Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 112573 February 9, 1995
NORTHWEST ORIENT IR!INES, INC. petitioner,
vs.
COURT OF PPE!S a"# C.F. SHRP $ COMPN% INC., respondents.

P&I!!, 'R., J.:
This petition for revie on certiorari see!s to set aside the decision of the "ourt
of #ppeals a$r%in& the dis%issal of the petitioner's co%plaint to enforce the
(ud&%ent of a )apanese court. The principal issue here is hether a )apanese
court can ac*uire (urisdiction over a Philippine corporation doin& business in
)apan b+ servin& su%%ons throu&h diplo%atic channels on the Philippine
corporation at its principal o$ce in Manila after prior atte%pts to serve
su%%ons in )apan had failed.
Petitioner Northest Orient #irlines, Inc. ,hereinafter NORTHWEST-, a
corporation or&ani.ed under the las of the State of Minnesota, /.S.#., sou&ht
to enforce in "ivil "ase No. 01234514 of the Re&ional Trial "ourt ,RT"-, 6ranch
78, Manila, a (ud&%ent rendered in its favor b+ a )apanese court a&ainst
private respondent ".F. Sharp 9 "o%pan+, Inc., ,hereinafter S:#RP-, a
corporation incorporated under Philippine las.
#s found b+ the "ourt of #ppeals in the challen&ed decision of 3; Nove%ber
3<<1,
1
the folloin& are the factual and procedural antecedents of this
controvers+=
On Ma+ <, 3<48, plainti> Northest #irlines and defendant
".F. Sharp 9 "o%pan+, throu&h its )apan branch, entered into
an International Passen&er Sales #&enc+ #&ree%ent,
hereb+ the for%er authori.ed the latter to sell its air
transportation tic!ets. /nable to re%it the proceeds of the
tic!et sales %ade b+ defendant on behalf of the plainti>
under the said a&ree%ent, plainti> on March ?7, 3<0; sued
defendant in To!+o, )apan, for collection of the unre%itted
proceeds of the tic!et sales, ith clai% for da%a&es.
On #pril 33, 3<0;, a rit of su%%ons as issued b+ the 15th
"ivil Depart%ent, To!+o District "ourt of )apan a&ainst
defendant at its o$ce at the Taihei+o 6uildin&, 1rd @oor, 31?,
Aa%ashita2cho, Na!a2!u, Ao!oho%a, Bana&aa Prefecture.
The atte%pt to serve the su%%ons as unsuccessful
because the baili> as advised b+ a person in the o$ce that
Mr. Dino.o, the person believed to be authori.ed to receive
court processes as in Manila and ould be bac! on #pril ?8,
3<0;.
On #pril ?8, 3<0;, baili> returned to the defendant's o$ce to
serve the su%%ons. Mr. Dino.o refused to accept the sa%e
clai%in& that he as no lon&er an e%plo+ee of the
defendant.
#fter the to atte%pts of service ere unsuccessful, the
(ud&e of the To!+o District "ourt decided to have the
co%plaint and the rits of su%%ons served at the head
o$ce of the defendant in Manila. On )ul+ 33, 3<0;, the
Director of the To!+o District "ourt re*uested the Supre%e
"ourt of )apan to serve the su%%ons throu&h diplo%atic
channels upon the defendant's head o$ce in Manila.
On #u&ust ?0, 3<0;, defendant received fro% Deput+ Sheri>
Rolando 6alin&it the rit of su%%ons ,p. ?45, Records-.
Despite receipt of the sa%e, defendant failed to appear at
the scheduled hearin&. Thus, the To!+o "ourt proceeded to
hear the plainti>'s co%plaint and on C)anuar+ ?<, 3<03D,
rendered (ud&%ent orderin& the defendant to pa+ the
plainti> the su% of 01,370,3<7 Aen and da%a&es for dela+ at
the rate of 5E per annu% fro% #u&ust ?0, 3<0; up to and
until pa+%ent is co%pleted ,pp. 3?238, Records-.
On March ?8, 3<03, defendant received fro% Deput+ Sheri>
6alin&it cop+ of the (ud&%ent. Defendant not havin&
appealed the (ud&%ent, the sa%e beca%e Fnal and
eGecutor+.
Plainti> as unable to eGecute the decision in )apan, hence,
on Ma+ ?;, 3<01, a suit for enforce%ent of the (ud&%ent as
Fled b+ plainti> before the Re&ional Trial "ourt of Manila
6ranch 78.
2
On )ul+ 35, 3<01, defendant Fled its anser averrin& that the
(ud&%ent of the )apanese "ourt sou&ht to be enforced is null
and void and unenforceable in this (urisdiction havin& been
rendered ithout due and proper notice to the defendant
andHor ith collusion or fraud andHor upon a clear %ista!e of
la and fact ,pp. 83287, Rec.-.
"on@ict of Ias 2 s(bPriorJ 3
/nable to settle the case a%icabl+, the case as tried on the
%erits. #fter the plainti> rested its case, defendant on #pril
?3, 3<0<, Fled a Motion for )ud&%ent on a De%urrer to
Kvidence based on to &rounds=
,3- the forei&n (ud&%ent sou&ht to be enforced is null and
void for ant of (urisdiction and ,?- the said (ud&%ent is
contrar+ to Philippine la and public polic+ and rendered
ithout due process of la. Plainti> Fled its opposition after
hich the court a quo rendered the no assailed decision
dated )une ?3, 3<0< &rantin& the de%urrer %otion and
dis%issin& the co%plaint ,Decision, pp. 1452140, Records-. In
&rantin& the de%urrer %otion, the trial court held that=
The forei&n (ud&%ent in the )apanese "ourt
sou&ht in this action is null and void for
ant of (urisdiction over the person of the
defendant considerin& that this is an action
in personamL the )apanese "ourt did not
ac*uire (urisdiction over the person of the
defendant because (urisprudence re*uires
that the defendant be served ith
su%%ons in )apan in order for the )apanese
"ourt to ac*uire (urisdiction over it, the
process of the "ourt in )apan sent to the
Philippines hich is outside )apanese
(urisdiction cannot confer (urisdiction over
the defendant in the case before the
)apanese "ourt of the case at bar. Boudard
versus Tait 54 Phil. 34;. The plainti>
contends that the )apanese "ourt ac*uired
(urisdiction because the defendant is a
resident of )apan, havin& four ,8- branches
doin& business therein and in fact had a
per%it fro% the )apanese &overn%ent to
conduct business in )apan ,citin& the
eGhibits presented b+ the plainti>-L if this is
so then service of su%%ons should have
been %ade upon the defendant in )apan in
an+ of these alle&ed four branchesL as
ad%itted b+ the plainti> the service of the
su%%ons issued b+ the )apanese "ourt
as %ade in the Philippines thru a
Philippine Sheri>. This "ourt a&rees that if
the defendant in a forei&n court is a
resident in the court of that forei&n court
such court could ac*uire (urisdiction over
the person of the defendant but it %ust be
served upon the defendant in the territorial
(urisdiction of the forei&n court. Such is not
the case here because the defendant as
served ith su%%ons in the Philippines
and not in )apan.
/nable to accept the said decision, plainti> on )ul+ 33, 3<0<
%oved for reconsideration of the decision, Flin& at the sa%e
ti%e a conditional Notice of #ppeal, as!in& the court to treat
the said notice of appeal Mas in e>ect after and upon
issuance of the court's denial of the %otion for
reconsideration.M
Defendant opposed the %otion for reconsideration to hich a
Repl+ dated #u&ust ?0, 3<0< as Fled b+ the plainti>.
On October 35, 3<0<, the loer court disre&arded the Motion
for Reconsideration and &ave due course to the plainti>'s
Notice of #ppeal.
3
In its decision, the "ourt of #ppeals sustained the trial court. It a&reed ith the
latter in its reliance upon Boudard vs. Tait
(
herein it as held that Mthe
process of the court has no eGtraterritorial e>ect and no (urisdiction is ac*uired
over the person of the defendant b+ servin& hi% be+ond the boundaries of the
state.M To support its position, the "ourt of #ppeals further stated=
In an action strictl+ in personam, such as the instant case,
personal service of su%%ons ithin the foru% is re*uired for
the court to ac*uire (urisdiction over the defendant
,Ma&dalena Kstate Inc. vs. Nieto, 3?7 S"R# ?1;-. To confer
(urisdiction on the court, personal or substituted service of
su%%ons on the defendant not eGtraterritorial service is
necessar+ ,Dial "orp vs. Soriano, 353 S"R# 41<-.
6ut hile plainti>2appellant concedes that the collection suit
Fled is an action in personam, it is its theor+ that a
distinction %ust be %ade beteen an action in personam
a&ainst a resident defendant and an action in personam
a&ainst a non2resident defendant. )urisdiction is ac*uired
over a non2resident defendant onl+ if he is served personall+
ithin the (urisdiction of the court and over a resident
defendant if b+ personal, substituted or constructive service
confor%abl+ to statutor+ authori.ation. Plainti>2appellant
ar&ues that since the defendant2appellee %aintains branches
in )apan it is considered a resident defendant. "orollaril+,
personal, substituted or constructive service of su%%ons
hen %ade in co%pliance ith the procedural rules is
su$cient to &ive the court (urisdiction to render (ud&%ent in
personam.
Such an ar&u%ent does not persuade.
It is a &eneral rule that processes of the court cannot lafull+
be served outside the territorial li%its of the (urisdiction of
the court fro% hich it issues ,"arter vs. "arterL 83 S.K. ?d
"on@ict of Ias 2 s(bPriorJ ?
71?, ?;3- and this is regardless of the residence or
citizenship of the part+ thus served ,Ioa2Rahr vs. Rahr, 3?<
NN 8<8, 37; Ioa 733, 17 IR", NS, ?<?, #%. "ase 3<3?
D50;-. There %ust be actual service ithin the proper
territorial li%its on defendant or so%eone authori.ed to
accept service for hi%. Thus, a defendant, hether a resident
or not in the foru% here the action is Fled, %ust be served
ith su%%ons ithin that foru%.
6ut even assu%in& a distinction beteen a resident
defendant and non2resident defendant ere to be adopted,
such distinction applies onl+ to natural persons and not in the
corporations. This Fnds support in the concept that Ma
corporation has no ho%e or residence in the sense in hich
those ter%s are applied to natural personsM ,"laude Neon
Ii&hts vs. Phil. #dvertisin& "orp., 74 Phil. 5;4-. Thus, as cited
b+ the defendant2appellee in its brief=
Residence is said to be an attribute of a natural person, and
can be predicated on an artiFcial bein& onl+ b+ %ore or less
i%perfect analo&+. Strictl+ spea!in&, therefore, a corporation
can have no local residence or habitation. It has been said
that a corporation is a %ere ideal eGistence, subsistin& onl+
in conte%plation of la O an invisible bein& hich can have,
in fact, no localit+ and can occup+ no space, and therefore
cannot have a dellin& place. ,30 #%. )ur. ?d, p. 5<1 citin&
Bi%%erle v. Tope!a, 00 14;, 3?0 p. 154L Nood v. :artfold F.
Ins. "o., 31 "onn ?;?-
)urisprudence so holds that the forei&n or do%estic character
of a corporation is to be deter%ined b+ the place of its ori&in
here its charter as &ranted and not b+ the location of its
business activities ,)ennin&s v. Idaho Rail Ii&ht 9 P. "o., ?5
Idaho 4;1, 385 p. 3;3-, # corporation is a MresidentM and an
inhabitant of the state in hich it is incorporated and no
other ,15 #%. )ur. ?d, p. 8<-.
Defendant2appellee is a Philippine "orporation dul+
or&ani.ed under the Philippine las. "learl+, its residence is
the Philippines, the place of its incorporation, and not )apan.
Nhile defendant2appellee %aintains branches in )apan, this
ill not %a!e it a resident of )apan. # corporation does not
beco%e a resident of another b+ en&a&in& in business there
even thou&h licensed b+ that state and in ter%s &iven all the
ri&hts and privile&es of a do%estic corporation ,Palveston :.
9 S.#.R. "o. vs. Pon.ales, 373 /S 8<5, 10 I ed. ?80, 8 S "t.
8;3-.
On this pre%ise, defendant appellee is a non2resident
corporation. #s such, court processes %ust be served upon it
at a place ithin the state in hich the action is brou&ht and
not elsehere ,St. "lair vs. "oG, 3;5 /S 17;, ?4 I ed. ???, 3
S. "t. 178-.
5
It then concluded that the service of su%%ons e>ected in Manila or be+ond the
territorial boundaries of )apan as null and did not confer (urisdiction upon the
To!+o District "ourt over the person of S:#RPL hence, its decision as void.
/nable to obtain a reconsideration of the decision, NORT:NKST elevated the
case to this "ourt contendin& that the respondent court erred in holdin& that
S:#RP as not a resident of )apan and that su%%ons on S:#RP could onl+ be
validl+ served ithin that countr+.
# forei&n (ud&%ent is presu%ed to be valid and bindin& in the countr+ fro%
hich it co%es, until the contrar+ is shon. It is also proper to presu%e the
re&ularit+ of the proceedin&s and the &ivin& of due notice therein.
)
/nder Section 7;, Rule 1< of the Rules of "ourt, a (ud&%ent in an action in
personam of a tribunal of a forei&n countr+ havin& (urisdiction to pronounce the
sa%e is presu%ptive evidence of a ri&ht as beteen the parties and their
successors2in2interest b+ a subse*uent title. The (ud&%ent %a+, hoever, be
assailed b+ evidence of ant of (urisdiction, ant of notice to the part+,
collusion, fraud, or clear %ista!e of la or fact. #lso, under Section 1 of Rule
313, a court, hether of the Philippines or elsehere, en(o+s the presu%ption
that it as actin& in the laful eGercise of (urisdiction and has re&ularl+
perfor%ed its o$cial dut+.
"onse*uentl+, the part+ attac!in& a forei&n (ud&%ent has the burden of
overco%in& the presu%ption of its validit+.
7
6ein& the part+ challen&in& the
(ud&%ent rendered b+ the )apanese court, S:#RP had the dut+ to de%onstrate
the invalidit+ of such (ud&%ent. In an atte%pt to dischar&e that burden, it
contends that the eGtraterritorial service of su%%ons e>ected at its ho%e
o$ce in the Philippines as not onl+ ine>ectual but also void, and the )apanese
"ourt did not, therefore ac*uire (urisdiction over it.
It is settled that %atters of re%ed+ and procedure such as those relatin& to the
service of process upon a defendant are &overned b+ the lex fori or the internal
la of the foru%.
*
In this case, it is the procedural la of )apan here the
(ud&%ent as rendered that deter%ines the validit+ of the eGtraterritorial
service of process on S:#RP. #s to hat this la is is a *uestion of fact, not of
la. It %a+ not be ta!en (udicial notice of and %ust be pleaded and proved li!e
an+ other fact.
9
Sections ?8 and ?7, Rule 31? of the Rules of "ourt provide that
it %a+ be evidenced b+ an o$cial publication or b+ a dul+ attested or
authenticated cop+ thereof. It as then incu%bent upon S:#RP to present
evidence as to hat that )apanese procedural la is and to sho that under it,
the assailed eGtraterritorial service is invalid. It did not. #ccordin&l+, the
presu%ption of validit+ and re&ularit+ of the service of su%%ons and the
decision thereafter rendered b+ the )apanese court %ust stand.
"on@ict of Ias 2 s(bPriorJ 1
#lternativel+ in the li&ht of the absence of proof re&ardin& )apanese
la, the presu%ption of identit+ or si%ilarit+ or the so2called processual
presu%ption
1+
%a+ be invo!ed. #ppl+in& it, the )apanese la on the %atter is
presu%ed to be si%ilar ith the Philippine la on service of su%%ons on a
private forei&n corporation doin& business in the Philippines. Section 38, Rule
38 of the Rules of "ourt provides that if the defendant is a forei&n corporation
doin& business in the Philippines, service %a+ be %ade= ,3- on its resident
a&ent desi&nated in accordance ith la for that purpose, or, ,?- if there is no
such resident a&ent, on the &overn%ent o$cial desi&nated b+ la to that
e>ectL or ,1- on an+ of its o$cers or a&ents ithin the Philippines.
If the forei&n corporation has desi&nated an a&ent to receive su%%ons, the
desi&nation is eGclusive, and service of su%%ons is ithout force and &ives the
court no (urisdiction unless %ade upon hi%.
11
Nhere the corporation has no such a&ent, service shall be %ade on the
&overn%ent o$cial desi&nated b+ la, to it= ,a- the Insurance "o%%issioner
in the case of a forei&n insurance co%pan+L ,b- the Superintendent of 6an!s, in
the case of a forei&n ban!in& corporationL and ,c- the Securities and KGchan&e
"o%%ission, in the case of other forei&n corporations dul+ licensed to do
business in the Philippines. Nhenever service of process is so %ade, the
&overn%ent o$ce or o$cial served shall trans%it b+ %ail a cop+ of the
su%%ons or other le&al proccess to the corporation at its ho%e or principal
o$ce. The sendin& of such cop+ is a necessar+ part of the service.
12
S:#RP contends that the las authori.in& service of process upon the
Securities and KGchan&e "o%%ission, the Superintendent of 6an!s, and the
Insurance "o%%issioner, as the case %a+ be, presuppose a situation herein
the forei&n corporation doin& business in the countr+ no lon&er has an+
branches or o$ces ithin the Philippines. Such contention is belied b+ the
pertinent provisions of the said las. Thus, Section 3?0 of the "orporation
"ode
13
and Section 3<; of the Insurance "ode
1(
clearl+ conte%plate to
situations= ,3- if the corporation had left the Philippines or had ceased to
transact business therein, and ,?- if the corporation has no desi&nated a&ent.
Section 34 of the Peneral 6an!in& #ct
15
does not even spea! a corporation
hich had ceased to transact business in the Philippines.
Nohere in its pleadin&s did S:#RP profess to havin& had a resident a&ent
authori.ed to receive court processes in )apan. This silence could onl+ %ean, or
least create an i%pression, that it had none. :ence, service on the desi&nated
&overn%ent o$cial or on an+ of S:#RP's o$cers or a&ents in )apan could be
availed of. The respondent, hoever, insists that onl+ service of an+ of its
o$cers or e%plo+ees in its branches in )apan could be resorted to. Ne do not
a&ree. #s found b+ the respondent court, to atte%pts at service ere %ade
at S:#RP's Ao!oha%a branch. 6oth ere unsuccessful. On the Frst atte%pt, Mr.
Dino.o, ho as believed to be the person authori.ed to accept court process,
as in Manila. On the second, Mr. Dino.o as present, but to accept the
su%%ons because, accordin& to hi%, he as no lon&er an e%plo+ee of S:#RP.
Nhile it %a+ be true that service could have been %ade upon an+ of the
o$cers or a&ents of S:#RP at its three other branches in )apan, the availabilit+
of such a recourse ould not preclude service upon the proper &overn%ent
o$cial, as stated above.
#s found b+ the "ourt of #ppeals, it as the To!+o District "ourt hich ordered
that su%%ons for S:#RP be served at its head o$ce in the Philippine's after
the to atte%pts of service had failed.
1)
The To!+o District "ourt re*uested
the Supre%e "ourt of )apan to cause the deliver+ of the su%%ons and other
le&al docu%ents to the Philippines. #ctin& on that re*uest, the Supre%e "ourt
of )apan sent the su%%ons to&ether ith the other le&al docu%ents to the
Ministr+ of Forei&n #>airs of )apan hich, in turn, forarded the sa%e to the
)apanese K%bass+ in Manila . Thereafter, the court processes ere delivered to
the Ministr+ ,no Depart%ent- of Forei&n #>airs of the Philippines, then to the
KGecutive )ud&e of the "ourt of First Instance ,no Re&ional Trial "ourt- of
Manila, ho forthith ordered Deput+ Sheri> Rolando 6alin&it to serve the
sa%e on S:#RP at its principal o$ce in Manila. This service is e*uivalent to
service on the proper &overn%ent o$cial under Section 38, Rule 38 of the
Rules of "ourt, in relation to Section 3?0 of the "orporation "ode. :ence,
S:#RP's contention that such %anner of service is not valid under Philippine
las holds no ater.
17
In decidin& a&ainst the petitioner, the respondent court sustained the trial
court's reliance on Boudard vs. Tait
1*
here this "ourt held=
The funda%ental rule is that (urisdiction in personam over
nonresidents, so as to sustain a %one+ (ud&%ent, %ust be
based upon personal service ithin the state hich renders
the (ud&%ent.
GGG GGG GGG
The process of a court, has no eGtraterritorial e>ect, and no
(urisdiction is ac*uired over the person of the defendant b+
servin& hi% be+ond the boundaries of the state. Nor has a
(ud&%ent of a court of a forei&n countr+ a&ainst a resident of
this countr+ havin& no propert+ in such forei&n countr+ based
on process served here, an+ e>ect here a&ainst either the
defendant personall+ or his propert+ situated here.
Process issuin& fro% the courts of one state or countr+
cannot run into another, and althou&h a nonresident
defendant %a+ have been personall+ served ith such
process in the state or countr+ of his do%icile, it ill not &ive
such (urisdiction as to authori.e a personal (ud&%ent a&ainst
hi%.
It further availed of the rulin& in agdalena Estate! "nc. vs. Nieto
19
and #ial
$orp. vs. Soriano,
2+
as ell as the principle laid don b+ the Ioa Supre%e
"ourt in the 3<33 case of Raher vs. Raher.
21
"on@ict of Ias 2 s(bPriorJ 8
The Frst three cases are, hoever, inapplicable. Boudard involved the
enforce%ent of a (ud&%ent of the civil division of the "ourt of First Instance of
:anoi, French Indo2"hina. The trial court dis%issed the case because the :anoi
court never ac*uired (urisdiction over the person of the defendant considerin&
that MCtDhe, evidence adduced at the trial conclusivel+ proves that neither the
appellee Cthe defendantD nor his a&ent or e%plo+ees ere ever in :anoi,
French Indo2"hinaL and that the deceased Marie Theodore )ero%e 6oudard had
never, at an+ ti%e, been his e%plo+ee.M In agdalena Estate, hat as
declared invalid resultin& in the failure of the court to ac*uire (urisdiction over
the person of the defendants in an action in personam as the service of
su%%ons throu&h publication a&ainst non2appearin& resident defendants. It
as clai%ed that the latter concealed the%selves to avoid personal service of
su%%ons upon the%. In #ial, the defendants ere forei&n corporations hich
ere not, do%iciled and licensed to en&a&e in business in the Philippines and
hich did not have o$cers or a&ents, places of business, or properties here.
On the other hand, in the instant case, S:#RP as doin& business in )apan and
as %aintainin& four branches therein.
Insofar as to the Philippines is concerned, Raher is a thin& of the past. In that
case, a divided Supre%e "ourt of Ioa declared that the principle that there
can be no (urisdiction in a court of a territor+ to render a personal (ud&%ent
a&ainst an+one upon service %ade outside its li%its as applicable ali!e to
cases of residents and non2residents. The principle as put at rest b+ the
/nited States Supre%e "ourt hen it ruled in the 3<8; case of illi%en vs.
e&er
22
that do%icile in the state is alone su$cient to brin& an absent
defendant ithin the reach of the state's (urisdiction for purposes of a personal
(ud&%ent b+ %eans of appropriate substituted service or personal service
ithout the state. This principle is e%bodied in section 30, Rule 38 of the Rules
of "ourt hich allos service of su%%ons on residents te%poraril+ out of the
Philippines to be %ade out of the countr+. The rationale for this rule as
eGplained in illi%en as follos=
CTDhe authorit+ of a state over one of its citi.ens is not
ter%inated b+ the %ere fact of his absence fro% the state.
The state hich accords hi% privile&es and a>ords protection
to hi% and his propert+ b+ virtue of his do%icile %a+ also
eGact reciprocal duties. MKn(o+%ent of the privile&es of
residence ithin the state, and the attendant ri&ht to invo!e
the protection of its las, are inseparableM fro% the various
incidences of state citi.enship. The responsibilities of that
citi.enship arise out of the relationship to the state hich
do%icile creates. That relationship is not dissolved b+ %ere
absence fro% the state. The attendant duties, li!e the ri&hts
and privile&es incident to do%icile, are not dependent on
continuous presence in the state. One such incident of
do%icile is a%enabilit+ to suit ithin the state even durin&
so(ourns ithout the state, here the state has provided and
e%plo+ed a reasonable %ethod for apprisin& such an absent
part+ of the proceedin&s a&ainst hi%.
23
The do%icile of a corporation belon&s to the state here it as incorporated.
2(
In a strict technical sense, such do%icile as a corporation %a+ have is sin&le in
its essence and a corporation can have onl+ one do%icile hich is the state of
its creation.
25
Nonetheless, a corporation for%ed in one2state %a+, for certain purposes, be
re&arded a resident in another state in hich it has o$ces and transacts
business. This is the rule in our (urisdiction and apropos thereto, it %a+ be
necesser+ to *uote hat e stated in State "nvestment House! "nc, vs.
$iti'an%! N.(.,
2)
to it=
The issue is hether these Philippine branches or units %a+
be considered Mresidents of the Philippine IslandsM as that
ter% is used in Section ?; of the Insolvenc+ Ia . . . or
residents of the state under the las of hich the+ ere
respectivel+ incorporated. The anser cannot be found in the
Insolvenc+ Ia itself, hich contains no deFnition of the
ter%, resident, or an+ clear indication of its %eanin&. There
are hoever other statutes, albeit of subse*uent enact%ent
and e>ectivit+, fro% hich enli&htenin& notions of the ter%
%a+ be derived.
The National Internal Revenue "ode declares that the ter%
M'resident forei&n corporation' applies to a forei&n corporation
en&a&ed in trade or business ithin the Philippines,M as
distin&uished fro% a M'non2resident forei&n corporation' . . .
,hich is one- not en&a&ed in trade or bussiness ithin the
Philippines.M CSec. ?;, pars. ,h- and ,i-D.
The O>shore 6an!in& Ia, Presidential Decree No. 3;18,
states Mthat branches, subsidiaries, a$liation, eGtension
o$ces or an+ other units of corporation or (uridical person
or&ani.ed under the las of an+ forei&n countr+ operatin& in
the Philippines shall be considered residents of the
Philippines. CSec. 3,e-D.
The Peneral 6an!in& #ct, Republic #ct No. 114, places
Mbranches and a&encies in the Philippines of forei&n
ban!s . . . ,hich are- called Philippine branches,M in the
sa%e cate&or+ as Mco%%ercial ban!s, savin&s associations,
%ort&a&e ban!s, develop%ent ban!s, rural ban!s, stoc!
savin&s and loan associationsM ,hich have been for%ed and
or&ani.ed under Philippine las-, %a!in& no distinction
beteen the for%er and the latter in so far as the ter%s
Mban!in& institutionsM and Mban!M are used in the #ct CSec. ?D,
declarin& on the contrar+ that in Mall %atters not speciFcall+
covered b+ special provisions applicable onl+ to forei&n
ban!s, or their branches and a&encies in the Philippines, said
forei&n ban!s or their branches and a&encies lafull+ doin&
business in the Philippines Mshall be bound b+ all las, rules,
"on@ict of Ias 2 s(bPriorJ 7
and re&ulations applicable to do%estic ban!in& corporations
of the sa%e class, eGcept such las, rules and re&ulations as
provided for the creation, for%ation, or&ani.ation, or
dissolution of corporations or as FG the relation, liabilities,
responsibilities, or duties of %e%bers, stoc!holders or
o$cers of corporation. CSec. 30D.
This court itself has alread+ had occasion to hold C"laude
Neon Ii&hts, Fed. Inc. vs. Philippine #dvertisin& "orp., 74 Phil.
5;4D that a forei&n corporation licitl+ doin& business in the
Philippines, hich is a defendant in a civil suit, %a+ not be
considered a non)resident ithin the scope of the le&al
provision authori.in& attach%ent a&ainst a defendant not
residing in the *hilippine "slandsL CSec. 8?8, in relation to Sec.
83? of #ct No. 3<;, the "ode of "ivil ProcedureL Sec. 3,f-,
Rule 7< of the Rules of 3<8;, Sec. 3,f-, Rule 74, Rules of
3<58D in other ords, a preli%inar+ attach%ent %a+ not be
applied for and &ranted solel+ on the asserted fact that the
defendant is a forei&n corporation authori.ed to do business
in the Philippines O and is conse*uentl+ and necessaril+, Ma
part+ ho resides out of the Philippines.M Parentheticall+, if it
%a+ not be considered as a part+ not residin& in the
Philippines, or as a part+ ho resides out of the countr+,
then, lo&icall+, it %ust be considered a part+ ho does reside
in the Philippines, ho is a resident of the countr+. 6e this as
it %a+, this "ourt pointed out that=
. . . Our las and (urisprudence indicate a
purpose to assi%ilate forei&n corporations,
dul+ licensed to do business here, to the
status of do%estic corporations. ,"f.
Section 41, #ct No. 387<, and Marshall
Nells "o. vs. :enr+ N. Klser 9 "o., 85 Phil.
4;, 45L Au "on& Kn& vs. Trinidad, 84 Phil.
107, 833- Ne thin! it ould be entirel+ out
of line ith this polic+ should e %a!e a
discri%ination a&ainst a forei&n
corporation, li!e the petitioner, and sub(ect
its propert+ to the harsh rit of sei.ure b+
attach%ent hen it has co%plied not onl+
ith ever+ re*uire%ent of la %ade
speciall+ of forei&n corporations, but in
addition ith ever+ re*uire%ent of la
%ade of do%estic corporations. . . .
Obviousl+, the assi%ilation of forei&n corporations authori.ed
to do business in the Philippines Mto the status of domestic
corporations, subsu%es their bein& found and operatin& as
corporations, hence, residing, in the countr+.
The sa%e principle is reco&ni.ed in #%erican la= that the
residence of a corporation, if it can be said to have a
residence, is necessaril+ here it eGercises corporate
functions . . .LM that it is considered as dellin& Min the place
here its business is done . . .,M as bein& Mlocated here its
franchises are eGercised . . .,M and as bein& Mpresent here it
is en&a&ed in the prosecution of the corporate enterpriseLM
that a Mforei&n corporation licensed to do business in a state
is a resident of an+ countr+ here it %aintains an o$ce or
a&ent for transaction of its usual and custo%ar+ business for
venue purposesLM and that the Mnecessar+ ele%ent in its
si&niFcation is localit+ of eGistence.M CNords and Phrases,
Per%anent Kd., vol. 14, pp. 1<8, 83?, 8<1D.
In as %uch as S:#RP as ad%ittedl+ doin& business in )apan throu&h its four
dul+ re&istered branches at the ti%e the collection suit a&ainst it as Fled,
then in the li&ht of the processual presu%ption, S:#RP %a+ be dee%ed a
resident of )apan, and, as such, as a%enable to the (urisdiction of the courts
therein and %a+ be dee%ed to have assented to the said courts' laful
%ethods of servin& process.
27
#ccordin&l+, the eGtraterritorial service of su%%ons on it b+ the )apanese "ourt
as valid not onl+ under the processual presu%ption but also because of the
presu%ption of re&ularit+ of perfor%ance of o$cial dut+.
Ne Fnd NORT:NKST's clai% for attorne+'s fees, liti&ation eGpenses, and
eGe%plar+ da%a&es to be ithout %erit. Ne Fnd no evidence that ould (ustif+
an aard for attorne+'s fees and liti&ation eGpenses under #rticle ??;0 of the
"ivil "ode of the Philippines. Nor is an aard for eGe%plar+ da%a&es
arranted. /nder #rticle ??18 of the "ivil "ode, before the court %a+ consider
the *uestion of hether or not eGe%plar+ da%a&es should be aarded, the
plainti> %ust sho that he is entitled to %oral, te%perate, or co%pensator+
da%a&ed. There bein& no such proof presented b+ NORT:NKST, no eGe%plar+
da%a&es %a+ be ad(ud&ed in its favor.
N:KRKFORK, the instant petition is partl+ PR#NTKD, and the challen&ed
decision is #FFIRMKD insofar as it denied NORT:NKST's clai%s for attorne+s
fees, liti&ation eGpenses, and eGe%plar+ da%a&es but RKVKRSKD insofar as in
sustained the trial court's dis%issal of NORT:NKST's co%plaint in "ivil "ase
No. 01234514 of 6ranch 78 of the Re&ional Trial "ourt of Manila, and another in
its stead is hereb+ rendered ORDKRINP private respondent ".F. S:#RP I
"OMP#NA, IN". to pa+ to NORT:NKST the a%ounts ad(ud&ed in the forei&n
(ud&%ent sub(ect of said case, ith interest thereon at the le&al rate fro% the
Flin& of the co%plaint therein until the said forei&n (ud&%ent is full+ satisFed.
"osts a&ainst the private respondent.
SO ORDKRKD.
"on@ict of Ias 2 s(bPriorJ 5
*adilla! Bellosillo! +uaison and ,apunan! --.! concur.
SECON& &I,ISION
-G.R. No. 1+*53*. 'a"uary 22, 199).
!OUR&ES . ,!MONTE a"# !FRE&O &. ,!MONTE, petitioners, vs.
THE HONOR/!E COURT OF PPE!S, THIR& &I,ISION a"# ROSIT
&IM!NT, respondents.
& E C I S I O N
MEN&O0, '.1
Petitioner Iourdes #. Val%onte is a forei&n resident. The *uestion is hether in
an action for partition Fled a&ainst her and her husband, ho is also her
attorne+, su%%ons intended for her %a+ be served on her husband, ho has a
la o$ce in the Philippines. The Re&ional Trial "ourt of Manila, 6ranch 80, said
no and refused to declare Iourdes #. Val%onte in default, but the "ourt of
#ppeals said +es. :ence this petition for revie on certiorari.
The facts of the case are as follos=
Petitioners Iourdes #. Val%onte and #lfredo D. Val%onte are husband and ife.
The+ are both residents of <;??? "ar!ee! Drive South Seattle, Nashin&ton,
/.S.#. Petitioner #lfredo D. Val%onte, ho is a %e%ber of the Philippine bar,
hoever, practices his profession in the Philippines, co%%utin& for this
purpose beteen his residence in the state of Nashin&ton and Manila, here
he holds o$ce at S21;8 Pedisco "entre, 3758 #. Mabini, Kr%ita, Manila.
On March <, 3<<?, private respondent Rosita Di%alanta, ho is the sister of
petitioner Iourdes #. Val%onte, Fled a co%plaint for partition of real propert+
and accountin& of rentals a&ainst petitioners Iourdes #. Val%onte and #lfredo
D. Val%onte before the Re&ional Trial "ourt of Manila, 6ranch 80. The sub(ect of
the action is a three2door apart%ent located in Paco, Manila.
In her "o%plaint, private respondent alle&ed=
The plainti> is of le&al a&e, a ido and is at present a resident of 380?1
"ona+ Road, "hesterFeld, Missouri, /.S.#., hile the defendants are spouses,
of le&al a&e and at present residents of <;??? "ar!ee! Drive, South Seattle,
Nashin&ton, /.S.#., but, for purposes of this co%plaint %a+ be served ith
su%%ons at Pedisco "enter, /nit 1;8, 3758 #. Mabini St., Kr%ita, Manila
here defendant #lfredo D. Val%onte as defendant Iourdes #rreola Val%onteQs
spouse holds o$ce and here he can be found.
#pparentl+, the fore&oin& aver%ents ere %ade on the basis of a letter
previousl+ sent b+ petitioner Iourdes #. Val%onte to private respondentQs
counsel
in hich, in re&ard to the partition of the propert+ in *uestion, she referred
private respondentQs counsel to her husband as the part+ to ho% all
co%%unications intended for her should be sent. The letter reads=
)ul+ 8, 3<<3
Dear #tt+. 6al&os=
"on@ict of Ias 2 s(bPriorJ 4
This is in response to +our letter, dated ?; )une 3<<3, hich I received on 1 )ul+
3<<3. Please address all co%%unications to %+ la+er, #tt+. #lfredo D.
Val%onte, hose address, telephone and faG nu%bers appear belo.
cHo Pri%e Marine
Pedisco "enter, /nit 1;8
3758 #. Mabini, Kr%ita
Metro Manila
Telephone= 7?323415
FaG= ?32?;<7
Service of su%%ons as then %ade upon petitioner #lfredo D. Val%onte, ho
at the ti%e, as at his o$ce in Manila. Petitioner #lfredo D. Val%onte accepted
the su%%ons, insofar as he as concerned, but refused to accept the
su%%ons for his ife, Iourdes #. Val%onte, on the &round that he as not
authori.ed to accept the process on her behalf. #ccordin&l+ the process server
left ithout leavin& a cop+ of the su%%ons and co%plaint for petitioner
Iourdes #. Val%onte.
Petitioner #lfredo D. Val%onte thereafter Fled his #nser ith "ounterclai%.
Petitioner Iourdes #. Val%onte, hoever, did not Fle her #nser. For this
reason private respondent %oved to declare her in default. Petitioner #lfredo
D. Val%onte entered a special appearance in behalf of his ife and opposed
the private respondentQs %otion.
In its Order dated )ul+ 1, 3<<?, the trial court, denied private respondentQs
%otion to declare petitioner Iourdes #. Val%onte in default. # %otion for
reconsideration as si%ilarl+ denied on Septe%ber ?1, 3<<?. Nhereupon,
private respondent Fled a petition for certiorari, prohibition and %anda%us
ith the "ourt of #ppeals.
On Dece%ber ?<, 3<<?, the "ourt of #ppeals rendered a decision &rantin& the
petition and declarin& Iourdes #. Val%onte in default. # cop+ of the appellate
courtQs decision as received b+ petitioner #lfredo D. Val%onte on )anuar+ /0!
3<<1 at his Manila o$ce and on )anuar+ ?3, 3<<1 in Seattle, Nashin&ton.
:ence, this petition.
The issue at bar is hether in li&ht of the facts set forth above, petitioner
Iourdes #. Val%onte as validl+ served ith su%%ons. In holdin& that she had
been, the "ourt of #ppeals stated=
3
C3D
CIDn her above2*uoted repl+, Mrs. Val%onte clearl+ and une*uivocall+ directed
the afore%entioned counsel of Di%alanta to address all communications
,evidentl+ referrin& to her controvers+ ith her sister Mrs. Di%alanta over the
Paco propert+, no the sub(ect of the instant case- to her la+er ho happens
also to be her husband. Such directive as %ade ithout an+ *ualiFcation (ust
as as her choiceHdesi&nation of her husband #tt+. Val%onte as her la+er
3
li!eise %ade ithout an+ *ualiFcation or reservation. #n+ disclai%er
therefore on the part of #tt+. Val%onte as to his bein& his ifeQs attorne+ ,at
least ith re&ard to the dispute vis2a2vis CsicD the Paco propert+- ould appear
to be feeble or tri@in&, if not incredible.
This vie is bolstered b+ #tt+. Val%onteQs subse*uent alle&ed special
appearance %ade on behalf of his ife. Nhereas Mrs. Val%onte had %anifestl+
authori.ed her husband to serve as her la+er relative to her dispute ith her
sister over the Paco propert+ and to receive all co%%unications re&ardin& the
sa%e and subse*uentl+ to appear on her behalf b+ a+ of a so2called special
appearance, she ould nonetheless no insist that the sa%e husband ould
nonetheless had absolutel+ no authorit+ to receive su%%ons on her behalf. In
e>ect, she is assertin& that representation b+ her la+er ,ho is also her
husband- as far as the Paco propert+ controvers+ is concerned, should onl+ be
%ade b+ hi% hen such representation ould be favorable to her but not
otherise. It ould obviousl+ be ine*uitable for this "ourt to allo private
respondent Iourdes #. Val%onte to hold that her husband has the authorit+ to
represent her hen an advanta&e is to be obtained b+ her and to den+ such
authorit+ hen it ould turn out to be her disadvanta&e. If this be alloed, Our
Rules of "ourt, instead of bein& an instru%ent to pro%ote (ustice ould be
%ade use of to thart or frustrate the sa%e.
GGG GGG GGG
Turnin& to another point, it ould not do for /s to overloo! the fact that the
disputed su%%ons as served not upon (ust an ordinar+ la+er of private
respondent Iourdes #. Val%onte, but upon her la+er husband. 6ut that is not
all, the sa%e la+erHhusband happens to be also her co2defendant in the
instant case hich involves real propert+ hich, accordin& to her
la+erHhusbandH co2defendant, belon&s to the con(u&al partnership of the
defendants ,the spouses Val%onte-. It is hi&hl+ inconceivable and certainl+ it
ould be contrar+ to hu%an nature for the la+erHhusbandHco2defendant to
!eep to hi%self the fact that the+ ,the spouses Val%onte- had been sued ith
re&ard to a propert+ hich he clai%s to be con(u&al. Parentheticall+, there is
nothin& in the records of the case before /s re&ardin& an+ %anifestation b+
private respondent Iourdes #. Val%onte about her lac! of !noled&e about the
case instituted a&ainst her and her la+erHhusbandHco2defendant b+ her sister
Rosita.
PRKMISKS "ONSIDKRKD, the instant petition for certiorari, prohibition and
%anda%us is &iven due course. This "ourt hereb+ Resolves to nullif+ the orders
of the court a quo dated )ul+ 1, 3<<? and Septe%ber ?1, 3<<? and further
declares private respondent Iourdes #rreola Val%onte as havin& been properl+
served ith su%%ons.
Petitioners assail the afore*uoted decision, alle&in& that the "ourt of #ppeals
erred ,3- in refusin& to appl+ the provisions of Rule 38, R 34 of the Revised
Rules of "ourt and appl+in& instead Rule 38, R 0 hen the fact is that petitioner
Iourdes #. Val%onte is a nonresident defendantL and ,?- because even if Rule
38, R 0 is the applicable provision, there as no valid substituted service as
"on@ict of Ias 2 s(bPriorJ 0
there as no strict co%pliance ith the re*uire%ent b+ leavin& a cop+ of the
su%%ons and co%plaint ith petitioner #lfredo D. Val%onte. Private
respondent, upon the other hand, asserts that petitioners are invo!in& a
technicalit+ and that strict adherence to the rules ould onl+ result in a useless
cere%on+.
Ne hold that there as no valid service of process on Iourdes #. Val%onte.
To provide perspective, it ill be helpful to deter%ine Frst the nature of the
action Fled a&ainst petitioners Iourdes #. Val%onte and #lfredo D. Val%onte b+
private respondent, hether it is an action in personam! in rem or quasi in
rem. This is because the rules on service of su%%ons e%bodied in Rule 38
appl+ accordin& to hether an action is one or the other of these actions.
In an action in personam! personal service of su%%ons or, if this is not possible
and he cannot be personall+ served, substituted service, as provided in Rule
38, R 420
?
C?D is essential for the ac*uisition b+ the court of (urisdiction over the
person of a defendant ho does not voluntaril+ sub%it hi%self to the authorit+
of the court.
1
C1D If defendant cannot be served ith su%%ons because he is
te%poraril+ abroad, but otherise he is a Philippine resident, service of
su%%ons %a+, b+ leave of court, be %ade b+ publication.
8
C8D Otherise
stated, a resident defendant in an action in personam! ho cannot be
personall+ served ith su%%ons, %a+ be su%%oned either b+ %eans of
substituted service in accordance ith Rule 38, R 0 or b+ publication as
provided in R 34 and 30 of the sa%e Rule.
7
C7D
In all of these cases, it should be noted, defendant %ust be a resident of the
Philippines, otherise an action in personam cannot be brou&ht because
(urisdiction over his person is essential to %a!e a bindin& decision.
On the other hand, if the action is in rem or quasi in rem! (urisdiction over the
person of the defendant is not essential for &ivin& the court (urisdiction so lon&
as the court ac*uires (urisdiction over the res. If the defendant is a nonresident
and he is not found in the countr+, su%%ons %a+ be served eGtraterritoriall+ in
accordance ith Rule 38, R 34, hich provides=
R 34. Extraterritorial service. 2 Nhen the defendant does not reside and is not
found in the Philippines and the action a>ects the personal status of the
plainti> or relates to, or the sub(ect of hich is, propert+ ithin the Philippines,
in hich the defendant has or clai%s a lien or interest, actual or contin&ent, or
?
1
8
7
in hich the relief de%anded consists, holl+ or in part, in eGcludin& the
defendant fro% an+ interest therein, or the propert+ of the defendant has been
attached ithin the Philippines, service %a+, b+ leave of court, be e>ected out
of the Philippines b+ personal service as under Section 4L or b+ publication in a
nespaper of &eneral circulation in such places and for such ti%e as the court
%a+ order, in hich case a cop+ of the su%%ons and order of the court shall
be sent b+ re&istered %ail to the last !non address of the defendant, or in
an+ other %anner the court %a+ dee% su$cient. #n+ order &rantin& such
leave shall specif+ a reasonable ti%e, hich shall not be less than siGt+ ,5;-
da+s after notice, ithin hich the defendant %ust anser.
In such cases, hat &ives the court (urisdiction in an action in rem or quasi in
rem is that it has (urisdiction over the res! i.e. the personal status of the
plainti> ho is do%iciled in the Philippines or the propert+ liti&ated or
attached. Service of su%%ons in the %anner provided in R 34 is not for the
purpose of vestin& it ith (urisdiction but for co%pl+in& ith the re*uire%ents
of fair pla+ or due process, so that he ill be infor%ed of the pendenc+ of the
action a&ainst hi% and the possibilit+ that propert+ in the Philippines belon&in&
to hi% or in hich he has an interest %a+ be sub(ected to a (ud&%ent in favor
of the plainti> and he can thereb+ ta!e steps to protect his interest if he is so
%inded.
5
C5D
#ppl+in& the fore&oin& rules to the case at bar, private respondentQs action,
hich is for partition and accountin& under Rule 5<, is in the nature of an
action *uasi in rem. Such an action is essentiall+ for the purpose of a>ectin&
the defendantQs interest in a speciFc propert+ and not to render a (ud&%ent
a&ainst hi%. #s eGplained in the leadin& case of Banco Espa1ol 2ilipino v.
*alanca 3
4
[7]
C#n action quasi in rem isD an action hich hile not strictl+ spea!in& an action
in rem parta!es of that nature and is substantiall+ such. . . . The action quasi in
rem di>ers fro% the true action in rem in the circu%stance that in the for%er
an individual is na%ed as defendant and the purpose of the proceedin& is to
sub(ect his interest therein to the obli&ation or lien burdenin& the propert+. #ll
proceedin&s havin& for their sole ob(ect the sale or other disposition of the
propert+ of the defendant, hether b+ attach%ent, foreclosure, or other for%
of re%ed+, are in a &eneral a+ thus desi&nated. The (ud&%ent entered in
these proceedin&s is conclusive onl+ beteen the parties.
#s petitioner Iourdes #. Val%onte is a nonresident ho is not found in the
Philippines, service of su%%ons on her %ust be in accordance ith Rule 38, R
34. Such service, to be e>ective outside the Philippines, %ust be %ade either
,3- b+ personal serviceL ,?- b+ publication in a nespaper of &eneral circulation
in such places and for such ti%e as the court %a+ order, in hich case a cop+
of the su%%ons and order of the court should be sent b+ re&istered %ail to the
5
4
"on@ict of Ias 2 s(bPriorJ <
last !non address of the defendantL or ,1- in an+ other %anner hich the
court %a+ dee% su$cient.
Since in the case at bar, the service of su%%ons upon petitioner Iourdes #.
Val%onte as not done b+ %eans of an+ of the Frst to %odes, the *uestion is
hether the service on her attorne+, petitioner #lfredo D. Val%onte, can be
(ustiFed under the third %ode, na%el+, Sin an+ . . . %anner the court %a+
dee% su$cient.T
Ne hold it cannot. This %ode of service, li!e the Frst to, %ust be %ade
outside the Philippines, such as throu&h the Philippine K%bass+ in the forei&n
countr+ here the defendant resides.
0
C0D Moreover, there are several reasons
h+ the service of su%%ons on #tt+. #lfredo D. Val%onte cannot be considered
a valid service of su%%ons on petitioner Iourdes #. Val%onte. In the Frst
place, service of su%%ons on petitioner #lfredo D. Val%onte as not %ade
upon the order of the court as re*uired b+ Rule 38, R 34 and certainl+ as not a
%ode dee%ed su$cient b+ the court hich in fact refused to consider the
service to be valid and on that basis declare petitioner Iourdes #. Val%onte in
default for her failure to Fle an anser.
In the second place, service in the atte%pted %anner on petitioner as not
%ade upon prior leave of the trial court as re*uired also in Rule 38, R 34. #s
provided in R 3<, such leave %ust be applied for b+ %otion in ritin&,
supported b+ a$davit of the plainti> or so%e person on his behalf and settin&
forth the &rounds for the application.
Finall+, and %ost i%portantl+, because there as no order &rantin& such leave,
petitioner Iourdes #. Val%onte as not &iven a%ple ti%e to Fle her #nser
hich, accordin& to the rules, shall be not less than siGt+ ,5;- da+s after notice.
It %ust be noted that the period to Fle an #nser in an action a&ainst a
resident defendant di>ers fro% the period &iven in an action Fled a&ainst a
nonresident defendant ho is not found in the Philippines. In the for%er, the
period is Ffteen 5/06 da+s fro% service of su%%ons, hile in the latter, it is at
least siGt+ ,5;- da+s fro% notice.
Strict co%pliance ith these re*uire%ents alone can assure observance of due
process. That is h+ in one case,
<
C<D

althou&h the "ourt considered publication
in the Philippines of the su%%ons ,a&ainst the contention that it should be
%ade in the forei&n state here defendant as residin&- su$cient,
nonetheless the service as considered insu$cient because no cop+ of the
su%%ons as sent to the last !non correct address in the Philippines.
Private respondent cites the rulin& in #e 7eon v. Hontanosas! 54 S"R# 870,85?2
851 ,3<47-, in hich it as held that service of su%%ons upon the defendantQs
husband as bindin& on her. 6ut the rulin& in that case is (ustiFed because
0
<
su%%ons ere served upon defendantQs husband in their con(u&al ho%e in
"ebu "it+ and the ife as onl+ te%poraril+ absent, havin& &one to
Du%a&uete "it+ for a vacation. The action as for collection of a su% of
%one+. In accordance ith Rule 38, R 0, substituted service could be %ade on
an+ person of su$cient discretion in the dellin& place of the defendant, and
certainl+ defendantQs husband, ho as there, as co%petent to receive the
su%%ons on her behalf. In an+ event, it appears that defendant in that case
sub%itted to the (urisdiction of the court b+ instructin& her husband to %ove
for the dissolution of the rit of attach%ent issued in that case.
On the other hand, in the case of 8emperle v. Schen%er!
/9
[10] it as held that
service on the ife of a nonresident defendant as found su$cient because
the defendant had appointed his ife as his attorne+2in2fact. It as held that
althou&h defendant Paul Schen!er as a Siss citi.en and resident of
Sit.erland, service of su%%ons upon his ife :elen Schen!er ho as in the
Philippines as su$cient because she as her husbandQs representative and
attorne+2in2fact in a civil case, hich he had earlier Fled a&ainst Nillia%
Pe%perle. In fact Pe%perleQs action as for da%a&es arisin& fro% alle&edl+
dero&ator+ state%ents contained in the co%plaint Fled in the Frst case. #s this
"ourt said, SiDn other ords, Mrs. Schen!er had authorit+ to sue, and had
actuall+ sued, on behalf of her husband, so that she as, also, e%poered to
represent hi% in suits Fled a&ainst hi%, particularl+ in a case, li!e the one at
bar, hich is a conse*uence of the action brou&ht b+ her on his behalf.T
33
C33D
Indeed, if instead of Flin& an independent action Pe%perle Fled a counterclai%
in the action brou&ht b+ Mr. Schen!er a&ainst hi%, there ould have been no
doubt that the trial court could have ac*uired (urisdiction over Mr. Schen!er
throu&h his a&ent and attorne+2in2fact, Mrs. Schen!er.
In contrast, in the case at bar, petitioner Iourdes #. Val%onte did not appoint
her husband as her attorne+2in2fact. #lthou&h she rote private respondentQ s
attorne+ that Sall co%%unicationsT intended for her should be addressed to
her husband ho is also her la+er at the latterQs address in Manila, no poer
of attorne+ to receive su%%ons for her can be inferred therefro%. In fact the
letter as ritten seven %onths before the Flin& of this case belo, and it
appears that it as ritten in connection ith the ne&otiations beteen her
and her sister, respondent Rosita Di%alanta, concernin& the partition of the
propert+ in *uestion. #s is usual in ne&otiations of this !ind, the eGchan&e of
correspondence as carried on b+ counsel for the parties. 6ut the authorit+
&iven to petitionerQs husband in these ne&otiations certainl+ cannot be
construed as also includin& an authorit+ to represent her in an+ litigation.
For the fore&oin& reasons, e hold that there as no valid service on petitioner
Iourdes #. Val%onte in this case.
3;
33
"on@ict of Ias 2 s(bPriorJ 3;
WHEREFORE, the decision appealed fro% is RE,ERSE& and the orders dated
)ul+ 1, 3<<? and Septe%ber ?1, 3<<? of the Re&ional Trial "ourt of Manila,
6ranch 80 are REINSTTE&.
SO ORDKRKD.
Re&alado ,"hair%an-, Ro%ero, and Puno, ))., concur.
Republic of the Philippines
SUPREME COURT
Manila
T:IRD DIVISION
G.R. No. 77+*5 2r34 2), 19*9
PHI!IPPINE INTERNTION! SHIPPING CORPORTION 5PISC6, GEORGE
!IM, MRCOS /UTIST, CR!OS !U&E, TN SING !IM, NTONIO !IU
!O, ONG TEH, PHI!IPPINE CONSORTIUM CONSTRUCTION
CORPORTION, PCIFIC MI!!S, INC., a"# UNI,ERS! STEE! SME!TING
CO., INC., petitioners,
vs.
THE HON. COURT OF PPE!S, HON. 'OSE C. &E GU0MN, a7 'u#8e
2re73#3"8 /ra"9: 93 o; <:e Re83o"a4 Tr3a4 Cour< o; =ue>o" C3<y,
INTERPOO!, !T&. a"# SHERIFF NOR/ERTO ,. &O/!& 'R., respondents.
R K S O I / T I O N

FE!ICINO, J.:
The sub(ect of the present Petition is the Decision of the "ourt of #ppeals dated
3? Dece%ber 3<05, in "#2P.R. SP No. 3;538. The appellate court upheld the
Order of 6ranch <1 of the Re&ional Trial "ourt of Uue.on "it+ &rantin& the
issuance of a rit of eGecution, in "ivil "ase No. U21<<?4.
The undisputed facts are stated in the appealed decision=
Plainti> Crespondent Interpool, Itd.D is a forei&n corporation,
dul+ or&ani.ed and eGistin& under the las of 6aha%as
Islands ith o$ce and business address at 51;, 1rd #venue,
Ne Aor!, Ne Aor!, and not licensed to do, and not doin&
business, in the Philippines.
Defendants Philippine International Shippin& "orporation,
Philippine "onstruction "onsortiu% "orporation, PaciFc Mills
Inc., and /niversal Steel S%eltin& "o%pan+, Inc., are
corporations dul+ or&ani.ed and eGistin& under and b+ virtue
of the las of the Philippines. The other defendants, Peor&e
Ii% Marcos 6autista, "arlos Iaude, Tan Sin& Ii%, #ntonio Iiu
Iao and On& Teh are Philippine residents.
In 3<4< to 3<03, the defendant, Philippine International
Shippin& "orporation ,PIS"- leased fro% the plainti> and its
holl+ oned subsidiar+, the "ontainer Tradin& "orporation,
several containers pursuant to the Me%bership #&ree%ent
and :irin& "onditions ,KGhibit 6- 1 and the Master K*uip%ent
Ieasin& #&ree%ent ,KGhibit " -, 2 both dated )une 0, 3<4<.
Defendants Philippine "onstruction "onsortiu% "orporation,
PaciFc Mills Inc. and /niversal Steel S%eltin& "o%pan+,
"on@ict of Ias 2 s(bPriorJ 33
&uaranteed to pa+ ,sic- all %onies due, or to beco%e due, to
the plainti> fro% ,PIS"- and an+ liabilit+ of the latter arisin&
out of the leasin& or purchasin& of e*uip%ent fro% the
plainti> or an+ of its subsidiaries, a$liates andHor a&ents of
I.S.". dr+ car&o containers andHor chassis, includin& but not
li%ited, to per die% leasin& char&es, da%a&es protection
plan char&es, da%a&es char&e andHor replace%ent costs of
constructivel+ andHor totall+ lost containers as ell as
handlin& and drop2o> char&es ,KGhibit )-. 3
The other defendants, na%el+= 3- Peor&e Ii%L ?- Marcos
6autistaL 1- "arlos Iaude 8- Tan Sin& Ii%L 7- #ntonio Iiu Iao
and 5- On& Teh, unconditionall+ and irrevocabl+ &uaranteed
to pa+ ,sic- plainti> all pa+%ents due to it under the Master
K*uip%ent Ieasin& #&ree%ent ,KGhibit "- and Me%bership
#&ree%ent and :irin& "onditions ,KGhibit 6- dated )une 0,
3<4<, in the a%ounts at the ti%e and in the %anner set out
in the said a&ree%ents and to inde%nif+ plainti> a&ainst all
clai%s, liabilities, costs, da%a&es and eGpenses ,includin&
le&al fees- su>ered or incurred b+ plainti>, arisin& out of or in
connection ith an+ failure b+ defendant Philippine
International Shippin& "orporation to perfor% an+ of its
obli&ations under the aforesaid #&ree%ents ,KGhibit D, K, F,
P, :, and I-. (
In 3<4< to 3<03, defendant Philippine International Shippin&
"orporation incurred outstandin& and unpaid obli&ations ith
the plainti>, in the a%ount of V<8,875.?0, representin&
unpaid per die%s, drop2o> char&es, interest and other
a&reed char&es.
The plainti> sent letters to the defendants ,KGhibit B, I, M, N
;, P, U, R, S and T -, 5 de%andin& pa+%ent of their
outstandin& and unpaid obli&ations, but to no avail, so
plainti> as constrained to Fle a case a&ainst the principal
defendant, ,PIS"- before the /nited States District "ourt,
Southern District of Ne Aor!, hich as doc!eted as 01 "ivil
?<; ,KN- Plainti> obtained a Default )ud&%ent on )ul+ 1,
3<01 a&ainst ,PIS"- orderin& it to pa+ the plainti> the su% of
V0;,44<.11, as li*uidated da%a&es, to&ether ith interest in
the a%ount of V31,545.<7 and costs in the a%ount of V0;.;;.
or for a total (ud&%ent of V<8,875.?0 ,KGhibit #-. )
6ecause of the un(ustiFable failure and refusal of PIS" and its
&uarantors to (ointl+ and severall+ pa+ their obli&ations to
the plainti>, the latter Fled on Nove%ber 35, 3<01 a
co%plaint Cdoc!eted as "ivil "ase No. U21<<?4, 6ranch <1,
Re&ional Trial "ourt of Uue.on "it+D ,#nneG #- 7 to enforce
the default (ud&%ent of the /.S. District "ourt a&ainst the
defendant PIS" and also to enforce the individuall+ eGecuted
"ontinuin& Puaranties of the other defendants ,#nneGes D, K,
F, P, :, I, and ) of the "o%plaint-.
The defendants ,herein petitioners- ere dul+ su%%oned,
but the+ failed to anser the co%plaint. On %otion of the
plainti>, the+ ere declared in default * and the plainti>
,herein private respondent- as alloed to present its
evidence ex parte.
On #pril 33, 3<07 the court rendered (ud&%ent for the
plainti>, 9 the dispositive part readin& as follos=
N:KRKFORK, (ud&%ent is hereb+ rendered in favor of the
plainti> and a&ainst the defendants, orderin&=
3- The defendant, Philippine International Shippin&
"orporation, and the defendants2Puarantors, to (ointl+ and
severall+ pa+ plainti> the li*uidated a%ount of V0;,44<.11,
to&ether ith interest in the a%ount of V31,545.<7 and costs
in the a%ount of V0;.;; or a total of V<8,875.?0, pursuant to
the Default )ud&%ent rendered b+ the /nited States District
"ourt, Southern District of Ne Aor!, or in the Philippine
currenc+ e*uivalent of the aforesaid a%ount of V<8,875.?0,
co%puted at the ti%e of pa+%ent, ith interest for late
pa+%ent at the rate of 30E per annu% fro% )ul+ 8, 3<01,
until full+ paidL
?- The defendant, Philippine International Shippin&
"orporation, and the defendants2Puarantors, to (ointl+ and
severall+ pa+ plainti> the su% e*uivalent to tent+ ,?;E-
percent of the total a%ount due fro% the defendants b+ a+
of attorne+'s feesL and
1- To pa+ the costs.
On Ma+ 34, 3<07, the defendants appealed the decision to
this #ppellate "ourt ,#"2P.R. /DB No. 4101- hich dis%issed
the appeal on Nove%ber 31, 3<07 for failure of the
appellants to pa+ the doc!etin& fee despite their receipt of
the notice to do so on #u&ust ?5, 3<07. 1+ Kntr+ of that Fnal
resolution as %ade on Dece%ber 5,3<07.
In vie of the Fnalit+ of the decision, the plainti> Fled on )ul+
?1, 3<05 a %otion for eGecution and for appoint%ent of a
special sheri> to enforce it. 11
Over the defendants' opposition, the trial court issued an
order of eGecution on October 37, 3<05 and appointed
"on@ict of Ias 2 s(bPriorJ 3?
Norberto V. Doblado, )r., of the o$ce of the Ma!ati Sheri>, as
special sheri> for the purpose ,#nneG D-. 12
On ?; Nove%ber 3<05, petitioners ,defendants belo- Fled ith the "ourt of
#ppeals a Petition to #nnul )ud&%ent ,doc!eted as ".#.2PR SP No. 3;538- 13
directed at the 37 October 3<05 Order of the Re&ional Trial "ourt. On 3?
Dece%ber 3<05, the appellate court rendered a Decision 1( den+in& that
petition for lac! of %erit. # Motion for Reconsideration as li!eise denied for
lac! of %erit.15
In the instant Petition for Revie, Fled ith this "ourt on ?4 Februar+ 3<04,
petitioners alle&e that both the Default )ud&%ent rendered b+ the /.S. District
"ourt, Southern District of Ne Aor!, in 01 "ivil ?<; ,KN-, and the Decision of
the Re&ional Trial "ourt of Uue.on "it+, in "ivil "ase No. U21<<?4, are null and
void essentiall+ on (urisdictional &rounds. In the Frst instance, petitioners
contend that the /.S. District "ourt never ac*uired (urisdiction over their
persons as the+ had not been served ith su%%ons and a cop+ of the
"o%plaint in 01 "ivil ?<; ,KN-. In the second instance, petitioners contend that
such (urisdictional t+ e>ectivel+ prevented the Re&ional Trial "ourt of Uue.on
"it+ fro% ta!in& co&ni.ance of the "o%plaint in "ivil "ase No. U21<<?4 and
fro% enforcin& the /.S. District "ourt's Default )ud&%ent a&ainst the%.
Petitioners contend, Fnall+, that assu%in& the validit+ of the disputed Default
)ud&%ent, the sa%e %a+ be enforced onl+ a&ainst petitioner Philippine
International Shippin& "orporation ,PIS"- the other nine ,<- petitioners not
havin& been i%pleaded ori&inall+ in the case Fled in Ne Aor!, /.S.#.
The Petition %ust fail.
3. To be&in ith, the evidence of record clearl+ shos that
the /.S. District "ourt had validl+ ac*uired (urisdiction over
petitioner ,PIS"- under the procedural la applicable in that
foru% i.e., the /.S. Federal Rules on "ivil Procedure. "opies
of the Su%%ons and "o%plaint 1) in 01 "ivil ?<; ,KN- hich
ere in fact attached to the Petition for Revie Fled ith this
"ourt, ere sta%ped :Received! /; -an /<;=! *"S$ anila.:
indicatin& that service thereof had been %ade upon and
ac!noled&ed b+ the ,PIS"- o$ce in Manila on, 30 )anuar+
3<01, and that ,PIS"- had actual notice of such "o%plaint
and Su%%ons. Moreover, copies of said Su%%ons and
"o%plaint had li!eise been served upon Prentice2:all
"orporation S+ste%, Inc. ,Ne Aor!-, petitioner PIS"s a&ent,
eGpressl+ desi&nated b+ it in the Master K*uip%ent Ieasin&
#&ree%ent ith respondent Interpool. Mfor the purpose of
acceptin& service of an+ process ithin the State of Ne
Aor!, /S# ith respect to an+ clai% or controvers+ arisin& out
of or relatin& to directl+ or indirectl+, this Iease.M 17 The
record also shos that petitioner PIS", ithout, hoever,
assailin& the (urisdiction of the /.S. District "ourt over the
person of petitioner, had Fled a Motion to Dis%iss 1* the
"o%plaint in 01 "ivil ?<; ,KN- hich Motion as denied. #ll
of the fore&oin& %atters, hich ere stated speciFcall+ in
the /.S. District "ourt's disputed Default )ud&e%ent, 19 have
not been disproven or otherise overco%e b+ petitioners,
hose bare and unsubstantiated alle&ations cannot prevail
over clear and convincin& evidence of record to the contrar+.
That forei&n (ud&%ent2hich had beco%e >nal and executor&, no appeal
havin& been ta!en therefro% and perfected b+ petitioner PIS"2is thus
Mpresu%ptive evidence of a ri&ht as beteen the parties Ci.e., PIS" and
InterpoolD and their successors in interest b+ a subse*uent title.M 2+ Ne note,
further that there has been in this case no shoin& b+ petitioners that the
Default )ud&%ent rendered b+ the /.S. District "ourt in 01 "ivil ?<; ,KN- as
vitiated b+ Mant of notice to the part+, collusion, fraud, or clear %ista!e of la
or fact. M 21 In other ords, the Default )ud&%ent i%posin& upon petitioner
PIS" a liabilit+ of /.S.V<8,875.?0 in favor of respondent Interpool, is valid and
%a+ be enforced in this (urisdiction.
?. The eGistence of liabilit+ ,i.e., in the a%ount of /.S.
V<8,875.?0- on the part of petitioner PIS" havin& been dul+
established in the /.S. case, it as not i%proper for
respondent Interpool, in see!in& enforce%ent in this
(urisdiction of the forei&n (ud&%ent i%posin& such liabilit+, to
have included the other nine ,<- petitioners herein ,i.e.,
Peor&e Ii%, Marcos 6autista, "arlos Iaude,Tan Sin& Ii%,
#ntonio Iiu Iao, On& Teh Philippine "onsortiu% "onstruction
"orporation, PaciFc Mills, Inc. and /niversal Steel S%eltin&
"o., Inc.- as defendants in "ivil "ase No. U2 1<<?4, Fled ith
6ranch <1 of the Re&ional Trial "ourt of Uue.on "it+. Nith
respect to the latter, Section 5, Rule 1 of the Revised Rules of
"ourt eGpressl+ provides=
Sec. 5. *ermissive ?oinder of parties. (ll persons in @hom or
against @hom an& right to relief in respect to or arising out of
the same transaction or series of transactions is alleged to
exist! @hether ?ointl&! severall&! or in the alternative! ma&!
except as other@ise provided in these rules! ?oin as plaintiAs
or 'e ?oined as defendants in one complaint! @here an&
question of la@ or fact common to all such plaintiAs or to all
such defendants ma& arise in the actionB but the court %a+
%a!e such orders as %a+ be (ust to prevent an+ plainti> or
defendant fro% bein& e%barrassed or put to eGpense in
connection ith an+ proceedin&s in hich he %a+ have no
interest. ,K%phasis supplied-
The record shos that said nine ,<- petitioners had eGecuted continuin&
&uaranteesM to secure perfor%ance b+ petitioner PIS" of its contractual
obli&ations, under the Me%bership #&ree%ent and :irin& "onditions and
Master K*uip%ent Ieasin& #&ree%ent ith respondent Interpool. #s
&uarantors, the+ had held the%selves out as liable. Mhether (ointl+, severall+,
or in the alternative,M to respondent Interpool under their separate Mcontinuin&
&uaranteesM eGecuted in the Philippines, for an+ breach of those #&ree%ents
on the part of ,PIS"- The liabilit+ of the nine ,<- other petitioners as, in other
"on@ict of Ias 2 s(bPriorJ 31
ords, not based upon the Me%bership #&ree%ent and the Master K*uip%ent
Ieasin& #&ree%ent to hich the+ ere not parties. The Ne Aor! aard of /.S.
V<8,875.?0 is precisel+ pre%ised upon a breach b+ PIS" of its on obli&ations
under those #&ree%ents. Ne, therefore, consider the nine ,<- other petitioners
as persons 88 a&ainst ho% CaD ri&ht to relief in respect to or arisin& out of the
sa%e transaction or series of transactions Chas beenD alle&ed to eGist.M as
conte%plated in the Rule *uoted above and, conse*uentl+, properl+ i%pleaded
as defendants in "ivil "ase No. U21<<?4. There as, in other ords, no need at
all, in order that "ivil "ase No. U21<<?4 ould prosper, for respondent
Interpool to have Frst i%pleaded the nine ,<- other petitioners in the Ne Aor!
case and there obtain (ud&%ent a&ainst all ten ,3;- petitioners.
1. Petitioners' ar&u%ent of lac! or absence of (urisdiction on
the part of the Uue.on "it+ Re&ional Trial "ourt, on the
alle&ed &round of non2service of notice or su%%ons in "ivil
"ase No. U21<<?4, does not persuade. 6ut e do not need to
address this speciFc ar&u%ent. For even assu%in& ,thou&h
%erel+ arguendo- that none of the ten ,3;- petitioner herein
had been served ith notice or su%%ons belo, the record
shos, hoever, that the+ did in fact Fle ith the Re&ional
Trial "ourt a Motion for KGtension of Ti%e to Fle #nser 22
,dated < Dece%ber 3<01- as ell as Motion for 6ill of
Particulars 23 ,dated 37 Dece%ber 3<01-, both addressin&
respondent Interpool's ."o%plaint in "ivil "ase No. U21<<?4.
In those pleadin&s, petitioners not onl+ %anifested their
intention to controvert the alle&ations in the "o%plaint, but
the+ neither *uestioned nor assailed the (urisdiction of the
trial court, either over the case Fled a&ainst the% or over
their individual persons, as defendants therein. There as
here, in e>ect, voluntar+ sub%ission to the (urisdiction of the
Uue.on "it+ trial court b+ petitioners, ho are thereb+
estopped fro% assertin& otherise before this "ourt. 2(
#""ORDINPIA, the Petition for Revie is DKNIKD and the Decision dated 3?
Dece%ber 3<05 of the "ourt of #ppeals in ".#.2P.R. SP No. 3;538, is hereb+
#FFIRMKD. This Resolution is i%%ediatel+ eGecutor+. "osts a&ainst petitioners.
SO ORDKRKD.
2ernan! $.-.! 8utierrez! -r.! Bidin and $ortes! --.! concur.
Republic of the Philippines
SUPREME COURT
Manila
SECON& &I,ISION
G.R. No. 1)2*9( February 2), 2++*
R%THEON INTERNTION!, INC., petitioner,
vs.
STOC?TON W. ROU0IE, 'R., respondent.
& E C I S I O N
TING, J.1
6efore this "ourt is a petition for revie on certiorari under Rule 87 of the 3<<4
Rules of "ivil Procedure hich see!s the reversal of the Decision
3
and
Resolution
?
of the "ourt of #ppeals in "#2P.R. SP No. 54;;3 and the dis%issal
of the civil case Fled b+ respondent a&ainst petitioner ith the trial court.
#s culled fro% the records of the case, the folloin& antecedents appear=
So%eti%e in 3<<;, 6rand Marine Services, Inc. ,6MSI-, a corporation dul+
or&ani.ed and eGistin& under the las of the State of "onnecticut, /nited
States of #%erica, and respondent Stoc!ton N. Rou.ie, )r., an #%erican citi.en,
entered into a contract hereb+ 6MSI hired respondent as its representative to
ne&otiate the sale of services in several &overn%ent pro(ects in the Philippines
for an a&reed re%uneration of 3;E of the &ross receipts. On 33 March 3<<?,
respondent secured a service contract ith the Republic of the Philippines on
behalf of 6MSI for the dred&in& of rivers a>ected b+ the Mt. Pinatubo eruption
and %ud@os.
1

"on@ict of Ias 2 s(bPriorJ 38
On 35 )ul+ 3<<8, respondent Fled before the #rbitration 6ranch of the National
Iabor Relations "o%%ission ,NIR"- a suit a&ainst 6MSI and Rust International,
Inc. ,R/ST-, Rodne+ ". Pilbert and Nalter P. 6ronin& for alle&ed nonpa+%ent
of co%%issions, ille&al ter%ination and breach of e%plo+%ent contract.
8
On ?0
Septe%ber 3<<7, Iabor #rbiter Pablo ". Kspiritu, )r. rendered (ud&%ent
orderin& 6MSI and R/ST to pa+ respondentQs %one+ clai%s.
7
/pon appeal b+
6MSI, the NIR" reversed the decision of the Iabor #rbiter and dis%issed
respondentQs co%plaint on the &round of lac! of (urisdiction.
5
Respondent
elevated the case to this "ourt but as dis%issed in a Resolution dated ?5
Nove%ber 3<<4. The Resolution beca%e Fnal and eGecutor+ on ;< Nove%ber
3<<0.
On 0 )anuar+ 3<<<, respondent, then a resident of Ia /nion, instituted an
action for da%a&es before the Re&ional Trial "ourt ,RT"- of 6auan&, Ia /nion.
The "o%plaint,
4
doc!eted as "ivil "ase No. 33<?26P, na%ed as defendants
herein petitioner Ra+theon International, Inc. as ell as 6MSI and R/ST, the
to corporations i%pleaded in the earlier labor case. The co%plaint essentiall+
reiterated the alle&ations in the labor case that 6MSI verball+ e%plo+ed
respondent to ne&otiate the sale of services in &overn%ent pro(ects and that
respondent as not paid the co%%issions due hi% fro% the Pinatubo dred&in&
pro(ect hich he secured on behalf of 6MSI. The co%plaint also averred that
6MSI and R/ST as ell as petitioner itself had co%bined and functioned as one
co%pan+.
In its #nser,
0
petitioner alle&ed that contrar+ to respondentQs clai%, it as a
forei&n corporation dul+ licensed to do business in the Philippines and denied
enterin& into an+ arran&e%ent ith respondent or pa+in& the latter an+ su% of
%one+. Petitioner also denied co%binin& ith 6MSI and R/ST for the purpose
of assu%in& the alle&ed obli&ation of the said co%panies.
<
Petitioner also
referred to the NIR" decision hich disclosed that per the ritten a&ree%ent
beteen respondent and 6MSI and R/ST, deno%inated as MSpecial Sales
Representative #&ree%ent,M the ri&hts and obli&ations of the parties shall be
&overned b+ the las of the State of "onnecticut.
3;
Petitioner sou&ht the
dis%issal of the co%plaint on &rounds of failure to state a cause of action and
forum non conveniens and pra+ed for da%a&es b+ a+ of co%pulsor+
counterclai%.
33
On 30 Ma+ 3<<<, petitioner Fled an O%nibus Motion for Preli%inar+ :earin&
6ased on #$r%ative Defenses and for Su%%ar+ )ud&%ent
3?
see!in& the
dis%issal of the co%plaint on &rounds of forum non conveniens and failure to
state a cause of action. Respondent opposed the sa%e. Pendin& the resolution
of the o%nibus %otion, the deposition of Nalter 6ronin& as ta!en before the
Philippine "onsulate Peneral in "hica&o.
31

In an Order
38
dated 31 Septe%ber ?;;;, the RT" denied petitionerQs o%nibus
%otion. The trial court held that the factual alle&ations in the co%plaint,
assu%in& the sa%e to be ad%itted, ere su$cient for the trial court to render
a valid (ud&%ent thereon. It also ruled that the principle of forum non
conveniens as inapplicable because the trial court could enforce (ud&%ent on
petitioner, it bein& a forei&n corporation licensed to do business in the
Philippines.
37
Petitioner Fled a Motion for Reconsideration
35
of the order, hich %otion as
opposed b+ respondent.
34
In an Order dated 13 )ul+ ?;;3,
30
the trial court
denied petitionerQs %otion. Thus, it Fled a Rule 57 Petition
3<
ith the "ourt of
#ppeals pra+in& for the issuance of a rit of certiorari and a rit of in(unction
to set aside the tin orders of the trial court dated 31 Septe%ber ?;;; and 13
)ul+ ?;;3 and to en(oin the trial court fro% conductin& further proceedin&s.
?;
On ?0 #u&ust ?;;1, the "ourt of #ppeals rendered the assailed Decision
?3

den+in& the petition for certiorari for lac! of %erit. It also denied petitionerQs
%otion for reconsideration in the assailed Resolution issued on 3; March
?;;8.
??

The appellate court held that althou&h the trial court should not have conFned
itself to the alle&ations in the co%plaint and should have also considered
evidence aliunde in resolvin& petitionerQs o%nibus %otion, it found the
evidence presented b+ petitioner, that is, the deposition of Nalter 6ronin&,
insu$cient for purposes of deter%inin& hether the co%plaint failed to state a
cause of action. The appellate court also stated that it could not rule one a+
or the other on the issue of hether the corporations, includin& petitioner,
na%ed as defendants in the case had indeed %er&ed to&ether based solel+ on
the evidence presented b+ respondent. Thus, it held that the issue should be
threshed out durin& trial.
?1
Moreover, the appellate court deferred to the
discretion of the trial court hen the latter decided not to desist fro% assu%in&
(urisdiction on the &round of the inapplicabilit+ of the principle of forum non
conveniens.
:ence, this petition raisin& the folloin& issues=
N:KT:KR OR NOT T:K "O/RT OF #PPK#IS KRRKD IN RKF/SINP TO
DISMISS T:K "OMPI#INT FOR F#II/RK TO ST#TK # "#/SK OF #"TION
#P#INST R#AT:KON INTKRN#TION#I, IN".
N:KT:KR OR NOT T:K "O/RT OF #PPK#IS KRRKD IN RKF/SINP TO
DISMISS T:K "OMPI#INT ON T:K PRO/ND OF 2ORC NON
$ONDEN"ENS.
?8
Incidentall+, respondent failed to Fle a co%%ent despite repeated notices. The
"eferino Padua Ia O$ce, counsel on record for respondent, %anifested that
the la+er handlin& the case, #tt+. Ro&elio Bara&da&, had severed relations
ith the la Fr% even before the Flin& of the instant petition and that it could
no lon&er Fnd the hereabouts of #tt+. Bara&da& or of respondent despite
dili&ent e>orts. In a Resolution
?7
dated ?; Nove%ber ?;;5, the "ourt resolved
to dispense ith the Flin& of a co%%ent.
The instant petition lac!s %erit.
Petitioner %ainl+ asserts that the ritten contract beteen respondent and
6MSI included a valid choice of la clause, that is, that the contract shall be
&overned b+ the las of the State of "onnecticut. It also %entions the
"on@ict of Ias 2 s(bPriorJ 37
presence of forei&n ele%ents in the dispute W na%el+, the parties and
itnesses involved are #%erican corporations and citi.ens and the evidence to
be presented is located outside the Philippines W that renders our local courts
inconvenient foru%s. Petitioner theori.es that the forei&n ele%ents of the
dispute necessitate the i%%ediate application of the doctrine of forum non
conveniens.
Recentl+ in Hasega@a v. ,itamura,
?5
the "ourt outlined three consecutive
phases involved in (udicial resolution of con@icts2of2las proble%s, na%el+=
(urisdiction, choice of la, and reco&nition and enforce%ent of (ud&%ents.
Thus, in the instances
?4
here the "ourt held that the local (udicial %achiner+
as ade*uate to resolve controversies ith a forei&n ele%ent, the folloin&
re*uisites had to be proved= ,3- that the Philippine "ourt is one to hich the
parties %a+ convenientl+ resortL ,?- that the Philippine "ourt is in a position to
%a!e an intelli&ent decision as to the la and the factsL and ,1- that the
Philippine "ourt has or is li!el+ to have the poer to enforce its decision.
?0
On the %atter of (urisdiction over a con@icts2of2las proble% here the case is
Fled in a Philippine court and here the court has (urisdiction over the sub(ect
%atter, the parties and the res, it %a+ or can proceed to tr+ the case even if
the rules of con@ict2of2las or the convenience of the parties point to a forei&n
foru%. This is an eGercise of soverei&n prero&ative of the countr+ here the
case is Fled.
?<

)urisdiction over the nature and sub(ect %atter of an action is conferred b+ the
"onstitution and the la
1;
and b+ the %aterial alle&ations in the co%plaint,
irrespective of hether or not the plainti> is entitled to recover all or so%e of
the clai%s or reliefs sou&ht therein.
13
"ivil "ase No. 33<?26P is an action for
da%a&es arisin& fro% an alle&ed breach of contract. /ndoubtedl+, the nature
of the action and the a%ount of da%a&es pra+ed are ithin the (urisdiction of
the RT".
#s re&ards (urisdiction over the parties, the trial court ac*uired (urisdiction over
herein respondent ,as part+ plainti>- upon the Flin& of the co%plaint. On the
other hand, (urisdiction over the person of petitioner ,as part+ defendant- as
ac*uired b+ its voluntar+ appearance in court.
1?
That the sub(ect contract included a stipulation that the sa%e shall be
&overned b+ the las of the State of "onnecticut does not su&&est that the
Philippine courts, or an+ other forei&n tribunal for that %atter, are precluded
fro% hearin& the civil action. )urisdiction and choice of la are to distinct
concepts. )urisdiction considers hether it is fair to cause a defendant to travel
to this stateL choice of la as!s the further *uestion hether the application of
a substantive la hich ill deter%ine the %erits of the case is fair to both
parties.
11
The choice of la stipulation ill beco%e relevant onl+ hen the
substantive issues of the instant case develop, that is, after hearin& on the
%erits proceeds before the trial court.
/nder the doctrine of forum non conveniens, a court, in con@icts2of2las cases,
%a+ refuse i%positions on its (urisdiction here it is not the %ost MconvenientM
or available foru% and the parties are not precluded fro% see!in& re%edies
elsehere.
18
PetitionerQs aver%ents of the forei&n ele%ents in the instant case
are not su$cient to oust the trial court of its (urisdiction over "ivil "ase No. No.
33<?26P and the parties involved.
Moreover, the propriet+ of dis%issin& a case based on the principle of forum
non conveniens re*uires a factual deter%inationL hence, it is %ore properl+
considered as a %atter of defense. Nhile it is ithin the discretion of the trial
court to abstain fro% assu%in& (urisdiction on this &round, it should do so onl+
after vital facts are established, to deter%ine hether special circu%stances
re*uire the courtQs desistance.
17

Findin& no &rave abuse of discretion on the trial court, the "ourt of #ppeals
respected its conclusion that it can assu%e (urisdiction over the dispute
notithstandin& its forei&n ele%ents. In the sa%e %anner, the "ourt defers to
the sound discretion of the loer courts because their Fndin&s are bindin& on
this "ourt.
Petitioner also contends that the co%plaint in "ivil "ase No. 33<?26P failed to
state a cause of action a&ainst petitioner. Failure to state a cause of action
refers to the insu$cienc+ of alle&ation in the pleadin&.
15
#s a &eneral rule, the
ele%entar+ test for failure to state a cause of action is hether the co%plaint
alle&es facts hich if true ould (ustif+ the relief de%anded.
14
The co%plaint alle&ed that petitioner had co%bined ith 6MSI and R/ST to
function as one co%pan+. Petitioner contends that the deposition of Nalter
6ronin& rebutted this alle&ation. On this score, the resolution of the "ourt of
#ppeals is instructive, thus=
G G G Our eGa%ination of the deposition of Mr. Nalter 6ronin& as ell
as other docu%ents produced in the hearin& shos that these
evidence aliunde are not *uite su$cient for us to %ete a rulin& that
the co%plaint fails to state a cause of action.
#nneGes M#M to MKM b+ the%selves are not substantial, convincin& and
conclusive proofs that Ra+theon Kn&ineers and "onstructors, Inc.
,RK"- assu%ed the arrant+ obli&ations of defendant Rust
International in the Ma!ar Port Pro(ect in Peneral Santos "it+, after
Rust International ceased to eGist after bein& absorbed b+ RK". Other
docu%ents alread+ sub%itted in evidence are li!eise %ea&er to
preponderantl+ conclude that Ra+theon International, Inc., Rust
InternationalC,D Inc. and 6rand Marine Service, Inc. have co%bined into
one co%pan+, so %uch so that Ra+theon International, Inc., the
survivin& co%pan+ ,if at all- %a+ be held liable for the obli&ation of
6MSI to respondent Rou.ie for unpaid co%%issions. Neither these
docu%ents clearl+ spea! otherise.
10

"on@ict of Ias 2 s(bPriorJ 35
#s correctl+ pointed out b+ the "ourt of #ppeals, the *uestion of hether
petitioner, 6MSI and R/ST %er&ed to&ether re*uires the presentation of further
evidence, hich onl+ a full2blon trial on the %erits can a>ord.
WHEREFORE, the instant petition for revie on certiorari is &ENIE&. The
Decision and Resolution of the "ourt of #ppeals in "#2P.R. SP No. 54;;3 are
hereb+ FFIRME&. "osts a&ainst petitioner.
SO OR&ERE&.
&NTE O. TING
(ssociate -ustice
FIRST &I,ISION
-G.R. No. 122191. O9<ober *, 199*.
SU&I R/IN IR!INES, petitioner, vs. COURT OF PPE!S,
MI!GROS P. MOR& a"# HON. RO&O!FO . ORTI0, 3" :37 9a2a93<y a7
Pre73#3"8 'u#8e o; /ra"9: *9, Re83o"a4 Tr3a4 Cour< o; =ue>o" C3<y,
respondents.
& E C I S I O N
=UISUM/ING, J.1
This petition for certiorari pursuant to Rule 87 of the Rules of "ourt see!s to
annul and set aside the Resolution
i
C3D dated Septe%ber ?4, 3<<7 and the
Decision
ii
C?D dated #pril 3;, 3<<5 of the "ourt of #ppeals
iii
C1D in "#2P.R. SP No.
15711,
iv
C8D and the Orders
v
C7D dated #u&ust ?<, 3<<8
vi
C5D and Februar+ ?,
3<<7
vii
C4D that ere issued b+ the trial court in "ivil "ase No. U2<12301<8.
viii
C0D
The pertinent antecedent facts hich &ave rise to the instant petition, as
stated in the *uestioned Decision
iG
C<D, are as follos=
SOn )anuar+ ?3, 3<00 defendant S#/DI# hired plainti> as a Fli&ht
#ttendant for its airlines based in )eddah, Saudi #rabia. G G G
On #pril ?4, 3<<;, hile on a la+2over in )a!arta, Indonesia, plainti>
ent to a disco dance ith fello cre %e%bers Tha%er #l2Pa..ai
and #llah #l2Pa..ai, both Saudi nationals. 6ecause it as al%ost
%ornin& hen the+ returned to their hotels, the+ a&reed to have
brea!fast to&ether at the roo% of Tha%er. Nhen the+ ere in te
,sic- roo%, #llah left on so%e preteGt. Shortl+ after he did, Tha%er
atte%pted to rape plainti>. Fortunatel+, a roo%bo+ and several
securit+ personnel heard her cries for help and rescued her. Iater,
the Indonesian police ca%e and arrested Tha%er and #llah #l2
Pa..ai, the latter as an acco%plice.
Nhen plainti> returned to )eddah a fe da+s later, several S#/DI#
o$cials interro&ated her about the )a!arta incident. The+ then
re*uested her to &o bac! to )a!arta to help arran&e the release of
Tha%er and #llah. In )a!arta, S#/DI# Ie&al O$cer Sirah #!!ad and
base %ana&er 6aharini ne&otiated ith the police for the i%%ediate
release of the detained cre %e%bers but did not succeed because
plainti> refused to cooperate. She as afraid that she %i&ht be
tric!ed into so%ethin& she did not ant because of her inabilit+ to
understand the local dialect. She also declined to si&n a blan! paper
and a docu%ent ritten in the local dialect. Kventuall+, S#/DI#
alloed plainti> to return to )eddah but barred her fro% the )a!arta
@i&hts.
Plainti> learned that, throu&h the intercession of the Saudi #rabian
&overn%ent, the Indonesian authorities a&reed to deport Tha%er
and #llah after to ee!s of detention. Kventuall+, the+ ere a&ain
put in service b+ defendant S#/DI ,sic-. In Septe%ber 3<<;,
defendant S#/DI# transferred plainti> to Manila.
On )anuar+ 38, 3<<?, (ust hen plainti> thou&ht that the )a!arta
incident as alread+ behind her, her superiors re*uested her to see
Mr. #li Menie+, "hief Ie&al O$cer of S#/DI#, in )eddah, Saudi
#rabia. Nhen she sa hi%, he brou&ht her to the police station
here the police too! her passport and *uestioned her about the
)a!arta incident. Minie+ si%pl+ stood b+ as the police put pressure
on her to %a!e a state%ent droppin& the case a&ainst Tha%er and
#llah. Not until she a&reed to do so did the police return her
passport and alloed her to catch the afternoon @i&ht out of )eddah.
One +ear and a half later or on )une 35, 3<<1, in Ri+adh, Saudi
#rabia, a fe %inutes before the departure of her @i&ht to Manila,
plainti> as not alloed to board the plane and instead ordered to
ta!e a later @i&ht to )eddah to see Mr. Minie+, the "hief Ie&al
"on@ict of Ias 2 s(bPriorJ 34
O$cer of S#/DI#. Nhen she did, a certain Bhalid of the S#/DI#
o$ce brou&ht her to a Saudi court here she as as!ed to si&n a
docu%ent ritten in #rabic. The+ told her that this as necessar+ to
close the case a&ainst Tha%er and #llah. #s it turned out, plainti>
si&ned a notice to her to appear before the court on )une ?4, 3<<1.
Plainti> then returned to Manila.
Shortl+ afterards, defendant S#/DI# su%%oned plainti> to report
to )eddah once a&ain and see Minie+ on )une ?4, 3<<1 for further
investi&ation. Plainti> did so after receivin& assurance fro%
S#/DI#Qs Manila %ana&er, #sla% Salee%i, that the investi&ation as
routinar+ and that it posed no dan&er to her.
In )eddah, a S#/DI# le&al o$cer brou&ht plainti> to the sa%e Saudi
court on )une ?4, 3<<1. Nothin& happened then but on )une ?0,
3<<1, a Saudi (ud&e interro&ated plainti> throu&h an interpreter
about the )a!arta incident. #fter one hour of interro&ation, the+ let
her &o. #t the airport, hoever, (ust as her plane as about to ta!e
o>, a S#/DI# o$cer told her that the airline had forbidden her to
ta!e @i&ht. #t the In@i&ht Service O$ce here she as told to &o,
the secretar+ of Mr. Aah+a Saddic! too! aa+ her passport and told
her to re%ain in )eddah, at the cre *uarters, until further orders.
On )ul+ 1, 3<<1 a S#/DI# le&al o$cer a&ain escorted plainti> to the
sa%e court here the (ud&e, to her astonish%ent and shoc!,
rendered a decision, translated to her in Kn&lish, sentencin& her to
Fve %onths i%prison%ent and to ?05 lashes. Onl+ then did she
reali.e that the Saudi court had tried her, to&ether ith Tha%er and
#llah, for hat happened in )a!arta. The court found plainti> &uilt+
of ,3- adulter+L ,?- &oin& to a disco, dancin& and listenin& to the
%usic in violation of Isla%ic lasL and ,1- sociali.in& ith the %ale
cre, in contravention of Isla%ic tradition.T
G
C3;D
Facin& conviction, private respondent sou&ht the help of her e%plo+er,
petitioner S#/DI#. /nfortunatel+, she as denied an+ assistance. She then
as!ed the Philippine K%bass+ in )eddah to help her hile her case is on appeal.
Meanhile, to pa+ for her up!eep, she or!ed on the do%estic @i&ht of
S#/DI#, hile Tha%er and #llah continued to serve in the international @i&hts.
Gi
C33D
6ecause she as ron&full+ convicted, the Prince of Ma!!ah dis%issed the
case a&ainst her and alloed her to leave Saudi #rabia. Shortl+ before her
return to Manila,
Gii
C3?D she as ter%inated fro% the service b+ S#/DI#, ithout
her bein& infor%ed of the cause.
On Nove%ber ?1, 3<<1, Morada Fled a "o%plaint
Giii
C31D for da%a&es a&ainst
S#/DI#, and Bhaled #l26alai ,S#l2 6alaiT-, its countr+ %ana&er.
On )anuar+ 3<, 3<<8, S#/DI# Fled an O%nibus Motion To Dis%iss
Giv
C38D hich
raised the folloin& &rounds, to it= ,3- that the "o%plaint states no cause of
action a&ainst SaudiaL ,?- that defendant #l26alai is not a real part+ in
interestL ,1- that the clai% or de%and set forth in the "o%plaint has been
aived, abandoned or otherise eGtin&uishedL and ,8- that the trial court has
no (urisdiction to tr+ the case.
On Februar+ 3;, 3<<8, Morada Fled her Opposition ,To Motion to Dis%iss-
Gv
C37D
Saudia Fled a repl+
Gvi
C35D thereto on March 1, 3<<8.
On )une ?1, 3<<8, Morada Fled an #%ended "o%plaint
Gvii
C34D herein #l26alai
as dropped as part+ defendant. On #u&ust 33, 3<<8, Saudia Fled its
Manifestation and Motion to Dis%iss #%ended "o%plaint
Gviii
C30D.
The trial court issued an Order
GiG
C3<D dated #u&ust ?<, 3<<8 den+in& the Motion
to Dis%iss #%ended "o%plaint Fled b+ Saudia.
Fro% the Order of respondent )ud&e
GG
C?;D den+in& the Motion to Dis%iss,
S#/DI# Fled on Septe%ber ?;, 3<<8, its Motion for Reconsideration
GGi
C?3D of
the Order dated #u&ust ?<, 3<<8. It alle&ed that the trial court has no
(urisdiction to hear and tr+ the case on the basis of #rticle ?3 of the "ivil "ode,
since the proper la applicable is the la of the Bin&do% of Saudi #rabia. On
October 38, 3<<8, Morada Fled her Opposition
GGii
C??D ,To DefendantQs Motion for
Reconsideration-.
In the Repl+
GGiii
C?1D Fled ith the trial court on October ?8, 3<<8, S#/DI#
alle&ed that since its Motion for Reconsideration raised lac! of (urisdiction as its
cause of action, the O%nibus Motion Rule does not appl+, even if that &round is
raised for the Frst ti%e on appeal. #dditionall+, S#/DI# alle&ed that the
Philippines does not have an+ substantial interest in the prosecution of the
instant case, and hence, ithout (urisdiction to ad(udicate the sa%e.
Respondent )ud&e subse*uentl+ issued another Order
GGiv
C?8D dated Februar+ ?,
3<<7, den+in& S#/DI#Qs Motion for Reconsideration. The pertinent portion of
the assailed Order reads as follos=
S#ctin& on the Motion for Reconsideration of defendant Saudi
#rabian #irlines Fled, thru counsel, on Septe%ber ?;, 3<<8, and the
Opposition thereto of the plainti> Fled, thru counsel, on October 38,
3<<8, as ell as the Repl+ thereith of defendant Saudi #rabian
#irlines Fled, thru counsel, on October ?8, 3<<8, considerin& that a
perusal of the plainti>Qs #%ended "o%plaint, hich is one for the
recover+ of actual, %oral and eGe%plar+ da%a&es plus attorne+Qs
fees, upon the basis of the applicable Philippine la, #rticle ?3 of
the Ne "ivil "ode of the Philippines, is, clearl+, ithin the
(urisdiction of this "ourt as re&ards the sub(ect %atter, and there
bein& nothin& ne of substance hich %i&ht cause the reversal or
%odiFcation of the order sou&ht to be reconsidered, the %otion for
reconsideration of the defendant, is DKNIKD.
SO ORDKRKD.T
GGv
C?7D
"on@ict of Ias 2 s(bPriorJ 30
"onse*uentl+, on Februar+ ?;, 3<<7, S#/DI# Fled its Petition for $ertiorari and
Prohibition ith Pra+er for Issuance of Nrit of Preli%inar+ In(unction andHor
Te%porar+ Restrainin& Order
GGvi
C?5D ith the "ourt of #ppeals.
Respondent "ourt of #ppeals pro%ul&ated a Resolution ith Te%porar+
Restrainin& Order
GGvii
C?4D dated Februar+ ?1, 3<<7, prohibitin& the respondent
)ud&e fro% further conductin& an+ proceedin&, unless otherise directed, in
the interi%.
In another Resolution
GGviii
C?0D pro%ul&ated on Septe%ber ?4, 3<<7, no
assailed, the appellate court denied S#/DI#Qs Petition for the Issuance of a Nrit
of Preli%inar+ In(unction dated Februar+ 30, 3<<7, to it=
SThe Petition for the Issuance of a Nrit of Preli%inar+ In(unction is
hereb+ DKNIKD, after considerin& the #nser, ith Pra+er to Den+
Nrit of Preli%inar+ In(unction ,Rollo, p. 317- the Repl+ and
Re(oinder, it appearin& that herein petitioner is not clearl+ entitled
thereto ,/nciano Para%edical "olle&e, et. (l.! v. "ourt of #ppeals,
et. (l. , 3;;117, #pril 4, 3<<1, Second Division-.
SO ORDKRKD.T
On October ?;, 3<<7, S#/DI# Fled ith this :onorable "ourt the instant
Petition
GGiG
C?<D for Revie ith Pra+er for Te%porar+ Restrainin& Order dated
October 31, 3<<7.
:oever, durin& the pendenc+ of the instant Petition, respondent "ourt of
#ppeals rendered the Decision
GGG
C1;D dated #pril 3;, 3<<5, no also assailed.
It ruled that the Philippines is an appropriate foru% considerin& that the
#%ended "o%plaintQs basis for recover+ of da%a&es is #rticle ?3 of the "ivil
"ode, and thus, clearl+ ithin the (urisdiction of respondent "ourt. It further
held that certiorari is not the proper re%ed+ in a denial of a Motion to Dis%iss,
inas%uch as the petitioner should have proceeded to trial, and in case of an
adverse rulin&, Fnd recourse in an appeal.
On Ma+ 4, 3<<5, S#/DI# Fled its Supple%ental Petition for Revie ith Pra+er
for Te%porar+ Restrainin& Order
GGGi
C13D dated #pril 1;, 3<<5, &iven due course
b+ this "ourt. #fter both parties sub%itted their Me%oranda,
GGGii
C1?D the instant
case is no dee%ed sub%itted for decision.
Petitioner S#/DI# raised the folloin& issues=
SI
The trial court has no (urisdiction to hear and tr+ "ivil "ase No. U2<12301<8
based on #rticle ?3 of the Ne "ivil "ode since the proper la applicable is the
la of the Bin&do% of Saudi #rabia inas%uch as this case involves hat is
!non in private international la as a Xcon@icts proble%Q. Otherise, the
Republic of the Philippines ill sit in (ud&%ent of the acts done b+ another
soverei&n state hich is abhorred.
II.
Ieave of court before Flin& a supple%ental pleadin& is not a (urisdictional
re*uire%ent. 6esides, the %atter as to absence of leave of court is no %oot
and acade%ic hen this :onorable "ourt re*uired the respondents to
co%%ent on petitionerQs #pril 1;, 3<<5 Supple%ental Petition For Revie Nith
Pra+er For # Te%porar+ Restrainin& Order Nithin Ten ,3;- Da+s Fro% Notice
Thereof. Further, the Revised Rules of "ourt should be construed ith liberalit+
pursuant to Section ?, Rule 3 thereof.
III.
Petitioner received on #pril ??, 3<<5 the #pril 3;, 3<<5 decision in "#2P.R. SP
NO. 15711 entitled XSaudi #rabian #irlines v. :on. Rodolfo #. Orti., et al.Q and
Fled its #pril 1;, 3<<5 Supple%ental Petition For Revie Nith Pra+er For #
Te%porar+ Restrainin& Order on Ma+ 4, 3<<5 at 3;=?< a.%. or ithin the 372da+
re&le%entar+ period as provided for under Section 3, Rule 87 of the Revised
Rules of "ourt. Therefore, the decision in "#2P.R. SP NO. 15711 has not +et
beco%e Fnal and eGecutor+ and this :onorable "ourt can ta!e co&ni.ance of
this case.T
GGGiii
C11D
Fro% the fore&oin& factual and procedural antecedents, the folloin& issues
e%er&e for our resolution=
I.
N:KT:KR RKSPONDKNT #PPKII#TK "O/RT KRRKD IN :OIDINP
T:#T T:K RKPION#I TRI#I "O/RT OF U/KYON "ITA :#S
)/RISDI"TION TO :K#R #ND TRA "IVII "#SK NO. U2<12301<8
KNTITIKD SMII#PROS P. MOR#D# V. S#/DI #R#6I#N #IRIINKS.T
II.
N:KT:KR RKSPONDKNT #PPKII#TK "O/RT KRRKD IN R/IINP T:#T
IN T:K "#SK P:IIIPPINK I#N S:O/ID POVKRN.
Petitioner S#/DI# clai%s that before us is a con@ict of las that %ust be
settled at the outset. It %aintains that private respondentQs clai% for alle&ed
abuse of ri&hts occurred in the Bin&do% of Saudi #rabia. It alle&es that the
eGistence of a forei&n ele%ent *ualiFes the instant case for the application of
the la of the Bin&do% of Saudi #rabia, b+ virtue of the lex loci delicti
commissi rule.
GGGiv
C18D
On the other hand, private respondent contends that since her #%ended
"o%plaint is based on #rticles 3<
GGGv
C17D and ?3
GGGvi
C15D of the "ivil "ode, then
the instant case is properl+ a %atter of do%estic la.
GGGvii
C14D
"on@ict of Ias 2 s(bPriorJ 3<
/nder the factual antecedents obtainin& in this case, there is no dispute that
the interpla+ of events occurred in to states, the Philippines and Saudi #rabia.
#s stated b+ private respondent in her #%ended "o%plaint
GGGviii
C10D dated )une
?1, 3<<8=
S?. Defendant S#/DI #R#6I#N #IRIINKS or S#/DI# is a forei&n
airlines corporation doin& business in the Philippines. It %a+ be
served ith su%%ons and other court processes at Travel Nide
#ssociated Sales ,Phils.-, Inc., 1
rd
Floor, "ou&ar 6uildin&, 338 Valero
St., Salcedo Villa&e, Ma!ati, Metro Manila.
G G G G G G G G G
5. Plainti> learned that, throu&h the intercession of the Saudi
#rabian &overn%ent, the Indonesian authorities a&reed to deport
Tha%er and #llah after to ee!s of detention. Kventuall+, the+
ere a&ain put in service b+ defendant S#/DI#. In Septe%ber
3<<;, defendant S#/DI# transferred plainti> to Manila.
4. On )anuar+ 38, 3<<?, (ust hen plainti> thou&ht that the )a!arta
incident as alread+ behind her, her superiors re*uested her to see
MR. #li Menie+, "hief Ie&al O$cer of S#/DI#, in )eddah, Saudi
#rabia. Nhen she sa hi%, he brou&ht her to the police station
here the police too! her passport and *uestioned her about the
)a!arta incident. Minie+ si%pl+ stood b+ as the police put
pressure on her to %a!e a state%ent droppin& the case a&ainst
Tha%er and #llah. Not until she a&reed to do so did the police
return her passport and alloed her to catch the afternoon @i&ht
out of )eddah.
0. One +ear and a half later or on )une 35, 3<<1, in Ri+adh, Saudi
#rabia, a fe %inutes before the departure of her @i&ht to Manila,
plainti> as not alloed to board the plane and instead ordered to
ta!e a later @i&ht to )eddah to see Mr. Menie+, the "hief Ie&al
O$cer of S#/DI#. Nhen she did, a certain Bhalid of the S#/DI#
o$ce brou&ht her to a Saudi court here she as as!ed to si&n a
docu%ent ritten in #rabic. The+ told her that this as necessar+
to close the case a&ainst Tha%er and #llah. #s it turned out,
plainti> si&ned a notice to her to appear before the court on )une
?4, 3<<1. Plainti> then returned to Manila.
<. Shortl+ afterards, defendant S#/DI# su%%oned plainti> to
report to )eddah once a&ain and see Minie+ on )une ?4, 3<<1 for
further investi&ation. Plainti> did so after receivin& assurance fro%
S#/DI#Qs Manila %ana&er, #sla% Salee%i, that the investi&ation
as routinar+ and that it posed no dan&er to her.
3;. In )eddah, a S#/DI# le&al o$cer brou&ht plainti> to the sa%e
Saudi court on )une ?4, 3<<1. Nothin& happened then but on )une
?0, 3<<1, a Saudi (ud&e interro&ated plainti> throu&h an interpreter
about the )a!arta incident. #fter one hour of interro&ation, the+ let
her &o. #t the airport, hoever, (ust as her plane as about to ta!e
o>, a S#/DI# o$cer told her that the airline had forbidden her to
ta!e that @i&ht. #t the In@i&ht Service O$ce here she as told to
&o, the secretar+ of Mr. Aah+a Saddic! too! aa+ her passport and
told her to re%ain in )eddah, at the cre *uarters, until further
orders.
33. On )ul+ 1, 3<<1 a S#/DI# le&al o$cer a&ain escorted plainti> to
the sa%e court here the (ud&e, to her astonish%ent and shoc!,
rendered a decision, translated to her in Kn&lish, sentencin& her to
Fve %onths i%prison%ent and to ?05 lashes. Onl+ then did she
reali.e that the Saudi court had tried her, to&ether ith Tha%er and
#llah, for hat happened in )a!arta. The court found plainti> &uilt+
of ,3- adulter+L ,?- &oin& to a disco, dancin&, and listenin& to the
%usic in violation of Isla%ic lasL ,1- sociali.in& ith the %ale cre,
in contravention of Isla%ic tradition.
3?. 6ecause S#/DI# refused to lend her a hand in the case, plainti>
sou&ht the help of the Philippine K%bass+ in )eddah. The latter
helped her pursue an appeal fro% the decision of the court. To pa+
for her up!eep, she or!ed on the do%estic @i&hts of defendant
S#/DI# hile, ironicall+, Tha%er and #llah freel+ served the
international @i&hts.T
GGGiG
C1<D
Nhere the factual antecedents satisfactoril+ establish the eGistence of a
forei&n ele%ent, e a&ree ith petitioner that the proble% herein could
present a Scon@ictsT case.
# factual situation that cuts across territorial lines and is a>ected b+ the
diverse las of to or %ore states is said to contain a Sforei&n ele%entT. The
presence of a forei&n ele%ent is inevitable since social and econo%ic a>airs of
individuals and associations are rarel+ conFned to the &eo&raphic li%its of their
birth or conception.
Gl
C8;D
The for%s in hich this forei&n ele%ent %a+ appear are %an+.
Gli
C83D The
forei&n ele%ent %a+ si%pl+ consist in the fact that one of the parties to a
contract is an alien or has a forei&n do%icile, or that a contract beteen
nationals of one State involves properties situated in another State. In other
cases, the forei&n ele%ent %a+ assu%e a co%pleG for%.
Glii
C8?D
In the instant case, the forei&n ele%ent consisted in the fact that private
respondent Morada is a resident Philippine national, and that petitioner S#/DI#
is a resident forei&n corporation. #lso, b+ virtue of the e%plo+%ent of Morada
ith the petitioner Saudia as a @i&ht steardess, events did transpire durin&
her %an+ occasions of travel across national borders, particularl+ fro% Manila,
Philippines to )eddah, Saudi #rabia, and vice versa, that caused a Scon@ictsT
situation to arise.
Ne thus Fnd private respondentQs assertion that the case is purel+ do%estic,
i%precise. # conEicts proble% presents itself here, and the *uestion of
(urisdiction
Gliii
C81D confronts the court a quo.
"on@ict of Ias 2 s(bPriorJ ?;
#fter a careful stud+ of the private respondentQs #%ended "o%plaint,
Gliv
C88D
and the "o%%ent thereon, e note that she aptl+ predicated her cause of
action on #rticles 3< and ?3 of the Ne "ivil "ode.
On one hand, #rticle 3< of the Ne "ivil "ode providesL
S#rt. 3<. Kver+ person %ust, in the eGercise of his ri&hts and in the
perfor%ance of his duties, act ith (ustice &ive ever+one his due
and observe honest+ and &ood faith.T
On the other hand, #rticle ?3 of the Ne "ivil "ode provides=
S#rt. ?3. #n+ person ho illfull+ causes loss or in(ur+ to another in
a %anner that is contrar+ to %orals, &ood custo%s or public polic+
shall co%pensate the latter for da%a&es.T
Thus, in *hilippine National Ban% 5*NB6 vs. $ourt of (ppeals,
Glv
C87D this "ourt
held that=
SThe aforecited provisions on hu%an relations ere intended to
eGpand the concept of torts in this (urisdiction b+ &rantin& ade*uate
le&al re%ed+ for the untold nu%ber of %oral ron&s hich is
i%possible for hu%an foresi&ht to speciFcall+ provide in the
statutes.T
#lthou&h #rticle 3< %erel+ declares a principle of la, #rticle ?3 &ives @esh to
its provisions. Thus, e a&ree ith private respondentQs assertion that
violations of #rticles 3< and ?3 are actionable, ith (udiciall+ enforceable
re%edies in the %unicipal foru%.
6ased on the alle&ations
Glvi
C85D in the #%ended "o%plaint, read in the li&ht of
the Rules of "ourt on (urisdiction
Glvii
C84D e Fnd that the Re&ional Trial "ourt
,RT"- of Uue.on "it+ possesses (urisdiction over the sub(ect %atter of the
suit.
Glviii
C80D Its authorit+ to tr+ and hear the case is provided for under Section
3 of Republic #ct No. 45<3, to it=
SSection 3. Section 3< of 6atas Pa%bansa 6l&. 3?<, otherise
!non as the S)udiciar+ Reor&ani.ation #ct of 3<0;T, is hereb+
a%ended to read as follos=
SK". 3<. )urisdiction in "ivil "ases. W Re&ional Trial "ourts shall eGercise
eGclusive (urisdiction=
G G G G G G G G G
,0- In all other cases in hich de%and, eGclusive of interest, da%a&es of
hatever !ind, attorne+Qs fees, liti&ation eGpenses, and costs or the value of
the propert+ in controvers+ eGceeds One hundred thousand pesos
,P3;;,;;;.;;- or, in such other cases in Metro Manila, here the de%and,
eGclusive of the above2%entioned ite%s eGceeds To hundred Thousand pesos
,P?;;,;;;.;;-. ,K%phasis ours-
G G G G G G G G G
#nd folloin& Section ? ,b-, Rule 8 of the Revised Rules of "ourtOthe venue,
Uue.on "it+, is appropriate=
SSK". ? Venue in "ourts of First Instance. WCNo Re&ional Trial "ourtD
,a- G G G G G G G G G
,b- Personal actions. W #ll other actions %a+ be co%%enced and
tried here the defendant or an+ of the defendants resides or %a+
be found, or here the plainti> or an+ of the plainti> resides, at the
election of the plainti>.T
Pra&%atic considerations, includin& the convenience of the parties, also ei&h
heavil+ in favor of the RT" Uue.on "it+ assu%in& (urisdiction. Para%ount is the
private interest of the liti&ant. Knforceabilit+ of a (ud&%ent if one is obtained is
*uite obvious. Relative advanta&es and obstacles to a fair trial are e*uall+
i%portant. Plainti> %a+ not, b+ choice of an inconvenient foru%, XveGQ,
XharassQ, or XoppressQ the defendant, e.&. b+ in@ictin& upon hi% needless
eGpense or disturbance. 6ut unless the balance is stron&l+ in favor of the
defendant, the plainti>Qs choice of foru% should rarel+ be disturbed.
GliG
C8<D
Nei&hin& the relative clai%s of the parties, the court a quo found it best to
hear the case in the Philippines. :ad it refused to ta!e co&ni.ance of the case,
it ould be forcin& plainti> ,private respondent no- to see! re%edial action
elsehere, i.e. in the Bin&do% of Saudi #rabia here she no lon&er %aintains
substantial connections. That ould have caused a funda%ental unfairness to
her.
Moreover, b+ hearin& the case in the Philippines no unnecessar+ di$culties
and inconvenience have been shon b+ either of the parties. The choice of
foru% of the plainti> ,no private respondent- should be upheld.
Si%ilarl+, the trial court also possesses (urisdiction over the persons of the
parties herein. 6+ Flin& her "o%plaint and #%ended "o%plaint ith the trial
court, private respondent has voluntar+ sub%itted herself to the (urisdiction of
the court.
The records sho that petitioner S#/DI# has Fled several %otions
l
C7;D pra+in&
for the dis%issal of MoradaQs #%ended "o%plaint. S#/DI# also Fled an
#nser In Ex ('undante $autelam dated Februar+ ?;, 3<<7. Nhat is ver+
patent and eGplicit fro% the %otions Fled, is that S#/DI# pra+ed for other
"on@ict of Ias 2 s(bPriorJ ?3
reliefs under the pre%ises. /ndeniabl+, petitioner S#/DI# has e>ectivel+
sub%itted to the trial courtQs (urisdiction b+ pra+in& for the dis%issal of the
#%ended "o%plaint on &rounds other than lac! of (urisdiction.
#s held b+ this "ourt in Repu'lic vs. ,er and $ompan&! 7td.=
li
C73D
SNe observe that the %otion to dis%iss Fled on #pril 38, 3<5?,
aside fro% disputin& the loer courtQs (urisdiction over defendantQs
person, pra+ed for dis%issal of the co%plaint on the &round that
plainti>Qs cause of action has prescribed. 6+ interposin& such
second &round in its %otion to dis%iss, Ber and "o., Itd. availed of
an a$r%ative defense on the basis of hich it pra+ed the court to
resolve controvers+ in its favor. For the court to validl+ decide the
said plea of defendant Ber 9 "o., Itd., it necessaril+ had to ac*uire
(urisdiction upon the latterQs person, ho, bein& the proponent of
the a$r%ative defense, should be dee%ed to have abandoned its
special appearance and voluntaril+ sub%itted itself to the
(urisdiction of the court.T
Si%ilarl+, the case of #e idgel& vs. 2erandos, held that=
SNhen the appearance is b+ %otion for the purpose of ob(ectin& to
the (urisdiction of the court over the person, it %ust be for the sole
and separate purpose of ob(ectin& to the (urisdiction of the court. If
his %otion is for an+ other purpose than to ob(ect to the (urisdiction
of the court over his person, he thereb+ sub%its hi%self to the
(urisdiction of the court. # special appearance b+ %otion %ade for
the purpose of ob(ectin& to the (urisdiction of the court over the
person ill be held to be a &eneral appearance, if the part+ in said
%otion should, for eGa%ple, as! for a dis%issal of the action upon
the further &round that the court had no (urisdiction over the
sub(ect %atter.T
lii
C7?D
"learl+, petitioner had sub%itted to the (urisdiction of the Re&ional Trial "ourt
of Uue.on "it+. Thus, e Fnd that the trial court has (urisdiction over the case
and that its eGercise thereof, (ustiFed.
#s to the choice of applicable la, e note that choice2of2la proble%s see! to
anser to i%portant *uestions= ,3- Nhat le&al s+ste% should control a &iven
situation here so%e of the si&niFcant facts occurred in to or %ore statesL
and ,?- to hat eGtent should the chosen le&al s+ste% re&ulate the situation.
liii
C71D
Several theories have been propounded in order to identif+ the le&al s+ste%
that should ulti%atel+ control. #lthou&h ideall+, all choice2of2la theories
should intrinsicall+ advance both notions of (ustice and predictabilit+, the+ do
not ala+s do so. The foru% is then faced ith the proble% of decidin& hich
of these to i%portant values should be stressed.
liv
C78D
6efore a choice can be %ade, it is necessar+ for us to deter%ine under hat
cate&or+ a certain set of facts or rules fall. This process is !non as
Scharacteri.ationT, or the Sdoctrine of *ualiFcationT. It is the Sprocess of
decidin& hether or not the facts relate to the !ind of *uestion speciFed in a
con@icts rule.T
lv
C77D The purpose of Scharacteri.ationT is to enable the foru%
to select the proper la.
lvi
C75D
Our startin& point of anal+sis here is not a le&al relation, but a factual situation,
event, or operative fact.
lvii
C74D #n essential ele%ent of con@ict rules is the
indication of a StestT or Sconnectin& factorT or Spoint of contactT. "hoice2of2
la rules invariabl+ consist of a factual relationship ,such as propert+ ri&ht,
contract clai%- and a connectin& factor or point of contact, such as the situs of
the res, the place of celebration, the place of perfor%ance, or the place of
ron&doin&.
lviii
C70D
Note that one or %ore circu%stances %a+ be present to serve as the possible
test for the deter%ination of the applicable la.
liG
C7<D These Stest factorsT or
Spoints of contactT or Sconnectin& factorsT could be an+ of the folloin&=
S,3- The nationalit+ of a person, his do%icile, his residence, his
place of so(ourn, or his ori&inL
,?- the seat of a le&al or (uridical person, such as a corporationL
,1- the situs of a thin&, that is, the place here a thin& is, or is
dee%ed to be situated. In particular, the lex situs is decisive hen
real ri&hts are involvedL
,8- <:e 24a9e @:ere a" a9< :a7 bee" #o"e, <:e locus actus ,
7u9: a7 <:e 24a9e @:ere a 9o"<ra9< :a7 bee" Aa#e, a
Aarr3a8e 9e4ebra<e#, a @344 738"e# or a <or< 9oAA3<<e#. T:e
lex loci actus 37 2ar<39u4ar4y 3A2or<a"< 3" 9o"<ra9<7 a"#
<or<7B
,7- the place here an act is intended to co%e into e>ect, e.&., the
place of perfor%ance of contractual duties, or the place here a
poer of attorne+ is to be eGercisedL
,5- the intention of the contractin& parties as to the la that should
&overn their a&ree%ent, the lex loci intentionisL
,4- the place here (udicial or ad%inistrative proceedin&s are
instituted or done. The lex foriOthe la of the foru%Ois
particularl+ i%portant because, as e have seen earlier, %atters of
XprocedureQ not &oin& to the substance of the clai% involved are
&overned b+ itL and because the lex fori applies henever the
content of the otherise applicable forei&n la is eGcluded fro%
application in a &iven case for the reason that it falls under one of
the eGceptions to the applications of forei&n laL and
,0- the @a& of a ship, hich in %an+ cases is decisive of practicall+
all le&al relationships of the ship and of its %aster or oner as such.
"on@ict of Ias 2 s(bPriorJ ??
It also covers contractual relationships particularl+ contracts of
a>rei&ht%ent.T
lG
C5;D ,/nderscorin& ours.-
#fter a careful stud+ of the pleadin&s on record, includin& alle&ations in the
#%ended "o%plaint dee%ed sub%itted for purposes of the %otion to dis%iss,
e are convinced that there is reasonable basis for private respondentQs
assertion that althou&h she as alread+ or!in& in Manila, petitioner brou&ht
her to )eddah on the pretense that she ould %erel+ testif+ in an investi&ation
of the char&es she %ade a&ainst the to S#/DI# cre %e%bers for the attac!
on her person hile the+ ere in )a!arta. #s it turned out, she as the one
%ade to face trial for ver+ serious char&es, includin& adulter+ and violation of
Isla%ic las and tradition.
There is li!eise lo&ical basis on record for the clai% that the Shandin& overT
or Sturnin& overT of the person of private respondent to )eddah o$cials,
petitioner %a+ have acted be+ond its duties as e%plo+er. PetitionerQs
purported act contributed to and a%pliFed or even proGi%atel+ caused
additional hu%iliation, %iser+ and su>erin& of private respondent. Petitioner
thereb+ alle&edl+ facilitated the arrest, detention and prosecution of private
respondent under the &uise of petitionerQs authorit+ as e%plo+er, ta!in&
advanta&e of the trust, conFdence and faith she reposed upon it. #s
purportedl+ found b+ the Prince of Ma!!ah, the alle&ed conviction and
i%prison%ent of private respondent as ron&ful. 6ut these capped the in(ur+
or har% alle&edl+ in@icted upon her person and reputation, for hich petitioner
could be liable as clai%ed, to provide co%pensation or redress for the ron&s
done, once dul+ proven.
"onsiderin& that the co%plaint in the court a quo is one involvin& torts, the
Sconnectin& factorT or Spoint of contactT could be the place or places here
the tortious conduct or lex loci actus occurred. #nd appl+in& the torts principle
in a con@icts case, e Fnd that the Philippines could be said as a situs of the
tort ,the place here the alle&ed tortious conduct too! place-. This is because
it is in the Philippines here petitioner alle&edl+ deceived private respondent,
a Filipina residin& and or!in& here. #ccordin& to her, she had honestl+
believed that petitioner ould, in the eGercise of its ri&hts and in the
perfor%ance of its duties, Sact ith (ustice, &ive her her due and observe
honest+ and &ood faith.T Instead, petitioner failed to protect her, she clai%ed.
That certain acts or parts of the in(ur+ alle&edl+ occurred in another countr+ is
of no %o%ent. For in our vie hat is i%portant here is the place here the
over2all har% or the fatalit+ of the alle&ed in(ur+ to the person, reputation,
social standin& and hu%an ri&hts of co%plainant, had lod&ed, accordin& to the
plainti> belo ,herein private respondent-. #ll told, it is not ithout basis to
identif+ the Philippines as the situs of the alle&ed tort.
Moreover, ith the idespread criticis% of the traditional rule of lex loci delicti
commissi, %odern theories and rules on tort liabilit+
lGi
C53D have been advanced
to o>er fresh (udicial approaches to arrive at (ust results. In !eepin& abreast
ith the %odern theories on tort liabilit+, e Fnd here an occasion to appl+ the
SState of the %ost si&niFcant relationshipT rule, hich in our vie should be
appropriate to appl+ no, &iven the factual conteGt of this case.
In appl+in& said principle to deter%ine the State hich has the %ost si&niFcant
relationship, the folloin& contacts are to be ta!en into account and evaluated
accordin& to their relative i%portance ith respect to the particular issue= ,a-
the place here the in(ur+ occurredL ,b- the place here the conduct causin&
the in(ur+ occurredL ,c- the do%icile, residence, nationalit+, place of
incorporation and place of business of the parties, and ,d- the place here the
relationship, if an+, beteen the parties is centered.
lGii
C5?D
#s alread+ discussed, there is basis for the clai% that over2all in(ur+ occurred
and lod&ed in the Philippines. There is li!eise no *uestion that private
respondent is a resident Filipina national, or!in& ith petitioner, a resident
forei&n corporation en&a&ed here in the business of international air carria&e.
Thus, the SrelationshipT beteen the parties as centered here, althou&h it
should be stressed that this suit is not based on %ere labor la violations.
Fro% the record, the clai% that the Philippines has the %ost si&niFcant contact
ith the %atter in this dispute,
lGiii
C51D raised b+ private respondent as plainti>
belo a&ainst defendant ,herein petitioner-, in our vie, has been properl+
established.
Prescindin& fro% this pre%ise that the Philippines is the situs of the tort
co%plaint of and the place Shavin& the %ost interest in the proble%T, e Fnd,
b+ a+ of recapitulation, that the Philippine la on tort liabilit+ should have
para%ount application to and control in the resolution of the le&al issues
arisin& out of this case. Further, e hold that the respondent Re&ional Trial
"ourt has (urisdiction over the parties and the sub(ect %atter of the co%plaintL
the appropriate venue is in Uue.on "it+, hich could properl+ appl+ Philippine
la. Moreover, e Fnd untenable petitionerQs insistence that SCsDince private
respondent instituted this suit, she has the burden of pleadin& and provin& the
applicable Saudi la on the %atter.T
lGiv
C58D #s aptl+ said b+ private respondent,
she has Sno obli&ation to plead and prove the la of the Bin&do% of Saudi
#rabia since her cause of action is based on #rticles 3< and ?3T of the "ivil
"ode of the Philippines. In her #%ended "o%plaint and subse*uent pleadin&s
she never alle&ed that Saudi la should &overn this case.
lGv
C57D #nd as
correctl+ held b+ the respondent appellate court, Sconsiderin& that it as the
petitioner ho as invo!in& the applicabilit+ of the la of Saudi #rabia, thus
the burden as on it CpetitionerD to plead and to establish hat the la of
Saudi #rabia isT.
lGvi
C55D
Iastl+, no error could be i%puted to the respondent appellate court in
upholdin& the trial courtQs denial of defendantQs ,herein petitionerQs- %otion to
dis%iss the case. Not onl+ as (urisdiction in order and venue properl+ laid,
but appeal after trial as obviousl+ available, and the eGpeditious trial itself
indicated b+ the nature of the case at hand. Indubitabl+, the Philippines is the
state inti%atel+ concerned ith the ulti%ate outco%e of the case belo not
(ust for the beneFt of all the liti&ants, but also for the vindication of the
countr+Qs s+ste% of la and (ustice in a transnational settin&. Nith these
&uidelines in %ind, the trial court %ust proceed to tr+ and ad(ud&e the case in
the li&ht of relevant Philippine la, ith due consideration of the forei&n
ele%ent or ele%ents involved. Nothin& said herein, of course, should be
construed as pre(ud&in& the results of the case in an+ %anner hatsoever.
"on@ict of Ias 2 s(bPriorJ ?1
WHEREFORE, the instant petition for certiorari is hereb+ DISMISSKD. "ivil
"ase No. U2<12301<8 entitled SMila&ros P. Morada vs. Saudi #rabia #irlinesT is
hereb+ RKM#NDKD to Re&ional Trial "ourt of Uue.on "it+, 6ranch 0< for further
proceedin&s.
SO ORDKRKD.
Davide, )r., ,"hair%an-, 6ellosillo, Vitu&, and Pan&aniban, ))., concur.
"on@ict of Ias 2 s(bPriorJ ?8
i
T:IRD DIVISION

B#Y/:IRO :#SKP#N# and NIPPON KNPINKKRINP "ONS/IT#NTS "O., ITD.,
Petitioners,
2 versus 2
MINOR/ BIT#M/R#,
Respondent.
P.R. No. 38<344

Present=

AN#RKS2S#NTI#PO, ).,
"hairperson,
#/STRI#2M#RTINKY,
":I"O2N#Y#RIO,
N#":/R#, and
RKAKS, )).

Pro%ul&ated=

Nove%ber ?1, ?;;4

G222222222222222222222222222222222222222222222222222222222222222222222222222222222222G


DK"ISION

N#":/R#, ).=
6efore the "ourt is a petition for revie on certiorari under Rule 87 of the Rules of "ourt assailin& the #pril 30, ?;;3
Decision C3D of the "ourt of #ppeals ,"#- in "#2P.R. SP No. 5;0?4, and the )ul+ ?7, ?;;3 Resolution C?D den+in& the %otion
for reconsideration thereof.
On March 1;, 3<<<, petitioner Nippon Kn&ineerin& "onsultants "o., Itd. ,Nippon-, a )apanese consultanc+ Fr% providin&
technical and %ana&e%ent support in the infrastructure pro(ects of forei&n &overn%ents, C1D entered into an Independent
"ontractor #&ree%ent ,I"#- ith respondent Minoru Bita%ura, a )apanese national per%anentl+ residin& in the Philippines.
C8D The a&ree%ent provides that respondent as to eGtend professional services to Nippon for a +ear startin& on #pril 3,
3<<<. C7D Nippon then assi&ned respondent to or! as the pro(ect %ana&er of the Southern Ta&alo& #ccess Road ,ST#R-
Pro(ect in the Philippines, folloin& the co%pan+'s consultanc+ contract ith the Philippine Povern%ent. C5D
Nhen the ST#R Pro(ect as near co%pletion, the Depart%ent of Public Nor!s and :i&ha+s ,DPN:- en&a&ed the
consultanc+ services of Nippon, on )anuar+ ?0, ?;;;, this ti%e for the detailed en&ineerin& and construction supervision of
the 6on&abon26aler Road I%prove%ent ,66RI- Pro(ect. C4D Respondent as na%ed as the pro(ect %ana&er in the contract's
#ppendiG 1.3. C0D

On Februar+ ?0, ?;;;, petitioner Ba.uhiro :ase&aa, Nippon's &eneral %ana&er for its International Division, infor%ed
respondent that the co%pan+ had no %ore intention of auto%aticall+ renein& his I"#. :is services ould be en&a&ed b+
the co%pan+ onl+ up to the substantial co%pletion of the ST#R Pro(ect on March 13, ?;;;, (ust in ti%e for the I"#'s eGpir+.
C<D
Threatened ith i%pendin& une%plo+%ent, respondent, throu&h his la+er, re*uested a ne&otiation conference and
de%anded that he be assi&ned to the 66RI pro(ect. Nippon insisted that respondentQs contract as for a FGed ter% that had
alread+ eGpired, and refused to ne&otiate for the reneal of the I"#. C3;D
#s he as not able to &enerate a positive response fro% the petitioners, respondent conse*uentl+ initiated on )une 3, ?;;;
"ivil "ase No. ;;2;?58 for speciFc perfor%ance and da%a&es ith the Re&ional Trial "ourt of Iipa "it+. C33D
For their part, petitioners, contendin& that the I"# had been perfected in )apan and eGecuted b+ and beteen )apanese
nationals, %oved to dis%iss the co%plaint for lac! of (urisdiction. The+ asserted that the clai% for i%proper pre2ter%ination
of respondent's I"# could onl+ be heard and ventilated in the proper courts of )apan folloin& the principles of leG loci
celebrationis and leG contractus. C3?D
In the %eanti%e, on )une ?;, ?;;;, the DPN: approved Nippon's re*uest for the replace%ent of Bita%ura b+ a certain A.
Bota!e as pro(ect %ana&er of the 66RI Pro(ect. C31D

On )une ?<, ?;;;, the RT", invo!in& our rulin& in Insular Povern%ent v. Fran! C38D that %atters connected ith the
perfor%ance of contracts are re&ulated b+ the la prevailin& at the place of perfor%ance, C37D denied the %otion to
dis%iss. C35D The trial court subse*uentl+ denied petitioners' %otion for reconsideration, C34D pro%ptin& the% to Fle
ith the appellate court, on #u&ust 38, ?;;;, their Frst Petition for "ertiorari under Rule 57 Cdoc!eted as "#2P.R. SP No.
5;?;7D. C30D On #u&ust ?1, ?;;;, the "# resolved to dis%iss the petition on procedural &roundsOfor lac! of state%ent of
%aterial dates and for insu$cient veriFcation and certiFcation a&ainst foru% shoppin&. C3<D #n Kntr+ of )ud&%ent as later
issued b+ the appellate court on Septe%ber ?;, ?;;;. C?;D
#&&rieved b+ this develop%ent, petitioners Fled ith the "#, on Septe%ber 3<, ?;;;, still ithin the re&le%entar+ period, a
second Petition for "ertiorari under Rule 57 alread+ statin& therein the %aterial dates and attachin& thereto the proper
veriFcation and certiFcation. This second petition, hich substantiall+ raised the sa%e issues as those in the Frst, as
doc!eted as "#2P.R. SP No. 5;0?4. C?3D
Rulin& on the %erits of the second petition, the appellate court rendered the assailed #pril 30, ?;;3 Decision C??D Fndin&
no &rave abuse of discretion in the trial court's denial of the %otion to dis%iss. The "# ruled, a%on& others, that the
principle of leG loci celebrationis as not applicable to the case, because nohere in the pleadin&s as the validit+ of the
ritten a&ree%ent put in issue. The "# thus declared that the trial court as correct in appl+in& instead the principle of leG
loci solutionis. C?1D
Petitioners' %otion for reconsideration as subse*uentl+ denied b+ the "# in the assailed )ul+ ?7, ?;;3 Resolution. C?8D
Re%ainin& steadfast in their stance despite the series of denials, petitioners instituted the instant Petition for Revie on
"ertiorari C?7D i%putin& the folloin& errors to the appellate court=

#. T:K :ONOR#6IK "O/RT OF #PPK#IS PR#VKIA KRRKD IN FINDINP T:#T T:K TRI#I "O/RT V#IIDIA KZKR"ISKD
)/RISDI"TION OVKR T:K INST#NT "ONTROVKRSA, DKSPITK T:K F#"T T:#T T:K "ONTR#"T S/6)K"T M#TTKR OF T:K
PRO"KKDINPS # U/O N#S KNTKRKD INTO 6A #ND 6KTNKKN TNO )#P#NKSK N#TION#IS, NRITTKN N:OIIA IN T:K
)#P#NKSK I#NP/#PK #ND KZK"/TKD IN TOBAO, )#P#N.

6. T:K :ONOR#6IK "O/RT OF #PPK#IS PR#VKIA KRRKD IN OVKRIOOBINP T:K NKKD TO RKVIKN O/R #D:KRKN"K
TO T:K PRIN"IPIK OF IKZ IO"I SOI/TIONIS IN T:K IIP:T OF RK"KNT DKVKIOPMKNTCSD IN PRIV#TK INTKRN#TION#I I#NS.
C?5D

The pivotal *uestion that this "ourt is called upon to resolve is hether the sub(ect %atter (urisdiction of Philippine courts
in civil cases for speciFc perfor%ance and da%a&es involvin& contracts eGecuted outside the countr+ b+ forei&n nationals
%a+ be assailed on the principles of leG loci celebrationis, leG contractus, the Sstate of the %ost si&niFcant relationship
rule,T or foru% non conveniens.
:oever, before rulin& on this issue, e %ust Frst dispose of the procedural %atters raised b+ the respondent.
Bita%ura contends that the Fnalit+ of the appellate court's decision in "#2P.R. SP No. 5;?;7 has alread+ barred the Flin& of
the second petition doc!eted as "#2P.R. SP No. 5;0?4 ,funda%entall+ raisin& the sa%e issues as those in the Frst one- and
the instant petition for revie thereof.
Ne do not a&ree. Nhen the "# dis%issed "#2P.R. SP No. 5;?;7 on account of the petition's defective certiFcation of non2
foru% shoppin&, it as a dis%issal ithout pre(udice. C?4D The sa%e holds true in the "#'s dis%issal of the said case due to
defects in the for%al re*uire%ent of veriFcation C?0D and in the other re*uire%ent in Rule 85 of the Rules of "ourt on the
state%ent of the %aterial dates. C?<D The dis%issal bein& ithout pre(udice, petitioners can re2Fle the petition, or Fle a
second petition attachin& thereto the appropriate veriFcation and certiFcationOas the+, in fact didOand statin& therein the
%aterial dates, ithin the prescribed period C1;D in Section 8, Rule 57 of the said Rules. C13D
The dis%issal of a case ithout pre(udice si&niFes the absence of a decision on the %erits and leaves the parties free to
liti&ate the %atter in a subse*uent action as thou&h the dis%issed action had not been co%%enced. In other ords, the
ter%ination of a case not on the %erits does not bar another action involvin& the sa%e parties, on the sa%e sub(ect %atter
and theor+. C1?D
Necessaril+, because the said dis%issal is ithout pre(udice and has no res (udicata e>ect, and even if petitioners still
indicated in the veriFcation and certiFcation of the second certiorari petition that the Frst had alread+ been dis%issed on
procedural &rounds, C11D petitioners are no lon&er re*uired b+ the Rules to indicate in their certiFcation of non2foru%
shoppin& in the instant petition for revie of the second certiorari petition, the status of the aforesaid Frst petition before
the "#. In an+ case, an o%ission in the certiFcate of non2foru% shoppin& about an+ event that ill not constitute res
(udicata and litis pendentia, as in the present case, is not a fatal defect. It ill not arrant the dis%issal and nulliFcation of
the entire proceedin&s, considerin& that the evils sou&ht to be prevented b+ the said certiFcate are no lon&er present. C18D
The "ourt also Fnds no %erit in respondent's contention that petitioner :ase&aa is onl+ authori.ed to verif+ and certif+,
on behalf of Nippon, the certiorari petition Fled ith the "# and not the instant petition. True, the #uthori.ation C17D dated
Septe%ber 8, ?;;;, hich is attached to the second certiorari petition and hich is also attached to the instant petition for
revie, is li%ited in scopeOits ordin&s indicate that :ase&aa is &iven the authorit+ to si&n for and act on behalf of the
co%pan+ onl+ in the petition Fled ith the appellate court, and that authorit+ cannot eGtend to the instant petition for
revie. C15D In a plethora of cases, hoever, this "ourt has liberall+ applied the Rules or even suspended its application
henever a satisfactor+ eGplanation and a subse*uent fulFll%ent of the re*uire%ents have been %ade. C14D Piven that
petitioners herein su$cientl+ eGplained their %is&ivin&s on this point and appended to their Repl+ C10D an updated
#uthori.ation C1<D for :ase&aa to act on behalf of the co%pan+ in the instant petition, the "ourt Fnds the sa%e as
su$cient co%pliance ith the Rules.
:oever, the "ourt cannot eGtend the sa%e liberal treat%ent to the defect in the veriFcation and certiFcation. #s
respondent pointed out, and to hich e a&ree, :ase&aa is trul+ not authori.ed to act on behalf of Nippon in this case.
The aforesaid Septe%ber 8, ?;;; #uthori.ation and even the subse*uent #u&ust 34, ?;;3 #uthori.ation ere issued onl+
b+ Nippon's president and chief eGecutive o$cer, not b+ the co%pan+'s board of directors. In not a fe cases, e have
ruled that corporate poers are eGercised b+ the board of directorsL thus, no person, not even its o$cers, can bind the
corporation, in the absence of authorit+ fro% the board. C8;D "onsiderin& that :ase&aa veriFed and certiFed the petition
onl+ on his behalf and not on behalf of the other petitioner, the petition has to be denied pursuant to Io*uias v. O$ce of
the O%buds%an. C83D Substantial co%pliance ill not su$ce in a %atter that de%ands strict observance of the Rules. C8?D
Nhile technical rules of procedure are desi&ned not to frustrate the ends of (ustice, nonetheless, the+ are intended to e>ect
the proper and orderl+ disposition of cases and e>ectivel+ prevent the clo&&in& of court doc!ets. C81D
Further, the "ourt has observed that petitioners incorrectl+ Fled a Rule 57 petition to *uestion the trial court's denial of
their %otion to dis%iss. It is a ell2established rule that an order den+in& a %otion to dis%iss is interlocutor+, and cannot
be the sub(ect of the eGtraordinar+ petition for certiorari or %anda%us. The appropriate recourse is to Fle an anser and
to interpose as defenses the ob(ections raised in the %otion, to proceed to trial, and, in case of an adverse decision, to
elevate the entire case b+ appeal in due course. C88D Nhile there are reco&ni.ed eGceptions to this rule, C87D petitioners'
case does not fall a%on& the%.

This brin&s us to the discussion of the substantive issue of the case.
#ssertin& that the RT" of Iipa "it+ is an inconvenient foru%, petitioners *uestion its (urisdiction to hear and resolve the civil
case for speciFc perfor%ance and da%a&es Fled b+ the respondent. The I"# sub(ect of the liti&ation as entered into and
perfected in To!+o, )apan, b+ )apanese nationals, and ritten holl+ in the )apanese lan&ua&e. Thus, petitioners posit that
local courts have no substantial relationship to the parties C85D folloin& the Cstate of theD %ost si&niFcant relationship rule
in Private International Ia. C84D
The "ourt notes that petitioners adopted an additional but di>erent theor+ hen the+ elevated the case to the appellate
court. In the Motion to Dis%iss C80D Fled ith the trial court, petitioners never contended that the RT" is an inconvenient
foru%. The+ %erel+ ar&ued that the applicable la hich ill deter%ine the validit+ or invalidit+ of respondent's clai% is
that of )apan, folloin& the principles of leG loci celebrationis and leG contractus. C8<D Nhile not abandonin& this stance in
their petition before the appellate court, petitioners on certiorari si&niFcantl+ invo!ed the defense of foru% non conveniens.
C7;D On petition for revie before this "ourt, petitioners dropped their other ar&u%ents, %aintained the foru% non
conveniens defense, and introduced their ne ar&u%ent that the applicable principle is the Cstate of theD %ost si&niFcant
relationship rule. C73D
6e that as it %a+, this "ourt is not inclined to den+ this petition %erel+ on the basis of the chan&e in theor+, as eGplained in
Philippine Ports #uthorit+ v. "it+ of Iloilo. C7?D Ne onl+ pointed out petitioners' inconstanc+ in their ar&u%ents to e%phasi.e
their incorrect assertion of con@ict of las principles.
To elucidate, in the (udicial resolution of con@icts proble%s, three consecutive phases are involved= (urisdiction, choice of
la, and reco&nition and enforce%ent of (ud&%ents. "orrespondin& to these phases are the folloin& *uestions= ,3- Nhere
can or should liti&ation be initiated[ ,?- Nhich la ill the court appl+[ and ,1- Nhere can the resultin& (ud&%ent be
enforced[ C71D
#nal+ticall+, (urisdiction and choice of la are to distinct concepts. C78D )urisdiction considers hether it is fair to cause a
defendant to travel to this stateL choice of la as!s the further *uestion hether the application of a substantive la hich
ill deter%ine the %erits of the case is fair to both parties. The poer to eGercise (urisdiction does not auto%aticall+ &ive a
state constitutional authorit+ to appl+ foru% la. Nhile (urisdiction and the choice of the leG fori ill often coincide, the
S%ini%u% contactsT for one do not ala+s provide the necessar+ Ssi&niFcant contactsT for the other. C77D The *uestion of
hether the la of a state can be applied to a transaction is di>erent fro% the *uestion of hether the courts of that state
have (urisdiction to enter a (ud&%ent. C75D
In this case, onl+ the Frst phase is at issueO(urisdiction. )urisdiction, hoever, has various aspects. For a court to validl+
eGercise its poer to ad(udicate a controvers+, it %ust have (urisdiction over the plainti> or the petitioner, over the
defendant or the respondent, over the sub(ect %atter, over the issues of the case and, in cases involvin& propert+, over the
res or the thin& hich is the sub(ect of the liti&ation. C74D In assailin& the trial court's (urisdiction herein, petitioners are
actuall+ referrin& to sub(ect %atter (urisdiction.
)urisdiction over the sub(ect %atter in a (udicial proceedin& is conferred b+ the soverei&n authorit+ hich establishes and
or&ani.es the court. It is &iven onl+ b+ la and in the %anner prescribed b+ la. C70D It is further deter%ined b+ the
alle&ations of the co%plaint irrespective of hether the plainti> is entitled to all or so%e of the clai%s asserted therein.
C7<D To succeed in its %otion for the dis%issal of an action for lac! of (urisdiction over the sub(ect %atter of the clai%, C5;D
the %ovant %ust sho that the court or tribunal cannot act on the %atter sub%itted to it because no la &rants it the
poer to ad(udicate the clai%s. C53D

In the instant case, petitioners, in their %otion to dis%iss, do not clai% that the trial court is not properl+ vested b+ la ith
(urisdiction to hear the sub(ect controvers+ for, indeed, "ivil "ase No. ;;2;?58 for speciFc perfor%ance and da%a&es is one
not capable of pecuniar+ esti%ation and is properl+ co&ni.able b+ the RT" of Iipa "it+. C5?D Nhat the+ rather raise as
&rounds to *uestion sub(ect %atter (urisdiction are the principles of leG loci celebrationis and leG contractus, and the Sstate
of the %ost si&niFcant relationship rule.T

The "ourt Fnds the invocation of these &rounds unsound.
IeG loci celebrationis relates to the Sla of the place of the cere%on+T C51D or the la of the place here a contract is
%ade. C58D The doctrine of leG contractus or leG loci contractus %eans the Sla of the place here a contract is eGecuted
or to be perfor%ed.T C57D It controls the nature, construction, and validit+ of the contract C55D and it %a+ pertain to the la
voluntaril+ a&reed upon b+ the parties or the la intended b+ the% either eGpressl+ or i%plicitl+. C54D /nder the Sstate of
the %ost si&niFcant relationship rule,T to ascertain hat state la to appl+ to a dispute, the court should deter%ine hich
state has the %ost substantial connection to the occurrence and the parties. In a case involvin& a contract, the court should
consider here the contract as %ade, as ne&otiated, as to be perfor%ed, and the do%icile, place of business, or place
of incorporation of the parties. C50D This rule ta!es into account several contacts and evaluates the% accordin& to their
relative i%portance ith respect to the particular issue to be resolved. C5<D
Since these three principles in con@ict of las %a!e reference to the la applicable to a dispute, the+ are rules proper for
the second phase, the choice of la. C4;D The+ deter%ine hich state's la is to be applied in resolvin& the substantive
issues of a con@icts proble%. C43D Necessaril+, as the onl+ issue in this case is that of (urisdiction, choice2of2la rules are
not onl+ inapplicable but also not +et called for.
Further, petitioners' pre%ature invocation of choice2of2la rules is eGposed b+ the fact that the+ have not +et pointed out
an+ con@ict beteen the las of )apan and ours. 6efore deter%inin& hich la should appl+, Frst there should eGist a
con@ict of las situation re*uirin& the application of the con@ict of las rules. C4?D #lso, hen the la of a forei&n countr+ is
invo!ed to provide the proper rules for the solution of a case, the eGistence of such la %ust be pleaded and proved. C41D
It should be noted that hen a con@icts case, one involvin& a forei&n ele%ent, is brou&ht before a court or ad%inistrative
a&enc+, there are three alternatives open to the latter in disposin& of it= ,3- dis%iss the case, either because of lac! of
(urisdiction or refusal to assu%e (urisdiction over the caseL ,?- assu%e (urisdiction over the case and appl+ the internal la
of the foru%L or ,1- assu%e (urisdiction over the case and ta!e into account or appl+ the la of so%e other State or States.
C48D The courtQs poer to hear cases and controversies is derived fro% the "onstitution and the las. Nhile it %a+ choose
to reco&ni.e las of forei&n nations, the court is not li%ited b+ forei&n soverei&n la short of treaties or other for%al
a&ree%ents, even in %atters re&ardin& ri&hts provided b+ forei&n soverei&ns. C47D
Neither can the other &round raised, foru% non conveniens, C45D be used to deprive the trial court of its (urisdiction herein.
First, it is not a proper basis for a %otion to dis%iss because Section 3, Rule 35 of the Rules of "ourt does not include it as a
&round. C44D Second, hether a suit should be entertained or dis%issed on the basis of the said doctrine depends lar&el+
upon the facts of the particular case and is addressed to the sound discretion of the trial court. C40D In this case, the RT"
decided to assu%e (urisdiction. Third, the propriet+ of dis%issin& a case based on this principle re*uires a factual
deter%inationL hence, this con@icts principle is %ore properl+ considered a %atter of defense. C4<D
#ccordin&l+, since the RT" is vested b+ la ith the poer to entertain and hear the civil case Fled b+ respondent and the
&rounds raised b+ petitioners to assail that (urisdiction are inappropriate, the trial and appellate courts correctl+ denied the
petitionersQ %otion to dis%iss.
N:KRKFORK, pre%ises considered, the petition for revie on certiorari is DKNIKD.
SO ORDKRKD.
#NTONIO KD/#RDO 6. N#":/R#
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