G.R. No.

149177               November 23, 2007

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD., Petitioners,

vs.
MINORU KITAMURA, Respondent.

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and
the July 25, 2001 Resolution2 denying the motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese
consultancy firm providing technical and management support in the infrastructure projects of
foreign governments,3 entered into an Independent Contractor Agreement (ICA) with
respondent Minoru Kitamura, a Japanese national permanently residing in the Philippines.4 The
agreement provides that respondent was to extend professional services to Nippon for a year
starting on April 1, 1999.5 Nippon then assigned respondent to work as the project manager of
the Southern Tagalog Access Road (STAR) Project in the Philippines, following the company's
consultancy contract with the Philippine Government.6

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

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's expiry.9

Threatened with impending unemployment, respondent, through his lawyer, requested a

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

As he was not able to generate a positive response from the petitioners, respondent
consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and
damages with the Regional Trial Court of Lipa City.11

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 grounds—for 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 correct in applying instead
the principle of lex loci solutionis.23

Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July
25, 2001 Resolution.24

Remaining steadfast in their stance despite the series of denials, petitioners instituted the
instant Petition for Review on Certiorari25 imputing the following errors to the appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL
COURT VALIDLY EXERCISED JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE
THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE PROCEEDINGS A QUO WAS
ENTERED INTO BY AND BETWEEN TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN
THE JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE NEED

TO REVIEW OUR ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT
OF RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.26

The pivotal question that this Court is called upon to resolve is whether the subject matter
jurisdiction of Philippine courts in civil cases for specific performance and damages involving
contracts executed outside the country by foreign nationals may be assailed on the principles
of lex loci celebrationis, lex contractus, the "state of the most significant relationship rule,"
or forum non conveniens.

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

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

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's
defective certification of non-forum shopping, it was a dismissal without prejudice.27 The same
holds true in the CA's dismissal of the said case due to defects in the formal requirement of
verification28 and in the other requirement in Rule 46 of the Rules of Court on the statement of
the material dates.29 The dismissal being without prejudice, petitioners can re-file the petition,
or file a second petition attaching thereto the appropriate verification and certification—as they,
in fact did—and stating therein the material dates, within the prescribed period30 in Section 4,
Rule 65 of the said Rules.31
The dismissal of a case without prejudice signifies the absence of a decision on the merits and
leaves the parties free to litigate the matter in a subsequent action as though the dismissed
action had not been commenced. In other words, the termination of a case not on the merits
does not bar another action involving the same parties, on the same subject matter and
theory.32

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 scope—its 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 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.

Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction
to hear and resolve the civil case for specific performance and damages filed by the respondent.
The ICA subject of the litigation was entered into and perfected in Tokyo, Japan, by Japanese
nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts
have no substantial relationship to the parties46 following the [state of the] most significant
relationship rule in Private International Law.47

The Court notes that petitioners adopted an additional but different theory when they elevated
the case to the appellate court. In the Motion to 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 following questions: (1) Where can or should litigation be
initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment be
enforced?53

Analytically, jurisdiction and choice of law are two distinct concepts.54 Jurisdiction considers
whether it is fair to cause a defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will determine the merits of the
case is fair to both parties. The power to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori  will
often coincide, the "minimum contacts" for one do not always provide the necessary "significant
contacts" for the other.55 The question of whether the law of a state can be applied to a
transaction is different from the question of whether the courts of that state have jurisdiction to
enter a judgment.56

In this case, only the first phase is at issue—jurisdiction.1âwphi1 Jurisdiction, however, has

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

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

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.

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 court’s 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.

G.R. No. 162894             February 26, 2008

RAYTHEON INTERNATIONAL, INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.

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 respondent’s money claims.5 Upon appeal by BMSI,
the NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s 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 BMSI.
The complaint also averred that BMSI and RUST as well as petitioner itself had combined and
functioned as one company.

In its Answer,8 petitioner alleged that contrary to respondent’s claim, it was a foreign

corporation duly licensed to do business in the Philippines and denied entering into any
arrangement with respondent or paying the latter any sum of money. Petitioner also denied
combining with BMSI and RUST for the purpose of assuming the alleged obligation of the said
companies.9 Petitioner also referred to the NLRC decision which disclosed that per the written
agreement between respondent and BMSI and RUST, denominated as "Special Sales
Representative Agreement," the rights and obligations of the parties shall be governed by the
laws of the State of Connecticut.10 Petitioner sought the dismissal of the complaint on grounds
of failure to state a cause of action and forum non conveniens and prayed for damages by way of
compulsory counterclaim.11

On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on
Affirmative Defenses and for Summary Judgment12 seeking the dismissal of the complaint on
grounds of forum non conveniens and failure to state a cause of action. Respondent opposed the
same. Pending the resolution of the omnibus motion, the deposition of Walter Browning was
taken before the Philippine Consulate General in Chicago.13

In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The trial
court held that the factual allegations in the complaint, assuming the same to be admitted, were
sufficient for the trial court to render a valid judgment thereon. It also ruled that the principle
of forum non conveniens was inapplicable because the trial court could enforce judgment on
petitioner, it being a foreign corporation licensed to do business in the Philippines.15

Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s motion. Thus,
it filed a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of
certiorari and a writ of injunction to set aside the twin orders of the trial court dated 13
September 2000 and 31 July 2001 and to enjoin the trial court from conducting further
proceedings.20

On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the petition
for certiorari for lack of merit. It also denied petitioner’s motion for reconsideration in the
assailed Resolution issued on 10 March 2004.22

The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in resolving
petitioner’s omnibus motion, it 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.
1192-BG 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 Petitioner’s 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 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 court’s desistance.35

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.

SO ORDERED.