THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD. v.
NATIONAL LABOR The LA decided the case against petitioners. Petitioners appealed to the NLRC,
RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G.
SANTOS
G.R. No. 120077, 13 October 2000, FIRST DIVISION (PARDO, J.)
When the case was filed in 1990, Manila Hotel Corp. (MHC) was still a government-
owned and controlled corporation duly organized and existing under the laws of the
Philippines. Manila Hotel International Co. Ltd. (MHICL) is a corporation duly
organized and existing under the laws of Hong Kong. MHC is an “incorporator” of
MHICL, owning 50% of its capital stock. By virtue of a “management agreement”
with the Palace Hotel, MHICL trained the personnel and staff of the Palace Hotel at
Beijing, China
Marcelo Santos was an overseas worker employed as a printer at the Mazoon
Printing Press, Sultanate of Oman. During Santos’ employment with the Mazoon
Printing Press, he received a letter from Mr. Gerhard Shmidt, General Manager at
Palace Hotel in Beijing, China and advised that he was recommended by his friend,
Nestor Buenio. Shmidt offered Santos the same position as printer, but with a
higher monthly salary and increased benefits. Santos wrote to Shmidt and signified
his acceptance of the offer.
Santos resigned from the Mazoon Printing Press under the pretext that he was
needed at home to help with the family's piggery and poultry business. The Palace
Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment contract to
Santos. Santos wrote the Palace Hotel and acknowledged Henk’s letter. The
employment contract stated that his employment would be for a period of two
years. He then started to work at the Palace Hotel. Subsequently, Santos signed an
amended “employment agreement” with the Palace Hotel. In the contract, Shmidt
represented the Palace Hotel. The Vice President (Operations and Development) of
petitioner MHICL Cergueda signed the employment agreement under the word
“noted.”
After working in the Palace hotel for less than a year, the Palace Hotel informed
Santos by letter signed by 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. The Palace Hotel terminated the employment of Santos and paid
all benefits due him, including his plane fare back to the Philippines. Santos was
repatriated to the Philippines.
Aggrieved, Santos filed a complaint for illegal dismissal with the Arbitration Branch,
NCR, NLRC. The complaint named MHC, MHICL, the Palace Hotel and Shmidt as
respondents. The Palace Hotel and Shmidt were not served with summons and
neither participated in the proceedings before the LA.
arguing that the POEA, not the NLRC had jurisdiction over the case. The NLRC
promulgated a resolution, stating that the appealed Decision be declared null and
void for want of jurisdiction. Santos moved for reconsideration of the afore-quoted
resolution. He argued 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 another LA to hear the case on the question of whether private
respondent was retrenched or dismissed. The La found that 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. The NLRC ruled
in favor of private respondent. Petitioners filed an MR arguing that the LA’s
recommendation had no basis in law and in fact, however it was denied. Hence, this
petition.
ISSUE: Is the NLRC a proper forum to decide this case?
HELD:
NO, the NLRC was a seriously inconvenient forum.
The main aspects of 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 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 that:
(1) The Philippine court is one to which the parties may conveniently resort to;
(2) The Philippine court is in a position to make an intelligent decision as to the law
and the facts; and
(3) The Philippine court has or is likely to have power to enforce its decision. 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. 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 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.
*CAVEAT: 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.
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. True, MHC is an incorporator of MHICL
and owns 50% of its capital stock. However, this is not enough to pierce the veil of
corporate fiction between MHICL and MHC. In Traders Royal Bank v. CA, we held
that “the mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities.”
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.
MHICL not Liable
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,
Cergueda signed the employment contract as a mere witness. He merely signed
under the word “noted”.
When one “notes” a contract, one is not expressing his agreement or
approval, as a party would. In Sichangco v. Board of Commissioners of Immigration,
the Court recognized that the term “noted” means that the person so noting has
merely taken cognizance of the existence of an act or declaration, without
exercising a judicious deliberation or rendering a decision on the matter.
Second, and more importantly, there was no existing employer-employee
relationship between Santos and MHICL. In determining the existence of an
employer-employee relationship, the following elements are considered:
“(1) the selection and engagement of the employee;
“(2) the payment of wages;
“(3) the power to dismiss; and
“(4) the power to control employee’s conduct.”
MHICL did not have and did not exercise any of the aforementioned
powers. It did not select respondent Santos as an employee for the Palace Hotel. He
was referred to the Palace Hotel by his friend, Buenio. MHICL did not engage
respondent Santos to work. The terms of employment were negotiated and
finalized through correspondence between Santos, Mr. Schmidt and Mr. Henk, who
were officers and representatives of the Palace Hotel and not MHICL. Neither did
Santos adduce any proof that MHICL had the power to control his conduct. Finally,
it was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated
Santos’ services.
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.
Considering that the NLRC was forum non-conveniens and considering
further that no employer-employee relationship existed between MHICL, MHC and
Santos, the LA clearly had no jurisdiction over respondent’s claim in the NLRC case.
In all the cases under the exclusive and original jurisdiction of the LA, an employer-
employee relationship is an indispensable jurisdictional requirement.
K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING OIL CO., LTD., petitioners,
vs. THE HONORABLE COURT OF APPEALS, ATLANTIC VENUS CO., S.A., and THE
VESSEL M/V "ESTELLA", respondents.
Facts:
Kumagai Kaiun Kaisha, Ltd., a corporation formed and existing under the laws of
Japan, filed a complaint for the collection of a sum of money with preliminary
attachment against Atlantic Venus Co., S.A., a corporation registered in Panama,
the vessel MV Estella and Crestamonte Shipping Corporation, a Philippine
corporation. Atlantic is the owner of the MV Estella.
The complaint alleged that Crestamonte, as bareboat charterer and operator of the
MV Estella, appointed N.S. Shipping Corporation as its general agent in Japan. The
appointment was formalized in an Agency Agreement. NSS in turn appointed
Kumagai as its local agent in Osaka, Japan. Kumagai supplied the MV Estella with
supplies and services but despite repeated demands Crestamonte failed to pay the
amounts due.
Petitioner Fu Hing Oil Co., Ltd., a corporation organized in Hong Kong and not doing
business in the Philippines, filed a motion for leave to intervene with an attached
complaint-in-intervention, alleging that Fu Hing supplied marine diesel oil/fuel to
the MV Estella and incurred barge expenses for the total sum of US$152,412.5, but
such has remained unpaid. The issuance of a writ of attachment was also prayed
for.
Petitioner K.K. Shell Sekiyu Osaka Hatsubaisho, a corporation organized in Japan
and not doing business in the Philippines, likewise filed a motion to intervene with
an attached complaint-in-intervention, alleging that upon request of NSS,
Crestamonte's general agent in Japan, K.K. Shell provided and supplied marine
diesel oil/fuel to the W Estella at the ports of Tokyo and Mutsure in Japan and that
despite previous demands Crestamonte has failed to pay the amounts of
US$16,996.96 and Y1,000,000.00, and that K.K. Shell's claim constitutes a maritime
lien on the MV Estella. The complaint-in-intervention sought the issuance of a writ
of preliminary attachment.
Trial court allowed the intervention and preliminary attachments were issued upon
the posting of bonds. Thereafter, respondents posted a counterbond which
discharged the earlier issued writ of attachment. Respondents moved to dismiss the
complaints-in- intervention filed by Fu Hing and K.K. Shell.
Thereafter, CA annulled the orders of the trial court and directed it to cease and
desist from proceeding with the case. According to the Court of Appeals, Fu Hing
and K.K. Shell were not suppliers but sub-agents of NSS, hence they were bound by
the Agency Agreement between Crestamonte and NSS, particularly, the choice of
forum clause, which provides that any matter of dispute shalle be resolved in the
district courts of Japan.
Issue:
WON the CA made an error of disallowing the motion for intervention filed by
herein Petitioners
Ruling:
Yes. Court finds reversible error on the part of the Court of Appeals in so far as it
disallowed petitioners' intervention in the case before the trial court and ordered
the latter to cease and desist from proceeding with the case. A reading of the
Agency Agreement fails to support the conclusion that K.K. Shell is a sub-agent of
NSS and is, therefore, bound by the agreement. No express reference to the
contracting of sub-agents or the applicability of the terms of the agreement,
particularly the choice-of-forum clause, to sub-agents is made in the text of the
agreement. What the contract clearly states are NSS' principal duties, i.e., that it
shall provide for the necessary services required for the husbanding of
Crestamonte's vessels in Japanese ports and shall be responsible for fixing
southbound cargoes with revenues sufficient to cover ordinary expenses
Moreover, the complaint-in-intervention filed by K.K. Shell merely alleges that it
provided and supplied the MV Estella with marine diesel oil/fuel, upon request of
NSS who was acting for and as duly appointed agent of Crestamonte. There is thus
no basis for the Court of Appeal's finding that "the sub-agents admitted in their
pleadings that they were appointed as local agent/sub-agent or representatives by
NSS by virtue of said Agency Agreement" The allegation of herein Petitioners do not
conclusively establish a sub-agency between NSS and K.K. Shell. It is therefore
surprising how the Court of Appeals could have come to the conclusion, just on the
basis of the Agency Agreement and the pleadings filed in the trial court, that
"Crestamonte is the principal, NSS is the agent and ... Fu Hing and K.K Shell are the
sub-agents."
In the same vein, as the choice-of-forum clause in the agreement has not been
conclusively shown to be binding upon K.K. Shell, additional evidence would also
still have to be presented to establish this defense, K.K. Shell cannot therefore, as of
yet, be barred from instituting an action in the Philippines.
Private respondents argued that the doctrine of forum non conveniens would be a
valid ground to cause the dismissal of K.K. Shell's complaint-in-intervention. K.K.
Shell counters this argument by invoking its right as maritime lienholder - Any
person furnishing repairs, supplies, to wage, use of dry dock or marine railway, or
other necessaries, to any vessel, whether foreign or domestic, upon the order of
the owner of such vessel, or of a person authorized by the owner, shall have a
maritime lien on the vessel, which may be enforced by suit in rem, and it shall be have the purported contract of sale be declared unenforceable against the Bank.
necessary to allege or prove that credit was given to the vessel. Ejercito et al argued that the second case constitutes forum shopping.

Private respondents on the other hand argue that even if P.D. No. 1521 is
applicable, K.K. Shell cannot rely on the maritime lien because the fuel was
provided not exclusively for the benefit of the MV Estella, but for the benefit of
Crestamonte in general. Under the law it must be established that the credit was
extended to the vessel itself. Now, this is a defense that calls precisely for a factual
determination by the trial court of who benefitted from the delivery of the fuel.
Hence, again, the necessity for the reception of evidence before the trial court.
In other words, considering the dearth of evidence due to the fact that the private
respondents have yet to file their answer in the proceedings below and trial on the
merits is still to be conducted, whether or not petitioners are indeed maritime
lienholders and as such may enforce the lien against the MV Estella are matters that
still have to be established.
Neither are we ready to rule on the private respondents' invocation of the doctrine
of forum non conveniens, as the exact nature of the relationship of the parties is
still to be established. We leave this matter to the sound discretion of the trial court
judge who is in the best position, after some vital facts are established, to
determine whether special circumstances require that his court desist from
assuming jurisdiction over the suit.
ISSUE: Whether or not there is forum shopping.
HELD: Yes. There is forum shopping because there is identity of interest and parties
between the first case and the second case. There is identity of interest because
both cases sought to have the agreement, which involves the same property, be
declared unenforceable as against the Bank. There is identity of parties even though
the first case is in the name of the bank as defendant, and the second case is in the
name of Henry Co as plaintiff. There is still forum shopping here because Henry Co
essentially represents the bank. Both cases aim to have the bank escape liability
from the agreement it entered into with Demetria et al.
The Supreme Court also discussed that to combat forum shopping, which originated
as a concept in international law, the principle of forum non conveniens was
developed. The doctrine of forum non conveniens provides that 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.

**Forum Shopping: “occurs when a party attempts to have his action tried in a
First Philippine International Bank vs CA
particular court or jurisdiction where he feels he will receive the most favorable
judgment or verdict.”
FACTS: Producers Bank (now called First Philippine International Bank), which has
been under conservatorship since 1984, is the owner of 6 parcels of land. The Bank
had an agreement with Demetrio Demetria and Jose Janolo for the two to purchase
the parcels of land for a purchase price of P5.5 million pesos. The said agreement
was made by Demetria and Janolo with the Bank’s manager, Mercurio Rivera. Later
however, the Bank, through its conservator, Leonida Encarnacion, sought the
repudiation of the agreement as it alleged that Rivera was not authorized to enter Heine v. New York Life Insurance Company
into such an agreement, hence there was no valid contract of sale. Subsequently, Facts
Demetria and Janolo sued Producers Bank. The regional trial court ruled in favor of The New York Life Insurance Company and the Guardian Insurance Company ("the
Demetria et al. The Bank filed an appeal with the Court of Appeals. insurance companies") were corporations created in New York, USA. As conditions
to be allowed to conduct business in Germany, they were made to agree to be
supervised by German authorities, to invest the proceeds of policies in German
Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a
securities, and to establish a local agency to whom summons may be served. The
motion for intervention with the trial court. The trial court denied the motion since
insurance companies were later sued before courts in both the US and Germany for
the trial has been concluded already and the case is now pending appeal.
the recovery on some 240 life insurance policies issued in Germany to German
Subsequently, Co, assisted by ACCRA law office, filed a separate civil case against
nationals, payable in German currency.
Carlos Ejercito as successor-in-interest (assignee) of Demetria and Janolo seeking to
Arguments for the Plaintiff
As the US courts have jurisdiction over the subject matter and the parties, they
have no choice but to try the case.
Issue
Whether or not the US courts may dismiss the case on the ground of forum non
conveniens.
Held
Yes. Under the circumstances, the case may be more suitably tried before German
courts.
Ratio Decidendi
The courts in both jurisdictions are competent to try the case and summons may be
served upon the insurance companies in both jurisdictions. Requiring the insurance
companies to defend their interests in the US would subject them to great and
unnecessary inconvenience and expenses, including the possibility of having to
bring documentary evidence all the way from their office in Germany. Moreover,
trying the case in the US additionally burden the courts in that jurisdiction, to the
detriment of other litigants. The assumption of jurisdiction over a case the cause of
action of which arose from another jurisdiction and wherein both parties are non-
residents is discretionary upon the court.
IN RE: UNION CARBIDE CORPORATION
Facts: Union Carbide India Limited (UCIL), incorporated under Indian Law in 1934, is
50.9% owned by a New York corporation named Union Carbide Corporation (UCC).
UCIL is a manufacturer of pesticides. On 3 December 1984, the chemical plant of
UCIL in Bhopal, India had a tragic disaster in the form of a leak of a highly toxic gas
(Methyl isocyanate) used in the production of pesticides. Unfortunately, the
prevailing winds on 3 December 1984 was from Northwest to Southeast which
forced the highly toxic gas to the overpopulated hutments adjacent to the chemical
plant. Over 2,100 dead and over 200,000 injured. Livestocks and crops were also
killed and damaged. 145 actions have been filed and joined at US District Court
(Southern District of New York) on 6 February 1985. However, these cases were
superseded by a consolidated complaint filed on 28 June 1985.
On 29 March 1985, the Indian Government enacted the Bhopal Gas Leak Disaster
(Process of Claims) Act (Bhopal Act) stating that the Government of India has the
exclusive right to represent Indian plaintiffs regarding this incident. On 8 April 1985,
the Government of India filed a complaint in the US District Court (Southern District
of New York). This involves around 487,000 claimants. UCC filed a motion to dismiss
the consolidated action on the grounds of forum non conveniens that the action
should be transferred before the Union of India.
Forum non conveniens
The doctrine of forum non conveniens allows a court to decline jurisdiction, even
when jurisdiction is authorized by a general venue statute.
Issue: WoN the case should be dismissed on the grounds of forum non conveniens?
Ruling: The consolidated case is dismissed on the grounds of forum non conveniens
under the following conditions:
1. UCC shall consent to submit to the jurisdiction of the courts of India, and shall
continue to waive defenses based upon the statute of limitations;
2. UCC shall agree to satisfy any judgment rendered against it by an Indian court,
and if applicable, upheld by an appellate court in that country, where such
judgment and affirmance comport with the minimal requirements of due process;
3. UCC shall be subject to discovery under the model of the United States Federal
Rules of Civil Procedure after appropriate demand by plaintiffs.
Ratio: Cited case: Piper Aircraft Co. v. Reyno - Piper teaches a straightforward
formulation of the doctrine of forum non conveniens. A district court is advised to
determine first whether the proposed alternative forum is "adequate."
1. Preliminary Considerations- "At the outset of any forum non conveniens
inquiry, the court must determine whether there exists an alternative forum."
a. Innovation in the Indian Judicial System- Indian Legal System is a common
law system from the British which makes it friendly to the US Legal System in terms
of appellate structure, the rule of stare decisis, the role of the judiciary as "guardian
of [India's] democratic structure and protector of citizens' rights."
b. Endemic Delays in the Indian Judicial System- However, American Courts
suffer delays too. Moreover, Bhopal Tragedy legislation will not be treated in an
ordinary fashion. The Bhopal Act permits the cases to be treated "speedily,
effectively, equitably and to the best advantage of the claimants."
c. Procedural and Practical Capacity of Indian Courts- Plaintiffs contend that
the Indian legal system lacks the wherewithal to allow it "to deal effectively and
expeditiously" with the issues raised in this lawsuit.
i. Limited capacity of Indian Bar
ii. Attorney General of India will handle the claimants
iii. The substantive tort law of India is not sufficiently developed to
accommodate the Bhopal claims
iv. India lacks certain procedural devices which are essential to the
adjudication of complex cases, the absence of which prevent India from providing
an adequate alternative forum
2. Private Interest Concerns
a. Sources of Proof- UCC argues that virtually all of the evidence which will be
relevant at a trial in this case is located in India.
b. Access to Witnesses- Most witnesses whose testimony would relate to
questions of causation and liability are in India. Engineers from UCIL and
Humphreys and Glasgow and other subcontractors, of whom there are hundreds,
are located in India. Shift employees from the possibly malfunctioning units, safety
monitoring personnel, those responsible for training, safety auditing, procurement,
compliance with regulations and other operations might be required to testify.
More than likely, many of these potential witnesses do not speak English, and
would require translators.
c. Possibility of View- Plaintiff argues that a viewing of the plant and
hutments would probably not be of utmost importance in determining liability, and
this consideration is not afforded great weight on this motion.
3. Public Interest Concerns
a. Administrative Difficulties
As is evident from the discussion thus far, the mere size of the Bhopal case, with its
multitude of witnesses and documents to be transported and translated, obviously
creates administrative problems.
b. The Interests of India and US
Plaintiffs, and especially amicus curiae emphasize this point of argument in
opposition to the motion to dismiss. Concerned with the asserted possibility of
developing a "double-standard" of liability for multinational corporations, plaintiffs
urge that American courts should administer justice to the victims of the Bhopal
disaster as they would to potential American victims of industrial accidents.
The Court concludes that the public interest of India in this litigation far outweighs
the public interest of the United States. This litigation offers a developing nation the
opportunity to vindicate the suffering of its own people within the framework of a
legitimate legal system. This interest is of paramount importance.
c. The Applicable Law
The lex loci delicti analysis used in other jurisdictions indicates that the law of the
state where the tort occurred should be applied. The place in which the tort
occurred was, to a very great extent, India. Other states apply the "most significant
relationship" test, or "weight of contacts" test, which evaluate in which state most
of the events constituting the tort occurred. The contacts with India with respect to
all phases of plant construction, operation, malfunction and subsequent injuries are
greater in number than those with the United States.
Wing On Company v. Syyap 64 O.G. 8311
Facts:
This is an appeal interposed by the defendant from the judgment of the
Court of the First of Manila in Court of First of Manila for recovery of sum of money.
The evidence for the plaintiff shows that Wing On Company is a foreign
partnership, with business address in New York County, New York, USA. Sometime
in the year 1948, the defendant, A. Syyap & Co., Inc., thru its agent, Murray Kern, in
New York, negotiated with plaintiff for the purchase of clothing materials under the
agreement that the defendant would pay the plaintiff the value thereof after the
sale of the goods by the defendant and that the profits derived from such sale
would be divided between them. Accordingly, in the said year, 1948, the plaintiff
shipped to the defendant the clothing materials in question, worth $22,246.04,
which were received by the latter and eventually sold it. The defendant, however,
were able to pay the plaintiff only the sum of $3,530.00 on account of the value of
the merchandise in question, leaving a balance of $18, 716.04. Despite, however,
plaintiff’s demands on the defendant and its agents, Murray Kern, and the promises
of the defendant to pay the account in full, the defendant failed to settle the said
account. Either was there any accounting or division of the profits made by the
defendant as agreed upon by the parties; hence, the present action was instituted.
Appellant now contends that the court a quo had no jurisdiction to try and
decide the case for the reason that the action was filed by one who is not the agent
or representative of the plaintiff had no legal capacity to sue the defendant.
Issue:
 Whether Wing On Company and its agent has legal capacity to sue to be
sued because Wing On is not licensed to do business in the Philippines
 Whether the trial court should have declined jurisdiction pursuant to the
principle of forum non conveniens.
Ruling:
In the case at bar, the facts show that the transaction in question was an
isolated act, contract or transaction. As such, it does not constitute “doing or
transacting business within the meaning of the law. Consequently, the plaintiff,
although a foreign juridical person or entity, not duly licensed to transact business
in the Philippines, has the legal personality to bring and maintain the present suit
arising from the transaction in question. In short, in this particular case, the
obtaining of a license to transact business is not a condition precedent to the
institution of the action. It is only when the foreign corporation is doing or
transacting business within the purview of the law that it has to be license before it
can sue in our court.
The facts surrounding the present case do not warrant the application of
any recognized rules of Private International Law. It is well-established practice in
the application of the principle of forum non conveniens that unless the balance is
strongly in favor of the defendant, the plaintiff's choice of forum should rarely be
disturbed, and that, furthermore, the consideration of the inadequacy to enforce
the judgment, which is one of the important factors to be considered in the
application of the said principle, would precisely constitute a problem to the
plaintiff if the local courts decline to assume jurisdiction on the basis of the said
principle, considering that the defendant is a resident of the Philippines.
Consequently, venue in the instant case was not improperly laid and the
court a quo did not err in taking cognizance of the case.
RAYTHEON VS. ROUZIE
 PETITIONER: 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.
 RTC: RTC denied petitioner’s omnibus motion. The trial court ruled that the
principle of forum non conveniens was inapplicable because the trial court
could enforce judgment on petitioner, it being a foreign corporation licensed to
do business in the Philippines.
 CA: 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.
 PETITIONER: mainly asserts that the written contract between respondent 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. Petitioner theorizes that the foreign elements of the dispute
necessitate the immediate application of the doctrine of forum non
conveniens.
 SC: Recently in Hasegawa v. Kitamura, the Court outlined three 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.
 On the matter of jurisdiction over a conflicts-of-laws problem where the case is
filed in a Philippine court and where the court has jurisdiction over the subject
matter, the parties and the res, it may or can 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 is an exercise of sovereign prerogative of the country where the
case is filed.
 Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law and by the material allegations in the complaint,
irrespective of whether or not the plaintiff is entitled to recover all or some of
the claims or reliefs sought therein. Civil Case No. 1192-BG is an action for
damages arising from an alleged breach of contract. Undoubtedly, the nature
of the action and the amount of damages prayed are within the jurisdiction of
the RTC.
 As regards jurisdiction over the parties, the trial court acquired jurisdiction over
herein respondent (as party plaintiff) upon the filing of the complaint. On the
other hand, jurisdiction over the person of petitioner (as party defendant) was
acquired by its voluntary appearance in court.
 That the subject contract included a stipulation that the same shall be
governed by the laws of the State of Connecticut does not suggest that the
Philippine courts, or any other foreign tribunal for that matter, are precluded
from hearing the civil action. Jurisdiction and choice of law are two 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 which will determine the merits of the case is fair to both
parties. The choice of law stipulation will become relevant only when the
substantive issues of the instant case develop, that is, after hearing on the
merits proceeds before the trial court.
 Under the doctrine of forum non conveniens, a court, in conflicts-of-laws 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. Petitioner’s averments of the foreign elements in the instant case
are not sufficient to oust the trial court of its jurisdiction over Civil Case No. No.
1192-BG and the parties involved.
 Moreover, the propriety of dismissing a case based on the principle of forum
non conveniens requires a factual determination; hence, it is more properly
considered as a matter of defense. 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.
 Finding no grave abuse of discretion on the trial court, the Court of Appeals
respected its conclusion that it can assume jurisdiction over the dispute
notwithstanding its foreign elements. In the same manner, the Court defers to
the sound discretion of the lower courts because their findings are binding on
this Court.
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 manager in the contract.
Hasegawa, Nippon’s 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
Kitamaru’s 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.

Nippon’s 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 Kitamaru’s 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 that 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
not automatically 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 1st phase is at issue—jurisdiction. 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, Nippon’s 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 court’s 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.
Puyat vs. Zabarte
Doctrine of Forum Non-Conveniens is inapplicable in this case
FACTS: On Jan. 24, 1994, respondent Zabarte commenced an action to enforce the
money judgment against petitioner Puyat rendered by the Superior Court for the
State of California, Country of Contra Costa, USA.
Puyat filed his Answer with the special and affirmative defenses such that
the Superior Court for the State of California did not properly acquire jurisdiction
over the subject matter of and over the persons involved in, thus the judgment on
stipulation for entry in judgment is null and void and unenforceable in the
Philippines; and that respondent has no capacity to sue in the Philippines.
On Aug. 1, 1994, respondent filed a Motion for Summary Judgment under
Rule 34 (ROC) alleging that the Answer filed by petitioner failed to tender any
genuine issue as to the material facts. Petitioner begs to disagree; in support
hereof, he alleged that the Judgment on Stipulations for Entry in Judgment is null
and void, fraudulent, illegal and unenforceable, the same having been obtained by
means of fraud, collusion, undue influence and/or clear mistake of fact and law. He
also maintained that said Judgment was obtained without the assistance of counsel
for petitioner and without sufficient notice to him and therefore, was rendered in
violation of his constitutional rights to substantial and procedural due process.
The RTC granted respondent’s Motion for Summary Judgment. Petitioner
filed a Motion for Reconsideration and thereafter a Motion to Dismiss on the
ground of lack of jurisdiction over the subject matter of the case and forum non
conveniens.
The RTC rendered its judgment and ordered petitioner to pay respondent.
CA affirmed and ruled that summary judgment was proper, because petitioner had
failed to tender any genuine issue of fact and was merely maneuvering to delay the
full effects of the judgment. The CA also rejected petitioner’s argument that the
RTC should have dismissed the action for the enforcement of a foreign judgment,
on the ground of forum non conveniens. It reasoned out that the recognition of the
foreign judgment was based on comity, reciprocity and res judicata.
ISSUE: Whether the principle of forum non conveniens is applicable in this case.
HELD: NO. Since the present action lodged in the RTC was for the enforcement of
a foreign judgment, there was no need to ascertain the rights and the obligations of
the parties based on foreign laws or contracts. The parties needed only to perform
their obligations under the Compromise Agreement they had entered into. Also,
under Sec. 5 (n) of Rule 131, a court – whether in the Philippines or elsewhere –
enjoys the presumption that it is acting in the lawful exercise of jurisdiction, and
that it is regularly performing its official duty.
The petitioner claims that the trial court had no jurisdiction, because the
case involved partnership interest, and there was difficulty in ascertaining the
applicable law in California. All the aspects of the transaction took place in a foreign
country, and respondent is not even a Filipino.
The Supreme Court disagreed and ruled that in the absence of proof of
California law on the jurisdiction of courts, it is presumed that such law, if any, is
similar to Philippine law. This conclusion is based on the presumption of identity
or similarity, also known as processual presumption.
 The grounds relied upon by the petitioner are contradictory. On the one
hand, he insists that the RTC take jurisdiction over the enforcement case in order to
invalidate the foreign judgment; yet, he avers that the trial court should not
exercise jurisdiction over the same case on the basis of forum non conveniens. Not
only these defenses weaken each other, but they bolster the finding of the lower
courts that he was merely maneuvering to avoid or delay payment of his obligation.
Under the principle of forum non conveniens, even if the exercise of
jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case
for any of the following practical reasons:
1) The belief that the matter can be better tried and decided elsewhere, either
because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known
as forum shopping[,] merely to secure procedural advantages or to convey or harass
the defendant;
3) The unwillingness to extend local judicial facilities to non-residents or aliens
when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to
be maintained; and
5) The difficulty of ascertaining foreign law.
None of the aforementioned reasons barred the RTC from exercising its
jurisdiction. In the case at bar, there was no more need for material witnesses, no
forum shopping or harassment of petitioner, no inadequacy in the local machinery
to enforce the foreign judgment, and no question raised as to the application of any
foreign law.
Authorities agree that the issue of whether a suit should be entertained
or dismissed on the basis of the above-mentioned principle depends largely upon
the facts of each case and on the sound discretion of the trial court.
The petiton is DENIED.
PIONEER VS. TODARO (PART3D)
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed
with the Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money
and Damages with Preliminary Attachment against Pioneer International Limited
(PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc.
(PPHI), John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig).
ALLEGATIONS OF TODARO:
That PIL is a corporation duly organized and existing under the laws of
Australia and is principally engaged in the ready-mix concrete and concrete
aggregates business; PPHI is the company established by PIL to own and hold the
stocks of its operating company in the Philippines; PCPI is the company established
by PIL to undertake its business of ready-mix concrete, concrete aggregates and
quarrying operations in the Philippines; McDonald is the Chief Executive of the
Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI
and PCPI; Todaro has been the managing director of Betonval Readyconcrete, Inc.
(Betonval), a company engaged in pre-mixed concrete and concrete aggregate
production; he resigned from Betonval in February 1996; in May 1996, PIL
contacted Todaro and asked him if he was available to join them in connection with
their intention to establish a ready-mix concrete plant and other related operations
in the Philippines; Todaro informed PIL of his availability and interest to join them;
subsequently, PIL and Todaro came to an agreement wherein the former consented
to engage the services of the latter as a consultant for two to three months, after
which, he would be employed as the manager of PIL's ready-mix concrete
operations should the company decide to invest in the Philippines; subsequently,
PIL started its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis.
PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the
grounds that the complaint states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint, as the same is within the
jurisdiction of the NLRC, and that the complaint should be dismissed on the basis of
the doctrine of forum non conveniens.
RTC: DENIED THE MTD.
CA: AFFIRMED THE DECISION OF RTC.
ISSUE: W/N THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE
PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND FOR DISMISSING A
COMPLAINT
RULING: No.
Petitioners assert that the principle of forum non conveniens dictates that
even where exercise of jurisidiction is authorized by law, courts may refuse to
entertain a case involving a foreign element where the matter can be better tried
and decided elsewhere, either because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their residence there and the
plaintiff sought the forum merely to secure procedural advantage or to annoy or
harass the defendant. Petitioners also argue that one of the factors in determining
the most convenient forum for conflicts problem is the power of the court to
enforce its decision. Petitioners contend that since the majority of the defendants
in the present case are not residents of the Philippines, they are not subject to
compulsory processes of the Philippine court handling the case for purposes of
requiring their attendance during trial. Even assuming that they can be summoned,
their appearance would entail excessive costs. Petitioners further assert that there
is no allegation in the complaint from which one can conclude that the evidence to
be presented during the trial can be better obtained in the Philippines. Moreover,
the events which led to the present controversy occurred outside the Philippines.
Petitioners conclude that based on the foregoing factual circumstances, the case
should be dismissed under the principle of forum non conveniens.
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. In the case
of Communication Materials and Design, Inc. vs. Court of Appeals, this
Court held that "xxx [a] 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; (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."
Moreover, this Court enunciated in Philsec. Investment Corporation vs.
Court of Appeals, that 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. 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.
In the present case, the factual circumstances cited by petitioners which
would allegedly justify the application of the doctrine of forum non conveniens are
matters of defense, the merits of which should properly be threshed out during
trial. Hence, petition is DENIED.

With respect to the applicability of the principle of forum non conveniens in the
present case, this Court's ruling in Bank of America NT & SA v. Court of Appeals is
instructive, to wit:

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.