FORUM NON CONVENIENS If trial was in a state court, it could apply its own law to events occurring there.

If in
federal court by reason of diversity of citizenship, the court would apply the law of
GULF OIL CORP. V. GILBERT its own state in which it is likely to be experienced. The course of adjudication in New
Doctrine: York federal court might be beset with conflict of laws problems all avoided if the
Forum Non Conveniens case is litigated in Virginia, where it arose.
- Federal district court has power to dismiss an action at law pursuant to the The doctrine leaves much to the discretion of the court to which plaintiff resorts, and
doctrine—at least where its jurisdiction is based on diversity of citizenship and the experience has not shown a judicial tendency to renounce one's own jurisdiction so
state courts have such power. strong as to result in many abuses.
- Court may resist imposition upon its jurisdiction even when jurisdiction is Important considerations in the application of the doctrine of forum non
authorized by the letter of a general venue statute. These statutes are drawn with a conveniens, from the standpoint of litigants, are relative ease of access to sources of
necessary generality, and usually give a plaintiff a choice of courts, so that he may be proof, availability of compulsory process for attendance of unwilling witnesses, cost
quite sure of some place in which to pursue his remedy. But the open door may admit of obtaining attendance of willing witnesses, possibility of view of the premises if that
those who seek not simply justice, but perhaps justice blended with some be appropriate, and all other practical problems that make trial of a case easy,
harassment. A plaintiff sometimes is under temptation to resort to a strategy of expeditious, and inexpensive. There may also be questions as to the enforceability of
forcing the trial at a most inconvenient place for an adversary, even at some a judgment if one is obtained. The court will weigh relative advantages and obstacles
inconvenience to himself. to fair trial. It is often said that the plaintiff may not, by choice of an inconvenient
forum, "vex," "harass," or "oppress" the defendant by inflicting upon him expense or
Facts:
trouble not necessary to his own right to pursue his remedy. But, unless the balance
A resident of Lynchburg, Virginia brought an action in a federal district court in New is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be
York City against a Pennsylvania corporation qualified to do business in both Virginia disturbed.
and New York—where it had designated agents to receive service of process—to
recover damages for destruction of plaintiff's public warehouse and its contents in
Virginia by fire resulting from defendant's negligence (carelessly handled a delivery
of gasoline to his warehouse tanks and pumps as to cause an explosion and fire which
consumed the warehouse building to his damage). The court had jurisdiction (based
solely on diversity of citizenship), and the venue was correct, but all events in
litigation had taken place in Virginia, most of the witnesses resided there, and both
state and federal courts in Virginia were available to plaintiff and were able to obtain
jurisdiction of defendant.
The District Court considered that the law of New York as to forum non conveniens
applied, and that it required the case to be left to Virginia courts. It therefore
dismissed. The Circuit Court of Appeals disagreed as to the applicability of New York
law, took a restrictive view of the application of the entire doctrine in federal courts.
Issue:
Whether or not the United States District Court has inherent power to dismiss a suit
pursuant to the doctrine of forum non conveniens
Held:
YES. The district Court did not exceed its powers or the bounds of its discretion in
dismissing plaintiff's complaint and remitting him to the courts of his own
community. The Circuit Court of Appeals took too restrictive a view and its judgment
is reversed.
PIPER AIRCRAFT CO. V. REYNO
Doctrine:
The is ordinarily a strong presumption in favor of the plaintiff's choice of forum, which
may be overcome only when the private and public interest factors clearly point
towards trial in the alternative forum. When the home forum has been chosen, it is
reasonable to assume that this choice is convenient. When the plaintiff is foreign,
however, this assumption is much less reasonable. Because the central purpose of
any forum non conveniens inquiry is to ensure that the trial is convenient, a foreign
plaintiff's choice deserves less deference.
Facts:
Respondent, as representative of the estates of the pilot and five passengers from
Scotland who were killed in an airplane crash in the Scottish highlands during a
charter flight from Blackpool to Perth, instituted wrongful death litigation in a
California state court against petitioners, which are the company that manufactured
the plane in Pennsylvania and the company that manufactured the plane's propellers
in Ohio. At the time of the crash, the plane was registered in Great Britain and was
owned and operated by companies organized in the United Kingdom. The pilot and
all of the decedents' heirs and next of kin were Scottish subjects and citizens, and the
investigation of the accident was conducted by British authorities.
A preliminary report found that the plane crashed after developing a spin, and
suggested that mechanical failure in the plane or the propeller was responsible. At
Hartzell's request, this report was reviewed. The Review Board found no evidence of
defective equipment and indicated that pilot error may have contributed to the
accident. The pilot, who had obtained his commercial pilot's license only three
months earlier, was flying over high ground at an altitude considerably lower than
the minimum height required by his company's operations manual.
A California probate court appointed respondent Gaynell Reyno administratrix of the
estates of the five passengers. Reyno is not related to and does not know any of the
decedents or their survivors; she was a legal secretary to the attorney who filed this
lawsuit. Several days after her appointment, Reyno sought to recover from
petitioners on the basis of negligence or strict liability which is not recognized by
Scottish law, and admitted that the action was filed in the United States because its
laws regarding liability, capacity to sue, and damages are more favorable to
respondent's position than those of Scotland. On petitioners' motion, the action was
removed to a Federal District Court in California and was then transferred to the
United States District Court for the Middle District of Pennsylvania. The District Court
granted petitioners' motion to dismiss the action on the ground of forum non
conveniens. Relying on the test set forth in Gulf Oil Corp. v. Gilbert, and analyzing the
"private interest factors" affecting the litigants' convenience and the "public interest
factors" affecting the forum's convenience, as set forth in Gilbert, the District Court
concluded that Scotland was the appropriate forum. However, the Court of Appeals
reversed, holding that the District Court had abused its discretion in conducting
the Gilbert analysis and that, in any event, dismissal is automatically barred where
the law of the alternative forum is less favorable to the plaintiff than the law of the
forum chosen by the plaintiff.
Issue:
Whether or not the district court is correct in holding that Scotland is the appropriate
forum in the case at bar
Held:
YES. The forum non conveniens determination is committed to the trial court's sound
discretion, and may be reversed only when there has been a clear abuse of discretion.
Here, the District Court did not abuse its discretion in weighing the private and public
interests, and thereby determining that the trial should be held in Scotland. Even
aside from the question whether Scottish law might be applicable in part, all other
public interest factors favor trial in Scotland, which has a very strong interest in this
litigation.
The accident occurred there, all of the decedents were Scottish, and apart from
petitioners, all potential parties are either Scottish or English. The Court of Appeals
erred in holding that plaintiffs may defeat a motion to dismiss on the ground of forum
non conveniens merely by showing that the substantive law that would be applied in
the alternative forum is less favorable to the plaintiffs than that of the present forum.
The possibility of a change in substantive law should ordinarily not be given
conclusive or even substantial weight in the forum non conveniens inquiry.
Note: Dismissal will ordinarily be appropriate where trial in the plaintiff's chosen
forum imposes a heavy burden on the defendant or the court, and where the plaintiff
is unable to offer any specific reasons of convenience supporting his choice. If
substantial weight were given to the possibility of an unfavorable change in law,
however, dismissal might be barred even where trial in the chosen forum was plainly
inconvenient, and the forum non conveniens doctrine would become virtually
useless. Such an approach not only would be inconsistent with the purpose of
the forum non conveniens doctrine, but also would pose substantial practical
problems, requiring that trial courts determine complex problems in conflict of laws
and comparative law, and increasing the flow into American courts of litigation by
foreign plaintiffs against American manufacturers.
SINOCHEM INT’L CO. V. MALAYSIA INT’L SHIPPING CORP.
Doctrine:
A federal district court may dismiss an action on the ground that a court abroad is
the more appropriate and convenient forum for adjudicating the controversy
Facts:
The underlying controversy concerns alleged misrepresentations by a Chinese
corporation to a Chinese admiralty court resulting in the arrest of a Malaysian vessel
in China.
In 2003, petitioner Sinochem International Company Ltd. (Sinochem), a Chinese
state-owned importer, contracted with Triorient Trading, Inc. (Triorient), a domestic
corporation that is not a party to this suit, to purchase steel coils. Pursuant to the
agreement, Triorient would receive payment under a letter of credit by producing a
valid bill of lading certifying that the coils had been loaded for shipment to China on
or before April 30, 2003. Triorient subchartered a vessel owned by respondent
Malaysia International Shipping Corporation (Malaysia International), a Malaysian
company, to transport the coils to China. Triorient then hired a stevedoring company
to load the steel coils at the Port of Philadelphia. A bill of lading, dated April 30, 2003,
triggered payment under the letter of credit.
On June 8, 2003, Sinochem petitioned the Guangzhou Admiralty Court in China for
interim relief, i.e., preservation of a maritime claim against Malaysia International
and arrest of the vessel that carried the steel coils to China. In support of its petition,
Sinochem alleged that the Malaysian company had falsely backdated the bill of
lading. The Chinese tribunal ordered the ship arrested the same day.
Thereafter, Sinochem timely filed a complaint against Malaysia International and
others in the Guangzhou Admiralty Court. Sinochem’s complaint repeated the
allegation that the bill of lading had been falsified resulting in unwarranted payment.
Malaysia International contested the jurisdiction of the Chinese tribunal. The
admiralty court rejected Malaysia International’s jurisdictional objection, and that
ruling was affirmed on appeal by the Guangdong Higher People’s Court.
Shortly after the Chinese court ordered the vessel’s arrest, Malaysia International
filed the instant action against Sinochem in the United States District Court for the
Eastern District of Pennsylvania. Malaysia International asserted in its federal court
pleading that Sinochem’s preservation petition to the Guangzhou court negligently
misrepresented the “vessel’s fitness and suitability to load its cargo.” As relief,
Malaysia International sought compensation for the loss it sustained due to the delay
caused by the ship’s arrest. Sinochem moved to dismiss the suit on several grounds,
including lack of subject-matter jurisdiction, lack of personal jurisdiction, forum non
conveniens, and international comity.
The District Court first determined that it had subject-matter jurisdiction. The court
next concluded that it lacked personal jurisdiction over Sinochem under
Pennsylvania’s long-arm statute. Nevertheless, the court conjectured, limited
discovery might reveal that Sinochem’s national contacts sufficed to establish
personal jurisdiction under Federal Rule of Civil Procedure. The court did not permit
such discovery, however, because it determined that the case could be adjudicated
adequately and more conveniently in the Chinese courts. No significant interests of
the United States were involved, the court observed, and while the cargo had been
loaded in Philadelphia, the nub of the controversy was entirely foreign. The dispute
centered on the arrest of a foreign ship in foreign waters pursuant to the order of a
foreign court. Given the proceedings ongoing in China, and the absence of cause “to
second-guess the authority of Chinese law or the competence of Chinese courts,” the
District Court granted the motion to dismiss under the doctrine of forum non
conveniens.
A panel of the Court of Appeals determined that forum non conveniens is a nonmerits
ground for dismissal, the majority nevertheless held that the District Court could not
dismiss the case under the forum non conveniens doctrine unless and until it
determined definitively that it had both subject-matter jurisdiction over the cause
and personal jurisdiction over the defendant.
Issue:
Whether or not forum non conveniens can be decided prior to matters of jurisdiction
Held:
YES. A district court has discretion to respond at once to a defendant’s forum non
conveniens plea, and need not take up first any other threshold objection. In
particular, a court need not resolve whether it has authority to adjudicate the cause
(subject-matter jurisdiction) or personal jurisdiction over the defendant if it
determines that, in any event, a foreign tribunal is plainly the more suitable arbiter
of the merits of the case. Although a federal court generally may not rule on the
merits of a case without first determining that it has jurisdiction over the cause
(subject-matter jurisdiction) and the parties (personal jurisdiction), there is no
mandatory sequencing of nonmerits issues, A court has leeway “to choose among
threshold grounds for denying audience to a case on the merits,”
A federal court has discretion to dismiss on forum non conveniens grounds “when an
alternative forum has jurisdiction to hear the case, and … trial in the chosen forum
would establish … oppressiveness and vexation to a defendant … out of all proportion
to plaintiff’s convenience, or … the chosen forum [is] inappropriate because of
considerations affecting the court’s own administrative and legal problems.” Such a
dismissal reflects a court’s assessment of a “range of considerations, most notably
the convenience to the parties and the practical difficulties that can attend the
adjudication of a dispute in a certain locality.” A defendant invoking forum non
conveniens ordinarily bears a heavy burden in opposing the plaintiff’s chosen forum.
When the plaintiff’s choice is not its home forum, however, the presumption in the
plaintiff’s favor “applies with less force,” for the assumption that the chosen forum
is appropriate is then “less reasonable.”
Forum non conveniens is a nonmerits ground for dismissal. A district court therefore
may dispose of an action by a forum non conveniens dismissal, bypassing questions
of subject-matter and personal jurisdiction, when considerations of convenience,
fairness, and judicial economy so warrant. Forum non conveniens, like other
threshold issues, may involve a brush with “factual and legal issues of the underlying
dispute.” But the critical point, rendering a forum non conveniens determination a
nonmerits issue that can be determined before taking up jurisdictional inquiries is
this: Resolving a forum non conveniens motion does not entail any assumption by
the court of substantive law-declaring power.
Statements in Gulf Oil Corp. v. Gilbert, that “forum non conveniens can never apply
if there is absence of jurisdiction,” and that “in all cases in which … forum non
conveniens comes into play, it presupposes at least two forums in which the
defendant is amenable to process,” account in large part for the Third Circuit’s
conclusion. Those statements draw their meaning from the context in which they
were embedded. Gulf Oil answered in the affirmative the question whether a court
that had jurisdiction over the cause and the parties and was a proper venue could
nevertheless dismiss the action under the forum non conveniens doctrine. Gulf Oil
did not address the issue decided here: whether a federal court can presume, rather
than dispositively decide, its jurisdiction before dismissing under the doctrine of
forum non conveniens. The quoted statements, confined to the setting in which they
were made, are no hindrance to the decision reached today. The Third Circuit’s
further concern—that a court failing first to establish its jurisdiction could not
condition a forum non conveniens dismissal on the defendant’s waiver of any statute
of limitations defense or objection to the foreign forum’s jurisdiction, and thus could
not shield the plaintiff against a foreign tribunal’s refusal to entertain the suit—is not
implicated on these facts. Malaysia International faces no genuine risk that the more
convenient forum will not take up the case. This Court therefore need not decide
whether a court conditioning a forum non conveniens dismissal on the waiver of
jurisdictional or limitations defenses in the foreign forum must first determine its
own authority to adjudicate the case.
PHILSEC INVESTMENT CORPORATION V. COURT OF APPEALS
Facts:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans
from petitioners Ayala International Finance Limited (AYALA) and Philsec Investment
Corporation (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, whereby
1488, Inc. executed a Warranty Deed with Vendors Lien by which it sold to petitioner
Athona Holdings, N.V. (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, private
respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United
States for payment of the balance 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 Agreement. Originally instituted in
the United States District Court of Texas, 165th Judicial District, the venue of the
action was later transferred to the United States District Court for the Southern
District of Texas, where 1488, Inc. filed an amended complaint, reiterating its
allegations in the original complaint. ATHONA filed an answer with counterclaim,
impleading private respondents herein as counter-defendants, for allegedly
conspiring in selling the property at a price over its market value. Private respondent
Perlas, who had allegedly appraised the property, was later dropped as counter-
defendant. ATHONA sought the recovery of damages and excess payment allegedly
made to 1488, Inc. and, in the alternative, the rescission of sale of the property. For
their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of
jurisdiction over their person, but, as their motion was denied, they later filed a joint
answer with counterclaim against private respondents and Edgardo V. Guevarra,
PHILSECs own former president, for the rescission of the sale on the ground that the
property had been overvalued. On March 13, 1990, the United States District Court
for the Southern District of Texas dismissed the counterclaim against Edgardo V.
Guevarra on the ground that it was frivolous and [was] brought against him simply to
humiliate and embarrass him. For this reason, the U.S. court imposed so-called Rule
11 sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra.
While the case was pending in the United States, petitioners filed a complaint For
Sum of Money with Damages and Writ of Preliminary Attachment against private
respondents in the Regional Trial Court of Makati. The complaint reiterated the
allegation of petitioners in their respective counterclaims in the case filed in the
United States District Court of Southern Texas that private respondents committed
fraud by selling the property at a price 400 percent more than its true value of
US$800,000.00. Petitioners claimed that, as a result of private respondents
fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter
into the Agreement and to purchase the Houston property. Petitioners prayed that
private respondents be ordered to return to ATHONA the excess payment of
US$1,700,000.00 and to pay damages. The trial court issued a writ of preliminary
attachment against the real and personal properties of private respondents.
Private respondent Ducat moved to dismiss the case on the grounds of litis
pendentia, forum non conveniens, and failure of petitioners PHILSEC and BPI-IFL to
state a cause of action. The trial court granted Ducats 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 Daics motion to
dismiss. The trial court granted the motion to dismiss filed by 1488, Inc. and Daic on
the ground of litis pendentia. 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. Court of Appeals affirmed the dismissal of
Civil Case against Ducat, 1488, Inc., and Daic on the ground of litis pendentia. The
Court of Appeals also held that the dismissal on the ground of forum non
conveniens was likewise affirmed 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.
Issue:
Whether or not the principle of forum non conveniens is applicable in this case
Held:
No. The trial court’s refusal to take cognizance of the case is not justifiable under the
principle of forum non conveniens. First, a motion to dismiss is limited to the grounds
under Rule 16, 1, which does not include forum non conveniens. The propriety of among others, the property of the defendant has been attached within the
dismissing a case based on this principle requires a factual determination, hence, it Philippines. It is not disputed that the properties, real and personal, of the private
is more properly considered a matter of defense. Second, while it is within the respondents had been attached prior to service of summons.
discretion of the trial court to abstain from assuming jurisdiction on this ground, it
should do so only after vital facts are established, to determine whether special
circumstances require the courts desistance.
In this case, the trial court abstained from taking jurisdiction solely on the basis of
the pleadings filed by private respondents in connection with the motion to
dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic
corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was
the extinguishment of the latter’s debt which was the object of the transaction under
litigation. The trial court arbitrarily dismissed the case even after finding that Ducat
was not a party in the U.S. case.
Note:
NO RES JUDICATA
While this Court has given the effect of res judicata to foreign judgments in several
cases, it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law. 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.
In the case at bar, it cannot be said that petitioners were given the opportunity to
challenge the judgment of the U.S. court as basis for declaring it res. The proceedings
in the trial court were summary. Neither the trial court nor the appellate court was
even furnished copies of the pleadings in the U.S. court or apprised of the evidence
presented thereat, to assure a proper determination of whether the issues then
being litigated in the U.S. court were exactly the issues raised in this case such that
the judgment that might be rendered would constitute res judicata.
To sustain the appellate courts ruling that the foreign judgment constitutes res
judicata and is a bar to the claim of petitioners would effectively preclude petitioners
from repelling the judgment in the case for enforcement. An absurdity could then
arise: a foreign judgment is not subject to challenge by the plaintiff against whom it
is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by
the defendant if the foreign judgment is sought to be enforced against him in a
separate proceeding.
THERE IS JURISDICTION OVER 1488 & DAIC
This is an action in personam and summons were served by extraterritorial service.
Rule 14, 17 on extraterritorial service provides that service of summons on a non-
resident defendant may be effected out of the Philippines by leave of Court where,
MANILA HOTEL CORPORATION V. NATIONAL LABOR RELATIONS
COMMISSION
Doctrine:
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. The
conditions are unavailing in the case at bar.
Facts:
During his employment with the Mazoon Printing Press in the Sultanate of Oman,
respondent Santos received a letter from Mr. Gerhard R. Shmidt, General Manager,
Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was
recommended by one Nestor Buenio, a friend of his. Mr. Shmidt offered respondent
Santos the same position as printer, but with a higher monthly salary and increased
benefits. Respondent Santos wrote to Mr. Shmidt and signified his acceptance of the
offer.
The Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment
contract to respondent Santos. Mr. Henk advised respondent Santos that if the
contract was acceptable, to return the same to Mr. Henk in Manila, together with his
passport and two additional pictures for his visa to China.
Respondent Santos resigned from the Mazoon Printing Press. He wrote the Palace
Hotel and acknowledged Mr. Henks letter. Respondent Santos enclosed four (4)
signed copies of the employment contract and notified them that he was going to
arrive in Manila. The employment contract ostated that his employment would
commence would be for a period of two years. It provided for a monthly salary of
nine hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year.
Respondent Santos arrived in Manila but soon left for Beijing, China. He started to
work at the Palace Hotel. Subsequently, respondent Santos signed an amended
employment agreement with the Palace Hotel. In the contract, Mr. Shmidt
represented the Palace Hotel. The Vice President (Operations and Development) of
petitioner MHICL Miguel D. Cergueda signed the employment agreement under the
word noted.
Respondent Santos was in the Philippines on vacation leave for a month. He returned
to China and reassumed his post. Then, Mr. Shmidts Executive Secretary, a certain
Joanna suggested in a handwritten note that respondent Santos be given one (1)
month notice of his release from employment. Consequently, 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. The Palace Hotel terminated the
employment of respondent Santos and paid all benefits due him, including his plane
fare back to the Philippines.
Respondent Santos, through his lawyer, wrote Mr. Shmidt, demanding full
compensation pursuant to the employment agreement which Shmidt rejected and
stating that his service “was not abruptly terminated” and they “followed the one-
month notice clause and Mr. Santos received all benefits due him.”
Respondent Santos filed a complaint for illegal dismissal with the Arbitration Branch,
National Labor Relations Commission (NLRC). The complaint named MHC, MHICL, the
Palace Hotel and Mr. Shmidt as respondents. The Palace Hotel and Mr. Shmidt were
not served with summons and neither participated in the proceedings before the
Labor Arbiter.
Labor Arbiter decided the case against petitioners. Petitioners appealed to the NLRC,
arguing that the POEA, not the NLRC had jurisdiction over the case. The NLRC
promulgated a resolution agreeing with the petitioners. Then respondent Santos
moved for reconsideration of the afore-quoted resolution. He argued that the case
was not cognizable by the POEA as he was not an overseas contract worker. The NLRC
granted the motion and reversed itself. The NLRC directed Labor Arbiter Emerson
Tumanon to hear the case on the question of whether private respondent was
retrenched or dismissed. Subsequently, Labor Arbiter Tumanon was re-assigned.
Labor Arbiter de Vera submitted his report and he found that respondent Santos was
illegally dismissed from employment and recommended that he be paid actual
damages equivalent to his salaries for the unexpired portion of his contract. The NLRC
ruled in favor of private respondent.
Petitioners filed a motion for reconsideration arguing that Labor Arbiter de Veras
recommendation had no basis in law and in fact which the NLRC denied.
Issue:
Whether or not NLRC was a convenient forum
Held:
NO, the NLRC was a seriously inconvenient forum. 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.
Under the rule of forum non conveniens, the conditions that a Philippine court or
agency may assume jurisdiction are unavailing in the case at bar.
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. Also, 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.
No power to determine the facts.-- Neither can the NLRC determine the facts Hotel and MHICL are one and the same entity. The fact that the Palace Hotel is a
surrounding the alleged illegal dismissal as all acts complained of took place in member of the Manila Hotel Group is not enough to pierce the corporate veil
Beijing, Peoples Republic of China. The NLRC was not in a position to determine between MHICL and the Palace Hotel.
whether the Tiannamen Square incident truly adversely affected operations of the
Palace Hotel as to justify respondent Santos retrenchment.
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). The employment contract
was not perfected in the Philippines.
Note:
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, specifically the POEA, not the NLRC,
would protect him. He is not an overseas contract worker a fact which he admits with
conviction.
NLRC NO JURISDICTION
No employer-employee relationship existed between MHICL, MHC and respondent
Santos, Labor Arbiter clearly had no jurisdiction over respondents claim in NLRC. An
employer-employee relationship is an indispensable jurisdictional requirement. The
lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the
complaint. Failure to dismiss the case amounts to grave abuse of discretion.
MHC Not Liable
MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital
stock. However, this is not enough to pierce the veil of corporate fiction between
MHICL and MHC. It is basic that a corporation has a personality separate and distinct
from those composing it as well as from that of any other legal entity to which it may
be related. Clear and convincing evidence is needed to pierce the veil of corporate
fiction. In this case, we find no evidence to show that MHICL and MHC are one and
the same entity.
MHICL not Liable
There was no existing employer-employee relationship between Santos and
MHICL. MHICL did not have and did not exercise any of the aforementioned
powers. It did not select respondent Santos as an employee for the Palace Hotel. He
was referred to the Palace Hotel by his friend. MHICL did not engage respondent
Santos to work. The terms of employment were negotiated and finalized through
correspondence between respondent Santos, Mr. Schmidt and Mr. Henk, who were
officers and representatives of the Palace Hotel and not MHICL. Neither did
respondent Santos adduce any proof that MHICL had the power to control his
conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that
terminated respondent Santos services. There is no evidence to show that the Palace
BANK OF AMERICA NT&SA V. COURT OF APPEALS
Doctrine:
Philippine Court may assume jurisdiction over the case if it chooses to do so:
(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
(3) that the Philippine Court has or is likely to have power to enforce its decision.
Facts:
Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas) filed a Complaint before
the Regional Trial Court of Pasig against the Bank of America NT&SA and Bank of
America International, Ltd. (defendant banks) alleging that: they were engaged in the
shipping business; they owned two vessels: Don Aurelio and El Champion, through
their wholly-owned corporations; they deposited their revenues from said business
together with other funds with the branches of said banks in the United Kingdom and
Hongkong up to 1979; with their business doing well, the defendant banks induced
them to increase the number of their ships in operation, offering them easy loans to
acquire said vessels; thereafter, the defendant banks acquired, through their
(Litonjuas) corporations as the borrowers: (a) El Carrier; (b) El General; (c) El
Challenger; and (d) El Conqueror; the vessels were registered in the names of their
corporations; the operation and the funds derived therefrom were placed under the
complete and exclusive control and disposition of the petitioners; and the possession
the vessels was also placed by defendant banks in the hands of persons selected and
designated by them (defendant banks).
The Litonjuas claimed that defendant banks as trustees did not fully render an
account of all the income derived from the operation of the vessels as well as of the
proceeds of the subsequent foreclosure sale; because of the breach of their fiduciary
duties and/or negligence of the petitioners and/or the persons designated by them
in the operation of private respondents six vessels, the revenues derived from the
operation of all the vessels declined drastically; the loans acquired for the purchase
of the four additional vessels then matured and remained unpaid, prompting
defendant banks to have all the six vessels, including the two vessels originally owned
by the private respondents, foreclosed and sold at public auction to answer for the
obligations incurred for and in behalf of the operation of the vessels; they (Litonjuas)
lost sizeable amounts of their own personal funds equivalent to ten percent (10%) of
the acquisition cost of the four vessels and were left with the unpaid balance of their
loans with defendant banks. 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 attorneys fees.
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and
lack of cause of action against them which the trial court denied. Instead of filing an
answer the defendant banks went to the Court of Appeals on a Petition for Review
on Certiorari which was aptly treated by the appellate court as a petition for
certiorari. The appellate court likewise dismissed the petition and denied the Motion
for Reconsideration.
Issue:
Whether or not the complaint be dismissed on the ground of forum non-conveniens
Held:
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, 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 impositions on its jurisdiction where it is not the most
convenient or available forum and the parties are not precluded from seeking
remedies elsewhere. Also, all the requisites for a Philippine Court to assume
jurisdiction present in this case,
This Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that
the doctrine of forum non conveniens should not be used as a ground for a motion to
dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine
as a ground. This Court further ruled that while it is within the discretion of the trial
court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the
courts desistance; and that the propriety of dismissing a case based on this principle
of forum non conveniens requires a factual determination, hence it is more properly
considered a matter of defense.
Petitioners:
In support of their claim that the local court is not the proper forum, petitioners
allege the following:
i) The Bank of America Branches involved, as clearly mentioned in the Complaint, are
based in Hongkong and England. As such, the evidence and the witnesses are not
readily available in the Philippines;
ii) The loan transactions were obtained, perfected, performed, consummated and
partially paid outside the Philippines;
iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged
vessels were part of an offshore fleet, not based in the Philippines;
iv) All the loans involved were granted to the Private Respondents
foreign CORPORATIONS;
v) The Restructuring Agreements were ALL governed by the laws of England;
vi) The subsequent sales of the mortgaged vessels and the application of the sales
proceeds occurred and transpired outside the Philippines, and the deliveries of the
sold mortgaged vessels were likewise made outside the Philippines;
vii) The revenues of the vessels and the proceeds of the sales of these vessels
were ALL deposited to the Accounts of the foreign CORPORATIONS abroad; and
viii) Bank of America International Ltd. is not licensed nor engaged in trade or
business in the Philippines.
Petitioners argue further that the loan agreements, security documentation and all
subsequent restructuring agreements uniformly, unconditionally and expressly
provided that they will be governed by the laws of England; that Philippine Courts
would then have to apply English law in resolving whatever issues may be presented
to it in the event it recognizes and accepts herein case; that it would then be imposing
a significant and unnecessary expense and burden not only upon the parties to the
transaction but also to the local court. Petitioners insist that the inconvenience and
difficulty of applying English law with respect to a wholly foreign transaction in a case
pending in the Philippines may be avoided by its dismissal on the ground of forum
non conveniens.
Note:
Did the trial court commit grave abuse of discretion in refusing to dismiss the
complaint on the ground that plaintiffs have no cause of action against defendants
since plaintiffs are merely stockholders of the corporations which are the registered
owners of the vessels and the borrowers of petitioners? – No.
No. Petitioners argument that private respondents, being mere stockholders of the
foreign corporations, have no personalities to sue, and therefore, the complaint
should be dismissed, is untenable. A case is dismissible for lack of personality to sue
upon proof that the plaintiff is not the real party-in-interest. Lack of personality to
sue can be used as a ground for a Motion to Dismiss based on the fact that the
complaint, on the face thereof, evidently states no cause of action. To emphasize, it
is not the lack or absence of cause of action that is a ground for dismissal of the
complaint but rather the fact that the complaint states no cause of action.
Are private respondents guilty of forum shopping because of the pendency of foreign
action? – No. Forum shopping exists where the elements of litis pendentia are
present and where a final judgment in one case will amount to res judicata in the
other. In case at bar, not all the requirements for litis pendentia are present.
CRESCENT PETROLEUM, LTD. V. M/V LOK MAHESHWARI
Facts:
Respondent M/V Lok Maheshwari (Vessel) is an oceangoing vessel of Indian registry
that is owned by respondent Shipping Corporation of India (SCI), a corporation
organized and existing under the laws of India and principally owned by the
Government of India. It was time-chartered by respondent SCI to Halla Merchant
Marine Co. Ltd. (Halla), a South Korean company. Halla, in turn, sub-chartered the
Vessel through a time charter to Transmar Shipping, Inc. (Transmar). Transmar
further sub-chartered the Vessel to Portserv Limited (Portserv). Both Transmar and
Portserv are corporations organized and existing under the laws of Canada.
Portserv requested petitioner Crescent Petroleum, Ltd. (Crescent), a corporation
organized and existing under the laws of Canada that is engaged in the business of
selling petroleum and oil products for the use and operation of oceangoing vessels,
to deliver marine fuel oils (bunker fuels) to the Vessel. Petitioner Crescent granted
and confirmed the request through an advice via facsimile. As security, petitioner
Crescent received two checks. Thus, petitioner Crescent contracted with its supplier,
Marine Petrobulk Limited (Marine Petrobulk), another Canadian corporation, for the
physical delivery of the bunker fuels to the Vessel.
Marine Petrobulk delivered the bunker fuels at the port of Pioneer Grain, Vancouver,
Canada. The Chief Engineer Officer of the Vessel duly acknowledged and received the
delivery receipt. Marine Petrobulk issued an invoice to petitioner Crescent. Petitioner
Crescent issued a check for the same amount in favor of Marine Petrobulk, which
check was duly encashed.
Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice to
Portserv Limited, and/or the Master, and/or Owners, and/or Operators, and/or
Charterers of M/V Lok Maheshwari with instruction to remit the amount within a
period. The period lapsed and several demands were made but no payment was
received. Also, the checks issued to petitioner Crescent as security for the payment
of the bunker fuels were dishonored for insufficiency of funds. As a consequence,
petitioner Crescent incurred additional expenses for interest, tracking, and legal fees.
While the Vessel was docked at the port of Cebu City, petitioner Crescent instituted
before the RTC of Cebu City an action against respondents Vessel and SCI, Portserv
and/or Transmar. For failing to file their respective answers and upon motion of
petitioner Crescent, the trial court declared respondents Vessel and SCI, Portserv
and/or Transmar in default. Petitioner Crescent was allowed to present its evidence
ex-parte. The trial court rendered its decision in favor of petitioner Crescent.
Respondents Vessel and SCI appealed to the Court of Appeals. The Court of Appeals
issued its assailed Decision which reversed that of the trial court. It also denied
petitioner Crescents motion for reconsideration explaining that it dismissed the
instant action primarily on the ground of forum non conveniens considering that the
parties are foreign corporations which are not doing business in the Philippines.
Issue:
Whether or not the appellate court erred when it denied the motion for
reconsideration on the ground of forum non conveniens
Held:
NO. In light of the interests of the various foreign elements involved, it is clear that
Canada has the most significant interest in this dispute. The injured party is a
Canadian corporation, the sub-charterer which placed the orders for the supplies is
also Canadian, the entity which physically delivered the bunker fuels is in Canada, the
place of contracting and negotiation is in Canada, and the supplies were delivered in
Canada.
The arbitration clause contained in the Bunker Fuel Agreement which states that New
York law governs the construction, validity and performance of the contract is only a
factor that may be considered in the choice-of-law analysis but is not conclusive.
It is worthy to note that petitioner Crescent never alleged and proved Canadian law
as basis for the existence of a maritime lien. To the end, it insisted on its theory that
Philippine law applies. Petitioner contends that even if foreign law applies, since the
same was not properly pleaded and proved, such foreign law must be presumed to
be the same as Philippine law pursuant to the doctrine of processual presumption.
Thus, we are left with two choices: (1) dismiss the case for petitioners failure to
establish a cause of action or (2) presume that Canadian law is the same as Philippine
law. In either case, the case has to be dismissed.
It is well-settled that a party whose cause of action or defense depends upon a
foreign law has the burden of proving the foreign law. Such foreign law is treated as
a question of fact to be properly pleaded and proved. Petitioner Crescents insistence
on enforcing a maritime lien before our courts depended on the existence of a
maritime lien under the proper law. By erroneously claiming a maritime lien under
Philippine law instead of proving that a maritime lien exists under Canadian law,
petitioner Crescent failed to establish a cause of action.
A discussion on the principle of forum non conveniens is unnecessary.
SAUDI ARABIAN AIRLINES V. REBESENCIO
Facts:
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and
existing under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine office
located at Makati City. Respondents were recruited and hired by Saudia Flight
Attendants. Respondents continued their employment with Saudia until they were
separated from service. Respondents contended that the termination of their
employment was illegal. They alleged that the termination was made solely because
they were pregnant. As respondents alleged, they had informed Saudia of their
respective pregnancies and had gone through the necessary procedures to process
their maternity leaves. Initially, Saudia had given its approval but later on informed
respondents that its management had disapproved their maternity leaves. In
addition, it required respondents to file their resignation letters. Respondents were
told that if they did not resign, Saudia would terminate them all the same. The threat
of termination entailed the loss of benefits, such as separation pay and ticket
discount entitlements.
Saudia anchored its disapproval of respondents' maternity leaves and demand for
their resignation on its "Unified Employment Contract for Female Cabin Attendants"
(Unified Contract). Under the Unified Contract, the employment of a Flight Attendant
who becomes pregnant is rendered void. Respondents emphasized that the Unified
Contract took effect on September 23, 2006, well after they had filed and had their
maternity leaves approved. Faced with the dilemma of resigning or totally losing their
benefits, respondents executed handwritten resignation letters.
Respondents filed a Complaint against Saudia and its officers. Saudia assailed the
jurisdiction of the Labor Arbiter. It claimed that all the determining points of contact
referred to foreign law and insisted that the Complaint ought to be dismissed on the
ground of forum non conveniens. It added that respondents had no cause of action
as they resigned voluntarily.
Executive Labor Arbiter rendered the Decision dismissing respondents' Complaint.
On respondents' appeal, the National Labor Relations Commission's Sixth Division
reversed the ruling of Executive Labor Arbiter Jambaro-Franco. On the matter
of forum non conveniens, it noted that there were no special circumstances that
warranted its abstention from exercising jurisdiction. In a Resolution, the National
Labor Relations Commission denied petitioners' Motion for Reconsideration.
The Court of Appeals also denied petitioners' Rule 65 Petition and modified the
Decision of the National Labor Relations Commission with respect to the award of
separation pay and backwages. In a Resolution, the Court of Appeals denied
petitioners' Motion for Reconsideration.
Issue:
Whether or not the complaint ought to be dismissed on the ground of forum non
conveniens
Held:
NO. Forum non conveniens finds no application and does not operate to divest
Philippine tribunals of jurisdiction and to require the application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the stipulations of
the Cabin Attendant contracts that require the application of the laws of Saudi
Arabia. Forum non conveniens relates to forum, not to the choice of governing law.
Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a
dispute: first, the vinculum which the parties and their relation have to a given
jurisdiction; and second, the public interest that must animate a tribunal, in its
capacity as an agent of the sovereign, in choosing to assume or decline jurisdiction.
The first is more concerned with the parties, their personal circumstances, and
private interests; the second concerns itself with the state and the greater social
order. In considering the vinculum, a court must look into the preponderance of
linkages which the parties and their transaction may have to either jurisdiction. In
this respect, factors, such as the parties' respective nationalities and places of
negotiation, execution, performance, engagement or deployment, come into play.
As the present dispute relates to the illegal termination of respondents' employment,
this case is immutably a matter of public interest and public policy. Consistent with
clear pronouncements in law and jurisprudence, Philippine laws properly find
application in and govern this case. 'Moreover, as this premise for Saudia's insistence
on the application forum non conveniens has been shattered, it follows that
Philippine tribunals may properly assume jurisdiction over the present controversy.
The case now before us does not entail a preponderance of linkages that favor a
foreign jurisdiction. Here, the circumstances of the parties and their relation do not
approximate the circumstances enumerated in Puyat, which this court recognized as
possibly justifying the desistance of Philippine tribunals from exercising jurisdiction:
(1) there is no basis for concluding that the case can be more conveniently tried
elsewhere—Saudia is doing business in the Philippines. For their part, all four
respondents are Filipino citizens maintaining residence in the Philippines and, apart
from their previous employment with Saudia, have no other connection to the
Kingdom of Saudi Arabia. It would even be to respondents' inconvenience if this case
were to be tried elsewhere; (2) the records are bereft of any indication that
respondents filed their Complaint in an effort to engage in forum shopping or to vex
and inconvenience Saudia; (3) there is no indication of "unwillingness to extend local
judicial facilities to non-residents or aliens." That Saudia has managed to bring the
present controversy all the way to this court proves this; (4) it cannot be said that the
local judicial machinery is inadequate for effectuating the right sought to be
maintained. Summons was properly served on Saudia and jurisdiction over its person
was validly acquired; and (5) Lastly, there is not even room for considering foreign
law. Philippine law properly governs the present dispute.
As the question of applicable law has been settled, the supposed difficulty of
ascertaining foreign law provides no insurmountable inconvenience or special
circumstance that will justify depriving Philippine tribunals of jurisdiction. Even if we
were to assume, for the sake of discussion, that it is the laws of Saudi Arabia which
should apply, it does not follow that Philippine tribunals should refrain from Termination—Respondents were illegally terminated. It is clear that respondents
exercising jurisdiction. To recall our pronouncements, it is not so much the mere were constructively dismissed. Hence, their termination was illegal. Pregnancy is a
applicability of foreign law which calls into operation forum non conveniens. Rather, time when they need employment to sustain their families. Indeed, it goes against
what justifies a court's desistance from exercising jurisdiction is "the difficulty of normal and reasonable human behavior to abandon one's livelihood in a time of
ascertaining foreign law" or the inability of a "Philippine Court to make an intelligent great financial need. It is clear that respondents intended to remain employed with
decision as to the law.” Saudia. All they did was avail of their maternity leaves. Evidently, the very nature of
All told, the considerations for assumption of jurisdiction by Philippine tribunals as a maternity leave means that a pregnant employee will not report for work only
outlined in Bank of America, NT&SA have been satisfied. First, all the parties are temporarily and that she will resume the performance of her duties as soon as the
based in the Philippines and all the material incidents transpired in this jurisdiction. leave allowance expires. It is also clear that respondents exerted all efforts to' remain
Thus, the parties may conveniently seek relief from Philippine tribunals. Second, employed with Saudia. Having been illegally and unjustly dismissed, respondents are
Philippine tribunals are in a position to make an intelligent decision as to the law and entitled to full backwages and benefits from the time of their termination until the
the facts. Third, Philippine tribunals are in a position to enforce their decisions. There finality of this Decision. They are likewise entitled to separation pay.
is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary,
the immense public policy considerations attendant to this case behoove Philippine
tribunals to not shy away from their duty to rule on the case.
Contracts involving foreign elements are, however, nothing new. Conflict of laws
situations precipitated by disputes and litigation anchored on these contracts are not
totally novel. There is no statutorily established mode of settling conflict of laws
situations on matters pertaining to substantive content of contracts. It has been
noted that three modes have emerged: (1) lex loci contractus or the law of the place
of the making; (2) lex loci solutionis or the law of the place of performance; and
(3) lex loci intentionis or the law intended by the parties. Saudia asserts that
stipulations set in the Cabin Attendant contracts require the application of the laws
of Saudi Arabia. It insists that the need to comply with these stipulations calls into
operation the doctrine of forum non conveniens and, in turn, makes it necessary for
Philippine tribunals to refrain from exercising jurisdiction. As mentioned, contractual
choice of laws factors into transnational litigation in any or a combination of four
ways. Moreover, forum non conveniens relates to one of these: choosing between
multiple possible fora.
Notes:
Summons—Summons were validly served on Saudia and jurisdiction over it validly
acquired. There is no doubt that the pleadings and summons were served on Saudia
through its counsel. Saudia, however, claims that the Labor Arbiter and the National
Labor Relations Commission had no jurisdiction over it because summons were never
served on it but on "Saudia Manila." Referring to itself as "Saudia Jeddah," it claims
that "Saudia Jeddah" and not "Saudia Manila" was the employer of respondents. By
its own admission, Saudia, while a foreign corporation, has a Philippine office. As
such, Saudia may be sued in the Philippines and is subject to the jurisdiction of
Philippine tribunals. Moreover, since there is no real distinction between "Saudia
Jeddah" and "Saudia Manila" — the latter being nothing more than Saudia's local
office — service of summons to Saudia's office in Manila sufficed to vest jurisdiction
over Saudia's person in Philippine tribunals
Doctrine:
Forum non conveniens relates to forum, not to the choice of governing law. A choice
of law governing the validity of contracts or the interpretation of its provisions does
not necessarily imply forum non conveniens. Choice of law and forum non
conveniens are entirely different matters.
Any evaluation of the propriety of contracting parties' choice of a forum and'its
incidents must grapple with two (2) considerations: first, the availability and
adequacy of recourse to a foreign tribunal; and second, the question of where, as
between the forum court and a foreign court, the balance of interests inhering in a
dispute weighs more heavily.
Under the Doctrine of forum non conveniens, "a court, in conflicts of law
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." In Puyat v. Zabarte, this court recognized the following situations as
among those that may warrant a court's desistance from exercising jurisdiction: (1)
The belief that the matter can be better tried and decided elsewhere, either because
the main aspects of the case transpired in a foreign jurisdiction or the material
witnesses have their residence there; (2) The belief that the non-resident plaintiff
sought the forum[,] a practice known as forum shopping[,] merely to secure
procedural advantages or to convey or harass the defendant; (3) The unwillingness
to extend local judicial facilities to non-residents or aliens when the docket may
already be overcrowded; (4) The inadequacy of the local judicial machinery for
effectuating the right sought to be maintained; and (5) The difficulty of ascertaining
foreign law.
Forum non conveniens must not only be clearly pleaded as a ground for dismissal; it
must be pleaded as such at the earliest possible opportunity. Otherwise, it shall be
deemed waived.
It would be improper to dismiss an action pursuant to forum non conveniens based
merely on a perceived, likely, or hypothetical multiplicity of fora. Thus, a defendant
must also plead and show that a prior suit has, in fact, been brought in another
jurisdiction. The existence of a prior suit makes real the vexation engendered by
duplicitous litigation, the embarrassment of intruding into the affairs of another
sovereign, and the squandering of judicial efforts in resolving a dispute already
lodged and better resolved elsewhere. We deem it more appropriate and in the
greater interest of prudence that a defendant not only allege supposed dangerous
tendencies in litigating in this jurisdiction; the defendant must also show that such
danger is real and present in that litigation or dispute resolution has commenced in
another jurisdiction and that a foreign tribunal has chosen to exercise jurisdiction.
Forum non conveniens is a device akin to the rule against forum shopping. It is
designed to frustrate illicit means for securing advantages and vexing litigants that
would otherwise be possible if the venue of litigation or dispute resolution were left
entirely to the whim of either party. Forum non conveniens, like the rules of forum
shopping, litis pendentia, and res judicata, is a means of addressing the problem of
parallel litigation. While the rules of forum shopping, litis pendentia, and res
judicata are designed to address the problem of parallel litigation within a single
jurisdiction, forum non conveniens is a means devised to address parallel litigation
arising in multiple jurisdictions.
Forum non conveniens literally translates to "the forum is inconvenient." It is a
concept in private international law and was devised to combat the "less than
honorable" reasons and excuses that litigants use to secure procedural advantages,
annoy and harass defendants, avoid overcrowded dockets, and select a "friendlier"
venue. Thus, the doctrine of forum non conveniens addresses the same rationale
that the rule against forum shopping does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata, is a concept originating in common
law. However, unlike the rule on res judicata, as well as those on litis pendentia and
forum shopping, forum non conveniens finds no textual anchor, whether in statute
or in procedural rules, in our civil law system. Nevertheless, jurisprudence has
applied forum non conveniens as basis for a court to decline its exercise of
jurisdiction.
Forum non conveniens is soundly applied not only to address parallel litigation and
undermine a litigant's capacity to vex and secure undue advantages by engaging in
forum shopping on an international scale. It is also grounded on principles of comity
and judicial efficiency. Consistent with the principle of comity, a tribunal's desistance
in exercising jurisdiction on account of forum non conveniens is a deferential gesture
to the tribunals of another sovereign. It is a measure that prevents the former's
having to interfere in affairs which are better and more competently addressed by
the latter. Further, forum non conveniens entails a recognition not only that tribunals
elsewhere are better suited to rule on and resolve a controversy, but also, that these
tribunals are better positioned to enforce judgments and, ultimately, to dispense
justice. Forum non conveniens prevents the embarrassment of an awkward situation
where a tribunal is rendered incompetent in the face of the greater capability — both
analytical and practical — of a tribunal in another jurisdiction. The wisdom of
avoiding conflicting and unenforceable judgments is as much a matter of efficiency
and economy as it is a matter of international courtesy. A court would effectively be
neutering itself if it insists on adjudicating a controversy when it knows full well that
it is in no position to enforce its judgment. Doing so is not only an exercise in futility;
it is an act of frivolity. It clogs the dockets of a tribunal and leaves it to waste its efforts
on affairs, which, given transnational exigencies, will be reduced to mere academic,
if not trivial, exercises.
A Philippine court may properly assume jurisdiction over a case if it chooses to do so
to the extent: "(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.” The use of the word "may" in the
decisions shows that the matter of jurisdiction rests on the sound discretion of a
court. Neither the mere invocation of forum non conveniens nor the averment of
foreign elements operates to automatically divest a court of jurisdiction. Rather, a
court should renounce jurisdiction only "after 'vital facts are established, to
determine whether special circumstances' require the court's desistance." As the
propriety of applying forum non conveniens is contingent on a factual determination,
it is, therefore, a matter of defense.
The forum non conveniens is not a ground for dismissal under Rule 9, Section 1 of the
1997 Rules of Civil Procedure as it is exclusive in its recital of the grounds for dismissal
that are exempt from the omnibus motion rule.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V. ASIAVEST
MERCHANT BANKERS
Facts:
PNCC and Asiavest Holdings caused the incorporation of an associate company
known as Asiavest-CDCP Sdn. Bhd. (Asiavest-CDCP), through which they entered into
contracts to construct rural roads and bridges for the State of Pahang, Malaysia.
In connection with this construction contract, PNCC obtained various guarantees and
bonds from Asiavest Merchant Bankers to guarantee the due performance of its
obligations. The four contracts of guaranty stipulate that Asiavest Merchant Bankers
shall guarantee to the State of Pahang "the due performance by PNCC of its
construction contracts . . . and the repayment of the temporary advances given to
PNCC.” These contracts were understood to be governed by the laws of Malaysia.
There was failure to perform the obligations under the construction contract,
prompting the State of Pahang to demand payment against Asiavest Merchant
Bankers’ performance bonds. Consequently, the corporation demanded indemnity
from PNCC by demanding the amount it paid to the State of Pahang.
Asiavest Merchant Bankers filed a Complaint for recovery of sum of money against
PNCC before the Regional Trial Court of Pasig. It based its action on Malaysian laws.
The trial court declared PNCC in default for failure to file any responsive pleading,
and allowed Asiavest Merchant Bankers to present its evidence ex parte. The
Regional Trial Court rendered judgment in favor of Asiavest Merchant Bankers and
ordered PNCC to reimburse it the sum of Malaysian Ringgit 3,915,053.54 or its
equivalent in Philippine peso.
The trial court found that Asiavest Merchant Bankers complied with the requisites
for proof of written foreign laws. The Malaysian laws invoked were found to be
similar with Articles 2066 and 2067 of the Civil Code. The trial court denied PNCC's
Motion to Lift Order of Default and it also denied PNCC's Motion for
Reconsideration Ad Cautelam. PNCC brought its case before the Court of Appeals
which dismissed PNCC's appeal for raising pure questions of law exclusively
cognizable by this court. It likewise denied reconsideration. Hence, PNCC filed this
Petition.
PNCC prays that this court reverse and set aside the Court of Appeals Decision and
Resolution, as well as the trial court's Decision declaring it in default. It prays the trial
court's order of default be reversed and it be allowed to file its Answer, or, the cause
of action having already prescribed under Malaysian laws, the case be dismissed
outright. PNCC submits that the trial court could have invoked the principle of forum
non conveniens and refused to take cognizance of the case considering the difficulty
in acquiring jurisdiction over the two Malaysian corporations and in determining
PNCC's exact liability.
Issue:
Whether or not the trial court erred in assuming jurisdiction on the ground of forum
non conveniens
Held:
NO. The trial court correctly assumed jurisdiction over the Complaint. It explained in
its order that "on the contrary, to try the case in the Philippines, it is believed, would
be more convenient to defendant-corporation as its principal office is located in the
Philippines, its records will be more accessible, witnesses would be readily available
and entail less expenses in terms of legal services." We agree. Petitioner is a domestic
corporation with its main office in the Philippines. It is safe to assume that all of its
pertinent documents in relation to its business would be available in its main office.
Most of petitioner's officers and employees who were involved in the construction
contract in Malaysia could most likely also be found in the Philippines. Thus, it is
unexpected that a Philippine corporation would rather engage this civil suit before
Malaysian courts. Our courts would be "better positioned to enforce the judgment
and, ultimately, to dispense" in this case against petitioner. Also, petitioner failed to
plead and show real and present danger that another jurisdiction commenced
litigation and the foreign tribunal chose to exercise jurisdiction.
"Forum non conveniens literally translates to 'the forum is inconvenient.'" This
doctrine applies in conflicts of law cases. It gives courts the choice of not assuming
jurisdiction when it appears that it is not the most convenient forum and the parties
may seek redress in another one. It is a device "designed to frustrate illicit means for
securing advantages and vexing litigants that would otherwise be possible if the
venue of litigation (or dispute resolution) were left entirely to the whim of either
party."
The determination of whether to entertain a case is addressed to the sound
discretion of the court, which must carefully consider the facts of the particular
case. A mere invocation of the doctrine of forum non conveniens or an easy
averment that foreign elements exist cannot operate to automatically divest a court
of its jurisdiction. It is crucial for courts to determine first if facts were established
such that special circumstances exist to warrant its desistance from assuming
jurisdiction.
Consistent with the principle of comity, a tribunal's desistance in exercising
jurisdiction on account of forum non conveniens is a deferential gesture to the
tribunals of another sovereign. It is a measure that prevents the former's having to
interfere in affairs which are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that tribunals
elsewhere are better suited to rule on and resolve a controversy, but also, that these
tribunals are better positioned to enforce judgments and, ultimately, to dispense
justice. Forum non conveniensprevents the embarrassment of an awkward situation
where a tribunal is rendered incompetent in the face of the greater capability — both
analytical and practical — of a tribunal in another jurisdiction.
Saudi Arabian Airlines also discussed the need to raise forum non conveniens at the
earliest possible time, and to show that a prior suit has been brought in another
jurisdiction.
We deem it more appropriate and in the greater interest of prudence that a
defendant not only allege supposed dangerous tendencies in litigating in this
jurisdiction; the defendant must also show that such danger is real and present in
that litigation or dispute resolution has commenced in another jurisdiction and that
a foreign tribunal has chosen to exercise jurisdiction.
Note:
No denial of petitioner's right to due process by the lower court. This court has
consistently held that the essence of due process is the opportunity to be heard. In
other words, there is no denial of the right to due process if there was an opportunity
for the parties to defend their interests in due course.
Petitioner invokes Malaysian laws on prescription, but it was not able to prove these
foreign law provisions. Our courts follow the doctrine of processual presumption. In
international law, the party who wants to have a foreign law applied to a dispute or
case has the burden of proving the foreign law. The foreign law is treated as a
question of fact to be properly pleaded and proved as the judge or labor arbiter
cannot take judicial notice of a foreign law. He is presumed to know only domestic or
forum law. Unfortunately for petitioner, it did not prove the pertinent Saudi laws on
the matter; thus, the International Law doctrine of presumed-identity
approachor processual presumption comes into play. Where a foreign law is not
pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the
same as ours. Thus, we apply Philippine labor laws.
In any event, respondent is a Malaysian corporation. Petitioner has not proven the
relevant foreign law provisions to support its allegations that respondent has ceased
to exist and that all its claims are consequently extinguished.