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[G.R. No. 103493. June 19, 1997] docketed as Case No.

docketed as Case No. 85-57746, the venue of the action was later transferred
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE to the United States District Court for the Southern District of Texas, where
LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE 1488, Inc. filed an amended complaint, reiterating its allegations in the original
COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, complaint. ATHONA filed an answer with counterclaim, impleading private
PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents. respondents herein as counterdefendants, for allegedly conspiring in
DECISION selling the property at a price over its market value.Private respondent Perlas,
MENDOZA, J.: who had allegedly appraised the property, was later dropped as
This case presents for determination the conclusiveness of a foreign judgment counterdefendant. ATHONA sought the recovery of damages and excess
upon the rights of the parties under the same cause of action asserted in a payment allegedly made to 1488, Inc. and, in the alternative, the rescission of
case in our local court. Petitioners brought this case in the Regional Trial Court sale of the property. For their part, PHILSEC and AYALA filed a motion to
of Makati, Branch 56, which, in view of the pendency at the time of the foreign dismiss on the ground of lack of jurisdiction over their person, but, as their
action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in motion was denied, they later filed a joint answer with counterclaim against
addition to forum non conveniens. On appeal, the Court of Appeals private respondents and Edgardo V. Guevarra, PHILSECs own former
affirmed. Hence this petition for review on certiorari. president, for the rescission of the sale on the ground that the property had
The facts are as follows: been overvalued. On March 13, 1990, the United States District Court for the
On January 15, 1983, private respondent Ventura O. Ducat obtained separate Southern District of Texas dismissed the counterclaim against Edgardo V.
loans from petitioners Ayala International Finance Limited (hereafter called Guevarra on the ground that it was frivolous and [was] brought against him
AYALA)[1] and Philsec Investment Corporation (hereafter called PHILSEC) in the simply to humiliate and embarrass him. For this reason, the U.S. court
sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them
market value of P14,088,995.00. In order to facilitate the payment of the to pay damages to Guevarra.
loans, private respondent 1488, Inc., through its president, private respondent On April 10, 1987, while Civil Case No. H-86-440 was pending in the United
Drago Daic, assumed Ducats obligation under an Agreement, dated January States, petitioners filed a complaint For Sum of Money with Damages and Writ
27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by of Preliminary Attachment against private respondents in the Regional Trial
which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a Court of Makati, where it was docketed as Civil Case No. 16563. The complaint
parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while reiterated the allegation of petitioners in their respective counterclaims in Civil
PHILSEC and AYALA extended a loan to ATHONA in the amount of Action No. H-86-440 of the United States District Court of Southern Texas that
US$2,500,000.00 as initial payment of the purchase price. The balance of private respondents committed fraud by selling the property at a price 400
US$307,209.02 was to be paid by means of apromissory note executed by percent more than its true value of US$800,000.00. Petitioners claimed that,
ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the as a result of private respondents fraudulent misrepresentations, ATHONA,
US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his PHILSEC, and AYALA were induced to enter into the Agreement and to
indebtedness and delivered to 1488, Inc. all the shares of stock in their purchase the Houston property. Petitioners prayed that private respondents
possession belonging to Ducat. be ordered to return to ATHONA the excess payment of US$1,700,000.00 and
As ATHONA failed to pay the interest on the balance of US$307,209.02, the to pay damages. On April 20, 1987, the trial court issued a writ of preliminary
entire amount covered by the note became due and demandable. Accordingly, attachment against the real and personal properties of private respondents. [2]
on October 17, 1985, private respondent 1488, Inc. sued petitioners PHILSEC, Private respondent Ducat moved to dismiss Civil Case No. 16563 on the
AYALA, and ATHONA in the United States for payment of the balance of grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488,
US$307,209.02 and for damages for breach of contract and for fraud allegedly Inc. and Daic in the U.S., (2) forum non conveniens,  and (3) failure of
perpetrated by petitioners in misrepresenting the marketability of the shares petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended
of stock delivered to 1488, Inc. under the Agreement. Originally instituted in that the alleged overpricing of the property prejudiced only petitioner
the United States District Court of Texas, 165th Judicial District, where it was ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the
sale and whose only participation was to extend financial accommodation to the U.S. case, breach of contract and the promissory note are sued upon by
ATHONA under a separate loan agreement. On the other hand, private 1488 Inc., which likewise alleges fraud employed by herein appellants, on the
respondents 1488, Inc. and its president Daic filed a joint Special Appearance marketability of Ducats securities given in exchange for the Texas property.
and Qualified Motion to Dismiss, contending that the action being in The recovery of a sum of money and damages, for fraud purportedly
personam, extraterritorial service of summons by publication was ineffectual committed by appellees, in overpricing the Texas land, constitute the action
and did not vest the court with jurisdiction over 1488, Inc., which is a non- before the Philippine court, which likewise stems from the same Warranty
resident foreign corporation, and Daic, who is a non-resident alien. Deed.
On January 26, 1988, the trial court granted Ducats motion to dismiss, stating The Court of Appeals also held that Civil Case No. 16563 was an action in
that the evidentiary requirements of the controversy may be more suitably personam for the recovery of a sum of money for alleged tortious acts, so that
tried before the forum of the litis pendentia  in the U.S., under the principle in service of summons by publication did not vest the trial court with jurisdiction
private international law of forum non conveniens, even as it noted that Ducat over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the
was not a party in the U.S. case. ground of forum non conveniens  was likewise affirmed by the Court of Appeals
A separate hearing was held with regard to 1488, Inc. and Daics motion to on the ground that the case can be better tried and decided by the U.S. court:
dismiss. On March 9, 1988, the trial court[3] granted the motion to dismiss filed The U.S. case and the case at bar arose from only one main transaction, and
by 1488, Inc. and Daic on the ground of litis pendentia considering that involve foreign elements, to wit:1) the property subject matter of the sale is
the main factual element of the cause of action in this case which is the situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign
validity of the sale of real property in the United States between defendant corporation; 3) although the buyer, Athona Holdings, a foreign corporation
1488 and plaintiff ATHONA is the subject matter of the pending case in the which does not claim to be doing business in the Philippines, is wholly owned
United States District Court which, under the doctrine of  forum non by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL,
conveniens, is the better (if not exclusive) forum to litigate matters needed to also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
determine the assessment and/or fluctuations of the fair market value of real In their present appeal, petitioners contend that:
estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME
1983 up to the present and verily, . . . (emphasis by trial court) PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE
The trial court also held itself without jurisdiction over 1488, Inc. and Daic COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE CIVIL
because they were non-residents and the action was not an action in rem ACTION IS NOT APPLICABLE.
or quasi in rem, so that extraterritorial service of summons was 2. THE PRINCIPLE OF FORUM NON CONVENIENS  ALSO RELIED UPON BY THE
ineffective. The trial court subsequently lifted the writ of attachment it had COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF
earlier issued against the shares of stocks of 1488, Inc. and Daic. THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred 3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS
in applying the principle of litis pendentia and forum non conveniens  and in ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE
ruling that it had no jurisdiction over the defendants, despite the previous ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS
attachment of shares of stocks belonging to 1488, Inc. and Daic. RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO
On January 6, 1992, the Court of Appeals [4] affirmed the dismissal of Civil Case PROTECT AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS OR WRONGFUL
No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the We will deal with these contentions in the order in which they are made.
defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFLs former First. It is important to note in connection with the first point that while the
name) and the Athona Holdings, NV. The case at bar involves the same present case was pending in the Court of Appeals, the United States District
parties. The transaction sued upon by the parties, in both cases is the Court for the Southern District of Texas rendered judgment [5] in the case
Warranty Deed executed by and between Athona Holdings and 1488 Inc. In before it. The judgment, which was in favor of private respondents, was
affirmed on appeal by the Circuit Court of Appeals. [6] Thus, the principal issue held that the foreign judgment was valid and enforceable in the Philippines
to be resolved in this case is whether Civil Case No. 16536 is barred by the there being no showing that it was vitiated by want of notice to the party,
judgment of the U.S. court. collusion, fraud or clear mistake of law or fact. The prima facie presumption
Private respondents contend that for a foreign judgment to be pleaded as res under the Rule had not been rebutted.
judicata, a judgment admitting the foreign decision is not necessary. On the In the case at bar, it cannot be said that petitioners were given the
other hand, petitioners argue that the foreign judgment cannot be given the opportunity to challenge the judgment of the U.S. court as basis for declaring
effect of res judicata without giving them an opportunity to impeach it on it res judicata  or conclusive of the rights of private respondents. The
grounds stated in Rule 39, 50 of the Rules of Court, to wit: want of jurisdiction, proceedings in the trial court were summary. Neither the trial court nor the
want of notice to the party, collusion, fraud, or clear mistake of law or fact. appellate court was even furnished copies of the pleadings in the U.S. court or
Petitioners contention is meritorious. While this Court has given the effect apprised of the evidence presented thereat, to assure a proper determination
of res judicata to foreign judgments in several cases, [7] it was after the parties of whether the issues then being litigated in the U.S. court were exactly the
opposed to the judgment had been given ample opportunity to repel them on issues raised in this case such that the judgment that might be rendered would
grounds allowed under the law.[8] It is not necessary for this purpose to initiate constitute res judicata. As the trial court stated in its disputed order dated
a separate action or proceeding for enforcement of the foreign judgment. March 9, 1988:
What is essential is that there is opportunity to challenge the foreign On the plaintiffs claim in its Opposition that the causes of action of this case
judgment, in order for the court to properly determine its efficacy. This is and the pending case in the United States are not identical, precisely the Order
because in this jurisdiction, with respect to actions in personam, as of January 26, 1988 never found that the causes of action of this case and the
distinguished from actions in rem, a foreign judgment merely constitutes case pending before the USA Court, were identical. (emphasis added)
prima facie evidence of the justness of the claim of a party and, as such, is It was error therefore for the Court of Appeals to summarily rule that
subject to proof to the contrary.[9]Rule 39, 50 provides: petitioners action is barred by the principle of res judicata. Petitioners in fact
SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of questioned the jurisdiction of the U.S. court over their persons, but their claim
a foreign country, having jurisdiction to pronounce the judgment is as follows: was brushed aside by both the trial court and the Court of Appeals. [13]
(a) In case of a judgment upon a specific thing, the judgment is conclusive Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a
upon the title to the thing; petition for the enforcement of judgment in the Regional Trial Court of Makati,
(b) In case of a judgment against a person, the judgment is presumptive where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134,
evidence of a right as between the parties and their successors in interest by a although the proceedings were suspended because of the pendency of this
subsequent title; but the judgment may be repelled by evidence of a want of case. To sustain the appellate courts ruling that the foreign judgment
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of constitutes res judicata and is a bar to the claim of petitioners would
law or fact. effectively preclude petitioners from repelling the judgment in the case for
Thus, in the case of General Corporation of the Philippines v. Union Insurance enforcement. An absurdity could then arise: a foreign judgment is not subject
Society of Canton, Ltd.,[10] which private respondents invoke for claiming to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist
conclusive effect for the foreign judgment in their favor, the foreign judgment a claim as in this case, but it may be opposed by the defendant if the foreign
was considered res judicata because this Court found from the evidence as judgment is sought to be enforced against him in a separate proceeding. This
well as from appellants own pleadings[11] that the foreign court did not make a is plainly untenable. It has been held therefore that:
clear mistake of law or fact or that its judgment was void for want of [A] foreign judgment may not be enforced if it is not recognized in the
jurisdiction or because of fraud or collusion by the defendants. Trial had been jurisdiction where affirmative relief is being sought. Hence, in the interest of
previously held in the lower court and only afterward was a decision rendered, justice, the complaint should be considered as a petition for the recognition of
declaring the judgment of the Supreme Court of the State of Washington to the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in
have the effect of res judicata in the case before the lower court. In the same order that the defendant, private respondent herein, may present evidence of
vein, in Philippine International Shipping Corp. v. Court of Appeals,[12] this Court
lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if No. 16563. The separability of Guevarras claim is not only admitted by
applicable.[14] petitioners,[20] it appears from the pleadings that petitioners only belatedly
Accordingly, to insure the orderly administration of justice, this case and Civil impleaded Guevarra as defendant in Civil Case No. 16563. [21] Hence, the TRO
Case No. 92-1070 should be consolidated. [15] After all, the two have been filed should be lifted and Civil Case No. 92-1445 allowed to proceed.
in the Regional Trial Court of Makati, albeit in different salas, this case being WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case
assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92- No. 16563 is REMANDED to the Regional Trial Court of Makati for
1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, consolidation with Civil Case No. 92-1070 and for further proceedings in
petitioners should have the burden of impeaching the foreign judgment and accordance with this decision. The temporary restraining order issued on June
only in the event they succeed in doing so may they proceed with their action 29, 1994 is hereby LIFTED.
against private respondents. SO ORDERED.
Second. Nor is the trial courts refusal to take cognizance of the case justifiable
under the principle of forum non conveniens. First, a motion to dismiss is
limited to the grounds under Rule 16, 1, which does not include forum non
conveniens.[16] The propriety of dismissing a case based on this principle
requires a factual determination, hence, it is more properly
considered a matter of defense. Second, while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it should do so
only after vital facts are established, to determine whether special
circumstances require the courts desistance. [17]
In this case, the trial court abstained from taking jurisdiction solely on the
basis of the pleadings filed by private respondents in connection with the
motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a
domestic corporation and one of the defendants (Ventura Ducat) is a Filipino,
and that it was the extinguishment of the latters debt which was the object of
the transaction under litigation. The trial court arbitrarily dismissed the case
even after finding that Ducat was not a party in the U.S. case.
Third.  It was error we think for the Court of Appeals and the trial court to hold
that jurisdiction over 1488, Inc. and Daic could not be obtained because this is
an action in personam and summons were served by extraterritorial
service. Rule 14, 17 on extraterritorial service provides that service of
summons on a non-resident defendant may be effected out of the Philippines
by leave of Court where, among others, the property of the defendant has
been attached within the Philippines. [18] It is not disputed that the properties,
real and personal, of the private respondents had been attached prior to
service of summons under the Order of the trial court dated April 20, 1987. [19]
Fourth. As for the temporary restraining order issued by the Court on June 29,
1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V.
Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by
the U.S. court, the Court finds that the judgment sought to be enforced is
severable from the main judgment under consideration in Civil Case
[G. R. No. 120077. October 13, 2000] Now the facts.
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD. petitioners, During his employment with the Mazoon Printing Press in the Sultanate of
vs.  NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. Oman, respondent Santos received a letter dated May 2, 1988 from Mr.
DIOSANA AND MARCELO G. SANTOS, respondents. Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt
DECISION informed respondent Santos that he was recommended by one Nestor Buenio,
PARDO, J.: a friend of his.
The case before the Court is a petition for certiorari[1] to annul the following Mr. Shmidt offered respondent Santos the same position as printer, but with a
orders of the National Labor Relations Commission (hereinafter referred to as higher monthly salary and increased benefits. The position was slated to open
NLRC) for having been issued without or with excess jurisdiction and with on October 1, 1988.[11]
grave abuse of discretion:[2] On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his
(1) Order of May 31, 1993.[3] Reversing and setting aside its earlier resolution acceptance of the offer.
of August 28, 1992.[4] The questioned order declared that the NLRC, not the On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready
Philippine Overseas Employment Administration (hereinafter referred to as to sign employment contract to respondent Santos. Mr. Henk advised
POEA), had jurisdiction over private respondents complaint; respondent Santos that if the contract was acceptable, to return the same to
(2) Decision of December 15, 1994.[5] Directing petitioners to jointly and Mr. Henk in Manila, together with his passport and two additional pictures for
severally pay private respondent twelve thousand and six hundred dollars his visa to China.
(US$12,600.00) representing salaries for the unexpired portion of his contract; On May 30, 1988, respondent Santos resigned from the Mazoon Printing
three thousand six hundred dollars (US$3,600.00) as extra four months salary Press, effective June 30, 1988, under the pretext that he was needed at home
for the two (2) year period of his contract, three thousand six hundred dollars to help with the familys piggery and poultry business.
(US$3,600.00) as 14th month pay or a total of nineteen thousand and eight On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged
hundred dollars (US$19,800.00) or its peso equivalent and attorneys fees Mr. Henks letter. Respondent Santos enclosed four (4) signed copies of the
amounting to ten percent (10%) of the total award; and employment contract (dated June 4, 1988) and notified them that he was
(3) Order of March 30, 1995.[6] Denying the motion for reconsideration of the going to arrive in Manila during the first week of July 1988.
petitioners. The employment contract of June 4, 1988 stated that his employment would
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as commence September 1, 1988 for a period of two years. [12] It provided for a
Santos) was an overseas worker employed as a printer at the Mazoon Printing monthly salary of nine hundred dollars (US$900.00) net of taxes, payable
Press, Sultanate of Oman.Subsequently, in June 1988, he was directly hired by fourteen (14) times a year.[13]
the Palace Hotel, Beijing, Peoples Republic of China and later terminated due On June 30, 1988, respondent Santos was deemed resigned from the Mazoon
to retrenchment. Printing Press.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as MHC) On July 1, 1988, respondent Santos arrived in Manila.
and the Manila Hotel International Company, Limited (hereinafter referred to On November 5, 1988, respondent Santos left for Beijing, China. He started to
as MHICL). work at the Palace Hotel.[14]
When the case was filed in 1990, MHC was still a government-owned and Subsequently, respondent Santos signed an amended employment agreement
controlled corporation duly organized and existing under the laws of the with the Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt
Philippines. represented the Palace Hotel. The Vice President (Operations and
MHICL is a corporation duly organized and existing under the laws of Hong Development) of petitioner MHICL Miguel D. Cergueda signed the
Kong.[7] MHC is an incorporator of MHICL, owning 50% of its capital stock. [8] employment agreement under the word noted.
By virtue of a management agreement[9] with the Palace Hotel (Wang Fu From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation
Company Limited), MHICL[10] trained the personnel and staff of the Palace leave. He returned to China and reassumed his post on July 17, 1989.
Hotel at Beijing, China.
On July 22, 1989, Mr. Shmidts Executive Secretary, a certain Joanna suggested equivalent to 20% of the damages prayed for. The complaint named MHC,
in a handwritten note that respondent Santos be given one (1) month notice MHICL, the Palace Hotel and Mr. Shmidt as respondents.
of his release from employment. The Palace Hotel and Mr. Shmidt were not served with summons and neither
On August 10, 1989, the Palace Hotel informed respondent Santos by letter participated in the proceedings before the Labor Arbiter. [18]
signed by Mr. Shmidt that his employment at the Palace Hotel print shop On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against
would be terminated due to business reverses brought about by the political petitioners, thus:[19]
upheaval in China.[15] We quote the letter:[16] WHEREFORE, judgment is hereby rendered:
After the unfortunate happenings in China and especially Beijing (referring to 1. directing all the respondents to pay complainant jointly and severally;
Tiannamen Square incidents), our business has been severely affected. To a) $20,820 US dollars or its equivalent in Philippine currency as unearned
reduce expenses, we will not open/operate printshop for the time being. salaries;
We sincerely regret that a decision like this has to be made, but rest assured b) P50,000.00 as moral damages;
this does in no way reflect your past performance which we found up to our c) P40,000.00 as exemplary damages; and
expectations. d) Ten (10) percent of the total award as attorneys fees.
Should a turnaround in the business happen, we will contact you directly and SO ORDERED.
give you priority on future assignment. On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not
On September 5, 1989, the Palace Hotel terminated the employment of the NLRC had jurisdiction over the case.
respondent Santos and paid all benefits due him, including his plane fare back On August 28, 1992, the NLRC promulgated a resolution, stating: [20]
to the Philippines. WHEREFORE, let the appealed Decision be, as it is hereby, declared null and
On October 3, 1989, respondent Santos was repatriated to the Philippines. void for want of jurisdiction.Complainant is hereby enjoined to file his
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave complaint with the POEA.
wrote Mr. Shmidt, demanding full compensation pursuant to the employment SO ORDERED.
agreement. On September 18, 1992, respondent Santos moved for reconsideration of the
On November 11, 1989, Mr. Shmidt replied, to wit: [17] afore-quoted resolution. He argued that the case was not cognizable by the
His service with the Palace Hotel, Beijing was not abruptly terminated but we POEA as he was not an overseas contract worker. [21]
followed the one-month notice clause and Mr. Santos received all benefits due On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC
him. directed Labor Arbiter Emerson Tumanon to hear the case on the question of
For your information, the Print Shop at the Palace Hotel is still not operational whether private respondent was retrenched or dismissed. [22]
and with a low business outlook, retrenchment in various departments of the On January 13, 1994, Labor Arbiter Tumanon completed the proceedings
hotel is going on which is a normal management practice to control costs. based on the testimonial and documentary evidence presented to and heard
When going through the latest performance ratings, please also be advised by him.[23]
that his performance was below average and a Chinese National who is doing Subsequently, Labor Arbiter Tumanon was re-assigned as trial arbiter of the
his job now shows a better approach. National Capital Region, Arbitration Branch, and the case was transferred to
In closing, when Mr. Santos received the letter of notice, he hardly showed up Labor Arbiter Jose G. de Vera.[24]
for work but still enjoyed free accommodation/laundry/meals up to the day of On November 25, 1994, Labor Arbiter de Vera submitted his report. [25] He
his departure. found that respondent Santos was illegally dismissed from employment and
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal recommended that he be paid actual damages equivalent to his salaries for
with the Arbitration Branch, National Capital Region, National Labor Relations the unexpired portion of his contract. [26]
Commission (NLRC). He prayed for an award of nineteen thousand nine On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:
hundred and twenty three dollars (US$19,923.00) as actual damages, forty
thousand pesos (P40,000.00) as exemplary damages and attorneys fees
WHEREFORE, finding that the report and recommendations of Arbiter de Vera Sultanate of Oman, where respondent Santos was then employed. He was
are supported by substantial evidence, judgment is hereby rendered, directing hired without the intervention of the POEA or any authorized recruitment
the respondents to jointly and severally pay complainant the following agency of the government.[36]
computed contractual benefits: (1) US$12,600.00 as salaries for the un-expired Under the rule of forum non conveniens, a Philippine court or
portion of the parties contract; (2) US$3,600.00 as extra four (4) months salary agency may assume jurisdiction over the case if it chooses to do
for the two (2) years period (sic) of the parties contract; (3) US$3,600.00 as so provided: (1) that the Philippine court is one to which the parties may
14th month pay for the aforesaid two (2) years contract stipulated by the conveniently resort to; (2) that the Philippine court is in a position to make an
parties or a total of US$19,800.00 or its peso equivalent, plus (4) attorneys intelligent decision as to the law and the facts; and (3) that the Philippine
fees of 10% of complainants total award. court has or is likely to have power to enforce its decision. [37] The conditions
SO ORDERED. are unavailing in the case at bar.
On February 2, 1995, petitioners filed a motion for reconsideration arguing Not Convenient.-- We fail to see how the NLRC is a convenient forum given
that Labor Arbiter de Veras recommendation had no basis in law and in fact. [28] that all the incidents of the case - from the time of recruitment, to
On March 30, 1995, the NLRC denied the motion for reconsideration. [29] employment to dismissal occurred outside the Philippines. The inconvenience
Hence, this petition.[30] is compounded by the fact that the proper defendants, the Palace Hotel and
On October 9, 1995, petitioners filed with this Court an urgent motion for the MHICL are not nationals of the Philippines. Neither are they doing business in
issuance of a temporary restraining order and/or writ of preliminary injunction the Philippines. Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are
and a motion for the annulment of the entry of judgment of the NLRC dated non-residents of the Philippines.
July 31, 1995.[31] No power to determine applicable law.-- Neither can an intelligent decision
On November 20, 1995, the Court denied petitioners urgent motion. The Court be made as to the law governing the employment contract as such was
required respondents to file their respective comments, without giving due perfected in foreign soil. This calls to fore the application of the principle of lex
course to the petition.[32] loci contractus  (the law of the place where the contract was made). [38]
On March 8, 1996, the Solicitor General filed a manifestation stating that after The employment contract was not perfected in the Philippines. Respondent
going over the petition and its annexes, they can not defend and sustain the Santos signified his acceptance by writing a letter while he was in the Republic
position taken by the NLRC in its assailed decision and orders. The Solicitor of Oman. This letter was sent to the Palace Hotel in the Peoples Republic of
General prayed that he be excused from filing a comment on behalf of the China.
NLRC[33] No power to determine the facts.-- Neither can the NLRC determine the facts
On April 30,1996, private respondent Santos filed his comment. [34] surrounding the alleged illegal dismissal as all acts complained of took place in
On June 26, 1996, the Court granted the manifestation of the Solicitor General Beijing, Peoples Republic of China.The NLRC was not in a position to determine
and required the NLRC to file its own comment to the petition. [35] whether the Tiannamen Square incident truly adversely affected operations of
On January 7, 1997, the NLRC filed its comment. the Palace Hotel as to justify respondent Santos retrenchment.
The petition is meritorious. Principle of effectiveness, no power to execute decision.-- Even assuming that
I. Forum Non-Conveniens a proper decision could be reached by the NLRC, such would not have any
The NLRC was a seriously inconvenient forum. binding effect against the employer, the Palace Hotel. The Palace Hotel is a
We note that the main aspects of the case transpired in two foreign corporation incorporated under the laws of China and was not even served
jurisdictions and the case involves purely foreign elements. The only link that with summons. Jurisdiction over its person was not acquired.
the Philippines has with the case is that respondent Santos is a Filipino This is not to say that Philippine courts and agencies have no power to solve
citizen. The Palace Hotel and MHICL are foreign corporations. Not all cases controversies involving foreign employers. Neither are we saying that we do
involving our citizens can be tried here. not have power over an employment contract executed in a foreign country. If
The employment contract.-- Respondent Santos was hired directly by the Santos were an overseas contract worker, a Philippine forum, specifically the
Palace Hotel, a foreign employer, through correspondence sent to the
POEA, not the NLRC, would protect him.[39] He is not an overseas contract When one notes a contract, one is not expressing his agreement or approval,
worker a fact which he admits with conviction. [40] as a party would.[46] In Sichangco v. Board of Commissioners of Immigration,
Even assuming that the NLRC was the proper forum, even on the merits, the  the Court recognized that the term noted means that the person so noting
NLRCs decision cannot be sustained. has merely taken cognizance of the existence of an act or declaration, without
II. MHC Not Liable exercising a judicious deliberation or rendering a decision on the matter.
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, Mr. Cergueda merely signed the witnessing part of the document. The
and (2) that MHICL was liable for Santos retrenchment, still MHC, as a witnessing part of the document is that which, in a deed or other formal
separate and distinct juridical entity cannot be held liable. instrument is that part which comes after the recitals, or where there are no
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its recitals, after the parties (emphasis ours).[48] As opposed to a party to a
capital stock.However, this is not enough to pierce the veil of corporate fiction contract, a witness is simply one who, being present, personally sees or
between MHICL and MHC. perceives a thing; a beholder, a spectator, or eyewitness. [49] One who notes
Piercing the veil of corporate entity is an equitable remedy. It is resorted to something just makes a brief written statement [50] a memorandum or
when the corporate fiction is used to defeat public convenience, justify wrong, observation.
protect fraud or defend a crime.[41] It is done only when a corporation is a mere Second, and more importantly, there was no existing employer-employee
alter ego or business conduit of a person or another corporation. relationship between Santos and MHICL. In determining the existence of an
In Traders Royal Bank v. Court of Appeals,[42] we held that the mere ownership employer-employee relationship, the following elements are considered: [51]
by a single stockholder or by another corporation of all or nearly all of the (1) the selection and engagement of the employee;
capital stock of a corporation is not of itself a sufficient reason for disregarding (2) the payment of wages;
the fiction of separate corporate personalities. (3) the power to dismiss; and
The tests in determining whether the corporate veil may be pierced are: First, (4) the power to control employees conduct.
the defendant must have control or complete domination of the other MHICL did not have and did not exercise any of the aforementioned powers. It
corporations finances, policy and business practices with regard to the did not select respondent Santos as an employee for the Palace Hotel. He was
transaction attacked. There must be proof that the other corporation had no referred to the Palace Hotel by his friend, Nestor Buenio. MHICL
separate mind, will or existence with respect the act complained of. Second, did not engage respondent Santos to work. The terms of employment were
control must be used by the defendant to commit fraud or wrong. Third, the negotiated and finalized through correspondence between respondent Santos,
aforesaid control or breach of duty must be the proximate cause of the injury Mr. Schmidt and Mr. Henk, who were officers and representatives of the
or loss complained of. The absence of any of the elements prevents the Palace Hotel and notMHICL. Neither did respondent Santos adduce any proof
piercing of the corporate veil.[43] that MHICL had the power to control his conduct. Finally, it was the Palace
It is basic that a corporation has a personality separate and distinct from those Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos
composing it as well as from that of any other legal entity to which it may be services.
related.[44] Clear and convincing evidence is needed to pierce the veil of Neither is there evidence to suggest that MHICL was a labor-only contractor.
corporate fiction.[45] In this case, we find no evidence to show that MHICL and [52]
 There is no proof that MHICL supplied respondent Santos or even referred
MHC are one and the same entity. him for employment to the Palace Hotel.
III. MHICL not Liable Likewise, there is no evidence to show that the Palace Hotel and MHICL are
Respondent Santos predicates MHICLs liability on the fact that MHICL signed one and the same entity. The fact that the Palace Hotel is a member of the
his employment contract with the Palace Hotel. This fact fails to persuade us. Manila Hotel Group is not enough to pierce the corporate veil between MHICL
First, we note that the Vice President (Operations and Development) of and the Palace Hotel.
MHICL, Miguel D. Cergueda signed the employment contract as a mere IV. Grave Abuse of Discretion
witness. He merely signed under the word noted. Considering that the NLRC was forum non-conveniens and considering further
that no employer-employee relationship existed between MHICL, MHC and
respondent Santos, Labor Arbiter Ceferina J. Diosana clearly had no
jurisdiction over respondents claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following:

1. Unfair labor practice cases;

2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
In all these cases, an employer-employee relationship is an indispensable
jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor
Code is limited to disputes arising from an employer-employee relationship
which can be resolved by reference to the Labor Code, or other labor statutes,
or their collective bargaining agreements. [54]
To determine which body has jurisdiction over the present controversy, we
rely on the sound judicial principle that jurisdiction over the subject matter is
conferred by law and is determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein.[55]
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of
the complaint.His failure to dismiss the case amounts to grave abuse of
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS
the orders and resolutions of the National Labor Relations Commission dated
May 31, 1993, December 15, 1994 and March 30, 1995 in NLRC NCR CA No.
002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
Davide, Jr., C.J., (Chairman), Puno, Kapunan,  and Ynares-Santiago, JJ.,  concur.
[G.R. No. 141536. February 26, 2001] the Philippines would result in the unjust enrichment of [respondent] at the
GIL MIGUEL T. PUYAT, petitioner, vs.  RON ZABARTE, respondent. expense of [petitioner] in this case.
DECISION 12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
PANGANIBAN, J.: dated December 12, 1991 is null and void and unenforceable in the
Summary judgment in a litigation is resorted to if there is no genuine issue as Philippines.
to any material fact, other than the amount of damages. If this verity is evident 13) In the transaction, which is the subject matter in Case #C21-00265,
from the pleadings and the supporting affidavits, depositions and admissions [petitioner] is not in any way liable, in fact and in law, to [respondent] in this
on file with the court, the moving party is entitled to such remedy as a matter case, as contained in [petitioners] Answer to Complaint in Case #C21-00265
of course. dated April 1, 1991, Annex B of [respondents] Complaint dated December 6,
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of 14) [Respondent] is guilty of misrepresentation or falsification in the filing of
Court, challenging the August 31, 1999 Decision [1] of the Court of Appeals (CA), his Complaint in this case dated December 6, 1993. Worse, [respondent] has
which affirmed the Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil no capacity to sue in the Philippines.
Case No. 64107; and the January 20, 2000 CA Resolution [2] which denied 15) Venue has been improperly laid in this case.
reconsideration. (Record, pp. 42-44)
The assailed CA Decision disposed as follows: On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment
WHEREFORE, finding no error in the judgment appealed from, the same is under Rule 34 of the Rules of Court alleging that the [A]nswer filed by
AFFIRMED."[3] [petitioner] failed to tender any genuine issue as to the material facts. In his
The Facts
[O]pposition to [respondents] motion, [petitioner] demurred as follows:
The facts of this case, as narrated by the Court of Appeals, are as follows:  [4] 2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention
It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an that in his Answer with Special and Affirmative Defenses dated March 16, 1994
action] to enforce the money judgment rendered by the Superior Court for the [petitioner] has interposed that the Judgment on Stipulations for Entry in
State of California, County of Contra Costa, U.S.A. On 18 March 1994, Judgment is null and void, fraudulent, illegal and unenforceable, the same
[petitioner] filed his Answer with the following special and affirmative having been obtained by means of fraud, collusion, undue influence and/or
defenses: clear mistake of fact and law. In addition, [he] has maintained that said
x x x x x x x x x Judgment on Stipulations for Entry in Judgment was obtained without the
8) The Superior Court for the State of California, County of Contra Costa[,] did assistance of counsel for [petitioner] and without sufficient notice to him and
not properly acquire jurisdiction over the subject matter of and over the therefore, was rendered in violation of his constitutional rights to substantial
persons involved in [C]ase #C21-00265. and procedural due process.
9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994
dated December 12, 1991 was obtained without the assistance of counsel for during which [respondent] marked and submitted in evidence the following:
[petitioner] and without sufficient notice to him and therefore, was rendered Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of the Supreme
in clear violation of [petitioners] constitutional rights to substantial and Court of the State of California[,] County of Contra Costa[,] signed by Hon.
procedural due process. Ellen James, Judge of the Superior Court.
10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 Exhibit B - x x x Certificate of Authentication of the [O]rder signed by the Hon.
dated December 12, 1991 was procured by means of fraud or collusion or Ellen James, issued by the Consulate General of the Republic of the
undue influence and/or based on a clear mistake of fact and law. Philippines.
11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 Exhibit C - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the
dated December 12, 1991 is contrary to the laws, public policy and canons of sheriff/marshall, County of Santa Clara, State of California.
morality obtaining in the Philippines and the enforcement of such judgment in Exhibit D - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of judgment, on the ground of forum non conveniens.  It reasoned out that the
[L]evy, [M]emorandum of [G]arnishee, [E]xemptions from [E]nforcement of recognition of the foreign judgment was based on comity, reciprocity and res
[J]udgment. judicata.
Exhibit F - Certification issued by the Secretary of State, State of California that Hence, this Petition.[9]
Stephen Weir is the duly elected, qualified and acting [c]ounty [c]lerk of the
County of Contra Costa of the State of California. In his Memorandum, petitioner submits this lone but all-embracing issue:
Exhibit G - Certificate of [A]uthentication of the [W]rit of [E]xecution. Whether or not the Court of Appeals acted in a manner x x x contrary to law
On 6 April 1995, the court a quo issued an [O]rder granting [respondents] when it affirmed the Order of the trial court granting respondents Motion for
[M]otion for [S]ummary [J]udgment [and] likewise granting [petitioner] ten Summary Judgment and rendering judgment against the petitioner. [10]
(10) days to submit opposing affidavits, after which the case would be deemed In his discussion, petitioner contends that the CA erred in ruling in this wise:
submitted for resolution (Record, pp. 152-153). [Petitioner] filed a [M]otion for 1. That his Answer failed to tender a genuine issue of fact regarding the
[R]econsideration of the aforesaid [O]rder and [respondent] filed following:
[C]omment. On 30 June 1995, [petitioner] filed a [M]otion to [D]ismiss on the (a) the jurisdiction of a foreign court over the subject matter
ground of lack of jurisdiction over the subject matter of the case and forum- (b) the validity of the foreign judgment
non-conveniens  (Record, pp. 166-170). In his [O]pposition to the [M]otion (c) the judgments conformity to Philippine laws, public policy, canons of
(Record, pp. 181-182) [respondent] contended that [petitioner could] no morality, and norms against unjust enrichment
longer question the jurisdiction of the lower court on the ground that [the 2. That the principle of forum non conveniens  was inapplicable to the instant
latters] Answer had failed to raise the issue of jurisdiction. [Petitioner] case.
This Courts Ruling
countered by asserting in his Reply that jurisdiction [could] not be fixed by
agreement of the parties. The lower court dismissed [his] [M]otion for The Petition has no merit.
First Question: Summary Judgment
[R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x x x.
The RTC[5] eventually rendered its February 21, 1997 Decision, [6] which Petitioner vehemently insists that summary judgment is inappropriate to
disposed as follows: resolve the case at bar, arguing that his Answer allegedly raised genuine and
WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay material factual matters which he should have been allowed to prove during
[respondent] the following amounts: trial.
1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from On the other hand, respondent argues that the alleged genuine issues of fact
October 18, 1991, or its peso equivalent, pursuant to the [J]udgment of raised by petitioner are mere conclusions of law, or propositions arrived at not
[S]tipulation for [E]ntry in [J]udgment dated December 19, 1991; by any process of natural reasoning from a fact or a combination of facts
2. The amount of P30,000.00 as attorneys fees; stated but by the application of the artificial rules of law to the facts pleaded.
3. To pay the costs of suit.
The claim for moral damages, not having been substantiated, it is hereby The RTC granted respondents Motion for Summary Judgment because
denied.[7] petitioner, in his Answer, admitted the existence of the Judgment on
Ruling of the Court of Appeals
Stipulation for Entry in Judgment. Besides, he had already paid $5,000 to
Affirming the trial court, the Court of Appeals held that petitioner was respondent, as provided in the foreign judgment sought to be enforced.
estopped from assailing the judgment that had become final and had, in fact,  Hence, the trial court ruled that, there being no genuine issue as to any
been partially executed. The CA also ruled that summary judgment was material fact, the case should properly be resolved through summary
proper, because petitioner had failed to tender any genuine issue of fact and judgment. The CA affirmed this ruling.
was merely maneuvering to delay the full effects of the judgment. We concur with the lower courts. Summary judgment is a procedural device
Citing Ingenohl v. Olsen,[8]  the CA also rejected petitioners argument that the for the prompt disposition of actions in which the pleadings raise only a legal
RTC should have dismissed the action for the enforcement of a foreign issue, and not a genuine issue as to any material fact. By genuine issue  is
meant a question of fact that calls for the presentation of evidence. It should any genuine issue of fact, and why a full-blown trial was not necessary for the
be distinguished from an issue that is sham, contrived, set in bad faith and resolution of the issues.
patently unsubstantial.[13] Jurisdiction

Summary judgment is resorted to in order to avoid long drawn out litigations Petitioner alleges that jurisdiction over Case No. C21-00265, which involved
and useless delays. When affidavits, depositions and admissions on file show partnership interest, was vested in the Securities and Exchange Commission,
that there are no genuine issues of fact to be tried, the Rules allow a party to not in the Superior Court of California, County of Contra Costa.
pierce the allegations in the pleadings and to obtain immediate relief by way We disagree. In the absence of proof of California law on the jurisdiction of
of summary judgment. In short, since the facts are not in dispute, the court is courts, we presume that such law, if any, is similar to Philippine law. We base
allowed to decide the case summarily by applying the law to the material this conclusion on the presumption of identity or similarity, also known as
facts. processual presumption.[18] The Complaint,[19] which respondent filed with the
Petitioner contends that by allowing summary judgment, the two courts a trial court, was for the enforcement of a foreign judgment. He alleged therein
quo  prevented him from presenting evidence to substantiate his claims. We that the action of the foreign court was for the collection of a sum of money,
do not agree. Summary judgment is based on facts directly proven by breach of promissory notes, and damages.[20]
affidavits, depositions or admissions.[14] In this case, the CA and the RTC both In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of
merely ruled that trial was not necessary to resolve the case. Additionally and the Securities and Exchange Commission (SEC). The jurisdiction of the latter is
correctly, the RTC specifically ordered petitioner to submit opposing affidavits exclusively over matters enumerated in Section 5, PD 902-A, [21] prior to its
to support his contentions that (1) the Judgment on Stipulation for Entry in latest amendment. If the foreign court did not really have jurisdiction over the
Judgment was procured on the basis of fraud, collusion, undue influence, or a case, as petitioner claims, it would have been very easy for him to show
clear mistake of law or fact; and (2) that it was contrary to public policy or the this. Since jurisdiction is determined by the allegations in a complaint, he only
canons of morality.[15] had to submit a copy of the complaint filed with the foreign court.Clearly, this
Again, in its Order[16] dated November 29, 1995, the trial court clarified that issue did not warrant trial.
Rights to Counsel and to Due Process
the opposing affidavits were for [petitioner] to spell out the facts or
circumstances [that] would constitute lack of jurisdiction over the subject Petitioner contends that the foreign judgment, which was in the form of a
matter of and over the persons involved in Case No. C21-00265, and that Compromise Agreement, cannot be executed without the parties being
would render the judgment therein null and void. In this light, petitioners assisted by their chosen lawyers. The reason for this, he points out, is to
contention that he was not allowed to present evidence to substantiate his eliminate collusion, undue influence and/or improper exertion of ascendancy
claims is clearly untenable. by one party over the other. He alleges that he discharged his counsel during
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, the proceedings, because he felt that the latter was not properly attending to
requires (a) that there must be no genuine issue as to any material fact, except the case. The judge, however, did not allow him to secure the services of
for the amount of damages; and (b) that the party presenting the motion for another counsel. Insisting that petitioner settle the case with respondent, the
summary judgment must be entitled to a judgment as a matter of law. [17] As judge practically imposed the settlement agreement on him. In his Opposing
mentioned earlier, petitioner admitted that a foreign judgment had been Affidavit, petitioner states:
rendered against him and in favor of respondent, and that he had paid $5,000 It is true that I was initially represented by a counsel in the proceedings in
to the latter in partial compliance therewith. Hence, respondent, as the party #C21-00625. I discharged him because I then felt that he was not properly
presenting the Motion for Summary Judgment, was shown to be entitled to attending to my case or was not competent enough to represent my interest. I
the judgment. asked the Judge for time to secure another counsel but I was practically
The CA made short shrift of the first requirement. To show that petitioner had discouraged from engaging one as the Judge was insistent that I settle the case
raised no genuine issue, it relied instead on the finality of the foreign at once with the [respondent]. Being a foreigner and not a lawyer at that I did
judgment which was, in fact, partially executed. Hence, we shall show in the not know what to do. I felt helpless and the Judge and [respondents] lawyer
following discussion how the defenses presented by petitioner failed to tender were the ones telling me what to do. Under ordinary circumstances, their
directives should have been taken with a grain of salt especially so [since was petitioner who chose to represent the other defendants; hence, he
respondents] counsel, who was telling me what to do, had an interest adverse cannot now be allowed to impugn a decision based on this ground.
to mine. But [because] time constraints and undue influence exerted by the In any event, contrary to petitioners contention, unjust enrichment or solutio
Judge and [respondents] counsel on me disturbed and seriously affected my indebiti  does not apply to this case. This doctrine contemplates payment when
freedom to act according to my best judgment and belief.In point of fact, the there is no duty to pay, and the person who receives the payment has no right
terms of the settlement were practically imposed on me by the Judge to receive it.[25] In this case, petitioner merely argues that the other two
seconded all the time by [respondents] counsel. I was then helpless as I had no defendants whom he represented were liable together with him. This is not a
counsel to assist me and the collusion between the Judge and [respondents] case of unjust enrichment.
counsel was becoming more evident by the way I was treated in the Superior We do not see, either, how the foreign judgment could be contrary to law,
Court of [t]he State of California. I signed the Judgment on Stipulation for morals, public policy or the canons of morality obtaining in the
Entry in Judgment without any lawyer assisting me at the time and without country. Petitioner owed money, and the judgment required him to pay it.That
being fully aware of its terms and stipulations. [22] is the long and the short of this case.
The manifestation of petitioner that the judge and the counsel for the In addition, the maneuverings of petitioner before the trial court reinforce our
opposing party had pressured him would gain credibility only if he had not belief that his claims are unfounded. Instead of filing opposing affidavits to
been given sufficient time to engage the services of a new lawyer.Respondents support his affirmative defenses, he filed a Motion for Reconsideration of the
Affidavit[23] dated May 23, 1994, clarified, however, that petitioner had Order allowing summary judgment, as well as a Motion to Dismiss the action
sufficient time, but he failed to retain a counsel. Having dismissed his lawyer as on the ground of forum non conveniens.  His opposing affidavits were filed only
early as June 19, 1991, petitioner directly handled his own defense and after the Order of November 29, 1995 had denied both Motions. [26] Such
negotiated a settlement with respondent and his counsel in December actuation was considered by the trial court as a dilatory ploy which justified
1991. Respondent also stated that petitioner, ignoring the judges reminder of the resolution of the action by summary judgment. According to the CA,
the importance of having a lawyer, argued that he would be the one to settle petitioners allegations sought to delay the full effects of the judgment; hence,
the case and pay anyway. Eventually, the Compromise Agreement was summary judgment was proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
presented in court and signed before Judge Ellen James on January 3,
1992. Hence, petitioners rights to counsel and to due process were not Petitioner argues that the RTC should have refused to entertain the Complaint
violated. for enforcement of the foreign judgment on the principle of forum non
Unjust Enrichment
conveniens.  He claims that the trial court had no jurisdiction, because the case
Petitioner avers that the Compromise Agreement violated the norm against involved partnership interest, and there was difficulty in ascertaining the
unjust enrichment because the judge made him shoulder all the liabilities in applicable law in California. All the aspects of the transaction took place in a
the case, even if there were two other defendants, G.S.P & Sons, Inc. and the foreign country, and respondent is not even Filipino.
Genesis Group. We disagree. Under the principle of forum non conveniens,  even if the
We cannot exonerate petitioner from his obligation under the foreign exercise of jurisdiction is authorized by law, courts may nonetheless refuse to
judgment, even if there are other defendants who are not being held liable entertain a case for any of the following practical reasons:
together with him. First, the foreign judgment itself does not mention these 1) The belief that the matter can be better tried and decided elsewhere, either
other defendants, their participation or their liability to respondent. Second, because the main aspects of the case transpired in a foreign jurisdiction or the
petitioners undated Opposing Affidavit states: [A]lthough myself and these material witnesses have their residence there;
entities were initially represented by Atty. Lawrence L. Severson of the Law 2) The belief that the non-resident plaintiff sought the forum[,] a practice
Firm Kouns, Quinlivan & Severson, x x x I discharged x x x said known as forum shopping[,]  merely to secure procedural advantages or to
lawyer.Subsequently, I assumed the representation for myself and these firms convey or harass the defendant;
and this was allowed by the Superior Court of the State of California without 3) The unwillingness to extend local judicial facilities to non-residents or aliens
any authorization from G.G.P. & Sons, Inc. and the Genesis Group. [24] Clearly, it when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right
sought to be maintained; and
The difficulty of ascertaining foreign law. [27]
None of the aforementioned reasons barred the RTC from exercising its
jurisdiction. In the present action, there was no more need for material
witnesses, no forum shopping or harassment of petitioner, no inadequacy in
the local machinery to enforce the foreign judgment, and no question raised
as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or
dismissed on the basis of the above-mentioned principle depends largely upon
the facts of each case and on the sound discretion of the trial court. [28] Since
the present action lodged in the RTC was for the enforcement of a foreign
judgment, there was no need to ascertain the rights and the obligations of the
parties based on foreign laws or contracts. The parties needed only to perform
their obligations under the Compromise Agreement they had entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in
an action in personam  rendered by a foreign tribunal clothed with jurisdiction
is presumptive evidence of a right as between the parties and their successors-
in-interest by a subsequent title.[29]
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or
elsewhere -- enjoys the presumption that it is acting in the lawful exercise of
its jurisdiction, and that it is regularly performing its official duty. [30] Its
judgment may, however, be assailed if there is evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law
or fact. But precisely, this possibility signals the need for a local trial court to
exercise jurisdiction. Clearly, the application of forum non coveniens  is not
called for.
The grounds relied upon by petitioner are contradictory. On the one hand, he
insists that the RTC take jurisdiction over the enforcement case in order to
invalidate the foreign judgment; yet, he avers that the trial court should not
exercise jurisdiction over the same case on the basis of forum non
conveniens.  Not only do these defenses weaken each other, but they bolster
the finding of the lower courts that he was merely maneuvering to avoid or
delay payment of his obligation.
WHEREFORE, the Petition is hereby DENIED  and the assailed Decision and
Resolution AFFIRMED.Double costs against petitioner.
[G.R. No. 120135. March 31, 2003] unpaid balance of their loans with defendant banks. [11] The Litonjuas prayed
BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, for the accounting of the revenues derived in the operation of the six vessels
LTD., petitioners, vs.  COURT OF APPEALS, HON. MANUEL PADOLINA, and of the proceeds of the sale thereof at the foreclosure proceedings
EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR., respondents. instituted by petitioners; damages for breach of trust; exemplary damages and
DECISION attorneys fees.[12]
AUSTRIA-MARTINEZ, J.: Defendant banks filed a Motion to Dismiss on grounds of forum non
This is a petition for review on certiorari under Rule 45 of the Rules of Court conveniens  and lack of cause of action against them. [13]
assailing the November 29, 1994 decision of the Court of Appeals [1] and the On December 3, 1993, the trial court issued an Order denying the Motion to
April 28, 1995 resolution denying petitioners motion for reconsideration. Dismiss, thus:
The factual background of the case is as follows: WHEREFORE, and in view of the foregoing consideration, the Motion to
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for Dismiss is hereby DENIED. The defendant is therefore, given a period of ten
brevity) filed a Complaint[2] before the Regional Trial Court of Pasig against the (10) days to file its Answer to the complaint.
Bank of America NT&SA and Bank of America International, Ltd. (defendant SO ORDERED.[14]
banks for brevity) alleging that: they were engaged in the shipping business; Instead of filing an answer the defendant banks went to the Court of Appeals
they owned two vessels: Don Aurelio and El Champion, through their wholly- on a Petition for Review on Certiorari [15] which was aptly treated by the
owned corporations; they deposited their revenues from said business appellate court as a petition for certiorari.They assailed the above-quoted
together with other funds with the branches of said banks in the United order as well as the subsequent denial of their Motion for Reconsideration.
Kingdom and Hongkong up to 1979; with their business doing well, the  The appellate court dismissed the petition and denied petitioners Motion
defendant banks induced them to increase the number of their ships in for Reconsideration.[17]
operation, offering them easy loans to acquire said vessels; [3] thereafter, the Hence, herein petition anchored on the following grounds:
defendant banks acquired, through their (Litonjuas) corporations as the 1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT THE
borrowers: (a) El Carrier[4]; (b) El General[5]; (c) El Challenger[6]; and (d) El SEPARATE PERSONALITIES OF THE PRIVATE RESPONDENTS (MERE
Conqueror[7]; the vessels were registered in the names of their corporations; STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL BORROWERS)
the operation and the funds derived therefrom were placed under the CLEARLY SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION THAT THE
complete and exclusive control and disposition of the petitioners; [8] and the PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
possession the vessels was also placed by defendant banks in the hands of 2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE THE
persons selected and designated by them (defendant banks). [9] PRINCIPLE OF FORUM NON CONVENIENS IS NOT MANDATORY, THERE ARE,
The Litonjuas claimed that defendant banks as trustees did not fully render an HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING WHETHER THE
account of all the income derived from the operation of the vessels as well as CHOICE OF FORUM SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES
of the proceeds of the subsequent foreclosure sale; [10] because of the breach SURROUNDING THE INSTANT CASE, DISMISSAL OF THE COMPLAINT ON THE
of their fiduciary duties and/or negligence of the petitioners and/or the GROUND OF FORUM NON-CONVENIENS IS MORE APPROPRIATE AND PROPER.
persons designated by them in the operation of private respondents six 3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT IN
vessels, the revenues derived from the operation of all the vessels declined THE PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN ACTION MAY BE THE
drastically; the loans acquired for the purchase of the four additional vessels LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED BY THE PRIVATE
then matured and remained unpaid, prompting defendant banks to have all RESPONDENT. COROLLARY TO THIS, THE RESPONDENT COURT OF APPEALS
the six vessels, including the two vessels originally owned by the private FAILED TO CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE GUILTY OF
respondents, foreclosed and sold at public auction to answer for the FORUM SHOPPING. [18]
obligations incurred for and in behalf of the operation of the vessels; they As to the first assigned error: Petitioners argue that the borrowers and the
(Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten registered owners of the vessels are the foreign corporations and not private
percent (10%) of the acquisition cost of the four vessels and were left with the respondents Litonjuas who are mere stockholders; and that the revenues
derived from the operations of all the vessels are deposited in the accounts of deliveries of the sold mortgaged vessels were likewise made outside the
the corporations. Hence, petitioners maintain that these foreign corporations Philippines;
are the legal entities that have the personalities to sue and not herein private vii) The revenues of the vessels and the proceeds of the sales of these vessels
respondents; that private respondents, being mere shareholders, have no were ALL deposited to the Accounts of the foreign CORPORATIONS abroad;
claim on the vessels as owners since they merely have an inchoate right to and
whatever may remain upon the dissolution of the said foreign corporations viii) Bank of America International Ltd. is not licensed nor engaged in trade or
and after all creditors have been fully paid and satisfied; [19] and that while business in the Philippines.[24]
private respondents may have allegedly spent amounts equal to 10% of the Petitioners argue further that the loan agreements, security documentation
acquisition costs of the vessels in question, their 10% however represents their and all subsequent restructuring agreements uniformly, unconditionally and
investments as stockholders in the foreign corporations. [20] expressly provided that they will be governed by the laws of England;
Anent the second assigned error, petitioners posit that while the application of  that Philippine Courts would then have to apply English law in resolving
the principle of forum non conveniens  is discretionary on the part of the Court, whatever issues may be presented to it in the event it recognizes and accepts
said discretion is limited by the guidelines pertaining to the private as well as herein case; that it would then be imposing a significant and unnecessary
public interest factors in determining whether plaintiffs choice of forum should expense and burden not only upon the parties to the transaction but also to
be disturbed, as elucidated in Gulf Oil Corp. vs. Gilbert[21]  and Piper Aircraft Co. the local court. Petitioners insist that the inconvenience and difficulty of
vs. Reyno,[22] to wit: applying English law with respect to a wholly foreign transaction in a case
Private interest factors include: (a) the relative ease of access to sources of pending in the Philippines may be avoided by its dismissal on the ground
proof; (b) the availability of compulsory process for the attendance of of forum non conveniens. [26]
unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses; Finally, petitioners claim that private respondents have already waived their
or (d) all other practical problems that make trial of a case easy, expeditious alleged causes of action in the case at bar for their refusal to contest the
and inexpensive.Public interest factors include: (a) the administrative foreign civil cases earlier filed by the petitioners against them in Hongkong and
difficulties flowing from court congestion; (b) the local interest in having England, to wit:
localized controversies decided at home; (c) the avoidance of unnecessary 1.) Civil action in England in its High Court of Justice, Queens Bench Division
problems in conflict of laws or in the application of foreign law; or (d) the Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN TRANSPORT
unfairness of burdening citizens in an unrelated forum with jury duty. [23] NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER SA;
In support of their claim that the local court is not the proper forum, (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC NAVIGATOS CORP. SA; (f) EDDIE
petitioners allege the following: NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h) AURELIO K. LITONJUA.
i) The Bank of America Branches involved, as clearly mentioned in the 2.) Civil action in England in its High Court of Justice, Queens Bench Division,
Complaint, are based in Hongkong and England. As such, the evidence and the Commercial Court (1992-Folio No. 2245) against (a) EL CHALLENGER S.A., (b)
witnesses are not readily available in the Philippines; ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA and
ii) The loan transactions were obtained, perfected, performed, consummated (d) AURELIO KATIPUNAN LITONJUA.
and partially paid outside the Philippines; 3.) Civil action in the Supreme Court of Hongkong High Court (Action No. 4039
iii) The monies were advanced outside the Philippines. Furthermore, the of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER
mortgaged vessels were part of an offshore fleet, not based in the Philippines; S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
iv) All the loans involved were granted to the Private Respondents CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA
v) The Restructuring Agreements were ALL governed by the laws of England; (h) EDUARDO KATIPUNAN LITONJUA.
vi) The subsequent sales of the mortgaged vessels and the application of the 4.) A civil action in the Supreme Court of Hong Kong High Court (Action No.
sales proceeds occurred and transpired outside the Philippines, and the 4040 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) court; or (c) appeal would not prove to be a speedy and adequate remedy as
LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN when an appeal would not promptly relieve a defendant from the injurious
LITONJUA, RJ., and (h) EDUARDO KATIPUNAN LITONJUA. effects of the patently mistaken order maintaining the plaintiffs baseless
and that private respondents alleged cause of action is already barred by the action and compelling the defendant needlessly to go through a protracted
pendency of another action or by litis pendentia as shown above.[27] trial and clogging the court dockets by another futile case. [34]
On the other hand, private respondents contend that certain material facts Records show that the trial court acted within its jurisdiction when it issued
and pleadings are omitted and/or misrepresented in the present petition for the assailed Order denying petitioners motion to dismiss. Does the denial of
certiorari; that the prefatory statement failed to state that part of the security the motion to dismiss constitute a patent grave abuse of discretion? Would
of the foreign loans were mortgages on a 39-hectare piece of real estate appeal, under the circumstances, not prove to be a speedy and adequate
located in the Philippines;[28] that while the complaint was filed only by the remedy? We will resolve said questions in conjunction with the issues raised
stockholders of the corporate borrowers, the latter are wholly-owned by the by the parties.
private respondents who are Filipinos and therefore under Philippine laws, First issue. Did the trial court commit grave abuse of discretion in refusing to
aside from the said corporate borrowers being but their alter-egos, they have dismiss the complaint on the ground that plaintiffs have no cause of action
interests of their own in the vessels. [29] Private respondents also argue that the against defendants since plaintiffs are merely stockholders of the corporations
dismissal by the Court of Appeals of the petition for certiorari was justified which are the registered owners of the vessels and the borrowers of
because there was neither allegation nor any showing whatsoever by the petitioners?
petitioners that they had no appeal, nor any plain, speedy, and adequate No. Petitioners argument that private respondents, being mere stockholders
remedy in the ordinary course of law from the Order of the trial judge denying of the foreign corporations, have no personalities to sue, and therefore, the
their Motion to Dismiss; that the remedy available to the petitioners after complaint should be dismissed, is untenable. A case is dismissible for lack of
their Motion to Dismiss was denied was to file an Answer to the complaint; personality to sue upon proof that the plaintiff is not the real party-in-
 that as upheld by the Court of Appeals, the decision of the trial court in not interest. Lack of personality to sue can be used as a ground for a Motion to
applying the principle of forum non conveniens is in the lawful exercise of its Dismiss based on the fact that the complaint, on the face thereof, evidently
discretion.[31] Finally, private respondents aver that the statement of states no cause of action.[35] In San Lorenzo Village Association, Inc. vs. Court of
petitioners that the doctrine of res judicata also applies to foreign judgment is Appeals,[36]  this Court clarified that a complaint states a cause of action where
merely an opinion advanced by them and not based on a categorical ruling of it contains three essential elements of a cause of action, namely: (1) the legal
this Court;[32] and that herein private respondents did not actually participate right of the plaintiff, (2) the correlative obligation of the defendant, and (3) the
in the proceedings in the foreign courts. [33] act or omission of the defendant in violation of said legal right. If these
We deny the petition for lack of merit. elements are absent, the complaint becomes vulnerable to a motion to dismiss
It is a well-settled rule that the order denying the motion to dismiss cannot be on the ground of failure to state a cause of action. [37] To emphasize, it is not
the subject of petition for certiorari. Petitioners should have filed an answer to the lack or absence of cause of action that is a ground for dismissal of the
the complaint, proceed to trial and await judgment before making an complaint but rather the fact that the complaint states no cause of action.
appeal. As repeatedly held by this Court:  Failure to state a cause of action refers to the insufficiency of allegation in
An order denying a motion to dismiss is interlocutory and cannot be the the pleading, unlike lack of cause of action which refers to the insufficiency of
subject of the extraordinary petition for certiorari or mandamus. The remedy factual basis for the action. Failure to state a cause of action may be raised at
of the aggrieved party is to file an answer and to interpose as defenses the the earliest stages of an action through a motion to dismiss the complaint,
objections raised in his motion to dismiss, proceed to trial, and in case of an while lack of cause of action may be raised any time after the questions of fact
adverse decision, to elevate the entire case by appeal in due course. xxx Under have been resolved on the basis of stipulations, admissions or evidence
certain situations, recourse to certiorari or mandamus is considered presented.[39]
appropriate, i.e., (a) when the trial court issued the order without or in excess In the case at bar, the complaint contains the three elements of a cause of
of jurisdiction; (b) where there is patent grave abuse of discretion by the trial action. It alleges that: (1) plaintiffs, herein private respondents, have the right
to demand for an accounting from defendants (herein petitioners), as trustees provided, that the following requisites are met: (1) that the Philippine Court is
by reason of the fiduciary relationship that was created between the parties one to which the parties may conveniently resort to; (2) that the Philippine
involving the vessels in question; (2) petitioners have the obligation, as Court is in a position to make an intelligent decision as to the law and the
trustees, to render such an accounting; and (3) petitioners failed to do the facts; and, (3) that the Philippine Court has or is likely to have power to
same. enforce its decision.[46] Evidently, all these requisites are present in the instant
Petitioners insist that they do not have any obligation to the private case.
respondents as they are mere stockholders of the corporation; that the Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court
corporate entities have juridical personalities separate and distinct from those of Appeals,[47]that the doctrine of forum non conveniens should not be used as
of the private respondents. Private respondents maintain that the a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court
corporations are wholly owned by them and prior to the incorporation of such does not include said doctrine as a ground. This Court further ruled that while
entities, they were clients of petitioners which induced them to acquire loans it is within the discretion of the trial court to abstain from assuming
from said petitioners to invest on the additional ships. jurisdiction on this ground, it should do so only after vital facts are established,
We agree with private respondents. As held in the San Lorenzo case,[40] to determine whether special circumstances require the courts desistance;
xxx assuming that the allegation of facts constituting plaintiffs cause of action and that the propriety of dismissing a case based on this principle of forum
is not as clear and categorical as would otherwise be desired, any uncertainty non conveniens  requires a factual determination, hence it is more properly
thereby arising should be so resolved as to enable a full inquiry into the merits considered a matter of defense.[48]
of the action. Third issue. Are private respondents guilty of forum shopping because of the
As this Court has explained in the San Lorenzo case, such a course, would pendency of foreign action?
preclude multiplicity of suits which the law abhors, and conduce to the No. Forum shopping exists where the elements of litis pendentia are present
definitive determination and termination of the dispute. To do otherwise, that and where a final judgment in one case will amount to res judicata in the
is, to abort the action on account of the alleged fatal flaws of the complaint other.[49] Parenthetically, for litis pendentia to be a ground for the dismissal of
would obviously be indecisive and would not end the controversy, since the an action there must be: (a) identity of the parties or at least such as to
institution of another action upon a revised complaint would not be represent the same interest in both actions; (b) identity of rights asserted and
foreclosed.[41] relief prayed for, the relief being founded on the same acts; and (c) the
Second Issue. Should the complaint be dismissed on the ground of forum non- identity in the two cases should be such that the judgment which may be
conveniens? rendered in one would, regardless of which party is successful, amount to res
No. The doctrine of forum non-conveniens,  literally meaning the forum is judicata in the other.[50]
inconvenient, emerged in private international law to deter the practice of In case at bar, not all the requirements for litis pendentia are present. While
global forum shopping,[42] that is to prevent non-resident litigants from there may be identity of parties, notwithstanding the presence of other
choosing the forum or place wherein to bring their suit for malicious reasons, respondents,[51] as well as the reversal in positions of plaintiffs and
such as to secure procedural advantages, to annoy and harass the defendant, defendants[52], still the other requirements necessary for litis pendentiawere
to avoid overcrowded dockets, or to select a more friendly venue. Under this not shown by petitioner. It merely mentioned that civil cases were filed in
doctrine, a court, in conflicts of law cases, may refuse impositions on its Hongkong and England without however showing the identity of rights
jurisdiction where it is not the most convenient or available forum and the asserted and the reliefs sought for as well as the presence of the elements
parties are not precluded from seeking remedies elsewhere. [43] of res judicata should one of the cases be adjudged.
Whether a suit should be entertained or dismissed on the basis of said As the Court of Appeals aptly observed:
doctrine depends largely upon the facts of the particular case and is addressed xxx [T]he petitioners, by simply enumerating the civil actions instituted abroad
to the sound discretion of the trial court. [44] In the case of Communication involving the parties herein xxx, failed to provide this Court with relevant and
Materials and Design, Inc. vs. Court of Appeals,[45] this Court held that xxx [a] clear specifications that would show the presence of the above-quoted
Philippine Court may assume jurisdiction over the case if it chooses to do so; elements or requisites for res judicata. While it is true that the petitioners in
their motion for reconsideration (CA Rollo, p. 72), after enumerating the
various civil actions instituted abroad, did aver that Copies of the foreign
judgments are hereto attached and made integral parts hereof as Annexes B,
C, D and E, they failed, wittingly or inadvertently, to include a single foreign
judgment in their pleadings submitted to this Court as annexes to their
petition. How then could We have been expected to rule on this issue even if
We were to hold that foreign judgments could be the basis for the application
of the aforementioned principle of res judicata?[53]
Consequently, both courts correctly denied the dismissal of herein subject
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioners.
G.R. No. 166920             February 19, 2007 January 1998
HENRICHSEN, Petitioners,  Letter of Employment
vs. This Letter of Employment with the attached General Conditions of
KLAUS K. SCHONFELD, Respondent. Employment constitutes the agreement under which you will be engaged by
DECISION our Company on the terms and conditions defined hereunder. In case of any
CALLEJO, SR., J.: discrepancies or contradictions between this Letter of Employment and the
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised General Conditions of Employment, this Letter of Employment will prevail.
Rules of Court of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. You will, from the date of commencement, be ["seconded"] to our subsidiary
76563. The CA decision reversed the Resolution of the National Labor Pacicon Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will
Relations Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, provide you with a separate contract, which will define that part of the
affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787- present terms and conditions for which Pacicon is responsible. In case of any
00 dismissing the complaint of respondent Klaus K. Schonfeld. discrepancies or contradictions between the present Letter of Employment
The antecedent facts are as follows: and the contract with Pacicon Philippines, Inc. or in the case that Pacicon
Respondent is a Canadian citizen and was a resident of New Westminster, should not live up to its obligations, this Letter of Employment will prevail.
British Columbia, Canada. He had been a consultant in the field of 1. Project Country: The Philippines with possible short-term assignments in
environmental engineering and water supply and sanitation. Pacicon other countries.
Philippines, Inc. (PPI) is a corporation duly established and incorporated in 2. Duty Station: Manila, the Philippines.
accordance with the laws of the Philippines. The primary purpose of PPI was to 3. Family Status: Married.
engage in the business of providing specialty and technical services both in 4. Position: Sector Manager, Water and Sanitation.
and out of the Philippines.2 It is a subsidiary of Pacific Consultants 5. Commencement: 1st October 1997.
International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who 6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a
was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen local salary (US$2,100.00 per month) by Pacicon and partly as an offshore
commuted from Japan to Manila and vice versa, as well as in other countries salary (US$4,900.00) by PCI to bank accounts to be nominated by you.
where PCIJ had business. A performance related component corresponding to 17.6% of the total annual
In 1997, PCIJ decided to engage in consultancy services for water and remuneration, subject to satisfactory performance against agreed tasks and
sanitation in the Philippines. In October 1997, respondent was employed by targets, paid offshore.
PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation 7. Accommodation: The company will provide partly furnished
Department. However, PCIJ assigned him as PPI sector manager in the accommodation to a rent including association fees, taxes and VAT not
Philippines. His salary was to be paid partly by PPI and PCIJ. exceeding the Pesos equivalent of US$2,900.00 per month.
On January 7, 1998, Henrichsen transmitted a letter of employment to 8. Transportation: Included for in the remuneration.
respondent in Canada, requesting him to accept the same and affix his 9. Leave Travels: You are entitled to two leave travels per year.
conformity thereto. Respondent made some revisions in the letter of 10. Shipment of Personal
employment and signed the contract. 3 He then sent a copy to Henrichsen. The Effects: The maximum allowance is US$4,000.00.
letter of employment reads: 11. Mobilization
Mr. Klaus K. Schonfeld Travel: Mobilization travel will be from New Westminster, B.C., Canada.
II-365 Ginger Drive This letter is send (sic) to you in duplicate; we kindly request you to sign and
New Westminster, B.C. return one copy to us.
Canada V3L 5L5 Yours sincerely,
Tokyo 7
Pacific Consultants International (Emphasis supplied)6
Jens Peter Henrichsen Respondent received his compensation from PPI for the following periods:
Above terms and conditions accepted February to June 1998, November to December 1998, and January to August
Date: 2 March 1998 1999. He was also reimbursed by PPI for the expenses he incurred in
(Sgd.) connection with his work as sector manager. He reported for work in Manila
Klaus Schonfeld except for occasional assignments abroad, and received instructions from
as annotated and initialed4 Henrichsen.7
Section 21 of the General Conditions of Employment appended to the letter of On May 5, 1999, respondent received a letter from Henrichsen informing him
employment reads: that his employment had been terminated effective August 4, 1999 for the
21 Arbitration reason that PCIJ and PPI had not been successful in the water and sanitation
Any question of interpretation, understanding or fulfillment of the conditions sector in the Philippines.8 However, on July 24, 1999, Henrichsen, by electronic
of employment, as well as any question arising between the Employee and the mail,9 requested respondent to stay put in his job after August 5, 1999, until
Company which is in consequence of or connected with his employment with such time that he would be able to report on certain projects and discuss all
the Company and which can not be settled amicably, is to be finally settled, the opportunities he had developed.10 Respondent continued his work with
binding to both parties through written submissions, by the Court of PPI until the end of business hours on October 1, 1999.
Arbitration in London.5 Respondent filed with PPI several money claims, including unpaid salary, leave
Respondent arrived in the Philippines and assumed his position as PPI Sector pay, air fare from Manila to Canada, and cost of shipment of goods to Canada.
Manager. He was accorded the status of a resident alien. PPI partially settled some of his claims (US$5,635.99), but refused to pay the
As required by Rule XIV (Employment of Aliens) of the Omnibus Rules rest.
Implementing the Labor Code, PPI applied for an Alien Employment Permit On December 5, 2000, respondent filed a Complaint 11 for Illegal Dismissal
(Permit) for respondent before the Department of Labor and Employment against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed
(DOLE). It appended respondent’s contract of employment to the as NLRC-NCR Case No. 30-12-04787-00.
application.1awphi1.net In his Complaint, respondent alleged that he was illegally dismissed; PPI had
On February 26, 1999, the DOLE granted the application and issued the Permit not notified the DOLE of its decision to close one of its departments, which
to respondent. It reads: resulted in his dismissal; and they failed to notify him that his employment
Republic of the Philippines was terminated after August 4, 1999. Respondent also claimed for separation
Department of Labor & Employment pay and other unpaid benefits. He alleged that the company acted in bad faith
National Capital Region and disregarded his rights. He prayed for the following reliefs:
ALIEN EMPLOYMENT PERMIT 1. Judgment be rendered in his favor ordering the respondents to reinstate
ISSUED TO: SCHONFELD, KLAUS KURT complainant to his former position without loss of seniority and other
DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian privileges and benefits, and to pay his full backwages from the time
POSITION: VP – WATER & SANITATION compensation was with held (sic) from him up to the time of his actual
EMPLOYER: PACICON PHILIPPINES, INC. reinstatement. In the alternative, if reinstatement is no longer feasible,
ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City respondents must pay the complainant full backwages, and separation pay
PERMIT equivalent to one month pay for every year of service, or in the amount of
ISSUED ON: February 26, 1999 SIGNATURE OF BEARER: US$16,400.00 as separation pay;
VALID UNTIL: January 7, 2000 (Sgd.) 2. Judgment be rendered ordering the respondents to pay the outstanding
APPROVED: BIENVENIDO S. LAGUESMA monetary obligation to complainant in the amount of US$10,131.76
By: MAXIMO B. ANITO representing the balance of unpaid salaries, leave pay, cost of his air travel and
REGIONAL DIRECTOR shipment of goods from Manila to Canada; and
3. Judgment be rendered ordering the respondent company to pay the This Letter of Employment with the attached General Conditions of
complainant damages in the amount of no less than US $10,000.00 and to pay Employment constitutes the agreement, under which you will be engaged by
10% of the total monetary award as attorney’s fees, and costs. Pacicon Philippines, Inc. on the terms and conditions defined hereunder.
Other reliefs just and equitable under the premises are, likewise, prayed 1. Project Country: The Philippines with possible assignments in other
for.12 1awphi1.net countries.
Petitioners filed a Motion to Dismiss the complaint on the following grounds: 2. Duty Station: Manila, the Philippines.
(1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue 3. Family Status: Married.
was improperly laid. It averred that respondent was a Canadian citizen, a 4. Position: Sector Manager – Water and Sanitation Sector.
transient expatriate who had left the Philippines. He was employed and 5. Commencement: 1 January, 1998.
dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. 6. Remuneration: US$3,100.00 per month payable to a bank account to be
Since respondent’s cause of action was based on his letter of employment nominated by you.
executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci 7. Accommodation: The company will provide partly furnished
contractus, the complaint should have been filed in Tokyo, Japan. Petitioners accommodation to a rent including association fees, taxes and VAT not
claimed that respondent did not offer any justification for filing his complaint exceeding the Pesos equivalent of US$2300.00 per month.
against PPI before the NLRC in the Philippines. Moreover, under Section 12 of 8. Transportation: Included for in the remuneration.
the General Conditions of Employment appended to the letter of employment 9. Shipment of Personal The maximum allowance is US$2500.00 in Effects:
dated January 7, 1998, complainant and PCIJ had agreed that any connection with initial shipment of personal effects from Canada.
employment-related dispute should be brought before the London Court of 10. Mobilization Travel: Mobilization travel will be from New Westminster,
Arbitration. Since even the Supreme Court had already ruled that such an B.C., Canada.
agreement on venue is valid, Philippine courts have no jurisdiction. 13 This letter is send (sic) to you in duplicate; we kindly request you to sign and
Respondent opposed the Motion, contending that he was employed by PPI to return one copy to us.
work in the Philippines under contract separate from his January 7, 1998 Yours sincerely,
contract of employment with PCIJ. He insisted that his employer was PPI, a Pacicon Philippines, Inc.
Philippine-registered corporation; it is inconsequential that PPI is a wholly- Jens Peter Henrichsen
owned subsidiary of PCIJ because the two corporations have separate and President14
distinct personalities; and he received orders and instructions from Henrichsen According to respondent, the material allegations of the complaint, not
who was the president of PPI. He further insisted that the principles of forum petitioners’ defenses, determine which quasi-judicial body has jurisdiction.
non conveniens and lex loci contractus do not apply, and that although he is a Section 21 of the Arbitration Clause in the General Conditions of Employment
Canadian citizen, Philippine Labor Laws apply in this case. does not provide for an exclusive venue where the complaint against PPI for
Respondent adduced in evidence the following contract of employment dated violation of the Philippine Labor Laws may be filed. Respondent pointed out
January 9, 1998 which he had entered into with Henrichsen: that PPI had adopted two inconsistent positions: it was first alleged that he
Mr. Klaus K. Schonfeld should have filed his complaint in Tokyo, Japan; and it later insisted that the
II-365 Ginger Drive complaint should have been filed in the London Court of Arbitration. 15
New Westminster, B.C. In their reply, petitioners claimed that respondent’s employer was PCIJ, which
Canada V3L 5L5 had exercised supervision and control over him, and not PPI. Respondent was
Manila 9 January, 1998 dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in
Dear Mr. Schonfeld, Japan.16 The letter of employment dated January 9, 1998 which respondent
Letter of Employment relies upon did not bear his (respondent’s) signature nor that of Henrichsen.
On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners’
Motion to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents’ Motion to Dismiss, the same is Respondent averred that the absence or existence of a written contract of
hereby granted. The instant complaint filed by the complainant is dismissed employment is not decisive of whether he is an employee of PPI. He
for lack of merit. maintained that PPI, through its president Henrichsen, directed his
SO ORDERED.17 work/duties as Sector Manager of PPI; proof of this was his letter-proposal to
The Labor Arbiter found, among others, that the January 7, 1998 contract of the Development Bank of the Philippines for PPI to provide consultancy
employment between respondent and PCIJ was controlling; the Philippines services for the Construction Supervision of the Water Supply and Sanitation
was only the "duty station" where Schonfeld was required to work under the component of the World Bank-Assisted LGU Urban Water and Sanitation
General Conditions of Employment. PCIJ remained respondent’s employer Project.20 He emphasized that as gleaned from Alien Employment Permit (AEP)
despite his having been sent to the Philippines. Since the parties had agreed No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an
that any differences regarding employer-employee relationship should be employee of PPI. It was PPI president Henrichsen who terminated his
submitted to the jurisdiction of the court of arbitration in London, this employment; PPI also paid his salary and reimbursed his expenses related to
agreement is controlling. transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no
On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and moment because the two corporations have separate and distinct
affirmed the latter’s decision in toto. 18 personalities.
Respondent then filed a petition for certiorari under Rule 65 with the CA The CA found the petition meritorious. Applying the four-fold test 21 of
where he raised the following arguments: determining an employer-employee relationship, the CA declared that
I respondent was an employee of PPI. On the issue of venue, the appellate
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS court declared that, even under the January 7, 1998 contract of employment,
COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR the parties were not precluded from bringing a case related thereto in other
EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITER’S DECISION venues. While there was, indeed, an agreement that issues between the
CONSIDERING THAT: parties were to be resolved in the London Court of Arbitration, the venue is
A. PETITIONER’S TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS not exclusive, since there is no stipulation that the complaint cannot be filed in
INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND THEREFORE, any other forum other than in the Philippines.
THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND On November 25, 2004, the CA rendered its decision granting the petition, the
BRANCH OF THE NLRC AND NOT THE COURT OF ARBITRATION IN LONDON. WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the
II NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS Labor Arbiter a quo for disposition of the case on the merits.
EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF THE A motion for the reconsideration of the above decision was filed by PPI and
COMPLAINT CONSIDERING THAT PETITIONER’S TERMINATION FROM Henrichsen, which the appellate court denied for lack of merit. 23
EMPLOYMENT IS ILLEGAL: In the present recourse, PPI and Henrichsen, as petitioners, raise the following
II There being no evidence that petitioner PPI is the employer of respondent, the
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER Labor Arbiter has no jurisdiction over respondent’s complaint.
A QUO HAS JURISDICTION OVER RESPONDENT’S CLAIM DESPITE THE Petitioners aver that since respondent is a Canadian citizen, the CA erred in
UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ignoring their claim that the principlesof forum non conveniens and lex loci
ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT contractus are applicable. They also point out that the principal office, officers
CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM and staff of PCIJ are stationed in Tokyo, Japan; and the contract of
"SHALL BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON." 24 employment of respondent was executed in Tokyo, Japan.
Petitioners fault the CA for reversing the findings of the Labor Arbiter and the Moreover, under Section 21 of the General Conditions for Employment
NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the incorporated in respondent’s January 7, 1998 letter of employment, the
NLRC, are conclusive on the CA. They maintain that it is not within the dispute between respondent and PCIJ should be settled by the court of
province of the appellate court in a petition for certiorari to review the facts arbitration of London. Petitioners claim that the words used therein are
and evidence on record since there was no conflict in the factual findings and sufficient to show the exclusive and restrictive nature of the stipulation on
conclusions of the lower tribunals. Petitioners assert that such findings and venue.
conclusions, having been made by agencies with expertise on the subject Petitioners insist that the U.S. Labor-Management Act applies only to U.S.
matter, should be deemed binding and conclusive. They contend that it was workers and employers, while the Labor Code of the Philippines applies only to
the PCIJ which employed respondent as an employee; it merely seconded him Filipino employers and Philippine-based employers and their employees, not
to petitioner PPI in the Philippines, and assigned him to work in Manila as to PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend
Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was to foreign workers who executed employment agreements with foreign
never the employer of respondent. employers abroad, although "seconded" to the Philippines. 25
Petitioners assert that the January 9, 1998 letter of employment which In his Comment,26 respondent maintains that petitioners raised factual issues
respondent presented to prove his employment with petitioner PPI is of in their petition which are proscribed under Section 1, Rule 45 of the Rules of
doubtful authenticity since it was unsigned by the purported parties. They Court. The finding of the CA that he had been an employee of petitioner PPI
insist that PCIJ paid respondent’s salaries and only coursed the same through and not of PCIJ is buttressed by his documentary evidence which both the
petitioner PPI. PPI, being its subsidiary, had supervision and control over Labor Arbiter and the NLRC ignored; they erroneously opted to dismiss his
respondent’s work, and had the responsibilities of monitoring the "daily complaint on the basis of the letter of employment and Section 21 of the
administration" of respondent. Respondent cannot rely on the pay slips, General Conditions of Employment. In contrast, the CA took into account the
expenses claim forms, and reimbursement memoranda to prove that he was evidence on record and applied case law correctly.
an employee of petitioner PPI because these documents are of doubtful The petition is denied for lack of merit.
authenticity. It must be stressed that in resolving a petition for certiorari, the CA is not
Petitioners further contend that, although Henrichsen was both a director of proscribed from reviewing the evidence on record. Under Section 9 of Batas
PCIJ and president of PPI, it was he who signed the termination letter of Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to
respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJ’s pass upon the evidence, if and when necessary, to resolve factual issues. 27 If it
letterhead was used to inform him that his employment was terminated. appears that the Labor Arbiter and the NLRC misappreciated the evidence to
Petitioners further assert that all work instructions came from PCIJ and that such an extent as to compel a contrary conclusion if such evidence had been
petitioner PPI only served as a "conduit." Respondent’s Alien Employment properly appreciated, the factual findings of such tribunals cannot be given
Permit stating that petitioner PPI was his employer is but a necessary great respect and finality.28
consequence of his being "seconded" thereto. It is not sufficient proof that Inexplicably, the Labor Arbiter and the NLRC ignored the documentary
petitioner PPI is respondent’s employer. The entry was only made to comply evidence which respondent appended to his pleadings showing that he was an
with the DOLE requirements. employee of petitioner PPI; they merely focused on the January 7, 1998 letter
of employment and Section 21 of the General Conditions of Employment.
Petitioner PPI applied for the issuance of an AEP to respondent before the in the section or department for which the expatriates are being hired to
DOLE. In said application, PPI averred that respondent is its employee. To insure the actual transfer of technology.
show that this was the case, PPI appended a copy of respondent’s Under Section 6 of the Rule, the DOLE may issue an alien employment permit
employment contract. The DOLE then granted the application of PPI and based only on the following:
issued the permit. (a) Compliance by the applicant and his employer with the requirements of
It bears stressing that under the Omnibus Rules Implementing the Labor Code, Section 2 hereof;
one of the requirements for the issuance of an employment permit is the (b) Report of the Bureau Director as to the availability or non-availability of
employment contract. Section 5, Rule XIV (Employment of Aliens) of the any person in the Philippines who is competent and willing to do the job for
Omnibus Rules provides: which the services of the applicant are desired;
SECTION 1. Coverage. – This rule shall apply to all aliens employed or seeking (c) His assessment as to whether or not the employment of the applicant will
employment in the Philippines and the present or prospective employers. redound to the national interest;
SECTION 2. Submission of list. – All employers employing foreign nationals, (d) Admissibility of the alien as certified by the Commission on Immigration
whether resident or non-resident, shall submit a list of nationals to the Bureau and Deportation;
indicating their names, citizenship, foreign and local address, nature of (e) The recommendation of the Board of Investments or other appropriate
employment and status of stay in the Philippines. government agencies if the applicant will be employed in preferred areas of
SECTION 3. Registration of resident aliens. – All employed resident aliens shall investments or in accordance with the imperative of economic development.
register with the Bureau under such guidelines as may be issued by it. Thus, as claimed by respondent, he had an employment contract with
SECTION 4. Employment permit required for entry. – No alien seeking petitioner PPI; otherwise, petitioner PPI would not have filed an application for
employment, whether as a resident or non-resident, may enter the Philippines a Permit with the DOLE. Petitioners are thus estopped from alleging that the
without first securing an employment permit from the Ministry. If an alien PCIJ, not petitioner PPI, had been the employer of respondent all along.
enters the country under a non-working visa and wishes to be employed We agree with the conclusion of the CA that there was an employer-employee
thereafter, he may only be allowed to be employed upon presentation of a relationship between petitioner PPI and respondent using the four-fold test.
duly approved employment permit. Jurisprudence is firmly settled that whenever the existence of an employment
SECTION 5. Requirements for employment permit applicants. – The application relationship is in dispute, four elements constitute the reliable yardstick: (a)
for an employment permit shall be accompanied by the following: the selection and engagement of the employee; (b) the payment of wages; (c)
(a) Curriculum vitae duly signed by the applicant indicating his educational the power of dismissal; and (d) the employer’s power to control the
background, his work experience and other data showing that he possesses employee’s conduct. It is the so-called "control test" which constitutes the
technical skills in his trade or profession. most important index of the existence of the employer-employee
(b) Contract of employment between the employer and the principal which relationship–that is, whether the employer controls or has reserved the right
shall embody the following, among others: to control the employee not only as to the result of the work to be done but
1. That the non-resident alien worker shall comply with all applicable laws and also as to the means and methods by which the same is to be accomplished.
rules and regulations of the Philippines; Stated otherwise, an employer-employee relationship exists where the person
2. That the non-resident alien worker and the employer shall bind themselves for whom the services are performed reserves the right to control not only the
to train at least two (2) Filipino understudies for a period to be determined by end to be achieved but also the means to be used in reaching such end. 29 We
the Minister; and quote with approval the following ruling of the CA:
3. That he shall not engage in any gainful employment other than that for [T]here is, indeed, substantial evidence on record which would erase any
which he was issued a permit. doubt that the respondent company is the true employer of petitioner. In the
(c) A designation by the employer of at least two (2) understudies for every case at bar, the power to control and supervise petitioner’s work performance
alien worker. Such understudies must be the most ranking regular employees devolved upon the respondent company. Likewise, the power to terminate the
employment relationship was exercised by the President of the respondent
company. It is not the letterhead used by the company in the termination Court is one to which the parties may conveniently resort to; (2) that the
letter which controls, but the person who exercised the power to terminate Philippine Court is in a position to make an intelligent decision as to the law
the employee. It is also inconsequential if the second letter of employment and the facts; and, (3) that the Philippine Court has or is likely to have power
executed in the Philippines was not signed by the petitioner. An employer- to enforce its decision. x x x
employee relationship may indeed exist even in the absence of a written Admittedly, all the foregoing requisites are present in this case.
contract, so long as the four elements mentioned in the Mafinco case are all WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in
present.30 CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor
The settled rule on stipulations regarding venue, as held by this Court in the Arbiter for disposition of the case on the merits. Cost against petitioners.
vintage case of Philippine Banking Corporation v. Tensuan, 31 is that while they SO ORDERED.
are considered valid and enforceable, venue stipulations in a contract do not,
as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of
Court in the absence of qualifying or restrictive words. They should be
considered merely as an agreement or additional forum, not as limiting venue
to the specified place. They are not exclusive but, rather permissive. If the
intention of the parties were to restrict venue, there must be accompanying
language clearly and categorically expressing their purpose and design that
actions between them be litigated only at the place named by them. 32
In the instant case, no restrictive words like "only," "solely," "exclusively in this
court," "in no other court save —," "particularly," "nowhere else but/except
—," or words of equal import were stated in the contract. 33 It cannot be said
that the court of arbitration in London is an exclusive venue to bring forth any
complaint arising out of the employment contract.
Petitioners contend that respondent should have filed his Complaint in his
place of permanent residence, or where the PCIJ holds its principal office, at
the place where the contract of employment was signed, in London as stated
in their contract. By enumerating possible venues where respondent could
have filed his complaint, however, petitioners themselves admitted that the
provision on venue in the employment contract is indeed merely permissive.
Petitioners’ insistence on the application of the principle of forum non
conveniens must be rejected. The bare fact that respondent is a Canadian
citizen and was a repatriate does not warrant the application of the principle
for the following reasons:
First. The Labor Code of the Philippines does not include forum non
conveniens as a ground for the dismissal of the complaint. 34
Second. The propriety of dismissing a case based on this principle requires a
factual determination; hence, it is properly considered as defense. 35
Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court
of Appeals,36 this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to
do so; provided, that the following requisites are met: (1) that the Philippine
G.R. No. 154830             June 8, 2007 Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss
PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and the complaint on the grounds that the complaint states no cause of action,
PHILIP J. KLEPZIG, petitioners,  that the RTC has no jurisdiction over the subject matter of the complaint, as
vs. the same is within the jurisdiction of the NLRC, and that the complaint should
ANTONIO D. TODARO, respondent. be dismissed on the basis of the doctrine of forum non conveniens.5
DECISION In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied
AUSTRIA-MARTINEZ, J.: herein petitioners' respective motions to dismiss.6 Herein petitioners, as
Before the Court is a Petition for Review on Certiorari seeking to annul and set defendants, filed an Urgent Omnibus Motion 7 for the reconsideration of the
aside the Decision1 of the Court of Appeals (CA) dated October 31, 2000 in CA- trial court's Order of January 4, 1999 but the trial court denied it via its
G.R. SP No. 54155 and its Resolution2 of August 21, 2002 denying petitioners’ Order8 dated June 3, 1999.
Motion for Reconsideration. On August 3, 1999, herein petitioners filed a Petition for Certiorari with the
The factual and procedural antecedents of the case are as follows: CA.9 On October 31, 2000, the CA rendered its presently assailed Decision
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with denying herein petitioners' Petition for Certiorari. Petitioners filed a Motion for
the Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money Reconsideration but the CA denied it in its Resolution dated August 21, 2002.
and Damages with Preliminary Attachment against Pioneer International Hence, herein Petition for Review on Certiorari based on the following
Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines assignment of errors:
Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig A.
In his complaint, Todaro alleged that PIL is a corporation duly organized and OF ACTION AGAINST PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE
existing under the laws of Australia and is principally engaged in the ready-mix ANNEXES TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION OF EXISTENCE
concrete and concrete aggregates business; PPHI is the company established OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND
by PIL to own and hold the stocks of its operating company in the Philippines; PETITIONERS.
PCPI is the company established by PIL to undertake its business of ready-mix B.
concrete, concrete aggregates and quarrying operations in the Philippines; THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THE SUPREME
the President and Managing Director of PPHI and PCPI; Todaro has been the COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL COURT DESPITE THE
managing director of Betonval Readyconcrete, Inc. (Betonval), a company FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR
engaged in pre-mixed concrete and concrete aggregate production; he AN ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE, FALLS
resigned from Betonval in February 1996; in May 1996, PIL contacted Todaro WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL LABOR RELATIONS
and asked him if he was available to join them in connection with their COMMISSION.
intention to establish a ready-mix concrete plant and other related operations C
in the Philippines; Todaro informed PIL of his availability and interest to join THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE
them; subsequently, PIL and Todaro came to an agreement wherein the PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND FOR
former consented to engage the services of the latter as a consultant for two DISMISSING A COMPLAINT.10
to three months, after which, he would be employed as the manager of PIL's In their first assigned error, petitioners contend that there was no perfected
ready-mix concrete operations should the company decide to invest in the employment contract between PIL and herein respondent. Petitioners assert
Philippines; subsequently, PIL started its operations in the Philippines; that the annexes to respondent's complaint show that PIL's offer was for
however, it refused to comply with its undertaking to employ Todaro on a respondent to be employed as the manager only of its pre-mixed concrete
permanent basis.4 operations and not as the company's managing director or CEO. Petitioners
argue that when respondent reiterated his intention to become the manager
of PIL's overall business venture in the Philippines, he, in effect did not accept authorized by law, courts may refuse to entertain a case involving a foreign
PIL's offer of employment and instead made a counter-offer, which, however, element where the matter can be better tried and decided elsewhere, either
was not accepted by PIL. Petitioners also contend that under Article 1318 of because the main aspects of the case transpired in a foreign jurisdiction or the
the Civil Code, one of the requisites for a contract to be perfected is the material witnesses have their residence there and the plaintiff sought the
consent of the contracting parties; that under Article 1319 of the same Code, forum merely to secure procedural advantage or to annoy or harass the
consent is manifested by the meeting of the offer and the acceptance upon defendant. Petitioners also argue that one of the factors in determining the
the thing and the cause which are to constitute the contract; that the offer most convenient forum for conflicts problem is the power of the court to
must be certain and the acceptance absolute; that a qualified acceptance enforce its decision. Petitioners contend that since the majority of the
constitutes a counter-offer. Petitioners assert that since PIL did not accept defendants in the present case are not residents of the Philippines, they are
respondent's counter-offer, there never was any employment contract that not subject to compulsory processes of the Philippine court handling the case
was perfected between them. for purposes of requiring their attendance during trial. Even assuming that
Petitioners further argue that respondent's claim for damages based on the they can be summoned, their appearance would entail excessive costs.
provisions of Articles 19 and 21 of the Civil Code is baseless because it was Petitioners further assert that there is no allegation in the complaint from
shown that there was no perfected employment contract. which one can conclude that the evidence to be presented during the trial can
Assuming, for the sake of argument, that PIL may be held liable for breach of be better obtained in the Philippines. Moreover, the events which led to the
employment contract, petitioners contend that PCPI and PPHI, may not also be present controversy occurred outside the Philippines. Petitioners conclude
held liable because they are juridical entities with personalities which are that based on the foregoing factual circumstances, the case should be
separate and distinct from PIL, even if they are subsidiary corporations of the dismissed under the principle of forum non conveniens.
latter. Petitioners also aver that the annexes to respondent's complaint show In his Comment, respondent extensively quoted the assailed CA Decision
that the negotiations on the alleged employment contract took place between maintaining that the factual allegations in the complaint determine whether or
respondent and PIL through its office in Hongkong. In other words, PCPI and not the complaint states a cause of action.
PPHI were not privy to the negotiations between PIL and respondent for the As to the question of jurisdiction, respondent contends that the complaint he
possible employment of the latter; and under Article 1311 of the Civil Code, a filed was not based on a contract of employment. Rather, it was based on
contract is not binding upon and cannot be enforced against one who was not petitioners' unwarranted breach of their contractual obligation to employ
a party to it even if he be aware of such contract and has acted with respondent. This breach, respondent argues, gave rise to an action for
knowledge thereof. damages which is cognizable by the regular courts.
Petitioners further assert that petitioner Klepzig may not be held liable Even assuming that there was an employment contract, respondent asserts
because he is simply acting in his capacity as president of PCPI and PPHI and that for the NLRC to acquire jurisdiction, the claim for damages must have a
settled is the rule that an officer of a corporation is not personally liable for reasonable causal connection with the employer-employee relationship of
acts done in the performance of his duties and within the bounds of the petitioners and respondent.
authority conferred on him. Furthermore, petitioners argue that even if PCPI Respondent further argues that there is a perfected contract between him and
and PPHI are held liable, respondent still has no cause of action against Klepzig petitioners as they both agreed that the latter shall employ him to manage and
because PCPI and PPHI have personalities which are separate and distinct from operate their ready-mix concrete operations in the Philippines. Even assuming
those acting in their behalf, such as Klepzig. that there was no perfected contract, respondent contends that his complaint
As to their second assigned error, petitioners contend that since herein alleges an alternative cause of action which is based on the provisions of
respondent's claims for actual, moral and exemplary damages are solely Articles 19 and 21 of the Civil Code.
premised on the alleged breach of employment contract, the present case As to the applicability of the doctrine of forum non conveniens, respondent
should be considered as falling within the exclusive jurisdiction of the NLRC. avers that the question of whether a suit should be entertained or dismissed
With respect to the third assigned error, petitioners assert that the principle on the basis of the principle of forum non conveniens depends largely upon the
of forum non conveniens dictates that even where exercise of jurisidiction is facts of the particular case and is addressed to the sound discretion of the trial
judge, who is in the best position to determine whether special circumstances the present case; rather, this issue must be taken up during trial, considering
require that the court desist from assuming jurisdiction over the suit. that its resolution would necessarily entail an examination of the veracity of
The petition lacks merit. the allegations not only of herein respondent as plaintiff but also of petitioners
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as defendants.
as the act or omission by which a party violates a right of another. A cause of The Court does not agree with petitioners' contention that they were not privy
action exists if the following elements are present: (1) a right in favor of the to the negotiations for respondent's possible employment. It is evident from
plaintiff by whatever means and under whatever law it arises or is created; (2) paragraphs 24 to 28 of the Complaint16 that, on various occasions, Klepzig
an obligation on the part of the named defendant to respect or not to violate conducted negotiations with respondent regarding the latter's possible
such right; and, (3) an act or omission on the part of such defendant violative employment. In fact, Annex "H"17 of the complaint shows that it was Klepzig
of the right of the plaintiff or constituting a breach of the obligation of the who informed respondent that his company was no longer interested in
defendant to the plaintiff for which the latter may maintain an action for employing respondent. Hence, based on the allegations in the Complaint and
recovery of damages.11 the annexes attached thereto, respondent has a cause of action against herein
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court petitioners.
held: As to the question of jurisdiction, this Court has consistently held that where
The elementary test for failure to state a cause of action is whether the no employer-employee relationship exists between the parties and no issue is
complaint alleges facts which if true would justify the relief demanded. Stated involved which may be resolved by reference to the Labor Code, other labor
otherwise, may the court render a valid judgment upon the facts alleged statutes or any collective bargaining agreement, it is the Regional Trial Court
therein? The inquiry is into the sufficiency, not the veracity of the material that has jurisdiction.18 In the present case, no employer-employee relationship
allegations. If the allegations in the complaint furnish sufficient basis on which exists between petitioners and respondent. In fact, in his complaint, private
it can be maintained, it should not be dismissed regardless of the defense that respondent is not seeking any relief under the Labor Code, but seeks payment
may be presented by the defendants. 13 of damages on account of petitioners' alleged breach of their obligation under
Moreover, the complaint does not have to establish or allege facts proving the their agreement to employ him. It is settled that an action for breach of
existence of a cause of action at the outset; this will have to be done at the contractual obligation is intrinsically a civil dispute.19 In the alternative,
trial on the merits of the case.14 To sustain a motion to dismiss for lack of respondent seeks redress on the basis of the provisions of Articles 19 and 21
cause of action, the complaint must show that the claim for relief does not of the Civil Code. Hence, it is clear that the present action is within the realm
exist, rather than that a claim has been defectively stated, or is ambiguous, of civil law, and jurisdiction over it belongs to the regular courts. 20
indefinite or uncertain.15 With respect to the applicability of the principle of forum non conveniens in
Hence, in resolving whether or not the Complaint in the present case states a the present case, this Court's ruling in Bank of America NT & SA v. Court of
cause of action, the trial court correctly limited itself to examining the Appeals21 is instructive, to wit:
sufficiency of the allegations in the Complaint as well as the annexes thereto. The doctrine of forum non conveniens, literally meaning ‘the forum is
It is proscribed from inquiring into the truth of the allegations in the Complaint inconvenient’, emerged in private international law to deter the practice of
or the authenticity of any of the documents referred or attached to the global forum shopping, that is to prevent non-resident litigants from choosing
Complaint, since these are deemed hypothetically admitted by the the forum or place wherein to bring their suit for malicious reasons, such as to
respondent. secure procedural advantages, to annoy and harass the defendant, to avoid
This Court has reviewed respondent’s allegations in its Complaint. In a overcrowded dockets, or to select a more friendly venue. Under this doctrine,
nutshell, respondent alleged that herein petitioners reneged on their a court, in conflicts of law cases, may refuse impositions on its jurisdiction
contractual obligation to employ him on a permanent basis. This allegation is where it is not the most "convenient" or available forum and the parties are
sufficient to constitute a cause of action for damages. not precluded from seeking remedies elsewhere.
The issue as to whether or not there was a perfected contract between Whether a suit should be entertained or dismissed on the basis of said
petitioners and respondent is a matter which is not ripe for determination in doctrine depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court. In the case of Communication
Materials and Design, Inc. vs. Court of Appeals, this Court held that "xxx [a]
Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (1) that the Philippine Court is
one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the
facts; and, (3) that the Philippine Court has or is likely to have power to
enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court
of Appeals, that the doctrine of forum non conveniens should not be used as
a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court
does not include said doctrine as a ground. This Court further ruled that
while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court’s
desistance; and that the propriety of dismissing a case based on this
principle of forum non conveniens requires a factual determination, hence it
is more properly considered a matter of defense.22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would
allegedly justify the application of the doctrine of forum non conveniens are
matters of defense, the merits of which should properly be threshed out
during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners.
G.R. No. 156848             October 11, 2007 Todaro attached nine letters, marked as Annexes "A" to "I," to his complaint.
PIONEER INTERNATIONAL, LTD., petitioner,  Annex "A"8 shows that on 15 July 1996, Todaro, under the letterhead of Ital
vs. Tech Distributors, Inc., sent a letter to Max Lindsay (Lindsay) of Pioneer
HON. TEOFILO GUADIZ, JR., in his capacity as Presiding Judge of Regional Concrete (Hong Kong) Limited. Todaro wrote that "[m]y aim is to run again a
Trial Court, Branch 147, Makati City, and ANTONIO D. TODARO, respondents. ready-mix concrete company in the Philippines and not to be a part-time
DECISION consultant. Otherwise, I could have charged your company with a much higher
CARPIO, J.: fee."
The Case Annex "B"9 shows that on 4 September 1996, Lindsay, under the letterhead of
This is a petition for review on certiorari 1 of the Decision2 dated 27 September Pioneer Concrete (Hong Kong) Limited, responded by fax to Todaro’s faxed
2001 and of the Resolution3 dated 14 January 2003 of the Court of Appeals letter to McDonald and proposed that Todaro "join Pioneer on a retainer basis
(appellate court) in CA-G.R. SP No. 54062. The Decision affirmed the for 2 to 3 months on the understanding that [Todaro] would become a
Orders4 dated 4 January 19995 and 3 June 19996 of Branch 147 of the Regional permanent employee if as we expect, our entry proceeds." The faxed letter to
Trial Court of Makati City (trial court) in Civil Case No. 98-124. The trial court McDonald referred to by Lindsay is not found in the rollo  and was not
denied the motion to dismiss filed by Pioneer International, Ltd. (PIL) 7in its attached to Todaro’s complaint.
special appearance. Annex "C"10 shows that on the same date as that of Annex "B," Todaro, under
The Facts the letterhead of Ital Tech Distributors, Inc., faxed another letter to Lindsay of
On 16 January 1998, Antonio D. Todaro (Todaro) filed a complaint for sum of Pioneer Concrete (Hong Kong) Limited. Todaro asked for a formal letter
money and damages with preliminary attachment against PIL, Pioneer addressed to him about the proposed retainer. Todaro requested that the
Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John letter contain a statement on his remuneration package and on his permanent
G. McDonald (McDonald), and Philip J. Klepzig (Klepzig). PIL and its co- employment "with PIONEER once it has established itself on a permanent
defendants were served copies of the summons and of the complaint at PPHI basis in the Philippines."
and PCPI’s office in Alabang, Muntinlupa, through Cecille L. De Leon (De Leon), Annex "D"11 shows that Todaro, under the letterhead of Ital Tech Distributors,
who was Klepzig’s Executive Assistant. Inc., sent a letter to McDonald of PIL. Todaro confirmed the following to
Todaro alleged that PIL is a corporation duly organized under Australian laws, McDonald:
while PCPI and PPHI are corporations duly organized under Philippine laws. PIL 1. That I am accepting the proposal of PIONEER INT’L. as a consultant for three
is engaged in the ready-mix and concrete aggregates business and has (3) months, starting October 1, 1996, with a retainer fee of U.S. $15,000.00 per
established a presence worldwide. PIL established PPHI as the holding month;
company of the stocks of its operating company in the Philippines, PCPI. 2. That after three (3) months consultancy, I should be employed by PIONEER
McDonald is the Chief Executive Officer of PIL’s Hong Kong office while Klepzig INT’L., on a permanent basis, as its Managing Director or CEO in the
is the President and Managing Director of PPHI and PCPI. For his part, Todaro Philippines. Remuneration package will be mutually agreed upon by PIONEER
further alleged that he was the managing director of Betonval Readyconcrete, and the undersigned;
Inc. (Betonval) from June 1975 up to his resignation in February 1996. 3. That Gino Martinel and the Sales Manager – Jun Ong, will be hired as well,
Before Todaro filed his complaint, there were several meetings and exchanges on a permanent basis, by PIONEER as soon as the company is established.
of letters between Todaro and the officers of Pioneer Concrete (Hong Kong) Salary, likewise, will be accepted by both PIONEER and the respective parties.
Limited, Pioneer Concrete Group HK, PPHI, and PIL. According to Todaro, PIL Annex "E"12 is a faxed letter dated 18 November 1996 of McDonald, under the
contacted him in May 1996 and asked if he could join it in establishing a pre- letterhead of Pioneer Concrete Group HK, to Todaro of Ital Tech Distributors,
mixed concrete plant and in overseeing its operations in the Philippines. Inc. The first three paragraphs of McDonald’s letter read:
Todaro confirmed his availability and expressed interest in joining PIL. Todaro Further to our recent meeting in Hong Kong, I am now able to confirm my
met with several of PIL’s representatives and even gave PIL the names of three offer to engage you as a consultant to Pioneer International Ltd. Should
of his subordinates in Betonval whom he would like to join him in PIL.
Pioneer proceed with an investment in the Philippines, then Pioneer would Thank you for your letter to Dr. Schubert dated 29 th September 1997 regarding
offer you a position to manage the premixed concrete operations. the alleged breach of contract with you. Dr. Schubert has asked me to
Pioneer will probably be in a position to make a decision on proceeding with investigate this matter.
an investment by mid January ‘97. I have discussed and examined the material regarding your association with
The basis for your consultancy would be: Pioneer over the period from mid 1996 through to September 1997.
 Monthly fee USD 15,000 per month billed on monthly basis and Clearly your consultancy services to Pioneer Hong Kong are well documented
payable 15 days from billing date. and have been appropriately rewarded. However, in regard to your request
 Additional pre-approved expenses to be reimbursed. and expectation to be given permanent employment with Pioneer Philippines
 Driver and secretarial support-basis for reimbursement of this to be Holdings, Inc. I am informed that negotiations to reach agreement on
agreed. appropriate terms and conditions have not been successful.
 Arrangement to commence from 1st November ‘96, reflecting your The employment conditions you specified in your letter to John McDonald
contributions so far and to continue until Pioneer makes a decision. dated 11th September are well beyond our expectations.
Annex "F"13 shows Todaro’s faxed reply, under the letterhead of Ital Tech Mr. Todaro, I regret that we do not wish to pursue our association with you
Distributors, Inc., to McDonald of Pioneer Concrete Group HK dated 19 any further. Mr. Klepzig was authorized to terminate this association and the
November 1996. Todaro confirmed McDonald’s package concerning the letter he sent to you dated 18th September has my support.
consultancy and reiterated his desire to be the manager of Pioneer’s Philippine Thank you for your involvement with Pioneer. I wish you all the best for the
business venture. future. (Emphasis added)
Annex "G"14 shows Todaro’s faxed reply, under the letterhead of Ital Tech PIL filed, by special appearance, a motion to dismiss Todaro’s complaint. PIL’s
Distributors, Inc., to McDonald of PIL dated 8 April 1997. Todaro informed co-defendants, PCPI, PPHI, and Klepzig, filed a separate motion to dismiss. 17 PIL
McDonald that he was willing to extend assistance to the Pioneer asserted that the trial court has no jurisdiction over PIL because PIL is a foreign
representative from Queensland. The tenor of the letter revealed that Todaro corporation not doing business in the Philippines. PIL also questioned the
had not yet occupied his expected position. service of summons on it. Assuming arguendo that Klepzig is PIL’s agent in the
Annex "H"15 shows Klepzig’s letter, under the letterhead of PPHI, to Todaro Philippines, it was not Klepzig but De Leon who received the summons for PIL.
dated 18 September 1997. Klepzig’s message reads: PIL further stated that the National Labor Relations Commission (NLRC), and
It has not proven possible for this company to meet with your expectations not the trial court, has jurisdiction over the subject matter of the action. It
regarding the conditions of your providing Pioneer with consultancy services. claimed that assuming that the trial court has jurisdiction over the subject
This, and your refusal to consider my terms of offer of permanent matter of the action, the complaint should be dismissed on the ground
employment, leave me no alternative but to withdraw these offers of of forum non-conveniens. Finally, PIL maintained that the complaint does not
employment with this company. state a cause of action because there was no perfected contract, and no
As you provided services under your previous agreement with our Pioneer personal judgment could be rendered by the trial court against PIL because PIL
Hong Kong office during the month of August, I will see that they pay you at is a foreign corporation not doing business in the Philippines and there was
the previous rates until the end of August. They have authorized me on behalf improper service of summons on PIL.
of Pioneer International Ltd. to formally advise you that the agreement will Todaro filed a Consolidated Opposition dated 26 August 1998 to refute PIL’s
cease from August 31stas per our previous discussions. assertions. PIL filed, still by special appearance, a Reply on 2 October 1998.
Annex "I"16 shows the letter dated 20 October 1997 of K.M. Folwell (Folwell), The Ruling of the Trial Court
PIL’s Executive General Manager of Australia and Asia, to Todaro. Folwell On 4 January 1999, the trial court issued an order 18 which ruled in favor of
confirmed the contents of Klepzig’s 18 September 1997 letter. Folwell’s Todaro. The trial court denied the motions to dismiss filed by PIL, PCPI, PPHI,
message reads: and Klepzig.
The trial court stated that the merits of a motion to dismiss a complaint for
lack of cause of action are tested on the strength of the allegation of facts in
the complaint. The trial court found that the allegations in the complaint A.1. [PIL] is a foreign corporation "not doing business" in the Philippines.
sufficiently establish a cause of action. The trial court declared that Todaro’s A.2. Moreover, the complaint does not contain appropriate allegations of
cause of action is based on an alleged breach of a contractual obligation and ultimate facts showing that [PIL] is doing or transacting business in the
an alleged violation of Articles 19 and 21 of the Civil Code. Therefore, the Philippines.
cause of action does not lie within the jurisdiction of the NLRC but with the A.3. Assuming arguendo that jurisdiction may be acquired over the person of
trial court. [PIL], [the trial court] still failed to acquire jurisdiction since summons was
The trial court also asserted its jurisdiction over PIL, holding that PIL did improperly served on [PIL].
business in the Philippines when it entered into a contract with Todaro. B. [Todaro] does not have a cause of action and the complaint fails to state a
Although PIL questions the service of summons on Klepzig, whom PIL claims is cause of action. Jurisprudence is settled in that in resolving a motion to
not its agent, the trial court ruled that PIL failed to adduce evidence to prove dismiss, a court can consider all the pleadings filed in the case, including
its contention. Finally, on the issue of forum non-conveniens, the trial court annexes, motions and all evidence on record.
found that it is more convenient to hear and decide the case in the Philippines C. [The trial court] did not and cannot acquire jurisdiction over the subject
because Todaro resides in the Philippines and the contract allegedly breached matter of the complaint since the allegations contained therein indubitably
involves employment in the Philippines. show that [Todaro] bases his claims on an alleged breach of an employment
PIL filed an urgent omnibus motion for the reconsideration of the trial court’s contract. Thus, exclusive jurisdiction is vested with the [NLRC].
4 January 1999 order and for the deferment of filing its answer. PCPI, PPHI, D. Pursuant to the principle of forum non-conveniens, [the trial court]
and Klepzig likewise filed an urgent omnibus motion. Todaro filed a committed grave abuse of discretion when it took cognizance of the case. 22
consolidated opposition, to which PIL, PCPI, PPHI, and Klepzig filed a joint The Ruling of the Court
reply. The trial court issued an order19on 3 June 1999 denying the motions of The petition has partial merit. We affirm with modification the rulings of the
PIL, PCPI, PPHI, and Klepzig. The trial court gave PIL, PCPI, PPHI, and Klepzig 15 trial and appellate courts. Apart from the issue on service of summons, the
days within which to file their respective answers. rulings of the trial and appellate courts on the issues raised by PIL are correct.
PIL did not file an answer before the trial court and instead filed a petition for Cause of Action
certiorari before the appellate court. Section 2, Rule 2 of the 1997 Rules of Civil Procedure states that a cause of
The Ruling of the Appellate Court action is the act or omission by which a party violates a right of another.
The appellate court denied PIL’s petition and affirmed the trial court’s ruling in The general rule is that the allegations in a complaint are sufficient to
toto. The dispositive portion of the appellate court’s decision reads: constitute a cause of action against the defendants if, admitting the facts
WHEREFORE, premises considered, the present petition for certiorari is hereby alleged, the court can render a valid judgment upon the same in accordance
DENIED DUE COURSE and accordingly DISMISSED. The assailed Orders dated with the prayer therein. A cause of action exists if the following elements are
January 4, 1999 and June 3, 1999 of the Regional Trial Court of Makati City, present, namely: (1) a right in favor of the plaintiff by whatever means and
Branch 147, in Civil Case No, 98-124 are hereby AFFIRMED in toto. under whatever law it arises or is created; (2) an obligation on the part of the
SO ORDERED.20 named defendant to respect or not to violate such right; and (3) an act or
On 14 January 2003, the appellate court dismissed 21 PIL’s motion for omission on the part of such defendant violative of the right of the plaintiff or
reconsideration for lack of merit. The appellate court stated that PIL’s motion constituting a breach of the obligation of the defendant to the plaintiff for
raised no new substantial or weighty arguments that could impel the appellate which the latter may maintain an action for recovery of damages. 23
court from departing or overturning its previous decision. PIL then filed a In the present case, the summary of Todaro’s allegations states that PIL, PCPI,
petition for review on certiorari before this Court. PPHI, McDonald, and Klepzig did not fulfill their contractual obligation to
The Issues employ Todaro on a permanent basis in PIL’s Philippine office. Todaro’s
PIL raised the following issues before this Court: allegations are thus sufficient to establish a cause of action. We quote with
A. [The trial court] did not and cannot acquire jurisdiction over the person of approval the trial court’s ruling on this matter:
[PIL] considering that:
On the issue of lack of cause of action – It is well-settled that the merits of a The doctrine of forum non-conveniens requires an examination of the
motion to dismiss a complaint for lack of cause of action is tested on the truthfulness of the allegations in the complaint. Section 1, Rule 16 of the 1997
strength of the allegations of fact contained in the complaint and no other (De Rules of Civil Procedure does not mention forum non-conveniens as a ground
Jesus, et al. vs. Belarmino, et al., 95 Phil. 366 [1954]). This Court finds that the for filing a motion to dismiss. The propriety of dismissing a case based
allegations of the complaint, specifically paragraphs 13-33 thereof, paragraphs on forum non-conveniens requires a factual determination; hence, it is more
30-33 alleging as follows: properly considered a matter of defense. While it is within the discretion of
"30. All of the acts set forth in the foregoing have been done with the the trial court to abstain from assuming jurisdiction on this ground, the trial
knowledge, consent and/or approval of the defendants who acted in concert court should do so only after vital facts are established to determine whether
and/or in conspiracy with one another. special circumstances require the court’s desistance. 25
31. Under the circumstances, there is a valid contract entered into between Jurisdiction over PIL
[Todaro] and the Pioneer Group, whereby, among others, the Pioneer Group PIL questions the trial court’s exercise of jurisdiction over it on two levels.
would employ [Todaro], on a permanent basis, to manage and operate the First, that PIL is a foreign corporation not doing business in the Philippines and
ready-mix concrete operations, if the Pioneer Group decides to invest in the because of this, the service of summons on PIL did not follow the mandated
Philippines. procedure. Second, that Todaro’s claims are based on an alleged breach of an
32. The Pioneer Group has decided to invest in the Philippines. The refusal of employment contract so Todaro should have filed his complaint before the
the defendants to comply with the Pioneer Group’s undertaking to employ NLRC and not before the trial court.
[Todaro] to manage their Philippine ready-mix operations, on a permanent Transacting Business in the Philippines and
basis, is a direct breach of an obligation under a valid and perfected contract. Service of Summons
33. Alternatively, assuming without conceding, that there was no contractual The first level has two sub-issues: PIL’s transaction of business in the
obligation on the part of the Pioneer Group to employ [Todaro] on a Philippines and the service of summons on PIL. Section 12, Rule 14 of the 1997
permanent basis, in their Philippine operations, the Pioneer Group and the Rules of Civil Procedure provides the manner by which summons may be
other defendants did not act with justice, give [Todaro] his due and observe served upon a foreign juridical entity which has transacted business in the
honesty and good faith and/or they have willfully caused injury to [Todaro] in Philippines. Thus:
a manner that is contrary to morals, good customs, and public policy, as Service upon foreign private juridical entity. — When the defendant is a
mandated under Arts. 19 and 21 of the New Civil Code." foreign juridical entity which has transacted business in the Philippines, service
sufficiently establish a cause of action for breach of contract and/or violation may be made on its resident agent designated in accordance with law for that
of Articles 19 and 21 of the New Civil Code. Whether or not these allegations purpose, or, if there be no such agent, on the government official designated
are true is immaterial for the court cannot inquire into the truth thereof, the by law to that effect, or any of its officers or agents within the Philippines.
test being whether, given the allegations of fact in the complaint, a valid As to the first sub-issue, PIL insists that its sole act of "transacting" or "doing
judgment could be rendered in accordance with the prayer in the complaint. 24 business" in the Philippines consisted of its investment in PPHI. Under
It should be emphasized that the presence of a cause of action rests on the Philippine law, PIL’s mere investment in PPHI does not constitute "doing
sufficiency, and not on the veracity, of the allegations in the complaint. The business." However, we affirm the lower courts’ ruling and declare that, based
veracity of the allegations will have to be examined during the trial on the on the allegations in Todaro’s complaint, PIL was doing business in the
merits. In resolving a motion to dismiss based on lack of cause of action, the Philippines when it negotiated Todaro’s employment with PPHI. Section 3(d) of
trial court is limited to the four corners of the complaint and its annexes. It is Republic Act No. 7042, Foreign Investments Act of 1991, states:
not yet necessary for the trial court to examine the truthfulness of the The phrase "doing business"  shall include soliciting orders, service contracts,
allegations in the complaint. Such examination is proper during the trial on the opening offices, whether called "liaison" offices or branches; appointing
merits. representatives or distributors domiciled in the Philippines or who in any
Forum Non-Conveniens 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 and distinct personalities, managements, and operations. The various Pioneer
Philippines; and any other act or acts that imply a continuity of commercial corporations were all working in concert to negotiate an employment contract
dealings or arrangements and contemplate to that extent the performance between Todaro and PPHI, a domestic corporation.
of acts or works, or the exercise of some of the functions normally incident Finally, the phrase "doing business in the Philippines" in the former version of
to, and in progressive prosecution of commercial gain or of the purpose and Section 12, Rule 14 now reads "has transacted business in the Philippines."
object of the business organization: Provided, however, That the phrase The scope is thus broader in that it is enough for the application of the Rule
"doing business" shall not be deemed to include mere investment as a that the foreign private juridical entity "has transacted business in the
shareholder by a foreign entity in domestic corporations duly registered to do Philippines."26
business, and/or the exercise of rights as such investor; nor having a nominee As to the second sub-issue, the purpose of summons is not only to acquire
director or officer to represent its interests in such corporation; nor appointing jurisdiction over the person of the defendant, but also to give notice to the
a representative or distributor domiciled in the Philippines which transacts defendant that an action has been commenced against it and to afford it an
business in its own name and for its own account; (Emphases added) opportunity to be heard on the claim made against it. The requirements of the
PIL’s alleged acts in actively negotiating to employ Todaro to run its pre-mixed rule on summons must be strictly followed; otherwise, the trial court will not
concrete operations in the Philippines, which acts are hypothetically admitted acquire jurisdiction over the defendant.
in PIL’s motion to dismiss, are not mere acts of a passive investor in a domestic When summons is to be served on a natural person, service of summons
corporation. Such are managerial and operational acts in directing and should be made in person on the defendant. 27 Substituted service is resorted
establishing commercial operations in the Philippines. The annexes that to only upon the concurrence of two requisites: (1) when the defendant
Todaro attached to his complaint give us an idea on the extent of PIL’s cannot be served personally within a reasonable time and (2) when there is
involvement in the negotiations regarding Todaro’s employment. In Annex "E," impossibility of prompt service as shown by the statement in the proof of
McDonald of Pioneer Concrete Group HK confirmed his offer to engage Todaro service in the efforts made to find the defendant personally and that such
as a consultant of PIL. In Annex "F," Todaro accepted the consultancy. In efforts failed.28
Annex "H," Klepzig of PPHI stated that PIL authorized him to tell Todaro about The statutory requirements of substituted service must be followed strictly,
the cessation of his consultancy. Finally, in Annex "I," Folwell of PIL wrote to faithfully, and fully, and any substituted service other than by the statute is
Todaro to confirm that "Pioneer" no longer wishes to be associated with considered ineffective. Substituted service is in derogation of the usual
Todaro and that Klepzig is authorized to terminate this association. Folwell method of service. It is a method extraordinary in character and may be used
further referred to a Dr. Schubert and to Pioneer Hong Kong. These only as prescribed and in the circumstances authorized by the statute. 29 The
confirmations and references tell us that, in this instance, the various officers need for strict compliance with the requirements of the rule on summons is
and companies under the Pioneer brand name do not work independently of also exemplified in the exclusive enumeration of the agents of a domestic
each other. It cannot be denied that PIL had knowledge of and even private juridical entity who are authorized to receive summons.
authorized the non-implementation of Todaro’s alleged permanent At present, Section 11 of Rule 14 provides that when the defendant is a
employment. In fact, in the letters to Todaro, the word "Pioneer" was used to domestic private juridical entity, service may be made on the "president,
refer not just to PIL alone but also to all corporations negotiating with Todaro managing partner, general manager, corporate secretary, treasurer, or in-
under the Pioneer name. house counsel." The previous version of Section 11 allowed for the service of
As further proof of the interconnection of the various Pioneer corporations summons on the "president, manager, secretary, cashier, agent, or any of its
with regard to their negotiations with Todaro, McDonald of Pioneer Concrete directors." The present Section 11 qualified "manager" to "general manager"
Group HK confirmed Todaro’s engagement as consultant of PIL (Annex "E") and "secretary" to "corporate secretary." The present Section 11 also removed
while Folwell of PIL stated that Todaro rendered consultancy services to "cashier, agent, or any of its directors" from the exclusive enumeration.
Pioneer HK (Annex "I"). In this sense, the various Pioneer corporations were When summons is served on a foreign juridical entity, there are three
not acting as separate corporations. The behavior of the various Pioneer prescribed ways: (1) service on its resident agent designated in accordance
corporations shoots down their defense that the corporations have separate with law for that purpose, (2) service on the government official designated by
law to receive summons if the corporation does not have a resident agent, and Todaro’s employment in the Philippines would not be with PIL but with PPHI
(3) service on any of the corporation’s officers or agents within the as stated in the 20 October 1997 letter of Folwell. Assuming the existence of
Philippines.30 the employment agreement, the employer-employee relationship would be
In the present case, service of summons on PIL failed to follow any of the between PPHI and Todaro, not between PIL and Todaro. PIL’s liability for the
prescribed processes. PIL had no resident agent in the Philippines. Summons non-implementation of the alleged employment agreement is a civil dispute
was not served on the Securities and Exchange Commission (SEC), the properly belonging to the regular courts. Todaro’s causes of action as stated in
designated government agency,31 since PIL is not registered with the SEC. his complaint are, in addition to breach of contract, based on "violation of
Summons for PIL was served on De Leon, Klepzig’s Executive Assistant. Klepzig Articles 19 and 21 of the New Civil Code" for the "clear and evident bad faith
is PIL’s "agent within the Philippines" because PIL authorized Klepzig to notify and malice"35 on the part of defendants. The NLRC’s jurisdiction is limited to
Todaro of the cessation of his consultancy (Annexes "H" and "I"). 32 The those enumerated under Article 217 of the Labor Code. 36
authority given by PIL to Klepzig to notify Todaro implies that Klepzig was WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated 27
likewise authorized to receive Todaro’s response to PIL’s notice. Todaro September 2001 and the Resolution dated 14 January 2003 of the appellate
responded to PIL’s notice by filing a complaint before the trial court. court are AFFIRMED with the MODIFICATION that there was improper service
However, summons was not served personally on Klepzig as agent of PIL. of summons on Pioneer International, Ltd. The case is remanded to the trial
Instead, summons was served on De Leon, Klepzig’s Executive Assistant. In this court for proper service of summons and trial. No costs.
instance, De Leon was not PIL’s agent but a mere employee of Klepzig. In SO ORDERED.
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
KAZUHIRO HASEGAWA and NIPPON ENGINEERING G.R. No. 149177 of the Bongabon-Baler Road Improvement (BBRI) Project. [7] Respondent was
CONSULTANTS CO., LTD.,   named as the project manager in the contract's Appendix 3.1. [8]
Petitioners, Present:  
    On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general
  YNARES-SANTIAGO, manager for its International Division, informed respondent that the company
  Chairperson, had no more intention of automatically renewing his ICA. His services would
- versus - AUSTRIA-MARTINEZ, be engaged by the company only up to the substantial completion of the STAR
  CHICO-NAZARIO, Project on March 31, 2000, just in time for the ICA's expiry.[9]
  NACHURA, and  
  REYES, JJ. Threatened with impending unemployment, respondent, through his lawyer,
    requested a negotiation conference and demanded that he be assigned to the
MINORU KITAMURA, Promulgated: BBRI project. Nipponinsisted that respondents contract was for a fixed term
Respondent.   that had already expired, and refused to negotiate for the renewal of the ICA.
  November 23, 2007 [10]
x------------------------------------------------------------------------------------x As he was not able to generate a positive response from the petitioners,
  respondent consequently initiated on June 1, 2000 Civil Case No. 00-0264 for
  specific performance and damages with the Regional Trial Court of Lipa City.[11]
  For their part, petitioners, contending that the ICA had been perfected
NACHURA, J.: in Japan and executed by and between Japanese nationals, moved to dismiss
Before the Court is a petition for review on certiorari  under Rule 45 of the the complaint for lack of jurisdiction. They asserted that the claim for
Rules of Court assailing the April 18, 2001 Decision [1] of the Court of Appeals improper pre-termination of respondent's ICA could only be heard and
(CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution  denying the ventilated in the proper courts of Japan following the principles of lex loci
motion for reconsideration thereof. celebrationis  and lex contractus.[12]
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. In the meantime, on June 20, 2000, the DPWH approved Nippon's request for
(Nippon), a Japanese consultancy firm providing technical and management the replacement of Kitamura by a certain Y. Kotake as project manager of the
support in the infrastructure projects of foreign governments, [3] entered into BBRI Project.[13]
an Independent Contractor Agreement (ICA) with respondent Minoru  
Kitamura, a Japanese national permanently residing in the Philippines. [4] The On June 29, 2000, the RTC, invoking our ruling in Insular Government v.
agreement provides that respondent was to extend professional services Frank[14] that matters connected with the performance of contracts are
to Nippon for a year starting on April 1, 1999.[5] Nippon then assigned regulated by the law prevailing at the place of performance, [15] denied the
respondent to work as the project manager of the Southern Tagalog Access motion to dismiss.[16] The trial court subsequently denied petitioners' motion
Road (STAR) Project in the Philippines, following the company's consultancy for reconsideration,[17] prompting them to file with the appellate court,
contract with the Philippine Government. [6] on August 14, 2000, their first Petition for Certiorari under Rule 65 [docketed
  as CA-G.R. SP No. 60205].[18] On August 23, 2000, the CA resolved to dismiss
When the STAR Project was near completion, the Department of Public Works the petition on procedural groundsfor lack of statement of material dates and
and Highways (DPWH) engaged the consultancy services of Nippon, on January for insufficient verification and certification against forum shopping. [19] An
28, 2000, this time for the detailed engineering and construction supervision
Entry of Judgment was later issued by the appellate court on September 20, performance and damages involving contracts executed outside the country
2000.[20] by foreign nationals may be assailed on the principles of lex loci
  celebrationis, lex contractus, the state of the most significant relationship rule,
Aggrieved by this development, petitioners filed with the CA, on September or forum non conveniens.
19, 2000, still within the reglementary period, a second Petition  
for Certiorari  under Rule 65 already stating therein the material dates and However, before ruling on this issue, we must first dispose of the procedural
attaching thereto the proper verification and certification. This second matters raised by the respondent.
petition, which substantially raised the same issues as those in the first, was  
docketed as CA-G.R. SP No. 60827.[21] Kitamura contends that the finality of the appellate court's decision in CA-G.R.
  SP No. 60205 has already barred the filing of the second petition docketed as
Ruling on the merits of the second petition, the appellate court rendered the CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the
assailed April 18, 2001 Decision[22] finding no grave abuse of discretion in the first one) and the instant petition for review thereof.
trial court's denial of the motion to dismiss. The CA ruled, among others, that  
the principle of lex loci celebrationis was not applicable to the case, because We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of
nowhere in the pleadings was the validity of the written agreement put in the petition's defective certification of non-forum shopping, it was a dismissal
issue. The CA thus declared that the trial court was correct in applying instead without prejudice.[27] The same holds true in the CA's dismissal of the said case
the principle of lex loci solutionis.[23] due to defects in the formal requirement of verification [28] and in the other
  requirement in Rule 46 of the Rules of Court on the statement of the material
Petitioners' motion for reconsideration was subsequently denied by the CA in dates.[29] The dismissal being without prejudice, petitioners can re-file the
the assailed July 25, 2001 Resolution.[24] petition, or file a second petition attaching thereto the appropriate verification
  and certificationas they, in fact didand stating therein the material dates,
Remaining steadfast in their stance despite the series of denials, petitioners within the prescribed period[30] in Section 4, Rule 65 of the said Rules. [31]
instituted the instant Petition for Review on Certiorari[25]  imputing the  
following errors to the appellate court: The dismissal of a case without prejudice signifies the absence of a decision on
  the merits and leaves the parties free to litigate the matter in a subsequent
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT action as though the dismissed action had not been commenced. In other
THE TRIAL COURT VALIDLY EXERCISED JURISDICTION OVER THE INSTANT words, the termination of a case not on the merits does not bar another action
CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER OF involving the same parties, on the same subject matter and theory. [32]
JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND Necessarily, because the said dismissal is without prejudice and has no res
EXECUTED IN TOKYO, JAPAN. judicata  effect, and even if petitioners still indicated in the verification and
  certification of the second certiorari  petition that the first had already been
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING dismissed on procedural grounds,[33] petitioners are no longer required by the
THE NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE OF LEX LOCI Rules to indicate in their certification of non-forum shopping in the instant
SOLUTIONIS IN THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE petition for review of the second certiorari petition, the status of the aforesaid
INTERNATIONAL LAWS.[26] first petition before the CA. In any case, an omission in the certificate of non-
  forum shopping about any event that will not
  constitute res judicata  and litis pendentia,  as in the present case, is not a fatal
The pivotal question that this Court is called upon to resolve is whether the defect. It will not warrant the dismissal and nullification of the entire
subject matter jurisdiction of Philippine courts in civil cases for specific
proceedings, considering that the evils sought to be prevented by the said and cannot be the subject of the extraordinary petition for certiorari or manda
certificate are no longer present.[34] mus.  The appropriate recourse is to file an answer and to interpose as
  defenses the objections raised in the motion, to proceed to trial, and, in case
The Court also finds no merit in respondent's contention that petitioner of an adverse decision, to elevate the entire case by appeal in due course.
Hasegawa is only authorized to verify and certify, on behalf of Nippon,  While there are recognized exceptions to this rule, [45] petitioners' case does
the certiorari  petition filed with the CA and not the instant petition. True, the not fall among them.
Authorization[35] dated September 4, 2000, which is attached to the  
second certiorari  petition and which is also attached to the instant petition for This brings us to the discussion of the substantive issue of the case.
review, is limited in scopeits wordings indicate that Hasegawa is given the  
authority to sign for and act on behalf of the company only in the petition filed Asserting that the RTC of Lipa City is an inconvenient forum, petitioners
with the appellate court, and that authority cannot extend to the instant question its jurisdiction to hear and resolve the civil case for specific
petition for review.[36] In a plethora of cases, however, this Court has liberally performance and damages filed by the respondent. The ICA subject of the
applied the Rules or even suspended its application whenever a satisfactory litigation was entered into and perfected in Tokyo, Japan, by Japanese
explanation and a subsequent fulfillment of the requirements have been nationals, and written wholly in the Japanese language. Thus, petitioners posit
made.[37] Given that petitioners herein sufficiently explained their misgivings that local courts have no substantial relationship to the parties [46] following the
on this point and appended to their Reply [38] an updated Authorization[39] for [state of the] most significant relationship rule in Private International Law. [47]
Hasegawa to act on behalf of the company in the instant petition, the Court  
finds the same as sufficient compliance with the Rules. The Court notes that petitioners adopted an additional but different theory
  when they elevated the case to the appellate court. In the Motion to
However, the Court cannot extend the same liberal treatment to the defect in Dismiss[48] filed with the trial court, petitioners never contended that the RTC is
the verification and certification. As respondent pointed out, and to which we an inconvenient forum. They merely argued that the applicable law which will
agree, Hasegawa is truly not authorized to act on behalf of Nippon in this case. determine the validity or invalidity of respondent's claim is that of Japan,
The aforesaid September 4, 2000 Authorization and even the subsequent following the principles of lex loci celebrationis and lex contractus.[49] While not
August 17, 2001 Authorization were issued only by Nippon's president and abandoning this stance in their petition before the appellate court, petitioners
chief executive officer, not by the company's board of directors. In not a few on certiorari  significantly invoked the defense of forum non conveniens.[50] On
cases, we have ruled that corporate powers are exercised by the board of petition for review before this Court, petitioners dropped their other
directors; thus, no person, not even its officers, can bind the corporation, in arguments, maintained the forum non conveniens  defense, and introduced
the absence of authority from the board. [40] Considering that Hasegawa their new argument that the applicable principle is the [state of the] most
verified and certified the petition only on his behalf and not on behalf of the significant relationship rule.[51]
other petitioner, the petition has to be denied pursuant to Loquias v. Office of  
the Ombudsman.[41] Substantial compliance will not suffice in a matter that Be that as it may, this Court is not inclined to deny this petition merely on the
demands strict observance of the Rules. [42] While technical rules of procedure basis of the change in theory, as explained in Philippine Ports Authority v. City
are designed not to frustrate the ends of justice, nonetheless, they are of Iloilo.[52] We only pointed out petitioners' inconstancy in their arguments to
intended to effect the proper and orderly disposition of cases and effectively emphasize their incorrect assertion of conflict of laws principles.
prevent the clogging of court dockets. [43]  
  To elucidate, in the judicial resolution of conflicts problems, three consecutive
Further, the Court has observed that petitioners incorrectly filed a Rule 65 phases are involved: jurisdiction, choice of law, and recognition and
petition  to question the trial court's denial of their motion to dismiss. It is a enforcement of judgments. Corresponding to these phases are the following
well-established rule that an order denying a motion to dismiss is questions: (1) Where can or should litigation be initiated? (2) Which law will
interlocutory, the court apply? and (3) Where can the resulting judgment be enforced? [53]
  The Court finds the invocation of these grounds unsound.
Analytically, jurisdiction and choice of law are two distinct concepts. Lex loci celebrationis relates to the law of the place of the ceremony [63] or the
 Jurisdiction considers whether it is fair to cause a defendant to travel to this law of the place where a contract is made. [64] The doctrine of lex
state; choice of law asks the further question whether the application of a contractus or lex loci contractus  means the law of the place where a contract
substantive law which will determine the merits of the case is fair to both is executed or to be performed.[65] It controls the nature, construction, and
parties. The power to exercise jurisdiction does not automatically give a state validity of the contract[66] and it may pertain to the law voluntarily agreed upon
constitutional authority to apply forum law. While jurisdiction and the choice by the parties or the law intended by them either expressly or implicitly.
of the lex fori  will often coincide, the minimum contacts for one do not always Under the state of the most significant relationship rule, to ascertain what
provide the necessary significant contacts for the other. [55] The question of state law to apply to a dispute, the court should determine which state has the
whether the law of a state can be applied to a transaction is different from the most substantial connection to the occurrence and the parties. In a case
question of whether the courts of that state have jurisdiction to enter a involving a contract, the court should consider where the contract was made,
judgment.[56] was negotiated, was to be performed, and the domicile, place of business, or
  place of incorporation of the parties.[68] This rule takes into account several
In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, contacts and evaluates them according to their relative importance with
has various aspects. For a court to validly exercise its power to adjudicate a respect to the particular issue to be resolved. [69]
controversy, it must have jurisdiction over the plaintiff or the petitioner, over  
the defendant or the respondent, over the subject matter, over the issues of Since these three principles in conflict of laws make reference to the law
the case and, in cases involving property, over the res or the thing which is the applicable to a dispute, they are rules proper for the second phase, the choice
subject of the litigation.[57] In assailing the trial court's jurisdiction herein, of law.[70] They determine which state's law is to be applied in resolving the
petitioners are actually referring to subject matter jurisdiction. substantive issues of a conflicts problem.[71] Necessarily, as the only issue in
  this case is that of jurisdiction, choice-of-law rules are not only inapplicable
Jurisdiction over the subject matter in a judicial proceeding is conferred by the but also not yet called for.
sovereign authority which establishes and organizes the court. It is given only  
by law and in the manner prescribed by law. [58] It is further determined by the Further, petitioners' premature invocation of choice-of-law rules is exposed by
allegations of the complaint irrespective of whether the plaintiff is entitled to the fact that they have not yet pointed out any conflict between the laws
all or some of the claims asserted therein. [59] To succeed in its motion for the of Japan and ours. Before determining which law should apply, first there
dismissal of an action for lack of jurisdiction over the subject matter of the should exist a conflict of laws situation requiring the application of the conflict
claim,[60] the movant must show that the court or tribunal cannot act on the of laws rules.[72] Also, when the law of a foreign country is invoked to provide
matter submitted to it because no law grants it the power to adjudicate the the proper rules for the solution of a case, the existence of such law must be
claims.[61] pleaded and proved.[73]
In the instant case, petitioners, in their motion to dismiss, do not claim that It should be noted that when a conflicts case, one involving a foreign element,
the trial court is not properly vested by law with jurisdiction to hear the is brought before a court or administrative agency, there are three alternatives
subject controversy for, indeed, Civil Case No. 00-0264 for specific open to the latter in disposing of it: (1) dismiss the case, either because of lack
performance and damages is one not capable of pecuniary estimation and is of jurisdiction or refusal to assume jurisdiction over the case; (2) assume
properly cognizable by the RTC of Lipa City. [62] What they rather raise as jurisdiction over the case and apply the internal law of the forum; or (3)
grounds to question subject matter jurisdiction are the principles of lex loci assume jurisdiction over the case and take into account or apply the law of
celebrationis and lex contractus,  and the state of the most significant some other State or States.[74] The courts power to hear cases and
relationship rule. controversies is derived from the Constitution and the laws. While it may
  choose to recognize laws of foreign nations, the court is not limited by foreign
sovereign law short of treaties or other formal agreements, even in matters
regarding rights provided by foreign sovereigns. [75]

Neither can the other ground raised, forum non conveniens,[76] be used to

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

Accordingly, since the RTC is vested by law with the power to entertain and
hear the civil case filed by respondent and the grounds raised by petitioners to
assail that jurisdiction are inappropriate, the trial and appellate courts
correctly denied the petitioners motion to dismiss.
WHEREFORE, premises considered, the petition for review
on certiorari is DENIED.

G.R. No. 162894             February 26, 2008 averred that BMSI and RUST as well as petitioner itself had combined and
RAYTHEON INTERNATIONAL, INC., petitioner,  functioned as one company.
vs. In its Answer,8 petitioner alleged that contrary to respondent’s claim, it was a
STOCKTON W. ROUZIE, JR., respondent. foreign corporation duly licensed to do business in the Philippines and denied
DECISION entering into any arrangement with respondent or paying the latter any sum
TINGA, J.: of money. Petitioner also denied combining with BMSI and RUST for the
Before this Court is a petition for review on certiorari under Rule 45 of the purpose of assuming the alleged obligation of the said companies. 9 Petitioner
1997 Rules of Civil Procedure which seeks the reversal of the Decision 1 and also referred to the NLRC decision which disclosed that per the written
Resolution2 of the Court of Appeals in CA-G.R. SP No. 67001 and the dismissal agreement between respondent and BMSI and RUST, denominated as "Special
of the civil case filed by respondent against petitioner with the trial court. Sales Representative Agreement," the rights and obligations of the parties
As culled from the records of the case, the following antecedents appear: shall be governed by the laws of the State of Connecticut. 10 Petitioner sought
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly the dismissal of the complaint on grounds of failure to state a cause of action
organized and existing under the laws of the State of Connecticut, United and forum non conveniens and prayed for damages by way of compulsory
States of America, and respondent Stockton W. Rouzie, Jr., an American counterclaim.11
citizen, entered into a contract whereby BMSI hired respondent as its On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing
representative to negotiate the sale of services in several government projects Based on Affirmative Defenses and for Summary Judgment 12 seeking the
in the Philippines for an agreed remuneration of 10% of the gross receipts. On dismissal of the complaint on grounds of forum non conveniens and failure to
11 March 1992, respondent secured a service contract with the Republic of state a cause of action. Respondent opposed the same. Pending the resolution
the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. of the omnibus motion, the deposition of Walter Browning was taken before
Pinatubo eruption and mudflows.3 the Philippine Consulate General in Chicago. 13
On 16 July 1994, respondent filed before the Arbitration Branch of the In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus
National Labor Relations Commission (NLRC) a suit against BMSI and Rust motion. The trial court held that the factual allegations in the complaint,
International, Inc. (RUST), Rodney C. Gilbert and Walter G. Browning for assuming the same to be admitted, were sufficient for the trial court to render
alleged nonpayment of commissions, illegal termination and breach of a valid judgment thereon. It also ruled that the principle of forum non
employment contract.4 On 28 September 1995, Labor Arbiter Pablo C. Espiritu, conveniens was inapplicable because the trial court could enforce judgment on
Jr. rendered judgment ordering BMSI and RUST to pay respondent’s money petitioner, it being a foreign corporation licensed to do business in the
claims.5 Upon appeal by BMSI, the NLRC reversed the decision of the Labor Philippines.15
Arbiter and dismissed respondent’s complaint on the ground of lack of Petitioner filed a Motion for Reconsideration16 of the order, which motion was
jurisdiction.6 Respondent elevated the case to this Court but was dismissed in opposed by respondent.17 In an Order dated 31 July 2001,18 the trial court
a Resolution dated 26 November 1997. The Resolution became final and denied petitioner’s motion. Thus, it filed a Rule 65 Petition 19 with the Court of
executory on 09 November 1998. Appeals praying for the issuance of a writ of certiorari and a writ of injunction
On 8 January 1999, respondent, then a resident of La Union, instituted an to set aside the twin orders of the trial court dated 13 September 2000 and 31
action for damages before the Regional Trial Court (RTC) of Bauang, La Union. July 2001 and to enjoin the trial court from conducting further proceedings. 20
The Complaint,7 docketed as Civil Case No. 1192-BG, named as defendants On 28 August 2003, the Court of Appeals rendered the assailed
herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the Decision21 denying the petition for certiorari for lack of merit. It also denied
two corporations impleaded in the earlier labor case. The complaint essentially petitioner’s motion for reconsideration in the assailed Resolution issued on 10
reiterated the allegations in the labor case that BMSI verbally employed March 2004.22
respondent to negotiate the sale of services in government projects and that The appellate court held that although the trial court should not have confined
respondent was not paid the commissions due him from the Pinatubo itself to the allegations in the complaint and should have also considered
dredging project which he secured on behalf of BMSI. The complaint also evidence aliunde in resolving petitioner’s omnibus motion, it found the
evidence presented by petitioner, that is, the deposition of Walter Browning, make an intelligent decision as to the law and the facts; and (3) that the
insufficient for purposes of determining whether the complaint failed to state Philippine Court has or is likely to have the power to enforce its decision. 28
a cause of action. The appellate court also stated that it could not rule one On the matter of jurisdiction over a conflicts-of-laws problem where the case
way or the other on the issue of whether the corporations, including is filed in a Philippine court and where the court has jurisdiction over the
petitioner, named as defendants in the case had indeed merged together subject matter, the parties and the res, it may or can proceed to try the case
based solely on the evidence presented by respondent. Thus, it held that the even if the rules of conflict-of-laws or the convenience of the parties point to a
issue should be threshed out during trial. 23 Moreover, the appellate court foreign forum. This is an exercise of sovereign prerogative of the country
deferred to the discretion of the trial court when the latter decided not to where the case is filed.29
desist from assuming jurisdiction on the ground of the inapplicability of the Jurisdiction over the nature and subject matter of an action is conferred by the
principle of forum non conveniens. Constitution and the law30 and by the material allegations in the complaint,
Hence, this petition raising the following issues: irrespective of whether or not the plaintiff is entitled to recover all or some of
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS the claims or reliefs sought therein.31 Civil Case No. 1192-BG is an action for
THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST damages arising from an alleged breach of contract. Undoubtedly, the nature
RAYTHEON INTERNATIONAL, INC. of the action and the amount of damages prayed are within the jurisdiction of
THE COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.24 As regards jurisdiction over the parties, the trial court acquired jurisdiction
Incidentally, respondent failed to file a comment despite repeated notices. The over herein respondent (as party plaintiff) upon the filing of the complaint. On
Ceferino Padua Law Office, counsel on record for respondent, manifested that the other hand, jurisdiction over the person of petitioner (as party defendant)
the lawyer handling the case, Atty. Rogelio Karagdag, had severed relations was acquired by its voluntary appearance in court. 32
with the law firm even before the filing of the instant petition and that it could That the subject contract included a stipulation that the same shall be
no longer find the whereabouts of Atty. Karagdag or of respondent despite governed by the laws of the State of Connecticut does not suggest that the
diligent efforts. In a Resolution25 dated 20 November 2006, the Court resolved Philippine courts, or any other foreign tribunal for that matter, are precluded
to dispense with the filing of a comment. from hearing the civil action. Jurisdiction and choice of law are two distinct
The instant petition lacks merit. concepts. Jurisdiction considers whether it is fair to cause a defendant to
Petitioner mainly asserts that the written contract between respondent and travel to this state; choice of law asks the further question whether the
BMSI included a valid choice of law clause, that is, that the contract shall be application of a substantive law which will determine the merits of the case is
governed by the laws of the State of Connecticut. It also mentions the fair to both parties.33 The choice of law stipulation will become relevant only
presence of foreign elements in the dispute – namely, the parties and when the substantive issues of the instant case develop, that is, after hearing
witnesses involved are American corporations and citizens and the evidence to on the merits proceeds before the trial court.
be presented is located outside the Philippines – that renders our local courts Under the doctrine of forum non conveniens, a court, in conflicts-of-laws
inconvenient forums. Petitioner theorizes that the foreign elements of the cases, may refuse impositions on its jurisdiction where it is not the most
dispute necessitate the immediate application of the doctrine of forum non "convenient" or available forum and the parties are not precluded from
conveniens. seeking remedies elsewhere.34 Petitioner’s averments of the foreign elements
Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive in the instant case are not sufficient to oust the trial court of its jurisdiction
phases involved in judicial resolution of conflicts-of-laws problems, namely: over Civil Case No. No. 1192-BG and the parties involved.
jurisdiction, choice of law, and recognition and enforcement of judgments. Moreover, the propriety of dismissing a case based on the principle of forum
Thus, in the instances27 where the Court held that the local judicial machinery non conveniens requires a factual determination; hence, it is more properly
was adequate to resolve controversies with a foreign element, the following considered as a matter of defense. While it is within the discretion of the trial
requisites had to be proved: (1) that the Philippine Court is one to which the court to abstain from assuming jurisdiction on this ground, it should do so only
parties may conveniently resort; (2) that the Philippine Court is in a position to
after vital facts are established, to determine whether special circumstances
require the court’s desistance.35
Finding no grave abuse of discretion on the trial court, the Court of Appeals
respected its conclusion that it can assume jurisdiction over the dispute
notwithstanding its foreign elements. In the same manner, the Court defers to
the sound discretion of the lower courts because their findings are binding on
this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to
state a cause of action against petitioner. Failure to state a cause of action
refers to the insufficiency of allegation in the pleading. 36 As a general rule, the
elementary test for failure to state a cause of action is whether the complaint
alleges facts which if true would justify the relief demanded. 37
The complaint alleged that petitioner had combined with BMSI and RUST to
function as one company. Petitioner contends that the deposition of Walter
Browning rebutted this allegation. On this score, the resolution of the Court of
Appeals is instructive, thus:
x x x Our examination of the deposition of Mr. Walter Browning as well as
other documents produced in the hearing shows that these
evidence aliunde are not quite sufficient for us to mete a ruling that the
complaint fails to state a cause of action.
Annexes "A" to "E" by themselves are not substantial, convincing and
conclusive proofs that Raytheon Engineers and Constructors, Inc. (REC)
assumed the warranty obligations of defendant Rust International in the
Makar Port Project in General Santos City, after Rust International ceased to
exist after being absorbed by REC. Other documents already submitted in
evidence are likewise meager to preponderantly conclude that Raytheon
International, Inc., Rust International[,] Inc. and Brand Marine Service, Inc.
have combined into one company, so much so that Raytheon International,
Inc., the surviving company (if at all) may be held liable for the obligation of
BMSI to respondent Rouzie for unpaid commissions. Neither these documents
clearly speak otherwise.38
As correctly pointed out by the Court of Appeals, the question of whether
petitioner, BMSI and RUST merged together requires the presentation of
further evidence, which only a full-blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The
Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs against petitioner.
G.R. Nos. 178382-83, September 23, 2015
CONTINENTAL MICRONESIA, INC., Petitioner, v. JOSEPH BASSO, Respondent. On January 11, 1996, Basso wrote a counter-proposal 11 to Mr. Schulz regarding
DECISION his employment status in CMI. On March 14, 1996, Basso wrote another letter
JARDELEZA, J.: addressed to Ms. Marty Woodward (Ms. Woodward) of CMI's Human
This is a Petition for Review on Certiorari1 under Rule 45 of the levised Rules of Resources Department inquiring about the status of his employment. 12 On the
Court assailing the Decision2 dated May 23, 2006 and Resolution3 dated June same day, Ms. Woodward responded that pursuant to the employment
19, 2007 of the Court of Appeals in the consolidated cases CA-G.R. SP No. contract dated February 1, 1991, Basso could be terminated at will upon a
83938 and CA-G.R. SP No. 84281. These assailed Decision and Resolution set thirty-day notice. This notice was allegedly the letter Basso received from Mr.
aside the Decision4 dated November 28, 2003 of the National Labor Relations Schulz on December 20, 1995. Ms. Woodward also reminded Basso of the
Commission (NLRC) declaring Joseph Basso's (Basso) dismissal illegal, and telephone conversation between him, Mr. Schulz and Ms. Woodward on
ordering the payment of separation pay as alternative to reinstatement and December 19, 1995, where they informed him of the company's decision to
full backwages until the date of the Decision. relieve him as General Manager. Basso, instead, was offered the position of
The Facts consultant to CMI. Ms. Woodward also informed Basso that CMI rejected his
counter-proposal and, thus, terminated his employment effective January 31,
Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation organized 1996. CMI offered Basso a severance pay, in consideration of the
and existing under the laws of and domiciled in the United States of America Php1,140,000.00 housing advance that CMI promised him. 13
(US). It is licensed to do business in the Philippines. 5 Basso, a US citizen,
resided in the Philippines prior to his death. 6 Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary
Damages against CMI on December 19, 1996. 14 Alleging the presence of
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden), Managing foreign elements, CMI filed a Motion to Dismiss 15 dated February 10, 1997 on
Director-Asia of Continental Airlines, Inc. (Continental), offered Basso the the ground of lack of jurisdiction over the person of CMI and the subject
position of General Manager of the Philippine Branch of Continental. Basso matter of the controversy. In an Order 16 dated August 27, 1997, the Labor
accepted the offer.7 Arbiter granted the Motion to Dismiss. Applying the doctrine of lex loci
contractus, the Labor Arbiter held that the terms and provisions of the
It was not until much later that Mr. Braden, who had since returned to the US, employment contract show that the parties did not intend to apply our Labor
sent Basso the employment contract8 dated February 1, 1991, which Mr. Code (Presidential Decree No. 442). The Labor Arbiter also held that no
Braden had already signed. Basso then signed the employment contract and employer-employee relationship existed between Basso and the branch office
returned it to Mr. Braden as instructed. of CMI in the Philippines, but between Basso and the foreign corporation
On November 7, 1992, CMI took over the Philippine operations of Continental,
with Basso retaining his position as General Manager. 9 On appeal, the NLRC remanded the case to the Labor Arbiter for the
determination of certain facts to settle the issue on jurisdiction. NLRC ruled
On December 20, 1995, Basso received a letter from Mr. Ralph Schulz (Mr. that the issue on whether the principle of lex loci contractusor lex loci
Schulz), who was then CMI's Vice President of Marketing and Sales, informing celebrationis should apply has to be further threshed out. 17
Basso that he has agreed to work in CMI as a consultant on an "as needed Labor Arbiter's Ruling
basis" effective February 1, 1996 to July 31, 1996. The letter also informed
Basso that: (1) he will not receive any monetary compensation but will Labor Arbiter Madjayran H. Ajan in his Decision 18 dated September 24, 1999
continue being covered by the insurance provided by CMI; (2) he will enjoy dismissed the case for lack of merit and jurisdiction.
travel privileges; and (3) CMI will advance Php1,140,000.00 for the payment of
housing lease for 12 months.10 The Labor Arbiter agreed with CMI that the employment contract was xecuted
in the US "since the letter-offer was under the Texas letterhead and the confidence of a managerial employee, such as Basso, mere existence of a basis
acceptance of Complainant was returned there." 19 Thus, applying the doctrine for believing that such employee has breached the trust of his employer
of lex loci celebrationis, US laws apply. Also, applying lex loci contractus, the suffices. However, the NLRC found that CMI denied Basso the required due
Labor Arbiter ruled that the parties did not intend to apply Philippine laws, process notice in his dismissal.26
Although the contract does not state what law shall apply, it is obvious that Both CMI and Basso filed their respective Motions for Reconsideration dated
Philippine laws were not written into it. More specifically, the Philippine law January 15, 200427 and January 8, 2004.28 Both motions were dismissed in
on taxes and the Labor Code were not intended by the parties to apply, separate Resolutions dated March 15, 2004 29 and February 27,
otherwise Par. 7 on the payment by Complainant U.S. Federal and Home State 2004,30 respectively.
income taxes, and Pars. 22/23 on termination by 30-day prior notice, will not
be there. The contract was prepared in contemplation of Texas or U.S. laws Basso filed a Petition for Certiorari dated April 16, 2004 with the Court of
where Par. 7 is required and Pars. 22/23 is allowed. 20 Appeals docketed as CA-G.R. SP No. 83938. 31 Basso imputed grave abuse of
The Labor Arbiter also ruled that Basso was terminated for a valid cause based discretion on the part of the NLRC in ruling that he was validiy dismissed. CMI
on the allegations of CMI that Basso committed a series of acts that constitute filed its own Petition for Certiorari dated May 13, 2004 docketed as CA-G.R. SP
breach of trust and loss of confidence. 21 No. 84281,32 alleging that the NLRC gravely abused its discretion when it
assumed jurisdiction over the person of CMI and the subject matter of the
The Labor Arbiter, however, found CMI to have voluntarily submitted to his case.
office's jurisdiction. CMI participated in the proceedings, submitted evidence
on the merits of the case, and sought affirmative relief through a motion to In its Resolution dated October 7, 2004, the Court of Appeals consolidated the
dismiss.22 two cases33 and ordered the parties to file their respective Memoranda.
NLRC's Ruling The Court of Appeal's Decision

On appeal, the NLRC Third Division promulgated its Decision 23 dated The Court of Appeals promulgated the now assailed Decision 34 dated May 23,
November 28, 2003, the decretal portion of which reads: 2006, the relevant dispositive portion of which reads:
WHEREFORE, the decision dated 24 September 1999 is VACATED and SET WHEREFORE, the petition of Continental docketed as CA-G.R. SP No. 84281
ASIDE. Respondent CMI is ordered to pay complainant the amount of is DENIED DUE COURSE and DISMISSED.
US$5,416.00 for failure to comply with the due notice requirement. The other
claims are dismissed. On the other hand the petition of Basso docketed as CA-G.R. SP No. 83938
is GIVEN DUE COURSE and GRANTED, and accordingly, the assailed Decision
SO ORDERED.24 dated November 28, 2003 and Resolution dated February 27, 2004 of the
The NLRC did not agree with the pronouncement of the Labor Arbiter that his NLRC are SET ASIDE and VACATED. Instead judgment is rendered hereby
office has no jurisdiction over the controversy. It ruled that the Labor Arbiter declaring the dismissal of Basso illegal and ordering Continental to pay him
acquired jurisdiction over the case when CMI voluntarily submitted to his separation pay equivalent to one (1) month pay for every year of service as an
office's jurisdiction by presenting evidence, advancing arguments in support of alternative to reinstatement. Further, ordering Continental to pay Basso his
the legality of its acts, and praying for reliefs on the merits of the full backwages from the date of his said illegal dismissal until date of this
case.25cralawred decision. The claim for moral and exemplary damages as well as attorney's
fees are dismissed.35
On the merits, the NLRC agreed with the Labor Arbiter that Basso was The Court of Appeals ruled that the Labor Arbiter and the NLRC had
dismissed for just and valid causes on the ground of breach of trust and loss of jurisdiction over the subject matter of the case and over the parties. The Court
confidence. The NLRC ruled that under the applicable rules on loss of trust and of Appeals explained that jurisdiction over the subject matter of the action is
determined by the allegations of the complaint and the law. Since the case jointly.
filed by Basso is a termination dispute that is "undoubtedly cognizable by the
labor tribunals", the Labor Arbiter and the NLRC had jurisdiction to rule on the The labor tribunals had jurisdiction over the parties and the subject matter of
merits of the case. On the issue of jurisdiction over he person of the parties, the case.
who are foreigners, the Court of Appeals ruled that jurisdiction over the
person of Basso was acquired when he filed the complaint for illegal dismissal, CMI maintains that there is a conflict-of-laws issue that must be settled to
while jurisdiction over the person of CMI was acquired through coercive determine proper jurisdiction over the parties and the subject matter of the
process of service of summons to its agent in the Philippines. The Court of case. It also alleges that the existence of foreign elements calls or the
Appeals also agreed that the active participation of CMI in the case rendered application of US laws and the doctrines of lex loci celebrationis (the law of the
moot the issue on jurisdiction. place of the ceremony), lex loci contractus (law of the place where a contract
is executed), and lex loci intentionis(the intention of the parties as to the law
On the merits of the case, the Court of Appeals declared that CMI illegally that should govern their agreement). CMI also invokes the application of the
dismissed Basso. The Court of Appeals found that CMI's allegations of loss of rule of forum non conveniens to determine the propriety of the assumption of
trust and confidence were not established. CMI "failed to prove its claim of the jurisdiction by the labor tribunals.
incidents which were its alleged bases for loss of trust or confidence." 36 While
managerial employees can be dismissed for loss of trust and confidence, there We agree with CMI that there is a conflict-of-laws issue that needs to be
must be a basis for such loss, beyond mere whim or caprice. resolved first. Where the facts establish the existence of foreign elements, he
case presents a conflict-of-laws issue.39 The foreign element in a case nay
After the parties filed their Motions for Reconsideration, 37 the Court of appear in different forms, such as in this case, where one of the parties s an
Appeals promulgated Resolution38dated June 19, 2007 denying CMI's motion, alien and the other is domiciled in another state.
while partially granting Basso's as to the computation of backwages.
In Hasegawa v. Kitamura,40 we stated that in the judicial resolution of conflict-
Hence, this petition, which raises the following issues: of-laws problems, three consecutive phases are involved: jurisdiction, choice
I. of law, and recognition and enforcement of judgments. In resolving the
conflicts problem, courts should ask the following questions:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REVIEWING THE 1. "Under the law, do I have jurisdiction over the subject matter and the
II. 2. "If the answer is yes, is this a convenient forum to the parties, in light of the
LABOR ARBITER AND THE NLRC HAD JURISDICTION TO HEAR AND TRY THE 3. "If the answer is yes, what is the conflicts rule for this particular problem?
III. 4. "If the conflicts rule points to a foreign law, has said law been properly
pleaded and proved by the one invoking it?
WAS NOT VALIDLY DISMISSED ON THE GROUND OF LOSS OF TRUST OR 5. "If so, is the application or enforcement of the foreign law in the forum one
CONFIDENCE. of the basic exceptions to the application of foreign law? In short, is there any
We begin with the second issue on the jurisdiction of the Labor Arbiter and the strong policy or vital interest of the forum that is at stake in this case and
NLRC in the illegal dismissal case. The first and third issues will be discussed which should preclude the application of foreign law? 41
Jurisdiction is defined as the power and authority of the courts to hear, try and Under the doctrine of forum non conveniens, a Philippine court in a conflict-of-
decide cases. Jurisdiction over the subject matter is conferred by the laws case may assume jurisdiction if it chooses to do so, provided, that the
Constitution or by law and by the material allegations in the complaint, following requisites are met: (1) that the Philippine Court is one to which the
regardless of whether or not the plaintiff is entitled to recover all or some of parties may conveniently resort to; (2) that the Philippine Court is in a position
the claims or reliefs sought therein.42 It cannot be acquired through a waiver to make an intelligent decision as to the law and the facts; and (3) that the
or enlarged by the omission of the parties or conferred by the acquiescence of Philippine Court has or is likely to have power to enforce its decision. 46 All
the court.43 That the employment contract of Basso was replete with these requisites are present here.
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 Basso may conveniently resort to our labor tribunals as he and CMI lad
to hear and try this case. physical presence in the Philippines during the duration of the trial. CMI has a
Philippine branch, while Basso, before his death, was residing here. Thus, it
This case stemmed from an illegal dismissal complaint. The Labor Code, under could be reasonably expected that no extraordinary measures were needed
Article 217, clearly vests original and exclusive jurisdiction to hear and decide for the parties to make arrangements in advocating their respective cases.
cases involving termination disputes to the Labor Arbiter. Hence, the Labor
Arbiter and the NLRC have jurisdiction over the subject matter of the case. The labor tribunals can make an intelligent decision as to the law and facts.
The incident subject of this case (i.e. dismissal of Basso) happened in the
As regards jurisdiction over the parties, we agree with the Court of Appeals Philippines, the surrounding circumstances of which can be ascertained
that the Labor Arbiter acquired jurisdiction over the person of Basso, without having to leave the Philippines. The acts that allegedly led to loss of
notwithstanding his citizenship, when he filed his complaint against CMI. On trust and confidence and Basso's eventual dismissal were committed in the
the other hand, jurisdiction over the person of CMI was acquired through the Philippines. As to the law, we hold that Philippine law is the proper law of he
coercive process of service of summons. We note that CMI never denied that forum, as we shall discuss shortly. Also, the labor tribunals have the power to
it was served with summons. CMI has, in fact, voluntarily appeared and enforce their judgments because they acquired jurisdiction over the persons of
participated in the proceedings before the courts. Though a foreign both parties.
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 Our labor tribunals being the convenient fora, the next question is what law
corporations doing business in the country be licensed to do so, is to subject should apply in resolving this case.
the foreign corporations to the jurisdiction of our courts. 44
The choice-of-law issue in a conflict-of-laws case seeks to answer the following
Considering that the Labor Arbiter and the NLRC have jurisdiction over the important questions: (1) What legal system should control a given situation
parties and the subject matter of this case, these tribunals may proceed to try where some of the significant facts occurred in two or more states; and (2) to
the case even if the rules of conflict-of-laws or the convenience of the parties what extent should the chosen legal system regulate the situation. 47 These
point to a foreign forum, this being an exercise of sovereign prerogative of the questions are entirely different from the question of jurisdiction that only
country where the case is filed.45 seeks to answer whether the courts of a state where the case is initiated have
jurisdiction to enter a judgment.48 As such, the power to exercise jurisdiction
The next question is whether the local forum is the convenient forum in light does not automatically give a state constitutional authority to apply forum
of the facts of the case. CMI contends that a Philippine court is an law.49
inconvenient forum.
CMI insists that US law is the applicable choice-of-law under the principles
We disagree. of lex loci celebrationis and lex loci contractus. It argues that the contract of
employment originated from and was returned to the US after Basso signed it,
and hence, was perfected there. CMI further claims that the references to US applicable law. Basso, though a US citizen, was a resident here from he time
law in the employment contract show the parties' intention to apply US law he was hired by CMI until his death during the pendency of the case. CMI,
and not ours. These references are: while a foreign corporation, has a license to do business in the Philippines and
a. Foreign station allowance of forty percent (40%) using the "U.S. State maintains a branch here, where Basso was hired to work. The contract of
Department Index, the base being Washington, D.C." employment was negotiated in the Philippines. A purely consensual contract,
b. Tax equalization that made Basso responsible for "federal and any it was also perfected in the Philippines when Basso accepted the terms and
home state income taxes." conditions of his employment as offered by CMI. The place of performance
c. Hardship allowance of fifteen percent (15%) of base pay based upon relative to Biasso's contractual duties was in the Philippines. The alleged
the "U.S. Department of State Indexes of living costs abroad." prohibited acts of Basso that warranted his dismissal were committed in the
d. The employment arrangement is "one at will, terminable by either Philippines.
party without any further liability on thirty days prior written notice." 50
CMI asserts that the US law on labor relations particularly, the US Railway Clearly, the Philippines is the state with the most significant relationship to the
Labor Act sanctions termination-at-will provisions in an employment contract. problem. Thus, we hold that CMI and Basso intended Philippine law to govern,
Thus, CMI concludes that if such laws were applied, there would have been no notwithstanding some references made to US laws and the fact that this
illegal dismissal to speak of because the termination-at-will provision in intention was not expressly stated in the contract. We explained in Philippine
Basso's employment contract would have been perfectly valid. Export and Foreign Loan Guarantee Corporation v. V. P. Eusebio Construction,
Inc.53 that the law selected may be implied from such factors as substantial
We disagree. connection with the transaction, or the nationality or domicile of the
parties.54 We cautioned, however, that while Philippine courts would do well
In Saudi Arabian Airlines v. Court of Appeals,51 we emphasized that an essential to adopt the first and most basic rule in most legal systems, namely, to allow
element of conflict rules is the indication of a "test" or "connecting factor" or the parties to select the law applicable to their contract, the selection is
"point of contact". Choice-of-law rules invariably consist of a factual subject to the limitation that it is not against the law, morals, or public policy
relationship (such as property right, contract claim) and a connecting fact or of the forum.55
point of contact, such as the situs of the res, the place of celebration, the place
of performance, or the place of wrongdoing. Pursuant to Saudi Arabian Similarly, in Bank of America, NT&SA v. American Realty Corporation,56 we
Airlines, we hold that the "test factors," "points of contact" or "connecting ruled that a foreign law, judgment or contract contrary to a sound and
factors" in this case are the following:chanRoblesvirtualLawlibrary established public policy of the forum shall not be applied. Thus:
Moreover, foreign law should not be applied when its application would work
(1) The nationality, domicile or residence of Basso;ChanRoblesVirtualawlibrary undeniable injustice to the citizens or residents of the forum. To give justice is
(2) The seat of CMI;ChanRoblesVirtualawlibrary the most important function of law; hence, a law, or judgment or contract that
(3) The place where the employment contract has been made, the locus is obviously unjust negates the fundamental principles of Conflict of Laws. 57
actus;ChanRoblesVirtualawlibrary Termination-at-will is anathema to the public policies on labor protection
(4) The place where the act is intended to come into effect, e.g., the place of espoused by our laws and Constitution, which dictates that no worker shall be
performance of contractual duties;ChanRoblesVirtualawlibrary dismissed except for just and authorized causes provided by law and after due
(5) The intention of the contracting parties as to the law that should govern process having been complied with.58 Hence, the US Railway Labor Act, which
their agreement, the lex loci intentionis; and sanctions termination-at-will, should not be applied in this case.
(6) The place where judicial or administrative proceedings are instituted or
done.52 Additionally, the rule is that there is no judicial notice of any foreign law. As
any other fact, it must be alleged and proved. 59 If the foreign law is not
Applying the foregoing in this case, we conclude that Philippine law the properly pleaded or proved, the presumption of identity or similarity of the
foreign law to our own laws, otherwise known as processual presumption, principles are now necessarily adhered to and are applied by the Court of
applies. Here, US law may have been properly pleaded but it was not proved in Appeals in its expanded jurisdiction over labor cases elevated through a
the labor tribunals. petition for certiorari; thus, we see no error on its part when it made anew a
factual determination of the matters and on that basis reversed the ruling of
Having disposed of the issue on jurisdiction, we now rule on the first and third the NLRC.63 (Citations omitted.)
issues. Thus, the Court of Appeals may grant the petition when the factual hidings
complained of are not supported by the evidence on record; when its
The Court of Appeals may review the factual findings of the NLRC in a Rule necessary to prevent a substantial wrong or to do substantial justice; when the
65 petition. findings of the NLRC contradict those of the Labor Arbiter; and when
necessary to arrive at a just decision of the case. 64 To make these findings, the
CMI submits that the Court of Appeals overstepped the boundaries of the Court of Appeals necessarily has to look at the evidence and make its own
limited scope of its certiorarijurisdiction when instead of ruling on the factual determination.65
existence of grave abuse of discretion, it proceeded to pass upon the legality
and propriety of Basso's dismissal. Moreover, CMI asserts that it was error on Since the findings of the Labor Arbiter differ with that of the NLRC, we find
the part of the Court of Appeals to re-evaluate the evidence and that the Court of Appeals correctly exercised its power to review the evidence
circumstances surrounding the dismissal of Basso. and the records of the illegal dismissal case.

We disagree. Basso was illegally dismissed.

The power of the Court of Appeals to review NLRC decisions via a Petition It is of no moment that Basso was a managerial employee of CMI Managerial
for Certiorari under Rule 65 of the Revised Rules of Court was settled in our employees enjoy security of tenure and the right of the management to
decision in St. Martin Funeral Home v. NLRC.60 The general rule is dismiss must be balanced against the managerial employee's right to security
that certiorari does not lie to review errors of judgment of the trial court, as of tenure, which is not one of the guaranties he gives up. 66
well as that of a quasi-judicial tribunal. In certiorari proceedings, judicial
review does not go as far as to examine and assess the evidence of the parties In Apo Cement Corporation v. Baptisma,67 we ruled that for an employer to
and to weigh their probative value.61 However, this rule admits of exceptions. validly dismiss an employee on the ground of loss of trust and confidence
In Globe Telecom, Inc. v. Florendo-Flores,62 we stated: under Article 282 (c) of the Labor Code, the employer must observe the
In the review of an NLRC decision through a special civil action for certiorari, following guidelines: 1) loss of confidence should not be simulated; 2) it should
resolution is confined only to issues of jurisdiction and grave abuse of not be used as subterfuge for causes which are improper, illegal or unjustified;
discretion on the part of the labor tribunal. Hence, the Court refrains from 3) it may not be arbitrarily asserted in the face of overwhelming evidence to
reviewing factual assessments of lower courts and agencies exercising the contrary; and 4) it must be genuine, not a mere afterthought to justify
adjudicative functions, such as the NLRC. Occasionally, however, the Court is earlier action taken in bad faith. More importantly, it must be based on a
constrained to delve into factual matters where, as in the instant case, the willful breach of trust and founded on clearly established facts.
findings of the NLRC contradict those of the Labor Arbiter.
We agree with the Court of Appeals that the dismissal of Basso was not
In this instance, the Court in the exercise of its equity jurisdiction may look founded on clearly established facts and evidence sufficient to warrant
into the records of the case and re-examine the questioned findings. As a dismissal from employment. While proof beyond reasonable doubt is not
corollary, this Court is clothed with ample authority to review matters, even if required to establish loss of trust and confidence, substantial evidence is
they are not assigned as errors in their appeal, if it finds that their required and on the employer rests the burden to establish it. 68 There must be
consideration is necessary to arrive at a just decision of the case. The same some basis for the loss of trust, or that the employer has reasonable ground to
believe that the employee is responsible for misconduct, which renders him indicated in the letter of Ms. Woodward. 80
unworthy of the trust and confidence demanded by his position. 69
CMI also accused Basso of making "questionable overseas phone calls". Basso,
CMI alleges that Basso committed the following:chanRoblesvirtualLawlibrary however, adequately explained in his Reply81 that the phone calls to Italy and
(1) Basso delegated too much responsibility to the General Sales Agent and Portland, USA were made for the purpose of looking for a technical
relied heavily on its judgments.70 maintenance personnel with US Federal Aviation Authority qualifications,
(2) Basso excessively issued promotional tickets to his friends who had no which CMI needed at that time. The calls to the US were also made in
direct business with CMI.71 connection with his functions as General Manager, such as inquiries on his tax
(3) The advertising agency that CMI contracted had to deal directly with Guam returns filed in Nevada. Biasso also explained that the phone lines 82were open
because Basso was hardly available.72 Mr. Schulz discovered that Basso direct lines that all personnel were free to use to make direct long distance
exceeded the advertising budget by $76,000.00 in 1994 and by $20,000.00 calls.83
in 1995.73
(4) Basso spent more time and attention to his personal businesses and was Finally, CMI alleged that Basso approved the disbursement of Php80,000.00 to
reputed to own nightclubs in the Philippines. 74 cover the transfer fee of the Manila Polo Club share from Mr. Kenneth Glover,
(5) Basso used free tickets and advertising money to promote his personal the previous General Manager, to him. CMI claimed that "nowhere in the said
business,75 such as a brochure that jointly advertised one of Basso's contract was it likewise indicated that the Manila Polo Club share was part of
nightclubs with CMI. the compensation package given by CMI to Basso." 84 CMI's claims are not
credible. Basso explained that the Manila Polo Club share was offered to him
We find that CMI failed to discharge its burden to prove the above acts. CMI as a bonus to entice him to leave his then employer, United Airlines. A letter
merely submitted affidavits of its officers, without any other corroborating from Mr. Paul J. Casey, former president of Continental, supports Basso. 85 In
evidence. Basso, on the other hand, had adequately explained his side. On the the letter, Mr. Casey explained:
advertising agency and budget issues raised by CMI, he explained that these As a signing bonus, and a perk to attract Mr. Basso to join Continental Airlines,
were blatant lies as the advertising needs of CMI were centralized in its Guam he was given the Manila Polo Club share and authorized to have the share re-
office and the Philippine office was not authorized to deal with CMI's issued in his name. In addition to giving Mr. Basso the Manila Polo Club share,
advertising agency, except on minor issues.76 Basso further stated that under Continental agreed to pay the dues for a period of three years and this was
CMI's existing policy, ninety percent (90%) of the advertising decisions were embodied in his contract with Continental. This was all clone with my
delegated to the advertising firm of McCann-Ericsson in Japan and only ten knowledge and approval.86
percent (10%) were left to the Philippine office. 77 Basso also denied the Clause 14 of the employment contract also states:
allegations of owning nightclubs and promoting his personal businesses and Club Memberships: The Company will locally pay annual dues for membership
explained that it was illegal for foreigners in the Philippines to engage in retail in a club in Manila that your immediate supervisor and I agree is of at least
trade in the first place. that value to Continental through you in your role as our General Manager for
the Philippines.87
Apart from these accusations, CMI likewise presented the findings of the audit Taken together, the above pieces of evidence suggest that the Manila Polo
team headed by Mr. Stephen D. Goepfert, showing that "for the period of Club share was part of Basso's compensation package and thus he validly used
1995 and 1996, personal passes for Continental and other airline employees company funds to pay for the transfer fees. If doubts exist between the
were noted (sic) to be issued for which no service charge was collected." 78 The evidence presented by the employer and the employee, the scales of justice
audit cited the trip pass log of a total of 10 months. The trip log does not must be tilted in favor of the latter. 88
show, however, that Basso caused all the ticket issuances. More, half of the
trips in the log occurred from March to July of 1996, 79 a period beyond the Finally, CMI violated procedural due process in terminating Basso. In King of
tenure of Basso. Basso was terminated effectively on January 31, 1996 as
Kings Transport, Inc. v. Mamac89 we detailed the procedural due process steps remove Basso as General Manager but with an offer to make him consultant. It
in termination of employment: was inconsistent of CMI to declare Basso as unworthy of its trust and
To clarify, the following should be considered in terminating the services of confidence and, in the same breath, offer him the position of consultant. As
employees:chanRoblesvirtualLawlibrary the Court of Appeals pointed out:
But mark well that Basso was clearly notified that the sole ground for his
(1) The first written notice to be served on the employees should contain the dismissal was the exercise of the termination at will clause in the employment
specific causes or grounds for termination against them, and a directive that contract. The alleged loss of trust and confidence claimed by Continental
the employees are given the opportunity to submit their written explanation appears to be a mere afterthought belatedly trotted out to save the day. 90
within a reasonable period. "Reasonable opportunity" under the Omnibus Basso is entitled to separation pay and full backwages.
Rules means every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense. This Under Article 279 of the Labor Code, an employee who is unjustly dismissed
should be construed as a period of at least five (5) calendar days from receipt from work shall be entitled to reinstatement without loss of eniority rights
of the notice to give the employees an opportunity to study the accusation and other privileges, and to his full backwages, inclusive of allowances and to
against them, consult a union official or lawyer, gather data and evidence, and his other benefits or their monetary equivalent omputed from the time his
decide on the defenses they will raise against the complaint. Moreover, in compensation was withheld up to the time of actual reinstatement.
order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and Where reinstatement is no longer viable as an option, separation pay
circumstances that will serve as basis for the charge against the employees. A equivalent to one (1) month salary for every year of service should be awarded
general description of the charge will not suffice. Lastly, the notice should as an alternative. The payment of separation pay is in addition to payment of
specifically mention which company rules, if any, are violated and/or which backwages.91 In the case of Basso, reinstatement is no longer possible since he
among the grounds under Art. 282 is being charged against the employees. has already passed away. Thus, Basso's separation pay with full backwages
shall be paid to his heirs.
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity As to the computation of backwages, we agree with CMI that Basso was
to: (1) explain and clarify their defenses to the charge against them; (2) entitled to backwages only up to the time he reached 65 years old, the
present evidence in support of their defenses; and (3) rebut the evidence compulsory retirement age under the law.92 This is our consistent
presented against them by the management. During the hearing or ruling.93 When Basso was illegally dismissed on January 31, 1996, he was
conference, the employees are given the chance to defend themselves already 58 years old.94 He turned 65 years old on October 2, 2002. Since
personally, with the assistance of a representative or counsel of their choice. backwages are granted on grounds of equity for earnings lost by an employee
Moreover, this conference or hearing could be used by the parties as an due to his illegal dismissal,95 Basso was entitled to backwages only for the
opportunity to come to an amicable settlement. period he could have worked had he not been illegally dismissed, i.e. from
(3) After determining that termination of employment is justified, the January 31, 1996 to October 2, 2002.
employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge against WHEREFORE, premises considered, the Decision of the Court of Appeals dated
the employees have been considered; and (2) grounds have been established May 23, 2006 and Resolution dated June 19, 2007 in the consolidated cases
to justify the severance of their employment. (Emphasis in original.) CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281 are AFFIRMED,
Here, Mr. Schulz's and Ms. Woodward's letters dated December 19, 1995 and with MODIFICATION as to the award of backwages. Petitioner Continental
March 14, 1996, respectively, are not one of the valid twin notices. Neither Micronesia, Inc. is hereby ordered to pay Respondent Joseph Basso's heirs: 1)
identified the alleged acts that CMI now claims as bases for Basso's separation pay equivalent to one (1) month pay for every year of service, and
termination. Ms. Woodward's letter even stressed that the original plan was to 2) full backwages from January 31, 1996, the date of his illegal dismissal, to
October 2, 2002, the date of his compulsory retirement age.

SO ORDERED.chanroblesvirtuallawlibrary