3C COL Digests

ABACAN, AGUILA, ALCANTARA F, ALCANTARA R, BAUTISTA, BELLO, CAMIÑA, CARANDANG, CARIÑO, CARINGAL, CHING, CLEMENTE, CONSUNJI, DEVESA, ESPIRITU, ESQUIVIAS, EVANGELISTA,

CONFLICT OF LAWS

CASE DIGESTS

3C

2012-2013

2

SEMESTER

JALANDONI, JANINA NADENE KOGA, KEN

LAIDAN, KRISTOFFER ALCANTARA, REGINE ANDREI LAZARO, PHOEBE ANN

BAUTISTA, PEARL CHARISSE LOMOTAN, JONATHAN JOSEPH BELLO, CRISTINA MARIE LUCIDO, LE IRIS

CAMIÑA, GERARD MARTIN LUMANOG, ERLAINE CARANDANG, NINA HERSCHELICA MADAMBA, AYAH CRISTINA CARIÑO, MARIANNE MAGPANTAY, REGINE EMPRESS CARINGAL, KRISTIA LORRAINE MANUEL, KAREN KAYE

CHING, MARIA ADELA MESINA, MARI JANINE EVAN CLEMENTE, CHRISTINE PRESBITERO, JULIAN SANTOS

CONSUNJI, PENNY RELLOSA, RASHY

DEVESA, VAN LEE ESPIRITU, DAYNE

ESQUIVIAS, MA. CARMELA

REYES, JOSEPH SANTOS, JJ SEVILLA, TONI LOU EVANGELISTA, CARLO SOLIMAN, NELLAINE FARCON, JOSE FLORINIO

GARCIA, CESAR DOMINI GRAIDO, HELEN MAUREEN

SOLLANO, MIKAELLA TUAZON, LARA KARINA YAO, AISLYN

GRANTOZA, CAMILLE HABANA, GABRIEL HERNANDEZ, JASON

JURISDICTION AND CHOICE OF LAW

1. SWEET LINES INC. V. TEVES

Facts: Respondents Atty. Leovigildo Tandog and Rogelio Tiro, bought tickets for Voyage 90 on December 31, 1971 at the branch office of petitioner, Sweet Lines Inc., a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro City. Tandog and Tiro were to board Sweet Lines’ vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu.

Upon learning that the vessel was not proceeding to Bohol (since many passengers were bound for Surigao), Tandog and Tiro, per advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard."

Tandog and Tiro alleged that they were exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits during the trip and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets. Hence, they sued Sweet Lines for damages and for breach of contract of carriage in the alleged sum of P10,000.00 before CFI of Misamis Oriental.

Sweet Lines moved to dismiss the complaint on the ground of improper venue based on the condition printed at the back of the tickets:

14. It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.

The motion was denied. MR was filed but was also denied. Hence, this instant petition for prohibition for preliminary injunction, 'alleging that the respondent judge Teves has departed from the accepted and usual course of judicial preoceeding" and "had acted without or in excess or in error of his jurisdicton or in gross abuse of discretion.

Issue: May a common carrier engaged in inter-island shipping stipulate thru a condition printed at the back of passage tickets to its vessels that any and all actions arising out of the contract of carriage should be filed only in a particular province or city, in this case the City of Cebu, to the exclusion of all others?

[Claims of Sweet Lines:

1. Condition No. 14 is valid and enforceable, since Tandog and Tiro acceded to it when they purchased passage tickets at its Cagayan de Oro branch office and took its vessel M/S "Sweet Town" for passage to Tagbilaran, Bohol

2. The condition of the venue of actions in the City of Cebu is proper since venue may be validly waived

3. Condition No. 14 is unequivocal and mandatory, the words and phrases "any and all", "irrespective of where it is issued," and "shag" leave no doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of other places

4. The orders of the respondent Judge are an unwarranted departure from established jurisprudence governing the case; and that he acted without or in excess of his jurisdiction in is the orders complained of]

[Claims of Tandog and Tiro:

1. Condition No. 14 is not valid, since the same is not an essential element of the contract of carriage, being in itself a different agreement which requires the mutual consent of the parties to it

2. They had no say in its preparation, the existence of which they could not refuse, hence, they had no choice but to pay for the tickets and to avail of Sweet Lines’ shipping facilities out of necessity

3. The carrier "has been exacting too much from the public by inserting impositions in the passage tickets too burdensome to bear," that the condition which was printed in fine letters is an imposition on the riding public and is not binding, citing - while venue of actions may be transferred from one province to another, such arrangement requires the "written agreement of the parties", not to be imposed unilaterally] Held: There was a valid contract of carriage entered into by Sweet Lines and Tandog and Tiro. Furthermore, the passage tickets are the best evidence thereof. All the essential elements of a valid contract (consent, cause or consideration and object) are present.

Whenever a passenger boards a ship for transportation from one place to another, he is issued a ticket by the shipper, which has all the elements of a written contract: (1) the consent of the contracting parties manifested by the fact that the passenger boards the ship and the shipper consents or accepts him in the ship for transportation; (2) cause or consideration which is the fare paid by the passenger as stated in the ticket; (3) object, which is the transportation of the passenger from the place of departure to the place of destination which are stated in the ticket.

However, in this case, with respect to the 14 conditions printed at the back of the passage tickets, these are commonly known as "contracts of adhesion," the validity and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each case and the nature of the conditions or terms sought to be enforced.

Generally, stipulations in a contract come about after deliberate drafting by the parties. However, there are certain contracts almost all the provisions of which have been drafted only by one party. Such contracts are called contracts of adhesion, because the only participation of the other party is the signing of his signature or his 'adhesion'. Insurance contracts, bills of lading, contracts of make of lots on the installment plan fall into this category.

By the peculiar circumstances under which contracts of adhesion are entered into, in which the other party, in this case, the passengers, who are made to adhere thereto on the "take it or leave it" basis, certain guidelines in the determination of their validity and/or enforceability have been formulated for justice and fair play.

In recognition of the character of contracts of this kind, the protection of the disadvantaged is expressly enjoined by the New Civil Code: Art. 24. In all contractual

ABACAN, AGUILA, ALCANTARA F, ALCANTARA R, BAUTISTA, BELLO, CAMIÑA, CARANDANG, CARIÑO, CARINGAL, CHING, CLEMENTE, CONSUNJI, DEVESA, ESPIRITU, ESQUIVIAS, EVANGELISTA, property or other relations, when one of the parties is at a disadvantage on account

of his moral dependence, ignorance indigence, mental weakness, tender age and other handicap, the courts must be vigilant for his protection.

In line with that, the court ruled that Condition No. 14 should be held as void and unenforceable for the following reasons:

1. Under circumstances obligation in the inter-island shipping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets.

There is an acute shortage in inter-island vessels plying between the country's several islands, and with that, the facilities they offer leave much to be desired, thus, passengers literally scramble to whatever accommodations may be availed of, even through circuitous routes, and/or at the risk of their safety and this was precisely the experience of Tandog and Tiro. Under these circumstances, it is hardly just and proper to expect the passengers to examine their tickets for conditions that may be printed much charge them with having consented to the conditions, so printed, especially if there are a number of such conditions in fine print, as in this case. Also, it should also be stressed that companies are franchise holders of certificates of public convenience and therefore, posses a virtual monopoly over the business of transporting passengers between the ports covered by their franchise. This being so, shipping companies, like Sweet Lines, engaged in inter-island shipping, have a virtual monopoly of the business of transporting passengers and may thus dictate their terms of passage, leaving passengers with no choice but to buy their tickets and avail of their vessels and facilities.

Lastly, bulk of those who board these inter-island vessels come from the low-income groups and are less literate, and who have little or no choice but to avail of petitioner's vessels.

2. Condition No. 14 subverts the public policy on transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of innumerable passengers from different places of the country who, under Condition No. 14, will have to file suits against Sweet Lines only in the City of Cebu.

For, although venue may be changed or transferred from one province to another by agreement of the parties in writing, based on Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice.

Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will defeat the ends of justice.

On the other hand, Sweet Lines has branches or offices in the respective ports of call

of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental will not cause inconvenience or prejudice Sweet Lines.

Public policy is that principle of the law, which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good. Under this principle, the freedom of contract or private dealing is restricted by law for the good of the public.

Petition for prohibition was dismissed.

Separate Opinions

BARREDO, J., concurring: Although, agreements regarding change of venue are enforceable, there may be instances where for equitable considerations and in the better interest of justice, a court may justify the laying of the venue in the place fixed by the rules instead of following written stipulation of the parties. I take it that the importance that a stipulation regarding change of the venue fixed by law entails is such that nothing less than mutually conscious agreement as to it must be what the rule means.

2. HSBC V. JACK ROBERT SHERMAN

FACTS: A complaint for collection of a sum of money was filed by petitioner Hongkong and Shanghai Banking Corporation (BANK) against private respondents Jack Robert Sherman and Deodato Reloj, before the RTC QC.

It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility.

(IMPT) The Joint and Several Guarantee provides that: This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee.

The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from private respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private respondents still failed

to pay, petitioner BANK filed the above-mentioned complaint.

On December 14,1984, private respondents filed a MTD on the ground of lack of jurisdiction over the SM and persons of the defendants. Acting on the motion, the trial court issued an order denying the MTD ruling that there is nothing in the Guarantee which says that the courts of Singapore shall have jurisdiction to the exclusion of the courts of other countries or nations and that jurisdiction over the persons of defendants is acquired by service of summons and copy of the complaint on them. There has been a valid service of summons on both defendants and in fact the same is admitted when said defendants filed a 'Motion for Extension of Time to File Responsive Pleading on December 5, 1984. MR was filed thereafter but still got denied.

Private respondents then filed before CA a petition for prohibition with preliminary injunction and/or prayer for a restraining order. CA rendered a decision granting the injunction.

ISSUE: W/N Philippine courts have jurisdiction over the suit. (YES)

HELD: While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that "[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally construed. One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice.

Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with more reason as a defendant. However, in this case, private respondents are Philippine residents (a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case. The defense of private respondents that the complaint should have been filed in Singapore is based merely on technicality. The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter's authorities. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A

State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them. As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue has been waived. However, We agree with the ruling of the respondent Court that: While in the main, the motion to dismiss fails to categorically use with exactitude the words 'improper venue' it can be perceived from the general thrust and context of the motion that what is meant is improper venue, The use of the word 'jurisdiction' was merely an attempt to copy-cat the same word employed in the guarantee agreement but conveys the concept of venue. At any rate, this issue is now of no moment because We hold that venue here was properly laid for the same reasons discussed above.

The respondent Court likewise ruled that: “In a conflict problem, a court will simply refuse to entertain the case if it is not authorized by law to exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain the case by applying the principle of forum non conveniens “.However, whether a suit should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court Thus, the respondent Court should not have relied on such principle. Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion and that consequently, it cannot be permitted to take a stand contrary to the stipulations of the contract, substantial bases exist for petitioner Bank's choice of forum, as discussed earlier.

ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the Regional Trial Court is REINSTATED, with costs against private respondents.

3. BELLIS V. BELLIS

FACTS: Amos Bellis was a citizen and resident of Texas at the time of his death. He executed a will in the Philippines, in which he directed that after all taxes, obligations, and expenses of administration are paid for, his distributable estate should be divided, in trust, in the following order and manner

a) $240,000.00 to his first wife Mary Mallen

b) $120,000.00 to his three illegitimate children Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis,or $40,000.00 each, and

c) After foregoing the two items have been satisfied, the remainder shall go to his seven surviving children by his first and second wives.

Maria Cristina Bellis and Miriam Palma Bellis, filed their respective oppositions to the project of partition on the ground that they were deprived of their legitimes as illegitimate children and, therefore, compulsory heirs of the deceased.

The lower court issued an order overruling the oppositions and approving the executor’s final account, report and administration, and project of partition. Relying upon Article 16 of the Civil Code, it applied the national law of the decedent, which in this case is which did not provide for legitimes.

ABACAN, AGUILA, ALCANTARA F, ALCANTARA R, BAUTISTA, BELLO, CAMIÑA, CARANDANG, CARIÑO, CARINGAL, CHING, CLEMENTE, CONSUNJI, DEVESA, ESPIRITU, ESQUIVIAS, EVANGELISTA, ISSUE: Whether or not such illegitimate children of Bellis be entitled to successional

rights?

HELD: The said illegitimate children are not entitled to their legitimes. Under Texas law, there are no legitimes. Even if the other will was executed in the Philippines, his national law, still, will govern the properties for succession even if it is stated in his testate that it shall be governed by the Philippine law.

Article 16, Paragraph 2 of Civil code render applicable the national law of the decedent, in intestate and testamentary successions, with regard to four items: (a) the order of succession, (b) the amount of successional rights, (c) the intrinsic validity of provisions of will, and (d) the capacity to succeed.

ART.16 Real property as well as personal property is subject to the law of the country to where it is situated.However, intestate and testamentary successions, both with respect to the order of successions and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found.

4. TAYAG V. BENGUET CONSOLIDATED

FACTS: Idonah Perkins died in New York and left stock certificates covering 32,000 shares of Benguet Consolidated under the possession of County Trust Co. of New York, the domiciliary administrator of the estate.

Ancillary administration proceedings were instituted in Manila and Renato Tayag was later appointed as ancillary administrator. A dispute arose between the domiciliary and ancillary administrator as to who was entitled to the possession of the stock certificates. So that claims of Perkins’ local creditors could be satisfied, the lower court ordered the domiciliary administrator to surrender the stock certificates but the domiciliary refused to comply. This prompted the ancillary administrator to petition to the court that the stock certificates be considered lost and cancelled, and that Benguet be ordered to issue new certificates to it. The CFI granted the petition. From such order, Benguet Consolidated appealed contending that it cannot be declare lost because they are in actual existence and is in the possession of Country Trust in New York.

ISSUE: Whether the lower court had the power to issue the questioned order? YES HELD: SC affirmed the Lower Court. The power of the ancillary administrator to gain control and possession of all the assets of the decedent within the jurisdiction of the Philippines is undisputed. The administration extends to all assets of the decedent within the state where it was granted and the administrator of one state has no power over assets in another state.

The court has the authority to require that the ancillary administrator’s authority over the stock certificates be respected. Benguet Consolidated is a domestic corp subject

to the unrestricted jurisdiction of the local courts. Its shares of stocks are not immune from lawful court orders. The actual situs of shares of stock is in the Philippines, the corporation being domiciled here.

Since the domiciliary persistently refuses to deliver that owned by the decedent to the ancillary, there was nothing arbitrary in considering them as lost and requiring issuance of new certificates in lieu thereof.

Benguet’s contention that its by-laws should be followed requiring a final court resolution on ownership first before issuance of a new certificate is also without merit. There is no question of ownership since Country Trust did not even appeal. Even assuming it did, the command of a court decree prevails over a by-law.

5. PAKISTAN INTERNATIONAL AIRLINES V. OPLE

FACTS: Pakistan Intl Airlines (PIA) executed 2 separate contracts of employments in Manila, one with Farrales and the other with Mamasig. The pertinent portions of the contract state that (1) the agreement is for a period of 3 years, but can be extended by the mutual consent of the parties; (2) notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's salary; (3) this agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this agreement.

1 year and 4 months before the expiration of the contracts of employment, PIA sent separate letters to Mamasig and Farrales, advising them that their services as flight stewardesses would be terminated. Farrales and Mamasig filed a complaint for illegal dismissal and non-payment of company benefits and bonuses. PIA contended that F & M were habitual absentees and had the habit of bringing in from abroad sizeable quantities of personal effects.

ISSUE: WON the provision in the contract that the agreement shall be governed by the laws of Pakistan (first clause) and that only the courts of Karachi, Pakistan shall have jurisdiction over any controversy arising out of the agreement (second clause), may be given effect (NO)

HELD: NO. The first clause cannot be invoked to prevent the application of Phil labor laws and regulations to the subject matter of the case. The ER-EE relationship between PIA and F&M is affected with public interest and the applicable Phil laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship. The second clause cannot also be invoked because the circumstances of the case shows multiple substantive contacts (no ‘r’) between Phil law and Phil courts on the one hand, and the relationship between the parties on the other: contract was executed and partially performed in the Phils., F&M are Filipino citizens and PIA is licensed to do business in the Phils., and F&M were based in the Phils. in between their flights. All the above contacts point to the Philippine courts and administrative agencies as a proper forum for the resolution of contractual disputes between the parties. The challenged portion of the employment agreement

cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law.

As to the dismissal of Farrales & Mamasig: they were illegally dismissed and are entitled to 3 years backwages without qualification or deduction. PIA’s right to procedural due process was observed as it was given the opportunity to submit a position paper and present evidence. Also, the provisions of the employment contract must not be contrary to law, morals, good customs, public order, public policy. The employment contract prevents security of tenure of F&M from accruing.

6. ZALAMEA V. COURT OF APPEALS

FACTS: Petitioner-spouses Zalamea and their daughter purchased 3 airline tickets from the Manila agent of TransWorld Airlines for a flight to NY-LA. The tickets were at a discount of 75% and the daughter was a full fare.

While in NY, they received a notice of the reconfirmation. On the appointed date, they checked in at 10am for their 11am flight but were placed on the waitlist. The daughter appeared as No.13 on the waitlist while the two Zalameas were listed as No. 34, showing a party of two. Out of the 42 names, the first 22 names were eventually allowed to board, including the father. The others weren’t able to fly. As it were, those holding full-fare tickets were given first priority. The father later discovered that he was holding his daughter’s full-fare ticket. Thos with discounted tickets were denied boarding. Even in the next flight to LA, the mother and daughter couldn’t be accommodated because it was fully book. They were constrained to book in another flight and purchased 2 tickets from American Airlines at $918.

In the Philippines, petitioners filed an action for damages based on breach of contract of air carriage before the RTC Makati. The RTC ordered the airline company to pay the ticket costs, as well as moral damages and attorney’s fees.

CA: Moral damages are recoverable only where there is fraud or bad faith (in a breach of contract of carriage). Since it is a matter of record that overbooking of flights is a common and accepted practice of airlines in the United States and is specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld Airlines. TWA was remiss in not informing petitioners that the flight was overbooked. There was no bad faith in placing the petitioners in the waitlist along with 48 passengers. ISSUE: W/N there was bad faith on the part of TWA, considering that TWA contends that overbooking of flights is a common and accepted practice in the US

HELD: Yes, there was fraud or bad faith. The US law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged and proved. Written law may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or

by his deputy, and accompanied with a certificate that such officer has custody. The certificate may be made by a secretary of an embassy or legation, consul general, consul, vice-consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.

TWA relied solely on the statement of its customer service agent, Ms. Lather, in her deposition. Aside from such, there is no official publication of said code presented as evidence. Respondent court’s finding that overbooking is allowed has no basis. Even if the claimed U.S. Code of Federal Regulations exist, the same isn’t applicable in accordance with the principle of lex loci contractus which require that the law of the place where the airline ticket was issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline. Since the tickets were sold and issued in the Philippines, the applicable law would be Philippine law.

Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the choice to ride with another airline. TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes beforedeparture time because the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left behind.

The Court ordered TWA to pay the $918 worth of tickets from American Airlines, 50k moral damages, 50k exemplary damages, 50k atty’s fees and the costs of suit. Notes: The tickets were sold and issued in the Philippines; thus, Philippine law is applicable, under the principled of lex loci contractus.

7. CADALIN V. POEA ADMINISTRATOR

GENERAL RULE: A foreign procedural law will not be applied in the forum.

EXCEPTION: When the country of the forum has a "borrowing statute," the country of the forum will apply the foreign statute of limitations.

EXCEPTION TO THE EXCEPTION: The court of the forum will not enforce any foreign claim obnoxious to the forum's public policy.

FACTS: On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in their own behalf and on behalf of 728 other overseas contract workers (OCWs) instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas Employment Administration (POEA) for money claims arising from their recruitment by AIBC and employment by BRII.

ABACAN, AGUILA, ALCANTARA F, ALCANTARA R, BAUTISTA, BELLO, CAMIÑA, CARANDANG, CARIÑO, CARINGAL, CHING, CLEMENTE, CONSUNJI, DEVESA, ESPIRITU, ESQUIVIAS, EVANGELISTA, BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in

construction; while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its foreign principals.

The amended complaint principally sought the payment of the unexpired portion of the employment contracts, which was terminated prematurely, and secondarily, the payment of the interest of the earnings of the Travel and Reserved Fund, interest on all the unpaid benefits; area wage and salary differential pay; fringe benefits; refund of SSS and premium not remitted to the SSS; refund of withholding tax not remitted to the BIR; penalties for committing prohibited practices; as well as the suspension of the license of AIBC and the accreditation of BRII.

EASIER FACTS: Cadalin et al. are overseas contract workers recruited by respondent-appellant AIBC for its accredited foreign principal, Brown & Root, on various dates from 1975 to 1983. As such, they were all deployed at various projects in several countries in the Middle East as well as in Southeast Asia, in Indonesia and Malaysia. The case arose when their overseas employment contracts were terminated even before their expiration. Under Bahrain law, where some of the complainants were deployed, the prescriptive period for claims arising out of a contract of employment is one year.

ISSUE: Whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

HELD: AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law," which is Section 48 of the Code of Civil Procedure and that where such kind of law exists, it takes precedence over the common- law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).

First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

Article 156 of the Amiri Decree No. 23 of 1976 provides: A claim arising out of a contract of employment shall not be actionable after the lapse of one year from the date of the expiry of the contract. (G.R. Nos. 105029-31, Rollo, p. 226).

As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action is based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive, depending on the characterization given such a law.

Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the statute of limitations of New York, instead of the Panamanian law, after finding that there was no showing that the Panamanian law on prescription was intended to be substantive. Being considered merely a procedural law even in Panama, it has to give way to the law of the forum on prescription of actions.

However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum has a "borrowing statute." Said statute has the practical effect of treating the foreign statute of limitation as one of substance (Goodrich, Conflict of Laws 152-153 [1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of limitations to the pending claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes," one form provides that an action barred by the laws of the place where it accrued, will not be enforced in the forum even though the local statute has not run against it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind. Said Section provides: If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippines Islands.

Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said Code repealed only those provisions of the Code of Civil Procedures as to which were inconsistent with it. There is no provision in the Civil Code of the Philippines, which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]). In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy (Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene the public policy on the protection to labor.

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that: The state shall promote social justice in all phases of national development. (Sec. 10).

The state affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare (Sec. 18).

In article XIII on Social Justice and Human Rights, the 1987 Constitution provides: Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

Having determined that the applicable law on prescription is the Philippine law, the next question is whether the prescriptive period governing the filing of the claims is

three years, as provided by the Labor Code or ten years, as provided by the Civil Code of the Philippines.

The claimants are of the view that the applicable provision is Article 1144 of the Civil Code of the Philippines, which provides: The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.

NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor Code of the Philippines, which in pertinent part provides: Money claims-all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued, otherwise they shall be forever barred.

8. UNITED AIRLINES V. COURT OF APPEALS

FACTS: Aniceto Fontanilla purchased from United Airlines, through the Philippine Travel Bureau in Manila three "Visit the U.S.A." tickets for himself, his wife and his minor son Mychal for four routes. All flights had been confirmed previously by United Airlines. The Fontanillas then proceeded to the US as planned. While there, Aniceto bought two additional coupons for his family at United's office in Washington Dulles Airport. After paying the penalty for rewriting their tickets, the Fontanillas were issued tickets with corresponding boarding passes with the words "CHECK-IN REQUIRED," set to leave from Los Angeles to San Francisco.

The cause of the non-boarding of the Fontanillas at the LA airport is the bone of contention of this controversy.

Aniceto's version is upon their arrival at the LA Airport for their flight, they proceeded to United's counter where they were attended by Linda. Linda examined their tickets, punched something into her computer and then told them that boarding would be in fifteen minutes. When the flight was called, the Fontanillas proceeded to the plane. To their surprise, the stewardess at the gate did not allow them to board the plane, as they had no assigned seat numbers. They were then directed to go back to the "check-in" counter where Linda subsequently informed them that the flight had been overbooked and asked them to wait. The Fontanillas tried to explain to Linda the special circumstances of their visit. However, Linda told them in arrogant manner, "So what, I can not do anything about it." Subsequently, three other passengers with Caucasian features were graciously allowed to baord, after the Fontanillas were told that the flight had been overbooked. The plane then took off with the Fontanillas’ baggage in tow, leaving them behind.

The Fontanillas then complained to Linda, who in turn gave them an ugly stare and rudely uttered, "it’s not my fault. It’s the fault of the company. Just sit down and wait." When Mr. Fontanilla reminded Linda of the inconvenience being caused to them, she bluntly retorted, "Who do you think you are? You lousy Flips are good for nothing beggars. You always ask for American aid." After which she remarked "Don’t worry about your baggage. Anyway there is nothing in there. What are you doing here anyway? I will report you to immigration. You Filipinos should go home." Such rude statements were made in front of other people in the airport causing the Fontanillas

to suffer shame, humiliation and embarrassment. The chastening situation even caused the younger Fontanilla to break into tears. After some time, Linda, without any explanation, offered the Fontanillas $50.00 each. She simply said "Take it or leave it." This, the Fontanillas declined. The Fontanillas then proceeded to the United Airlines customer service counter to plead their case. The male employee at the counter reacted by shouting and left without saying anything.

United Airlines has a different version of what occurred at the LA Airport. According to it, the Fontanillas did not initially go to the check-in counter to get their seat assignments for the flight. They instead proceeded to join the queue boarding the aircraft without first securing their seat assignments as required in their ticket and boarding passes. Having no seat assignments, the stewardess at the door of the plane instructed them to go to the check-in counter. When the Fontanillas proceeded to the check-in counter, Linda Allen, the United Airlines Customer Representative at the counter informed them that the flight was overbooked. She booked them on the next available flight and offered them denied boarding compensation. Linda vehemently denies uttering the derogatory and racist words attributed to her by the Fontanillas.

The incident prompted the Fontanillas to file case for damages before the RTC of Makati however the latter dismissed the complaint.

On appeal, the CA ruled in favor of the Fontanillas. Hence, United Airlines sought redress with the SC.

ISSUE: Whether or not the CA erred in applying US laws in the case at bar? Yes HELD: The court held that the CA erred in applying the laws of the US as Philippine law is the applicable law. Although, the contract of carriage was to be performed in the US, the tickets were purchased through United's agent in Manila. It is true that the tickets were "rewritten" in Washington, D.C. however, such fact did not change the nature of the original contract of carriage entered into by the parties in Manila. According to the doctrine of lex loci contractus, as a general rule, the law of the place where a contract is made or entered into governs with respect to its nature and validity, obligation and interpretation. This has been said to be the rule even though the place where the contract was made is different from the place where it is to be performed, and particularly so, if the place of the making and the place of performance are the same. Hence, the court should apply the law of the place where the airline ticket was issued, when the passengers are residents and nationals of the forum and the ticket is issued in such State by the airline.

9. ASIAVEST MERCHANT BANKERS V. COURT OF APPEALS

FACTS: Asiavest Merchant Bankers, a corporation organized under the laws of Malaysia, initiated a collection suit before the High Court of Malaya in Kuala Lumpur against Philippine National Construction Corporation (PNCC), a corporation duly incorporated and existing under Philippine laws. Asiavest sought to recover the indemnity of the performance bond it had put up in favor of PNCC to guarantee completion of the Felda Project and the non-payment of the loan it extended for the

ABACAN, AGUILA, ALCANTARA F, ALCANTARA R, BAUTISTA, BELLO, CAMIÑA, CARANDANG, CARIÑO, CARINGAL, CHING, CLEMENTE, CONSUNJI, DEVESA, ESPIRITU, ESQUIVIAS, EVANGELISTA, completion of another project. The High Court of Malaya rendered judgment in favor

of Asiavest and against PNCC, ordering the latter to pay the former.

Following unsuccessful attempts to secure payment from PNCC under the judgment, Asiavest initiated a complaint before the RTC to enforce the judgment of the High Court of Malaya. PNCC moved to dismiss the case contending that the foreign judgment should be denied recognition or enforcement for want of jurisdiction, want of notice, collusion and/or fraud, and there is a clear mistake of law or fact. The RTC and CA dismissed the case.

ISSUE: Whether the foreign judgment should be given recognition and enforcement in the Philippines.

HELD: YES. Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries.

In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction; that the trial upon regular proceedings has been conducted, following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment.

A foreign judgment is presumed to be valid and binding in the country from which it comes, until a contrary showing, on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. Under Section 50(b), Rule 39 of the Revised Rules of Court, which was the governing law at the time the instant case was decided by the trial court and respondent appellate court, a judgment, against a person, of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. In addition, under Section 3(n), Rule 131 of the Revised Rules of Court, a court, whether in the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of its jurisdiction. Hence, once the authenticity of the foreign judgment is proved, the party attacking a foreign judgment, is tasked with the burden of overcoming its presumptive validity.

Having thus proven through evidence of the existence and authenticity of the foreign judgment, said foreign judgment enjoys presumptive validity and the burden then fell upon the party who disputes its validity, herein PNCC, to prove otherwise.

PNCC failed to sufficiently discharge the burden that fell upon it – to prove by clear and convincing evidence the grounds which it relied upon to prevent enforcement of

the Malaysian High Court judgment, namely, (a) that jurisdiction was not acquired by the Malaysian Court over the person of PNCC due to alleged improper service of summons upon PNCC and the alleged lack of authority of its counsel to appear and represent PNCC in the suit; (b) the foreign judgment is allegedly tainted by evident collusion, fraud and clear mistake of fact or law; and (c) not only were the requisites for enforcement or recognition allegedly not complied with but also that the Malaysian judgment is allegedly contrary to the Constitutional prescription that the “every decision must state the facts and law on which it is based.”

The foregoing reasons or grounds relied upon by PNCC in preventing enforcement and recognition of the Malaysian judgment primarily refer to matters of remedy and procedure taken by the Malaysian High Court relative to the suit for collection initiated by petitioner. Needless to stress, the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the procedure in the courts of the country in which such judgment was rendered differs from that of the courts of the country in which the judgment is relied on. Ultimately, matters of remedy and procedure such as those relating to the service of summons or court process upon the defendant, the authority of counsel to appear and represent a defendant and the formal requirements in a decision are governed by the lex fori or the internal law of the forum, i.e., the law of Malaysia in this case.

In this case, it is the procedural law of Malaysia where the judgment was rendered that determines the validity of the service of court process on PNCC as well as other matters raised by it. As to what the Malaysian procedural law is, remains a question of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may be evidenced by an official publication or by a duly attested or authenticated copy thereof. It was then incumbent upon PNCC to present evidence as to what that Malaysian procedural law is and to show that under it, the assailed service of summons upon a financial officer of a corporation, as alleged by it, is invalid. It did not. Accordingly, the presumption of validity and regularity of service of summons and the decision thereafter rendered by the High Court of Malaya must stand.

Fraud to hinder the enforcement within the jurisdiction of a foreign judgment must be extrinsic, i.e., fraud based on facts not controverted or resolved in the case where judgment is rendered, or that which would go to the jurisdiction of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which he has a meritorious defense. Intrinsic fraud is one which goes to the very existence of the cause of action is deemed already adjudged, and it, therefore, cannot militate against the recognition or enforcement of the foreign judgment. Evidence is wanting on the alleged extrinsic fraud. Hence, such unsubstantiated allegation cannot give rise to liability therein.

Lastly, there is no merit to the argument that the foreign judgment is not enforceable in view of the absence of any statement of facts and law upon which the award in favor of the petitioner was based. As aforestated, the lex fori or the internal law of the forum governs matters of remedy and procedure. Considering that under the procedural rules of the High Court of Malaya, a valid judgment may be rendered even without stating in the judgment every fact and law upon which the judgment is based,

then the same must be accorded respect and the courts in this jurisdiction cannot invalidate the judgment of the foreign court simply because our rules provide otherwise.

All in all, PNCC had the ultimate duty to demonstrate the alleged invalidity of such foreign judgment, being the party challenging the judgment rendered by the High Court of Malaya. But instead of doing so, PNCC merely argued, to which the trial court agreed, that the burden lay upon petitioner to prove the validity of the money judgment. Such is clearly erroneous and would render meaningless the presumption of validity accorded a foreign judgment were the party seeking to enforce it be required to first establish its validity.

10. GARCIA V. RECIO

Doctrine: A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such decree is valid according to the national law of the foreigner. However, the divorce decree and the governing personal law of the alien spouse who obtained the divorce must be proven. Our courts do not take judicial notice of foreign laws and judgment; hence, like any other facts, both the divorce decree and the national law of the alien must be alleged and proven according to our law on evidence.

FACTS: Rederick A. Recio (Rederick), a Filipino, was married to Editha Samson, an Australian citizen, in Malabon, Rizal in 1987. They lived together as husband and wife in Australia. In 1989, a decree of divorce, purportedly dissolving the marriage, was issued by an Australian family court. Rederick later became an Australian Citizen in 1992.

In 1994, petitioner Grace J Garcia (Grace) – a Filipina – and Rederick were married in Cabanatuan City. In their application for a marriage license, Rederick was declared as "single" and "Filipino."

In March 1998, Grace filed a Complaint for Declaration of Nullity of Marriage on the ground of bigamy. She claimed that she learned of respondent's marriage to Editha Samson only in November 1997. In his Answer, Rederick averred that, as far back as 1993, he had revealed to Grace his prior marriage and its subsequent dissolution. He contended that his first marriage had been validly dissolved by the divorce decree obtained in Australian in 1989; thus, he was legally capacitated to marry Grace in 1994.

In July 1998, while the suit for the declaration of nullity was pending – Rederick was able to secure a divorce decree from a family court in Sydney because his marriage with Grace had " irretrievably broken down." Thus, Rederick prayed in his Answer that the Complaint be dismissed on the ground that it stated no cause of action. The trial court declared the marriage dissolved on the ground that the divorce issued in Australia was valid and recognized in the Philippines. The Australian divorce had ended the marriage; thus, there was no more martial union to nullify or annual. ISSUES:

(1) Whether or not the divorce between respondent and Editha Samson was proven (YES)

(2) Whether or not Rederick was proven to be legally capacitated to marry Grace (NO)

HELD:

(1) Yes. Before a divorce decree can be admitted in evidence, it must first comply with the registration requirements under Articles 11, 13 and 52 of the Family Code . However, in this case, when the divorce decree of 1989 was submitted in evidence, counsel for Grace objected, not to its admissibility, but only to the fact that it had not been registered in the Local Civil Registry of Cabanatuan City. The trial court ruled that it was admissible, subject to Grace’s qualification. Hence, it was admitted in evidence and accorded weight by the judge. The failure of Grace’s counsel to object properly rendered the divorce decree admissible as a written act of the Family Court of Sydney, Australia. Furthermore, compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary as Rederick was no longer bound by Philippine personal laws after he acquired Australian citizenship in 1992.

(2) No. Rederick merely presented a decree nisi or an interlocutory decree – a conditional or provisional judgment of divorce. It is in effect the same as a separation from bed and board, although an absolute divorce may follow after the lapse of the prescribed period during which no reconciliation is effected. On its face, the herein Australian divorce decree contains a restriction that reads: "1. A party to a marriage who marries again before this decree becomes absolute (unless the other party has died) commits the offence of bigamy."

Therefore, the divorce decree did not absolutely establish his legal capacity to remarry according to his national law. Hence, there is no basis for the ruling of the trial court, which erroneously assumed that the Australian divorce ipso facto restored Rederick’s capacity to remarry despite the paucity of evidence on this matter. The legal capacity to contract marriage is determined by the national law of the party concerned. The certificate mentioned in Article 21 of the Family Code would have been sufficient to establish the legal capacity of Rederick, had he duly presented it in court. A duly authenticated and admitted certificate is prima facie evidence of legal capacity to marry on the part of the alien applicant for a marriage license. However, based on the records submitted, there is absolutely no evidence that proves Rederick’s legal capacity to marry Grace.

The court a quo erred in finding that the divorce decree ipso facto clothed Rederick with the legal capacity to remarry without requiring him to adduce sufficient evidence to show the Australian personal law governing his status; or at the very least, to prove his legal capacity to contract the second marriage. Neither can we declare the marriage null and void on the ground of bigamy. It may turn out that under Australian law, Rederick was really capacitated to marry Grace as a direct result of the divorce decree. Hence, the most judicious course is to remand this case to the trial court to receive evidence, if any, which show Rederick’s legal capacity to marry Grace. WHEREFORE, in the interest of orderly procedure and substantial justice, we REMAND the case to the court a quo for the purpose of receiving evidence which conclusively show respondent's legal capacity to marry petitioner; and failing in that, of declaring the parties' marriage void on the ground of bigamy, as above discussed.

ABACAN, AGUILA, ALCANTARA F, ALCANTARA R, BAUTISTA, BELLO, CAMIÑA, CARANDANG, CARIÑO, CARINGAL, CHING, CLEMENTE, CONSUNJI, DEVESA, ESPIRITU, ESQUIVIAS, EVANGELISTA, No costs.

11. RAYTHEON INTERNATIONAL V. ROUZIE

FACTS: Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under the laws of the State of Connecticut, USA, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired Rouzie as its representative to negotiate the sale of services in several government projects in the Philippines for an agreed remuneration of 10% of the gross receipts. Rouzie secured a service contract with the Republic of the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo eruption and mudflows.

On July 16, 1994, Rouzie filed before the Arbitration Branch of the NLRC a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach of employment contract. Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay Rouzie’s money claims. Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and dismissed Rouzie’s complaint on the ground of lack of jurisdiction. Rouzie elevated the case to this Court but was dismissed in a Resolution which became final and executory on November 9, 1998. On 8 January 1999, Rouzie, then a resident of La Union, instituted an action for damages before the RTC of Bauang, La Union. The Complaint, named as defendants Raytheon International, Inc. as well as BMSI and RUST, the two corporations impleaded in the earlier labor case. The complaint essentially reiterated the allegations in the labor case that BMSI verbally employed Rouzie to negotiate the sale of services in government projects and that Rouzie was not paid the commissions due him from the Pinatubo dredging project which he secured on behalf of BMSI. The complaint also averred that BMSI and RUST as well as Raytheon itself had combined and functioned as one company.

In its Answer, Raytheon alleged that contrary to Rouzie’s claim, it was a foreign corporation duly licensed to do business in the Philippines and denied entering into any arrangement with Rouzie or paying the latter any sum of money. Raytheon also denied combining with BMSI and RUST for the purpose of assuming the alleged obligation of the said companies. Raytheon also referred to the NLRC decision which disclosed that per the written agreement between respondent and BMSI and RUST, denominated as "Special Sales Representative Agreement," the rights and obligations of the parties shall be governed by the laws of the State of Connecticut. Raytheon sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non conveniens and prayed for damages by way of compulsory counterclaim.

On 18 May 1999, Raytheon filed an Omnibus Motion for Preliminary Hearing Based on Affirmative Defenses and for Summary Judgment seeking the dismissal of the complaint on grounds of forum non conveniens and failure to state a cause of action. Rouzie opposed the same. Pending the resolution of the omnibus motion, the deposition of Walter Browning was taken before the Philippine Consulate General in Chicago.

In an Order, the RTC denied Raytheon’s omnibus motion. The trial court held that the factual allegations in the complaint, assuming the same to be admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled that the principle of forum non conveniens was inapplicable because the trial court could enforce judgment on Raytheon, it being a foreign corporation licensed to do business in the Philippines.

Raytheon filed a MR of the order, which motion was opposed by Rouzie. In an Order, the trial court denied Raytheon’s motion. Thus, it filed a Rule 65 Petition with the CA praying for the issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of the trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from conducting further proceedings.

On 28 August 2003, the CA rendered the assailed Decision denying the petition for certiorari for lack of merit. It also denied Raytheon’s MR in the assailed Resolution issued on 10 March 2004. The appellate court held that although the trial court should not have confined itself to the allegations in the complaint and should have also considered evidence aliunde in resolving Raytheon’s omnibus motion, it found the evidence presented by Raytheon, that is, the deposition of Walter Browning, insufficient for purposes of determining whether the complaint failed to state a cause of action. The appellate court also stated that it could not rule one way or the other on the issue of whether the corporations, including Raytheon, named as defendants in the case had indeed merged together based solely on the evidence presented by Rouzie. Thus, it held that the issue should be threshed out during trial. Moreover, the appellate court deferred to the discretion of the trial court when the latter decided not to desist from assuming jurisdiction on the ground of the inapplicability of the principle of forum non conveniens.

ISSUE: WON the CA erred in refusing to dismiss the complaint on the ground of forum non conveniens? (NO)

HELD: Raytheon mainly asserts that the written contract between Rouzie and BMSI included a valid choice of law clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also mentions the presence of foreign elements in the dispute – namely, the parties and witnesses involved are American corporations and citizens and the evidence to be presented is located outside the Philippines – that renders our local courts inconvenient forums. Raytheon theorizes that the foreign elements of the dispute necessitate the immediate application of the doctrine of forum non conveniens.

Recently in Hasegawa v. Kitamura, the Court outlined 3 consecutive phases involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and enforcement of judgments. Thus, in the instances where the Court held that the local judicial machinery was adequate to resolve controversies with a foreign element, the following requisites had to be proved: (1) that the Philippine Court is one to which the parties may conveniently resort; (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 the power to enforce its decision.