Case Digest Nippon

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO.
,
LTD., Petitioners, vs.
MINORU KITAMURA, Respondent.
G.R. No. 149177. November 23, 2007. Nachura, J.

FACTS:
Petitioner Nippon Engineering Consultants (Nippon), a Japanese consultancy firm

providing technical and management support in the infrastructure projects of foreign
governments entered into an Independent Contractor Agreement (ICA) with respondent
Minoru Kitamura, a Japanese national permanently residing in the Philippines. The
agreement provides that Kitamaru was to extend professional services to Nippon for a year
starting on April 1, 1999. Nippon assigned Kitamaru to work as the project manager of the
Southern Tagalog Access Road (STAR) project.
When the STAR project was near completion, DPWH engaged the consultancy services of
Nippon, this time for the detailed engineering & construction supervision of the Bongabon-
Baler Road Improvement (BBRI) Project. Kitamaru was named as the project manager in
the contract.
Hasegawa, Nippon’s general manager for its International Division, informed Kitamaru 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.
Threatened with impending unemployment, Kitamaru demanded that he be assigned to the

BBRI project. Nippon insisted that Kitamaru’s contract was for a fixed term that had
expired, and refused to negotiate for the renewal of the ICA. Consequently, Kitamaru
initiated specific performance & damages with the Regional Trial Court (RTC) of Lipa City.
Nippon moved to dismiss the complaint for lack of jurisdiction contending that the ICA had
been perfected in Japan and executed by & between Japanese nationals. Thus, the claim for
improper pre-termination of Kitamaru’s ICA could only be heard in the proper courts of
Japan following the principles of lex loci celebrationis & lex contractus.
The RTC denied the motion to dismiss. On appeal, the Court of Appeals (CA) ruled 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. CA held that the RTC was
correct in applying the principle of lex loci solutionis.
ISSUE:
Whether or not the subject matter jurisdiction of Philippine courts in civil cases for specific
performance & 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.
RULING:
NO. Jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether
it is fair to cause a defendant to travel to this state, while 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. 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.
In this case, only the jurisdiction is at issue. Jurisdiction has various aspects. For a court to
validly exercise its power to adjudicate a controversy, it must have jurisdiction over the
plaintiff/petitioner, over the defendant/respondent, over the subject matter, over the
issues of the case, and, in cases involving property, over the res or the thing w/c is the
subject of the litigation. In assailing the trial court's jurisdiction herein, Nippon is 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. 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. To succeed in its motion for the dismissal of an action for lack of jurisdiction over
the subject matter of the claim, the movant must show that the court or tribunal cannot act
on the matter submittedto it because no law grants it the power to adjudicate the claims.
In the instant case, petitioner Nippon does not claim that the RTC is not properly vested by
law which jurisdiction to hear the subject controversy for a civil case for specific
performance and damages is one not capable of pecuniary estimation and is properly
cognizable by the RTC of Lipa City. 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.
Since the three (3) principles in conflict of laws make reference to the law applicable to a
dispute, they are rules proper for the choice of law. They determine which state's law is to
be applied in resolving the substantive issues of a conflicts problem. 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, Nippon’s 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, 1st there should exist a conflict of laws situation
requiring the application of the conflict of laws rules. 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.
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 (3) 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. 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.
Neither can the other ground raised, forum non conveniens, be used to deprive the RTC of
its jurisdiction. First, it is not a proper basis for a motion to dismiss because Sec. 1, Rule 16
of the Rules of Court does not include it as a ground. 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 RTC. 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.
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.

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Case Digest Nippon

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KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO.

Petitioner Nippon Engineering Consultants (Nippon), a Japanese consultancy firm

Threatened with impending unemployment, Kitamaru demanded that he be assigned to the

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign

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