G.R. No.

162894 09/08/2017, 10:10 PM

Today is Wednesday, August 09, 2017

Custom Search

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 162894 February 26, 2008

RAYTHEON INTERNATIONAL, INC., petitioner,

vs.
STOCKTON W. ROUZIE, JR., respondent.

DECISION

TINGA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure which
seeks the reversal of the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No. 67001 and the
dismissal of the civil case filed by respondent against petitioner with the trial court.

As culled from the records of the case, the following antecedents appear:

Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under the laws of
the State of Connecticut, United States of America, and respondent Stockton W. Rouzie, Jr., an American citizen,
entered into a contract whereby BMSI hired respondent 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. On 11
March 1992, respondent secured a service contract with the Republic of the Philippines on behalf of BMSI for the
dredging of rivers affected by the Mt. Pinatubo eruption and mudflows.3

On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations Commission
(NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and Walter G. Browning for
alleged nonpayment of commissions, illegal termination and breach of employment contract.4 On 28 September
1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay respondents money
claims.5 Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and dismissed respondents
complaint on the ground of lack of jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a
Resolution dated 26 November 1997. The Resolution became final and executory on 09 November 1998.

On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the Regional
Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil Case No. 1192-BG, named as
defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the two corporations
impleaded in the earlier labor case. The complaint essentially reiterated the allegations in the labor case that BMSI
verbally employed respondent to negotiate the sale of services in government projects and that respondent was not
paid the commissions due him from the Pinatubo dredging project which he secured on behalf of BMSI. The
complaint also averred that BMSI and RUST as well as petitioner itself had combined and functioned as one
company.

In its Answer,8 petitioner alleged that contrary to respondents claim, it was a foreign corporation duly licensed to do
business in the Philippines and denied entering into any arrangement with respondent or paying the latter any sum
of money. Petitioner also denied combining with BMSI and RUST for the purpose of assuming the alleged obligation
of the said companies.9 Petitioner also referred to the NLRC decision which disclosed that per the written
agreement between respondent and BMSI and RUST, denominated as "Special Sales Representative Agreement,"
the rights and obligations of the parties shall be governed by the laws of the State of Connecticut.10 Petitioner
sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non conveniens and
prayed for damages by way of compulsory counterclaim.11

On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative Defenses and for
Summary Judgment12 seeking the dismissal of the complaint on grounds of forum non conveniens and failure to
state a cause of action. Respondent opposed the same. Pending the resolution of the omnibus motion, the
deposition of Walter Browning was taken before the Philippine Consulate General in Chicago.13

In an Order14 dated 13 September 2000, the RTC denied petitioners omnibus motion. The trial court held that the
factual allegations in the complaint, assuming the same to be admitted, were sufficient for the trial court to render a
valid judgment thereon. It also ruled that the principle of forum non conveniens was inapplicable because the trial
court could enforce judgment on petitioner, it being a foreign corporation licensed to do business in the
Philippines.15

Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by respondent.17 In an
Order dated 31 July 2001,18 the trial court denied petitioners motion. Thus, it filed a Rule 65 Petition19 with the

http://www.lawphil.net/judjuris/juri2008/feb2008/gr_162894_2008.html Page 1 of 5
G.R. No. 162894 09/08/2017, 10:10 PM

Court of Appeals praying for the issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of
the trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from conducting further
proceedings.20

On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the petition for certiorari for lack
of merit. It also denied petitioners motion for reconsideration in the assailed Resolution issued on 10 March 2004.22

The appellate court held that although the trial court should not have confined itself to the allegations in the
complaint and should have also considered evidence aliunde in resolving petitioners omnibus motion, it found the
evidence presented by petitioner, that is, the deposition of Walter Browning, insufficient for purposes of determining
whether the complaint failed to state a cause of action. The appellate court also stated that it could not rule one way
or the other on the issue of whether the corporations, including petitioner, named as defendants in the case had
indeed merged together based solely on the evidence presented by respondent. Thus, it held that the issue should
be threshed out during trial.23 Moreover, the appellate court deferred to the discretion of the trial court when the
latter decided not to desist from assuming jurisdiction on the ground of the inapplicability of the principle of forum
non conveniens.

Hence, this petition raising the following issues:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT
FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST RAYTHEON INTERNATIONAL, INC.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT ON
THE GROUND OF FORUM NON CONVENIENS.24

Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua Law Office, counsel
on record for respondent, manifested that the lawyer handling the case, Atty. Rogelio Karagdag, had severed
relations with the law firm even before the filing of the instant petition and that it could no longer find the
whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a Resolution25 dated 20 November 2006,
the Court resolved to dispense with the filing of a comment.

The instant petition lacks merit.

Petitioner mainly asserts that the written contract between respondent and BMSI included a valid choice of law
clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also mentions the
presence of foreign elements in the dispute namely, the parties and witnesses involved are American corporations
and citizens and the evidence to be presented is located outside the Philippines that renders our local courts
inconvenient forums. Petitioner theorizes that the foreign elements of the dispute necessitate the immediate
application of the doctrine of forum non conveniens.

Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases involved in judicial resolution of
conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and enforcement of judgments. Thus,
in the instances27 where the Court held that the local judicial machinery was adequate to resolve controversies with
a foreign element, the following requisites had to be proved: (1) that the Philippine Court is one to which the parties
may conveniently resort; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and
the facts; and (3) that the Philippine Court has or is likely to have the power to enforce its decision.28

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.29

Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the law30 and by the
material allegations in the complaint, irrespective of whether or not the plaintiff is entitled to recover all or some of
the claims or reliefs sought therein.31 Civil Case No. 1192-BG is an action for damages arising from an alleged
breach of contract. Undoubtedly, the nature of the action and the amount of damages prayed are within the
jurisdiction of the RTC.

As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as party plaintiff)
upon the filing of the complaint. On the other hand, jurisdiction over the person of petitioner (as party defendant)
was acquired by its voluntary appearance in court.32

That the subject contract included a stipulation that the same shall be governed by the laws of the State of
Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter, are precluded
from hearing the civil action. Jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether
it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of
a substantive law which will determine the merits of the case is fair to both parties.33 The choice of law stipulation
will become relevant only when the substantive issues of the instant case develop, that is, after hearing on the
merits proceeds before the trial court.

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.34 Petitioners averments of the foreign elements in the instant case are not sufficient to oust
the trial court of its jurisdiction over Civil Case No. No. 1192-BG 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 within the discretion of the

http://www.lawphil.net/judjuris/juri2008/feb2008/gr_162894_2008.html Page 2 of 5
G.R. No. 162894 09/08/2017, 10:10 PM

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.35

Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion that it can
assume jurisdiction over the dispute notwithstanding its foreign elements. In the same manner, the Court defers to
the sound discretion of the lower courts because their findings are binding on this Court.

Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action against
petitioner. Failure to state a cause of action refers to the insufficiency of allegation in the pleading.36 As a general
rule, the elementary test for failure to state a cause of action is whether the complaint alleges facts which if true
would justify the relief demanded.37

The complaint alleged that petitioner had combined with BMSI and RUST to function as one company. Petitioner
contends that the deposition of Walter Browning rebutted this allegation. On this score, the resolution of the Court of
Appeals is instructive, thus:

x x x Our examination of the deposition of Mr. Walter Browning as well as other documents produced in the
hearing shows that these evidence aliunde are not quite sufficient for us to mete a ruling that the complaint
fails to state a cause of action.

Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs that Raytheon
Engineers and Constructors, Inc. (REC) assumed the warranty obligations of defendant Rust International in
the Makar Port Project in General Santos City, after Rust International ceased to exist after being absorbed by
REC. Other documents already submitted in evidence are likewise meager to preponderantly conclude that
Raytheon International, Inc., Rust International[,] Inc. and Brand Marine Service, Inc. have combined into one
company, so much so that Raytheon International, Inc., the surviving company (if at all) may be held liable for
the obligation of BMSI to respondent Rouzie for unpaid commissions. Neither these documents clearly speak
otherwise.38

As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST merged
together requires the presentation of further evidence, which only a full-blown trial on the merits can afford.

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

DANTE O. TINGA
Associate Justice

WE CONCUR:

*
ANTONIO T. CARPIO
Associate Justice
Acting Chairperson
**
ANGELINA SANDOVAL-GUTIERREZ CONCHITA CARPIO MORALES
Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Acting Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

Footnotes

http://www.lawphil.net/judjuris/juri2008/feb2008/gr_162894_2008.html Page 3 of 5
G.R. No. 162894 09/08/2017, 10:10 PM

*
Acting Chairperson.
**
As replacement of Justice Leonardo A. Quisumbing who inhibited himself per Administrative Circular No.
84-2007.

1 Rollo, pp. 42-46. Dated 28 August 2003; penned by Associate Justice Arsenio J. Magpale and concurred in
by Associate Justices Bienvenido L. Reyes, Acting Chairperson of the Special Ninth Division, and Rebecca
De Guia-Salvador.
2 Id. at 47. Dated 10 March 2004.

3 Id. at 48-49.

4 Id. at 61-62.

5 Id. at 63-74.

6 Id. at 75-90.

7 Id. at 48-54.

8 Id. at 91-99.

9 Id. at 94.

10 Id. at 96.

11 Id. at 97-98.

12 Id. at 100-111.

13 Records, Vol. I, pp. 180-238.

14 Rollo, pp. 127-131.

15 Id. at 130.

16 Id. at 132-149.

17 Id. at 150-151.

18 Id. at 162.

19 Id. at 163-192.

20 Id. at 191.

21 Supra note 1.

22 Supra note 2.

23 Id. at 44.

24 Id. at 18.

25 Id. at 318.

26 G.R. No. 149177, 23 November 2007.

27 Bank of America NT & SA v. Court of Appeals, 448 Phil. 181 (2003); Puyat v. Zabarte, 405 Phil. 413
(2001); Philsec Investment Corporation v. Court of Appeals, G.R. No. 103493, 19 June 1997, 274 SCRA 102.
28 The Manila Hotel Corp. v. NLRC, 397 Phil. 1, 16-17 (2000); Communication Materials and Design, Inc. v.
CA, 329 Phil. 487, 510-511 (1996).

29 Agpalo, Ruben E. CONFLICT OF LAWS (Private International Law), 2004 Ed., p. 491.

30 Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, G.R. No. 162890, 22 November
2005, 475 SCRA 743, 756.

31 Laresma v. Abellana, G.R. No. 140973, 11 November 2004, 442 SCRA 156, 168.

32 See Arcelona v. CA, 345 Phil. 250, 267 (1997).

33 Hasegawa v. Kitamura, supra note 26.

http://www.lawphil.net/judjuris/juri2008/feb2008/gr_162894_2008.html Page 4 of 5
G.R. No. 162894 09/08/2017, 10:10 PM

34 Bank of America NT & SA v. Court of Appeals, supra note 27.

35 Philsec Investment Corporation v. Court of Appeals, supra note 27 at 113.

36 Bank of America NT & SA v. Court of Appeals, supra note 27 at 194.

37 Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R. No. 143896, 8 July 2005, 463 SCRA
64, 73.
38 Rollo, p. 44.

The Lawphil Project - Arellano Law Foundation

http://www.lawphil.net/judjuris/juri2008/feb2008/gr_162894_2008.html Page 5 of 5