1

FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank

of the Philippines) and MERCURIO RIVERA, petitioners, vs. COURT OF
APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO
DEMETRIA, and JOSE JANOLO, respondents.
The Facts
Producers Bank (now called First Philippine International Bank), which has been
under conservatorship since 1984, is the owner of 6 parcels of land. The Bank had
an agreement with Demetrio Demetria and Jose Janolo for the two to purchase the
parcels of land for a purchase price of P5.5 million pesos. The said agreement was
made by Demetria and Janolo with the Banks manager, Mercurio Rivera. Later
however, the Bank, through its conservator, Leonida Encarnacion, sought the
repudiation of the agreement as it alleged that Rivera was not authorized to enter
into such an agreement, hence there was no valid contract of sale. Subsequently,
Demetria and Janolo sued Producers Bank. The regional trial court ruled in favor
of Demetria et al. The Bank filed an appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a
motion for intervention with the trial court. The trial court denied the motion since
the trial has been concluded already and the case is now pending appeal.
Subsequently, Co, assisted by ACCRA law office, filed a separate civil case
against Carlos Ejercito as successor-in-interest (assignee) of Demetria and Janolo
seeking to have the purported contract of sale be declared unenforceable against
the Bank. Ejercito et al argued that the second case constitutes forum shopping.

ISSUE: Whether or not there is forum shopping.

HELD: Yes. There is forum shopping because there is identity of interest and
parties between the first case and the second case. There is identity of interest
because both cases sought to have the agreement, which involves the same
property, be declared unenforceable as against the Bank. There is identity of
parties even though the first case is in the name of the bank as defendant, and the
second case is in the name of Henry Co as plaintiff. There is still forum shopping
here because Henry Co essentially represents the bank. Both cases aim to have the
bank escape liability from the agreement it entered into with Demetria et al.
The Supreme Court also discussed that to combat forum shopping, which
originated as a concept in international law, the principle of forum non conveniens
was developed. The doctrine of forum non conveniens provides that a court, in
conflicts of law cases, may refuse impositions on its jurisdiction where it is not the
2

most convenient or available forum and the parties are not precluded from
seeking remedies elsewhere.







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

FACTS:

Brand Marine Services, Inc. (BMSI), a corporation duly organized & existing
under the laws of Connecticut, &Stockton Rouzie, Jr., an American citizen, entered
into a contract
BMSI hired Rouzie as its representative to negotiate the sale of services in several
government projects in the Philippines for an agreed remuneration of 10% of the
gross receipts.
Rouzie secured a service contract w/ the Rep. of Phil. on behalf of BMSI for the
dredging of rivers affected by the Mt. Pinatubo eruption & mudflows.

Rouzie filed before the NLRC a suit against BMSI and Rust International (Rust)
for alleged nonpayment of commissions, illegal termination, & breach of
employment contract.
The Labor Arbiter ordered BMSI & Rust to pay Rouzies money claims.
Upon appeal, the NLRC reversed & dismissed Rouzies complaint on the ground
of lack of jurisdiction.
3

Rouzie filed an action for damages before the RTC of La Union (where he was a
resident) against Raytheon International. He reiterated that he was not paid the
commissions due him from the Pinatubo dredging project w/c he secured on behalf
of BMSI. The complaint also averred that BMSI, RUST and Raytheon had
combined & functioned as 1 company.
RAYTHEON SOUGHT THE DISMISSAL OF THE COMPLAINT ON THE
GROUNDS OF FAILURE TO STATE ACAUSE OF ACTION & FORUM NON
CONVENIENS & PRAYED FOR DAMAGES BY WAY OF COMPULSORY
COUNTERCLAIM. THE RTC DENIED RAYTHEONS MOTION. THE CA
AFFIRMED.



Raytheons contention: The written contract be
tween Rouzie & 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 that the parties & witnesses
involved are American corporations & citizens & the evidence to be presented is
located outside the Philippines, that renders our local courts inconvenient forums.
The foreign elements of the dispute necessitate the immediate application of the
doctrine of forum non conveniens.
ISSUES
(a) W/N the RTC had jurisdiction.
(b) W/N the complaint should be dismissed on the ground of forum non
conveniens.
RULING(a) YES.

4

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.
Jurisdiction over the nature and subject matter of an action is conferred by
the Constitution and the law & by the material allegations in the complaint,
irrespective of w/n the plaintiff is entitled to recover all or some of the claims or
reliefs sought therein. The case file was an action for damages arising from an
alleged breach of contract. Undoubtedly, the nature of the action and the amount of
damages prayed are w/in the jurisdiction of the RTC.
As regards jurisdiction over the parties, the RTC acquired jurisdiction over Rouzi
upon the filing of the complaint. On the other hand, jurisdiction over the person of
Raytheon was acquired by its voluntary appearance in court.

That THE SUBJECT CONTRACT INCLUDED A STIPULATION THAT THE
SAME SHALL BE GOVERNED BYTHE 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 & CHOICE OF LAW ARE 2 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. The choice of
law stipulation will become relevant only when the substantive issues of the instant
case develop, that is, after hearing on the merits proceeds before the trial court.(b)




5

NO. UNDER THE DOCTRINE OF FORUM NON CONVENIENS, A
COURT, IN CONFLICTS-OF-LAWS CASES, MAY
REFUSE IMPOSITIONS ON ITS JURISDICTION WHERE IT IS NOT THE
MOST CONVENIENT OR
AVAILABLE FORUM AND THE PARTIES ARE NOT PRECLUDED FROM
SEEKING REMEDIES ELSEWHERE.
Raytheons averments of the foreign elements are not sufficient to oust the RTC of
its jurisdiction over the case and the parties involved.

Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered
as a matter of defense. While it is w/c the discretion of the trial court to abstain
from assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the courts
desistance.

343 SCRA 1 Private International Law Forum Non Conveniens
In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he
was recruited by Palace Hotel in Beijing, China. Due to higher pay and benefits,
Santos agreed to the hotels job offer and so he started working there in November
1988. The employment contract between him and Palace Hotel was however
without the intervention of the Philippine Overseas Employment Administration
(POEA). In August 1989, Palace Hotel notified Santos that he will be laid off due
to business reverses. In September 1989, he was officially terminated.
In February 1990, Santos filed a complaint for illegal dismissal against Manila
Hotel Corporation (MHC) and Manila Hotel International, Ltd. (MHIL). The
Palace Hotel was impleaded but no summons were served upon it. MHC is a
government owned and controlled corporation. It owns 50% of MHIL, a foreign
corporation (Hong Kong). MHIL manages the affair of the Palace Hotel. The labor
6

arbiter who handled the case ruled in favor of Santos. The National Labor
Relations Commission (NLRC) affirmed the labor arbiter.
ISSUE: Whether or not the NLRC has jurisdiction over the case.
HELD: No. The NLRC is a very inconvenient forum for the following reasons:
The only link that the Philippines has in this case is the fact that Santos is a
Filipino;
However, the Palace Hotel and MHIL are foreign corporations MHC cannot be
held liable because it merely owns 50% of MHIL, it has no direct business in the
affairs of the Palace Hotel. The veil of corporate fiction cant be pierced because it
was not shown that MHC is directly managing the affairs of MHIL. Hence, they
are separate entities.
Santos contract with the Palace Hotel was not entered into in the Philippines;
Santos contract was entered into without the intervention of the POEA (had
POEA intervened, NLRC still does not have jurisdiction because it will be the
POEA which will hear the case);
MHIL and the Palace Hotel are not doing business in the Philippines; their
agents/officers are not residents of the Philippines;
Due to the foregoing, the NLRC cannot possibly determine all the relevant facts
pertaining to the case. It is not competent to determine the facts because the acts
complained of happened outside our jurisdiction. It cannot determine which law is
applicable. And in case a judgment is rendered, it cannot be enforced against the
Palace Hotel (in the first place, it was not served any summons).
The Supreme Court emphasized that under the rule of forum non conveniens, a
Philippine court or agency may assume jurisdiction over the case if it chooses to do
so provided:
(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
7

(3) that the Philippine court has or is likely to have power to enforce its decision.
None of the above conditions are apparent in the case at bar.

Kazuhiro Hasegawa and Nippon Engr. Consultants Co. vs. Kitamura
538 SCRA 261 Conflict of Laws Private International Law Jurisdiction Lex
Loci Celebrationis Lex Loci Solutionis State of the Most Significant
Relationship Forum Non Conveniens
In March 1999, Nippon Engineering Consultants Co., Ltd, a Japanese firm, was
contracted by the Department of Public Works and Highways (DPWH) to
supervise the construction of the Southern Tagalog Access Road. In April 1999,
Nippon entered into an independent contractor agreement (ICA) with Minoru
Kitamura for the latter to head the said project. The ICA was entered into in Japan
and is effective for a period of 1 year (so until April 2000). In January 2000,
DPWH awarded the Bongabon-Baler Road project to Nippon. Nippon
subsequently assigned Kitamura to head the road project. But in February 2000,
Kazuhiro Hasegawa, the general manager of Nippon informed Kitamura that they
are pre-terminating his contract. Kitamura sought Nippon to reconsider but Nippon
refused to negotiate. Kitamura then filed a complaint for specific performance and
damages against Nippon in the RTC of Lipa.
Hasegawa filed a motion to dismiss on the ground that the contract was entered in
Japan hence, applying the principle of lex loci celebracionis, cases arising from the
contract should be cognizable only by Japanese courts. The trial court denied the
motion. Eventually, Nippon filed a petition for certiorari with the Supreme Court.
Hasegawa, on appeal significantly changed its theory, this time invoking forum
non conveniens; that the RTC is an inconvenient forum because the parties are
Japanese nationals who entered into a contract in Japan. Kitamura on the other
hand invokes the trial courts ruling which states that matters connected with the
performance of contracts are regulated by the law prevailing at the place of
performance, so since the obligations in the ICA are executed in the Philippines,
courts here have jurisdiction.
8

ISSUE: Whether or not the complaint against Nippon should be dismissed.
HELD: No. The trial court did the proper thing in taking cognizance of it.
In the first place, the case filed by Kitamura is a complaint for specific
performance and damages. Such case is incapable of pecuniary estimation; such
cases are within the jurisdiction of the regional trial court.
Hasegawa filed his motion to dismiss on the ground of forum non conveniens.
However, such ground is not one of those provided for by the Rules as a ground for
dismissing a civil case.
The Supreme Court also emphasized that the contention that Japanese laws should
apply is premature. In conflicts cases, there are three phases and each next phase
commences when one is settled, to wit:
Jurisdiction Where should litigation be initiated? Court must have jurisdiction
over the subject matter, the parties, the issues, the property, the res. Also 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.
Choice of Law Which law will the court apply? Once a local court takes
cognizance, it does not mean that the local laws must automatically apply. The
court must determine which substantive law when applied to the merits will be fair
to both parties.
Recognition and Enforcement of Judgment Where can the resulting judgment be
enforced?
This case is not yet in the second phase because upon the RTCs taking cognizance
of the case, Hasegawa immediately filed a motion to dismiss, which was denied.
He filed a motion for reconsideration, which was also denied. Then he bypassed
the proper procedure by immediately filing a petition for certiorari. The question of
which law should be applied should have been settled in the trial court had
Hasegawa not improperly appealed the interlocutory order denying his MFR.

9

BANK OF AMERICA, NT & SA v. AMERICAL REALTY CORPORATION
G.R. No. 133876 December 29, 1999Petitioner: BANK OF AMERICA, NT and
SARespondents: AMERICAN REALTY CORPORATION and COURT OF
APPEALS
FACTS
The petition alleged the following:-

Bank of America NT and SA (BANTSA) - an international banking institution
existing under thelaws of State of California, USA - and Bank of America
International Limited (BAIL) - limitedliability company existing under laws of
England

granted multi-million US dollar loans to: (1)Liberian Transport Navigation, S.A.;
(2) El Challenger S.A; and (3) Eshley Compania NavieraS.A., which were all
existing under laws of Republic of Panama-

As additional security, American Realty Corporation (ARC) as third party
mortgagor executedtwo real party estate mortgages over its parcel of land at San
Jose Del Monte, Bulacan.-

The borrowers defaulted in the payment of loans prompting petitioner BANTSA to
file civilaction before courts of England and Hong Kong.-

On December 16, 1992, petitioner BANTSA filed before the Office of the
Provincial Sheriff of Bulacan, Philippines an application for extrajudicial
foreclosure of real estate mortgage.-

10

On December 14, 1993, ARC filed a motion for suspension of redemption.-

On May 12, 1993, lower court rendered a decision ordering BANTSA to pay ARC
compensatorydamages of ninety-nine million pesos, exemplary damages of five
million pesos and costs of suits.-

On September 30, 1997, the Court of Appeals affirmed the lower courts decision
and denied the petitioners motion for reconsideration.

ISSUES
1. Whether or not the petitioners act of filing a collection suit against the
principal debtors for the recovery of the loans before the foreign courts
constituted a waiver of the remedy of theforeclosure.2.
Whether or not the award by the lower court of actual and exemplary
damages in favour of the private respondent ARC, as third-party mortgagor, is
proper.
HELD
1.

By the act of filing of the ordinary action for collection against the principal
debtors in foreign courts, the petitioner is deemed to have elected the remedy of
civil suit; thus, abandoning her remedy to foreclose the real estate mortgages
constituted over properties of the respondent. Furthermore, Philippine law shall
apply on the present case as the foreign law alleged by the petitioners was contrary
to a sound and established public policy of the forum.

11

2.The lower court actions of awarding actual and exemplary damages in favour of
the private respondent are sanctioned by the Rule 10, Section 5 of the Rules of
Court and supported by jurisprudence; however, exemplary damages is modified to
fifty thousand pesos. Hence, the court denied the petition for lack of merit.

PHILSEC. INVESTMENT V. COURT OF APPEALS, 274 SCRA 102 (1997


6. PHILSEC. INVESTMENT V. COURT OF APPEALS, 274 SCRA 102 (1997)
FACTS
Ducat obtained two separate loans from Ayala and Philsec in the sum of $2.5M
secured by shares of stock owned by Ducat.
In order to facilitate the payment of the loans, 1488 Inc. undertook the obligation
to pay by virtue of a Warranty
Deed with a Vendors Lien. Through the latter, 1488 Inc. sold to Athona Holdings
(Athona) a parcel of land in
Texas while Philsec and Ayala extended a $2.5M loan to Athona to partially cover
the value of the $2.8M lot.
Athona executed a promissory note in favour of 1488 Inc. worth $.3M to complete
the payment for the lot. After all these transactions, Ducat was released by Philsec
and Ayala of his loan.
Athona failed to pay the $.3M promissory note.
1488 Inc. sued Athona, Philsec and Ayala for the payment of the $.3M.
The case was filed in Texas. While the Texas case was pending, Philsec filed a
complaint to recover a sum of money with damages in a Makati RTC against
Ducat.
12

Ducat, on the other hand, filed and was granted a MTD on the basis of litis
pendentia and forum non conveniens.
The trial court also held that it had no jurisdiction over 1488 Inc. because the
action was neither in rem nor quasiin rem, accompanied by the fact that the said
defendant was a non-resident.
The Court of Appeals affirmed the decision.

ISSUES1.

Does a judgment in a US court bar actions to be instituted in Philippine courts?
(i.e. Can the foreign judgment constitute res judicata?)2.

Did CA err in dismissing the case based on the principle of forum non conveniens?

RULING1.
It depends. The FOREIGN JUDGMENT CANNOT BE GIVEN THE EFFECT OF
RES JUDICATA WITHOUTGIVING THE ADVERSE PARTY AN
OPPORTUNITY TO IMPEACH IT ON GROUNDS STATED IN RULE 39,
50 of the Rules of Court, to wit:
WANT OF JURISDICTION, WANT OF NOTICE TO THE PARTY,
COLLUSION, FRAUD, OR CLEAR MISTAKE OF LAW OR FACT.
While this Court has given the effect of res judicata to foreign judgments in several
cases, it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law.

13


IT IS NOT NECESSARY FOR THIS PURPOSE TO INITIATE A SEPARATE
ACTION OR PROCEEDING FORENFORCEMENT OF THE FOREIGN
JUDGMENT.

WHAT IS ESSENTIAL IS THAT THERE IS OPPORTUNITY TO CHALLENGE
THE FOREIGN JUDGMENT, INORDER FOR THE COURT TO PROPERLY
DETERMINE ITS EFFICACY.
This is because in this jurisdiction, with respect to ACTIONS IN PERSONAM, as
distinguished from actions in rem, a FOREIGN JUDGMENT MERELY
CONSTITUTES PRIMA FACIE EVIDENCE OF THE JUSTNESS OFTHE
CLAIM OF A PARTY AND, AS SUCH, IS SUBJECT TO PROOF TO THE
CONTRARY.
In the case at bar, it cannot be said that petitioners were given the opportunity to
challenge the judgment of the U.S. court as basis for declaring it res judicata or
conclusive of the rights of private respondents.

The proceedings in the trial court were summary. Neither the trial court nor the
appellate court was even furnished copies of the pleadings in the U.S. court or
apprised of the evidence presented thereat, to assure a proper determination of
whether the issues then being litigated in the U.S. court were exactly the issues
raised in this case such that the judgment that might be rendered would constitute
res judicata.
2.
Yes.
First, a MTD is limited to the grounds under Rule 16, 1, which does not include
forum non conveniens
The propriety of dismissing a case based on this principle requires a factual
determination, hence, it is more properly considered a matter of defense.
14

Second, while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to
determine whether special circumstances require the courts desistance.

In this case, the TRIAL COURT ABSTAINED FROM TAKING JURISDICTION
SOLELY ON THE BASIS OF THEPLEADINGS FILED BY PRIVATE
RESPONDENTS IN CONNECTION WITH THE MOTION TO DISMISS.

IT FAILED TO CONSIDER THAT PHILSEC IS A DOMESTIC
CORPORATION AND DUCAT IS A FILIPINO, AND
THAT IT WAS THE EXTINGUISHMENT OF THE LATTERS DEBT WHICH
WAS THE OBJECT OF THE
TRANSACTION UNDER LITIGATION.
The trial court arbitrarily dismissed the case even after finding that Ducat was not a
party in the U.S. case.


Gil Miguel T. Puyat vs. Ron Zabarte
Civil Law Conflict of Laws Processual Presumption Forum Non Conveniens
Remedial Law Civil Procedure Rule 34 Summary Judgment
Gil Miguel Puyat, a foreigner, lost a collection suit filed against him by Ron
Zabarte in a court in California, USA. The California court ordered Puyat to pay
the amount of $241k. Puyat was only able to pay $5k.
In January 1994, Zabarte filed an action to enforce the California judgment here in
the Philippines against Puyat. Puyat filed an Answer where he alleged, among
others, that the California court had no jurisdiction over the case, hence, the
foreign judgment is void. He likewise averred that the trial court had no
15

jurisdiction because the issue involved are partnership matters which are under the
jurisdiction of the Securities and Exchange Commission (SEC).
Zabarte then filed a motion for summary judgment as he argued that Puyats
Answer tendered no issue. The trial court granted the motion and eventually gave a
favorable judgment for Zabarte. The Court of Appeals affirmed the decision of the
trial court.
On appeal, Puyat now avers that the trial court should have never taken cognizance
of the case because it had no jurisdiction over the case pursuant to the forum non
conveniens rule. He averred that under this principle, since all the transaction
involved in this case occurred in California, he being a foreigner, and the
California law was not properly determined, the trial court had no jurisdiction. He
also assailed the validity of the trial courts act in granting the motion for summary
judgment filed by Zabarte.
ISSUE: Whether or not Puyat is correct.
HELD: No. The allowance of summary judgment is proper. In this case, Puyats
Answer did not really tender an issue. Summary judgment is resorted to in order to
avoid long drawn out litigations and useless delays. When affidavits, depositions
and admissions on file show that there are no genuine issues of fact to be tried, the
Rules allow a party to pierce the allegations in the pleadings and to obtain
immediate relief by way of summary judgment. In short, since the facts are not in
dispute, the court is allowed to decide the case summarily by applying the law to
the material facts. In this case, Puyats Answer merely alleged that the California
court, a civil court, had no jurisdiction because the case involved was a partnership
issue. He however admitted that the issue involved is the payment of money upon
promissory notes with damages. Puyat also did not attach a copy of the complaint
filed by Zabarte with the California court. As such, the trial court properly
presumed, applying the principle of processual presumption, that the California
law is the same as Philippine law - that cases involving collection of money is
cognizable by civil courts. And by applying the principle of processual
presumption, theres no longer a need to try the facts in this case, hence, a
summary judgment was in order.
16

Anent the issue of forum non conveniens, such does not exist in this case. Under
the principle of forum non conveniens, even if the exercise of jurisdiction is
authorized by law, courts may nonetheless refuse to entertain a case for any of the
following practical reasons:
1) The belief that the matter can be better tried and decided elsewhere, either
because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as
forum shopping[,] merely to secure procedural advantages or to convey or harass
the defendant;

3) The unwillingness to extend local judicial facilities to non-residents or aliens
when the docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought
to be maintained; and

The difficulty of ascertaining foreign law.

Pioneer Concrete Philippines, Inc. vs. Todaro G.R. No. 154830 June 8,
2007AUSTRIA-MARTINEZ, J.


A petition for Review on Certiorari Seeking to annul and set aside the Decision of
the Court of Appeals and its Resolution denying petitioners Motion for
Reconsideration to dismiss the complaint on the grounds that the complaint states
17

no cause of action, that the RTC has no jurisdiction over the subject matter of the
complaint, as the same is within the jurisdiction of the NLRC, and that the
complaint should be dismissed on the basis of the doctrine of Forum non
conveniens
The Facts:
Antonio D. Todaro (resigned managing director of Betonval Ready concrete, Inc.,
accompany engaged in pre-mixed concrete and concrete aggregate production) was
contacted by PIL and asked him if he was available to join them in connection with
their intention to establish a ready-mix concrete plant and other related operations
in the Philippines.

PIL and Todaro came to an agreement wherein PIL consented to engage the
services of Todaro as a consultant for two to three months,
after which, he would be employed as the manager of PIL's
ready-mix concrete operations should the company decide to invest
in the Philippines.

PIL started its operations in the Philippines; however, it refused
to comply with its undertaking to employ Todaro on a
permanent basis.

Todaro filed a complaint for Sum of Money and Damages with
Preliminary Attachment against Pioneer International Limited (PIL),
Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines
Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip
J. Klepzig (Klepzig).


18

PIL Mother company based in Australia, Cement Aggregate Business
PPHIPIL soperating company (onstocks) in the Philippines
PCPI Undertakes PILs business of ready-mix concrete, concrete
aggregates and quarrying operations in the Philippines
McDonald
Chief Executive of the Hongkong office of PIL

Klepzig
- President and Managing Director of PPHI and PCPI


Instead of filing an Answer, PPHI, PCPI and Klepzig separately
moved to dismiss the complaint on the ground that the RTC
has no jurisdiction over the subject matter of the complaint, as
the same is within the jurisdiction of the NLRC.


Petitioners contend that since Todaros claims for actual, moral
and exemplary damages are solely premised on the alleged breach
of employment contract, the present case should be considered
as falling within the exclusive jurisdiction of the NLRC.
The Issue:
Question of jurisdiction.
The Ruling:
19

The complaint was not based on a contract of employment for
this was no employer-employee relationship existed between them;
it was based on petitioners' unwarranted breach of their
contractual obligation to employ Todaro. It has been consistently
held that where no employer-employee relationship exists between
the parties and no issue is involved which may be resolved
by reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that
has jurisdiction.

Wing On Company vs. Syyap
(1967)
FACTS: Syyap failed pay Wing On, a NY-based partnership, its obligation for a
contract of purchase of clothing material. Wing On filed an action in the
Philippines against Syyap, but Syyap contends that the trial court should have
declined JD on the ground of forum non conveniens.

HELD: Forum non conveniens is inapplicable. Unless the balance is strongly in
favor of the defendant, the plaintiffs choice of forum should be rarely disturbed,
and furthermore, the consideration of inadequacy to enforce the judgment, which is
one of the important factors to be considered in the application of said principle,
would precisely constitute a problem to the plaintiff if the local courts decline to
assume JD on the basis of said principle, considering that defendant is a resident of
the Philippines.

There is no existing catalogue of circumstances that will justify sustaining a plea of
forum non conveniens but, in general, both public and private interests should be
weighed.

20

When the forum is the only state where JD can be obtained over the defendant and,
in addition, some relation with the parties exists or when the forum provides
procedural remedies not available in another state, the forum court may not resist
imposition upon its JD.


In re UNION CARBIDE CORPORATION GAS PLANT DISASTER AT
BHOPAL, INDIA IN DECEMBER, 1984.
This appeal raises the question of whether thousands of claims by citizens of India
and the Government of India arising out of the most devastating industrial disaster
in history--the deaths of over 2,000 persons and injuries of over 200,000 caused by
lethal gas known as methyl isocyanate which was released from a chemical plant
operated by Union Carbide India Limited (UCIL) in Bhopal, India--should be tried
in the United States or in India. The Southern District of New York, John F.
Keenan, Judge, granted the motion of Union Carbide Corporation (UCC), a
defendant in some 145 actions commenced in federal courts in the United States, to
dismiss these actions on grounds of forum non conveniens so that the claims may
be tried in India, subject to certain conditions.

India enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, granting
to its government, the UOI, the exclusive right to represent the victims in India or
elsewhere. Thereupon the Union Of India, purporting to act in the capacity of
parens patriae, and with retainers executed by many of the victims, on April 8,
1985, filed a complaint in the Southern District of New York on behalf of all
victims of the Bhopal disaster, similar to the purported class action complaints
already filed by individuals in the United States. The UOI’s decision to
bring suit in the United States was attributed to the fact that, although numerous
lawsuits (by now, some 6,500) had been instituted by victims in India against
UCIL, the Indian courts did not have jurisdiction over UCC, the parent company,
which is a defendant in the United States actions. The actions in India asserted
claims not only against UCIL but also against the UOI, the State of Madhya
21

Pradesh, and the Municipality of Bhopal, and were consolidated in the District
Court of Bhopal. UCC moved to dismiss the complaints on grounds of forum non
conveniens, the plaintiffs; lack of standing to bring the actions in the United States,
and their purported attorneys; lack of authority to represent them.

The standard to be applied in reviewing the district court’s forum non
conveniens dismissal was clearly expressed by the Supreme Court in Piper Aircraft
Co. v. Reyno, supra, 454 U.S. at 257, 102 S.Ct. at 266, as follows:

The forum non conveniens determination is committed to the sound discretion of
the trial court. It may be reversed only when there has been a clear abuse of
discretion; where the court has considered all relevant public and private interest
factors, and where its balancing of these factors is reasonable, its decision deserves
substantial deference.
Having reviewed Judge Keenan’s detailed decision, in which he thoroughly
considered the comparative adequacy of the forums and the public and private
interests involved, we are satisfied that there was no abuse of discretion in his
granting dismissal of the action. On the contrary, it might reasonably be concluded
that it would have been an abuse of discretion to deny a forum non conveniens
dismissal. See Schertenleib v. Traum, 589 F.2d 1156, 1164 (2d Cir.1978); De
Oliveira v. Delta Marine Drilling Co., 707 F.2d 843 (5th Cir.1983) (per curiam).
Practically all relevant factors demonstrate that transfer of the cases to India for
trial and adjudication is both fair and just to the parties.

Plaintiffs’ principal contentions in favor of retention of the cases by the
district court are that deference to the plaintiffs’ choice of forum has been
inadequate, that the Indian courts are insufficiently equipped for the task, that UCC
has its principal place of business here, that the most probative evidence regarding
negligence and causation is to be found here, that federal courts are much better
equipped through experience and procedures to handle such complex actions
efficiently than are Indian courts, and that a transfer of the cases to India will
22

jeopardize a $350 million settlement being negotiated by plaintiffs’ counsel.
All of these arguments, however, must be rejected.
Under New York law, which governs actions brought in New York to enforce
foreign judgments, see Island Territory of Curacao v. Solitron Devices, Inc., 489
F.2d 1313, 1318 (2d Cir.1973), cert. denied, 416 U.S. 986, 94 S.Ct. 2389, 40
L.Ed.2d 763 (1974), a foreign-country judgment that is final, conclusive and
enforceable where rendered must be recognized and will be enforced as
“conclusive between the parties to the extent that it grants or denies recovery
of a sum of money” except that it is not deemed to be conclusive if:

1. the judgment was rendered under a system which does not provide impartial
tribunals or procedures compatible with the requirements of due process of law;

2. the foreign court did not have personal jurisdiction over the defendant.

Art. 53, Recognition of Foreign Country Money Judgments, 7B N.Y.Civ.Prac.L. &
R. 5301-09 (McKinney 1978). Although 5304 further provides that under
certain specified conditions a foreign country judgment need not be recognized,
[FN4] none of these conditions would apply to the present cases except for the
possibility of failure to provide UCC with sufficient notice of proceedings or the
existence of fraud in obtaining the judgment, which do not presently exist but
conceivably could occur in the future. [FN5]

FN4. Section 5304 provides in pertinent part:

(b) Other grounds for non-recognition. A foreign country judgment need not be
recognized if:

23

1. the foreign court did not have jurisdiction over the subject matter;

2. the defendant in the proceedings in the foreign court did not receive notice of the
proceedings in sufficient time to enable him to defend;

3. the judgment was obtained by fraud;

4. the cause of action on which the judgment is based is repugnant to the public
policy of this state;

5. the judgment conflicts with another final and conclusive judgment;

6. the proceeding in the foreign court was contrary to an agreement between the
parties under which the dispute in question was to be settled otherwise than by
proceedings in that court; or

7. in the case of jurisdiction based only on personal service, the foreign court was a
seriously inconvenient forum for the trial of the action.


Piper Aircraft v. Reyno
Brief Fact Summary. Following an airplane crash in Scotland that killed 6 people, a legal secretary
followed a products liability suit in California against the airplanes manufacturer. The manufacturer
moved to dismiss the suit on grounds of forum non conveniens.

Synopsis of Rule of Law. The possibility of change in substantive law should not be given
conclusive or even substantial weight in a forum non conveniens inquiry.
24

Facts. In 1976 a small commercial aircraft crashed in the Scottish highlands. The pilot and five
passengers, all Scottish subjects and residents, were killed. The heirs and next of kin of all 6 victims
were all also Scottish. The aircraft was manufactured in Pennsylvania by petitioner Piper Aircraft Co.
The aircraft was owned and operated by a Scottish air taxi service. In July, 1977 a California probate
court appointed Defendant Gaynell Reyno administratrix of the estates of the five passengers
Defendant was not related to any of the passengers; she was merely the legal secretary to the
attorney who filed this lawsuit. Several days after her appointment, Defendant commenced separate
wrongful death actions against Plaintiffs Piper and Hartzell in California superior court claiming
negligence and strict liability. Defendant admitted that suit was filed in the U.S., as opposed to
Scotland, because of its more favorable laws regarding liability and damages. Plaintiffs first removed
to federal court in California, and then successfully sought transfer to the Middle District of
Pennsylvania, where Plaintiff does business. They then sought to dismiss the case on grounds of
forum non conveniens.

Issue. Whether a change in substantive law between venues is a sufficient reason for denying a
motion to dismiss on grounds of forum non conveniens. What is the standard of review of a trial
courts ruling on a motion to dismiss via forum non conveniens.
Held. The Court of Appeals erred in holding that plaintiffs may defeat a motion to dismiss on the
ground of forum non conveniens merely by showing that the substantive law that would be applied in
the alternate forum is less favorable to the plaintiffs than that of the present forum. The possibility of
change in substantive law should not be given conclusive or even substantial weight in the forum
non conveniens inquiry. A plaintiffs choice of forum is given greater weight when the plaintiff has
chosen the home forum. The forum non conveniens determination is committed to the sound
discretion of the trial court, and may be overturned only when there has been a clear abuse of
discretion.
Discussion. Although the Supreme Court of the United States rejected the
argument that the motion to dismiss should be denied because the law in other
forums would be less
25

favorable to the plaintiff, it did however acknowledge that if the alternative forum
was so clearly inadequate that it would offer no remedy at all, then the change in
substantive law might be grounds for denying the motion. In ruling that the district
court did not abuse its discretion in granting the motion, the Supreme Court noted
Scotlands strong interest in the litigation, since all the victims were Scottish
residents, coupled with the fact that holding the trial in Pennsylvania would make
it impossible for Plaintiff to interplead third party defendants residing in Scotland.
Thus the district court correctly held that public policy favored holding the trial in
Scotland.

Gulf Oil Corporation vs. Gilbert
Facts:
The case arose when a fire gutted a warehouse owned and operated by the plaintiff.
The Allegations provide that the defendant carfelessly handled a gasoline to his
warehouse tanks and pumps as to cause explosion and fire which consumed the
whole warehouse together with the merchandise of his customers. The plaintiff
asked for a judgement amounting to $365,529.77 in damages.
The plaintiff brought the case in Southern District of New York despite living in
Lynchburg, Virginia and where the warehouse is located. On the one hand, the
defendant is a corporation organized under the state of Pennsylvania and is
qualified to do business in New York and Virginia. It has officials designated to
each state as agents to receive service of process.
When the defendant is sued it invoked the doctrine of forum non conveniens. It
claimed that Virginia is the appropriate place of trial because it is where the
plaintiff lives, where the defendant does its business, where the events of litigation
took place, where most witnesses reside, and where both the state and the federal
courts are available to the plaintiff and are able to obtain jurisdiction over the
defendant.

Issue:
26

Whether or not the United States district court has inherent power to dismiss a suit
pursuant to the doctrine of forum non conveniens.
Ruling:
Yes. The district court has the power to dismiss a suit pursuant to the doctrine of
forum non conveniens. As shown in several jurisprudence, the US courts are
allowed to decline jurisdiction on cases rightfully under its jurisdiction on
exceptional circumstances, one of which is the application of forum non
conveniens. The doctrine provides that a court may relinquish its jurisdiction
to hear a case when such choice in venue to file the case causes inconvenience
or burden to one of the parties or when the choice in venue is clearly a form of
harassment to the adverse party. Also in the interest of fair play,
inconvenience on the part of the adverse party, public interest and the
character and nature of the parties must be balanced. If the court sees a strong
balance in favor of the adverse party, it may apply the doctrine. In the case at bar
several factors were considered in able to apply the doctrine . First the plaintiff is
not a resident of New York and the tortuous act happened in Lynchburg Virginia.
IN fact the court was candidly told by the plaintiff that the venue was chosen by
the insurance company for purposes of subrogation. Second all the witnesses, the
customers of the plaintiff and those part of the negligent act live in Lynchburg,
Virginia. Only the lawyer of the plaintiff resides in New York. Third the trial in
Virginia simplify the proceedings. If the proceeding is conducted in Virginia,
issues in the conflict of laws can be avoided. Hence, the court did not abuse its
discretion in applying this doctrine.

Lueck vs. Sunstrand
Plaintiffs appeal the district court's dismissal of their suit on the basis of forum non
conveniens. Plaintiffs, citizens of New Zealand, are victims of an airplane crash
in New Zealand, on a New Zealand carrier. Plaintiffs allege that the radio
altimeter of the Ground Proximity Warning System (GPWS) malfunctioned
during flight and was a causal factor of the accident. Defendants, the Canadian
manufacturer of the aircraft and the American manufacturers of the GPWS and the
radio altimeter, argued that New Zealand was an adequate alternative forum and
27

that the public and private factors weighed in favor of dismissal. The district
court agreed with Defendants. We have jurisdiction under 28 U.S.C. 1291, and
we affirm.
n June 5, 1995, Ansett New Zealand (Ansett) Flight 703 took off from Auckland
with an intended destination of Palmerston North, New Zealand. The commuter
flight carried 21 persons-three crew members and 18 passengers. All of the
passengers were citizens of New Zealand, except for one who was a citizen of the
United States. As the flight approached Palmerston North, the flight crew
prepared for landing. The landing gear of the aircraft failed to lower
hydraulically, so the pilot and co-pilot were forced to lower the landing gear
manually. While the flight crew focused on lowering the landing gear, the
aircraft flew toward the hilly terrain leading into Palmerston North. Although the
aircraft's GPWS emitted an alarm four seconds before the aircraft hit the ground,
the crew was unable to avoid the accident. The aircraft crashed into the ground,
killing one member of the flight crew and three passengers and injuring all others
on board.
In 1972, the New Zealand legislature passed the Accident Compensation Act (the
Act), amended in 1982, 1992, and 1998, which provides coverage, on a no-fault
basis, for those who suffer personal injury arising from accidents.2 The Act bars
civil claims for damages.
The defendants in this case are each responsible for manufacturing parts of the
landing gear or the GPWS of the deHavilland aircraft. With the exception of
defendant deHavilland, all are American corporations. Plaintiffs brought suit
against Defendants in federal district court for the District of Arizona, alleging
strict liability, negligence, and breach of warranty. They did not allege gross
negligence or seek punitive damages. Defendants moved to dismiss the action,
arguing that New Zealand provides a remedy for Plaintiffs' injuries and is a more
convenient location for the suit. The district court granted the motion and
dismissed the action. The only American citizen onboard the flight, who was the
only American plaintiff in this suit, settled his claims after Plaintiffs filed their
notice of appeal to this Court. Thus, all of the remaining plaintiffs are New
Zealand citizens.
28

A district court has discretion to decline to exercise jurisdiction in a case where
litigation in a foreign forum would be more convenient for the parties. Gulf Oil
Corp. v. Gilbert, 330 U.S. 501, 504, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). In
dismissing an action on forum non conveniens grounds the court must examine:
(1) whether an adequate alternative forum exists, and (2) whether the balance of
private and public interest factors favors dismissal.
The first requirement for a forum non conveniens dismissal is that an adequate
alternative forum is available to the plaintiff. The Supreme Court has held that an
alternative forum ordinarily exists when the defendant is amenable to service of
process in the foreign forum.

B. The Balance of Public and Private Factors
Ordinarily, a plaintiff's choice of forum will not be disturbed unless the private
interest and the public interest factors strongly favor trial in a foreign country.
Gulf Oil, 330 U.S. at 509, 67 S.Ct. 839. We have further held that a foreign
plaintiff's choice of forum merits less deference than that of a plaintiff who resides
in the selected forum, and the showing required for dismissal is reduced. Gemini
Capital, 150 F.3d at 1091. [I]f the balance of conveniences suggests that trial in
the chosen forum would be unnecessarily burdensome for the defendant or the
court, dismissal is proper. Lockman Found., 930 F.2d at 767 (quoting Piper
Aircraft, 454 U.S. at 255 n. 23, 102 S.Ct. 252).
1. The Private Interest Factors
Courts consider the following private interest factors:
(1) the residence of the parties and the witnesses;
(2) the forum's convenience to the litigants;
(3) access to physical evidence and other sources of proof;
(4) whether unwilling witnesses can be compelled to testify;
(5) the cost of bringing witnesses to trial;
29

(6) the enforceability of the judgment; and
(7) all other practical problems that make trial of a case easy, expeditious and
inexpensive.
Furthermore, as noted above, Plaintiffs are maintaining a suit against Ansett, the
carrier, in New Zealand. Ansett, though not a party to this suit, controls
documents and witnesses that are relevant to this dispute. Although Plaintiffs
characterize the instant suit as focusing on the GPWS rather than the accident, the
fact is that both this and the Ansett lawsuits revolve around the causes of the
accident. Therefore, a significant number of the same witnesses will be needed in
both proceedings and much the same evidence will have to be presented to both
courts. Currently, the main difference is that Defendants are not parties to the
Ansett suit. If they are brought into that suit, all the evidence under their control
would have to be produced in New Zealand. Defendants, who have brought this
motion, are willing to cooperate in the production of evidence. Given the
existence of the related proceedings, it is all the more clear that the private interest
factors weigh in favor of dismissal.
2. The Public Interest Factors
Courts consider the following public interest factors:
(1) local interest of lawsuit;
(2) the court's familiarity with governing law;
(3) burden on local courts and juries;
(4) congestion in the court; and
(5) the costs of resolving a dispute unrelated to this forum.
Piper Aircraft, 454 U.S. at 259-61, 102 S.Ct. 252; Gulf Oil, 330 U.S. at 508-09, 67
S.Ct. 839.
The public interest factors weigh against maintenance of this action in Arizona.
None of the remaining plaintiffs are citizens or residents of the United States.
One of the defendants is a citizen of the chosen forum: Honeywell, which
manufactured the radio altimeter in issue. The citizens of Arizona certainly have
30

an interest in the manufacturing of defective products by corporations located in
their forum. However, this interest is slight compared to the time and resources
the district court in Arizona would expend if it were to retain jurisdiction over this
dispute. Furthermore, the interest in New Zealand regarding this suit is extremely
high. The crash involved a New Zealand airline carrying New Zealand
passengers. The accident and its aftermath, including the accident investigation,
the post-investigation activity, and the various legal proceedings including an
ongoing criminal probe, have all received significant attention by the local media.
Because the local interest in this lawsuit is comparatively low, the citizens of
Arizona should not be forced to bear the burden of this dispute.
C. Choice of Law Analysis
This court has held that [b]efore dismissing a case for forum non conveniens, a
district court must first make a choice of law determination. Zipfel v.
Halliburton Co., 832 F.2d 1477, 1482 (9th Cir.1987), amended on other grounds
by 861 F.2d 565 (9th Cir.1988). However, the choice of law analysis is only
determinative when the case involves a United States statute requiring venue in the
United States, such as the Jones Act or the Federal Employers' Liability Act. See
Creative Tech., 61 F.3d at 700. The Jones Act, 46 U.S.C.App. 688(a), and the
Federal Employers' Liability Act, 45 U.S.C. 56, contain special provisions
mandating venue in the United States district courts. Creative Tech., 61 F.3d at
700. The purpose of a choice of law inquiry in a forum non conveniens analysis
is to determine if one of these statutes would apply. See id.5
Where no such law is implicated, the choice of law determination is given much
less deference on a forum non conveniens inquiry. Because there is no arguably
applicable law that would end the forum non conveniens inquiry [in this case], no
potentially dispositive choice of law determination need have been made.
Lockman Found., 930 F.2d at 771; see also Gemini Capital, 150 F.3d at 1092
(This case does not implicate any United States law which mandates venue in the
United States district courts. Consequently, the applicability of United States law
to the various causes of action should ordinarily not be given conclusive or even
substantive weight.) (quoting Piper Aircraft, 454 U.S. at 247, 102 S.Ct. 252).6
31

Accordingly, because New Zealand provides an adequate alternative forum and
based on the balance of public and private factors, we find that the district court
did not abuse its discretion in dismissing this suit on forum non conveniens
grounds. The dismissal of this action is AFFIRMED.

Yan Carlos RAVELO MONEGRO; Nelson Rolando Gonzalez Sosa;
Franklin Alvares Galvez; Rafael Micael De La Cruz; Francisco De Los
Santos Heredia; Porfirio Alfred Vasquez Mota; Manuel Acevedo; Angel
Esteban Guillen Solano; Carlos Celedonio Sujilio; Edelmiro Reyes Santana;
Ignacio Henriquez De La Rosa; Fernando Romero; Tulio Miguel Lizardo
Nolosco, Plaintiffs-Appellants, v. Luis ROSA; Jack Hiatt; San Francisco
Baseball Associates, L.P., dba San Francisco Giants, Defendants-Appellees.

The thirteen plaintiffs are aspiring professional baseball players who live in the
Dominican Republic. When they were between sixteen and twenty years old,
they were recruited by Luis Rosa, the Giants' former Latin America scout. At
Rosa's instigation, each player signed a seven-year minor league contract with the
Giants. Although the contracts initially provided that all the plaintiffs would play
baseball for the San Pedro Giants in the Dominican Republic, the contracts could
be assigned, and the players transferred, to minor or major league teams in the
United States. Underscoring this potential for transfer, many of the contracts
contained addenda stating salaries in Bellingham, Washington, Scottsdale,
Arizona, and Shreveport, Louisiana.

Playing for the San Francisco Giants or some other United States team was the
plaintiffs' common goal. All thirteen plaintiffs claim that Rosa expressly
conditioned their continued employment and/or reassignment to United States
teams upon their submitting to his sexual advances, and that Rosa appropriated part
of their earnings or signing bonuses for his own use. They also allege that the
Giants' management knew or had reason to know of Rosa's misconduct. In April
1998, plaintiffs initiated this suit against the Giants, Rosa and Hiatt.
32


In June 1997, plaintiffs had brought substantially similar allegations to the
attention of authorities in the Dominican Republic. As a result of their
complaints, a combined criminal and civil suit against the Giants and Rosa is now
pending in the Dominican Republic. Noting the pendency of this parallel
proceeding, the defendants moved in June 1998 to dismiss plaintiffs' complaint on
the alternative grounds of forum non conveniens and abstention. The district
court granted the defendants' motion on the ground of forum non conveniens.
Plaintiffs timely appeal.

II

A forum non conveniens determination is committed to [the] sound discretion
of the trial court, and may be reversed only when there has been a clear abuse of
discretion. Creative Tech., Ltd. v. Aztech Sys. Pte Ltd., 61 F.3d 696, 699 (9th
Cir.1995). A district court may abuse its discretion by relying on an erroneous
view of the law, by relying on a clearly erroneous assessment of the evidence, or
by striking an unreasonable balance of relevant factors. See K.V. Mart Co. v.
United Food & Commercial Workers Int'l Union, Local 324, 173 F.3d 1221, 1223
(9th Cir.1999); Creative Tech., 61 F.3d at 699.

III

A threshold issue is whether, under Erie Railroad v. Tompkins, 304 U.S. 64, 58
S.Ct. 817, 82 L.Ed. 1188 (1938), a forum non conveniens motion in federal court is
governed by federal or state law. The Supreme Court expressly avoided deciding
this issue in Piper Aircraft v. Reyno, 454 U.S. 235, 248 n. 13, 102 S.Ct. 252, 70
L.Ed.2d 419 (1981). Since Piper, however, several circuits have held that a
forum non conveniens motion in federal court is governed by federal law. See
Rivendell Forest Prods. Ltd. v. Canadian Pac. Ltd., 2 F.3d 990, 992 (10th
33

Cir.1993); Royal Bed & Spring Co. v. Famossul Industria e Comercio de Moveis,
Ltda., 906 F.2d 45, 50 (1st Cir.1990); In re Air Crash Disaster Near New Orleans,
La., 821 F.2d 1147, 1159 (5th Cir.1987) (en banc), vacated on other grounds, 490
U.S. 1032, 109 S.Ct. 1928, 104 L.Ed.2d 400 (1989), prior opinion reinstated in
relevant part, 883 F.2d 17 (5th Cir.1989); Sibaja v. Dow Chem. Co., 757 F.2d
1215, 1219 (11th Cir.), cert. denied, 474 U.S. 948, 106 S.Ct. 347, 88 L.Ed.2d 294
(1985). But see In Re Air Crash Disaster, 821 F.2d at 1180-86 (Higginbotham, J.,
concurring in the judgment) (arguing that state forum non conveniens law should
apply to diversity actions in federal court); Weiss v. Routh, 149 F.2d 193, 195 (2d
Cir.1945) (L. Hand, J.) (stating that state law should control a federal court's
assertion of jurisdiction). We join these circuits and hold that federal rather than
state law governs. We agree with the Fifth Circuit's conclusion that the interests
of the federal forum in self-regulation, in administrative independence, and in self-
management are more important than any interest in uniformity between the
federal and state forums in a single state. In re Air Crash Disaster, 821 F.2d at
1159. Our conclusion is reinforced by the Supreme Court's statement in
American Dredging Co. v. Miller, 510 U.S. 443, 114 S.Ct. 981, 127 L.Ed.2d 285
(1994), that the doctrine [of forum non conveniens] is one of procedure rather
than substance. Id. at 453, 114 S.Ct. 981 (upholding the application in state court
of a state forum non conveniens rule in a Jones Act admiralty case).

We note, however, that the result in this case would likely be the same if we
applied California's law of forum non conveniens. See Cal.Civ.Proc.Code
410.30. When the Supreme Court reserved the Erie issue in Piper, it observed that
California and federal forum non conveniens laws were virtually identical.
Piper, 454 U.S. at 249 n. 13, 102 S.Ct. 252. While this statement was almost
certainly untrue when made, see 2 B. Witkin, California Procedure Jurisdiction
304-306 (3d ed.1985); Holmes v. Syntex Labs., 156 Cal.App.3d 372, 202
Cal.Rptr. 773 (1984), it appears to have become true since then. See Stangvik v.
Shiley, Inc., 54 Cal.3d 744, 1 Cal.Rptr.2d 556, 819 P.2d 14 (Cal.1991).

IV
34


There are two types of cases in which forum non conveniens dismissals have been
deemed appropriate in federal court. In the first type, now rarely encountered, a
foreign or domestic plaintiff chooses a forum with little or no relation to either the
defendant or the action in order to disadvantage the defendant. See, e.g., Gulf Oil
Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947); Koster v.
Lumbermens Mut. Cas. Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067 (1947).
In the second type, now more commonly encountered, a foreign plaintiff chooses
the home forum of an American defendant in an action that has little or no relation
to the United States in order to take advantage of more favorable American
procedural or substantive rules. See, e.g., Piper, 454 U.S. 235, 102 S.Ct. 252, 70
L.Ed.2d 419.

The first type of case was common in federal courts before the adoption of 28
U.S.C. 1404(a) in 1948. For example, in Gilbert, decided just before the
passage of 1404(a), a Virginia plaintiff sued Pennsylvania-based Gulf Oil in the
Southern District of New York based on Gulf's allegedly negligent delivery of
gasoline and an ensuing explosion at Gilbert's Virginia warehouse. Gilbert, 330
U.S. at 502-03, 67 S.Ct. 839. In upholding a forum non conveniens dismissal, the
Court articulated a number of private and public interest factors relevant in
assessing whether exceptional circumstances justified a forum non conveniens
dismissal. Id. at 504, 67 S.Ct. 839. Private interest factors included the relative
ease of access to sources of proof, the availability of compulsory process for
unwilling witnesses, the comparative cost of obtaining willing witnesses, the
possibility of a view of any affected premises, the ability to enforce any judgment
eventually obtained, and all other practical problems that make trial of a case
easy, expeditious and inexpensive. Id. at 508, 67 S.Ct. 839. Public interest
factors included court congestion, the unfairness of burdening citizens in an
unrelated forum with jury duty, the interest in having localized controversies
decided at home, the interest in trying the case in a forum familiar with the
applicable law, and the interest in avoiding unnecessary conflicts of laws. See id.
at 508-09, 67 S.Ct. 839.
35


Rather than requiring dismissal and refiling of a suit where the alternative forum
is another federal court, 1404(a) now allows transfer of a case from one federal
district court to another for the convenience of parties and witnesses in the interest
of justice. 28 U.S.C. 1404(a). Section 1404(a) thus serves as a statutory
substitute for forum non conveniens in federal court when the alternative forum is
within the territory of the United States. The doctrine of forum non conveniens
survives in federal court only when the alternative forum is in a foreign country.
As a consequence, a forum non conveniens motion in a Gilbert-type case is now
rare, for foreign plaintiffs seeking to avoid their home forums by filing in the
United States do not typically sue in a forum with little or no relation to either the
defendant or the action. Indeed, foreign plaintiffs typically bring such suits in the
quintessentially convenient forum for the defendant-the defendant's home forum.

In Piper, the Supreme Court adapted the analytic structure of Gilbert to take into
account the special characteristics of a case in which a foreign plaintiff sues an
American defendant in its home forum. Piper arose out of the crash of a small
plane in the Scottish highlands that killed the Scottish pilot and five Scottish
passengers. Gaynell Reyno was appointed as administratrix of the estates of
several of the passengers for the purpose of filing a wrongful death action in
California state court against Piper Aircraft and Hartzell Propeller, the
manufacturers of the plane and its propeller. Defendants removed the case to
federal district court in California under 28 U.S.C. 1441. Pursuant to 28 U.S.C.
1404(a) and 1406(a),2 defendants then secured its transfer to the Middle
District of Pennsylvania, the home of Piper's manufacturing plant.

Even though the action was now brought in Piper's home forum, the Pennsylvania
district court granted defendants' motion to dismiss under forum non conveniens,
finding that a combination of the public and private interest factors derived from
Gilbert overwhelmingly favored the Scottish forum. The decedents were
Scottish; all the real plaintiffs in interest and witnesses were Scottish; trial would
be aided by local familiarity with Scottish geography; and crucial evidence in
36

Scotland was beyond the reach of the district court's compulsory process.
Further, there was a significant risk of inconsistent verdicts because there was a
separate action filed in Scotland, and defendants Piper and Hartzell could not
reduce or eliminate that risk by impleading as third-party defendants the charter
company and the estate of the pilot. Finally, the district court stressed that it was
unfamiliar with Scottish law, and that since different law applied to different
defendants, a trial in the United States would be hopelessly complex and
confusing. See Reyno v. Piper Aircraft Co., 479 F.Supp. 727, 732-34
(M.D.Pa.1979).

In sustaining the district court's dismissal, the Supreme Court generally endorsed
the district court's reliance on the Gilbert factors, but gave special attention to two
factors peculiar to a case brought in the United States against American defendants
by a foreign plaintiff. First, the possibility of less favorable substantive law in the
plaintiff's home forum should ordinarily not be given conclusive or even
substantial weight in the forum non conveniens inquiry.3 Piper, 454 U.S. at 247,
102 S.Ct. 252. Second, in contrast to the strong presumption in favor of a
domestic plaintiff's forum choice, a foreign plaintiff's choice deserves less
deference. Id. at 256, 102 S.Ct. 252.

V

This case is unlike Piper in a number of respects. First, unlike Piper, plaintiffs'
chosen forum is more than merely the American defendants' home forum. It is
also a forum with a substantial relation to the action. Plaintiffs allege that the
Giants, through their agent, Rosa, solicited and entered into contracts with the
plaintiffs. Based on these contracts, plaintiffs formed the legitimate expectation
that if they demonstrated sufficient skill they would be able to play professional
baseball in the United States, possibly in San Francisco for the Giants themselves.

37

Second, unlike Piper, there are no possible co-defendants or third-party defendants
who could not be made to appear in the American forum. Indeed, quite the
opposite problem exits in this case: If this suit were dismissed in favor of a suit in
the Dominican Republic, it is not clear that defendant Rosa would appear, or could
be compelled to appear, in that forum. Although the relative ability of the
forums to compel the attendance of significant unwilling witnesses at trial is an
important private interest factor, see 17 James Wm. Moore et al., Moore's Federal
Practice 111.74[3][c][iii] (3d ed.1997), the district court did not accord this
factor any weight because Rosa agreed to participate in legal proceedings in the
Dominican Republic. The plaintiffs expressed concern that Rosa's agreement
was feigned. Indeed, in their Rule 60(b) motion in the district court for
reconsideration of the dismissal, plaintiffs produced affidavits from two people
who recount that Rosa told them he did not plan to return to the Dominican
Republic where he faces possible imprisonment. Despite this concern, the district
court did not make its forum non conveniens dismissal contingent upon Rosa's
participation in the proceeding in the Dominican Republic, either by so ordering in
its original dismissal or by amending its dismissal order in response to plaintiffs'
Rule 60(b) motion.

Third, unlike Piper, there is no showing that access to proof-even aside from Rosa's
testimony-would be easier in the Dominican Republic. The Giants asserted in
their motion to dismiss in the district court that the costs of bringing witnesses to
California would be significantly greater than litigating the matter in the
Dominican Republic, and that United States citizens have much easier access to
the Dominican Republic than Dominican Republic citizens have to enter the
United States. But there is no evidence to support these assertions. Indeed, the
only evidence before the district court was a declaration tending to show the
opposite, stating that visas would be readily available to plaintiffs.

In Cheng v. Boeing Co., 708 F.2d 1406 (9th Cir.1983), this court noted that the
standard to be applied [to a motion for dismissal on the ground of forum non
conveniens] is whether defendants have made a clear showing of facts which
38

establish such oppression and vexation of a defendant as to be out of proportion to
plaintiff's convenience, which may be shown to be slight or nonexistent Id. at
1410. The record in this case indicates the district court misunderstood this
standard: rather than treating forum non conveniens as an exceptional tool to be
employed sparingly, the district court perceived it as a doctrine that compels
plaintiffs to choose the optimal forum for their claim. We recognize that the
Supreme Court in Piper held that a foreign plaintiff's [forum] choice deserves less
deference than the forum choice of a domestic plaintiff. But less deference is
not the same thing as no deference. See Lony v. E.I DuPont de Nemours & Co.,
886 F.2d 628, 633 (3d Cir.1989). We hold that it was an abuse of discretion for
the district court to deny plaintiffs their choice of federal district court in San
Francisco as their forum.

VI

The decision of the district court is therefore REVERSED, and the case is
REMANDED for further proceedings consistent with this opinion.

Erie Railroad v. Tompkins
Brief Fact Summary. Defendant Harry Tompkins, was injured by a freight car of
Plaintiff Erie Railroad while in Hughestown, Pennsylvania. Defendant brought suit
in federal district court in New York, asking the judge to apply general law
regarding negligence, rather than Pennsylvania law, which required a greater
degree of negligence.
Synopsis of Rule of Law. Except in matters governed by the United States
Constitution or Act of Congress, the law that is to be applied in any case is the law
of the state


39

Facts.
In July of 1934 Defendant visited his mother-in-laws house in Pennsylvania. He
walked part of the distance along the railroad tracks of the Plaintiff. A train passed,
and an open door on a refrigerator car struck him and knocked him partially under
the train. His right arm was severed. Defendant then brought suit against the
railroad in the Federal District Court for the Southern District of New York. Under
Pennsylvania law the railroad would have been liable only for wanton
negligence. However, rather than apply Pennsylvania law, the District Judge, at
Defendants urging, applied the general law that the railroad was liable even if it
was guilty only of ordinary negligence. The jury returned a verdict for Defendant.
Plaintiff appealed, but the Second Circuit upheld Defendants verdict. The railroad
then sought certiorari from the Supreme Court of the United States.

Issue. Whether a Federal court sitting in diversity jurisdiction, should apply the
substantive law of the state the activities leading to the suit arose in, or the law of
the Federal court in the forum state.

Held. The Supreme Court reversed the decision of the court of appeals, holding
that except in matters governed by the United States Constitution or Act of
Congress, the law that is to be applied in any case is the law of the state. There is
no Federal common law.

Dissent. The dissenting opinions of Justices Butler and McReynolds are omitted
by the casebook. Concurrence. Justice Reed concurred. Justice Reed agreed with
the majority to the extent that he thought where Congress has not spoken, then a
Federal court should apply the law of the state in which the activities arose.
However, he disagreed that there could be no such thing as federal common law,
finding instead that Congress has the power to declare what rules of substantive
law the federal courts shall use.

40

Discussion. The primary rationale for the Supreme Courts decision here was the
prevention of forum shopping, whereby, under the old policy of allowing a federal
court to ignore the states substantive law and instead apply general law made it
so that the substantive law that was applied in each case varied according to
enforcement was sought in the state or federal court. Moreover, in asserting that
there is no such thing as federal common law, the court is probably referring to
judicial common law. Common law, Congress implicitly retained the right to pass
rules governing the federal courts, e.g. the Federal Rules of Civil Procedure, etc.

K.K. Shell Sekiyu Osaka Hatsubaisho and Fu Hing Oil Co., LTD., vs. Court of
Appeals
G.R. Nos. 90306-07
July 30, 1990
Justice Cortes


Facts:

On January 7,1987, Kumagai Kaiun Kaisha, Ltd. (hereinafter referred to as
Kumagai), a corporation formed and existing under the laws of Japan, filed a
complaint for the collection of a sum of money with preliminary attachment
against Atlantic Venus Co., S.A. (hereinafter referred to as "Atlantic"), a
corporation registered in Panama, the vessel MV Estella and Crestamonte Shipping
Corporation (hereinafter referred to as "Crestamonte"), a Philippine corporation.
Atlantic is the owner of the MV Estella. The complaint, docketed as Civil Case No.
8738930 of the Regional Trial Court, Branch XIV, Manila alleged that
Crestamonte, as bareboat charterer and operator of the MV Estella, appointed N.S.
Shipping Corporation (hereinafter referred to as "NSS"), a Japanese corporation, as
its general agent in Japan. The appointment was formalized in an Agency
41

Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan.
Kumagai supplied the MV Estella with supplies and services but despite repeated
demands Crestamonte failed to pay the amounts due.

NSS and Keihin Narasaki Corporation (hereinafter referred to a Keihin filed
complaints-in-intervention.

On May 19,1987, petitioner Fu Hing Oil Co., Ltd. (hereinafter referred to as Fu
Hing"), a corporation organized in Hong Kong and not doing business in the
Philippines, filed a motion for leave to intervene with an attached complaint-in-
intervention, alleging that Fu Hing supplied marine diesel oil/fuel to the MV
Estella and incurred barge expenses for the total sum of One Hundred Fifty-two
Thousand Four Hundred Twelve Dollars and Fifty-Six Cents (US$152,412.56) but
such has remained unpaid despite demand and that the claim constitutes a maritime
lien. The issuance of a writ of attachment was also prayed for.

On July 16, 1987, petitioner K.K. Shell Sekiyu Osaka Hatsubaisho (hereinafter
referred to as K.K. Shell"), a corporation organized in Japan and not doing
business in the Philippines, likewise filed a motion to intervene with an attached
complaint-in-intervention, alleging that upon request of NSS, Crestamonte's
general agent in Japan, K.K. Shell provided and supplied marine diesel oil/fuel to
the W Estella at the ports of Tokyo and Mutsure in Japan and that despite previous
demands Crestamonte has failed to pay the amounts of Sixteen Thousand Nine
Hundred Ninety-Six Dollars and Ninety- Six Cents (US$16,996.96) and One
Million Yen (Y1,000,000.00) and that K.K. Shell's claim constitutes a maritime
lien on the MV Estella. The complaint-in-intervention sought the issuance of a writ
of preliminary attachment.

Issue:
Whether the court has acquired jurisdiction?
42


Ruling:

Private respondents have anticipated the possibility that the courts will not find that
K.K. Shell is expressly bound by the Agency Agreement, and thus they fall back
on the argument that even if this were so, the doctrine of forum non conveniens
would be a valid ground to cause the dismissal of K.K. Shell's complaint-in-
intervention.

K.K. Shell counters this argument by invoking its right as maritime lienholder. It
cites Presidential Decree No. 1521, the Ship Mortgage Decree of 1978, which
provides:

SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-Any person
furnishing repairs, supplies, to wage, use of dry dock or marine railway, or other
necessaries, to any vessel, whether foreign or domestic, upon the order of the
owner of such vessel, or of a person authorized by the owner, shall have a maritime
lien on the vessel, which may be enforced by suit in rem, and it shall be necessary
to allege or prove that credit was given to the vessel.

Private respondents on the other hand argue that even if P.D. No. 1521 is
applicable, K.K. Shell cannot rely on the maritime lien because the fuel was
provided not exclusively for the benefit of the MV Estella, but for the benefit of
Crestamonte in general. Under the law it must be established that the credit was
extended to the vessel itself. Now, this is a defense that calls precisely for a factual
determination by the trial court of who benefitted from the delivery of the fuel.
Hence, again, the necessity for the reception of evidence before the trial court.

43

In other words, considering the dearth of evidence due to the fact that the private
respondents have yet to file their answer in the proceedings below and trial on the
merits is still to be conducted, whether or not petitioners are indeed maritime
lienholders and as such may enforce the lien against the MV Estella are matters
that still have to be established.

Neither are we ready to rule on the private respondents' invocation of the doctrine
of forum non conveniens, as the exact nature of the relationship of the parties is
still to be established. We leave this matter to the sound discretion of the trial court
judge who is in the best position, after some vital facts are established, to
determine whether special circumstances require that his court desist from
assuming jurisdiction over the suit.
ASE CONCERNING UNITED STATES DIPLOMATIC AND
CONSULAR STAFF IN TEHRAN
Judgment of 24 May 1980

Facts:
In November 4, 1974, student militants of the group Muslim Student Followers of
the Imam's Line barged into the US Embassy in Tehran and held US diplomats and
consulars hostage for 444 days. The cause of the Iranian students action against
the US was believed to be the latters grant of medical asylum to Shah Mohammad
Reza Pahlavi and its refusal to turn the Shah over for trial.

The US sought recourse before the international court, asking that the hostages be
freed and that reparations be given to the US by the Iranian government for the
latters failure to carry its international legal obligations. US averred that Iran was
responsible due to its initial inaction to the crisis and its subsequent statement of
support to the seizure.

44

Issue:
Whether or not Iran was liable to the United States for the seizure of the US
embassy and the hostage-taking of the US nationals by the Iranian militants.

Ruling:
Iran was under obligation to make reparations for the injury caused to the United
States.
Irans failure to take appropriate steps to protect the US embassy and Consulates
was a violation of its obligations under the 1961 Vienna Convention on Diplomatic
Relations, the 1963 Vienna Convention on Consular Relations, and 1955 Treaty of
Amity, Economic Relations and Consular Rights between Iran and the United
States. Iran had the international legal responsibility to keep the embassy
inviolable. Iran was fully aware of its obligations but it did nothing to prevent the
take over and the captivity of the US nationals.

Although the take-over of the embassy was not held to have been an act of the
state, the consequent detention of the US nationals was attributed to Iran because
of its approval and support to said detention, such act was a violation of the
provisions in the aforenamed conventions and treaty. Once organs of the Iranian
State had thus given approval to the acts complained of and decided to perpetuate
them as a means of pressure on the United States, those acts were transformed into
acts of the Iranian State: the militants became agents of that State, which itself
became internationally responsible for their acts.

For its breaches, the Islamic Republic of Iran had incurred responsibility towards
the United States of America. Iran is obliged to make reparations and to endeavor
for the release of the hostages.


45

The crisis arising from the seizure of American hostages in Iran was settled on
January 19, 1981 when Iran and the United States executed the General
Declaration and the Claims Settlement Declaration, agreements commonly known
as the Algerian Accords. These agreements dealt primarily with the unfreezing of
Iranian assets located in the United States and the method for resolving suits by
nationals of the United States against the government of Iran. They also provided
that the United States Government would take certain steps in connection with
legal actions involving the Shah's property. Specifically, the United States agreed
to freeze the Shah's assets within this country, to inform United States courts that
in any litigation involving Iran and the Shah's estate sovereign immunity and the
Act of State doctrine were not available as defenses and to guarantee the
enforcement of any final judgments involving these matters. Any claimed failure
of the United States to meet these treaty obligations was made subject to arbitration
between the signatories in a specially designated international tribunal and its
award of damages to plaintiff for the breach could be enforced in the courts of any
nation. In addition, a summary statement issued by the United States Government
prior to the signing of the Accords stated that it would advise American courts of
the right of the Iranian government to bring an action in this country to recover the
Shah's assets. Plaintiff contends that these promises preclude New York courts
from dismissing the action on forum non conveniens grounds.
At the time the Accords were executed, this action had been instituted in Supreme
Court and there was pending a motion to dismiss, made several months earlier,
[62 N.Y.2d 485]
based upon defendant's contentions that the action involved a nonjusticiable
political question, that plaintiff had unclean hands and on grounds of forum non
conveniens. Indeed, the action was mentioned in an earlier communication of the
United States directed to the government of Iran on December 3, 1980.
Nevertheless, although the Accords when finally concluded contained specific
provisions concerning plaintiff's claims against the Shah and his family, they
contained no reference to the pending suit asserting those claims nor did the United
States guarantee that a forum would be available to plaintiff to litigate them.
46

Plaintiff asserts, however, that various statements issued by the State Department
when read in conjunction with these treaties evidence a commitment by the United
States to assure that New York courts would entertain plaintiff's claim. It refers
particularly to a State Department summary of the United States position on the
Iranian situation, which indicated that the Federal Government would "facilitate
any legal action" brought by the government of Iran to recover on claims to the
former Shah's assets and request the court's assistance in obtaining information
about such assets (Summary Report, Hostage Crisis in Iran, 1979-1981, submitted
by Secretary of State Edmund Muskie in Hearings before the Senate Committee on
Foreign Relations, 97th Cong, 1st Sess, Feb. 17, 18 and March 4, 1981, p 14).
Generally, a treaty is to be construed according to principles applied to
written contracts between individuals and the clear language of the treaty controls
unless it is inconsistent with the intent or expectations of the parties (Sumitomo
Shoji Amer. v Avagliano, 457 U.S. 176; Sullivan v Kidd, 254 U.S. 433, 439;
Hamilton v Erie R. R. Co., 219 N.Y. 343, 352-353). Permissibly the history of the
treaty, diplomatic correspondence and other extraneous documents may be
considered to discover that intent (see Sumitomo Shoji Amer. v Avagliano, supra,
at p 180; Maximov v United States, 373 U.S. 49, 54; Ross v Pan Amer. Airways,
299 N.Y. 88; and see, generally, Restatement, Foreign Relations Law of United
States [rev-Tent Draft No. 1], 329 et seq.). We have no difficulty interpreting the
Accords and the extraneous evidence submitted by the parties to determine that the
United States Government did not guarantee plaintiff a New York forum for its
claim.

Neither the agreements nor the statement of the Summary Report indicates
otherwise when analyzed in terms of the natural and ordinary meaning of the
words used (see Sullivan v Kidd, supra, at p 439; Hamilton v Erie R. R. Co., 219
N.Y. 343, 352-353, supra). The Federal Government simply expressed a
willingness to "facilitate" or aid Iran in bringing the claims, presumably by
complying with the limited promises it made in the Accords. Indeed, inasmuch as
treaties are subject to constitutional restraints (Reid v Covert, 354 U.S. 1;
Restatement, Foreign Relations Law of United States [rev-Tent Draft No. 1],
304), it is questionable whether the Federal Government could guarantee a New
47

York forum by treaty without violating constitutional principles of federalism and
separation of powers (see, generally, Guaranty Trust Co. v United States, 304 U.S.
126, 140 [Statute of Limitations]; see, also, United States v Pink, 315 U.S. 203,
216, 230-234).
The precedents cited by plaintiff are not helpful (Dames & Moore v Regan,
453 U.S. 654; United States v Pink, 315 U.S. 203, supra; United States v Belmont,
301 U.S. 324). Those cases concern the broad powers of the Federal Government
to mandate that the resolution of claims against Iran by nationals of the United
States shall be pursued in an international tribunal (Dames & Moore v Regan,
supra), or to implement the right of the Soviet government (by assignment to the
United States) to recapture Russian assets held by Americans or American
institutions in this country (United States v Pink, supra; United States v Belmont,
supra).
Such commitments of the Federal Government to resolve claims between the
signatories or nationals are viewed liberally because unless resolved the claims
may provide continuing irritations and conflicts which interfere with peaceful
relations between the nations. Similar commitments are made in Points I-III of the
General Declaration and in the Claims Settlement Declaration of the Accords and
are not at issue here. This is litigation by a foreign government against its own
national who happened to be within the State of New York at the time this suit was
commenced. It involves an internal dispute, not normally a matter considered in
the exercise of treaty powers and a matter which does not generally engage the
national interest to the same extent as claims by nationals of one signatory nation
against the other signatory nation (see Nowak-Rotunda-Young, Constitutional Law
[2d ed], p 202).
The parties have culled statements from the various documents and
communiques and the testimony of witnesses before the Senate allegedly
supporting their respective positions. The evidence suggests, however, that the
State Department recognized the problems inherent in this litigation and the
restraints of federalism in our system of government and that, as Mr. Warren
Christopher, the United States negotiator, stated in his testimony before the Senate,
the courts would have to decide whether plaintiff had "a right [to maintain this
action] within our legal system" (Senate Committee on Foreign Relations Hearing,
48

97th Cong, 1st Sess, Feb. 17, 1981, at p 56). The United States agreed that plaintiff
would not be foreclosed from pursuing its claim in our courts by preclusive
doctrines of international law but it did not undertake to guarantee the opportunity
for plaintiff to prove its claim in the New York courts. The United States has met
its commitment to "facilitate" this lawsuit by freezing the Shah's assets and by
advising the courts that the Act of State doctrine and sovereign immunity
principles are not to apply to plaintiff's claim. Nothing in the record or in its
communication to the trial court suggests that a promise was made that it or the
courts would do more.
Accordingly, the order of the Appellate Division should be affirmed, with costs

In 1978, in MacShannon v Rockware Glass Ltd, the House of Lords in the word of
Lord Salmon stated: "the real test of [whether to grant a stay] depends upon what
the court in its discretion considers that justice demands". This test is preferable to
the test of whether the plaintiff has behaved 'vexatiously' or 'oppressively' on a so-
called liberal interpretation of those words. With respect, it is extremely difficult to
interpret them liberally without emasculating them and completely destroying their
true meaning[8]. Almost unanimously the House of Lords agreed that the concept
had to be changed. However, English judges tended not to use the new words of
forum non conveniens preferring for a more open-minded interpretation of the
concept of oppression, vexation and abuse. It was only 1984 when Lord Diplock ,
in The Abidin Daver, was able to say "My Lords, the essential change in the
attitude of the English courts to pending or prospective litigation in foreign
jurisdictions that has been achieved step-by-step during the last 10 years as a result
of the successive decisions of this HouseI think the time is now ripe to
acknowledge frankly it is, in the field of law with which this appeal is concerned,
indistinguishable from the Scottish legal doctrine of forum non conveniens
49

G.R. No. 166920 February 19, 2007

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER
HENRICHSEN, Petitioners,
vs.
KLAUS K. SCHONFELD, Respondent.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563.
The CA decision reversed the Resolution of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed
the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00
dismissing the complaint of respondent Klaus K. Schonfeld.

The antecedent facts are as follows:

Respondent is a Canadian citizen and was a resident of New Westminster, British
Columbia, Canada. He had been a consultant in the field of environmental
engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a
corporation duly established and incorporated in accordance with the laws of the
Philippines. The primary purpose of PPI was to engage in the business of
providing specialty and technical services both in and out of the Philippines.2 It is
a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of
50

PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in
Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well
as in other countries where PCIJ had business.

In 1997, PCIJ decided to engage in consultancy services for water and sanitation in
the Philippines. In October 1997, respondent was employed by PCIJ, through
Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department.
However, PCIJ assigned him as PPI sector manager in the Philippines. His salary
was to be paid partly by PPI and PCIJ.

On January 7, 1998, Henrichsen transmitted a letter of employment to respondent
in Canada, requesting him to accept the same and affix his conformity thereto.
Respondent made some revisions in the letter of employment and signed the
contract.3 He then sent a copy to Henrichsen. The letter of employment reads:

Mr. Klaus K. Schonfeld
II-365 Ginger Drive
New Westminster, B.C.
Canada V3L 5L5
Tokyo 7

January 1998

Dear Mr. Schonfeld,

Letter of Employment
51


This Letter of Employment with the attached General Conditions of Employment
constitutes the agreement under which you will be engaged by our Company on the
terms and conditions defined hereunder. In case of any discrepancies or
contradictions between this Letter of Employment and the General Conditions of
Employment, this Letter of Employment will prevail.

You will, from the date of commencement, be ["seconded"] to our subsidiary
Pacicon Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will
provide you with a separate contract, which will define that part of the present
terms and conditions for which Pacicon is responsible. In case of any discrepancies
or contradictions between the present Letter of Employment and the contract with
Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its
obligations, this Letter of Employment will prevail.

1. Project Country: The Philippines with possible short-term assignments in other
countries.

2. Duty Station: Manila, the Philippines.

3. Family Status: Married.

4. Position: Sector Manager, Water and Sanitation.

5. Commencement: 1st October 1997.

52

6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a
local salary (US$2,100.00 per month) by Pacicon and partly as an offshore salary
(US$4,900.00) by PCI to bank accounts to be nominated by you.

A performance related component corresponding to 17.6% of the total annual
remuneration, subject to satisfactory performance against agreed tasks and targets,
paid offshore.

7. Accommodation: The company will provide partly furnished accommodation to
a rent including association fees, taxes and VAT not exceeding the Pesos
equivalent of US$2,900.00 per month.

8. Transportation: Included for in the remuneration.

9. Leave Travels: You are entitled to two leave travels per year.

10. Shipment of Personal

Effects: The maximum allowance is US$4,000.00.

11. Mobilization

Travel: Mobilization travel will be from New Westminster, B.C., Canada.

53

This letter is send (sic) to you in duplicate; we kindly request you to sign and
return one copy to us.

Yours sincerely,

Pacific Consultants International
Jens Peter Henrichsen

Above terms and conditions accepted

Date: 2 March 1998

(Sgd.)
Klaus Schonfeld

as annotated and initialed4

Section 21 of the General Conditions of Employment appended to the letter of
employment reads:

21 Arbitration

Any question of interpretation, understanding or fulfillment of the conditions of
employment, as well as any question arising between the Employee and the
54

Company which is in consequence of or connected with his employment with the
Company and which can not be settled amicably, is to be finally settled, binding to
both parties through written submissions, by the Court of Arbitration in London.5

Respondent arrived in the Philippines and assumed his position as PPI Sector
Manager. He was accorded the status of a resident alien.

As required by Rule XIV (Employment of Aliens) of the Omnibus Rules
Implementing the Labor Code, PPI applied for an Alien Employment Permit
(Permit) for respondent before the Department of Labor and Employment (DOLE).
It appended respondents contract of employment to the application.1awphi1.net

On February 26, 1999, the DOLE granted the application and issued the Permit to
respondent. It reads:

Republic of the Philippines
Department of Labor & Employment
National Capital Region

ALIEN EMPLOYMENT PERMIT

ISSUED TO: SCHONFELD, KLAUS KURT

DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian

55

POSITION: VP WATER & SANITATION

EMPLOYER: PACICON PHILIPPINES, INC.

ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City

P E R M I T

ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:

VALID UNTIL: January 7, 2000 (Sgd.)

APPROVED: BIENVENIDO S. LAGUESMA

By: MAXIMO B. ANITO
REGIONAL DIRECTOR

(Emphasis supplied)6

Respondent received his compensation from PPI for the following periods:
February to June 1998, November to December 1998, and January to August 1999.
He was also reimbursed by PPI for the expenses he incurred in connection with his
work as sector manager. He reported for work in Manila except for occasional
assignments abroad, and received instructions from Henrichsen.7
56


On May 5, 1999, respondent received a letter from Henrichsen informing him that
his employment had been terminated effective August 4, 1999 for the reason that
PCIJ and PPI had not been successful in the water and sanitation sector in the
Philippines.8 However, on July 24, 1999, Henrichsen, by electronic mail,9
requested respondent to stay put in his job after August 5, 1999, until such time
that he would be able to report on certain projects and discuss all the opportunities
he had developed.10 Respondent continued his work with PPI until the end of
business hours on October 1, 1999.

Respondent filed with PPI several money claims, including unpaid salary, leave
pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI
partially settled some of his claims (US$5,635.99), but refused to pay the rest.

On December 5, 2000, respondent filed a Complaint11 for Illegal Dismissal
against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as
NLRC-NCR Case No. 30-12-04787-00.

In his Complaint, respondent alleged that he was illegally dismissed; PPI had not
notified the DOLE of its decision to close one of its departments, which resulted in
his dismissal; and they failed to notify him that his employment was terminated
after August 4, 1999. Respondent also claimed for separation pay and other unpaid
benefits. He alleged that the company acted in bad faith and disregarded his rights.
He prayed for the following reliefs:

1. Judgment be rendered in his favor ordering the respondents to reinstate
complainant to his former position without loss of seniority and other privileges
and benefits, and to pay his full backwages from the time compensation was with
held (sic) from him up to the time of his actual reinstatement. In the alternative, if
reinstatement is no longer feasible, respondents must pay the complainant full
57

backwages, and separation pay equivalent to one month pay for every year of
service, or in the amount of US$16,400.00 as separation pay;

2. Judgment be rendered ordering the respondents to pay the outstanding monetary
obligation to complainant in the amount of US$10,131.76 representing the balance
of unpaid salaries, leave pay, cost of his air travel and shipment of goods from
Manila to Canada; and

3. Judgment be rendered ordering the respondent company to pay the complainant
damages in the amount of no less than US $10,000.00 and to pay 10% of the total
monetary award as attorneys fees, and costs.

Other reliefs just and equitable under the premises are, likewise, prayed for.12
1awphi1.net

Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1)
the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was
improperly laid. It averred that respondent was a Canadian citizen, a transient
expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a
foreign corporation with principal office in Tokyo, Japan. Since respondents cause
of action was based on his letter of employment executed in Tokyo, Japan dated
January 7, 1998, under the principle of lex loci contractus, the complaint should
have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer
any justification for filing his complaint against PPI before the NLRC in the
Philippines. Moreover, under Section 12 of the General Conditions of Employment
appended to the letter of employment dated January 7, 1998, complainant and PCIJ
had agreed that any employment-related dispute should be brought before the
London Court of Arbitration. Since even the Supreme Court had already ruled that
such an agreement on venue is valid, Philippine courts have no jurisdiction.13

58

Respondent opposed the Motion, contending that he was employed by PPI to work
in the Philippines under contract separate from his January 7, 1998 contract of
employment with PCIJ. He insisted that his employer was PPI, a Philippine-
registered corporation; it is inconsequential that PPI is a wholly-owned subsidiary
of PCIJ because the two corporations have separate and distinct personalities; and
he received orders and instructions from Henrichsen who was the president of PPI.
He further insisted that the principles of forum non conveniens and lex loci
contractus do not apply, and that although he is a Canadian citizen, Philippine
Labor Laws apply in this case.

Respondent adduced in evidence the following contract of employment dated
January 9, 1998 which he had entered into with Henrichsen:

Mr. Klaus K. Schonfeld

II-365 Ginger Drive
New Westminster, B.C.
Canada V3L 5L5

Manila 9 January, 1998

Dear Mr. Schonfeld,

Letter of Employment

59

This Letter of Employment with the attached General Conditions of Employment
constitutes the agreement, under which you will be engaged by Pacicon
Philippines, Inc. on the terms and conditions defined hereunder.

1. Project Country: The Philippines with possible assignments in other countries.

2. Duty Station: Manila, the Philippines.

3. Family Status: Married.

4. Position: Sector Manager Water and Sanitation Sector.

5. Commencement: 1 January, 1998.

6. Remuneration: US$3,100.00 per month payable to a bank account to be
nominated by you.

7. Accommodation: The company will provide partly furnished accommodation to
a rent including association fees, taxes and VAT not exceeding the Pesos
equivalent of US$2300.00 per month.

8. Transportation: Included for in the remuneration.

9. Shipment of Personal The maximum allowance is US$2500.00 in Effects:
connection with initial shipment of personal effects from Canada.
60


10. Mobilization Travel: Mobilization travel will be from New Westminster, B.C.,
Canada.

This letter is send (sic) to you in duplicate; we kindly request you to sign and
return one copy to us.

Yours sincerely,

Pacicon Philippines, Inc.
Jens Peter Henrichsen
President14

According to respondent, the material allegations of the complaint, not petitioners
defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the
Arbitration Clause in the General Conditions of Employment does not provide for
an exclusive venue where the complaint against PPI for violation of the Philippine
Labor Laws may be filed. Respondent pointed out that PPI had adopted two
inconsistent positions: it was first alleged that he should have filed his complaint in
Tokyo, Japan; and it later insisted that the complaint should have been filed in the
London Court of Arbitration.15

In their reply, petitioners claimed that respondents employer was PCIJ, which had
exercised supervision and control over him, and not PPI. Respondent was
dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in
Japan.16 The letter of employment dated January 9, 1998 which respondent relies
upon did not bear his (respondents) signature nor that of Henrichsen.
61


On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners
Motion to Dismiss. The dispositive portion reads:

WHEREFORE, finding merit in respondents Motion to Dismiss, the same is
hereby granted. The instant complaint filed by the complainant is dismissed for
lack of merit.

SO ORDERED.17

The Labor Arbiter found, among others, that the January 7, 1998 contract of
employment between respondent and PCIJ was controlling; the Philippines was
only the "duty station" where Schonfeld was required to work under the General
Conditions of Employment. PCIJ remained respondents employer despite his
having been sent to the Philippines. Since the parties had agreed that any
differences regarding employer-employee relationship should be submitted to the
jurisdiction of the court of arbitration in London, this agreement is controlling.

On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and
affirmed the latters decision in toto.18

Respondent then filed a petition for certiorari under Rule 65 with the CA where he
raised the following arguments:

I

62

WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
AFFIRMED THE LABOR ARBITERS DECISION CONSIDERING THAT:

A. PETITIONERS TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS
INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND
THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE
INSTANT CASE; AND

B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE
ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF
ARBITRATION IN LONDON.

II

WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT
PETITIONERS TERMINATION FROM EMPLOYMENT IS ILLEGAL:

A. THE CLOSURE OF RESPONDENT COMPANYS WATER AND
SANITATION SECTOR WAS NOT BONA FIDE.

B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT
COMPANYS WATER AND SANITATION SECTOR WAS JUSTIFIABLE,
PETITIONERS DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT
63

OF LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT
NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.19

Respondent averred that the absence or existence of a written contract of
employment is not decisive of whether he is an employee of PPI. He maintained
that PPI, through its president Henrichsen, directed his work/duties as Sector
Manager of PPI; proof of this was his letter-proposal to the Development Bank of
the Philippines for PPI to provide consultancy services for the Construction
Supervision of the Water Supply and Sanitation component of the World Bank-
Assisted LGU Urban Water and Sanitation Project.20 He emphasized that as
gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him
by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president
Henrichsen who terminated his employment; PPI also paid his salary and
reimbursed his expenses related to transactions abroad. That PPI is a wholly-
owned subsidiary of PCIJ is of no moment because the two corporations have
separate and distinct personalities.

The CA found the petition meritorious. Applying the four-fold test21 of
determining an employer-employee relationship, the CA declared that respondent
was an employee of PPI. On the issue of venue, the appellate court declared that,
even under the January 7, 1998 contract of employment, the parties were not
precluded from bringing a case related thereto in other venues. While there was,
indeed, an agreement that issues between the parties were to be resolved in the
London Court of Arbitration, the venue is not exclusive, since there is no
stipulation that the complaint cannot be filed in any other forum other than in the
Philippines.

On November 25, 2004, the CA rendered its decision granting the petition, the
decretal portion of which reads:

64

WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the
NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to
the Labor Arbiter a quo for disposition of the case on the merits.

SO ORDERED.22

A motion for the reconsideration of the above decision was filed by PPI and
Henrichsen, which the appellate court denied for lack of merit.23

In the present recourse, PPI and Henrichsen, as petitioners, raise the following
issues:

I

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN
EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND
RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A
FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN
CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD,
AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK
ASSIGNMENT WAS IN MANILA.

II

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENTS
CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A
65

FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN
CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD,
AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL BE
FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON."24

Petitioners fault the CA for reversing the findings of the Labor Arbiter and the
NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the
NLRC, are conclusive on the CA. They maintain that it is not within the province
of the appellate court in a petition for certiorari to review the facts and evidence on
record since there was no conflict in the factual findings and conclusions of the
lower tribunals. Petitioners assert that such findings and conclusions, having been
made by agencies with expertise on the subject matter, should be deemed binding
and conclusive. They contend that it was the PCIJ which employed respondent as
an employee; it merely seconded him to petitioner PPI in the Philippines, and
assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-
owned subsidiary of PCIJ, was never the employer of respondent.

Petitioners assert that the January 9, 1998 letter of employment which respondent
presented to prove his employment with petitioner PPI is of doubtful authenticity
since it was unsigned by the purported parties. They insist that PCIJ paid
respondents salaries and only coursed the same through petitioner PPI. PPI, being
its subsidiary, had supervision and control over respondents work, and had the
responsibilities of monitoring the "daily administration" of respondent. Respondent
cannot rely on the pay slips, expenses claim forms, and reimbursement memoranda
to prove that he was an employee of petitioner PPI because these documents are of
doubtful authenticity.

Petitioners further contend that, although Henrichsen was both a director of PCIJ
and president of PPI, it was he who signed the termination letter of respondent
upon instructions of PCIJ. This is buttressed by the fact that PCIJs letterhead was
used to inform him that his employment was terminated. Petitioners further assert
66

that all work instructions came from PCIJ and that petitioner PPI only served as a
"conduit." Respondents Alien Employment Permit stating that petitioner PPI was
his employer is but a necessary consequence of his being "seconded" thereto. It is
not sufficient proof that petitioner PPI is respondents employer. The entry was
only made to comply with the DOLE requirements.

There being no evidence that petitioner PPI is the employer of respondent, the
Labor Arbiter has no jurisdiction over respondents complaint.

Petitioners aver that since respondent is a Canadian citizen, the CA erred in
ignoring their claim that the principlesof forum non conveniens and lex loci
contractus are applicable. They also point out that the principal office, officers and
staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment of
respondent was executed in Tokyo, Japan.

Moreover, under Section 21 of the General Conditions for Employment
incorporated in respondents January 7, 1998 letter of employment, the dispute
between respondent and PCIJ should be settled by the court of arbitration of
London. Petitioners claim that the words used therein are sufficient to show the
exclusive and restrictive nature of the stipulation on venue.

Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers
and employers, while the Labor Code of the Philippines applies only to Filipino
employers and Philippine-based employers and their employees, not to PCIJ. In
fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign
workers who executed employment agreements with foreign employers abroad,
although "seconded" to the Philippines.25

67

In his Comment,26 respondent maintains that petitioners raised factual issues in
their petition which are proscribed under Section 1, Rule 45 of the Rules of Court.
The finding of the CA that he had been an employee of petitioner PPI and not of
PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and
the NLRC ignored; they erroneously opted to dismiss his complaint on the basis of
the letter of employment and Section 21 of the General Conditions of Employment.
In contrast, the CA took into account the evidence on record and applied case law
correctly.

The petition is denied for lack of merit.

It must be stressed that in resolving a petition for certiorari, the CA is not
proscribed from reviewing the evidence on record. Under Section 9 of Batas
Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass
upon the evidence, if and when necessary, to resolve factual issues.27 If it appears
that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent
as to compel a contrary conclusion if such evidence had been properly appreciated,
the factual findings of such tribunals cannot be given great respect and finality.28

Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence
which respondent appended to his pleadings showing that he was an employee of
petitioner PPI; they merely focused on the January 7, 1998 letter of employment
and Section 21 of the General Conditions of Employment.

Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE.
In said application, PPI averred that respondent is its employee. To show that this
was the case, PPI appended a copy of respondents employment contract. The
DOLE then granted the application of PPI and issued the permit.

68

It bears stressing that under the Omnibus Rules Implementing the Labor Code, one
of the requirements for the issuance of an employment permit is the employment
contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules
provides:

SECTION 1. Coverage. This rule shall apply to all aliens employed or seeking
employment in the Philippines and the present or prospective employers.

SECTION 2. Submission of list. All employers employing foreign nationals,
whether resident or non-resident, shall submit a list of nationals to the Bureau
indicating their names, citizenship, foreign and local address, nature of
employment and status of stay in the Philippines.

SECTION 3. Registration of resident aliens. All employed resident aliens shall
register with the Bureau under such guidelines as may be issued by it.

SECTION 4. Employment permit required for entry. No alien seeking
employment, whether as a resident or non-resident, may enter the Philippines
without first securing an employment permit from the Ministry. If an alien enters
the country under a non-working visa and wishes to be employed thereafter, he
may only be allowed to be employed upon presentation of a duly approved
employment permit.

SECTION 5. Requirements for employment permit applicants. The application
for an employment permit shall be accompanied by the following:

69

(a) Curriculum vitae duly signed by the applicant indicating his educational
background, his work experience and other data showing that he possesses
technical skills in his trade or profession.

(b) Contract of employment between the employer and the principal which shall
embody the following, among others:

1. That the non-resident alien worker shall comply with all applicable laws and
rules and regulations of the Philippines;

2. That the non-resident alien worker and the employer shall bind themselves to
train at least two (2) Filipino understudies for a period to be determined by the
Minister; and

3. That he shall not engage in any gainful employment other than that for which he
was issued a permit.

(c) A designation by the employer of at least two (2) understudies for every alien
worker. Such understudies must be the most ranking regular employees in the
section or department for which the expatriates are being hired to insure the actual
transfer of technology.

Under Section 6 of the Rule, the DOLE may issue an alien employment permit
based only on the following:

(a) Compliance by the applicant and his employer with the requirements of Section
2 hereof;
70


(b) Report of the Bureau Director as to the availability or non-availability of any
person in the Philippines who is competent and willing to do the job for which the
services of the applicant are desired;

(c) His assessment as to whether or not the employment of the applicant will
redound to the national interest;

(d) Admissibility of the alien as certified by the Commission on Immigration and
Deportation;

(e) The recommendation of the Board of Investments or other appropriate
government agencies if the applicant will be employed in preferred areas of
investments or in accordance with the imperative of economic development.

Thus, as claimed by respondent, he had an employment contract with petitioner
PPI; otherwise, petitioner PPI would not have filed an application for a Permit with
the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner
PPI, had been the employer of respondent all along.

We agree with the conclusion of the CA that there was an employer-employee
relationship between petitioner PPI and respondent using the four-fold test.
Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employees
conduct. It is the so-called "control test" which constitutes the most important
index of the existence of the employer-employee relationshipthat is, whether the
employer controls or has reserved the right to control the employee not only as to
71

the result of the work to be done but also as to the means and methods by which
the same is to be accomplished. Stated otherwise, an employer-employee
relationship exists where the person for whom the services are performed reserves
the right to control not only the end to be achieved but also the means to be used in
reaching such end.29 We quote with approval the following ruling of the CA:

[T]here is, indeed, substantial evidence on record which would erase any doubt
that the respondent company is the true employer of petitioner. In the case at bar,
the power to control and supervise petitioners work performance devolved upon
the respondent company. Likewise, the power to terminate the employment
relationship was exercised by the President of the respondent company. It is not the
letterhead used by the company in the termination letter which controls, but the
person who exercised the power to terminate the employee. It is also
inconsequential if the second letter of employment executed in the Philippines was
not signed by the petitioner. An employer-employee relationship may indeed exist
even in the absence of a written contract, so long as the four elements mentioned in
the Mafinco case are all present.30

The settled rule on stipulations regarding venue, as held by this Court in the
vintage case of Philippine Banking Corporation v. Tensuan,31 is that while they
are considered valid and enforceable, venue stipulations in a contract do not, as a
rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in
the absence of qualifying or restrictive words. They should be considered merely
as an agreement or additional forum, not as limiting venue to the specified place.
They are not exclusive but, rather permissive. If the intention of the parties were to
restrict venue, there must be accompanying language clearly and categorically
expressing their purpose and design that actions between them be litigated only at
the place named by them.32


72

In the instant case, no restrictive words like "only," "solely," "exclusively in this
court," "in no other court save ," "particularly," "nowhere else but/except ," or
words of equal import were stated in the contract.33 It cannot be said that the court
of arbitration in London is an exclusive venue to bring forth any complaint arising
out of the employment contract.

Petitioners contend that respondent should have filed his Complaint in his place of
permanent residence, or where the PCIJ holds its principal office, at the place
where the contract of employment was signed, in London as stated in their
contract. By enumerating possible venues where respondent could have filed his
complaint, however, petitioners themselves admitted that the provision on venue in
the employment contract is indeed merely permissive.

Petitioners insistence on the application of the principle of forum non conveniens
must be rejected. The bare fact that respondent is a Canadian citizen and was a
repatriate does not warrant the application of the principle for the following
reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as
a ground for the dismissal of the complaint.34

Second. The propriety of dismissing a case based on this principle requires a
factual determination; hence, it is properly considered as defense.35

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court
of Appeals,36 this Court held that:

73

x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do
so; provided, that the following requisites are met: (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. x x
x

Admittedly, all the foregoing requisites are present in this case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in
CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor
Arbiter for disposition of the case on the merits. Cost against petitioners.

SO ORDERED.