[G.R. No. 124371.

November 23, 2000]

PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA

F. LLORENTE, respondents.

DECISION
PARDO, J.:

The Case

The case raises a conflict of laws issue.

What is before us is an appeal from the decision of the Court of Appeals [1] modifying
that of the Regional Trial Court, Camarines Sur, Branch 35, Iriga City[2] declaring
respondent Alicia F. Llorente (herinafter referred to as Alicia), as co-owners of whatever
property she and the deceased Lorenzo N. Llorente (hereinafter referred to as Lorenzo)
may have acquired during the twenty-five (25) years that they lived together as husband
and wife.

The Facts

The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States
Navy from March 10, 1927 to September 30, 1957.[3]
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to
as Paula) were married before a parish priest, Roman Catholic Church, in Nabua,
Camarines Sur.[4]
Before the outbreak of the Pacific War, Lorenzo departed for the United States and
Paula stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur.[5]
On November 30, 1943, Lorenzo was admitted to United States citizenship and
Certificate of Naturalization No. 5579816 was issued in his favor by the United States
District Court, Southern District of New York.[6]
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was
granted an accrued leave by the U. S. Navy, to visit his wife and he visited the
Philippines.[7] He discovered that his wife Paula was pregnant and was living in and having
an adulterous relationship with his brother, Ceferino Llorente.[8]
 On December 4, 1945, Paula gave birth to a boy registered in the Office of the
Registrar of Nabua as Crisologo Llorente, with the certificate stating that the child was not
legitimate and the line for the fathers name was left blank.[9]
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the
couple drew a written agreement to the effect that (1) all the family allowances allotted by
the United States Navy as part of Lorenzos salary and all other obligations for Paulas
daily maintenance and support would be suspended; (2) they would dissolve their marital
union in accordance with judicial proceedings; (3) they would make a separate agreement
regarding their conjugal property acquired during their marital life; and (4) Lorenzo would
not prosecute Paula for her adulterous act since she voluntarily admitted her fault and
agreed to separate from Lorenzo peacefully. The agreement was signed by both Lorenzo
and Paula and was witnessed by Paulas father and stepmother. The agreement was
notarized by Notary Public Pedro Osabel.[10]
Lorenzo returned to the United States and on November 16, 1951 filed for
divorce with the Superior Court of the State of California in and for the County of San
Diego. Paula was represented by counsel, John Riley, and actively participated in the
proceedings. On November 27, 1951, the Superior Court of the State of California, for the
County of San Diego found all factual allegations to be true and issued an interlocutory
judgment of divorce.[11]
On December 4, 1952, the divorce decree became final.[12]
In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.[13] Apparently,
Alicia had no knowledge of the first marriage even if they resided in the same town as
Paula, who did not oppose the marriage or cohabitation.[14]
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. [15] Their
twenty-five (25) year union produced three children, Raul, Luz and Beverly, all surnamed
Llorente.[16]
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was
notarized by Notary Public Salvador M. Occiano, duly signed by Lorenzo with attesting
witnesses Francisco Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo
bequeathed all his property to Alicia and their three children, to wit:

(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my

residential house and lot, located at San Francisco, Nabua, Camarines Sur,
Philippines, including ALL the personal properties and other movables or
belongings that may be found or existing therein;

(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my

children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal
shares, all my real properties whatsoever and wheresoever located,
specifically my real properties located at Barangay Aro-Aldao, Nabua,
Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras,
Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong,
Nabua, Camarines Sur;

(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno
and unto my children, Raul F. Llorente, Luz F. Llorente and Beverly F.
Llorente, in equal shares, my real properties located in Quezon City
Philippines, and covered by Transfer Certificate of Title No. 188652; and my
lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title
Nos. 124196 and 165188, both of the Registry of Deeds of the province of
Rizal, Philippines;

(4) That their respective shares in the above-mentioned properties, whether

real or personal properties, shall not be disposed of, ceded, sold and
conveyed to any other persons, but could only be sold, ceded, conveyed and
disposed of by and among themselves;

(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this

my Last Will and Testament, and in her default or incapacity of the latter to
act, any of my children in the order of age, if of age;

(6) I hereby direct that the executor named herein or her lawful substitute
should served (sic) without bond;

(7) I hereby revoke any and all my other wills, codicils, or testamentary
dispositions heretofore executed, signed, or published, by me;

(8) It is my final wish and desire that if I die, no relatives of mine in any degree
in the Llorentes Side should ever bother and disturb in any manner
whatsoever my wife Alicia R. Fortunato and my children with respect to any
real or personal properties I gave and bequeathed respectively to each one of
them by virtue of this Last Will and Testament. [17]

On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines
Sur, a petition for the probate and allowance of his last will and testament wherein
Lorenzo moved that Alicia be appointed Special Administratrix of his estate. [18]
On January 18, 1984, the trial court denied the motion for the reason that the testator
Lorenzo was still alive.[19]
On January 24, 1984, finding that the will was duly executed, the trial court admitted
the will to probate.[20]
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.[21]
 On September 4, 1985, Paula filed with the same court a petition [22] for letters of
administration over Lorenzos estate in her favor. Paula contended (1) that she was
Lorenzos surviving spouse, (2) that the various property were acquired during their
marriage, (3) that Lorenzos will disposed of all his property in favor of Alicia and her
children, encroaching on her legitime and 1/2 share in the conjugal property. [23]
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755),
a petition for the issuance of letters testamentary.[24]
On October 14, 1985, without terminating the testate proceedings, the trial court gave
due course to Paulas petition in Sp. Proc. No. IR-888.[25]
On November 6, 13 and 20, 1985, the order was published in the newspaper Bicol
Star.[26]
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:

Wherefore, considering that this court has so found that the divorce decree
granted to the late Lorenzo Llorente is void and inapplicable in the Philippines,
therefore the marriage he contracted with Alicia Fortunato on January 16,
1958 at Manila is likewise void. This being so the petition of Alicia F. Llorente
for the issuance of letters testamentary is denied. Likewise, she is not entitled
to receive any share from the estate even if the will especially said so her
relationship with Lorenzo having gained the status of paramour which is under
Art. 739 (1).

On the other hand, the court finds the petition of Paula Titular Llorente,
meritorious, and so declares the intrinsic disposition of the will of Lorenzo
Llorente dated March 13, 1981 as void and declares her entitled as conjugal
partner and entitled to one-half of their conjugal properties, and as primary
compulsory heir, Paula T. Llorente is also entitled to one-third of the estate
and then one-third should go to the illegitimate children, Raul, Luz and
Beverly, all surname (sic) Llorente, for them to partition in equal shares and
also entitled to the remaining free portion in equal shares.

Petitioner, Paula Llorente is appointed legal administrator of the estate of the

deceased, Lorenzo Llorente. As such let the corresponding letters of
administration issue in her favor upon her filing a bond in the amount (sic) of
P100,000.00 conditioned for her to make a return to the court within three (3)
months a true and complete inventory of all goods, chattels, rights, and
credits, and estate which shall at any time come to her possession or to the
possession of any other person for her, and from the proceeds to pay and
discharge all debts, legacies and charges on the same, or such dividends
thereon as shall be decreed or required by this court; to render a true and just
account of her administration to the court within one (1) year, and at any other
time when required by the court and to perform all orders of this court by her
to be performed.

On the other matters prayed for in respective petitions for want of evidence
could not be granted.

SO ORDERED. [27]

In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted
decision.[28]
On September 14, 1987, the trial court denied Alicias motion for reconsideration but
modified its earlier decision, stating that Raul and Luz Llorente are not children legitimate
or otherwise of Lorenzo since they were not legally adopted by him. [29] Amending its
decision of May 18, 1987, the trial court declared Beverly Llorente as the only illegitimate
child of Lorenzo, entitling her to one-third (1/3) of the estate and one-third (1/3) of the free
portion of the estate.[30]
On September 28, 1987, respondent appealed to the Court of Appeals. [31]
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with
modification the decision of the trial court in this wise:

WHEREFORE, the decision appealed from is hereby AFFIRMED with the

MODIFICATION that Alicia is declared as co-owner of whatever properties
she and the deceased may have acquired during the twenty-five (25) years of
cohabitation.

SO ORDERED. [32]

On August 25, 1995, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision.[33]
On March 21, 1996, the Court of Appeals,[34] denied the motion for lack of merit.
Hence, this petition.[35]

The Issue

Stripping the petition of its legalese and sorting through the various arguments
raised,[36] the issue is simple. Who are entitled to inherit from the late Lorenzo N. Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to
the trial court for ruling on the intrinsic validity of the will of the deceased.
 The Applicable Law

The fact that the late Lorenzo N. Llorente became an American citizen long before
and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his
will; and (4) death, is duly established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by
foreign law.
The Civil Code clearly provides:

Art. 15. Laws relating to family rights and duties, or to the status, condition
and legal capacity of persons are binding upon citizens of the Philippines,
even though living abroad.

Art. 16. Real property as well as personal property is subject to the law of the
country where it is situated.

However, intestate and testamentary succession, both with respect to the

order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country
wherein said property may be found. (emphasis ours)

True, foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other fact, they must be alleged and
proved.[37]
While the substance of the foreign law was pleaded, the Court of Appeals did not
admit the foreign law. The Court of Appeals and the trial court called to the fore
the renvoi doctrine, where the case was referred back to the law of the decedents
domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently
proven, in the same breath it made the categorical, albeit equally unproven statement
that American law follows the domiciliary theory hence, Philippine law applies when
determining the validity of Lorenzos will.[38]
First, there is no such thing as one American law. The "national law" indicated in
Article 16 of the Civil Code cannot possibly apply to general American law. There is no
such law governing the validity of testamentary provisions in the United States. Each
State of the union has its own law applicable to its citizens and in force only within the
State. It can therefore refer to no other than the law of the State of which the decedent
was a resident.[39] Second, there is no showing that the application of the renvoi doctrine
is called for or required by New York State law.
 The trial court held that the will was intrinsically invalid since it contained dispositions
in favor of Alice, who in the trial courts opinion was a mere paramour. The trial court threw
the will out, leaving Alice, and her two children, Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one half
(1/2) of whatever property she and Lorenzo acquired during their cohabitation, applying
Article 144 of the Civil Code of the Philippines.
The hasty application of Philippine law and the complete disregard of the will, already
probated as duly executed in accordance with the formalities of Philippine law, is
fatal, especially in light of the factual and legal circumstances here obtaining.

Validity of the Foreign Divorce

In Van Dorn v. Romillo, Jr.[40] we held that owing to the nationality principle embodied
in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against
absolute divorces, the same being considered contrary to our concept of public policy and
morality. In the same case, the Court ruled that aliens may obtain divorces abroad,
provided they are valid according to their national law.
Citing this landmark case, the Court held in Quita v. Court of Appeals,[41] that once
proven that respondent was no longer a Filipino citizen when he obtained the divorce
from petitioner, the ruling in Van Dorn would become applicable and petitioner could very
well lose her right to inherit from him.
In Pilapil v. Ibay-Somera,[42] we recognized the divorce obtained by the respondent in
his country, the Federal Republic of Germany. There, we stated that divorce and its legal
effects may be recognized in the Philippines insofar as respondent is concerned in view
of the nationality principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be
reversed.[43] We hold that the divorce obtained by Lorenzo H. Llorente from his first wife
Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects
of this divorce (as to the succession to the estate of the decedent) are matters best left to
the determination of the trial court.

Validity of the Will

The Civil Code provides:

Art. 17. The forms and solemnities of contracts, wills, and other public
instruments shall be governed by the laws of the country in which they are
executed.
When the acts referred to are executed before the diplomatic or consular
officials of the Republic of the Philippines in a foreign country, the solemnities
established by Philippine laws shall be observed in their execution.
(underscoring ours)

The clear intent of Lorenzo to bequeath his property to his second wife and children
by her is glaringly shown in the will he executed. We do not wish to frustrate his wishes,
since he was a foreigner, not covered by our laws on family rights and duties, status,
condition and legal capacity.[44]
Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues
best proved by foreign law which must be pleaded and proved. Whether the will was
executed in accordance with the formalities required is answered by referring to Philippine
law. In fact, the will was duly probated.
As a guide however, the trial court should note that whatever public policy or good
customs may be involved in our system of legitimes, Congress did not intend to extend
the same to the succession of foreign nationals. Congress specifically left the amount of
successional rights to the decedent's national law.[45]
Having thus ruled, we find it unnecessary to pass upon the other issues raised.

The Fallo

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-
G. R. SP No. 17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and
RECOGNIZES as VALID the decree of divorce granted in favor of the deceased Lorenzo
N. Llorente by the Superior Court of the State of California in and for the County of San
Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of the
intrinsic validity of Lorenzo N. Llorentes will and determination of the parties successional
rights allowing proof of foreign law with instructions that the trial court shall proceed with
all deliberate dispatch to settle the estate of the deceased within the framework of the
Rules of Court.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.
 KAZUHIRO HASEGAWA and NIPPON G.R. No. 149177
ENGINEERING CONSULTANTS CO.,
LTD., Present:
Petitioners,
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus - CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

Promulgated:
MINORU KITAMURA,
Respondent. November 23, 2007

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the April 18, 2001 Decision[1] of the Court of Appeals (CA) in CA-
G.R. SP No. 60827, and the July 25, 2001 Resolution[2] denying the motion for
reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon),
a Japanese consultancy firm providing technical and management support in the
infrastructure projects of foreign governments,[3] entered into an Independent
Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national
permanently residing in the Philippines.[4] The agreement provides that respondent
was to extend professional services to Nippon for a year starting on April 1,
1999.[5] Nippon then assigned respondent to work as the project manager of the
Southern Tagalog Access Road (STAR) Project in the Philippines, following the
company's consultancy contract with the Philippine Government.[6]

When the STAR Project was near completion, the Department of Public Works and
Highways (DPWH) engaged the consultancy services of Nippon, on January 28,
2000, this time for the detailed engineering and construction supervision of the
Bongabon-Baler Road Improvement (BBRI) Project.[7] Respondent was named as
the project manager in the contract's Appendix 3.1.[8]

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for
its International Division, informed respondent that the company had no more
intention of automatically renewing his ICA. His services would be engaged by the
company only up to the substantial completion of the STAR Project on March 31,
2000, just in time for the ICA's expiry.[9]

Threatened with impending unemployment, respondent, through his lawyer,

requested a negotiation conference and demanded that he be assigned to the BBRI
project. Nippon insisted that respondents contract was for a fixed term that had
already expired, and refused to negotiate for the renewal of the ICA.[10]

As he was not able to generate a positive response from the petitioners, respondent
consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific
performance and damages with the Regional Trial Court of Lipa City.[11]

For their part, petitioners, contending that the ICA had been perfected in Japan and
executed by and between Japanese nationals, moved to dismiss the complaint for
lack of jurisdiction. They asserted that the claim for improper pre-termination of
respondent's ICA could only be heard and ventilated in the proper courts
of Japan following the principles of lex loci celebrationis and lex contractus.[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the
replacement of Kitamura by a certain Y. Kotake as project manager of the BBRI
Project.[13]

On June 29, 2000, the RTC, invoking our ruling in Insular Government v.
Frank[14] that matters connected with the performance of contracts are regulated by
the law prevailing at the place of performance,[15] denied the motion to
dismiss.[16] The trial court subsequently denied petitioners' motion for
reconsideration,[17] prompting them to file with the appellate court, on August 14,
2000, their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No.
60205].[18] On August 23, 2000, the CA resolved to dismiss the petition on
procedural groundsfor lack of statement of material dates and for insufficient
verification and certification against forum shopping.[19] An Entry of Judgment was
later issued by the appellate court on September 20, 2000.[20]

Aggrieved by this development, petitioners filed with the CA, on September 19,
2000, still within the reglementary period, a second Petition for Certiorari under
Rule 65 already stating therein the material dates and attaching thereto the proper
verification and certification. This second petition, which substantially raised the
same issues as those in the first, was docketed as CA-G.R. SP No. 60827.[21]

Ruling on the merits of the second petition, the appellate court rendered the
assailed April 18, 2001 Decision[22] finding no grave abuse of discretion in the trial
court's denial of the motion to dismiss. The CA ruled, among others, that the
principle of lex loci celebrationis was not applicable to the case, because nowhere
in the pleadings was the validity of the written agreement put in issue. The CA thus
declared that the trial court was correct in applying instead the principle of lex loci
solutionis.[23]

Petitioners' motion for reconsideration was subsequently denied by the CA in the

assailed July 25, 2001 Resolution.[24]

Remaining steadfast in their stance despite the series of denials, petitioners instituted
the instant Petition for Review on Certiorari[25] imputing the following errors to the
appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE
THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE
PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN
 TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO
THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF
RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL
LAWS.[26]

The pivotal question that this Court is called upon to resolve is whether the subject
matter jurisdiction of Philippine courts in civil cases for specific performance and
damages involving contracts executed outside the country by foreign nationals may
be assailed on the principles of lex loci celebrationis, lex contractus, the state of the
most significant relationship rule, or forum non conveniens.

However, before ruling on this issue, we must first dispose of the procedural matters
raised by the respondent.

Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP
No. 60205 has already barred the filing of the second petition docketed as CA-G.R.
SP No. 60827 (fundamentally raising the same issues as those in the first one) and
the instant petition for review thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the
petition's defective certification of non-forum shopping, it was a dismissal without
prejudice.[27] The same holds true in the CA's dismissal of the said case due to defects
in the formal requirement of verification[28] and in the other requirement in Rule 46
of the Rules of Court on the statement of the material dates. [29] The dismissal being
without prejudice, petitioners can re-file the petition, or file a second petition
attaching thereto the appropriate verification and certificationas they, in fact didand
stating therein the material dates, within the prescribed period[30] in Section 4, Rule
65 of the said Rules.[31]

The dismissal of a case without prejudice signifies the absence of a decision on the
merits and leaves the parties free to litigate the matter in a subsequent action as
though the dismissed action had not been commenced. In other words, the
termination of a case not on the merits does not bar another action involving the
same parties, on the same subject matter and theory.[32]

Necessarily, because the said dismissal is without prejudice and has no res
judicata effect, and even if petitioners still indicated in the verification and
certification of the second certiorari petition that the first had already been
dismissed on procedural grounds,[33] petitioners are no longer required by the Rules
to indicate in their certification of non-forum shopping in the instant petition for
review of the second certiorari petition, the status of the aforesaid first petition
before the CA. In any case, an omission in the certificate of non-forum shopping
about any event that will not constitute res judicata and litis pendentia, as in the
present case, is not a fatal defect. It will not warrant the dismissal and nullification
of the entire proceedings, considering that the evils sought to be prevented by the
said certificate are no longer present.[34]

The Court also finds no merit in respondent's contention that petitioner Hasegawa is
only authorized to verify and certify, on behalf of Nippon, the certiorari petition
filed with the CA and not the instant petition. True, the Authorization[35] dated
September 4, 2000, which is attached to the second certiorari petition and which is
also attached to the instant petition for review, is limited in scopeits wordings
indicate that Hasegawa is given the authority to sign for and act on behalf of the
company only in the petition filed with the appellate court, and that authority cannot
extend to the instant petition for review.[36] In a plethora of cases, however, this
Court has liberally applied the Rules or even suspended its application whenever a
satisfactory explanation and a subsequent fulfillment of the requirements have been
made.[37] Given that petitioners herein sufficiently explained their misgivings on this
point and appended to their Reply[38] an updated Authorization[39] for Hasegawa to
act on behalf of the company in the instant petition, the Court finds the same as
sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the
verification and certification. As respondent pointed out, and to which we agree,
Hasegawa is truly not authorized to act on behalf of Nippon in this case. The
aforesaid September 4, 2000 Authorization and even the subsequent August 17,
2001 Authorization were issued only by Nippon's president and chief executive
officer, not by the company's board of directors. In not a few cases, we have ruled
that corporate powers are exercised by the board of directors; thus, no person, not
even its officers, can bind the corporation, in the absence of authority from the
board.[40] Considering that Hasegawa verified and certified the petition only on his
behalf and not on behalf of the other petitioner, the petition has to be denied pursuant
to Loquias v. Office of the Ombudsman.[41] Substantial compliance will not suffice
in a matter that demands strict observance of the Rules.[42] While technical rules of
procedure are designed not to frustrate the ends of justice, nonetheless, they are
intended to effect the proper and orderly disposition of cases and effectively prevent
the clogging of court dockets.[43]

Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to
question the trial court's denial of their motion to dismiss. It is a well-established
rule that an order denying a motion to dismiss is interlocutory,
and cannot be the subject of the extraordinary petition for certiorari or mandamus.
The appropriate recourse is to file an answer and to interpose as defenses the
objections raised in the motion, to proceed to trial, and, in case of an adverse
decision, to elevate the entire case by appeal in due course.[44] While there are
recognized exceptions to this rule,[45] petitioners' case does not fall among them.

This brings us to the discussion of the substantive issue of the case.

Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question
its jurisdiction to hear and resolve the civil case for specific performance and
damages filed by the respondent. The ICA subject of the litigation was entered into
and perfected in Tokyo, Japan, by Japanese nationals, and written wholly in the
Japanese language. Thus, petitioners posit that local courts have no substantial
relationship to the parties[46] following the [state of the] most significant relationship
rule in Private International Law.[47]

The Court notes that petitioners adopted an additional but different theory when they
elevated the case to the appellate court. In the Motion to Dismiss[48] filed with the
trial court, petitioners never contended that the RTC is an inconvenient forum. They
merely argued that the applicable law which will determine the validity or invalidity
of respondent's claim is that of Japan, following the principles of lex loci
celebrationis and lex contractus.[49] While not abandoning this stance in their
petition before the appellate court, petitioners on certiorari significantly invoked the
defense of forum non conveniens.[50] On petition for review before this Court,
petitioners dropped their other arguments, maintained the forum non
conveniens defense, and introduced their new argument that the applicable principle
is the [state of the] most significant relationship rule.[51]

Be that as it may, this Court is not inclined to deny this petition merely on the basis
of the change in theory, as explained in Philippine Ports Authority v. City of
Iloilo.[52] We only pointed out petitioners' inconstancy in their arguments to
emphasize their incorrect assertion of conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three consecutive

phases are involved: jurisdiction, choice of law, and recognition and enforcement of
judgments. Corresponding to these phases are the following questions: (1) Where
can or should litigation be initiated? (2) Which law will the court apply? and (3)
Where can the resulting judgment be enforced?[53]

Analytically, jurisdiction and choice of law are two distinct concepts.[54] 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 power to exercise
jurisdiction does not automatically give a state constitutional authority to apply
forum law. While jurisdiction and the choice of the lex fori will often coincide, the
minimum contacts for one do not always provide the necessary significant contacts
for the other.[55] The question of whether the law of a state can be applied to a
transaction is different from the question of whether the courts of that state have
jurisdiction to enter a judgment.[56]

In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy,
it must have jurisdiction over the plaintiff or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of the case and, in cases
involving property, over the res or the thing which is the subject of the
litigation.[57] In assailing the trial court's jurisdiction herein, petitioners are actually
referring to subject matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the

sovereign authority which establishes and organizes the court. It is given only by
law and in the manner prescribed by law.[58] It is further determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein.[59] To succeed in its motion for the dismissal of
an action for lack of jurisdiction over the subject matter of the claim, [60] the movant
must show that the court or tribunal cannot act on the matter submitted to it because
no law grants it the power to adjudicate the claims.[61]

In the instant case, petitioners, in their motion to dismiss, do not claim that the trial
court is not properly vested by law with jurisdiction to hear the subject controversy
for, indeed, Civil Case No. 00-0264 for specific performance and damages is one
not capable of pecuniary estimation and is properly cognizable by the RTC of Lipa
City.[62] What they rather raise as grounds to question subject matter jurisdiction are
the principles of lex loci celebrationis and lex contractus, and the state of the most
significant relationship rule.

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the law of the place of the ceremony[63] or the law of
the place where a contract is made.[64] The doctrine of lex contractus or lex loci
contractus means the law of the place where a contract is executed or to be
performed.[65] It controls the nature, construction, and validity of the contract[66] and
it may pertain to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly.[67] Under the state of the most significant
relationship rule, to ascertain what state law to apply to a dispute, the court should
determine which state has the most substantial connection to the occurrence and the
parties. In a case involving a contract, the court should consider where the contract
was made, was negotiated, was to be performed, and the domicile, place of business,
or place of incorporation of the parties.[68] This rule takes into account several
contacts and evaluates them according to their relative importance with respect to
the particular issue to be resolved.[69]

Since these three principles in conflict of laws make reference to the law applicable
to a dispute, they are rules proper for the second phase, the choice of law. [70] They
determine which state's law is to be applied in resolving the substantive issues of a
conflicts problem.[71] Necessarily, as the only issue in this case is that of jurisdiction,
choice-of-law rules are not only inapplicable but also not yet called for.

Further, petitioners' premature invocation of choice-of-law rules is exposed by the

fact that they have not yet pointed out any conflict between the laws of Japan and
ours. Before determining which law should apply, first there should exist a conflict
of laws situation requiring the application of the conflict of laws rules.[72] Also, when
the law of a foreign country is invoked to provide the proper rules for the solution
of a case, the existence of such law must be pleaded and proved.[73]

It should be noted that when a conflicts case, one involving a foreign element, is
brought before a court or administrative agency, there are three alternatives open to
the latter in disposing of it: (1) dismiss the case, either because of lack of jurisdiction
or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case
and apply the internal law of the forum; or (3) assume jurisdiction over the case and
take into account or apply the law of some other State or States.[74] The courts power
to hear cases and controversies is derived from the Constitution and the laws. While
it may choose to recognize laws of foreign nations, the court is not limited by foreign
sovereign law short of treaties or other formal agreements, even in matters regarding
rights provided by foreign sovereigns.[75]

Neither can the other ground raised, forum non conveniens,[76] be used to
deprive the trial court of its jurisdiction herein. First, it is not a proper basis for a
motion to dismiss because Section 1, Rule 16 of the Rules of Court does not include
it as a ground.[77] Second, whether a suit should be entertained or dismissed on the
basis of the said doctrine depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court.[78] In this case, the RTC decided
to assume jurisdiction. Third, the propriety of dismissing a case based on this
principle requires a factual determination; hence, this conflicts principle is more
properly considered a matter of defense.[79]

Accordingly, since the RTC is vested by law with the power to entertain and hear
the civil case filed by respondent and the grounds raised by petitioners to assail that
jurisdiction are inappropriate, the trial and appellate courts correctly denied the
petitioners motion to dismiss.
 WHEREFORE, premises considered, the petition for review
on certiorari is DENIED.

SO ORDERED.