FORUM NON CONVENIENS RELATES TO FORUM, NOT TO THE CHOICE OF GOVERNING LAW; THE CHOICE OF FOREIGN LAW IS MERELY AN INCIDENT OF ITS APPLICATION

Saudi Arabian Airlines (Saudia) and Brenda J. Betia Vs. Ma. Jopette M. Rebesencio Montassah B. Sacar-Adiong, et al.
G.R. No. 198587, January 14, 2015

Facts:

Respondents (complainants before the Labor Arbiter) were recruited and hired by Saudia as Temporary Flight Attendants with the accreditation and approval of the Philippine Overseas Employment Administration.

Get an updated copy of the Labor Code (2017), by Atty. Villanueva, as re-numbered pursuant to R.A. 10151 and per DOLE Department Advisory o1, Series of 2015

After undergoing seminars required by the Philippine Overseas Employment Administration for deployment overseas, as well as training modules offered by Saudia (e.g., initial flight attendant/training course and transition training), and after working as Temporary Flight Attendants, respondents became Permanent Flight Attendants.

They then entered into Cabin Attendant contracts with Saudia. Respondents continued their employment with Saudia until they were separated from service on various dates in 2006. Respondents contended that the termination of their employment was illegal. They alleged that the termination was made solely because they were pregnant.

As respondents alleged, they had informed Saudia of their respective pregnancies and had gone through the necessary procedures to process their maternity leaves. Initially, Saudia had given its approval but later on informed respondents that its management in Jeddah, Saudi Arabia had disapproved their maternity leaves.

In addition, it required respondents to file their resignation letters. Respondents were told that if they did not resign, Saudia would terminate them all the same. The threat of termination entailed the loss of benefits, such as separation pay and ticket discount entitlements.

Saudia anchored its disapproval of respondents’ maternity leaves and demand for their resignation on its “Unified Employment Contract for Female Cabin Attendants” (Unified Contract). Under the Unified Contract, the employment of a Flight Attendant who becomes pregnant is rendered void stating that if the Air Hostess becomes pregnant at any time during the term of this contract, this shall render her employment contract as void and she will be terminated due to lack of medical fitness.

Faced with the dilemma of resigning or totally losing their benefits, respondents executed handwritten resignation letters. In Montassah’s and Rouen Ruth’s cases, their resignations were executed on Saudia’s blank letterheads that Saudia had provided. These letterheads already had the word “RESIGNATION” typed on the subject portions of their headings when these were handed to respondents.

Respondents filed a Complaint against Saudia and its officers for illegal dismissal and money claims.

Saudia assailed the jurisdiction of the Labor Arbiter. It claimed that all the determining points of contact referred to foreign law and insisted that the Complaint ought to be dismissed on the ground of forum non conveniens. It added that respondents had no cause of action as they resigned voluntarily.

LA Ruling:

The Executive Labor Arbiter Fatima Jambaro-Franco rendered the Decision dismissing respondents’ Complaint.

NLRC Ruling:

On respondents’ appeal, the National Labor Relations Commission’s Sixth Division reversed the ruling of Executive Labor Arbiter Jambaro-Franco. It explained that “[c]onsidering that complainants-appellants are OFWs, the Labor Arbiters and the NLRC has [sic] jurisdiction to hear and decide their complaint for illegal termination.”

On the matter of forum non conveniens, it noted that there were no special circumstances that warranted its abstention from exercising jurisdiction. On the issue of whether respondents were validly dismissed, it held that there was nothing on record to support Saudia’s claim that respondents resigned voluntarily.

The National Labor Relations Commission denied petitioners’ Motion for Reconsideration.

CA Ruling:

The Court of Appeals denied petitioners’ Rule 65 Petition and modified the Decision of the National Labor Relations Commission with respect to the award of separation pay and backwages.

The Court of Appeals denied petitioners’ Motion for Reconsideration. Hence, the Appeal before the SC.

Issue/s:

Whether or not the laws of Saudi Arabia apply and the Philippines is a forum non conveniens

SC Ruling:

A choice of law governing the validity of contracts or the interpretation of its provisions does not necessarily imply forum non conveniens. Choice of law and forum non conveniens are entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of contracts.

In contrast, forum non conveniens is a device akin to the rule against forum shopping. It is designed to frustrate illicit means for securing advantages and vexing litigants that would otherwise be possible if the venue of litigation (or dispute resolution) were left entirely to the whim of either party.

Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a given jurisdiction as the governing law of a contract does not preclude the exercise of jurisdiction by tribunals elsewhere. The reverse is equally true: The assumption of jurisdiction by tribunals does not ipso facto mean that it cannot apply and rule on the basis of the parties’ stipulation.

Philippine law is definite as to what governs the formal or extrinsic validity of contracts. The first paragraph of Article 17 of the Civil Code provides that “[t]he forms and solemnities of contracts . . . shall be governed by the laws of the country in which they are executed” (i.e., lex loci celebrationis).

In contrast, there is no statutorily established mode of settling conflict of laws situations on matters pertaining to substantive content of contracts. It has been noted that three (3) modes have emerged: (1) lex loci contractusor the law of the place of the making; (2) lex loci solutionis or the law of the place of performance; and (3) lex loci intentionis or the law intended by the parties.

Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of the laws of Saudi Arabia. It insists that the need to comply with these stipulations calls into operation the doctrine of forum non conveniens and, in turn, makes it necessary for Philippine tribunals to refrain from exercising jurisdiction. As mentioned, contractual choice of laws factors into transnational litigation in any or a combination of four (4) ways. Moreover, forum non conveniens relates to one of these: choosing between multiple possible fora.

When parallel litigation arises strictly within the context of a single jurisdiction, such rules as those on forum shopping, litis pendentia, and res judicata come into operation. Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a means of addressing the problem of parallel litigation. While the rules of forum shopping, litis pendentia, and res judicata are designed to address the problem of parallel litigation within a single jurisdiction, forum non conveniens is a means devised to address parallel litigation arising in multiple jurisdictions.

Forum non conveniens literally translates to “the forum is inconvenient.” It is a concept in private international law and was devised to combat the “less than honorable” reasons and excuses that litigants use to secure procedural advantages, annoy and harass defendants, avoid overcrowded dockets, and select a “friendlier” venue. Thus, the doctrine of forum non conveniens addresses the same rationale that the rule against forum shopping does, albeit on a multijurisdictional scale.

Unlike the rule on res judicata, as well as those on litis pendentia and forum shopping, forum non conveniens finds no textual anchor, whether in statute or in procedural rules, in our civil law system. Nevertheless, jurisprudence has applied forum non conveniens as basis for a court to decline its exercise of jurisdiction.

Accordingly, under the doctrine of forum non conveniens, “a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most ‘convenient’ or available forum and the parties are not precluded from seeking remedies elsewhere.”

In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals, this court underscored that a Philippine court may properly assume jurisdiction over a case if it chooses to do so to the extent: “(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.

The use of the word “may” (i.e., “may refuse impositions on its jurisdiction”) in the decisions shows that the matter of jurisdiction rests on the sound discretion of a court. Neither the mere invocation of forum non conveniens nor the averment of foreign elements operates to automatically divest a court of jurisdiction. Rather, a court should renounce jurisdiction only “after ‘vital facts are established, to determine whether special circumstances’ require the court’s desistance.” As the propriety of applying forum non conveniens is contingent on a factual determination, it is, therefore, a matter of defense.

Forum non conveniens must not only be clearly pleaded as a ground for dismissal; it must be pleaded as such at the earliest possible opportunity. Otherwise, it shall be deemed waived. The SC notes that it is stated in Hasegawa, forum non conveniens is not a ground for a motion to dismiss. Consistent with forum non conveniens as fundamentally a factual matter, it is imperative that it proceeds from a factually established basis. It would be improper to dismiss an action pursuant to forum non conveniens based merely on a perceived, likely, or hypothetical multiplicity of fora. Thus, a defendant must also plead and show that a prior suit has, in fact, been brought in another jurisdiction.

In the greater interest of prudence that a defendant not only allege supposed dangerous tendencies in litigating in this jurisdiction; the defendant must also show that such danger is real and present in that litigation or dispute resolution has commenced in another jurisdiction and that a foreign tribunal has chosen to exercise jurisdiction.

Forum non conveniens relates to forum, not to the choice of governing law. That forum non conveniens may ultimately result in the application of foreign law is merely an incident of its application. In this strict sense, forum non conveniens is not applicable. It is not the primarily pivotal consideration in this case.

Any evaluation of the propriety of contracting parties’ choice of a forum and its incidents must grapple with two (2) considerations: first, the availability and adequacy of recourse to a foreign tribunal; and second, the question of where, as between the forum court and a foreign court, the balance of interests inhering in a dispute weighs more heavily.

The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign tribunal and can be resolved by juxtaposing the competencies and practical circumstances of the tribunals in alternative fora. Exigencies, like the statute of limitations, capacity to enforce orders and judgments, access to records, requirements for the acquisition of jurisdiction, and even questions relating to the integrity of foreign courts, may render undesirable or even totally unfeasible recourse to a foreign court. As mentioned, we consider it in the greater interest of prudence that a defendant show, in pleading forum non conveniens, that litigation has commenced in another jurisdiction and that a foreign tribunal has, in fact, chosen to exercise jurisdiction.

Two (2) factors weigh into a court’s appraisal of the balance of interests inhering in a dispute: first, the vinculum which the parties and their relation have to a given jurisdiction; and second, the public interest that must animate a tribunal, in its capacity as an agent of the sovereign, in choosing to assume or decline jurisdiction. The first is more concerned with the parties, their personal circumstances, and private interests; the second concerns itself with the state and the greater social order.

In considering the vinculum, a court must look into the preponderance of linkages which the parties and their transaction may have to either jurisdiction. In this respect, factors, such as the parties’ respective nationalities and places of negotiation, execution, performance, engagement or deployment, come into play.

In considering public interest, a court proceeds with a consciousness that it is an organ of the state. It must, thus, determine if the interests of the sovereign (which acts through it) are outweighed by those of the alternative jurisdiction. In this respect, the court delves into a consideration of public policy. Should it find that public interest weighs more heavily in favor of its assumption of jurisdiction, it should proceed in adjudicating the dispute, any doubt or contrary view arising from the preponderance of linkages notwithstanding.

Our law on contracts recognizes the validity of contractual choice of law provisions. Where such provisions exist, Philippine tribunals, acting as the forum court, generally defer to the parties’ articulated choice. This is consistent with the fundamental principle of autonomy of contracts. Article 1306 of the Civil Code expressly provides that “[t]he contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient.” Nevertheless, while a Philippine tribunal (acting as the forum court) is called upon to respect the parties’ choice of governing law, such respect must not be so permissive as to lose sight of considerations of law, morals, good customs, public order, or public policy that underlie the contract central to the controversy.

Article II, Section 14 of the 1987 Constitution provides that “[t]he State . . . shall ensure the fundamental equality before the law of women and men.” Contrasted with Article II, Section 1 of the 1987 Constitution’s statement that “[n]o person shall . . . be denied the equal protection of the laws,” Article II, Section 14 exhorts the State to “ensure.” This does not only mean that the Philippines shall not countenance nor lend legal recognition and approbation to measures that discriminate on the basis of one’s being male or female. It imposes an obligation to actively engage in securing the fundamental equality of men and women. The Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), signed and ratified by the Philippines on July 15, 1980, and on August 5, 1981, respectively, is part of the law of the land. In view of the widespread signing and ratification of, as well as adherence (in practice) to it by states, it may even be said that many provisions of the CEDAW may have become customary international law. The CEDAW gives effect to the Constitution’s policy statement in Article II, Section 14.

Saudia’s policy entails the termination of employment of flight attendants who become pregnant. At the risk of stating the obvious, pregnancy is an occurrence that pertains specifically to women. Saudia’s policy excludes from and restricts employment on the basis of no other consideration but sex.

Apart from the constitutional policy on the fundamental equality before the law of men and women, it is settled that contracts relating to labor and employment are impressed with public interest. Article 1700 of the Civil Code provides that “[t]he relation between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good.”

As the present dispute relates to (what the respondents allege to be) the illegal termination of respondents’ employment, this case is immutably a matter of public interest and public policy. Consistent with clear pronouncements in law and jurisprudence, Philippine laws properly find application in and govern this case. Moreover, as this premise for Saudia’s insistence on the application forum non conveniens has been shattered, it follows that Philippine tribunals may properly assume jurisdiction over the present controversy.

There is no basis for concluding that the case can be more conveniently tried elsewhere. As established earlier, Saudia is doing business in the Philippines. For their part, all four (4) respondents are Filipino citizens maintaining residence in the Philippines and, apart from their previous employment with Saudia, have no other connection to the Kingdom of Saudi Arabia. It would even be to respondents’ inconvenience if this case were to be tried elsewhere.

Second, the records are bereft of any indication that respondents filed their Complaint in an effort to engage in forum shopping or to vex and inconvenience Saudia. Third, there is no indication of “unwillingness to extend local judicial facilities to non-residents or aliens.” That Saudia has managed to bring the present controversy all the way to this court proves this. Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating the right sought to be maintained. Summons was properly served on Saudia and jurisdiction over its person was validly acquired. Lastly, there is not even room for considering foreign law. Philippine law properly governs the present dispute.

It does not follow that Philippine tribunals should refrain from exercising jurisdiction. To recall the Court pronouncements in Puyat, as well as in Bank of America, NT&SA, it is not so much the mere applicability of foreign law which calls into operation forum non conveniens. Rather, what justifies a court’s desistance from exercising jurisdiction is “[t]he difficulty of ascertaining foreign law” or the inability of a “Philippine Court . . . to make an intelligent decision as to the law[.]

All told, the considerations for assumption of jurisdiction by Philippine tribunals as outlined in Bank of America, NT&SA99 have been satisfied. First, all the parties are based in the Philippines and all the material incidents transpired in this jurisdiction. Thus, the parties may conveniently seek relief from Philippine tribunals. Second, Philippine tribunals are in a position to make an intelligent decision as to the law and the facts. Third, Philippine tribunals are in a position to enforce their decisions. There is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary, the immense public policy considerations attendant to this case behoove Philippine tribunals to not shy away from their duty to rule on the case.