litis pendentia, as in the present case, is
not a fatal defect. It will not warrant the dismissal and nullification
of the entire proceedings, considering that the evils sought to be
prevented by the said certificate are no longer present.34

The Court also finds no merit in respondent's contention that

petitioner Hasegawa is only authorized to verify and certify, on
behalf of Nippon, the certiorari petition filed with the CA and not the
instant petition. True, the Authorization35 dated September 4, 2000,
which is attached to the second certiorari petition and which is also
attached to the instant Petition for Review, is limited in scope its
wordings indicate that Hasegawa is given the authority to sign for
and act on behalf of the company only in the petition filed with the
appellate court, and that authority cannot extend to the instant
Petition for Review .36 In a plethora of cases, however, this Court
has liberally applied the Rules or even suspended its application
whenever a satisfactory explanation and a subsequent fulfillment of
the requirements have been made.37 Given that petitioners herein
sufficiently explained their misgivings on this point and appended to
their Reply38 an updated Authorization39 for Hasegawa to act on
behalf of the company in the instant petition, the Court finds the
same as sufficient compliance with the Rules.

However, the Court cannot extend the same liberal treatment to the
defect in the verification and certification. As respondent pointed
out, and to which we agree, Hasegawa is truly not authorized to act
on behalf of Nippon in this case. The aforesaid September 4, 2000
Authorization and even the subsequent August 17, 2001
Authorization were issued only by Nippon's president and chief
executive officer, not by the company's board of directors. In not a
few cases, we have ruled that corporate powers are exercised by
the board of directors; thus, no person, not even its officers, can
bind the corporation, in the absence of authority from the
board.40Considering that Hasegawa verified and certified the petition
only on his behalf and not on behalf of the other petitioner, the
petition has to be denied pursuant to Loquias v. Office of the
Ombudsman.41 Substantial compliance will not suffice in a matter
that demands strict observance of the Rules.42 While technical rules
of procedure are designed not to frustrate the ends of justice,
nonetheless, they are intended to effect the proper and orderly
disposition of cases and effectively prevent the clogging of court
dockets.43

Further, the Court has observed that petitioners incorrectly filed a

Rule 65 petition to question the trial court's denial of their motion to
dismiss. It is a well-established rule that an order denying a motion
to dismiss is interlocutory, and cannot be the subject of the
extraordinary Petition for Certiorari or mandamus. The appropriate
recourse is to file an answer and to interpose as defenses the
objections raised in the motion, to proceed to trial, and, in case of
an adverse decision, to elevate the entire case by appeal in due
course.44 While there are recognized exceptions to this
rule,45 petitioners' case does not fall among them.

This brings us to the discussion of the substantive issue of the case.

Asserting that the RTC of Lipa City is an inconvenient forum,

petitioners question its jurisdiction to hear and resolve the civil case
for specific performance and damages filed by the respondent. The
ICA subject of the litigation was entered into and perfected in
Tokyo, Japan, by Japanese nationals, and written wholly in the
Japanese language. Thus, petitioners posit that local courts have no
substantial relationship to the parties46following the [state of the]
most significant relationship rule in Private International Law.47

The Court notes that petitioners adopted an additional but different

theory when they elevated the case to the appellate court. In the
Motion to Dismiss48 filed with the trial court, petitioners never
contended that the RTC is an inconvenient forum. They merely
argued that the applicable law which will determine the validity or
invalidity of respondent's claim is that of Japan, following the
principles of lex loci celebrationis and lex contractus.49While not
abandoning this stance in their petition before the appellate court,
petitioners on certiorari significantly invoked the defense of forum
non conveniens.50 On Petition for Review before this Court,
petitioners dropped their other arguments, maintained the forum
non conveniens defense, and introduced their new argument that
the applicable principle is the [state of the] most significant
relationship rule.51

Be that as it may, this Court is not inclined to deny this petition

merely on the basis of the change in theory, as explained
in Philippine Ports Authority v. City of Iloilo.52 We only pointed out
petitioners' inconstancy in their arguments to emphasize their
incorrect assertion of conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three

consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or should
litigation be initiated? (2) Which law will the court apply? and (3)
Where can the resulting judgment be enforced?53

Analytically, jurisdiction and choice of law are two distinct

concepts.54Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will
determine the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction and
the choice of the lex fori will often coincide, the "minimum contacts"
for one do not always provide the necessary "significant contacts"
for the other.55 The question of whether the law of a state can be
applied to a transaction is different from the question of whether
the courts of that state have jurisdiction to enter a judgment.56

In this case, only the first phase is at issue jurisdiction. ςηαñrοbl εš νι r†υ αl lαω l ιbrα rÿ

Jurisdiction, however, has various aspects. For a court to validly

exercise its power to adjudicate a controversy, it must have
jurisdiction over the plaintiff or the petitioner, over the defendant or
the respondent, over the subject matter, over the issues of the case
and, in cases involving property, over the res or the thing which is
the subject of the litigation.57 In assailing the trial court's
jurisdiction herein, petitioners are actually referring to subject
matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which establishes and
organizes the court. It is given only by law and in the manner
prescribed by law.58 It is further determined by the allegations of
the complaint irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein.59 To succeed in its motion for
the dismissal of an action for lack of jurisdiction over the subject
matter of the claim,60 the movant must show that the court or
tribunal cannot act on the matter submitted to it because no law
grants it the power to adjudicate the claims.61

In the instant case, petitioners, in their motion to dismiss, do not

claim that the trial court is not properly vested by law with
jurisdiction to hear the subject controversy for, indeed, Civil Case
No. 00-0264 for specific performance and damages is one not
capable of pecuniary estimation and is properly cognizable by the
RTC of Lipa City.62 What they rather raise as grounds to question
subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the "state of the most
significant relationship rule."

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the "law of the place of the

ceremony"63 or the law of the place where a contract is made.64 The
doctrine of lex contractus or lex loci contractus means the "law of
the place where a contract is executed or to be performed."65 It
controls the nature, construction, and validity of the contract66 and
it may pertain to the law voluntarily agreed upon by the parties or
the law intended by them either expressly or implicitly.67 Under the
"state of the most significant relationship rule," to ascertain what
state law to apply to a dispute, the court should determine which
state has the most substantial connection to the occurrence and the
parties. In a case involving a contract, the court should consider
where the contract was made, was negotiated, was to be
performed, and the domicile, place of business, or place of
incorporation of the parties.68 This rule takes into account several
contacts and evaluates them according to their relative importance
with respect to the particular issue to be resolved.69
Since these three principles in conflict of laws make reference to the
law applicable to a dispute, they are rules proper for the second
phase, the choice of law.70 They determine which state's law is to be
applied in resolving the substantive issues of a conflicts
problem.71 Necessarily, as the only issue in this case is that of
jurisdiction, choice-of-law rules are not only inapplicable but also
not yet called for.

Further, petitioners' premature invocation of choice-of-law rules is

exposed by the fact that they have not yet pointed out any conflict
between the laws of Japan and ours. Before determining which law
should apply, first there should exist a conflict of laws situation
requiring the application of the conflict of laws rules.72 Also, when
the law of a foreign country is invoked to provide the proper rules
for the solution of a case, the existence of such law must be pleaded
and proved.73

It should be noted that when a conflicts case, one involving a

foreign element, is brought before a court or administrative agency,
there are three alternatives open to the latter in disposing of it: (1)
dismiss the case, either because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume jurisdiction over the
case and apply the internal law of the forum; or (3) assume
jurisdiction over the case and take into account or apply the law of
some other State or States.74 The 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.75

Neither can the other ground raised, forum non conveniens,76 be

used to deprive the trial court of its jurisdiction herein. First, it is
not a proper basis for a motion to dismiss because Section 1, Rule
16 of the Rules of Court does not include it as a ground.77 Second,
whether a suit should be entertained or dismissed on the basis of
the said doctrine depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court.78 In
this case, the RTC decided to assume jurisdiction. Third, the
propriety of dismissing a case based on this principle requires a
factual determination; hence, this conflicts principle is more
properly considered a matter of defense.79

Accordingly, since the RTC is vested by law with the power to

entertain and hear the civil case filed by respondent and the
grounds raised by petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts correctly denied the
petitioners' motion to dismiss.

WHEREFORE, premises considered, the Petition for Review

on Certiorari is DENIED.

SO ORDERED.

Endnotes: