G.R. No. 149177; November 23, 2007
Kazuhiro Hasegawa and Nippon Engineering Consultants Co., Ltd., Petitioners, vs. Minoru Kitamura, Respondent.

FACTS

Petitioner Nippon, a Japanese consultancy firm, entered into an Independent Contractor Agreement (ICA) in Tokyo with respondent Kitamura, a Japanese national residing in the Philippines. The ICA engaged Kitamura’s services for one year to work as project manager for a Philippine infrastructure project. Near the contract’s expiry, Nippon informed Kitamura of its non-renewal. Kitamura demanded assignment to a new project, which Nippon refused, leading Kitamura to file a complaint for specific performance and damages before the Regional Trial Court (RTC) of Lipa City.
Petitioners moved to dismiss the complaint for lack of jurisdiction. They argued that the ICA was perfected and executed in Japan between Japanese nationals, and thus, any dispute should be governed by Japanese law and heard by Japanese courts under the principles of lex loci celebrationis (law of the place of celebration) and lex contractus (law of the contract). The RTC denied the motion, applying the principle of lex loci solutionis (law of the place of performance) since the contract was to be performed in the Philippines.

ISSUE

Whether Philippine courts have jurisdiction over a complaint for specific performance and damages arising from a contract executed abroad between foreign nationals.

RULING

Yes, Philippine courts have jurisdiction. The Supreme Court upheld the CA and RTC, ruling that the principle of lex loci solutionis governs this dispute. The contract, although executed in Japan, was to be performed in the Philippines, as Kitamura was assigned to manage a Philippine government project. Jurisdiction over the subject matter is conferred by law, specifically the RTC’s authority over actions incapable of pecuniary estimation. The nationality of the parties or the place of contract execution does not divest Philippine courts of this jurisdiction.
The Court clarified that lex loci celebrationis and lex contractus pertain to the validity and interpretation of a contract, not to a court’s jurisdiction to hear a case involving its breach. Since Kitamura’s complaint did not challenge the ICA’s validity but its alleged improper termination and the obligation to assign him to a new project, the place of performance is the most significant connecting factor. The Court also noted that the doctrine of forum non conveniens is discretionary and was not sufficiently invoked to warrant dismissal. Thus, the Philippine courts correctly assumed jurisdiction.