Hasegawa, et al. 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
court’s 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.

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:
1. 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.
2. 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.
3. Recognition and Enforcement of Judgment – Where can the resulting judgment be
enforced?

This case is not yet in the second phase because upon the RTC’s 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.