CONTINENTAL MICRONESIA, INC.
vs JOSEPH BASSO
G.R. Nos. 178382-83, September 23, 2015
J. JARDELEZA
FACTS:
Joseph Basso, was hired as General Manager of the Philippine Branch of
Continental, pursuant to an employment contract executed and signed in the US by Mr.
Keith R. Braden, Managing Director of Asia of Continental Airlines, Inc. (Continental).
When petitioner CMI took over the Philippine operations of Continental, it relieved Basso
as General Manager and offered the position as Consultant on “as needed basis”,
effective February 1, 1996 to July 31, 1996. Basso, having rejected his counter-proposal
by CMI, filed a Complaint for Illegal Dismissal with Moral and Exemplary Damages
against CMI. CMI filed a Motion to Dismiss on the ground of lack of jurisdiction over the
person of CMI and the subject matter of the controversy. The Labor Arbiter granted the
Motion to Dismiss, and held that the terms and provisions of the employment contract
show that the parties did not intend to apply our Labor Code (Presidential Decree No.
442). Further, no employer-employee relationship existed between Basso and the branch
office of CMI in the Philippines, but between Basso and the foreign corporation itself. The
NLRC remanded the case to the Labor Arbiter to settle the issue on jurisdiction. However,
the NLRC did not agree on the pronouncement of the Labor Arbiter that the latter has no
jurisdiction over the controversy. Aggrieved with the conflicting ruling of the NLRC and
the Labor Arbiter, CMI and Basso filed their respective Motions for Reconsideration, but
both were denied. CMI filed a Petition for Certiorari with the Court of Appeals alleging that
the NLRC gravely abused its discretion when it assumed jurisdiction over the person of
CMI and the subject matter of the case. The Court of Appeals denied CMI’s motion, while
partially granted Basso’s motion as to the computation of back wages. Thus, this petition.
ISSUE:
Whether or not, the CA erred in ruling that both the Labor Arbiter and NLRC had
acquired jurisdiction to hear and try the illegal dismissal case.
RULING:
The Court agreed with CMI that there is a conflict-of-laws issue that needs to be
resolved first. Where the facts establish the existence of foreign elements, the case
presents a conflict-of-laws issue, such as in this case, where one of the parties is an alien
and the other is domiciled in another state. In Hasegawa v. Kitamura, the court stated that
in the judicial resolution of conflict-of-laws problems, three consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Jurisdiction is defined as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law and
by the material allegations in the complaint, regardless of whether or not the plaintiff is
entitled to recover all or some of the claims or reliefs sought therein. It cannot be acquired
through a waiver, enlarged by the omission of the parties, or conferred by the
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acquiescence of the court. That the employment contract of Basso was replete with
references to US laws, and that it originated from and was returned to the US, do not
automatically preclude our labor tribunals from exercising jurisdiction to hear and try this
case.
This case stemmed from an illegal dismissal complaint. The Labor Code, under
Article 217, clearly vests original and exclusive jurisdiction to hear and decide cases
involving termination disputes to the Labor Arbiter. Hence, the Labor Arbiter and the
NLRC have jurisdiction over the subject matter of the case.
As regards jurisdiction over the parties, the SC agreed with the Court of Appeals
that the Labor Arbiter acquired jurisdiction over the person of Basso, notwithstanding his
citizenship, when he filed his complaint against CMI. On the other hand, jurisdiction over
the person of CMI was acquired through the coercive process of service of summons. We
note that CMI never denied that it was served with summons. CMI has, in fact, voluntarily
appeared and participated in the proceedings before the courts. Though, a foreign
corporation, CMI is licensed to do business in the Philippines and has a local business
address here. The purpose of the law in requiring that foreign corporations doing business
in the country be licensed to do so, is to subject the foreign corporations to the jurisdiction
of our courts.
Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties
and the subject matter of this case, these tribunals may proceed to try the case even if
the rules of conflict-of-laws or the convenience of the parties point to a foreign forum, this
being an exercise of sovereign prerogative of the country where the case is filed
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