14. Pacific Consultants International Asia, Inc. v.

Schonfeld
G.R. No. 166920, February 19, 2007
CALLEJO, SR., J.:

Blurb:

Topic: Step 2: Should the court or executive agency exercise jurisdiction?

Doctrine: A Philippine court may assume jurisdiction over a case if it chooses to do so, provided that
the following requisites are met: 1) the Philippine Court is one to which the parties may conveniently
resort to; 2) that the Philippines 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.

SuperSummary: Respondent Klaus Schonfeld is a Canadian citizen and resident who was hired by
Pacific Consultants International of Japan (PCIJ), a company incorporated and based in Tokyo, Japan.
However, PCIJ assigned him as the sector manager of Pacicon Philippines, Inc. (PPI), a subsidiary
corporation of PCIJ that was duly established and incorporated in accordance with Philippine laws. The
January 7, 1998 letter of employment transmitted by PPI President and PCIJ Director Jens Henrichsen
specified that PPI and PCIJ will partly pay for respondent Schonfeld’s salary, that PPI will provide
another separate contract to define which terms and conditions PPI will be responsible for, and that in
case of any discrepancies or contradictions, the letter of employment between PCIJ and Schonfeld will
prevail. Section 21 of the General Conditions of Employment appended to the letter of employment
also states that in case of any dispute that cannot be settled amicably, the dispute is to be submitted to
and settled by the Court of Arbitration in London. Respondent arrived in the Philippines and assumed
his position, prompting PPI to apply for an Alien Employment Permit before the DOLE on his behalf.
The DOLE granted the application and issued the permit to respondent.

Henrichsen transmitted a letter to respondent on May 5, 1999, informing him that his employment had
been terminated effective August 4 of the same year, but the former sent the latter an email 4 months
later, requesting him to stay put and continue working on certain projects. Respondent continued to
work until October 1, 1999, prompting him to file a complaint for illegal dismissal against PPI and
Henrichsen once PPI refused to pay the whole amount of his claims. The LA dismissed the petition,
finding that the January 7, 1998 letter of employment was controlling, the Philippines was only the duty
station where Schonfeld was required to work, and that the dispute should have been submitted to the
court of arbitration in London. The NLRC affirmed this decision. Respondent filed a petition for
certiorari with the CA, which ruled in his favor. Hence, this petition for certiorari filed by the petitioners
before the SC. The issue in this case is W/N the Philippine court can take jurisdiction over the case,
and the Court said yes.

Because PPI applied before the DOLE for the issuance of respondent’s AEP, it admitted that
respondent was its employee. Using the four-fold test and the control test, the employer-employee
relationship was between PPI and respondent, and not PCIJ and respondent. Moreover, since the
venue stipulation did not use qualifying or restrictive language, it was merely permissive, and the
London court of arbitration was merely an additional forum the parties could refer to. Lastly, the
petitioners’ insistence that the principle of forum non conveniens must be applied due to the
respondent being a Canadian citizen must be rejected due to the following reasons:

First, the Labor Code does not include forum non conveniens as a ground for the dismissal of a
complaint.

Second, the propriety of dismissing a case based on this principle requires a factual determination, and
as such, it is considered as a defense.

Third, in Bank of America v. Court of Appeals, the Court held that a Philippine court may assume
jurisdiction over a case if it chooses to do so, provided that the following requisites are met: 1) the
 Philippine Court is one to which the parties may conveniently resort to; 2) that the Philippines 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.

All the requisites are present in this case. Hence, this petition is denied. The case is remanded to the
Labor Arbiter for its disposition based on its merits.

Facts:
● Respondent Klaus Schonfeld is a Canadian citizen and resident who was hired by Pacific
Consultants International of Japan (PCIJ), a company incorporated and based in Tokyo, Japan.
● However, PCIJ assigned him as the sector manager of Pacicon Philippines, Inc. (PPI), a
subsidiary corporation of PCIJ that was duly established and incorporated in accordance with
Philippine laws.
● The January 7, 1998 letter of employment transmitted by PPI President and PCIJ Director Jens
Henrichsen specified that PPI and PCIJ will partly pay for respondent Schonfeld’s salary, that PPI
will provide another separate contract to define which terms and conditions PPI will be
responsible for, and that in case of any discrepancies or contradictions, the letter of employment
between PCIJ and Schonfeld will prevail.
● Section 21 of the General Conditions of Employment appended to the letter of employment also
states that in case of any dispute that cannot be settled amicably, the dispute is to be submitted
to and settled by the Court of Arbitration in London.
● Respondent arrived in the Philippines and assumed his position, prompting PPI to apply for an
Alien Employment Permit before the DOLE on his behalf.
● The DOLE granted the application and issued the permit to respondent.
● Henrichsen transmitted a letter to respondent on May 5, 1999, informing him that his employment
had been terminated effective August 4 of the same year, but the former sent the latter an email 4
months later, requesting him to stay put and continue working on certain projects.
● Respondent continued to work until October 1, 1999, prompting him to file a complaint for illegal
dismissal against PPI and Henrichsen since PPI refused to pay the whole amount of his claims.
● The LA dismissed the petition, finding that the January 7, 1998 letter of employment was
controlling, the Philippines was only the duty station where Schonfeld was required to work, and
that the dispute should have been submitted to the court of arbitration in London.
● The NLRC affirmed this decision.
● Respondent filed a petition for certiorari with the CA, which ruled in his favor.
● Hence, this petition for certiorari filed by the petitioners before the SC.

Issue: W/N the Philippine court can exercise jurisdiction over this case? - YES

Ruling:

PPI is respondent’s employer

● First, when PPI applied for the issuance of an AEP for respondent, it was required to append a
copy of respondent’s employment contract with PPI pursuant to Section 5, Rule XIV of the
Omnibus Rules of the Labor Code. In other words, PPI itself admitted that respondent was its
employee. Otherwise, the DOLE would not have approved its application. PPI is therefore
estopped from alleging that it was PCIJ that had been respondent’s employer.
● Second, using the four-fold test and the control test, the employer-employee relationship was
between petitioner PPI and respondent Schonfeld. It was PPI that had a hand in a) the selection
and engagement of the employee, b) the payment of wages, c) the power of dismissal, and d) the
power to control the employee’s conduct.

The stipulation regarding venue was merely permissive

● In the case of Philippine Banking Corporation v. Tensuan, the Court ruled that venue stipulations
in a contract are considered valid and enforceable. However, they do not supersede the general
rule set forth in Rule 4 of the ROC. In the absence of qualifying or restrictive words, venue
 stipulations are considered merely as an additional forum. They are not exclusive, but rather
permissive. If the intention of the parties were to restrict the venue, there must be accompanying
language clearly and categorically expressing this purpose and design. In this case, no restrictive
words like “only,” “solely,” “exclusively in this court,” “in no other court save,” “particularly,”
“nowhere else except,” were ever stated in the contract. Hence, the court of arbitration in London
is not an exclusive venue.

Forum non conveniens cannot be applied

● Petitioners’ insistence that the principle of forum non conveniens must be applied due to the
respondent being a Canadian citizen must be rejected due to the following reasons:
○ First, the Labor Code does not include forum non conveniens as a ground for the
dismissal of a complaint.
○ Second, the propriety of dismissing a case based on this principle requires a factual
determination, and as such, it is considered as a defense.
○ Third, in Bank of America v. Court of Appeals, the Court held that a Philippine court may
assume jurisdiction over a case if it chooses to do so, provided that the following
requisites are met: 1) the Philippine Court is one to which the parties may conveniently
resort to; 2) that the Philippines 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.
● All the requisites are present in this case.

Disposition: Petition denied. PPI is respondent’s employer. Case is remanded to the LA for disposition.