PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V ASIAVESTG.R. No. 172301, August 19, 2015

FACTS

Philippine National Construction Corporation (PNCC) and Asiavest Holdings (M) Sdn. Bhd. (Asiavest Holdings) caused the incorporation of an associate company known as Asiavest-CDCP Sdn. Bhd. (Asiavest-CDCP), through which they entered into contracts to construct rural roads and bridges for the State of Pahang, Malaysia. In connection with this construction contract, PNCC obtained various guarantees and bonds from Asiavest Merchant Bankers (M) Berhad to guarantee the due performance of its obligations. The four contracts of guaranty stipulate that Asiavest Merchant Bankers (M) Berhad shall guarantee to the State of Pahang "the due performance by PNCC of its construction contracts and the repayment of the temporary advances given to PNCC." These contracts were understood to be governed by the laws of Malaysia.

There was failure to perform the obligations under the construction contract, prompting the State of Pahang to demand payment against Asiavest Merchant Bankers (M) Berhad's performance bonds. Asiavest Merchant Bankers (M) Berhad filed a Complaint16 for recovery of sum of money against PNCC before the Regional Trial Court of Pasig. It based its action on Malaysian laws. Specifically, it invoked Section 9818 of the Malaysian Contracts Act of 1950 and Section 1119 of the Malaysian Civil Law Act of 1956. The trial court declared PNCC in default for failure to file any responsive pleading and allowed Asiavest Merchant Bankers (M) Berhad to present its evidence ex parte and rendered judgment in favor of Asiavest Merchant Bankers (M) Berhad. The trial court found that Asiavest Merchant Bankers (M) Berhad complied with the requisites for proof of written foreign laws.24 The Malaysian laws invoked were found to be similar with Articles 2066 and 2067 of the Civil Code.

The trial court denied PNCC's Motion to Lift Order of and also denied PNCC's Motion for Reconsideration Ad Cautelam. PNCC brought its case before the Court of Appeals. The Court of Appeals dismissed PNCC's appeal for raising pure questions of law exclusively cognizable by this court. It likewise denied reconsideration. Hence, PNCC filed this Petition.

ISSUE
Whether or not our courts have subject matter jurisdiction over an action for recovery of sum of money filed by a Malaysian corporation against a Philippine corporation involving a contract executed and performed in Malaysia, and the applicability of the forum non conveniens principle.

RATIO

Yes. Jurisdiction over the subject matter is conferred by law. Batas Pambansa Blg. 129, otherwise known as The Judiciary Reorganization Act of 1980, is one such law that provides for the jurisdiction of our courts. A plain reading of Section 19 shows that civil actions for payment of sum of money are within the exclusive original jurisdiction of trial courts:

SEC. 19. Jurisdiction in civil cases. -Regional Trial Courts shall exercise exclusive original jurisdiction:

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000) or, in such other cases in Metro Manila, where the demand, exclusive of the above mentioned items exceeds Two hundred thousand pesos (P200,000).

These jurisdictional amounts were adjusted to P300,000.00, and P400,000.00 in the case of Metro Manila. Thus, the Regional Trial Court of Pasig has jurisdiction over respondent's complaint for recovery of the sum of Malaysian Ringgit (MYR) 3,915,053.54.
"Forum non conveniens literally translates to 'the forum is inconvenient.' This doctrine applies in conflicts of law cases. It gives courts the choice of not assuming jurisdiction when it appears that it is not the most convenient forum and the parties may seek redress in another one.97 It is a device "designed to frustrate illicit means for securing advantages and vexing litigants that would otherwise be possible if the venue of litigation (or dispute resolution) were left entirely to the whim of either party.

In the case of Puyat v. Zabarte, the court enumerated practical reasons when courts may refuse to entertain a case even though the exercise of jurisdiction is authorized by law:
1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum, a practice known as forum shopping merely to secure procedural advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and
5) The difficulty of ascertaining foreign law.

On the other hand, courts may choose to assume jurisdiction subject to the following requisites: "(1) that the Philippine Court is one to which the parties may conveniently resort to; (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 power to enforce its decision." The determination of whether to entertain a case is addressed to the sound discretion of the court, which must carefully consider the facts of the particular case. A mere invocation of the doctrine of forum non conveniens or an easy averment that foreign elements exist cannot operate to automatically divest a court of its jurisdiction. It is crucial for courts to determine first if facts were established such that special circumstances exist to warrant its desistance from assuming jurisdiction.

The trial court assumed jurisdiction and explained in its Order dated August 11, 1995 that on the contrary, to try the case in the Philippines, it is believed, would be more convenient to defendant corporation as its principal office is located in the Philippines, its records will be more accessible, witnesses would be readily available and entail less expenses in terms of legal services."

Petitioner is a domestic corporation with its main office in the Philippines. It is safe to assume that all of its pertinent documents in relation to its business would be available in its main office. Most of petitioner's officers and employees who were involved in the construction contract in Malaysia could most likely also be found in the Philippines. Thus, it is unexpected that a Philippine corporation would rather engage this civil suit before Malaysian courts. Our courts would be "better positioned to enforce [the] judgment and, ultimately, to dispense" in this case against petitioner. Also, petitioner failed to plead and show real and present danger that another jurisdiction commenced litigation and the foreign tribunal chose to exercise jurisdiction.

FALLO
WHEREFORE, the Petition is DENIED for lack of merit.