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5/18/2016

G.R.No.162894

TodayisWednesday,May18,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.162894February26,2008
RAYTHEONINTERNATIONAL,INC.,petitioner,
vs.
STOCKTONW.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 CAG.R. SP No. 67001 and the
dismissalofthecivilcasefiledbyrespondentagainstpetitionerwiththetrialcourt.
Asculledfromtherecordsofthecase,thefollowingantecedentsappear:
Sometimein1990,BrandMarineServices,Inc.(BMSI),acorporationdulyorganizedandexistingunderthelawsof
theStateofConnecticut,UnitedStatesofAmerica,andrespondentStocktonW.Rouzie,Jr.,anAmericancitizen,
enteredintoacontractwherebyBMSIhiredrespondentasitsrepresentativetonegotiatethesaleofservicesin
several government projects in the Philippines for an agreed remuneration of 10% of the gross receipts. On 11
March1992,respondentsecuredaservicecontractwiththeRepublicofthePhilippinesonbehalfofBMSIforthe
dredgingofriversaffectedbytheMt.Pinatuboeruptionandmudflows.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,LaborArbiterPabloC.Espiritu,Jr.renderedjudgmentorderingBMSIandRUSTtopayrespondentsmoney
claims.5UponappealbyBMSI,theNLRCreversedthedecisionoftheLaborArbiteranddismissedrespondents
complaintonthegroundoflackofjurisdiction.6RespondentelevatedthecasetothisCourtbutwasdismissedina
Resolutiondated26November1997.TheResolutionbecamefinalandexecutoryon09November1998.
On8January1999,respondent,thenaresidentofLaUnion,institutedanactionfordamagesbeforetheRegional
Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil Case No. 1192BG, named as
defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the two corporations
impleadedintheearlierlaborcase.ThecomplaintessentiallyreiteratedtheallegationsinthelaborcasethatBMSI
verballyemployedrespondenttonegotiatethesaleofservicesingovernmentprojectsandthatrespondentwas
notpaidthecommissionsduehimfromthePinatubodredgingprojectwhichhesecuredonbehalfofBMSI.The
complaint also averred that BMSI and RUST as well as petitioner itself had combined and functioned as one
company.
InitsAnswer,8petitionerallegedthatcontrarytorespondentsclaim,itwasaforeigncorporationdulylicensedto
dobusinessinthePhilippinesanddeniedenteringintoanyarrangementwithrespondentorpayingthelatterany
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,"therightsandobligationsofthepartiesshallbegovernedbythelawsoftheStateofConnecticut.10
Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non
conveniensandprayedfordamagesbywayofcompulsorycounterclaim.11
On18May1999,petitionerfiledanOmnibusMotionforPreliminaryHearingBasedonAffirmativeDefensesand
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forSummaryJudgment12seekingthedismissalofthecomplaintongroundsofforumnonconveniensandfailure
to state a cause of action. Respondent opposed the same. Pending the resolution of the omnibus motion, the
depositionofWalterBrowningwastakenbeforethePhilippineConsulateGeneralinChicago.13
InanOrder14dated13September2000,theRTCdeniedpetitionersomnibusmotion.Thetrialcourtheldthatthe
factualallegationsinthecomplaint,assumingthesametobeadmitted,weresufficientforthetrialcourttorender
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
Orderdated31July2001,18thetrialcourtdeniedpetitionersmotion.Thus,itfiledaRule65Petition19 with the
CourtofAppealsprayingfortheissuanceofawritofcertiorariandawritofinjunctiontosetasidethetwinorders
ofthetrialcourtdated13September2000and31July2001andtoenjointhetrialcourtfromconductingfurther
proceedings.20
On28August2003,theCourtofAppealsrenderedtheassailedDecision21denyingthepetitionforcertiorarifor
lackofmerit.ItalsodeniedpetitionersmotionforreconsiderationintheassailedResolutionissuedon10March
2004.22
The appellate court held that although the trial court should not have confined itself to the allegations in the
complaintandshouldhavealsoconsideredevidencealiundeinresolvingpetitionersomnibusmotion,itfoundthe
evidence presented by petitioner, that is, the deposition of Walter Browning, insufficient for purposes of
determiningwhetherthecomplaintfailedtostateacauseofaction.Theappellatecourtalsostatedthatitcould
notruleonewayortheotherontheissueofwhetherthecorporations,includingpetitioner,namedasdefendants
inthecasehadindeedmergedtogetherbasedsolelyontheevidencepresentedbyrespondent.Thus,itheldthat
theissueshouldbethreshedoutduringtrial.23Moreover,theappellatecourtdeferredtothediscretionofthetrial
court when the latter decided not to desist from assuming jurisdiction on the ground of the inapplicability of the
principleofforumnonconveniens.
Hence,thispetitionraisingthefollowingissues:
WHETHERORNOTTHECOURTOFAPPEALSERREDINREFUSINGTODISMISSTHECOMPLAINTFOR
FAILURETOSTATEACAUSEOFACTIONAGAINSTRAYTHEONINTERNATIONAL,INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT ON
THEGROUNDOFFORUMNONCONVENIENS.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
severedrelationswiththelawfirmevenbeforethefilingoftheinstantpetitionandthatitcouldnolongerfindthe
whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a Resolution25 dated 20 November
2006,theCourtresolvedtodispensewiththefilingofacomment.
Theinstantpetitionlacksmerit.
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
corporationsandcitizensandtheevidencetobepresentedislocatedoutsidethePhilippinesthatrendersour
local courts inconvenient forums. Petitioner theorizes that the foreign elements of the dispute necessitate the
immediateapplicationofthedoctrineofforumnonconveniens.
RecentlyinHasegawav.Kitamura,26theCourtoutlinedthreeconsecutivephasesinvolvedinjudicialresolutionof
conflictsoflaws 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
controversieswithaforeignelement,thefollowingrequisiteshadtobeproved:(1)thatthePhilippineCourtisone
to which the parties may conveniently resort (2) that the Philippine Court is in a position to make an intelligent
decisionastothelawandthefactsand(3)thatthePhilippineCourthasorislikelytohavethepowertoenforce
itsdecision.28
OnthematterofjurisdictionoveraconflictsoflawsproblemwherethecaseisfiledinaPhilippinecourtandwhere
thecourthasjurisdictionoverthesubjectmatter,thepartiesandtheres, it may or can proceed to try the case
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eveniftherulesofconflictoflawsortheconvenienceofthepartiespointtoaforeignforum.Thisisanexerciseof
sovereignprerogativeofthecountrywherethecaseisfiled.29
JurisdictionoverthenatureandsubjectmatterofanactionisconferredbytheConstitutionandthelaw30andby
thematerialallegationsinthecomplaint,irrespectiveofwhetherornottheplaintiffisentitledtorecoverallorsome
oftheclaimsorreliefssoughttherein.31CivilCaseNo.1192BGisanactionfordamagesarisingfromanalleged
breach of contract. Undoubtedly, the nature of the action and the amount of damages prayed are within the
jurisdictionoftheRTC.
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)wasacquiredbyitsvoluntaryappearanceincourt.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,
thatis,afterhearingonthemeritsproceedsbeforethetrialcourt.
Under the doctrine of forum non conveniens, a court, in conflictsoflaws cases, may refuse impositions on its
jurisdictionwhereitisnotthemost"convenient"oravailableforumandthepartiesarenotprecludedfromseeking
remedieselsewhere.34Petitionersavermentsoftheforeignelementsintheinstantcasearenotsufficienttooust
thetrialcourtofitsjurisdictionoverCivilCaseNo.No.1192BGandthepartiesinvolved.
Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a factual
determinationhence,itismoreproperlyconsideredasamatterofdefense.Whileitiswithinthediscretionofthe
trialcourttoabstainfromassumingjurisdictiononthisground,itshoulddosoonlyaftervitalfactsareestablished,
todeterminewhetherspecialcircumstancesrequirethecourtsdesistance.35
Findingnograveabuseofdiscretiononthetrialcourt,theCourtofAppealsrespecteditsconclusionthatitcan
assumejurisdictionoverthedisputenotwithstandingitsforeignelements.Inthesamemanner,theCourtdefersto
thesounddiscretionofthelowercourtsbecausetheirfindingsarebindingonthisCourt.
Petitioner also contends that the complaint in Civil Case No. 1192BG failed to state a cause of action against
petitioner.Failuretostateacauseofactionreferstotheinsufficiencyofallegationinthepleading.36Asageneral
rule,theelementarytestforfailuretostateacauseofactioniswhetherthecomplaintallegesfactswhichiftrue
wouldjustifythereliefdemanded.37
ThecomplaintallegedthatpetitionerhadcombinedwithBMSIandRUSTtofunctionasonecompany.Petitioner
contendsthatthedepositionofWalterBrowningrebuttedthisallegation.Onthisscore,theresolutionoftheCourt
ofAppealsisinstructive,thus:
xxxOurexaminationofthedepositionofMr.WalterBrowningaswellasotherdocumentsproducedinthe
hearingshowsthattheseevidencealiundearenotquitesufficientforustometearulingthatthecomplaint
failstostateacauseofaction.
Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs that Raytheon
EngineersandConstructors,Inc.(REC)assumedthewarrantyobligationsofdefendantRustInternationalin
theMakarPortProjectinGeneralSantosCity,afterRustInternationalceasedtoexistafterbeingabsorbed
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
documentsclearlyspeakotherwise.38
As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST merged
togetherrequiresthepresentationoffurtherevidence,whichonlyafullblowntrialonthemeritscanafford.
WHEREFORE,theinstantpetitionforreviewoncertiorariisDENIED.TheDecisionandResolutionoftheCourtof
AppealsinCAG.R.SPNo.67001areherebyAFFIRMED.Costsagainstpetitioner.
SOORDERED.
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DANTEO.TINGA
AssociateJustice

WECONCUR:
*ANTONIOT.CARPIO

AssociateJustice
ActingChairperson
**ANGELINASANDOVALGUTIERREZ

AssociateJustice

CONCHITACARPIOMORALES
AssociateJustice

PRESBITEROJ.VELASCO,JR.
AssociateJustice

ATTESTATION
IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassigned
tothewriteroftheopinionoftheCourtsDivision.
ANTONIOT.CARPIO
AssociateJustice
ActingChairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.
REYNATOS.PUNO
ChiefJustice

Footnotes
*ActingChairperson.
**AsreplacementofJusticeLeonardoA.QuisumbingwhoinhibitedhimselfperAdministrativeCircularNo.

842007.
1Rollo,pp.4246.Dated28August2003pennedbyAssociateJusticeArsenioJ.Magpaleandconcurred

inbyAssociateJusticesBienvenidoL.Reyes,ActingChairpersonoftheSpecialNinthDivision,and
RebeccaDeGuiaSalvador.
2Id.at47.Dated10March2004.
3Id.at4849.
4Id.at6162.
5Id.at6374.
6Id.at7590.
7Id.at4854.
8Id.at9199.
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9Id.at94.
10Id.at96.
11Id.at9798.
12Id.at100111.
13Records,Vol.I,pp.180238.
14Rollo,pp.127131.
15Id.at130.
16Id.at132149.
17Id.at150151.
18Id.at162.
19Id.at163192.
20Id.at191.
21Supranote1.
22Supranote2.
23Id.at44.
24Id.at18.
25Id.at318.
26G.R.No.149177,23November2007.
27BankofAmericaNT&SAv.CourtofAppeals,448Phil.181(2003)Puyatv.Zabarte,405Phil.413

(2001)PhilsecInvestmentCorporationv.CourtofAppeals,G.R.No.103493,19June1997,274SCRA
102.
28TheManilaHotelCorp.v.NLRC,397Phil.1,1617(2000)CommunicationMaterialsandDesign,Inc.v.

CA,329Phil.487,510511(1996).
29Agpalo,RubenE.CONFLICTOFLAWS(PrivateInternationalLaw),2004Ed.,p.491.
30HeirsofJulianDelaCruzandLeonoraTalarov.HeirsofAlbertoCruz,G.R.No.162890,22November

2005,475SCRA743,756.
31Laresmav.Abellana,G.R.No.140973,11November2004,442SCRA156,168.
32SeeArcelonav.CA,345Phil.250,267(1997).
33Hasegawav.Kitamura,supranote26.
34BankofAmericaNT&SAv.CourtofAppeals,supranote27.
35PhilsecInvestmentCorporationv.CourtofAppeals,supranote27at113.
36BankofAmericaNT&SAv.CourtofAppeals,supranote27at194.
37BancoFilipinoSavingsandMortgageBankv.CourtofAppeals,G.R.No.143896,8July2005,463

SCRA64,73.
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38Rollo,p.44.

TheLawphilProjectArellanoLawFoundation

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