The liberal atmosphere which pervades the procedure in

administrative proceedings does not empower the presiding

officer to make conclusions of fact before hearing all the parties
concerned. (Matuguina Integrated Wood Products, Inc. vs. Court
of Appeals, 263 SCRA 490 [1996])
——o0o——
 
 
G.R. No. 162894. February 26, 2008.*
RAYTHEON INTERNATIONAL, INC., petitioner, vs.
STOCKTON W. ROUZIE, JR., respondent.
Conflict of Laws; Phases in Judicial Resolution of Conflict-of-Laws
Problems.—Recently in Hasegawa v. Kitamura, 538 SCRA 261 (2007),
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.
Same; Jurisdictions; Pleadings and Practice; 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; 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.—On
the matter of jurisdiction over a
_______________
* SECOND DIVISION.
556
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.
Same; Same; Choice of Law; Words and Phrases; While 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 develop, that is, after hearing on the merits proceeds
before the trial 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.
Same; Same; Forum Non Conveniens; The propriety of dismissing a
case based on the principle of forum non conveniens requires a factual
determination—it is more properly considered as a matter of defense.—
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
557
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.
Cause of Action; Pleadings and Practice; Words and Phrases;
Failure to state a cause of action refers to the insufficiency of allegation
in the pleading.—Petitioner also contends that the complaint in Civil Case
No. 1192-BG failed to state a cause of action against petitioner. Failure to
state a cause of action refers to the insufficiency of allegation in the
pleading. As a general rule, the elementary test for failure to state a
cause of action is whether the complaint alleges facts which if true would
justify the relief demanded.
PETITION for review on certiorari of the decision and resolution of
the Court of Appeals.
  The facts are stated in the opinion of the Court.
Quisumbing, Torres for petitioner.
Ceferino Padua Law Office for respondent.
TINGA, J.:
Before this Court is a petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure which seeks the
reversal of the Decision1 and Resolution2 of the Court of Appeals
in CA-G.R. SP No. 67001 and the dismissal of the
_______________
1 Rollo, pp. 42-46. Dated 28 August 2003; penned by Associate Justice Arsenio J.
Magpale and concurred in by Associate Justices Bienvenido L. Reyes, Acting
Chairperson of the Special Ninth Division, and Rebecca De Guia-Salvador.
2 Id., at p. 47. Dated 10 March 2004.
558
civil case filed by respondent against petitioner with the trial court.
As culled from the records of the case, the following antecedents
appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a
corporation duly organized and existing under the laws of the
State of Connecticut, United States of America, and respondent
Stockton W. Rouzie, Jr., an American citizen, entered into a
contract whereby BMSI hired respondent as its representative to
negotiate the sale of services in several government projects in
the Philippines for an agreed remuneration of 10% of the gross
receipts. On 11 March 1992, respondent secured a service
contract with the Republic of the Philippines on behalf of BMSI for
the dredging of rivers affected by the Mt. Pinatubo eruption and
mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch of
the National Labor Relations Commission (NLRC) a suit against
BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and
Walter G. Browning for alleged nonpayment of commissions,
illegal termination and breach of employment contract.4 On 28
September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered
judgment ordering BMSI and RUST to pay respondent’s money
claims.5 Upon appeal by BMSI, the NLRC reversed the decision of
the Labor Arbiter and dismissed respondent’s complaint on the
ground of lack of jurisdiction.6 Respondent elevated the case to
this Court but it it was dismissed in a Resolution dated 26
November 1997. The Resolution became final and executory on
09 November 1998.
On 8 January 1999, respondent, then a resident of La Union,
instituted an action for damages before the Regional Trial
_______________
3Id.
4 Id., at pp. 61-62.
5 Id., at pp. 63-74.
6 Id., at pp. 75-90.
559
Court (RTC) of Bauang, La Union. The Complaint,7 docketed as
Civil Case No. 1192-BG, named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. The complaint
essentially reiterated the allegations in the labor case that BMSI
verbally employed respondent to negotiate the sale of services in
government projects and that respondent was not paid the
commissions due him from the Pinatubo dredging project which
he secured on behalf of BMSI. The complaint also averred that
BMSI and RUST as well as petitioner itself had combined and
functioned as one company.
In its Answer,8 petitioner alleged that contrary to respondent’s
claim, it was a foreign corporation duly licensed to do business in
the Philippines and denied entering into any arrangement with
respondent or paying the latter any sum of money. Petitioner also
denied combining with BMSI and RUST for the purpose of
assuming the alleged obligation of the said companies.9 Petitioner
also referred to the NLRC decision which disclosed that per the
written agreement between respondent and BMSI and RUST,
denominated as “Special Sales Representative Agreement,” the
rights and obligations of the parties shall be governed by the laws
of the State of Connecticut.10 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.11
On 18 May 1999, petitioner filed an Omnibus Motion for
Preliminary Hearing Based on Affirmative Defenses and for
Summary Judgment12 seeking the dismissal of the complaint
_______________
7 Id., at pp. 48-54.
8  Id., at pp. 91-99.
9  Id., at p. 94.
10 Id., at p. 96.
11 Id., at pp. 97-98.
12 Id., at pp. 100-111.
560
on grounds of forum non conveniens and failure to state a cause
of action. Respondent opposed the same. Pending the resolution
of the omnibus motion, the deposition of Walter Browning was
taken before the Philippine Consulate General in Chicago.13
In an Order14 dated 13 September 2000, the RTC denied
petitioner’s omnibus motion. The trial court held that the factual
allegations in the complaint, assuming the same to be admitted,
were sufficient for the trial court to render a valid judgment
thereon. It also 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.15
Petitioner filed a Motion for Reconsideration16 of the order, which
motion was opposed by respondent.17 In an Order dated 31 July
2001,18 the trial court denied petitioner’s motion. Thus, it filed a
Rule 65 Petition19 with the Court of Appeals praying for the
issuance of a writ of certiorari and a writ of injunction to set aside
the twin orders of the trial court dated 13 September 2000 and 31
July 2001 and to enjoin the trial court from conducting further
proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed
Decision21 denying the petition for certiorari for lack of merit. It
also denied petitioner’s motion for reconsideration in the assailed
Resolution issued on 10 March 2004.22
_______________
13 Records, Vol. I, pp. 180-238.
14 Rollo, pp. 127-131.
15 Id., at p. 130.
16 Id., at pp. 132-149.
17 Id., at pp. 150-151.
18 Id., at p. 162.
19 Id., at pp. 163-192.
20 Id., at p. 191.
21 Supra note 1.
22 Supra note 2.
561
The appellate court held that although the trial court should not
have confined itself to the allegations in the complaint and should
have also considered evidence aliunde in resolving petitioner’s
omnibus motion, it found the evidence presented by petitioner,
that is, the deposition of Walter Browning, insufficient for
purposes of determining whether the complaint failed to state a
cause of action. The appellate court also stated that it could not
rule one way or the other on the issue of whether the
corporations, including petitioner, named as defendants in the
case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be
threshed out during trial.23 Moreover, 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.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING
TO DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF
ACTION AGAINST RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING
TO DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON
CONVENIENS.24
Incidentally, respondent failed to file a comment despite repeated
notices. The Ceferino Padua Law Office, counsel on record for
respondent, manifested that the lawyer handling the case, Atty.
Rogelio Karagdag, had severed relations with the law firm even
before the filing of the instant petition and that it could no longer
find the whereabouts of Atty. Karagdag or of respondent despite
diligent efforts. In a Resolution25
_______________
23Id.
24 Id., at p. 18.
25 Id., at p. 318.
562
dated 20 November 2006, the Court resolved to dispense with the
filing of a comment.
The instant petition lacks merit.
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.
Recently in Hasegawa v. Kitamura,26 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 instances27 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.28
_______________
26 G.R. No. 149177, 23 November 2007, 538 SCRA 261.
27 Bank of America NT & SA v. Court of Appeals, 448 Phil. 181; 400 SCRA 156
(2003); Puyat v. Zabarte, 405 Phil. 413; 352 SCRA 738 (2001); Philsec Investment
Corporation v. Court of Appeals, G.R. No. 103493, 19 June 1997, 274 SCRA 102.
28  The Manila Hotel Corp. v. National Labor Relations Commission, 397 Phil. 1,
16-17; 343 SCRA 1, 13 (2000); Communication Materials and Design, Inc. v. Court
of Appeals, 329 Phil. 487, 510-511; 260 SCRA 673 (1996).
564
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.29
Jurisdiction over the nature and subject matter of an action is
conferred by the Constitution and the law30 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.31 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.32
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
_______________
29 Agpalo, Ruben E. CONFLICT OF LAWS (Private International Law), 2004 Ed.,
p. 491.  
30 Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, G.R. No.
162890, 22 November 2005, 475 SCRA 743, 756.
31  Laresma v. Abellana, G.R. No. 140973, 11 November 2004, 442 SCRA 156,
168.
32 See Arcelona v. Court of Appeals, 345 Phil. 250, 267; 280 SCRA 20 (1997).
564
will determine the merits of the case is fair to both parties.33 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.34 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.35
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.
Petitioner also contends that the complaint in Civil Case No.
1192-BG failed to state a cause of action against petitioner.
Failure to state a cause of action refers to the insuffi-
_______________
33 Hasegawa v. Kitamura, supra note 26.
34 Bank of America NT & SA v. Court of Appeals, supra note 27.
35 Philsec Investment Corporation v. Court of Appeals, supra note 27 at p. 113.
565
ciency of allegation in the pleading.36 As a general rule, the
elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief
demanded.37
The complaint alleged that petitioner had combined with BMSI
and RUST to function as one company. Petitioner contends that
the deposition of Walter Browning rebutted this allegation. On this
score, the resolution of the Court of Appeals is instructive, thus:
“x x x Our examination of the deposition of Mr. Walter Browning as well
as other documents produced in the hearing shows that these evidence
aliunde are not quite sufficient for us to mete a ruling that the complaint
fails to state a cause of action.
Annexes “A” to “E” by themselves are not substantial, convincing and
conclusive proofs that Raytheon Engineers and Constructors, Inc. (REC)
assumed the warranty obligations of defendant Rust International in the
Makar Port Project in General Santos City, after Rust International
ceased to exist after being absorbed by REC. Other documents already
submitted in evidence are likewise meager to preponderantly conclude
that Raytheon International, Inc., Rust International[,] Inc. and Brand
Marine Service, Inc. have combined into one company, so much so that
Raytheon International, Inc., the surviving company (if at all) may be held
liable for the obligation of BMSI to respondent Rouzie for unpaid
commissions. Neither these documents clearly speak otherwise.”38
As correctly pointed out by the Court of Appeals, the question of
whether petitioner, BMSI and RUST merged together requires the
presentation of further evidence, which only a full-blown trial on
the merits can afford.
_______________
36 Bank of America NT & SA v. Court of Appeals, supra note 27 at p. 194; p. 167.
37  Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R. No.
143896, 8 July 2005, 463 SCRA 64, 73.
38 Rollo, p. 44.
566
WHEREFORE, the instant petition for review on certiorari is
DENIED. The Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs against
petitioner.
SO ORDERED.
Carpio (Acting Chairperson), Sandoval-Gutierrez,** Carpio-
Morales and Velasco, Jr., JJ., concur.
Petition denied, judgment and resolution affirmed.
Notes.—Forum shopping originated as a concept in private
international law, where non-resident litigants are given the option
to choose the forum or place wherein to bring their suit for various
reasons or excuses, including to secure procedural advantages,
to annoy and harass the defendant, to avoid overcrowded
dockets, or to select a more friendly venue. (First Philippine
International Bank vs. Court of Appeals, 252 SCRA 259 [1996])
Generally, a “foreign corporation” has no legal existence within
the state in which it is foreign, and this proceeds from the principle
that juridical existence of a corporation is confined within the
territory of the state under whose laws it was incorporated and
organized, and it has no legal status beyond such territory.
(Communications Materials and Design, Inc. vs. Court of Appeals,
260 SCRA 673 [1996])
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