G.R. No.

149177               November 23, 2007 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
KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD.,
Petitioners, On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank 14 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'
vs.
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
MINORU KITAMURA, Respondent. 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,
DECISION 2000.20

NACHURA, J.: 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
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court the material dates and attaching thereto the proper verification and certification. This second
assailing the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, petition, which substantially raised the same issues as those in the first, was docketed as CA-
and the July 25, 2001 Resolution2 denying the motion for reconsideration thereof. G.R. SP No. 60827.21

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese Ruling on the merits of the second petition, the appellate court rendered the assailed April 18,
consultancy firm providing technical and management support in the infrastructure projects of 2001 Decision22 finding no grave abuse of discretion in the trial court's denial of the motion to
foreign governments,3 entered into an Independent Contractor Agreement (ICA) with respondent dismiss. The CA ruled, among others, that the principle of lex loci celebrationis was not
Minoru Kitamura, a Japanese national permanently residing in the Philippines. 4 The agreement applicable to the case, because nowhere in the pleadings was the validity of the written
provides that respondent was to extend professional services to Nippon for a year starting on agreement put in issue. The CA thus declared that the trial court was correct in applying instead
April 1, 1999.5 Nippon then assigned respondent to work as the project manager of the Southern the principle of lex loci solutionis.23
Tagalog Access Road (STAR) Project in the Philippines, following the company's consultancy
contract with the Philippine Government. 6 Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July
25, 2001 Resolution.24
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 Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant
detailed engineering and construction supervision of the Bongabon-Baler Road Improvement Petition for Review on Certiorari25 imputing the following errors to the appellate court:
(BBRI) Project.7 Respondent was named as the project manager in the contract's Appendix 3.1. 8

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE

Threatened with impending unemployment, respondent, through his lawyer, requested a B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE
negotiation conference and demanded that he be assigned to the BBRI project. Nippon insisted NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN
that respondent’s contract was for a fixed term that had already expired, and refused to THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS. 26
negotiate for the renewal of the ICA.10

The pivotal question that this Court is called upon to resolve is whether the subject matter
As he was not able to generate a positive response from the petitioners, respondent jurisdiction of Philippine courts in civil cases for specific performance and damages involving
consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and contracts executed outside the country by foreign nationals may be assailed on the principles of
damages with the Regional Trial Court of Lipa City.11 lex loci celebrationis, lex contractus, the "state of the most significant relationship rule," or forum
non conveniens.
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 However, before ruling on this issue, we must first dispose of the procedural matters raised by
asserted that the claim for improper pre-termination of respondent's ICA could only be heard and the respondent.
ventilated in the proper courts of Japan following the principles of lex loci celebrationis and lex
contractus.12
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 the trial court's denial of their motion to dismiss. It is a well-established rule that an order denying
review thereof. 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
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's
decision, to elevate the entire case by appeal in due course. 44 While there are recognized
defective certification of non-forum shopping, it was a dismissal without prejudice. 27 The same
exceptions to this rule,45 petitioners' case does not fall among them.
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 This brings us to the discussion of the substantive issue of the case.
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 period 30 in Section 4, Rule
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction
65 of the said Rules.31
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
The dismissal of a case without prejudice signifies the absence of a decision on the merits and nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts
leaves the parties free to litigate the matter in a subsequent action as though the dismissed have no substantial relationship to the parties 46 following the [state of the] most significant
action had not been commenced. In other words, the termination of a case not on the merits relationship rule in Private International Law.47
does not bar another action involving the same parties, on the same subject matter and theory. 32
The Court notes that petitioners adopted an additional but different theory when they elevated
Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and the case to the appellate court. In the Motion to Dismiss 48 filed with the trial court, petitioners
even if petitioners still indicated in the verification and certification of the second certiorari never contended that the RTC is an inconvenient forum. They merely argued that the applicable
petition that the first had already been dismissed on procedural grounds, 33 petitioners are no law which will determine the validity or invalidity of respondent's claim is that of Japan, following
longer required by the Rules to indicate in their certification of non-forum shopping in the instant the principles of lex loci celebrationis and lex contractus.49 While not abandoning this stance in
petition for review of the second certiorari petition, the status of the aforesaid first petition before their petition before the appellate court, petitioners on certiorari significantly invoked the defense
the CA. In any case, an omission in the certificate of non-forum shopping about any event that of forum non conveniens.50 On petition for review before this Court, petitioners dropped their
will not constitute res judicata and litis pendentia, as in the present case, is not a fatal defect. It other arguments, maintained the forum non conveniens defense, and introduced their new
will not warrant the dismissal and nullification of the entire proceedings, considering that the evils argument that the applicable principle is the [state of the] most significant relationship rule. 51
sought to be prevented by the said certificate are no longer present.34
Be that as it may, this Court is not inclined to deny this petition merely on the basis of the
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only change in theory, as explained in Philippine Ports Authority v. City of Iloilo.52 We only pointed out
authorized to verify and certify, on behalf of Nippon, the certiorari petition filed with the CA and petitioners' inconstancy in their arguments to emphasize their incorrect assertion of conflict of
not the instant petition. True, the Authorization35 dated September 4, 2000, which is attached to laws principles.
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
To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are
on behalf of the company only in the petition filed with the appellate court, and that authority
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
cannot extend to the instant petition for review. 36 In a plethora of cases, however, this Court has
Corresponding to these phases are the following questions: (1) Where can or should litigation be
liberally applied the Rules or even suspended its application whenever a satisfactory explanation
initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment be
and a subsequent fulfillment of the requirements have been made. 37 Given that petitioners
enforced?53
herein sufficiently explained their misgivings on this point and appended to their Reply 38 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. 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
However, the Court cannot extend the same liberal treatment to the defect in the verification and
is fair to both parties. The power to exercise jurisdiction does not automatically give a state
certification. As respondent pointed out, and to which we agree, Hasegawa is truly not
constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori will
authorized to act on behalf of Nippon in this case. The aforesaid September 4, 2000
often coincide, the "minimum contacts" for one do not always provide the necessary "significant
Authorization and even the subsequent August 17, 2001 Authorization were issued only by
contacts" for the other. 55 The question of whether the law of a state can be applied to a
Nippon's president and chief executive officer, not by the company's board of directors. In not a
transaction is different from the question of whether the courts of that state have jurisdiction to
few cases, we have ruled that corporate powers are exercised by the board of directors; thus, no
enter a judgment.56
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 In this case, only the first phase is at issue—jurisdiction.1âwphi1 Jurisdiction, however, has
the Ombudsman.41 Substantial compliance will not suffice in a matter that demands strict various aspects. For a court to validly exercise its power to adjudicate a controversy, it must
observance of the Rules.42 While technical rules of procedure are designed not to frustrate the have jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over
ends of justice, nonetheless, they are intended to effect the proper and orderly disposition of the subject matter, over the issues of the case and, in cases involving property, over the res or
cases and effectively prevent the clogging of court dockets.43 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.
Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign entertained or dismissed on the basis of the said doctrine depends largely upon the facts of the
authority which establishes and organizes the court. It is given only by law and in the manner particular case and is addressed to the sound discretion of the trial court. 78 In this case, the RTC
prescribed by law.58 It is further determined by the allegations of the complaint irrespective of decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle
whether the plaintiff is entitled to all or some of the claims asserted therein. 59 To succeed in its requires a factual determination; hence, this conflicts principle is more properly considered a
motion for the dismissal of an action for lack of jurisdiction over the subject matter of the claim, 60 matter of defense.79
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
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
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not inappropriate, the trial and appellate courts correctly denied the petitioners’ motion to dismiss.
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
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
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." SO ORDERED.

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 contract 66 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