I.

INTRODUCTION
SAUDI ARABIAN AIRLINES v. CA

FACTS: Saudia hired Milagros Morada as a flight

Attendant for its airlines based in Jeddah, Saudi Arabia.
While on a lay-over in Jakarta, Morada went to a disco
dance w/ fellow crew members Thamer & Allah, both
Saudi nationals. Because it was almost morning when
they returned to their hotels, they agreed to have
breakfast together at the room of Thamer. When they
were in the room, Allah left, and that’s when Thamer
attempted to rape Morada. Fortunately, a roomboy &
several security personnel heard her cries for help &
rescued her. The Indonesian police came & arrested
Thamer & Allah.

Saudia officials interrogated Morada about the Jakarta

incident. They tried to pressure her in making a
statement to drop the case against Thamer & Allah, but
Morada refused to cooperate. Indonesian authorities
agreed to deport Thamer & Allah after 2 weeks of
detention, & they were again employed by Saudia.

1 ½ years later, in Riyadh, a few minutes before the

departure of her flight to Manila, Morada was not allowed
to board the plane & instead ordered to take a later flight
to Jeddah to see Mr. Miniewy, the Chief Legal Officer of
Saudia. When she did, she was brought to a Saudi court
where she was asked to sign a document written in
Arabic. They told her this was necessary to close the case
against Thamer & Allah. As it turned out, Morada signed a
notice to her to appear before the court. Morada returned
to Manila.

Later on, Morada was brought to the same Saudi court, &
she was informed that the investigation was merely
routinary & posed no danger to her. A Saudi judge
interrogated her through an interpreter about the Jakarta
incident. When her plane was about to take off, a Saudia
officer told her that the airline had forbidden her to take
flight. She was escorted to the same court where the
judge rendered a decision sentencing her to 5 months
imprisonment & to 286 lashes. It was then that she
realized that the Saudi court tried her, together w/
Thamer & Allah, for the Jakarta incident. The court found
Morada guilty of
1. adultery,
2. going to a disco, dancing & listening to the music in
violation of Islamic laws
3. socializing w/ the male crew, in contravention of
Islamic tradition

Because she was wrongfully convicted, the Prince of

Makkah dismissed the case against her & allowed her to
leave Saudi Arabia. She was terminated from the service
by Saudia, w/o her being informed of the cause. Morada
filed a Complaint for Damages against Saudia. Saudia filed
a MTD.

Saudia’s contention: The trial court has no jurisdiction to

try the case. Morada’s claim for alleged abuse of rights
occurred in Saudi. The existence of a foreign element
qualifies the instant case for the application of the law of
Saudi, by virtue of the lex loci delicti commissi rule.

Morada’s contention: Since her complaint is based on

Arts. 19 and 21 of the NCC, then the instant case is
properly a matter of domestic law.

ISSUE
(a) W/N the instant case is a matter of domestic law.
(b) W/N Philippine courts have jurisdiction to hear & try
the case.
(c) W/N Philippine law should govern.

RULING
(a) NO. A factual situation that cuts across territorial
lines & is affected by the diverse laws of 2 or more states
is said to contain a “foreign element.”

In the instant case, the foreign element consisted in the

fact that Morada is a resident Philippine national, & that
Saudia is a resident foreign corporation. Also, by virtue of
the employment of Morada w/ Saudia as a flight
stewardess, events did transpire during her many
occasions of travel across national borders, particularly
from Manila to Jeddah & vice versa, that caused a
“conflicts” situation to arise.

(b) YES. The RTC of QC possesses jurisdiction over the

subject matter of the suit. Pragmatic considerations,
including the convenience of the parties, also weigh
heavily in favor the RTC of QC assuming jurisdiction.
Paramount is the private interest of the litigant.
Enforceability of a judgment if one is obtained is quite
obvious. Relative advantages & obstacles to a fair trial are
equally important. Saudia may not, by choice of an
inconvenient form, vex, harass or oppress Morada, i.e.
inflicting upon him needless expense or disturbance. But
unless the balance is strongly in favor of the defendant,
the plaintiff’s choice of forum should rarely be disturbed.

Weighing the relative claims of the parties, QC RTC found

it best to hear the case in the Philippines. Had it refused
to take cognizance of the case, it would be forcing Morada
to seek remedial action elsewhere, i.e. in Saudi where she
no longer maintains substantial connections. That would
have caused a fundamental unfairness to her. Moreover,
by hearing the case in the Philippines no unnecessary
difficulties and inconvenience have been shown by either
of the parties. The choice of forum of Morada should be
upheld.
Similarly, the QC RTC also possesses jurisdiction over the
persons of the parties. By filing her Complaint w/ QC
RTC, Morada has voluntary submitted herself to the
jurisdiction of the court. The records show that Saudia
filed several motions praying for the dismissal of
Morada’s Complaint. Saudia also filed an Answer In Ex
Abundante Cautelam. What is very patent and explicit
from the motions filed, is that Saudia prayed for other
reliefs under the premises. Undeniably, Saudia has
effectively submitted to QC RTC’s jurisdiction by praying
for the dismissal of the Complaint on grounds other than
lack of jurisdiction.

(c) YES. Considering that the complaint in the court a quo

is one involving torts, the “connecting factor” or “point of
contact” could be the place where the tortuous conduct
or lex loci actus occurred. And applying the torts
principle in a conflicts case, we find that the Philippines
could be said as situs of the tort (the place where the
alleged tortuous conduct took place). This is because it is
in the Philippines where Saudia allegedly deceived
Morada, a Filipina residing & working here. That certain
acts or parts of the injury allegedly occurred in another
country is of no moment. What is important is the place
where the overall harm or the fatality of the alleged
injury to the person, reputation, social standing & human
rights of complainant, had lodged, according to the
Morada.
Also, we find here an occasion to apply the “State of the
most significant relationship” rule, which in our view
should be appropriate to apply now, given the factual
context of this case. In applying said principle to
determine the State which has the most significant
relationship, the following contacts are to be taken into
account and evaluated according to their relative
importance with respect to the particular issue: (a) the
place where the injury occurred; (b) the place where the
conduct causing the injury occurred; (c) the domicile,
residence, nationality, place of incorporation and place of
business of the parties, and (d) the place where the
relationship, if any, between the parties is centered.

There is basis for the claim that over-all injury occurred

and lodged in the Philippines. There is likewise no
question that Morada is a resident Filipina national,
working w/ Saudia, a resident foreign corporation
engaged here in the business of international air
carriage. Thus, the “relationship” between the parties
was centered here, although it should be stressed that
this suit is not based on mere labor law violations.

CADALIN V POEA
FACTS: Cadalin et al. are Filipino workers recruited by
Asia Int’l Builders Co. (AIBC), a domestic recruitment
corporation, for employment in Bahrain to work for
Brown & Root Int’l Inc. (BRII) which is a foreign
corporation with headquarters in Texas.

Plaintiff instituted a class suit with the POEA for money

claims arising from the unexpired portion of their
employment contract which was prematurely
terminated. They worked in Bahrain for BRII and they
filed the suit after 1 yr. from the termination of their
employment contract.

As provided by Art. 156 of the Amiri Decree aka as the

Labor Law of the Private Sector of Bahrain: “a claim
arising out of a contract of employment shall not be
actionable after the lapse of 1 year from the date of the
expiry of the contract,” it appears that their suit has
prescribed.

Plaintiff contends that the prescription period should

be 10 years as provided by Art. 1144 of the Civil
Code as their claim arise from a violation of a contract.

The POEA Administrator holds that the 10 year period of

prescription should be applied but the NLRC provides a
different view asserting that Art 291 of the Labor Code
of the Phils with a 3 years prescription period should
be applied.
The Solicitor General expressed his personal point of
view that the 1 yr period provided by the Amiri Decree
should be applied.

ISSUE: Whether it is the Bahrain law on prescription of

action based on the Amiri Decree No. 23 of 1976 or a
Philippine law on prescription that shall be the governing
law

HELD: Philippine law on prescription shall be applied

GR: The Supreme Court held that as a general rule a

foreign procedural law will not be applied in our country
as we must adopt our own procedural laws.

EXCEPTION: Philippines may adopt foreign procedural

law under the Borrowing Statute such as Sec. 48 of the
Civil Procedure Rule stating “if by the laws of the State or
country where the cause of action arose the action is
barred, it is also barred in
the Philippines.” Thus, Bahrain law must be applied.

EXCEPTION TO THE EXCEPTION: However, the court

contends that Bahrain’s law on prescription cannot be
applied because the court will not enforce any foreign
claim that is obnoxious to the forum’s public policy
and the 1 yr. rule on prescription is against public
policy on labor as enshrined in the Phils.
Constitution.
The court ruled that the prescription period applicable to
the case should be Art 291 of the Labor Code of the
Philippines with a 3 years prescription period since
the claim arose from labor employment.

HELD: As a general rule, a foreign procedural law will

not be applied in the forum. Procedural matters, such as
service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the
laws of the forum. This is true even if the action is based
upon a foreign substantive law.

A law on prescription of actions is sui generis in Conflict

of Laws in the sense that it may be viewed either as
procedural or substantive, depending on the
characterization given such a law.

However, the characterization of a statute into a

procedural or substantive law becomes irrelevant
when the country of the forum has a “borrowing
statute.” Said statute has the practical effect of treating
the foreign statute of limitation as one of substance.

A “borrowing statute” directs the state of the forum

to apply the foreign statute of limitations to the
pending claims based on a foreign law. While there are
several kinds of “borrowing statutes,” one form provides
that an action barred by the laws of the place where it
accrued, will not be enforced in the forum even though
the local statute has not run against it. Section 48 of our
Code of Civil Procedure is of this kind. Said Section
provides:
“If by the laws of the state or country where the
cause of action arose, the action is barred, it is also
barred in the Philippine Islands.”

In the light of the 1987 Constitution, however, Section 48

cannot be enforced ex propio vigore insofar as it ordains
the application in this jurisdiction of Section 156 of the
Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign

claims obnoxious to the forum’s public policy. To enforce
the one-year prescriptive period of the Amiri Decree No.
23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor.

FACTS: On June 6, 1984, Bienvenido M.. Cadalin, Rolando

M. Amul and Donato B. Evangelista, in their own behalf
and on behalf of 728 other overseas contract workers
(OCWs) instituted a class suit with the Philippine
Overseas Employment Administration (POEA) for money
claims arising from their recruitment by AIBC and
employment by BRII.'

BRII is a foreign corporation with headquarters in

Houston, Texas, and is engaged in construction; while
AIBC is a domestic corporation licensed as a service
contractor to recruit, mobilize and deploy Filipino
workers for overseas employment on behalf of its foreign
principals.

Cadalin, et al. principally sought the payment of the

unexpired portion of the employment contracts, which
was terminated prematurely, and secondarily, the
payment of the interest of the earnings of the Travel and
Reserved Fund, interest on all the unpaid benefits,
refund, differential pay and penalties for committing
prohibited practices, as well as the suspension of the
license of AIBC and the accreditation of BRII.

From the records, it appears that the complainants-

appellants allege that they were recruited by respondent-
appellant AIBC for its accredited foreign principal, Brown
& Root, on various dates from 1975 to 1983. They were
all deployed at various projects undertaken by Brown &
Root in several countries in the Middle East, as well as in
Southeast Asia.

Having been officially processed as overseas contract

workers by the Philippine Government, all the individual
complainants signed standard overseas employment
contracts with AIBC before their departure from the
Philippines. These overseas employment contracts
invariably contained terms and conditions regarding
hours of work and compensation, termination,
vacation/sick leave benefits, bonus, and offday pay.

In the State of Bahrain, where some of the individual

complainants were deployed, His Majesty Isa Bin Salman
Al Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23,
otherwise known as the Labour Law for the Private
Sector. Some of the provisions of Amiri Decree No. 23
include a worker receiving payment for each extra hour
equivalent to his wage entitlement increased by a
minimum of 25% for hours worked during the day (50%
from 7PM to 7AM); a weekly day of rest on full pay;
additional sum equivalent to 150% of worker’s normal
wage when required to work on his weekly day of rest or
on any official holiday; leave on full pay for a period of
not less than 21 days for each year after a year of
continuous service (28 if five years);

Moreover, Art. 156 of the Amiri Decree states that a claim

arising out of a contract of employment shall not be
actionable after the lapse of 1 year from the date of the
expiry of the contract. It appears that the suit of the
complainants has already expired. Plaintiff, however,
contends that the prescription period should be 10 years
as provided by Art. 1144 of the Civil Code as their claim
arise from a violation of a contract. The POEA
Administrator holds that the 10-year period of
prescription should be applied but the NLRC provides a
different view asserting that the 3-year period of the
Labor Code should be applied. The Solicitor General,
however, expressed that the 1-year period provided by
the Amiri Decree should be applied.

ISSUES:
I. Whether or not a foreign law should govern the
contract of the parties.
II. If foreign law applies, whether or not the action has
already prescribed.

RULING:

I. Amiri Decree applies.

AIBC and BRII claim that NLRC acted capriciously and

whimsically when it refused to enforce the overseas-
employment contracts, which became the law of the
parties. They contend that the principle that a law is
deemed to be a part of a contract applies only to
provisions of Philippine law in relation to contracts
executed in the Philippines.
The overseas-employment contracts, which were
prepared by AIBC and BRII themselves, provided that the
laws of the host country became applicable to said
contracts if they offer terms and conditions more
favorable that those stipulated therein. While a part
thereof provides that the compensation to the employee
may be "adjusted downward so that the total
computation (thereunder) plus the non-waivable benefits
shall be equivalent to the compensation" therein agreed,
another part of the same provision categorically states
"that total remuneration and benefits do not fall below
that of the host country regulation and custom."
Any ambiguity in the overseas-employment contracts
should be interpreted against AIBC and BRII, the parties
that drafted it (Eastern Shipping Lines, Inc. v. Margarine-
Verkaufs-Union, 93 SCRA 257 [1979]).

Article 1377 of the Civil Code of the Philippines provides:

The interpretation of obscure words or stipulations in
a contract shall not favor the party who caused the
obscurity.

The parties to a contract may select the law by which it is

to be governed. In such a case, the foreign law is adopted
as a "system" to regulate the relations of the parties,
including questions of their capacity to enter into the
contract, the formalities to be observed by them, matters
of performance, and so forth.

Instead of adopting the entire mass of the foreign law, the

parties may just agree that specific provisions of a foreign
statute shall be deemed incorporated into their contract
"as a set of terms." By such reference to the provisions of
the foreign law, the contract does not become a foreign
contract to be governed by the foreign law. The said law
does not operate as a statute but as a set of contractual
terms deemed written in the contract.
A basic policy of contract is to protect the expectation of
the parties. Such party expectation is protected by giving
effect to the parties' own choice of the applicable law. The
choice of law must, however, bear some relationship to
the parties or their transaction. There is no question that
the contracts sought to be enforced by the claimants have
a direct connection with the Bahrain law because the
services were rendered in that country.

II. As a general rule, a foreign procedural law will not be

applied in the forum. This is true even if the action is
based upon a foreign substantive law. A law on
prescription of actions is sui generis in Conflict of Laws in
the sense that it may be viewed either as procedural or
substantive, depending on the characterization given
such a law.

The exception is when the country of the forum has a

"borrowing statute." Said statute has the practical effect
of treating the foreign statute of limitation as one of
substance. A "borrowing statute" directs the state of the
forum to apply the foreign statute of limitations to the
pending claims based on a foreign law.

Section 48 of the Civil Procedure Rule states that “if by

the laws of the State or country where the cause of action
arose the action is barred, it is also barred in the
Philippines”. However, the Supreme Court opted not to
apply Bahrain’s prescriptive period. The courts of the
forum will not enforce any foreign claim obnoxious to the
forum's public policy. To enforce the one-year
prescriptive period of the Amiri Decree No. 23 as regards
the claims in question would contravene the public policy
on the protection to labor as enshrined in the
Constitution.

The prescriptive period applicable to the case should be

three years as provided by the Labor Code since the claim
arose from labor employment.

GUERERO V BAYBLOCK

FACTS In 1972, the US Naval Base authorities in Subic

conducted a public bidding for a 5-year contract for the
right to operate and/or manage the transportation
services inside the naval base.

This bidding was won by Santiago Guerrero, owner-

operator of Guerrero’s Transport Services, Inc.
(Guerrero), over Concepcion Blayblock, the then
incumbent concessionaire doing business under the
name of Blayblock Transport Services Blayblock.
Blayblock’s 395 employees are members of the union
BTEA-KILUSAN (the Union).

When Guererro commenced its operations, it refused to

employ the members of the Union. Thus, the Union filed a
complaint w/ the NLRC against Guerrero to compel it to
employ its members, pursuant to Art. 1, Sec. 2 of the RP-
US Base Agreement.

The case was dismissed by the NLRC upon Guerrero’s

MTD on jurisdictional grounds, there being no employer-
employee relationship between the parties. Upon appeal,
the Sec. of Labor remanded the case to the NLRC.

The NLRC issued a Resolution ordering Guererro to

“absorb all complainants who filed their applications on
or before the deadline” set by Guerrero, except those who
may have derogatory records w/ the US Naval
Authorities in Subic. The Sec. of Labor affirmed.

Guerrero claims that it substantially complied w/ the

decision of the Sec. of Labor affirming the NLRC
Resolution, & that any non-compliance was attributable
to the individual complainants who failed to submit
themselves for processing & examination. The Labor
Arbiter ordered the reinstatement of 129 individuals.

The Union filed a Motion for Issuance of Writ of

Execution. The order wasn’t appealed so it was declared
final & executory

Subsequently, the parties arrived at a Compromise

Agreement wherein they agreed to submit to the Sec. of
Labor the determination of members of the Union who
shall be reinstated by Guerrero, w/c determination shall
be final. The agreement is deemed to have superseded
the Resolution of the NLRC. The Sec. of Labor ordered the
absorption of 175 members of the Union subject to 2
conditions.

ISSUE W/N the said members of the Union were entitled

to be reinstated by Guerrero.

RULING YES. Pursuant to Sec. 6 of Art. I of the RP-US

Labor Agreement, the US Armed Forces undertook,
consistent w/ military requirements, "to provide security
for employment, and, in the event certain services are
contracted out, the US Armed Forces shall require the
contractor or concessioner to give priority consideration
to affected employees for employment.

A treaty has 2 aspects — as an international agreement

between states, and as municipal law for the people of
each state to observe.
As part of the municipal law, the aforesaid provision
of the treaty enters into and forms part of the contract
between Guerrero and the US Naval Base authorities.
In view of said stipulation, the new contractor
(Guerrero) is, therefore, bound to give "priority" to
the employment of the qualified employees of the
previous contractor (Blaylock). It is obviously in
recognition of such obligation that Guerrero entered
into the aforementioned Compromise Agreement.
Under the Compromise Agreement, the parties agreed to
submit to the Sec. of Labor the determination as to who of
the members of the Union shall be absorbed or employed
by Guerrero, and that such determination shall be
considered as final.

The Sec. of Labor issued an Order directing the NLRC,

through Labor Arbiter Francisco de los Reyes, to
implement the absorption of the 175 members into
Guerrero's Transport Services, subject to the following
conditions:
a. that they were bona fide employees of the Blaylock
Transport Service at the time its concession expired;
and
b. that they should pass final screening and approval by
the appropriate authorities of the U.S. Naval Base
concerned.

For this purpose, Guerrero is ordered to submit to and

secure from the appropriate authorities of the U.S. naval
Base at Subic, Zambales the requisite screening and
approval, the names of the members of the Union.

Considering that the Compromise Agreement of the

parties is more than a mere contract and has the force
and effect of any other judgment, it is, therefore,
conclusive upon the parties and their privies. For it is
settled that a compromise has, upon the parties, the effect
and authority of res judicata and is enforceable by
execution upon approval by the court.

NORTHERN PACIFIC RAILROAD COMPANY V.

BABCOCK

FACTS This was an action by Albert L. Babcock , as

administrator of Hugh M. Munro, deceased, against the
Northern Pacific Railroad Company (“the Company”), for
damages for the death of said Munro.

Munro was a locomotive engineer employed by the

Company within the territory of Montana. In January
10, 1888, Munro was assigned to operate Train No. 161.

During that day, there was a severe snowstorm in

progress yet it was alleged that the Company negligently
refused to send a snow plow ahead of Train No. 161 to
clear the snow and ice that had accumulated from the
track where the train was to pass. This made the passage
of the train unsafe and improper.

As a result, the train got derailed when it ran into an

accumulation of snow and ice near Gray Cliff (also in
Montana), and Munro was instantly killed.

The estate of Munro filed a case for $25,000 in damages

in the district court of Minnesota.
ISSUE Was the amount of damage to be controlled by the
law of the place of employment and where the accident
occurred (lex loci), or by the law of the forum in which
the suit was pending (lex fori)?

* Under the law of Minnesota, [LEX FORI] when the death

occurred, the limit of recovery in case of death was
$5,000, but at the time of the trial of the case in the court
below, this limit had been increased to $10,000 by
amendment of the Minnesota statutes.

**Under the law of Montana, [LEX LOCI] where the death

of a person is caused by the negligence of another, the
only limitation for the amount of damages which may be
given is “as under all the circumstances of the case may
be just."

RULING The law of Montana applies. The statute of

another state has, of course, no extraterritorial force, but
rights acquired under it will always, in comity, be
enforced if not against the public policy of the laws of the
former. In such cases, the law of the place where the right
was acquired or the liability was incurred will govern as
to the right of action, while all that pertains merely to the
remedy will be controlled by the law of the state where
the action is brought. The principle is the same whether
the right of action be ex contractu or ex delicto.
Therefore, as a general rule, where the lex loci contractus
and the lex fori are altogether different, and they are
construed these contracts and enforce rights under them
according to their force and effect under the laws of the
state where made. As an exception, which is to justify a
court in refusing to enforce a right of action which
accrued under the law of another state because against
the policy of our laws, it must appear that it is against
good morals or natural justice or that for some other such
reason the enforcement of it would be prejudicial to the
general interests of our own citizens.

LAUREL V. GARCIA 187 SCRA 797 (1990)

FACTS The subject Roppongi property is one of the four

properties in Japan acquired by the Philippine
government under the Reparations Agreement entered
into with Japan on 9 May 1956, the other lots being the
Nampeidai Property (site of Philippine Embassy
Chancery), the Kobe Commercial Property (Commercial
lot used as warehouse and parking lot of consulate staff),
and the Kobe Residential Property (a vacant residential
lot). The properties and the capital goods and services
procured from the Japanese government for national
development projects are part of the indemnification to
the Filipino people for their losses in life and property
and their suffering during World War II.
The Roppongi property was acquired from the Japanese
government through Reparations Contract. The Roponggi
property consists of the land and building "for the
Chancery of the Philippine Embassy." As intended, it
became the site of the Philippine Embassy until the latter
was transferred to Nampeidai on 22 July 1976 when the
Roppongi building needed major repairs. Due to the
failure of our government to provide necessary funds, the
Roppongi property has remained undeveloped since that
time.

During the incumbency of President Aquino, a proposal

was made by former Philippine Ambassador to Japan,
Carlos J. Valdez, to lease the subject property to Kajima
Corporation, a Japanese firm, in exchange of the
construction of 2 buildings in Roppongi, 1 building in
Nampeidai, and the renovation of the Philippine
Chancery in Nampeidai. The President issued EO 296
entitling non-Filipino citizens or entities to avail of
reparations' capital goods and services in the event of
sale, lease or disposition. Amidst opposition by various
sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the
reparations properties starting with the Roppongi lot.

ISSUE
1. Whether or not the Roppongi property and others of
its kind can be alienated by the Philippine
government.
 2. Whether there was a conflict of law between the
Japanese law on property (as the real property is
situated there) and Philippine law.

RULING
1. No. The nature of the Roppongi lot as property for
public service is expressly spelled out. It is dictated by
the terms of the Reparations Agreement and the
corresponding contract of procurement which bind
both the Philippine government and the Japanese
government. There can be no doubt that it is of public
dominion and is outside the commerce of man. And
the property continues to be part of the public
domain, not available for private appropriation or
ownership until there is a formal declaration on the
part of the government to withdraw it from being
such.

It is not for the President to convey valuable real

property of the government on his or her own sole
will. Any such conveyances must be authorized and
approved by a law enacted by the Congress. It
requires executive and legislative concurrence.

2. No. A conflict of law rule cannot apply when no

conflict of law situation exists. A conflict of law
situation arises only when: (1) there is a dispute over
the title or ownership of an immovable, such that the
capacity to take and transfer immovables, the
 formalities of conveyance, the essential validity and
effect of the transfer, or the interpretation and effect
of a conveyance, are to be determined; and (2) a
foreign law on land ownership and its conveyance is
asserted to conflict with a domestic law on the same
matters. Hence, the need to determine which law
should apply. In the present case, none of the above
elements exists.

HSBC V SHEMAN
FACTS In 1981, Eastern Book Supply Service PTE, Ltd.,
(Eastern) a company incorporated in Singapore applied
w/, & was granted by the Singapore branch of HSBC an
overdraft facility in the max amount of Singapore
$200,000 (w/c amount was subsequently increased to
Singapore $375,000) w/ interest at 3% over HSBC prime
rate, payable monthly, on amounts due under said
overdraft facility.

As a security for the repayment by Eastern of sums

advanced by HSBC to it through the aforesaid overdraft
facility, in 1982, Jack Sherman, Dodato Reloj, and a
Robin de Clive Lowe, all of whom were directors of
Eastern at such time, executed a Joint and Several
Guarantee in favor of HSBC whereby Sherman, Reloj and
Lowe agreed to pay, jointly and severally, on demand all
sums owed by Eastern to HSBC under the aforestated
overdraft facility.
The Joint and Several Guarantee provides that: “This
guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and
may be enforced in accordance with the laws of the
Republic of Singapore. We hereby agree that the Courts of
Singapore shall have jurisdiction over all disputes arising
under this guarantee.”

Eastern failed to pay its obligation. Thus, HSBC

demanded payment of the obligation from Sherman &
Reloj, conformably w/ the provisions of the Joint and
Several Guarantee. Inasmuch as Sherman & Reloj still
failed to pay, HSBC filed a complaint for collection of a
sum of money against them. Sherman & Reloj filed a
motion to dismiss on the grounds that (1) the court has
no jurisdiction over the subject matter of the complaint,
and (2) the court has no jurisdiction over the person of
the defendants.

ISSUE W/N Philippine courts should have jurisdiction

over the suit.

RULING YES. While it is true that "the transaction took

place in Singaporean setting" and that the Joint and
Several Guarantee contains a choice-of-forum clause, the
very essence of due process dictates that the stipulation
that "this guarantee and all rights, obligations & liabilities
arising hereunder shall be construed & determined under
& may be enforced in accordance w/ the laws of the
Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising
under this guarantee" be liberally construed. One basic
principle underlies all rules of jurisdiction in
International Law: a State does not have jurisdiction in
the absence of some reasonable basis for exercising it,
whether the proceedings are in rem quasi in rem or in
personam. To be reasonable, the jurisdiction must be
based on some minimum contacts that will not offend
traditional notions of fair play and substantial justice.
Indeed, as pointed-out by HSBC at the outset, the instant
case presents a very odd situation. In the ordinary habits
of life, anyone would be disinclined to litigate before a
foreign tribunal, w/ more reason as a defendant.
However, in this case, Sherman & Reloj are Philippine
residents (a fact which was not disputed by them) who
would rather face a complaint against them before a
foreign court and in the process incur considerable
expenses, not to mention inconvenience, than to have a
Philippine court try and resolve the case. Their stance is
hardly comprehensible, unless their ultimate intent is to
evade, or at least delay, the payment of a just obligation.

The defense of Sherman & Reloj that the complaint

should have been filed in Singapore is based merely on
technicality. They did not even claim, much less prove,
that the filing of the action here will cause them any
unnecessary trouble, damage, or expense. On the other
hand, there is no showing that petitioner BANK filed the
action here just to harass Sherman & Reloj.

The parties did not thereby stipulate that only the courts
of Singapore, to the exclusion of all the rest, has
jurisdiction. Neither did the clause in question operate to
divest Philippine courts of jurisdiction. In International
Law, jurisdiction is often defined as the light of a State to
exercise authority over persons and things w/in its
boundaries subject to certain exceptions. Thus, a State
does not assume jurisdiction over travelling sovereigns,
ambassadors and diplomatic representatives of other
States, and foreign military units stationed in or marching
through State territory w/ the permission of the latter's
authorities. This authority, which finds its source in the
concept of sovereignty, is exclusive w/in and throughout
the domain of the State. A State is competent to take hold
of any judicial matter it sees fit by making its courts and
agencies assume jurisdiction over all kinds of cases
brought before them.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS

v. QUISUMBING

FACTS Private respondent International School, Inc. (the

School), pursuant to Presidential Decree 732, is a
domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other
temporary residents. The School hires both foreign and
local teachers as members of its faculty, classifying the
same into two: (1) foreign-hires and (2) local-hires. The
School employs four tests to determine whether a faculty
member should be classified as a foreign-hire or a local
hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic
allegiance?
d.....Was the individual hired abroad specifically to
work in the School and was the School responsible for
bringing that individual to the Philippines?

The School grants foreign-hires certain benefits not

accorded local-hires. These include housing,
transportation, shipping costs, taxes, and home leave
travel allowance. Foreign-hires are also paid a salary rate
twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant
economic disadvantages" foreign-hires have to endure,
namely: (a) the "dislocation factor" and (b) limited
tenure. The School grants such benefit to the foreign-
hires because of economic factor, better opportunities
are often available in the country where he foreign-hires
are from. They have to adjust because they have to leave
their country, family and friends. The School also
reasoned that it is also their means of attracting
competent professionals and to stay competitive.
When negotiations for a new collective bargaining
agreement were held, petitioner International School
Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty
members" of the School, contested the difference in
salary rates between foreign and local-hires. This issue,
as well as the question of whether foreign-hires should
be included in the appropriate bargaining unit, eventually
caused a deadlock between the parties. A notice of strike
was filed and DOLE eventually acquired jurisdiction
because of the failure to have a compromise. DOLE ruled
in favor of the School.

ISSUE W/N there is discrimination (equal protection) in

the hiring and compensation method used by the School.

RULING YES. In this case, we find the point-of-hire

classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and
local hires to be an invalid classification. There is no
reasonable distinction between the services rendered by
foreign-hires and local-hires. The practice of the School of
according higher salaries to foreign-hires contravenes
public policy and, certainly, does not deserve the
sympathy of this Court.

The Court held that there must be “equal pay for equal
work” Persons who work with substantially equal
qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. This
rule applies to the School, its "international character"
notwithstanding. If an employer accords employees the
same position and rank, the presumption is that these
employees perform equal work. This presumption is
borne by logic and human experience. If the employer
pays one employee less than the rest, it is not for that
employee to explain why he receives less or why the
others receive more. That would be adding insult to
injury. The employer has discriminated against that
employee; it is for the employer to explain why the
employee is treated unfairly.

The employer in this case has failed to discharge this

burden. There is no evidence here that foreign-hires
perform 25% more efficiently or effectively than the
local-hires. Both groups have similar functions and
responsibilities, which they perform under similar
working conditions. The School cannot invoke the need to
entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the
principle of equal work for equal pay.

While we recognize the need of the School to attract

foreign-hires, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires
perform the same services as foreign-hires and they
ought to be paid the same salaries as the latter. For the
same reason, the "dislocation factor" and the foreign-
hires' limited tenure also cannot serve as valid bases for
the distinction in salary rates. The dislocation factor and
limited tenure affecting foreign-hires are adequately
compensated by certain benefits accorded them which
are not enjoyed by local-hires, such as housing,
transportation, shipping costs, taxes and home leave
travel allowances.

II. JURSIDICTION
INTERNATIONAL SHOE CO V WASHINGTON
Brief Fact Summary. Defendant was an out of state
company that employed salesmen within the state of
Washington. Washington sued Defendant to recover
unpaid unemployment taxes and served Defendant in
two ways: (1) by mail and (2) by serving one of its
salesmen within the state. Defendant appealed from a
verdict for Washington, claiming that Washington had no
personal jurisdiction over Defendant.
Synopsis of Rule of Law. In order for a state to exercise
personal jurisdiction over a defendant, the defendant
must have such minimum contacts with the state so that
exercising jurisdiction over the defendant would not
offend “traditional notions of fair play and substantial
justice.”
Facts. International Shoe Co., Defendant, was a company
based in Delaware with an office in St. Louis, Missouri.
Defendant employed salesmen that resided in
Washington to sell their product in the state of
Washington. Defendant regularly shipped orders to the
salesmen who accepted them, the salesmen would
display the products at places in Washington, and the
salesmen were compensated by commission for sale
of the products. The salesmen were also reimbursed for
the cost of renting the places of business in Washington.

Washington sued Defendant after Defendant failed to

make contributions to an unemployment compensation
fund exacted by state statutes.

The Washington statute said that the commissioner could

issue personal service if Defendant was found within the
state, or by mailing it to Defendant if Defendant was not
in the state.

The notice of assessment was served upon

Defendant’s salesperson and a copy of the notice was
mailed to Defendant.

Defendant appeared specially, moving to set aside the

order that service upon the salesperson was proper
service. Defendant also argued that it did not “do
business” in the state, that there was no agent upon
which service could be made, and that Defendant did not
furnish employment within the meaning of the statute.
Defendant also argued that the statute violated the Due
Process Clause of the Fourteenth Amendment and
imposed a prohibitive burden of interstate commerce.

The trial court found for Washington and the Supreme

Court of Washington affirmed, reasoning that the
continuous flow of Defendant’s product into Washington
was sufficient to establish personal jurisdiction.
Defendant appealed.

Issue. Is service of process upon Defendant’s agent

sufficient notice when the corporation’s activities result
in a large volume of interstate business so that the
corporation receives the protection of the laws of the
state and the suit is related to the activities which make
the corporation present?

Held. Yes. Affirmed. The general rule is that in order to

have jurisdiction with someone outside the state, the
person must have certain minimum contacts with it
such that the maintenance of the suit does not offend
“traditional notions of fair play and substantial
justice.
For a corporation, the “minimum contacts” required are
not just continuous and systematic activities but also
those that give rise to the liabilities sued on.
Defendant could have sued someone in Washington. It
was afforded the protection of the laws of that state, and
therefore it should be subject to suit.

Dissent. The state’s power to tax should not be qualified

by an ambiguous statement regarding fair play and
substantial justice.
Discussion. This decision articulates the rule for
determining whether a state has personal jurisdiction
over an absent defendant via the “minimum contacts”
test. In general, International Shoe demonstrates that
contacts with a state should be evaluated in terms of how
“fair” it would be to exercise jurisdiction over an absent
defendant.
SHAFFER V HEITNER
Brief Fact Summary. Plaintiff stockholder brought a
shareholder’s derivative action in Delaware state court
against Defendants, corporations incorporated in
Delaware with their principal place of business in
Arizona, and corporate officers of the corporations
(Defendants). Plaintiff moved to sequester Defendants’
property, which was stock in the company, located in
Delaware as defined by the Delaware statute. Defendants
moved to quash the summons and to vacate the
sequestration order, arguing that both exercising
personal jurisdiction and seizing Defendants’ property
violated due process.
Synopsis of Rule of Law. When the only contact the
defendant has with the forum state is the location of
property as defined by statute in the forum state, the
forum lacks personal jurisdiction over the defendant
unless the minimum contacts test of International Shoe is
satisfied.
Facts. Plaintiff, a stockholder for Greyhound Corp., a
company incorporated in Delaware with its principal
place of business in Arizona, sued Greyhound Corp.,
Greyhound Lines, Inc., (a subsidiary of Greyhound
Corp.) and present and former officers of the two
companies for violating duties to Greyhound Corp. by
causing it to be liable for damages in an antitrust suit
and a fine in a criminal contempt action in Oregon.
Plaintiff filed a motion for sequestration of the
officers’ stock. Under a Delaware statute, Delaware is
the situs of all stock in Delaware corporations. The
stock was seized.

Defendants were notified by certified mail of the

sequestration and notice was published in a
Delaware newspaper. Defendants entered a special
appearance so they could move to quash service of
process and vacate the sequestration order. Defendant
argued that the order violated due process and therefore
the property could not be attached in Delaware. In
addition, Defendants argued that they did not have the
minimum contacts with Delaware required to
establish jurisdiction under International Shoe Co. v.
Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95
(1945). In addition, Defendants argued that the
sequestration procedures were inconsistent with the
Sniadach cases (see Sniadach v. Family Finance Corp.,
395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969)). The
Court of Chancery found for Plaintiff and the Supreme
Court of Delaware affirmed the Court of Chancery.

The Supreme Court of Delaware reasoned that the

Sniadach cases involved default judgments and not
compelling a party to appear. This court furthered
reasoned that sequestration procedures help to
adjudicate claims of mismanagement against Delaware
companies, and do not cause permanent deprivation of
property to their shareholders. Defendants appealed.

Issue.
In order for the forum state to exercise in rem
jurisdiction on a non-resident, must the non-resident
have minimum contacts with the forum state such that
the defendant has purposefully availed itself of the
benefits of that state’s laws?

If so, must the cause of action be sufficiently related to

the contacts the non-resident has with the forum state?

Held. Yes to both. Judgment reversed.

In rem is not a proceeding against the property, it is a
proceeding against a person’s interest in the
property. You need to give an owner of property
reasonable and appropriate notice of an in rem
proceeding so that he or she recognizes that such a
proceeding directly affects his or her interests.

Having property in a state does not give the state

jurisdiction over causes of action unrelated to the
property unless the person also passes the minimum
contacts test articulated in the International Shoe
decision. If it is unconstitutional to exercise jurisdiction
over the person directly then it should be
unconstitutional to assert jurisdiction indirectly.

Plaintiff’s argument that Delaware has an interest in

asserting jurisdiction over corporate fiduciaries is not
established by Delaware law. Delaware law determines
that it has jurisdiction over Defendants because
Defendants’ property is in Delaware; and not due to
their status as corporate fiduciaries.

First, the statute authorizing jurisdiction does not

specifically apply to stockholder derivative actions.
Moreover, Plaintiff’s inability to secure jurisdiction over
seven of the defendants because they didn’t have
property in Delaware shows that there is no necessary
relationship between corporate fiduciaries and
stockholders. In addition, Plaintiff has not demonstrated
that Delaware is a fair forum. Plaintiff must demonstrate
more than the applicability of Delaware’s laws to the
controversy to establish a basis for jurisdiction. Plaintiff’s
argument that Defendants have received benefits from
Delaware laws only demonstrates that it would be
appropriate for Delaware law to govern obligations
between Defendant and stockholders. This argument
does not require that Delaware be permitted to exercise
jurisdiction, especially considering its lack of a long-arm
statute. Concurrence. Justice Stevens: The majority
should not broadly eliminate in rem jurisdiction by
stating that there is no personal jurisdiction if the only
contact the defendant has with the forum state is
property located in the state. There are other means of
acquiring jurisdiction over local actions that may be
unintentionally limited by this broad language. Justice
Brennan (concurring in part and dissenting in part): The
Delaware sequestration statute embodies quasi in rem
jurisdiction that is no longer valid. The parties did not
make the minimum contacts test an issue so the court
should not have decided this issue. There is no proper
factual record for determining the level of contacts in this
case. This is also a constitutional question, and this
decision will reach to all the state statutes that permit
quasi in rem action through sequestration of property.
The general rule is that the forum state has jurisdiction
over the directors and officers of a corporation chartered
by the state in a shareholder derivative action. A state’s
valid substantive interests are considerations in
assessing the constitutionality of exercising jurisdiction.
Delaware has interests in preventing local corporations
from being victims of foreign stockholders and in
regulating its own corporations. In addition, jurisdiction
can be based on out-of-state activities that have
foreseeable effects in the forum state. Delaware’s failure
to express an interest in corporate fiduciaries does not
pertain to the minimum contacts analysis. In addition,
there was purposeful availment of the forum’s laws
because the corporate officers entered business
relationships with Greyhound’s stockholders pursuant to
the laws of Delaware.

Discussion. As the concurring opinions illustrate, it is

highly unlikely a court has personal jurisdiction over a
non-resident defendant that is absent from the forum
state when the only contact is property owned by the
defendant located within the forum state. Even if the
property is connected to the suit, minimum contacts must
still be established in compliance with the International
Shoe test.
PENNOYER V NEFF
Facts: Marcus Neff ("Neff"), a resident of California,
hired John H. Mitchell ("Mitchell"), an Oregon lawyer.

Mitchell subsequently sued Neff before a state court in

Oregon to collect $300.00 in unpaid attorney's fees.
Summons were served upon Neff by publication in an
Oregon newspaper.

Neff failed to appear in court to defend his interests.

Consequently, the court rendered a default judgment
against Neff.

At the time the judgment was rendered, Neff did not

own any property in Oregon. However, he was
eventually granted a landholding in the said state. To
satisfy the judgment, the court ordered the seizure and
auction of the landholding owned by Neff.

Sylvester Pennoyer won in the auction. Neff then

instituted an action to recover his property before a
federal court in Oregon on the ground that the state court
did not acquire jurisdiction over him.

Issue: Whether or not the state court acquired

jurisdiction over Neff.

Held: No. Since the suit is one in personam, the service of

summons upon the defendant through publication is not
enough for the state court to acquire jurisdiction over
him. Moreover, the defendant's property must have been
brought under court custody at the commencement of the
suit.
Ratio Decidendi:
In rem and in personam suits distinguished; Substituted
service by publication ineffective in actions in
personam. Substituted service by publication is valid only
in suits which are in rem in character, or those actions in
which the jurisdiction pertains to the property. However,
in suits which are in personam, or those actions which
seek to determine only the personal rights and
obligations of the defendant, substituted service by
publication is ineffectual for any purpose. Legal processes
within one state cannot be effective in another state.
Neither service by publication within the state nor extra-
territorial service will cure this.
Jurisdiction over a non-resident dependent on the presence
of his or her property within the forum state. A state does
not have jurisdiction over a non-resident who does not
have any property within its territorial jurisdiction since
the court's jurisdiction over the defendant is only
incidental to its jurisdiction over the property. Hence, for
a suit against a non-resident to prosper, he or she must
have property within the forum state which must
brought under the control of the court at the beginning of
the suit. Otherwise, the judgment is void and cannot be
rendered valid thought the subsequent acquisition of
property within the forum state by the defendant.
Furthermore, if the n0n-resident's property is not
immediately seized, the defendant could easily frustrate
the suit by disposing of the said property.
Summary:
 A court may enter a judgment against a non-resident

only if the party

a. Is personally served with process while within the
state, or
b. Has property within the state, and that property is
attached before litigation begins (as in quasi in
rem jurisdiction)
 Field theory" of state-court jurisdiction

 Every state possesses exclusive jurisdiction and

sovereignty over persons and property within its
territory
 No state can exercise direct jurisdiction and authority
over persons or property outside its territory
 These principles follow because the states resemble
independent nations
 Principles are rooted in the Due Process clause of the
14th Amendment. Courts have to give other
judgments "full faith and credit".
 "Full faith and credit" is not valid if the court did not
have jurisdiction.
MULLANE V CENTRAL BANK
Brief Fact Summary. Appellee, a bank located in New
York, set up a trust covering 113 participants and sent
notice by publication to all known and unknown
beneficiaries regarding Appellee’s application for judicial
settlement of the trust, as required under a New York
statute. Upon first distribution of the trust, Appellee
would mail notice to known beneficiaries that could
benefit from the interest or principal. Appellant, guardian
of the beneficiaries, appealed, arguing that notice by
publication alone violated the beneficiaries’ due process
rights under the Fourteenth Amendment.
Synopsis of Rule of Law. Notice must be “reasonably
calculated under all the circumstances, to apprise
interested parties of the action and give them an
opportunity to object.
Facts. Appellee, Central Hanover Bank & Trust, set up
common fund pursuant to a New York statute allowing
the creation of common funds for distribution of
judicial settlement trusts. There were 113 participating
trusts.
Appellee petitioned for settlement of its first account
as common trustee. Some of the beneficiaries were
not residents of New York. “Notice” was by publication
for four weeks in a local newspaper. Appellee had
notified those people by mail that were of full age and
sound mind who would be entitled to share in the
principal if the interest they held became distributable.

Appellant was appointed as special guardian and

attorney for all persons known or unknown not
otherwise appearing who had or might thereafter have
any interest in the income of the common trust fund.
Appellee was appointed to represent those interested in
the principal.

Appellant appeared specially, objecting that notice by

publication, permitted under the applicable statute
was inadequate to afford the beneficiaries due
process under the Fourteenth Amendment and that
therefore jurisdiction was lacking.

Issue. Is notice by publication of a judicial settlement to

unknown beneficiaries of a common trust reasonable
notice under the due process requirements of the
Fourteenth Amendment? YES

Is notice by publication to all of the beneficiaries of a

common trust whose residences are known reasonable
notice under the due process requirements of the
Fourteenth Amendment? NO
Held. First issue: Yes. Second issue: No.
Whether or not the action is in personam or in rem, the
court can determine the interests of all claimants as long
as there is a procedure allowing for notice and an
opportunity to be heard.
There has to be notice and opportunity for a hearing
appropriate to the nature of the case. The claimants at
issue could potentially be deprived of property here, as
the proposed disposition cuts off their rights to sue for
negligent or illegal impairments of their interests. In
addition, the court’s decision appoints someone who,
without their knowledge, could use the trust to obtain the
fees and expenses necessary for a sham proceeding.
There need not be personal service because the state has
an interest in settling trusts. “Notice has to be reasonably
calculated, under all the circumstances, to apprise
interested parties of the pending action and afford them
an opportunity to present their objections.” You do not
have to notify all the beneficiaries when the trust
concerns many small interests. Sending notice to most of
them will protect their interests sufficiently.
The New York Banking Law, however, that does not
require notice to all persons whose whereabouts are
known, violates the due process clause of the Fourteenth
Amendment because contacting beneficiaries by mail at
their last known address is not particularly burdensome.
Dissent. Justice Burton: Omitted from casebook.
Discussion. The majority’s opinion illustrates that notice
by publication will not suffice only because it would be
burdensome for the plaintiff to notify all parties involved.
If the plaintiff knows of a way to contact the parties, then
the plaintiff must bear that expense. Mailing notice to an
address, if known, will suffice. Notice by publication will
suffice only if there is no practical way of knowing the
identity or location of the party.

GEMPERLE VS. SCHENKER

Facts: This case was the result of William Gemperle’s

retaliatory act when respondent spouses Paul and Helen
Schenker filed a case against him for the enforcement of
Schenker's allegedly initial subscription to the shares of
stock of the Philippines-Swiss Trading Co., Inc. and the
exercise of his alleged pre-emptive rights to the then
unissued original capital stock of said corporation and
the increase thereof, as well as for an accounting and
damages. Petitioner alleged that the said complaint
tainted his name as a businessman. He then filed a
complaint for damages and prays for the retraction of
statements made by Helen Schenker.

Summons was personally served to Helen Schenker but

not to Paul Schenker. Helen then filed an answer with a
counterclaim, but Paul Schenker filed a motion to dismiss
arguing that the court never acquired jurisdiction over
his person since admittedly, he is a Swiss citizen, residing
in Zurich, Switzerland, and has not been actually served
with summons in the Philippines.
Issue: Whether or not the court acquired jurisdiction
over the person of Paul Schenker.

Ruling: Yes, although as a rule, when the defendant is a

non-resident and in an accion in personam, jurisdiction
over the person of the defendant can be acquired only
through voluntary appearance or personal service of
summons. But this case is an exception to the said rule.
The Supreme ratiocinated:

“We hold that the lower court had acquired jurisdiction

over said defendant, through service of the summons
addressed to him upon Mrs. Schenker, it appearing
from said answer that she is the representative and
attorney-in-fact of her husband aforementioned civil
case No. Q-2796, which apparently was filed at her
behest, in her aforementioned representative
capacity. In other words, Mrs. Schenker had authority to
sue, and had actually sued on behalf of her husband, so
that she was, also, empowered to represent him in suits
filed against him, particularly in a case, like the of the one
at bar, which is consequence of the action brought by her
on his behalf.”

Briefly, in an accion in personam where the defendant is a

non-resident, substituted service of summons does not
apply. However, by way of exception, substituted service
of summons may be effected, if the following requisites
are present:
1. The summons is served to the spouse of the
defendant

2. The spouse must be residing in the Philippines

3. The spouse is appointed as attorney-in-fact of the

spouse defendant in a previous case involving the non-
resident spouse.

SANTOS III V NORTHWEST OREINT LINES

Warsaw Convention is constitutional
A treaty commitment voluntarily assumed by the
Philippine government and, as such, has the force and
effect of law in this country.

Warsaw Convention, when applicable:

To all "international transportations of persons by
aircraft for hire." Whether the transportation is
"international" is determined by the contract of the
parties, which in the case of passengers is the ticket.
When the contract of carriage provides for the
transportation of the passenger between certain
designated terminals "within the territories of two High
Contracting Parties," the provisions of the Convention
automatically apply and exclusively govern the rights and
liabilities of the airline and its passenger.
Warsaw Convention, jurisdiction: Place of Destination
vis-a-vis Agreed Stopping Place:
The contract is a single undivided operation, beginning
with the place of departure and ending with the ultimate
destination. The use of the singular in this expression
indicates the understanding of the parties to the
Convention that every contract of carriage has one place
of departure and one place of destination. An
intermediate place where the carriage may be broken is
not regarded as a "place of destination."

FACTS: Petitioner is a minor and a resident of the

Philippines. Private respondent Nortwest Orient Airlines
(NOA) is a foreign corporation with principal office in
Minnesota, U.S.A. and licensed to do business and
maintain a branch office in the Philippines. The petitioner
purchased from NOA a round-trip ticket in San Francisco,
U.S.A. In December 19, 1986, the petitioner checked in
the at the NOA counter in the San Francisco airport for
his departure to Manila. Despite a previous confirmation
and re-confirmation, he was informed that he had no
reservation for his flight for Tokyo to Manila. He
therefore had to be wait-listed. On March 12, 1987, the
petitioner sued NOA for damages in RTC Makati. NOA
moved to dismiss the complaint on the ground of lack of
jurisdiction.

ISSUE: Whether or not Article 28 (1) of the Warsaw

Convention is in accordance with the constitution so
as to deprive the Philippine Courts jurisdiction over
the case

HELD: Art. 28. (1) An action for damage must be brought

at the option of the plaintiff, in the territory of one of the
High Contracting Parties, either before the court of the
domicile of the carrier or of his principal place of
business, or where he has a place of business through
which the contract has been made, or before the court at
the place of destination.

Constitutionality of the Warsaw Convention

The Republic of the Philippines is a party to the

Convention for the Unification of Certain Rules Relating
to International Transportation by Air, otherwise known
as the Warsaw Convention. It took effect on February 13,
1933. The Convention was concurred in by the Senate,
through its Resolution No. 19, on May 16, 1950. The
Philippine instrument of accession was signed by
President Elpidio Quirino on October 13, 1950, and was
deposited with the Polish government on November 9,
1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23, 1955,
President Ramon Magsaysay issued Proclamation No.
201, declaring our formal adherence thereto. "to the end
that the same and every article and clause thereof may be
observed and fulfilled in good faith by the Republic of the
Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily
assumed by the Philippine government and, as such, has
the force and effect of law in this country.

Does the Warsaw Convention apply in this case?

By its own terms, the Convention applies to all

international transportation of persons performed
by aircraft for hire.

International transportation is defined in paragraph

(2) of Article 1 as follows:
(2) For the purposes of this convention, the
expression "international transportation" shall mean
any transportation in which, according to the
contract made by the parties, the place of
departure and the place of destination, whether or
not there be a break in the transportation or a
transshipment, are situated [either] within the
territories of two High Contracting Parties . . .

Whether the transportation is "international" is

determined by the contract of the parties, which in the
case of passengers is the ticket. When the contract of
carriage provides for the transportation of the passenger
between certain designated terminals "within the
territories of two High Contracting Parties," the
provisions of the Convention automatically apply and
exclusively govern the rights and liabilities of the airline
and its passenger.

Since the flight involved in the case at bar is international,

the same being from the United States to the Philippines
and back to the United States, it is subject to the
provisions of the Warsaw Convention, including Article
28(1), which enumerates the four places where an action
for damages may be brought.

Does Article 28(1) refer to Jurisdiction or Venue?

...where the matter is governed by the Warsaw

Convention, jurisdiction takes on a dual concept.
Jurisdiction in the international sense must be
established in accordance with Article 28(1) of the
Warsaw Convention, following which the jurisdiction of
a particular court must be established pursuant to the
applicable domestic law. Only after the question of which
court has jurisdiction is determined will the issue of
venue be taken up. This second question shall be
governed by the law of the court to which the case is
submitted.

Was the case properly filed in the Philippines, since

the plaintiff’s destination was Manila?

The place of destination, within the meaning of the

Warsaw Convention, is determined by the terms of the
contract of carriage or, specifically in this case, the ticket
between the passenger and the carrier. Examination of
the petitioner's ticket shows that his ultimate destination
is San Francisco. Although the date of the return flight
was left open, the contract of carriage between the
parties indicates that NOA was bound to transport the
petitioner to San Francisco from Manila. Manila should
therefore be considered merely an agreed stopping place
and not the destination.

Article 1(2) also draws a distinction between a

"destination" and an "agreed stopping place." It is the
"destination" and not an "agreed stopping place" that
controls for purposes of ascertaining jurisdiction
under the Convention.

The contract is a single undivided operation, beginning

with the place of departure and ending with the ultimate
destination. The use of the singular in this expression
indicates the understanding of the parties to the
Convention that every contract of carriage has one place
of departure and one place of destination. An
intermediate place where the carriage may be
broken is not regarded as a "place of destination."

WHEREFORE, the petition is DENIED, with costs against

the petitioner. It is so ordered.
Pasted from <http://scire-
licet.blogspot.com/2010/07/santos-iii-vs-northwest-
orient-airlines.html>

18. Excuses from treaty obligations

a. Grounds
xxx
vi. By the fundamental changes in the circumstances
from the time the treaty was entered into (rebus sic
stantibus)

Augusto Santos III vs Northwest Orient Airlines

G.R. No. 101538, June 23, 1992

REBUS SIC STANTIBUS - ‘in these circumstance’, in public

international law, it is a doctrine that considers a treaty as
being no longer obligatory if there is a material change in
circumstances.

FACTS: This case involves the Proper interpretation of

Article 28(1) of the Warsaw Convention, reading as
follows:

Art. 28. (1) An action for damage must be brought at

the option of the plaintiff, in the territory of one of the
High Contracting Parties, either before the court of the
domicile of the carrier or of his principal place of
business, or where he has a place of business through
 which the contract has been made, or before the court
at the place of destination.

The petitioner, Augusto Benedicto Santos III, is a minor

represented by his dad and a resident of the Philippines.
Private respondent Northwest Orient Airlines (NOA) is a
foreign corporation with principal office in Minnesota,
U.S.A. and licensed to do business and maintain a branch
office in the Philippines. The petitioner purchased from
NOA a round-trip ticket in San Francisco. U.S.A., for his
flight from San Francisco to Manila via Tokyo and back.
The scheduled departure date from Tokyo was in
December. A day before the scheduled departure, the
petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila.
Despite a previous confirmation and re-confirmation, he
was informed that he had no reservation for his flight
from Tokyo to Manila. He therefore had to be wait-listed.

Almost three months thereafter, the petitioner sued

NOA for damages in the Regional Trial Court of Makati.
NOA moved to dismiss the complaint on the ground of
lack of jurisdiction. Citing Article 28(1) of the Warsaw
Convention, it contended that the complaint against
international carriers could be instituted only in the
territory of one of the High Contracting Parties,
before:
 1. the court of the domicile of the carrier; (NOA’s
domicile is in the USA)
2. the court of its principal place of business; (which is
San Francisco, USA)
3. the court where it has a place of business through
which the contract had been made; (ticket was
purchased in San Francisco so that’s where the contract
was made)
4. the court of the place of destination. (Santos bought a
round trip ticket which final destination is San
Francisco)

The private respondent contended that the Philippines

was not its domicile nor was this its principal place of
business. Neither was the petitioner's ticket issued in this
country nor was his destination Manila but San Francisco
in the United States.

The lower court granted the motion and dismissed the

case. The petitioner appealed to the Court of Appeals,
which affirmed the decision of the lower court. The
petitioner filed a motion for reconsideration, but the
same was denied. The petitioner then came to the
Supreme Court, raising substantially the same issues it
submitted in the Court of Appeals.

ISSUE: Whether or not Article 28(1) of the Warsaw

Convention is inapplicable because of a fundamental
change in the circumstances that served as its basis.
RULING: The petitioner goes at great lengths to show
that the provisions in the Convention were intended to
protect airline companies under "the conditions
prevailing then and which have long ceased to exist." He
argues that in view of the significant developments in the
airline industry through the years, the treaty has become
irrelevant. Hence, to the extent that it has lost its basis for
approval, it has become unconstitutional.

The petitioner is invoking the doctrine of rebus sic

stantibus. According to Jessup, "this doctrine
constitutes an attempt to formulate a legal principle
which would justify non-performance of a treaty
obligation if the conditions with relation to which the
parties contracted have changed so materially and so
unexpectedly as to create a situation in which the
exaction of performance would be unreasonable."
The key element of this doctrine is the vital change in
the condition of the contracting parties that they
could not have foreseen at the time the treaty was
concluded.

The Court notes in this connection the following

observation made in Day v. Trans World Airlines, Inc.:

The Warsaw drafters wished to create a system of

liability rules that would cover all the hazards of air
travel . . . The Warsaw delegates knew that, in the
 years to come, civil aviation would change in ways
that they could not foresee. They wished to design a
system of air law that would be both durable and
flexible enough to keep pace with these changes . . .
The ever-changing needs of the system of civil
aviation can be served within the framework they
created.

It is true that at the time the Warsaw Convention was

drafted, the airline industry was still in its infancy.
However, that circumstance alone is not sufficient
justification for the rejection of the treaty at this time.
The changes recited by the petitioner were, realistically,
not entirely unforeseen although they were expected in a
general sense only. In fact, the Convention itself,
anticipating such developments, contains the following
significant provision:

Article 41. Any High Contracting Party shall be

entitled not earlier than two years after the coming
into force of this convention to call for the assembling
of a new international conference in order to consider
any improvements which may be made in this
convention. To this end, it will communicate with the
Government of the French Republic which will take
the necessary measures to make preparations for
such conference.
But the more important consideration is that the treaty
has not been rejected by the Philippine government. The
doctrine of rebus sic stantibus does not operate
automatically to render the treaty inoperative. There is a
necessity for a formal act of rejection, usually made by
the head of State, with a statement of the reasons why
compliance with the treaty is no longer required.

In lieu thereof, the treaty may be denounced even

without an expressed justification for this action. Such
denunciation is authorized under its Article 39, viz:

Article 39. (1) Any one of the High Contracting Parties

may denounce this convention by a notification
addressed to the Government of the Republic of
Poland, which shall at once inform the Government of
each of the High Contracting Parties.
(2) Denunciation shall take effect six months after the
notification of denunciation, and shall operate only as
regards the party which shall have proceeded to
denunciation.

Obviously, rejection of the treaty, whether on the ground

of rebus sic stantibus or pursuant to Article 39, is not a
function of the courts but of the other branches of
government. This is a political act. The conclusion and
renunciation of treaties is the prerogative of the political
departments and may not be usurped by the judiciary.
The courts are concerned only with the interpretation
and application of laws and treaties in force and not with
their wisdom or efficacy.

WHEREFORE, the petition is DENIED.

REGNER V LOGARTA
Facts: Luis Regner, during his lifetime, is the owner of
share at Cebu Country Club, Inc. (Proprietary Ownership
Certficate No. 0272)

On May 15, 1998, he executed a Deed of Donation over

the said property in favor of her daughters Cynthia and
Teresa (respondents).

Luis passed away on February 11, 1999.

On June 15, 1999, Victoria Regner, Luis’ second wife, filed

a complaint for Declaration of Nullity of the Deed of
Donation against Cynthia and Teresa with the RTC.

Victoria alleged that:

1. Luis made a written declaration wherein he stated
that due to his illness and forgetfulness, he would not
sign any document without the knowledge of his
lawyer.
2. On May 15, 1998, when Luis was very ill and no longer
of sound mind, Cynthia and Teresa fraudulently made
a Deed of Donation whereby they made it appear that
 Luis donated to them Proprietary Ownership
Certificate No. 0272.
3. Since Luis no longer had the ability to write or affix
his signature, Melinda (another daughter), acting
under the influence of her sisters, fraudulently
manipulated the hand of their father so he could affix
his thumbmark on the assailed deed of donation.
4. Three days before their father died, the daughters
caused the preparation of an affidavit to the effect that
Luis affirmed the Deed of Donation that he executed.

The sheriff served summonses on Cynthia and Teresa at

the Borja Family Clinic in Tagbilaran City but Melinda
refused to receive it.

Teresa was personally served summons at her

condominium in Banilad, Cebu when she was on
vacation in the Philippines.

Cynthia was never served summons because like

Teresa, she was also residing in the United States.

On September 12, 2002, Teresa filed a motion to

dismiss because of petitioner’s failure to prosecute
her action for an unreasonable length of time.

Teresa, in her rejoinder, alleged that the case should be

dismissed because Cynthia, who is an indispensable
party, was not issued any summons, hence, since an
indispensable party is not served with summons, without
her who has such an interest in the controversy or
subject matter there can be no proper determination of
the case.

The RTC granted Teresa’s motion.

On review with the CA, it ratiocinated that petitioner’s

move for an extraterritorial service of summons
constitutes failure to prosecute for an unreasonable
length of time.

Issue: Whether or not the delay in the service of

summons upon one of the defendants constitutes failure
to prosecute that would warrant the dismissal of the
complaint.

Held: YES, because the petitioner failed to

extraterritorially serve the summons upon the
defendants.

There are generally two types of actions: actions in rem

and actions in personam.

An action in personam is an action against a person on

the basis of his personal liability, while an action in
rem is an action against the thing itself, instead of
against the person.
The certificate, subject of the donation, is a personal
property. The action filed by Victoria is therefore a
personal action. So in order for the court to acquire
jurisdiction over the respondents, summons must be
served upon them.

Further, the certificate is indivisible, Cynthia’s and

Teresa’s interests thereto can only be determined if both
are summoned in court.

In personal actions, if the respondents are residents of

the Philippines, they may be served summons in the
following order:
1. Personal Service;
2. If (1) is not possible, Substituted Service;
3. If respondent can’t be found because he is abroad but
still a resident of the Philippines, by publication with
leave of court.

If the defendant is a nonresident and he is not found

in the country, summons may be served
extraterritorially in accordance with Section 15, Rule 14
of the Rules of Court. There are only four instances
wherein a defendant who is a non-resident and is not
found in the country may be served a summons by
extraterritorial service, to wit:
1. When the action affects the personal status of the
plaintiff;
 2. When the action relates to, or the subject of which is
property within the Philippines, on which the
defendant claims a lien or an interest, actual or
contingent;
3. When the relief demanded in such action consists,
wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; and
4. When the defendant non-resident's property has been
attached within the Philippines.

In these instances, service of summons may be effected

by:
1. personal service out of the country, with leave of
court;
2. publication, also with leave of court; or
3. any other manner the court may deem sufficient.

In such cases, what gives the court jurisdiction in an

action in rem or quasi in rem is that it has jurisdiction
over the res, i.e., the personal status of the plaintiff who is
domiciled in the Philippines or the property litigated or
attached. Service of summons in the manner provided in
Section 15, Rule 14 of the Rules of Court is not for the
purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due
process, so that the defendant will be informed of the
pendency of the action against him; and the possibility
that property in the Philippines belonging to him, or in
which he has an interest, might be subjected to a
judgment in favor of the plaintiff and he can thereby take
steps to protect his interest if he is so minded.

In the case at bar, Cynthia was never served any

summons in any of the manners authorized by the Rules
of Court. The summons served to Teresa cannot bind
Cynthia. It is incumbent upon Victoria to compel the
court to authorize the extraterritorial service of
summons against Cynthia. Her failure to do so for a long
period of time constitutes a failure to prosecute on her
part.

BANCO ESPANOL FILIPINO V PALANCA

G.R. No. L-11390, March 26, 1918
 JURISDICTION, HOW ACQUIRED: Jurisdiction over
the property which is the subject of the litigation may
result either from
[a] a seizure of the property under legal process,
whereby it is brought into the actual custody of the
law, or
[b] it may result from the institution of legal
proceedings wherein, under special provisions of law,
the power of the court over the property is recognized
and made effective.
 The action to foreclose a mortgage is said to be a
proceeding quasi in rem, by which is expressed the
idea that while it is not strictly speaking an action in
 rem yet it partakes of that nature and is substantially
such.
 DUE PROCESS IN FORECLOSURE PROCEEDINGS:
Property is always assumed to be in the possession of
its owner, in person or by agent; and he may be safely
held, under certain conditions, to be affected with
knowledge that proceedings have been instituted for
its condemnation and sale.

FACTS: Engracio Palanca Tanquinyeng y Limquingco

mortgaged various parcels of real property in
Manila to El Banco Espanol-Filipino. Afterwards,
Engracio returned to China and there he died on
January 29, 1810 without returning again to the
Philippines.

The mortgagor then instituted foreclosure proceeding

but since defendant is a non-resident, it was
necessary to give notice by publication. The Clerk of
Court was also directed to send copy of the summons
to the defendant’s last known address, which is in
Amoy, China.

It is not shown whether the Clerk complied with

this requirement. Nevertheless, after publication in
a newspaper of the City of Manila, the cause
proceeded and judgment by default was rendered.
The decision was likewise published and afterwards
sale by public auction was held with the bank as the
highest bidder. On August 7, 1908, this sale was
confirmed by the court.

However, about seven years after the confirmation

of this sale, a motion was made by Vicente Palanca,
as administrator of the estate of the original
defendant, wherein the applicant requested the court
to set aside the order of default and the judgment, and
to vacate all the proceedings subsequent thereto. The
basis of this application was that the order of default
and the judgment rendered thereon were void because
the court had never acquired jurisdiction over the
defendant or over the subject of the action.

ISSUE:
[1] Whether or not the lower court acquired
jurisdiction over the defendant and the subject matter
of the action
[2] Whether or not due process of law was observed

RULING:

On Jurisdiction

The word “jurisdiction” is used in several different,

though related, senses since it may have reference (1)
to the authority of the court to entertain a particular
kind of action or to administer a particular kind of
relief, or it may refer to the power of the court over the
parties, or (2) over the property which is the subject to
the litigation.

The sovereign authority which organizes a court

determines the nature and extent of its powers in
general and thus fixes its competency or jurisdiction
with reference to the actions which it may entertain
and the relief it may grant.

How Jurisdiction is Acquired

Jurisdiction over the person is acquired by the

voluntary appearance of a party in court and his
submission to its authority, or it is acquired by the
coercive power of legal process exerted over the
person.

Jurisdiction over the property which is the subject of

the litigation may result either from a [a] seizure of the
property under legal process, whereby it is brought
into the actual custody of the law, or it may result from
the [b] institution of legal proceedings wherein, under
special provisions of law, the power of the court over
the property is recognized and made effective. In the
latter case the property, though at all times within the
potential power of the court, may never be taken into
actual custody at all. An illustration of the jurisdiction
acquired by actual seizure is found in attachment
proceedings, where the property is seized at the
beginning of the action, or some subsequent stage of
its progress, and held to abide the final event of the
litigation. An illustration of what we term potential
jurisdiction over the res, is found in the proceeding to
register the title of land under our system for the
registration of land. Here the court, without taking
actual physical control over the property assumes, at
the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to
adjudicate the title in favor of the petitioner against all
the world.

In the terminology of American law the action to

foreclose a mortgage is said to be a proceeding
quasi in rem, by which is expressed the idea that
while it is not strictly speaking an action in rem yet it
partakes of that nature and is substantially such. The
expression "action in rem" is, in its narrow application,
used only with reference to certain proceedings in
courts of admiralty wherein the property alone is
treated as responsible for the claim or obligation upon
which the proceedings are based. The action quasi rem
differs from the true action in rem in the circumstance
that in the former an individual is named as defendant,
and the purpose of the proceeding is to subject his
interest therein to the obligation or lien burdening the
property. All proceedings having for their sole
object the sale or other disposition of the property
of the defendant, whether by attachment,
foreclosure, or other form of remedy, are in a
general way thus designated. The judgment
entered in these proceedings is conclusive only
between the parties.
xxx

It is true that in proceedings of this character, if the

defendant for whom publication is made appears, the
action becomes as to him a personal action and is
conducted as such. This, however, does not affect the
proposition that where the defendant fails to appear
the action is quasi in rem; and it should therefore be
considered with reference to the principles governing
actions in rem.

On Due Process

xxx As applied to a judicial proceeding, however, it

may be laid down with certainty that the requirement
of due process is satisfied if the following conditions
are present, namely; (1) There must be a court or
tribunal clothed with judicial power to hear and
determine the matter before it; (2) jurisdiction must
be lawfully acquired over the person of the defendant
or over the property which is the subject of the
proceeding; (3) the defendant must be given an
opportunity to be heard; and (4) judgment must be
rendered upon lawful hearing.

Passing at once to the requisite that the defendant

shall have an opportunity to be heard, we observe that
in a foreclosure case some notification of the
proceedings to the nonresident owner, prescribing the
time within which appearance must be made, is
everywhere recognized as essential. To answer this
necessity the statutes generally provide for
publication, and usually in addition thereto, for the
mailing of notice to the defendant, if his residence is
known. Though commonly called constructive, or
substituted service of process in any true sense. It is
merely a means provided by law whereby the owner
may be admonished that his property is the subject of
judicial proceedings and that it is incumbent upon him
to take such steps as he sees fit to protect it.

It will be observed that this mode of notification does

not involve any absolute assurance that the absent
owner shall thereby receive actual notice. The
periodical containing the publication may never in fact
come to his hands, and the chances that he should
discover the notice may often be very slight. Even
where notice is sent by mail the probability of his
receiving it, though much increased, is dependent
upon the correctness of the address to which it is
forwarded as well as upon the regularity and security
of the mail service. It will be noted, furthermore, that
the provision of our law relative to the mailing of
notice does not absolutely require the mailing of notice
unconditionally and in every event, but only in the case
where the defendant's residence is known. In the light
of all these facts, it is evident that actual notice to the
defendant in cases of this kind is not, under the law, to
be considered absolutely necessary.

The idea upon which the law proceeds in recognizing

the efficacy of a means of notification which may fall
short of actual notice is apparently this: Property is
always assumed to be in the possession of its owner, in
person or by agent; and he may be safely held, under
certain conditions, to be affected with knowledge that
proceedings have been instituted for its condemnation
and sale.

Did the failure of the clerk to send notice to

defendant’s last known address constitute denial of
due process?

The observations which have just been made lead to

the conclusion that the failure of the clerk to mail the
notice, if in fact he did so fail in his duty, is not such an
irregularity, as amounts to a denial of due process of
law; and hence in our opinion that irregularity, if
proved, would not avoid the judgment in this case.
Notice was given by publication in a newspaper and
this is the only form of notice which the law
unconditionally requires. This in our opinion is all that
was absolutely necessary to sustain the proceedings.

It will be observed that in considering the effect of this

irregularity, it makes a difference whether it be viewed
as a question involving jurisdiction or as a question
involving due process of law. In the matter of
jurisdiction there can be no distinction between the
much and the little. The court either has jurisdiction or
it has not; and if the requirement as to the mailing of
notice should be considered as a step antecedent to the
acquiring of jurisdiction, there could be no escape from
the conclusion that the failure to take that step was
fatal to the validity of the judgment. In the application
of the idea of due process of law, on the other hand, it
is clearly unnecessary to be so rigorous. The
jurisdiction being once established, all that due
process of law thereafter requires is an opportunity for
the defendant to be heard; and as publication was duly
made in the newspaper, it would seem highly
unreasonable to hold that failure to mail the notice
was fatal. We think that in applying the requirement of
due process of law, it is permissible to reflect upon the
purposes of the provision which is supposed to have
been violated and the principle underlying the exercise
of judicial power in these proceedings. Judge in the
light of these conceptions, we think that the provision
of Act of Congress declaring that no person shall be
 deprived of his property without due process of law
has not been infringed.

IDONAH PERKINS vs. ROXAS ET AL.

FACTS: July 5, 1938, respondent Eugene Perkins filed a

complaint in the CFI- Manila against the Benguet
Consolidated Mining Company for the recovery of a sum
consisting of dividends which have been declared and
made payable on shares of stock registered in his name,
payment of which was being withheld by the company,
and for the recognition of his right to the control and
disposal of said shares to the exclusion of all others.

The company alleged, by way of defense that the

withholding of plaintiff’s right to the disposal and control
of the shares was due to certain demands made with
respect to said shares by the petitioner Idonah Perkins,
and by one Engelhard.

Eugene Perkins included in his modified complaint as

parties defendants petitioner, Idonah Perkins, and
Engelhard. Eugene Perkins prayed that petitioner Idonah
Perkins and H. Engelhard be adjudged without interest in
the shares of stock in question and excluded from any
claim they assert thereon.
Summons by publication were served upon the
nonresident defendants Idonah Perkins and Engelhard.
Engelhard filed his answer.

Petitioner filed her answer with a crosscomplaint in

which she sets up a judgment allegedly obtained by
her against respondent Eugene Perkins, from the SC
of the State of New York, wherein it is declared that she
is the sole legal owner and entitled to the possession and
control of the shares of stock in question with all the cash
dividends declared thereon by the Benguet Consolidated
Mining Company.

Idonah Perkins filed a demurrer thereto on the ground

that “the court has no jurisdiction of the subject of the
action,” because the alleged judgment of the SC of the
State of New York is res judicata. Petitioner’s demurrer
was overruled, thus this petition.

ISSUE: WON in view of the alleged judgment entered in

favor of the petitioner by the SC of New York and which is
claimed by her to be res judicata on all questions raised
by the respondent, Eugene Perkins, the local court has
jurisdiction over the subject matter of the action.

RULING: By jurisdiction over the subject matter is meant

the nature of the cause of action and of the relief sought,
and this is conferred by the sovereign authority which
organizes the court, and is to be sought for in general
nature of its powers, or in authority specially conferred.
In the present case, the amended complaint filed by the
respondent, Eugene Perkins alleged calls for the
adjudication of title to certain shares of stock of the
Benguet Consolidated Mining Company and the granting
of affirmative reliefs, which fall within the general
jurisdiction of the CFI- Manila. Similarly CFI- Manila is
empowered to adjudicate the several demands contained
in petitioner’s cross-complaint.
Idonah Perkins in her cross-complaint brought suit
against Eugene Perkins and the Benguet Consolidated
Mining Company upon the alleged judgment of the SC of
the State of New York and asked the court below to
render judgment enforcing that New York judgment, and
to issue execution thereon. This is a form of action
recognized by section 309 of the Code of Civil Procedure
(now section 47, Rule 39, Rules of Court) and which falls
within the general jurisdiction of the CFI- Manila, to
adjudicate, settle and determine.

The petitioner expresses the fear that the respondent

judge may render judgment “annulling the final,
subsisting, valid judgment rendered and entered in this
petitioner’s favor by the courts of the State of New York,
which decision is res judicata on all the questions
constituting the subject matter of civil case” and argues
on the assumption that the respondent judge is without
jurisdiction to take cognizance of the cause. Whether or
not the respondent judge in the course of the proceedings
will give validity and efficacy to the New York judgment
set up by the petitioner in her cross-complaint is a
question that goes to the merits of the controversy and
relates to the rights of the parties as between each other,
and not to the jurisdiction or power of the court. The test
of jurisdiction is whether or not the tribunal has power to
enter upon the inquiry, not whether its conclusion in the
course of it is right or wrong. If its decision is erroneous,
its judgment can be reversed on appeal; but its
determination of the question, which the petitioner here
anticipates and seeks to prevent, is the exercise by that
court and the rightful exercise of its jurisdiction.

Petition denied.

38 EUROPEAN RESOURCES AND TECHNOLOGIES INC.

v. INGENIEUBURO BIRKHAHN + NOLTE,
INGENIURGESELLSCHAFT MBH

Facts: European Resources and Technologies Inc. (

"ERTI"), a corporation organized and existing under the
laws of the Republic of the Philippines. Respondents are
German corporations (the "German Consortium").

The German Consortium tendered and submitted its bid

to the Clark Development Corporation ("CDC") to
construct, operate and manage the Integrated Waste
Management Center at the Clark Special Economic Zone
("CSEZ"). CDC accepted the German Consortium’s bid and
awarded the contract to it.

On August 1, 2000, without the Shareholders’ Agreement

having been executed, the German Consortium and
petitioner ERTI entered into a Memorandum of
Agreement (MOA) whereby the German Consortium
ceded its rights and obligations under the Contract for
Services in favor of ERTI and assigned unto ERTI, among
others, "its license from CDC to engage in the business of
providing environmental services needed in the CSEZ in
connection with the waste management within the CSEZ
and other areas."

On December 11, 2000, ERTI received a letter stating that

the German Consortium’s contract with ERTI has been
terminated or extinguished on various grounds including
(a) the CDC did not give its approval to the Consortium’s
request for the approval of the assignment or transfer by
the German Consortium in favor of ERTI of its rights and
interests under the Contract for Services and (b) the
parties failed to prepare and finalize the Shareholders’
Agreement pursuant to the provision of the MOU.

On February 20, 2001, petitioner ERTI, through counsel,

sent a letter to CDC requesting for the reconsideration of
its disapproval of the agreement between ERTI and the
German Consortium.
Before CDC could act upon petitioner ERTI’s letter, the
German Consortium filed a complaint for injunction
against herein petitioners before the Regional Trial
Court of Angeles City. It claimed that petitioner ERTI’s
continued misrepresentation as to their right to accept
solid wastes from third parties for processing at the
waste management center will cause irreparable damage
to the Consortium and its exclusive right to operate the
waste management center at the CSEZ.

At the hearings on the application for injunction,

petitioners objected to the presentation of evidence on
the ground that the trial court had no jurisdiction over
the case since the German Consortium was composed of
foreign corporations doing business in the country
without a license.

The trial court overruled the objection and proceeded

with the hearing. CA affirmed.

Issue: Whether or not the German Consortium can

properly file a case in our jurisdiction

Held: No. There is no general rule or governing principle

laid down as to what constitutes "doing" or "engaging in"
or "transacting" business in the Philippines. Thus, it has
often been held that a single act or transaction may be
considered as "doing business" when a corporation
performs acts for which it was created or exercises some
of the functions for which it was organized. The Court
has held that the act of participating in a bidding process
constitutes "doing business" because it shows the foreign
corporation’s intention to engage in business in the
Philippines. In this regard, it is the performance by a
foreign corporation of the acts for which it was created,
regardless of volume of business, that determines
whether a foreign corporation needs a license or not.

Consequently, the German Consortium is doing business

in the Philippines without the appropriate license as
required by our laws. By participating in the bidding
conducted by the CDC for the operation of the waste
management center, the German Consortium exhibited
its intent to transact business in the Philippines. Although
the Contract for Services provided for the establishment
of a local corporation to serve as respondents’
representative, it is clear from the other provisions of the
Contract for Services as well as the letter by the CDC
containing the disapproval that it will be the German
Consortium which shall manage and conduct the
operations of the waste management center for at least
twenty-five years. Moreover, the German Consortium was
allowed to transact with other entities outside the CSEZ
for solid waste collection. Thus, it is clear that the local
corporation to be established will merely act as a conduit
or extension of the German Consortium.
As a general rule, unlicensed foreign non-resident
corporations cannot file suits in the Philippines. (Section
133 of the Corporation Code)

A corporation has legal status only within the state or

territory in which it was organized. For this reason, a
corporation organized in another country has no
personality to file suits in the Philippines. In order to
subject a foreign corporation doing business in the
country to the jurisdiction of our courts, it must acquire a
license from the Securities and Exchange Commission
(SEC) and appoint an agent for service of process.
Without such license, it cannot institute a suit in the
Philippines.

Estoppel, however is an exception to the rule—a foreign

corporation doing business in the Philippines without
license may sue in Philippine Courts when a Philippine
citizen or entity that had contracted with and benefited
from it.

In the case at bar, petitioners have clearly not received

any benefit from its transactions with the German
Consortium. In fact, there is no question that petitioners
were the ones who have expended a considerable
amount of money and effort preparatory to the
implementation of the MOA. Neither do petitioners seek
to back out from their obligations under both the MOU
and the MOA by challenging respondents’ capacity to sue.
To rule that the German Consortium has the capacity to
institute an action against petitioners even when the
latter have not committed any breach of its obligation
would be tantamount to an unlicensed foreign
corporation gaining access to our courts for protection
and redress. We cannot allow this without violating the
very rationale for the law prohibiting a foreign
corporation not licensed to do business in the Philippines
from suing or maintaining an action in Philippine courts.
The object of requiring a license is not to prevent the
foreign corporation from performing single acts, but to
prevent it from acquiring domicile for the purpose of
business without taking the steps necessary to render it
amenable to suits in the local courts. In other words, the
foreign corporation is merely prevented from being in a
position where it takes the good without accepting the
bad.

IN RE UNION CARBIDE

Facts
 On the night of 23 December 1984, a gas leak

occurred at the pesticide plant of Union Carbide India

Limited (UCIL) in Bhopal, India resulting in the deaths
of more than 2,000 people and injuries to more than
200,000 others.
 Thereafter, the India passed a law giving the Indian
government the exclusive right to represent the
victims of the disaster.
 As thus, the Indian government filed a complaint
before a New York district court.
 The Union Carbide Corporation (UCC) filed a motion
to dismiss on the ground of forum non conveniens and
lack of personality.
 The district court granted the motion on three
conditions, namely, that UCC:
o (1) consent to the jurisdiction of Indian courts and

waive defenses based on the Statute of

Limitations;
o (2) agree to the satisfy the judgement of the Indian

court, provided it complied with the requirements

of due process; and
o (3) be subject to discovery under the Federal Rules

of Civil Procedure of the US.

 Consequently, the Indian government filed sued the
UCIL and the UCC before the a district court in India.
The UCC appealed the conditions.
 Arguments for the Defendant While Indian courts
may provide an adequate alternative forum, they
adhere to standards of due process much lower than
that followed in the US. Hence, US courts must
supervise the proceedings before Indian courts.

Issue Whether or not the dismissal on the ground

of forum non conveniens is proper.
Held Yes. The Indian courts are adequate alternative
fora.

Ratio Decidendi:
 Almost all of the estimated 200,000 plaintiffs are

citizens and residents of India who have revoked their

representation by an American counsel in favor of the
Indian government, which now prefers Indian courts.
Further, the UCC has already consented to the
assumption of jurisdiction by the Indian courts. All the
witnesses and evidence are likewise in India.
 As to the conditions,

o The first is valid in order to secure the viability of

the Indian courts as alternate fora.

o The second is problematic as it gives the

impression that foreign judgments the UCC's

consent is necessary in order for the judgement of
the Indian courts to be enforceable in New York.
 The laws of New York, in fact, recognizes that a

judgment rendered by a foreign court may be

enforced in that State except if such judgment
was rendered in violation of due process or
without jurisdiction over the person of the
defendant.
 The request of UCC of supervision by US courts

of Indian courts is untenable.

 The power of US courts cannot extend beyond

their territorial jurisdiction.

  Moreover, once US courts dismiss a case on
the ground of forum non conveniens, they
lose any further jurisdiction over the case,
except in case of an action for enforcement
later on.
 Denial of due process may, however, constitute

a defense against the enforcement of the Indian

judgment.
o The third condition is likewise invalid. Basic
justice dictates that both parties must be given
equal access to evidence in each other's
possession. Hence, both parties maybe subjected
to the modes of discovery under the Federal Rules
of Civil Procedure on equal terms subject to
approval by Indian courts.

HEINE V. NEW YORK INSURANCE COMPANY

Oregon - a state in the Pacific Northwest region of the

United States
New York - a state in the North eastern United States

FACTS:
 The New York Life Insurance Company and the

Guardian Insurance Company ("the insurance

companies") were corporations created in New York,
USA.
  Their principal offices are located in New York
and statutory agents are found in Orgeon, upon
whom service can be made
 As conditions to be allowed to conduct business in
Germany, they were made to agree the following:
 to be supervised by German authorities,

 to invest the proceeds of policies in German

securities, and
 to establish a local agency to whom summons

may be served
 The insurance companies issued life insurance
policies in Germany, in favour of German citizens and
subjects and payable in German marks
 They were later sued before courts in both US and
Germany for the recovery on some 240 life
insurance policies
 The actions now pending are brought and prosecuted
in the name of, or as assignee of the insured by,
certain parties in the United States and Germany,
under an irrevocable power of attorney.
 Defendants file a motion to have the court, in its
discretion, to refuse to exercise jurisdiction over
actions brought by the plaintiff insureds
 Plaintiff argued that US courts have jurisdiction of the
subject matter and the parties to this case, it has no
discretion but should proceed with the case
regardless
 where the cause of action arose or

 law by which it is controlled or

  of the difficulty the court would encounter in
attempting to interpret and enforce a foreign
contract or
 of the interference w/ other business of the
court

ISSUE: WON US courts may dismiss the case on the

principle of forum non conveniens

RULING: YES

In granting the defendant’s motion, the court explained:

The courts of Germany and New York are open and
functioning and competent to take jurisdiction of the
controversies, and service can be made upon the
defendants in either of such jurisdictions

To require the defendants to defend the actions in this

district would impose upon them great and
unnecessary inconvenience and expense, and
probably compel them to produce here (three thousand
miles from their home office) numerous records, books,
and papers, all of which are in daily use by it in taking
care of current business.

In addition, it would no doubt consume months of the

time of this court to try and dispose of these cases,
thus necessarily disarranging the calendar, resulting
in delay, inconvenience, and expense to other
litigants who are entitled to invoke its jurisdiction.

Under these circumstances, the defendants, while

conceding that the court has jurisdiction of the person
and subject-matter, urges that it should refuse, in its
discretion, to exercise such jurisdiction. As said by Mr.
Justice Holmes:
"It should be remembered that parties do not enter into
civil relations in foreign jurisdictions in reliance upon
our courts. They could not complain if our courts
refused to meddle with their affairs, and remitted them
to the place that established and would enforce their
rights. * * * The only just ground for complaint would be
if their rights and liabilities, when enforced by our
courts, should be measured by a different rule from that
under which the parties dealt."

In response to the plaintiff’s arguments, the court ruled

that:
The courts may retain jurisdiction, or it may, in the
exercise of a sound discretion, decline to do so, as the
circumstances suggest. The courts have repeatedly
refused, in their discretion, to entertain jurisdiction
of causes of action arising in a foreign jurisdiction,
where both parties are non-residents of the forum. As
said by Mr. Justice Bradley:
“Circumstances often exist which render it inexpedient
for the court to take jurisdiction of controversies
 between foreigners in cases not arising in the country of
the forum; as, where they are governed by the laws of
the country to which the parties belong, and there is no
difficulty in a resort to its courts; or where they have
agreed to resort to no other tribunals * * * not on the
ground that it has not jurisdiction, but that, from
motives of convenience, or international comity, it will
use its discretion whether to exercise jurisdiction or
not."

It should be noted that in this case

1. None of the parties to the litigation are residents
or inhabitants of this district.
2. The plaintiffs reside in, and are citizens of, the
republic of Germany.
3. The defendants are corporations organized and
existing under the laws of New York, with their
principal offices in that state, with statutory agents in
Oregon, upon whom service can be made.
4. None of the causes of action arose here, nor do any of
the material witnesses reside in the district, nor are
any of the records of the defendant companies
pertaining to the policies in suit in the district, but
such records are either at the home office in New York
or at their offices in Germany.
5. The contract of insurance was made and to be paid
there and in German currency.
a. It is to be construed and given effect according to
the laws of the place where it was made.
The courts of this country are established and maintained
primarily to determine controversies between its own
citizens and those having business there, and manifestly
the court may protect itself against a flood of litigation
over contracts made and to be performed in a foreign
country, where the parties and witnesses are non-
residents of the forum, and no reason exists why the
liability, if any, cannot be enforced in the courts of the
country where the cause of action arose, or in the state
where the defendant was organized and has its principal
offices.

FIRST PHILIPPINE INTERNATIONAL BANK

Facts:
 In the course of its banking operations, the
defendant Producer Bank of the Philippines
acquired 6 parcels of land with a total area of 101
hectares located at Don Jose, Sta. Rosa, Laguna and
covered by TCT No. T-106932 to T-106937.
 The property used to be owned by BYME Investment

and Development Corporation which had them

mortgaged with the bank as collateral for a loan.
 The plaintiff originals, Demetrio Demetria and Jose

Janolo wanted to purchase the property and thus

initiated negotiations for that purpose.
 In the early part of August 1987 said plaintiffs, upon

the suggestion of BYME investment’s legal counsel,

 Fajardo met with defendant Mercurio Rivera,
manager of the property management department of
the defendant bank.
 The meeting was held in pursuant to plaintiffs’ plan to
buy the property.
 After the meeting, plaintiff Janolo, following the advice
of defendant Rivera made a formal purchase offer to
the Bank through a letter dated August 30,1987.
 Negotiations took place and an offer price was fixed at
P5.5million.
 During the course of the negotiations, the defendant
bank was placed under conservatorship and a new
conservator was appointed to which the name has
been refused to recognize. A derivative suit has been
filed against Rivera for the damages suffered from the
alleged perfect contract of sale involving the 6 parcels
of land.

Issue: Whether or not a derivative suit may lie involving

the bank and its stockholders.

Held: No. An individual stockholder is permitted to

institute a derivative suit on behalf of the corporation
wherein he hold stock in order to protect or vindicate
corporate rights, whenever the officials of the
corporation refuse to sue, or are the ones, to be sued or
hold the control of the corporation. In such actions, the
suing stockholder is regarded as a nominal party with the
corporation as the real party in interest.
In the face of the damaging admissions taken from the
complaint in the second case, petitioners, quite strangely,
sought to deny that the second case was a derivative suit,
reasoning that it was brought not by the minority
shareholders, but by Henry Co. etal. who not only hold or
control over 80% of the outstanding capital stock, but
also constitute the majority in the board of directors of
petitioners bank. That being so, then they really
represent the bank, so whether they sued derivatively or
directly, there is undeniably an identity of interest/entity
represented.

In addition to the many cases, where the corporate fiction

has been regarded, we now add the instant case, and
declare herewith that the corporate veil cannot be used
to shield an otherwise blatant violation of the prohibition
against forum shopping.

Shareholders, whether suing as the majority in direct

actions or as the minority in a derivative suit, cannot be
allowed to trifle with court processes particularly where,
as in this case, the corporation itself has not been remiss
in vigorously prosecuting or defending corporate causes
and in using and applying remedies available to it. To rule
otherwise would be to encourage corporate litigants to
use their shareholders as fronts to circumvent the
stringent rules against forum shopping.
From the facts, the official bank price, at any rate, the
bank placed its official, Rivera is a position of authority to
accept offers to buy and negotiate the sale by having the
offer officially acted upon by the bank. The bank cannot
turn around and say, as it now does, that what Rivera
states as the bank’s action on the matter is not in fact so.
It is a familiar doctrine, the doctrine of ostensible
authority, that if a corporation on knowingly permits one
of its officers, or any other agent, to do acts within the
scope of apparent authority, and thus holds him out to
the public as possessing power to do those acts, the
corporation will, as against any one who has in good faith
dealt with the corporation through such agent, he
estopped from denying his authority.

A bank is liable for wrongful acts of its officers done in

the interest of the bank or in he course of dealings of the
officers in their representative capacity but not for acts
outside the scope of their authority. A bank holding out
its officers and agents as worthy of confidence will not be
permitted to profit by the frauds they my thus be enabled
to perpetrate in the apparent scope of their employment;
nor will it be permitted to shrink its responsibility for
such fraud even through no benefit may accrue to the
bank therefrom.

Accordingly, a banking corporation is liable to innocent

third persons where the representation is made in the
course of its business by an agent acting within the
general scope of its authority even though, in the
particular case, the agent is secretly abusing his authority
and attempting to perpetrate fraud upon his principal or
some other person, for his own ultimate benefit.

Section 28-A of BP 68 merely gives the conservator

power to revoke contracts that are, under existing law,
deemed not to be effective – i.e void, voidable,
unenforceable or rescissible. Hence, the conservator
merely takes the place of a bank’s board of directors.
What the said board cannot do – such as repudiating a
contract validly entered into under the doctrine of
implied authority – the conservator cannot do either.

ISSUES:
1. Whether or not there is forum shopping.
2. Whether or not there is a perfected contract of sale.
HELD:
1. Yes. There is forum shopping because there is [a]
identity of interest and parties between the first case
and the second case.
There is identity of interest because both cases sought
to have the agreement, which involves the same
property, be declared unenforceable as against the
Bank.
 There is identity of parties even though the first case
is in the name of the bank as defendant, and the
second case is in the name of Henry Co as plaintiff.
There is still forum shopping here because Henry Co
essentially represents the bank.

Both cases aim to have the bank escape liability from

the agreement it entered into with Demetria et al. The
Supreme Court did not lay down any disciplinary
action against the ACCRA lawyers but they were
warned that a repetition will be dealt with more
severely.

2. Yes. There is a perfected contract of sale because the

bank manager, Rivera, entered into the agreement with
apparent authority. This apparent authority has been
duly proved by the evidence presented which showed
that in all the dealings and transactions, Rivera
participated actively without the opposition of the
conservator. In fact, in the advertisements and
announcements of the bank, Rivera was designated as the
go-to guy in relation to the disposition of the Bank’s
assets.

GOODWINE V SUPERIOR COURT

Marjorie E. Goodwine v. Superior Court of Los Angeles

County
Wife's separate maintenance action against husband
who was domiciliary of Mexico.
The Superior Court, Los Angeles County, Roger Alton
Pfaff, J., dismissed the action for lack of jurisdiction.

The wife then filed petition for writ of mandate to compel

the trial court to vacate its order dismissing the action.

The Supreme Court, Traynor,C. J., held that jurisdiction

does not depend on domicile but on acquiring personal
jurisdiction over the husband or quasi-in-rem jurisdiction
over his property. The court further held that a defendant
should be allowed to point out lack of subject matter
jurisdiction without making a general appearance. The
court also determined that since the trial court had
jurisdiction of the subject matter, it should consider the
applicability of the doctrine of forum non conveniens.
Plaintiff and defendant were married in Reno, Nevada.
They lived in California and moved to Mexico to live in
retirement. Defendant obtained a resident's visa and
became a domiciliary of Mexico but not the plaintiff. On
September 3, 1964, plaintiff left defendant and went to
Los Angeles to reside with her sister, allegedly because
he treated plaintiff with extreme cruelty. On October 8,
1964, plaintiff, began an action for separate maintenance,
seeking support of $1,000 per month, against her
husband, Don F. Goodwine (defendant). A writ of
attachment was levied upon defendant's real property in
the County of Los Angeles, giving the trial court quasi-in-
rem jurisdiction. Plaintiff secured an order for service by
publication based on an affidavit that defendant resided
out of the state, and defendant was personally served in
Mexico. Defendant moved to quash the writ of
attachment and to dismiss the action on the ground that
neither party is domiciled in the state. The trial court
granted defendant's motion and dismissed the action.
Plaintiff then filed this petition for a writ of mandate to
compel the trial court to vacate its order dismissing the
action.
ISSUE:
1.) Whether the court acquires jurisdiction over the res.
2.) Whether the doctrine of forum non conveniens is
applicable.
HELD:
1.) An action for separate maintenance is essentially an
action for support, domicile is neither sufficient nor
necessary for jurisdiction. Jurisdiction does not depend
on domicile but on acquiring personal jurisdiction over
the husband or quasi-in-rem jurisdiction over his
property. Once quasi-in-rem jurisdiction is established,
the court can award a money judgment to the extent of
the defendant's interest in the property attached.
Defendant contends that the trial court has no
jurisdiction in an action for separate maintenance when
neither party is domiciled in the state. There is no merit
in this contention. In an action for divorce, domicile is
dispositive, since "the domicile of one spouse within a
State gives power to that State ... to dissolve a marriage
wheresoever contracted. The state in which one spouse is
domiciled is deemed to have sufficient interest to
terminate the marriage. Thus, a state has the power to
grant an ex parte divorce to a domiciliary wife without
personal jurisdiction over the husband or quasi-in-rem
jurisdiction over his property. In an action for separate
maintenance, however, domicile is neither sufficient nor
necessary for jurisdiction.
2.) Defendant contends that even if the trial court has
quasi-in-rem jurisdiction, it properly refused to exercise
it under the doctrine of forum non conveniens. The trial
court, however, has not yet considered whether the
doctrine of forum non conveniens applies to this case,
since it treated defendant's motion as being "for the sole
purpose of objecting to the court's jurisdiction." Since the
court has jurisdiction of the subject matter, it can now
consider the applicability of that doctrine, which is
accepted in this jurisdiction and applies to actions for
support.In determining the applicability of the doctrine,
the court must consider the public interest as well as the
private interests of the litigants. The court must consider
such factors as the ease of access of proof, the availability
and cost of obtaining witnesses, the possibility of
harassment of the defendant in litigating in an
inconvenient forum, the enforceability of the judgment,
the burden on the community in litigating matters not of
local concern, and the desirability of litigating local
matters in local courts. [U]nless the balance is strongly in
favor of the defendant, the plaintiff's choice of forum
should rarely be disturbed. The trial court must in the
first instance consider these factors in determining
whether to apply the doctrine. Thus plaintiff alleges
mistreatment throughout the marriage, both in California
and in Mexico, and the trial court must ascertain the
location of witnesses and other sources of proof.
Moreover, the trial court must consider plaintiff's
contention that she is domiciled in California. The trial
court originally relied on defendant's affidavit that
plaintiff was domiciled in Mexico, on the failure of
plaintiff to file a counteraffidavit, on the ambiguity of
plaintiff's allegation of residence in her complaint, and on
points and authorities submitted by the parties in
deciding plaintiff was not a California domiciliary. On
remand, plaintiff can submit further evidence of her
domicile in this state. A determination that a plaintiff is
domiciled here would ordinarily preclude granting the
defendant's motion for dismissal on the ground of forum
non conveniens. Let the peremptory writ issue as prayed.
PIONEER CONCRETE PHILIPPINES v. TODARO

FACTS:
Antonio D. Todaro (Todaro) filed with the RTC of
Makati City, a complaint for Sum of Money and
Damages with Preliminary Attachment against
Pioneer International Limited (PIL), Pioneer
Concrete Philippines, Inc. (PCPI), Pioneer
Philippines Holdings, Inc. (PPHI), John G.
McDonald (McDonald) and Philip J. Klepzig
(Klepzig).

Todaro alleged that PIL is a corporation duly

organized and existing under the laws of Australia
and is principally engaged in the ready-mix concrete
and concrete aggregates business;

PPHI is the company established by PIL to own and

hold the stocks of its operating company in the
Philippines;

PCPI is the company established by PIL to undertake

its business of ready-mix concrete, concrete
aggregates and quarrying operations in the
Philippines;

McDonald is the Chief Executive of the Hongkong

office of PIL; and, Klepzig is the President and
Managing Director of PPHI and PCPI;

Todaro has been the managing director of Betonval

Readyconcrete, Inc. (Betonval), a company engaged in
pre-mixed concrete and concrete aggregate
production; he resigned from Betonval in February
1996; in May 1996, PIL contacted Todaro and asked
him if he was available to join them in connection
with their intention to establish a ready-mix concrete
plant and other related operations in the Philippines;

Todaro informed PIL of his availability and interest to

join them; subsequently, PIL and Todaro came to an
agreement wherein the former consented to engage
the services of the latter as a consultant for two to
three months, after which, he would be employed as
the manager of PIL's ready-mix concrete operations
should the company decide to invest in the
Philippines.

Subsequently, PIL started its operations in the

Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis.
Instead of filing an Answer,

PPHI, PCPI and Klepzig separately moved to dismiss

the complaint on the grounds that the complaint
states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint,
as the same is within the jurisdiction of the NLRC, and
that the complaint should be dismissed on the basis of
the doctrine of forum non conveniens. RTC dismissed
the MTD which was affirmed by the CA.
ISSUE:
W/N the RTC should have dismissed the case on the
basis of forum non conveniens due to a presence of a
foreign element

RULING:

NO. 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. In
the case of Communication Materials and Design, Inc.
vs. Court of Appeals, 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."
 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
court’s 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.

Note: the case was also being dismissed on the ground that
there was no cause of action but SC held that there was
cause of action, to sustain a motion to dismiss for lack of
cause of action, the complaint must show that the claim for
relief does not exist, rather than that a claim has been
defectively stated, or is ambiguous, indefinite or uncertain.
And it was also argued in this case that jurisdiction is with
the NLRC and not with the RTC. SC held it was with RTC, SC
has consistently held that where no employer-employee
relationship exists between the parties and no issue is
involved which may be resolved by reference to the Labor
Code, other labor statutes or any collective bargaining
agreement, it is the RTC that has jurisdiction.

FLEUMER V HIX
FACTS: Fleumer, the special administrator of the
estate of Edward Randolph Hix appealed from a
decision of Judge of First Instance Tuason denying the
probate of the document alleged to by the last will
and testament of the deceased.
Appellee is not authorized to carry on this appeal. We
think, however, that the appellant, who appears to have
been the moving party in these proceedings, was a
"person interested in the allowance or disallowance of a
will by a Court of First Instance," and so should be
permitted to appeal to the Supreme Court from the
disallowance of the will (Code of Civil Procedure, sec.
781, as amended; Villanueva vs. De Leon [1925], 42 Phil.,
780).
It is theory of the petitioner that the alleged will was
executed in Elkins, West Virginia, on November 3, 1925,
by Hix who had his residence in that jurisdiction, and that
the laws of West Verginia Code, Annotated, by Hogg,
Charles E., and as certified to by the Director of the
National Library, should govern.
ISSUE: Whether or not the laws of West Virginia should
govern.
RULING: The laws of a foreign jurisdiction do not
prove themselves in our courts. the courts of the
Philippine Islands are not authorized to take
American Union. Such laws must be proved as
facts.(In re Estate of Johnson [1918], 39 Phil., 156.) Here
the requirements of the law were not met.

1. There was no was printed or published under the

authority of the State of West Virginia, as provided
in section 300 of the Code of Civil Procedure.

a. Nor was the extract from the law attested by the

certificate of the officer having charge of the
original, under the sale of the State of West
Virginia, as provided in section 301 of the Code of
Civil Procedure.

a. No evidence was introduced to show that the

extract from the laws of West Virginia was in
force at the time the alleged will was executed.

3. Note: In addition, the due execution of the will was

not established. The only evidence on this point is
to be found in the testimony of the petitioner.

Aside from this, there was nothing to indicate that

the will was acknowledged by the testator in the
presence of two competent witnesses, of that these
witnesses subscribed the will in the presence of the
testator and of each other as the law of West Virginia
seems to require. On the supposition that the
witnesses to the will reside without the Philippine
Islands, it would then the duty of the petitioner to
prove execution by some other means (Code of Civil
Procedure, sec. 633.)

It was also necessary for the petitioner to prove that

the testator had his domicile in West Virginia and not
establish this fact consisted of the recitals in the
CATHY will and the testimony of the petitioner. Also
in beginning administration proceedings originally in
the Philippine Islands, the petitioner violated his own
theory by attempting to have the principal
administration in the Philippine Islands.

While the appeal pending submission in this court, the

attorney for the appellant presented an unverified
petition asking the court to accept as part of the
evidence the documents attached to the petition.

One of these documents discloses that a paper writing

purporting to be the was presented for probate on
June 8, 1929, to the clerk of Randolph Country, State
of West Virginia, in vacation, and was duly proven by
the oaths of Dana Wamsley and Joseph L. MAdden, the
subscribing witnesses thereto , and ordered to be
recorded and filed. It was shown by another
document that, in vacation, on June 8, 1929, the clerk
of court of Randolph Country, West Virginia,
appointed Claude W. Maxwell as administrator, cum
 testamento annexo, of the estate of Edward Randolph
Hix, deceased. In this connection, it is to be noted
that the application for the probate of the will in
the Philippines was filed on February 20, 1929,
while the proceedings in West Virginia appear to
have been initiated on June 8, 1929. These facts
are strongly indicative of an intention to make the
Philippines the principal administration and West
Virginia the ancillary administration.
However this may be, no attempt has been made
to comply with Civil Procedure, for no hearing on
the question of the allowance of a will said to have
been proved and allowed in West Virginia has
been requested. There is no showing that the
deceased left any property at any place other than
the Philippine Islands and no contention that he
left any in West Virginia.
Reference has been made by the parties to a divorce
purported to have been awarded Edward Randolph Hix
from Annie Cousins Hix on October 8, 1925, in the State
of West specific pronouncements on the validity or
validity of this alleged divorce.
For all of the foregoing, the judgment appealed from will
be affirmed, with the costs of this instance against the
appellant.
K.K. SHELL SEKIYU OSAKA HATSUBAISHO, FU HING
OIL CO., LTD., v. COURT OF APPEALS, ATLANTIC
VENUS CO., S.A., and the VESSEL M/V “ESTELLA”
 FACTS
 In January 1987, Kumagai Kaiun Kaisha, Ltd.

(Kumagai), a corporation formed and existing

under Japanese law, filed in the RTC Manila a
complaint for the collection of a sum of money
with preliminary attachment against respondent
Atlantic Venus Co., S.A. (Atlantic), a corporation
registered in Panama, and the vessel MV Estella
and Crestamonte Shipping Corporation, a
Philippine corporation.
 Atlantic is the owner of MV Estella.

 Petitioner alleged that Crestamonte, as bareboat

charterer and operator of the MV Estella,

appointed N.S. Shipping Corporation (NSS), a
Japanese Corporation, as its general agent in Japan.
This appointment was formalized in an Agency
Agreement.
 NSS in turn appointed Kumagai as its local agent in

Osaka, Japan.
 Kumagai supplied mV Estella with supplies and

services but despite repeated demands,

Crestamonte failed to pay the amounts due for the
same.
 NSS and Keihin Narasaki Corporation filed
complaints-in-intervention.
 In May 1987, petitioner Fu Hing Oil Co. Ltd., a

Hong Kong corporation and not doing business

in the Philippnes, filed a motion for leave to
 intervene, alleging that it has an unpaid claim
of $152K for fuel supplied to MV Estella.
 Petitioner KK Shell, a Japanese corporation not
doing business in the Philippines, filed a motion to
intervene, alleging that upon the request of NSS, it
provided fuel to M/V Estella when it was docked in
Tokyo amounting to $16,996 and Y1,000,000.
 The trial court allowed the intervention of
petitioners.
 Atlantic and MV Estella moved to dismiss the
complaint-in-intervention.
 Atlantic and MV Estella filed with the CA a petition
against the trial court judge, Kumagai, NSS and
Kelhin, seeking the annulment of the orders.
 The CA annulled the orders and directed it to cease
and desist from proceeding with the case. The CA
ruled that petitioners were not suppliers but sub-
agents of NSS, hence they were bound by the
Agency Agreement between Crestamonte and NSS,
particularly the choice of forum clause (“That
this Agreement shall be governed by the Laws of
Japan. Any matters, disputes, and/or differences
arising between the parties hereto concerned
regarding this Agreement shall be subject
exclusively to the jurisdiction of the District
Courts of Japan”)
NOTE: Fu Hing Oil filed a motion to withdraw as
co-petitioner, having entered into an amicable
settlement with private respondents.
 ISSUES
 Whether or not the complaints-in-intervention by

petitioners should have been dismissed on the

ground that jurisdiction over the case was
exclusively vested in Japanese courts pursuant to
the choice of forum clause.

 RULING
 - NO. The petition is GRQANTED and the decision of
the CA is REVERSED.
 The Agency Agreement does not support the

conclusion that KK Shell is a sub-agent of NSS and

is thus bound by the agreement.

The body of the Agrement provided that the Agent

(NSS) will provide by the decisions of Crestamonte
and will provide the necessary husbanding
services for the latter’s vessels and will be
responsible for fixing southbound cargoes with
revenues sufficient to cover ordinary expenses.
The agreement enumerates the principal duties
of NSS but makes no express reference to the
contracting of sub-agents or the applicability of
the terms of the agreement, particularly the
choice of forum clause, to sub-agents.

Moreover, KK Shell’s statement in its motion that it

was a representative of NSS for the supply of fuel
 to vessels of which the latter is an agent does NOT
conclusively establish a sub-agency between NSS
and KK Shell.

Consequently, since KK Shell is not bound by the

Agreement as it is not a party thereto nor a sub-
agent, it is not bound by the choice of forum clause
and is not barred from instituting the action in the
Philippines.

It was contended that the case should be dismissed

pursuant to the doctrine of forum non conveniens.
The SC ruled that it cannot rule on such invocation
of forum non conveniens, as the exact nature of the
relationship of the parties is still to be established.
This is to be left to the sound discretion of the trial
court judge.

TESTATE ESTATE OF C. O. BOHANAN, deceased.

PHILIPPINE TRUST CO., executor-
appellee, vs.MAGDALENA C. BOHANAN, EDWARD C.
BOHANAN, and MARY LYDIA BOHANAN, oppositors-
appellants, G.R. No. L-12105, January 30, 1960

FACTS: The testator C. O. Bohanan was at the time of his

death a citizen of the United States and of the State of
Nevada and declares that his will and testament, is fully
in accordance with the laws of the state of Nevada and
admits the same to probate.
The long residence of the decedent in the Philippines,
was merely temporary, and he continued and remained
to be a citizen of the United States and of the state of his
pertinent residence to spend the rest of his days in that
state.

Accordingly, the Philippine Trust Company, named as

the executor of the will, is appointed to such executor.

The executor filed a project of partition dated, making,

in accordance with the provisions of the will, the
following adjudications:
(1) one-half of the residuary estate, to the Farmers and
Merchants National Bank of Los Angeles, California, U.S.A.
in trust only for the benefit of testator's grandson
Edward George Bohanan, which consists of several
mining companies;
(2) the other half of the residuary estate to the testator's
brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith,
share and share alike. This consist in the same amount of
cash and of shares of mining stock similar to those given
to testator's grandson;
(3) legacies of P6,000 each to his (testator) son, Edward
Gilbert Bohana, and his daughter, Mary Lydia Bohanan, to
be paid in three yearly installments;
(4) legacies to Clara Daen, in the amount of P10,000.00;
Katherine Woodward, P2,000; Beulah Fox, P4,000; and
Elizabeth Hastings, P2,000;
It will be seen from the above that out of the total estate
(after deducting administration expenses) of
P211,639.33 in cash, the testator gave his grandson
P90,819.67 and one-half of all shares of stock of several
mining companies and to his brother and sister the same
amount. To his children he gave a legacy of only P6,000
each, or a total of P12,000.

The wife Magadalena C. Bohanan and her two children

question the validity of the testamentary provisions
disposing of the estate in the manner above indicated,
claiming that they have been deprived of the legitime
that the laws of the forum concede to them. (It must be
noted that the testator and Magdalena C. Bohanan were
married on January 30, 1909, and the divorce was granted
to him on May 20, 1922; that sometime in 1925,
Magdalena C. Bohanan married Carl Aaron and this
marriage was subsisting at the time of the death of the
testator.)

ISSUES:
1. Whether or not the Magdalena Bohanan, wife of the
testator, is entitled to the share.
2. Whether or not the claim of the testator's children,
Edward and Mary Lydia, who had received legacies in the
amount of P6,000 each only, and, therefore, have not
been given their shares in the estate which, in accordance
with the laws of the forum, should be two-thirds of the
estate left by the testator is correct.

HELD:
1. No. The will has not given her any share in the estate
left by the testator. The laws of Nevada, of which the
deceased was a citizen, allow him to dispose of all of
his properties without requiring him to leave any
portion of his estate to his wife. Section 9905 of Nevada
Compiled Laws of 1925 provides: Every person over the
age of eighteen years, of sound mind, may, by last will,
dispose of all his or her estate, real and personal, the
same being chargeable with the payment of the testator's
debts.

Besides, the right of the former wife of the testator,

Magdalena C. Bohanan, to a share in the testator's estate
had already been passed upon adversely against her in an
order dated June 19, 1955, which had become final, as
Magdalena C. Bohanan does not appear to have appealed
therefrom to question its validity.

On December 16, 1953, the said former wife filed a

motion to withdraw the sum of P20,000 from the funds of
the estate, chargeable against her share in the conjugal
property, and the court found that there exists no
community property owned by the decedent and his
former wife at the time the decree of divorce was issued.
Since no right to share in the inheritance in favor of a
divorced wife exists in the State of Nevada and since the
court below had already found that there was no conjugal
property between the testator and Magdalena C.
Bohanan, the latter can now have no longer claim to pay
portion of the estate left by the testator.

2. No. The old Civil Code, which is applicable to this case

because the testator died in 1944, expressly provides that
successional rights to personal property are to be
earned by the national law of the person whose
succession is in question. Says the law on this point:
Nevertheless, legal and testamentary successions, in
respect to the order of succession as well as to the extent
of the successional rights and the intrinsic validity of
their provisions, shall be regulated by the national law of
the person whose succession is in question, whatever
may be the nature of the property and the country in
which it is found. (par. 2, Art. 10, old Civil Code, which is
the same as par. 2 Art. 16, new Civil Code.)

In the proceedings for the probate of the will, it was

found out and it was decided that the testator was a
citizen of the State of Nevada because he had selected this
as his domicile and his permanent residence.

It is not disputed that the laws of Nevada allow a testator

to dispose of all his properties by will. It does not appear
that at time of the hearing of the project of partition, the
above-quoted provision was introduced in evidence, as it
was the executor's duty to do so. The law of Nevada,
being a foreign law can only be proved in our courts in
the form and manner provided for by our Rules, which
are as follows:
SEC. 41. Proof of public or official record. — An official
record or an entry therein, when admissible for any
purpose, may be evidenced by an official publication
thereof or by a copy tested by the officer having the
legal custody of he record, or by his deputy, and
accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the
custody. . . . (Rule 123).
The court consulted the records of the case and found
that during the hearing on the motion of Magdalena C.
Bohanan for withdrawal of P20,000 as her share, the
foreign law, especially Section 9905, Compiled Nevada
Laws was introduced in evidence by appellant's counsel.
Again said laws presented by the counsel for the executor
and admitted by the Court during the hearing of the case.

In addition, the other appellants, children of the testator,

do not dispute the above-quoted provision of the laws of
the State of Nevada. Under all the above circumstances,
the Court hold that the pertinent law of Nevada,
especially Section 9905 of the Compiled Nevada Laws of
1925, can be taken judicial notice of by us, without proof
of such law having been offered at the hearing of the
project of partition.
As in accordance with Article 10 of the old Civil Code, the
validity of testamentary dispositions are to be governed
by the national law of the testator, and as it has been
decided and it is not disputed that the national law of the
testator is that of the State of Nevada, which allows a
testator to dispose of all his property according to his
will, as in the case at bar, the order of the court approving
the project of partition made in accordance with the
testamentary provisions, must be, as it is hereby
affirmed, with costs against appellants.

PHILIPPINE TRUST CO. v. BOHANAN

Topic: Succession and Administration

Date: January 30, 1960
Labrador, J.

DOCTRINE: The validity of testamentary dispositions are

to be governed by the national law of the testator,
provided that the law must be proved in courts.

QUICK FACTS:
Decedent Bohanan was a US citizen. Nevada law allows a
testator to dispose of all his property according to his
will. His ex-wife and children oppose the project of
partition filed by the executor-petitioner, saying they
were deprived of their legitimes. According to them,
Philippine law must prevail, requiring decedent to
reserve the legitime for surviving spouse and children.

CONFLICT LAWS:
Old CC Art. 10(2), now NCC Art. 16(2)
“Nevertheless, legal and testamentary successions, in
respect to the order of succession as well as to the extent of
the successional rights to personal property are to be
earned by the national law of the person whose succession
is in question.”

Nevada Compiled Laws of 1925, Sec. 9905

“Every person over the age of 18 years, of sound mind, may,
by last will, dispose of all his or her estate, real and
personal, the same being chargeable with the payment of
the testator’s debts.”

FACTS:
Testator Bohanan was born in Nebraska and was a US
citizen. He has some properties in California. Despite his
long residence in the Philippines, his stay was found by
the CFI to be merely temporary, and he remained to be a
US citizen. The CFI declared his will as fully in accordance
with the laws of Nevada and admitted it to probate. The
Philippine Trust Co. was named executor of the will.

A project of partition was filed by Phil Trust which

distributed the residuary estate into 3: 1) ½ to his
grandson, 2) ½ to his brother and sister, to be distributed
equally, 3) legacies of P6,000 each to his son and
daughter, and 4) legacies to other people.

Respondent Magdalena Bohanan, his ex-wife, questions

the validity of the partition, claiming that she and her
children were deprived of their legitimes. (It must be
noted that Magdalena and decedent C.O. Bohanan were
married in 1909 but he divorced her in 1922. She re-
married in 1925 and this marriage was subsisting at the
time of the death of decedent.)

ISSUE 1: W/N Magdalena is entitled to legitime as

surviving spouse

HELD: NO.
There is no right to share in the inheritance in favor of a
divorced wife in the State of Nevada. There is also no
conjugal property between her and decedent.

Moreover, during the proceedings of the case, Magdalena

filed a motion to withdraw P20,000 from the estate
funds, chargeable against her share in the conjugal
property. But the Court found that there is no community
property.

ISSUE 2: W/N the children are entitled to their legitime

HELD: NO.
1) The CFI has correctly held that the law to be applied is
Nevada law, because the decedent was a US citizen.
2) The children do not dispute the provision.
3) While Sec. 9905 was not introduced as evidence in the
hearing of the project of partition, it was introduced
during the hearing of the motion to withdraw filed by
Magdalena. The Court took judicial notice of the law and
deemed it unnecessary to prove the law at the hearing of
the project of partition.

DISPOSITIVE:
As in accordance with Art. 10 of the old Civil Code, the
validity of testamentary dispositions are to be governed
by the national law of the testator, and as it has been
decided and it is not disputed that the national law of the
testator is that of the State of Nevada, already indicated
above, which allows a testator to dispose of all his
property according to his will, as in the case at bar, the
order of the court approving the project of partition
made in accordance with the testamentary provisions,
must be, as it is hereby affirmed, with costs against
appellants.

PHILSEC INVESTMENT CORPORATION, BPI-

INTERNATIONAL FINANCE LIMITED, and ATHONA
HOLDINGS, N.V., petitioners, vs. THE HONORABLE
COURT OF APPEALS, 1488, INC., DRAGO DAIC,
VENTURA O. DUCAT, PRECIOSO R. PERLAS, and
WILLIAM H. CRAIG, respondents.

US CASE – 1488 Inc. ang plaintiff

PHILSEC, AYALA, and ATHONA ang respondents
PH case - PHILSEC, AYALA, and ATHONA ang petitioner
1488 Inc, Ducat, ang private respo

FACTS:
Ventura O. Ducat obtained separate loans from Ayala
and Philsec in the sum of US$2,500,000.00, secured
by shares of stock (P14,088,995.00) owned by Ducat.
This was assumed by 1488, Inc (thru its pres. Daic)
and executed a Warranty Deed with Vendors Lien
where it sold to Athona Holdings a parcel of land in
Texas, U.S.A., for US$2.8M.

PHILSEC and AYALA extended a loan to ATHONA in the

amount of US$2.5M as initial payment of the price.
The balance of US$307,209.02 was to be paid by means of
a promissory note executed by ATHONA in favor of 1488,
Inc.
Upon receipt of the US$2.5M from 1488, Inc., PHILSEC
and AYALA released Ducat and delivered to 1488, Inc.
all the shares of stock belonging to Ducat.
ATHONA failed to pay the interest on the balance of
US$307,209.02, so the entire amount became due.
1488, Inc. sued petitioners PHILSEC, AYALA, and
ATHONA in the United States for 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.

ATHONA, in its answer, sought the recovery of damages

and excess payment allegedly made to 1488, Inc. and, in
the alternative, the rescission of sale of the property. The
judgment, which was in favor of private respondents
(1488 and Daic), was affirmed on appeal by the Circuit
Court of Appeals
While the said case is pending in the US, petitioners filed
a complaint For Sum of Money with Damages and Writ of
Preliminary Attachment against private respondents in
the RTC of Makati, reiterating their claims in the US civil
case that private respondents (1488, inc) committed
fraud by selling the property at a price 400 percent more
than its true value of US$800,000.00.
ATHONA, PHILSEC, and AYALA claimed that they were
induced to enter into the Agreement and to purchase the
Houston property. Petitioners prayed that private
respondents be ordered to return to ATHONA the
excess payment of US$1,700,000.00 and to pay damages.
 The trial court issued a writ of preliminary attachment
against the real and personal properties of private
respondents.[2]
Private respondent Ducat moved to dismiss the PH case
on the grounds of (1) litis pendentia (2) forum non
conveniens, and (3) failure of petitioners PHILSEC and
BPI-IFL to state a cause of action. Ducat contended that
the alleged overpricing of the property prejudiced only
petitioner ATHONA, as buyer
On the other hand, private respondents 1488, Inc. and its
president Daic filed a joint Special Appearance and
Qualified Motion to Dismiss, on the grounf that being in
personam, extraterritorial service of summons by
publication was ineffectual and did not vest the court
with jurisdiction over 1488, Inc. (a non-resident foreign
corp) and Daic (a NRA).
RTC: granted Ducats motion to dismiss, stating that the
evidentiary requirements of the controversy may
suitably tried before the forum of the litis pendentia in the
U.S., under the principle of forum non conveniens.
: without jurisdiction over 1488, Inc. and Daic, being a
action in personam
: lifted the writ of attachment
CA: affirmed the RTC’s decision

Issue:
1. Was the PH case barred by judgement in the US case?
2. Was the granting of the Motion to Dismiss proper on the
ground of forum non conveniens?
3. Was there jurisdiction?

Held:
4. No, because petitioners (Phil sec, et al) must be given the
opportunity to challenge the foreign decision based on
Rule 39, Sec. 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.
SEC. 50. Effect of foreign judgments. - The effect of a
judgment of a tribunal of a foreign country, having
jurisdiction to pronounce the judgment is as follows:
(b) In case of a judgment against a person, the judgment
is presumptive evidence of a right as between the parties
and their successors in interest by a subsequent title; but
the judgment may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.
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. (so dapat naay presentation of evidence and
pleadings na walay fraud, violation sa due process sa
parties and etc. sa pagdecide sa foreign case).
 In the case, 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.

5. No. It is not one of the grounds in Rule 16 of the ROC. The

propriety of dismissing a case based on this principle
requires a factual determination, hence, it is more
properly considered a matter of defense. 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 one of the defendants (Ventura Ducat) is
a Filipino, and that it was the extinguishment of the
latters debt which was the object of the transaction under
litigation.

6. Yes. Rule 14, 17 on extraterritorial service provides that

service of summons on a non-resident defendant may be
effected out of the Philippines by leave of Court where,
among others, the property of the defendant has been
attached within the Philippines.[18] It is not disputed that
the properties, real and personal, of the private
respondents had been attached prior to service of
summons under the Order of the trial court dated April
20, 1987. (na attach na man ang properties thru the writ,
so murag na convert from personam to in rem )

LAUREANO v. CA, 324 SCRA 414 (2000)

Facts: Sometimes in 1978, petitioner applied for

employment with private respondent Singapore Airlines
Limited through its Area Manager in Manila.
On September 30, 1978, private respondent offered a
contract of employment to petitioner as an expatriate B-
707 captain for an original period of two (2) years
commencing on January 21, 1978. Petitioner accepted
the offer.
On July 21, 1979, private respondent offered
petitioner an extension of his two-year contract to
five (5) years effective January 21, 1979 to January 20,
1984 subject to the terms and conditions set forth in the
contract of employment, which the latter accepted.
On September 25, 1981, plaintiff was invited to take a
course of A-300 conversion training in France at
defendant’s expense. Having successfully completed
and passed the training course, petitioner was
cleared on April 7, 1981 for solo duty as captain of
the Airbus A-300 and subsequently appointed as
captain of the A-300 fleet commanding an Airbus A-
300 in flights over Southeast Asia.
Sometime in 1982, private respondent, hit by a
recession, initiated cost-cutting measures. Seventeen
(17) expatriate captains in the Airbus fleet were found in
excess of the defendant’s requirement. Consequently,
private respondent informed its expatriate pilots
including petitioner of the situation and advised them to
take advance leaves.
Realizing that the recession would not be for a short time,
private respondent decided to terminate its excess
personnel. It did not, however, immediately terminate its
A-300 pilots. It reviewed their qualifications for possible
promotion to the B-747 fleet. Petitioner was not
qualified.
On October 5, 1982, private respondent informed
petitioner of his termination effective November 1, 1982
and that he will be paid three (3) months salary in lieu of
three months notice. Because he could not uproot his
family on such short notice, petitioner requested a three-
month notice to afford him time to exhaust all possible
avenues for reconsideration and retention. Private
respondent only gave him two (2) months notice and one
(1) month salary.
On June 29, 1983, petitioner instituted a case for illegal
dismissal before the Labor Arbiter. Private respondent
moved to dismiss on jurisdictional grounds. Before the
motion was resolved, the complaint was withdrawn.
Thereafter, petitioner filed a complaint for damages due
to illegal termination of contract of services before the
Regional Trial Court.
Private respondent moved to dismiss the complaint,
alleging that (1) the court has no jurisdiction over the
subject matter of the case; and (2) Philippine courts have
no jurisdiction over the instant case. Private respondent
also contended that the complaint is for illegal dismissal
together with a money claim arising out of and in the
course of petitioner’s employment “thus it is the Labor
Arbiter and the NLRC who have the jurisdiction pursuant
to Article 217 of the Labor Code” and that since plaintiff
was employed in Singapore, Singapore laws should apply
and courts thereat shall have jurisdiction.
The trial court denied the motion to dismiss and ruled in
favor of the petitioner.
Singapore Airlines timely appealed before the respondent
court and raised the issues of jurisdiction, validity of
termination, estoppel, and damages.
The appellate court set aside the decision of the trial
court, ruling that the action for damages due to illegal
termination had already prescribed, having been filed
more than four (4) years after the effectivity date of his
dismissal.

Issues:
1. Whether Singapore law or Philippine law applies
to the present case; and
2. Whether the present action is based on contract
which prescribes in ten (10) years under Article
1144 of the New Civil Code or one for damages
arising from an injury to the rights of the plaintiff
which prescribes in four (4) years under Article
1146 of the New Civil Code.

Ruling: The Court found that the trial court had rightly
ruled on the application of Philippine law. Private
respondent had failed to show which specific laws of
Singapore Laws apply to this case. The Philippine courts
do not take judicial notice of the laws of Singapore. The
defendant that claims the applicability of the Singapore
Laws has the burden of proof. Private respondent had
failed to do so; therefore, Philippine law should be
applied.
The Court also found that neither Article 1144 nor Article
1146 of the New Civil Code is applicable to the present
case. What is applicable is Article 291 of the Labor Code
which covers all money claims arising from employee-
employer relations. The prescriptive period for such
action is three (3) years.
It had long been settled by the Court that the ten-year
prescriptive period fixed in Article 1144 of the Civil Code
may not be invoked by petitioners, for the Civil Code is a
law of general application, while the prescriptive period
fixed in Article 291 of the Labor Code is a special law
applicable to claims arising from employer-employee
relations.
In light of Article 291, the Court agreed with the appellate
court’s conclusion that petitioner’s action for damages
due to illegal termination filed again on January 8, 1987
or more than four (4) years after the effective date of his
dismissal on November 1, 1982 has already prescribed.

WILDVALLEY SHIPPING CO., LTD. petitioner,

vs. COURT OF APPEALS and PHILIPPINE PRESIDENT
LINES INC., respondents.

 In the Orinoco River in Venezuela, it is a rule that

ships passing through it must be piloted by pilots
familiar to the river.
 Hence, in 1988 Captain Nicandro Colon, master
of Philippine Roxas, a ship owned by Philippine
President Lines, Inc. (PPL), obtained the services of
Ezzar Vasquez, a duly accredited pilot in
Venezuela to pilot the ship in the Orinoco River.
 

 Unfortunately, Philippine Roxas ran aground in the

Orinoco River while being piloted by Vasquez.

 As a result, the stranded ship blocked other vessels.

One such vessel was owned Wildvalley Shipping Co.,
Ltd. (WSC).

 The blockade caused $400k worth of losses to WSC

as its ship was not able to make its delivery.

 Subsequently, WSC sued PPL in the RTC of Manila. It

averred that PPL is liable for the losses it incurred
under the laws of Venezuela, to wit: Reglamento
General de la Ley de Pilotaje and Reglamento Para la
Zona de Pilotaje No 1 del Orinoco. T

 These two laws provide that the master and owner

of the ship is liable for the negligence of the pilot
of the ship. Vasquez was proven to be negligent when
he failed to check on certain vibrations that the
ship was experiencing while traversing the river.

ISSUE: Whether or not Philippine President Lines, Inc. is

liable under the said Venezuelan laws.
HELD: No. The two Venezuelan Laws were not duly
proven as fact before the court. Only mere
photocopies of the laws were presented as evidence.

For a copy of a foreign public document to be

admissible, the following requisites are mandatory:
(1) It must be attested by the officer having legal
custody of the records or by his deputy; and
(2) It must be accompanied by a certificate by a
secretary of the embassy or legation, consul general,
consul, vice consular or consular agent or foreign
service officer, and with the seal of his office.
And in case of unwritten foreign laws, the
[a] oral testimony of expert witnesses is admissible, as
are
[b] printed and published books of reports of decisions of
the courts of the country concerned if proved to be
commonly admitted in such courts.

Failure to prove the foreign laws gives rise to

processual presumption where the foreign law is
deemed to be the same as Philippine laws.

Under Philippine laws, PPL nor Captain Colon cannot be

held liable for the negligence of Vasquez. PPL and Colon
had shown due diligence in selecting Vasquez to pilot the
vessel. Vasquez is competent and was a duly accredited
pilot in Venezuela in good standing when he was
engaged.

FACTS: Sometime in February 1988, the Philippine

Roxas, a vessel owned by Philippine President Lines, Inc.,
private respondent herein, arrived in Puerto Ordaz,
Venezuela, to load iron ore. Upon the completion of the
loading and when the vessel was ready to leave port, Mr.
Ezzar del Valle Solarzano Vasquez, an official pilot of
Venezuela, was designated by the harbour authorities in
Puerto Ordaz to navigate the Philippine Roxas through
the Orinoco River. He was asked to pilot the said vessel
on February 11, 1988 boarding it that night at 11:00 p.m.
The master (captain) of the Philippine Roxas, Captain
Nicandro Colon, was at the bridge together with the pilot
(Vasquez), the vessel's third mate (then the officer on
watch), and a helmsman when the vessel left the port at
1:40 a.m. on February 12, 1988. Captain Colon left the
bridge when the vessel was under way.
The Philippine Roxas experienced some vibrations when
it entered the San Roque Channel at mile 172. The vessel
proceeded on its way, with the pilot assuring the watch
officer that the vibration was a result of the shallowness
of the channel.
Between mile 158 and 157, the vessel again experienced
some vibrations. These occurred at 4:12 a.m. It was then
that the watch officer called the master to the bridge.
At around 4:35 a.m., the Philippine Roxas ran aground in
the Orinoco River, thus obstructing the ingress and
egress of vessels.
As a result of the blockage, the Malandrinon, a vessel
owned by herein petitioner Wildvalley Shipping
Company, Ltd., was unable to sail out of Puerto Ordaz on
that day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a
suit with the Regional Trial Court of Manila, Branch III
against Philippine President Lines, Inc. and Pioneer
Insurance Company for damages in the form of unearned
profits, and interest thereon amounting to US
$400,000.00 plus attorney's fees, costs, and expenses of
litigation. The complaint against Pioneer Insurance
Company was dismissed in an Order dated November 7,
1988.
The trial court rendered its decision on October 16, 1991
in favor of the petitioner, Wildvalley Shipping Co.,
Ltd. The dispositive portion thereof reads as follows:
"WHEREFORE, judgment is rendered for the plaintiff,
ordering defendant Philippine President Lines, Inc. to pay
to the plaintiff the sum of U.S. $259,243.43, as actual and
compensatory damages, and U.S. $162,031.53, as
expenses incurred abroad for its foreign lawyers, plus
additional sum of U.S. $22,000.00, as and for attorney's
fees of plaintiff's local lawyer, and to pay the cost of this
suit.
"Defendant's counterclaim is dismissed for lack of merit.
Both parties appealed: the petitioner appealing the non-
award of interest with the private respondent
questioning the decision on the merits of the case.
After the requisite pleadings had been filed, the Court of
Appeals came out with its questioned decision dated June
14, 1994:
"WHEREFORE, finding defendant-appellant's appeal to be
meritorious, judgment is hereby rendered reversing the
Decision of the lower court. Plaintiff-appellant's
Complaint is dismissed and it is ordered to pay
defendant-appellant the amount of Three Hundred
Twenty-three Thousand, Forty-two Pesos and Fifty-three
Centavos (P323,042.53) as and for attorney's fees plus
cost of suit. Plaintiff-appellant's appeal is DISMISSED.
Petitioner filed a motion for reconsideration but the same
was denied for lack of merit.
ISSUES:
1. Whether or not Venezuelan Law is applicable to the
case at bar
2. Whether or not there was negligence on the part of
the respondents
HELD:
1. The petition is without merit.
It is well-settled that foreign laws do not prove
themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other
fact, they must be alleged and proved.
A distinction is to be made as to the manner of proving a
written and an unwritten law. The former falls under
Section 24, Rule 132 of the Rules of Court, as amended,
the entire provision of which is quoted hereunder. Where
the foreign law sought to be proved is "unwritten," the
oral testimony of expert witnesses is admissible, as are
printed and published books of reports of decisions of the
courts of the country concerned if proved to be
commonly admitted in such courts.
Section 24 of Rule 132 of the Rules of Court, as amended,
provides:
"Sec. 24. Proof of official record. -- The record of public
documents referred to in paragraph (a) of Section 19,
when admissible for any purpose, may be evidenced by
an official publication thereof or by a copy attested by the
officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the
custody. If the office in which the record is kept is in a
foreign country, the certificate may be made by a
secretary of the embassy or legation, consul general,
consul, vice consul, or consular agent or by any officer in
the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and
authenticated by the seal of his office." (Underscoring
supplied)
The court has interpreted Section 25 (now Section 24) to
include competent evidence like the testimony of a
witness to prove the existence of a written foreign law.
We do not dispute the competency of Capt. Oscar Leon
Monzon, the Assistant Harbor Master and Chief of Pilots
at Puerto Ordaz, Venezuela, to testify on the existence of
the Reglamento General de la Ley de Pilotaje (pilotage law
of Venezuela) and the Reglamento Para la Zona de Pilotaje
No 1 del Orinoco(rules governing the navigation of the
Orinoco River). Captain Monzon has held the
aforementioned posts for eight years. As such he is in
charge of designating the pilots for maneuvering and
navigating the Orinoco River. He is also in charge of the
documents that come into the office of the harbour
masters.
Nevertheless, we take note that these written laws were
not proven in the manner provided by Section 24 of Rule
132 of the Rules of Court.
The Reglamento General de la Ley de Pilotaje was
published in the Gaceta Oficial of the Republic of
Venezuela. A photocopy of the Gaceta Oficial was
presented in evidence as an official publication of the
Republic of Venezuela.
The Reglamento Para la Zona de Pilotaje No 1 del
Orinoco is published in a book issued by the Ministerio de
Comunicaciones of Venezuela. Only a photocopy of the
said rules was likewise presented as evidence.
Both of these documents are considered in Philippine
jurisprudence to be public documents for they are the
written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and
public officers of Venezuela.
For a copy of a foreign public document to be admissible,
the following requisites are mandatory: (1) It must be
attested by the officer having legal custody of the records
or by his deputy; and (2) It must be accompanied by a
certificate by a secretary of the embassy or legation,
consul general, consul, vice consular or consular agent or
foreign service officer, and with the seal of his office. The
latter requirement is not a mere technicality but is
intended to justify the giving of full faith and credit to the
genuineness of a document in a foreign country.
It is not enough that the Gaceta Oficial, or a book
published by the Ministerio de Comunicaciones of
Venezuela, was presented as evidence with Captain
Monzon attesting it. It is also required by Section 24 of
Rule 132 of the Rules of Court that a certificate that
Captain Monzon, who attested the documents, is the
officer who had legal custody of those records made by a
secretary of the embassy or legation, consul general,
consul, vice consul or consular agent or by any officer in
the foreign service of the Philippines stationed in
Venezuela, and authenticated by the seal of his office
accompanying the copy of the public document.No such
certificate could be found in the records of the case.
With respect to proof of written laws, parol proof is
objectionable, for the written law itself is the best
evidence. According to the weight of authority, when a
foreign statute is involved, the best evidence rule
requires that it be proved by a duly authenticated copy of
the statute.
At this juncture, we have to point out that the Venezuelan
law was not pleaded before the lower court.
A foreign law is considered to be pleaded if there is an
allegation in the pleading about the existence of the
foreign law, its import and legal consequence on the
event or transaction in issue.
We reiterate that under the rules of private international
law, a foreign law must be properly pleaded and proved
as a fact. In the absence of pleading and proof, the laws of
a foreign country, or state, will be presumed to be the
same as our own local or domestic law and this is known
as processual presumption.
Having cleared this point, we now proceed to a thorough
study of the errors assigned by the petitioner.

2. There being no contractual obligation, the private

respondent is obliged to give only the diligence required
of a good father of a family in accordance with the
provisions of Article 1173 of the New Civil Code, thus:
Art. 1173. The fault or negligence of the obligor consists
in the omission of that diligence which is required by the
nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of
articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is
to be observed in the performance, that which is expected
of a good father of a family shall be required.
The diligence of a good father of a family requires only
that diligence which an ordinary prudent man would
exercise with regard to his own property. This we have
found private respondent to have exercised when the
vessel sailed only after the "main engine, machineries,
and other auxiliaries" were checked and found to be in
good running condition; when the master left a
competent officer, the officer on watch on the bridge with
a pilot who is experienced in navigating the Orinoco
River; when the master ordered the inspection of the
vessel's double bottom tanks when the vibrations
occurred anew.
The Philippine rules on pilotage, embodied in Philippine
Ports Authority Administrative Order No. 03-85,
otherwise known as the Rules and Regulations Governing
Pilotage Services, the Conduct of Pilots and Pilotage Fees
in Philippine Ports enunciate the duties and
responsibilities of a master of a vessel and its pilot,
among other things.
The pertinent provisions of the said administrative order
governing these persons are quoted hereunder:
Sec. 11. Control of Vessels and Liability for Damage. -- On
compulsory pilotage grounds, the Harbor Pilot providing
the service to a vessel shall be responsible for the damage
caused to a vessel or to life and property at ports due to
his negligence or fault. He can be absolved from liability if
the accident is caused by force majeure or natural
calamities provided he has exercised prudence and extra
diligence to prevent or minimize the damage.
The Master shall retain overall command of the vessel
even on pilotage grounds whereby he can countermand
or overrule the order or command of the Harbor Pilot on
board. In such event, any damage caused to a vessel or to
life and property at ports by reason of the fault or
negligence of the Master shall be the responsibility and
liability of the registered owner of the vessel concerned
without prejudice to recourse against said Master.
Such liability of the owner or Master of the vessel or its
pilots shall be determined by competent authority in
appropriate proceedings in the light of the facts and
circumstances of each particular case.
xxx
Sec. 32. Duties and Responsibilities of the Pilots or Pilots
Association. -- The duties and responsibilities of the
Harbor Pilot shall be as follows:
xxx
f) A pilot shall be held responsible for the direction of a
vessel from the time he assumes his work as a pilot
thereof until he leaves it anchored or berthed safely;
Provided, however, that his responsibility shall cease at
the moment the Master neglects or refuses to carry out
his order."
The Code of Commerce likewise provides for the
obligations expected of a captain of a vessel, to wit:
Art. 612. The following obligations shall be inherent in
the office of captain:
xxx
"7. To be on deck on reaching land and to take command
on entering and leaving ports, canals, roadsteads, and
rivers, unless there is a pilot on board discharging his
duties. x x x.
The law is very explicit. The master remains the overall
commander of the vessel even when there is a pilot on
board. He remains in control of the ship as he can still
perform the duties conferred upon him by law despite
the presence of a pilot who is temporarily in charge of the
vessel. It is not required of him to be on the bridge while
the vessel is being navigated by a pilot.
However, Section 8 of PPA Administrative Order No. 03-
85, provides:
Sec. 8. Compulsory Pilotage Service - For entering a harbor
and anchoring thereat, or passing through rivers or
straits within a pilotage district, as well as docking and
undocking at any pier/wharf, or shifting from one berth
or another, every vessel engaged in coastwise and foreign
trade shall be under compulsory pilotage.
xxx.
The Orinoco River being a compulsory pilotage channel
necessitated the engaging of a pilot who was presumed to
be knowledgeable of every shoal, bank, deep and shallow
ends of the river. In his deposition, pilot Ezzar Solarzano
Vasquez testified that he is an official pilot in the Harbour
at Port Ordaz, Venezuela, and that he had been a pilot for
twelve (12) years. He also had experience in navigating
the waters of the Orinoco River.
The law does provide that the master can countermand
or overrule the order or command of the harbor pilot on
board. The master of the Philippine Roxas deemed it best
not to order him (the pilot) to stop the vessel, mayhap,
because the latter had assured him that they were
navigating normally before the grounding of the vessel.
Based on these declarations, it comes as no surprise to us
that the master chose not to regain control of the
ship. Admitting his limited knowledge of the Orinoco
River, Captain Colon relied on the knowledge and
experience of pilot Vasquez to guide the vessel safely.
Licensed pilots, enjoying the emoluments of compulsory
pilotage, are in a different class from ordinary employees,
for they assume to have a skill and a knowledge of
navigation in the particular waters over which their
licenses extend superior to that of the master; pilots are
bound to use due diligence and reasonable care and
skill. A pilot's ordinary skill is in proportion to the pilot's
responsibilities, and implies a knowledge and observance
of the usual rules of navigation, acquaintance with the
waters piloted in their ordinary condition, and nautical
skill in avoiding all known obstructions. The character of
the skill and knowledge required of a pilot in charge of a
vessel on the rivers of a country is very different from
that which enables a navigator to carry a vessel safely in
the ocean. On the ocean, a knowledge of the rules of
navigation, with charts that disclose the places of hidden
rocks, dangerous shores, or other dangers of the way, are
the main elements of a pilot's knowledge and skill. But
the pilot of a river vessel, like the harbor pilot, is selected
for the individual's personal knowledge of the
topography through which the vessel is steered."[
We find that the grounding of the vessel is attributable to
the pilot. When the vibrations were first felt the watch
officer asked him what was going on, and pilot Vasquez
replied that "(they) were in the middle of the channel and
that the vibration was as (sic) a result of the shallowness
of the channel."
Pilot Ezzar Solarzano Vasquez was assigned to pilot the
vessel Philippine Roxas as well as other vessels on the
Orinoco River due to his knowledge of the same. In his
experience as a pilot, he should have been aware of the
portions which are shallow and which are not. His failure
to determine the depth of the said river and his decision
to plod on his set course, in all probability, caused
damage to the vessel. Thus, we hold him as negligent and
liable for its grounding.
In the case of Homer Ramsdell Transportation
Company vs. La Compagnie Generale Transatlantique,
182 U.S. 406, it was held that:
x x x The master of a ship, and the owner also, is liable for
any injury done by the negligence of the crew employed
in the ship. The same doctrine will apply to the case of a
pilot employed by the master or owner, by whose
negligence any injury happens to a third person or his
property: as, for example, by a collision with another
ship, occasioned by his negligence. And it will make no
difference in the case that the pilot, if any is employed, is
required to be a licensed pilot; provided the master is at
liberty to take a pilot, or not, at his pleasure, for in such a
case the master acts voluntarily, although he is
necessarily required to select from a particular class. On
the other hand, if it is compulsive upon the master to
take a pilot, and, a fortiori, if he is bound to do so
under penalty, then, and in such case, neither he nor
the owner will be liable for injuries occasioned by the
negligence of the pilot; for in such a case the pilot
cannot be deemed properly the servant of the master or
the owner, but is forced upon them, and the maxim Qui
facit per alium facit per se does not apply." (Underscoring
supplied)
Anent the river passage plan, we find that, while there
was none, the voyage has been sufficiently planned and
monitored as shown by the following actions undertaken
by the pilot, Ezzar Solarzano Vasquez.
We, therefore, do not find the absence of a river passage
plan to be the cause for the grounding of the vessel.
The doctrine of res ipsa loquitur does not apply to the
case at bar because the circumstances surrounding the
injury do not clearly indicate negligence on the part of the
private respondent. For the said doctrine to apply, the
following conditions must be met: (1) the accident was of
such character as to warrant an inference that it would
not have happened except for defendant's negligence; (2)
the accident must have been caused by an agency or
instrumentality within the exclusive management or
control of the person charged with the negligence
complained of; and (3) the accident must not have been
due to any voluntary action or contribution on the part of
the person injured.[
As has already been held above, there was a temporary
shift of control over the ship from the master of the
vessel to the pilot on a compulsory pilotage
channel. Thus, two of the requisites necessary for the
doctrine to apply, i.e., negligence and control, to render
the respondent liable, are absent.
As to the claim that the ship was unseaworthy, we hold
that it is not.
The Lloyds Register of Shipping confirmed the vessels
seaworthiness in a Confirmation of Class issued on
February 16, 1988 by finding that "the above named ship
(Philippine Roxas) maintained the class "+100A1
Strengthened for Ore Cargoes, Nos. 2 and 8 Holds may be
empty (CC) and +LMC" from 31/12/87 up until the time
of casualty on or about 12/2/88." The same would not
have been issued had not the vessel been built according
to the standards set by Lloyd's.
Eduardo P. Mata, Second Engineer of the Philippine Roxas
submitted an accident report wherein he stated that on
February 11, 1988, he checked and prepared the main
engine, machineries and all other auxiliaries and found
them all to be in good running condition and ready for
maneuvering. That same day the main engine, bridge and
engine telegraph and steering gear motor were also
tested. Engineer Mata also prepared the fuel for
consumption for maneuvering and checked the engine
generators.
HASEGAWA V KITAMURA

FACTS: Nippon Engineering Consultants (Nippon), a

Japanese consultancy firm providing technical and
management support in the infrastructure projects
national permanently residing in the Philippines.
The agreement provides that Kitamaru was to extend
professional services to Nippon for a year.

Nippon assigned Kitamaru to work as the project

manager of the Southern Tagalog Access Road (STAR)
project.

When the STAR project was near completion, DPWH

engaged the consultancy services of Nippon, this time for
the detailed engineering & construction supervision of
the Bongabon-Baler Road Improvement (BBRI)
Project.

Kitamaru was named as the project manger in the

contract.

Hasegawa, Nippon’s general manager for its International

Division, informed Kitamaru that the company had no
more intention of automatically renewing his ICA. His
services would be engaged by the company only up to the
substantial completion of the STAR Project.
Kitamaru demanded that he be assigned to the BBRI
project. Nippon insisted that Kitamaru’s contract was for
a fixed term that had expired. Kitamaru then filed for
specific performance & damages w/ the RTC of Lipa City.
Nippon filed a MTD.

Nippon’s contention: The ICA had been perfected in Japan

& executed by & between Japanese nationals. Thus, the
RTC of Lipa City has no jurisdiction. The claim for
improper pre-termination of Kitamaru’s ICA could only
be heard & ventilated in the proper courts of Japan
following the principles of lex loci celebrationis & lex
contractus.
The RTC denied the motion to dismiss. The CA ruled hat
the principle of lex loci celebrationis was not applicable
to the case, because nowhere in the pleadings was the
validity of the written agreement put in issue. It held that
the RTC was correct in applying the principle of lex loci
solutionis.
ISSUE:
Whether or not the subject matter jurisdiction of
Philippine courts in civil cases for specific performance &
damages involving contracts executed outside the
country by foreign nationals may be assailed on the
principles of lex loci celebrationis, lex contractus, “the
state of the most significant relationship rule,” or forum
non conveniens.
HELD:
NO. In the judicial resolution of conflicts problems, 3
consecutive phases are involved: jurisdiction, choice of
law, and recognition and enforcement of judgments.
Jurisdiction & choice of law are 2 distinct concepts.
Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the
further question whether the application of a substantive
law w/c will determine the merits of the case is fair to
both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to
apply forum law. While jurisdiction and the choice of the
lex fori will often coincide, the “minimum contacts” for
one do not always provide the necessary “significant
contacts” for the other. The question of whether the law
of a state can be applied to a transaction is different from
the question of whether the courts of that state have
jurisdiction to enter a judgment.
In this case, only the 1st phase is at issue—jurisdiction.
Jurisdiction, however, has various aspects. For a court to
validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff/petitioner, over
the defendant/respondent, over the subject matter, over
the issues of the case and, in cases involving property,
over the res or the thing w/c is the subject of the
litigation. In assailing the trial court's jurisdiction herein,
Nippon is actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial
proceeding is conferred by the sovereign authority w/c
establishes and organizes the court. It is given only by
law and in the manner prescribed by law. It is further
determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein. To succeed in its
motion for the dismissal of an action for lack of
jurisdiction over the subject matter of the claim, the
movant must show that the court or tribunal cannot act
on the matter submitted to it because no law grants it the
power to adjudicate the claims.
In the instant case, Nippon, in its MTD, does not claim
that the RTC is not properly vested by law w/ jurisdiction
to hear the subject controversy for a civil case for specific
performance & damages is one not capable of pecuniary
estimation & is properly cognizable by the RTC of Lipa
City. What they rather raise as grounds to question
subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the “state of the most
significant relationship rule.” The Court finds the
invocation of these grounds unsound.
Lex loci celebrationis relates to the “law of the place of the
ceremony” or the law of the place where a contract is
made. The doctrine of lex contractus or lex loci contractus
means the “law of the place where a contract is executed
or to be performed.” It controls the nature, construction,
and validity of the contract and it may pertain to the law
voluntarily agreed upon by the parties or the law
intended by them either expressly or implicitly. Under
the “state of the most significant relationship rule,” to
ascertain what state law to apply to a dispute, the court
should determine which state has the most substantial
connection to the occurrence and the parties. In a case
involving a contract, the court should consider where the
contract was made, was negotiated, was to be performed,
and the domicile, place of business, or place of
incorporation of the parties. This rule takes into account
several contacts and evaluates them according to their
relative importance with respect to the particular issue to
be resolved.
Since these 3 principles in conflict of laws make reference
to the law applicable to a dispute, they are rules proper
for the 2nd phase, the choice of law. They determine
which state's law is to be applied in resolving the
substantive issues of a conflicts problem. Necessarily, as
the only issue in this case is that of jurisdiction, choice-of-
law rules are not only inapplicable but also not yet called
for.
Further, Nippon’s premature invocation of choice-of-law
rules is exposed by the fact that they have not yet pointed
out any conflict between the laws of Japan and ours.
Before determining which law should apply, 1st there
should exist a conflict of laws situation requiring the
application of the conflict of laws rules. Also, when the
law of a foreign country is invoked to provide the proper
rules for the solution of a case, the existence of such law
must be pleaded and proved.
It should be noted that when a conflicts case, one
involving a foreign element, is brought before a court or
administrative agency, there are 3 alternatives open to
the latter in disposing of it: (1) dismiss the case, either
because of lack of jurisdiction or refusal to assume
jurisdiction over the case; (2) assume jurisdiction over
the case and apply the internal law of the forum; or (3)
assume jurisdiction over the case and take into account
or apply the law of some other State or States. The court’s
power to hear cases and controversies is derived from
the Constitution and the laws. While it may choose to
recognize laws of foreign nations, the court is not limited
by foreign sovereign law short of treaties or other formal
agreements, even in matters regarding rights provided by
foreign sovereigns.
Neither can the other ground raised, forum non
conveniens, be used to deprive the RTC of its jurisdiction.
1st, it is not a proper basis for a motion to dismiss
because Sec. 1, Rule 16 of the Rules of Court does not
include it as a ground. 2nd, whether a suit should be
entertained or dismissed on the basis of the said doctrine
depends largely upon the facts of the particular case and
is addressed to the sound discretion of the RTC. In this
case, the RTC decided to assume jurisdiction. 3rd, the
propriety of dismissing a case based on this principle
requires a factual determination; hence, this conflicts
principle is more properly considered a matter of
defense.
III. CHOICE OF LAW

TAYAG V BENGUET CONSOLIDATED

FACTS:

1. Idonah Slade Perkins, an American citizen who

died in New York City, left among others, two two
stock certificates covering 33,002 shares of
appellant, issued by Benguet Consolidated, a
corporation domiciled in the Philippines.

2. The certificates are in the possession of the County

Trust Company of New York, which is the
domiciliary administrator of the estate of the
deceased.

3. Tayag, the ancillary administrator of Perkins’ estate in

the Philippines, now wants to take possession of these
stock certificates.

4. CFI ordered the produce and deposit the stock

certificates to Tayag, which County Trust Company of
 New York, the domiciliary administrator, refused to
do so.

5. Thus, the probate court of the Philippines rendered an

order declaring the stock certificates as lost and
ordering Benguet Consolidated to issue new stock
certificates representing Perkins’ shares. Benguet
Consolidated appealed the order, arguing that the
stock certificates are not lost as they are in existence
and currently in the possession of County Trust
Company of New York, hence there was a failure to
observe certain requirements of its by-laws before
new stock certificates could be issued.

ISSUE: Whether or not the order of the lower court is

proper

HELD: The appeal lacks merit.

Tayag, as ancillary administrator, has the power to

gain control and possession of all assets of the
decedent within the jurisdiction of the Philippines

It is to be noted that the scope of the power of the

ancillary administrator was, in an earlier case, set forth
by Justice Malcolm. Thus: "It is often necessary to have
more than one administration of an estate.
When a person dies intestate owning property in the
country of his domicile as well as in a foreign country,
administration is had in both countries. That which is
granted in the jurisdiction of decedent's last domicile is
termed the principal administration, while any other
administration is termed the ancillary administration.

The reason for the latter is because a grant of

administration does not ex proprio vigore have any
effect beyond the limits of the country in which it is
granted. Hence, an administrator appointed in a
foreign state has no authority in the [Philippines].

The ancillary administration is proper, whenever a

person dies, leaving in a country other than that of his
last domicile, property to be administered in the nature
of assets of the deceased liable for his individual debts or
to be distributed among his heirs."

Probate court has authority to issue the order

enforcing the ancillary administrator’s right to the
stock certificates when the actual situs of the shares
of stocks is in the Philippines.

It would follow then that the authority of the probate

court to require that ancillary administrator's right to
"the stock certificates covering the 33,002 shares ...
standing in her name in the books of [appellant] Benguet
Consolidated, Inc...." be respected is equally beyond
question.

For appellant is a Philippine corporation owing full

allegiance and subject to the unrestricted jurisdiction of
local courts. Its shares of stock cannot therefore be
considered in any wise as immune from lawful court
orders.

The Court Order shall prevail over the Corporation

by-laws

In the first place, there is no such occasion to apply such

by-law.

It is admitted that the foreign domiciliary administrator

did not appeal from the order now in question.

Moreover, there is likewise the express admission of

appellant that as far as it is concerned, "it is immaterial ...
who is entitled to the possession of the stock certificates
..." Even if such were not the case, it would be a legal
absurdity to impart to such a provision conclusiveness
and finality. Assuming that a contrariety exists between
the above by-law and the command of a court decree, the
latter is to be followed.

It is understandable, as Cardozo pointed out, that the

Constitution overrides a statute, to which, however, the
judiciary must yield deference, when appropriately
invoked and deemed applicable. It would be most highly
unorthodox, however, if a corporate by-law would be
accorded such a high estate in the jural order that a court
must not only take note of it but yield to its alleged
controlling force.

UNITED AIRLINES, INC., Petitioner vs. COURT OF

APPEALS, ANICETO FONTANILLA, in his personal
capacity and in behalf of his minor son MYCHAL
ANDREW FONTANILLA, Respondents, G.R. No.
124110, April 20, 2001.
FACTS:
Aniceto Fontanilla purchased from petitioner United
Airlines, through the Philippine Travel Bureau in
Manila three (3) "Visit the U.S.A." tickets for himself, his
wife and his minor son Mychal.
The Fontanillas proceeded to the United States as
planned, where they used the first coupon from San
Francisco to Washington.
On April 24, 1989, Aniceto Fontanilla bought two (2)
additional coupons each for himself, his wife and his
son from petitioner at its office in Washington
Dulles Airport. After paying the penalty for rewriting
their tickets, the Fontanillas were issued tickets with
corresponding boarding passes with the words
"CHECK-IN REQUIRED," for United Airlines Flight No.
1108, set to leave from Los Angeles to San Francisco
at 10:30 a.m. on May 5, 1989.

The cause of the non-boarding of the Fontanillas

on United Airlines Flight No. 1108 makes up the
bone of contention of this controversy.

The incident prompted the Fontanillas to file Civil

Case No. 89-4268 for damages before the Regional
Trial Court of Makati.

After trial on the merits, the trial court rendered a

decision, dismissing the complaint for there is a
failure to comply with the check-in requirement.

The counterclaim is likewise dismissed as it appears

that plaintiffs were not actuated by legal malice when
they filed the instant complaint.

On appeal, the Court of Appeals ruled in favor of the

Fontanillas. The appellate court found that there was
an admission on the part of United Airlines that the
Fontanillas did in fact observe the check-in
requirement. It ruled further that even assuming
there was a failure to observe the check-in
requirement, United Airlines failed to comply with the
procedure laid down in cases where a passenger is
denied boarding. The appellate court likewise gave
 credence to the claim of Aniceto Fontanilla that the
employees of United Airlines were discourteous and
arbitrary and, worse, discriminatory. In light of such
treatment, the Fontanillas were entitled to moral
damages.

ISSUE: Whether or not the CA is correct in relying the

Code of Federal Regulation Part on Oversales (laws of
USA).
HELD: No. Notably, the appellate court relied on the
Code of Federal Regulation Part on Oversales which
states:
250.6 Exceptions to eligibility for denied boarding
compensation.
A passenger denied board involuntarily from an oversold
flight shall not be eligible for denied board compensation
if:
a. The passenger does not comply with the
carrier’s contract of carriage or tariff
provisions regarding ticketing,
reconfirmation, check-in, and
acceptability for transformation.
The appellate court, erred in applying the laws of the
United States as, in the case at bar, Philippine law is the
applicable law. Although, the contract of carriage was
to be performed in the United States, the tickets were
purchased through petitioner’s agent in Manila. It is
true that the tickets were "rewritten" in Washington, D.C.
however, such fact did not change the nature of the
original contract of carriage entered into by the parties in
Manila.
In the case of Zalanea vs. Court of Appeals, this Court
applied the doctrine of lex loci contractus. According to
the doctrine, as a general rule, the law of the place
where a contract is made or entered into governs
with respect to its nature and validity, obligation and
interpretation. This has been said to be the rule even
though the place where the contract was made is
different from the place where it is to be performed, and
particularly so, if the place of the making and the place
of performance are the same. Hence, the court should
apply the law of the place where the airline ticket
was issued, when the passengers are residents and
nationals of the forum and the ticket is issued in such
State by the defendant airline.
The law of the forum on the subject matter is Economic
Regulations No. 7 as amended by Boarding Priority and
Denied Board Compensation of the Civil Aeronautics
Board which provides that the check-in requirement be
complied with before a passenger may claim against a
carrier for being denied boarding:
Sec. 5. Amount of Denied Boarding Compensation Subject
to the exceptions provided hereinafter under Section 6,
carriers shall pay to passengers holding confirmed
reserved space and who have presented themselves at
the proper place and time and fully complied with the
carrier’s check-in and reconfirmation procedures and
who are acceptable for carriage under the Carrier’s tariff
but who have been denied boarding for lack of space, a
compensation at the rate of: xxx
Therefore, since there is failure to comply with the check-
in requirement, their claims are defeated.
PAKISTAN INTERNATIONAL AIRLINES CORP. v. OPLE
(1990)
Facts: On December 2, 1978, petitioner Pakistan
International Airlines Corporation (“PIA”), a foreign
corporation licensed to do business in the Philippines,
executed in Manila two (2) separate contracts of
employment, one with private respondent Farrales and
the other with private respondent Mamasig.
Paragraphs 5, 6, and 10 of these contracts are
significant to this case.
a. Paragraph 5 provides for the duration of
employment, a period of three (3) years but can
be extended by the mutual consent of the parties.

a. Paragraph 6 provides for termination. PIA

reserves the right to terminate the agreement at
any time by giving the employee notice in
writing in advance one month before the
intended termination or in lieu thereof, by
 paying the employee wages equivalent to one
month’s salary.

b. Paragraph 10 provides that the applicable law is

the laws of Pakistan and that only the Courts of
Karachi, Pakistan shall have jurisdiction to
consider any matter arising out of or under this
agreement.

On August 2, 1980, roughly one (1) year and four (4)

months prior to the expiration of the contracts of
employment, PIA sent separate letters to private
respondents advising both that their services as
flight stewardesses would be terminated effective
September 1, 1980, conformably to clause 6 (b) of
the employment agreement.

Subsequently, private respondents jointly instituted a

complaint for illegal dismissal and non-payment of
company benefits and bonuses against PIA with the
then Ministry of Labor and Employment (“MOLE”).
After several failed attempts at conciliation, the MOLE
hearing officer ordered the parties to submit their
position papers and evidence supporting their
respective positions.

The PIA submitted its position paper, but no evidence.

 In an Order dated January 22, 1981, the Regional
Director ordered the reinstatement of private
respondents. The Order stated that private
respondents had attained the status of regular
employees after they had rendered more than a year
of continue service; that the stipulation limiting the
period of the employment contract to three (3) years
was null and void as violative of the provisions of the
Labor Code and its implementing rules and
regulations on regular and casual employment.

On appeal, the Deputy Minister of MOLE adopted the

findings of fact and conclusions of the Regional
Director and affirmed the latter’s order.

Issues: Is the contract of employment governed by the

provisions therein or the general provisions of the Labor
Code?

Ruling: Generally, a contract freely entered into should

be respected since a contract is the law between the
parties.

The principle of party autonomy in contracts is not,

however, an absolute principle. The rule in Article 1306
of the Civil Code is that the contracting parties may
establish such stipulations as they may deem convenient,
“provided they are not contrary to law, morals, good
customs, public order or public policy.” Thus, counter-
balancing the principle of autonomy of contracting
parties is the equally general rule that provisions of
applicable law, especially provisions relating to matters
affected with public policy, are deemed written into the
contract.

The law relating to labor and employment is clearly such

an area and parties are not at liberty to insulate
themselves and their relationships from the impact of
labor laws and regulations by simply contracting with
each other.
Both the Labor Arbiter and the Deputy Minister, MOLE,
held that paragraph 5 of the employment contract was
inconsistent with Articles 280 and 281 of the Labor Code
as they existed at the time the contract of employment
was entered into, and refused to give effect to said
paragraph 5.
Examining the provisions of paragraphs 5 and 6, the
Court considered that those provisions must be read
together. When so read, the fixed period of three (3)
years specified in paragraph 5 will be seen to have been
effectively neutralized by the provisions of paragraph 6
of that agreement. Paragraph 6 in effect took back from
the employee the fixed three (3)-year period granted by
paragraph 5 by rendering such period in effect a
facultative one at the option of the employer FIA. Because
the net effect of paragraphs 5 and 6 of the agreement
here involved is to render the employment of private
respondents basically employment at the pleasure of
petitioner PIA, the Court concluded that paragraphs 5
and 6 were intended to prevent any security of tenure
from accruing in favor of private respondents even
during the limited period of three (3) years.
The first clause of paragraph 10 cannot be invoked to
prevent the application of Philippine labor laws and
regulations to the subject matter of this case. The
relationship is much affected with public interest and
that the otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the parties
agreeing upon some other law to govern their
relationship. Neither may petitioner invoke the second
clause of paragraph 10, specifying the Karachi courts as
the sole venue for the settlement of dispute between the
parties. There are multiple and substantive contacts
between Philippine law and Philippine courts, and the
relationship between the parties.
The contract was not only executed in the
Philippines, it was also performed here, at least
partially. Private respondents are Philippine citizens
and respondents, while petitioner, although a foreign
corporation, is licensed to do business in the
Philippines. The above contacts point to the
Philippine courts and administrative agencies as a
proper forum for the resolution of contractual
disputes between the parties.
In any event, the petitioner did not undertake to plead
and prove the contents of Pakistan law on the matter.
It must therefore be presumed that the applicable
provisions of the law of Pakistan are the same as the
applicable provisions of Philippine law.

HUTTINGHON V ATTRILL

FACTS
1. Huntington is a resident of New York who filed a
case against Equitable Gaslight Company, a
corporation of Maryland, and against Attrill, his wife,
and three daughters, which are residents of Canada.
Huntington’s prayer was to set aside a transfer of stock
which was acquired through Atrill’s through fraud to his
creditors. Further, Huntington prayed that such stock will
be paid as recovery for Atrill’s liability as a director in a
New York Corporation under the statute of New York.

2. The appellant, in June, 1880, became a creditor for

money lent to the Rockaway Beach Improvement
Company, Limited, which carried on business in the
State of New York, being incorporated pursuant to
Chapter 611 of the State laws of 1875.

3. Sect. 21 of the Act provides that: “If any certificate or

report made, or public notice given, by the officers of any
such corporation, shall be false in any material
representation, all the officers who shall have signed the
same shall be jointly and severally liable for all the debts
of the corporation contracted while they are officers
thereof.”

4. The respondent was, in June, 1880, a director, and in

that capacity an officer of the company within the
meaning of the statute. On the 30th of that month he,
along with other officers of the company, signed and
verified on oath, as prescribed by sect. 37, a certificate
setting forth that the whole capital stock had, at its date,
been paid up in cash.

5. In such oath, Attrill, as a director of the company,

signed and made oath to, and caused to be recorded, as
required by the law of New York, a certificate, which he
knew to be false, stating that the whole of the capital
stock of the corporation had been paid in, whereas in
truth no part had been paid in, and by making such false
certificate became liable, by the law of New York, for all
the debts of the company contracted before January 29,
1881, including its debt to the plaintiff.

6. On March 8, 1882, by proceedings in a court of New

York, the corporation was declared to be insolvent,
and to have been so since July, 1880, and was
dissolved. A duly exemplified copy of the record of that
judgment was annexed to and made part of the bill.
7. The complaint also alleged that "at the time of its
dissolution, as aforesaid, the said company was indebted
to the plaintiff and to other creditors to an amount far in
excess of its assets; that by the law of the State of New
York, all the stockholders of the company were liable to
pay all its debts, each to the amount of the stock held by
him, and the defendant, Henry Y. Attrill, was liable at said
date, and on April 14, 1882, as such stockholder, to the
amount of $340,000, the amount of stock held by him,
and was on both said dates also severally and directly
liable as a director, having signed the false report above
mentioned, for all the debts of said company contracted
between February 26, 1880, and January 29, 1881, which
debts aggregate more than the whole value of the
property owned by said Attrill. "

8. The complaint further alleged that Attrill was in March,

1882, and had ever since remained, individually liable in
a large amount over and above the debts for which he
was liable as a stockholder and director in the company,
and that he was insolvent, and had secreted and
concealed all his property for the purpose of defrauding
his creditors.

9. The complaint then alleged that in April, 1882, Attrill

acquired a large amount of stock in the Equitable Gaslight
Company of Baltimore, and forthwith transferred into his
own name, as trustee for his wife, 1,000 shares of such
stock, and as trustee for each of his three daughters, 250
shares of the same, without valuable consideration, and
with intent to delay, hinder, and defraud his creditors,
and especially with the intent to delay, hinder, and
defraud this plaintiff of his lawful suits, damages, debts,
and demands against Attrill arising out of the cause of
action on which the aforesaid judgment was recovered
and out of the plaintiff's claim against him as a
stockholder; that the plaintiff in June, 1880, and ever
since was domiciled and resident in the State of New
York, and that from February, 1880, to December 6, 1884,
Attrill was domiciled and resident in that state, and that
his transfers of stock in the gas company were made in
the City of New York, where the principal office of the
company then was and where all its transfers of stock
were made, and that those transfers were, by the laws of
New York as well as by those of Maryland, fraudulent and
void as against the creditors of Attrill, including the
creditors of the Rockaway Company, and were fraudulent
and void as against the plaintiff.

10. The complaint further, by distinct allegations, averred

that those transfers, unless set aside and annulled by a
court of equity, would deprive the plaintiff of all his rights
and interests of every sort therein to which he was
entitled as a creditor of Attrill at the time when those
fraudulent transfers were made, and "that the said
fraudulent transfers were wholly without legal
consideration, were fraudulent and void, and should be
set aside by a court of equity."
11. The complaint prayed that the transfer of shares in
the gas company be declared fraudulent and void and
executed for the purpose of defrauding the plaintiff out of
his claim as existing creditor; that the certificates of those
shares in the name of Attrill as trustee be ordered to be
brought into court and cancelled, and that the shares "be
decreed to be subject to the claim of this plaintiff on the
judgment aforesaid," and to be sold by a trustee
appointed by the court, and new certificates issued by the
gas company to the purchasers, and for further relief.

12. One of the daughters demurred to the bill (complaint)

because it showed that the plaintiff's claim was for the
recovery of a penalty against Attrill arising under a
statute of the State of New York, and because it did not
state a case which entitled the plaintiff to any relief in a
court of equity in the State of Maryland.

13. By a stipulation of counsel filed in the cause, it was

agreed that for the purposes of the demurrer, the bill
should be treated as embodying the New York statute of
June 21, 1875, and that the Rockaway Beach
Improvement Company, Limited, was incorporated under
the provisions of that statute.

14. Having failed to recover payment, the appellant, in

September, 1886, brought an action upon his decree in
the Common Pleas Division of the High Court of Justice
for the Province of Ontario, where the respondent
resided. The only plea stated in defence was to the effect
that the judgment sued on was for a penalty inflicted by
the municipal law of New York; and that the action being
one of a penal character ought not to be entertained by
the Courts of a foreign State.

Issue: Whether or not the Canadian Courts have

jurisdiction to hear an appeal of a decision made by the
New York courts pertaining to penal law?

Held: The courts of Ontario [Canada] were bound to pay

absolute deference to any interpretation which might
have been put upon the statute of 1875 in the State of
New York. They had to construe and apply an
international rule, which was a matter of law entirely
within the cognizance of the foreign court whose
jurisdiction was invoked. Judicial decisions in the state
where the cause of action arose were not precedents
which must be followed, although the reasoning upon
which they were founded must always receive careful
consideration and might be conclusive. The court
appealed to must determine for itself, in the first place,
[1] the substance of the right sought to be enforced; and,
in the second place, [2] whether its enforcement would,
either directly or indirectly, involve the execution of the
penal law of another state. Were any other principle to
guide its decision, a court might find itself in the position
of giving effect in one case, and denying effect in another,
to suits of the same character, in consequence of the
causes of action having arisen in different countries, or in
the predicament of being constrained to give effect to
laws which were, in its own judgment, strictly penal.

CONFLICTS OF LAW PRINCIPLE- The rule has its

foundation in the well-recognised principle that crimes,
including in that term all breaches of public law
punishable by pecuniary mulct or otherwise, at the
instance of the State Government, or of some one
representing the public, are local in this sense, that they
are only cognizable and punishable in the country
where they were committed. Accordingly no
proceeding, even in the shape of a civil suit, which has for
its object the enforcement by the State, whether directly
or indirectly, of punishment imposed for such breaches
by the lex fori, ought to be admitted in the Courts of any
other country.

Chief Justice Marshall in the fewest possible words: "The

courts of no country execute the penal laws of
another."

Penal laws, strictly and properly, are those imposing

punishment for an offense committed against the state,
and which, by the English and American constitutions,
the executive of the state has the power to pardon.
Statutes giving a private action against the wrongdoer are
sometimes spoken of as penal in their nature, but in such
cases it has been pointed out that neither the liability
imposed nor the remedy given is strictly penal.

The rule that the courts of no country execute the penal

laws of another applies not only to prosecutions and
sentences for crimes and misdemeanors, but to all suits
in favor of the state for the recovery of pecuniary
penalties for any violation of statutes for the protection of
its revenue, or other municipal laws, and to all judgments
for such penalties.

BELLIS V BELLIS

FACTS: Amos Bellis, born in Texas, was a citizen of the

State of Texas and of the United States. He had 5
legitimate children with his wife, Mary Mallen, whom he
had divorced, 3 legitimate children with his 2nd wife,
Violet Kennedy and finally, 3 illegitimate children.

Prior to his death, Amos Bellis executed a will in the

Philippines in which his distributable estate should be
divided in trust in the following order and manner:

a. $240,000 to his 1st wife Mary Mallen;

b. P120,000 to his 3 illegitimate children at P40,000 each;
c. The remainder shall go to his surviving children by his
1st and 2nd wives, in equal shares.
Subsequently, Amos Bellis died a resident of San Antonio,
Texas, USA. His will was admitted to probate in the
Philippines. The People’s Bank and Trust Company, an
executor of the will, paid the entire bequest therein.

Preparatory to closing its administration, the executor

submitted and filed its “Executor’s Final Account, Report
of Administration and Project of Partition” where it
reported, inter alia, the satisfaction of the legacy of Mary
Mallen by the shares of stock amounting to $240,000
delivered to her, and the legacies of the 3 illegitimate
children in the amount of P40,000 each or a total of
P120,000. In the project partition, the executor divided
the residuary estate into 7 equal portions for the benefit
of the testator’s 7 legitimate children by his 1st and 2nd
marriages.

Among the 3 illegitimate children, Mari Cristina and

Miriam Palma Bellis filed their respective opposition to
the project partition on the ground that they were
deprived of their legitimates as illegitimate children.

The lower court denied their respective motions for

reconsideration.

ISSUE: Whether Texan Law of Philippine Law must apply.

RULING: It is not disputed that the decedent was both a

national of Texas and a domicile thereof at the time of his
death. So that even assuming Texan has a conflict of law
rule providing that the same would not result in a
reference back (renvoi) to Philippine Law, but would still
refer to Texas Law.

Nonetheless, if Texas has conflict rule adopting the situs

theory (lex rei sitae) calling for the application of the law
of the place where the properties are situated, renvoi
would arise, since the properties here involved are found
in the Philippines. In the absence, however of proofs as to
the conflict of law rule of Texas, it should not be
presumed different from our appellants, position is
therefore not rested on the doctrine of renvoi.

The parties admit that the decedent, Amos Bellis, was a

citizen of the State of Texas, USA and that under the Laws
of Texas, there are no forced heirs or legitimates.
Accordingly, since the intrinsic validity of the provision of
the will and the amount of successional rights has to be
determined under Texas Law, the Philippine Law on
legitimates can not be applied to the testate of Amos
Bellis.

>Procedural Facts:
Case filed in Court of First instance of Manila, which
overruled Petitioner’s opposition approving the
executor’s final account, report and administration and
project of partition. Relying upon Art. 16 of the Civil Code,
it applied the national law of the decedent, which in this
case is Texas law, which did not provide for legitimes.
Substantive Facts: Amos G. Bellis, a resident of San
Antonio, Texas, U.S. A died testate. His will was admitted
to probate in the Court of First Instance of Manila. He left
the bulk of his testate to his legitimate children resulting
in the impairment of the legitime of his other heirs
(illegitimate children).
Issue: Which law shall apply in executing the deceased’s
will —Texas law or Philippine law?
Held:The parties admit that the decedent, Amos G. Bellis,
was a citizen of the State of Texas, U.S.A., and that under
the laws of Texas, there are no forced heirs or legitimes.
Accordingly, since the intrinsic validity of the provision of
the will and the amount of successional rights are to be
determined under Texas law, the Philippine law on
legitimes cannot be applied to the testacy of Amos G.
Bellis.
Reasoning:
Article 16, par. 2, and Art. 1039 of the Civil Code, render
applicable the national law of the decedent, in intestate
or testamentary successions, with regard to four items:
(a) the order of succession; (b) the amount of
successional rights; (e) the intrinsic validity of the
provisions of the will; and (d) the capacity to succeed.
Intestate and testamentary successions, both with
respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the
national law of the person whose succession is under
consideration, whatever may he the nature of the
property and regardless of the country wherein said
property may be found.
SPS ZALAMEA V CA

FACTS: Spouses Cesar and Suthira Zalamea, and their

daughter, Liana Zalamea, purchased three (3) airline
tickets from the Manila agent of respondent TransWorld
Airlines, Inc. (TWA) for a flight from New York to Los
Angeles on June 6, 1984. The tickets of the spouses were
purchased at a discount of 75% while that of their
daughter was a full fare ticket. All three tickets
represented confirmed reservations.

While in New York, on June 4, 1984, the spouses Zalamea

and their daughter received a notice of reconfirmation of
their reservations for said flight. On the appointed date,
however, the spouses Zalamea and their daughter
checked in at 10:00 am, an hour earlier than the
scheduled flight at 11:00 am but were placed on the wait-
list because the number of passengers who checked in
before tem had already taken all the seats available on
the flight.
Out of the 42 names on the wait-list, the first 22 names
were eventually allowed to board the flight to Los
Angeles, including Cesar Zalamea. The two others, on the
other hand, being ranked lower than 22, were not able to
fly. As it were, those holding full-fare ticket were given
first priority among the wait-listed passengers. Mr.
Zalamea, who was holding the full-fare ticket of his
daughter, was allowed to board the plane; while his wife
and daughter, who presented the discounted tickets were
denied boarding. Even in the next TWA flight to Los
Angeles, Mrs. Zalamea and her daughter, could not be
accommodated because it was full booked. Thus, they
were constrained to book in another flight and purchased
two tickets from American Airlines.

Upon their arrival in the Philippines, the spouses Zalamea

filed an action for damages based on breach of contract of
air carriage before the RTC of Makati which rendered a
decision in their favor ordering the TWA to pay the price
of the tickets bought from American Airlines together
with moral damages and attorney’s fees. On appeal, the
CA held that moral damages are recoverable in a damage
suit predicated upon a breach of contract of carriage only
where there is fraud or bad faith. It further stated that
since it is a matter of record that overbooking of flights is
a common and accepted practice of airlines in the United
States and is specifically allowed under the Code of
Federal Regulations by the Civil Aeronautics Board,
neither fraud nor bad faith could be imputed on TWA.

ISSUE:
Whether or not the CA erred in accepting the finding that
overbooking is specifically allowed by the US Code of
Federal Regulations and in holding that there was no
fraud or bad faith on the part of TWA ?

HELD:
The CA was in error. There was fraud or bad faith on the
part of TWA when it did not allow Mrs. Zalamea and her
daughter to board their flight for Los Angeles in spite of
confirmed tickets. The US law or regulation allegedly
authorizing overbooking has never been proved.

1.) Foreign laws do not prove themselves nor can the

court take judicial notice of them. Like any other fact,
they must be alleged and proved. Written law may be
evidenced by an official publication thereof or by a copy
attested by the officers having legal custody of the record,
or by his deputy and accompanied with a certificate that
such officer has custody. The certificate may be made by
a secretary of an embassy or legation, consul-general,
consul, vice-consul, or consular agent or by any officer in
the foreign service of the Phil. stationed in the foreign
country in which the record is kept and authenticated by
the seal of his office. Here, TWA relied solely on the
testimony of its customer service agent in her deposition
that the Code of Federal Regulations of the Civil
Aeronautic Board allows overbooking. Aside from said
statement, no official publication of said code was
presented as evidence. Thus, the CA’s finding that
overbooking is specifically allowed by the US Code of
Federal Regulations has no basis in fact.

"That there was fraud or bad faith on the part of

respondent airline when it did not allow petitioners to
board their flight for Los Angeles in spite of confirmed
tickets cannot be disputed. The U.S. law or regulation
allegedly authorizing overbooking has never been
proved. Foreign laws do not prove themselves nor can
the courts take judicial notice of them. Like any other fact,
they must be alleged and proved. Written law may be
evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the
record, or by his deputy, and accompanied with a
certificate that such officer has custody. The certificate
may be made by a secretary of an embassy or legation,
consul general, consul, vice-consul, or consular agent or
by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office.
Respondent TWA relied solely on the statement of Ms.
Gwendolyn Lather, its customer service agent, in her
deposition dated January 27, 1986 that the Code of
Federal Regulations of the Civil Aeronautics Board allows
overbooking. Aside from said statement, no official
publication of said code was presented as evidence. Thus,
respondent court's finding that overbooking is
specifically allowed by the US Code of Federal
Regulations has no basis in fact."

"Even if the claimed U.S. Code of Federal Regulations does

exist, the same is not applicable to the case at bar in
accordance with the principle of lex loci contractus which
require that the law of the place where the airline ticket
was issued should be applied by the court where the
passengers are residents and nationals of the forum and
the ticket is issued in such State by the defendant airline.
Since the tickets were sold and issued in the Philippines,
the applicable law in this case would be Philippine law."

Other Issues:

2.) Even if the claimed US Code of Federal Regulations

does exist, the same is not applicable to the case at bar in
accordance with the principle of lex loci contractus which
requires that the law of the place where the airline ticket
was issued should be applied by the court where the
passengers are residents and nationals of the forum and
the ticket is issued in such State by the airline.

3.) Existing jurisprudence explicitly states that

overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral damages.
Where an airline had deliberately overbooked, it took the
risk of having to deprive some passengers of their seats
in case all of them would show up for check in. for the
indignity and inconvenience of being refused a confirmed
seat on the last minute, said passenger is entitled to an
award of moral damages. This is so, for a contract of
carriage generates a relation attended with public duty --
- a duty to provide public service and convenience to its
passengers which must be paramount to self-interest or
enrichment. Even on the assumption that overbooking is
allowed, TWA is still guilty of bad faith in not informing
its passengers beforehand that it could breach the
contract of carriage even if they have confirmed tickets if
there was overbooking. Moreover, TWA was also guilty of
not informing its passengers of its alleged policy of giving
less priority to discounted tickets. Evidently, TWA placed
self-interest over the rights of the spouses Zalamea and
their daughter under their contract of carriage. Such
conscious disregard make respondent TWA liable for
moral damages, and to deter breach of contracts by TWA
in similar fashion in the future, the SC adjudged TWA
liable for exemplary damages, as well.

GARCIA V RECIO

FACTS: The respondent, a Filipino was married to Editha

Samson, an Australian citizen, in Rizal in 1987. They lived
together as husband and wife in Australia. In 1989, the
Australian family court issued a decree of divorce
supposedly dissolving the marriage. In 1992, respondent
acquired Australian citizenship. In 1994, he married
Grace Garcia, a Filipina, herein petitioner, in Cabanatuan
City. In their application for marriage license, respondent
was declared as “single” and “Filipino”. Since October
1995, they lived separately; and in 1996 while in Autralia,
their conjugal assets were divided. In 1998, petitioner
filed Complaint for Declaration of Nullity of Marriage on
the ground of bigamy, claiming that she learned of the
respondent’s former marriage only in November. On the
other hand, respondent claims that he told petitioner of
his prior marriage in 1993, before they were married.
Respondent also contended that his first marriage was
dissolved by a divorce decree obtained in Australia in
1989 and hence, he was legally capacitated to marry
petitioner in 1994. The trial court declared that the first
marriage was dissolved on the ground of the divorce
issued in Australia as valid and recognized in the
Philippines. Hence, this petition was forwarded before
the Supreme Court.

ISSUES:
1. Whether or not the divorce between respondent and
Editha Samson was proven.
2. Whether or not respondent has legal capacity to marry
Grace Garcia.

RULING: The Philippine law does not provide for

absolute divorce; hence, our courts cannot grant it. In
mixed marriages involving a Filipino and a foreigner,
Article 26 of the Family Code allows the former to
contract a subsequent marriage in case the divorce is
“validly obtained abroad by the alien spouse capacitating
him or her to remarry”. A divorce obtained abroad by two
aliens, may be recognized in the Philippines, provided it
is consistent with their respective laws. Therefore, before
our courts can recognize a foreign divorce, the party
pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it.

In this case, the divorce decree between the respondent

and Samson appears to be authentic, issued by an
Australian family court. Although, appearance is not
sufficient; and compliance with the rules on evidence
regarding alleged foreign laws must be demonstrated, the
decree was admitted on account of petitioner’s failure to
object properly because he objected to the fact that it was
not registered in the Local Civil Registry of Cabanatuan
City, not to its admissibility.

Respondent claims that the Australian divorce decree,

which was validly admitted as evidence, adequately
established his legal capacity to marry under Australian
law. However, there are two types of divorce, absolute
divorce terminating the marriage and limited divorce
merely suspending the marriage. In this case, it is not
known which type of divorce the respondent procured.
Even after the divorce becomes absolute, the court may
under some foreign statutes, still restrict remarriage.
Under the Australian divorce decree “a party to a
marriage who marries again before this decree becomes
absolute commits the offense of bigamy”. This shows that
the divorce obtained by the respondent might have been
restricted. Respondent also failed to produce sufficient
evidence showing the foreign law governing his status.
Together with other evidences submitted, they don’t
absolutely establish his legal capacity to remarry
according to the alleged foreign law.

Case remanded to the court a quo. The marriage between

the petitioner and respondent can not be declared null
and void based on lack of evidence conclusively showing
the respondent’s legal capacity to marry petitioner. With
the lack of such evidence, the court a quo may declare
nullity of the parties’ marriage based on two existing
marriage certificates.

ASIAVEST V CA

FACTS OF THE CASE: The petitioner Asiavest Merchant

Bankers (M) Berhad is a corporation organized under the
laws of Malaysia while private respondent Philippine
National Construction Corporation is a corporation duly
incorporated and existing under Philippine laws.
In 1983, petitioner initiated a suit for collection
against private respondent, then known as
Construction and Development Corporation of the
Philippines, before the High Court of Malaya in Kuala
Lumpur, Malaysia.
Petitioner sought to recover the indemnity of the
performance bond it had put up in favor of private
respondent to guarantee the completion of the Felda
Project and the non-payment of the loan it extended to
Asiavest-CDCP Sdn. Bhd. for the completion of Paloh
Hanai and Kuantan By-Pass Project.
On September 13, 1985, the High Court of Malaya
(Commercial Division) rendered judgment in favor of the
petitioner and against the private respondent which is
also designated therein as the 2nd Defendant.
However Petitioner failed to secure payment from
private respondent under the judgment rendered by the
High Court of Malaya, Thus petitioner initiated a
complaint before Regional Trial Court of Pasig, Metro
Manila, to enforce the judgment of the High Court of
Malaya. However the Trial Court rendered a decision
against the Petitioner and dismissed the case, on appeal
to the Court of Appeals, the Appellate court affirmed the
RTC’s Decision, hence this instant appeal to the Supreme
Court.
ISSUE OF THE CASE: Whether or not the Court of
Appeals erred in ruling that the judgment rendered by
the High Court of Malaya against private respondent
PNCC is not enforceable here in the Philippines, due to
the fact that it was decided in Malaysia.
RULING OF THE SUPREME COURT: Yes, the Supreme
Court reversed the Court of Appeals decision and held
that the judgment rendered by the High Court of Malaya
is enforceable in our jurisdiction.
Generally, in the absence of a special compact, no
sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country;
however, the rules of comity, utility and convenience of
nations have established a usage among civilized states
by which final judgments of foreign courts of competent
jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in
different countries.
In this jurisdiction, a valid judgment rendered by a
foreign tribunal may be recognized insofar as the
immediate parties and the underlying cause of action are
concerned so long as it is convincingly shown that there
has been an opportunity for a full and fair hearing before
a court of competent jurisdiction; that the trial upon
regular proceedings has been conducted, following due
citation or voluntary appearance of the defendant and
under a system of jurisprudence likely to secure an
impartial administration of justice; and that there is
nothing to indicate either a prejudice in court and in the
system of laws under which it is sitting or fraud in
procuring the judgment.

Further Under the Rules of Court:

A foreign judgment is presumed to be valid and binding
in the country from which it comes, until a contrary
showing, on the basis of a presumption of regularity of
proceedings and the giving of due notice in the foreign
forum.
As a General Rule: A judgment, against a person, of a
tribunal of a foreign country having jurisdiction to
pronounce the same is presumptive evidence of a right as
between the parties and their successors in interest by a
subsequent title.
Exception to this rule is that: The judgment may,
however, be assailed by evidence of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
In addition, under Section 3(n), Rule 131 of the
Revised Rules of Court, a court, whether in the
Philippines or elsewhere, enjoys the presumption that it
was acting in the lawful exercise of its jurisdiction. Hence,
once the authenticity of the foreign judgment is proved,
the party attacking a foreign judgment, is tasked with the
burden of overcoming its presumptive validity
ASIAVEST MERCHANT BANKERS (M) BERHAD v. CA
G.R. No. 110263
July 20, 2001

PARTIES The petitioner Asiavest Merchant Bankers (M)

Berhad is a corporation organized under the laws of
Malaysia while private respondent Philippine National
Construction Corporation is a corporation duly
incorporated and existing under Philippine laws.

FACTS In 1985, the High Court of Malaysia ordered the

Philippine National Construction Corporation (PNCC) to
pay $5.1 million to Asiavest Merchant Bankers (M)
Berhad. This was the result of a recovery suit filed by
Asiavest against PNCC in Malaysia for PNCC’s failure to
complete a construction project there despite due
payment from Asiavest. Despite demand, PNCC failed to
comply with the judgment in Malaysia hence Asiavest
filed a complaint for the enforcement of the Malaysian
ruling against PNCC in the Philippines. The case was filed
with the Pasig RTC which eventually denied the
complaint. The Court of Appeals affirmed the decision of
the RTC.

Asiavest appealed. In its defense, PNCC alleged that the

foreign judgment cannot be enforced here because of
want of jurisdiction, want of notice to PNCC, collusion
and/or fraud, and there is a clear mistake of law or fact.
Asiavest assailed the arguments of PNCC on the ground
that PNCC’s counsel participated in all the proceedings in
the Malaysian Court.

ISSUE: Whether or not the Malaysian Court judgment

should be enforced against PNCC in the Philippines.

HELD Yes. PNCC failed to prove and substantiate its bare

allegations of want of jurisdiction, want of notice,
collusion and/or fraud, and mistake of fact. On the
contrary, Asiavest was able to present evidence as to the
validity of the proceedings that took place in Malaysia.
Asiavest presented the certified and authenticated copies
of the judgment and the order issued by the Malaysian
Court. It also presented correspondences between
Asiavest’s lawyers and PNCC’s lawyers in and out of court
which belied PNCC’s allegation that the Malaysian court
never acquired jurisdiction over it. PNCC’s allegation of
fraud is not sufficient too, further, it never invoked the
same in the Malaysian Court.

The Supreme Court notes, to assail a foreign judgment

the party must present evidence of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear
mistake of law or fact. Otherwise, the judgment enjoys
the presumption of validity so long as it was duly
certified and authenticated. In this case, PNCC failed to
present the required evidence.
INTERCONTINENTAL HOTELS COPR. V. GOLDEN

Intercontinental Hotels Corporation (Puerto Rico),

Appellant, v. Jack Golden, Respondent.
Argued September 30, 1964. Decided November 19,
1964.

FACTS: Defendant was a guest at plaintiff's

Intercontinental Hotel in Puerto Rico from December
8 through December 14, 1960. During his stay there, in an
attempt to turn chance into fortune, he played — on
credit generously furnished by plaintiff — at the dice
tables in the casino conducted by the hotel, lost and,
when he ascertained the extent of his indebtedness,
reneged. Following the loss of $6,000 in cash which
defendant allegedly brought with him, plaintiff advanced
chips to the defendant in the sum of $12,000 which he
eventually also lost.

On December 14, 1960, he delivered to plaintiff his check

for $3,000, dated December 17, 1960, payable at the
Manufacturers Trust Co. in New York City, in part
payment of his gambling debt. The check was not
honored when presented for payment. For the remaining
$9,000 defendant had given plaintiff 13 I. O. U.'s. At Trial
Term in New York, plaintiff recovered judgment on the
check and the I. O. U.'s for the full $12,000 plus interest of
$1,102.50.
It is conceded that in Puerto Rico gambling has been
legalized and that plaintiff's casino was duly licensed at
the time defendant used its facilities. In Puerto Rico there
is specific statutory provision for the enforcement of legal
gambling debts there and many times that the Supreme
Court of Puerto Rico has upheld the enforcement of such
claims.
The courts of New York will generally enforce contracts
made in other jurisdictions. The validity of such contracts
is determined by the law of the place where the contracts
are made. But as the court in the Straus & Co., "There is,
however, a well-established exception to the rule to the
effect that a court will not enforce a contract though valid
where made if its enforcement is contrary to the policy of
the forum.”

ISSUE: Whether or not the courts of this State (New

York) must deny access to a party seeking to enforce
obligations validly entered into in the Commonwealth of
Puerto Rico and enforceable under Puerto Rican law.

HELD: Once again we are faced with the question of

when our courts may refuse to enforce a foreign right,
though valid where acquired, on the ground that its
"enforcement is contrary to [the public] policy of the
forum"
Since these gambling debts were validly contracted in
Puerto Rico and the Puerto Rican law provides a remedy
for their enforcement absent a clear showing that the
enforcement of the causes of action here would "offend
our sense of justice or menace the public welfare", we
may not withhold aid. We do not think that public policy
forbids us to enforce these contracts.
Substantially all of the commentators agree that foreign-
based rights should be enforced unless the judicial
enforcement of such a contract would be the approval of
a transaction which is inherently vicious, wicked or
immoral, and shocking to the prevailing moral sense.
There was no strong public policy to prevent the
enforcement of such contracts according to the law of the
place of performance. The courts are not free to refuse to
enforce a foreign right at the pleasure of the judges, to
suit the individual notion of expediency or fairness. They
do not close their doors unless help would violate some *
* * prevalent conception of good morals"
In the present case there is no indication that the evils of
gambling, which New York prohibits and Puerto Rico has
licensed, will spill over into our community if these debts
are enforced in New York courts. The New York
constitutional provisions were adopted with a view
toward protecting the family man of meager resources
from his own imprudence at the gaming tables
There is nothing immoral per se in the contract before us,
but injustice would result if citizens of this State were
allowed to retain the benefits of the winnings in a State
where such gambling is legal, but to renege if they were
losers. We think, therefore, that this case falls within the
consistent practice of enforcing rights validly created by
the laws of a sister State which do not tend to disturb our
local laws or corrupt the public.
AZNAR V GARCIA

Facts: Edward Christensen’s (citizen of the State of

California) will was executed in Manila where it provides
that Helen Christensen Garcia receive a payment of
P3,600 and proposed that the residue of the estate be
transferred to his daughter Maria Lucy Christensen.
Helen Christensen Garcia opposed the project of partition
of Edward’s estate claiming that she was deprived of her
legitime as acknowledged natural child under the
Philippine law.

Issue: Whether or not the California law or the Philippine

law should apply in the case at bar.

Held: Philippine law should be applied. The State of

California prescribes two sets of laws for its citizens
residing therein and a conflict of law rules for its citizens
domiciled in other jurisdictions. Art. 946 of the California
Civil Code states that “If there is no law to the contrary in
the place where personal property is situated, it is
deemed to follow the person of its owner and is governed
by the law of his domicile.” Edward, a citizen of the State
of California, is considered to have his domicile in the
Philippines. The court of domicile cannot and should not
refer the case back to the California, as such action would
leave the issue incapable of determination, because the
case would then be tossed back and forth between the
states(doctrine of renvoi). The validity of the provisions
of Edward’s will depriving his acknowledged natural
child of latter’s legacy, should be governed by the
Philippine law.

The decision appealed from is reversed and the case

returned to the lower court with instruction that the
partition be made as the Philippine law on succession
provides.