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PHILSEC, Et Al V CA, Et Al G.R. No. 103493 June 19, 1997 Facts

This case involved a land sale transaction where the buyer failed to pay the full purchase price. The seller then sued the buyer and its affiliates in US court. While that case was pending, the buyer's affiliates filed a related case against the seller in Philippine court. The Philippine court dismissed the case based on the principle of forum non conveniens, finding the US court was a more suitable forum. The Supreme Court reversed, holding that forum non conveniens was not properly raised in a motion to dismiss and that the trial court did not establish vital facts to determine if special circumstances warranted abstaining from jurisdiction.

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35 views

PHILSEC, Et Al V CA, Et Al G.R. No. 103493 June 19, 1997 Facts

This case involved a land sale transaction where the buyer failed to pay the full purchase price. The seller then sued the buyer and its affiliates in US court. While that case was pending, the buyer's affiliates filed a related case against the seller in Philippine court. The Philippine court dismissed the case based on the principle of forum non conveniens, finding the US court was a more suitable forum. The Supreme Court reversed, holding that forum non conveniens was not properly raised in a motion to dismiss and that the trial court did not establish vital facts to determine if special circumstances warranted abstaining from jurisdiction.

Uploaded by

Ronyr Ramos
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PHILSEC, et al v CA, et al; G.R. No.

103493; June 19, 1997

FACTS:
Private respondent, 1488, Inc. sold a parcel of land located in Harris County, Texas, U.S.A., for
US$2,807,209.02 to petitioner Athona Holdings, N.V. ( ATHONA). Relatedly, PHILSEC and
AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the
purchase price. However, ATHONA failed to pay the balance of the purchased price to 1488 inc.
As a result, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the
United States for payment of the balance of US$307,209.02 and for damages for breach of
contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of
the shares of stock delivered to 1488, Inc. under the Agreement.
ATHONA filed an answer with counterclaim, impleading private respondents herein as
counterdefendants, for allegedly conspiring in selling the property at a price over its market value.
While the said Civil Case was pending in the United States, petitioners filed a complaint "For Sum
of Money with Damages and Writ of Preliminary Attachment" against private respondents in the
Regional Trial Court of Makati.
Private respondent Ducat moved to dismiss such Civil Case filed in the RTC Makati on the ground
among others of forum non conveniens,
The trial court granted Ducat's motion to dismiss, stating that "the evidentiary requirements of the
controversy may be more suitably tried in the US under the principle in private international law
of forum non conveniens" even as it noted that Ducat was not a party in the U.S. case.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the
principle of forum non conveniens
The CA affirmed the RTC’s dismissal based on forum non conveniens on the ground that the case
can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign
elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the
seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a
foreign corporation which does not claim to be doing business in the Philippines, is wholly owned
by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign
corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
ISSUE:
is the trial court's refusal to take cognizance of the case justifiable under the principle of forum non
conveniens?
HELD:
No. The Supreme Court thru Justice Mendoza cited two grounds for non-applicability of forum non
conveniens principle in here: first, a motion to dismiss 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 court's 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 one
of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is
a Filipino, and that it was the extinguishment of the latter's 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.

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