THIRD DIVISION

KAZUHIRO HASEGAWA and NIPPON

ENGINEERING CONSULTANTS CO.,
LTD.,

G.R. No.
149177

Petitioners,
Present:

YNARES-SANTIAGO, J.,
- versus -

Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

MINORU KITAMURA,
Respondent.

Promulgated:

November 23, 2007

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the April 18, 2001 Decision 1[1] of the Court of Appeals
(CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution 2[2] denying the
motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd.

(Nippon), a Japanese consultancy firm providing technical and management
support in the infrastructure projects of foreign governments, 3[3] entered into an
Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a
Japanese national permanently residing in the Philippines.4[4] The agreement
1[1]Penned by Associate Justice Bienvenido L. Reyes, with the late Associate Justice
Eubulo G. Verzola and Associate Justice Marina L. Buzon, concurring; rollo, pp. 3744.
2[2]Id. at 46-47.
3[3]CA rollo (CA-G.R. SP No. 60827), p. 84.
4[4]Id. at 116-120.

provides that respondent was to extend professional services to Nippon for a year
starting on April 1, 1999.5[5] Nippon then assigned respondent to work as the
project manager of the Southern Tagalog Access Road (STAR) Project in the
Philippines, following the company's consultancy contract with the Philippine
Government.6[6]

When the STAR Project was near completion, the Department of Public
Works and Highways (DPWH) engaged the consultancy services of Nippon, on
January 28, 2000, this time for the detailed engineering and construction
supervision of the Bongabon-Baler Road Improvement (BBRI) Project. 7[7]
Respondent was named as the project manager in the contract's Appendix 3.1.8[8]

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general

manager for its International Division, informed respondent 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
on March 31, 2000, just in time for the ICA's expiry.9[9]
5[5]Id. at 32-36.
6[6]Id. at 85.
7[7]Id. at 121-148.
8[8]Id. at 166-171.
9[9]Id. at 38.

Threatened with impending unemployment, respondent, through his lawyer,

requested a negotiation conference and demanded that he be assigned to the BBRI
project. Nippon insisted that respondents contract was for a fixed term that had
already expired, and refused to negotiate for the renewal of the ICA.10[10]

As he was not able to generate a positive response from the petitioners,

respondent consequently initiated on June 1, 2000 Civil Case No. 00-0264 for
specific performance and damages with the Regional Trial Court of Lipa City.11[11]

For their part, petitioners, contending that the ICA had been perfected in
Japan and executed by and between Japanese nationals, moved to dismiss the
complaint for lack of jurisdiction. They asserted that the claim for improper pretermination of respondent's ICA could only be heard and ventilated in the proper
courts of Japan following the principles of lex loci celebrationis and lex
contractus.12[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request
for the replacement of Kitamura by a certain Y. Kotake as project manager of the
10[10]Id. at 39-41.
11[11]Id. at 109.
12[12]Id. at 53-57.

BBRI Project.13[13]

On June 29, 2000, the RTC, invoking our ruling in Insular Government v.
Frank14[14] that matters connected with the performance of contracts are regulated
by the law prevailing at the place of performance, 15[15] denied the motion to
dismiss.16[16]

The trial court subsequently denied petitioners' motion for

reconsideration,17[17] prompting them to file with the appellate court, on August

14, 2000, their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP
No. 60205].18[18] On August 23, 2000, the CA resolved to dismiss the petition on
procedural groundsfor lack of statement of material dates and for insufficient
verification and certification against forum shopping.19[19] An Entry of Judgment
was later issued by the appellate court on September 20, 2000.20[20]

Aggrieved by this development, petitioners filed with the CA, on September

19, 2000, still within the reglementary period, a second Petition for Certiorari
under Rule 65 already stating therein the material dates and attaching thereto the
13[13]Id. at 42-43.
14[14]13 Phil. 236 (1909).
15[15]Insular Government v. Frank, id. at 240.
16[16]CA rollo (CA-G.R. SP No. 60827), pp. 25-26.
17[17]Id. at 27-28.
18[18]CA rollo (CA-G.R. SP No. 60205), pp. 2-42.

proper verification and certification. This second petition, which substantially

raised the same issues as those in the first, was docketed as CA-G.R. SP No.
60827.21[21]

Ruling on the merits of the second petition, the appellate court rendered the
assailed April 18, 2001 Decision22[22] finding no grave abuse of discretion in the
trial court's denial of the motion to dismiss. The CA ruled, among others, 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. The CA thus

19[19]Id. at 44. The August 23, 2000 Resolution penned by Associate Justice
Delilah Vidallon-Magtolis (retired), with the concurrence of Associate Justices Eloy R.
Bello, Jr. (retired) and Elvi John S. Asuncion (dismissed) pertinently provides as
follows:
A cursory reading of the petition indicates no statement as to the date when
the petitioners filed their motion for reconsideration and when they received the order of
denial thereof, as required in Section 3, paragraph 2, Rule 46 of the 1997 Rules of Civil
Procedure as amended by Circular No. 39-98 dated August 18, 1998 of the Supreme Court.
Moreover, the verification and certification of non-forum shopping was executed by
petitioner Kazuhiro Hasegawa for both petitioners without any indication that the latter had
authorized him to file the same.
WHEREFORE, the [petition] is DENIED due course and DISMISSED outright.
SO ORDERED.

20[20]Id. at 45.
21[21]CA rollo (CA-G.R. SP No. 60827), pp. 2-24.
22[22]Supra note 1.

declared that the trial court was correct in applying instead the principle of lex loci
solutionis.23[23]

Petitioners' motion for reconsideration was subsequently denied by the CA

in the assailed July 25, 2001 Resolution.24[24]

Remaining steadfast in their stance despite the series of denials, petitioners

instituted the instant Petition for Review on Certiorari25[25] imputing the
following errors to the appellate court:

A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE TRIAL COURT VALIDLY EXERCISED JURISDICTION
OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE
CONTRACT SUBJECT MATTER OF THE PROCEEDINGS A QUO WAS
ENTERED INTO BY AND BETWEEN TWO JAPANESE NATIONALS,
WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN
TOKYO, JAPAN.
B.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE
PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS. 26[26]
23[23]Id. at 222.
24[24]Supra note 2.
25[25]Rollo, pp. 3-35.
26[26]Id. at 15.

The pivotal question that this Court is called upon to resolve is whether the
subject matter jurisdiction of Philippine courts in civil cases for specific
performance and 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.

However, before ruling on this issue, we must first dispose of the procedural
matters raised by the respondent.

Kitamura contends that the finality of the appellate court's decision in CAG.R. SP No. 60205 has already barred the filing of the second petition docketed as
CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the first
one) and the instant petition for review thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on

account of the petition's defective certification of non-forum shopping, it was a

dismissal without prejudice.27[27] The same holds true in the CA's dismissal of the
said case due to defects in the formal requirement of verification28[28] and in the
other requirement in Rule 46 of the Rules of Court on the statement of the material
dates.29[29] The dismissal being without prejudice, petitioners can re-file the
petition, or file a second petition attaching thereto the appropriate verification and
certificationas they, in fact didand stating therein the material dates, within the
prescribed period30[30] in Section 4, Rule 65 of the said Rules.31[31]

27[27]See Spouses Melo v. Court of Appeals, 376 Phil. 204, 213-214 (1999), in which
the Supreme Court ruled that compliance with the certification against forum
shopping is separate from, and independent of, the avoidance of forum shopping
itself. Thus, there is a difference in the treatmentin terms of imposable
sanctionsbetween failure to comply with the certification requirement and violation
of the prohibition against forum shopping. The former is merely a cause for the
dismissal, without prejudice, of the complaint or initiatory pleading, while the latter
is a ground for summary dismissal thereof and constitutes direct contempt. See also
Philippine Radiant Products, Inc. v. Metropolitan Bank & Trust Company, Inc., G.R.
No. 163569, December 9, 2005, 477 SCRA 299, 314, in which the Court ruled that
the dismissal due to failure to append to the petition the board resolution
authorizing a corporate officer to file the same for and in behalf of the corporation is
without prejudice. So is the dismissal of the petition for failure of the petitioner to
append thereto the requisite copies of the assailed order/s.
28[28]See Torres v. Specialized Packaging Development Corporation, G.R. No.
149634, July 6, 2004, 433 SCRA 455, 463-464, in which the Court made the
pronouncement that the requirement of verification is simply a condition affecting
the form of pleadings, and noncompliance therewith does not necessarily render it
fatally defective.
29[29]Section 3, Rule 46 of the Rules of Court pertinently states that x x x [i]n
actions filed under Rule 65, the petition shall further indicate the material dates
showing when notice of the judgment or final order or resolution subject thereof was
received, when a motion for new trial or reconsideration, if any, was filed and when
notice of the denial thereof was received. x x x
30[30]Estrera v. Court of Appeals, G.R. Nos. 154235-36, August 16, 2006, 499 SCRA
86, 95; and Spouses Melo v. Court of Appeals, supra note 27, at 214.

The dismissal of a case without prejudice signifies the absence of a decision

on the merits and leaves the parties free to litigate the matter in a subsequent action
as though the dismissed action had not been commenced. In other words, the
termination of a case not on the merits does not bar another action involving the
same parties, on the same subject matter and theory.32[32]

Necessarily, because the said dismissal is without prejudice and has no res judicata
effect, and even if petitioners still indicated in the verification and certification of the second
certiorari petition that the first had already been dismissed on procedural grounds, 33[33]
petitioners are no longer required by the Rules to indicate in their certification of non-forum
shopping in the instant petition for review of the second certiorari petition, the status of the
aforesaid first petition before the CA. In any case, an omission in the certificate of non-forum
shopping about any event that will not constitute res judicata and litis pendentia, as in the
present case, is not a fatal defect. It will not warrant the dismissal and nullification of the entire
proceedings, considering that the evils sought to be prevented by the said certificate are no
longer present.34[34]
31[31]The Rules of Court pertinently provides in Section 4, Rule 65 that [t]he
petition may be filed not later than sixty (60) days from notice of the judgment,
order or resolution. In case a motion for reconsideration or new trial is timely filed,
whether such motion is required or not, the sixty (60) day period shall be counted
from notice of the denial of said motion. x x x
32[32]Delgado v. Court of Appeals, G.R. No. 137881, December 21, 2004, 447 SCRA
402, 415.
33[33]CA rollo (CA-G.R. SP No. 60827), p. 21.
34[34]Fuentebella v. Castro, G.R. No. 150865, June 30, 2006, 494 SCRA 183, 193194; see Roxas v. Court of Appeals, 415 Phil. 430 (2001).

The Court also finds no merit in respondent's contention that petitioner Hasegawa is only
authorized to verify and certify, on behalf of Nippon, the certiorari petition filed with the CA and
not the instant petition. True, the Authorization35[35] dated September 4, 2000, which is attached
to the second certiorari petition and which is also attached to the instant petition for review, is
limited in scopeits wordings indicate that Hasegawa is given the authority to sign for and act on
behalf of the company only in the petition filed with the appellate court, and that authority
cannot extend to the instant petition for review.36[36] In a plethora of cases, however, this Court
has liberally applied the Rules or even suspended its application whenever a satisfactory
explanation and a subsequent fulfillment of the requirements have been made. 37[37] Given that
petitioners herein sufficiently explained their misgivings on this point and appended to their

35[35]Rollo, p. 33; CA rollo (CA-G.R. SP No. 60827), p. 23. The Authorization dated September
4, 2000 pertinently reads:
I, KEN TAKAGI, President and Chief Executive Officer of
NIPPON ENGINEERING CONSULTANTS CO., LTD., a corporation duly organized and
existing in accordance with the corporation laws of Japan, with principal address at 3-23-1
Komagome, Toshima-ku Tokyo, Japan, hereby authorize its International Division General
Manager, Mr. Kazuhiro Hasegawa, to sign and act for and in behalf of Nippon Engineering
Consultants Co., Ltd., for purposes of filing a Petition for Certiorari before the proper tribunal in
the case entitled: Kazuhiro Hasegawa and Nippon Engineering Consultants Co., Ltd. vs. Minoru
Kitamura and Hon. Avelino C. Demetria of the Regional Trial Court, Fourth Judicial RegionBranch 85, Lipa City, and to do such other things, acts and deals which may be necessary and
proper for the attainment of the said objectives [Underscoring ours].

36[36]Cf. Orbeta v. Sendiong, G.R. No. 155236, July 8, 2005, 463 SCRA 180, 199200, in which the Court ruled that the agent's signing therein of the verification and
certification is already covered by the provisions of the general power of attorney
issued by the principal.
37[37]Barcenas v. Tomas, G.R. No. 150321, March 31, 2005, 454 SCRA 593, 604.

Reply38[38] an updated Authorization39[39] for Hasegawa to act on behalf of the company in the
instant petition, the Court finds the same as sufficient compliance with the Rules.

However, the Court cannot extend the same liberal treatment to the defect in the
verification and certification. As respondent pointed out, and to which we agree, Hasegawa is
truly not authorized to act on behalf of Nippon in this case. The aforesaid September 4, 2000
Authorization and even the subsequent August 17, 2001 Authorization were issued only by
Nippon's president and chief executive officer, not by the company's board of directors. In not a
few cases, we have ruled that corporate powers are exercised by the board of directors; thus, no
person, not even its officers, can bind the corporation, in the absence of authority from the
board.40[40] Considering that Hasegawa verified and certified the petition only on his behalf and
not on behalf of the other petitioner, the petition has to be denied pursuant to Loquias v. Office of
the Ombudsman.41[41] Substantial compliance will not suffice in a matter that demands strict
observance of the Rules.42[42] While technical rules of procedure are designed not to frustrate
the ends of justice, nonetheless, they are intended to effect the proper and orderly disposition of
cases and effectively prevent the clogging of court dockets.43[43]

38[38]Dated October 11, 2001; rollo, pp. 192-203.

39[39]Dated August 17, 2001, id. at 202.
40[40]San Pablo Manufacturing Corporation v. Commissioner of Internal Revenue,
G.R. No. 147749, June 22, 2006, 492 SCRA 192, 197; LDP Marketing, Inc. v. Monter,
G.R. No. 159653, January 25, 2006, 480 SCRA 137, 142; Expertravel & Tours, Inc. v.
Court of Appeals, G.R. No. 152392, May 26, 2005, 459 SCRA 147, 160.
41[41]392 Phil. 596, 603-604 (2000).
42[42]Loquias v. Office of the Ombudsman, id. at 604.
43[43]Santos v. Court of Appeals, 413 Phil. 41, 54 (2001).

Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to
question the trial court's denial of their motion to dismiss. It is a well-established rule that an
order denying a motion to dismiss is interlocutory, and cannot be the subject of the extraordinary
petition for certiorari or mandamus. The appropriate recourse is to file an answer and to
interpose as defenses the objections raised in the motion, to proceed to trial, and, in case of an
adverse decision, to elevate the entire case by appeal in due course. 44[44] While there are
recognized exceptions to this rule,45[45] petitioners' case does not fall among them.

This brings us to the discussion of the substantive issue of the case.

Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its
jurisdiction to hear and resolve the civil case for specific performance and damages filed by the
respondent. The ICA subject of the litigation was entered into and perfected in Tokyo, Japan, by
Japanese nationals, and written wholly in the Japanese language. Thus, petitioners posit that local

44[44]Yutingco v. Court of Appeals, 435 Phil. 83, 92 (2002).

45[45]Bank of America NT & SA v. Court of Appeals, 448 Phil. 181, 193 (2003). As
stated herein, under certain situations resort to certiorari is considered appropriate
when: (1) the trial court issued the order without or in excess of jurisdiction; (2)
there is patent grave abuse of discretion by the trial court; or (3) appeal would not
prove to be a speedy and adequate remedy as when an appeal would not promptly
relieve a defendant from the injurious effects of the patently mistaken order
maintaining the plaintiffs baseless action and compelling the defendants needlessly
to go through a protracted trial and clogging the court dockets with another futile
case.

courts have no substantial relationship to the parties 46[46] following the [state of the] most
significant relationship rule in Private International Law.47[47]

The Court notes that petitioners adopted an additional but different theory when they
elevated the case to the appellate court. In the Motion to Dismiss 48[48] filed with the trial court,
petitioners never contended that the RTC is an inconvenient forum. They merely argued that the
applicable law which will determine the validity or invalidity of respondent's claim is that of
Japan, following the principles of lex loci celebrationis and lex contractus.49[49] While not
abandoning this stance in their petition before the appellate court, petitioners on certiorari
significantly invoked the defense of forum non conveniens.50[50] On petition for review before
this Court, petitioners dropped their other arguments, maintained the forum non conveniens
defense, and introduced their new argument that the applicable principle is the [state of the] most
significant relationship rule.51[51]

Be that as it may, this Court is not inclined to deny this petition merely on the basis of the
change in theory, as explained in Philippine Ports Authority v. City of Iloilo.52[52] We only
46[46]Rollo, p. 228.
47[47]Id. at 234-245.
48[48]Dated June 5, 2000; CA rollo (CA-G.R. SP No. 60827), pp. 53-57.
49[49]Id. at 55.
50[50]Id. at 14.
51[51]Rollo, pp. 19-28.
52[52]453 Phil. 927, 934 (2003).

pointed out petitioners' inconstancy in their arguments to emphasize their incorrect assertion of
conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Corresponding to these phases are the following questions: (1) Where can or should litigation be
initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment be
enforced?53[53]

Analytically, jurisdiction and choice of law are two distinct concepts. 54[54] 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 power to exercise jurisdiction does not automatically give a
state constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori
will often coincide, the minimum contacts for one do not always provide the necessary
significant contacts for the other.55[55] 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.56[56]

53[53]Scoles, Hay, Borchers, Symeonides, Conflict of Laws, 3rd ed. (2000), p. 3.

54[54]Coquia and Aguiling-Pangalangan, Conflict of Laws, 1995 ed., p. 64.
55[55]Supra note 53, at 162, citing Hay, The Interrelation of Jurisdictional Choice of
Law in U.S. Conflicts Law, 28 Int'l. & Comp. L.Q. 161 (1979).
56[56]Shaffer v. Heitner, 433 U.S. 186, 215; 97 S.Ct. 2569, 2585 (1977), citing
Justice Black's Dissenting Opinion in Hanson v. Denckla, 357 U.S. 235, 258; 78 S. Ct.
1228, 1242 (1958).

In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has various
aspects. For a court to validly exercise its power to adjudicate a controversy, it must have
jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over the
subject matter, over the issues of the case and, in cases involving property, over the res or the
thing which is the subject of the litigation. 57[57] In assailing the trial court's jurisdiction herein,
petitioners are actually referring to subject matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign
authority which establishes and organizes the court. It is given only by law and in the manner
prescribed by law.58[58] 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. 59[59] To succeed
in its motion for the dismissal of an action for lack of jurisdiction over the subject matter of the
claim,60[60] the movant must show that the court or tribunal cannot act on the matter submitted
to it because no law grants it the power to adjudicate the claims.61[61]

57[57]See Regalado, Remedial Law Compendium, Vol. 1, 8th Revised Ed., pp. 7-8.

58[58]U.S. v. De La Santa, 9 Phil. 22, 25-26 (1907).

59[59]Bokingo v. Court of Appeals, G.R. No. 161739, May 4, 2006, 489 SCRA 521,
530; Tomas Claudio Memorial College, Inc. v. Court of Appeals, 374 Phil. 859, 864
(1999).
60[60]See RULES OF COURT, Rule 16, Sec. 1.
61[61]See In Re: Calloway, 1 Phil. 11, 12 (1901).

In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court
is not properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil
Case No. 00-0264 for specific performance and damages is one not capable of pecuniary
estimation and is properly cognizable by the RTC of Lipa City.62[62] 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 ceremony63[63] or the law of
the place where a contract is made. 64[64] The doctrine of lex contractus or lex loci contractus
means the law of the place where a contract is executed or to be performed. 65[65] It controls the
nature, construction, and validity of the contract66[66] and it may pertain to the law voluntarily

62[62]Bokingo v. Court of Appeals, supra note 59, at 531-533; Radio

Communications of the Phils. Inc. v. Court of Appeals, 435 Phil. 62, 68-69 (2002).
63[63]Garcia v. Recio, 418 Phil. 723, 729 (2001); Board of Commissioners (CID) v.
Dela Rosa, G.R. Nos. 95122-23, May 31, 1991, 197 SCRA 853, 888.
64[64]<http://web2.westlaw.com/search/default.wl?
rs=WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+lex+loci+celebrationis+)&db=DIBLACK&utid=
%7bD0AE3BEE-91BC-4B2B-B788-3FB4D963677B%7d&vr=2.0&rp=%2fsearch
%2fdefault.wl&mt=WLIGeneralSubscription> (visited October 22, 2007).
65[65]<http://web2.westlaw.com/search/default.wl?
rs=WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+lex+loci+contractus+)&db=DIBLACK&utid=
%7bD0AE3BEE-91BC-4B2B-B788-3FB4D963677B%7d&vr=2.0&rp=%2fsearch
%2fdefault.wl&mt=WLIGeneralSubscription>(visited October 22, 2007).
66[66]Id.

agreed upon by the parties or the law intended by them either expressly or implicitly.67[67]
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.68[68] This rule takes into account several contacts and
evaluates them according to their relative importance with respect to the particular issue to be
resolved.69[69]

Since these three principles in conflict of laws make reference to the law applicable to a
dispute, they are rules proper for the second phase, the choice of law. 70[70] They determine
which state's law is to be applied in resolving the substantive issues of a conflicts problem. 71[71]
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.
67[67]Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio
Construction, Inc., G.R. No. 140047, July 13, 2004, 434 SCRA 202, 214-215.
68[68]<http://web2.westlaw.com/search/default.wl?
rs=WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+most+significant+relationship+)&db=DIBLACK&utid=
%7bD0AE3BEE-91BC-4B2B-B788-3FB4D963677B%7d&vr=2.0&rp=%2fsearch
%2fdefault.wl&mt= WLIGeneralSubscription> (visited October 22, 2007).
69[69]Saudi Arabian Airlines v. Court of Appeals, 358 Phil. 105, 127 (1998). The
contacts which were taken into account in this case are the following: (a) the place
where the injury occurred; (b) the place where the conduct causing the injury
occurred; (c) the domicile, residence, nationality, place of incorporation and place of
business of the parties; and (d) the place where the relationship, if any, between the
parties is centered.
70[70]See Auten v. Auten, 308 N.Y 155, 159-160 (1954).
71[71]Supra note 53, at 117-118; supra note 54, at 64-65.

Further, petitioners' 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, first there should exist a conflict of laws situation requiring
the application of the conflict of laws rules. 72[72] 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.73[73]

It should be noted that when a conflicts case, one involving a foreign element, is brought
before a court or administrative agency, there are three 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.74[74] The courts power to hear cases and controversies is derived from the
Constitution and the laws. While it may choose to recognize laws of foreign nations, the court is
not limited by foreign sovereign law short of treaties or other formal agreements, even in matters
regarding rights provided by foreign sovereigns.75[75]

72[72]Laurel v. Garcia, G.R. Nos. 92013 and 92047, July 25, 1990, 187 SCRA 797,
810-811.
73[73]International Harvester Company in Russia v. Hamburg-American Line, 42
Phil. 845, 855 (1918).
74[74]Salonga, Private International Law, 1995 ed., p. 44.
75[75]Veitz, Jr. v. Unisys Corporation, 676 F. Supp. 99, 101 (1987), citing Randall v.
Arabian Am. Oil. Co., 778 F. 2d 1146 (1985).

Neither can the other ground raised, forum non conveniens,76[76] be used to deprive the
trial court of its jurisdiction herein. First, it is not a proper basis for a motion to dismiss because
Section 1, Rule 16 of the Rules of Court does not include it as a ground. 77[77] Second, 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 trial court. 78[78] In this
case, the RTC decided to assume jurisdiction. Third, 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.79[79]

Accordingly, since the RTC is vested by law with the power to entertain and hear the civil
case filed by respondent and the grounds raised by petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts correctly denied the petitioners motion to dismiss.

76[76]Under this rule, a court, in conflicts 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 (Bank of America NT & SA v. Court of Appeals, supra note
45, at 196). The court may 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 (Puyat v. Zabarte, 405 Phil. 413, 432 [2001]).

77[77]Philsec Investment Corporation v. Court of Appeals, G.R. No. 103493, June 19,
1997, 274 SCRA 102, 113.
78[78]Bank of America NT & SA v. Court of Appeals, supra note 45, at 196.
79[79]Bank of America NT & SA v. Court of Appeals, supra note 45, at 197.

WHEREFORE, premises considered, the petition for review on certiorari

is DENIED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ

MINITA V. CHICO-NAZARIO

Associate Justice

Associate Justice

RUBEN T. REYES
Associate Justice

AT T E S TAT I O N

I attest that the conclusions in the above Decision were reached in

consultation before the case was assigned to the writer of the opinion of the Courts
Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

C E R T I F I C AT I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice