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PHILIPPINE NATIONAL CONSTRUCTION CORP. v. ASIAVEST MERCHANT BANKERS BERHAD

FACTS:

The case involves an action for recovery of a sum of money filed by Asiavest Merchant Bankers (M) Berhad against Philippine National Construction Corporation (PNCC). The dispute arose from contracts entered into by PNCC and Asiavest-CDCP Sdn. Bhd., for the construction of rural roads and bridges in Malaysia. PNCC failed to perform its contractual obligations, leading the State of Pahang to demand payment against Asiavest Merchant Bankers (M) Berhad's performance bonds. Asiavest Merchant Bankers (M) Berhad then entered into a compromise agreement with the State of Pahang and demanded reimbursement from PNCC. PNCC appealed the trial court's decision to the Court of Appeals, which dismissed the appeal. PNCC subsequently filed a Petition before the Supreme Court, seeking to reverse the Court of Appeals' decision.

PNCC argues that it should only be liable for a portion of the guarantee liability and that the trial court should have applied the principle of forum non conveniens to dismiss the case. They also claim that they were denied due process and raise the defense of prescription. Additionally, PNCC argues that Asiavest Merchant Bankers (M) Berhad's voluntary winding up of its operations renders the case moot and academic.

Asiavest Merchant Bankers (M) Berhad argues that the Court of Appeals correctly dismissed PNCC's appeal and denies that their corporate existence has ceased. They also argue that the issues of impleading the Malaysian corporations and their participant liability were not properly raised before the Court of Appeals. They raise several other issues for the court's consideration.

ISSUES:

  1. Whether the two Malaysian corporations should be impleaded and held liable in the case.

  2. Whether the trial court had jurisdiction over the subject matter of the case.

  3. Whether the trial court was correct in assuming jurisdiction over the complaint despite the argument of forum non conveniens raised by the petitioner.

  4. Whether the Philippine court has jurisdiction over the civil suit filed by the respondent corporation in Malaysia.

  5. Whether the petitioner was denied its right to due process.

  6. Whether Philippine labor laws should be applied in determining the issues presented.

  7. Whether the six-year prescription period applies in this case.

  8. Whether respondent has ceased to exist and therefore, all its claims are extinguished.

RULING:

  1. The Court held that the two Malaysian corporations should not be impleaded and held liable in the case. The petitioner failed to provide copies of the subcontract agreement and guaranty agreement that would establish the alleged liability of the Malaysian corporations. The lower courts cannot determine the validity and extent of the liability without these agreements. Moreover, the petitioner's argument based on the admissions in the respondent's complaint was not supported by factual findings. The court also noted that the issue of the two Malaysian corporations was already considered by the lower courts in their previous rulings.

  2. The Court held that the trial court had jurisdiction over the subject matter of the case. The jurisdiction of the trial court is conferred by law, specifically Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of 1980). The plain reading of Section 19 of the said law includes civil actions for payment of sum of money within the exclusive original jurisdiction of trial courts.

  3. The trial court was correct in assuming jurisdiction over the complaint. The doctrine of forum non conveniens does not automatically divest a court of its jurisdiction. The determination of whether to entertain a case based on forum non conveniens is addressed to the sound discretion of the court, which must carefully consider the facts of the particular case. It is crucial for courts to determine if special circumstances exist to warrant the desistance from assuming jurisdiction. In this case, the trial court found that the special circumstances did not exist, and it was more convenient to try the case in the Philippines.

  4. The Philippine court has jurisdiction over the civil suit. Since the petitioner is a domestic corporation with its main office in the Philippines, it is more convenient for the defendant corporation to have the case heard in the Philippines. The Philippine court would be better positioned to enforce any judgment and dispense justice. Furthermore, the petitioner failed to show any real and present danger that another jurisdiction commenced litigation and that the foreign tribunal exercised jurisdiction.

  5. The petitioner was not denied its right to due process. It had the opportunity to be heard through its filed Motion for Reconsideration Ad Cautelam before the trial court and by elevating the case to the Court of Appeals. Due process was not denied as long as a party was given an opportunity to be heard. The petitioner also did not take advantage of the opportunities given to file a responsive pleading and allowed the filing periods to lapse.

  6. The court applies the doctrine of presumed-identity approach or processual presumption. If a foreign law is not pleaded or proved, the presumption is that the foreign law is the same as the Philippine labor laws. Philippine labor laws will be applied in determining the issues presented.

  7. Even assuming the six-year prescription applies, petitioner cannot conclude prescription based on the allegations in the Complaint. The Complaint was filed on April 12, 1994, and if the payment was made on April 13, 1988, six years would not have yet elapsed since the filing of the Complaint.

  8. Petitioner failed to attach a copy of the alleged liquidators' declaration that respondent had no more existing claims. Moreover, petitioner did not raise this issue before the lower courts. Therefore, new issues cannot be raised for the first time before the court, and the allegation that respondent has ceased to exist and that all its claims are extinguished has not been proven.

PRINCIPLES:

  • The party seeking to implead and hold another party liable must provide sufficient evidence and supporting documents to establish the existence and extent of the liability.

  • Jurisdiction over the subject matter of a case is conferred by law and must be determined based on the applicable statutory provisions.

  • The doctrine of forum non conveniens applies in conflicts of law cases and gives courts the choice to not assume jurisdiction when it is not the most convenient forum and the parties may seek redress in another forum.

  • Forum non conveniens is grounded on principles of comity and judicial efficiency, recognizing that other tribunals may be better positioned to enforce judgments and dispense justice in certain cases.

  • The determination of whether to entertain a case based on forum non conveniens is within the sound discretion of the court and must be based on the facts of the particular case.

  • To successfully raise forum non conveniens, it must be clearly pleaded as a ground for dismissal at the earliest possible opportunity and must be based on a factually established basis. It must be shown that a prior suit has been brought in another jurisdiction.

  • A Philippine court may exercise jurisdiction over a civil suit filed against a domestic corporation with its main office in the Philippines.

  • Due process requires an opportunity to be heard and defend one's interests.

  • The opportunity for due process is not denied if a party was given the chance to file a motion for reconsideration and be heard.

  • The party invoking the application of a foreign law has the burden of proving the law.

  • The doctrine of processual presumption applies when a party fails to prove the foreign law provisions. In such cases, the court applies the laws of the forum.

  • The doctrine of presumed-identity approach or processual presumption applies when a foreign law is not pleaded or proved. The presumption is that the foreign law is the same as the Philippine law.

  • Philippine courts do not take judicial notice of foreign laws. To prove a foreign law, the party invoking it must present a copy thereof and comply with the relevant provisions of the Rules of Court.

  • The prescription period for actions upon a written contract is 10 years from the accrual of the right, as provided in Article 1144(1) of the Civil Code.