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Kazuhiro Hasegawa and Nippon Engineering Consultants Co. vs.

Minoru Kitamura

Definition: Jurisdiction

Facts:

- Petitioner Nippon, a Japanese consultancy firm providing technical and management support,
entered into an Independent Contractor Agreement with respondent Kitamura, a Japanese
national permanently residing in the Philippines.
- Under the agreement, respondent will extend professional services for petitioner for a year.
- Respondent was then assigned as project manager of STAR project in 1999. In 2000, he was
informed by the petitioner that it will no longer renew the Agreement and that he will be retained
until its expiration.
- Respondent then filed a civil case for specific performance before the RTC of Lipa due to his
alleged improper termination
- Petitioners move to dismiss the case on the ground of lack of jurisdiction over the subject matter
and contended that the Agreement was perfected in Japan and executed by and between
Japanese nationals.
o Further argued that the claim for improper termination could only be heard and
ventilated in the proper courts of Japan following the principles of lex loci celebrationis
and lex contractus.
- RTC ruled that it has jurisdiction over the dispute and denied the petitioner’s motion to dismiss.
o RTC claimed that matters connected with the performance of contracts are regulated by
the law prevailing at the place of performance.
- CA upheld RTC decision
o Claiming that RTC was correct in applying the principle of lex loci solutionis and not lex
loci celebrationis

Issue:

- Whether or not Philippine courts have jurisdiction over the case. YES

Ruling:

- The Supreme Court explained the three consecutive phases are involved in judicial resolution of
conflicts problems:
o Jurisdiction
o Choice of Law
o Recognition and enforcement of judgments
- In this case, only the first phase is at issue – jurisdiction.
- Supreme Court further explained that 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 litigation.
o In assailing the trial court’s jurisdiction in this case, petitioners are actually referring to
subject matter of jurisdiction.
- Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority
which establishes and organizes the court.
- Petitioners did not claim that the trial court is not vested by law with jurisdiction to hear the
subject matter.
o What they raise as grounds to question subject matter jurisdiction are principles of lex
loci celebrationis and lex contractus, and the “state of the most significant relationship
rule”
o These principles involve CHOICE OF LAW and not JURISDICTION.
- Jurisdiction and Choice of Law are two distinct concepts
o Jurisdiction considers whether it is fair to cause a defendant to travel to this state
o 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
- Neither can forum non conveniens be used to deprive the trial court of its jurisdiction because:
o It is not a proper basis for a motion to dismiss (Rules of Court does not include it as a
ground)
o This principle is more properly considered a matter of defense.