Gulf Oil Corp. v.
Gilbert Then several days after appointment, Reyno filed separate wrongful death actions against PAC and HPI
Facts: The respondent-plaintiff, Gilbert resides at Lynchburg, Virginia, where he operated a public
warehouse. Gulf Oil, the petitioner-defendant is a corporation organized under the laws of Pennsylvaniain.
Gilbert alleges that Gulf Oil carelessly handled a delivery of gasoline to his warehouse causing an explosion
and fire. Due to said nagligence, Gilbert brought an action for damages in the Southern District of New
York.
Gulf Oil sought the dismissal of the case invoking the doctrine of forum non conveniens, and claimed that
the appropriate place for trial is Virginia, where the plaintiff lives and defendant does business, where all
events in litigation took place, where most of the witnesses reside, and where both state and federal courts
are available to plaintiff, and are able to obtain jurisdiction of the defendant.
The District Court considered that the law of New York as to forum non conveniens applied, and that it
required the case to be left to Virginia courts. It therefore dismissed. The Circuit Court of Appeals disagreed
as to the applicability of New York law, took a restrictive view of the application of the entire doctrine in
federal courts, and reversed. The case is before the Supreme Court on certiorari.
Issue: Whether the action should be dismissed from the New York federal district court under the doctrine of
forum non conveniens given the facts of the case, even though in personam jurisdiction and venue are
proper.
Held: The District Court did not abuse its discretion in doing so. The principle of forum non conveniens is
simply that a court may resist imposition upon its jurisdiction even when jurisdiction is authorized by the
letter of a general venue statute. These statutes are drawn with a necessary generality, and usually give a
plaintiff a choice of courts, so that he may be quite sure of some place in which to pursue his remedy.
The doctrine is one of discretion of the court. The private interest of the litigant should be considered by the
Court. Important considerations include the relative ease of access to sources of proof; availability of
compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses;
possibility of view of premises, if view would be appropriate to the action; and all other practical problems
that make trial of a case easy, expeditious and inexpensive. There may also be questions as to the
enforcibility of a judgment if one is obtained. The court will weigh relative advantages and obstacles to fair
trial. It is often said that the plaintiff may not, by choice of an inconvenient forum, 'vex,' 'harass,' or 'oppress'
the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy.
But unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be
disturbed.
We are convinced that the District Court did not exceed its powers or the bounds of its discretion in
dismissing plaintiff's complaint and remitting him to the courts of his own community. The Circuit Court of
Appeals took too restrictive a view of the doctrine as approved by this Court. Its judgment is reversed.
Piper Aircraft CO. (PAC) v. Reyno
Facts:In july 1976, a small commercial aircraft crashed in the Scotish Highlands during the course of a
charter flight from Blackpool to Perth. The pilot and 5 passengers were killed. They and their heirs and next
of kin, are Scottish subjects and residents. At the time of the crash, the pilot was subject to Scottish air
traffic control.
The aircraft is a twin-engine Piper Azter, manufactured in Pennsylvania by PAC. The propellers were
manufactured in Ohio by Hartzell Propeller, Inc. At the time of the crash, the plane was registered in Great
Britain, and owned and maintained by Air Navigation and Trading Co., Ltd (ANT), and operated by
Mcdonald Aviation, Ltd. (MAL), a Scottish air taxi service- both organized in the UK. The wreckage of the
plane is now in a hangar in Farnsborough, England.
In its preliminary report, the British Department of Trade found that the plane crashed agter developing a
spin, and suggested that mechanical failure in the plane or the propeller was responsible. At HPL's request,
this report was reviewed by a 3-member Review Boardm which held a 0-day adversary hearing attended by
all interested parties. It then found that no evidence of defective equipment and indicated that pilot error
may have contributed to the accident. The pilot, who obtained his commercial pilot's license only three
months earlier, was flying over high ground at an altitude considerably lower than the minimum height
required by his company's operational manual.
Then in JUly 1977, a California probate court appointed GaynellReynoadministratrix of the estates of the 5
passengers. She is not related and does not know any of the decedents or their survivors; but was a legal
secretary to the lawyer who filed this case.
before the Superior Court of California, claiming negligence and strict liability. ANT, MAL, and the pilot's
estate are not parties to this case. Then the survivors of the 5 passengers filed a separate action in the UK
against ANT, MAL regarding liability, capacity to sue, and damages are more favorable to her than are
those of Scotland, which does not recognize strict liability in tort and allows wrongful death actions only
when brought by a decedent's relatives - who may sue only for "loss for support and society.
Then in May 1978, HPI and PAC moved to dismiss the action against ground in FNV. which the District
Court grandted in Oct. 1979. It invoked the Gulf Oil v Giber, ruling, where the court held that while plaintiff's
choice of forum should rarely b disturbed, the court may dismiss the case if: 1. an alternative forum has
jurisdiction to hear the case; and 2a. trial in the chosen forum would cause oppressiveness and vexation to
adefendant, ou of all proportion to plaintiff's convenience; or 2b. when the chosen forum is inappropriate
because of considerations affecting the court's administrative and legal problems.
It held that there is an alternative forum in Scotland; and that the courts are less solicitious when the plaintiff
is not an American citizen or resident; particular when the foreign citizen seek to benefit from the more
liberal tort rules provided fir the protection of US citizens and residents. The Court also noted that while
evidence on the plane's and properller's design, manufacturing, and testing in the US, the connections with
Scotland are "overwhelming". The real parties in interest, and their decendants are citizens of Scotland; the
witness to the plane's maintenance and the pilot's training are in Great Britain, and the witness to damages
are in Scotland. It also held that relevant public interests merit dismissal. If tried in the US, the court would
have to apply Pennsylvania law to Piper and Scottish law to HAL, and the trial would be hopelessly complex
and confusing.
On appeal, the US CA for the 3rd Circuit reversed, on the ground that dismissal is never appropriate where
the law of the alternative forum is less favorable to the plaintiff.
Issue:In an FNC inquiry, can a case be dismissed even if it would result in a change in substantive law?
Held:Yes.
I. FNC Focus and Considerations:
A. Convenience:
The CA erred in holding that plaintiffs may defeat a M/D on the ground of FNC merely by showing that the
substantive law in the alternative forum is less favorable to them than that of the present forum.
Ordinarily, the possibility of a change in substative law DOES NOT HAVE conclusive or even
SUBSTANTIAL WEIGHT in an FNC inquiry. The SC already rejected this argument in the 1932 case of
Canda Malting Co. v. Paterson Steamships, Ltd. True, it was only in Gilbert that the FNC doctrine was fully
crystalized until the latter case. However, by holding that the CENTRAL FOCUS of the FNC inquiry is
CONVENIENCE, Gilbert IMPLICITLY RECOGNIZED that dismissal MAY NOT BE BARRED SOLELY
because of the possibility of an UNFAVORABLE CHANGE in LAW.
If substantial weight were given to the possibility of an unfavorablr change in law, then, dismissal might be
barred EVEN WHERE trial in the chosen forum was PLAINLY INCONVENIENT.
B. Flexibility
The CA decision is also inconsistent with previous FNC decisions, which have emphasize the NEED to
RETAIN FLEXIBILITY. Thus, the the SC has REPEATEDLY REFUSED to IDENTIFY SPECIFIC
CIRCUMSTANCES that will justify either grant or remedy, but ha always said thath EACH CASE TURNS
ON ITS FACTS.
If central emphasis were [;aced on any 1 factor, the FNC doctrine would LOSE MUCH of the VERY
FLEXIBILITY that makes it SO VALUABLE.
In fact if conclusive or substantial weight is given to the possibility of a change in law, the FNC doctrine
would become VIRTUALLY USELESS
This is because jurisdiction and venue requirements are easily satisfied, and thus, plaintiffs are able to
choose from among several forums. Of course, they will select that forum whose choice of law rues are
most advantageous. Hence, if the possibility of an unfavorable change in substantive law is given
substantial weight in the FNC inquiry, dismissal would REALLY be proper
II. Substantial Practical Problems
If the possibility of a change in law were given substantial weight, deciding M/Ds on the ground of FNC
would become quite difficult - choice of law analysis would become extremely important, and the courts
would be required to interpret the foreign laws. Trial courts would have to compare the applicable laws, and
the rights, remedies, and proceduers available under each forum.
However, the FNC doctrine is precisely designed to help courts avoid conductiong complex exercises in
comparative law.
Also where the foreign plaintiff named an American manufacturer as defendant, a court could not dismiss
the case on grounds of FNC where dismissal might lead to an unfavoarable change in law. Thus, American
courts, which are already extremely attractive to foreign plaintiffs, would become even more attractive, thus
further congesting US courts.
III. Caveat:
This does not mean that the possibility of an unfavorable change in law is never relevant in an FNC inquiry.
Of course, if the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that is
no remedy at all, such unfavorable change in law may be given substantial weight - the trial court may
conclude that dismissal would not be in the interests of justice.
here, however, the remedies provided by the Scottish courts do not fall within this category. While the
decendent's may not be able to rely on the strict liability theory, and their potential damages award may be
smaller, there is no danger that they will be deprived of any remedy or treated infairly.
V. Foreign vs Resident/CItizen Plaintiffs:
The district Court acknowledged that there is ordinarily a strong presumption in favor of the plaintiff's choice
of forum, which may be overcome only when the private and public interest factors clearly point towards trial
in the alternative forum. IT held, however that the presumption applies with less force when the plaintiff or
real parties in interest are foreign.
This distinction between resident plaintiff and foreign plaintiffs is fully justified.
When the Home Form was chosen, it is reasonable to assume that this choice is convenient. But, when the
plaintiff is foreign, this assumption is much less reasonable.
Since the central purpose of an FNC inquiry is to ensure that the trial is convenient, a foreign plaintiff's
choice deserves less deference.
VI. Public Interest Considerations:
The CA rejected the District Court's choice of law analysis, and held that US would apply to both HAL and
PAC. Assuming this, however, all other public interest factors favored trial in Scotland. Scotland has a very
strong interest in this litigation - the occurred in its airspace; all the decedents were Scottish; all defendants
(except PAC and HAL) are either Scottish or English.
SINOCHEM INTL CO. v. MALAYSIA INTL SHIPPINGCORP549 U.S. 422(2007)
Facts:A contract between petitioner (Sinochem), a Chinese state-owned importer, and a domestic
corporation not a party here (Triorient) provided that Sinochem would purchase steel coils and that Triorient
would be paid under a letter of credit by producing a valid bill of lading certifying that the coils had been
loaded for shipment to China on or before April 30, 2003. Triorientsubchartered a vessel owned by
respondent (Malaysia International), a Malaysian company, to transport the coils, and hired a stevedoring
company to load the coils in Philadelphia. A bill of lading, dated April 30, 2003, triggered payment under the
letter of credit. Sinochem petitioned a Chinese admiralty court for preservation of a maritime claim against
Malaysia International and arrest of the vessel, alleging that the Malaysian company had falsely backdated
the bill of lading. The Chinese court ordered the ship arrested, and Sinochem timely filed a complaint in that
tribunal. The Chinese admiralty court rejected Malaysia Internationals jurisdictional objections to
Sinochems complaint and that ruling was affirmed on appeal.
Shortly after the Chinese admiralty court ordered the vessels arrest, Malaysia International filed this action
in a United States District Court, asserting that Sinochems preservation petition to the Chinese court
contained misrepresentations, and seeking compensation for losses sustained due to the ships arrest.
Sinochem moved to dismiss on several grounds, including lack of subject-matter and personal jurisdiction
and the doctrine of forum non conveniens, under which a federal district court may dismiss an action if a
court abroad is the more appropriate and convenient forum for adjudicating the controversy.
Issue:Can a federal court presume, rather than dispositively decide, its jurisdiction before dismissing under
the doctrine of forum non conveniens?
Held:Yes.
A district court has discretion to respond at once to a defendants forum non conveniens plea, and need not
take up first any other threshold objection. In particular, a court need not resolve whether it has authority to
adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over the defendant if it determines
that, in any event, a foreign tribunal is the more suitable arbiter of the merits of the case.
A federal court has discretion to dismiss on forum non conveniens grounds when an alternative forum has
jurisdiction to hear [the] case, and trial in the chosen forum would establish oppressiveness and
vexation to a defendant out of all proportion to plaintiffs convenience, or the chosen forum [is]
inappropriate because of considerations affecting the courts own administrative and legal problems. A
defendant invoking forum non conveniens ordinarily bears a heavy burden in opposing the plaintiffs chosen
forum. When the plaintiffs choice is not its home forum, however, the presumption in the plaintiffs favor
applies with less force, for the assumption that the chosen forum is appropriate is then less reasonable.
Forum non conveniens is a nonmerits ground for dismissal. A district court therefore may dispose of an
action by a forum non conveniens dismissal, bypassing questions of subject-matter and personal
jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant. Forum non
conveniens, like other threshold issues, may involve a brush with factual and legal issues of the underlying
dispute. But the critical point, rendering a forum non conveniens determination a nonmerits issue that can
be determined before taking up jurisdictional inquiries is this: Resolving a forum non conveniens motion
does not entail any assumption by the court of substantive law-declaring power.
This is a textbook case for immediate forum non conveniens dismissal. The District Courts subject-matter
jurisdiction presented an issue of first impression in the Third Circuit, and was considered at some length by
the courts below. Discovery concerning personal jurisdiction would have burdened Sinochem with expense
and delay to scant purpose: The District Court inevitably would dismiss the case without reaching the
merits, given its well-considered forum non conveniens appraisal. Judicial economy is disserved by
continuing litigation in the District Court given the proceedings long launched in China. And the gravamen of
Malaysia Internationals complaintmisrepresentations to the Chinese admiralty court in securing the
vessels arrest in Chinais an issue best left for determination by the Chinese courts. If, as in the mine run
of cases, a court can readily determine that it lacks jurisdiction over the cause or the defendant, the proper
course would be to dismiss on that ground. But where subject-matter or personal jurisdiction is difficult to
determine, and forum non conveniens considerations weigh heavily in favor of dismissal, the court properly
takes the less burdensome course.
PHILSEC INVESTMENT CORPORATION, et al., PETITIONERS, VS. THE HONORABLE COURT OF
APPEALS, 1488, et al., RESPONDENTS.G.R. No. 103493, June 19, 1997, MENDOZA, J.
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala
and Philsec secured by shares of stock owned by Ducat. To facilitate the payment of the loans, private
respondent 1488, Inc., through its president, private respondent DragoDaic, assumed Ducats obligation
whereby it sold to petitioner ATHONA parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02,
while PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial
payment of the purchase price. The balance of US$307,209.02 was to be paid by means of a PN executed
by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc.,
PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of
stock in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance, the entire amount covered by the note became due
and demandable. Accordingly, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and
ATHONA in the United States for payment of the balance and for damages for breach of contract and for
fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock
delivered to 1488, Inc. Originally instituted in the United States District Court of Texas, 165th Judicial
District, where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the
United States District Court for the Southern District of Texas. ATHONA sought the recovery of damages
and excess payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the
property. For their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction
over their person, but their motion was denied.
Subsequently, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint
For Sum of Money with Damages and Writ of Preliminary Attachment against private respondents in the
RTC of Makati. The trial court issued a writ of preliminary attachment against the real and personal
properties of private respondents. Private respondents Ducat, 1488, Inc. and Daic moved to dismiss Civil
Case No. 16563 on the ground of, inter alia, forum non conveniens. The trial court granted the motion to
dismiss on the ground of litispendentia considering that the main factual element of the cause of action in
this case which is the validity of the sale of real property in the United States between defendant 1488 and
plaintiff ATHONA is the subject matter of the pending case in the United States District Court which, under
the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters needed to
determine the assessment and/or fluctuations of the fair market value of real estate situated in Houston,
Texas, U.S.A. from the date of the transaction in 1983 up to the present.
The dismissal on the ground of forum non conveniens was affirmed by the Court of Appeals on
the ground that the case can be better tried and decided by the U.S. court.
ISSUEWhether the case at bar should be dismissed under the doctrine of forum non conveniens
RULINGNO. The trial courts refusal to take cognizance of the case is not justifiable under the principle of
forum non conveniens.
First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does not include
forum non conveniens. The propriety of dismissing a case based on this principle requires a factual
determination, hence, it is more properly considered a matter of defense. Second, while it is within the
discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the courts desistance.
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings
filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the
plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and
that it was the extinguishment of the latters debt which was the object of the transaction under litigation.
The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.
**The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even
furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure
a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues
raised in this case
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD.
vs. NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO
G. SANTOS
During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos
received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing,
China. Mr. Schmidt informed respondent Santos that he was recommended by one Nestor Buenio, a friend
of his. Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary
and increased benefits. The position was slated to open on October 1, 1988. He then signified his
acceptance of the offer.
The employment contract of June 4, 1988 stated that his employment would commence September 1, 1988
for a period of two years. It provided for a monthly salary of nine hundred dollars (US$900.00) net of taxes,
payable fourteen (14) times a year. From June 8 to 29, 1989, respondent Santos was in the Philippines on
vacation leave. He returned to China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten note that
respondent Santos be given one (1) month notice of his release from employment. On August 10, 1989, the
Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that his employment at the Palace
Hotel print shop would be terminated due to business reverses brought about by the political upheaval in
China. We quote the letter: ("After the unfortunate happenings in China and especially Beijing (referring to
Tiannamen Square incidents), our business has been severely affected. To reduce expenses, we will not
open/operate printshop for the time being.) On September 5, 1989, the Palace Hotel terminated the
employment of respondent Santos and paid all benefits due him, including his plane fare back to the
Philippines.
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration Branch,
National Capital Region, National Labor Relations Commission (NLRC). He prayed for an award of nineteen
thousand nine hundred and twenty three dollars (US$19,923.00) as actual damages, forty thousand pesos
(P40,000.00) as exemplary damages and attorney's fees equivalent to 20% of the damages prayed for. The
complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the
proceedings before the Labor Arbiter. Labor Arbiter Ceferina J. Diosana, decided the case against
petitioners. petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction over
the case. NLRC promulgated a resolution, stating that the Decision be, as it is hereby, declared null and
void for want of jurisdiction.
On September 18, 1992, respondent Santos moved for reconsideration arguing that the case was not
cognizable by the POEA as he was not an "overseas contract worker." The NLRC granted the motion and
reversed itself. The NLRC directed Labor Arbiter Emerson Tumanon to hear the case on the question of
whether private respondent was retrenched or dismissed. Subsequently, Labor Arbiter Tumanon was re-
assigned as trial Arbiter of the National Capital Region, Arbitration Branch, and the case was transferred to
Labor Arbiter Jose G. de Vera. Labor Arbiter de Vera submitted his report. He found that respondent Santos
was illegally dismissed from employment and recommended that he be paid actual damages equivalent to
his salaries for the unexpired portion of his contract. NLRC ruled in favor of Private Respondent.
Petitioners filed a motion for reconsideration arguing that Labor Arbiter de Vera's recommendation had no
basis in law and in fact, the NLRC denied the motion for reconsideration. Hence, this petition.
ISSUE: WON NLRC has jurisdiction
The NLRC was a seriously inconvenient forum.
The case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link
that the Philippines has with the case is that respondent Santos is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Not all cases involving our citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the Palace Hotel, a foreign
employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was then
employed. He was hired without the intervention of the POEA or any authorized recruitment agency of the
government.
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.37 The conditions
are unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a convenient forum given that all the incidents of the
case from the time of recruitment, to employment to dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL are not
nationals of the Philippines. Neither .are they "doing business in the Philippines." Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent decision be made as to the law
governing the employment contract as such was perfected in foreign soil. This calls to fore the application of
the principle of lex loci contractus (the law of the place where the contract was made).
The employment contract was not perfected in the Philippines. Respondent Santos signified his acceptance
by writing a letter while he was in the Republic of Oman. This letter was sent to the Palace Hotel in the
People's Republic of China.
No power to determine the facts. Neither can the NLRC determine the facts surrounding the alleged
illegal dismissal as all acts complained of took place in Beijing, People's Republic of China. The NLRC was
not in a position to determine whether the Tiannamen Square incident truly adversely affected operations of
the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming that a proper decision could be
reached by the NLRC, such would not have any binding effect against the employer, the Palace Hotel. The
Palace Hotel is a corporation incorporated under the laws of China and was not even served with summons.
Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies involving foreign
employers. Neither are we saying that we do not have power over an employment contract executed in a
foreign country. If Santos were an "overseas contract worker", a Philippine forum, specifically the POEA, not
the NLRC, would protect him. He is not an "overseas contract worker" a fact which he admits with
conviction.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL was
liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity cannot be held liable.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is
used to defeat public convenience, justify wrong, protect fraud or defend a crime. It is done only when a
corporation is a mere alter ego or business conduit of a person or another corporation.
The tests in determining whether the corporate veil may be pierced are: First, the defendant must have
control or complete domination of the other corporation's finances, policy and business practices with regard
to the transaction attacked. There must be proof that the other corporation had no separate mind, will or
existence with respect the act complained of. Second, control must be used by the defendant to commit
fraud or wrong. Third, the aforesaid control or breach of duty must be the proximate cause of the injury or
loss complained of. The absence of any of the elements prevents the piercing of the corporate veil.
It is basic that a corporation has a personality separate and distinct from those composing it as well as from
that of any other legal entity to which it may be related. Clear and convincing evidence is needed to pierce
the veil of corporate fiction. In this case, we find no evidence to show that MHICL and MHC are one and the
same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment contract
with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda signed
the employment contract as a mere witness. He merely signed under the word "noted". And Second, and
more importantly, there was no existing employer-employee relationship between Santos and MHICL. In
determining the existence of an employer-employee relationship.
Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There is no proof that
MHICL "supplied" respondent Santos or even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same entity. The
fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to pierce the corporate veil
between MHICL and the Palace Hotel.
BANK OF AMERICA NT & SA, BANK OF AMERICA INTERNATIONAL, LTD., petitioners, v. COURT OF
APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR.,
respondents.
The doctrine of forum non conveniens should not be used as a ground for a motion to dismiss
because Sec. 1, Rule 16 of the Rules
Of Court does not include said doctrine as a ground.
FACTS:
Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas), engaged in shipping business filed a Complaint
before the RTC Pasig against the Bank of America NT&SA and Bank of America International, Ltd. (defendant
banks) where they deposit their revenues and where they loaned capital to purchase several more vessels.
The possession of these vessels was placed by defendant banks in the hands of persons selected and
designated by them (defendant
banks), while all revenues went to the Litonjuas.
Due to the breach of their fiduciary duties by the defendant banks in the operation of Litonjuas six vessels, the
revenues derived from the operation of all the vessels declined drastically. The loans acquired for the
purchase of the four additional vessels then matured and remained unpaid, prompting defendant banks to
have all the vessels foreclosed and sold at public auction to answer for the obligations incurred for and in
behalf of the operation of the vessels.
The Litonjuas prayed for the accounting of the revenues derived in the operation of the six vessels and of the
proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners; damages for breach of
trust;
exemplary damages and attorney's fees. Defendant banks filed a Motion to Dismiss on grounds of forum non
conveniens and lack of cause of action against them.
ISSUE: Whether or not the complaint must be dismissed on the ground of forum non-conveniens?
HELD: No. Petition is DENIED for lack of merit.
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, that is to prevent non-resident litigants from
choosing the forum or place wherein to bring their suit for malicious reasons, such as to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly
venue. 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.
However, though this case satisfies all the requisites for the application the doctrine of forum non conveniens,
this principle should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of
Court
does not include said doctrine as a ground. This Court has also 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.
CRESCENT PETROLEUM, LTD., Petitioner, vs. M/V "LOK MAHESHWARI," THE SHIPPING
CORPORATION OF INDIA, and PORTSERV LIMITEDG.R. No. 155014 November 11, 2005
Facts:Respondent M/V "LokMaheshwari" (Vessel) is an oceangoing vessel of Indian registry that is owned
by respondent Shipping Corporation of India (SCI), a corporation organized and existing under the laws of
India and principally owned by the Government of India. It was time-chartered by respondent SCI to Halla
Merchant Marine Co. Ltd. (Halla), a South Korean company. Halla, in turn, sub-chartered the Vessel
through a time charter to Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to
Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized and existing under the
laws of Canada.
On or about November 1, 1995, Portserv requested petitioner Crescent Petroleum, Ltd. (Crescent), a
corporation organized and existing under the laws of Canada that is engaged in the business of selling
petroleum and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils
(bunker fuels) to the Vessel. Petitioner Crescent granted and confirmed the request through an advice via
facsimile dated November 2, 1995. As security for the payment of the bunker fuels and related services,
petitioner Crescent received two (2) checks in the amounts of US$100,000.00 and US$200,000.00. Thus,
petitioner Crescent contracted with its supplier, Marine Petrobulk Limited (Marine Petrobulk), another
Canadian corporation, for the physical delivery of the bunker fuels to the Vessel.
On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting to US$103,544
inclusive of barging and demurrage charges to the Vessel at the port of Pioneer Grain, Vancouver, Canada.
The Chief Engineer Officer of the Vessel duly acknowledged and received the delivery receipt. Marine
Petrobulk issued an invoice to petitioner Crescent for the US$101,400.00 worth of the bunker fuels.
Petitioner Crescent issued a check for the same amount in favor of Marine Petrobulk, which check was duly
encashed.
Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice dated November 21, 1995 to
"Portserv Limited, and/or the Master, and/or Owners, and/or Operators, and/or Charterers of M/V
LokMaheshwari" in the amount of US$103,544.00 with instruction to remit the amount on or before
December 1, 1995. The period lapsed and several demands were made but no payment was received.
Also, the checks issued to petitioner Crescent as security for the payment of the bunker fuels were
dishonored for insufficiency of funds. As a consequence, petitioner Crescent incurred additional expenses
of US$8,572.61 for interest, tracking fees, and legal fees.
On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent instituted before
the RTC of Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of
preliminary attachment" against respondents Vessel and SCI, Portserv and/or Transmar.
On May 3, 1996, the trial court issued a writ of attachment against the Vessel with bond at P2,710,000.00.
Petitioner Crescent withdrew its prayer for a temporary restraining order and posted the required bond.
On May 18, 1996, summonses were served to respondents Vessel and SCI, and Portserv and/or Transmar
through the Master of the Vessel. On May 28, 1996, respondents Vessel and SCI, through Pioneer
Insurance and Surety Corporation (Pioneer), filed an urgent ex-parte motion to approve Pioneers letter of
undertaking, to consider it as counter-bond and to discharge the attachment. On May 29, 1996, the trial
court granted the motion; thus, the letter of undertaking was approved as counter-bond to discharge the
attachment.
Issue:Whether or not Crescent is entitled to maritime lien under our laws on foreign vessel docked on
Philippine port and supplies furnished to a vessel in a foreign port?
Ruling:No.
In a suit to establish and enforce a maritime lien for supplies furnished to a vessel in a foreign port, whether
such lien exists, or whether the court has or will exercise jurisdiction, depends on the law of the country
where the supplies were furnished, which must be pleaded and proved.
In the Philippines any vessel even though it be a foreign vessel found in any port of this Archipelago
may be attached and sold under the substantive law which defines the right, and the procedural law
contained in the Code of Commerce by which this right is to be enforced. But where neither the law nor the
contract between the parties creates any lien or charge upon the vessel, the only way in which it can be
seized before judgment is by pursuing the remedy relating to attachment under Rule 59 [now Rule 57] of the
Rules of Court.
However, in Lauritizen v. Larsen, to determine which jurisdictions law should be applied to a petitioners
claim, we must apply the factors Multiple Contact Test: (1) place of the wrongful act; (2) law of the
flag; (3) allegiance or domicile of the injured; (4) allegiance of the defendant shipowner; (5) place of
contract; (6) inaccessibility of foreign forum; and (7) law of the forum.
Out of the seven basic factors listed in the case of Lauritzen, Philippine law only falls under one the law of
the forum. All other elements are foreign Canada is the place of the wrongful act, of the allegiance or
domicile of the injured and the place of contract; India is the law of the flag and the allegiance of the
defendant shipowner. Balancing these basic it is inconceivable that the Philippine court has any interest in
the case that outweighs the interests of Canada or India for that matter.
Also, P.D. No. 1521 is inapplicable following the factors under Restatement (Second) of Conflict of Laws.
P.D. 1521 was enacted primarily to protect Filipino suppliers and was not intended to create a lien from a
contract for supplies between foreign entities delivered in a foreign port. Moreover, applying P.D. No. 1521
to a foreign corporations claim would unduly open up our courts to foreign suppliers by granting them a
maritime lien under our laws even if they are not entitled to a maritime lien under their laws will encourage
forum shopping.
And finally, submission of petitioner is not in keeping with the reasonable expectation of the parties to the
contract since the parties, upon execution of the perfection of the contract, could not have intended the laws
of a remote country like the Philippines to determine the creation of a lien by the mere accident of the
Vessels being in Philippine territory.
In light of the interests of the various foreign elements involved, it is clear that Canada has the most
significant interest in this dispute. The injured party is a Canadian corporation, the sub-charterer which
placed the orders for the supplies is also Canadian, the entity which physically delivered the bunker fuels is
in Canada, the place of contracting and negotiation is in Canada, and the supplies were delivered in
Canada.