Gulf Oil Corporation vs.

Gilbert
330 US 501
Argued December 18, 19, 1946
Decided March 10, 1947
Facts:
The case arose when a fire gutted a warehouse owned and operated by the plaintiff. The allegations provide that the defendant
carelessly handled a delivery of gasoline to his warehouse tanks and pumps as to cause an explosion and fire which consumed the
whole warehouse together with the merchandise of his customers. The plaintiff asks for a judgment amounting to $365,529.77 in
damages. The breakdown of which are the following: (1)$41,889.10 damage to his warehouse which was totally consumed; (2)
$3,602.40 destroyed merchandise and fixtures to his damage; (3) $20,030 injury to his business and profits; (4) $300,000 worth
of burned property of customers in his custody through the warehousing agreement; (5) costs, disbursements, and interests from
the date of the fire.
The plaintiff brought the case in Southern District of New York despite living in Lynchburg, Viriginia and where the warehouse is
located. On the one hand, the defendant is a corporation organized under the laws of Pennsylvania and is qualified to do business
both in New York and Virginia. It has officials designated to each state as agents to receive service of process.
When the defendant was sued, it invoked the doctrine of forum non conveniens. It claimed that the Virginia is the appropriate
place for trial because it is where the plaintiff lives, where the defendant does his business, where all the events of the litigation
took place, where most of the witnesses reside, and where both the state and federal courts are available to the plaintiff and are
able to obtain jurisdiction of the defendant.
No Federal question is involved and was brought to the United States District Court solely on the issue of diversity of citizenship
of the parties. The district court dismissed the case citing the Erie Railroad Co. vs Tompkins and considered the that the law of
New York is forum non conveniens applied and should be left to Virginia Courts. However, the Circuit Court of Appeals
disagreed as to the applicability of New York law, took a restrictive view of the application of the entire doctrine in federal courts.
It reversed the district court. Hence, certiorari was filed.
Issue:
Whether the United States District Court has inherent power to dismiss a suit pursuant to the doctrine of forum non conveniens.
Ruling:
Yes. The district court has the power to dismiss a suit pursuant to the doctrine of forum non conveniens. As shown by several
jurisprudence, the US courts are allowed to decline jurisdiction on cases rightfully under its jurisdiction on exceptional
circumstances, one of which is the application of forum non conveniens. The doctrine provides that a court may relinquish its
jurisdiction to hear a case when such choice in venue to file the case causes inconvenience or burden to one of the parties or when
the choice in venue clearly is a form of harassment to the adverse party. Also, the interests of fair play, inconvenience on the part
of the adverse party, public interest, and the character or nature of the parties are to be balanced. If the court sees a strong balance
in favor of the adverse party, it may apply the doctrine. In the case at bar, several factors were considered in order to apply the
doctrine. First, the plaintiff is not a resident of New York and the tortious event happened in Lynchburg, Virginia. In fact, the
court was candidly told by the plaintiff that the venue was chosen by the insurance company for purposes of subrogation.
Second, all the witnesses, the customers of the plaintiff and those that were part of negligent act live in Lynchburg, Virginia. Only
the lawyer for the plaintiff is said to be residing in New York. Third, a trial in Virginia would simplify the proceedings. If the
proceeding is conducted in Virginia, issues on conflicts of laws may be avoided. Hence, given these circumstances, the district
court did not abuse its discretion in applying the doctrine of forum non conveniens.

Piper Aircraft Co. vs. Reyno

Brief Fact Summary. Plaintiffs sued Defendants, in state court arising from injuries sustained in a plane crash in Scotland. The
cases were removed to federal court and transferred to the District Court of Pennsylvania. Defendants moved to dismiss under the
doctrine
of
forum
non
conveniens,
arguing
that
the
better
forum
was
located
in
Scotland.
Synopsis of Rule of Law. The doctrine of forum non conveniens allows a court to dismiss a case that was brought in the wrong

forum. When all or most of the significant events, witnesses and evidence are centered in one location, then a court must dismiss
a case brought in another location under the doctrine of forum non conveniens unless the alternate forum provides the plaintiff
with absolutely no remedy. Whether the law of the forum chosen by the plaintiff is more favorable to the plaintiff should not be
given weight.
Facts
In 1976, a small commercial aircraft crashed in Scotland, killing the pilot and five passengers. The deceased were all Scottish
citizens and residents. The plane was manufactured in Pennsylvania by Piper (defendant), and the propellers were manufactured
in Ohio by Hartzell (defendant). Reyno (plaintiff), the administratrix of the estates of the five passengers, filed wrongful death
actions against Piper and Hartzell in California state court, alleging negligence and strict liability. Reyno admitted to filing the
action in the United States because its laws were more favorable to her case than those of Scotland. Piper and Hartzell removed
to federal district court in California and then sought a transfer to the Middle District of Pennsylvania. The California district
court granted these motions. After both cases were moved to federal district court in Pennsylvania, Piper and Hartzell sought to
dismiss the case on grounds of forum non conveniens. The Pennsylvania district court granted the motions, citing the discretion
courts have to dismiss a case when an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum
would be burdensome to the defendant. The Third Circuit Court of Appeals reversed on the ground that dismissal for forum non
conveniens is not appropriate where the law of the alternative forum is less favorable to the plaintiff. Piper and Hartzell appealed
to the United States Supreme Court.
Facts.
There was a plane crash in Scotland, where five citizens of Scotland were killed. The aircraft was manufactured in Pennsylvania
by Piper Aircraft Company (Defendant) and the propellers were made in Ohio by Hartzell Propeller, Inc. (Defendant). The plane
was registered in Great Britain and owned and operated by people from the United Kingdom. The wreckage was in England. An
investigation conducted by The British Department of Trade concluded that there was no evidence of defective equipment and
that the crash was probably due to pilot error. Reyno, Plaintiff, a legal secretary for the attorney of the decedents survivors, was
appointed administratrix of the decedents estate by a California probate court. Plaintiff commenced separate wrongful death
actions against the Piper and Hartzell in California Superior Court, claiming negligence and strict liability. They also filed suit in
the United Kingdom against the owner and operator. Plaintiff admits that she filed suit in the United Stat
es because of its laws regarding liability and capacity to sue. Defendant filed motion to remove to the District Court in California
which was granted. Piper moved to transfer to the District Court in Pennsylvania. Hartzell moved to dismiss for lack of personal
jurisdiction or, in the alternative, to transfer. The District Court quashed service and transferred the case to Pennsylvania. Plaintiff
then served Hartzell with process in the District Court in Pennsylvania. Defendants moved to dismiss for forum non conveniens.
The District Court of Pennsylvania granted the motions based on the analysis articulated in [Gulf Oil Corp. v. Gilbert, 330 U.S.
501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947)], namely that: 1) An alternative forum existed in Scotland; 2) The plaintiff only filed in
the U.S. for the favorable law; 3) There were overwhelming connections with Scotland; 4) Witnesses and evidence were beyond
the reach of compulsory process.; 5) All of Defendants witnesses are in Great Britain; 6) There should be only one trial to
preserve judicial expense and avoid the risk of inconsistent verdicts; 7) Scottish law would apply to Hartzell, and Pennsylvania
law would apply to Piper, which would be excessively confusing for a jury; 8) The jurors have little connection to the
controversy;
9)
Scotland
has
a
substantial
interest
in
the
outcome
of
litigation.
The Circuit Court reversed and remanded District Courts decision. It held that the District Court abused its discretion when using
the Gilbert analysis. In addition, the court baed its argument on several additional factors: (1) dismissal is never appropriate
where the law of the alternative forum is less favorable to Plaintiffs; (2) Plaintiffs choice of forum deserves substantial weight
even though they are non-residents; (3) Defendants did not prove that all their witnesses were in Great Britain; (4) Defendants
inability to implead other defendants would be burdensome but not unfair; (5) viewing the wreckage and Scottish topography was
not that significant; (6) application of foreign law does not require dismissal; (7) Pennsylvania and Ohio would be the governing
law anyway, because these states have the greatest policy interests; and finally (8) a dismissal for forum non conveniens should
not result in a change in the applicable law, just a change in the location of the trial. T
he Supreme Court read this holding to mandate that dismissal is automatically barred if it would lead to a change in the
applicable
law
unfavorable
to
the
plaintiff.
Issue. Should a case be dismissed on the grounds of forum non conveniens when all the witnesses and evidence are in another
country, the other countrys jurors would be more connected to the problem, it is inconvenient to the parties to try the case in the
jurisdiction where it was brought, and the other countrys law will be applied?

Held. Yes.
Reversed.
The possibility of a change of law should not be given substantial weight in a forum non conveniens analysis. Plaintiffs can
choose among many forums, and generally choose the most favorable one. If they do not choose the most favorable but the action
can be dismissed anyway, it would not be proper. In addition, courts would have to interpret the law of foreign districts, which
would pose a lot of problems and inconsistencies. This is why there is a doctrine of forum non conveniens, to get rid of this kind
of confusion.
Upholding the Court of Appeals judgment would also increase the flow of litigation, and the courts would be overwhelmed.
Choice of law should only be considered in this scenario when the remedy in the alternative forum is totally inadequate or when
the alternative forum lacks subject matter jurisdiction. The facts of the case do not show either scenario.
Giving the plaintiffs interests less weight is justified when the plaintiffs are foreign. Under this circumstance, the choice of
forum is not necessarily convenient. The connections with Scotland were not necessarily overwhelming, but the District Court
correctly found that there would be fewer evidentiary problems. If Defendants had to prove exactly what persons it would be
difficult to identify and bring as witnesses, Defendants required expenditures would defeat the purpose of their motion.
Even if Scottish law would not apply, the other public interest factors would be sufficient to support dismissal. There is a local
interest. The American interest is not sufficient.

Discussion. Choosing a particular forum because the law is more favorable to the plaintiff cannot be given any substantial weight
under a forum non conveniens analysis. Although the general rule is that a court should not dismiss a case on grounds of forum
non conveniens unless there is an alternate forum in which the plaintiff can pursue a remedy, this rule only requires that the
plaintiff be able to file a proper lawsuit in that alternate fo
SINOCHEM INT'L CO. V. MALAYSIA INT'L SHIPPINGCORP.
SUPREME COURT OF THE UNITED STATES

SINOCHEM INTERNATIONAL CO. LTD. v. MALAYSIA INTERNATIONAL SHIPPING CORP.

certiorari to the united states court of appeals for the third circuit
No. 06102.Argued January 9, 2007 Decided March 5, 2007
A contract between petitioner (Sinochem), a Chinese state-owned importer, and a domestic corporation not a party here
(Triorient) provided that Sinochem would purchase steel coils and that Triorient would be paid under a letter of credit by
producing a valid bill of lading certifying that the coils had been loaded for shipment to China on or before April 30, 2003.
Triorient subchartered a vessel owned by respondent (Malaysia International), a Malaysian company, to transport the coils, and
hired a stevedoring company to load the coils in Philadelphia. A bill of lading, dated April 30, 2003, triggered payment under the
letter of credit. Sinochem petitioned a Chinese admiralty court for preservation of a maritime claim against Malaysia
International and arrest of the vessel, alleging that the Malaysian company had falsely backdated the bill of lading. The Chinese
court ordered the ship arrested, and Sinochem timely filed a complaint in that tribunal. The Chinese admiralty court rejected
Malaysia Internationals jurisdictional objections to Sinochems complaint and that ruling was affirmed on appeal.
Shortly after the Chinese admiralty court ordered the vessels arrest, Malaysia International filed this action in a United States
District Court, asserting that Sinochems preservation petition to the Chinese court contained misrepresentations, and seeking
compensation for losses sustained due to the ships arrest. Sinochem moved to dismiss on several grounds, including lack of
subject-matter and personal jurisdiction and the doctrine of forum non conveniens, under which a federal district court may
dismiss an action if a court abroad is the more appropriate and convenient forum for adjudicating the controversy. The District
Court determined it had subject-matter jurisdiction over the cause, concluded it lacked personal jurisdiction over Sinochem under
Pennsylvania law, conjectured that limited discovery might reveal that it had personal jurisdiction under Federal Rule of Civil

Procedure 4(k)(2), but dismissed onforum non conveniens grounds, finding that the case could be adjudicated adequately and
more conveniently in the Chinese courts. Agreeing that there was subject-matter jurisdiction and that personal jurisdiction could
not be resolved sans discovery, the Third Circuit panel held that the District Court could not dismiss the case under the forum non
conveniens doctrine unless and until it determined definitively that it had both subject-matter and personal jurisdiction.
Held: A district court has discretion to respond at once to a defendants forum non conveniens plea, and need not take up first any
other threshold objection. In particular, a court need not resolve whether it has authority to adjudicate the cause (subject-matter
jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is the more suitable
arbiter of the merits of the case. Pp. 512.
(a) A federal court has discretion to dismiss on forum non conveniens grounds when an alternative forum has jurisdiction to
hear [the] case, and trial in the chosen forum would establish oppressiveness and vexation to a defendant out of all
proportion to plaintiffs convenience, or the chosen forum [is] inappropriate because of considerations affecting the courts
own administrative and legal problems. American Dredging Co. v. Miller, 510 U. S. 443, 447448. Such a dismissal reflects a
courts assessment of a range of considerations, most notably the convenience to the parties and the practical difficulties that can
attend the adjudication of a dispute in a certain locality. Quackenbush v. Allstate Ins. Co., 517 U. S. 706, 723. A defendant
invoking forum non conveniens ordinarily bears a heavy burden in opposing the plaintiffs chosen forum. When the plaintiffs
choice is not its home forum, however, the presumption in the plaintiffs favor applies with less force, for the assumption that
the chosen forum is appropriate is then less reasonable. Piper Aircraft Co. v. Reyno, 454 U. S. 235, 255256. Pp. 56.
(b) Although a federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over
the cause (subject-matter jurisdiction) and the parties (personal jurisdiction), see Steel Co. v. Citizens for Better
Environment, 523 U. S. 83, 93102, there is no mandatory sequencing of nonmerits issues, see Ruhrgas AG v. Marathon Oil
Co., 526 U. S. 574, 584. A court has leeway to choose among threshold grounds for denying audience to a case on the
merits, Id., at 585. Pp. 78.
(c) Forum non conveniens is a nonmerits ground for dismissal. See American Dredging, 510 U. S., at 454; Chick Kam
Choo v. Exxon Corp., 486 U. S. 140, 148. A district court therefore may dispose of an action by a forum non
conveniens dismissal, bypassing questions of subject-matter and personal jurisdiction, when considerations of convenience,
fairness, and judicial economy so warrant.Forum non conveniens, like other threshold issues, may involve a brush with factual
and legal issues of the underlying dispute. Van Cauwenberghe v. Biard, 486 U. S. 517, 529. But the critical point, rendering
a forum non conveniens determination a nonmerits issue that can be determined before taking up jurisdictional inquiries is this:
Resolving a forum non conveniens motion does not entail any assumption by the court of substantive law-declaring power.
Statements in Gulf Oil Corp. v. Gilbert, 330 U. S. 501, that forum non conveniens can never apply if there is absence of
jurisdiction, id., at 504, and that [i]n all cases in which forum non convenienscomes into play, it presupposes at least two
forums in which the defendant is amenable to process, id., at 506507, account in large part for the Third Circuits conclusion.
Those statements draw their meaning from the context in which they were embedded. Gulf Oilanswered in the affirmative the
question whether a court that had jurisdiction over the cause and the parties and was a proper venue could nevertheless dismiss
the action under the forum non conveniens doctrine. Gulf Oil did not address the issue decided here: whether a federal court can
presume, rather than dispositively decide, its jurisdiction before dismissing under the doctrine of forum non conveniens. The
quoted statements, confined to the setting in which they were made, are no hindrance to the decision reached today. The Third
Circuits further concernthat a court failing first to establish its jurisdiction could not condition a forum non
conveniensdismissal on the defendants waiver of any statute of limitations defense or objection to the foreign forums
jurisdiction, and thus could not shield the plaintiff against a foreign tribunals refusal to entertain the suitis not implicated on
these facts. Malaysia International faces no genuine risk that the more convenient forum will not take up the case. This Court
therefore need not decide whether a court conditioning a forum non conveniens dismissal on the waiver of jurisdictional or
limitations defenses in the foreign forum must first determine its own authority to adjudicate the case. Pp. 811.
(d) This is a textbook case for immediate forum non conveniens dismissal. The District Courts subject-matter jurisdiction
presented an issue of first impression in the Third Circuit, and was considered at some length by the courts below. Discovery
concerning personal jurisdiction would have burdened Sinochem with expense and delay to scant purpose: The District Court
inevitably would dismiss the case without reaching the merits, given its well-considered forum non conveniens appraisal. Judicial
economy is disserved by continuing litigation in the District Court given the proceedings long launched in China. And the
gravamen of Malaysia Internationals complaintmisrepresentations to the Chinese admiralty court in securing the vessels
arrest in Chinais an issue best left for determination by the Chinese courts. If, as in the mine run of cases, a court can readily
determine that it lacks jurisdiction over the cause or the defendant, the proper course would be to dismiss on that ground. But
where subject-matter or personal jurisdiction is difficult to determine, and forum non conveniens considerations weigh heavily in
favor of dismissal, the court properly takes the less burdensome course. Pp. 1112.

Manila Hotel Corp vs. NLRC

343 SCRA 1 Private International Law Forum Non Conveniens
In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace Hotel in Beijing,
China. Due to higher pay and benefits, Santos agreed to the hotels job offer and so he started working there in November 1988.
The employment contract between him and Palace Hotel was however without the intervention of the Philippine Overseas
Employment Administration (POEA). In August 1989, Palace Hotel notified Santos that he will be laid off due to business
reverses. In September 1989, he was officially terminated.
In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC) and Manila Hotel
International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were served upon it. MHC is a government owned
and controlled corporation. It owns 50% of MHIL, a foreign corporation (Hong Kong). MHIL manages the affair of the Palace
Hotel. The labor arbiter who handled the case ruled in favor of Santos. The National Labor Relations Commission (NLRC)
affirmed the labor arbiter.
ISSUE: Whether or not the NLRC has jurisdiction over the case.
HELD: No. The NLRC is a very inconvenient forum for the following reasons:
1.
2.

3.

The only link that the Philippines has in this case is the fact that Santos is a Filipino;
However, the Palace Hotel and MHIL are foreign corporations MHC cannot be held liable because it merely owns
50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of corporate fiction cant be pierced because it
was not shown that MHC is directly managing the affairs of MHIL. Hence, they are separate entities.
Santos contract with the Palace Hotel was not entered into in the Philippines;

4.

Santos contract was entered into without the intervention of the POEA (had POEA intervened, NLRC still does not
have jurisdiction because it will be the POEA which will hear the case);

5.

MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not residents of the
Philippines;
Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It is not competent to
determine the facts because the acts complained of happened outside our jurisdiction. It cannot determine which law is
applicable. And in case a judgment is rendered, it cannot be enforced against the Palace Hotel (in the first place, it was not served
any summons).
The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided:
(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.
None of the above conditions are apparent in the case at bar.

6. PhilSec. Investment v. Court of Appeals, 274 SCRA 102 (1997)

FACTS
Ducat obtained two separate loans from Ayala and Philsec in the sum of $2.5M secured by shares of stock owned by
Ducat.
In order to facilitate the payment of the loans, 1488 Inc. undertook the obligation to pay by virtue of a Warranty Deed
with a Vendors Lien. Through the latter, 1488 Inc. sold to Athona Holdings (Athona) a parcel of land in Texas while
Philsec and Ayala extended a $2.5M loan to Athona to partially cover the value of the $2.8M lot.
Athona executed a promissory note in favour of 1488 Inc. worth $.3M to complete the payment for the lot. After all
these transactions, Ducat was released by Philsec and Ayala of his loan.
Athona failed to pay the $.3M promissory note.

1488 Inc. sued Athona, Philsec and Ayala for the payment of the $.3M.
The case was filed in Texas. While the Texas case was pending, Philsec filed a complaint to recover a sum of money
with damages in a Makati RTC against Ducat.
Ducat, on the other hand, filed and was granted a MTD on the basis of litis pendentia and forum non conveniens.
The trial court also held that it had no jurisdiction over 1488 Inc. because the action was neither in rem nor quasi in
rem, accompanied by the fact that the said defendant was a non-resident.
The Court of Appeals affirmed the decision.

ISSUES
1. Does a judgment in a US court bar actions to be instituted in Philippine courts? (i.e. Can the foreign judgment
constitute res judicata?)
2. Did CA err in dismissing the case based on the principle of forum non conveniens?
RULING
1. It depends. The FOREIGN JUDGMENT CANNOT BE GIVEN THE EFFECT OF RES JUDICATA WITHOUT
GIVING THE ADVERSE PARTY AN OPPORTUNITY TO IMPEACH IT ON GROUNDS STATED IN RULE 39,
50 of the Rules of Court, to wit: WANT OF JURISDICTION, WANT OF NOTICE TO THE PARTY, COLLUSION,
FRAUD, OR CLEAR MISTAKE OF LAW OR FACT.

2.

While this Court has given the effect of res judicata to foreign judgments in several cases, it was after the parties
opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law.
IT IS NOT NECESSARY FOR THIS PURPOSE TO INITIATE A SEPARATE ACTION OR PROCEEDING FOR
ENFORCEMENT OF THE FOREIGN JUDGMENT.
WHAT IS ESSENTIAL IS THAT THERE IS OPPORTUNITY TO CHALLENGE THE FOREIGN JUDGMENT, IN
ORDER FOR THE COURT TO PROPERLY DETERMINE ITS EFFICACY.
This is because in this jurisdiction, with respect to ACTIONS IN PERSONAM, as distinguished from actions in rem, a
FOREIGN JUDGMENT MERELY CONSTITUTES PRIMA FACIE EVIDENCE OF THE JUSTNESS OF THE
CLAIM OF A PARTY AND, AS SUCH, IS SUBJECT TO PROOF TO THE CONTRARY.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S.
court as basis for declaring it res judicata or conclusive of the rights of private respondents.
The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even furnished
copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination
of whether the issues then being litigated in the U.S. court were exactly the issues raised in this case such that the
judgment that might be rendered would constitute res judicata.
Yes.
First, a MTD is limited to the grounds under Rule 16, 1, which does not include forum non conveniens. The propriety
of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a
matter of defense.
Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should
do so only after vital facts are established, to determine whether special circumstances require the courts desistance.
In this case, the TRIAL COURT ABSTAINED FROM TAKING JURISDICTION SOLELY ON THE BASIS OF THE
PLEADINGS FILED BY PRIVATE RESPONDENTS IN CONNECTION WITH THE MOTION TO DISMISS.
IT FAILED TO CONSIDER THAT PHILSEC IS A DOMESTIC CORPORATION AND DUCAT IS A FILIPINO,
AND THAT IT WAS THE EXTINGUISHMENT OF THE LATTERS DEBT WHICH WAS THE OBJECT OF THE
TRANSACTION UNDER LITIGATION.
The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.

CRESCENT PETROLEUM, LTD., Petitioner, vs. M/V "LOK MAHESHWARI," THE SHIPPING CORPORATION OF INDIA,
and PORTSERV LIMITED
G.R. No. 155014 November 11, 2005
FACTS:
Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing vessel of Indian registry that is owned by respondent
Shipping Corporation of India (SCI), a corporation organized and existing under the laws of India and principally owned by the
Government of India. It was time-chartered by respondent SCI to Halla Merchant Marine Co. Ltd. (Halla), a South Korean
company. Halla, in turn, sub-chartered the Vessel through a time charter to Transmar Shipping, Inc. (Transmar). Transmar further

sub-chartered the Vessel to Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized and existing
under the laws of Canada.
On or about November 1, 1995, Portserv requested petitioner Crescent Petroleum, Ltd. (Crescent), a corporation
organized and existing under the laws of Canada that is engaged in the business of selling petroleum and oil products for the use
and operation of oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the Vessel. Petitioner Crescent granted and
confirmed the request through an advice via facsimile dated November 2, 1995. As security for the payment of the bunker fuels
and related services, petitioner Crescent received two (2) checks in the amounts of US$100,000.00 and US$200,000.00. Thus,
petitioner Crescent contracted with its supplier, Marine Petrobulk Limited (Marine Petrobulk), another Canadian corporation, for
the physical delivery of the bunker fuels to the Vessel.
On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting to US$103,544 inclusive of
barging and demurrage charges to the Vessel at the port of Pioneer Grain, Vancouver, Canada. The Chief Engineer Officer of the
Vessel duly acknowledged and received the delivery receipt. Marine Petrobulk issued an invoice to petitioner Crescent for the
US$101,400.00 worth of the bunker fuels. Petitioner Crescent issued a check for the same amount in favor of Marine Petrobulk,
which check was duly encashed.
Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice dated November 21, 1995 to "Portserv
Limited, and/or the Master, and/or Owners, and/or Operators, and/or Charterers of M/V Lok Maheshwari" in the amount of
US$103,544.00 with instruction to remit the amount on or before December 1, 1995. The period lapsed and several demands
were made but no payment was received. Also, the checks issued to petitioner Crescent as security for the payment of the bunker
fuels were dishonored for insufficiency of funds. As a consequence, petitioner Crescent incurred additional expenses of
US$8,572.61 for interest, tracking fees, and legal fees.
On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent instituted before the RTC of
Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of preliminary attachment" against
respondents Vessel and SCI, Portserv and/or Transmar.
On May 3, 1996, the trial court issued a writ of attachment against the Vessel with bond at P2,710,000.00. Petitioner
Crescent withdrew its prayer for a temporary restraining order and posted the required bond.
On May 18, 1996, summonses were served to respondents Vessel and SCI, and Portserv and/or Transmar through the
Master of the Vessel. On May 28, 1996, respondents Vessel and SCI, through Pioneer Insurance and Surety Corporation
(Pioneer), filed an urgent ex-parte motion to approve Pioneers letter of undertaking, to consider it as counter-bond and to
discharge the attachment. On May 29, 1996, the trial court granted the motion; thus, the letter of undertaking was approved as
counter-bond to discharge the attachment.
ISSUE:
Whether the Philippine court has or will exercise jurisdiction and entitled to maritime lien under our laws on foreign vessel
docked on Philippine port and supplies furnished to a vessel in a foreign port?
RULING:
In a suit to establish and enforce a maritime lien for supplies furnished to a vessel in a foreign port, whether such lien
exists, or whether the court has or will exercise jurisdiction, depends on the law of the country where the supplies were furnished,
which must be pleaded and proved.
The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such single-factor methodologies as the law of the
place of supply. The multiple-contact test to determine, in the absence of a specific Congressional directive as to the statutes
reach, which jurisdictions law should be applied. The following factors were considered: (1) place of the wrongful act; (2) law of
the flag; (3) allegiance or domicile of the injured; (4) allegiance of the defendant shipowner; (5) place of contract; (6)
inaccessibility of foreign forum; and (7) law of the forum. This is applicable not only to personal injury claims arising under the
Jones Act but to all matters arising under maritime law in general
The Court cannot sustain petitioner Crescents insistence on the application of P.D. No. 1521 or the Ship Mortgage
Decree of 1978 and hold that a maritime lien exists. Out of the seven basic factors listed in the case of Lauritzen, Philippine law
only falls under one the law of the forum. All other elements are foreign Canada is the place of the wrongful act, of the
allegiance or domicile of the injured and the place of contract; India is the law of the flag and the allegiance of the defendant
shipowner. Applying P.D. No. 1521,a maritime lien exists would not promote the public policy behind the enactment of the law to
develop the domestic shipping industry. Opening up our courts to foreign suppliers by granting them a maritime lien under our
laws even if they are not entitled to a maritime lien under their laws will encourage forum shopping. In light of the interests of the
various foreign elements involved, it is clear that Canada has the most significant interest in this dispute. The injured party is a
Canadian corporation, the sub-charterer which placed the orders for the supplies is also Canadian, the entity which physically
delivered the bunker fuels is in Canada, the place of contracting and negotiation is in Canada, and the supplies were delivered in
Canada.
Gulf Oil Corp. v. Gilbert
Forum Non-Conveniens
The questions are whether the United States District Court has inherent power to dismiss a suit pursuant to the doctrine of forum
non conveniens and, if so, whether that power was abused in this case.

The respondent-plaintiff brought this action in the Southern District of New York, but resides at Lynchburg, Virginia, where he
operated a public warehouse. He alleges that the petitioner-defendant, in violation of the ordinances of Lynchburg, so carelessly
handled a delivery of gasoline to his warehouse tanks and pumps as to cause [330 U.S. 501, 503] an explosion and fire which
consumed the warehouse building to his damage of $41,889.10, destroyed merchandise and fixtures to his damage of $3,602. 40,
caused injury to his business and profits of $20,038.27, and burned the property of customers in his custody under warehousing
agreements to the extent of $300,000. He asks judgment of $365,529.77 with costs and disbursements, and interest from the date
of fire. The action clearly is one in tort.
The petitioner-defendant is a corporation organized under the laws of Pennsylvania, qualified to do business in both Virginia and
New York, and it has designated officials of each state as agents to receive service of process. When sued in New York, the
defendant, invoking the doctrine of forum non conveniens, claimed that the appropriate place for trial is Virginia where the
plaintiff lives and defendant does business, where all events in litigation took place, where most of the witnesses reside, and
where both state and federal courts are available to plaintiff and are able to obtain jurisdiction of the defendant.
The case, on its merits, involves no federal question and was brought in the United States District Court solely because of
diversity in citizenship of the parties. Because of the charact r of its jurisdiction and the holdings of and under Erie Railroad Co.
v. Tompkins, 304 U.S. 64 , 58 S.Ct. 817, 114 A.L.R. 1487, the District Court considered that the law of New York as to forum
non conveniens applied and that it required the case to be left to Virginia courts. 1 It therefore dismissed.
The Circuit Court of Appeals disagreed as to the applicability of New York law, took a restrictive view of the application of the
entire doctrine in federal courts and, one judge dissenting, reversed. 2 The case is here on certiorari. 328 U.S. 830 ,
Issue: Whether or not the action was properly dismissed from NY court under the doctrine of FNC thought personam jurisdiction
and venue are proper
HELD:
YES. The application of the doctrine lies in the the discretion of the court. However, tje interests of the plaintiff, the defendant
and the forum state need to be considered. Here, there is not interest for any party to have the litigation in New York. In fact,
interests weigh against it.
Moreover, the plaintiff may not choose an inconvenient forum to harass the petitioner. Finally, the state has an interest in avoiding
the overcrowding of its own courts and subjecting its citizens to jury duty in a case having no ties to their state.
The principle of forum non conveniens is simply that a court may resist imposition upon its jurisdiction even when jurisdiction is
authorized by the letter of a general venue statute. These statutes are drawn with a necessary generality and usually give a
plaintiff a choice of courts, so that he may be quite sure of some place in which to pursue his remedy. But the open door may
admit those who seek not simply justice but perhaps justice blended with some harassment. A plaintiff sometimes is under
temptation to resort to a strategy of f rcing the trial at a most inconvenient place for an adversary, even at some inconvenience to
himself.
Many of the states have met misuse of venue by investing courts with a discretion to change the place of trial on various grounds,
such as the convenience of witnesses and the ends of justice. 5 The federal law contains no such express criteria to guide the
district court in exercising its power. But the problem is a very old one affecting the administration of the courts as well as the
rights of litigants, and both in England and in this country the common law worked out techniques and criteria for dealing with
it. 6 [330 U.S. 501, 508] Wisely, it has not been attempted to catalogue the circumstances which will justify or require either
grant or denial of remedy. The doctrine leaves much to the discretion of the court to which plaintiff resorts, and experience has
not shown a judicial tendency to renounce one's own jurisdiction so strong as to result in many abuses. 7
If the combination and weight of factors requisite to given results are difficult to forecast or s
Turning to the question whether this is one of those rather rare cases where the doctrine should be applied, we look first to the
interests of the litigants.
The plaintiff himself is not a resident of New York, nor did any event connected with the case take place there, nor does any
witness with the possible exception of experts live there. No one connected with that side of the case save counsel for the plaintiff
resides there, and he has candidly told us that he was retained by insurance companies interested presumably because of
subrogation. His affidavits and argument are devoted to controvering claims as to defendant's inconvenience rather than to
showing that the present forum serves any convenience [330 U.S. 501, 510] of his own, with one exception. The only
justification for trial in New York advanced here is one rejected by the district court and is set forth in the brief as follows: 'This
Court can readily realize that an action of this type, involving as it does a claim for damages in an amount close to $ 400,000, is
one which may stagger the imagination of a local jury which is surely unaccustomed to dealing with amounts of such a nature.
Furthermore, removed from Lynchburg, the respondent will have an opportunity to try this case free from local influences and
preconceived notions which make it difficult to procure a jury which has no previous knowledge of any of the facts herein.'
The court likewise could well have concluded that the task of the trial court would be simplified by trial in Vir- [330 U.S. 501,
512] ginia. If trial was in a state court, it could apply its own law to events occurring there. If in federal court by reason of

diversity of citizenship, the court would apply the law of its own state in which it is likely to be experienced. The course of
adjudication in New York federal court might be beset with conflict of laws problems all avoided if the case is litigated in
Virginia where it arose.
We are convinced that the District Court did not exceed its powers or the bounds of its discretion in dismissing plaintiff's
complaint and remitting him to the courts of his own community. The Circuit Court of Appeals took too restrictive a view of the
doctrine as approved by this Court. Its judgment is reversed.
SECOND DIVISION

[G.R. No. 120135. March 31, 2003]

BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, LTD., petitioners, vs. COURT OF APPEALS,
HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR., respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the November 29, 1994 decision of
the Court of Appeals[1] and the April 28, 1995 resolution denying petitioners motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a Complaint [2] before the
Regional Trial Court of Pasig against the Bank of America NT&SA and Bank of America International, Ltd. (defendant banks for
brevity) alleging that: they were engaged in the shipping business; they owned two vessels: Don Aurelio and El Champion,
through their wholly-owned corporations; they deposited their revenues from said business together with other funds with the
branches of said banks in the United Kingdom and Hongkong up to 1979; with their business doing well, the defendant banks
induced them to increase the number of their ships in operation, offering them easy loans to acquire said vessels; [3] thereafter, the
defendant banks acquired, through their (Litonjuas) corporations as the borrowers: (a) El Carrier [4]; (b) El General[5]; (c) El
Challenger[6]; and (d) El Conqueror[7]; the vessels were registered in the names of their corporations; the operation and the funds
derived therefrom were placed under the complete and exclusive control and disposition of the petitioners; [8]and the possession
the vessels was also placed by defendant banks in the hands of persons selected and designated by them (defendant banks). [9]
The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the income derived from the
operation of the vessels as well as of the proceeds of the subsequent foreclosure sale; [10] because of the breach of their fiduciary
duties and/or negligence of the petitioners and/or the persons designated by them in the operation of private respondents six
vessels, the revenues derived from the operation of all the vessels declined drastically; the loans acquired for the purchase of the
four additional vessels then matured and remained unpaid, prompting defendant banks to have all the six vessels, including the
two vessels originally owned by the private respondents, foreclosed and sold at public auction to answer for the obligations
incurred for and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds
equivalent to ten percent (10%) of the acquisition cost of the four vessels and were left with the unpaid balance of their loans
with defendant banks.[11] The Litonjuas prayed for the accounting of the revenues derived in the operation of the six vessels and
of the proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners; damages for breach of trust; exemplary
damages and attorneys fees.[12]
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause of action against them.
[13]

On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss, thus:
WHEREFORE, and in view of the foregoing consideration, the Motion to Dismiss is hereby DENIED. The defendant is
therefore, given a period of ten (10) days to file its Answer to the complaint.
SO ORDERED.[14]

Instead of filing an answer the defendant banks went to the Court of Appeals on a Petition for Review on
Certiorari[15] which was aptly treated by the appellate court as a petition for certiorari. They assailed the above-quoted order as
well as the subsequent denial of their Motion for Reconsideration. [16] The appellate court dismissed the petition and denied
petitioners Motion for Reconsideration.[17]
Hence, herein petition anchored on the following grounds:
1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT THE SEPARATE PERSONALITIES OF
THE PRIVATE RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL
BORROWERS) CLEARLY SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION THAT THE PRIVATE
RESPONDENTS HAVE NO PERSONALITIES TO SUE.
2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE THE PRINCIPLE OF FORUM NON
CONVENIENS IS NOT MANDATORY, THERE ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING
WHETHER THE CHOICE OF FORUM SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES SURROUNDING
THE INSTANT CASE, DISMISSAL OF THE COMPLAINT ON THE GROUND OF FORUM NON-CONVENIENS IS MORE
APPROPRIATE AND PROPER.
3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT IN THE PHILIPPINES. IN FACT, THE
PENDENCY OF FOREIGN ACTION MAY BE THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED
BY THE PRIVATE RESPONDENT. COROLLARY TO THIS, THE RESPONDENT COURT OF APPEALS FAILED TO
CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE GUILTY OF FORUM SHOPPING. [18]
As to the first assigned error: Petitioners argue that the borrowers and the registered owners of the vessels are the foreign
corporations and not private respondents Litonjuas who are mere stockholders; and that the revenues derived from the operations
of all the vessels are deposited in the accounts of the corporations. Hence, petitioners maintain that these foreign corporations are
the legal entities that have the personalities to sue and not herein private respondents; that private respondents, being mere
shareholders, have no claim on the vessels as owners since they merely have an inchoate right to whatever may remain upon the
dissolution of the said foreign corporations and after all creditors have been fully paid and satisfied; [19]and that while private
respondents may have allegedly spent amounts equal to 10% of the acquisition costs of the vessels in question, their 10%
however represents their investments as stockholders in the foreign corporations. [20]
Anent the second assigned error, petitioners posit that while the application of the principle of forum non conveniens is
discretionary on the part of the Court, said discretion is limited by the guidelines pertaining to the private as well as public
interest factors in determining whether plaintiffs choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert[21]and Piper Aircraft Co. vs. Reyno,[22] to wit:
Private interest factors include: (a) the relative ease of access to sources of proof; (b) the availability of compulsory process for
the attendance of unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses; or (d) all other practical problems
that make trial of a case easy, expeditious and inexpensive. Public interest factors include: (a) the administrative difficulties
flowing from court congestion; (b) the local interest in having localized controversies decided at home; (c) the avoidance of
unnecessary problems in conflict of laws or in the application of foreign law; or (d) the unfairness of burdening citizens in an
unrelated forum with jury duty.[23]
In support of their claim that the local court is not the proper forum, petitioners allege the following:
i) The Bank of America Branches involved, as clearly mentioned in the Complaint, are based in Hongkong and England. As such,
the evidence and the witnesses are not readily available in the Philippines;
ii) The loan transactions were obtained, perfected, performed, consummated and partially paid outside the Philippines;
iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged vessels were part of an offshore fleet, not
based in the Philippines;
iv) All the loans involved were granted to the Private Respondents foreign CORPORATIONS;
v) The Restructuring Agreements were ALL governed by the laws of England;

vi) The subsequent sales of the mortgaged vessels and the application of the sales proceeds occurred and transpired outside the
Philippines, and the deliveries of the sold mortgaged vessels were likewise made outside the Philippines;
vii) The revenues of the vessels and the proceeds of the sales of these vessels were ALL deposited to the Accounts of the
foreign CORPORATIONS abroad; and
viii) Bank of America International Ltd. is not licensed nor engaged in trade or business in the Philippines. [24]
Petitioners argue further that the loan agreements, security documentation and all subsequent restructuring agreements
uniformly, unconditionally and expressly provided that they will be governed by the laws of England; [25] that Philippine Courts
would then have to apply English law in resolving whatever issues may be presented to it in the event it recognizes and accepts
herein case; that it would then be imposing a significant and unnecessary expense and burden not only upon the parties to the
transaction but also to the local court. Petitioners insist that the inconvenience and difficulty of applying English law with respect
to a wholly foreign transaction in a case pending in the Philippines may be avoided by its dismissal on the ground of forum non
conveniens. [26]
Finally, petitioners claim that private respondents have already waived their alleged causes of action in the case at bar for
their refusal to contest the foreign civil cases earlier filed by the petitioners against them in Hongkong and England, to wit:
1.) Civil action in England in its High Court of Justice, Queens Bench Division Commercial Court (1992-Folio No. 2098) against
(a) LIBERIAN TRANSPORT NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER SA; (d)
ESPRIONA SHIPPING CO. SA; (e) PACIFIC NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO
K. LITONJUA & (h) AURELIO K. LITONJUA.
2.) Civil action in England in its High Court of Justice, Queens Bench Division, Commercial Court (1992-Folio No. 2245)
against (a) EL CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA
and (d) AURELIO KATIPUNAN LITONJUA.
3.) Civil action in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992), against (a) ESHLEY COMPANIA
NAVIERA S.A., (b) EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g)
AURELIO KATIPUNAN LITONJUA, JR., and (h) EDUARDO KATIPUNAN LITONJUA.
4.) A civil action in the Supreme Court of Hong Kong High Court (Action No. 4040 of 1992), against (a) ESHLEY COMPANIA
NAVIERA S.A., (b) EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g)
AURELIO KATIPUNAN LITONJUA, RJ., and (h) EDUARDO KATIPUNAN LITONJUA.
and that private respondents alleged cause of action is already barred by the pendency of another action or by litis pendentia as
shown above.[27]
On the other hand, private respondents contend that certain material facts and pleadings are omitted and/or misrepresented
in the present petition for certiorari; that the prefatory statement failed to state that part of the security of the foreign loans were
mortgages on a 39-hectare piece of real estate located in the Philippines; [28] that while the complaint was filed only by the
stockholders of the corporate borrowers, the latter are wholly-owned by the private respondents who are Filipinos and therefore
under Philippine laws, aside from the said corporate borrowers being but their alter-egos, they have interests of their own in the
vessels.[29] Private respondents also argue that the dismissal by the Court of Appeals of the petition for certiorari was justified
because there was neither allegation nor any showing whatsoever by the petitioners that they had no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law from the Order of the trial judge denying their Motion to Dismiss; that
the remedy available to the petitioners after their Motion to Dismiss was denied was to file an Answer to the complaint; [30] that as
upheld by the Court of Appeals, the decision of the trial court in not applying the principle of forum non conveniens is in the
lawful exercise of its discretion. [31]Finally, private respondents aver that the statement of petitioners that the doctrine of res
judicata also applies to foreign judgment is merely an opinion advanced by them and not based on a categorical ruling of this
Court;[32] and that herein private respondents did not actually participate in the proceedings in the foreign courts. [33]
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss cannot be the subject of petition for certiorari.
Petitioners should have filed an answer to the complaint, proceed to trial and await judgment before making an appeal. As
repeatedly held by this Court:

An order denying a motion to dismiss is interlocutory and cannot be the subject of the extraordinary petition for certiorari or
mandamus. The remedy of the aggrieved party is to file an answer and to interpose as defenses the objections raised in his motion
to dismiss, proceed to trial, and in case of an adverse decision, to elevate the entire case by appeal in due course. xxx Under
certain situations, recourse to certiorari or mandamus is considered appropriate, i.e., (a) when the trial court issued the order
without or in excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or (c) appeal would not
prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a defendant from the injurious effects
of the patently mistaken order maintaining the plaintiffs baseless action and compelling the defendant needlessly to go through a
protracted trial and clogging the court dockets by another futile case. [34]
Records show that the trial court acted within its jurisdiction when it issued the assailed Order denying petitioners motion
to dismiss. Does the denial of the motion to dismiss constitute a patent grave abuse of discretion? Would appeal, under the
circumstances, not prove to be a speedy and adequate remedy? We will resolve said questions in conjunction with the issues
raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the complaint on the ground that
plaintiffs have no cause of action against defendants since plaintiffs are merely stockholders of the corporations which are the
registered owners of the vessels and the borrowers of petitioners?
No. Petitioners argument that private respondents, being mere stockholders of the foreign corporations, have no
personalities to sue, and therefore, the complaint should be dismissed, is untenable. A case is dismissible for lack of personality to
sue upon proof that the plaintiff is not the real party-in-interest. Lack of personality to sue can be used as a ground for a Motion
to Dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action. [35] In San Lorenzo Village
Association, Inc. vs. Court of Appeals,[36] this Court clarified that a complaint states a cause of action where it contains three
essential elements of a cause of action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant,
and (3) the act or omission of the defendant in violation of said legal right. If these elements are absent, the complaint becomes
vulnerable to a motion to dismiss on the ground of failure to state a cause of action. [37] To emphasize, it is not the lack or absence
of cause of action that is a ground for dismissal of the complaint but rather the fact that the complaint states no cause of action.
[38]
Failure to state a cause of action refers to the insufficiency of allegation in the pleading, unlike lack of cause of action which
refers to the insufficiency of factual basis for the action. Failure to state a cause of action may be raised at the earliest stages of an
action through a motion to dismiss the complaint, while lack of cause of action may be raised any time after the questions of fact
have been resolved on the basis of stipulations, admissions or evidence presented. [39]
In the case at bar, the complaint contains the three elements of a cause of action. It alleges that: (1) plaintiffs, herein private
respondents, have the right to demand for an accounting from defendants (herein petitioners), as trustees by reason of the
fiduciary relationship that was created between the parties involving the vessels in question; (2) petitioners have the obligation, as
trustees, to render such an accounting; and (3) petitioners failed to do the same.
Petitioners insist that they do not have any obligation to the private respondents as they are mere stockholders of the
corporation; that the corporate entities have juridical personalities separate and distinct from those of the private respondents.
Private respondents maintain that the corporations are wholly owned by them and prior to the incorporation of such entities, they
were clients of petitioners which induced them to acquire loans from said petitioners to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case,[40]
xxx assuming that the allegation of facts constituting plaintiffs cause of action is not as clear and categorical as would otherwise
be desired, any uncertainty thereby arising should be so resolved as to enable a full inquiry into the merits of the action.
As this Court has explained in the San Lorenzo case, such a course, would preclude multiplicity of suits which the law abhors,
and conduce to the definitive determination and termination of the dispute. To do otherwise, that is, to abort the action on account
of the alleged fatal flaws of the complaint would obviously be indecisive and would not end the controversy, since the institution
of another action upon a revised complaint would not be foreclosed. [41]
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning the forum is inconvenient, emerged in private international
law to deter the practice of global forum shopping, [42] that is to prevent non-resident litigants from choosing the forum or place
wherein to bring their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass thedefendant,
to avoid overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts of law cases, may
refuse impositions on its jurisdiction where it is not the most convenient or available forum and the parties are not precluded from
seeking remedies elsewhere.[43]
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. [44] In the case of Communication Materials and Design,

Inc. vs. Court of Appeals,[45] this Court held that xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do
so; provided, that the following requisites are met: (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. [46] Evidently, all these requisites are present in the instant
case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, [47] that the doctrine of forum non
conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include
said doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances
require the courts desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens requires
a factual determination, hence it is more properly considered a matter of defense. [48]
Third issue. Are private respondents guilty of forum shopping because of the pendency of foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and where a final judgment in one case will
amount to res judicata in the other.[49] Parenthetically, for litis pendentia to be a ground for the dismissal of an action there must
be: (a) identity of the parties or at least such as to represent the same interest in both actions; (b) identity of rights asserted and
relief prayed for, the relief being founded on the same acts; and (c) the identity in the two cases should be such that the judgment
which may be rendered in one would, regardless of which party is successful, amount to res judicata in the other.[50]
In case at bar, not all the requirements for litis pendentia are present. While there may be identity of parties,
notwithstanding the presence of other respondents, [51] as well as the reversal in positions of plaintiffs and defendants [52], still the
other requirements necessary for litis pendentia were not shown by petitioner. It merely mentioned that civil cases were filed in
Hongkong and England without however showing the identity of rights asserted and the reliefs sought for as well as the presence
of the elements of res judicata should one of the cases be adjudged.
As the Court of Appeals aptly observed:
xxx [T]he petitioners, by simply enumerating the civil actions instituted abroad involving the parties herein xxx, failed to provide
this Court with relevant and clear specifications that would show the presence of the above-quoted elements or requisites for res
judicata. While it is true that the petitioners in their motion for reconsideration (CA Rollo, p. 72), after enumerating the various
civil actions instituted abroad, did aver that Copies of the foreign judgments are hereto attached and made integral parts hereof as
Annexes B, C, D and E, they failed, wittingly or inadvertently, to include a single foreign judgment in their pleadings submitted
to this Court as annexes to their petition. How then could We have been expected to rule on this issue even if We were to hold
that foreign judgments could be the basis for the application of the aforementioned principle of res judicata?[53]