GR NO 122191 SAUDI ARABIAN AIRLINES VS CA

FACTS:
Saudi Arabian Airlines (SAUDIA), foreign airlines corporation doing business in the
Philippines and may be served summons in agent in Makati, hired Milagros P. Morada
as a flight attendant for its airlines based in Jeddah, Saudi Arabia. * April 27, 1990:
While on a lay-over in Jakarta, Indonesia, Morada went to a disco dance with fellow
crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. It was
almost morning when they returned to their hotels so they agreed to have breakfast
together at the room of Thamer. Shortly after Allah left the room, Thamer attempted to
rape Morada. Fortunately, a roomboy and several security personnel heard her cries for
help and rescued her. Indonesian police arrested Thamer and Allah Al-Gazzawi, the
latter as an accomplice. * When Morada returned to Jeddah, SAUDIA officials
interrogated her about the Jakarta incident and requested her to go back to Jakarta to
help arrange the release of Thamer and Allah. In Jakarta, SAUDIA Legal Officers
negotiated with the police for the immediate release of the detained crew members but
did not succeed. Afraid that she might be tricked into something she did not want
because of her inability to understand the local dialect, Morado refused to cooperate
and declined to sign a blank paper and a document written in the local dialect.
Eventually, SAUDIA allowed Morada to return to Jeddah but barred her from the
Jakarta flights. * Indonesian authorities agreed to deport Thamer and Allah and they
were again put in service. While, Morada was transferred to Manila. * January 14, 1992:
Morada was asked to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah,
Saudi Arabia. He brought her to the police station where the police took her passport
and questioned her about the Jakarta incident.
The police pressured her to drop the case against Thamer and Allah. Not until she agreed
to do so did the police return her passport and allowed her to catch the afternoon flight
out of Jeddah. * June 16, 1993: Morada, while in Riyadh Saudi Arabia, was not allowed
to board the plane to Manila and instead ordered to take a later flight to Jeddah to see
Mr. Miniewy. Khalid of the SAUDIA office brought her to a Saudi court where she was
asked to sign a document written in Arabic. They told her that this was necessary to
close the case against Thamer and Allah but it was actually a notice for her to appear
before the court on June 27, 1993. Plaintiff then returned to Manila. * June 27, 1993:
SAUDIA's Manila manager, Aslam Saleemi, assured Morada that the investigation was
routinary and that it posed no danger to her so she reported to Miniewy in Jeddah for
further investigation. She was brought to the Saudi court. * June 28, 1993: Saudi judge
interrogated Morada through an interpreter about the Jakarta incident for an hour and
let her go. SAUDIA officers forbidden her to take flight. She was told to go the Inflight
Service Office where her passport was taken and they told her to remain in Jeddah, at
the crew quarters, until further orders. * July 3, 1993: She was brought to court again
and to her astonishment and shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286 lashes. The court tried her,
together with Thamer and Allah, and found her guilty of (1) adultery (2) going to a disco,
dancing and listening to the music in violation of Islamic laws and (3) socializing with
the male crew, in contravention of Islamic tradition. * Failing to seek the assistance of

1
her employer, SAUDIA, she asked the Philippine Embassy in Jeddah to help her while
her case is on appeal. She continued to workon the domestic flight of SAUDIA, while
Thamer and Allah continued to serve in the international flights. * Because she was
wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed
her to leave Saudi Arabia. Before her return to Manila, she was terminated from the
service by SAUDIA, without her being informed of the cause. * November 23, 1993:
Morada filed a Complaint for damages against SAUDIA, and Khaled Al-Balawi, its
country manager. * January 19, 1994: SAUDIA filed an Omnibus Motion To Dismiss on
following grounds: (1) that the Complaint states no cause of action against SAUDIA (2)
that defendant Al-Balawi is not a real party in interest (3) that the claim or demand set
forth in the Complaint has been waived, abandoned or otherwise extinguished and (4)
that the trial court has no jurisdiction to try the case. * After opposition to the motion
to dismiss by Morada and reply by SAUDIA, Morada filed an Amended Complaint
dropping Al-Balawi. SAUDIA filed its Manifestation, Motion to Dismiss Amended
Complaint, subsequently motion for reconsideration which were all denied.
SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary Restraining
Order: o It is a conflict of laws that must be settled at the outset: § Morada's claim for
alleged abuse of rights occurred in the Kingdom of Saudi Arabia. § Existence of a foreign
element qualifies the instant case for the application of the law of the Kingdom of Saudi
Arabia, by virtue of the lex loci delicti commissi rule. * Morada: Amended Complaint is
based on Articles 19 and 21 of the Civil Code which is a matter of domestic law

ISSUE: W/N the RTC of Quezon City has jurisdiction over the case and it is the proper
forum for recovery of damages under Art. 21 of the Civil Code which should govern.

HELD: YES. petition for certiorari is hereby DISMISSED. REMANDED to RTC of Quezon
City, Branch 89 for further proceedings * Where the factual antecedents satisfactorily
establish the existence of a foreign element, the problem could present a "conflicts" case
* A factual situation that cuts across territorial lines and is affected by the diverse laws
of two or more states is said to contain a "foreign element". o Morada is a resident
Philippine national o SAUDIA is a resident foreign corporation o by virtue of the
employment of Morada with the SAUDIA as a flight stewardess, events did transpire
during her many occasions of travel across national borders, particularly from Manila,
Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a "conflicts" situation
to arise * Forms of foreign element: o Simple: one of the parties to a contract is an alien
or has a foreign domicile, or that a contract between nationals of one State involves
properties situated in another State o Complex * Violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal forum. RTC of Quezon
City possesses jurisdiction over the subject matter of the suit.

* Pragmatic considerations, including the convenience of the parties, also weigh heavily
in favor of the RTC Quezon City assuming jurisdiction: o private interest of the litigant
o enforceability of a judgment if one is obtained o relative advantages and obstacles to
a fair trial § Plaintiff may not, by choice of an inconvenient forum, "vex", "harass", or
"oppress" the defendant, e.g. by inflicting upon him needless expense or disturbance.
but unless the balance is strongly in favor of the defendant, the plaintiffs choice of forum
should rarely be disturbed. * Weighing the relative claims of the parties, the court a quo

2
found it best to hear the case in the Philippines. Had it refused to take cognizance of
the case, it would be forcing plaintiff (private respondent now) to seek remedial action
elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains
substantial connections. That would have caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. * Trial court possesses
jurisdiction over the persons of the parties o By filing her Complaint and Amended
Complaint with the trial court, private respondent has voluntary submitted herself to
the jurisdiction of the court o SAUDIA has effectively submitted to the trial court's
jurisdiction by praying for the dismissal of the Amended Complaint on grounds other
than lack of jurisdiction. * As to the choice of applicable law, it seeks to answer 2
important questions: o (1) What legal system should control a given situation where
some of the significant facts occurred in two or more states o (2) to what extent should
the chosen legal system regulate the situation * Although ideally, all choice-of-law
theories should intrinsically advance both notions of justice and predictability, they do
not always do so. The forum is then faced with the problem of deciding which of these
two important values should be stressed. * Before a choice can be made, it is necessary
for us to determine under what category a certain set of facts or rules fall o
"characterization" or the "doctrine of qualification” § process of deciding whether or not
the facts relate to the kind of question specified in a conflicts rule § purpose: to enable
the forum to select the proper law * Choice-of-law rules invariably consist of: (essential
element of conflict rules) o factual situation/relationship or operative fact (such as
property right, contract claim); and § starting point of analysis o test or connecting factor
or point of contact (such as the situs of the res, the place of celebration, the place of
performance, or the place of wrongdoing) – could be: § (1) The nationality of a person,
his domicile, his residence, his place of sojourn, or his origin § (2) the seat of a legal or
juridical person, such as a corporation § (3) the situs of a thing, that is, the place where
a thing is, or is deemed to be situated.

3
GR NO 112573 NORTHWEST ORIENT VS CA
FACTS:
* Northwest Airlines (Northwest) and C.F. Sharp & Company (C.F.), through its Japan
branch, entered into an International Passenger Sales Agency Agreement, whereby the
Northwest authorized the C.F. to sell its air transportation tickets * March 25, 1980:
Unable to remit the proceeds of the ticket sales, Northwest sued C.F. in Tokyo, Japan,
for collection of the unremitted proceeds of the ticket sales, with claim for damages *
April 11, 1980: writ of summons was issued by the 36th Civil Department, Tokyo
District Court of Japan * The attempt to serve the summons was unsuccessful because
Mr. Dinozo was in Manila and would be back on April 24, 1980 * April 24, 1980: Mr.
Dinozo returned to C.F. Office to serve the summons but he refused to receive claiming
that he no longer an employee * After the 2 attempts of service were unsuccessful,
Supreme Court of Japan sent the summons together with the other legal documents to
the Ministry of Foreign Affairs of Japan> Japanese Embassy in Manila>Ministry (now
Department) of Foreign Affairs of the Philippines>Executive Judge of the Court of First
Instance (now Regional Trial Court) of Manila who ordered Deputy Sheriff Rolando
Balingit>C.F. Main Office * August 28, 1980: C.F. received from Deputy Sheriff Rolando
Balingit the writ of summons but failed to appear at the scheduled hearing. * January
29, 1981: Tokyo Court rendered judgment ordering the C.F. to pay 83,158,195 Yen and
damages for delay at the rate of 6% per annum from August 28, 1980 up to and until
payment is completed * March 24, 1981: C.F. received from Deputy Sheriff Balingit copy
of the judgment. C.F. did not appeal so it became final and executory * May 20, 1983:
Northwest filed a suit for enforcement of the judgment a RTC * July 16, 1983: C.F.
averred that the Japanese Court sought to be enforced is null and void and
unenforceable in this jurisdiction having been rendered without due and proper notice
and/or with collusion or fraud and/or upon a clear mistake of law and fact. The foreign
judgment in the Japanese Court sought in this action is null and void for want of
jurisdiction over the person of the defendant considering that this is an action in
personam. The process of the Court in Japan sent to the Philippines which is outside
Japanese jurisdiction cannot confer jurisdiction over the defendant in the case before
the Japanese Court of the case at bar * CA sustained RTC: Court agrees that if the C.F.
in a foreign court is a resident in the court of that foreign court such court could acquire
jurisdiction over the person of C.F. but it must be served in the territorial jurisdiction
of the foreign court
ISSUE: W/N the Japanese Court has jurisdiction over C.F.

HELD: YES. instant petition is partly GRANTED, and the challenged decision is
AFFIRMED insofar as it denied NORTHWEST's claims for attorneys fees, litigation
expenses, and exemplary damages * Consequently, the party attacking (C.F.) a foreign
judgment has the burden of overcoming the presumption of its validity * Accordingly,
the presumption of validity and regularity of the service of summons and the decision
thereafter rendered by the Japanese court must stand. * Applying it, the Japanese law
on the matter is presumed to be similar with the Philippine law on service of summons
on a private foreign corporation doing business in the Philippines. Section 14, Rule 14
of the Rules of Court provides that if the defendant is a foreign corporation doing

4
business in the Philippines, service may be made: * (1) on its resident agent designated
in accordance with law for that purpose, or, * (2) if there is no such resident agent, on
the government official designated by law to that effect; or * (3) on any of its officers or
agents within the Philippines. * If the foreign corporation has designated an agent to
receive summons, the designation is exclusive, and service of summons is without force
and gives the court no jurisdiction unless made upon him. * Where the corporation has
no such agent, service shall be made on the government official designated by law, to
wit: * (a) the Insurance Commissioner in the case of a foreign insurance company * (b)
the Superintendent of Banks, in the case of a foreign banking corporation * (c) the
Securities and Exchange Commission, in the case of other foreign corporations duly
licensed to do business in the Philippines. Whenever service of process is so made, the
government office or official served shall transmit by mail a copy of the summons or
other legal proccess to the corporation at its home or principal office. The sending of
such copy is a necessary part of the service. * The service on the proper government
official under Section 14, Rule 14 of the Rules of Court, in relation to Section 128 of the
Corporation Code
* Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly
licensed to do business here, to the status of domestic corporations * We think it would
be entirely out of line with this policy should we make a discrimination against a foreign
corporation, like the petitioner, and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every requirement of law made specially
of foreign corporations, but in addition with every requirement of law made of domestic
corporations * In as much as SHARP was admittedly doing business in Japan through
its four duly registered branches at the time the collection suit against it was filed, then
in the light of the processual presumption, SHARP may be deemed a resident of Japan,
and, as such, was amenable to the jurisdiction of the courts therein and may be deemed
to have assented to the said courts' lawful methods of serving process. * �Accordingly,
the extraterritorial service of summons on it by the Japanese Court was valid not only
under the processual presumption but also because of the presumption of regularity of
performance of official duty.

5
GR NO 12769210 GOMEZ VS CA
Facts:
Under a "Principal Loan Agreement" and "Complementary Loan Agreement," both dated
4 November 1992, Asian Development Bank (ADB), a multilateral development finance
institution, agreed to extend to Marcopper Mining Corporation (Marcopper) a loan in the
aggregate amount of US$40,000,000.00 to finance the latter's mining project at Sta.
Cruz, Marinduque. The principal loan of US$15,000,000.00 was sourced from ADB's
ordinary capital resources, while the complementary loan of US$25,000,000.00 was
funded by the Bank of Nova Scotia, a participating finance institution. On even date,
ADB and Placer Dome, Inc., (Placer Dome), a foreign corporation which owns 40% of
Marcopper, executed a "Support and Standby Credit Agreement" whereby the latter.
agreed to provide Marcopper with cash flow support for the payment of its obligations
to ADB. To secure the loan, Marcopper executed in favor of ADB a "Deed of Real Estate
and Chattel Mortgage" dated 11 November 1992, covering substantially all of its
(Marcopper's) properties and assets in Marinduque. It was registered with the Register
of Deeds on 12 November 1992. When Marcopper defaulted in the payment of its loan
obligation, Placer Dome, in fulfillment of its undertaking under the "Support and
Standby Credit Agreement," and presumably to preserve its international credit
standing, agreed to have its subsidiary corporation, MR Holding, Ltd., assumed
Marcopper's obligation to ADB in the amount of US$18,453,450.02. Consequently, in
an "Assignment Agreement" dated 20 March 1997 ADB assigned to MR Holdings all its
rights, interests and obligations under the principal and complementary loan
agreements, ("Deed of Real Estate and Chattel Mortgage," and "Support and Standby
Credit Agreement"). On 8 December 1997, Marcopper likewise executed a "Deed of
Assignment" in favor of MR Holdings. Under its provisions, Marcopper assigns,
transfers, cedes and conveys to MR Holdings, its assigns and/or successors-in-interest
all of its (Marcopper's) properties, mining equipment and facilities. Meanwhile, it
appeared that on 7 May 1997, Solidbank Corporation (Solidbank) obtained a Partial
Judgment against Marcopper from the RTC, Branch 26, Manila, in Civil Case 96-80083,
ordering Marcopper to pay Solidbank he amount if PHP 52,970,756.89, plus interest
and charges until fully paid; to pay an amount equivalent to 10% of above-stated
amount as attorney's fees; and to pay the costs of suit. Upon Solidbank's motion, the
RTC of Manila issued a writ of execution pending appeal directing Carlos P. Bajar,
sheriff, to require Marcopper "to pay the sums of money to satisfy the Partial Judgment."
Thereafter, Bajar issued two notices of levy on Marcopper's personal and real properties,
and over all its stocks of scrap iron and unserviceable mining equipment. Together with
sheriff Ferdinand M. Jandusay of the RTC, Branch 94, Boac, Marinduque, Bajar issued
two notices setting the public auction sale of the levied properties on 27 August 1998
at the Marcopper mine site. Having learned of the scheduled auction sale, MR Holdings
served an "Affidavit of Third-Party Claim" upon the sheriffs on 26 August 1998, asserting
its ownership over all Marcopper's mining properties, equipment and facilities by virtue
of the "Deed of Assignment." Upon the denial of its "Affidavit of Third-Party Claim" by
the RTC of Manila, MR Holdings commenced with the RTC of Boac, Marinduque,
presided by Judge Leonardo P. Ansaldo, a complaint for reivindication of properties,
etc., with prayer for preliminary injunction and temporary restraining order against

6
Solidbank, Marcopper, and sheriffs Bajar and Jandusay (Civil Case 98-13). In an Order
dated 6 October 1998, Judge Ansaldo denied MR Holdings' application for a writ of
preliminary injunction on the ground that (a) MR Holdings has no legal capacity to sue,
it being a foreign corporation doing business in the Philippines without license; (b) an
injunction will amount "to staying the execution of a final judgment by a court of co-
equal and concurrent jurisdiction;" and (c) the validity of the "Assignment Agreement"
and the "Deed of Assignment" has been "put into serious question by the timing of their
execution and registration." Unsatisfied, MR Holdings elevated the matter to the Court
of Appeals on a Petition for Certiorari, Prohibition and Mandamus (CA-GR SP 49226).
On 8 January 1999, the Court of Appeals rendered a Decision affirming the trial court's
decision. MR Holdings filed the Petition for Review on Certiorari.
Issue: Whether MR Holdings' participation under the "Assignment Agreement" and the
"Deed of Assignment" constitutes “doing business.”
Held: Batas Pambansa 68, otherwise known as "The Corporation Code of the
Philippines," is silent as to what constitutes doing" or "transacting" business in the
Philippines. Fortunately, jurisprudence has supplied the deficiency and has held that
the term "implies a continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works or the exercise of some
of the functions normally incident to, and in progressive prosecution of, the purpose
and object for which the corporation was organized." The traditional case law definition
has metamorphosed into a statutory definition, having been adopted with some
qualifications in various pieces of legislation in Philippine jurisdiction, such as Republic
Act 7042 (Foreign Investment Act of 1991), and Republic Act 5455. There are other
statutes defining the term "doing business," and as may be observed, one common
denominator among them all is the concept of "continuity." The expression "doing
business" should not be given such a strict and literal construction as to make it apply
to any corporate dealing whatever. At this early stage and with MR Holdings' acts or
transactions limited to the assignment contracts, it cannot be said that it had performed
acts intended to continue the business for which it was organized. Herein, at this early
stage and with MR Holdings' acts or transactions limited to the assignment contracts,
it cannot be said that it had performed acts intended to continue the business for which
it was organized. It may not be amiss to point out that the purpose or business for which
MR Holdings was organized is not discernible in the records. No effort was exerted by
the Court of Appeals to establish the nexus between MR Holdings' business and the acts
supposed to constitute "doing business." Thus, whether the assignment contracts were
incidental to MR Holdings' business or were continuation thereof is beyond
determination. The Court of Appeals' holding that MR Holdings was determined to be
"doing business" in the Philippines is based mainly on conjectures and speculation. In
concluding that the "unmistakable intention" of MR Holdings is to continue Marcopper's
business, the Court of Appeals hangs on the wobbly premise that "there is no other way
for petitioner to recover its huge financial investments which it poured into Marcopper's
rehabilitation without it (petitioner) continuing Marcopper's business in the country."
Absent overt acts of MR Holdings from which we may directly infer its intention to
continue Marcopper's business, the Supreme Court cannot give its concurrence.
Significantly, a view subscribed upon by many authorities is that the mere ownership

7
by a foreign corporation of a property in a certain state, unaccompanied by its active
use in furtherance of the business for which it was formed, is insufficient in itself to
constitute doing business. Further, long before MR Holdings assumed Marcopper's debt
to ADB and became their assignee under the two assignment contracts, there already
existed a "Support and Standby Credit Agreement" between ADB and Placer Dome
whereby the latter bound itself to provide cash flow support for Marcopper's payment of
its obligations to ADB. Plainly, MR Holdings' payment of US$18,453,450.12 to ADB was
more of a fulfillment of an obligation under the "Support and Standby Credit Agreement"
rather than an investment. That MR Holdings had to step into the shoes of ADB as
Marcopper's creditor was just a necessary legal consequence of the transactions that
transpired. Also, the "Support and Standby Credit Agreement" was executed 4 years
prior to Marcopper's insolvency, hence, the alleged "intention of MR Holdings to continue
Marcopper's business" could have no basis for at that time, Marcopper's fate cannot yet
be determined. In the final analysis, MR Holdings was engaged only in isolated acts or
transactions. Single or isolated acts, contracts, or transactions of foreign corporations
are not regarded as a doing or carrying on of business. Typical examples of these are
the making of a single contract, sale, sale with the taking of a note and mortgage in the
state to secure payment therefor, purchase, or note, or the mere commission of a tort.
In these instances, there is no purpose to do any other business within the country.

8
GR NO 138104 MR HOLDINGS VS BAJAR

MR HOLDINGS, LTD., vs. SHERIFF CARLOS P. BAJAR, SHERIFF FERDINAND M.

JANDUSAY, SOLIDBANK CORPORATION, AND MARCOPPER MINING
CORPORATION
G.R. No. 138104 April 11, 2002
SANDOVAL-GUTIERREZ, J .:

FACTS:
Asian Development Bank (ADB), a multilateral development finance institution, agreed
to extend to respondent Marcopper Mining Corporation (Marcopper) a loan in the
aggregate amount of US$40,000,000.00 to finance the latter's mining project at Sta.
Cruz, Marinduque. To secure the loan, Marcopper executed in favor of ADB a "Deed of
Real Estate and Chattel Mortgage" covering substantially all of its (Marcopper's)
properties and assets in Marinduque. When Marcopper defaulted in the payment of its
loan obligation, petitioner MR Holdings, Ltd., assumed Marcopper's obligation to ADB
in the amount of US$18,453,450.02. Consequently, in an "Assignment Agreement", ADB
assigned to petitioner all its rights, interests and obligations under the principal and
complementary loan agreements. Respondent Marcopper likewise executed a "Deed of
Assignment" in favor of petitioner.
In the meantime, respondent Solidbank Corporation obtained a Partial Judgment
against Marcopper from the RTC, Branch 26, Manila, in Civil Case No. 96-80083 entitled
"Solidbank Corporation vs. Marcopper Mining Corporation, John E. Loney, Jose E.
Reyes and Teodulo C. Gabor, Jr.," Having learned of the scheduled auction sale,
petitioner filed an "Affidavit of Third-Party Claim" asserting its ownership over all
Marcopper's mining properties, equipment and facilities by virtue of the "Deed of
Assignment." Upon the denial of its "Affidavit of Third-Party Claim" by the RTC of Manila,
petitioner commenced with the RTC of Boac, Marinduque, a complaint for reivindication
of properties, etc., with prayer for preliminary injunction and temporary restraining
order against respondents Solidbank, Marcopper, and the sheriffs assigned in
implementing the writ of execution. The trial court denied petitioner's application for a
writ of preliminary injunction on the ground that petitioner has no legal capacity to sue,
it being a foreign corporation doing business in the Philippines without license.

Unsatisfied, petitioner elevated the matter to the Court of Appeals on a Petition for
Certiorari, Prohibition and Mandamus. The Court of Appeals affirmed the ruling of the
trial court that petitioner has no legal capacity to sue in the Philippine courts because
it is a foreign corporation doing business here without license. Hence, the present
petition. Petitioner alleged that it is not "doing business" in the Philippines and
characterized its participation in the assignment contracts (whereby Marcopper's assets
were transferred to it) as mere isolated acts that cannot foreclose its right to sue in local
courts.

9
ISSUE: Whether or not petitioner has no legal capacity to sue in the Philippine courts
because it is a foreign corporation doing business here without license
HELD: The Supreme Court ruled in favor of petitioner and granted the petition. The
Court ruled that a foreign corporation, which becomes the assignee of mining properties,
facilities and equipment, cannot be automatically considered as doing business, nor
presumed to have the intention of engaging in mining business. According to the Court,
petitioner was engaged only in isolated acts or transactions. Single or isolated acts,
contracts, or transactions of foreign corporations are not regarded as a doing or carrying
on of business. Typical examples are the making of a single contract, sale, sale with the
taking of a note and mortgage in the state to secure payment therefor, purchase, or
note, or the mere commission of a tort. In the said instances, there is no purpose to do
any other business within the country. The Court further ruled that the Court of
Appeals' holding that petitioner was determined to be "doing business" in the Philippines
is based mainly on conjectures and speculation. No effort was exerted by the appellate
court to establish the nexus between petitioner's business and the acts supposed to
constitute "doing business." Thus, whether the assignment contracts were incidental to
petitioner's business or were continuation thereof is beyond determination.

10
GR NO 178362-83 CONTINENTAL MICRONESIA INC V BASSO
Continental Micronesia, Inc. vs. Basso

PETITIONER Continental Micronesia, Inc. (CMI) is a foreign corporation organized and

existing under the laws of and domiciled in the United States of America. It is licensed
to do business in the Philippines. Respondent Joseph Basso, a US citizen, resided in
the Philippines prior to his death. In 1990, Basso was employed by Mr. Keith R. Braden,
managing director-Asia of Continental Airlines, Inc. (Continental), as the general
manager of its Philippine branch. In Nov. 7, 1992, CMI took over the Philippine
operations of Continental with Basso retaining his position as general manager. For
failure to agree on the new terms and conditions of his employment, Basso was
dismissed from the service effective Jan. 31, 1996.

Basso filed a complaint for illegal dismissal with moral and exemplary damages against
CMI. Alleging the presence of foreign elements, CMI filed a motion to dismiss on the
ground of lack of jurisdiction over the person of CMI and the subject matter of the
controversy. Does the motion find merit?
Ruling: No.
Jurisdiction is defined as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law
and by the material allegations in the complaint, regardless of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs sought therein. It cannot
be acquired through a waiver or enlarged by the omission of the parties or conferred by
the acquiescence of the court. That the employment contract of Basso was replete with
references to US laws, and that it originated from and was returned to the US, do not
automatically preclude our labor tribunals from exercising jurisdiction to hear and try
this case.

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

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

11
Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and
the subject matter of this case, these tribunals may proceed to try the case even if the
rules of conflict-of-laws or the convenience of the parties point to a foreign forum, this
being an exercise of sovereign prerogative of the country where the case is filed
(Jardeleza, J.:, SC Third Division, Continental Micronesia, Inc. vs. Joseph Basso, G.R.
Nos. 178382-83, September 23, 2015).

12
GR NO 156848 PIONEER VS GUADIZ
The Facts
On 16 January 1998, Antonio D. Todaro (Todaro) filed a complaint for sum of money
and damages with preliminary attachment against PIL, Pioneer Concrete Philippines,
Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald),
and Philip J. Klepzig (Klepzig). PIL and its co-defendants were served copies of the
summons and of the complaint at PPHI and PCPI’s office in Alabang, Muntinlupa,
through Cecille L. De Leon (De Leon), who was Klepzig’s Executive Assistant.
Todaro alleged that PIL is a corporation duly organized under Australian laws, while
PCPI and PPHI are corporations duly organized under Philippine laws. PIL is engaged in
the ready-mix and concrete aggregates business and has established a presence
worldwide. PIL established PPHI as the holding company of the stocks of its operating
company in the Philippines, PCPI. McDonald is the Chief Executive Officer of PIL’s Hong
Kong office while Klepzig is the President and Managing Director of PPHI and PCPI. For
his part, Todaro further alleged that he was the managing director of Betonval
Readyconcrete, Inc. (Betonval) from June 1975 up to his resignation in February 1996.
Before Todaro filed his complaint, there were several meetings and exchanges of letters
between Todaro and the officers of Pioneer Concrete (Hong Kong) Limited, Pioneer
Concrete Group HK, PPHI, and PIL. According to Todaro, PIL contacted him in May 1996
and asked if he could join it in establishing a pre-mixed concrete plant and in overseeing
its operations in the Philippines. Todaro confirmed his availability and expressed
interest in joining PIL. Todaro met with several of PIL’s representatives and even gave
PIL the names of three of his subordinates in Betonval whom he would like to join him
in PIL.
The Issues
PIL raised the following issues before this Court:

A. [The trial court] did not and cannot acquire jurisdiction over the person of [PIL]
considering that:
A.1. [PIL] is a foreign corporation "not doing business" in the Philippines.
A.2. Moreover, the complaint does not contain appropriate allegations of ultimate facts
showing that [PIL] is doing or transacting business in the Philippines.
A.3. Assuming arguendo that jurisdiction may be acquired over the person of [PIL], [the
trial court] still failed to acquire jurisdiction since summons was improperly served on
[PIL].
B. [Todaro] does not have a cause of action and the complaint fails to state a cause of
action. Jurisprudence is settled in that in resolving a motion to dismiss, a court can
consider all the pleadings filed in the case, including annexes, motions and all evidence
on record.

13
C. [The trial court] did not and cannot acquire jurisdiction over the subject matter of
the complaint since the allegations contained therein indubitably show that [Todaro]
bases his claims on an alleged breach of an employment contract. Thus, exclusive
jurisdiction is vested with the [NLRC].

D. Pursuant to the principle of forum non-conveniens, [the trial court] committed grave
abuse of discretion when it took cognizance of the case.22
The Ruling of the Court

The petition has partial merit. We affirm with modification the rulings of the trial and
appellate courts. Apart from the issue on service of summons, the rulings of the trial
and appellate courts on the issues raised by PIL are correct.
Cause of Action

Section 2, Rule 2 of the 1997 Rules of Civil Procedure states that a cause of action is
the act or omission by which a party violates a right of another.

The general rule is that the allegations in a complaint are sufficient to constitute a cause
of action against the defendants if, admitting the facts alleged, the court can render a
valid judgment upon the same in accordance with the prayer therein. A cause of action
exists if the following elements are present, namely: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the
part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the
latter may maintain an action for recovery of damages.23
In the present case, the summary of Todaro’s allegations states that PIL, PCPI, PPHI,
McDonald, and Klepzig did not fulfill their contractual obligation to employ Todaro on a
permanent basis in PIL’s Philippine office. Todaro’s allegations are thus sufficient to
establish a cause of action. We quote with approval the trial court’s ruling on this
matter:

On the issue of lack of cause of action – It is well-settled that the merits of a motion to
dismiss a complaint for lack of cause of action is tested on the strength of the allegations
of fact contained in the complaint and no other (De Jesus, et al. vs. Belarmino, et al.,
95 Phil. 366 [1954]). This Court finds that the allegations of the complaint, specifically
paragraphs 13-33 thereof, paragraphs 30-33 alleging as follows:

"30. All of the acts set forth in the foregoing have been done with the knowledge, consent
and/or approval of the defendants who acted in concert and/or in conspiracy with one
another.

31. Under the circumstances, there is a valid contract entered into between [Todaro]
and the Pioneer Group, whereby, among others, the Pioneer Group would employ
[Todaro], on a permanent basis, to manage and operate the ready-mix concrete
operations, if the Pioneer Group decides to invest in the Philippines.

14
32. The Pioneer Group has decided to invest in the Philippines. The refusal of the
defendants to comply with the Pioneer Group’s undertaking to employ [Todaro] to
manage their Philippine ready-mix operations, on a permanent basis, is a direct breach
of an obligation under a valid and perfected contract.

33. Alternatively, assuming without conceding, that there was no contractual obligation
on the part of the Pioneer Group to employ [Todaro] on a permanent basis, in their
Philippine operations, the Pioneer Group and the other defendants did not act with
justice, give [Todaro] his due and observe honesty and good faith and/or they have
willfully caused injury to [Todaro] in a manner that is contrary to morals, good customs,
and public policy, as mandated under Arts. 19 and 21 of the New Civil Code."
sufficiently establish a cause of action for breach of contract and/or violation of Articles
19 and 21 of the New Civil Code. Whether or not these allegations are true is immaterial
for the court cannot inquire into the truth thereof, the test being whether, given the
allegations of fact in the complaint, a valid judgment could be rendered in accordance
with the prayer in the complaint.24

It should be emphasized that the presence of a cause of action rests on the sufficiency,
and not on the veracity, of the allegations in the complaint. The veracity of the
allegations will have to be examined during the trial on the merits. In resolving a motion
to dismiss based on lack of cause of action, the trial court is limited to the four corners
of the complaint and its annexes. It is not yet necessary for the trial court to examine
the truthfulness of the allegations in the complaint. Such examination is proper during
the trial on the merits.
Forum Non-Conveniens
The doctrine of forum non-conveniens requires an examination of the truthfulness of
the allegations in the complaint. Section 1, Rule 16 of the 1997 Rules of Civil Procedure
does not mention forum non-conveniens as a ground for filing a motion to dismiss. The
propriety of dismissing a case based on forum non-conveniens requires a factual
determination; hence, it is more properly considered a matter of defense. While it is
within the discretion of the trial court to abstain from assuming jurisdiction on this
ground, the trial court should do so only after vital facts are established to determine
whether special circumstances require the court’s desistance.25
Jurisdiction over PIL
PIL questions the trial court’s exercise of jurisdiction over it on two levels. First, that PIL
is a foreign corporation not doing business in the Philippines and because of this, the
service of summons on PIL did not follow the mandated procedure. Second, that
Todaro’s claims are based on an alleged breach of an employment contract so Todaro
should have filed his complaint before the NLRC and not before the trial court.
Transacting Business in the Philippines and
Service of Summons
The first level has two sub-issues: PIL’s transaction of business in the Philippines and
the service of summons on PIL. Section 12, Rule 14 of the 1997 Rules of Civil Procedure

15
provides the manner by which summons may be served upon a foreign juridical entity
which has transacted business in the Philippines. Thus:
Service upon foreign private juridical entity. — When the defendant is a foreign juridical
entity which has transacted business in the Philippines, service may be made on its
resident agent designated in accordance with law for that purpose, or, if there be no
such agent, on the government official designated by law to that effect, or any of its
officers or agents within the Philippines.

As to the first sub-issue, PIL insists that its sole act of "transacting" or "doing business"
in the Philippines consisted of its investment in PPHI. Under Philippine law, PIL’s mere
investment in PPHI does not constitute "doing business." However, we affirm the lower
courts’ ruling and declare that, based on the allegations in Todaro’s complaint, PIL was
doing business in the Philippines when it negotiated Todaro’s employment with PPHI.
Section 3(d) of Republic Act No. 7042, Foreign Investments Act of 1991, states:

The phrase "doing business" shall include soliciting orders, service contracts, opening
offices, whether called "liaison" offices or branches; appointing representatives or
distributors domiciled in the Philippines or who in any calendar year stay in the country
for a period or periods totaling one hundred eighty [180] days or more; participating in
the management, supervision or control of any domestic business, firm, entity or
corporation in the Philippines; and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that extent the performance
of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of commercial gain or of the purpose and object of the business
organization:Provided, however, That the phrase "doing business" shall not be deemed
to include mere investment as a shareholder by a foreign entity in domestic corporations
duly registered to do business, and/or the exercise of rights as such investor; nor having
a nominee director or officer to represent its interests in such corporation; nor
appointing a representative or distributor domiciled in the Philippines which transacts
business in its own name and for its own account; (Emphases added)
PIL’s alleged acts in actively negotiating to employ Todaro to run its pre-mixed concrete
operations in the Philippines, which acts are hypothetically admitted in PIL’s motion to
dismiss, are not mere acts of a passive investor in a domestic corporation. Such are
managerial and operational acts in directing and establishing commercial operations in
the Philippines. The annexes that Todaro attached to his complaint give us an idea on
the extent of PIL’s involvement in the negotiations regarding Todaro’s employment. In
Annex "E," McDonald of Pioneer Concrete Group HK confirmed his offer to engage
Todaro as a consultant of PIL. In Annex "F," Todaro accepted the consultancy. In Annex
"H," Klepzig of PPHI stated that PIL authorized him to tell Todaro about the cessation of
his consultancy. Finally, in Annex "I," Folwell of PIL wrote to Todaro to confirm that
"Pioneer" no longer wishes to be associated with Todaro and that Klepzig is authorized
to terminate this association. Folwell further referred to a Dr. Schubert and to Pioneer
Hong Kong. These confirmations and references tell us that, in this instance, the various
officers and companies under the Pioneer brand name do not work independently of
each other. It cannot be denied that PIL had knowledge of and even authorized the non-
implementation of Todaro’s alleged permanent employment. In fact, in the letters to

16
Todaro, the word "Pioneer" was used to refer not just to PIL alone but also to all
corporations negotiating with Todaro under the Pioneer name.
As further proof of the interconnection of the various Pioneer corporations with regard
to their negotiations with Todaro, McDonald of Pioneer Concrete Group HK confirmed
Todaro’s engagement as consultant of PIL (Annex "E") while Folwell of PIL stated that
Todaro rendered consultancy services to Pioneer HK (Annex "I"). In this sense, the
various Pioneer corporations were not acting as separate corporations. The behavior of
the various Pioneer corporations shoots down their defense that the corporations have
separate and distinct personalities, managements, and operations. The various Pioneer
corporations were all working in concert to negotiate an employment contract between
Todaro and PPHI, a domestic corporation.

Finally, the phrase "doing business in the Philippines" in the former version of Section
12, Rule 14 now reads "has transacted business in the Philippines." The scope is thus
broader in that it is enough for the application of the Rule that the foreign private
juridical entity "has transacted business in the Philippines."26

As to the second sub-issue, the purpose of summons is not only to acquire jurisdiction
over the person of the defendant, but also to give notice to the defendant that an action
has been commenced against it and to afford it an opportunity to be heard on the claim
made against it. The requirements of the rule on summons must be strictly followed;
otherwise, the trial court will not acquire jurisdiction over the defendant.
When summons is to be served on a natural person, service of summons should be
made in person on the defendant.27 Substituted service is resorted to only upon the
concurrence of two requisites: (1) when the defendant cannot be served personally
within a reasonable time and (2) when there is impossibility of prompt service as shown
by the statement in the proof of service in the efforts made to find the defendant
personally and that such efforts failed.28
The statutory requirements of substituted service must be followed strictly, faithfully,
and fully, and any substituted service other than by the statute is considered ineffective.
Substituted service is in derogation of the usual method of service. It is a method
extraordinary in character and may be used only as prescribed and in the circumstances
authorized by the statute.29 The need for strict compliance with the requirements of
the rule on summons is also exemplified in the exclusive enumeration of the agents of
a domestic private juridical entity who are authorized to receive summons.

At present, Section 11 of Rule 14 provides that when the defendant is a domestic private
juridical entity, service may be made on the "president, managing partner, general
manager, corporate secretary, treasurer, or in-house counsel." The previous version of
Section 11 allowed for the service of summons on the "president, manager, secretary,
cashier, agent, or any of its directors." The present Section 11 qualified "manager" to
"general manager" and "secretary" to "corporate secretary." The present Section 11 also
removed "cashier, agent, or any of its directors" from the exclusive enumeration.
When summons is served on a foreign juridical entity, there are three prescribed ways:
(1) service on its resident agent designated in accordance with law for that purpose, (2)

17
service on the government official designated by law to receive summons if the
corporation does not have a resident agent, and (3) service on any of the corporation’s
officers or agents within the Philippines.30

In the present case, service of summons on PIL failed to follow any of the prescribed
processes. PIL had no resident agent in the Philippines. Summons was not served on
the Securities and Exchange Commission (SEC), the designated government
agency,31 since PIL is not registered with the SEC. Summons for PIL was served on De
Leon, Klepzig’s Executive Assistant. Klepzig is PIL’s "agent within the Philippines"
because PIL authorized Klepzig to notify Todaro of the cessation of his consultancy
(Annexes "H" and "I").32 The authority given by PIL to Klepzig to notify Todaro implies
that Klepzig was likewise authorized to receive Todaro’s response to PIL’s notice. Todaro
responded to PIL’s notice by filing a complaint before the trial court.

However, summons was not served personally on Klepzig as agent of PIL. Instead,
summons was served on De Leon, Klepzig’s Executive Assistant. In this instance, De
Leon was not PIL’s agent but a mere employee of Klepzig. In effect, the sheriff33 resorted
to substituted service. For symmetry, we apply the rule on substituted service of
summons on a natural person and we find that no reason was given to justify the service
of PIL’s summons on De Leon.
Thus, we rule that PIL transacted business in the Philippines and Klepzig was its agent
within the Philippines. However, there was improper service of summons on PIL since
summons was not served personally on Klepzig.
NLRC Jurisdiction

As to the second level, Todaro prays for payment of damages due him because of PIL’s
non-implementation of Todaro’s alleged employment agreement with PPHI. The
appellate court stated its ruling on this matter, thus:
It could not be denied that there was no existing contract yet to speak of between
PIONEER INTL. and [Todaro]. Since there was an absence of an employment contract
between the two parties, this Court is of the opinion and so holds that no employer-
employee relationship actually exists. Record reveals that all that was agreed upon by
[Todaro] and the Pioneer Concrete, acting in behalf of PIONEER INTL., was the
confirmation of the offer to engage the services of the former as consultant of PIONEER
INTL. (Rollo, p. 132). The failure on the part of PIONEER INTL. to abide by the said
agreement, which was duly confirmed by PIONEER INTL., brought about a breach of an
obligation on a valid and perfected agreement. There being no employer-employee
relationship established between [PIL] and [Todaro], it could be said that the instant
case falls within the jurisdiction of the regular courts of justice as the money claim of
[Todaro] did not arise out of or in connection with [an] employer-employee
relationship.34

Todaro’s employment in the Philippines would not be with PIL but with PPHI as stated
in the 20 October 1997 letter of Folwell. Assuming the existence of the employment
agreement, the employer-employee relationship would be between PPHI and Todaro, not
between PIL and Todaro. PIL’s liability for the non-implementation of the alleged

18
employment agreement is a civil dispute properly belonging to the regular courts.
Todaro’s causes of action as stated in his complaint are, in addition to breach of
contract, based on "violation of Articles 19 and 21 of the New Civil Code" for the "clear
and evident bad faith and malice"35 on the part of defendants. The NLRC’s jurisdiction
is limited to those enumerated under Article 217 of the Labor Code.36

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated 27 September

2001 and the Resolution dated 14 January 2003 of the appellate court
are AFFIRMED with the MODIFICATION that there was improper service of summons
on Pioneer International, Ltd. The case is remanded to the trial court for proper service
of summons and trial. No costs.
SO ORDERED.

19
GR NO 172301 PH NATIONAL CONSTRUCTION CORP V ASIAVEST MERCHANT
BANKERS
FACTS

In 1985, the High Court of Malaysia ordered the Philippine National Construction
Corporation (PNCC) to pay $5.1 million to Asiavest Merchant Bankers (M) Berhad. This
was the result of a recovery suit filed by Asiavest against PNCC in Malaysia for PNCC’s
failure to complete a construction project there despite due payment from Asiavest.
Despite demand, PNCC failed to comply with the judgment in Malaysia hence Asiavest
filed a complaint for the enforcement of the Malaysian ruling against PNCC in the
Philippines. The case was filed with the Pasig RTC which eventually denied the
complaint. The Court of Appeals affirmed the decision of the RTC.
Asiavest appealed. In its defense, PNCC alleged that the foreign judgment cannot be
enforced here because of want of jurisdiction, want of notice to PNCC, collusion and/or
fraud, and there is a clear mistake of law or fact. Asiavest assailed the arguments of
PNCC on the ground that PNCC’s counsel participated in all the proceedings in the
Malaysian Court.
ISSUE: Whether or not the Malaysian Court judgment should be enforced against PNCC
in the Philippines.
HELD: Yes. PNCC failed to prove and substantiate its bare allegations of want of
jurisdiction, want of notice, collusion and/or fraud, and mistake of fact. On the
contrary, Asiavest was able to present evidence as to the validity of the proceedings that
took place in Malaysia. Asiavest presented the certified and authenticated copies of the
judgment and the order issued by the Malaysian Court. It also presented
correspondences between Asiavest’s lawyers and PNCC’s lawyers in and out of court
which belied PNCC’s allegation that the Malaysian court never acquired jurisdiction over
it. PNCC’s allegation of fraud is not sufficient too, further, it never invoked the same in
the Malaysian Court.
The Supreme Court notes, to assail a foreign judgment the party must present evidence
of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact. Otherwise, the judgment enjoys the presumption of validity so long as it was
duly certified and authenticated. In this case, PNCC failed to present the required
evidence.

20