THE$SUPREME$COURT$OF$THE$PHILIPPINES$

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THE$CASE$OF$THE$SELLER$THAT$CHANGED$ITS$MIND.$

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FILIPINO$CORPORATION$

(PLAINTIFF)$

$

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V.$

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MT$FUJI$PROPERTY$CORP.$PHILIPPINES,$ET$AL.$

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(DEFENDANTS)$

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MEMORIAL$FOR$THE$PLAINTIFF$

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TABLE OF CONTENTS I. The Philippine Courts have Jurisdiction over the Person of the Defendants!.......................................!4!

A. The Philippine Courts have Jurisdiction over Domestic Corporations!............................................!4!B. The Philippine Courts have Jurisdiction over Branches and Affiliates of Foreign Corporations in the Philippines!................................................................................................................................!5!C. The Philippine Courts have Jurisdiction over Foreign Corporations Doing Business in the Philippines!...........................................................................................................................................................................!6!

i. Mt. Fuji Philippines is an Alter Ego of Mt. Fuji Japan!.................................................................................!9!ii. Mt. Fuji Japan is Doing Business in the Philippines!.................................................................................!10!

C. The Courts of the Philippines has Jurisdiction over the Officers of Defendant Corporations!...............................................................................................................................................................................................!11!

i. Directors of Corporations are Personally Liable for Acts Done in Bad Faith!...................................!11!ii. The Directors of Mt. Fuji and Dick Bellis Acted in Their Personal Capacity!..................................!12!

D. Philippine Courts may Exercise Jurisdiction over the Res.!.................................................................!12!E. The Philippine Regional Trial Court has Jurisdiction over the Subject Matter!........................!14!

II. The Minimum Contacts Test was Satisfied.!....................................................................................................!15!A. Lack of Minimum Contacts is not a ground for a motion to dismiss!..............................................!16!B. Defendants conduct of business in the Philippines was continuous and systematic!.................!16!C. Defendants purposefully availed of the benefits of the forum and the suit in question is foreseeable in light of the circumstances!............................................................................................................!19!D. The exercise of jurisdictional power is proper pursuant to the doctrine of agency by estoppel!..............................................................................................................................................................................!21!E. Suit was based on a contract with substantial connection with the Philippines!.........................!23!

III. The Courts of the Philippines is the proper forum for Plaintiff to bring the action!...................!25!A. Forum Non Conveniens is not a proper ground in a motion to dismiss!.........................................!25!B. Assuming that it is a proper ground in a motion to dismiss, the Courts of the Philippines is the natural forum to bring the action!..................................................................................................................!26!

i. Real actions shall be commenced and tried in the court that has jurisdiction over the area where the property is situated.!............................................................................................................................................!26!

C. It is proper for the Philippine Courts to assume and exercise jurisdiction!..................................!27!D. The balance of private and public factors is strongly in favor of Plaintiff’s choice of forum.!...............................................................................................................................................................................................!29!

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i. Unless the balance of private and public interest factors is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.!..................................................................................!29!ii. The private interest factors favor Plaintiff’s choice of forum!................................................................!30!ii. The public interest factors favor Plaintiff’s choice of forum!.................................................................!31!iii. The balance of private and public factors reveal that the Philippines is the more appropriate forum!..............................................................................................................................................................................!32!

E. Respondent failed to discharge the burden of proving that another more appropriate forum exists!....................................................................................................................................................................................!33!

IV. Philippine Law should govern the suit!.............................................................................................................!34!A. Since the subject matter relates to real property, the law of the situs of the property should govern, the Philippines!..................................................................................................................................................................!34!

i. Article 16 of the Civil Code of the Philippines!............................................................................................!34!ii. Choice of Law!........................................................................................................................................................!35!

B. Given that the contract was executed in the Philippines, the law of the Philippines should govern with respect to its nature and validity, obligation and interpretation!...................................!37!C. Defendants failed to discharge the burden of proving the existence of applicable foreign law!...............................................................................................................................................................................................!39!

CONCLUSION!AND!PRAYER!FOR!RELIEF!.....................................................................................................................!40!

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I. THE PHILIPPINE COURTS HAVE JURISDICTION OVER THE PERSON OF THE DEFENDANTS

In Hasegawa v. Kitamura,1 the Court held that the local judicial machinery was adequate

to resolve controversies with a foreign element, when the following requisites are 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.

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.

As regards jurisdiction over the parties, the court acquires jurisdiction over the

respondent upon the filing of the complaint. On the other hand, jurisdiction over the person of

petitioner was acquired by its voluntary appearance in court. It is elementary that courts acquire

jurisdiction over the person of the defendant x x x only when the latter voluntarily appeared or

submitted to the court or by coercive process issued by the court to him, x x x.”2

A. THE PHILIPPINE COURTS HAVE JURISDICTION OVER DOMESTIC CORPORATIONS

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!1 Kazuhiro Hasegawa and Nippon Engineering Consultants Co. v. Minoru Kitamura, G.R. No. 149177, 2007. 2 Boston Equity v. CA, G.R. No. 173946, June 19, 2013.

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A domestic corporation is a corporation organized under the laws of the Philippines with

a juridical personality. Courts validly acquire jurisdiction over a domestic corporation through

service of summons on its president, managing partner, general manager, corporate secretary,

treasurer, or in-house counsel.3 Undisputably, Mt. Fuji Philippines is a domestic corporation. It is

organized under the laws of the Philippines.

B. THE PHILIPPINE COURTS HAVE JURISDICTION OVER BRANCHES AND AFFILIATES OF FOREIGN CORPORATIONS IN THE PHILIPPINES

There are five lawful ways or modes of entry of foreign corporations in the Philippines.

The first mode is by establishing a branch or agency in the Philippines. 4 Under Section 125 of

the Corporation Code, a foreign corporation shall have the right to transact business in the

Philippines after it shall have obtained a license to transact business in this country in accordance

with this Code and a certificate of authority from the appropriate government agency. In this

mode no separate corporate entity is created and the foreign corporation actually considered

as the one transacting or doing business in the country.

Dick Bellis an international brokerage corporation with branch and affiliate offices in all

Asian countries. It is a foreign corporation doing business in the Philippines through its

Philippine branch. Thus, the court has jurisdiction over the person of Dick Bellis Japan. Dick

Bellis brokered the sale of the subject property by Mt. Fuji Philippines to Filipino Corp. Here,

Mt. Fuji Philippines act is considered as an act of Mt. Fuji Japan, the former being a branch of

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!3 1997 RULES OF CIVIL PROCEDURE, Rule 14 § 11 (1997). 4 JOVITO R. SALONGA, PRIVATE INTERNATIONAL LAW, p. 448 (1966).

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the latter. The court undeniably has a jurisdiction over both Mt. Fuji Japan and its Philippine

Branch.

C. THE PHILIPPINE COURTS HAVE JURISDICTION OVER FOREIGN CORPORATIONS DOING BUSINESS IN THE PHILIPPINES

In determining the nationality of corporations, the Philippine law follows the

incorporation principle. Thus, a “foreign corporation” is defined under the Corporation Code of

the Philippines as follows:

Sec. 123. For the purposes of this Code, a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines after it shall have obtained a license to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency. (Emphasis supplied)

A foreign corporation can transact or do business in this jurisdiction even without a

license. However, such unlicensed foreign corporation suffers a disability. The law denies it legal

standing to sue and seek for redress.5

Although no foreign corporation transacting business in the Philippines without a license,

or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or

proceeding in Philippine Courts, such corporation may be sued or proceeded against before

Philippine courts or administrative tribunals on any valid cause of action recognized under !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!5 The Corporation Code of the Philippines [CORPORATION CODE], Batas Pambansa Bilang 68, Sec. 133.

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Philippine laws.6 This is an exception to the rule of territorial jurisdiction. Further, Section 129

of the Corporation Code provides that “any foreign corporation lawfully doing business in the

Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations

of the same class xxx”

Doing business in a State amounts to consent to be submit one’s person to the State’s

jurisdiction. As stated in the Second Restatement: “State has power to exercise judicial

jurisdiction over a foreign corporation which has consented to the exercise of such jurisdiction.”

7 In the Philippines, consent is the method on acquiring jurisdiction over foreign corporations.

Consent can also be in the form of application of license to transact business.

Originally it was believed that a corporation, being a creature of law, has no legal status

beyond the bounds of the sovereignty within which it was created.8 Such view can no longer be

followed in modern conditions. Before a corporation can actually transact or do business in a

State, it must be first recognized by that State to exist. Recognition is the affirmation of the

existence of a foreign business associated, created under the law of one State, given or extended

by the authorities of other States.9

The purpose of the law is to provide a basis for the court to acquire jurisdiction over

foreign corporations transacting business in the Philippines and make it amenable to state

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!6 Id. 7 Bank of August vs. Earl, 38 U.S. 13 Pet. 519, 588, 10 L. Ed. 274, 440 (1939). 8 RUBEN E. AGPALO, CONFLICT OF LAWS. PRIVATE INTERNATIONAL LAW, p.475 (Manila. Rex Book Store. 2004). 9 SALONGA, supra note 4, at 456.

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regulation and legal process. If a foreign corporation could do business without being amenable

to process, it would possess an undue advantage over both domestic corporations and

individuals, since both could always be reached by process.10

In the case of McGee v. International,11 the subject contract was delivered in California,

the premiums were mailed from there, and the insured was a resident of that State when he died.

The Court held that “it is sufficient for purposes of due process that the suit was based on a

contract which had substantial connection with that State.” It cannot be denied that California

has a manifest interest in providing effective means of redress for its residents when their

insurers refuse to pay claims. The residents would be at a severe disadvantage if they were

forced to follow the insurance company to a distant State in order to hold it legally accountable.

In the case of International Shoe Co. v. Washington,12 the issue involved a determination

of the level of connection that must exist between a non-resident corporation and a state in order

for that corporation to be sued within that state. In that case, the Court held that the amount and

kind of activities which must be carried on by the foreign corporation in the state of the forum so

as to make it reasonable and just to subject the corporation to the jurisdiction of that state are to

be determined in each case. On the other hand, if the same corporation carries on, in that state,

other continuous and systematic corporate activities as it did here -- consisting of directors'

meetings, business correspondence, banking, stock transfers, payment of salaries, purchasing of

machinery, etc. -- those activities are enough to make it fair and reasonable to subject that

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!10 GEORGE WILFRED STUMBERG, CONFLICT OF LAWS, p. 826, (1951). 11 McGee v. International Life Insurance Co., 355 U.S. 220 (1957). 12 International Shoe Co. v. Washington, 326 U.S. 310 (1945).

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corporation to proceedings in personam in that state, at least insofar as the proceedings in

personam seek to enforce causes of action relating to those very activities or to other activities of

the corporation within the state.”13

In the case of Calder v. Jones,14 the Court held that “knowingly causing harm to a person

in another state is sufficient to establish minimum contacts.” In that case, California is the focal

point both of the story and of the harm suffered. Jurisdiction over petitioners is therefore proper

in California based on the "effects" of their Florida conduct in California.

Lastly, in the case of Compuserve,15 the "purposeful availment" test was used. This

requirement is satisfied when the defendant's contacts with the forum state "proximately result

from actions by the defendant himself that create a `substantial connection' with the forum

State," and when the defendant's conduct and connection with the forum are such that he "should

reasonably anticipate being haled into court there.

i. Mt. Fuji Philippines is an Alter Ego of Mt. Fuji Japan

Mt. Fuji Japan and Mt. Fuji Philippines should not be considered as separate juridical

entities. The latter is merely an alter ego of the other. Where a corporation is merely a farce since

it is a mere alter ego or business conduit of a person, or where the corporation is so organized

and controlled and its affairs are so conducted as to make it merely an instrumentality, agency,

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!13 International Shoe Co. v. Washington, supra note 12. 14 Calder v. Jones, 465 U.S. 783 (1984). 15 CompuServe, Inc. v. Patterson 89 F.3d 1257 (1996).

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conduit or adjacent of another corporation, piercing the corporate veil is proper.16

Mt. Fuji Japan owns forty percent (40%) of the stocks of Mt. Fuji Philippines. The

remaining sixty percent (60%) is owned by the trustees of its pension plan. These peculiar

circumstances show that Mt. Fuji Japan has control over Mt. Fuji Philippines. This is bolstered

by the fact that the CEO of Filipino Corp has to be sent to Tokyo to meet the CEOs of Mt. Fuji

when they can actually meet in the Philippines where Mt. Fuji Philippines is registered.

In recent cases, unless there was a showing that awrong or inequity committed by the

merging of resources and interests, then the piercing doctrine was refused application, especially

when there is a plausible business purpose for the existence of corporate fiction. See Padilla v.

CA, 370 SCRA 208 (2001);

ii. Mt. Fuji Japan is Doing Business in the Philippines

A cursory look at Section 123 of the Corporation Code reveals that the right given to a

foreign corporation is the “right to transact business in the Philippines.” The Supreme Court has occasion to note that “there is no exact rule or governing principle as to what constitutes "doing" or "engaging" or "transacting" business.”17 Consequently, “each case must be judged in the light of its peculiar environmental circumstances.”18

Further, even an isolated transaction may constitute doing business in the Philippines.

“An isolated transaction carried out by a corporation does not equate to doing business. Where a single act or transaction, however, is not merely incidental or casual but indicates the foreign corporation's intention to do other business in the Philippines, said single act or transaction

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!16 Pantranco Employees v. NLRC, 581 SCRA 598 (2009); General Credit Corp. v. Alsons Dev. Investment Corp., 513 SCRA 225 (2007); Sarona v. NLRC, 663 SCRA 39 (2012). 17 Communication Materials and Design, Inc. vs. Court of Appeals, 260 SCRA 673 (1996). 18 Mentholatum Co., Inc. et al. vs. Mangaliman et. al., G.R. No. 47701 (1941).

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constitutes doing business. “19 Thus, Mt. Fuji Philippines’s act of buying shares of the Mt. Fuji Japan, although an isolated transaction, is indicative of its intention to do other business in the Philippines.

C. THE COURTS OF THE PHILIPPINES HAS JURISDICTION OVER THE OFFICERS OF DEFENDANT CORPORATIONS

i. Directors of Corporations are Personally Liable for Acts Done in Bad Faith

The general rule is that if an officer acts within his authority, he wouldn't be held

personally liable. However, if the act was not authorized or otherwise, the tortuous act was

authorized by the corporation, then the officer may be held personally liable.20 The Corporation

Code provides for the personal liability of directors, trustees or officers:

Section 31. Liability of directors, trustees or officers. - Directors or trustees who wilfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. (Emphasis supplied)

In the case of Aratea v. Suico, the Court held that petitioners may be held personally

liable even though the corporation has a separate and distinct personality from them. In that case,

the officers were held liable personally for the loans and advances made by Suico to the

corporation which they represent on account of their bad faith in carrying out the business of the

corporation. There was bad faith when they prevented Suico from selling the coal they extracted,

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!19 Far East International vs. Nankai Kogyo, 6 SCRA 725 (1962). 20 Vasquez vs. Borja, 74 PHIL 560 (1944).

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which was in violation of their agreement.”21

ii. The Directors of Mt. Fuji and Dick Bellis Acted in Their Personal Capacity

Applying the Corporate Code and the Aratea case, the act of the directors of Mt. Fuji in

refusing to sign the Deed of Sale, even after receipt of downpayment, was done in their personal

capacity. Likewise, the act of the directors of Dick Bellis in brokering the sale of the subject

property between Filipino Corp. and Mt. Fuji, despite knowledge of the existence of previous

unrecorded agreement for Power Grabber’s right of first refusal, was also done in their personal

capacity. Acts tainted with bad faith are done in one’s personal capacity. It cannot be attributed

to the corporation because such acts are not within the duties and responsibilities of corporate

directors. Therefore, the officers or directors in this case are subject to the jurisidiction of the

court.

D. PHILIPPINE COURTS MAY EXERCISE JURISDICTION OVER THE RES.

Jurisdiction over the res is “the power or authority of courts over the thing or property

under litigation.” 22 Such is obtained by actual or constructive seizure or placing the property or

res under the orders of the Court.23 When an action is in rem, it means that the action is against

the thing itself instead of against the person24. Actions in personam and actions in rem are

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!21 Aratea v. Suico 538 SCRA 501 (2007). 22 Severiano S. Tabios, Jurisdiction Over A Non-Resident Corporation, 225 SCRA 748(1993). (citing Perkins vs. Dion, 69 Phil. 186). 23 Id. (citing Zamora, et. al. vs. Court of Appeals, 183 SCRA 279, 284; Banco Español-Filipino vs. Palanca, 37 Phil. 921). 24 Jorge R. Coquia, Judicial Jurisdiction Over Non-Resident Persons or Entities, 333 SCRA 561(2000). (citing Hernandez v. Rural Bank of Lucena, Inc., 81 SCRA 75 (1978))

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different in that the former are directed against specific persons and seek personal judgments,

whereas the latter are directed as against the thing or property or status of a person and seek

judgments with respect thereto as against the whole world.25 “The remedy against a non-resident

defendant who cannot be served with summons in the Philippines is to locate real or personal

property and attach the property. The action becomes in rem or quasi in rem in which case

service by publication is permissible.”26

Under Section 15, Rule 14 of the 1997 Rules of Court, a Philippine court may acquire

jurisdiction over non-residents or persons through other extraterritorial service of summons, thus:

Sec. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. 27

Hence, a defendant who does not reside or is not found in the Philippines may be sued

when the relief sought by the Plaintiff relates to or the subject of which is real or personal

property in the Philippines or in which the defendant has a claim, lien or interest, actual or

contingent. 28

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!25 Id. ( citing Ching v. Court of Appeals, 181 SCRA 9 [1990]) JORGE R. COQUIA, JUDICIAL JURISDICTION OVER NON-RESIDENT PERSONS OR ENTITIES, 333 SCRA 561(2000). 26 Id. (citing Magdalena Estate, Inc. v. Nieto, 125 SCRA 758 [1983]) JORGE R. COQUIA, JUDICIAL JURISDICTION OVER NON-RESIDENT PERSONS OR ENTITIES, 333 SCRA 561(2000). 27 1997 RULES OF CIVIL PROCEDURE, Rule 14 § 15 (1997). 28 Id.

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In the present case, the property in question is located in Batangas, Philippines. Thus,

assuming without conceding that the persons of the Defendants cannot be subject to Philippine

jurisdiction, the Philippine courts may nevertheless exercise jurisdiction over the res, which is

the real property in Batangas, pursuant to Section 15, Rule 14 of the 1997 Rules of Court.

E. THE PHILIPPINE REGIONAL TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER

Jurisdiction over the subject matter is the power to hear and determine cases of the

general class to which the proceedings in question belong. 29 This power is conferred by law.

Because subject matter jurisdiction is a matter of law, parties cannot choose, consent to, or agree

as to what court or tribunal should decide their disputes.” 30 In other words, it must exist as a

matter of law and “cannot be fixed by agreement of the parties, acquired through, or waived,

enlarged or diminished by, any act or omission and neither can it be conferred by acquiescence

of the tribunal.”31 The material allegations of the complaint and the character of the relief sought

are examined in order to determine whether a court has subject matter jurisdiction, irrespective

of whether the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.32

Plaintiff submits that the present controversy properly falls under the jurisdiction of the

Regional Trial Courts. Section 19 of Batas Pambansa 129 provides the jurisdiction of Regional

Trial Courts, thus:

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!29 Villagracia vs. Fifth (5th) Shari'a District Court, 723 SCRA 550(2014). 30 Id. 31 (Chung Ka Bio, et. al. vs. SEC. L-71837, July 26, 1988). Severiano S. Tabios, Jurisdiction Over A Non-Resident Corporation, 225 SCRA 748(1993). 32 Villagracia, supra note 29.

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Section 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where such the value exceeds Fifty thousand pesos (50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (100,000.00) or, in such other abovementioned items exceeds Two hundred thousand pesos (200,000.00).33

Plaintiff may appropriately file a complaint alleging a cause of action involving the title

to, or possession of, the Batangas property in dispute, or any interest therein. Plaintiff may also

claim damages, attorney's fees, litigation expenses, and costs. Such allegations establishing

Plaintiff’s entitlement to the claims or reliefs sought bestow the proper Regional Trial Court with

jurisdiction over the subject matter of the action pursuant to the above-quoted Batas Pambansa

129. Therefore, it is clear that the courts of the Philippines has jurisdiction over the subject

matter.

II. THE MINIMUM CONTACTS TEST WAS SATISFIED.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!33An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and for other purposes [THE JUDICIARY REORGANIZATION ACT OF 1980], Batas Pambansa Blg.129, § 19 (1980).

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The minimum contracts doctrine is a test used by a court in determining whether it should

exercise personal jurisdiction over a nonresident party before it.34 It ascertains whether a

defendant has minimum contacts or a degree of association in the jurisdiction of the court where

the action is put forth.35 By having connection within the state where of the chosen court

exercises jurisdiction, the defendant is protected by the laws of such state, among other benefits,

which is the reason why it makes it equitable to subject him to the court’s jurisdiction.36 The

minimum contacts test therefore protects litigants from costly, inconvenient litigation in remote

states.37

A. LACK OF MINIMUM CONTACTS IS NOT A GROUND FOR A MOTION TO DISMISS

Rule 16 of the 1997 Rules of Civil Procedure enumerates the grounds for a motion to

dismiss. Nowhere is it found in such rule that the lack of minimum contacts from the forum state

is a ground for a motion to dismiss. It is submitted by plaintiff that the assertion of lack of

minimum contacts in a motion to dismiss by respondent does not warrant the dismissal of the

case, because the ground asserted is not one of those enumerated by the Rules. Thus, the

defendants’ motion should be denied outright on this technicality alone.

B. DEFENDANTS CONDUCT OF BUSINESS IN THE PHILIPPINES WAS CONTINUOUS AND SYSTEMATIC

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!34 International Shoe Co. v. Washington, supra note 12. 35 Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102 (1987). 36 International Shoe Co. v. Washington, supra note 12. 37 Asahi Metal v. Superior Court of California, supra note 36.

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Assuming without conceding that the lack of minimum contacts can be considered as a

ground for a motion to dismiss, plaintiff maintains that the defendants collectively established

sufficient contacts within the Philippines that justifies the Philippine courts to properly exercise

jurisdiction over the defendants.

Defendants, Mt. Fuji Property Corp. and Dick Bellis, moved to dismiss the complaint in

the Philippine court on the ground of lack of minimum contacts with the forum state. At the

outset, it must be noted that Mt. Fuji Philippines is a domestic corporation which owns the

property supposedly sold to plaintiff Filipinas Corp. Also, Dick Bellis, who brokered the

transaction is an international brokerage corporation with branches in all Asian Countries,

including the Philippines. Defendants argue that their contacts in the Philippines are not

sufficient to enable the Philippine courts to entertain the suit filed by plaintiffs. Plaintiff

respectfully maintains that the minimum contacts test is satisfied and as such, the motion to

dismiss filed by defendants must be denied.

The defendant Mt. Fuji Philippines’ argument that it cannot be subjected to the

jurisdiction of Philippine courts is untenable because it is a domestic corporation. Regarding

defendant Dick Bellis, a foreign corporation, it must be established that it has sufficient

minimum contacts in the Philippines so that the action can be properly litigated in Philippine

courts. The case of International Shoe Co. vs. Washington38 is illustrative, it says that “due

process requires only that, in order to subject a defendant to a judgment in personam, if he be not

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!38 International Shoe Co. v. Washington, supra note 12.

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present within the territory of the forum, he have certain minimum contacts with it such that the

maintenance of the suit does not offend "traditional notions of fair play and substantial justice."39

Further, it has been held that “since the corporate personality is a fiction, it is clear that, unlike an

individual, its presence without, as well as within, the state of its origin can be manifested only

by activities carried on in its behalf by those who are authorized to act for it.”40 The activities

that such corporation undertakes should be “systematic and continuous”41 so that it satisfies the

test of minimum contacts provided for in International Shoe Co., to wit:

“Although the commission of some single or occasional acts of the corporate agent in a state sufficient to impose an obligation or liability on the corporation has not been thought to confer upon the state authority to enforce it, other such acts, because of their nature and quality and the circumstances of their commission, may be deemed sufficient to render the corporation liable to suit. But, to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.”42

It is submitted that defendant Dick Bellis Japan, conducted methodical and continuous

operations which derived substantial commerce or in the wording of International Shoe Co.

“resulted in a large volume of interstate business, in the course of which [defendant] received the

benefits and protection of the laws of the state, including the right to resort to the courts for the

enforcement of its rights.”43 Such business activites can be seen in paragraph five of the

compromis where Dick Bellis brokered a deal between two Philippine corporations, namely !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!39 Id. 40 Id. 41 Id. 42 Id. 43 Id.

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Power Grabber and Haya Corporation. Further, it has been held that “[g]eneral jurisdiction

exists when the nonresident defendant's affiliations with the forum state are so continuous and

systematic as to render the defendant essentially at home in the forum state.”44 Thus, it is

maintained that the defendants have conducted business of a systematic and continuous manner

such that these corporate entities are essentially within the jurisdiction of the forum state.

Meanwhile, Dick Bellis Philippines is a going concern operating under Philippine law,

and therefore in cannot be desputed that it falls under the jursisidction of Philippine courts.

C. DEFENDANTS PURPOSEFULLY AVAILED OF THE BENEFITS OF THE FORUM AND THE SUIT IN QUESTION IS FORESEEABLE IN LIGHT OF THE CIRCUMSTANCES

The minimum contacts test also provides that foreseeability45 is essential in due process

analysis.46 The case of Burger King Corp vs. Rudzewicz47 states that “defendant's conduct and

connection with the forum State are such that he should reasonably anticipate being haled into

court there."48 Thus, it is necessary in minimum contacts analysis to satisfy the “purposeful

availment” requirement which ensures that “a defendant will not be haled into a jurisdiction

solely as a result of random, fortuitous, attenuated contacts.”49 Jurisdiction over the foreign or

non-resident defendant is proper where the contacts established by the defendant proximately

results from actions of the defendant himself that create a “substantial connection” with the

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!44 Robinson v. Harley-Davidson Motor Co, 354 Or. 571, 316 P. 3d 287 (2013). 45 The test of forseeability is related to the test of purposeful availment; if a non-resident defendant purposefully avails of the benefits of the forum, or its actions are purposefully directed towards the residents of the forum state, then such non-resident defendant should not be surprised by a suit in such a forum state, and the suit is considered as one that is forseeable and the due process requirements are met. 46 Burger King Corp vs. Rudzewicz, 471, U.S. 462 (1985). 47 Id. 48 Id. 49 Id.

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forum state50 and not the unilateral acts of the plaintiff.51 As long as the defendant’s efforts are

“purposefully directed” toward residents of another State, the courts have consistently rejected

the notion that an absence of physical contacts can defeat personal jurisdiction52 as the cause of

the contact with the forum state focuses on the defendants’ purposeful conduct and not the

unilateral acts of the plaintiff. Stated simply, it must be the defendants’ actions that caused the

contact. This requisite is satisfied since it was the conduct of the defendant Mt. Fuji Philippines--

which is substantially owned by Mt. Fuji Japan--and its broker in offering to sell a property

located inside the forum state that created the contact between the parties-in-litigation. Further, it

was defendant Dick Bellis Japan who invited plaintiff to its office in Japan to discuss the details

with regards to their contract. As such, it was the very conduct of the defendants that created the

relationship between the “parties, the litigation, and the forum.”53

It is essential to note that purposeful availment alone is not enough to subject a non-

resident defendant to the jurisdiction of the forum state.54 It must be shown that the cause of

action arises from or is related to an activity conducted within the forum.55 It is maintained that

this requisite is satisfied because the cause of action of the plaintiff arose because of the

wrongful conduct of the defendants in reneging on the already partially executed contract. Thus,

not only was there purposeful availment on the part of the defendants, also the cause of action

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!50 Id. 51 U.S.C.A. Const. Amend 14. Touradji v. Beach Capital Partnership, L.P., 316 S.W.3d 15 (Tex. App. Houston 1st Dist. 2010). 52 Id. 53 International Shoe Co. v. Washington, supra note 12. 54 V.T.C.A., Civil Practice & Remedies Code § 17.042; U.S.C.A. Const. Amend. 14; Touradji v. Beach Capital Partnership, L.P., 316 S.W.3d 15 (Tex. App. Houston 1st Dist. 2010). 55 Id.

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between the parties refers to activities which were conducted within the forum state—namely the

Philippines.

Plaintiff respectfully maintains that defendant Dick Bellis Japan purposely availed of the

benefits of the Philippines by having branches located within its territorial jurisdiction. The

subject property of the litigation is located in the Philippines and the cause of action of the

plaintiff is the result of the conduct of defendants in not respecting the terms of their contractual

agreement. From the foregoing factors, it was foreseeable for the defendants to expect a suit

regarding their alleged conduct in the Philippines.

D. THE EXERCISE OF JURISDICTIONAL POWER IS PROPER PURSUANT TO THE DOCTRINE OF AGENCY BY ESTOPPEL

The prevalent theory courts use to determine the proper exercise of jurisdictional power

is agency by estoppel.56 Parenthetically, this equitable theory is used by the courts to impose

liability on the principal for the negligent acts of the agent. In the jurisdictional context, the

doctrine was used in Creech v. Roberts57 to properly exercise jurisdiction over an out-of-state

beneficiary of solicitation being done by another person in the forum state.58 In this case,

although Oral Roberts was instrumental in the beneficiary corporation’s establishment, the

corporation considered itself as an independent corporate entity and denied the allegation that

Oral Roberts served as its agent in the solicitations. The court held that by using the agency by

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!56 RICHARD S. GELLER, CIVIL PROCEDURE-EXPANDING THE MINIMUM CONTACTS DOCTRINE, Temple Law Review (1991). 57 Creech v. Roberts 908 F. 2d 75 (6th Cir. 1990) cert. denied 111 S. Ct. 1619 (1991). 58 Id.

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estoppel doctrine, Oral Robert’s activities, as an apparent agent can be imputed to the Medical

Center beneficiary, as the principal.59 The Creech court found that the Medical Center had

established minimum contacts with the forum state of Ohio although it had never conducted any

business therein.60 Consequently, the court in Ohio could assert personal jurisdiction over the

Medical Center.61

Further, courts have also used the agency theory to ascribe certain forum state activities

of a corporate agent to corporate entities that are considered principals.62 Thus, a court may

attribute a subsidiary corporation’s minimum contacts to its parent.63 In determining whether

jurisdiction is proper, a court may examine the quality and nature of the corporate entities’

relationship. 64 Relevant factors in this inquiry include the extent to which a parent corporation

owns a subsidiary, the degree to which a parent corporation controls the activities of a

subsidiary.65 As such, the substantial ownership of Mt. Fuji Japan is an indicator that it exercises

control over its subsidiary Mt. Fuji Philippines. The same can also be said of defendant Dick

Bellis Japan since defendant Dick Bellis Philippines is only one of its branches to which it

exercises control. Assuming that Dick Bellis Philippines is an affiliate, the same conclusion is

reached. Therefore, the actions of the agents in the Philippines can be attributed to their parent

corporations.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!59 Id. 60 Id. 61 Id. 62 RICHARD, S. Geller supra 63 Id. 64 Id. 65 Id.

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In Creech, it was enunciated that the absence of a formal, consensual agency relationship

between Oral Roberts and Medical Center was not relevant. In applying agency by estoppel, the

principal assumes the responsibility for his own actions or omissions that furnish the appearance

of authorizing the agent’s activities and which cause detrimental reliance on the part of third

person.66

Thus, a court, using this equitable doctrine, imputes the agent’s actions onto the principal,

ascribing conduct on the basis of who should be held accountable to whom.67 The Creech court

held, in effect, that when a court attributes one person’s conduct to another in an equitable

manner, “traditional notions of fair play and substantial justice” are not violated. Plaintiff

respectfully submits that it is not unreasonable to attribute the acts of Mt. Fuji Philippines and

Dick Bellis Philippines to their respective parent corporations. The act of Dick Bellis Philippines

in inviting Filipinas Corp. to its Japan branch in order to meet with the CEOs of Mt. Fuji

constituted the act which clothed the subsidiary corporations with authority to act for their

respective parent corporations. On this basis, it is proper to attribute the acts of the subsidiary

corporations to their parent corporations.

E. SUIT WAS BASED ON A CONTRACT WITH SUBSTANTIAL CONNECTION WITH THE PHILIPPINES

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!66 Id. 67 Id.

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The case of McGee v. International Life Ins. Co.68 further states that a suit based on a

contract which had substantial connection with that State satisfies due process and renders the

exercise of jurisdiction proper. Thus a contract with a resident of the forum establishes minimum

contacts which can properly subject such party to a contract to that forum’s jurisdiction. As such,

the contract between Filipinas and Mt. Fuji which was brokered by the defendant can properly

subject such defendant to Philippine jurisdiction. Further, it has been held in Calder vs. Jones69

that knowingly causing harm to a person in another state is sufficient to establish minimum

contacts. It must be highlighted that Mt Fuji Philippines already accepted petitioner’s offer to

buy the litigated property and that petitioner already made a downpayment for such sale.

Moreover, as petitioner was given access to the building, it had already introduced improvements

amounting to five million Pesos (P5,000,000). Thus, the act of defendant Mt. Fuji in selling the

property to Power Grabber, and the conduct of Dick Bellis in brokering the eventual sale to Haya

Corp, despite the attendant circumstances abovementioned, constituted vouluntary acts that

caused prejudice to the petitioner.

Although it might be argued that “the mere presence of the property in a State does not

establish a sufficient relationship between the owner of the property and the State to support the

exercise of jurisdiction over an unrelated cause of action,”70 such decision is not applicable since

the property present in the Philippines is not unrelated to the cause of action of the plaintiff. The

subject property is directly related to the cause of action of the plaintiff. As such, the presence in

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!68 McGee vs. International Life Ins., supra note 11. 69 Calder vs. Jones, supra note 14. 70 Rush vs. Sauchuk, 444 U.S. 320 (1981).

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the Philippines of the property owned by both Mt. Fuji Philippines and Mt. Fuji Japan renders

the exercise of jurisdiction over these defendants as proper.

III. THE COURTS OF THE PHILIPPINES IS THE PROPER FORUM FOR PLAINTIFF TO BRING THE

ACTION

A. FORUM NON CONVENIENS IS NOT A PROPER GROUND IN A MOTION TO DISMISS

A motion to dismiss invites the attention of the court to certain specific deficiencies, either

in the adverse pleading, in the litigant's evidence or in the procedural techniques of the adverse

party, and requests the court to dismiss the adversary's case on the basis of the defects so

stated.”71 It may be filed on any of the grounds mentioned in Rule 16, §1 of the Revised Rules of

Civil Procedure, thus:

Rule 16, Section 1. Grounds. — Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds: (a) That the court has no jurisdiction over the person of the defending party; (b) That the court has no jurisdiction over the subject matter of the claim; (c) That venue is improperly laid; (d) That the plaintiff has no legal capacity to sue; (e) That there is another action pending between the same parties for the same cause; (f) That the cause of action is barred by a prior judgment or by the statute of limitations; (g) That the pleading asserting the claim states no cause of action; (h) That the claim or demand set forth in the plaintiff's pleading has been paid, waived, abandoned, or otherwise extinguished; (i) That the claim on which the action is founded is enforceable under the provisions of the statute of frauds; and (j) That a condition precedent for filing the claim has not been complied with. (1a) 72

A perusal of the above-cited provision makes it clear that forum non conveniens is not a

proper ground in a motion to dismiss.73

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!71 S. TABIOS, THE FRAMEWORK FOR HANDLING MOTION TO DISMISS, 30 SCRA 464 (1969). 72 1997 RULES OF CIVIL PROCEDURE, Rule 16 § 1 (1997). 73 Id.

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The case of Philsec Investment Corporation vs. Court of Appeals 74 sheds light on the

reasons why forum non conveniens is not a proper ground in a motion to dismiss. First, a motion

to dismiss is limited to the grounds specified under Rule 16, §1 of the Rules of Civil Procedure,

which plainly does not include forum non conveniens. 75 Second, “the propriety of dismissing a

case based on this principle requires a factual determination; hence, it is more properly

considered a matter of defense.” 76 Third, the trial court, while it has discretion 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.” 77

Thus, Plaintiff submits that it was improper for Defendant to anchor its motion to dismiss

on the ground of forum non conveniens.

B. ASSUMING THAT IT IS A PROPER GROUND IN A MOTION TO DISMISS, THE COURTS OF THE PHILIPPINES IS THE NATURAL FORUM TO BRING THE ACTION

i. Real actions shall be commenced and tried in the court that has jurisdiction over the area where the property is situated.

The case of Home Guaranty Corporation v. R-II Builders, Inc. 78 demonstrates the

differences between personal and real actions, viz:

In contrast to personal actions where the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages, real actions are those which affect title to or possession of real property, or interest therein. While personal actions should be

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!74 Philsec Investment Corporation vs. Court of Appeals, 274 SCRA 102 (1997). 75 Id. 76 Id. 77 Id. 78 Home Guaranty Corporation vs. R-II Builders, Inc., 645 SCRA 219 (2011).

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commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff, the venue for real actions is the court of the place where the real property is located.79

Moreover, “[a]ccording to the Rules of Civil Procedure, real actions shall be commenced

and tried in the court that has jurisdiction over the area where the property is situated.”80

However, as an exception, the Rules provide that real actions can be commenced and tried in a

court other than where the property is situated where the parties have previously and validly

agreed in writing on the exclusive venue thereof.81

In this case, the property in question is located in the Province of Batangas. The action

affects title to the real property in question. Moreover, no agreement as to an exclusive venue has

been agreed upon by the parties. Thus, following the general rule, the action should be filed in

the proper court in Batangas.

C. IT IS PROPER FOR THE PHILIPPINE COURTS TO ASSUME AND EXERCISE JURISDICTION

“Under the doctrine of forum non conveniens, a court, in conflicts of law 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.” 82 The question of whether a suit

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!79 Id. 80 Paglaum Management Development Corp. vs. Union Bank of the Philippines, 673 SCRA 506 (2012). 81 Id. 82 Pioneer Concrete Philippines, Inc. vs. Todaro, 524 SCRA 153(2007).

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should be entertained or dismissed on the basis of forum non conveniens is addressed to the

sound discretion of the trial court and depends largely upon the facts of the case at hand.83

“A plaintiff's choice of forum is entitled to great deference when the forum chosen was

the home of the plaintiff. This presumption is based on the fact that the choice of the home forum

indicated a reasonable assumption that the choice was convenient.”84

Thus, in the present case, the forum being Plaintiff’s home, its choice of forum is must be

regarded with great deference.

The Supreme Court has opined that a Philippine Court may assume jurisdiction over the

case if it chooses to do so subject to the following requisites: “(1) that the Philippine Court is one

to which the parties may conveniently resort to; (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 power to enforce its decision.”85

Plaintiff submits that all these requisites are met. First, the Philippine Court may be

conveniently resorted to not only by the Plaintiff, but likewise by the domestic and foreign

Defendants. Second, the Philippine Court is in a position to make an intelligent decision given

that the contract involving real property located in the Philippines was entered into and partially

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!83 Id. 84 Koster v. Lumbermens Mutual Casualty Co., 330 U.S. 518 (1947). 85 Communication Materials and Design, Inc. vs. Court of Appeals, supra note 17.

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executed within Philippine Territory and, consequently, governed by Philippine law. Third, the

Philippine court has power to enforce its decision primarily because the property in dispute is in

the Philippines.

D. THE BALANCE OF PRIVATE AND PUBLIC FACTORS IS STRONGLY IN FAVOR OF PLAINTIFF’S CHOICE OF FORUM.

i. Unless the balance of private and public interest factors is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.

“In dismissing an action on forum non conveniens grounds the court must examine: (1)

whether the balance of private and public interest factors favors dismissal; and (2) whether an

adequate alternative forum exists.”86

The doctrine of forum non conveniens serves to restrict access to courts when the chosen

forum is “inconvenient both to the parties and the court itself, and the forum state has relatively

little interest in the controversy.” 87 The Court determines this by balancing the private and

public interest factors that involved in retaining the plaintiff's choice of forum against the

potential burdens on the defendant and the competing interests of the local and foreign forums.88

“Unless the balance of private and public interest factors is strongly in favor of the defendant, the

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!86 Lueck vs. Sundstrand no. 99-15961, d.c. no. Cv-97-2223, (2001). 87 STEPHANIE MARIE FOSTER , R. MAGANLAL COMPANY V. M.G. CHEMICAL COMPANY: A MINOR CASE WITH MAJOR ISSUES—CONVENIENCE, CONFLICTS AND COMITY RECONSIDERED IN THE CONTEXT OF FORUM NON CONVENIENS, 19 BROOK. J. INT'L L. 583 (1993). 88 Id.

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plaintiff's choice of forum should rarely be disturbed.”89 The defendant has the burden of

showing that the public and private interests weigh heavily in favor of dismissal.90 Plaintiff

submits that Defendants have failed to discharge this burden.!

ii. The private interest factors favor Plaintiff’s choice of forum !

Private interest factors refer to the aspects of the burden posed by the respective forums

to each party. 91 These factors mainly entail practical difficulties in obtaining evidence and

witnesses that may be outside the forum.92 These are focused on a standard that forbids

harassment or undue burden to the defendant. 93 In Gulf Oil v. Gilbert, the court took note of the

following private interest factors: (1) Relative ease of access to sources of proof; (2) availability

of compulsory process for attendance of unwilling, and the cost of obtaining attendance of

willing, witnesses; (3) possibility of view of premises, if view would be appropriate to the action;

(4) and all other practical problems that make trial of a case easy, expeditious and inexpensive;

enforceability of a judgment if one is obtained. 94

Applying this criterion to the present case, Plaintiff submits that the private interest

factors favors sustaining the chosen forum. The indisputable facts show that the contract was

entered into and partially executed in the Philippines. Accordingly, all of the relevant evidence

and witnesses are within the jurisdiction of Plaintiff’s chosen forum. The possibility of view of !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!89 Gulf Oil vs. Gilbert, 330 US 501 (1947). 90 Lacey v. Cessna Aircraft Co., 932 F.2d 170, 180 (3d Cir.1991). 91 FOSTER, supra note 87. 92 Id. 93 Id. 94 Gulf Oil vs. Gilbert, supra note 89.

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the premises would be burdensome if the suit were tried elsewhere. Ultimately, all of the

practical problems would significantly be lesser as compared to any other forum.

ii. The public interest factors favor Plaintiff’s choice of forum

“Public interest factors involve the inconvenience to the court posed by docket

congestion and complex issues of foreign law, as well as the state's interest in the adjudication of

a suit which may be more significantly related to an alternate forum.”95 Public interest factors

include: (1) the administrative difficulties flowing from congestion of the courts; (2) the local

interest in resolving localized controversies at home; (3) having the trial of a diversity case in a

forum that is familiar with the law that must govern the action; (4) the avoidance of unnecessary

problems in conflicts of law or in application of foreign law; and, (5) the unfairness of burdening

citizens in an unrelated forum with jury duty.96

Three principles underlie public interest factors: first, that courts may validly protect their

dockets from cases which arise within their jurisdiction, but which lack significant connection to

it; second, that courts may legitimately encourage trial of controversies in the localities in which

they arise; and third, that a court may validly consider its familiarity with governing law when

deciding whether or not to retain jurisdiction over a case.97

The parties seeking a forum non conveniens dismissal must convince the court that the

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!95 FOSTER, supra note 87. 96 Lueck vs. Sundstrand, supra note 86. 97 DESMOND T. BARRY, JR. FOREIGN CORPORATIONS: FORUM NON CONVENIENS AND CHANGE OF VENUE, 61 DEF. COUNS. J. 543 (1994). (citing Pain v. United Technologies Corp., 637 F.2d 775, 797 (D.C. Cir. 1990)).

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“alternative forum contains the most significant contacts with the facts giving rise to the

litigation and thus should bear the substantial administrative weight of the litigation.” 98 The

nature and number of contacts between the controversy and the forum provides the justification

for burdening a jurisdiction with litigation. 99

The court, however, should consider the public interest factors only when the private

interest factors do not decidedly favor one forum.100 Plaintiff submits that consideration of the

private interest factors is sufficient to tip the balance in favor of the chosen forum herein.

However, assuming without conceding that an examination of the public interest factors is

necessary, Plaintiff submits that the public interest factors likewise point to the Philippine Court

as the proper forum. There is a local interest in having localized controversies decided at home.

101 The interest of the Philippines in resolving disputes arising from contracts entered into and

executed within the Philippines and the subject matter of which is Philippine real estate far

outweighs that of any other forum. Moreover, litigating the suit in a Philippine Court would

avoid unnecessary problems in conflicts of law or application of foreign law seeing as Philippine

law clearly applies.

iii. The balance of private and public factors reveal that the Philippines is the more appropriate forum

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!98 Id. 99 Id. 100 Id. (citing Baumgart v. Fairchild Aircraft Corp., 981 F.2d 824, 837 (5th Cir. 1991)). 101 Gulf Oil, supra note 89.

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Forum non conveniens necessitates a discretionary balancing of the private and public

interest factors. “In exercising its full discretionary authority, the district court ultimately should

rule in favor of the most convenient and practical forum for the parties and the court.”102

Considering the attendant circumstances in the present case, Plaintiff submits that the balance of

private and public interest factors is in favor of the chosen forum.

E. RESPONDENT FAILED TO DISCHARGE THE BURDEN OF PROVING THAT ANOTHER MORE APPROPRIATE FORUM EXISTS

The other prerequisite to the application of the forum non conveniens doctrine is the

existence of an available and adequate alternative forum.103 “A foreign forum is ‘available’ when

the entire case and all parties can come within the jurisdiction of that forum.”104 “It is “adequate”

when the parties will not be deprived of all legal remedies or treated unfairly, although they may

not enjoy the same benefits they might receive in the chosen forum.”105 However, the availability

of an alternative forum, despite considered as a pertinent factor, is not a precondition to

dismissal.106 “Otherwise, this would place an undue burden on courts, forcing them to accept

cases merely because a more appropriate forum is unwilling or unable to accept jurisdiction.”107

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!102 BARRY JR., supra note 97. 103 Id. (citing Piper Aircraft, 454 U.S. at 254 n.22). 104 Id. (citing New Orleans Air Crash, 821 F.2d at 1165.) 105 Id. 106 Islamic Republic of Iran v. Pahlavi, 62 NY 2D. 474 (1984). 107 Id.

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The burden on the movant is not just to show that the opposed forum is not the natural or

appropriate forum for the trial but to establish that there is another available forum clearly more

appropriate.108

Multinational corporations face unique difficulties when they attempt to use forum non conveniens as a defensive strategy. In litigation against a foreign subsidiary, the multinational should make every effort to preserve the presumption of separate corporate entities in order to substantiate the convenience of the alternative forum while decreasing the risk of liability to the parent. To be successful in a forum non conveniens dismissal, multinationals must demonstrate the superior convenience and adequacy of the alternative forum and must satisfy the court that the alternative forum is more appropriate to both parties in terms of justice and remedy.109

In light of all the foregoing, Plaintiff submits that Defendant neither discharged this

burden of showing that the chosen forum is not the natural or appropriate forum nor proved

that there is another more appropriate forum.

IV. PHILIPPINE LAW SHOULD GOVERN THE SUIT

A. SINCE THE SUBJECT MATTER RELATES TO REAL PROPERTY, THE LAW OF THE SITUS OF THE PROPERTY SHOULD GOVERN, THE PHILIPPINES

i. Article 16 of the Civil Code of the Philippines

Article 16, par. 1 of the Civil Code provides that, “Real property as well as personal

property is subject to the law of the country where it is situated.”110 In an annotation authored by

Paras, he elaborates on the role of the above rule in the concept of “choice of law”. To wit:

It is axiomatic that almost everything concerning real property should be governed by the law of the place where the property is situated. This rule of lex situs or lex rei sitae is universlly recognized. The reason for this rule is obvious: real property, particularly and ,

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!108 The “Rainbow Joy”, 2005 SGCA 36, Court of Appeal – Civil Appeal No 116 of 2004, Singapore. 109 BARRY JR., supra note 97. 110 Civil Code of the Philippines [CIVIL CODE], Republic Act 386, Art. 16 § 1 (1949).

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(sic) us PART of the country where it is located; its immovability makes it logical that it shall be subject to the laws of the States where it is found; contrary rules in foreign States can not certainly be given effect, unless the SITUS so allows. As Wolff has so aptly pointed out, “As the place where a thing is situated is the natural center of rights over it, everybody concerned with the thing may be expected to reckon with the law of such place.111

Accordingly, Philippine law should govern actions involving property found therein. In

this case, the subject of the action is property consisting of land and building situated in Batangas

City. Thus, contrary to the defendants’ position, it is Philippine law, not Japanese law, that

should govern.

ii. Choice of Law

In Saudi Arabian Airlines vs. Court of Appeals,112 the Court described the doctrine of

“choice of law” in the following wise:

As to the choice of applicable law, we note that choice-of-law problems seek to answer two important questions: (1) What legal system should control a given situation where some of the significant facts occurred in two or more states; and (2) to what extent should the chosen legal system regulate the situation. xxx Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact. An essential element of conflict rules is the indication of a “test” or “connecting factor” or “point of contact”. Choice-of-law rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing. 113

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!111 EDGARDO L. PARAS, PHILIPPINE CONFLICT OF LAWS (1996 ed.). 112 Saudi Arabian Airlines vs. Court of Appeals, G.R. No. 122191 (1998). 113 Id.

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In the same case, the Court enumerated the factors or tests in determining the proper choice

of law, 114 to wit:

Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable law. These “test factors” or “points of contact” or “connecting factors” could be any of the following: (1) The nationality of a person, his domicile, h is residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such as a corporation; (3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex situs is decisive when real rights are involved; (4) the place where an act has been done, the locus actus, such as the place where a contract has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in contracts and torts; (5) the place where an act is intended to come into effect, e.g., the place of performance of contractual duties, or the place where a power of attorney is to be exercised; (6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis; (7) the place where judicial or administrative proceedings are instituted or done. The lex fori—the law of the forum—is particularly important because, as we have seen earlier, matters of ‘procedure’ not going to the substance of the claim involved are governed by it; and because the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the reason that it falls under one of the exceptions to the applications of foreign law; and (8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers contractual relationships particularly contracts of affreightment115 (emphasis supplied).

While in the case of Sumitomo Bank vs Kartika Thahir & Ors116, a similar rule was

cited in the determination of the applicable law to be applied:

As to the determination of the proper law of the obligation, sub-r 2 is reproduced below: (a) if the obligation arises in connection with a contract, its proper law is the proper law of the contract; (b) if it arises in connection with a transaction concerning an immovable(land), its proper law is the law of the country where the immovable is situated (lex situs); (c) if it arises in any other circumstances, its proper law is the law of the country where the enrichment occurs.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!114 Id. 115 Id. 116 Sumitomo Bank Ltd vs. Kartika Ratna Thahir, High Court of Singapore, OS 308/1976 (1976).

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Applying the choice of law doctrine to the present case, the relevant “point of contact”

would be the situs of the thing or subject matter, as seen in the above enumeration. This is so

because real property is involved and, thus, in the determination of the proper law, the place

where the “thing is deemed to be situated” is controlling. Consequently, it is the lex situs, which

is the Philippines, that would be decisive in determining the proper choice of law as real rights

are involved.

B. GIVEN THAT THE CONTRACT WAS EXECUTED IN THE PHILIPPINES, THE LAW OF THE PHILIPPINES SHOULD GOVERN WITH RESPECT TO ITS NATURE AND VALIDITY, OBLIGATION AND INTERPRETATION

The res, offer, acceptance and thus the execution of the contract entered into by Filipino

Corp. and Mt Fuji Property Corp was made in the Philippines. And according to Article 17 of the

Civil Code, "The forms and solemnities of contracts, wills, and other public instruments shall be

governed by the laws of the country in which they are executed.”117

Accordingly, Philippine law governs the forms and solemnities of contracts that are

executed in the Philippines. As held in United Airlines Inc. vs. Court of Appeals118 and Sps.

Zalamea vs. Court of Appeals,119 the Court explained the doctrine of lex loci contractus in that,

“as a general rule, the law of the place where a contract is made or entered into governs with

respect to its nature and validity, obligation and interpretation.”120 To determine which law is to

apply with respect to the contract of the parties, the determining factor is the place of execution

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!117 Civil Code of the Philippines [CIVIL CODE], Republic Act 386, Art. 17 (1949). 118 United Airlines Inc vs. Court of Appeals, G.R. No. 124110 (2001). 119 Sps. Zalamea vs. Court of Appeals, G.R. No. 104235 (1993). 120 Id.

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of such. The Civil Code is illuminating as it provides for the presumption that “[t]he contract is

presumed to have been entered into in the place where the offer was made.”121

In this case, the offer was made by the plaintiff in the Philippines. Hence, a presumption

arises that the Philippines is place of execution of the contract. Applying the doctrine of lex loci

contractus, it, then, follows that with respect to its nature, validity, obligation and interpretation,

Philippine law would govern the contract of sale that was executed between the plaintiff and the

defendant. Moreover, its forms and solemnities must also follow Philippine law pursuant to

Article 17 of the Civil Code, as stated above.

Furthermore, in Cadalin vs. POEA Administrator 122, the Court held that:

A basic policy of contract is to protect the expectation of the parties. Such party expectation is protected by giving effect to the parties’ own choice of the applicable law. The choice of law must, however, bear some relationship the parties or their transaction. Thus, the exception to the rule that a party’s choice of law should be respected is that such choice should have a relationship with the parties or their transaction. 123

Thus, choice of law in a forum must yield to a reasonable relationship with the parties or the

transaction. In this case, it is the choice of Philippine Law as the applicable law must be

respected as such choice bears a relationship with the parties and their transaction. Here, the

contract was entered into in the Philippines, and the contract has been partially executed.

Furthermore, plaintiff is a Philippine corporation and resident. This is reinforced by the ruling in

Pakistan International Airlines vs. Ople124, wherein the Court held that:

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!121 Civil Code of the Philippines [CIVIL CODE], Republic Act 386, Art. 1319 (1949). 122 Cadalin vs. POEA Administrator, 238 SCRA 721 (1994). 123 Id. 124 Pakistan International Airlines vs. Ople, 190 SCRA 1990 (1990).

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Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship between the parties, upon the other: the contract was not only executed in the Philippines, it was also performed here, at least partially; private respondents are Philippine citizens and respondents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the Middle East. 125

C. DEFENDANTS FAILED TO DISCHARGE THE BURDEN OF PROVING THE EXISTENCE OF APPLICABLE FOREIGN LAW

In Overseas Corporation vs. Echin,126 the Supreme Court explained that:

The Philippines does not take judicial notice of foreign laws, hence, they must not only be alleged; they must be proven. To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads: SEC. 24. Proof of official record. — The record of public documents referred to in paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.127

Further, in Garcia vs. Recio128, the court ruled that:

The burden of proof lies with “the party who alleges the existence of a fact or thing necessary in the prosecution or defense of an action.” In civil cases, plaintiffs have the burden of proving the material allegations of the complaint when those are denied by the answer; and defendants have the burden of proving the material allegations in their answer when they introduce new matters… It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws. Like any other facts, they must be alleged and proved. 129

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!125 Id. 126 ATCI Overseas Corporation vs. Echin, G.R. No. 178551 (2010). 127 Id. 128 Garcia vs. Recio, G.R. No. 138322, (2001). 129 Id.

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In this case, such burden of proof was not discharged by the defendants. Not having

alleged such law and much less proved it, Japanese law cannot be applied in the present case as

Philippine courts cannot take judicial notice of such. Furthermore, the defendants have not

undertaken to plead and prove the contents of Japanese Law on the matter, thus, it must therefore

be presumed that the applicable laws of Japan are the same as that of the Philippines. In the case

of Pakistan International Airlines vs. Ople, the Court held that as PIA did not undertake to plead

and prove the contents of Pakistan law on the matter; it must therefore be presumed that the

applicable provisions of the law of Pakistan are the same as the applicable provisions of

Philippine law.130 Thus, the defendants’ argument that Japanese law should apply to the

controversy deserves scant consideration. Japanese law must yield to Philippine law.

CONCLUSION!AND!PRAYER!FOR!RELIEF!!

WHEREFORE, it is respectfully prayed that this Honorable Court:

1. Deny defendants' motion to dismiss on the ground of Forum Non Conveniens,

Lack of Jurisdiction and Lack of Minimum Contacts;

2. Order the specific performance of the contract executed between plaintiff, Filipino

Corp., and defendant, Mt. Fuji Property Corp;

3. Order the rescission of the contract executed between co-defendants;

4. Award damages of ten million pesos (Php 10,000,000.00) to the plaintiff;

Other just and equitable relief under the foregoing are likewise being prayer for.

Respectfully submitted.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!130 Pakistan International Airlines vs. Ople, supra note 124.