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PHILSEC
INVESTMENT
CORPORATION,
BPI-INTERNATIONAL
FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC,
VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG,
respondents.
MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign
judgment upon the rights of the parties under the same cause of action
asserted in a case in our local court. Petitioners brought this case in the
Regional Trial Court of Makati, Branch 56, which, in view of the pendency at
the time of the foreign action, dismissed Civil Case No. 16563 on the
ground of litis pendentia, in addition to forum non conveniens. On appeal,
the Court of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained
separate loans from petitioners Ayala International Finance Limited
(hereafter called AYALA) 1 and Philsec Investment Corporation (hereafter
called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock
owned by Ducat with a market value of P14,088,995.00. In order to
facilitate the payment of the loans, private respondent 1488, Inc., through
its president, private respondent Drago Daic, assumed Ducat's obligation
under an Agreement, dated January 27, 1983, whereby 1488, Inc.
executed a Warranty Deed with Vendor's Lien by which it sold to petitioner
Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris
County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA
extended a loan to ATHONA in the amount of US$2,500,000.00 as initial
payment of the purchase price. The balance of US$307,209.02 was to be
paid by means of a promissory note executed by ATHONA in favor of 1488,
Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488,
Inc., PHILSEC and AYALA released Ducat from his indebtedness and
delivered to 1488, Inc. all the shares of stock in their possession belonging
to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the
entire amount covered by the note became due and demandable.
Accordingly, on October 17, 1985, private respondent 1488, Inc. sued
petitioners PHILSEC, AYALA, and ATHONA in the United States for payment
of the balance of US$307,209.02 and for damages for breach of contract
and for fraud allegedly perpetrated by petitioners in misrepresenting the
marketability of the shares of stock delivered to 1488, Inc. under the
CONFLICTS | 03Dec | 2
hand, private respondents 1488, Inc. and its president Daic filed a joint
"Special Appearance and Qualified Motion to Dismiss," contending that the
action being in personam, extraterritorial service of summons by publication
was ineffectual and did not vest the court with jurisdiction over 1488, Inc.,
which is a non-resident foreign corporation, and Daic, who is a non-resident
alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss,
stating that "the evidentiary requirements of the controversy may be more
suitably tried before the forum of the litis pendentia in the U.S., under the
principle in private international law of forum non conveniens," even as it
noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to
dismiss. On March 9, 1988, the trial court 3 granted the motion to dismiss
filed by 1488, Inc. and Daic on the ground of litis pendentia considering
that
the "main factual element" of the cause of action in this case which is the
validity of the sale of real property in the United States between defendant
1488 and plaintiff ATHONA is the subject matter of the pending case in the
United States District Court which, under the doctrine of forum non
conveniens, is the better (if not exclusive) forum to litigate matters needed
to determine the assessment and/or fluctuations of the fair market value of
real estate situated in Houston, Texas, U.S.A. from the date of the
transaction in 1983 up to the present and verily, . . . (emphasis by trial
court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic
because they were non-residents and the action was not an action in rem or
quasi in rem, so that extraterritorial service of summons was ineffective.
The trial court subsequently lifted the writ of attachment it had earlier
issued against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court
erred in applying the principle of litis pendentia and forum non conveniens
and in ruling that it had no jurisdiction over the defendants, despite the
previous attachment of shares of stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil
Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis
pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the
defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL's
former name) and the Athona Holdings, NV. The case at bar involves the
same parties. The transaction sued upon by the parties, in both cases is the
Warranty Deed executed by and between Athona Holdings and 1488 Inc. In
the U.S. case, breach of contract and the promissory note are sued upon by
1488 Inc., which likewise alleges fraud employed by herein appellants, on
the marketability of Ducat's securities given in exchange for the Texas
property. The recovery of a sum of money and damages, for fraud
purportedly committed by appellees, in overpricing the Texas land,
constitute the action before the Philippine court, which likewise stems from
the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in
personam for the recovery of a sum of money for alleged tortious acts, so
that service of summons by publication did not vest the trial court with
jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No.
16563 on the ground of forum non conveniens was likewise affirmed by the
Court of Appeals on the ground that the case can be better tried and
decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction,
and involve foreign elements, to wit: 1) the property subject matter of the
sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident
foreign corporation; 3) although the buyer, Athona Holdings, a foreign
corporation which does not claim to be doing business in the Philippines, is
wholly owned by Philsec, a domestic corporation, Athona Holdings is also
owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was
executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1.
THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE
SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY
THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURT'S DISMISSAL OF
THE CIVIL ACTION IS NOT APPLICABLE.
2.
THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON
BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL
COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3.
AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF
APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY
REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL
COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE
IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS' RIGHTS
FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE
RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED
UPON THEM HERE IN THE PHILIPPINES.
We will deal with these contentions in the order in which they are made.
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First. It is important to note in connection with the first point that while
the present case was pending in the Court of Appeals, the United States
District Court for the Southern District of Texas rendered judgment 5 in the
case before it. The judgment, which was in favor of private respondents,
was affirmed on appeal by the Circuit Court of Appeals. 6 Thus, the
principal issue to be resolved in this case is whether Civil Case No. 16536 is
barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as
res judicata, a judgment admitting the foreign decision is not necessary. On
the other hand, petitioners argue that the foreign judgment cannot be given
the effect of res judicata without giving them an opportunity to impeach it
on grounds stated in Rule 39, 50 of the Rules of Court, to wit: "want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact."
Petitioners' contention is meritorious. While this Court has given the effect
of res judicata to foreign judgments in several cases, 7 it was after the
parties opposed to the judgment had been given ample opportunity to repel
them on grounds allowed under the law. 8 It is not necessary for this
purpose to initiate a separate action or proceeding for enforcement of the
foreign judgment. What is essential is that there is opportunity to challenge
the foreign judgment, in order for the court to properly determine its
efficacy. This is because in this jurisdiction, with respect to actions in
personam, as distinguished from actions in rem, a foreign judgment merely
constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the
contrary. 9 Rule 39, 50 provides:
Sec. 50.
Effect of foreign judgments. The effect of a judgment of a
tribunal of a foreign country, having jurisdiction to pronounce the judgment
is as follows:
(a)
In case of a judgment upon a specific thing, the judgment is
conclusive upon the title to the thing;
(b)
In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their successors
in interest by a subsequent title; but the judgment may be repelled by
evidence of a want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.
Thus, in the case of General Corporation of the Philippines v. Union
Insurance Society of Canton, Ltd., 10 which private respondents invoke for
claiming conclusive effect for the foreign judgment in their favor, the foreign
judgment was considered res judicata because this Court found "from the
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attached prior to service of summons under the Order of the trial court
dated April 20, 1987. 19
Fourth. As for the temporary restraining order issued by the Court on June
29, 1994, to suspend the proceedings in Civil Case No. 92-1445 filed by
Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the
petitioners by the U.S. court, the Court finds that the judgment sought to
be enforced is severable from the main judgment under consideration in
Civil Case No. 16563. The separability of Guevara's claim is not only
admitted by petitioners, 20 it appears from the pleadings that petitioners
only belatedly impleaded Guevarra as defendant in Civil Case No. 16563. 21
Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to
proceed.
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Collector of Customs illegal or null and void; in other words, it could not
have the effect of annulling or setting aside the decision of the Collector of
Customs which was rendered while the law was in force and which should
stand until it is revoked by the appellate tribunal.
4. CONSTITUTIONAL LAW; BILL OF RIGHTS; SEIZURE IN INSTANT CASE
DOES NOT CONSTITUTE DENIAL OF DUE PROCESS There could be no
denial of due process. There was nothing arbitrary about the manner in
which such seizure and forfeiture were effected. The right to a hearing of
petitioners-appellants was respected. They could not have been unaware of
what they were doing. It would be an affront to reason if under the
circumstances they could be allowed to raise in all seriousness a due
process question. Such a conditional guaranty, basic and fundamental,
certainly should not be allowed to lend itself as an instrument for escaping
a liability arising from ones own nefarious acts.
FERNANDO, J.:
The policy relentlessly adhered to and unhesitatingly pursued to minimize,
if not to do away entirely, with the evil and corruption that smuggling brings
in its wake would be frustrated and set at naught if the action taken by
respondent Commissioner of Customs in this case, as affirmed by the Court
of Tax Appeals, were to be set aside and this appeal from the decision of
the latter were to succeed. Fortunately, the controlling principles of law do
not call for a contrary conclusion. It cannot be otherwise if the legitimate
authority vested in the government were not to be reduced to futility and
impotence in the face of an admittedly serious malady, that at times has
assumed epidemic proportions.
The principal question raised by petitioners, owners of five sailing vessels
and the cargo loaded therein declared forfeited by respondent
Commissioner of Customs for smuggling, is the validity of their interception
and seizure by customs officials on the high seas, the contention being
raised that importation had not yet begun and that the seizure was effected
outside our territorial waters..
Why such a plea could not be given the least credence without doing
violence to common sense and placing the law in disrepute would be
apparent from a statement of the case and the findings of facts as set forth
in the decision now under review, of the Court of Tax Appeals, dated
November 19, 1964, the opinion being penned by the late Associate Judge
Augusto M. Luciano.
His opinion starts thus: "This is an appeal from the decision of the Acting
Commissioner of Customs in Customs Case No. 113, dated September 26,
1961, (Jolo Seizure Identification Cases Nos. 38, 39, 40, 41 & 42)
decreeing the forfeiture of five (5) sailing vessels (kumpits) named 'Iroc-
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Iroc,' 'Lahat-lahat,' 'Liberal Wing III,' 'Sulu Area Command,' and 'Business,'
with their respective cargoes of blue seal cigarettes and rattan chairs for
violation of Section 1363(a) of the Revised Administrative Code and Section
20 of Republic Act No. 426 in relation with Section 1363(f) of the Revised
Administrative Code."1
The facts according to the above opinion "are not controverted." Thus: "It
appears that on September 10, 1950, at about noon time, a customs patrol
team on board Patrol Boat ST-23 intercepted the five (5) sailing vessels in
question on the high seas, between British North Borneo and Sulu while
they were heading towards Tawi-tawi, Sulu. After ordering the vessels to
stop, the customs officers boarded and found on board, 181 cases of
'Herald' cigarettes, 9 cases of 'Camel' cigarettes, and some pieces of rattan
chairs. The sailing vessels are all of Philippine registry, owned and manned
by Filipino residents of Sulu, and of less than thirty (30) tons burden. They
came from Sandakan, British North Borneo, but did not possess any permit
from the Commissioner of Customs to engage in the importation of
merchandise into any port of the Sulu sea, as required by Section 1363(a)
of the Revised Administrative Code. Their cargoes were not covered by the
required import license under Republic Act No. 426, otherwise known as the
Import Control Law."2
Respondent Commissioner of Customs, as noted at the outset, affirmed the
decision rendered by the Collector of Customs of Jolo, who found cause for
forfeiture under the law of the vessels and the cargo contained therein. He
was, as also already made known, sustained by the Court of Tax Appeals.
Hence this petition for review.
The first two errors assigned by petitioners would impugn the jurisdiction of
the Bureau of Customs to institute seizure proceedings and thereafter to
declare the forfeiture of the vessels in question and their cargo. They would
justify their stand thus: "In the light of the fact that the vessels involved
with the articles laden therein were apprehended and seized on the high
seas, beyond the territorial waters of the Philippines, the said vessels could
not have touched any place or port in the Philippines, whether a port or
place of entry or not, consequently, the said vessels could not have been
engaged in the importation of the articles laden therein into any Philippine
port or place, whether a port or place of entry or not, to have incurred the
liability of forfeiture under Section 1363(a) of the Revised Administrative
Code."3
Such a contention was advanced by petitioners before the Court of Tax
Appeals. It met the repudiation that it deserved. Thus: "We perfectly see
the point of the petitioners but considering the circumstances surrounding
the apprehension of the vessels in question, we believe that Section
1363(a) of the Revised Administrative Code should be applied to the case at
bar. It has been established that the five vessels came from Sandakan,
British North Borneo, a foreign port, and when intercepted, all of them were
heading towards Tawi-tawi, a domestic port within the Sulu sea. Laden with
foreign manufactured cigarettes, they did not possess the import license
required by Republic Act No. 426, nor did they carry a permit from the
Commissioner of Customs to engage in importation into any port in the
Sulu sea. Their course announced loudly their intention not merely to skirt
along the territorial boundary of the Philippines but to come within our
limits and land somewhere in Tawi-tawi towards which their prows were
pointed. As a matter of fact, they were about to cross our aquatic boundary
but for the intervention of a customs patrol which, from all appearances,
was more than eager to accomplish its mission."4
The sense of realism and the vigorous language employed by the late Judge
Luciano in rejecting such a plea deserve to be quoted. Thus: "To entertain
even for a moment the thought that these vessels were probably not bound
for a Philippine port would be too much a concession even for a simpleton
or a perennial optimist. It is quite irrational for Filipino sailors manning five
Philippine vessels to sneak out of the Philippines and go to British North
Borneo, and come a long way back laden with highly taxable goods only to
turn about upon reaching the brink of our territorial waters and head for
another foreign port."5
1. We find no plausible reason not to accept in its entirety such a conclusion
reached by the Court of Tax Appeals. Nor, even if the persuasive element in
the above view were not so overwhelming, could we alter the decisive facts
as found by it. For it is now beyond question that its finding, if supported by
substantial evidence, binds us, only questions of law being for us to resolve.
Where the issue raised belongs to the former category, we lack the power
of review.6
Moreover, for understandable reasons, we feel extreme reluctance to
substitute our own discretion for that of the Court of Tax Appeals in its
appreciation of the relevant facts and its appraisal of their significance. As
we had occasion to state in a relatively recent decision: "Nor as a matter of
principle is it advisable for this Court to set aside the conclusion reached by
an agency such as the Court of Tax Appeals which is, by the very nature of
its function, dedicated exclusively to the study and consideration of tax
problems and has necessarily developed an expertise on the subject, ...,
there has been an abuse or improvident exercise of its authority."7
2. We thus could rest our decision affirming that of the Court of Tax Appeals
on the above consideration.
It might not be amiss however to devote some degree of attention to the
legal points raised in the above two assignment of errors, discussed jointly
by petitioners-appellants, alleging the absence of jurisdiction, the
deprivation of property without due process of law and the abatement of
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liability consequent upon the repeal of Republic Act No. 426. Not one of the
principles of law relied upon suffices to call for reversal of the action taken
by the respondent Commissioner of Customs, even if the facts presented a
situation less conclusive against the pretension of petitioners-appellants.
From the apprehension and seizure of the vessels in question on the high
seas beyond the territorial waters of the Philippines, the absence of
jurisdiction of Commissioner of Customs is predicated. Such contention of
petitioners-appellants is without merit.
It is unquestioned that all vessels seized are of Philippine registry. The
Revised Penal Code leaves no doubt as to its applicability and enforceability
not only within the Philippines, its interior waters and maritime zone, but
also outside of its jurisdiction against those committing offense while on a
Philippine ship ...8 The principle of law that sustains the validity of such a
provision equally supplies a firm foundation for the seizure of the five
sailing vessels found thereafter to have violated the applicable provisions of
the Revised Administrative Code.9
Moreover, it is a well settled doctrine of International Law that goes back to
Chief Justice Marshall's opinion in Church v. Hubbart,10 an 1804 decision,
that a state has the right to protect itself and its revenues, a right not
limited to its own territory but extending to the high seas. In the language
of Chief Justice Marshall: "The authority of a nation within its own territory
is absolute and exclusive. The seizure of a vessel within the range of its
cannon by a foreign force is an invasion of that territory, and is a hostile act
which it is its duty to repel. But its power to secure itself from injury may
certainly be exercised beyond the limits of its territory."
The question asked in the brief of petitioners-appellants as to whether the
seizure of the vessels in question and the cargoes on the high seas and
thus beyond the territorial waters of the Philippines was legal must be
answered in the affirmative.
4. The next question raised is the alleged denial of due process arising from
such forfeiture and seizure. The argument on the alleged lack of validity of
the action taken by the Commissioner of Customs is made to rest on the
fact that the alleged offense imputed to petitioners-appellants is a violation
of Section 1363(a) and not Section 1363(f). The title of Section 1363 is
clear, "Property subject to forfeiture under customs laws." The first
subsection thereof, (a) cover any vessel including cargo unlawfully engaged
in the importation of merchandise except a port of entry. Subsection (f)
speaks of any merchandise of any prohibited importation, the importation
of which is effected or attempted contrary to law and all other merchandise
which in the opinion of the Collector of Customs have been used are or
were intended to be used as instrument in the importation or exportation of
the former.
From the above recital of the legal provisions relied upon, it would appear
most clearly that the due process question raised is insubstantial. Certainly,
the facts on which the seizure was based were not unknown to petitionersappellants. On those facts the liability of the vessels and merchandise under
the above terms of the statute would appear to be undeniable. The action
taken then by the Commissioner of Customs was in accordance with law.
How could there be a denial of due process? There was nothing arbitrary
about the manner in which such seizure and forfeiture were effected. The
right to a hearing of petitioners-appellants was respected. They could not
have been unaware of what they were doing. It would be an affront to
reason if under the above circumstances they could be allowed to raise in
all seriousness a due process question. Such a constitutional guaranty,
basic and fundamental, certainly should not be allowed to lend itself as an
instrument for escaping a liability arising from one's own nefarious acts.
5. Petitioners-appellants would further assail the validity of the action taken
by the respondent Commissioner of Customs by the plea that the repeal of
Republic Act No. 426 abated whatever liability could have been incurred
thereunder. This argument raised before the Court of Tax Appeals was
correctly held devoid of any persuasive force. The decision under review
cited our opinion in Golay-Buchel & Cie v. Commissioner of Customs11 to
the effect that the expiration of the Import Control Law "did not produce
the effect of declaring legal the importation of goods which were illegally
imported and the seizure and forfeiture thereof as ordered by the Collector
of Customs illegal or null and void."
Roxas v. Sayoc 12 announced that principle earlier. Thus: "Herein, we are
concerned with the effect of the expiration of a law, not with the abrogation
of a law, and we hold the view that once the Commissioner of Customs has
acquired jurisdiction over the case, the mere expiration of Republic Act No.
650 will not divest him of his jurisdiction thereon duly acquired while said
law was still in force. In other words, we believe that despite the expiration
of Republic Act No. 650 the Commissioner of Customs retained his
jurisdiction over the case and could continue to take cognizance thereof
until its final determination, for the main question brought in by the appeal
from the decision of the Collector of Customs was the legality or illegality of
the decision of the Collector of Customs, and that question could not have
been abated by the mere expiration of Republic Act No. 650. We firmly
believe that the expiration of Republic Act No. 650 could not have produced
the effect (1) of declaring legal the importation of the cotton counterpanes
which were illegally imported, and (2) of declaring the seizure and forfeiture
ordered by the Collector of Customs illegal or null and void; in other words
it could not have the effect of annulling or setting aside the decision of the
Collector of Customs which was rendered while the law was in force and
which should stand until it is revoked by the appellate tribunal."
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the ship where the firemen habitually sleep, and that they were delivered to
the first officer of the ship to be returned to the said firemen after the
vessel should have left the Philippines, because the firemen and crew of
foreign vessels, pursuant to the instructions he had from the Manila
custom-house, were permitted to retain certain amounts of opium, always
provided it should not be taken shore.
And, finally, another can of opium, marked "Exhibit D," is also corpus delicti
and important as evidence in this cause. With regard to this the internalrevenue agent testified as follows:itc-alf
FISCAL. What is it?
WITNESS. It is a can opium which was bought from the defendant by a
secret-service agent and taken to the office of the governor to prove that
the accused had opium in his possession to sell.
On motion by the defense, the court ruled that this answer might be
stricken out "because it refers to a sale." But, with respect to this answer,
the chief of the department of customs had already given this testimony, to
wit:
The facts of the case are contained in the following finding of the trial court:
The defense moved that this testimony be rejected, on the ground of its
being hearsay evidence, and the court only ordered that the part thereof
"that there was more opium, on board the vessel" be stricken out.
The defense, to abbreviate proceedings, admitted that the receptacles
mentioned as Exhibits A, B, and C, contained opium and were found on
board the steamship Erroll, a vessel of English nationality, and that it was
true that the defendant stated that these sacks of opium were his and that
he had them in his possession.
According to the testimony of the internal-revenue agent, the defendant
stated to him, in the presence of the provincial fiscal, of a Chinese
interpreter (who afterwards was not needed, because the defendant spoke
English), the warden of the jail, and four guards, that the opium seized in
the vessel had been bought by him in Hongkong, at three pesos for each
round can and five pesos for each one of the others, for the purpose of
selling it, as contraband, in Mexico and Puerto de Vera Cruz; that on the
15th the vessel arrived at Cebu, and on the same day he sold opium; that
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he had tried to sell opium for P16 a can; that he had a contract to sell an
amount of the value of about P500; that the opium found in the room of the
other two Chinamen prosecuted in another cause, was his, and that he had
left it in their stateroom to avoid its being found in his room, which had
already been searched many times; and that, according to the defendant,
the contents of the large sack was 80 cans of opium, and of the small one,
49, and the total number, 129.
appear that, on such account, the two penalties fixed by the law on the
subject, should be imposed in the maximum degree.
Therefore, reducing the imprisonment and the fine imposed to six months
and P1,000, respectively, we affirm in all other respects the judgment
appealed from, with the costs of this instance against the appellant. So
ordered.
It was established that the steamship Erroll was of English nationality, that
it came from Hongkong, and that it was bound for Mexico, via the call ports
of Manila and Cebu.
The defense moved for a dismissal of the case, on the grounds that the
court had no jurisdiction to try the same and the facts concerned therein
did not constitute a crime. The fiscal, at the conclusion of his argument,
asked that the maximum penalty of the law be imposed upon the
defendant, in view of the considerable amount of opium seized. The court
ruled that it did not lack jurisdiction, inasmuch as the crime had been
committed within its district, on the wharf of Cebu.
The court sentenced the defendant to five years' imprisonment, to pay a
fine of P10,000, with additional subsidiary imprisonment in case of
insolvency, though not to exceed one third of the principal penalty, and to
the payment of the costs. It further ordered the confiscation, in favor of the
Insular Government, of the exhibits presented in the case, and that, in the
event of an appeal being taken or a bond given, or when the sentenced
should have been served, the defendant be not released from custody, but
turned over to the customs authorities for the purpose of the fulfillment of
the existing laws on immigration.
From this judgment, the defendant appealed to this court.lawphi1.net
The appeal having been heard, together with the allegations made therein
by the parties, it is found: That, although the mere possession of a thing of
prohibited use in these Islands, aboard a foreign vessel in transit, in any of
their ports, does not, as a general rule, constitute a crime triable by the
courts of this country, on account of such vessel being considered as an
extension of its own nationality, the same rule does not apply when the
article, whose use is prohibited within the Philippine Islands, in the present
case a can of opium, is landed from the vessel upon Philippine soil, thus
committing an open violation of the laws of the land, with respect to which,
as it is a violation of the penal law in force at the place of the commission of
the crime, only the court established in that said place itself had competent
jurisdiction, in the absence of an agreement under an international treaty.
It is also found: That, even admitting that the quantity of the drug seized,
the subject matter of the present case, was considerable, it does not
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There shall be between the territories of the United States of America, and
all the territories of His Britanic Majesty in Europe, a reciprocal liberty of
commerce. The inhabitants of the two countries, respectively, shall have
liberty freely and securely to come with their ships and cargoes to all such
places, ports and rivers, in the territories aforesaid, to which other
foreigners are permitted to come, to enter into the same, and to remain
and reside in any parts of the said territories, respectively; also to hire and
occupy houses and warehouses for the purposes of their commerce; and,
generally, the merchants and traders of each nation respectively shall enjoy
the most complete protection and security for their commerce, but subject
always to the laws and statutes of the two countries, respectively. (Art. 1,
Commerce and Navigation Convention.)
We have seen that the mere possession of opium aboard a foreign vessel in
transit was held by this court not triable by or courts, because it being the
primary object of our Opium Law to protect the inhabitants of the
Philippines against the disastrous effects entailed by the use of this drug, its
mere possession in such a ship, without being used in our territory, does
not being about in the said territory those effects that our statute
contemplates avoiding. Hence such a mere possession is not considered a
disturbance of the public order.
But to smoke opium within our territorial limits, even though aboard a
foreign merchant ship, is certainly a breach of the public order here
established, because it causes such drug to produce its pernicious effects
within our territory. It seriously contravenes the purpose that our
Legislature has in mind in enacting the aforesaid repressive statute.
Moreover, as the Attorney-General aptly observes:
. . . The idea of a person smoking opium securely on board a foreign vessel
at anchor in the port of Manila in open defiance of the local authorities, who
are impotent to lay hands on him, is simply subversive of public order. It
requires no unusual stretch of the imagination to conceive that a foreign
ship may come into the port of Manila and allow or solicit Chinese residents
to smoke opium on board.
The order appealed from is revoked and the cause ordered remanded to the
court of origin for further proceedings in accordance with law, without
special findings as to costs. So ordered.
CONFLICTS | 03Dec | 13
banks.11 The Litonjuas prayed for the accounting of the revenues derived
in the operation of the six vessels and of the proceeds of the sale thereof at
the foreclosure proceedings instituted by petitioners; damages for breach of
trust; exemplary damages and attorney's fees.12
Defendant banks filed a Motion to Dismiss on grounds of forum non
conveniens and lack of cause of action against them.13
On December 3, 1993, the trial court issued an Order denying the Motion to
Dismiss, thus:
"WHEREFORE, and in view of the foregoing consideration, the Motion to
Dismiss is hereby DENIED. The defendant is therefore, given a period of ten
(10) days to file its Answer to the complaint.
"SO ORDERED."14
Instead of filing an answer the defendant banks went to the Court of
Appeals on a "Petition for Review on Certiorari"15 which was aptly treated
by the appellate court as a petition for certiorari. They assailed the abovequoted order as well as the subsequent denial of their Motion for
Reconsideration.16 The appellate court dismissed the petition and denied
petitioners' Motion for Reconsideration.17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT
THAT THE SEPARATE PERSONALITIES OF THE PRIVATE RESPONDENTS
(MERE STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL
BORROWERS) CLEARLY SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION
THAT THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE
THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT MANDATORY, THERE
ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING
WHETHER THE CHOICE OF FORUM SHOULD BE DISTURBED. UNDER THE
CIRCUMSTANCES SURROUNDING THE INSTANT CASE, DISMISSAL OF THE
COMPLAINT ON THE GROUND OF FORUM NON-CONVENIENS IS MORE
APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT
IN THE PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN ACTION MAY
BE THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED BY
THE PRIVATE RESPONDENT. COROLLARY TO THIS, THE RESPONDENT
COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT PRIVATE
RESPONDENTS ARE GUILTY OF FORUM SHOPPING." 18
CONFLICTS | 03Dec | 14
As to the first assigned error: Petitioners argue that the borrowers and the
registered owners of the vessels are the foreign corporations and not
private respondents Litonjuas who are mere stockholders; and that the
revenues derived from the operations of all the vessels are deposited in the
accounts of the corporations. Hence, petitioners maintain that these foreign
corporations are the legal entities that have the personalities to sue and not
herein private respondents; that private respondents, being mere
shareholders, have no claim on the vessels as owners since they merely
have an inchoate right to whatever may remain upon the dissolution of the
said foreign corporations and after all creditors have been fully paid and
satisfied;19 and that while private respondents may have allegedly spent
amounts equal to 10% of the acquisition costs of the vessels in question,
their 10% however represents their investments as stockholders in the
foreign corporations.20
"iv) All the loans involved were granted to the Private Respondents' foreign
CORPORATIONS;
Anent the second assigned error, petitioners posit that while the application
of the principle of forum non conveniens is discretionary on the part of the
Court, said discretion is limited by the guidelines pertaining to the private
as well as public interest factors in determining whether plaintiffs' choice of
forum should be disturbed, as elucidated in Gulf Oil Corp. vs. Gilbert21 and
Piper Aircraft Co. vs. Reyno,22 to wit:
"viii) Bank of America International Ltd. is not licensed nor engaged in trade
or business in the Philippines."24
"Private interest factors include: (a) the relative ease of access to sources
of proof; (b) the availability of compulsory process for the attendance of
unwilling witnesses; (c) the cost of obtaining attendance of willing
witnesses; or (d) all other practical problems that make trial of a case easy,
expeditious and inexpensive. Public interest factors include: (a) the
administrative difficulties flowing from court congestion; (b) the local
interest in having localized controversies decided at home; (c) the
avoidance of unnecessary problems in conflict of laws or in the application
of foreign law; or (d) the unfairness of burdening citizens in an unrelated
forum with jury duty."23
In support of their claim that the local court is not the proper forum,
petitioners allege the following:
performed,
"1.) Civil action in England in its High Court of Justice, Queen's Bench
Division Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN
TRANSPORT NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL
CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC
NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO K.
LITONJUA & (h) AURELIO K. LITONJUA.
"iii) The monies were advanced outside the Philippines. Furthermore, the
mortgaged vessels were part of an offshore fleet, not based in the
Philippines;
"2.) Civil action in England in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO
KATIPUNAN LITONJUA and (d) AURELIO KATIPUNAN LITONJUA.
CONFLICTS | 03Dec | 15
"3.) Civil action in the Supreme Court of Hongkong High Court (Action No.
4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A.,
(f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN
LITONJUA, JR., and (h) EDUARDO KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court (Action
No. 4040 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A.,
(f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN
LITONJUA, RJ., and (h) EDUARDO KATIPUNAN LITONJUA."
and that private respondents' alleged cause of action is already barred by
the pendency of another action or by litis pendentia as shown above.27
On the other hand, private respondents contend that certain material facts
and pleadings are omitted and/or misrepresented in the present petition for
certiorari; that the prefatory statement failed to state that part of the
security of the foreign loans were mortgages on a 39-hectare piece of real
estate located in the Philippines;28 that while the complaint was filed only
by the stockholders of the corporate borrowers, the latter are wholly-owned
by the private respondents who are Filipinos and therefore under Philippine
laws, aside from the said corporate borrowers being but their alter-egos,
they have interests of their own in the vessels.29 Private respondents also
argue that the dismissal by the Court of Appeals of the petition for certiorari
was justified because there was neither allegation nor any showing
whatsoever by the petitioners that they had no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law from the Order
of the trial judge denying their Motion to Dismiss; that the remedy available
to the petitioners after their Motion to Dismiss was denied was to file an
Answer to the complaint;30 that as upheld by the Court of Appeals, the
decision of the trial court in not applying the principle of forum non
conveniens is in the lawful exercise of its discretion.31 Finally, private
respondents aver that the statement of petitioners that the doctrine of res
judicata also applies to foreign judgment is merely an opinion advanced by
them and not based on a categorical ruling of this Court;32 and that herein
private respondents did not actually participate in the proceedings in the
foreign courts.33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss cannot
be the subject of petition for certiorari. Petitioners should have filed an
answer to the complaint, proceed to trial and await judgment before
making an appeal. As repeatedly held by this Court:
CONFLICTS | 03Dec | 16
factual basis for the action. "Failure to state a cause of action" may be
raised at the earliest stages of an action through a motion to dismiss the
complaint, while "lack of cause of action" may be raised any time after the
questions of fact have been resolved on the basis of stipulations,
admissions or evidence presented.39
In the case at bar, the complaint contains the three elements of a cause of
action. It alleges that: (1) plaintiffs, herein private respondents, have the
right to demand for an accounting from defendants (herein petitioners), as
trustees by reason of the fiduciary relationship that was created between
the parties involving the vessels in question; (2) petitioners have the
obligation, as trustees, to render such an accounting; and (3) petitioners
failed to do the same.
Petitioners insist that they do not have any obligation to the private
respondents as they are mere stockholders of the corporation; that the
corporate entities have juridical personalities separate and distinct from
those of the private respondents. Private respondents maintain that the
corporations are wholly owned by them and prior to the incorporation of
such entities, they were clients of petitioners which induced them to acquire
loans from said petitioners to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case,40
"xxx assuming that the allegation of facts constituting plaintiffs' cause of
action is not as clear and categorical as would otherwise be desired, any
uncertainty thereby arising should be so resolved as to enable a full inquiry
into the merits of the action."
As this Court has explained in the San Lorenzo case, such a course, would
preclude multiplicity of suits which the law abhors, and conduce to the
definitive determination and termination of the dispute. To do otherwise,
that is, to abort the action on account of the alleged fatal flaws of the
complaint would obviously be indecisive and would not end the controversy,
since the institution of another action upon a revised complaint would not
be foreclosed.41
Second Issue. Should the complaint be dismissed on the ground of forum
non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning 'the forum is
inconvenient', emerged in private international law to deter the practice of
global forum shopping,42 that is to prevent non-resident litigants from
choosing the forum or place wherein to bring their suit for malicious
reasons, such as to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly
venue. Under this doctrine, a court, in conflicts of law cases, may refuse
CONFLICTS | 03Dec | 17
rights asserted and the reliefs sought for as well as the presence of the
elements of res judicata should one of the cases be adjudged.
As the Court of Appeals aptly observed:
"xxx [T]he petitioners, by simply enumerating the civil actions instituted
abroad involving the parties herein xxx, failed to provide this Court with
relevant and clear specifications that would show the presence of the
above-quoted elements or requisites for res judicata. While it is true that
the petitioners in their motion for reconsideration (CA Rollo, p. 72), after
enumerating the various civil actions instituted abroad, did aver that
"Copies of the foreign judgments are hereto attached and made integral
parts hereof as Annexes 'B', 'C', 'D' and 'E'", they failed, wittingly or
inadvertently, to include a single foreign judgment in their pleadings
submitted to this Court as annexes to their petition. How then could We
have been expected to rule on this issue even if We were to hold that
foreign judgments could be the basis for the application of the
aforementioned principle of res judicata?"53
Consequently, both courts correctly denied the dismissal of herein subject
complaint.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioners.
SO ORDERED.
THE MANILA
petitioners,
CORP.
HOTEL
AND
MANILA
HOTEL
INTL.
LTD.,
CONFLICTS | 03Dec | 18
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J.
DIOSANA AND MARCELO G. SANTOS, respondents.
PARDO, J.:
The case before the Court is a petition for certiorari1 to annul the following
orders of the National Labor Relations Commission (hereinafter referred to
as "NLRC") for having been issued without or with excess jurisdiction and
with grave abuse of discretion:2
(1) Order of May 31, 1993.3 Reversing and setting aside its earlier
resolution of August 28, 1992.4 The questioned order declared that the
NLRC, not the Philippine Overseas Employment Administration (hereinafter
referred to as "POEA"), had jurisdiction over private respondent's
complaint;
(2) Decision of December 15, 1994.5 Directing petitioners to jointly and
severally pay private respondent twelve thousand and six hundred dollars
(US$ 12,600.00) representing salaries for the unexpired portion of his
contract; three thousand six hundred dollars (US$3,600.00) as extra four
months salary for the two (2) year period of his contract, three thousand
six hundred dollars (US$3,600.00) as "14th month pay" or a total of
nineteen thousand and eight hundred dollars (US$19,800.00) or its peso
equivalent and attorney's fees amounting to ten percent (10%) of the total
award; and
(3) Order of March 30, 1995.6 Denying the motion for reconsideration of
the petitioners.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing
Press, effective June 30, 1988, under the pretext that he was needed at
home to help with the family's piggery and poultry business.
When the case was filed in 1990, MHC was still a government-owned and
controlled corporation duly organized and existing under the laws of the
Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong
Kong.7 MHC is an "incorporator" of MHICL, owning 50% of its capital
stock.8
On June 30, 1988, respondent Santos was deemed resigned from the
Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
CONFLICTS | 03Dec | 19
His service with the Palace Hotel, Beijing was not abruptly terminated but
we followed the one-month notice clause and Mr. Santos received all
benefits due him.
"For your information the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in various
departments of the hotel is going on which is a normal management
practice to control costs.
"When going through the latest performance ratings, please also be advised
that his performance was below average and a Chinese National who is
doing his job now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed
up for work but still enjoyed free accommodation/laundry/meals up to the
day of his departure."
On August 10, 1989, the Palace Hotel informed respondent Santos by letter
signed by Mr. Shmidt that his employment at the Palace Hotel print shop
would be terminated due to business reverses brought about by the political
upheaval in China.15 We quote the letter:16
The Palace Hotel and Mr. Shmidt were not served with summons and
neither participated in the proceedings before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case
against petitioners, thus:19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as unearned
salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
CONFLICTS | 03Dec | 20
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA,
not the NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:20
On March 30, 1995, the NLRC denied the motion for reconsideration.29
"SO ORDERED."
On October 9, 1995, petitioners filed with this Court an urgent motion for
the issuance of a temporary restraining order and/or writ of preliminary
injunction and a motion for the annulment of the entry of judgment of the
NLRC dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's urgent motion. The
Court required respondents to file their respective comments, without
giving due course to the petition.32
On March 8, 1996, the Solicitor General filed a manifestation stating that
after going over the petition and its annexes, they can not defend and
sustain the position taken by the NLRC in its assailed decision and orders.
The Solicitor General prayed that he be excused from filing a comment on
behalf of the NLRC33
On April 30,1996, private respondent Santos filed his comment.34
On June 26, 1996, the Court granted the manifestation of the Solicitor
General and required the NLRC to file its own comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only link
that the Philippines has with the case is that respondent Santos is a Filipino
citizen. The Palace Hotel and MHICL are foreign corporations. Not all cases
involving our citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the
Palace Hotel, a foreign employer, through correspondence sent to the
Sultanate of Oman, where respondent Santos was then employed. He was
CONFLICTS | 03Dec | 21
specifically the POEA, not the NLRC, would protect him.39 He is not an
"overseas contract worker" a fact which he admits with conviction.40
Under the rule of forum non conveniens, a Philippine court or agency may
assume jurisdiction over the case if it chooses to do so provided: (1) that
the Philippine court is one to which the parties may conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent decision
as to the law and the facts; and (3) that the Philippine court has or is likely
to have power to enforce its decision.37 The conditions are unavailing in the
case at bar.
Even assuming that the NLRC was the proper forum, even on the merits,
the NLRC's decision cannot be sustained.
Not Convenient. We fail to see how the NLRC is a convenient forum given
that all the incidents of the case from the time of recruitment, to
employment to dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants, the
Palace Hotel and MHICL are not nationals of the Philippines. Neither .are
they "doing business in the Philippines." Likewise, the main witnesses, Mr.
Shmidt and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent decision
be made as to the law governing the employment contract as such was
perfected in foreign soil. This calls to fore the application of the principle of
lex loci contractus (the law of the place where the contract was made).38
The employment contract was not perfected in the Philippines. Respondent
Santos signified his acceptance by writing a letter while he was in the
Republic of Oman. This letter was sent to the Palace Hotel in the People's
Republic of China.
No power to determine the facts. Neither can the NLRC determine the
facts surrounding the alleged illegal dismissal as all acts complained of took
place in Beijing, People's Republic of China. The NLRC was not in a position
to determine whether the Tiannamen Square incident truly adversely
affected operations of the Palace Hotel as to justify respondent Santos'
retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming
that a proper decision could be reached by the NLRC, such would not have
any binding effect against the employer, the Palace Hotel. The Palace Hotel
is a corporation incorporated under the laws of China and was not even
served with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to
solve controversies involving foreign employers. Neither are we saying that
we do not have power over an employment contract executed in a foreign
country. If Santos were an "overseas contract worker", a Philippine forum,
CONFLICTS | 03Dec | 22
Likewise, there is no evidence to show that the Palace Hotel and MHICL are
one and the same entity. The fact that the Palace Hotel is a member of the
"Manila Hotel Group" is not enough to pierce the corporate veil between
MHICL and the Palace Hotel.
"3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare
and maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable
jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-employee
relationship which can be resolved by reference to the Labor Code, or other
labor statutes, or their collective bargaining agreements.54
CONFLICTS | 03Dec | 23
"To determine which body has jurisdiction over the present controversy, we
rely on the sound judicial principle that jurisdiction over the subject matter
is conferred by law and is determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the
allegations of the complaint. His failure to dismiss the case amounts to
grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and
ANNULS the orders and resolutions of the National Labor Relations
Commission dated May 31, 1993, December 15, 1994 and March 30, 1995
in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.
CONFLICTS | 03Dec | 24
dismiss
the
complaints-in-
In the meantime, Atlantic and the AWU Estella filed a petition in the Court
of Appeals against the trial court judge, Kumagai, NSS and Keihin, docketed
as CA-G.R. SP No. 12999, which sought the annulment of the orders of the
trial court dated April 30, 1987 and August 11, 1987. Among others, the
omnibus order dated August 11, 1987 denied the motion to reconsider the
order allowing Fu Hing's intervention and granted K.K. Shell's motion to
intervene. Again Fu Hing and K.K. Shell intervened, CA-G.R. SP No. 12999
was consolidated with another case (CA-G.R. SP No. 12341). Fu Hing and
K.K. Shell intervened in CA-G.R. SP No. 12999.
In a decision dated June 14, 1989, the Court of Appeals annulled the orders
of the trial court and directed it to cease and desist from proceeding with
the case.
According to the Court of Appeals, Fu Hing and K.K. Shell were not
suppliers but sub-agents of NSS, hence they were bound by the Agency
Agreement between Crestamonte and NSS, particularly, the choice of forum
clause, which provides:
12.0-That this Agreement shall be governed by the Laws of Japan. Any
matters, disputes, and/or differences arising between the parties hereto
concerned regarding this Agreement shall be subject exclusively to the
jurisdiction of the District Courts of Japan.
CONFLICTS | 03Dec | 25
Thus, concluded the Court of Appeals, the trial court should have disallowed
their motions to intervene.
A motion for reconsideration was filed by Fu Hing and K.K. Shell but this
was denied by the Court of Appeals. Hence this petition;
The Agent expressly agrees that the Owner's cash flow in Japan shall be
essentially the Agent's responsibility, and should the revenue for southbound cargoes as above-mentioned be insufficient to cover the aforesaid
expenses, the Agent shall provide credit to the extent of the vessels'
requirements, provided however that said obligation shall be secured by the
Owner committing at least forty-eight (48) mailings of Japan/Philippines
liner service per year.
only
Ltd.
that
The
After considering the pleadings filed by the parties and the arguments
raised therein, the Court finds reversible error on the part of the Court of
Appeals in so far; as it disallowed petitioners' intervention in the case
before the trial court and ordered the latter to cease and desist from
proceeding with the case.
1.
A reading of the Agency Agreement fails to support the conclusion
that K.K. Shell is a sub-agent of NSS and is, therefore, bound by the
agreement.
The body of the Agency Agreement entered into by and between
Crestamonte (referred to in the agreement as "Owner") and NSS ("Agent")
provides:
WITNESSETH
That the OWNER has appointed and by these presents hereby appoints the
AGENT as its General Agents for all Japan in connection with the Owner's
vessels and/or providing suitable vessels for Japan Ports under the following
terms and conditions:
1.0 - In general, the Agent will abide by the Owner's decisions regarding
the mode of operations of the vessels in Japan and that all cargo bookings,
vessel's fixtures/charters, etc. by the Agent, shall always be subject to the
prior approval and consent of the Owners.
2.0 - That the Agent shall provide for the necessary services required for
the husbanding of the Owner's vessels in all Japan Ports and issue Bill(s) of
Lading to Shippers in the form prescribed by the Owners.
3.0 - That the Agent shall be responsible for fixing south-bound cargoes
with revenues sufficient to cover ordinary liner operation expenses such as
bunkers, additives, lubricating oil, water, running repairs, drydocking
expenses, usual port disbursement accounts, cargo handling charges
The Agent shall settle, in behalf of the Owner, all outstanding payments for
the operation costs on Owner's liner service carried forward from the
present Owner's agent, subject to approval of Owner's Representative in
Japan in regard to amount and nature thereof.
4.0- That the agent shall furnish office space of approximately thirty (30)
square meters for the exclusive use of the Owner and its representatives,
within the premises of the Agent's office, free of charge.
5.0 That the responsibilities of the Agent in regard to the cargo shall
begin, in the case of imports into the territory of Japan, from the time such
cargo has left the ship's tackles, and shall cease, in case of export, upon
completion of loading.
6.0 That the remuneration of the Agent from the Owner shall be as
follows:
xxx
xxx
xxx
7.0 That the Agent shall exert best efforts to recommend to Owners
stevedoring and other expenses incurred in connection with work on board
the Owner's vessels, as well as customs house charges, pilotage, harbour
dues, cables, etc. which are for Owner's account, on the cheapest possible
terms. Owners shall decide and may appoint through the Agent the services
described herein.
8.0 That the Agent shall be responsible for the due collection of and due
payment to the Owner of all outward freight prepaid for cargo without delay
upon the sailing of each vessel from the port. The Agent shall be also
responsible for the due collection of all inward freight payable at the port
against delivery unless otherwise instructed by the Owner to the contrary.
9.0 The account statements supported by vouchers in two copies
itemized for each service and/or supply for each vessel, shall be forwarded
by the Agent to the Owner promptly after the departure of each vessel but
in no case later than 60 days thereafter.
CONFLICTS | 03Dec | 26
CONFLICTS | 03Dec | 27
CONFLICTS | 03Dec | 28
COMMUNICATION MATERIALS AND DESIGN, INC., ASPAC MULTITRADE, INC., (formerly ASPAC-ITEC PHILIPPINES, INC.) and
FRANCISCO S. AGUIRRE, petitioners,
vs.
THE COURT OF APPEALS, ITEC INTERNATIONAL, INC., and ITEC,
INC., respondents.
TORRES, JR., J.:p
Business Corporations, according to Lord Coke, "have no souls." They do
business peddling goods, wares or even services across national boundaries
in "souless forms" in quest for profits albeit at times, unwelcomed in these
strange lands venturing into uncertain markets and, the risk of dealing with
wily competitors.
This is one of the issues in the case at bar.
Contested in this petition for review on Certiorari is the Decision of the
Court of Appeals on June 7, 1991, sustaining the RTC Order dated February
22, 1991, denying the petitioners' Motion to Dismiss, and directing the
issuance of a writ of preliminary injunction, and its companion Resolution of
October 9, 1991, denying the petitioners' Motion for Reconsideration.
Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI, for
brevity) and ASPAC MULTI-TRADE INC., (ASPAC, for brevity) are both
domestic corporations, while petitioner Francisco S. Aguirre is their
President and majority stockholder. Private Respondents ITEC, INC. and/or
ITEC, INTERNATIONAL, INC. (ITEC, for brevity) are corporations duly
organized and existing under the laws of the State of Alabama, United
States of America. There is no dispute that ITEC is a foreign corporation not
licensed to do business in the Philippines.
On August 14, 1987, ITEC entered into a contract with petitioner ASPAC
referred to as "Representative Agreement". 1 Pursuant to the contract, ITEC
engaged ASPAC as its "exclusive representative" in the Philippines for the
sale of ITEC's products, in consideration of which, ASPAC was paid a
stipulated commission. The agreement was signed by G.A. Clark and
Francisco S. Aguirre, presidents of ITEC and ASPAC respectively, for and in
behalf of their companies. 2 The said agreement was initially for a term of
twenty-four months. After the lapse of the agreed period, the agreement
was renewed for another twenty-four months.
Through a "License Agreement" 3 entered into by the same parties on
November 10, 1988, ASPAC was able to incorporate and use the name
"ITEC" in its own name. Thus , ASPAC Multi-Trade, Inc. became legally and
publicly known as ASPAC-ITEC (Philippines).
By virtue of said contracts, ASPAC sold electronic products, exported by
ITEC, to their sole customer, the Philippine Long Distance Telephone
Company, (PLDT, for brevity).
To facilitate their transactions, ASPAC, dealing under its new appellation,
and PLDT executed a document entitled "PLDT-ASPAC/ITEC PROTOCOL" 4
which defined the project details for the supply of ITEC's Interface
Equipment in connection with the Fifth Expansion Program of PLDT.
One year into the second term of the parties' Representative Agreement,
ITEC decided to terminate the same, because petitioner ASPAC allegedly
violated its contractual commitment as stipulated in their agreements. 5
ITEC charges the petitioners and another Philippine Corporation, DIGITAL
BASE COMMUNICATIONS, INC. (DIGITAL, for brevity), the President of
which is likewise petitioner Aguirre, of using knowledge and information of
ITEC's products specifications to develop their own line of equipment and
product support, which are similar, if not identical to ITEC's own, and
offering them to ITEC's former customer.
On January 31, 1991, the complaint 6 in Civil Case No. 91-294, was filed
with the Regional Trial Court of Makati, Branch 134 by ITEC, INC. Plaintiff
sought to enjoin, first, preliminarily and then, after trial, permanently; (1)
defendants DIGITAL, CMDI, and Francisco Aguirre and their agents and
business associates, to cease and desist from selling or attempting to sell to
PLDT and to any other party, products which have been copied or
manufactured "in like manner, similar or identical to the products, wares
and equipment of plaintiff," and (2) defendant ASPAC, to cease and desist
from using in its corporate name, letter heads, envelopes, sign boards and
business dealings, plaintiff's trademark, internationally known as ITEC; and
the recovery from defendants in solidum, damages of at least P500,000.00,
attorney's fees and litigation expenses.
In due time, defendants filed a motion to dismiss 7 the complaint on the
following grounds:
(1)
That plaintiff has no legal capacity to sue as it is a foreign
corporation doing business in the Philippines without the required BOI
authority and SEC license, and (2) that plaintiff is simply engaged in forum
shopping which justifies the application against it of the principle of "forum
non conveniens".
On February 8, 1991, the complaint was amended by virtue of which ITEC
INTERNATIONAL, INC. was substituted as plaintiff instead of ITEC, INC. 8
CONFLICTS | 03Dec | 29
SO ORDERED. 12
2.0
2.1
Sale of ITEC products shall be at the purchase price set by ITEC
from time to time. Unless otherwise expressly agreed to in writing by ITEC
the purchase price is net to ITEC and does not include any transportation
charges, import charges or taxes into or within the Territory. All orders from
customers are subject to formal acceptance by ITEC at its Huntsville,
Alabama U.S.A. facility.
xxx
xxx
xxx
3.0
Duties of Representative
3.1.
REPRESENTATIVE SHALL:
CONFLICTS | 03Dec | 30
3.1.1. Not represent or offer for sale within the Territory any product
which competes with an existing ITEC product or any product which ITEC
has under active development.
3.1.2. Actively solicit all potential customers within the Territory in a
systematic and business like manner.
3.1.3. Inform ITEC of all request for proposals, requests for bids,
invitations to bid and the like within the Territory.
3.1.4. Attain the Annual Sales Goal for the Territory established by ITEC.
The Sales Goals for the first 24 months is set forth on Attachment two (2)
hereto. The Sales Goal for additional twelve month periods, if any, shall be
sent to the Sales Agent by ITEC at the beginning of each period. These
Sales Goals shall be incorporated into this Agreement and made a part
hereof.
xxx
xxx
xxx
6.0.
xxx
xxx
xxx
6.2.
When acting under this Agreement REPRESENTATIVE is authorized
to solicit sales within the Territory on ITEC's behalf but is authorized to bind
ITEC only in its capacity as Representative and no other, and then only to
specific customers and on terms and conditions expressly authorized by
ITEC in writing. 17
Aside from the abovestated provisions, petitioners point out the following
matters of record, which allegedly bear witness to the respondents'
activities within the Philippines in pursuit of their business dealings:
a.
While petitioner ASPAC was the authorized exclusive representative
for three (3) years, it solicited from and closed several sales for and on
behalf of private respondents as to their products only and no other, to
PLDT, worth no less than US $ 15 Million (p. 20, tsn, Feb. 18, 1991);
b.
Contract No. 1 (Exhibit for Petitioners) which covered these sales
and identified by private respondents' sole witness, Mr. Clarence Long, is
not in the name of petitioner ASPAC as such representative, but in the
name of private respondent ITEC, INC. (p. 20, tsn, Feb. 18, 1991);
c.
The document denominated as "PLDT-ASPAC/ITEC PROTOCOL
(Annex C of the original and amended complaints) which defined the
responsibilities of the parties thereto as to the supply, installation and
maintenance of the ITEC equipment sold under said Contract No. 1 is, as its
very title indicates, in the names jointly of the petitioner ASPAC and private
respondents;
d.
To evidence receipt of the purchase price of US $ 15 Million, private
respondent ITEC, Inc. issued in its letter head, a Confirmation of payment
dated November 13, 1989 and its Invoice dated November 22, 1989
(Annexes 1 and 2 of the Motion to Dismiss and marked as Exhibits 2 and 3
for the petitioners), both of which were identified by private respondent's
sole witness, Mr. Clarence Long (pp. 25-27, tsn, Feb. 18, 1991). 18
Petitioners contend that the above acts or activities belie the supposed
independence of petitioner ASPAC from private respondents. "The
unrebutted evidence on record below for the petitioners likewise reveal the
continuous character of doing business in the Philippines by private
respondents based on the standards laid down by this Court in Wang
Laboratories, Inc. vs. Hon. Rafael T . Mendoza, et al. 19 and again in TOPWELD. (supra)" It thus appears that as the respondent Court of Appeals
and the trial court's failure to give credence on the grounds relied upon in
support of their Motion to Dismiss that petitioners ascribe grave abuse of
discretion amounting to an excess of jurisdiction of said courts.
Petitioners likewise argue that since private respondents have no capacity
to bring suit here, the Philippines is not the "most convenient forum"
because the trial court is devoid of any power to enforce its orders issued or
decisions rendered in a case that could not have been commenced to begin
with, such that in insisting to assume and exercise jurisdiction over the case
below, the trial court had gravely abused its discretion and even actually
exceeded its jurisdiction.
As against petitioner's insistence that private respondent is "doing
business" in the Philippines, the latter maintains that it is not.
We can discern from a reading of Section 1 (f) (1) and 1 (f) (2) of the Rules
and Regulations Implementing the Omnibus Investments Code of 1987, the
following:
(1)
A foreign firm is deemed not engaged in business in the Philippines
if it transacts business through middlemen, acting in their own names, such
as indebtors, commercial bookers commercial merchants.
(2)
A foreign corporation is deemed not "doing business" if its
representative domiciled in the Philippines has an independent status in
that it transacts business in its name and for its account. 20
Private respondent argues that a scrutiny of its Representative Agreement
with the Petitioners will show that although ASPAC was named as
CONFLICTS | 03Dec | 31
representative of ITEC., ASPAC actually acted in its own name and for its
own account. The following provisions are particularly mentioned:
3.1.7.1.
In the event that REPRESENTATIVE imports directly from
ITEC, REPRESENTATIVE will pay for its own account; all customs duties and
import fees imposed on any ITEC products; all import expediting or
handling charges and expenses imposed on ITEC products; and any stamp
tax fees imposed on ITEC.
xxx
xxx
4.1.
As
under this
equivalent
customers
efforts. 21
xxx
6.1.
When performing any of its duties under this Agreement,
REPRESENTATIVE shall act as an independent contractor and not as an
employee, worker, laborer, partner, joint venturer of ITEC as these terms
are defined by the laws, regulations, decrees or the like of any jurisdiction,
including the jurisdiction of the United States, the state of Alabama and the
Territory. 22
Although it admits that the Representative Agreement contains provisions
which both support and belie the independence of ASPAC, private
respondent echoes the respondent court's finding that the lower court did
not commit grave abuse of discretion nor acted in excess of jurisdiction
when it found that the ground relied upon by the petitioners in their motion
to dismiss does not appear to be indubitable. 23
The issues before us now are whether or not private respondent ITEC is an
unlicensed corporation doing business in the Philippines, and if it is,
whether or not this fact bars it from invoking the injunctive authority of our
courts.
Considering the above, it is necessary to state what is meant by "doing
business" in the Philippines. Section 133 of the Corporation Code, provides
that "No foreign corporation, transacting business in the Philippines without
a license, or its successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative
CONFLICTS | 03Dec | 32
their local contacts were made the basis of their being regarded by this
Tribunal as corporations doing business in the country. Likewise, in Merill
Lynch Futures, Inc. vs. Court of Appeals, etc. 38 the FUTURES CONTRACT
entered into by the petitioner foreign corporation weighed heavily in the
court's ruling.
With the abovestated precedents in mind, we are persuaded to conclude
that private respondent had been "engaged in" or "doing business" in the
Philippines for some time now. This is the inevitable result after a scrutiny
of the different contracts and agreements entered into by ITEC with its
various business contacts in the country, particularly ASPAC and Telephone
Equipment Sales and Services, Inc. (TESSI, for brevity). The latter is a local
electronics firm engaged by ITEC to be its local technical representative,
and to create a service center for ITEC products sold locally. Its
arrangements, with these entities indicate convincingly ITEC's purpose to
bring about the situation among its customers and the general public that
they are dealing directly with ITEC, and that ITEC is actively engaging in
business in the country.
In its Master Service Agreement 39 with TESSI, private respondent required
its local technical representative to provide the employees of the technical
and service center with ITEC identification cards and business cards, and to
correspond only on ITEC, Inc., letterhead. TESSI personnel are instructed to
answer the telephone with "ITEC Technical Assistance Center.", such
telephone being listed in the telephone book under the heading of ITEC
Technical Assistance Center, and all calls being recorded and forwarded to
ITEC on a weekly basis.
What is more, TESSI was obliged to provide ITEC with a monthly report
detailing the failure and repair of ITEC products, and to requisition monthly
the materials and components needed to replace stock consumed in the
warranty repairs of the prior month.
A perusal of the agreements between petitioner ASPAC and the respondents
shows that there are provisions which are highly restrictive in nature, such
as to reduce petitioner ASPAC to a mere extension or instrument of the
private respondent.
The "No Competing Product" provision of the Representative Agreement
between ITEC and ASPAC provides: "The Representative shall not represent
or offer for sale within the Territory any product which competes with an
existing ITEC product or any product which ITEC has under active
development." Likewise pertinent is the following provision: "When acting
under this Agreement, REPRESENTATIVE is authorized to solicit sales within
the Territory on ITEC's behalf but is authorized to bind ITEC only in its
capacity as Representative and no other, and then only to specific
CONFLICTS | 03Dec | 33
The parties are charged with knowledge of the existing law at the time they
enter into a contract and at the time it is to become operative. (Twiehaus v.
Rosner, 245 SW 2d 107; Hall v. Bucher, 227 SW 2d 98). Moreover, a person
is presumed to be more knowledgeable about his own state law than his
alien or foreign contemporary. In this case, the record shows that, at least,
petitioner had actual knowledge of the applicability of R.A. No. 5455 at the
time the contract was executed and at all times thereafter. This conclusion
is compelled by the fact that the same statute is now being propounded by
the petitioner to bolster its claim. We, therefore sustain the appellate
court's view that "it was incumbent upon TOP-WELD to know whether or not
IRTI and ECED were properly authorized to engage in business in the
Philippines when they entered into the licensing and distributorship
agreements." The very purpose of the law was circumvented and evaded
when the petitioner entered into said agreements despite the prohibition of
R.A. No. 5455. The parties in this case being equally guilty of violating R.A.
No. 5455, they are in pari delicto, in which case it follows as a consequence
that petitioner is not entitled to the relief prayed for in this case.
The doctrine of lack of capacity to sue based on the failure to acquire a local
license is based on considerations of sound public policy. The license
requirement was imposed to subject the foreign corporation doing business
in the Philippines to the jurisdiction of its courts. It was never intended to
favor domestic corporations who enter into solitary transactions with
unwary foreign firms and then repudiate their obligations simply because
the latter are not licensed to do business in this country. 45
In Antam Consolidated Inc. vs. Court of Appeals, et al. 46 we expressed our
chagrin over this commonly used scheme of defaulting local companies
which are being sued by unlicensed foreign companies not engaged in
business in the Philippines to invoke the lack of capacity to sue of such
foreign companies. Obviously, the same ploy is resorted to by ASPAC to
prevent the injunctive action filed by ITEC to enjoin petitioner from using
knowledge possibly acquired in violation of fiduciary arrangements between
the parties.
By entering into the "Representative Agreement" with ITEC, Petitioner is
charged with knowledge that ITEC was not licensed to engage in business
activities in the country, and is thus estopped from raising in defense such
incapacity of ITEC, having chosen to ignore or even presumptively take
advantage of the same.
In Top-Weld, we ruled that a foreign corporation may be exempted from the
license requirement in order to institute an action in our courts if its
representative in the country maintained an independent status during the
existence of the disputed contract. Petitioner is deemed to have acceded to
such independent character when it entered into the Representative
Agreement with ITEC, particularly, provision 6.2 (supra).
CONFLICTS | 03Dec | 34
CONFLICTS | 03Dec | 35
BMSI. The complaint also averred that BMSI and RUST as well as petitioner
itself had combined and functioned as one company.
DECISION
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 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
respondents money claims.5 Upon appeal by BMSI, the NLRC reversed the
decision of the Labor Arbiter and dismissed respondents complaint on the
ground of lack of jurisdiction.6 Respondent elevated the case to this Court
but 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 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
CONFLICTS | 03Dec | 36
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 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
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. 1192BG 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 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 Petitioners 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
CONFLICTS | 03Dec | 37
SO ORDERED.
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 insufficiency 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.
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.
G.R. No. 125078
CONFLICTS | 03Dec | 38
The petitions in G.R. Nos. 1250781 and 1255982 both assail the Order3
dated May 20, 1996 of the Regional Trial Court (RTC) of General Santos
City, Branch 37, in Civil Case No. 5617. The said Order decreed the
dismissal of the case in view of the perceived lack of jurisdiction of the RTC
over the subject matter of the complaint. The petition in G.R. No. 125598
also challenges the Orders dated June 4, 19964 and July 9, 1996,5 which
held that the RTC of General Santos City no longer had jurisdiction to
proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos. 126654,6 127856,7 and
1283988 seek the reversal of the Order9 dated October 1, 1996 of the RTC
of Davao City, Branch 16, in Civil Case No. 24,251-96, which also dismissed
the case on the ground of lack of jurisdiction.
CHEMICAL
CONFLICTS | 03Dec | 39
(2) either waived or accepted service of process and waived any other
jurisdictional defense within 40 days after the entry of this Memorandum
and Order in any action commenced by a plaintiff in these actions in his
home country or the country in which his injury occurred. Any plaintiff
desiring to bring such an action will do so within 30 days after the entry of
this Memorandum and Order;
(3) waived within 40 days after the entry of this Memorandum and Order
any limitations-based defense that has matured since the commencement
of these actions in the courts of Texas;
(4) stipulated within 40 days after the entry of this Memorandum and Order
that any discovery conducted during the pendency of these actions may be
used in any foreign proceeding to the same extent as if it had been
conducted in proceedings initiated there; and
(5) submitted within 40 days after the entry of this Memorandum and Order
an agreement binding them to satisfy any final judgment rendered in favor
of plaintiffs by a foreign court.
xxxx
Notwithstanding the dismissals that may result from this Memorandum and
Order, in the event that the highest court of any foreign country finally
affirms the dismissal for lack of jurisdiction of an action commenced by a
plaintiff in these actions in his home country or the country in which he was
injured, that plaintiff may return to this court and, upon proper motion, the
court will resume jurisdiction over the action as if the case had never been
dismissed for [forum non conveniens].13
Navida, et al., prayed for the payment of damages in view of the illnesses
and injuries to the reproductive systems which they allegedly suffered
because of their exposure to DBCP. They claimed, among others, that they
were exposed to this chemical during the early 1970s up to the early
1980s when they used the same in the banana plantations where they
worked at; and/or when they resided within the agricultural area where
such chemical was used. Navida, et al., claimed that their illnesses and
injuries were due to the fault or negligence of each of the defendant
companies in that they produced, sold and/or otherwise put into the stream
of commerce DBCP-containing products. According to NAVIDA, et al., they
were allowed to be exposed to the said products, which the defendant
companies knew, or ought to have known, were highly injurious to the
formers health and well-being.
Instead of answering the complaint, most of the defendant companies
respectively filed their Motions for Bill of Particulars.15 During the pendency
of the motions, on March 13, 1996, NAVIDA, et al., filed an Amended Joint
Complaint,16 excluding Dead Sea Bromine Co., Ltd., Ameribrom, Inc.,
Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for
Bill of Particulars.17 On May 15, 1996, DOW filed an Answer with
Counterclaim.18
On May 20, 1996, without resolving the motions filed by the parties, the
RTC of General Santos City issued an Order dismissing the complaint. First,
the trial court determined that it did not have jurisdiction to hear the case,
to wit:
Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos.
125078 and 125598
THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT
SHOULD BE DISMISSED FOR LACK OF JURISDICTION
xxxx
The substance of the cause of action as stated in the complaint against the
defendant foreign companies cites activity on their part which took place
abroad and had occurred outside and beyond the territorial domain of the
Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
through sale or other disposition, resulting in their becoming part of the
stream of commerce.
Accordingly, the subject matter stated in the complaint and which is
uniquely particular to the present case, consisted of activity or course of
conduct engaged in by foreign defendants outside Philippine territory,
CONFLICTS | 03Dec | 40
U.S. court that defendants will voluntarily submit to the jurisdiction of this
court. While it is true that this court acquires jurisdiction over persons of
the defendants through their voluntary appearance, it appears that such
voluntary appearance of the defendants in this case is conditional. Thus in
the "Defendants Amended Agreement Regarding Conditions of Dismissal
for Forum Non Conveniens" (Annex to the Complaint) filed with the U.S.
District Court, defendants declared that "(t)he authority of each designated
representative to accept service of process will become effective upon final
dismissal of these actions by the Court". The decision of the U.S. District
Court dismissing the case is not yet final and executory since both the
plaintiffs and defendants appealed therefrom (par. 3(h), 3(i), Amended
Complaint). Consequently, since the authority of the agent of the
defendants in the Philippines is conditioned on the final adjudication of the
case pending with the U.S. courts, the acquisition of jurisdiction by this
court over the persons of the defendants is also conditional. x x x.
The appointment of agents by the defendants, being subject to a
suspensive condition, thus produces no legal effect and is ineffective at the
moment.22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of
filing the case in the Philippine courts violated the rules on forum shopping
and litis pendencia. The trial court expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING
Third, the RTC of General Santos City adjudged that Navida, et al., were
coerced into submitting their case to the Philippine courts, viz:
This court frowns upon the fact that the parties herein are both vigorously
pursuing their appeal of the decision of the U.S. District court dismissing
the case filed thereat. To allow the parties to litigate in this court when they
are actively pursuing the same cases in another forum, violates the rule on
forum shopping so abhorred in this jurisdiction. x x x.
xxxx
The Court views that the plaintiffs did not freely choose to file the instant
action, but rather were coerced to do so, merely to comply with the U.S.
District Courts Order dated July 11, 1995, and in order to keep open to the
plaintiffs the opportunity to return to the U.S. District Court.21
THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN
JURISDICTION
to
the
voluntary
Moreover, the filing of the case in the U.S. courts divested this court of its
own jurisdiction. This court takes note that the U.S. District Court did not
decline jurisdiction over the cause of action. The case was dismissed on the
ground of forum non conveniens, which is really a matter of venue. By
taking cognizance of the case, the U.S. District Court has, in essence,
concurrent jurisdiction with this court over the subject matter of this case.
It is settled that initial acquisition of jurisdiction divests another of its own
jurisdiction. x x x.
xxxx
CONFLICTS | 03Dec | 41
CHIQUITA and SHELL filed their motions for reconsideration30 of the above
order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in
order to assail the RTC Order dated May 20, 1996, which was docketed as
G.R. No. 125078.
The RTC of General Santos City then issued an Order31 dated August 14,
1996, which merely noted the incidents still pending in Civil Case No. 5617
and reiterated that it no longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review
on Certiorari,32 challenging the orders of the RTC of General Santos City
dated May 20, 1996, June 4, 1996 and July 9, 1996. Their petition was
docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General
Santos City erred in ruling that it has no jurisdiction over the subject matter
of the case as well as the persons of the defendant companies.
In a Resolution33 dated October 7, 1996, this Court resolved to consolidate
G.R. No. 125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari,34 which sought the
reversal of the RTC Orders dated May 20, 1996, July 9, 1996 and August
14, 1996. The petition was docketed as G.R. No. 126018. In a Resolution35
dated November 13, 1996, the Court dismissed the aforesaid petition for
failure of CHIQUITA to show that the RTC committed grave abuse of
discretion. CHIQUITA filed a Motion for Reconsideration,36 but the same
was denied through a Resolution37 dated January 27, 1997.
Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos.
126654, 127856, and 128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL,
DOLE, DEL MONTE, and CHIQUITA was filed before Branch 16 of the RTC of
Davao City by 155 plaintiffs from Davao City. This case was docketed as
Civil Case No. 24,251-96. These plaintiffs (the petitioners in G.R. No.
126654, hereinafter referred to as ABELLA, et al.) amended their JointComplaint on May 21, 1996.38
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as
workers in the banana plantation and/or as residents near the said
plantation, they were made to use and/or were exposed to nematocides,
which contained the chemical DBCP. According to ABELLA, et al., such
exposure resulted in "serious and permanent injuries to their health,
including, but not limited to, sterility and severe injuries to their
CONFLICTS | 03Dec | 42
Filipino complainants. One of the conditions imposed was for the plaintiffs
to file actions in their home countries or the countries in which they were
injured x x x. Notwithstanding, the Memorandum and [O]rder further
provided that should the highest court of any foreign country affirm the
dismissal for lack of jurisdictions over these actions filed by the plaintiffs in
their home countries [or] the countries where they were injured, the said
plaintiffs may return to that court and, upon proper motion, the Court will
resume jurisdiction as if the case had never been dismissed for forum non
conveniens.
The Court however is constrained to dismiss the case at bar not solely on
the basis of the above but because it shares the opinion of legal experts
given in the interview made by the Inquirer in its Special report "Pesticide
Cause Mass Sterility," to wit:
1. Former Justice Secretary Demetrio Demetria in a May 1995 opinion said:
The Philippines should be an inconvenient forum to file this kind of damage
suit against foreign companies since the causes of action alleged in the
petition do not exist under Philippine laws. There has been no decided case
in Philippine Jurisprudence awarding to those adversely affected by DBCP.
This means there is no available evidence which will prove and disprove the
relation between sterility and DBCP.
2. Retired Supreme Court Justice Abraham Sarmiento opined that while a
class suit is allowed in the Philippines the device has been employed strictly.
Mass sterility will not qualify as a class suit injury within the contemplation
of Philippine statute.
3. Retired High Court Justice Rodolfo Nocom stated that there is simply an
absence of doctrine here that permits these causes to be heard. No product
liability ever filed or tried here.
Case ordered dismissed.40
Docketed as G.R. No. 126654, the petition for review, filed on November
12, 1996 by ABELLA, et al., assails before this Court the above-quoted
order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil
Case No. 24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the
subject matter of the case since Articles 2176 and 2187 of the Civil Code
are broad enough to cover the acts complained of and to support their
claims for damages.
CONFLICTS | 03Dec | 43
ABELLA, et al., further aver that the dismissal of the case, based on the
opinions of legal luminaries reported in a newspaper, by the RTC of Davao
City is bereft of basis. According to them, their cause of action is based on
quasi-delict under Article 2176 of the Civil Code. They also maintain that
the absence of jurisprudence regarding the award of damages in favor of
those adversely affected by the DBCP does not preclude them from
presenting evidence to prove their allegations that their exposure to DBCP
caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for
reconsideration of the Order dated October 1, 1996 of the RTC of Davao
City. DEL MONTE also filed its motion for reconsideration, which contained
an additional motion for the inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an Order41 dated December
2, 1996, voluntarily inhibiting himself from trying the case. Thus, the case
was re-raffled to Branch 13 of the RTC of Davao City.
In an Order42 dated December 16, 1996, the RTC of Davao City affirmed
the Order dated October 1, 1996, and denied the respective motions for
reconsideration filed by defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997,
questioning the Orders dated October 1, 1996 and December 16, 1996 of
the RTC of Davao City. This case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in
dismissing the case motu proprio as it acquired jurisdiction over the subject
matter of the case as well as over the persons of the defendant companies
which voluntarily appeared before it. CHIQUITA also claims that the RTC of
Davao City cannot dismiss the case simply on the basis of opinions of
alleged legal experts appearing in a newspaper article.
Initially, this Court in its Resolution43 dated July 28, 1997, dismissed the
petition filed by CHIQUITA for submitting a defective certificate against
forum shopping. CHIQUITA, however, filed a motion for reconsideration,
which was granted by this Court in the Resolution44 dated October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review on certiorari
before this Court assailing the above-mentioned orders of the RTC of Davao
City. Its petition was docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil
Case No. 24,251-96, as defined under the law and that the said court
already obtained jurisdiction over its person by its voluntary appearance
and the filing of a motion for bill of particulars and, later, an answer to the
complaint. According to DEL MONTE, the RTC of Davao City, therefore,
acted beyond its authority when it dismissed the case motu proprio or
without any motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March 10,
1999, this Court consolidated G.R. Nos. 125078, 125598, 126654, 127856,
and 128398.
The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as PartyRespondents filed by NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before
this Court a Consolidated Motion (to Drop Party-Respondents).45 The
plaintiff claimants alleged that they had amicably settled their cases with
DOW, OCCIDENTAL, and SHELL sometime in July 1997. This settlement
agreement was evidenced by facsimiles of the "Compromise Settlement,
Indemnity, and Hold Harmless Agreement," which were attached to the said
motion. Pursuant to said agreement, the plaintiff claimants sought to
withdraw their petitions as against DOW, OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as
the settlement entered into between the plaintiff claimants and DOW,
OCCIDENTAL, and SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the parties,
this Court, in a Resolution dated June 22, 1998,46 required all the parties
to submit their respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998;47 SHELL asked to be
excused from the filing of a memorandum alleging that it had already
executed a compromise agreement with the plaintiff claimants.48 DOLE
filed its Memorandum on October 12, 199849 while DEL MONTE filed on
October 13, 1998.50 NAVIDA, et al., and ABELLA, et al., filed their
Consolidated Memorandum on February 3, 1999;51 and DOW and
OCCIDENTAL jointly filed a Memorandum on December 23, 1999.52
The Motion to Withdraw Petition for Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw
Petition for Review in G.R. No. 125598, 53 explaining that the said petition
"is already moot and academic and no longer presents a justiciable
controversy" since they have already entered into an amicable settlement
with NAVIDA, et al. DOW and OCCIDENTAL added that they have fully
complied with their obligations set forth in the 1997 Compromise
Agreements.
CONFLICTS | 03Dec | 44
NAVIDA, et al., also filed their Comment dated September 14, 2004,55
stating that they agree with the view of DOW and OCCIDENTAL that the
petition in G.R. No. 125598 has become moot and academic because Civil
Case No. 5617 had already been amicably settled by the parties in 1997.
DISCUSSION
CONFLICTS | 03Dec | 45
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction
over the subject matter of the cases filed before them. The Amended JointComplaints sought approximately P2.7 million in damages for each plaintiff
claimant, which amount falls within the jurisdiction of the RTC. CHIQUITA
avers that the pertinent matter is the place of the alleged exposure to
DBCP, not the place of manufacture, packaging, distribution, sale, etc., of
the said chemical. This is in consonance with the lex loci delicti commisi
theory in determining the situs of a tort, which states that the law of the
place where the alleged wrong was committed will govern the action.
CHIQUITA and the other defendant companies also submitted themselves to
the jurisdiction of the RTC by making voluntary appearances and seeking
for affirmative reliefs during the course of the proceedings. None of the
defendant companies ever objected to the exercise of jurisdiction by the
courts a quo over their persons. CHIQUITA, thus, prays for the remand of
Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and
the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction
over Civil Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations in the complaint and
the character of the relief sought, irrespective of whether the plaintiffs are
entitled to all or some of the claims asserted therein.59 Once vested by
law, on a particular court or body, the jurisdiction over the subject matter
or nature of the action cannot be dislodged by anybody other than by the
legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil
cases under Batas Pambansa Blg. 129, as amended by Republic Act No.
7691, was:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorneys fees, litigation expenses, and costs or the
value of the property in controversy exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the abovementioned items exceeds Two hundred thousand
pesos (P200,000.00).60
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
CONFLICTS | 03Dec | 46
From the foregoing, it is clear that the claim for damages is the main cause
of action and that the total amount sought in the complaints is
approximately P2.7 million for each of the plaintiff claimants. The RTCs
unmistakably have jurisdiction over the cases filed in General Santos City
and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall
within the purview of the definition of the jurisdiction of the RTC under
Batas Pambansa Blg. 129.
e. Failed to test DBCP prior to releasing these products for sale, or to cause
their subsidiaries or affiliates to do so; and
f. Failed to reveal the results of tests conducted on DBCP to each plaintiff,
governmental agencies and the public, or to cause their subsidiaries or
affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due to the FAULT or
negligence of defendants Standard Fruit Company, Dole Fresh Fruit
Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita
Brands International, Inc. in that they failed to exercise reasonable care to
prevent each plaintiffs harmful exposure to DBCP-containing products
which defendants knew or should have known were hazardous to each
plaintiff in that they, AMONG OTHERS:
a. Failed to adequately supervise and instruct Plaintiffs in the safe and
proper application of DBCP-containing products;
b. Failed to implement proper methods and techniques of application of said
products, or to cause such to be implemented;
c. Failed to warn Plaintiffs of the hazards of exposure to said products or to
cause them to be so warned;
d. Failed to test said products for adverse health effects, or to cause said
products to be tested;
e. Concealed from Plaintiffs information concerning the observed effects of
said products on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed to said products;
g. Failed to place adequate labels on containers of said products to warn
them of the damages of said products; and
CONFLICTS | 03Dec | 47
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et
al., allegedly suffered resulted from their exposure to DBCP while they were
employed in the banana plantations located in the Philippines or while they
were residing within the agricultural areas also located in the Philippines.
The factual allegations in the Amended Joint-Complaints all point to their
cause of action, which undeniably occurred in the Philippines. The RTC of
General Santos City and the RTC of Davao City obviously have reasonable
basis to assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they dismissed
the cases on the ground of lack of jurisdiction on the mistaken assumption
that the cause of action narrated by NAVIDA, et al., and ABELLA, et al.,
took place abroad and had occurred outside and beyond the territorial
boundaries of the Philippines, i.e., "the manufacture of the pesticides, their
packaging in containers, their distribution through sale or other disposition,
resulting in their becoming part of the stream of commerce,"65 and, hence,
outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the
situs of the act complained of, would be determinative of jurisdiction and
venue for trial of cases. In personal civil actions, such as claims for
payment of damages, the Rules of Court allow the action to be commenced
and tried in the appropriate court, where any of the plaintiffs or defendants
resides, or in the case of a non-resident defendant, where he may be
found, at the election of the plaintiff.66
In a very real sense, most of the evidence required to prove the claims of
NAVIDA, et al., and ABELLA, et al., are available only in the Philippines.
First, plaintiff claimants are all residents of the Philippines, either in General
Santos City or in Davao City. Second, the specific areas where they were
allegedly exposed to the chemical DBCP are within the territorial jurisdiction
of the courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed
their claims for damages. Third, the testimonial and documentary evidence
from important witnesses, such as doctors, co-workers, family members
and other members of the community, would be easier to gather in the
Philippines. Considering the great number of plaintiff claimants involved in
this case, it is not far-fetched to assume that voluminous records are
involved in the presentation of evidence to support the claim of plaintiff
claimants. Thus, these additional factors, coupled with the fact that the
alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the
defendant companies for damages occurred in the Philippines, demonstrate
that, apart from the RTC of General Santos City and the RTC of Davao City
having jurisdiction over the subject matter in the instant civil cases, they
are, indeed, the convenient fora for trying these cases.67
The RTC of General Santos City and the RTC of Davao City validly acquired
jurisdiction over the persons of all the defendant companies
CONFLICTS | 03Dec | 48
It is well to stress again that none of the parties claims that the courts a
quo lack jurisdiction over the cases filed before them. All parties are one in
asserting that the RTC of General Santos City and the RTC of Davao City
have validly acquired jurisdiction over the persons of the defendant
companies in the action below. All parties voluntarily, unconditionally and
knowingly appeared and submitted themselves to the jurisdiction of the
courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that
"[t]he defendants voluntary appearance in the action shall be equivalent to
service of summons." In this connection, all the defendant companies
designated and authorized representatives to receive summons and to
represent them in the proceedings before the courts a quo. All the
defendant companies submitted themselves to the jurisdiction of the courts
a quo by making several voluntary appearances, by praying for various
affirmative reliefs, and by actively participating during the course of the
proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines
v. Sandiganbayan,68 held that jurisdiction over the person of the defendant
in civil cases is acquired either by his voluntary appearance in court and his
submission to its authority or by service of summons. Furthermore, the
active participation of a party in the proceedings is tantamount to an
invocation of the courts jurisdiction and a willingness to abide by the
resolution of the case, and will bar said party from later on impugning the
court or bodys jurisdiction.69
Thus, the RTC of General Santos City and the RTC of Davao City have
validly acquired jurisdiction over the persons of the defendant companies,
as well as over the subject matter of the instant case. What is more, this
jurisdiction, which has been acquired and has been vested on the courts a
quo, continues until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the
"exercise of jurisdiction." Jurisdiction refers to the authority to decide a
case, not the orders or the decision rendered therein. Accordingly, where a
court has jurisdiction over the persons of the defendants and the subject
matter, as in the case of the courts a quo, the decision on all questions
arising therefrom is but an exercise of such jurisdiction. Any error that the
court may commit in the exercise of its jurisdiction is merely an error of
judgment, which does not affect its authority to decide the case, much less
divest the court of the jurisdiction over the case.70
Plaintiffs purported bad faith in filing the subject civil cases in Philippine
courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases
in bad faith merely to procure a dismissal of the same and to allow them to
return to the forum of their choice, this Court finds such argument much
too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are
unsupported by evidence on record. This Court does not rule on allegations
which are manifestly conjectural, as these may not exist at all. This Court
deals with facts, not fancies; on realities, not appearances. When this Court
acts on appearances instead of realities, justice and law will be shortlived.71 This is especially true with respect to allegations of bad faith, in
line with the basic rule that good faith is always presumed and bad faith
must be proved.72
In sum, considering the fact that the RTC of General Santos City and the
RTC of Davao City have jurisdiction over the subject matter of the amended
complaints filed by NAVIDA, et al., and ABELLA, et al., and that the courts a
quo have also acquired jurisdiction over the persons of all the defendant
companies, it therefore, behooves this Court to order the remand of Civil
Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the
RTC of Davao City, respectively.
On the issue of the dropping of DOW, OCCIDENTAL and SHELL as
respondents in view of their amicable settlement with NAVIDA, et al., and
ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW,
OCCIDENTAL and SHELL be dropped as respondents in G.R. Nos. 125078
and 126654, as well as in Civil Case Nos. 5617 and 24,251-96. The nonsettling defendants allegedly manifested that they intended to file their
cross-claims against their co-defendants who entered into compromise
agreements. NAVIDA, et al., and ABELLA, et al., argue that the non-settling
defendants did not aver any cross-claim in their answers to the complaint
and that they subsequently sought to amend their answers to plead their
cross-claims only after the settlement between the plaintiff claimants and
DOW, OCCIDENTAL, and SHELL were executed. NAVIDA, et al., and ABELLA,
et al., therefore, assert that the cross-claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of
NAVIDA, et al., and ABELLA, et al., since the latters Amended Complaints
cited several instances of tortious conduct that were allegedly committed
jointly and severally by the defendant companies. This solidary obligation
on the part of all the defendants allegedly gives any co-defendant the
statutory right to proceed against the other co-defendants for the payment
of their respective shares. Should the subject motion of NAVIDA, et al., and
ABELLA, et al., be granted, and the Court subsequently orders the remand
of the action to the trial court for continuance, CHIQUITA and DOLE would
CONFLICTS | 03Dec | 49
In light of the foregoing legal precepts, the RTC of General Santos City and
the RTC of Davao City should first receive in evidence and examine all of
the alleged compromise settlements involved in the cases at bar to
determine the propriety of dropping any party as a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents)
that was filed by NAVIDA, et al., and ABELLA, et al., only pertained to DOW,
OCCIDENTAL and SHELL in view of the latter companies alleged
compromise agreements with the plaintiff claimants. However, in
subsequent developments, DEL MONTE and CHIQUITA supposedly reached
their own amicable settlements with the plaintiff claimants, but DEL MONTE
qualified that it entered into a settlement agreement with only four of the
plaintiff claimants in Civil Case No. 5617. These four plaintiff claimants were
allegedly the only ones who were asserting claims against DEL MONTE.
However, the said allegation of DEL MONTE was simply stipulated in their
Compromise Settlement, Indemnity, and Hold Harmless Agreement and its
truth could not be verified with certainty based on the records elevated to
this Court. Significantly, the 336 plaintiff claimants in Civil Case No. 5617
jointly filed a complaint without individually specifying their claims against
DEL MONTE or any of the other defendant companies. Furthermore, not one
plaintiff claimant filed a motion for the removal of either DEL MONTE or
CHIQUITA as defendants in Civil Case Nos. 5617 and 24,251-96.
There is, thus, a primary need to establish who the specific parties to the
alleged compromise agreements are, as well as their corresponding rights
and obligations therein. For this purpose, the courts a quo may require the
presentation of additional evidence from the parties. Thereafter, on the
basis of the records of the cases at bar and the additional evidence
submitted by the parties, if any, the trial courts can then determine who
among the defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two
or more persons who are liable for the same quasi-delict is solidary. A
solidary obligation is one in which each of the debtors is liable for the entire
obligation, and each of the creditors is entitled to demand the satisfaction
of the whole obligation from any or all of the debtors.81
In solidary obligations, the paying debtors right of reimbursement is
provided for under Article 1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already made.
CONFLICTS | 03Dec | 50
If the payment is made before the debt is due, no interest for the
intervening period may be demanded.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its
petition in G.R. No. 127856. In view of the previous grant of the motion to
withdraw the petition in G.R. No. 125598, both G.R. Nos. 127856 and
125598 are considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.
CONFLICTS | 03Dec | 51
for specific performance and damages with the Regional Trial Court of Lipa
City.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 pre-termination 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
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 BBRI Project.13
On June 29, 2000, the RTC, invoking our ruling in Insular Government v.
Frank14 that matters connected with the performance of contracts are
regulated by the law prevailing at the place of performance,15 denied the
motion to dismiss.16 The trial court subsequently denied petitioners' motion
for reconsideration,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 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 An Entry of Judgment was later issued by the appellate
court on September 20, 2000.20
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 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
Ruling on the merits of the second petition, the appellate court rendered
the assailed April 18, 2001 Decision22 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 declared that the trial court was
Threatened with impending unemployment, respondent, through his lawyer, correct in applying instead the principle of lex loci solutionis.23
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 Petitioners' motion for reconsideration was subsequently denied by the CA
the ICA.10
in the assailed July 25, 2001 Resolution.24
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
CONFLICTS | 03Dec | 52
does not bar another action involving the same parties, on the same
subject matter and theory.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 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
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 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 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 Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply38 an updated
Authorization39 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
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 Substantial
compliance will not suffice in a matter that demands strict observance of
the Rules.42 While technical rules of procedure are designed not to
CONFLICTS | 03Dec | 53
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
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 While there are recognized exceptions to this
rule,45 petitioners' case does not fall among them.
This brings us to the discussion of the substantive issue of the case.
The Court notes that petitioners adopted an additional but different theory
when they elevated the case to the appellate court. In the Motion to
Dismiss48 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
While not abandoning this stance in their petition before the appellate
court, petitioners on certiorari significantly invoked the defense of forum
non conveniens.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
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 We only 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
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 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.
CONFLICTS | 03Dec | 54
Lex loci celebrationis relates to the "law of the place of the ceremony"63 or
the law of the place where a contract is made.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 It controls the nature,
construction, and validity of the contract66 and it may pertain to the law
voluntarily agreed upon by the parties or the law intended by them either
expressly or implicitly.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 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
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 They determine which state's law is to be applied in
resolving the substantive issues of a conflicts problem.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.
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 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
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 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
Neither can the other ground raised, forum non conveniens,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 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 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
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.
WHEREFORE, premises considered, the petition for review on certiorari is
DENIED.
SO ORDERED.