CONFLICT OF LAWS

DIGESTED CASES

By:
CooL Team
 ADOLFO AZNAR vs. HELEN CHRISTENSEN GARCIA
7 SCRA 95 (1963)

Application of the Renvoi Doctrine

FACTS:

Edward S. Christensen, though born in New York, migrated to California where he

resided and consequently was considered a California Citizen for a period of nine years to
1913. He came to the Philippines where he became a domiciliary until the time of his death.
However, during the entire period of his residence in this country, he had always considered
himself as a citizen of California.

In his will, executed on March 5, 1951, he instituted an acknowledged natural daughter,

Maria Lucy Christensen as his only heir but left a legacy of some money in favor of Helen
Christensen Garcia who, in a decision rendered by the Supreme Court had been declared as an
acknowledged natural daughter of his. Counsel of Helen claims that under Art. 16 (2) of the
civil code, California law should be applied, the matter is returned back to the law of domicile,
that Philippine law is ultimately applicable, that the share of Helen must be increased in view
of successional rights of illegitimate children under Philippine laws. On the other hand, counsel
for daughter Maria , in as much that it is clear under Art, 16 (2) of the Mew Civil Code, the
national of the deceased must apply, our courts must apply internal law of California on the
matter. Under California law, there are no compulsory heirs and consequently a testator should
dispose any property possessed by him in absolute dominion.

ISSUE:

Whether the national law of the deceased should be applied in determining the
successional rights of his heirs.

HELD:

The Supreme Court deciding to grant more successional rights to Helen Christensen
Garcia said in effect that there be two rules in California on the matter:

1. The conflict rule which should apply to Californians outside the California, and
2. The internal Law which should apply to California domiciles in California.

The California conflict rule, found on Art. 946 of the California Civil code States that
if there is no law to the contrary in the place where personal property is situated, it is deemed
to follow the decree of its owner and is governed by the law of the domicile.

Christensen being domiciled outside California, the law of his domicile, the Philippines
is ought to be followed.

The case was remanded to the lower court for further proceedings the determination
of the successional rights under Philippine law only.
 CADALIN vs. POEA ADMINISTRATOR
238 SCRA 721 (1994)

Borrowing Statute

FACTS:

Cadalin et al. are Filipino workers recruited by Asia Intl Builders Co. (AIBC), a
domestic recruitment corporation, for employment in Bahrain to work for Brown & Root Intl
Inc. (BRII) which is a foreign corporation with headquarters in Texas. Plaintiff instituted a class
suit with the POEA for money claims arising from the unexpired portion of their employment
contract which was prematurely terminated. They worked in Bahrain for BRII and they filed
the suit after 1 yr. from the termination of their employment contract.

As provided by Art. 156 of the Amiri Decree aka as the Labor Law of the Private Sector
of Bahrain: a claim arising out of a contract of employment shall not be actionable after the
lapse of 1 year from the date of the expiry of the contract, it appears that their suit has
prescribed.

Plaintiff contends that the prescription period should be 10 years as provided by Art.
1144 of the Civil Code as their claim arise from a violation of a contract.

The POEA Administrator holds that the 10 year period of prescription should be applied
but the NLRC provides a different view asserting that Art 291 of the Labor Code of the Phils
with a 3 years prescription period should be applied. The Solicitor General expressed his
personal point of view that the 1 yr period provided by the Amiri Decree should be applied.

ISSUE:

Whether it is the Bahrain law on prescription of action based on the Amiri Decree No.
23 of 1976 or a Philippine law on prescription that shall be the governing law.

HELD:

As a general rule, a foreign procedural law will not be applied in the forum. Procedural
matters, such as service of process, joinder of actions, period and requisites for appeal, and so
forth, are governed by the laws of the forum. This is true even if the action is based upon a
foreign substantive law.

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it
may be viewed either as procedural or substantive, depending on the characterization given
such a law.

However, the characterization of a statute into a procedural or substantive law becomes

irrelevant when the country of the forum has a "borrowing statute." Said statute has the practical
effect of treating the foreign statute of limitation as one of substance. A "borrowing statute"
directs the state of the forum to apply the foreign statute of limitations to the pending claims
based on a foreign law. While there are several kinds of "borrowing statutes," one form provides
that an action barred by the laws of the place where it accrued, will not be enforced in the forum
even though the local statute has not run against it.

Thus, Bahrain law must be applied. However, the court contends that Bahrains law on
prescription cannot be applied because the court will not enforce any foreign claim that is
obnoxious to the forums public policy and the 1 year rule on prescription is against public
policy on labor as enshrined in the Philippine Constitution.
 GIBBS vs. GOVT. OF THE PHILIPPINE ISLANDS
59 PHIL 283 (1933)

Descendible Interest

FACTS:

Allison D. Gibbs and his wife Eva Johnson Gibbs are both citizens of California and
domiciled therein since their marriage in July 1906. There was no antenuptial marriage contract
between the parties and during the existence their marriage the spouses acquired lands in the
Philippine Islands, as conjugal property. On November 28, 1929, Mrs. Gibbs died and that in
accordance with the law of California, the community property of spouses who are citizens of
California, upon the death of the wife previous to that of the husband, belongs absolutely to the
surviving husband without administration. In intestate proceedings, Allison D. Gibbs, on
September 22, 1930, filed an ex parte petition. The court granted said petition and entered a
decree adjudicating the said Allison D. Gibbs to be the sole and absolute owner of said lands,
applying section 1401 of the Civil Code of California. When this decree presented to the
Register of Deeds of Manila and demanded for the issuance of a Transfer Certificate of Title,
it declined to accept as binding said decree of court and refused to register the transfer of title
of the said conjugal property to Allison D. Gibbs, on the ground that the corresponding
inheritance tax had not been paid. Thereupon, Allison filed in the said court a petition for an
order requiring the said register of deeds "to issue the corresponding titles" to the petitioner
without requiring previous payment of any inheritance tax.

ISSUE:

Whether Eva Johnson Gibbs at the time of her death is the owner of a descendible
interest in the Philippine lands.

RULING:

The second paragraph Article 10 of the Civil Code provides:

Nevertheless, legal and testamentary successions, in respect to the order of succession

as well as to the amount of the successional rights and the intrinsic validity of their
provisions, shall be regulated by the national law of the person whose succession is in
question, whatever may be the nature of the property or the country in which it may be
situated.

The second paragraph of article 10 applies only when a legal or testamentary succession
has taken place in the Philippines and in accordance with the law of the Philippine Islands; and
the foreign law is consulted only in regard to the order of succession or the extent of the
successional rights; in other words, the second paragraph of article 10 can be invoked only
when the deceased was vested with a descendible interest in property within the jurisdiction of
the Philippine Islands.

In the case of Clarke vs. Clarke, the court said:

 It is principle firmly established that to the law of the state in which the land is situated
we must look for the rules which govern its descent, alienation, and transfer, and for
the effect and construction of wills and other conveyances.

This fundamental principle is stated in the first paragraph of article 10 of our Civil Code
as follows: "Personal property is subject to the laws of the nation of the owner thereof; real
property to the laws of the country in which it is situated.

Under this broad principle, the nature and extent of the title which vested in Mrs. Gibbs
at the time of the acquisition of the community lands here in question must be determined in
accordance with the lex rei sitae. It is admitted that the Philippine lands here in question were
acquired as community property of the conjugal partnership of the appellee and his wife. Under
the law of the Philippine Islands, she was vested of a title equal to that of her husband. It results
that the wife of the appellee was, by the law of the Philippine Islands, vested of a descendible
interest, equal to that of her husband, in the Philippine lands covered by certificates of title
Nos. 20880, 28336 and 28331, from the date of their acquisition to the date of her death.

The descendible interest of Eva Johnson Gibbs in the lands aforesaid was transmitted to her
heirs by virtue of inheritance and this transmission plainly falls within the language of section
1536 of Article XI of Chapter 40 of the Administrative Code which levies a tax on inheritances.
It is unnecessary in this proceeding to determine the "order of succession" or the "extent of the
successional rights" (article 10, Civil Code, supra) which would be regulated by section 1386
of the Civil Code of California which was in effect at the time of the death of Mrs. Gibbs.
 PHILIPPINE NATL CONSTRUCTION CORP. vs. ASIAVEST MERCHANT
BANKERS
G.R. No. 172301, August 19, 2015

Forum Non Conveniens

FACTS:

PNCC and Asiavest Holdings (M) Sdn. Bhd. (Asiavest Holdings) caused the
incorporation of an associate company known as Asiavest-CDCP Sdn. Bhd. (Asiavest-CDCP),
through which they entered into contracts to construct rural roads and bridges for the State of
Pahang, Malaysia.

In connection with this construction contract, PNCC obtained various guarantees and
bonds from Asiavest Merchant Bankers (M) Berhad to guarantee the due performance of its
obligations. These contracts were understood to be governed by the laws of Malaysia.

There was failure to perform the obligations under the construction contract, prompting
the State of Pahang to demand payment against Asiavest Merchant Bankers (M) Berhad's
performance bonds. Consequently, the corporation demanded indemnity from PNCC by
demanding the amount it paid to the State of Pahang.

On April 12, 1994, Asiavest Merchant Bankers (M) Berhad filed a Complaint for
recovery of sum of money against PNCC before the Regional Trial Court of Pasig. It based its
action on Malaysian laws. Specifically, it invoked Section 98 of the Malaysian Contracts Act
of 1950 and Section 11 of the Malaysian Civil Law Act of 1956.

On July 27, 1994, the trial court declared PNCC in default for failure to file any
responsive pleading, and allowed Asiavest Merchant Bankers (M) Berhad to present its
evidence ex parte.

PNCC prays that the trial court's order of default be reversed and it be allowed to file
its answer, or, the cause of action having already prescribed under Malaysian laws, the case be
dismissed outright.

ISSUE:

Whether the trial court erred in not refusing to assume jurisdiction on the ground of
forum non-conveniens.

HELD:

Forum non conveniens literally translates to 'the forum is inconvenient. This doctrine
applies in conflicts of law cases. It gives courts the choice of not assuming jurisdiction when it
appears that it is not the most convenient forum and the parties may seek redress in another
one. It is a device "designed to frustrate illicit means for securing advantages and vexing
litigants that would otherwise be possible if the venue of litigation (or dispute resolution) were
left entirely to the whim of either party."

The determination of whether to entertain a case is addressed to the sound discretion of

the court, which must carefully consider the facts of the particular case. A mere invocation of
the doctrine of forum non conveniens or an easy averment that foreign elements exist cannot
operate to automatically divest a court of its jurisdiction. It is crucial for courts to determine
first if facts were established such that special circumstances exist to warrant its desistance
from assuming jurisdiction.

The trial court assumed jurisdiction and explained in its Order dated August 11, 1995
that "on the contrary, to try the case in the Philippines, it is believed, would be more convenient
to defendant corporation as its principal office is located in the Philippines, its records will be
more accessible, witnesses would be readily available and entail less expenses in terms of legal
services."

Petitioner is a domestic corporation with its main office in the Philippines. It is safe to
assume that all of its pertinent documents in relation to its business would be available in its
main office. Most of petitioner's officers and employees who were involved in the construction
contract in Malaysia could most likely also be found in the Philippines. Thus, it is unexpected
that a Philippine corporation would rather engage this civil suit before Malaysian courts. Our
courts would be "better positioned to enforce the judgment and, ultimately, to dispense" in this
case against petitioner.
 FUJIKI vs. MARINAY
G.R. No. 196049, June 26, 2013

Marriage

FACTS:

Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria
Paz Galela Marinay (Marinay) in the Philippines on 23 January 2004. The marriage did not sit
well with petitioners parents. Thus, Fujiki could not bring his wife to Japan where he resides.
Eventually, they lost contact with each other.

In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first
marriage being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon City,
Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly suffered physical
abuse from Maekara. She left Maekara and started to contact Fujiki.

Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In
2010, Fujiki helped Marinay obtain a judgment from a family court in Japan which declared
the marriage between Marinay and Maekara void on the ground of bigamy. On 14 January
2011, Fujiki filed a petition in the RTC entitled: "Judicial Recognition of Foreign Judgment (or
Decree of Absolute Nullity of Marriage)."

ISSUE:

Whether the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment
of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.

HELD:

No. The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign
judgment relating to the status of a marriage where one of the parties is a citizen of a foreign
country. Moreover, in Juliano-Llave v. Republic,47 this Court held that the rule in A.M. No.
02-11-10-SC that only the husband or wife can file a declaration of nullity or annulment of
marriage "does not apply if the reason behind the petition is bigamy."

For Philippine courts to recognize a foreign judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign country, the petitioner only needs to prove the
foreign judgment as a fact under the Rules of Court. To be more specific, a copy of the foreign
judgment may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and
25, in relation to Rule 39, Section 48(b) of the Rules of Court.

There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese
Family Court judgment nullifying the marriage between Marinay and Maekara on the ground
of bigamy. While the Philippines has no divorce law, the Japanese Family Court judgment is
fully consistent with Philippine public policy, as bigamous marriages are declared void from
the beginning under Article 35(4) of the Family Code. Bigamy is a crime under Article 349 of
the Revised Penal Code. Thus, Fujiki can prove the existence of the Japanese Family Court
judgment in accordance with Rule 132, Sections 24 and 25, in relation to Rule 39, Section
48(b) of the Rules of Court.
 SAUDI ARABIAN AIRLINES vs. REBESENCIO
G.R. No. 198587, January 14, 2015

Forum Non Conveniens

FACTS:

Petitioner Saudi Arabian Airlines is a foreign corporation established and existing

under the Royal Decree No. M/24 of Jeddah, who hired Respondents as flight attendants. After
undergoing seminars required by the Philippine Overseas Employment Administration for
deployment overseas, as well as training modules offered by Saudia, Respondents became
Temporary and then eventually Permanent Flight Attendants; they entered into the necessary
Cabin Attendant Contracts with Saudi.

Respondents were released from service on separate dates in 2006; claimed that such
release was illegal since the basis of termination of contract was solely because they were
pregnant. They claim that they had informed Saudia of their respective pregnancies and had
gone through the necessary procedures to process their maternity leaves and while initially,
Saudia had given its approval, they ultimately reneged and rather required them to file for
resignation.

Respondents claim that Petitioner Airlines threatened that if they would not resign, they
would be terminated along with loss of benefits, separation pay, and ticket discount
entitlements; they anchored such on its Unified Employment Contract for Female Cabin
Attendants" which provides that if the Air Hostess becomes pregnant at any time during the
term of this contract, this shall render her employment contract as void and she will be
terminated due to lack of medical fitness.

On November 8,2007, Respondents filed a Complaint with the Labor Arbiter against
Saudia and its officers for illegal dismissal and for underpayment, along with moral and
exemplary damages, and attorney's fees. Petitioner Airlines contests the Labor Arbiters
jurisdiction, as the contracts points referred to foreign law and that Respondents had no cause
of action since they already voluntarily resigned.

Executive Labor Arbiter dismissed the complaint, but on appeal the NLRC reversed
the Labor Arbiters decision and denied Petitioner Airlines Motion for Reconsideration, hence
the current appeal.

ISSUE:

Whether the Labor Arbiter and the National Labor Relations Commission may exercise
jurisdiction over Saudi Arabian Airlines and apply Philippine law in adjudicating the present
dispute.
HELD:

Summons were validly served on Saudia and jurisdiction over it validly acquired. There
is no doubt that the pleadings and summons were served on Saudia through its counsel.

Saudia, while a foreign corporation, has a Philippine office.

Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments
Act of 1991, provides the following:

The phrase "doing business" shall include . . . opening offices, whether called "liaison"
offices or branches; . . . and any other act or acts that imply a continuity of commercial dealings
or arrangements and contemplate to that extent the performance of acts or works, or the exercise
of some of the functions normally incident to, and in progressive prosecution of commercial
gain or of the purpose and object of the business organization. (Emphasis supplied)

A plain application of Section 3(d) of the Foreign Investments Act leads to no other
conclusion than that Saudia is a foreign corporation doing business in the Philippines. As such,
Saudia may be sued in the Philippines and is subject to the jurisdiction of Philippine tribunals.

Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia
Manila" the latter being nothing more than Saudia's local office service of summons to
Saudia's office in Manila sufficed to vest jurisdiction over Saudia's person in Philippine
tribunals.
 INTELLECTUAL PROPERTY ASSOC. OF THE PHILIPPINES vs. OCHOA
G.R. No. 204605, July 19, 2016

Intellectual Property Trademarks

FACTS:

The Madrid System for the International Registration of Marks (Madrid System), which
is the centralized system providing a one-stop solution for registering and managing marks
worldwide, allows the trademark owner to file one application in one language, and to pay one
set of fees to protect his mark in the territories of up to 97 member-states. The Madrid System
is governed by the Madrid Agreement, concluded in 1891, and the Madrid Protocol, concluded
in 1989.The Madrid Protocol has two objectives, namely: (1) to facilitate securing protection
for marks; and (2) to make the management of the registered marks easier in different countries.

In 2004, the Intellectual Property Office of the Philippines (IPOPHL),began

considering the country's accession to the Madrid Protocol. After a campaign for information
dissemination, and a series of consultations with stakeholders, IPOPHL ultimately arrived at
the conclusion that accession would benefit the country and help raise the level of
competitiveness for Filipino brands. Hence, it recommended to the Department of Foreign
Affairs (DFA) that the Philippines should accede to the Madrid Protocol. After its own review,
the DFA endorsed to the President the country's accession to the Madrid Protocol. The DFA
determined that the Madrid Protocol was an executive agreement.

On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol
through an instrument of accession, which was deposited with the Director General of the
World Intellectual Property Organization (WIPO) on April 25, 2012. The Madrid Protocol
entered into force in the Philippines on July 25, 2012.

Thus, the Intellectual Property Association of the Philippines (IPAP)commenced this

special civil action for certiorari and prohibition to challenge the validity of the President's
accession to the Madrid Protocol without the concurrence of the Senate. According to the IPAP,
the Madrid Protocol is a treaty, not an executive agreement; hence, respondent DFA Secretary
Albert Del Rosario acted with grave abuse of discretion in determining the Madrid Protocol as
an executive agreement. Also, the IPAP has argued that the implementation of the Madrid
Protocol in the Philippines; specifically the processing of foreign trademark applications,
conflicts with the Intellectual Property Code of the Philippines.

ISSUE:

Whether or not the Madrid Protocol is in conflict with the IP Code.

HELD:

There is no conflict between the Madrid Protocol and the IP Code.

The method of registration through the IPOPHL, as laid down by the IP Code, is distinct
and separate from the method of registration through the WIPO, as set in the Madrid Protocol.
Comparing the two methods of registration despite their being governed by two separate
systems of registration is thus misplaced.

The IPAP misapprehends the procedure for examination under the Madrid Protocol.
The difficulty, which the IPAP illustrates, is minimal, if not altogether inexistent. The IPOPHL
actually requires the designation of the resident agent when it refuses the registration of a mark.
Local representation is further required in the submission of the Declaration of Actual Use, as
well as in the submission of the license contract.38 The Madrid Protocol accords with the intent
and spirit of the IP Code, particularly on the subject of the registration of trademarks. The
Madrid Protocol does not amend or modify the IP Code on the acquisition of trademark rights
considering that the applications under the Madrid Protocol are still examined according to the
relevant national law. In that regard, the IPOPHL will only grant protection to a mark that meets
the local registration requirements.
 KOREA TECHNOLOGIES v. LERMA
542 SCRA 1 (2008)

Foreign Judgment Arbitration

FACTS:

Korea Technologies Co., Ltd. [Korea Tech], a Korean corporation, entered into a
contract with Pacific General Steel Manufacturing Corporation [Pacific General], a domestic
corporation, whereby Korea Tech undertook to ship and install in Pacific Generals site in
Carmona, Cavite the machinery and facilities necessary for manufacturing LPG cylinders, and
to initially operate the plant after it is installed.

The plant, after completion of installation, could not be operated by Pacific General due
to its financial difficulties affecting the supply of materials. The last payments made by Pacific
General to Korea Tech consisted of postdated checks which were dishonored upon
presentment. According to Pacific General, it stopped payment because Korea Tech had
delivered a hydraulic press which was different in kind and of lower quality than that agreed
upon. Korea Tech also failed to deliver equipment parts already paid for by it. It threatened to
cancel the contract with Korea Tech and dismantle the Carmona plant.

Finally, Pacific General filed before the Office of the Prosecutor a Complaint-Affidavit
for estafa against Mr. Dae Hyun Kang, President of Korea Tech. Korea Tech informed PGSMC
that it could not unilaterally rescind the contract. Of greater importance to the present article,
KOGIES also insisted that their dispute be settled by arbitration as provided by Article 15 of
their contract the arbitration clause.

Korea Tech initiated arbitration before the Korea Commercial Arbitration Board
[KCAB] in Seoul, Korea and, at the same time, commenced a civil action before the Regional
Trial Court [the trial court] where it prayed that Pacific General be restrained from
dismantling the plant and equipment. Pacific General opposed the application and argued that
the arbitration clause was null and void, being contrary to public policy as it ousts the local
court of jurisdiction.
The trial court denied the application for preliminary injunction and declared the arbitration
agreement null and void. Korea Tech moved to dismiss the counterclaims for damages.

Korea Tech filed a petition for certiorari before the Court of Appeals [CA]. The court
dismissed the petition and held that an arbitration clause which provided for a final
determination of the legal rights of the parties to the contract by arbitration was against public
policy. Further appeal was made to the Supreme Court by way of a petition for review.

ISSUE:

Whether or not the arbitration clause in the contract of the parties should govern.
HELD:

Yes. Established in this jurisdiction is the rule that the law of the place where the
contract is made governs. Lex loci contractus. The contract in this case was perfected here in
the Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code
sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an
arbitral award. Art. 2044 provides, Any stipulation that the arbitrators award or decision shall
be final, is valid, without prejudice to Articles 2038, 2039 and 2040.

The arbitration clause was mutually and voluntarily agreed upon by the parties. It has
not been shown to be contrary to any law, or against morals, good customs, public order, or
public policy. There has been no showing that the parties have not dealt with each other on
equal footing. We find no reason why the arbitration clause should not be respected and
complied with by both parties. In Gonzales v. Climax Mining Ltd., we held that submission to
arbitration is a contract and that a clause in a contract providing that all matters in dispute
between the parties shall be referred to arbitration is a contract. Again in Del Monte
Corporation-USA v. Court of Appeals, we likewise ruled that [t]he provision to submit to
arbitration any dispute arising therefrom and the relationship of the parties is part of that
contract and is itself a contract.

Having said that the instant arbitration clause is not against public policy, we come to
the question on what governs an arbitration clause specifying that in case of any dispute arising
from the contract, an arbitral panel will be constituted in a foreign country and the arbitration
rules of the foreign country would govern and its award shall be final and binding.

Thus, it can be gleaned that the concept of a final and binding arbitral award is similar
to judgments or awards given by some of our quasi-judicial bodies, like the National Labor
Relations Commission and Mines Adjudication Board, whose final judgments are stipulated to
be final and binding, but not immediately executory in the sense that they may still be judicially
reviewed, upon the instance of any party. Therefore, the final foreign arbitral awards are
similarly situated in that they need first to be confirmed by the RTC.
 HASEGAWA vs. KITAMURA
538 SCRA 26 (2007)

Jurisdiction

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 manger in the contract.

Hasegawa, Nippons 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 Kitamarus
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.

Nippons 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 Kitamarus 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 hat 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 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.

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 fori will 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 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/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 law grants 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 contractus means 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, Nippons 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
the application 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 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.

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.
 CONTINENTAL MICRONESIA, INC. vs. JOSEPH BASSO
G.R. NOS. 178382-83, September 23, 2015

Forum Non Conveniens

FACTS:

Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation organized and

existing under the laws of and domiciled in the United States of America (US). It is licensed to
do business in the Philippines. Basso, a US citizen, resided in the Philippines prior to his death.

Mr. Braden Managing Director-Asia of Continental Airlines (Continental), offered

Basso the position of General Manager of the Philippine Branch of Continental. Basso accepted
the offer.

It was not until much later that Mr. Braden, who had since returned to the US, sent
Basso the employment contract8 dated February 1, 1991, which Mr. Braden had already signed.
Basso then signed the employment contract and returned it to Mr. Braden as instructed.

CMI took over the Philippine operations of Continental, with Basso retaining his
position as General Manager.Basso received a letter from Mr. Schulz, who was then CMI's
Vice President of Marketing and Sales, informing Basso that he has agreed to work in CMI as
a consultant on an "as needed basis

Basso wrote another letter addressed to Ms. Woodward of CMI's Human Resources
Department inquiring about the status of his employment. Ms. Woodward responded that
pursuant to the employment contract dated February 1, 1991, Basso could be terminated at will
upon a thirty-day notice.Ms. Woodward also reminded Basso of the telephone conversation
between him, Mr. Schulz and Ms. Woodward where they informed him of the company's
decision to relieve him as General Manager. CMI offered Basso a severance pay, in
consideration of the Php1,140,000.00 housing advance that CMI promised him.

Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary Damages
against CMI CMI filed a Motion on the ground of lack of jurisdiction over the person of CMI
and the subject matter of the controversy Labor Arbiter granted the Motion to Dismiss.
Applying the doctrine of lex loci contractus, the Labor Arbiter held that the terms and
provisions of the employment contract show that the parties did not intend to apply our Labor
Code The Labor Arbiter also held that no employer-employee relationship existed between
Basso and the branch office of CMI in the Philippines, but between Basso and the foreign
corporation itself.

On appeal, the NLRC REMANDED the case to the Labor Arbiter for the determination
of certain facts to settle the issue on jurisdiction.

ISSUE:

Whether the Labor Arbiter and the NLRC had jurisdiction to hear and try the illegal
dismissal case.
HELD:

Jurisdiction is defined as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or not the plaintiff is entitled to
recover all or some of the claims or reliefs sought therein. It cannot be acquired through a
waiver or enlarged by the omission of the parties or conferred by the acquiescence of the court.
That the employment contract of Basso was replete with references to US laws, and that it
originated from and was returned to the US, do not automatically preclude our labor tribunals
from exercising jurisdiction to hear and try this case.

This case stemmed from an illegal dismissal complaint. The Labor Code, under Article
217, clearly vests original and exclusive jurisdiction to hear and decide cases involving
termination disputes to the Labor Arbiter. Hence, the Labor Arbiter and the NLRC have
jurisdiction over the subject matter of the case.

As regards jurisdiction over the parties, we agree with the Court of Appeals that the
Labor Arbiter acquired jurisdiction over the person of Basso, notwithstanding his citizenship,
when he filed his complaint against CMI. On the other hand, jurisdiction over the person of
CMI was acquired through the coercive process of service of summons. We note that CMI
never denied that it was served with summons. CMI has, in fact, voluntarily appeared and
participated in the proceedings before the courts. Though a foreign corporation, CMI is licensed
to do business in the Philippines and has a local business address here. The purpose of the law
in requiring that foreign corporations doing business in the country be licensed to do so, is to
subject the foreign corporations to the jurisdiction of our courts.

Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and
the subject matter of this case, these tribunals may 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 being an
exercise of sovereign prerogative of the country where the case is filed.