KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD.

,
vs
MINORU KITAMURA

G.R. No. 149177

November 23, 2007

FACTS:

Nippon Engineering Consultants (Nippon), a Japanese consultancy firm providing technical and
management support in the infrastructure projects national permanently residing in the Philippines.
The agreement provides that Kitamaru was to extend professional services to Nippon for a year.
Nippon assigned Kitamaru to work as the project manager of the Southern Tagalog Access Road
(STAR) project. When the STAR project was near completion, DPWH engaged the consultancy
services of Nippon, this time for the detailed engineering & construction supervision of the
Bongabon-Baler Road Improvement (BBRI) Project. Kitamaru was named as the project manger in the
contract.

Hasegawa, Nippons general manager for its International Division, informed Kitamaru that the
company had no more intention of automatically renewing his ICA. His services would be engaged by
the company only up to the substantial completion of the STAR Project.

Kitamaru demanded that he be assigned to the BBRI project. Nippon insisted that Kitamarus contract
was for a fixed term that had expired. Kitamaru then filed for specific performance & damages w/ the
RTC of Lipa City. Nippon filed a MTD.

Nippons contention: The ICA had been perfected in Japan & executed by & between Japanese
nationals. Thus, the RTC of Lipa City has no jurisdiction. The claim for improper pre-termination of
Kitamarus ICA could only be heard & ventilated in the proper courts of Japan following the
principles of lex loci celebrationis & lex contractus.

The RTC denied the motion to dismiss. The CA ruled hat the principle of lex loci celebrationis was
not applicable to the case, because nowhere in the pleadings was the validity of the written agreement
put in issue. It held that the RTC was correct in applying the principle of lex loci solutionis.

ISSUE:

Whether or not the subject matter jurisdiction of Philippine courts in civil cases for specific
performance & damages involving contracts executed outside the country by foreign nationals may be
assailed on the principles of lex loci celebrationis, lex contractus, the state of the most significant
relationship rule, or forum non conveniens.

HELD:

NO. In the judicial resolution of conflicts problems, 3 consecutive phases are involved: jurisdiction,
choice of law, and recognition and enforcement of judgments. Jurisdiction & choice of law are 2
distinct concepts.Jurisdiction considers whether it is fair to cause a defendant to travel to this state;
choice of law asks the further question whether the application of a substantive law w/c will
determine the merits of the case is fair to both parties. The power to exercise jurisdiction does
notautomatically give a state constitutional authority to apply forum law. While jurisdiction and the
choice of the lex foriwill often coincide, the minimum contacts for one do not always provide the
necessary significant contacts for the other. The question of whether the law of a state can be
applied to a transaction is different from the question of whether the courts of that state have
jurisdiction to enter a judgment.

In this case, only the 1 st phase is at issuejurisdiction. Jurisdiction, however, has various aspects. For
a court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the
plaintiff/petitioner, over the defendant/respondent, over the subject matter, over the issues of the case
and, in cases involving property, over the res or the thing w/c is the subject of the litigation.In
assailing the trial court's jurisdiction herein, Nippon is actually referring to subject matter
jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority w/c
establishes and organizes the court. It is given only by law and in the manner prescribed by law. It is
further determined by the allegations of the complaint irrespective of whether the plaintiff is entitled
to all or some of the claims asserted therein. To succeed in its motion for the dismissal of an action for
lack of jurisdiction over the subject matter of the claim, the movant must show that the court or
tribunal cannot act on the matter submitted to it because no lawgrants it the power to adjudicate the
claims.

In the instant case, Nippon, in its MTD, does not claim that the RTC is not properly vested by law w/
jurisdiction to hear the subject controversy for a civil case for specific performance & damages is one
not capable of pecuniary estimation & is properly cognizable by the RTC of Lipa City.What they
rather raise as grounds to question subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the state of the most significant relationship rule. The Court
finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the law of the place of the ceremony or the law of the place where a
contract is made. The doctrine of lex contractus or lex loci contractusmeans the law of the place
where a contract is executed or to be performed. It controls the nature, construction, and validity of
the contract and it may pertain to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly. Under the state of the most significant relationship rule, to
ascertain what state law to apply to a dispute, the court should determine which state has the most
substantial connection to the occurrence and the parties. In a case involving a contract, the court
should consider where the contract was made, was negotiated, was to be performed, and the domicile,
place of business, or place of incorporation of the parties.This rule takes into account several contacts
and evaluates them according to their relative importance with respect to the particular issue to be
resolved.

Since these 3 principles in conflict of laws make reference to the law applicable to a dispute, they are
rules proper for the 2nd phase, the choice of law. They determine which state's law is to be applied in
resolving the substantive issues of a conflicts problem. Necessarily, as the only issue in this case is
that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for.

Further, Nippons premature invocation of choice-of-law rules is exposed by the fact that they have
not yet pointed out any conflict between the laws of Japan and ours. Before determining which law
should apply, 1st there should exist a conflict of laws situation requiring theapplication of the conflict
of laws rules. Also, when the law of a foreign country is invoked to provide the proper rules for the
solution of a case, the existence of such law must be pleaded and proved.

It should be noted that when a conflicts case, one involving a foreign element, is brought before a
court or administrative agency, there are 3 alternatives open to the latter in disposing of it: (1) dismiss
the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2)
assume jurisdiction over the case and apply the internal law of the forum; or (3) assume jurisdiction
over the case and take into account or apply the law of some other State or States. The courts power to
hear cases and 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 formalagreements, even in matters regarding rights provided by foreign sovereigns.

Neither can the other ground raised, forum non conveniens, be used to deprive the RTC of its
jurisdiction. 1st, it is not a proper basis for a motion to dismiss because Sec. 1, Rule 16 of the Rules of
Court does not include it as a ground. 2nd, 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 RTC. In this case, the RTC decided to assume jurisdiction. 3rd, 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.

In March 1999, Nippon Engineering Consultants Co., Ltd, a Japanese firm, was contracted by the
Department of Public Works and Highways (DPWH) to supervise the construction of the Southern
Tagalog Access Road. In April 1999, Nippon entered into an independent contractor agreement (ICA)
with Minoru Kitamura for the latter to head the said project. The ICA was entered into in Japan and is
effective for a period of 1 year (so until April 2000). In January 2000, DPWH awarded the Bongabon-Baler
Road project to Nippon. Nippon subsequently assigned Kitamura to head the road project. But in
February 2000, Kazuhiro Hasegawa, the general manager of Nippon informed Kitamura that they are
pre-terminating his contract. Kitamura sought Nippon to reconsider but Nippon refused to negotiate.
Kitamura then filed a complaint for specific performance and damages against Nippon in the RTC of
Lipa.
Hasegawa filed a motion to dismiss on the ground that the contract was entered in Japan hence, applying
the principle of lex loci celebracionis, cases arising from the contract should be cognizable only by
Japanese courts. The trial court denied the motion. Eventually, Nippon filed a petition for certiorari with
the Supreme Court.
Hasegawa, on appeal significantly changed its theory, this time invoking forum non conveniens; that the
RTC is an inconvenient forum because the parties are Japanese nationals who entered into a contract in
Japan. Kitamura on the other hand invokes the trial courts ruling which states that matters connected
 with the performance of contracts are regulated by the law prevailing at the place of performance, so
since the obligations in the ICA are executed in the Philippines, courts here have jurisdiction.
ISSUE: Whether or not the complaint against Nippon should be dismissed.
HELD: No. The trial court did the proper thing in taking cognizance of it.
In the first place, the case filed by Kitamura is a complaint for specific performance and damages. Such
case is incapable of pecuniary estimation; such cases are within the jurisdiction of the regional trial court.
Hasegawa filed his motion to dismiss on the ground of forum non conveniens. However, such ground is
not one of those provided for by the Rules as a ground for dismissing a civil case.
The Supreme Court also emphasized that the contention that Japanese laws should apply is premature. In
conflicts cases, there are three phases and each next phase commences when one is settled, to wit:
1. Jurisdiction Where should litigation be initiated? Court must have jurisdiction over the subject
matter, the parties, the issues, the property, the res. Also considers, whether it is fair to cause a defendant
to travel to this state; choice of law asks the further question whether the application of a substantive law
which will determine the merits of the case is fair to both parties.
2. Choice of Law Which law will the court apply? Once a local court takes cognizance, it does not
mean that the local laws must automatically apply. The court must determine which substantive law
when applied to the merits will be fair to both parties.

3. Recognition and Enforcement of Judgment Where can the resulting judgment be enforced?

This case is not yet in the second phase because upon the RTCs taking cognizance of the case, Hasegawa
immediately filed a motion to dismiss, which was denied. He filed a motion for reconsideration, which
was also denied. Then he bypassed the proper procedure by immediately filing a petition for certiorari.
The question of which law should be applied should have been settled in the trial court had Hasegawa
not improperly appealed the interlocutory order denying his MFR.

Manila Hotel Corporation vs National Labor Relations Commission

In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace
Hotel in Beijing, China. Due to higher pay and benefits, Santos agreed to the hotels job offer and so he
started working there in November 1988. The employment contract between him and Palace Hotel was
however without the intervention of the Philippine Overseas Employment Administration (POEA). In
August 1989, Palace Hotel notified Santos that he will be laid off due to business reverses. In September
1989, he was officially terminated.

In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC)
and Manila Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were
served upon it. MHC is a government owned and controlled corporation. It owns 50% of MHIL, a foreign
corporation (Hong Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who handled
the case ruled in favor of Santos. The National Labor Relations Commission (NLRC) affirmed the labor
arbiter.

ISSUE: Whether or not the NLRC has jurisdiction over the case.
 HELD: No. The NLRC is a very inconvenient forum for the following reasons:

1. The only link that the Philippines has in this case is the fact that Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations MHC cannot be held liable because it
merely owns 50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of
corporate fiction cant be pierced because it was not shown that MHC is directly managing the affairs of
MHIL. Hence, they are separate entities.
3. Santos contract with the Palace Hotel was not entered into in the Philippines;
4. Santos contract was entered into without the intervention of the POEA (had POEA intervened, NLRC
still does not have jurisdiction because it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not
residents of the Philippines;
Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It
is not competent to determine the facts because the acts complained of happened outside our jurisdiction.
It cannot determine which law is applicable. And in case a judgment is rendered, it cannot be enforced
against the Palace Hotel (in the first place, it was not served any summons).

The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency
may assume jurisdiction over the case if it chooses to do so provided:

(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.

None of the above conditions are apparent in the case at bar.

In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace
Hotel in Beijing, China. Due to higher pay and benefits, Santos agreed to the hotels job offer and so he
started working there in November 1988. The employment contract between him and Palace Hotel was
however without the intervention of the Philippine Overseas Employment Administration (POEA). In
August 1989, Palace Hotel notified Santos that he will be laid off due to business reverses. In September
1989, he was officially terminated.
In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC)
and Manila Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were
served upon it. MHC is a government owned and controlled corporation. It owns 50% of MHIL, a foreign
corporation (Hong Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who handled
the case ruled in favor of Santos. The National Labor Relations Commission (NLRC) affirmed the labor
arbiter.
ISSUE: Whether or not the NLRC has jurisdiction over the case.
HELD: No. The NLRC is a very inconvenient forum for the following reasons:
1. The only link that the Philippines has in this case is the fact that Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations MHC cannot be held liable
because it merely owns 50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil
 of corporate fiction cant be pierced because it was not shown that MHC is directly managing the affairs
of MHIL. Hence, they are separate entities.

3. Santos contract with the Palace Hotel was not entered into in the Philippines;

4. Santos contract was entered into without the intervention of the POEA (had POEA intervened,
NLRC still does not have jurisdiction because it will be the POEA which will hear the case);

5. MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are
not residents of the Philippines;

Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It
is not competent to determine the facts because the acts complained of happened outside our jurisdiction.
It cannot determine which law is applicable. And in case a judgment is rendered, it cannot be enforced
against the Palace Hotel (in the first place, it was not served any summons).
The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency
may assume jurisdiction over the case if it chooses to do so provided:
(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.
None of the above conditions are apparent in the case at bar.

Conflict Of Laws Digest: Bank Of America V. CA (2003)

FACTS:

Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas) were engaged in the shipping
business owning 2 vessels: Don Aurelio and El Champion
Because their business where doing well, Bank of America (BA) offered them to take a loan for
them to increase their ships.
BA acquired through them as borrowers four more ships: (a) El Carrier; (b) El General; (c) El
Challenger; and (d) El Conqueror. The registration, operation, income, funds, possession of the
vessel belonged to the corporation.
May 10, 1993: Litonjuas filed a complaint to the RTC Pasig claming that during its operations and
the foreclosure sale, BA as trutees failed to fully render an account of the income. They lost all their 6
vessels and 10% of their personal funds and they still have an unpaid balance of their loans.
BA NT&SA, and BA international filed a Motion to Dismiss on grounds of forum non conveniens
and lack of cause of action against them
RTC and CA: Dismissed
ISSUE:
1. W/N there is grounds of forum non conveniens
2. W/N there is litis pendentia

HELD: Denied

1. NO.
 The doctrine of forum non-conveniens, literally meaning 'the forum is inconvenient', emerged in
private international law to deter the practice of global forum shopping
Under this doctrine, 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.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely
upon the facts of the particular case and is addressed to the sound discretion of the trial court.
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; -
present
(2) that the Philippine Court is in a position to make an intelligent decision as to the law
and the facts; and, - present
(3) that the Philippine Court has or is likely to have power to enforce its decision -
present
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
2. NO.
litis pendentia to be a ground for the dismissal of an action there must be:
(a) identity of the parties or at least such as to represent the same interest in both actions
-present
(b) identity of rights asserted and relief prayed for, the relief being founded on the same
acts - not shown
(c) the identity in the two cases should be such that the judgment which may be rendered
in one would, regardless of which party is successful, amount to res judicata in the other - not shown
It merely mentioned that civil cases were filed in Hongkong and England