538 SCRA 261 Conflict of Laws Private International Law Jurisdiction Lex

Loci Celebrationis Lex Loci Solutionis State of the Most Significant

Relationship Forum Non Conveniens

In March 1999, Nippon Engineering Consultants Co., Ltd, a Japanese firm,

was contracted by the Department of Public Works and Highways (DPWH) to
supervise the construction of the Southern Tagalog Access Road. In April 1999,
Nippon entered into an independent contractor agreement (ICA) with Minoru
Kitamura for the latter to head the said project. The ICA was entered into in
Japan and is effective for a period of 1 year (so until April 2000). In January
2000, DPWH awarded the Bongabon-Baler Road project to Nippon. Nippon
subsequently assigned Kitamura to head the road project. But in February
2000, Kazuhiro Hasegawa, the general manager of Nippon informed Kitamura
that they are pre-terminating his contract. Kitamura sought Nippon to
reconsider but Nippon refused to negotiate. Kitamura then filed a complaint for
specific performance and damages against Nippon in the RTC of Lipa.

Hasegawa filed a motion to dismiss on the ground that the contract was
entered in Japan hence, applying the principle of lex loci celebracionis, cases
arising from the contract should be cognizable only by Japanese courts. The
trial court denied the motion. Eventually, Nippon filed a petition for certiorari
with the Supreme Court.

Hasegawa, on appeal significantly changed its theory, this time invoking forum
non conveniens; that the RTC is an inconvenient forum because the parties are
Japanese nationals who entered into a contract in Japan. Kitamura on the
other hand invokes the trial courts ruling which states that matters connected
with the performance of contracts are regulated by the law prevailing at the
place of performance, so since the obligations in the ICA are executed in the
Philippines, courts here have jurisdiction.

ISSUE: Whether or not the complaint against Nippon should be dismissed.

HELD: No. The trial court did the proper thing in taking cognizance of it.

In the first place, the case filed by Kitamura is a complaint for specific
performance and damages. Such case is incapable of pecuniary estimation;
such cases are within the jurisdiction of the regional trial court.

Hasegawa filed his motion to dismiss on the ground of forum non conveniens.
However, such ground is not one of those provided for by the Rules as a ground
for dismissing a civil case.

The Supreme Court also emphasized that the contention that Japanese laws
should apply is premature. In conflicts cases, there are three phases and each
next phase commences when one is settled, to wit:

1. Jurisdiction Where should litigation be initiated? Court must have

jurisdiction over the subject matter, the parties, the issues, the property,
the res. Also 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.
2. Choice of Law Which law will the court apply? Once a local court takes
cognizance, it does not mean that the local laws must automatically
 apply. The court must determine which substantive law when applied to
the merits will be fair to both parties.

3. Recognition and Enforcement of Judgment Where can the resulting

judgment be enforced?

This case is not yet in the second phase because upon the RTCs taking
cognizance of the case, Hasegawa immediately filed a motion to dismiss, which
was denied. He filed a motion for reconsideration, which was also denied. Then
he bypassed the proper procedure by immediately filing a petition for certiorari.
The question of which law should be applied should have been settled in the
trial court had Hasegawa not improperly appealed the interlocutory order
denying his MFR.