EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991) Equal Employment Opportunity Commission v.

Arabian American Oil Company Nos. 89-1838, 89-1845 Argued Jan. 16, 1991 Decided March 26, 1991 499 U.S. 244 CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Syllabus Petitioner Boureslan, a naturalized United States citizen born in Lebanon and working in Saudi Arabia, was discharged by his employer, respondent Arabian American Oil Company, a Delaware corporation. After filing a charge with petitioner Equal Employment Opportunity Commission (EEOC), he instituted suit in the District Court, seeking relief under, inter alia, Title VII of the Civil Rights Act of 1964, on the ground that he had been discriminated against because of his race, religion, and national origin. In dismissing this claim, the court ruled that it lacked subject matter jurisdiction because Title VII's protections do not extend to United States citizens employed abroad by American employers. The Court of Appeals affirmed. Held: Title VII does not apply extraterritorially to regulate the employment practices of United States firms that employ American citizens abroad. Petitioners' evidence, while not totally lacking in probative value, falls short of demonstrating the clearly expressed affirmative congressional intent that is required to overcome the well-established presumption against statutory extraterritoriality. Pp. 499 U. S. 249-259. (a) Petitioners argue unpersuasively that Title VII's "broad jurisdictional language" -- which extends the Act's protections to commerce "between a State and any place outside thereof" -- evinces a clear intent to legislate extraterritorially. The language relied on is ambiguous, does not speak directly to the question presented here, and constitutes boilerplate language found in any number of congressional Acts, none of which have been held to apply overseas. Petitioners' argument also finds no support in this Court's decisions, which have repeatedly held that even statutes containing broad language in their definitions of "commerce" that expressly refer to "foreign commerce" do not apply abroad. See, e.g., McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U. S. 10, 372 U. S. 15, 372 U. S. 19. Steele v. Bulova Watch Co., 344 U. S. 280, 344 U. S. 286, distinguished. Pp. 499 U. S. 249-253. Page 499 U. S. 245 (b) Petitioners also argue unpersuasively that Title VII's "alien exemption" clause -- which renders the statute inapplicable "to an employer with respect to the employment of aliens outside any State" -- clearly manifests the necessary congressional intent to cover employers of United States citizens working abroad. If petitioners were correct, there would be no statutory basis for distinguishing between American employers and foreign employers. Absent clearer evidence of congressional intent, this Court is unwilling to ascribe to Congress a policy which would raise difficult international law issues by imposing this country's employment discrimination regime upon foreign corporations operating in foreign commerce. This conclusion is fortified by other factors suggesting a purely domestic focus, including Title VII's failure even to mention foreign nations or

proceedings, despite a number of provisions indicating a concern that the sovereignty and laws of States not be unduly interfered with, and the Act's failure to provide any mechanisms for its overseas enforcement. It is also reasonable to conclude that, had Congress intended Title VII to apply overseas, it would have addressed the subject of conflicts with foreign laws and procedures, as it did in amending the Age Discrimination in Employment Act of 1967 (ADEA) to apply abroad. Pp. 499 U. S. 253-256. (c) Petitioners' contention that this Court should defer to the EEOC's position that Title VII applies abroad is rejected. The EEOC's interpretation does not fare well under the deference standards set forth in General Electric Co. v. Gilbert, 429 U. S. 125, 429 U. S. 140-146, since the interpretation has been neither contemporaneous with Title VII's enactment nor consistent with an earlier contrary position enunciated by the EEOC closer to the date the statute came into law, since the EEOC offers no basis in its experience for the change, and since the interpretation lacks support in the statute's plain language. Although this Court does not wholly discount the interpretation, it is of insufficient weight, even when considered in combination with petitioners' other arguments, to overcome the presumption against extraterritorial application. Pp. 499 U. S. 256-258. (d) Congress' awareness of the need to make a clear statement that a statute applies overseas is amply demonstrated by the numerous occasions on which it has legislated extraterritoriality, including its amendment of the ADEA. Congress may similarly amend Title VII, and, in doing so, will be able to calibrate its provisions in a way that this Court cannot. Pp. 499 U. S. 258-259. 892 F.2d 1271 (CA 5 1990), affirmed. REHNQUIST, C.J., delivered the opinion of the Court, in which WHITE, O'CONNOR, KENNEDY, and SOUTER, JJ., joined. SCALIA, J., filed an opinion Page 499 U. S. 246 concurring in part and concurring in the judgment, post at 499 U. S. 259. MARSHALL, J., filed a dissenting opinion, in which BLACKMUN and STEVENS, JJ., joined post at 499 U. S. 260. CHIEF JUSTICE REHNQUIST delivered the opinion of the Court. These cases present the issue whether Title VII applies extraterritorially to regulate the employment practices of United States employers who employ United States citizens abroad. The United States Court of Appeals for the Fifth Page 499 U. S. 247 Circuit held that it does not, and we agree with that conclusion. Petitioner Boureslan is a naturalized United States citizen who was born in Lebanon. The respondents are two Delaware corporations, Arabian. American Oil Company (Aramco), and its subsidiary, Aramco Service Company (ASC). Aramco's principal place of business is Dhahran, Saudi Arabia, and it is licensed to do business in Texas. ASC's principal place of business is Houston, Texas. In 1979, Boureslan was hired by ASC as a cost engineer in Houston. A year later, he was transferred, at his request, to work for Aramco in Saudi Arabia. Boureslan remained with Aramco in Saudi Arabia until he was discharged in 1984. After filing a charge of discrimination with the Equal Employment Opportunity Commission (EEOC), he instituted this suit in the United States District Court for the Southern District of Texas against Aramco and ASC. He sought relief under both state

law and Title VII of the Civil Rights Act of 1964, 78 Stat. 243, as amended, 42 U.S.C. 2000a-2000h-6, on the ground that he was harassed and ultimately discharged by respondents on account of his race, religion, and national origin. Respondents filed a motion for summary judgment on the ground that the District Court lacked subject matter jurisdiction over Boureslan's claim because the protections of Title VII do not extend to United States citizens employed abroad by American employers. The District Court agreed, and dismissed Boureslan's Title VII claim; it also dismissed his state law claims for lack of pendent jurisdiction, and entered final judgment in favor of respondents. A panel for the Fifth Circuit affirmed. After vacating the panel's decision and rehearing the case en banc, the court affirmed the District Court's dismissal of Boureslan's complaint. Both Boureslan and the EEOC petitioned for certiorari. We granted both petitions for certiorari to resolve this important issue of statutory interpretation. Page 499 U. S. 248 Both parties concede, as they must, that Congress has the authority to enforce its laws beyond the territorial boundaries of the United States. Cf. Foley Bros., Inc. v. Filardo, 336 U. S. 281, 336 U. S. 284-285 (1949); Benz v. Compania Naviera Hidalgo, S.A., 353 U. S. 138, 353 U. S. 147 (1957). Whether Congress has in fact exercised that authority in this case is a matter of statutory construction. It is our task to determine whether Congress intended the protections of Title VII to apply to United States citizens employed by American employers outside of the United States. It is a longstanding principle of American law "that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Foley Bros., 336 U.S. at 336 U. S. 285. This "canon of construction . . . is a valid approach whereby unexpressed congressional intent may be ascertained." Ibid. It serves to protect against unintended clashes between our laws and those of other nations which could result in international discord. See McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U. S. 10, 372 U. S. 20-22 (1963). In applying this rule of construction, we look to see whether "language in the [relevant act] gives any indication of a congressional purpose to extend its coverage beyond places over which the United States has sovereignty or has some measure of legislative control." Foley Bros., supra, 336 U.S. at 336 U. S. 285. We assume that Congress legislates against the backdrop of the presumption against extraterritoriality. Therefore, unless there is "the affirmative intention of the Congress clearly expressed," Benz, supra, 353 U.S. at 353 U. S. 147, we must presume it "is primarily concerned with domestic conditions." Foley Bros., supra, 336 U.S. at 336 U. S. 285. Boureslan and the EEOC contend that the language of Title VII evinces a clearly expressed intent on behalf of Congress to legislate extraterritorially. They rely principally on two provisions of the statute. First, petitioners argue that the statute's definitions of the jurisdictional terms "employer" Page 499 U. S. 249 and "commerce" are sufficiently broad to include U.S. firms that employ American citizens overseas. Second, they maintain that the statute's "alien exemption" clause, 42 U.S.C. 2000e1, necessarily implies that Congress intended to protect American citizens from employment discrimination abroad. Petitioners also contend that we should defer to the EEOC's consistently held position that Title VII applies abroad. We

conclude that petitioners' evidence, while not totally lacking in probative value, falls short of demonstrating the affirmative congressional intent required to extend the protections of the Title VII beyond our territorial borders. Title VII prohibits various discriminatory employment practices based on an individual's race, color, religion, sex, or national origin. See 2000e-2, 2000e-3. An employer is subject to Title VII if it has employed 15 or more employees for a specified period and is "engaged in an industry affecting commerce." An industry affecting commerce is "any activity, business, or industry in commerce or in which a labor dispute would hinder or obstruct commerce or the free flow of commerce and includes any activity or industry 'affecting commerce' within the meaning of the LaborManagement Reporting and Disclosure Act of 1959 [(LMRDA)] [29 U.S.C. 401 et seq.]." 2000e(h). "Commerce," in turn, is defined as "trade, traffic, commerce, transportation, transmission, or communication among the several States; or between a State and any place outside thereof; or within the District of Columbia, or a possession of the United States; or between points in the same State but through a point outside thereof." 2000e(g). Petitioners argue that, by its plain language, Title VII's "broad jurisdictional language" reveals Congress's intent to extend the statute's protections to employment discrimination anywhere in the world by a U.S. employer who affects trade "between a State and any place outside thereof." More precisely, they assert that, since Title VII Page 499 U. S. 250 defines "States" to include States, the District of Columbia, and specified territories, the clause "between a State and any place outside thereof" must be referring to areas beyond the territorial limit of the United States. Reply Brief for Petitioner 3. Respondents offer several alternative explanations for the statute's expansive language. They contend that the "or between a State and any place outside thereof" clause "provide[s] the jurisdictional nexus required to regulate commerce that is not wholly within a single state, presumably as it affects both interstate and foreign commerce," but not to "regulate conduct exclusively within a foreign country." Brief for Respondents 21, n. 14. They also argue that, since the definitions of the terms "employer," "commerce," and "industry affecting commerce" make no mention of "commerce with foreign nations," Congress cannot be said to have intended that the statute apply overseas. In support of this argument, petitioners point to Title II of the Civil Rights Act of 1964, governing public accommodation, which specifically defines commerce as it applies to foreign nations. Finally, respondents argue that, while language present in the first bill considered by the House of Representatives contained the terms "foreign commerce" and "foreign nations," those terms were deleted by the Senate before the Civil Rights Act of 1964 was passed. They conclude that these deletions "[are] inconsistent with the notion of a clearly expressed congressional intent to apply Title VII extraterritorially." Brief for Respondents 7. We need not choose between these competing interpretations, as we would be required to do in the absence of the presumption against extraterritorial application discussed above. Each is plausible, but no more persuasive than that. The language relied upon by petitioners -- and it is they who

must make the affirmative showing -- is ambiguous, and does not speak directly to the question presented here. The intent of Congress as to the extraterritorial application of this Page 499 U. S. 251 statute must be deduced by inference from boilerplate language which can be found in any number of congressional acts, none of which have ever been held to apply overseas. See, e.g., Consumer Product Safety Act, 15 U.S.C. 2052(a)(12); Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 321(b); Transportation Safety Act of 1974, 49 U.S.C.App. 1802(1); Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. 401 et seq.; Americans with Disabilities Act of 1990, 42 U.S.C. 12101, et seq. Petitioners' reliance on Title VII's jurisdictional provisions also finds no support in our case law; we have repeatedly held that even statutes that contain broad language in their definitions of "commerce" that expressly refer to "foreign commerce" do not apply abroad. For example, in New York Central R. Co. v. Chisholm, 268 U. S. 29 (1925), we addressed the extraterritorial application of the Federal Employers Liability Act (FELA), 45 U.S.C. 51 et seq. FELA provides that common carriers by railroad, while engaging in "interstate or foreign commerce" or commerce between "any of the States or territories and any foreign nation or nations," shall be liable in damages to its employees who suffer injuries resulting from their employment. 45 U.S.C. 51. Despite this broad jurisdictional language, we found that the Act "contains no words which definitely disclose an intention to give it extraterritorial effect," Chisholm, supra, at 268 U. S. 31, and therefore there was no jurisdiction under FELA for a damages action by a U.S. citizen employed on a U.S. railroad who suffered fatal injuries at a point 30 miles north of the U.S. border into Canada. Similarly, in McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U. S. 10 (1963), we addressed whether Congress intended the National Labor Relations Act (NLRA), 29 U.S.C. 151-168, to apply overseas. Even though the NLRA contained broad language that referred by its terms to foreign commerce, 29 U.S.C. 152(6), this Court refused to find a congressional intent to apply the statute abroad, Page 499 U. S. 252 because there was not "any specific language" in the Act reflecting congressional intent to do so. McCulloch, supra, at 372 U. S. 19.

properly interpreted as applying abroad. Steele, supra, 344 U.S. at 344 U. S. 285, 344 U. S. 287.

The EEOC's attempt to analogize this case to Steele is unpersuasive. The Lanham Act, by terms, applies to "all commerce which may lawfully be regulated by Congress." The Constitution gives Congress the power "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." U.S.Const., Art. I, 8, cl. 3. Since the Act expressly stated that it applied to the extent of Congress's power over commerce, the Court in Steele concluded that Congress intended that the statute apply abroad. By contrast, Title VII's more limited boilerplate "commerce" language does not support such an expansive construction of congressional intent. Moreover, unlike Page 499 U. S. 253 the language in the Lanham Act, Title VII's definition of "commerce" was derived expressly from the LMRDA, a statute that this Court had held, prior to the enactment of Title VII, did not apply abroad. McCulloch, supra, 372 U.S. at 372 U. S. 15. Thus, petitioner's argument based on the jurisdictional language of Title VII fails both as a matter of statutory language and of our previous case law. Many acts of Congress are based on the authority of that body to regulate commerce among the several States, and the parts of these acts setting forth the basis for legislative jurisdiction will obviously refer to such commerce in one way or another. If we were to permit possible, or even plausible interpretations of language such as that involved here to override the presumption against extraterritorial application, there would be little left of the presumption. Petitioners argue that Title VII's "alien exemption provision," 42 U.S.C. 2000e-1, "clearly manifests an intention" by Congress to protect U.S. citizens with respect to their employment outside of the United States. The alien exemption provision says that the statute "shall not apply to an employer with respect to the employment of aliens outside any State." 2000e-1. Petitioners contend that, from this language, a negative inference should be drawn that Congress intended Title VII to cover United States citizens working abroad for United States employers. There is "[no] other plausible explanation [that] the alien exemption exists," they argue, because, "[i]f Congress believed that the statute did not apply extraterritorially, it would have had no reason to include an exemption for a certain category of individuals employed outside the United States."

The EEOC places great weight on an assertedly similar "broad jurisdictional grant in the Lanham Act" that this Court held applied extraterritorially in Steele v. Bulova Watch Co., 344 U. S. 280, 344 U. S. 286 (1952). Brief for Petitioner in No. 891838, p. 12. In Steele, we addressed whether the Lanham Act, designed to prevent deceptive and misleading use of trademarks, applied to acts of a U.S. citizen consummated in Mexico. The Act defined commerce as "all commerce which may lawfully be regulated by Congress." 15 U.S.C. 1127. The stated intent of the statute was "to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce." Ibid. While recognizing that "the legislation of Congress will not extend beyond the boundaries of the United States unless a contrary legislative intent appears," the Court concluded that, in light of the fact that the allegedly unlawful conduct had some effects within the United States, coupled with the Act's "broad jurisdictional grant" and its "sweeping reach into all commerce which may lawfully be regulated by Congress,'" the statute was

Brief for Petitioner in No. 89-1838, pp. 12-13. Since "[t]he statute's jurisdictional provisions cannot possibly be read to confer coverage only upon aliens employed outside the United States," petitioners conclude that "Congress could not rationally have enacted an exemption for the employment of aliens abroad if it intended to foreclose

Page 499 U. S. 254 all potential extraterritorial applications of the statute." Id. at 13. Respondents resist petitioners' interpretation of the alien exemption provision, and assert two alternative raisons d'etre

for that language. First, they contend that, since aliens are included in the statute's definition of employee, and the definition of commerce includes possessions as well as "States," the purpose of the exemption is to provide that employers of aliens in the possessions of the United States are not covered by the statute. Thus, the "outside any State" clause means outside any State, but within the control of the United States. Respondents argue that "[t]his reading of the alien exemption provision is consistent with and supported by the historical development of the provision" because Congress's inclusion of the provision was a direct response to this Court's interpretation of the term "possessions" in the Fair Labor Standards Act in Vermilya-Brown Co. v. Connell, 335 U. S. 377 (1948), to include leased bases in foreign nations that were within the control of the United States. Brief for Respondents 27. They conclude that the alien exemption provision was included "to limit the impact of Vermilya-Brown by excluding from coverage employers of aliens in areas under U.S. control that" were not encompassed within Title VII's definition of the term "State." Id. at 29. Second, respondents assert that, by negative implication, the exemption "confirm[s] the coverage of aliens in the United States." Id. at 26. They contend that this interpretation Page 499 U. S. 255 is consistent with our conclusion in Espinoza v. Farah Mfg. Co., 414 U. S. 86 (1973), that aliens within the United States are protected from discrimination both because Title VII uses the term "individual," rather than "citizen," and because of the alien exemption provision. If petitioners are correct that the alien exemption clause means that the statute applies to employers overseas, we see no way of distinguishing in its application between United States employers and foreign employers. Thus, a French employer of a United States citizen in France would be subject to Title VII -a result at which even petitioners balk. The EEOC assures us that, in its view, the term "employer" means only "American employer," but there is no such distinction in this statute, and no indication that EEOC, in the normal course of its administration, had produced a reasoned basis for such a distinction. Without clearer evidence of congressional intent to do so than is contained in the alien exemption clause, we are unwilling to ascribe to that body a policy which would raise difficult issues of international law by imposing this country's employment discrimination regime upon foreign corporations operating in foreign commerce. This conclusion is fortified by the other elements in the statute suggesting a purely domestic focus. The statute as a whole indicates a concern that it not unduly interfere with the sovereignty and laws of the States. See, e.g., 42 U.S.C. 2000h-4 (stating that Title VII should not be construed to exclude the operation of state law or invalidate any state law unless inconsistent with the purposes of the act); 2000e-5 (requiring the EEOC to accord substantial weight to findings of state or local authorities in proceedings under state or local law); 2000e-7 (providing that nothing in Title VII shall affect the application of state or local law unless such law requires or permits practices that would be unlawful under Title VII); 2000e-5(c), (d), and (e) (provisions addressing deferral to state discrimination proceedings). Page 499 U. S. 256 While Title VII consistently speaks in terms of "States" and state proceedings, it fails even to mention foreign nations or foreign proceedings.

Similarly, Congress failed to provide any mechanisms for overseas enforcement of Title VII. For instance, the statute's venue provisions, 2000e-5(f)(3), are ill-suited for extraterritorial application, as they provide for venue only in a judicial district in the state where certain matters related to the employer occurred or were located. And the limited investigative authority provided for the EEOC, permitting the Commission only to issue subpoenas for witnesses and documents from "anyplace in the United States or any Territory or possession thereof," 2000e-9, suggests that Congress did not intend for the statute to apply abroad. It is also reasonable to conclude that, had Congress intended Title VII to apply overseas, it would have addressed the subject of conflicts with foreign laws and procedures. In amending the Age Discrimination in Employment Act of 1967, 81 Stat. 602, as amended, 29 U.S.C. 621 et seq. (ADEA), to apply abroad, Congress specifically addressed potential conflicts with foreign law by providing that it is not unlawful for an employer to take any action prohibited by the ADEA "where such practices involve an employee in a workplace in a foreign country, and compliance with [the ADEA] would cause such employer . . . to violate the laws of the country in which such workplace is located." 29 U.S.C. 623(f)(1). Title VII, by contrast, fails to address conflicts with the laws of other nations. Finally, the EEOC, as one of the two federal agencies with primary responsibility for enforcing Title VII, argues that we should defer to its "consistent" construction of Title VII, first formally expressed in a statement issued after oral argument but before the Fifth Circuit's initial decision in this case, Policy Statement No. N-915.033, EEOC Compl.Man. (BNA) 605:0055 (Apr.1989), "to apply to discrimination against Page 499 U. S. 257 American citizens outside the United States." Brief for Petitioner in No. 891838, p. 22. Citing a 1975 letter from the EEOC's General Counsel, 1983 testimony by its Chairman, and a 1985 decision by the Commission, it argues that its consistent administrative interpretations "reinforce" the conclusion that Congress intended Title VII to apply abroad. In General Electric Co. v. Gilbert, 429 U. S. 125, 429 U. S. 140-146 (1976), we addressed the proper deference to be afforded the EEOC's guidelines. Recognizing that "Congress, in enacting Title VII, did not confer upon the EEOC authority to promulgate rules or regulations," we held that the level of deference afforded "'will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.'" Id. at 429 U. S. 141, 429 U. S. 142 (quoting Skidmore v. Swift & Co., 323 U. S. 134, 323 U. S. 140 (1944)). The EEOC's interpretation does not fare well under these standards. As an initial matter, the position taken by the Commission "contradicts the position which [it] had enunciated at an earlier date, closer to the enactment of the governing statute." General Electric Co., supra, 429 U.S. at 429 U. S. 142. The Commission's early pronouncements on the issue supported the conclusion that the statute was limited to domestic application. See 29 CFR 1606.1(c) (1971) ("Title VII . . . protects all individuals, both citizen and noncitizens, domiciled or residing in the United States, against discrimination on the basis of race, color, religion, sex, or national origin.") While the Commission later intimated that the

statute applied abroad, this position was not expressly reflected in its policy guidelines until some 24 years after the passage of the statute. Page 499 U. S. 258 The EEOC offers no basis in its experience for the change. The EEOC's interpretation of the statute here thus has been neither contemporaneous with its enactment nor consistent since the statute came into law. As discussed above, it also lacks support in the plain language of the statute. While we do not wholly discount the weight to be given to the 1988 guideline, its persuasive value is limited when judged by the standards set forth in Skidmore. Accord: Southeastern Community College v. Davis, 442 U. S. 397, 442 U. S. 411-412 (1979); SEC v. Sloan, 436 U. S. 103, 436 U. S. 117-118 (1978); Espinoza v. Farah Mfg. Co., 414 U.S. at 414 U. S. 9394. We are of the view that, even when considered in combination with petitioners' other arguments, the EEOC's interpretation is insufficiently weighty to overcome the presumption against extraterritorial application. Our conclusion today is buttressed by the fact that "[w]hen it desires to do so, Congress knows how to place the high seas within the jurisdictional reach of a statute." Argentine Republic v. Amerada Hess Shipping Corp., 488 U. S. 428, 488 U. S. 440 (1989). Congress's awareness of the need to make a clear statement that a statute applies overseas is amply demonstrated by the numerous occasions on which it has expressly legislated the extraterritorial application of a statute. See, e.g., the Export Administration Act of 1979, 50 U.S.C.App. 2401-2420 (1982, and Supp. III ed.) (defining "United States person" to include "any domestic concern (including any permanent domestic establishment of any foreign concern) and any foreign subsidiary or affiliate (including any permanent foreign establishment) of any domestic concern which is controlled in fact by such domestic concern") 2415(2); Coast Guard Act, 14 U.S.C. 89(a) (Coast Guard searches and seizures upon the high seas); 18 U.S.C. 7 (Criminal code extends to high seas); 19 U.S.C. 1701 (Customs enforcement on the high seas); Comprehensive Anti-Apartheid Act of 1986, 22 U.S.C. 5001-5116 (1982 ed. Supp. V) (definition of "national of the United States" as "a natural person who is a citizen of the United States . . .") 5001(5)(A); the Logan Act, 18 U.S.C. 953 (applying act to "[a]ny citizen . . . wherever he may be . . ."). Indeed, after several courts had held that the ADEA did not apply overseas, Congress amended 11(f) to provide, "[t]he term 'employee' includes any individual who is a citizen of the United States employed

S.Rep. No. 98-467, p. 2 (1984), U.S. Code Cong. & Admin.News 1984, pp. 2974, 2975. Congress, should it wish to do so, may similarly amend Title VII and in doing so will be able to calibrate its provisions in a way that we cannot. Petitioners have failed to present sufficient affirmative evidence that Congress intended Title VII to apply abroad. Accordingly, the judgment of the Court of Appeals is Affirmed. * Title VII defines "employee" as: "an individual employed by an employer, except that the term 'employee' shall not include any person elected to public office in any State or political subdivision of any State by the qualified voters thereof, or any person chosen by such officer to be on such officer's personal staff, or an appointee on the policy making level or an immediate adviser with respect to the exercise of the constitutional or legal powers of the office. The exemption set forth in the preceding sentence shall not include employees subject to the civil service laws of a State government, government agency or political subdivision." 42 U.S.C. 2000e(f). JUSTICE SCALIA, concurring in part and concurring in the judgment. I join the judgment of the Court, and its opinion except that portion, ante at 499 U. S. 256-258, asserting that the views of the Equal Employment Opportunity Commission -- not only with respect to the particular point at issue here but apparently as a general matter -- are not entitled to the deference normally accorded administrative agencies under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). The case relied upon for the proposition that the EEOC's interpretations have only the force derived from their "power to persuade" was decided in an era when we were disposed to give deference (as opposed to "persuasive force") only to so-called "legislative regulations." The reasoning of General Electric Co. v. Gilbert, 429 U. S. 125 (1976) was not that the EEOC (singled out from other agencies) was not entitled to deference, but that the EEOC's guidelines, like the guidelines of all agencies without explicit rulemaking Page 499 U. S. 260 power, could not be considered legislative rules, and therefore could not be accorded deference. See id. at 429 U. S. 141. In an era when our treatment of agency positions is governed by Chevron, the "legislative rules vs. other action" dichotomy of Gilbert is an anachronism; and it is not even a correct description of that anachronism to say that Gilbert held that the EEOC (as opposed to all agency action other than legislative rules) is not entitled to deference. We recognized that only three years ago, in EEOC v. Commercial Office Products Co., 486 U. S. 107 (1988) -- which case, rather than Gilbert, was our last word on deference to the EEOC. We said, in language quite familiar from our cases following Chevron, that "the EEOC's interpretation of ambiguous language need only be reasonable to be entitled to deference." Id. 486 U.S. at 486 U. S. 115. Commercial Office Products has not been overruled (or even mentioned) in today's opinion, so that the state of the law regarding deference to the EEOC is left unsettled. I would resolve these cases by assuming, without deciding, that the EEOC was entitled to deference on the particular point in question. But deference is not abdication, and it requires us to accept only those agency interpretations that are reasonable in light of the principles of construction courts normally employ. Given the presumption against extraterritoriality that the Court accurately describes, and the requirement that the intent to

Page 499 U. S. 259 by an employer in a workplace in a foreign country." 29 U.S.C. 630(f). Congress also amended 4(g)(1), which states, "[i]f an employer controls a corporation whose place of incorporation is in a foreign country, any practice by such corporation prohibited under this section shall be presumed to be such practice by such employer." 29 U.S.C. 623(h)(1). The expressed purpose of these changes was to "mak[e] provisions of the Act apply to citizens of the United States employed in foreign countries by United States corporations or their subsidiaries."

overcome it be "clearly expressed," it is, in my view, not reasonable to give effect to mere implications from the statutory language, as the EEOC has done. Cf. Sunstein, Law and Administration after Chevron, 90 Colum.L.Rev. 2071, 2114 (1990). On all other points, I join the opinion of the Court. JUSTICE MARSHALL, with whom JUSTICE BLACKMUN and JUSTICE STEVENS join, dissenting. Like any issue of statutory construction, the question whether Title VII protects United States citizens from discrimination by United States employers abroad turns solely on congressional intent. As the majority recognizes, our inquiry Page 499 U. S. 261 into congressional intent in this setting is informed by the traditional "canon of construction which teaches that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Foley Bros., Inc. v. Filardo, 336 U. S. 281, 336 U. S. 285 (1949). But contrary to what one would conclude from the majority's analysis, this canon is not a "clear statement" rule, the application of which relieves a court of the duty to give effect to all available indicia of the legislative will. Rather, as our case law applying the presumption against extraterritoriality well illustrates, a court may properly rely on this presumption only after exhausting all of the traditional tools "whereby unexpressed congressional intent may be ascertained." Ibid. When these tools are brought to bear on the issue in this case, the conclusion is inescapable that Congress did intend Title VII to protect United States citizens from discrimination by United States employers operating overseas. Consequently, I dissent. I Because it supplies the driving force of the majority's analysis, I start with "[t]he canon . . . that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Ibid. The majority recasts this principle as "the need to make a clear statement that a statute applies overseas." Ante at 499 U. S. 258 (emphasis added). So conceived, the presumption against extraterritoriality allows the majority to derive meaning from various instances of statutory silence -- from Congress' failure, for instance, "to mention foreign nations or foreign proceedings," ante at 499 U. S. 256, "to provide any mechanisms for overseas enforcement," ibid., or to "addres[s] the subject of conflicts with foreign laws and procedures," ante at 499 U. S. 256. At other points, the majority relies on its reformulation of the presumption to avoid the "need [to] choose between . . . competing interpretations" of affirmative Page 499 U. S. 262 statutory language that the majority concludes "does not speak directly to the question" of extraterritoriality. Ante at 499 U. S. 250 (emphasis added). In my view, the majority grossly distorts the effect of this rule of construction upon conventional techniques of statutory interpretation. Our most extensive discussion of the presumption against extraterritoriality can be found in Foley Brothers, supra. The issue in that case was whether the Eight Hour Law -- a statute regulating the length of the workday of employees hired to perform contractual work for the United States -- applied to construction projects in foreign nations. After noting "the

assumption that Congress is primarily concerned with domestic conditions," the Court concluded that there was "nothing in the Act itself, as amended, nor in the legislative history, which would lead to the belief that Congress entertained any intention other than the normal one in this case." 336 U.S. at 336 U. S. 285. The Court put particular emphasis on "[t]he scheme of the Act," including Congress' failure to draw a "distinction . . . therein between laborers who are aliens and those who are citizens of the United States." Id. at 336 U. S. 286. "The absence of any [such] distinction," the Court explained, "indicates . . . that the statute was intended to apply only to those places where the labor conditions of both citizen and alien employees are a probable concern of Congress." Ibid. The Court also engaged in extended analyses of the legislative history of the statute, see id. at 336 U. S. 286-288, and of pertinent administrative interpretations, see id. at 336 U. S. 288-290. The range of factors that the Court considered in Foley Brothers demonstrates that the presumption against extraterritoriality is not a "clear statement" rule. Clearstatement rules operate less to reveal actual congressional intent than to shield important values from an insufficiently strong legislative intent to displace them. See, e.g., Webster v. Doe, 486 U. S. 592, 486 U. S. 601, 486 U. S. 603 (1988); Atascadero State Hospital v. Scanlon, 473 U. S. 234, 473 U. S. 242-243 (1985); Kent v. Dulles, 357 U. S. 116, Page 499 U. S. 263 357 U. S. 130 (1958). When they apply, such rules foreclose inquiry into extrinsic guides to interpretation, see, e.g., Dellmuth v. Muth, 491 U. S. 223, 491 U. S. 230 (1989), and even compel courts to select less plausible candidates from within the range of permissible constructions, see, e.g., Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Construction Trades Council, 485 U. S. 568, 485 U. S. 575 (1988). The Court's analysis in Foley Brothers was by no means so narrowly constrained. Indeed, the Court considered the entire range of conventional sources "whereby unexpressed congressional intent may be ascertained," 336 U.S. at 336 U. S. 285 (emphasis added), [Footnote 1] including legislative history, statutory structure, and administrative interpretations. Subsequent applications of the presumption against extraterritoriality confirm that we have not imposed the drastic clear statement burden upon Congress before giving effect to its intention that a particular enactment apply beyond the national boundaries. See, e.g., Steele v. Bulova Watch Co., 344 U. S. 280, 344 U. S. 286-287 (1952) (relying on "broad jurisdictional grant" to find intention that Lanham Act applies abroad). The majority converts the presumption against extraterritoriality into a clear statement rule in part through selective quotation. Thus, the majority reports that the Court in New York Central R. Co. v. Chisholm, 268 U. S. 29 (1925), declined to construe the Federal Employers Liability Act to apply extraterritorially because it concluded that the statute " contains no words which definitely disclose an intention to give it extraterritorial effect,'" ante at 499 U. S. 251, quoting 268 U.S. at 268 U. S. 31. The majority omits the remainder of the quoted sentence, which states, "nor do the circumstances require an inference of such purpose." 268 U.S. at 268 U. S. 31 (emphasis added). Similarly, the majority notes that the Court, in McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U. S. 10 (1963), did not find "`any specific language'" in the National

Page 499 U. S. 264 Labor Relations Act indicating that Congress expected the statute to apply to foreign-flag ships. Ante at 499 U. S. 251, quoting 372 U.S. at 372 U. S. 19. The full sentence states: "But, as in Benz [v. Compania Naviera Hidalgo, S.A., 353 U. S. 138 (1957)], [petitioners] have been unable to point to any specific language in the Act itself or in its extensive legislative history that reflects such a congressional intent." 372 U.S. at 372 U. S. 19 (emphasis added). The majority also overstates the strength of the presumption by drawing on language from cases involving a wholly independent rule of construction: "that an act of congress ought never to be construed to violate the law of nations if any other possible construction remains. . . .'" McCulloch v. Sociedad Nacional, supra, 372 U.S. at 372 U. S. 21, quoting The Charming Betsy, 2 Cranch 64, 6 U. S. 118 (1804) (Marshall, C.J.); see Benz v. Compania Naviera Hidalgo, S.A., 353 U. S. 138, 353 U. S. 146-147 (1957). At issue in Benz was whether the Labor Management Relations Act of 1947 "applie[d] to a controversy involving damages resulting from the picketing of a foreign ship operated entirely by foreign seamen under foreign articles while the vessel is temporarily in an American port." Id. at 353 U. S. 138-139. Construing the statute to apply under such circumstances would have displaced labor regulations that were founded on the law of another nation and that were applicable solely to foreign nationals. Id. at 353 U. S. 139, 353 U. S. 142, 353 U. S. 146. In language quoted in the majority's opinion, see ante at 499 U. S. 248, the Court stated that "there must be present the affirmative intention of the Congress clearly expressed" before it would infer that Congress intended courts to enter "such a delicate field of international relations." Benz, supra, at 353 U. S. 147. Similarly, in McCulloch, the Court focused on the absence of "the affirmative intention of the Congress clearly expressed,'" in declining to apply the National Labor Relations Act to foreign-flag vessels with foreign crews. 372 U.S. at 372 U. S. 22, quoting Benz, supra, 353 U.S. at 353 U. S. 147. Extraterritorial application in McCulloch would have violated not only "the Page 499 U. S. 265 well-established rule of international law that the law of the flag state ordinarily governs the internal affairs of a ship," 372 U.S. at 372 U. S. 21, but also regulations issued by the State Department, see id. at 372 U. S. 20, and n. 11. Far from equating Benz and McCulloch's clear statement rule with Foley's presumption against extraterritoriality, the Court has, until now, recognized that Benz and McCulloch are reserved for settings in which the extraterritorial application of a statute would "implicat[e] sensitive issues of the authority of the Executive over relations with foreign nations." NLRB v. Catholic Bishop of Chicago, 440 U. S. 490, 440 U. S. 500 (1979); see Weinberger v. Rossi, 456 U. S. 25, 456 U. S. 32 (1982) (McCulloch rule designed to avoid constructions that raise "foreign policy implications"); Longshoremen v. Ariadne Shipping Co., 397 U. S. 195, 397 U. S. 198-199 (1970) (declining to follow Benz and McCulloch in setting in which United States citizens were employed by foreign vessels). The strictness of the McCulloch and Benz presumption permits the Court to avoid, if possible, the separation of powers and international comity questions associated with construing a statute to displace the domestic law of another nation. See NLRB v. Catholic Bishop of Chicago, supra, 440 U.S. at 440 U. S. 500. Nothing nearly so dramatic is at stake when Congress merely seeks to regulate the conduct of United States

nationals abroad. See Steele v. Bulova Watch Co., supra, 344 U.S. at 344 U. S. 285-286; Skiriotes v. Florida, 313 U. S. 69, 313 U. S. 73-74 (1941). [Footnote 2] Because petitioners advance a construction of Title VII that would extend its extraterritorial reach only to United States nationals, it is the weak presumption of Foley Brothers, not the strict clear statement rule of Benz and McCulloch, Page 499 U. S. 266 that should govern our inquiry here. Under Foley Brothers, a court is not free to invoke the presumption against extraterritoriality until it has exhausted all available indicia of Congress' intent on this subject. Once these indicia are consulted and given effect in this case, I believe there can be no question that Congress intended Title VII to protect United States citizens from discrimination by United States employers abroad. II A Title VII states: "It shall be an unlawful employment practice for an employer . . . to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. 2000e-2(a)(1). Under the statute, "[t]he term employer' means a person engaged in an industry affecting commerce who has fifteen or more employees," 2000e(b); "[t]he term 'commerce' means trade, traffic, commerce, transportation, transmission, or communication among the several States; or between a State and any place outside thereof. . . ." 2000e(g). These terms are broad enough to encompass discrimination by United States employers abroad. Nothing in the text of the statute indicates that the protection of an "individual" from employment discrimination depends on the location of that individual's workplace; nor does anything in the statute indicate that employers whose businesses affect commerce "between a State and any other place outside thereof" are exempted when their discriminatory conduct occurs beyond the Nation's borders. While conceding that it is "plausible" to infer from the breadth of the statute's central prohibition that Congress intended Title VII to apply extraterritorially, Page 499 U. S. 267 ante at 499 U. S. 250, the majority goes to considerable lengths to show that this language is not sufficient to overcome the majority's clear statement conception of the presumption against extraterritoriality. However, petitioners claim no more -and need claim no more, given additional textual evidence of Congress' intent -- than that this language is consistent with a legislative expectation that Title VII apply extraterritorially, a proposition that the majority does not dispute. Confirmation that Congress did, in fact, expect Title VII's central prohibition to have an extraterritorial reach is supplied by the so-called "alien exemption" provision. The alien exemption provision states that Title VII "shall not apply to an employer with respect to the employment of aliens outside any State." 42 U.S.C. 2000e-1 (emphasis added). [Footnote 3] Absent an intention that Title VII apply "outside any State," Congress would have had no reason to craft this extraterritorial

exemption. And because only discrimination against aliens is exempted, employers remain accountable for discrimination against United States citizens abroad. The inference arising from the alien exemption provision is more than sufficient to rebut the presumption against extraterritoriality. Compare Pennsylvania v. Union Gas Co., 491 U. S. 1 (1989). In Union Gas, we considered the question whether Congress had stated with sufficient clarity its intention to abrogate the States' Eleventh Amendment immunity under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. Based on a limited exemption provision directed at the States, we concluded that Congress had spoken with sufficient clarity; absent "a background understanding" that the general terms of the statute had made the States amenable to suit, we explained, Page 499 U. S. 268 the limited exemption "would [have] be[en] unnecessary." Id. at 491 U. S. 8. If this logic is sufficiently sharp to pierce the dense armor afforded the States by the clear statement abrogation rule of Atascadero State Hospital v. Scanlon, 473 U.S. at 473 U. S. 242-243; accord, Dellmuth v. Muth, 491 U.S. at 491 U. S. 230, then the same logic necessarily overcomes the much weaker presumption against extraterritoriality recognized in Foley Brothers. The history of the alien exemption provision confirms the inference that Congress expected Title VII to have extraterritorial application. As I have explained the Court, in Foley Brothers declined to construe the Eight Hour Law to apply extraterritorially in large part because of "[t]he absence of any distinction between citizen and alien labor" under the Law: "Unless we were to read such a distinction into the statute, we should be forced to conclude . . . that Congress intended to regulate the working hours of a citizen of Iran who chanced to be employed on a public work of the United States in that foreign land. . . . An intention so to regulate labor conditions which are the primary concern of a foreign country should not be attributed to Congress in the absence of a clearly expressed purpose." 336 U.S. at 336 U. S. 286. The language comprising the alien exemption provision first appeared in an employment discrimination bill introduced only seven weeks after the Court decided Foley Brothers, see H.R. 4453, 81st Cong., 1st Sess. (1949), and was clearly aimed at insulating that legislation from the concern that prevented the Court from adopting an extraterritorial construction of the Eight Hour Law. The legislative history surrounding Title VII leaves no doubt that Congress had extraterritorial application in mind when it revived the alien exemption provision from the earlier antidiscrimination bill: Page 499 U. S. 269 "In section 4 of the Act, a limited exception is provided for employers with respect to employment of aliens outside of any State. . . . The intent of [this] exemption is to remove conflicts of law which might otherwise exist between the United States and a foreign nation in the employment of aliens outside the United States by an American enterprise." H.R.Rep. No. 570, 88th Cong., 1st Sess. 4 (1963) (emphasis added), reprinted in Civil Rights, Hearings on H.R. 7152, as amended, before Subcommittee No. 5 of the Committee on the Judiciary, 88th Cong., 1st Sess. 2303 (Civil Rights Hearings). [Footnote 4] See also S.Rep. No. 867, 88th Cong., 2d Sess., 11 (1964) ("Exempted from the bill are . . . U.S. employers employing citizens of foreign countries in foreign lands" (emphasis added)).

Notwithstanding the basic rule of construction requiring courts to give effect to all of the statutory language, see Reiter v. Sonotone Corp., 442 U. S. 330, 442 U. S. 339 (1979), the majority never advances an alternative explanation of the alien exemption provision that is consistent with the majority's own conclusion that Congress intended Title VII to have a purely domestic focus. The closest that the majority comes to attempting to give meaning to the alien exemption provision is to identify without endorsement "two alternative raisons d'etre for that language" offered by respondents. Ante at 499 U. S. 254. Neither of these explanations is even minimally persuasive. Page 499 U. S. 270 The first is the suggestion that the alien exemption provision indicates, by negative implication, merely that aliens are covered by Title VII if they are employed in the United States. This construction hardly makes sense of the statutory language as a whole; indeed, it hardly makes sense. Under respondent's construction of the statute, no one -- neither citizen nor alien -- is protected from discrimination abroad. Thus, in order to credit respondent's interpretation of the alien exemption provision, we must attribute to Congress a decision to enact a completely superfluous exemption solely as a means of signaling its intent that aliens be protected from employment discrimination in this Nation. In addition to being extremely improbable, such a legislative subterfuge would have been completely unnecessary, for as we indicated in Espinoza v. Farah Mfg. Co., 414 U. S. 86 (1973), Congress clearly communicated its intent to cover aliens working in this country by prohibiting discrimination against "any individual." See id. at 414 U. S. 95. Respondent's second explanation is that Congress included the alien exemption provision in anticipation that courts would otherwise construe Title VII to apply to companies employing aliens in United States "possessions," an outcome supposedly dictated by this Court's decision in Vermilya-Brown Co. v. Connell, 335 U. S. 377 (1948). This explanation may very well be true, but it only corroborates the conclusion that Congress expected Title VII to apply extraterritorially. Although there is no fixed legal meaning for the term "possession," see id. at 335 U. S. 386, it is clear that possessions, like foreign nations, are extraterritorial jurisdictions to which the presumption against extraterritorial application of a statute attaches. See Foley Bros., supra, 336 U.S. at 336 U. S. 285. [Footnote 5] Because only one rule of construction applies to both types of jurisdiction, a Page 499 U. S. 271 court following Vermilya-Brown and Foley Brothers would have reached the same conclusion about the applicability of Title VII to companies employing aliens in possessions and to companies employing aliens in foreign nations. Consequently, if Congress believed that the alien exemption provision was necessary to protect employers in the former class, it would have had just as much reason to believe that the provision was necessary to protect employers in the latter. In any case, the specific history surrounding the alien exemption provision makes clear that Congress had the situation of "U.S. employers employing citizens of foreign countries in foreign lands" firmly in mind when it enacted that provision. S.Rep. No. 867, supra, at 11 (emphasis added). B Rather than attempting to reconcile its interpretation of Title VII with the language and legislative history of the alien exemption provision, the majority contents itself with pointing out various legislative silences that, in the majority's view, communicate a

congressional intent to limit Title VII to instances of domestic employment discrimination. In particular, the majority claims that, had Congress intended to give Title VII an extraterritorial reach, it "would have addressed the subject of conflicts with foreign laws and procedures," ante at 499 U. S. 256, and would have "provide[d] . . . mechanisms for overseas enforcement," including special venue provisions and extraterritorial investigatory powers for the Equal Employment Opportunity Commission (EEOC), see ibid. The majority also emphasizes Congress' failure to draw an express distinction between extraterritorial application of Title VII to United States employers and extraterritorial application of Title VII to foreign employers. See ante at 499 U. S. 255. In my view, none of these supposed omissions detracts from the conclusion that Congress intended Title VII to apply extraterritorially. Page 499 U. S. 272 The majority is simply incorrect in its claim that Congress disregarded the subject of conflicts with foreign law. Congress addressed this concern by enacting the alien exemption provision, the announced purpose of which was "to remove conflicts of law which might otherwise exist between the United States and a foreign nation in the employment of aliens outside the United States by an American enterprise." H.R.Rep. No. 570, at 4, reprinted in Civil Rights Hearings, at 2303 (emphasis added). As I have explained, the alien exemption provision is tailored to avert the very type of potential conflict that prevented the Court from construing the Eight Hour Law to apply extraterritorially in Foley Brothers. Congress could have gone further in addressing the topic of conflicts, but it is not our position to second-guess the balance struck by Congress in this respect. The majority also misrepresents the character of Title VII's venue provisions. Title VII provides that venue is proper in various districts related to the underlying charge of discrimination, but also states that "if the [employer] is not found within any such district, such an action may be brought within the judicial district in which the [employer] has his principal office." 42 U.S.C. 2000e-5(f)(3). "Principal office" venue would extend to any United States employer doing business abroad. Identical language is found in the venue provision of the Jones Act, 46 U.S.C.App. 688(a), which, under appropriate circumstances, applies to injuries occurring outside the territorial jurisdiction of the United States, see generally Hellenic Lines Ltd. v. Rhoditis, 398 U. S. 306, 398 U. S. 308309 (1970). [Footnote 6] Page 499 U. S. 273 Nor can any inference be drawn from the scope of the EEOC's investigatory powers under the statute. Title VII directs the EEOC to conduct an investigation "[w]henever a charge is filed" under the statute, 42 U.S.C. 2000e-5(b); it also states that the EEOC is to "have access to, for the purposes of examination, and the right to copy any evidence of any person being investigated," 2000e-8(a). Far from imposing a geographic limitation on either of these powers, Title VII states that the EEOC may "exercise any or all its powers" in the District of Columbia (the site of the EEOC's principal office) or "at any other place." 2000e-4(f) (emphasis added). Title VII does limit the reach of the subpoena power of the EEOC, see 2000e-9; 29 U.S.C. 161(1), but this limitation does not detract from the potential extraterritorial reach of the agency's investigatory powers. See FTC v. Compagnie De

Saint-Gobain-Pont-A-Mousson, 205 U.S. App.D.C. 172, 194, 636 F.2d 1300, 1322 (1980) (territorial limitation on subpoena power does not prevent extraterritorial investigations). Moreover, Congress has also declined to give extraterritorial subpoena power to either the EEOC under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. 626(a); 29 U.S.C. 209, 15 U.S.C. 49, or to the Securities and Exchange Commission under the Securities Exchange Act of 1934, 15 U.S.C. 78u(b), even though the former statute expressly applies abroad, 29 U.S.C. 623(h)(1), 630(f), [Footnote 7] and the latter is widely recognized as doing so, see Page 499 U. S. 274 Turley, "When in Rome": Multinational Misconduct and the Presumption against Extraterritoriality, 84 Nw.U.L.Rev. 598, 613-617 (1990). In short, there simply is no correlation between the scope of an agency's subpoena power and the extraterritorial reach of the statute that the agency is charged with enforcing. Finally, the majority overstates the importance of Congress' failure expressly to disclaim extraterritorial application of Title VII to foreign employers. As I have discussed, our cases recognize that application of United States law to United States nationals abroad ordinarily raises considerably less serious questions of international comity than does the application of United States law to foreign nationals abroad. See Steele v. Bulova Watch Co., 344 U.S. at 344 U. S. 285-286; Skiriotes v. Florida, 313 U.S. at 313 U. S. 73-74. It is the latter situation that typically presents the foreign policy and conflicts of law concerns that underlie the clear statement rule of McCulloch and Benz. Because two different rules of construction apply depending on the national identity of the regulated parties, the same statute might be construed to apply extraterritorially to United States nationals but not to foreign nationals. Compare Steele v. Bulova Watch Co., supra, 344 U.S. at 344 U. S. 285287 (applying Lanham Act to United States national for conduct abroad) with Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F.2d 633, 642-643 (CA2) (declining to apply Lanham Act to foreign national for conduct abroad), cert. denied, 352 U.S. 871 (1956). Cf. Webster v. Doe, 486 U.S. at 486 U. S. 599-601, 486 U. S. 603 (finding language in judicial-review statute to have different meanings depending on applicability of different rules of construction). The legislative history of Title VII, moreover, furnishes direct support for such a construction. See H.R.Rep. No. 570, at 4 (explaining that alien exemption provision applies to "employment of aliens outside the United States by an Page 499 U. S. 275 American enterprise" (emphasis added)), reprinted in Civil Rights Hearings, at 2303; S.Rep. No. 867, at 11 (alien exemption provision directed at "U.S. employers employing citizens of foreign countries in foreign lands" (emphasis added)); see also EEOC Policy Statement No. 125, BNA EEOC Compliance Manual 605:0061 (April, 1989) (construing nationality of employer abroad to be "significant" under Title VII). Thus, although the issue is not before us in this case, we would not be at a loss for interpretive resources for narrowing Title VII's extraterritorial reach to United States employers should such a construction be necessary in order to avoid conflicts with foreign law. III The extraterritorial application of Title VII is supported not only by its language and legislative history, but also by pertinent administrative interpretations. See Foley Bros, 336 U.S. at 336

U. S. 288, the EEOC has been on record as construing Title VII to apply to United States companies employing United States citizens abroad: "Section [2000e-2(a)(1)] provides that it is unlawful to discriminate against 'any individual' with respect to his employment. . . . The only exception to 'any individual' appears to be that contained in Section [2000e-1], i.e., aliens working outside the U.S. and to employees of certain religious and educational institutions." "Giving Section [2000e-1] its normal meaning would indicate a Congressional intent to exclude from the coverage of the statute aliens employed by covered employers working in the employers' operations outside of the United States." "The reason for such exclusions is obvious; employment conditions in foreign countries are beyond the control of Congress. The section does not similarly exempt from the provisions of the Act U.S. Citizens employed abroad by U.S. employers. If Section [2000e-1] is to Page 499 U. S. 276 have any meaning at all, therefore, it is necessary to construe it as expressing a Congressional intent to extend the coverage of Title VII to include employment conditions of citizens in overseas operations of domestic corporations at the same time it excludes aliens of the domestic corporation from the operation of the statute." Letter from W. Carey, EEOC General Counsel, to Senator Frank Church (Mar. 14, 1975), reprinted in App. 48-49. The agency has reiterated this interpretation in various decisions and policy pronouncements since then. See, e.g., EEOC Dec. No. 85-16 (Sept. 16, 1985), 38 FEP Cases 1889, 1891-1892; EEOC Policy Statement No. 125, supra, at 605:005 to 605:0057. "[I]t is axiomatic that the EEOC's interpretation of Title VII, for which it has primary enforcement responsibility, need not be the best one by grammatical or any other standards. Rather, the EEOC's interpretation of ambiguous language need only be reasonable to be entitled to deference." EEOC v. Commercial Office Products Co., 486 U. S. 107, 486 U. S. 115 (1988). In this case, moreover, the EEOC's interpretation is reinforced by the longstanding interpretation of the Department of JUSTICE, the agency with secondary enforcement responsibility under Title VII. See Sheet Metal Workers v. EEOC, 478 U. S. 421, 478 U. S. 465-466 (1986) (plurality opinion) (deference owed Department of Justice interpretation of Title VII). Stating the position of the Department, then-Assistant Attorney General Scalia testified before Congress: "With respect to discrimination in employment by private companies and individuals, Title VII of the 1964 Civil Rights Act, as amended, prohibits a broad range of 'unlawful employment practices' by any private employer 'engaged in any industry affecting commerce who has fifteen or more employees.' . . . Once again the [statute] contains an exemption 'with respect to the employment of aliens outside any State,' which implies that it is Page 499 U. S. 277 applicable to the employment of United States citizens by covered employers anywhere in the world." Foreign Investment and Arab Boycott Legislation, Hearings before the Subcommittee on International Finance of the Senate Committee on Banking, Housing and Urban Affairs, 94th Cong., 1st Sess., 165 (1975). The majority offers no

response to the view of the Department of Justice. It discounts the force of the EEOC's views on the ground that the EEOC has been inconsistent. The majority points to a 1970 EEOC regulation in which the agency declared that "Title VII of the Civil Rights Act of 1964 protects all individuals, both citizen and noncitizens, domiciled or residing in the United States, against discrimination on the basis of race, color, religion, sex, or national origin." 29 CFR 1606.1(c) (1971). According to the majority, the inconsistency between 1606.1(c) and the EEOC's 1975 pronouncement deprives the latter of persuasive force. See ante at 499 U. S. 257. This conclusion is based on a misreading of 1606.1(c). Obviously, it does not follow from the EEOC's recognition that Title VII applies to "both citizens and noncitizens, domiciled or residing in the United States" that the agency understood Title VII to apply to no one outside the United States. The context of the regulation confirms that the EEOC meant no such thing. The agency promulgated 1606.1 in order to announce its interpretation of Title VII's ban on national-origin discrimination. See 1606.1(a) (b), (d). The agency emphasized that Title VII "protects all individuals, both citizens and noncitizens, domiciled or residing in the United States" only to underscore that neither the citizenship nor the residency status of an individual affects this statutory prohibition. Indeed, the EEOC could not have stated that Title VII protects "both citizens and noncitizens" from national-origin discrimination outside the United States, because such an interpretation would have been inconsistent with the alien exemption provision. At the very time that Page 499 U. S. 278 1606.1 was in effect, the EEOC was representing to Congress that Title VII did protect United States citizens from discrimination by United States employers abroad. See Letter from William A. Carey, EEOC General Counsel, supra, at 16. The majority's insistence that the EEOC was contradicting itself fails to give the agency the deference that it is due on the interpretation of its own regulations. See Udall v. Tallman, 380 U. S. 1, 380 U. S. 16-17 (1965). In sum, there is no reason not to give effect to the considered and consistently expressed views of the two agencies assigned to enforce Title VII. IV In the hands of the majority, the presumption against extraterritoriality is transformed from a "valid approach whereby unexpressed congressional intent may be ascertained," Foley Bros., 336 U.S. at 336 U. S. 285, into a barrier to any genuine inquiry into the sources that reveal Congress' actual intentions. Because the language, history, and administrative interpretations of the statute all support application of Title VII to United States companies employing United States citizens abroad, I dissent.

G.R. No. 157376 October 2, 2007 CORAZON C. SIM, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and * EQUITABLE PCI-BANK, respondents . DECISION AUSTRIA-MARTINEZ, J.: Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor Arbiter, alleging that she was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. Eventually, she was promoted to Manager position, until September 1999, when she received a letter from Remegio David -- the Senior Officer, European Head of PCIBank, and Managing Director of PCIB- Europe -- informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds. Respondent denied any employer-employee relationship between them, and sought the dismissal of the complaint. On September 3, 2001, the Labor Arbiter rendered its Decision dismissing the case for want of jurisdiction and/or lack of 1 merit. According to the Labor Arbiter: It should be stressed at this juncture that the labor relations system in the Philippines has no extra-territorial jurisdiction. It is limited to the relationship between labor and capital within the Philippines. Since complainant was hired and assigned in a foreign land, although by a Philippine Corporation, it follows that the law that govern their relationship is the law of the place where the employment was executed and her place of work or assignment. On this premise, the Italian law allegedly provides severance pay which was applied and extended to herein complainant (Annex "P", respondent's position paper). As can be gleaned from the foregoing, a further elucidation on the matter would be an exercise in futility. Hence, this case should be dismissed for want of jurisdiction. Assuming for the sake of argument that this Office has jurisdiction over this case, still, this Office is inclined to rule in favor of the respondent. Complainant, as General Manager is an employee whom the respondent company reposed its trust and confidence. In other words, she held a position of trust. It is well-settled doctrine that the basic premise for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence. (National Sugar Refineries Corporation vs. NLRC, 286 SCRA 478.) xxx In this case, the respondent company had strong reason to believe that the complainant was guilty of the offense charged 2 against her. On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's 3 appeal for lack of merit. Without filing a motion for reconsideration with the NLRC, petitioner went to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. In a Resolution dated October 29, 2002, the CA dismissed the petition due to petitioner's non-filing of a motion for 5 reconsideration with the NLRC. Petitioner filed a motion for reconsideration but it was nonetheless denied by the CA per Resolution dated February 26, 2003.
4

Hence, the present recourse under Rule 45 of the Rules of Court. Petitioner alleges that: I. The Court of Appeals departed from the accepted and usual concepts of remedial law when it ruled that the petitioner should have first filed a Motion for Reconsideration with the National Labor Relations Commission. II. The National Labor Relations Commission decided a question of jurisdiction heretofore not yet determined by the Court and decided the same in a manner not in accord with law when it ruled that it had no jurisdiction over a labor dispute between a Philippine corporation and its employee which it 6 assigned to work for a foreign land. The pivotal question that needs to be resolved is whether or not a prior motion for reconsideration is indispensable for the filing of a petition for certiorari under Rule 65 of the Rules of Court with the CA. Under Rule 65, the remedy of filing a special civil action for certiorari is available only when there is no appeal; or any plain, speedy, and adequate remedy in the ordinary course of 7 law. A "plain" and "adequate remedy" is a motion for reconsideration of the assailed order or resolution, the filing of which is an indispensable condition to the filing of a special 8 civil action for certiorari. This is to give the lower court the 9 opportunity to correct itself. There are, of course, exceptions to the foregoing rule, to wit: (a) where the order is a patent nullity, as where the court a quo has no jurisdiction; (b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is perishable; (d) where, under the circumstances, reconsideration would be useless; a motion for

(e) where petitioner was deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; (g) where the proceedings in the lower court are a nullity for lack of due process; (h) where the proceeding was ex parte or in which the petitioner had no opportunity to object; and (i) where the issue raised is one purely of law or public interest 10 is involved. Petitioner, however, failed to qualify her case as among the few exceptions. In fact, the Court notes that the petition filed before the CA failed to allege any reason why a motion for reconsideration was dispensed with by petitioner. It was only in her motion for reconsideration of the CA's resolution of dismissal and in the petition filed in this case that petitioner justified her non-filing of a motion for reconsideration. Petitioner argues that filing a motion for reconsideration with the NLRC would be merely an exercise in futility and useless.

But it is not for petitioner to determine whether it is so. As stressed in Cervantes v. Court of Appeals: It must be emphasized that a writ of certiorari is a prerogative writ, never demandable as a matter of right, never issued except in the exercise of judicial discretion. Hence, he who seeks a writ of certiorari must apply for it only in the manner and strictly in accordance with the provisions of the law and the Rules. Petitioner may not arrogate to himself the determination of whether a motion for reconsideration is necessary or not. To dispense with the requirement of filing a motion for reconsideration, petitioner must show a concrete, compelling, and valid reason for doing so, which petitioner failed to do. Thus, the Court of Appeals correctly 11 dismissed the petition. (Emphasis supplied) Petitioner also contends that the issue at bench is purely a question of law, hence, an exception to the rule. A reading of the petition filed with the CA shows otherwise. The issues raised in this case are mixed questions of fact and law. There is a question of fact when doubt or difference arises as to the truth or falsehood of the alleged facts, and there is a question of law where the doubt or difference arises as to what the law 12 is on a certain state of facts. Petitioner, aside from questioning the ruling of the NLRC sustaining the Labor Arbiter's view that it does not have any jurisdiction over the case, also questions the NLRC's ruling affirming the Labor Arbiter's conclusion that she was validly dismissed by respondent. The legality of petitioner's dismissal hinges on the question of whether there was an employeremployee relationship, which was denied by respondent; and, if in the affirmative, whether petitioner, indeed, committed a breach of trust and confidence justifying her dismissal. These are mixed questions of fact and law and, as such, do not fall within the exception from the filing of a motion for reconsideration. Consequently, the CA was not in error when it dismissed the petition. More so since petitioner failed to show any error on the part of the Labor Arbiter and the NLRC in ruling that she was dismissed for cause. The rule is that the Court is bound by the findings of facts of the Labor Arbiter or the NLRC, unless it is shown that grave abuse of discretion or lack or excess of jurisdiction has been 13 committed by said quasi-judicial bodies. The Court will not deviate from said doctrine without any clear showing that the findings of the Labor Arbiter, as affirmed by the NLRC, are bereft of sufficient substantiation. Petitioner does not deny having withdrawn the amount of P3,000,000.00 lire from the bank's account. What petitioner submits is that she used said amount for the Radio Pilipinas sa Roma radio program of the company. Respondent, however, countered that at the time she withdrew said amount, the radio program was already off the air. Respondent is a managerial employee. Thus, loss of trust and confidence is a valid ground 14 for her dismissal. The mere existence of a basis for believing that a managerial employee has breached the trust of the 15 employer would suffice for his/her dismissal. [w]hen an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, she gives up some of the rigid guaranties available to ordinary workers. Infractions which if committed by others would be overlooked or condoned or penalties mitigated may be visited with more severe disciplinary action. A company's resort to 16 acts of self-defense would be more easily justified. The Court notes, however, a palpable error in the Labor Arbiter's disposition of the case, which was affirmed by the

NLRC, with regard to the issue on jurisdiction. It was wrong for the Labor Arbiter to rule that "labor relations system in the 17 Philippines has no extra-territorial jurisdiction." Article 217 of the Labor Code provides for the jurisdiction of the Labor Arbiter and the National Labor Relations Commission, viz.: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. Moreover, Section 10 of Republic Act (R.A.) No. 8042, or the 18 Migrant Workers and Overseas Filipinos Act of 1995, provides: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. Also, Section 62 of the Omnibus Rules and Regulations 19 Implementing R.A. No. 8042 provides that the Labor Arbiters of the NLRC shall have the original and exclusive jurisdiction to hear and decide all claims arising out of employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages, subject to the rules and procedures of the NLRC. Under these provisions, it is clear that labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations, including termination disputes involving all workers, among whom are overseas Filipino 20 workers. In Philippine National Bank v. Cabansag, the Court pronounced: x x x Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary

notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws "which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon 21 in a foreign country." (Emphasis supplied) In any event, since the CA did not commit any error in dismissing the petition before it for failure to file a prior motion for reconsideration with the NLRC, and considering that the Labor Arbiter and the NLRC's factual findings as regards the validity of petitioner's dismissal are accorded great weight and respect and even finality when the same are supported by substantial evidence, the Court finds no compelling reason to relax the rule on the filing of a motion for reconsideration prior to the filing of a petition for certiorari. WHEREFORE, the petition is DENIED. Costs against petitioner.

thereto, granted the said Motion and admitted the annexes attached thereto as the reconstituted records of this case per Order dated September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of which had been deferred; was denied by the Court in its Order of October 4, 1988. On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial conference. At the conference, the parties could not arrive at any settlement. However, they agreed on the following stipulations of facts: 1. The defendant admits the existence of the judgment dated December 28, 1984 as well as its amendment dated April 13, 1987, but not necessarily the authenticity or validity thereof; 2. The plaintiff is not doing business and is not licensed to do business in the Philippines; 3. The residence of defendant, Antonio Heras, is New Manila, Quezon City. The only issue for this Court to determine is, whether or not the judgment of the Hong Kong Court has been repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact, such as to overcome the presumption established in Section 50, Rule 39 of the Rules of Court in favor of foreign judgments. In view of the admission by the defendant of the existence of the aforementioned judgment (Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of January 18, 1989), as well as the legal presumption in favor of the plaintiff as provided for in paragraph (b); Sec. 50, ( Ibid.), the plaintiff presented only documentary evidence to show rendition, existence, and authentication of such judgment by the proper officials concerned (Pls. See Exhibits "A" thru "B", with their submarkings). In addition, the plaintiff presented testimonial and documentary evidence to show its entitlement to attorney's fees and other expenses of litigation. . . . . On the other hand, the defendant presented two witnesses, namely. Fortunata dela Vega and Russel Warren Lousich.

G.R. No. 128803 September 25, 1998 ASIAVEST vs. THE COURT respondents. LIMITED, OF APPEALS and ANTONIO petitioner, HERAS,

DAVIDE, JR., J.: In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are summarized in the 24 August 1 1990 Decision of Branch 107 of the Regional Trial Court of Quezon City in Civil Case No. Q-52452; thus: The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant Antonio Heras praying that said defendant be ordered to pay to the plaintiff the amounts awarded by the Hong Kong Court Judgment dated December 28, 1984 and amended on April 13, 1987, to wit: 1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of payment with legal interest from December 28, 1984 until fully paid; 2) interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to December 28, 1984; and 3) HK$905.00 at fixed cost in the action; and 4) at least $80,000.00 representing attorney's fees, litigation expenses and cost, with interest thereon from the date of the judgment until fully paid. On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could resolve the said motion, a fire which partially razed the Quezon City Hall Building on June 11, 1988 totally destroyed the office of this Court, together with all its records, equipment and properties. On July 26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution of Case Records. The Court, after allowing the defendant to react

The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of a statement of claim of Asiavest Limited was ever served in the office of the Navegante Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of summons was either served on the defendant at his residence in New Manila, Quezon City. Her knowledge is based on the fact that she was the personal secretary of Mr. Heras during his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping business in Hong Kong; that she was in-charge of all his letters and correspondence, business commitments, undertakings, conferences and appointments, until October 1984 when Mr. Heras left Hong Kong for good; that she was also the Officerin-Charge or Office Manager of Navegante Shipping Agency LTD, a Hong Kong registered and based company acting as ships agent, up to and until the company closed shop sometime in the first quarter of 1985, when shipping business collapsed worldwide; that the said company held office at 3435 Connaught Road, Central Hong Kong and later transferred to Carton House at Duddel Street, Hong Kong, until the company closed shop in 1985; and that she was certain of such facts because she held office at Caxton House up to the first quarter of 1985. Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of the law office of the defendant's counsel who made a verification of the record of the case filed by the plaintiff in Hong Kong against the defendant, as well as the procedure in serving Court processes in Hong Kong.

In his affidavit (Exh. "2") which constitutes his direct testimony, the said witness stated that: The defendant was sued on the basis of his personal guarantee of the obligations of Compania Hermanos de Navegacion S.A. There is no record that a writ of summons was served on the person of the defendant in Hong Kong, or that any such attempt at service was made. Likewise, there is no record that a copy of the judgment of the High Court was furnished or served on the defendant; anyway, it is not a legal requirement to do so under Hong Kong laws; a) The writ of summons or claim can be served by the solicitor (lawyer) of the claimant or plaintiff. In Hong Kong there are no Court personnel who serve writs of summons and/or most other processes. b) If the writ of summons or claim (or complaint) is not contested, the claimant or the plaintiff is not required to present proof of his claim or complaint nor present evidence under oath of the claim in order to obtain a Judgment. c) There is no legal requirement that such a Judgment or decision rendered by the Court in Hong Kong [to] make a recitation of the facts or the law upon which the claim is based. d) There is no necessity to furnish the defendant with a copy of the Judgment or decision rendered against him. e) In an action based on a guarantee, there is no established legal requirement or obligation under Hong Kong laws that the creditor must first bring proceedings against the principal debtor. The creditor can immediately go against the guarantor. On cross examination, Mr. Lousich stated that before he was commissioned by the law firm of the defendant's counsel as an expert witness and to verify the records of the Hong Kong case, he had been acting as counsel for the defendant in a number of commercial matters; that there was an application for service of summons upon the defendant outside the jurisdiction of Hong Kong; that there was an order of the Court authorizing service upon Heras outside of Hong Kong, particularly in Manila or any other place in the Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of service of summons, otherwise the Hong Kong Court will refuse to render judgment (p. 10, ibid); that the mere fact that the Hong Kong Court rendered judgment, it can be presumed that there was service of summons; that in this case, it is not just a presumption because there was an affidavit stating that service was effected in [sic] a particular man here in Manila; that such affidavit was filed by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of December 1984, and stated in essence that "on Friday, the 23rd of November 1984 he served the 4th defendant at No. 6 First Street, Quezon City by leaving it at that address with Mr. Dionisio Lopez, the son-in-law of the 4th defendant the copy of the writ and Mr. Lopez informed me and I barely believed that he would bring the said writ to the attention of the 4th defendant" (pp. 11-12, ibid.); that upon filing of that affidavit, the Court was asked and granted judgment against the 4th defendant; and that if the summons or claim is not contested, the claimant of the plaintiff is not required to present proof of his claim or complaint or present evidence under oath of the claim in order to obtain judgment; and that such judgment can be enforced in the same manner as a judgment rendered after full hearing. The trial court held that since the Hong Kong court judgment had been duly proved, it is a presumptive evidence of a right as between the parties; hence, the party impugning it had the burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden. He did not testify to state categorically and under oath that he never received summons.

Even his own witness Lousich admitted that HERAS was served with summons in his Quezon City residence. As to De la Vega's testimony regarding non-service of summons, the same was hearsay and had no probative value. As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the procedural laws of the Philippines because it contained no statements of the facts and the law on which it was based, the trial court ruled that since the issue relate to procedural matters, the law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich, such legalities were not required under Hong Kong laws. The trial Court also debunked HERAS' contention that the principle of excussion under Article 2058 of the Civil Code of the Philippines was violated. It declared that matters of substance are subject to the law of the place where the transaction occurred; in this case, Hong Kong laws must govern. The trial court concluded that the Hong Kong court judgment should be recognized and given effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the foreign judgment. It then decreed; thus: WHEREFORE, judgment is hereby rendered ordering defendant to pay to the plaintiff the following sums or their equivalents in Philippine currency at the time of payment: US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate amount from December 28, 1984, and to pay attorney's fees in the sum of P80,000.00. ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs and an increase in attorney's fees in the amount of US$19,346.45 with interest until full payment of the said obligations. On the other hand, HERAS no longer opposed the motion and instead appealed the decision to the Court of Appeals, which docketed the appeal as CAG.R. CV No. 29513. In its order of 2 November 1990, the trial court granted ASIAVEST's motion for reconsideration by increasing the award of attorney's fees to "US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS SUIT," provided that ASIAVEST would pay the corresponding filing fees for the increase. ASIAVEST appealed the order requiring prior payment of filing fees. However, it later withdrew its appeal and paid the additional filing fees. On 3 April 1997, the Court of Appeals rendered its decision reversing the decision of the trial court and dismissing ASIAVEST's complaint without prejudice. It underscored the fact that a foreign judgment does not of itself have any extraterritorial application. For it to be given effect, the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If such tribunal has not acquired jurisdiction, its judgment is void.
3 2

The Court of Appeals agreed with the trial court that matters of remedy and procedure, such as those relating to service of summons upon the defendant are governed by the lex fori, which was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousich's testimony that under the Hong Kong law, the substituted service of summons upon HERAS effected in the Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would be valid provided that it was done in accordance with Philippine laws. It then stressed that where the action is in personam and the defendant is in the Philippines, the summons should be personally served on the defendant pursuant to Section 7, Rule

14 of the Rules of Court. Substituted service may only be availed of where the defendant cannot be promptly served in person, the fact of impossibility of personal service should be explained in the proof of service. It also found as persuasive HERAS' argument that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge of the court issuing the summons, ASIAVEST should have asked for leave of the local courts to have the foreign summons served by the sheriff or other court officer of the place where service was to be made, or for special reasons by any person authorized by the judge. The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is unavailing to give jurisdiction in an action against him personally for money recovery." Summons should have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did not acquire jurisdiction over HERAS. Nonetheless it did not totally foreclose the claim of ASIAVEST; thus: While We are not fully convinced that [HERAS] has a meritorious defense against [ASIAVEST's] claims or that [HERAS] ought to be absolved of any liability, nevertheless, in view of the foregoing discussion, there is a need to deviate front the findings of the lower court in the interest of justice and fair play. This, however, is without prejudice to whatever action [ASIAVEST] might deem proper in order to enforce its claims against [HERAS]. Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence supporting the validity of the foreign judgment be submitted, and that our courts are not bound to give effect to foreign judgments which contravene our laws and the principle of sound morality and public policy. ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling that I. . . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE "SUPPORTING THE VALIDITY OF THE JUDGMENT"; II. . . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINES LAW; III. . . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG; IV. . . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF PHILIPPINE COURTS; V. . . . THE FOREIGN JUDGMENT "CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES. Being interrelated, we shall take up together the assigned errors. Under paragraph (b) of Section 50, Rule 39 of the Rules of 5 Court, which was the governing law at the time this case was decided by the trial court and respondent Court of Appeals, a foreign judgment against a person rendered by a court having

jurisdiction to pronounce the judgment is presumptive evidence of a right as between the parties and their successors in interest by the subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to the contrary, a court, or judge acting as such, whether in the Philippines or elsewhere, is presumed to have acted in the lawful exercise of jurisdiction. Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party challenging the foreign judgment HERAS in this case. At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the other hand, ASIAVEST presented evidence to prove rendition, existence, and authentication of the judgment by the proper officials. The judgment is thus presumed to be valid and binding in the 6 country from which it comes, until the contrary is shown. Consequently, the first ground relied upon by ASIAVEST has merit. The presumption of validity accorded foreign judgment would be rendered meaningless were the party seeking to enforce it be required to first establish its validity. The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme Court did not acquire jurisdiction over the person of HERAS. This involves the issue of whether summons was properly and validly served on HERAS. It is settled that matters of remedy and procedure such as those relating to the service of process upon the defendant are 7 governed by the lex fori or the law of the forum, i.e., the law of Hong Kong in this case. HERAS insisted that according to his witness Mr. Lousich, who was presented as an expert on Hong Kong laws, there was no valid service of summons on him. In his counter-affidavit, which served as his direct testimony 9 per agreement of the parties, Lousich declared that the record of the Hong Kong case failed to show that a writ of summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither did the record show that a copy of the judgment of the court was served on HERAS. He stated further that under Hong Kong laws (a) a writ of summons could be served by the solicitor of the claimant or plaintiff; and (b) where the said writ or claim was not contested, the claimant or plaintiff was not required to present proof under oath in order to obtain judgment. On cross-examination by counsel for ASIAVEST, Lousich' testified that the Hong Kong court authorized service of summons on HERAS outside of its jurisdiction, particularly in the Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERAS's son-in-law 10 Dionisio Lopez. On redirect examination, Lousich declared that such service of summons would be valid under Hong Kong 11 laws provided that it was in accordance with Philippine laws. We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of public documents of a sovereign authority, tribunal, official body, or public officer may be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal custody thereof, which must be accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. The certificate may be issued by a secretary of the embassy or
8

legation, consul general, consul, vice consul, or consular agent, or 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. The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and must be under the official seal of the attesting officer. Nevertheless, the testimony of an expert witness may be 12 allowed to prove a foreign law. An authority on private international law thus noted: Although it is desirable that foreign law be proved in accordance with the above rule, however, the Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the presentation of other competent evidence to prove the existence of a foreign law. In that case, the Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco, California, who quoted verbatim a section of California Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the existence of said law. Accordingly, in line with this view, the Supreme Court in the Collector of Internal Revenue v. Fisher et 14 al., upheld the Tax Court in considering the pertinent law of California as proved by the respondents' witness. In that case, the counsel for respondent "testified that as an active member of the California Bar since 1951, he is familiar with the revenue and taxation laws of the State of California. When asked by the lower court to state the pertinent California law as regards exemption of intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derring's California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited section was offered in evidence by respondents." Likewise, in several naturalization cases, it was held by the Court that evidence of the law of a foreign country on reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and used as basis for favorable action, if, in the light of all the circumstances, the Court is 15 "satisfied of the authenticity of the written proof offered." Thus, in, a number of decisions, mere authentication of the Chinese Naturalization Law by the Chinese Consulate General 16 of Manila was held to be competent proof of that law. There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong Kong in respect of service of summons either in actions in rem or in personam, and where the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-called processual presumption shall come into play. It will thus be presumed that the Hong Kong law on the matter is 17 similar to the Philippine law. As stated in Valmonte vs. Court of Appeals, it will be helpful to determine first whether the action is in personam, in rem, or quasi in rem because the rules on service of summons under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action. An action in personam is an action against a person on the basis of his personal liability. An action in rem is an action 19 against the thing itself instead of against the person. An action quasi in rem is one wherein 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.
20 18

In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. Jurisdiction over the person of a resident defendant who does not voluntarily appear in court can be acquired by personal service of summons as provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a reasonable time, substituted service may be made in accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following modes of service may be resorted to: (1) substituted service 21 set forth in Section 8; (2) personal service outside the country, with leave of court; (3) service by publication, also with 22 leave of court; or (4) any other manner the court may deem 23 sufficient. However, in an action in personam wherein the defendant is a non-resident who does not voluntarily submit himself to the authority of the court, personal service of summons within the state is essential to the acquisition of jurisdiction over her 24 person. This method of service is possible if such defendant is physically present in the country. If he is not found therein, the court cannot acquire jurisdiction over his person and 25 therefore cannot validly try and decide the case against him. 26 An exception was laid down in Gemperle v. Schenker wherein a non-resident was served with summons through his wife, who was a resident of the Philippines and who was his representatives and attorney-in-fact in a prior civil case filed by him; moreover, the second case was a mere offshoot of the first case. On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res. Nonetheless summons must be served upon the defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying the 27 due process requirements. Thus, where the defendant is a non-resident who is not found in the Philippines and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject matter of which is property in the Philippines in which the defendant has or claims a lien or interest; (3) the action seeks the exclusion of the defendant from any interest in the property located in the Philippines; or (4) the property of the defendant has been attached in the Philippines service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court, or (c) any other manner 28 the court may deem sufficient. In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was based on his personal guarantee of the obligation of the principal debtor. Before we can apply the foregoing rules, we must determine first whether HERAS was a resident of Hong Kong. Fortunata de la Vega, HERAS's personal secretary in Hong 29 Kong since 1972 until 1985, testified that HERAS was the President and part owner of a shipping company in Hong Kong during all those times that she served as his secretary. He had 30 in his employ a staff of twelve. He had "business commitments, undertakings, conferences, and appointments 31 until October 1984 when [he] left Hong Kong for good," HERAS's other witness, Russel Warren Lousich, testified that he had acted as counsel for HERAS "for a number of 32 commercial matters." ASIAVEST then infers that HERAS was a resident of Hong Kong because he maintained a business there. It must be noted that in his Motion to Dismiss, as well as in his 34 Answer to ASIAVEST's complaint for the enforcement of the
33

Hong Kong court judgment, HERAS maintained that the Hong Kong court did not have jurisdiction over him because the fundamental rule is that jurisdiction in personam over nonresident defendants, so as to sustain a money judgment, must be based upon personal service of summons within the state 35 which renders the judgment. For its part, ASIAVEST, in its Opposition to the Motion to 36 Dismiss contended: "The question of Hong Kong court's 'want of jurisdiction' is therefore a triable issue if it is to be pleaded by the defendant to 'repel' the foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong Kong suit was in personam, that defendant was not a resident of Hong Kong when the suit was filed or that he did not voluntarily submit to the Hong Kong court's jurisdiction) should be alleged and 37 proved by the defendant." In his Reply (to the Opposition to Motion to Dismiss), HERAS argued that the lack of jurisdiction over his person was corroborated by ASIAVEST's allegation in the complaint that he "has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines." He then concluded that such judicial admission amounted to evidence that he was and is not a resident of Hong Kong.
38

defendant's attorney-in-fact at the latter's address. The Court held that under the facts of the case, it could not be said that the defendant was "still a resident of the Philippines because he ha[d] escaped to his country and [was] therefore an absentee in the Philippines." As such, he should have been "summoned in the same manner as one who does not reside and is not found in the Philippines." Similarly, HERAS, who was also an absentee, should have been served with summons in the same manner as a nonresident not found in Hong Kong. Section 17, Rule 14 of the Rules of Court providing for extraterritorial service will not apply because the suit against him was in personam. Neither can we apply Section 18, which allows extraterritorial service on a resident defendant who is temporarily absent from the country, because even if HERAS be considered as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong not only "temporarily" but "for good." IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this case and AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513. No costs. SO ORDERED. G.R. Nos. 121576-78 June 16, 2000

Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among which was that "the residence 39 of defendant, Antonio Heras, is New Manila, Quezon City." We note that the residence of HERAS insofar as the action for the enforcement of the Hong Kong court judgment is concerned, was never in issue. He never challenged the service of summons on him through a security guard in his Quezon City residence and through a lawyer in his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the Philippine court over his person on the ground of invalid service of summons. What was in issue was his residence as far as the Hong Kong suit was concerned. We therefore conclude that the stipulated fact that HERAS "is a resident of New Manila, Quezon City, Philippines" refers to his residence at the time jurisdiction over his person was being sought by the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS was a resident of Hong Kong at the time. Accordingly, since HERAS was not a resident of Hong Kong and the action against him was, indisputably, one in personam, summons should have been personally served on him in Hong Kong. The extraterritorial service in the Philippines was therefore invalid and did not confer on the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court judgment cannot be given force and effect here in the Philippines for having been rendered without jurisdiction. Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in November 1984 when the extraterritorial service of summons was attempted to be made on him. As declared by his secretary, which statement was not disputed by ASIAVEST, HERAS left Hong Kong in October 40 1984 "for good." His absence in Hong Kong must have been the reason why summons was not served on him therein; thus, ASIAVEST was constrained to apply for leave to effect service in the Philippines, and upon obtaining a favorable action on the matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the summons here in the Philippines. In Brown v. Brown, the defendant was previously a resident of the Philippines. Several days after a criminal action for concubinage was filed against him, he abandoned the Philippines. Later, a proceeding quasi in rem was instituted against him. Summons in the latter case was served on the
41

BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS, HON. ARSENIO M. GONONG, and CESAR S. URBINO, SR., respondents. DE LEON, JR., J.: Before us is a petition for review on certiorari of the Decision 2 3 and the Resolution of the Court of Appeals dated July 19, 1993 and August 15, 1995, respectively, which reinstated the 4 entire Decision dated February 18, 1991 of the Regional Trial Court of Manila, Branch 8, holding, among others, petitioner Banco do Brasil liable to private respondent Cesar Urbino, Sr. 5 for damages amounting to $300,000.00. At the outset, let us state that this case should have been consolidated with the recently decided case of Vlason Enterprises Corporation v. Court of Appeals and Duraproof Services, represented by its General Manager, Cesar Urbino 6 Sr. , for these two (2) cases involved the same material antecedents, though the main issue proffered in the present petition vary with the Vlason case. The material antecedents, as quoted from the Vlason are:
7 1

case,

Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of Honduras & Panama, a Panamanian Company (hereafter referred to as Omega), requested permission for its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it at the Philippine Ports Authority (PPA) compound in San Fernando, La Union while awaiting transhipment to Hongkong. The 8 request was approved by the Bureau of Customs. Despite the approval, the customs personnel boarded the vessel when it docked on January 7, 1989, on suspicion that it was the hijacked M/V Silver Med owned by Med Line Philippines Co., 9 and that its cargo would be smuggled into the country. The district customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of Thailand.

While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered into salvage agreement with private respondent to secure and repair the vessel at the agreed consideration of $1 million and "fifty percent (50%) [of] the 10 cargo after all expenses, cost and taxes." Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted the warrant of seizure on 11 July 1989. However, in a Second Indorsement dated November 11, 1989, then Customs Commissioner Salvador M. Mison declined to issue a clearance for Quiray's Decision; instead, he forfeited the vessel and its cargo in accordance 12 with Section 2530 of the Tariff and Customs Code. Accordingly, acting District Collector of Customs John S. Sy issued a Decision decreeing the forfeiture and the sale of the 13 cargo in favor of the government. To enforce its preferred salvor's lien, herein Private Respondent Duraproof Services filed with the Regional Trial Court of Manila a Petition for Certiorari, Prohibition and 14 Mandamus assailing the actions of Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA Representative Silverio Mangaoang and Med Line Philippines, Inc. On January 10, 1989, private respondent amended its Petition 15 to include former District Collector Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.; x Vlason Enterprises as represented by its president, Vicente Angliongto; Singkong Trading Company as represented by Atty. Eddie Tamondong; Banco Du Brasil; Dusit International Co.; Thai-Nan Enterprises 16 Ltd., and Thai-United Trading Co., Ltd. . . . Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line Philippines: Anglionto (through his secretary, Betty Bebero), Atty. Tamondong and 17 Commissioner Mison. Upon motion of the private respondent, the trial court allowed summons by publication to be served upon defendants who were not residents and had no 18 direct representative in the country. On January 29, 1990, private respondent moved to declare respondents in default, but the trial court denied the motion in 19 its February 23, 1990 Order , because Mangaoang and Amor had jointly filed a Motion to Dismiss, while Mison and Med Line had moved separately for an extension to file a similar motion. 20 Later it rendered an Order dated July 2, 1990, giving due course to the motions to dismiss filed by Mangaoang and Amor on the ground of litis pendentia, and by the commissioner and district collector of customs on the ground of lack of 21 jurisdiction. In another Order, the trial court dismissed the action against Med Line Philippines on the ground of litis 22 pendentia. On two other occasions, private respondent again moved to declare the following in default: [Vlason], Quiray, Sy and Mison 23 on March 26, 1990; and Banco [do] Bra[s]il, Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai24 United Trading Co., Ltd. on August 24, 1990. There is no record, however, that the trial court acted upon the motions. On September 18, 1990, [private respondent] filed another 25 Motion for leave to amend the petition, alleging that its counsel failed to include "necessary and/or indispensable parties": Omega represented by Cadacio; and M/V Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading these additional respondents, private respondent 26 also alleged in the Second (actually, third) Amended Petition that the owners of the vessel intended to transfer and alienate their rights and interest over the vessel and its cargo, to the detriment of the private respondent.

The trial court granted leave to private respondent to amend its Petition, but only to exclude the customs commissioner and the 27 district collector. Instead, private respondent filed the "Second Amended Petition with Supplemental Petition" against 28 Singkong Trading Company; and Omega and M/V Star Ace, 29 to which Cadacio and Rada filed a Joint Answer. Declared in default in an Order issued by the trial court on January 23, 1991, were the following: Singkong Trading Co., 30 Commissioner Mison, M/V Star Ace and Omega. Private respondent filed, and the trial court granted, an ex parte Motion 31 to present evidence against the defaulting respondents. Only private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V Star Ace appeared in the next pretrial hearing; thus, the trial court declared the other respondents in default and allowed private respondent to present evidence 32 against them. Cesar Urbino, general manager of private respondent, testified and adduced evidence against the other 33 respondents, . . . On December 29, 1990, private respondent and Rada, representing Omega, entered into a Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the demand for salvage fees of private respondent; and that if Rada did not receive any instruction from his 34 principal, he would assign the vessel in favor of the salvor. On February 18, 1991, the trial court disposed as follows: WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence adduced, both testimonial and documentary, the Court is convinced, that, indeed, defendants/respondents are liable to [private respondent] in the amount as prayed for in the petition for which it renders judgment as follows: 1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from alienating or [transferring] the vessel M/V Star Ace to any third parties; 2. Singkong Trading Company to pay the following: a. Taxes due the government; b. Salvage fees on the vessel in the amount of $1,000,000.00 based on . . . Lloyd's Standard Form of Salvage Agreement; c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00; d. Maintenance fees in the amount of P2,685,000.00; e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and unpaid salaries from January 1990 up to the present; f. Attorney's fees in the amount of P656,000.00; 3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages; 4. Banco [Du] Brasil to pay [private respondent] in the amount 35 of $300,000.00 in damages; and finally, 5. Costs of [s]uit. Subsequently, upon the motion of Omega, Singkong Trading Co., and private respondent, the trial court approved a 36 Compromise Agreement among the movants, reducing by 20 percent the amounts adjudged. For their part, respondents37 movants agreed not to appeal the Decision. On March 8, 1991, private respondent moved for the execution of judgment, claiming that the trial court Decision had already become final and executory. The Motion was granted and a Writ of

Execution was issued. To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were deputized on March 13, 1991 to levy and to sell on execution the defendants vessel and personal property. xxx xxx xxx

Hence, the instant petition. Petitioner Banco do Brasil takes exception to the appellate court's declaration that the suit below is in rem, not in 51 personam, thus, service of summons by publication was sufficient for the court to acquire jurisdiction over the person of petitioner Banco do Brasil, and thereby liable to private respondent Cesar Urbino for damages claimed, amounting to $300,000.00. Petitioner further challenges the finding that the February 18, 1991 decision of the trial court was already final 52 and thus, cannot be modified or assailed. Petitioner avers that the action filed against it is an action for damages, as such it is an action in personam which requires personal service of summons be made upon it for the court to acquire jurisdiction over it. However, inasmuch as petitioner Banco do Brasil is a non-resident foreign corporation, not engaged in business in the Philippines, unless it has property located in the Philippines which may be attached to convert the action into an action in rem, the court cannot acquire jurisdiction over it in respect of an action in personam. The petition bears merit, thus the same should be as it is hereby granted. First. When the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in 53 accordance with Rule 14, Section 17 of the Rules of Court. Under this provision, there are only four (4) instances when extraterritorial service of summons is proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or 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 54 property has been attached within the Philippines." In these instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner 55 the court may deem sufficient. Clear from the foregoing, extrajudicial service of summons apply only where the action is in rem, an action against the thing itself instead of against the person, or in an action quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or loan burdening the property. This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires 56 jurisdiction over the res. However, where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction 57 over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore 58 cannot validly try and decide the case against him. In the instant case, private respondent's suit against petitioner is premised on petitioner's being one of the claimants of the 59 subject vessel M/V Star Ace. Thus, it can be said that private respondent initially sought only to exclude petitioner from claiming interest over the subject vessel M/V Star Ace. However, private respondent testified during the presentation of evidence that, for being a nuisance defendant, petitioner

On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution, and to quash the notice of levy and the sale on execution. Despite this Motion, the auction sale was conducted on March 21, 1991 by Sheriff Camagon, with private respondent submitting the winning bid. The trial court ordered the deputy sheriffs to cease and desist from implementing the Writ of Execution and from levying on the personal property of the defendants. Nevertheless, Sheriff Camagon issued the corresponding Certificate of Sale on March 27, 1991. On April 10, 1991, petitioner Banco do Brasil filed, by special appearance, an Urgent Motion to Vacate Judgement and to 38 Dismiss Case on the ground that the February 18, 1991 Decision of the trial court is void with respect to it for having been rendered without validly acquiring jurisdiction over the person of Banco do Brasil. Petitioner subsequently amended 39 its petition to specifically aver that its special appearance is solely for the purpose of questioning the Court's exercise of personal jurisdiction. On May 20, 1991, the trial court issued an Order acting favorably on petitioner's motion and set aside as against petitioner the decision dated February 18, 1991 for having been rendered without jurisdiction over Banco do Brasil's 41 person. Private respondent sought reconsideration of the Order dated May 20, 1991. However, the trial court in an Order 42 dated June 21, 1991 denied said motion. Meanwhile, a certiorari petition was filed by private respondent before public respondent Court of Appeals seeking to nullify the cease and desist Order dated April 5, 1991 issued by Judge Arsenio M. Gonong. Two (2) more separate petitions for certiorari were subsequently filed by private respondent. 44 45 The second petition sought to nullify the Order dated June 26, 1992 setting aside the Deputy Sheriff's return dated April 1, 1991 as well as the certificate of sale issued by Deputy Sheriff 46 Camagon. The third petition sought to nullify the Order dated October 5, 1992 of the Court of Tax Appeals directing the Commissioner of Customs to place Bureau of Customs and PNP officers and guards to secure the M/V Star Ace and its cargoes, make inventory of the goods stored in the premises as indicated to belong to the private respondent. Likewise challenged was the Order dated August 17, 1992 authorizing the sale of M/V Star Ace and its cargoes. These three (3) petitions were consolidated and on July 19, 47 1993, the appellate court rendered its Decision granting private respondent's petitions, thereby nullifying and setting aside the disputed orders and effectively "giving way to the entire decision dated February 18, 1991 of the . . . Regional Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 which remains valid, final and executory, if not yet wholly 48 executed." Private respondent Urbino, Vlason Enterprises and petitioner Banco do Brasil filed separate motions for reconsideration. For its part, petitioner Banco do Brasil sought reconsideration, insofar as its liability for damages, on the ground that there was no valid service of summons as service was on the wrong party the ambassador of Brazil. Hence, it argued, the trial court did not acquire jurisdiction over petitioner Banco do 49 Brasil. Nonetheless, the appellate court denied the motions 50 for reconsideration in its Resolution dated August 15, 1995.
43 40

caused irreparable damage to private respondent in the 60 amount of $300,000.00. Therefore, while the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a relief totally alien to the action. It must be stressed that any relief granted in rem or quasi in rem actions must be confined to the res, and the court cannot 61 lawfully render a personal judgment against the defendant. Clearly, the publication of summons effected by private respondent is invalid and ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitioner for the alleged 62 commission of an injury to his person or property caused by petitioner's being a nuisance defendant, private respondent's action became in personam. Bearing in mind the in personam nature of the action, personal or, if not possible, substituted service of summons on petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against herein petitioner.1awphil Second. We settled the issue of finality of the trial court's decision dated February 18, 1991 in the Vlason case, wherein we stated that, considering the admiralty case involved multiple defendants, "each defendant had a different period within which to appeal, depending on the date of receipt of decision." 63 Only upon the lapse of the reglementary period to appeal, with no appeal perfected within such period, does the decision 64 become final and executory. In the case of petitioner, its Motion to Vacate Judgment and to Dismiss Case was filed on April 10, 1991, only six (6) days after it learned of the existence of the case upon being informed by the Embassy of the Federative Republic of Brazil in the Philippines, on April 4, 1991, of the February 18, 1991 65 decision. Thus, in the absence of any evidence on the date of receipt of decision, other than the alleged April 4, 1991 date when petitioner learned of the decision, the February 18, 1991 decision of the trial court cannot be said to have attained finality as regards the petitioner. WHEREFORE, the subject petition is hereby GRANTED. The Decision and the Resolution of the Court of Appeals dated July 19, 1993 and August 15, 1995, respectively, in CA-G.R. SP Nos. 24669, 28387 and 29317 are hereby REVERSED and SET ASIDE insofar as they affect petitioner Banco do Brasil. The Order dated May 20, 1991 of the Regional Trial Court of Manila, Branch 8 in Civil Case No. 89-51451 is REINSTATED. SO ORDERED.1wphi1.nt Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur. G.R. No. 168747 October 19, 2007

herein petitioners complaint for declaration of nullity of a deed of donation, for failure to serve summons on Cynthia Logarta, an indispensable party therein. Civil Case No. CEB. 23927 arose from the following factual antecedents: Luis Regner (Luis) had three daughters with his first wife, Anicita C. Regner, namely, Cynthia Logarta (Cynthia) and Teresa Tormis (Teresa), the respondents herein, and Melinda Regner-Borja (Melinda). Herein petitioner Victoria Regner (Victoria) is the second wife of Luis. During the lifetime of Luis, he acquired several properties, among which is a share at Cebu Country Club Inc., evidenced by Proprietary Ownership Certificate No. 0272. On 15 May 2 1998, Luis executed a Deed of Donation in favor of respondents Cynthia and Teresa covering Proprietary Ownership Certificate No. 0272 of the Cebu Country Club, Inc. Luis passed away on 11 February 1999. On 15 June 1999, Victoria filed a Complaint for Declaration of Nullity of the Deed of Donation with Prayer for Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order against Cynthia and Teresa with the RTC, docketed as Civil Case No. CEB. 23927. Victoria alleged in her complaint that: on 17 March 1997, 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, Atty. Francis Zosa; on 15 May 1998, when Luis was already very ill and no longer of sound and disposing mind, Cynthia and Teresa , conspiring and confederating with each other, fraudulently made or caused to be fraudulently made a Deed of Donation whereby they made it appear that Luis donated to them Proprietary Ownership Certificate No. 0272; since Luis no longer had the ability to write or affix his signature, Melinda, acting under the influence of her sisters, Cynthia and Teresa, fraudulently manipulated the hand of Luis so that he could affix his thumbmark on the assailed Deed of Donation; on 8 February 1998, or three days before the death of Luis, and when he was already in comatose condition at the Cebu Doctors Hospital, Melinda, Teresa, and Cynthia caused the preparation of an affidavit to the effect that Luis affirmed the Deed of Donation he allegedly executed earlier by lifting his hand to affix his thumbmark on the said affidavit. Sheriff Melchor A. Solon served the summonses on Cynthia and Teresa at the Borja Family Clinic in Tagbilaran City wherein Melinda worked as a doctor, but Melinda refused to receive the summonses for her sisters and informed the sheriff that their lawyer, Atty. Francis Zosa, would be the one to receive the same. Upon her arrival in the Philippines, on 1 June 2000, Teresa was personally served the summons at Room 304, Regency 4 Crest Condominium, Banilad, Cebu City. She filed her Answer with counterclaim with the RTC on 6 June 2000. Subsequently, on 12 September 2002, Teresa filed a motion to dismiss Civil Case No. CEB 23927 because of petitioners failure to prosecute her action for an unreasonable length of time. Petitioner opposed the motion and filed her own motion to set the case for pre-trial, to which Teresa filed her rejoinder on the ground that their sister, Cynthia, an indispensable party, had not yet been served a summons. Thus, Teresa prayed for the dismissal of petitioners complaint, as the case would not proceed without Cynthias presence.
5 3

VICTORIA REGNER, Petitioner, vs. CYNTHIA R. LOGARTA, TERESA R. TORMIS and CEBU COUNTRY CLUB, Inc., Respondents. DECISION CHICO-NAZARIO, J.: This Petition for Review on Certiorari seeks to reverse the 1 Decision dated 6 May 2005 of the Court of Appeals in CAG.R. CV No. 71028 entitled, "Victoria Regner v. Cynthia Logarta, Teresa R. Tormis and Cebu Country Club, Inc.," which affirmed the Order dated 9 November 2000 of the Regional Trial Court (RTC) of Cebu, granting herein respondents motion to dismiss Civil Case No. C EB 23927. The Order dated 9 November 2000 of the RTC dismissed

On 9 November 2000, the RTC issued an Order granting respondent Teresas motion to dismiss, pertinent portions of which read: Considering that the donees in the Deed of Donation are Cynthia R. Logarta and Teresa R. Tormis, they are therefore an (sic) indispensable party (sic). In the case of Quisumbing vs. Court of Appeals, 189 SCRA 325, indispensable parties are those with such an interest in the controversy that a final decree would necessarily affect their rights so that the court could not proceed without their presence Wherefore, in view of the foregoing, the instant case is hereby dismissed without prejudice. A motion for reconsideration was filed by petitioner, but the same was denied in an Order dated 14 February 2001. Aggrieved, petitioner appealed to the Court of Appeals. On 6 May 2005, the Court of Appeals rendered a Decision denying the appeal and affirming in toto the order of dismissal of the complaint by the RTC and the denial of the motion for reconsideration thereof. The Court of Appeals ratiocinated that petitioners failure to move for an extraterritorial service of summons constitutes failure to prosecute for an unreasonable length of time, thus: [T]he plaintiff-appellant [Victoria Regner] should have moved for the extraterritorial service of summons for both defendantsappellees Teresa R. Tormis and Cynthia R. Logarta as they were not residing and were not found in the Philippines when plaintiff-appellant [Victoria Regner] filed this case below. Although defendant-appellant Teresa Tormis was personally served with summons on June 1, 2000 when she came to the Philippines but the same was only effected after a long wait or after the lapse of almost one year from the date the complaint was filed on June 15, 1999. To allow this practice would be to make the continuation of like proceedings before the courts dependent on when the defendants would be personally served with summons by the time they would come to the Philippines, which would only unnecessarily delay the proceedings and clog the court dockets as well. The aforecited rule was precisely crafted to meet situations similar to the present case to avoid unnecessary delays. It has to be emphasized that it is incumbent upon the plaintiff [Victoria Regner] to move with leave of court for the extraterritorial service of summons. Taking into account the considerable time that had elapsed from the filing of the complaint on June 15, 1999 until defendant-appellee Teresa R. Tormis, through counsel, filed a motion to dismiss on September 12, 2000, or approximately fifteen (15) months, without any act on the part of plaintiff-appellant [Victoria Regner] to move for extraterritorial service of summons upon the person of defendant-appellee Cynthia Logarta renders plaintiff-appellants [Victoria Regner] complaint dismissible for failure to prosecute her action for unreasonable length of time 7 under Section 3, Rule 17, Revised Rules of Court, x x x. Hence, this appeal via petition for review on certiorari filed by petitioner raising the following assignment of errors: THE COURT OF APPEALS ERRED IN HOLDING THAT THE DELAY IN SERVING SUMMONS ON ONE OF THE DEFENDANTS CONSTITUTES A FAILURE TO PROSECUTE NOTWITHSTANDING THAT THE REST OF THE CODEFENDANTS WERE DULY SERVED WITH SUMMONSES THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THE ANSWER FILED BY ONE INDIVIDUAL DEFENDANT REDOUNDS TO THE BENEFIT OF THE OTHER DEFENDANT WHO HAS NOT BEEN SERVED WITH
8

SUMMONS, THE NATURE OF ACTION BEING ADMITTEDLY 9 COMMON AMONG ALL DEFENDANTS. From the foregoing, this Court identifies the issues to be resolved in this petition as: (1) Whether a co-donee is an indispensable party in an action to declare the nullity of the deed of donation, and (2) whether delay in the service of summons upon one of the defendants constitutes failure to prosecute that would warrant dismissal of the complaint. A Court must acquire jurisdiction over the persons of indispensable parties before it can validly pronounce judgments personal to the parties. Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint. On the other hand, jurisdiction over the person of a party defendant is assured upon the service of summons in the manner required by law or otherwise by his voluntary appearance. As a rule, if a defendant has not been summoned, the court acquires no jurisdiction over his person, and a personal judgment rendered 10 against such defendant is null and void. A decision that is null and void for want of jurisdiction on the part of the trial court is not a decision in the contemplation of law and, hence, it can 11 never become final and executory. Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interest without whom there can be no final determination of an action. As such, they must be joined either as plaintiffs or as defendants. The general rule with reference to the making of parties in a civil action requires, of course, the joinder of all necessary parties where possible, and the joinder of all indispensable parties under any and all conditions, their presence being a sine qua non for the 12 exercise of judicial power. It is precisely "when an indispensable party is not before the court [that] the action 13 should be dismissed." The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but 14 even as to those present. As we ruled in Alberto v. Mananghala
15

In an action for recovery of property against a person who purchased it from another who in turn acquired it from others by the same means or by donation or otherwise, the predecessors of defendants are indispensable parties if the transfers, if not voided, may bind plaintiff. (Garcia vs. Reyes, 17 Phil. 127.) In the latter case, this Court held: In order to bring this suit duly to a close, it is imperative to determine the only question raised in connection with the pending appeal, to wit, whether all the persons who intervened in the matter of the transfers and donation herein referred to, are or are not necessary parties to this suit, since it is asked in the complaint that the said transfers and donation be declared null and void an indispensable declaration for the purpose, in a proper case, of concluding the plaintiff to be the sole owner of the house in dispute. If such a declaration of annulment can directly affect the persons who made and who were concerned in the said transfers, nothing could be more proper and just than to hear them in the litigation, as parties interested in maintaining the validity of those transactions, and therefore, whatever be the nature of the judgment rendered, Francisco Reyes, Dolores Carvajal, Alfredo Chicote, Vicente Miranda, and Rafael Sierra, besides the said minors, must be included in the case as defendants." (Garcia vs. Reyes, 17 Phil., 130-131.) It takes no great degree of legal sophistication to realize that Cynthia and Teresa are indispensable parties to Civil Case No. CEB 23927. Cynthia and Teresa allegedly derived their rights to the subject property by way of donation from their father

Luis. The central thrust of the petitioners complaint in Civil Case No. CEB 23927 was that Luis could not have donated Proprietary Ownership Certificate No. 0272 to his daughters Cynthia and Teresa, as Luis was already very ill and no longer of sound and disposing mind at the time of donation on 15 May 1997. Accordingly, the prayer in petitioners complaint was for the trial court to declare null and void the Deed of Donation and to restrain the Cebu Country Club, Inc. from transferring title and ownership of Proprietary Ownership Certificate No. 0272 to Cynthia and Teresa. Thus, based on the Deed of Donation, Teresa and Cynthia are co-owners of Proprietary Membership Certificate No. 0272 of Cebu Country Club, Inc. The country club membership certificate is undivided and it is impossible to pinpoint which specific portion of the property belongs to either Teresa or Cynthia. Indeed, both Teresa and Cynthia are indispensable parties in Civil Case No. CEB 23927. An indispensable party has been defined as follows: An indispensable party is a party who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest, a party who has not only an interest in the subject matter of the controversy, but also has an interest of such nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already before the court which is effective, complete, or equitable. Further, an indispensable party is one who must be included in an action before it may properly go forward. A person is not an indispensable party, however, if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him and those already parties to the action, or if he has no interest in the subject matter of the action. It is not a sufficient reason to declare a person to be an indispensable party that his presence will avoid multiple 16 litigation. In Servicewide Specialists, Incorporated v. Court of Appeals, this Court held that no final determination of a case could be made if an indispensable party is not legally present therein:
17

as many succeeding actions of ejectment, as there might be co-owners of the title asserted against him. The purpose of this provision was to prevent multiplicity of suits by requiring the person asserting a right against the defendant to include with him, either as co-plaintiffs or as co-defendants, all persons standing in the same position, so that the whole matter in dispute may be determined once and for all in one litigation. Applying the foregoing definitions and principles to the present case, this Court finds that any decision in Civil Case No. CEB 23927 cannot bind Cynthia, and the Court cannot nullify the donation of the property she now co-owns with Teresa, even if limited only to the portion belonging to Teresa, to whom summons was properly served, since ownership of the property is still pro indiviso. Obviously, Cynthia is an indispensable party in Civil Case No. CEB 23927 without whom the lower court is barred from making a final adjudication as to the validity of the entire donation. Without the presence of indispensable parties to a suit or proceeding, a 19 judgment therein cannot attain finality. Being an indispensable party in Civil Case No. CEB 23927, the trial court must also acquire jurisdiction over Cynthias person through the proper service of summons. Based on the foregoing disquisitions, the issue of whether the answer filed by Teresa should benefit Cynthia who was not served summons need not be discussed. As to determine whether Cynthia was properly served a summons, it will be helpful to determine first the nature of the action filed against Cynthia and Teresa by petitioner Victoria, whether it is an action in personam, in rem or quasi in rem. This is because the rules on service of summons embodied in Rule 14 apply according to whether an action is one or the other of these actions. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the 20 recovery of damages. In contrast, in a real action, the plaintiff seeks the recovery of real property; or, as indicated in Section 2(a), Rule 4 of the then Rules of Court, a real action is an action affecting title to real property or for the recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property. 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, 21 instead of against the person. In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served, substituted service, as provided in Section 7, Rule 14 of the 22 Rules of Court, is essential for the acquisition by the court of jurisdiction over the person of a defendant who does not 23 voluntarily submit himself to the authority of the court. If defendant cannot be served a summons because he is temporarily abroad, but is otherwise a Philippine resident, service of summons may, by leave of court, be made by 24 publication. Otherwise stated, a resident defendant in an action in personam, who cannot be personally served a summons, may be summoned either by means of substituted service in accordance with Section 7, Rule 14 of the Rules of Court, or by publication as provided in Sections 15 and 16 of the same Rule. In all of these cases, it should be noted, defendant must be a resident of the Philippines; otherwise an action in personam cannot be brought because jurisdiction over his person is essential to make a binding decision. On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for

An indispensable party is one whose interest will be affected by the courts action in the litigation, and without whom no final determination of the case can be had. The partys interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable. The rationale for treating all the co-owners of a property as indispensable parties in a suit involving the co-owned property 18 is explained in Arcelona v. Court of Appeals : As held by the Supreme Court, were the courts to permit an action in ejectment to be maintained by a person having merely an undivided interest in any given tract of land, a judgment in favor of the defendants would not be conclusive as against the other co-owners not parties to the suit, and thus the defendant in possession of the property might be harassed by

giving the court jurisdiction so long as the court acquires jurisdiction over the res. 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, which provides: Section 15. Extraterritorial service. - When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under Section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. As stated above, 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-residents property has been attached within the Philippines. In these instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner 25 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 26 he is so minded. In petitioners Complaint in Civil Case No. CEB No. 23427, she alleged that Cynthia is residing at 462 West Vine No. 201, Glendale, California, 912041, U.S.A.; while Teresa is residing at 2408 South Hacienda Boulevard, Hacienda Heights, California, but they usually visit here in the Philippines and can be served summonses and other processes at the Borja Family Clinic, Bohol. Pertinent portions of the Complaint read: 2. Defendant Cynthia R. Logarta is a Filipino, of legal age, married to Ramon Logarta, resident (sic) 463 West Vine No.201, Glendale, California, 912041, USA. She however usually visits in the Philippines and can be served with summons and other processes of this Honorable Court at Borja Family Clinic, Tagbilaran, Bohol; 3. Defendant Teresa R. Tormis is likewise a Filipino, of legal age, married to Antonio Tormis, and a resident of 2408 South

Hacienda Heights, California, 19745, U.S.A. She however usually visits in the Philippines and can be served with summons and other processes of this Honorable Court at Borja 27 Family Clinic, Tagbilaran, Bohol. Petitioner prayed for a declaration of nullity of the deed of donation, to restrain Cebu Country Club, Inc. from transferring title and ownership of Proprietary Ownership Certificate No. 0272 to Cynthia and Teresa, and for moral and exemplary damages. Civil Case No. CEB 23927 is evidently an action against Cynthia and Teresa on the basis of their personal liability for the alleged fraudulent transfer of the subject Country Club membership from Luis to their name. In this sense, petitioner questions the participation and shares of Cynthia and Teresa in the transferred Country Club membership. Moreover, the membership certificate from the Cebu Country Club, Inc. is a personal property. Thus, the action instituted by petitioner before the RTC is in personam. Being an action in personam, the general rule requires the personal service of summons on Cynthia within the Philippines, but this is not possible in the present case because Cynthia is a non-resident and is not found within the Philippines. As Cynthia is a nonresident who is not found in the Philippines, service of summons on her must be in accordance with Section 15, Rule 14 of the Rules of Court. Such service, to be effective outside the Philippines, must be made either (1) by personal service; (2) by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court should be sent by registered mail to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient. The third mode, like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign country where Cynthia resides. Since in the case at bar, the service of summons upon Cynthia was not done by any of the authorized modes, the trial court was correct in dismissing petitioners complaint. Section 3, Rule 17 of the 1997 Rules of Civil Procedure, states SEC. 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. As can be gleaned from the rule, there are three instances when the complaint may be dismissed due to the plaintiff's fault: (1) if he fails to appear during a scheduled trial, especially on the date for the presentation of his evidence in chief; (2) if he fails to prosecute his action for an unreasonable length of time; and (3) if he fails to comply with the rules or any order of 28 the court. Considering the circumstances of the case, it can be concluded that the petitioner failed to prosecute the case for an unreasonable length of time. There is failure to prosecute when the plaintiff, being present, is not ready or is unwilling to proceed with the scheduled trial or when postponements in the past were due to the plaintiff's own making, intended to be

dilatory or caused substantial prejudice on the part of the 29 defendant. While a court can dismiss a case on the ground of failure to prosecute, the true test for the exercise of such power is whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in failing to proceed with 30 reasonable promptitude. As to what constitutes an "unreasonable length of time," within the purview of the abovequoted provision, the Court has ruled that it "depends upon the circumstances of each particular case," and that "the sound discretion of the court" in the determination of said question "will not be disturbed, in the absence of patent abuse"; and that "the burden of showing abuse of judicial discretion is upon the appellant since every presumption is in favor of the correctness 31 of the court's action." Likewise, the concept of promptness is a relative term and must not unnecessarily be an inflexible one. It connotes an action without hesitation and loss of time. As to what constitutes the term is addressed to the consideration of the trial court, bearing in mind that while actions must be disposed of with dispatch, the essential ingredient is the 32 administration of justice and not mere speed. It is well to quote the doctrine laid in Padua v. Ericta, as 34 accentuated in the subsequent case Marahay v. Melicor : Courts should not brook undue delays in the ventilation and determination of causes. It should be their constant effort to assure that litigations are prosecuted and resolved with dispatch. Postponements of trials and hearings should not be allowed except on meritorious grounds; and the grant or refusal thereof rests entirely in the sound discretion of the Judge. It goes without saying, however, that discretion must be reasonably and wisely exercised, in the light of the attendant circumstances. Some reasonable deferment of the proceedings may be allowed or tolerated to the end that cases may be adjudged only after full and free presentation of evidence by all the parties, especially where the deferment would cause no substantial prejudice to any part. The desideratum of a speedy disposition of cases should not, if at all possible, result in the precipitate loss of a partys right to present evidence and either in plaintiff's being non-suited or the defendant's being pronounced liable under an ex parte judgment. "[T]rial courts have x x x the duty to dispose of controversies after trial on the merits whenever possible. It is deemed an abuse of discretion for them, on their own motion, to enter a dismissal which is not warranted by the circumstances of the case (Municipality of Dingras v. Bonoan, 85 Phil. 458 -59 [1950]). While it is true that the dismissal of an action on grounds specified under Section 3, Rule 17 of the Revised Rules of Court is addressed to their discretion (Flores v. Phil. Alien Property Administrator, 107 Phil. 778 [1960]; Montelibano v. Benares, 103 Phil. 110 [1958]; Adorable v. Bonifacio, 105 Phil. 1269 [1959]; Inter-Island Gas Service, Inc. v. De la Gerna, L-17631, October 19, 1966, 18 SCRA 390), such discretion must be exercised soundly with a view to the circumstances surrounding each particular case (Vernus-Sanciangco v. Sanciangco, L-12619, April 28, 1962, 4 SCRA 1209). If facts obtain that serve as mitigating circumstances for the delay, the same should be considered and dismissal denied or set aside (Rudd v. Rogerson, 15 ALR 2d 672; Cervi v. Greenwood, 147 Colo. 190, 362 P.2d 1050 [1961]), especially where the suit appears to be meritorious and the plaintiff was not culpably negligent and no injury results to defendant (27 C.J.S. 235-36; 15 ALR 3rd 680)." (Abinales vs. Court of First Instance of Zamboanga City, Br. I, 70 SCRA 590, 595). "It is true that the allowance or denial of petitions for postponement and the setting aside of orders previously
33

issued, rest principally upon the sound discretion of the judge to whom they are addressed, but always predicated on the consideration that more than the mere convenience of the courts or of the parties of the case, the ends of justice and fairness would be served thereby (Camara Vda. de Zubiri v. Zubiri, et al., L-16745, December 17, 1966). When no substantial rights are affected and the intention to delay is not manifest, the corresponding motion to transfer the hearing having been filed accordingly, it is sound judicial discretion to allow them (Rexwell Corp. v. Canlas, L-16746, December 30, 1961)." x x x. This Court recalls that the complaint herein was filed on 15 June 1999. The summonses for Cynthia and Teresa were served on their sister Melinda at the Borja Family Clinic in Tagbilaran City, but the latter refused to receive the same. It was only on 1 June 2000 that summons was served on Teresa at Room 304, Regency Crest Condominium, Banilad, Cebu City, when she was in the Philippines for a visit. However, the summons for Cynthia was never served upon her.1wphi1 Although Section 1, Rule 14 of the Rules, imposes upon the clerk of court the duty to serve summons, this does not relieve the petitioner of her own duty as the plaintiff in a civil case to prosecute the case diligently. If the clerk had been negligent, it was petitioners duty to call the courts attention to that fact. It must be noted that it was not even petitioner who called the courts attention that summons had not been served on Cynthia, but Teresa. This despite the fact that petitioner was aware, as early as 15 June 1999, when she filed her complaint, that the summonses could not be served on Teresa and Cynthia, as she admitted therein that Teresa and Cynthia were residing abroad. Petitioner as plaintiff should have asked that Cynthia and Teresa be summoned by publication at the earliest possible time. She cannot idly sit by and wait till this is done. She cannot afterwards wash her hands and say that the delay was not her fault. She cannot simply "fold [her] hands" and say that it is the duty of the clerk of court to have the summonses served on Cynthia and Teresa for the prompt disposition of her case. If there were no means of summoning any of the defendants, petitioner should have so informed the court within a reasonable period of time, so that the case could be disposed of one way or another and the administration of justice would not suffer delay. The non-performance of that duty by petitioner as plaintiff is an express ground for dismissing an action. For, indeed, this duty imposed upon her was precisely to spur on the slothful. For failure to diligently pursue the complaint, petitioner trifled with the right of the respondents to speedy trial. It also sorely tried the patience of the court and wasted its precious time and attention. To allow petitioner to wait until such time that summonses were served on respondents would frustrate the protection against unreasonable delay in the prosecution of cases and violate the constitutional mandate of speedy dispensation of justice which would in time erode the peoples confidence in the judiciary. We take a dim view of petitioners 35 complacent attitude. Ex nihilo nihil fit. Likewise, petitioners counsel inexplicably failed to diligently pursue the service of summonses on respondents. These were acts of negligence, laxity and truancy which the court could have very easily avoided or timely remedied. Petitioner and her counsel could not avail themselves of this Courts sympathy, considering their apparent complacency, if not delinquency, in the conduct of their litigation. Considering the foregoing, we sustain the dismissal by the trial court of the petitioners complaint for failure to prosecute for a period of more than one year (from the time of filing thereof on 15 June 1997 until Teresas filing of a motion to dismiss).

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit and the assailed Decision dated 6 May 2005 of the Court of Appeals in CA-G.R. CV No. 71028 is hereby AFFIRMED. Costs against petitioner. SO ORDERED. .R. No. 175799 November 28, 2011 (AUSTRALIA) LIMITED,

committed grave abuse of discretion in denying its Motion to Dismiss. The Petition was docketed as CA-G.R. SP No. 94382. On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the Petition for Certiorari. The Court of Appeals ruled that since the denial of a Motion to Dismiss is an interlocutory order, it cannot be the subject of a Petition for Certiorari, and may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. On December 12, 2006, the Court of Appeals rendered the assailed Resolution denying the petitioners Motion for Reconsideration. Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent to answer some of the questions in petitioners Interrogatories to Plaintiff dated September 7, 2006. Notwithstanding the foregoing, petitioner filed the present petition assailing the September 8, 2006 Decision and the December 12, 2006 Resolution of the Court of Appeals. Arguing against the ruling of the appellate court, petitioner insists that (a) an order denying a motion to dismiss may be the proper subject of a petition for certiorari; and (b) the trial court committed grave abuse of discretion in not finding that it had not validly acquired jurisdiction over petitioner and that the plaintiff had no cause of action. Respondent, on the other hand, posits that: (a) the present Petition should be dismissed for not being filed by a real party in interest and for lack of a proper verification and certificate of non-forum shopping; (b) the Court of Appeals correctly ruled that certiorari was not the proper remedy; and (c) the trial court correctly denied petitioners motion to dismiss. Our discussion of the issues raised by the parties follows: Whether petitioner is a real party in interest Respondent argues that the present Petition should be dismissed on the ground that petitioner no longer existed as a corporation at the time said Petition was filed on February 1, 2007. Respondent points out that as of the date of the filing of the Petition, there is no such corporation that goes by the name NM Rothschild and Sons (Australia) Limited. Thus, according to respondent, the present Petition was not filed by a real party in interest, citing our ruling in Philips Export B.V. v. 10 Court of Appeals, wherein we held: A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co., 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the corporate franchise as any other privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial 11 Association, 18 RI 165, 26 A 36). In its Memorandum before this Court, petitioner started to refer to itself as Investec Australia Limited (formerly "NM Rothschild & Sons [Australia] Limited") and captioned said Memorandum accordingly. Petitioner claims that NM Rothschild and Sons (Australia) Limited still exists as a
12

NM ROTHSCHILD & SONS Petitioner, vs. LEPANTO CONSOLIDATED Respondent. DECISION LEONARDO-DE CASTRO, J.:

MINING

COMPANY,

This is a Petition for Review on Certiorari assailing the 1 Decision of the Court of Appeals dated September 8, 2006 in 2 CA-G.R. SP No. 94382 and its Resolution dated December 12, 2006, denying the Motion for Reconsideration. On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the Regional Trial Court (RTC) of Makati 3 City a Complaint against petitioner NM Rothschild & Sons (Australia) Limited praying for a judgment declaring the loan and hedging contracts between the parties void for being 4 contrary to Article 2018 of the Civil Code of the Philippines and for damages. The Complaint was docketed as Civil Case No. 05-782, and was raffled to Branch 150. Upon respondents (plaintiffs) motion, the trial court authorized respondents counsel to personally bring the summons and Complaint to the Philippine Consulate General in Sydney, Australia for the latter office to effect service of summons on petitioner (defendant). On October 20, 2005, petitioner filed a Special Appearance 5 With Motion to Dismiss praying for the dismissal of the Complaint on the following grounds: (a) the court has not acquired jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) the Complaint failed to state a cause of action and respondent does not have any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come to court with clean hands. On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the deposition of Mr. Paul Murray (Director, Risk Management of petitioner) before the Philippine Consul General; and (2) a Motion for Leave to Serve Interrogatories on respondent. On December 9, 2005, the trial court issued an Order denying the Motion to Dismiss. According to the trial court, there was a proper service of summons through the Department of Foreign Affairs (DFA) on account of the fact that the defendant has neither applied for a license to do business in the Philippines, nor filed with the Securities and Exchange Commission (SEC) a Written Power of Attorney designating some person on whom summons and other legal processes maybe served. The trial court also held that the Complaint sufficiently stated a cause of action. The other allegations in the Motion to Dismiss were brushed aside as matters of defense which can best be ventilated during the trial. On December 27, 2005, petitioner filed a Motion for 7 Reconsideration. On March 6, 2006, the trial court issued an Order denying the December 27, 2005 Motion for Reconsideration and disallowed the twin Motions for Leave to 8 take deposition and serve written interrogatories. On April 3, 2006, petitioner sought redress via a Petition for 9 Certiorari with the Court of Appeals, alleging that the trial court
6

corporation under the laws of Australia under said new name. It presented before us documents evidencing the process in the Australian Securities & Investment Commission on the change of petitioners company name from NM Rothschild and 13 Sons (Australia) Limited to Investec Australia Limited. We find the submissions of petitioner on the change of its corporate name satisfactory and resolve not to dismiss the present Petition for Review on the ground of not being prosecuted under the name of the real party in interest. While we stand by our pronouncement in Philips Export on the importance of the corporate name to the very existence of corporations and the significance thereof in the corporations right to sue, we shall not go so far as to dismiss a case filed by the proper party using its former name when adequate identification is presented. A real party in interest is the party who stands to be benefited or injured by the judgment in the 14 suit, or the party entitled to the avails of the suit. There is no doubt in our minds that the party who filed the present Petition, having presented sufficient evidence of its identity and being represented by the same counsel as that of the defendant in the case sought to be dismissed, is the entity that will be benefited if this Court grants the dismissal prayed for. Since the main objection of respondent to the verification and certification against forum shopping likewise depends on the supposed inexistence of the corporation named therein, we give no credit to said objection in light of the foregoing discussion. Propriety of the Resort to a Petition for Certiorari with the Court of Appeals We have held time and again that an order denying a Motion to Dismiss is an interlocutory order which neither terminates nor finally disposes of a case as it leaves something to be done by the court before the case is finally decided on the merits. The general rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in a special civil action for Certiorari which is a remedy designed to correct errors of jurisdiction and 15 not errors of judgment. However, we have likewise held that when the denial of the Motion to Dismiss is tainted with grave abuse of discretion, the grant of the extraordinary remedy of Certiorari may be justified. By "grave abuse of discretion" is meant: [S]uch capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined 16 by or to act all in contemplation of law. The resolution of the present Petition therefore entails an inquiry into whether the Court of Appeals correctly ruled that the trial court did not commit grave abuse of discretion in its denial of petitioners Motion to Dismiss. A mere error in judgment on the part of the trial court would undeniably be inadequate for us to reverse the disposition by the Court of Appeals. Issues more properly ventilated during the trial of the case As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the following grounds: (a) lack of jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) failure of the Complaint to state a cause of action and absence of a cause of action; (c) the action is barred by estoppel; and (d) respondent did not come to court with clean hands.

As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of a cause of action (as opposed to the failure to state a cause of action), the alleged estoppel on the part of petitioner, and the argument that respondent is in pari delicto in the execution of the challenged contracts, are not grounds in a Motion to Dismiss as enumerated in Section 17 1, Rule 16 of the Rules of Court. Rather, such defenses raise evidentiary issues closely related to the validity and/or existence of respondents alleged cause of action and should therefore be threshed out during the trial. As regards the allegation of failure to state a cause of action, while the same is usually available as a ground in a Motion to Dismiss, said ground cannot be ruled upon in the present Petition without going into the very merits of the main case. It is basic that "[a] cause of action is the act or omission by 18 which a party violates a right of another." Its elements are the following: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiff's right, and (3) an act or omission of the defendant in violation of such 19 right. We have held that to sustain a Motion to Dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist and not only that the claim was 20 defectively stated or is ambiguous, indefinite or uncertain. The trial court held that the Complaint in the case at bar contains all the three elements of a cause of action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration of nullity of the Hedging Contracts for being null and void and contrary to Article 2018 of the Civil Code of the Philippines; (2) defendant has the corresponding obligation not to enforce the Hedging Contracts because they are in the nature of wagering or gambling agreements and therefore the transactions implementing those contracts are null and void under Philippine laws; and (3) defendant ignored the advice and intends to enforce the Hedging Contracts by demanding 21 financial payments due therefrom. The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the material allegations of the 22 ultimate facts contained in the plaintiff's complaint. However, this principle of hypothetical admission admits of exceptions. 23 Thus, in Tan v. Court of Appeals, we held: The flaw in this conclusion is that, while conveniently echoing the general rule that averments in the complaint are deemed hypothetically admitted upon the filing of a motion to dismiss grounded on the failure to state a cause of action, it did not take into account the equally established limitations to such rule, i.e., that a motion to dismiss does not admit the truth of mere epithets of fraud; nor allegations of legal conclusions; nor an erroneous statement of law; nor mere inferences or conclusions from facts not stated; nor mere conclusions of law; nor allegations of fact the falsity of which is subject to judicial notice; nor matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter inserted merely to insult the opposing party; nor to legally impossible facts; nor to facts which appear unfounded by a record incorporated in the pleading, or by a document referred to; and, nor to general averments contradicted by more specific averments. A more judicious resolution of a motion to dismiss, therefore, necessitates that the court be not restricted to the consideration of the facts alleged in the complaint and inferences fairly deducible therefrom. Courts may consider other facts within the range of judicial notice as well as relevant laws and jurisprudence which the courts are bound to take into account, and they are also fairly entitled to examine records/documents duly incorporated into the complaint by the pleader himself in ruling on the demurrer to the 24 complaint. (Emphases supplied.)

In the case at bar, respondent asserts in the Complaint that the 25 Hedging Contracts are void for being contrary to Article 2018 of the Civil Code. Respondent claims that under the Hedging Contracts, despite the express stipulation for deliveries of gold, the intention of the parties was allegedly merely to compel each other to pay the difference between the value of the gold at the forward price stated in the contract and its market price at the supposed time of delivery. Whether such an agreement is void is a mere allegation of a conclusion of law, which therefore cannot be hypothetically admitted. Quite properly, the relevant portions of the contracts sought to be nullified, as well as a copy of the contract itself, are incorporated in the Complaint. The determination of whether or not the Complaint stated a cause of action would therefore involve an inquiry into whether or not the assailed contracts are void under Philippine laws. This is, precisely, the very issue to be determined in Civil Case No. 05-782. Indeed, petitioners defense against the charge of nullity of the Hedging Contracts is the purported intent of the parties that actual deliveries of gold be made pursuant thereto. Such a defense requires the presentation of evidence on the merits of the case. An issue that "requires the contravention of the allegations of the complaint, as well as the full ventilation, in effect, of the main merits of the case, should not be within the province of a 26 mere Motion to Dismiss." The trial court, therefore, correctly denied the Motion to Dismiss on this ground. It is also settled in jurisprudence that allegations of estoppel and bad faith require proof. Thus, in Paraaque Kings 27 Enterprises, Inc. v. Court of Appeals, we ruled: Having come to the conclusion that the complaint states a valid cause of action for breach of the right of first refusal and that the trial court should thus not have dismissed the complaint, we find no more need to pass upon the question of whether the complaint states a cause of action for damages or whether the complaint is barred by estoppel or laches. As these matters require presentation and/or determination of facts , they 28 can be best resolved after trial on the merits. (Emphases supplied.) On the proposition in the Motion to Dismiss that respondent has come to court with unclean hands, suffice it to state that the determination of whether one acted in bad faith and whether damages may be awarded is evidentiary in nature. Thus, we have previously held that "[a]s a matter of defense, it can be best passed upon after a full-blown trial on the 29 merits." Jurisdiction over the person of petitioner Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the improper service of summons. Summons was served on petitioner through the DFA, with respondents counsel personally bringing the summons and Complaint to the Philippine Consulate General in Sydney, Australia. In the pleadings filed by the parties before this Court, the parties entered into a lengthy debate as to whether or not petitioner is doing business in the Philippines. However, such discussion is completely irrelevant in the case at bar, for two reasons. Firstly, since the Complaint was filed on August 30, 2005, the provisions of the 1997 Rules of Civil Procedure govern the service of summons. Section 12, Rule 14 of said rules provides: Sec. 12. Service upon foreign private juridical entity. When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law

for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.) This is a significant amendment of the former Section 14 of said rule which previously provided: Sec. 14. Service upon private foreign corporations. If the defendant is a foreign corporation, or a nonresident joint stock company or association, doing business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.) The coverage of the present rule is thus broader. Secondly, the service of summons to petitioner through the DFA by the conveyance of the summons to the Philippine Consulate General in Sydney, Australia was clearly made not through the above-quoted Section 12, but pursuant to Section 15 of the same rule which provides: Sec. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. Respondent argues that extraterritorial service of summons upon foreign private juridical entities is not proscribed under the Rules of Court, and is in fact within the authority of the trial court to adopt, in accordance with Section 6, Rule 135: Sec. 6. Means to carry jurisdiction into effect. When by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer; and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any suitable process or mode of proceeding may be adopted which appears comformable to the spirit of said law or rules. Section 15, Rule 14, however, is the specific provision dealing precisely with the service of summons on a defendant which does not reside and is not found in the Philippines, while Rule 135 (which is in Part V of the Rules of Court entitled Legal Ethics) concerns the general powers and duties of courts and judicial officers. Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a defendant who is a nonresident and is not found in the country may be served with summons by extraterritorial service, to wit: (1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when the relief demanded in such
31 30

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 (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) 32 any other manner the court may deem sufficient. Proceeding from this enumeration, we held in Perkin Elmer 33 Singapore Pte Ltd. v. Dakila Trading Corporation that: Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in rem, but not if an action is in personam. When the case instituted is an action in rem or quasi in rem, Philippine courts already have jurisdiction to hear and decide the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court, provided that the court acquires jurisdiction over the res. Thus, in such instance, extraterritorial service of summons can be made upon the defendant. The said extraterritorial service of summons 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 may 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. On the other hand, when the defendant or respondent does not reside and is not found in the Philippines, and the action involved is in personam, Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he 34 voluntarily appears in court. (Emphases supplied.) In Domagas v. Jensen,
35

Since the action involved in the case at bar is in personam and since the defendant, petitioner Rothschild/Investec, does not reside and is not found in the Philippines, the Philippine courts cannot try any case against it because of the impossibility of acquiring jurisdiction over its person unless it voluntarily 38 appears in court. In this regard, respondent vigorously argues that petitioner should be held to have voluntarily appeared before the trial court when it prayed for, and was actually afforded, specific 39 reliefs from the trial court. Respondent points out that while petitioners Motion to Dismiss was still pending, petitioner prayed for and was able to avail of modes of discovery against respondent, such as written interrogatories, requests for admission, deposition, and motions for production of 40 documents. Petitioner counters that under this Courts ruling in the leading 41 case of La Naval Drug Corporation v. Court of Appeals, a party may file a Motion to Dismiss on the ground of lack of jurisdiction over its person, and at the same time raise affirmative defenses and pray for affirmative relief, without waiving its objection to the acquisition of jurisdiction over its 42 person. It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading of La Naval reveals that the Court intended a distinction between the raising of affirmative defenses in an Answer (which would not amount to acceptance of the jurisdiction of the court) and the prayer for affirmative reliefs (which would be considered acquiescence to the jurisdiction of the court): In the same manner that a plaintiff may assert two or more causes of action in a court suit, a defendant is likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to put up his own defenses alternatively or even hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in an answer, except for the failure to state a cause of action, are deemed waived. We take this to mean that a defendant may, in fact, feel enjoined to set up, along with his objection to the court's jurisdiction over his person, all other possible defenses. It thus appears that it is not the invocation of any of such defenses, but the failure to so raise them, that can result in waiver or estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16 of the Rules of Court that must be asserted in a motion to dismiss or by way of affirmative defenses in an answer. Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled: "This is not to say, however, that the petitioner's right to question the jurisdiction of the court over its person is now to be deemed a foreclosed matter. If it is true, as Signetics claims, that its only involvement in the Philippines was through a passive investment in Sigfil, which it even later disposed of, and that TEAM Pacific is not its agent, then it cannot really be said to be doing business in the Philippines. It is a defense, however, that requires the contravention of the allegations of the complaint, as well as a full ventilation, in effect, of the main merits of the case, which should not thus be within the province of a mere motion to dismiss. So, also, the issue posed by the petitioner as to whether a foreign corporation which has done business in the country, but which has ceased to do business at the time of the filing of a complaint, can still be made to answer for a cause of action which accrued while it was doing business, is another matter that would yet have to await the reception and admission of evidence. Since these points have seasonably been raised

we held that:

[T]he aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions 36 to fasten a pecuniary liability on him. It is likewise settled that "[a]n action in personam is lodged against a person based on personal liability; an action in rem is directed against the thing itself instead of the person; while an action quasi in rem names a person as defendant, but its object is to subject that persons interest in a property to a 37 corresponding lien or obligation." The Complaint in the case at bar is an action to declare the loan and Hedging Contracts between the parties void with a prayer for damages. It is a suit in which the plaintiff seeks to be freed from its obligations to the defendant under a contract and to hold said defendant pecuniarily liable to the plaintiff for entering into such contract. It is therefore an action in personam, unless and until the plaintiff attaches a property within the Philippines belonging to the defendant, in which case the action will be converted to one quasi in rem.

by the petitioner, there should be no real cause for what may understandably be its apprehension, i.e., that by its participation during the trial on the merits, it may, absent an invocation of separate or independent reliefs of its own, be considered to have voluntarily submitted itself to 43 the court's jurisdiction." (Emphases supplied.) In order to conform to the ruling in La Naval, which was 44 decided by this Court in 1994, the former Section 23, Rule 14 concerning voluntary appearance was amended to include a second sentence in its equivalent provision in the 1997 Rules of Civil Procedure: SEC. 20. Voluntary appearance. The defendant's voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. (Emphasis supplied.) The new second sentence, it can be observed, merely mentions other grounds in a Motion to Dismiss aside from lack of jurisdiction over the person of the defendant. This clearly refers to affirmative defenses, rather than affirmative reliefs. Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court, in several cases, ruled that seeking affirmative relief in a court is tantamount to voluntary 45 appearance therein. Thus, in Philippine Commercial 46 International Bank v. Dy Hong Pi, wherein defendants filed a "Motion for Inhibition without submitting themselves to the jurisdiction of this Honorable Court" subsequent to their filing of a "Motion to Dismiss (for Lack of Jurisdiction)," we held: Besides, any lingering doubts on the issue of voluntary appearance dissipate when the respondents' motion for inhibition is considered. This motion seeks a sole relief: inhibition of Judge Napoleon Inoturan from further hearing the case. Evidently, by seeking affirmative relief other than dismissal of the case, respondents manifested their voluntary submission to the court's jurisdiction. It is wellsettled that the active participation of a party in the proceedings is tantamount to an invocation of the court's jurisdiction and a willingness to abide by the resolution of the case, and will bar said party from later on impugning the court's 47 jurisdiction. (Emphasis supplied.)1wphi1 In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from the trial court, is deemed to have voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief, repudiate or question that same 48 jurisdiction. Consequently, the trial court cannot be considered to have committed grave abuse of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to Dismiss on account of failure to acquire jurisdiction over the person of the defendant. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated September 8, 2006 and its Resolution dated December 12, 2006 in CA-G.R. SP No. 94382 are hereby AFFIRMED. No pronouncement as to costs. INTERNATIONAL SHOE CO. v. WASHINGTON, 326 U.S. 310 (1945) 326 U.S. 310 INTERNATIONAL SHOE CO. v. STATE OF WASHINGTON, OFFICE OF UNEMPLOYMENT COMPENSATION AND PLACEMENT et al.

No. Decided Dec. 3, 1945.

107.

Appeal from the Supreme Court of the State of Washington. [326 U.S. 310, 311] Mr. Henry C. Lowenhaupt, of St. Louis Mo., for appellant. Mr. George W. Wilkins, of Olympia, Wash., for appellees. Mr. Chief Justice STONE delivered the opinion of the Court. The questions for decision are (1) whether, within the limitations of the due process clause of the Fourteenth Amendment, appellant, a Delaware corporation, has by its activities in the State of Washington rendered itself amenable to proceedings in the courts of that state to recover unpaid contributions to the state unemployment compensation fund exacted by state statutes, Washington Unemployment Compensation Act, Washington Revised Statutes, 9998-103a through 9998-123a, 1941 Supp., and (2) whether the state can exact those contributions consistently with the due process clause of the Fourteenth Amendment. The statutes in question set up a comprehensive scheme of unemployment compensation, the costs of which are defrayed by contributions required to be made by employers to a state unemployment compensation fund. [326 U.S. 310, 312] The contributions are a specified percentage of the wages payable annually by each employer for his employees' services in the state. The assessment and collection of the contributions and the fund are administered by respondents. Section 14(c) of the Act, Wash.Rev.Stat. 1941 Supp., 9998- 114c, authorizes respondent Commissioner to issue an order and notice of assessment of delinquent contributions upon prescribed personal service of the notice upon the employer if found within the state, or, if not so found, by mailing the notice to the employer by registered mail at his last known address. That section also authorizes the Commissioner to collect the assessment by distraint if it is not paid within ten days after service of the notice. By 14(e) and 6(b) the order of assessment may be administratively reviewed by an appeal tribunal within the office of unemployment upon petition of the employer, and this determination is by 6(i) made subject to judicial review on questions of law by the state Superior Court, with further right of appeal in the state Supreme Court as in other civil cases. In this case notice of assessment for the years in question was personally served upon a sales solicitor employed by appellant in the State of Washington, and a copy of the notice was mailed by registered mail to appellant at its address in St. Louis, Missouri. Appellant appeared specially before the office of unemployment and moved to set aside the order and notice of assessment on the ground that the service upon appellant's salesman was not proper service upon appellant; that appellant was not a corporation of the State of Washington and was not doing business within the state; that it had no agent within the state upon whom service could be made; and that appellant is not an employer and does not furnish employment within the meaning of the statute. The motion was heard on evidence and a stipulation of facts by the appeal tribunal which denied the motion [326 U.S. 310, 313] and ruled that respondent Commissioner was entitled to recover the unpaid contributions. That action was affirmed by the Commissioner; both the Superior Court and the Supreme Court affirmed. 154 P.2d 801. Appellant in each of these courts assailed the statute as applied, as a violation of the due process clause of the Fourteenth Amendment, and as imposing a constitutionally prohibited burden on interstate commerce. The cause comes here on appeal under 237(a) of

the Judicial Code, 28 U.S.C. 344(a), 28 U.S.C.A. 344(a), appellant assigning as error that the challenged statutes as applied infringe the due process clause of the Fourteenth Amendment and the commerce clause. The facts as found by the appeal tribunal and accepted by the state Superior Court and Supreme Court, are not in dispute. Appellant is a Delaware corporation, having its principal place of business in St. Louis, Missouri, and is engaged in the manufacture and sale of shoes and other footwear. It maintains places of business in several states, other than Washington, at which its manufacturing is carried on and from which its merchandise is distributed interstate through several sales units or branches located outside the State of Washington. Appellant has no office in Washington and makes no contracts either for sale or purchase of merchandise there. It maintains no stock of merchandise in that state and makes there no deliveries of goods in intrastate commerce. During the years from 1937 to 1940, now in question, appellant employed eleven to thirteen salesmen under direct supervision and control of sales managers located in St. Louis. These salesmen resided in Washington; their principal activities were confined to that state; and they were compensated by commissions based upon the amount of their sales. The commissions for each year totaled more than $31,000. Appellant supplies its salesmen with a line of samples, each consisting of one shoe of a pair, which [326 U.S. 310, 314] they display to prospective purchasers. On occasion they rent permanent sample rooms, for exhibiting samples, in business buildings, or rent rooms in hotels or business buildings temporarily for that purpose. The cost of such rentals is reimbursed by appellant. The authority of the salesmen is limited to exhibiting their samples and soliciting orders from prospective buyers, at prices and on terms fixed by appellant. The salesmen transmit the orders to appellant's office in St. Louis for acceptance or rejection, and when accepted the merchandise for filling the orders is shipped f.o.b. from points outside Washington to the purchasers within the state. All the merchandise shipped into Washington is invoiced at the place of shipment from which collections are made. No salesman has authority to enter into contracts or to make collections. The Supreme Court of Washington was of opinion that the regular and systematic solicitation of orders in the state by appellant's salesmen, resulting in a continuous flow of appellant's product into the state, was sufficient to constitute doing business in the state so as to make appellant amenable to suit in its courts. But it was also of opinion that there were sufficient additional activities shown to bring the case within the rule frequently stated, that solicitation within a state by the agents of a foreign corporation plus some additional activities there are sufficient to render the corporation amenable to suit brought in the courts of the state to enforce an obligation arising out of its activities there. International Harvester Co. v. Kentucky, 234 U.S. 579, 587 , 34 S.Ct. 944, 946; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 87 , 38 S.Ct. 233, 235, Ann.Cas.1918C, 537; Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926. The court found such additional activities in the salesmen's display of samples sometimes in permanent display rooms, and the salesmen's residence within the state, continued over a period of years, all resulting in a [326 U.S. 310, 315] substantial volume of merchandise regularly shipped by appellant to purchasers within the state. The court also held that the statute as applied did not invade the constitutional power of Congress to regulate interstate commerce and did not impose a prohibited burden on such commerce.

Appellant's argument, renewed here, that the statute imposes an unconstitutional burden on interstate commerce need not detain us. For 53 Stat. 1391, 26 U.S.C. 1606(a), 26 U.S.C.A. Int.Rev.Code, 1606(a), provides that 'No person required under a State law to make payments to an unemployment fund shall be relieved from compliance therewith on the ground that he is engaged in interstate or foreign commerce, or that the State law does not distinguish between employees engaged in interstate or foreign commerce and those engaged in intrastate commerce.' It is no longer debatable that Congress, in the exercise of the commerce power, may authorize the states, in specified ways, to regulate interstate commerce or impose burdens upon it. Kentucky Whip & Collar Co. v. Illinois Central R. Co., 299 U.S. 334 , 57 S.Ct. 277; Perkins v. Pennsylvania, 314 U.S. 586 , 62 S.Ct. 484; Standard Dredging Corp. v. Murphy, 319 U.S. 306, 308 , 63 S.Ct. 1067, 1068; Hooven & Allison v. Evatt, 324 U.S. 652, 679 , 65 S.Ct. 870, 883; Southern Pacific Co. v. Arizona, 325 U.S. 761, 769 , 65 S.Ct. 1515, 1520 Appellant also insists that its activities within the state were not sufficient to manifest its 'presence' there and that in its absence the state courts were without jurisdiction, that consequently it was a denial of due process for the state to subject appellant to suit. It refers to those cases in which it was said that the mere solicitation of orders for the purchase of goods within a state, to be accepted without the state and filled by shipment of the purchased goods interstate, does not render the corporation seller amenable to suit within the state. See Green v. Chicago, Burlington & Quincy R. Co., 205 U.S. 530, 533 , 27 S.Ct. 595, 596; International Harvester Co. v. Kentucky, supra, 234 U.S. 586, 587 , 34 S.Ct. 946; Philadelphia [326 U.S. 310, 316] & Reading R. Co. v. McKibbin, 243 U.S. 264, 268 , 37 S.Ct. 280; People's Tobacco Co. v. American Tobacco Co., supra, 246 U.S. 87 , 38 S.Ct. 235, Ann.Cas.1918C, 537. And appellant further argues that since it was not present within the state, it is a denial of due process to subject it to taxation or other money exaction. It thus denies the power of the state to lay the tax or to subject appellant to a suit for its collection. Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence his presence within the territorial jurisdiction of court was prerequisite to its rendition of a judgment personally binding him. Pennoyer v. Neff, 95 U.S. 714 , 733. But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' Milliken v. Meyer, 311 U.S. 457, 463 , 61 S.Ct. 339, 343, 132 A.L.R. 1357. See Holmes, J., in McDonald v. Mabee, 243 U.S. 90, 91 , 37 S.Ct. 343, L.R.A.1917F, 458. Compare Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316 , 319 S., 63 S.Ct. 602, 604, 606, 145 A.L.R. 1113. See Blackmer v. United States, 284 U.S. 421 , 52 S.Ct. 252; Hess v. Pawloski, 274 U.S. 352 , 47 S.Ct. 632; Young v. Masci, 289 U.S. 253 , 53 S.Ct. 599, 88 A.L.R. 170. Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, Klein v. Board of Tax Supervisors, 282 U.S. 19, 24 , 51 S.Ct. 15, 16, 73 A.L.R. 679, it is clear that unlike an individual its 'presence' without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it. To say that the corporation is so far 'present' there as to satisfy due process requirements,

for purposes of taxation or the maintenance of suits against it in the courts of the state, is to beg the question to be decided. For the terms 'present' or 'presence' are [326 U.S. 310, 317] used merely to symbolize those activities of the corporation's agent within the state which courts will deem to be sufficient to satisfy the demands of due process. L. Hand, J., in Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139, 141. Those demands may be met by such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there. An 'estimate of the inconveniences' which would result to the corporation from a trial away from its 'home' or principal place of business is relevant in this connection. Hutchinson v. Chase & Gilbert, supra, 45 F.2d 141. 'Presence' in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given. St. Clair v. Cox, 106 U.S. 350, 355 , 1 S.Ct. 354, 359; Connecticut Mutual Life Ins. Co. v. Spratley, 172 U.S. 602, 610 , 611 S., 19 S.Ct. 308, 311, 312; Pennsylvania Lumbermen's Mut. Fire Ins. Co. v. Meyer, 197 U.S. 407, 414 , 415 S., 25 S.Ct. 483, 484, 485; Commercial Mutual Accident Co. v. Davis, 213 U.S. 245, 255 , 256 S., 29 S.Ct. 445, 448; International Harvester Co. v. Kentucky, supra; cf. St. Louis S.W.R. Co. v. Alexander, 227 U.S. 218 , 33 S.Ct. 245, Ann.Cas.1915B, 77. Conversely it has been generally recognized that the casual presence of the corporate agent or even his conduct of single or isolated items of activities in a state in the corporation's behalf are not enough to subject it to suit on causes of action unconnected with the activities there. St. Clair v. Cox, supra, 106 U.S. 359, 360 , 1 S.Ct. 362, 363; Old Wayne Mut. Life Ass'n v. McDonough, 204 U.S. 8, 21 , 27 S.Ct. 236, 240; Frene v. Louisville Cement Co., supra, 77 U.S.App.D.C. 133, 134 F.2d 515, 146 A.L.R. 926, and cases cited. To require the corporation in such circumstances to defend the suit away from its home or other jurisdiction where it carries on more substantial activities has been thought to lay too great and unreasonable a burden on the corporation to comport with due process. [326 U.S. 310, 318] While it has been held in cases on which appellant relies that continuous activity of some sorts within a state is not enough to support the demand that the corporation be amenable to suits unrelated to that activity, Old Wayne Mut. Life Ass'n v. McDonough, supra; Green v. Chicago, Burlington & Quincy R. Co., supra; Simon v. Southern R. Co., 236 U.S. 115 , 35 S.Ct. 255; People's Tobacco Co. v. American Tobacco Co., supra; cf. Davis v. Farmers' Co-operative Equity Co., 262 U.S. 312, 317 , 43 S.Ct. 556, 558, there have been instances in which the continuous corporate operations within a state were thought so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities. See Missouri, K. & T.R. Co. v. Reynolds, 255 U.S. 565 , 41 S.Ct. 446; Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St. Louis S.W.R. Co. v. Alexander, supra. Finally, although the commission of some single or occasional acts of the corporate agent in a state sufficient to impose an obligation or liability on the corporation has not been thought to confer upon the state authority to enforce it, Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S. 516 , 43 S.Ct. 170, other such acts, because of their nature and quality and the circumstances of their commission, may be deemed sufficient to render the corporation liable to suit. Cf. Kane v. New Jersey, 242 U.S. 160 , 37 S.Ct. 30; Hess v. Pawloski, supra; Young v. Masci, supra. True, some of the decisions holding the corporation amenable to suit have been supported by resort to

the legal fiction that it has given its consent to service and suit, consent being implied from its presence in the state through the acts of its authorized agents. Lafayette Insurance Co. v. French, 18 How. 404, 407; St. Clair v. Cox, supra, 106 U.S. 356 , 1 S.Ct. 359; Commercial Mutual Accident Co. v. Davis, supra, 213 U.S. 254 , 29 S.Ct. 447; State of Washington v. Superior Court, 289 U.S. 361, 364 , 365 S., 53 S.Ct. 624, 626, 627, 89 A.L.R. 653. But more realistically it may be said that those authorized acts were of such a nature as to justify the fiction. Smolik v. Philadelphia & [326 U.S. 310, 319] R.C. & I. Co., D.C., 222 F. 148, 151. Henderson, The Position of Foreign Corporations in American Constitutional Law, 94, 95. It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. The test is not merely, as has sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in another state, is a little more or a little less. St. Louis S.W.R. Co. v. Alexander, supra, 227 U.S. 228 , 33 S.Ct. 248, Ann.Cas. 1915B, 77; International Harvestor Co. v. Kentucky, supra, 234 U.S. 587 , 34 S.Ct. 946. Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations. Cf. Pennoyer v. Neff, supra; Minnesota Commercial Men's Ass'n v. Benn, 261 U.S. 140 , 43 S.Ct. 293. But to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations; and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. Compare International Harvester Co. v. Kentucky, supra, with Green v. Chicago, Burlington & Quincy R. Co., supra, and People's Tobacco Co. v. American Tobacco Co., supra. Compare Connecticut Mutual Life Ins. Co. v. Spratley, supra, 172 U.S. 619, 620 , 19 S.Ct. 314, 315, and Commercial Mutual Accident Co. v. Davis, supra, with Old Wayne Mut. Life Ass'n v. McDonough, supra. See 29 Columbia Law Review, 187-195. [326 U.S. 310, 320] Applying these standards, the activities carried on in behalf of appellant in the State of Washington were neither irregular nor casual. They were systematic and continuous throughout the years in question. They resulted in a large volume of interstate business, in the course of which appellant received the benefits and protection of the laws of the state, including the right to resort to the courts for the enforcement of its rights. The obligation which is here sued upon arose out of those very activities. It is evident that these operations establish sufficient contacts or ties with the state of the forum to make it reasonable and just according to our traditional conception of fair play and substantial justice to permit the state to enforce the obligations which appellant has incurred there. Hence we cannot say that the maintenance of the present suit in the State of Washington involves an unreasonable or undue procedure. We are likewise unable to conclude that the service of the process within the state upon an agent whose activities establish appellant's 'presence' there was not sufficient notice of the suit, or that the suit was so unrelated to those activities as to make the agent an inappropriate vehicle for communicating the notice. It is enough that appellant has

established such contacts with the state that the particular form of substituted service adopted there gives reasonable assurance that the notice will be actual. Connecticut Mutual Life Ins. Co. v. Spratley, supra, 172 U.S. 618, 619 , 19 S.Ct. 314, 315; Board of Trade v. Hammond Elevator Co., 198 U.S. 424, 437 , 438 S., 25 S.Ct. 740, 743, 744; Commercial Mutual Accident Co. v. Davis, supra, 213 U.S. 254, 255 , 29 S.Ct. 447, 448. Cf. Riverside & Dan River Cotton Mills v. Menefee, 237 U.S. 189, 194 , 195 S., 35 S.Ct. 579, 580, 581; see Knowles v. Gaslight & Coke Co., 19 Wall. 58, 61; McDonald v. Mabee, supra; Milliken v. Meyer, supra. Nor can we say that the mailing of the notice of suit to appellant by registered mail at its home office was not reasonably calculated to apprise appellant of the suit. Compare Hess v. Pawloski, supra, with McDonald v. Mabee, supra, 243 U.S. [326 U.S. 310, 321] 92, 37 S.Ct. 344, L.R.A.1917F, 458, and Wuchter v. Pizzutti, 276 U.S. 13, 19 , 24 S., 48 S.Ct. 259, 260, 262, 57 A.L.R. 1230; cf. Bequet v. MacCarthy, 2 B. & Ad. 951; Maubourquet v. Wyse, 1 Ir.Rep.C.L. 471. See State of Washington v. Superior Court, supra, 289 U.S. 365 , 53 S. Ct. 626, 89 A.L.R. 653. Only a word need be said of appellant's liability for the demanded contributions of the state unemployment fund. The Supreme Court of Washington, construing and applying the statute, has held that it imposes a tax on the privilege of employing appellant's salesmen within the state measured by a percentage of the wages, here the commissions payable to the salesmen. This construction we accept for purposes of determining the constitutional validity of the statute. The right to employ labor has been deemed an appropriate subject of taxation in this country and England, both before and since the adoption of the Constitution. Steward Machine Co. v. Davis, 301 U.S. 548 , 579 et seq., 57 S.Ct. 883, 887 et seq., 109 A.L.R. 1293. And such a tax imposed upon the employer for unemployment benefits is within the constitutional power of the states. Carmichael v. Southern Coal & Coke Co., 301 U.S. 495 , 508 et seq., 57 S.Ct. 868, 871 et seq., 109 A.L.R. 1327. Appellant having rendered itself amenable to suit upon obligations arising out of the activities of its salesmen in Washington, the state may maintain the present suit in personam to collect the tax laid upon the exercise of the privilege of employing appellant's salesmen within the state. For Washington has made one of those activities, which taken together establish appellant's 'presence' there for purposes of suit, the taxable event by which the state brings appellant within the reach of its taxing power. The state thus has constitutional power to lay the tax and to subject appellant to a suit to recover it. The activities which establish its 'presence' subject it alike to taxation by the state and to suit to recover the tax. Equitable Life Assur. Society v. Pennsylvania, 238 U.S. 143, 146 , 35 S.Ct. 829, 830; cf. International Harvester Co. v. Wisconsin Department of Taxation, 322 U.S. 435 , 442 et seq., 64 S.Ct. 1060, 1064 et seq.; Hoopeston Canning Co. v. Cullen, [326 U.S. 310, 322] supra, 318 U.S. 316 -319, 63 S.Ct. 604606, 145 A.L.R. 113; see General Trading Co. v. State Tax Com., 322 U.S. 335, 349 , 64 S.Ct. 1028, 1030, 1319. AFFIRMED. Mr. Justice JACKSON took no part in the consideration or decision of this case. Mr. Justice BLACK delivered the following opinion. Congress, pursuant to its constitutional power to regulate commerce, has expressly provided that a State shall not be prohibited from levying the kind of unemployment compensation tax here challenged. 26 U.S.C. 1606, 26 U.S.C.A. Int.Rev.Code, 1606. We have twice decided that this Congressional consent is an adequate answer to a claim that imposition of the tax violates the Commerce Clause. Perkins v.

Pennsylvania, 314 U.S. 586 , 62 S.Ct. 484, affirming 342 Pa. 529, 21 A.2d 45; Standard Dredging Corp. v. Murphy, 319 U.S. 306, 308 , 63 S.Ct. 1067, 1068. Two determinations by this Court of an issue so palpably without merit are sufficient. Consequently that part of this appeal which again seeks to raise the question seems so patently frivolous as to make the case a fit candidate for dismissal. Fay v. Crozer, 217 U.S. 455 , 30 S. Ct. 568. Nor is the further ground advanced on this appeal, that the State of Washington has denied appellant due process of law, any less devoid of substance. It is my view, therefore, that we should dismiss the appeal as unsubstantial,1 Seaboard Air Line R. Co. v. Watson, 287 U.S. 86, 90 , 92 S., 53 S.Ct. 32, 34, 35, 86 A.L.R. 174; and decline the invitation to formulate broad rules as to the meaning of due process, which here would amount to deciding a constitutional question 'in advance of the necessity for its decision.' Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 461 , 65 S.Ct. 1384, 1389, 1734. [326 U.S. 310, 323] Certainly appellant can not in the light of our past decisions meritoriously claim that notice by registered mail and by personal service on its sales solicitors in Washington did not meet the requirements of procedural due process. And the due process clause is not brought in issue any more by appellant's further conceptualistic contention that Washington could not levy a tax or bring suit against the corporation because it did not honor that State with its mystical 'presence.' For it is unthinkable that the vague due process clause was ever intended to prohibit a State from regulating or taxing a business carried on within its boundaries simply because this is done by agents of a corporation organized and having its headquarters elsewhere. To read this into the due process clause would in fact result in depriving a State's citizens of due process by taking from the State the power to protect them in their business dealings within its boundaries with representatives of a foreign corporation. Nothing could be more irrational or more designed to defeat the function of our federative system of government. Certainly a State, at the very least, has power to tax and sue those dealing with its citizens within its boundaries, as we have held before. Hoopeston Canning Co. v. Cullen, 318 U.S. 313 , 63 S.Ct. 602, 145 A.L.R. 1113. Were the Court to follow this principle, it would provide a workable standard for cases where, as here, no other questions are involved. The Court has not chosen to do so, but instead has engaged in an unnecessary discussion in the course of which it has announced vague Constitutional criteria applied for the first time to the issue before us. It has thus introduced uncertain elements confusing the simple pattern and tending to curtail the exercise of State powers to an extent not justified by the Constitution. The criteria adopted insofar as they can be identified read as follows: Due process does permit State courts to 'enforce the obligations which appellant has incurred' if [326 U.S. 310, 324] it be found 'reasonable and just according to our traditional conception of fair play and substantial justice.' And this in turn means that we will 'permit' the State to act if upon 'an 'estimate of the inconveniences' which would result to the corporation from a trial away from its 'home' or principal place of business', we conclude that it is 'reasonable' to subject it to suit in a State where it is doing business. It is true that this Court did use the terms 'fair play' and 'substantial justice' in explaining the philosophy underlying the holding that it could not be 'due process of law' to render a personal judgment against a defendant without notice to and an opportunity to be heard by him. Milliken v. Meyer, 311 U.S. 457 , 61 S.Ct. 339, 132 A.L. R. 1357. In McDonald v. Mabee, 243 U.S. 90, 91 , 37 S.Ct. 343, L.R.A.1917F, 458, cited in the Milliken case, Mr. Justice Holmes speaking for the Court warned against judicial curtailment of this opportunity to be

heard and referred to such a curtailment as a denial of 'fair play', which even the common law would have deemed 'contrary to natural justice.' And previous cases had indicated that the ancient rule against judgments without notice had stemmed from 'natural justice' concepts. These cases, while giving additional reasons why notice under particular circumstances is inadequate, did not mean thereby that all legislative enactments which this Court might deem to be contrary to natural justice ought to be held invalid under the due process clause. None of the cases purport to support or could support a holding that a State can tax and sue corporations only if its action comports with this Court's notions of 'natural justice.' I should have thought the Tenth Amendment settled that. I believe that the Federal Constitution leaves to each State, without any 'ifs' or 'buts', a power to tax and to open the doors of its courts for its citizens to sue corporations whose agents do business in those States. Believing that the Constitution gave the States that power, I think it a judicial deprivation to condition its exercise upon this [326 U.S. 310, 325] Court's notion of 'fairplay', however appealing that term may be. Nor can I stretch the meaning of due process so far as to authorize this Court to deprive a State of the right to afford judicial protection to its citizens on the ground that it would be more 'convenient' for the corporation to be sued somewhere else. There is a strong emotional appeal in the words 'fair play', 'justice', and 'reasonableness.' But they were not chosen by those who wrote the original Constitution or the Fourteenth Amendment as a measuring rod for this Court to use in invalidating State or Federal laws passed by elected legislative representatives. No one, not even those who most feared a democratic government, ever formally proposed that courts should be given power to invalidate legislation under any such elastic standards. Express prohibitions against certain types of legislation are found in the Constitution, and under the long settled practice, courts invalidate laws found to conflict with them. This requires interpretation, and interpretation, it is true, may result in extension of the Constitution's purpose. But that is no reason for reading the due process clause so as to restrict a State's power to tax and sue those whose activities affect persons and businesses within the State, provided proper service can be had. Superimposing the natural justice concept on the Constitution's specific prohibitions could operate as a drastic abridgment of democratic safeguards they embody, such as freedom of speech, press and religion,2 and the right to counsel. This [326 U.S. 310, 326] has already happened. Betts v. Brady, 316 U.S. 455 , 62 S.Ct. 1252. Compare Feldman v. United States, 322 U.S. 487 , 494-503, 64 S.Ct. 1082, 1085-1089, 154 A.L.R. 982. For application of this natural law concept, whether under the terms 'reasonableness', 'justice', or 'fair play', makes judges the supreme arbiters of the country's laws and practices. Polk Co. v. Glover, 305 U.S. 5 , 17-18, 59 S.Ct. 15, 20, 21; Federal Power Commission v. Natural Gas Pipeline Co., 315 U.S. 575, 600 , 62 S.Ct. 736, 750, note 4. This result, I believe, alters the form of government our Constitution provides. I cannot agree. True, the State's power is here upheld. But the rule announced means that tomorrow's judgment may strike down a State or Federal enactment on the ground that it does not conform to this Court's idea of natural justice. I therefore find myself moved by the same fears that caused Mr. Justice Holmes to say in 1930: 'I have not yet adequately expressed the more than anxiety that I feel at the ever increasing scope given to the Fourteenth Amendment in cutting down what I believe to be the constitutional rights of the States. As the decisions now stand, I see hardly any limit but the sky to the invalidating of those

rights if they happen to strike a majority of this Court as for any reason undesirable.' Baldwin v. Missouri, 281 U.S. 586, 595 , 50 S.Ct. 436, 439, 72 A.L.R. 1303. U.S. Supreme Court Kulko v. Superior Ct., 436 U.S. 84 (1978) Kulko v. Superior Court of California No. 77-293 Argued March 29, 1978 Decided May 15, 1978 436 U.S. 84 APPEAL FROM THE SUPREME COURT OF CALIFORNIA Syllabus Appellant and appellee, both then New York domiciliaries, were married in 1959 in California during appellant's three-day stopover while he was en route to overseas military duty. After the marriage, appellee returned to New York, as did appellant following his tour of duty and a 24-hour stopover in California. In 1961 and 1962, a son and daughter were born to them in New York, where the family resided together until March, 1972, when appellant and appellee separated. Appellee then moved to California. Under a separation agreement, executed by both parties in New York, the children were to remain with appellant father during the school year, but during specified vacations with appellee mother, whom appellant agreed to pay $3,000 per year in child support for the periods when the children were in her custody. Appellee, after obtaining a divorce in Haiti, which incorporated the terms of the separation agreement, returned to California. In December, 1973, the daughter, at her request and with her father's consent, joined her mother in California, and remained there during the school year, spending vacations with her father. Appellee, without appellant's consent, arranged for the son to join her in California about two years later. Appellee then brought this action against appellant in California to establish the Haitian divorce decree as a California judgment, to modify the judgment so as to award her full custody of the children, and to increase appellant's child support obligations. Appellant, resisting the claim for increased support, appeared specially, claiming that he lacked sufficient "minimum contacts" with that State under International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316, to warrant the State's assertion of personal jurisdiction over him. The California Supreme Court, upholding lower court determinations adverse to appellant, concluded that, where a nonresident defendant has caused an "effect" in the State by an act or omission outside the State, personal jurisdiction over the defendant arising from the effect may be exercised whenever "reasonable," and that such exercise was "reasonable" here because appellant had "purposely availed himself of the benefits and protections of California" by sending the daughter to Page 436 U. S. 85 live with her mother there, and that it was "fair and reasonable" for the defendant to be subject to personal jurisdiction for the support of both children. Held: The exercise of in personam jurisdiction by the California courts over appellant, a New York domiciliary, would violate the Due Process Clause of the Fourteenth Amendment. The mere act of sending a child to California to live with her mother connotes no intent to obtain nor expectancy of receiving a corresponding benefit in that State that would make fair the assertion of that State's judicial jurisdiction over appellant. Pp. 436 U. S. 91-101.

(a) A defendant to be bound by a judgment against him must "have certain minimum contacts with [the forum State] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, supra, at 326 U. S. 316, quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463. P. 436 U. S. 92. (b) The acquiescence of appellant in his daughter's desire to live with her mother in California was not enough to confer jurisdiction over appellant in the California courts. See Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 216. P. 436 U. S. 94. (c) Exercise of in personam jurisdiction over appellant was not warranted by the financial benefit appellant derived from his daughter's presence in California for nine months of the year, since any diminution in appellant's household costs resulted not from the child's presence in California, but from her absence from appellant's home, and from appellee's failure to seek an increase in support payments in New York. Pp. 436 U. S. 94-96. (d) The "effects" rule that the California courts applied is intended to reach wrongful activity outside of the forum State causing injury within the State where such application would not be "unreasonable," but here, where there is no claim that appellant visited physical injury on either property or persons in California; where the cause of action arises from appellant's personal, domestic relations; and where the controversy arises from a separation that occurred in New York, and modification is sought of a contract negotiated and signed in New York that had virtually no connection with the forum State, it is "unreasonable" for California to assert personal jurisdiction over appellant. P. 436 U. S. 96-97. (e) Since appellant remained in the State of marital domicile and did no more than acquiesce in the stated preference of his daughter to live with her mother in California, basic considerations of fairness point decisively to appellant's State of domicile as the proper forum for adjudicating this case, whatever be the merits of appellee's underlying claim. Pp. 436 U. S. 97-98. Page 436 U. S. 86 (f) California's legitimate interest in ensuring the support of children residing in California without unduly disrupting the children's lives is already being served by the State's participation in the Uniform Reciprocal Enforcement of Support Act of 1968, which permits a California resident claiming support from a nonresident to file a petition in California and have its merits adjudicated in the State of the alleged obligor's residence, without either party's having to leave his or her own State. New York is a signatory to a similar statute. Those statutes appear to provide appellee with means to vindicate her claimed right to additional child support from appellant and collection of any support payments found to be owed to her by appellant. Pp. 436 U. S. 98-101. Appeal dismissed and certiorari granted; 19 Cal.3d 514, 564 P.2d 353, reversed. MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, BLACKMUN, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a dissenting opinion, in which WHITE and POWELL, JJ., joined, post, p. 436 U. S. 101. MR. JUSTICE MARSHALL delivered the opinion of the Court. The issue before us is whether, in this action for child support, the California state courts may exercise in personam

jurisdiction over a nonresident, nondomiciliary parent of minor children domiciled within the State. For reasons set forth below, we hold that the exercise of such jurisdiction would violate the Due Process Clause of the Fourteenth Amendment. I Appellant Ezra Kulko married appellee Sharon Kulko Horn in 1959, during appellant's three-day stopover in California en route from a military base in Texas to a tour of duty in Korea. At the time of this marriage, both parties were domiciled in and residents of New York State. Immediately following Page 436 U. S. 87 the marriage, Sharon Kulko returned to New York, as did appellant after his tour of duty. Their first child, Darwin, was born to the Kulkos in New York in 1961, and, a year later their second child, Ilsa, was born, also in New York. The Kulkos and their two children resided together as a family in New York City continuously until March, 1972, when the Kulkos separated. Following the separation, Sharon Kulko moved to San Francisco, Cal. A written separation agreement was drawn up in New York; in September, 1972, Sharon Kulko flew to New York City in order to sign this agreement. The agreement provided, inter alia, that the children would remain with their father during the school year but would spend their Christmas, Easter, and summer vacations with their mother. While Sharon Kulko waived any claim for her own support or maintenance, Ezra Kulko agreed to pay his wife $3,000 per year in child support for the periods when the children were in her care, custody, and control. Immediately after execution of the separation agreement, Sharon Kulko flew to Haiti and procured a divorce there; [Footnote 1] the divorce decree incorporated the terms of the agreement. She then returned to California, where she remarried and took the name Horn. The children resided with appellant during the school year and with their mother on vacations, as provided by the separation agreement, until December, 1973. At this time, just before Ilsa was to leave New York to spend Christmas vacation with her mother, she told her father that she wanted to remain in California after her vacation. Appellant bought his daughter a one-way plane ticket, and Ilsa left, taking her Page 436 U. S. 88 clothing with her. Ilsa then commenced living in California with her mother during the school year and spending vacations with her father. In January, 1976, appellant's other child, Darwin, called his mother from New York and advised her that he wanted to live with her in California. Unbeknownst to appellant, appellee Horn sent a plane ticket to her son, which he used to fly to California where he took up residence with his mother and sister. Less than one month after Darwin's arrival in California, appellee Horn commenced this action against appellant in the California Superior Court. She sought to establish the Haitian divorce decree as a California judgment; to modify the judgment so as to award her full custody of the children; and to increase appellant's child support obligations. [Footnote 2] Appellant appeared specially and moved to quash service of the summons on the ground that he was not a resident of California and lacked sufficient "minimum contacts" with the State under International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945), to warrant the State's assertion of personal jurisdiction over him. The trial court summarily denied the motion to quash, and appellant sought review in the California Court of Appeal by petition for a writ of mandate. Appellant did not contest the

court's jurisdiction for purposes of the custody determination, but, with respect to the claim for increased support, he renewed his argument that the California courts lacked personal jurisdiction over him. The appellate court affirmed the denial of appellant's motion to quash, reasoning that, by consenting to his children's living in California, appellant had "caused Page 436 U. S. 89 an effect in th[e] state" warranting the exercise of jurisdiction over him. 133 Cal.Rptr. 627, 628 (1976). The California Supreme Court granted appellant's petition for review, and, in a 4-2 decision, sustained the rulings of the lower state courts. 19 Cal.3d 514, 564 P.2d 353 (1977). It noted first that the California Code of Civil Procedure demonstrated an intent that the courts of California utilize all bases of in personam jurisdiction "not inconsistent with the Constitution." [Footnote 3] Agreeing with the court below, the Supreme Court stated that, where a nonresident defendant has caused an effect in the State by an act or omission outside the State, personal jurisdiction over the defendant in causes arising from that effect may be exercised whenever "reasonable." Id. at 521, 564 P.2d at 356. It went on to hold that such an exercise was "reasonable" in this case because appellant had "purposely availed himself of the benefits and protections of the laws of California" by sending Ilsa to live with her mother in California. Id. at 521-522, 524, 564 P.2d at 356, 358. While noting that appellant had not, "with respect to his other child, Darwin, caused an effect in [California]" -- since it was appellee Horn who had arranged for Darwin to fly to California in January, 1976 -- the court concluded that it was "fair and reasonable for defendant to be subject to personal jurisdiction for the support of both children, where he has committed acts with respect to one child which confers [sic] personal jurisdiction and has consented to the permanent residence of the other child in California." Id. at 525, 564 P.2d at 358-359. In the view of the two dissenting justices, permitting a minor child to move to California could not be regarded as a Page 436 U. S. 90 purposeful act by which appellant had invoked the benefits and protection of state law. Since appellant had been in the State of California on only two brief occasions many years before on military stopovers, and lacked any other contact with the State, the dissenting opinion argued that appellant could not reasonably be subjected to the in personam jurisdiction of the California state courts. Id. at 526-529, 564 P.2d at 359-360. On Ezra Kulko's appeal to this Court, probable jurisdiction was postponed. 434 U.S. 983 (1977). We have concluded that jurisdiction by appeal does not lie, [Footnote 4] but, treating the papers as a petition for a writ of certiorari, we hereby grant the petition and reverse the judgment below. [Footnote 5] Page 436 U. S. 91 II The Due Process Clause of the Fourteenth Amendment operates as a limitation on the jurisdiction of state courts to enter judgments affecting rights or interests of nonresident defendants. See Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 198-200 (1977). It has long been the rule that a valid judgment imposing a personal obligation or duty in favor of the plaintiff may be entered only by a court having jurisdiction over the person of the defendant. Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 732-733 (1878); International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 316. The existence of personal jurisdiction, in

turn, depends upon the presence of reasonable notice to the defendant that an action has been brought, Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 313-314 (1950), and a sufficient connection between the defendant and the forum State to make it fair to require defense of the action in the forum. Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463-464 (1940). In this case, appellant does not dispute the adequacy of the notice that he received, but contends that his connection with the State of California is too attenuated, under the standards implicit in the Due Process Clause of the Constitution, to justify imposing upon him the burden and inconvenience of defense in California. Page 436 U. S. 92 The parties are in agreement that the constitutional standard for determining whether the State may enter a binding Judgment against appellant here is that set forth in this Court's opinion in International Shoe Co. v. Washington, supra: that a defendant "have certain minimum contacts with [the forum State] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" 326 U.S. at 326 U. S. 316, quoting Milliken v. Meyer, supra at 311 U. S. 463. While the interests of the forum State and of the plaintiff in proceeding with the cause in the plaintiff's forum of choice are, of course, to be considered, see McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223 (1957), an essential criterion in all cases is whether the "quality and nature" of the defendant's activity is such that it is "reasonable" and "fair" to require him to conduct his defense in that State. International Shoe Co. v. Washington, supra at 326 U. S. 316317, 326 U. S. 319. Accord, Shaffer v. Heitner, supra at 433 U. S. 207-212; Perkins v. Benguet Mining Co., 342 U. S. 437, 342 U. S. 445 (1952). Like any standard that requires a determination of "reasonableness," the "minimum contacts" test of International Shoe is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite "affiliating circumstances" are present. Hanson v. Denckla, 357 U. S. 235, 357 U. S. 246 (1958). We recognize that this determination is one in which few answers will be written "in black and white. The greys are dominant, and, even among them, the shades are innumerable." Estin v. Estin, 334 U. S. 541, 334 U. S. 545 (1948). But we believe that the California Supreme Court's application of the minimum contacts test in this case represents an unwarranted extension of International Shoe and would, if sustained, sanction a result that is neither fair, just, nor reasonable. A In reaching its result, the California Supreme Court did not rely on appellant's glancing presence in the State some 13 Page 436 U. S. 93 years before the events that led to this controversy, nor could it have. Appellant has been in California on only two occasions, once in 1959 for a three-day military stopover on his way to Korea, see supra at 436 U. S. 86-87, and again in 1960 for a 24-hour stopover on his return from Korean service. To hold such temporary visits to a State a basis for the assertion of in personam jurisdiction over unrelated actions arising in the future would make a mockery of the limitations on state jurisdiction imposed by the Fourteenth Amendment. Nor did the California court rely on the fact that appellant was actually married in California on one of his two brief visits. We agree that where two New York domiciliaries, for reasons of convenience, marry in the State of California and thereafter

spend their entire married life in New York, the fact of their California marriage, by itself, cannot support a California court's exercise of jurisdiction over a spouse who remains a New York resident in an action relating to child support. Finally, in holding that personal jurisdiction existed, the court below carefully disclaimed reliance on the fact that appellant had agreed at the time of separation to allow his children to live with their mother three months a year, and that he had sent them to California each year pursuant to this agreement. As was noted below, 19 Cal.3d at 523-524, 564 P.2d at 357, to find personal jurisdiction in a State on this basis, merely because the mother was residing there, would discourage parents from entering into reasonable visitation agreements. Moreover, it could arbitrarily subject one parent to suit in any State of the Union where the other parent chose to spend time while having custody of their offspring pursuant to a separation agreement. As we have emphasized: [Footnote 6] "The unilateral activity of those who claim some relationship Page 436 U. S. 94 with a nonresident defendant cannot satisfy the requirement of contact with the forum State. . . . [I]t is essential in each case that there be some act by which the defendant purposefully avails [him]self of the privilege of conducting activities within the forum State. . . ." Hanson v. Denckla, supra at 357 U. S. 253. The "purposeful act" that the California Supreme Court believed did warrant the exercise of personal jurisdiction over appellant in California was his "actively and fully consent[ing] to Ilsa living in California for the school year . . . and . . . sen[ding] her to California for that purpose." 19 Cal.3d at 524, 564 P.2d at 358. We cannot accept the proposition that appellant's acquiescence in Ilsa's desire to live with her mother conferred jurisdiction over appellant in the California courts in this action. A father who agrees, in the interests of family harmony and his children's preferences, to allow them to spend more time in California than was required under a separation agreement can hardly be said to have "purposefully availed himself" of the "benefits and protections" of California's laws. See Shaffer v. Heitner, 433 U.S. at 433 U. S. 216. [Footnote 7] Nor can we agree with the assertion of the court below that the exercise of in personam jurisdiction here was warranted by the financial benefit appellant derived from his daughter's presence in California for nine months of the year. 19 Cal.3d at 524-525, 564 P.2d at 358. This argument rests on the premise that, while appellant's liability for support payments Page 436 U. S. 95 remained unchanged, his yearly expenses for supporting the child in New York decreased. But this circumstance, even if true, does not support California's assertion of jurisdiction here. Any diminution in appellant's household costs resulted not from the child's presence in California, but rather from her absence from appellant's home. Moreover, an action by appellee Horn to increase support payments could now be brought, and could have been brought when Ilsa first moved to California, in the State of New York; [Footnote 8] a New York court would clearly have personal jurisdiction over appellant, and, if a judgment were entered by a New York court increasing appellant's child support obligations, it could properly be enforced against him in both New York and California. [Footnote 9] Any ultimate financial advantage to appellant thus results not from the child's presence in California, but from appellee's failure earlier to seek an increase in payments under the separation agreement. [Footnote 10] The argument below to the contrary, in our

Page 436 U. S. 96 view, confuses the question of appellant's liability with that of the proper forum in which to determine that liability. B In light of our conclusion that appellant did not purposefully derive benefit from any activities relating to the State of California, it is apparent that the California Supreme Court's reliance on appellant's having caused an "effect" in California was misplaced. See supra at 436 U. S. 89. This "effects" test is derived from the American Law Institute's Restatement (Second) of Conflict of Laws 37 (1971), which provides: "A state has power to exercise judicial jurisdiction over an individual who causes effects in the state by an act done elsewhere with respect to any cause of action arising from these effects unless the nature of the effects and of the individual's relationship to the state make the exercise of such jurisdiction unreasonable. [Footnote 11]" While this provision is not binding on this Court, it does not in any event support the decision below. As is apparent from the examples accompanying 37 in the Restatement, this section was intended to reach wrongful activity outside of the State causing injury within the State, see, e.g., Comment a, p. 157 (shooting bullet from one State into another), or commercial activity affecting state residents, ibid. Even in such situations, moreover, the Restatement recognizes that there might be circumstances that would render "unreasonable" the assertion of jurisdiction over the nonresident defendant. The circumstances in this case clearly render "unreasonable" California's assertion of personal jurisdiction. There is no claim that appellant has visited physical injury on either Page 436 U. S. 97 property or persons within the State of California. Cf. Hess v. Pawloski, 274 U. S. 352 (1927). The cause of action herein asserted arises, not from the defendant's commercial transactions in interstate commerce, but rather from his personal, domestic relations. It thus cannot be said that appellant has sought a commercial benefit from solicitation of business from a resident of California that could reasonably render him liable to suit in state court; appellant's activities cannot fairly be analogized to an insurer's sending an insurance contract and premium notices into the State to an insured resident of the State. Cf. McGee v. International Life Insurance Co., 355 U. S. 220 (1957). Furthermore, the controversy between the parties arises from a separation that occurred in the State of New York; appellee Horn seeks modification of a contract that was negotiated in New York and that she flew to New York to sign. As in Hanson v. Denckla, 357 U.S. at 357 U. S. 252, the instant action involves an agreement that was entered into with virtually no connection with the forum State. See also n 6, supra. Finally, basic considerations of fairness point decisively in favor of appellant's State of domicile as the proper forum for adjudication of this case, whatever the merits of appellee's underlying claim. It is appellant who has remained in the State of the marital domicile, whereas it is appellee who has moved across the continent. Cf. May v. Anderson, 345 U. S. 528, 345 U. S. 534-535, n. 8 (1953). Appellant has at all times resided in New York State, and, until the separation and appellee's move to California, his entire family resided there as well. As noted above, appellant did no more than acquiesce in the stated preference of one of his children to live with her mother in California. This single act is surely not one that a reasonable parent would expect to result in the substantial financial burden and personal strain of litigating a child support suit in a forum

3,000 miles away, and we therefore see no basis on which it can be said that appellant could reasonably have Page 436 U. S. 98 anticipated being "haled before a [California] court," Shaffer v. Heitner, 433 U.S. at 433 U. S. 216. [Footnote 12] To make jurisdiction in a case such as this turn on whether appellant bought his daughter her ticket or instead unsuccessfully sought to prevent her departure would impose an unreasonable burden on family relations, and one wholly unjustified by the "quality and nature" of appellant's activities in or relating to the State of California. International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 319. III In seeking to justify the burden that would be imposed on appellant were the exercise of in personam jurisdiction in California sustained, appellee argues that California has substantial interests in protecting the welfare of its minor residents and in promoting to the fullest extent possible a healthy and supportive family environment in which the children of the State are to be raised. These interests are unquestionably important. But while the presence of the children and one parent in California arguably might favor application of California law in a lawsuit in New York, the fact that California may be the "center of gravity'" for choice of law purposes does not mean that California has personal jurisdiction over the defendant. Hanson v. Denckla, supra at 357 U. S. 254. And California has not attempted to assert any particularized interest in trying such cases in its courts by, e.g., enacting a special jurisdictional statute. Cf. McGee v. International Life Ins. Co., supra, at 355 U. S. 221, 355 U. S. 224. California's legitimate interest in ensuring the support of children resident in California without unduly disrupting the children's lives, moreover, is already being served by the State's participation in the Revised Uniform Reciprocal Enforcement of Support Act of 1968. This statute provides a mechanism Page 436 U. S. 99 for communication between court systems in different States, in order to facilitate the procurement and enforcement of child support decrees where the dependent children reside in a State that cannot obtain personal jurisdiction over the defendant. California's version of the Act essentially permits a California resident claiming support from a nonresident to file a petition in California and have its merits adjudicated in the State of the alleged obligor's residence, without either party's having to leave his or her own State. Cal.Civ.Proc.Code Ann. 1650 et seq. (West 1972 and Supp. 1978). [Footnote 13] New York State is a signatory to a similar Act. [Footnote 14] Thus, not only may Page 436 U. S. 100 plaintiff-appellee here vindicate her claimed right to additional child support from her former husband in a New York court, see supra at 436 U. S. 95, but also the Uniform Act will facilitate both her prosecution of a claim for additional support and collection of any support payments found to be owed by appellant. [Footnote 15] It cannot be disputed that California has substantial interests in protecting resident children and in facilitating child support actions on behalf of those children. But these interests simply do not make California a "fair forum," Shaffer v. Heitner, supra at 433 U. S. 215, in which to require appellant, who derives no

personal or commercial benefit from his child's presence in California and who lacks any other Page 436 U. S. 101 relevant contact with the State, either to defend a child support suit or to suffer liability by default. IV We therefore believe that the state courts in the instant case failed to heed our admonition that "the flexible standard of International Shoe" does not "heral[d] the eventual demise of all restrictions on the personal jurisdiction of state courts." Hanson v. Denckla, 357 U.S. at 357 U. S. 251. In McGee v. International life Ins. Co., we commented on the extension of in personam jurisdiction under evolving standards of due process, explaining that this trend was in large part "attributable to the . . . increasing nationalization of commerce . . . [accompanied by] modern transportation and communication [that] have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity." 355 U.S. at 355 U. S. 222-223. But the mere act of sending a child to California to live with her mother is not a commercial act, and connotes no intent to obtain or expectancy of receiving a corresponding benefit in the State that would make fair the assertion of that State's judicial jurisdiction. Accordingly, we conclude that the appellant's motion to quash service, on the ground of lack of personal jurisdiction, was erroneously denied by the California courts. The judgment of the California Supreme Court is, therefore, Reversed. U.S. Supreme Court Burnham v. Superior Court, 495 U.S. 604 (1990) Burnham v. Superior Court of California, County of Marin No. 89-44 Argued Feb. 28, 1990 Decided May 29, 1990 495 U.S. 604 CERTIORARI CALIFORNIA, TO THE COURT OF APPEALS OF

FIRST APPELLATE DISTRICT Syllabus During a trip to California to conduct business and visit his children, petitioner Burnham, a New Jersey resident, was served with a California court summons and his estranged wife's divorce petition. The California Superior Court denied his motion to quash the service of process, and the State Court of Appeal denied mandamus relief, rejecting his contention that the Due Process Clause of the Fourteenth Amendment prohibited California courts from asserting jurisdiction over him because he lacked "minimum contacts" with the State. The latter court held it to be a valid predicate for in personam jurisdiction that he was personally served while present in the forum State. Held: The judgment is affirmed. Justice SCALIA, joined by THE CHIEF JUSTICE, Justice WHITE, and Justice KENNEDY, concluded in Parts II-A, II-B, and II-C that the Due Process Clause does not deny a State's courts jurisdiction over a nonresident, who was personally

served with process while temporarily in that State, in a suit unrelated to his activities in the State. Pp. 495 U. S. 2-12. (a) To determine whether the assertion of personal jurisdiction is consistent with due process, this Court has long relied on the principles traditionally followed by American courts in marking out the territorial limits of each State's authority. See Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 722. The classic expression of that criterion appeared in International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316, which held that a state court's assertion of personal jurisdiction must not violate "traditional notions of fair play and substantial justice." Pp. 495 U. S. 608-610. (b) A formidable body of precedent, stretching from common law antecedents through decisions at or near the crucial time of the Fourteenth Amendment's adoption to many recent cases, reflects the near-unanimous view that service of process confers state court jurisdiction over a physically present nonresident, regardless of whether he was only briefly in the State or whether the cause of action is related to his activities there. Pp. 495 U. S. 610-616. (c) Burnham's contention that, in the absence of "continuous and systematic" contacts with the forum, a nonresident defendant can be subjected Page 495 U. S. 605 to judgment only as to matters that arise out of or relate to his contacts with the forum misreads this Court's decisions applying that standard. The standard was developed by analogy to the traditional "physical presence" requirement as a means of evaluating novel state procedures designed to do away with that requirement with respect to in personam jurisdiction over absent defendants. Nothing in International Shoe or the subsequent cases supports the proposition that a defendant's presence in the forum is not only unnecessary to validate such novel assertions of jurisdiction, but is itself no longer sufficient to establish jurisdiction. Pp. 495 U. S. 616619. Justice SCALIA, joined by THE CHIEF JUSTICE and Justice KENNEDY, concluded in Parts II-D and III that: 1. Shaffer v. Heitner, 433 U. S. 186 -- which applied the jurisdictional rules developed under International Shoe to invalidate a Delaware court's assertion of quasi in rem jurisdiction over absent defendants whose sole contact with the State (ownership of property) was unrelated to the suit -- does not support Burnham's position. When read in context, Shaffer's statement that "all assertions of state court jurisdiction must be evaluated according to the [ International Shoe] standards," id. at 433 U. S. 212, means only that quasi in rem jurisdiction, like other forms of in personam jurisdiction over absent defendants, must satisfy the litigation-relatedness requirement. Nothing in Shaffer compels the conclusion that physically present defendants must be treated identically to absent ones or expands the "minimum contacts" requirement beyond situations involving the latter persons. Pp. 495 U. S. 619-622. 2. The proposal of Justice BRENNAN's concurrence to apply "contemporary notions of due process" to the constitutional analysis constitutes an outright break with the International Shoe standard, and, without authority, seeks to measure state court jurisdiction not only against traditional doctrines and current practice, but also against each Justice's subjective assessment of what is fair and just. In effect, the proposed standard amounts to a "totality of the circumstances" test, guaranteeing uncertainty and unnecessary litigation over the

preliminary issue of the forum's competence. Pp. 495 U. S. 622-627. Justice WHITE concluded that the traditionally accepted rule allowing jurisdiction to be obtained over a nonresident by personal service in the forum State cannot be invalidated absent a showing that, as a general proposition, it is so arbitrary and lacking in common sense in so many instances that it should be held violative of due process in every case. Until such a difficult showing is made, claims in individual cases that the rule would operate unfairly as applied to the particular nonresident involved need not be entertained, at least in the usual instance where presence in the forum State is intentional. P. 495 U. S. 628. Page 495 U. S. 606 Justice BRENNAN, joined by Justice MARSHALL, Justice BLACKMUN, and Justice O'CONNOR, although agreeing that the traditional "transient jurisdiction" rule is generally valid, concluded that historical pedigree, although important, is not the only factor to be taken into account in establishing whether a jurisdictional rule satisfies due process, and that an independent inquiry into the fairness of the prevailing in-State service rule must be undertaken. Pp. 495 U. S. 628-640. (a) Reliance solely on historical precedent is foreclosed by International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316, and Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 212, which demonstrate that all rules of state court jurisdiction, even ancient ones such as transient jurisdiction, must satisfy contemporary notions of due process. While Shaffer's holding may have been limited to quasi in rem jurisdiction, its mode of analysis -- which discarded an "ancient form without substantial modern justification" -- was not. Minimum contacts analysis represents a far more sensible construct for the exercise of state court jurisdiction. Pp. 495 U. S. 629-633. (b) The transient jurisdiction rule will generally satisfy due process requirements. Tradition, although alone not dispositive, is relevant, because the fact that American courts have announced the rule since the latter part of the 19th century provides a defendant voluntarily present in a particular State today with clear notice that he is subject to suit in that forum. Thus, the rule is consistent with reasonable expectations, and is entitled to a strong presumption that it comports with due process. Moreover, by visiting the forum State, a transient defendant actually avails himself of significant benefits provided by the State: police, fire, and emergency services, the freedom to travel its roads and waterways, the enjoyment of the fruits of its economy, the protection of its laws, and the right of access to its courts. Without transient jurisdiction, the latter right would create an asymmetry, since a transient would have the full benefit of the power of the State's courts as a plaintiff while retaining immunity from their authority as a defendant. Furthermore, the potential burdens on a transient defendant are slight in light of modern transportation and communications methods, and any burdens that do arise can be ameliorated by a variety of procedural devices. Pp. 495 U. S. 633-640. Justice STEVENS concluded that the historical evidence, a persisting consensus, considerations of fairness, and common sense all indicated that the judgment should be affirmed. P. 495 U. S. 640. SCALIA, J., announced the judgment of the Court and delivered an opinion, in which REHNQUIST, C.J., and KENNEDY, J., joined, and in which Page 495 U. S. 607

WHITE, J., joined as to Parts I, II-A, II-B, and II-C. WHITE, J., filed an opinion concurring in part and concurring in the judgment, post, p. 495 U. S. 628. BRENNAN, J., filed an opinion concurring in the judgment, in which MARSHALL, BLACKMUN, and O'CONNOR, JJ., joined, post, p. 495 U. S. 628. STEVENS, J., filed an opinion concurring in the judgment, post, p. 495 U. S. 640. Justice SCALIA announced the judgment of the Court and delivered an opinion in which THE CHIEF JUSTICE and Justice KENNEDY join, and in which Justice WHITE joins with respect to Parts I, II-A, II-B, and II-C. The question presented is whether the Due Process Clause of the Fourteenth Amendment denies California courts jurisdiction over a nonresident who was personally served with process while temporarily in that State in a suit unrelated to his activities in the State. I Petitioner Dennis Burnham married Francie Burnham in 1976, in West Virginia. In 1977, the couple moved to New Jersey, where their two children were born. In July, 1987, the Burnhams decided to separate. They agreed that Mrs. Burnham, who intended to move to California, would take custody of the children. Shortly before Mrs. Burnham departed for California that same month, she and petitioner agreed that she would file for divorce on grounds of "irreconcilable differences." In October 1987, petitioner filed for divorce in New Jersey state court on grounds of "desertion." Petitioner did not, however, obtain an issuance of summons against his wife, and did not attempt to serve her with process. Mrs. Burnham, after unsuccessfully demanding that petitioner adhere to Page 495 U. S. 608 their prior agreement to submit to an "irreconcilable differences" divorce, brought suit for divorce in California state court in early January, 1988. In late January, petitioner visited southern California on business, after which he went north to visit his children in the San Francisco Bay area, where his wife resided. He took the older child to San Francisco for the weekend. Upon returning the child to Mrs. Burnham's home on January 24, 1988, petitioner was served with a California court summons and a copy of Mrs. Burnham's divorce petition. He then returned to New Jersey. Later that year, petitioner made a special appearance in the California Superior Court, moving to quash the service of process on the ground that the court lacked personal jurisdiction over him because his only contacts with California were a few short visits to the State for the purposes of conducting business and visiting his children. The Superior Court denied the motion, and the California Court of Appeal denied mandamus relief, rejecting petitioner's contention that the Due Process Clause prohibited California courts from asserting jurisdiction over him because he lacked "minimum contacts" with the State. The court held it to be "a valid jurisdictional predicate for in personam jurisdiction" that the "defendant [was] present in the forum state and personally served with process." App. to Pet. for Cert. 5. We granted certiorari. 493 U.S. 807 (1989). II A The proposition that the judgment of a court lacking jurisdiction is void traces back to the English Year Books, see Bowser v.

Collins, Y.B.Mich. 22 Edw. 4, f. 30, pl. 11, 145 Eng.Rep. 97 (1482), and was made settled law by Lord Coke in Case of the Marshalsea, 10 Co.Rep. 68b, 77 Eng.Rep. 1027, 1041 (K.B. 1612). Traditionally that proposition was embodied in the phrase coram non judice, Page 495 U. S. 609 "before a person not a judge" -- meaning, in effect, that the proceeding in question was not a judicial proceeding because lawful judicial authority was not present, and could therefore not yield a judgment. American courts invalidated, or denied recognition to, judgments that violated this common law principle long before the Fourteenth Amendment was adopted. See, e.g., Grumon v. Raymond, 1 Conn. 40 (1814); Picquet v. Swan, 19 F.Cas. 609 (No. 11, 134) (CC Mass.1828); Dunn v. Dunn, 4 Paige 425 (N.Y.Ch. 1834); Evans v. Instine, 7 Ohio 273 (1835); Steel v. Smith, 7 Watts & Serg. 447 (Pa.1844); Boswell's Lessee v. Otis, 50 U. S. 336, 51 U. S. 350 (1850). In Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 732 (1878), we announced that the judgment of a court lacking personal jurisdiction violated the Due Process Clause of the Fourteenth Amendment as well. To determine whether the assertion of personal jurisdiction is consistent with due process, we have long relied on the principles traditionally followed by American courts in marking out the territorial limits of each State's authority. That criterion was first announced in Pennoyer v. Neff, supra, in which we stated that due process "mean[s] a course of legal proceedings according to those rules and principles which have been established in our systems of jurisprudence for the protection and enforcement of private rights," id. at 733, including the "well-established principles of public law respecting the jurisdiction of an independent State over persons and property," id. at 95 U. S. 722. In what has become the classic expression of the criterion, we said in International Shoe Co. v. Washington, 326 U. S. 310 (1945), that a State court's assertion of personal jurisdiction satisfies the Due Process Clause if it does not violate " traditional notions of fair play and substantial justice.'" Id. at 326 U. S. 316, quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). See also Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U. S. 694, 456 U. S. 703 (1982). Since International Shoe, we have only been called upon to decide whether these "traditional notions" permit Page 495 U. S. 610 States to exercise jurisdiction over absent defendants in a manner that deviates from the rules of jurisdiction applied in the 19th century. We have held such deviations permissible, but only with respect to suits arising out of the absent defendant's contacts with the State. [Footnote 1] See, e.g., Helicopteros Nacionales de Colombia v. Hall, 466 U. S. 408, 466 U. S. 414 (1984). The question we must decide today is whether due process requires a similar connection between the litigation and the defendant's contacts with the State in cases where the defendant is physically present in the State at the time process is served upon him. B Among the most firmly established principles of personal jurisdiction in American tradition is that the courts of a State have jurisdiction over nonresidents who are physically present in the State. The view developed early that each State had the power to hale before its courts any individual who could be found within its borders, and that, once having acquired

jurisdiction over such a person by properly serving him with process, the State could retain jurisdiction to enter Page 495 U. S. 611 judgment against him, no matter how fleeting his visit. See, e.g., Potter v. Allin, 2 Root 63, 67 (Conn.1793); Barrell v. Benjamin, 15 Mass. 354 (1819). That view had antecedents in English common law practice, which sometimes allowed "transitory" actions, arising out of events outside the country, to be maintained against seemingly nonresident defendants who were present in England. See, e.g., Mostyn v. Fabrigas, 98 Eng.Rep. 1021 (K.B.1774); Cartwright v. Pettus, 22 Eng.Rep. 916 (Ch. 1675). Justice Story believed the principle, which he traced to Roman origins, to be firmly grounded in English tradition: "[B]y the common law[,] personal actions, being transitory, may be brought in any place, where the party defendant may be found," for "every nation may . . . rightfully exercise jurisdiction over all persons within its domains." J. Story, Commentaries on the Conflict of Laws 554, 543 (1846). See also 530-538; Picquet v. Swan, supra, at 611612 (Story, J.) ("Where a party is within a territory, he may justly be subjected to its process, and bound personally by the judgment pronounced, on such process, against him"). Recent scholarship has suggested that English tradition was not as clear as Story thought, see Hazard, A General Theory of State Court Jurisdiction, 1965 Sup.Ct.Rev. 241, 253-260; Ehrenzweig, The Transient Rule of Personal Jurisdiction: The "Power" Myth and Forum Conveniens, 65 Yale L.J. 289 (1956). Accurate or not, however, judging by the evidence of contemporaneous or near-contemporaneous decisions, one must conclude that Story's understanding was shared by American courts at the crucial time for present purposes: 1868, when the Fourteenth Amendment was adopted. The following passage in a decision of the Supreme Court of Georgia, in an action on a debt having no apparent relation to the defendant's temporary presence in the State, is representative: "Can a citizen of Alabama be sued in this State, as he passes through it? " Page 495 U. S. 612 "Undoubtedly he can. The second of the axioms of Huberus, as translated by Story, is:" "that all persons who are found within the limits of a government, whether their residence is permanent or temporary, are to be deemed subjects thereof." "(Stor.Conf.Laws, 29, Note 3.)" ". . . [A] citizen of another State, who is merely passing through this, resides, as he passes, wherever he is. Let him be sued, therefore, wherever he may, he will be sued where he resides." "The plaintiff in error, although a citizen of Alabama, was passing through the County of Troup, in this State, and whilst doing so, he was sued in Troup. He was liable to be sued in this State, and in Troup County of this State." Murphy v. J.S. Winter & Co., 18 Ga. 690, 691-692 (1855). See also, e.g., Peabody v. Hamilton, 106 Mass. 217, 220 (1870) (relying on Story for the same principle); Alley v. Caspari, 80 Me. 234, 236-237, 14 A. 12, 13 (1888) (same). Decisions in the courts of many States in the 19th and early 20th centuries held that personal service upon a physically present defendant sufficed to confer jurisdiction, without regard to whether the defendant was only briefly in the State or whether the cause of action was related to his activities there. See, e.g., Vinal v. Core, 18 W.Va. 1, 20 (1881); Roberts v. Dunsmuir, 75 Cal. 203, 204, 16 P. 782 (1888); De Poret v.

Gusman, 30 La.Ann., pt. 2, pp. 930, 932 (1878); Smith v. Gibson, 83 Ala. 284, 285, 3 So. 321 (1887); Savin v. Bond, 57 Md. 228, 233 (1881); Hart v. Granger, 1 Conn. 154, 165 (1814); Mussina v. Belden, 6 Abb.Pr. 165, 176 (N.Y.1858); Darrah v. Watson, 36 Iowa 116, 120-121(1872); Baisley v. Baisley, 113 Mo. 544, 549-550, 21 S.W. 29, 30 (1893); Bowman v. Flint, 37 Tex.Civ.App. 28, 29, 82 S.W. 1049, 1050 (1904). See also Reed v. Hollister, 106 Ore. 407, 412-414, 212 P. 367, 369-370 (1923); Hagen v. Viney, 124 Fla. 747, 751, 169 So. 391, 392-393 (1936); Vaughn Page 495 U. S. 613 v. Love, 324 Pa. 276, 280, 188 A. 299, 302 (1936). [Footnote 2] Although research has not revealed a case deciding the issue in every State's courts, that appears to be because the issue was so well settled that it went unlitigated. See R. Leflar, American Conflicts Law 24, p. 43 (1968) ("The law is so clear on this point that there are few decisions on it"); Note, Developments in the Law -- State Court Jurisdiction, 73 Harv.L.Rev. 909, 937-938 (1960). Opinions from the courts of other States announced the rule in dictum. See, e.g., Reed v. Browning, 130 Ind. 575, 577, 30 N.E. 704, 705 (1892); Nathanson v. Spitz, 19 R.I. 70, 72, 31 A. 690, 691 (1895); McLeod v. Connecticut & P.R. Co., 58 Vt. 727, 733-734, 6 A. 648, 649, 650 (1886); New Orleans J & G.N.R. Co. v. Wallace, 50 Miss. 244, 248-249 (1874); Wagner v. Hallack, 3 Colo. 176, 182-183 (1877); Downer v. Shaw, 22 N.H. 277, 281 (1851); Moore v. Smith, 41 Ky. 340, 341 (1842); Adair County Bank v. Forrey, 74 Neb. 811, 815, 105 N.W. 714, 715-716 (1905). Most States, moreover, had statutes or common law rules that exempted from service of process individuals who were brought into the forum by force or fraud, see, e.g., Wanzer v. Bright, 52 Ill. 35 (1869), or who were there as a party or witness in unrelated judicial proceedings, see, e.g., Burroughs v. Cocke & Willis, 56 Okla. 627, 156 P. 196 (1916); Malloy v. Brewer, 7 S.D. 587, 64 N.W. 1120 (1895). These exceptions obviously rested upon the premise that service of process conferred jurisdiction. See Anderson v. Atkins, 161 Tenn. 137, 140, 29 S.W.2d 248, 249 (1930). Particularly striking is the fact that, as far as we have been able to determine, not one American case Page 495 U. S. 614 from the period (or, for that matter, not one American case until 1978) held, or even suggested, that in-state personal service on an individual was insufficient to confer personal jurisdiction. [Footnote 3] Commentators were also seemingly unanimous Page 495 U. S. 615 on the rule. See, e.g., 1 A. Freeman, Law of Judgments 470471 (1873); 1 H. Black, Law of Judgments 276-277 (1891); W. Alderson, Law of Judicial Writs and Process 225-226 (1895). See also Restatement of Conflict of Laws, 77-78 (1934). This American jurisdictional practice is, moreover, not merely old; it is continuing. It remains the practice of not only a substantial number of the States, but, as far as we are aware, all the States and the federal government -- if one disregards (as one must for this purpose) the few opinions since 1978 that have erroneously said, on grounds similar to those that petitioner presses here, that this Court's due process decisions render the practice unconstitutional. See Nehemiah v. Athletics Congress of the U.S.A., 765 F.2d 42, 46-47 (CA3 1985); Schreiber v. Allis-Chalmers Corp., 448 F.Supp. 1079, 10881091 (D.Kan.1978), rev'd on other grounds, 611 F.2d 790 (CA10 1979); Harold M. Pitman Co. v. Typecraft Software, 626 F.Supp. 305, 310-314 (N.D.Ill.1986); Bershaw v. Sarbacher, 40 Wash.App. 653, 700 P.2d 347, 349 (1985); Duehring v. Vasquez, 490 So.2d 667, 671 (La.App.1986). We do not know

of a single State or federal statute, or a single judicial decision resting upon State law, that has abandoned in-State service as a basis of jurisdiction. Many recent cases reaffirm it. See Hutto v. Plagens, 254 Ga. 512, Page 495 U. S. 616 513, 330 S.E.2d 341, 342 (1985); Oxmans' Erwin Meat Co. v. Blacketer, 86 Wis.2d 683, 273 N.W.2d 285 (1979); Lockert v. Breedlove, 321 N.C. 66, 361 S.E.2d 581 (1987); Nutri-West v. Gibson, 764 P.2d 693 (Wyo.1988); Klavan v. Klavan, 405 Mass. 1105, 1106, 544 N.E.2d 863, 864 (1989); Nielsen v. Braland, 264 Minn. 481, 483, 484, 119 N.W.2d 737, 738 (1963); Read v. Sonat Offshore Drilling, Inc., 515 So.2d 1229, 1230 (Miss.1987); Cariaga v. Eighth Judicial District Court, 104 Nev. 544, 762 P.2d 886 (1988); El-Maksoud v. El-Maksoud, 237 N.J.Super. 483, 486-490, 568 A.2d 140, 142-144 (1989); Carr v. Carr, 375 S.E.2d 190, 192 (W.Va.1988); O'Brien v. Eubanks, 701 P.2d 614, 616 (Colo.App. 1985); Wolfson v. Wolfson, 455 So.2d 577, 578 (Fla.App.1984); In re Marriage of Pridemore, 146 Ill.App.3d 990, 991-992, 100 Ill.Dec. 640, 641642, 497 N.E.2d 818, 819-820 (1986); Swarts v. Dean, 13 Kan.App.2d 228, 766 P.2d 1291, 1292 (1989). C Despite this formidable body of precedent, petitioner contends, in reliance on our decisions applying the International Shoe standard, that in the absence of "continuous and systematic" contacts with the forum, see note 1 supra, a nonresident defendant can be subjected to judgment only as to matters that arise out of or relate to his contacts with the forum. This argument rests on a thorough misunderstanding of our cases. The view of most courts in the 19th century was that a court simply could not exercise in personam jurisdiction over a nonresident who had not been personally served with process in the forum. See, e.g., Reber v. Wright, 68 Pa. 471, 476-477 (1871); Sturgis v. Fay, 16 Ind. 429, 431 (1861); Weil v. Lowenthal, 10 Iowa 575, 578 (1860); Freeman, Law of Judgments, at 468-470; see also D'Arcy v. Ketchum, 52 U. S. 165, 53 U. S. 176 (1851); Knowles v. Gaslight & Coke Co., 86 U. S. 58 (1874). Pennoyer v. Neff, while renowned for its statement of the principle that the Fourteenth Amendment Page 495 U. S. 617 prohibits such an exercise of jurisdiction, in fact set that forth only as dictum, and decided the case (which involved a judgment rendered more than two years before the Fourteenth Amendment's ratification) under "well established principles of public law." 95 U.S. at 95 U. S. 722. Those principles, embodied in the Due Process Clause, required (we said) that when proceedings "involv[e] merely a determination of the personal liability of the defendant, he must be brought within [the court's] jurisdiction by service of process within the State, or his voluntary appearance." Id. at 95 U. S. 733. We invoked that rule in a series of subsequent cases, as either a matter of due process or a "fundamental principl[e] of jurisprudence," Wilson v. Seligman, 144 U. S. 41, 144 U. S. 46 (1892). See, e.g., New York Life Ins. Co. v. Dunlevy, 241 U. S. 518, 241 U. S. 522-523 (1916); Goldey v. Morning News, 156 U. S. 518, 156 U. S. 521 (1895). Later years, however, saw the weakening of the Pennoyer rule. In the late 19th and early 20th centuries, changes in the technology of transportation and communication, and the tremendous growth of interstate business activity led to an "inevitable relaxation of the strict limits on state jurisdiction" over nonresident individuals and corporations. Hanson v.

Denckla, 357 U. S. 235, 357 U. S. 260 (1958) (Black, J., dissenting). States required, for example, that nonresident corporations appoint an in-state agent upon whom process could be served as a condition of transacting business within their borders, see, e.g., St. Clair v. Cox, 106 U. S. 350 (1882), and provided in-state "substituted service" for nonresident motorists who caused injury in the State and left before personal service could be accomplished, see, e.g., Kane v. New Jersey, 242 U. S. 160 (1916); Hess v. Pawloski, 274 U. S. 352 (1927). We initially upheld these laws under the Due Process Clause on grounds that they complied with Pennoyer's rigid requirement of either "consent," see, e.g., Hess v. Pawloski, supra, at 274 U. S. 356, or "presence," see, e.g., Philadelphia & Reading R. Co. v. McKibbin, 243 U. S. 264, 243 U. S. 265 (1917). As many observed, Page 495 U. S. 618 however, the consent and presence were purely fictional. See, e.g., 1 J. Beale, Treatise on the Conflict of Laws 360, 384 (1935); Hutchinson v. Chase & Gilbert, Inc., 45 F.2d 139, 141 (CA2 1930) (L. Hand, J.). Our opinion in International Shoe cast those fictions aside, and made explicit the underlying basis of these decisions: due process does not necessarily require the States to adhere to the unbending territorial limits on jurisdiction set forth in Pennoyer. The validity of assertion of jurisdiction over a nonconsenting defendant who is not present in the forum depends upon whether "the quality and nature of [his] activity" in relation to the forum, 326 U.S. at 326 U. S. 319, renders such jurisdiction consistent with " traditional notions of fair play and substantial justice.'" Id. at 326 U. S. 316 (citation omitted). Subsequent cases have derived from the International Shoe standard the general rule that a State may dispense with in-forum personal service on nonresident defendants in suits arising out of their activities in the State. See generally Helicopteros Nacionales de Colombia v. Hall, 466 U.S. at 466 U. S. 414-415. As International Shoe suggests, the defendant's litigation-related "minimum contacts" may take the place of physical presence as the basis for jurisdiction: "Historically, the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding on him. Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 733. But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that, in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " Page 495 U. S. 619 326 U.S. at 326 U. S. 316 (citations omitted). Nothing in International Shoe or the cases that have followed it, however, offers support for the very different proposition petitioner seeks to establish today: that a defendant's presence in the forum is not only unnecessary to validate novel, nontraditional assertions of jurisdiction, but is itself no longer sufficient to establish jurisdiction. That proposition is unfaithful to both elementary logic and the foundations of our due process jurisprudence. The distinction between what is needed to support novel procedures and what is needed to sustain traditional ones is fundamental, as we observed over a century ago: "[A] process of law which is not otherwise forbidden must be taken to be due process of law if it can show the sanction of

settled usage both in England and in this country; but it by no means follows that nothing else can be due process of law. . . . [That which], in substance, has been immemorially the actual law of the land . . . therefor[e] is due process of law. But to hold that such a characteristic is essential to due process of law would be to deny every quality of the law but its age, and to render it incapable of progress or improvement. It would be to stamp upon our jurisprudence the unchangeableness attributed to the laws of the Medes and Persians." Hurtado v. California, 110 U. S. 516, 110 U. S. 528-529 (1884). The short of the matter is that jurisdiction based on physical presence alone constitutes due process because it is one of the continuing traditions of our legal system that define the due process standard of "traditional notions of fair play and substantial justice." That standard was developed by analogy to "physical presence," and it would be perverse to say it could now be turned against that touchstone of jurisdiction. D Petitioner's strongest argument, though we ultimately reject it, relies upon our decision in Shaffer v. Heitner, 433 U. S. 186 Page 495 U. S. 620 (1977). In that case, a Delaware court hearing a shareholder's derivative suit against a corporation's directors secured jurisdiction quasi in rem by sequestering the out-of-State defendants' stock in the company, the situs of which was Delaware under Delaware law. Reasoning that Delaware's sequestration procedure was simply a mechanism to compel the absent defendants to appear in a suit to determine their personal rights and obligations, we concluded that the normal rules we had developed under International Shoe for jurisdiction over suits against absent defendants should apply - viz., Delaware could not hear the suit because the defendants' sole contact with the State (ownership of property there) was unrelated to the lawsuit. 433 U.S. at 433 U. S. 213215. It goes too far to say, as petitioner contends, that Shaffer compels the conclusion that a State lacks jurisdiction over an individual unless the litigation arises out of his activities in the State. Shaffer, like International Shoe, involved jurisdiction over an absent defendant, and it stands for nothing more than the proposition that, when the "minimum contact" that is a substitute for physical presence consists of property ownership, it must, like other minimum contacts, be related to the litigation. Petitioner wrenches out of its context our statement in Shaffer that "all assertions of state court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny," 433 U.S. at 433 U. S. 212. When read together with the two sentences that preceded it, the meaning of this statement becomes clear: "The fiction that an assertion of jurisdiction over property is anything but an assertion of jurisdiction over the owner of the property supports an ancient form without substantial modern justification. Its continued acceptance would serve only to allow state court jurisdiction that is fundamentally unfair to the defendant." "We therefore conclude that all assertions of state court jurisdiction must be evaluated according to the Page 495 U. S. 621 standards set forth in International Shoe and its progeny." Ibid. (emphasis added). Shaffer was saying, in other words, not that all bases for the assertion of in personam jurisdiction (including, presumably, in-state service) must be treated alike and subjected to the "minimum contacts" analysis of

International Shoe, but rather that quasi in rem jurisdiction, that fictional "ancient form," and in personam jurisdiction, are really one and the same, and must be treated alike -- leading to the conclusion that quasi in rem jurisdiction, i.e., that form of in personam jurisdiction based upon a "property ownership" contact and by definition unaccompanied by personal, in-state service, must satisfy the litigation-relatedness requirement of International Shoe. The logic of Shaffer's holding -- which places all suits against absent nonresidents on the same constitutional footing, regardless of whether a separate Latin label is attached to one particular basis of contact -- does not compel the conclusion that physically present defendants must be treated identically to absent ones. As we have demonstrated at length, our tradition has treated the two classes of defendants quite differently, and it is unreasonable to read Shaffer as casually obliterating that distinction. International Shoe confined its "minimum contacts" requirement to situations in which the defendant "be not present within the territory of the forum," 326 U.S. at 326 U. S. 316, and nothing in Shaffer expands that requirement beyond that. It is fair to say, however, that while our holding today does not contradict Shaffer, our basic approach to the due process question is different. We have conducted no independent inquiry into the desirability or fairness of the prevailing in-state service rule, leaving that judgment to the legislatures that are free to amend it; for our purposes, its validation is its pedigree, as the phrase "traditional notions of fair play and substantial justice" makes clear. Shaffer did conduct such an independent inquiry, asserting that "'traditional notions of fair play and substantial justice' can be as readily offended Page 495 U. S. 622 by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures that are inconsistent with the basic values of our constitutional heritage." 433 U.S. at 433 U. S. 212. Perhaps that assertion can be sustained when the "perpetuation of ancient forms" is engaged in by only a very small minority of the States. [Footnote 4] Where, however, as in the present case, a jurisdictional principle is both firmly approved by tradition and still favored, it is impossible to imagine what standard we could appeal to for the judgment that it is "no longer justified." While in no way receding from or casting doubt upon the holding of Shaffer or any other case, we reaffirm today our time-honored approach, see, e.g., Ownbey v. Morgan, 256 U. S. 94, 256 U. S. 110-112 (1921); Hurtado v. California, 110 U. S. 516, 110 U. S. 528-529 (1884); Murray's Lessee v. Hoboken Land & Improvement Co., 59 U. S. 272, 60 U. S. 276-277 (1856). For new procedures, hitherto unknown, the Due Process Clause requires analysis to determine whether "traditional notions of fair play and substantial justice" have been offended. International Shoe, 326 U.S. at 326 U. S. 316. But a doctrine of personal jurisdiction that dates back to the adoption of the Fourteenth Amendment and is still generally observed unquestionably meets that standard. III A few words in response to Justice BRENNAN's concurrence: It insists that we apply "contemporary notions of due process" to determine the constitutionality of California's assertion of jurisdiction. Post at 495 U. S. 632. But our analysis today comports with that prescription, at least if we give it the only sense allowed by our precedents. The "contemporary notions of due process" applicable to personal

Page 495 U. S. 623 jurisdiction are the enduring "traditional notions of fair play and substantial justice" established as the test by International Shoe. By its very language, that test is satisfied if a state court adheres to jurisdictional rules that are generally applied and have always been applied in the United States. But the concurrence's proposed standard of "contemporary notions of due process" requires more: it measures state court jurisdiction not only against traditional doctrines in this country, including current state court practice, but against each Justice's subjective assessment of what is fair and just. Authority for that seductive standard is not to be found in any of our personal jurisdiction cases. It is, indeed, an outright break with the test of "traditional notions of fair play and substantial justice," which would have to be reformulated "our notions of fair play and substantial justice." The subjectivity, and hence inadequacy, of this approach becomes apparent when the concurrence tries to explain why the assertion of jurisdiction in the present case meets its standard of continuing-American-tradition-plus-innate-fairness. Justice BRENNAN lists the "benefits" Mr. Burnham derived from the State of California -- the fact that, during the few days he was there, "his health and safety [were] guaranteed by the State's police, fire, and emergency medical services; he [was] free to travel on the State's roads and waterways; he likely enjoy[ed] the fruits of the State's economy." Post at 495 U. S. 637-638. Three days' worth of these benefits strike us as powerfully inadequate to establish, as an abstract matter, that it is "fair" for California to decree the ownership of all Mr. Burnham's worldly goods acquired during the ten years of his marriage, and the custody over his children. We daresay a contractual exchange swapping those benefits for that power would not survive the "unconscionability" provision of the Uniform Commercial Code. Even less persuasive are the other "fairness" factors alluded to by Justice BRENNAN. It would create "an asymmetry," we are told, if Burnham were permitted (as he is) to appear Page 495 U. S. 624 in California courts as a plaintiff, but were not compelled to appear in California courts as defendant; and travel being as easy as it is nowadays, and modern procedural devices being so convenient, it is no great hardship to appear in California courts. Post at 638-639. The problem with these assertions is that they justify the exercise of jurisdiction over everyone, whether or not he ever comes to California. The only "fairness" elements setting Mr. Burnham apart from the rest of the world are the three-days' "benefits" referred to above -- and even those do not set him apart from many other people who have enjoyed three days in the Golden State (savoring the fruits of its economy, the availability of its roads and police services) but who were fortunate enough not to be served with process while they were there, and thus are not (simply by reason of that savoring) subject to the general jurisdiction of California's courts. See, e.g., Helicopteros Nacionales de Colombia v. Hall, 466 U.S. at 466 U. S. 414-416. In other words, even if one agreed with Justice BRENNAN's conception of an equitable bargain, the "benefits" we have been discussing would explain why it is "fair" to assert general jurisdiction over "Burnham returned to New Jersey after service" only at the expense of proving that it is also "fair" to assert general jurisdiction over "Burnham returned to New Jersey without service" -- which we know does not conform with "contemporary notions of due process."

There is, we must acknowledge, one factor mentioned by Justice BRENNAN that both relates distinctively to the assertion of jurisdiction on the basis of personal in-state service and is fully persuasive -- namely, the fact that a defendant voluntarily present in a particular State has a "reasonable expectatio[n]" that he is subject to suit there. Post at 495 U. S. 637. By formulating it as a "reasonable expectation" Justice BRENNAN makes that seem like a "fairness" factor; but in reality, of course, it is just tradition masquerading as "fairness." The only reason for charging Mr. Burnham with the reasonable expectation of being subject to suit is that the Page 495 U. S. 625 States of the Union assert adjudicatory jurisdiction over the person, and have always asserted adjudicatory jurisdiction over the person, by serving him with process during his temporary physical presence in their territory. That continuing tradition, which anyone entering California should have known about, renders it "fair" for Mr. Burnham, who voluntarily entered California, to be sued there for divorce -- at least "fair" in the limited sense that he has no one but himself to blame. Justice BRENNAN's long journey is a circular one, leaving him, at the end of the day, in complete reliance upon the very factor he sought to avoid: The existence of a continuing tradition is not enough; fairness also must be considered; fairness exists here because there is a continuing tradition. While Justice BRENNAN's concurrence is unwilling to confess that the Justices of this Court can possibly be bound by a continuing American tradition that a particular procedure is fair, neither is it willing to embrace the logical consequences of that refusal -- or even to be clear about what consequences (logical or otherwise) it does embrace. Justice BRENNAN says that "[f]or these reasons [i.e., because of the reasonableness factors enumerated above], as a rule the exercise of personal jurisdiction over a defendant based on his voluntary presence in the forum will satisfy the requirements of due process." Post at 495 U. S. 639. The use of the word "rule" conveys the reassuring feeling that he is establishing a principle of law one can rely upon -- but of course he is not. Since Justice BRENNAN's only criterion of constitutionality is "fairness," the phrase "as a rule" represents nothing more than his estimation that, usually, all the elements of "fairness" he discusses in the present case will exist. But what if they do not? Suppose, for example, that a defendant in Mr. Burnham's situation enjoys not three days' worth of California's "benefits," but fifteen minutes' worth. Or suppose we remove one of those "benefits" -- "enjoy[ment of] the fruits of the State's economy" -- by positing that Mr. Burnham had not Page 495 U. S. 626 come to California on business, but only to visit his children. Or suppose that Mr. Burnham were demonstrably so impecunious as to be unable to take advantage of the modern means of transportation and communication that Justice BRENNAN finds so relevant. Or suppose, finally, that the California courts lacked the "variety of procedural devices," post at 495 U. S. 639, that Justice BRENNAN says can reduce the burden upon out-of-state litigants. One may also make additional suppositions relating not to the absence of the factors that Justice BRENNAN discusses, but to the presence of additional factors bearing upon the ultimate criterion of "fairness." What if, for example, Mr. Burnham were visiting a sick child? Or a dying child? Cf. Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 93 (1978) (finding the exercise of long-arm jurisdiction over an absent parent unreasonable because it would "discourage parents from entering into reasonable visitation

agreements"). Since, so far as one can tell, Justice BRENNAN's approval of applying the in-state service rule in the present case rests on the presence of all the factors he lists, and on the absence of any others, every different case will present a different litigable issue. Thus, despite the fact that he manages to work the word "rule" into his formulation, Justice BRENNAN's approach does not establish a rule of law at all, but only a "totality of the circumstances" test, guaranteeing what traditional territorial rules of jurisdiction were designed precisely to avoid: uncertainty and litigation over the preliminary issue of the forum's competence. It may be that those evils, necessarily accompanying a freestanding "reasonableness" inquiry, must be accepted at the margins, when we evaluate nontraditional forms of jurisdiction newly adopted by the states, see, e.g., Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U. S. 102, 480 U. S. 115 (1987). But that is no reason for injecting them into the core of our American practice, exposing to such a "reasonableness" inquiry the ground of jurisdiction that has hitherto Page 495 U. S. 627 been considered the very baseline of reasonableness, physical presence. The difference between us and Justice BRENNAN has nothing to do with whether "further progress [is] to be made" in the "evolution of our legal system." Post at 495 U. S. 631, n. 3. It has to do with whether changes are to be adopted as progressive by the American people or decreed as progressive by the Justices of this Court. Nothing we say today prevents individual States from limiting or entirely abandoning the instate service basis of jurisdiction. And nothing prevents an overwhelming majority of them from doing so, with the consequence that the "traditional notions of fairness" that this Court applies may change. But the states have overwhelmingly declined to adopt such limitation or abandonment, evidently not considering it to be progress. [Footnote 5] The question is whether, armed with no authority other than individual Justices' perceptions of fairness that conflict with both past and current practice, this Court can compel the states to make such a change on the ground that "due process" requires it. We hold that it cannot. Page 495 U. S. 628 **** Because the Due Process Clause does not prohibit the California courts from exercising jurisdiction over petitioner based on the fact of in-state service of process, the judgment is Affirmed. U.S. Supreme Court World-Wide Volkwagen Corp. v. Woodson, 444 U.S. 286 (1980) World-Wide Volkwagen Corp. v. Woodson No. 78-1078 Argued October 3, 1979 Decided January 21, 1980 444 U.S. 286 CERTIORARI TO THE SUPREME COURT OF OKLAHOMA Syllabus A products liability action was instituted in an Oklahoma st,ate court by respondents husband and wife to recover for personal

injuries sustained in Oklahoma in an accident involving an automobile that had been purchased by them in New York while they were New York residents and that was being driven through Oklahoma at the time of the accident. The defendants included the automobile retailer and its wholesaler (petitioners), New York corporations that did no business in Oklahoma. Petitioners entered special appearances, claiming that Oklahoma's exercise of jurisdiction over them would offend limitations on the State's jurisdiction imposed by the Due Process Clause of the Fourteenth Amendment. The trial court rejected petitioners' claims, and they then sought, but were denied, a writ of prohibition in the Oklahoma Supreme Court to restrain respondent trial judge from exercising in personam jurisdiction over them. Held: Consistently with the Due Process Clause, the Oklahoma trial court may not exercise in personam jurisdiction over petitioners. Pp. 444 U. S. 291-299. (a) A state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist "minimum contacts" between the defendant and the forum State. International Shoe Co. v. Washington, 326 U. S. 310. The defendant's contacts with the forum State must be such that maintenance of the suit does not offend traditional notions of fair play and substantial justice, id. at 326 U. S. 316, and the relationship between the defendant and the forum must be such that it is "reasonable . . . to require the corporation to defend the particular suit which is brought there," id. at 326 U. S. 317. The Due Process Clause "does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations." Id. at 326 U. S. 319. Pp. 444 U. S. 291-294. (b) Here, there is a total absence in the record of those affiliating circumstances that are a necessary predicate to any exercise of state court jurisdiction. Petitioners carry on no activity whatsoever in Oklahoma; they close no sales and perform no services there, avail Page 444 U. S. 287 themselves of none of the benefits of Oklahoma law, and solicit no business there either through salespersons or through advertising reasonably calculated to reach that State. Nor does the record show that they regularly sell cars to Oklahoma residents, or that they indirectly, through others, serve or seek to serve the Oklahoma market. Although it is foreseeable that automobiles sold by petitioners would travel to Oklahoma and that the automobile here might cause injury in Oklahoma, "foreseeability" alone is not a sufficient benchmark for personal jurisdiction under the Due Process Clause. The foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State, but rather is that the defendant's conduct and connection with the forum are such that he should reasonably anticipate being haled into court there. Nor can jurisdiction be supported on the theory that petitioners earn substantial revenue from goods used in Oklahoma. Pp. 444 U. S. 295-299. 585 P.2d 351, reversed. WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, POWELL, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a dissenting opinion, post, p. 444 U. S. 299. MARSHALL, J., filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 444 U. S. 313. BLACKMUN, J., filed a dissenting opinion, post, p. 444 U. S. 317.

MR. JUSTICE WHITE delivered the opinion of the Court. The issue before us is whether, consistently with the Due Process Clause of the Fourteenth Amendment, an Oklahoma court may exercise in personam jurisdiction over a nonresident automobile retailer and its wholesale distributor in a products liability action, when the defendants' only connection with Oklahoma is the fact that an automobile sold in New York to New York residents became involved in an accident in Oklahoma. Page 444 U. S. 288 I Respondents Harry and Kay Robinson purchased a new Audi automobile from petitioner Seaway Volkswagen, Inc. (Seaway), in Massena, N.Y. in 1976. The following year, the Robinson family, who resided in New York, left that State for a new home in Arizona. As they passed through the State of Oklahoma, another car struck their Audi in the rear, causing a fire which severely burned Kay Robinson and her two children. [Footnote 1] The Robinsons [Footnote 2] subsequently brought a products liability action in the District Court for Creek County, Okla., claiming that their injuries resulted from defective design and placement of the Audi's gas tank and fuel system. They joined as defendants the automobile's manufacturer, Audi NSU Auto Union Aktiengesellschaft (Audi); its importer, Volkswagen of America, Inc. (Volkswagen); its regional distributor, petitioner World-Wide Volkswagen Corp. (World-Wide); and its retail dealer, petitioner Seaway. Seaway and World-Wide entered special appearances, [Footnote 3] claiming that Oklahoma's exercise of jurisdiction over them would offend the limitations on the State's jurisdiction imposed by the Due Process Clause of the Fourteenth Amendment. [Footnote 4] The facts presented to the District Court showed that WorldWide is incorporated and has its business office in New Page 444 U. S. 289 York. It distributes vehicles, parts, and accessories, under contract with Volkswagen, to retail dealers in New York, New Jersey, and Connecticut. Seaway, one of these retail dealers, is incorporated and has its place of business in New York. Insofar as the record reveals, Seaway and World-Wide are fully independent corporations whose relations with each other and with Volkswagen and Audi are contractual only. Respondents adduced no evidence that either World-Wide or Seaway does any business in Oklahoma, ships or sells any products to or in that State, has an agent to receive process there, or purchases advertisements in any media calculated to reach Oklahoma. In fact, as respondents' counsel conceded at oral argument, Tr. of Oral Arg 32, there was no showing that any automobile sold by World-Wide or Seaway has ever entered Oklahoma, with the single exception of the vehicle involved in the present case. Despite the apparent paucity of contacts between petitioners and Oklahoma, the District Court rejected their constitutional claim and reaffirmed that ruling in denying petitioners' motion for reconsideration. [Footnote 5] Petitioners then sought a writ of prohibition in the Supreme Court of Oklahoma to restrain the District Judge, respondent Charles S. Woodson, from exercising in personam jurisdiction over them. They renewed their contention that, because they had no "minimal contacts," App. 32, with the State of Oklahoma, the actions of the District Judge were in violation of their rights under the Due Process Clause.

The Supreme Court of Oklahoma denied the writ, 585 P.2d 351 (1978), [Footnote 6] holding that personal jurisdiction over petitioners was authorized by Oklahoma's "long-arm" statute, Page 444 U. S. 290 Okla.Stat., Tit. 12, 1701.03(a)(4) (1971). [Footnote 7] Although the court noted that the proper approach was to test jurisdiction against both statutory and constitutional standards, its analysis did not distinguish these questions, probably because 1701.03(a)(4) has been interpreted as conferring jurisdiction to the limits permitted by the United States Constitution. [Footnote 8] The court's rationale was contained in the following paragraph, 585 P.2d at 354: "In the case before us, the product being sold and distributed by the petitioners is, by its very design and purpose, so mobile that petitioners can foresee its possible use in Oklahoma. This is especially true of the distributor, who has the exclusive right to distribute such automobile in New York, New Jersey and Connecticut. The evidence presented below demonstrated that goods sold and distributed by the petitioners were used in the State of Oklahoma, and, under the facts, we believe it reasonable to infer, given the retail value of the automobile, that the petitioners derive substantial income from automobiles which from time to time are used in the State of Oklahoma. This being the case, we hold that, under the facts presented, the trial court was justified in concluding Page 444 U. S. 291 that the petitioners derive substantial revenue from goods used or consumed in this State." We granted certiorari, 440 U.S. 907 (1979), to consider an important constitutional question with respect to state court jurisdiction and to resolve a conflict between the Supreme Court of Oklahoma and the highest courts of at least four other States. [Footnote 9] We reverse. II The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant. Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 91 (1978). A judgment rendered in violation of due process is void in the rendering State and is not entitled to full faith and credit elsewhere. Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 732-733 (1878). Due process requires that the defendant be given adequate notice of the suit, Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 313-314 (1950), and be subject to the personal jurisdiction of the court, International Shoe Co. v. Washington, 326 U. S. 310 (1945). In the present case, it is not contended that notice was inadequate; the only question is whether these particular petitioners were subject to the jurisdiction of the Oklahoma courts. As has long been settled, and as we reaffirm today, a state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist "minimum contacts" between the defendant and the forum State. International Shoe Co. v. Washington, supra at 326 U. S. 316. The concept of minimum contacts, in turn, can be seen to perform two related, but Page 444 U. S. 292 distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.

The protection against inconvenient litigation is typically described in terms of "reasonableness" or "fairness." We have said that the defendant's contacts with the forum State must be such that maintenance of the suit "does not offend traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, supra at 326 U. S. 316, quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). The relationship between the defendant and the forum must be such that it is "reasonable . . . to require the corporation to defend the particular suit which is brought there." 326 U.S. at 326 U. S. 317. Implicit in this emphasis on reasonableness is the understanding that the burden on the defendant, while always a primary concern, will in an appropriate case be considered in light of other relevant factors, including the forum State's interest in adjudicating the dispute, see McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223 (1957); the plaintiff's interest in obtaining convenient and effective relief, see Kulko v. California Superior Court, supra at 436 U. S. 92, at least when that interest is not adequately protected by the plaintiff's power to choose the forum, cf. Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 211, n. 37 (1977); the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies, see Kulko v. California Superior Court, supra at 436 U. S. 93, 436 U. S. 98. The limits imposed on state jurisdiction by the Due Process Clause, in its role as a guarantor against inconvenient litigation, have been substantially relaxed over the years. As we noted in McGee v. International Life Ins. Co., supra at 355 U. S. 222-223, Page 444 U. S. 293 this trend is largely attributable to a fundamental transformation in the American economy: "Today many commercial transactions touch two or more States, and may involve parties separated by the full continent. With this increasing nationalization of commerce has come a great increase in the amount of business conducted by mail across state lines. At the same time, modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity." The historical developments noted in McGee, of course, have only accelerated in the generation since that case was decided. Nevertheless, we have never accepted the proposition that state lines are irrelevant for jurisdictional purposes, nor could we and remain faithful to the principles of interstate federalism embodied in the Constitution. The economic interdependence of the States was foreseen and desired by the Framers. In the Commerce Clause, they provided that the Nation was to be a common market, a "free trade unit" in which the States are debarred from acting as separable economic entities. H. P. Hood Sons, Inc. v. Du Mond, 336 U. S. 525, 336 U. S. 538 (1949). But the Framers also intended that the States retain many essential attributes of sovereignty, including, in particular, the sovereign power to try causes in their courts. The sovereignty of each State, in turn, implied a limitation on the sovereignty of all of its sister States -- a limitation express or implicit in both the original scheme of the Constitution and the Fourteenth Amendment. Hence, even while abandoning the shibboleth that "[t]he authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established," Pennoyer v. Neff, supra, at 95 U. S. 720, we emphasized that the reasonableness of asserting jurisdiction over the defendant

must be assessed "in the context of our federal system of government," Page 444 U. S. 294 International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 317, and stressed that the Due Process Clause ensures not only fairness, but also the "orderly administration of the laws," id. at 326 U. S. 319. As we noted in Hanson v. Denckla, 357 U. S. 235, 357 U. S. 250-251 (1958): "As technological progress has increased the flow of commerce between the States, the need for jurisdiction over nonresidents has undergone a similar increase. At the same time, progress in communications and transportation has made the defense of a suit in a foreign tribunal less burdensome. In response to these changes, the requirements for personal jurisdiction over nonresidents have evolved from the rigid rule of Pennoyer v. Neff, 95 U. S. 714, to the flexible standard of International Shoe Co. v. Washington, 326 U. S. 310. But it is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. [Citation omitted.] Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States." Thus, the Due Process Clause "does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations." International Shoe Co. v. Washington, supra at 326 U. S. 319. Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment. Hanson v. Denckla, supra at 357 U. S. 251, 357 U. S. 254. Page 444 U. S. 295 III Applying these principles to the case at hand, [Footnote 10] we find in the record before us a total absence of those affiliating circumstances that are a necessary predicate to any exercise of state court jurisdiction. Petitioners carry on no activity whatsoever in Oklahoma. They close no sales and perform no services there. They avail themselves of none of the privileges and benefits of Oklahoma law. They solicit no business there either through salespersons or through advertising reasonably calculated to reach the State. Nor does the record show that they regularly sell cars at wholesale or retail to Oklahoma customers or residents, or that they indirectly, through others, serve or seek to serve the Oklahoma market. In short, respondents seek to base jurisdiction on one, isolated occurrence and whatever inferences can be drawn therefrom: the fortuitous circumstance that a single Audi automobile, sold in New York to New York residents, happened to suffer an accident while passing through Oklahoma. It is argued, however, that, because an automobile is mobile by its very design and purpose, it was "foreseeable" that the Robinsons' Audi would cause injury in Oklahoma. Yet "foreseeability" alone has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause. In Hanson v. Denckla, supra, it was no doubt foreseeable that the

settlor of a Delaware trust would subsequently move to Florida and seek to exercise a power of appointment there; yet we held that Florida courts could not constitutionally Page 444 U. S. 296 exercise jurisdiction over a Delaware trustee that had no other contacts with the forum State. In Kulko v. California Superior Court, 436 U. S. 84 (1978), it was surely "foreseeable" that a divorced wife would move to California from New York, the domicile of the marriage, and that a minor daughter would live with the mother. Yet we held that California could not exercise jurisdiction in a child support action over the former husband, who had remained in New York. If foreseeability were the criterion, a local California tire retailer could be forced to defend in Pennsylvania when a blowout occurs there, see Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502, 507 (CA4 1956); a Wisconsin seller of a defective automobile jack could be haled before a distant court for damage caused in New Jersey, Reilly v. Phil Tolkan Pontiac, Inc., 372 F.Supp. 1205 (NJ 1974); or a Florida softdrink concessionaire could be summoned to Alaska to account for injuries happening there, see Uppgren v. Executive Aviation Services, Inc., 304 F.Supp. 165, 170-171 (Minn.1969). Every seller of chattels would, in effect, appoint the chattel his agent for service of process. His amenability to suit would travel with the chattel. We recently abandoned the outworn rule of Harris v. Balk, 198 U. S. 215 (1905), that the interest of a creditor in a debt could be extinguished or otherwise affected by any State having transitory jurisdiction over the debtor. Shaffer v. Heitner, 433 U. S. 186 (1977). Having interred the mechanical rule that a creditor's amenability to a quasi in rem action travels with his debtor, we are unwilling to endorse an analogous principle in the present case. [Footnote 11] Page 444 U. S. 297 This is not to say, of course, that foreseeability is wholly irrelevant. But the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there. See Kulko v. California Superior Court, supra at 436 U. S. 97-98; Shaffer v. Heitner, 433 U.S. at 433 U. S. 216; and see id. at 433 U. S. 217-219 (STEVENS, J., concurring in judgment). The Due Process Clause, by ensuring the "orderly administration of the laws," International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 319, gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit. When a corporation "purposefully avails itself of the privilege of conducting activities within the forum State," Hanson v. Denckla, 357 U.S. at 357 U. S. 253, it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. The forum State does not Page 444 U. S. 298

exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. Cf. Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961). But there is no such or similar basis for Oklahoma jurisdiction over World-Wide or Seaway in this case. Seaway's sales are made in Massena, N. Y. World-Wide's market, although substantially larger, is limited to dealers in New York, New Jersey, and Connecticut. There is no evidence of record that any automobiles distributed by World-Wide are sold to retail customers outside this tristate area. It is foreseeable that the purchasers of automobiles sold by World-Wide and Seaway may take them to Oklahoma. But the mere "unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State." Hanson v. Denckla, supra, at 357 U. S. 253. In a variant on the previous argument, it is contended that jurisdiction can be supported by the fact that petitioners earn substantial revenue from goods used in Oklahoma. The Oklahoma Supreme Court so found, 585 P.2d at 354-355, drawing the inference that, because one automobile sold by petitioners had been used in Oklahoma, others might have been used there also. While this inference seems less than compelling on the facts of the instant case, we need not question the court's factual findings in order to reject its reasoning. This argument seems to make the point that the purchase of automobiles in New York, from which the petitioners earn substantial revenue, would not occur but for the fact that the automobiles are capable of use in distant States like Oklahoma. Respondents observe that the very purpose of an automobile is to travel, and that travel of automobiles sold by petitioners is facilitated by an extensive chain of Volkswagen service centers throughout the country, including some in Oklahoma. [Footnote 12] Page 444 U. S. 299 However, financial benefits accruing to the defendant from a collateral relation to the forum State will not support jurisdiction if they do not stem from a constitutionally cognizable contact with that State. See Kulko v. California Superior Court, 436 U.S. at 436 U. S. 94-95. In our view, whatever marginal revenues petitioners may receive by virtue of the fact that their products are capable of use in Oklahoma is far too attenuated a contact to justify that State's exercise of in personam jurisdiction over them. Because we find that petitioners have no "contacts, ties, or relations" with the State of Oklahoma, International Shoe Co. v. Washington, supra, at 326 U. S. 319, the judgment of the Supreme Court of Oklahoma is Reversed. [Footnote 1] The driver of the other automobile does not figure in the present litigation . [Footnote 2] Kay Robinson sued on her own behalf. The two children sued through Harry Robinson as their father and next friend. [Footnote 3] Volkswagen also entered a special appearance in the District Court, but, unlike World-Wide and Seaway, did not seek review in the Supreme Court of Oklahoma, and is not a petitioner

here. Both Volkswagen and Audi remain as defendants in the litigation pending before the District Court in Oklahoma. [Footnote 4] The papers filed by the petitioners also claimed that the District Court lacked "venue of the subject matter," App. 9, or "venue over the subject matter," id. at 11. [Footnote 5] The District Court's rulings are unreported, and appear at App. 13 and 20. [Footnote 6] Five judges joined in the opinion. Two concurred in the result, without opinion, and one concurred in part and dissented in part, also without opinion. [Footnote 7] This subsection provides: "A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action or claim for relief arising from the persons . . . causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this state. . . ." The State Supreme Court rejected jurisdiction based on 1701.03(a)(3), which authorizes jurisdiction over any person "causing tortious injury in this state by an act or omission in this state." Something in addition to the infliction of tortious injury was required. [Footnote 8] Fields v. Volkswagen of America, Inc., 555 P.2d 48 (Okla.1976); Carmack v. Chemical Bank New York Trust Co., 536 P.2d 897 (Okla.1975); Hines v. Clendennin, 465 P.2d 460 (Okla.1970). [Footnote 9] Cf. Tilley v. Keller Truck & Implement Corp., 200 Kan. 641, 438 P.2d 128 (1968); Granite States Volkswagen, Inc. v. District Court, 177 Colo. 42, 492 P.2d 624 (1972); Pellegrini v. Sachs & Sons, 522 P.2d 704 (Utah 1974); Oliver v. American Motors Corp., 70 Wash.2d 875, 425 P.2d 647 (1967). [Footnote 10] Respondents argue, as a threshold matter, that petitioners waived any objections to personal jurisdiction by (1) joining with their special appearances a challenge to the District Court's subject matter jurisdiction, see n 4, supra, and (2) taking depositions on the merits of the case in Oklahoma. The trial court, however, characterized the appearances as "special," and the Oklahoma Supreme Court, rather than finding jurisdiction waived, reached and decided the statutory and constitutional questions. Cf. Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 91, n. 5 (1978). [Footnote 11] Respondents' counsel, at oral argument, see Tr. of Oral Arg.19-22, 29, sought to limit the reach of the foreseeability standard by suggesting that there is something unique about automobiles. It is true that automobiles are uniquely mobile, see Tyson v. Whitaker & Son, Inc., 407 A.2d 1, 6, and n. 11 (Me.1979) (McKusick, C.J.), that they did play a crucial role in the expansion of personal jurisdiction through the fiction of implied consent, e.g., Hess v. Pawloski, 274 U. S. 352 (1927), and that some of the cases have treated the automobile as a

"dangerous instrumentality." But today, under the regime of International Shoe, we see no difference for jurisdictional purposes between an automobile and any other chattel. The "dangerous instrumentality" concept apparently was never used to support personal jurisdiction; and to the extent it has relevance today, it bears not on jurisdiction, but on the possible desirability of imposing substantive principles of tort law such as strict liability. [Footnote 12] As we have noted, petitioners earn no direct revenues from these service centers. See supra at 444 U. S. 289. MR. JUSTICE BRENNAN, dissenting. * The Court holds that the Due Process Clause of the Fourteenth Amendment bars the States from asserting jurisdiction over the defendants in these two cases. In each case, the Court so decides because it fails to find the "minimum contacts" that have been required since International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945). Because I believe that the Court reads International Shoe and its progeny too narrowly, and because I believe that the standards enunciated by those cases may already be obsolete as constitutional boundaries, I dissent. I The Court's opinions focus tightly on the existence of contacts between the forum and the defendant. In so doing, they accord too little weight to the strength of the forum State's interest in the case, and fail to explore whether there Page 444 U. S. 300 would be any actual inconvenience to the defendant. The essential inquiry in locating the constitutional limits on state court jurisdiction over absent defendants is whether the particular exercise of jurisdiction offends " traditional notions of fair play and substantial justice.'" International Shoe, supra at 326 U. S. 316, quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). The clear focus in International Shoe was on fairness and reasonableness. Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 92 (1978). The Court specifically declined to establish a mechanical test based on the quantum of contacts between a State and the defendant: "Whether due process is satisfied must depend, rather, upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations." 326 U.S. at 326 U. S. 319 (emphasis added). The existence of contacts, so long as there were some, was merely one way of giving content to the determination of fairness and reasonableness. Surely International Shoe contemplated that the significance of the contacts necessary to support jurisdiction would diminish if some other consideration helped establish that jurisdiction would be fair and reasonable. The interests of the State and other parties in proceeding with the case in a particular forum are such considerations. McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223 (1957), for instance, accorded great importance to a State's "manifest interest in providing effective means of redress" for its citizens. See also Kulko v. California Superior Court, supra at 436 U. S. 92; Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 208 (1977); Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 313 (1950).

Another consideration is the actual burden a defendant Page 444 U. S. 301 must bear in defending the suit in the forum. McGee, supra. Because lesser burdens reduce the unfairness to the defendant, jurisdiction may be justified despite less significant contacts. The burden, of course, must be of constitutional dimension. Due process limits on jurisdiction do not protect a defendant from all inconvenience of travel, McGee, supra at 355 U. S. 224, and it would not be sensible to make the constitutional rule turn solely on the number of miles the defendant must travel to the courtroom. [Footnote 2/1] Instead, the constitutionally significant "burden" to be analyzed relates to the mobility of the defendant's defense. For instance, if having to travel to a foreign forum would hamper the defense because witnesses or evidence or the defendant himself were immobile, or if there were a disproportionately large number of witnesses or amount of evidence that would have to be transported at the defendant's expense, or if being away from home for the duration of the trial would work some special hardship on the defendant, then the Constitution would require special consideration for the defendant's interests. That considerations other than contacts between the forum and the defendant are relevant necessarily means that the Constitution does not require that trial be held in the State which has the "best contacts" with the defendant. See Shaffer v. Heitner, supra at 433 U. S. 228 (BRENNAN, J., dissenting). The defendant has no constitutional entitlement to the best forum or, for that matter, to any particular forum. Under even the most restrictive view of International Shoe, several States could have jurisdiction over a particular cause of action. We need only determine whether the forum States in these cases satisfy the constitutional minimum. [Footnote 2/2] Page 444 U. S. 302 II In each of these cases, I would find that the forum State has an interest in permitting the litigation to go forward, the litigation is connected to the forum, the defendant is linked to the forum, and the burden of defending is not unreasonable. Accordingly, I would hold that it is neither unfair nor unreasonable to require these defendants to defend in the forum State. A In No. 78-952, a number of considerations suggest that Minnesota is an interested and convenient forum. The action was filed by a bona fide resident of the forum. [Footnote 2/3] Consequently, Minnesota's interests are similar to, even if lesser than, the interests of California in McGee, supra, "in providing a forum for its residents and in regulating the activities of insurance companies" doing business in the State. [Footnote 2/4] Post at 444 U. S. 332. Moreover, Minnesota has "attempted to assert [its] particularized interest in trying such cases in its courts by . . . enacting a special jurisdictional statute." Kulko, supra at 436 U. S. 98; McGee, supra at 355 U. S. 221, 355 U. S. 224. As in McGee, a resident forced to travel to a distant State to prosecute an action Page 444 U. S. 303 against someone who has injured him could, for lack of funds, be entirely unable to bring the cause of action. The plaintiff's residence in the State makes the State one of a very few convenient fora for a personal injury case (the others usually being the defendant's home State and the State where the accident occurred). [Footnote 2/5] In addition, the burden on the defendant is slight. As Judge Friendly has recognized, Shaffer emphasizes the importance

of identifying the real impact of the lawsuit. O'Connor v. Lee-Hy Paving Corp., 579 F.2d 194, 00 (CA2 1978) (upholding the constitutionality of jurisdiction in a very similar case under New York's law after Shaffer). Here the real impact is on the defendant's insurer, which is concededly amenable to suit in the forum State. The defendant is carefully protected from financial liability because the action limits the prayer for damages to the insurance policy's liability limit. [Footnote 2/6] The insurer will handle the case for the defendant. The defendant is only a nominal party who need be no more active in the case than the cooperation clause of his policy requires. Because of the ease of airline transportation, he need not lose significantly more time than if the case were at home. Consequently, if the suit went forward Page 444 U. S. 304 in Minnesota, the defendant would bear almost no burden or expense beyond what he would face if the suit were in his home State. The real impact on the named defendant is the same as it is in a direct action against the insurer, which would be constitutionally permissible. Watson v. Employers Liability Assurance Corp., 348 U. S. 66 (1954); Minichiello v. Rosenberg, 410 F.2d 106, 109-110 (CA2 1968). The only distinction is the formal, "analytica[l] prerequisite," post at 444 U. S. 331, of making the insured a named party. Surely the mere addition of appellant's name to the complaint does not suffice to create a due process violation. [Footnote 2/7] Finally, even were the relevant inquiry whether there are sufficient contacts between the forum and the named defendant, I would find that such contacts exist. The insurer's presence in Minnesota is an advantage to the defendant that may well have been a consideration in his selecting the policy he did. An insurer with offices in many States makes it easier for the insured to make claims or conduct other business that may become necessary while traveling. It is simply not true that "State Farm's decision to do business in Minnesota was completely adventitious as far as Rush was concerned." Post at 444 U. S. 328-329. By buying a State Farm policy, the defendant availed himself of the benefits he might derive from having an insurance agent in Minnesota who could, among other things, facilitate a suit for appellant against a Minnesota resident. It seems unreasonable to read the Constitution as permitting one to take advantage of his nationwide insurance network but not to be burdened by it. In sum, I would hold that appellant is not deprived of due process by being required to submit to trial in Minnesota, first because Minnesota has a sufficient interest in and connection Page 444 U. S. 305 to this litigation and to the real and nominal defendants, and second because the burden on the nominal defendant is sufficiently slight. B In No. 78-1078, the interest of the forum State and its connection to the litigation is strong. The automobile accident underlying the litigation occurred in Oklahoma. The plaintiffs were hospitalized in Oklahoma when they brought suit. Essential witnesses and evidence were in Oklahoma. See Shaffer v. Heitner, 433 U.S. at 433 U. S. 208. The State has a legitimate interest in enforcing its laws designed to keep its highway system safe, and the trial can proceed at least as efficiently in Oklahoma as anywhere else. The petitioners are not unconnected with the forum. Although both sell automobiles within limited sales territories, each sold the automobile which, in fact, was driven to Oklahoma, where it was involved in an accident. [Footnote 2/8] It may be true, as

the Court suggests, that each sincerely intended to limit its commercial impact to the limited territory, and that each intended to accept the benefits and protection of the laws only of those States within the territory. But obviously these were unrealistic hopes that cannot be treated as an automatic constitutional shield. [Footnote 2/9] Page 444 U. S. 306 An automobile simply is not a stationary item or one designed to be used in one place. An automobile is intended to be moved around. Someone in the business of selling large numbers of automobiles can hardly plead ignorance of their mobility, or pretend that the automobiles stay put after they are sold. It is not merely that a dealer in automobiles foresees that they will move. Ante at 444 U. S. 295. The dealer actually intends that the purchasers will use the automobiles to travel to distant States where the dealer does not directly "do business." The sale of an automobile does purposefully inject the vehicle into the stream of interstate commerce so that it can travel to distant States. See Kulko, 436 U.S. at 436 U. S. 94; Hanson v. Denckla, 357 U. S. 235, 357 U. S. 253 (1958). This case is similar to Ohio v. Wyandotte Chemicals Corp., 401 U. S. 493 (1971). There we indicated, in the course of denying leave to file an original jurisdiction case, that corporations having no direct contact with Ohio could constitutionally be brought to trial in Ohio because they dumped pollutants into streams outside Ohio's limits which ultimately, through the action of the water, reached Lake Erie and affected Ohio. No corporate acts, only their consequences, occurred in Ohio. The stream of commerce is just as natural a force as a stream of water, and it was equally predictable that the cars petitioners released would reach distant states. [Footnote 2/10] The Court accepts that a State may exercise jurisdiction over a distributor which "serves" that State "indirectly" by "deliver[ing] its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." Ante at 444 U. S. 297-298. It is difficult to see why the Constitution should distinguish between a case involving Page 444 U. S. 307 goods which reach a distant State through a chain of distribution and a case involving goods which reach the same State because a consumer, using them as the dealer knew the customer would, took them there. [Footnote 2/11] In each case, the seller purposefully injects the goods into the stream of commerce, and those goods predictably are used in the forum State. [Footnote 2/12] Furthermore, an automobile seller derives substantial benefits from States other than its own. A large part of the value of automobiles is the extensive, nationwide network of highways. Significant portions of that network have been constructed by, and are maintained by, the individual States, including Oklahoma. The States, through their highway programs, contribute in a very direct and important way to the value of petitioners' businesses. Additionally, a network of other related dealerships with their service departments operates throughout the country under the protection of the laws of the various States, including Oklahoma, and enhances the value of petitioners' businesses by facilitating their customers' traveling. Thus, the Court errs in its conclusion, ante at 444 U. S. 299 (emphasis added), that "petitioners have no contacts, ties, or relations'" with Oklahoma. There obviously are contacts, and, given Oklahoma's connection to the litigation, the contacts are sufficiently significant to make it fair and reasonable for the petitioners to submit to Oklahoma's jurisdiction. III

It may be that affirmance of the judgments in these cases would approach the outer limits of International Shoe's jurisdictional Page 444 U. S. 308 principle. But that principle, with its almost exclusive focus on the rights of defendants, may be outdated. As MR. JUSTICE MARSHALL wrote in Shaffer v. Heitner, 433 U.S. at 433 U. S. 212: "'[T]raditional notions of fair play and substantial justice' can be as readily offended by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures. . . ." International Shoe inherited its defendant focus from Pennoyer v. Neff, 95 U. S. 714 (1878), and represented the last major step this Court has taken in the long process of liberalizing the doctrine of personal jurisdiction. Though its flexible approach represented a major advance, the structure of our society has changed in many significant ways since International Shoe was decided in 1945. Mr. Justice Black, writing for the Court in McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 222 (1957), recognized that "a trend is clearly discernible toward expanding the permissible scope of state jurisdiction over foreign corporations and other nonresidents." He explained the trend as follows: "In part, this is attributable to the fundamental transformation of our national economy over the years. Today, many commercial transactions touch two or more States, and may involve parties separated by the full continent. With this increasing nationalization of commerce has come a great increase in the amount of business conducted by mail across state lines. At the same time, modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity." Id. at 355 U. S. 222-223. As the Court acknowledges, ante at 444 U. S. 292-293, both the nationalization of commerce and the ease of transportation and communication have accelerated in the generation since 1957. [Footnote 2/13] Page 444 U. S. 309 The model of society on which the International Shoe Court based its opinion is no longer accurate. Business people, no matter how local their businesses, cannot assume that goods remain in the business' locality. Customers and goods can be anywhere else in the country, usually in a matter of hours and always in a matter of a very few days. In answering the question whether or not it is fair and reasonable to allow a particular forum to hold a trial binding on a particular defendant, the interests of the forum State and other parties loom large in today's world, and surely are entitled to as much weight as are the interests of the defendant. The "orderly administration of the laws" provides a firm basis for according some protection to the interests of plaintiffs and States as well as of defendants. [Footnote 2/14] Certainly, I cannot see how a defendant's right to due process is violated if the defendant suffers no inconvenience. See ante at 444 U. S. 294. The conclusion I draw is that constitutional concepts of fairness no longer require the extreme concern for defendants that was once necessary. Rather, as I wrote in dissent from Shaffer v. Heitner, supra, at 433 U. S. 220 (emphasis added), minimum Page 444 U. S. 310

contacts must exist "among the parties, the contested transaction, and the forum State." [Footnote 2/15] The contacts between any two of these should not be determinative. "[W]hen a suitor seeks to lodge a suit in a State with a substantial interest in seeing its own law applied to the transaction in question, we could wisely act to minimize conflicts, confusion, and uncertainty by adopting a liberal view of jurisdiction, unless considerations of fairness or efficiency strongly point in the opposite direction. [Footnote 2/16]" 433 U.S. at 433 U. S. 225-226. Mr. Justice Black, dissenting in Hanson v. Denckla, 357 U.S. at 357 U. S. 258-250, expressed similar concerns by suggesting that a State should have jurisdiction over a case growing out of a transaction significantly related to that State "unless litigation there would impose such a heavy and disproportionate burden on a nonresident defendant that it would offend what this Court has referred to as 'traditional notions of fair play and substantial justice.' [Footnote 2/17]" Assuming Page 444 U. S. 311 that a State gives a nonresident defendant adequate notice and opportunity to defend, I do not think the Due Process Clause is offended merely because the defendant has to board a plane to get to the site of the trial. The Court's opinion in No. 78-1078 suggests that the defendant ought to be subject to a State's jurisdiction only if he has contacts with the State "such that he should reasonably anticipate being haled into court there." [Footnote 2/18] Ante at 444 U. S. 297. There is nothing unreasonable or unfair, however, about recognizing commercial reality. Given the tremendous mobility of goods and people, and the inability of businessmen to control where goods are taken by customers (or retailers), I do not think that the defendant should be in complete control of the geographical stretch of his amenability to suit. Jurisdiction is no longer premised on the notion that nonresident defendants have somehow impliedly consented to suit. People should understand that they are held responsible for the consequences of their actions, and that, in our society, most actions have consequences affecting many States. When an action in fact causes injury in another State, the actor should be prepared to answer for it there unless defending in that State would be unfair for some reason other than that a state boundary must be crossed. [Footnote 2/19] In effect, the Court is allowing defendants to assert the sovereign Page 444 U. S. 312 rights of their home States. The expressed fear is that, otherwise, all limits on personal jurisdiction would disappear. But the argument's premise is wrong. I would not abolish limits on jurisdiction or strip state boundaries of all significance, see Hanson, supra at 357 U. S. 260 (Black, J., dissenting); I would still require the plaintiff to demonstrate sufficient contacts among the parties, the forum, and the litigation to make the forum a reasonable State in which to hold the trial. [Footnote 2/20] I would also, however, strip the defendant of an unjustified veto power over certain very appropriate fora -- a power the defendant justifiably enjoyed long ago when communication and travel over long distances were slow and unpredictable and when notions of state sovereignty were impractical and exaggerated. But I repeat that that is not today's world. If a plaintiff can show that his chosen forum State has a sufficient interest in the litigation (or sufficient contacts with the

defendant), then the defendant who cannot show some real injury to a constitutionally protected interest, see O'Connor v. Lee-Hy Paving Corp., 579 F.2d at 201, should have no constitutional excuse not to appear. [Footnote 2/21] The plaintiffs in each of these cases brought suit in a forum with which they had significant contacts and which had significant contacts with the litigation. I am not convinced that the defendants would suffer any "heavy and disproportionate burden" in defending the suits. Accordingly, I would hold Page 444 U. S. 313 that the Constitution should not shield the defendants from appearing and defending in the plaintiffs' chosen fora. * [This opinion applies also to No. 7952, Rush et al. v. Savchuk, post, p. 444 U. S. 320] [Footnote 2/1] In fact, a courtroom just across the state line from a defendant may often be far more convenient for the defendant than a courtroom in a distant corner of his own State. [Footnote 2/2] The States themselves, of course, remain free to choose whether to extend their jurisdiction to embrace all defendants over whom the Constitution would permit exercise of jurisdiction. [Footnote 2/3] The plaintiff asserted jurisdiction pursuant to Minn.Stat. 571.41, subd. 2 (1978), which allows garnishment of an insurer's obligation to defend and indemnify its insured. See post at 444 U. S. 322-323, n. 3, and accompanying text. The Minnesota Supreme Court has interpreted the statute as allowing suit only to the insurance policy's liability limit. The court has held that the statute embodies the rule of Seider v. Roth, 17 N.Y.2d 111, 216 N.E.2d 312 (1966). [Footnote 2/4] To say that these considerations are relevant is a far cry from saying that they are "substituted for . . . contacts with the defendant and the cause of action." Post at 444 U. S. 332. The forum's interest in the litigation is an independent point of inquiry even under traditional readings of International Shoe's progeny. If there is a shift in focus, it is not away from "the relationship among the defendant, the forum, and the litigation." Post at 444 U. S. 332 (emphasis added). Instead, it is a shift within the same accepted relationship from the connections between the defendant and the forum to those between the forum and the litigation. [Footnote 2/5] In every International Shoe inquiry, the defendant, necessarily, is outside the forum State. Thus, it is inevitable that either the defendant or the plaintiff will be inconvenienced. The problem existing at the time of Pennoyer v. Neff, 95 U. S. 714 (1878), that a resident plaintiff could obtain a binding judgment against an unsuspecting, distant defendant, has virtually disappeared in this age of instant communication and virtually instant travel. [Footnote 2/6] It is true that the insurance contract is not the subject of the litigation. Post at 444 U. S. 329. But one of the undisputed clauses of the insurance policy is that the insurer will defend this action and pay any damages assessed, up to the policy limit. The very purpose of the contract is to relieve the insured from having to defend himself, and, under the state statute, there could be no suit absent the insurance contract. Thus, in a

real sense, the insurance contract is the source of the suit. See Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 207 (1977). [Footnote 2/7] Were the defendant a real party subject to actual liability, or were there significant noneconomic consequences such as those suggested by the Court's note 20, post at 444 U. S. 331, a more substantial connection with the forum State might well be constitutionally required. [Footnote 2/8] On the basis of this fact, the state court inferred that the petitioners derived substantial revenue from goods used in Oklahoma. The inference is not without support. Certainly, were use of goods accepted as a relevant contact, a plaintiff would not need to have an exact count of the number of petitioners' cars that are used in Oklahoma. [Footnote 2/9] Moreover, imposing liability in this case would not so undermine certainty as to destroy an automobile dealer's ability to do business. According jurisdiction does not expand liability except in the marginal case where a plaintiff cannot afford to bring an action except in the plaintiff's own State. In addition, these petitioners are represented by insurance companies. They not only could, but did, purchase insurance to protect them should they stand trial and lose the case. The costs of the insurance no doubt are passed on to customers. [Footnote 2/10] One might argue that it was more predictable that the pollutants would reach Ohio than that one of petitioners' cars would reach Oklahoma. The Court's analysis, however, excludes jurisdiction in a contiguous State such as Pennsylvania as surely as in more distant States such as Oklahoma. [Footnote 2/11] For example, I cannot understand the constitutional distinction between selling an item in New Jersey and selling an item in New York expecting it to be used in New Jersey. [Footnote 2/12] The manufacturer in the case cited by the Court, Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), had no more control over which States its goods would reach than did the petitioners in this case. [Footnote 2/13] Statistics help illustrate the amazing expansion in mobility since International Shoe. The number of revenue passengermiles flown on domestic and international flights increased by nearly three orders of magnitude between 1945 (450 million) and 1976 (179 billion). U.S. Department of Commerce, Historical Statistics of the United States, pt. 2, P. 770 (1975); U.S. Department of Commerce, Statistical Abstract of the United States 670 (1978). Automobile vehicle-miles (including passenger cars, buses, and trucks) driven in the United States increased by a relatively modest 500% during the same period, growing from 250 billion in 1945 to 1,409 billion in 1976. Historical Statistics, supra at 718; Statistical Abstract, supra at 647. [Footnote 2/14] The Court has recognized that there are cases where the interests of justice can turn the focus of the jurisdictional inquiry away from the contacts between a defendant and the forum State. For instance, the Court indicated that the

requirement of contacts may be greatly relaxed (if indeed any personal contacts would be required) where a plaintiff is suing a nonresident defendant to enforce a judgment procured in another State. Shaffer v. Heitner, 433 U.S. at 433 U. S. 210211, nn. 36, 37. [Footnote 2/15] In some cases, the inquiry will resemble the inquiry commonly undertaken in determining which State's law to apply. That it is fair to apply a State's law to a nonresident defendant is clearly relevant in determining whether it is fair to subject the defendant to jurisdiction in that State. Shaffer v. Heitner, supra at 433 U. S. 225 (BRENNAN, J., dissenting); Hanson v. Denckla, 357 U. S. 235, 357 U. S. 258 (1958) (Black, J., dissenting). See n.19, infra. [Footnote 2/16] Such a standard need be no more uncertain than the Court's test "in which few answers will be written 'in black and white. The greys are dominant and even among them the shades are innumerable.' Estin v. Estin, 334 U. S. 541, 334 U. S. 545 (1948)." Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 92 (1978). [Footnote 2/17] This strong emphasis on the State's interest is nothing new. This Court, permitting the forum to exercise jurisdiction over nonresident claimants to a trust largely on the basis of the forum's interest in closing the trust, stated: "[T]he interest of each state in providing means to close trusts that exist by the grace of its laws and are administered under the supervision of its courts is so insistent and rooted in custom as to establish beyond doubt the right of its courts to determine the interests of all claimants, resident or nonresident, provided its procedure accords full opportunity to appear and be heard." Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 313(1950). [Footnote 2/18] The Court suggests that this is the critical foreseeability rather than the likelihood that the product will go to the forum State. But the reasoning begs the question. A defendant cannot know if his actions will subject him to jurisdiction in another State until we have declared what the law of jurisdiction is. [Footnote 2/19] One consideration that might create some unfairness would be if the choice of forum also imposed on the defendant an unfavorable substantive law which the defendant could justly have assumed would not apply. See n. 15, supra. [Footnote 2/20] For instance, in No. 78-952, if the plaintiff were not a bona fide resident of Minnesota when the suit was filed or if the defendant were subject to financial liability, I might well reach a different result. In No. 78-1078, I might reach a different result if the accident had not occurred in Oklahoma. [Footnote 2/21] Frequently, of course, the defendant will be able to influence the choice of forum through traditional doctrines, such as venue or forum non conveniens, permitting the transfer of

litigation. Shaffer v. Heitner, 433 U.S. at 433 U. S. 228, n. 8 (BRENNAN, J., dissenting). MR. JUSTICE MARSHALL, with whom MR. JUSTICE BLACKMUN joins, dissenting. For over 30 years, the standard by which to measure the constitutionally permissible reach of state court jurisdiction has been well established: "[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945), quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). The corollary, that the Due Process Clause forbids the assertion of jurisdiction over a defendant "with which the state has no contacts, ties, or relations," 326 U.S. at 326 U. S. 319, is equally clear. The concepts of fairness and substantial justice as applied to an evaluation of "the quality and nature of the [defendant's] activity," ibid., are not readily susceptible of further definition, however, and it is not surprising that the constitutional standard is easier to state than to apply. This is a difficult case, and reasonable minds may differ as to whether respondents have alleged a sufficient "relationship among the defendant[s], the forum, and the litigation," Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 204 (1977), to satisfy the requirements of International Shoe. I am concerned, however, that the majority has reached its result by taking an unnecessarily narrow view of petitioners' forum-related conduct. The majority asserts that "respondents seek to base jurisdiction on one, isolated occurrence and whatever inferences can be drawn therefrom: the fortuitous circumstance that a single Audi automobile, sold in New York to New York Page 444 U. S. 314 residents, happened to suffer an accident while passing through Oklahoma." Ante at 444 U. S. 295. If that were the case, I would readily agree that the minimum contacts necessary to sustain jurisdiction are not present. But the basis for the assertion of jurisdiction is not the happenstance that an individual over whom petitioners had no control made a unilateral decision to take a chattel with him to a distant State. Rather, jurisdiction is premised on the deliberate and purposeful actions of the defendants themselves in choosing to become part of a nationwide, indeed a global, network for marketing and servicing automobiles. Petitioners are sellers of a product whose utility derives from its mobility. The unique importance of the automobile in today's society, which is discussed in MR. JUSTICE BLACKMUN's dissenting opinion, post at 444 U. S. 318, needs no further elaboration. Petitioners know that their customers buy cars not only to make short trips, but also to travel long distances. In fact, the nationwide service network with which they are affiliated was designed to facilitate and encourage such travel. Seaway would be unlikely to sell many cars if authorized service were available only in Massena, N.Y. Moreover, local dealers normally derive a substantial portion of their revenues from their service operations, and thereby obtain a further economic benefit from the opportunity to service cars which were sold in other States. It is apparent that petitioners have not attempted to minimize the chance that their activities will

have effects in other States; on the contrary, they have chosen to do business in a way that increases that chance, because it is to their economic advantage to do so. To be sure, petitioners could not know in advance that this particular automobile would be driven to Oklahoma. They must have anticipated, however, that a substantial portion of the cars they sold would travel out of New York. Seaway, a local dealer in the second most populous State, and World-Wide, Page 444 U. S. 315 one of only seven regional Audi distributors in the entire country, see Brief for Respondents 2, would scarcely have been surprised to learn that a car sold by then had been driven in Oklahoma on Interstate 44, a heavily traveled transcontinental highway. In the case of the distributor, in particular, the probability that some of the cars it sells will be driven in every one of the contiguous States must amount to a virtual certainty. This knowledge should alert a reasonable businessman to the likelihood that a defect in the product might manifest itself in the forum State -- not because of some unpredictable, aberrant, unilateral action by a single buyer, but in the normal course of the operation of the vehicles for their intended purpose. It is misleading for the majority to characterize the argument in favor of jurisdiction as one of "foreseeability' alone." Ante at 444 U. S. 295. As economic entities, petitioners reach out from New York, knowingly causing effects in other States and receiving economic advantage both from the ability to cause such effects themselves and from the activities of dealers and distributors in other States. While they did not receive revenue from making direct sales in Oklahoma, they intentionally became part of an interstate economic network, which included dealerships in Oklahoma, for pecuniary gain. In light of this purposeful conduct, I do not believe it can be said that petitioners "had no reason to expect to be haled before a[n Oklahoma] court." Shaffer v. Heitner, supra at 433 U. S. 216; see ante at 444 U. S. 297, and Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 97-98 (1978). The majority apparently acknowledges that, if a product is purchased in the forum State by a consumer, that State may assert jurisdiction over everyone in the chain of distribution. See ante at 444 U. S. 297-298. With this I agree. But I cannot agree that jurisdiction is necessarily lacking if the product enters the State not through the channels of distribution but in the course of its intended use by the consumer. We have recognized Page 444 U. S. 316 the role played by the automobile in the expansion of our notions of personal jurisdiction. See Shaffer v. Heitner, supra at 433 U. S. 204; Hess v. Pawloski, 274 U. S. 352 (1927). Unlike most other chattels, which may find their way into States far from where they were purchased because their owner takes them there, the intended use of the automobile is precisely as a means of traveling from one place to another. In such a case, it is highly artificial to restrict the concept of the "stream of commerce" to the chain of distribution from the manufacturer to the ultimate consumer. I sympathize with the majority's concern that persons ought to be able to structure their conduct so as not to be subject to suit in distant forums. But that may not always be possible. Some activities, by their very nature, may foreclose the option of conducting them in such a way as to avoid subjecting oneself to jurisdiction in multiple forums. This is by no means to say that all sellers of automobiles should be subject to suit everywhere; but a distributor of automobiles to a multistate

market and a local automobile dealer who makes himself part of a nationwide network of dealerships can fairly expect that the cars they sell may cause injury in distant States and that they may be called on to defend a resulting lawsuit there. In light of the quality and nature of petitioners' activity, the majority's reliance on Kulko v. California Superior Court, supra, is misplaced. Kulko involved the assertion of state court jurisdiction over a nonresident individual in connection with an action to modify his child custody rights and support obligations. His only contact with the forum State was that he gave his minor child permission to live there with her mother. In holding that the exercise of jurisdiction violated the Due Process Clause, we emphasized that the cause of action, as well as the defendant's actions in relation to the forum State, arose "not from the defendant's commercial transactions in interstate commerce, but rather from his personal, Page 444 U. S. 317 domestic relations," 436 U.S. at 436 U. S. 97 (emphasis supplied), contrasting Kulko's actions with those of the insurance company in McGee v. International Life Ins. Co., 355 U. S. 220 (1957), which were undertaken for commercial benefit.* Manifestly, the "quality and nature" of commercial activity is different, for purposes of the International Shoe test, from actions from which a defendant obtains no economic advantage. Commercial activity is more likely to cause effects in a larger sphere, and the actor derives an economic benefit from the activity that makes it fair to require him to answer for his conduct where its effects are felt. The profits may be used to pay the costs of suit, and, knowing that the activity is likely to have effects in other States, the defendant can readily insure against the costs of those effects, thereby sparing himself much of the inconvenience of defending in a distant forum. Of course, the Constitution forbids the exercise of jurisdiction if the defendant had no judicially cognizable contacts with the forum. But as the majority acknowledges, if such contacts are present, the jurisdictional inquiry requires a balancing of various interests and policies. See ante at 444 U. S. 292; Rush v. Savchuk, post at 444 U. S. 332. I believe such contacts are to be found here, and that, considering all of the interests and policies at stake, requiring petitioners to defend this action in Oklahoma is not beyond the bounds of the Constitution. Accordingly, I dissent. * Similarly, I believe the Court in Hanson v. Denckla, 357 U. S. 235 (1958), was influenced by the fact that trust administration has traditionally been considered a peculiarly local activity. MR JUSTICE BLACKMUN, dissenting. I confess that I am somewhat puzzled why the plaintiffs in this litigation are so insistent that the regional distributor and the retail dealer, the petitioners here, who handled the ill-fated Audi automobile involved in this litigation, be named defendants. It would appear that the manufacturer and the Page 444 U. S. 318 importer, whose subjectability to Oklahoma jurisdiction is not challenged before this Court, ought not to be judgment-proof. It may, of course, ultimately amount to a contest between insurance companies that, once begun, is not easily brought to a termination. Having made this much of an observation, I pursue it no further. For me, a critical factor in the disposition of the litigation is the nature of the instrumentality under consideration. It has been said that we are a nation on wheels. What we are concerned with here is the automobile and its peripatetic character. One

need only examine our national network of interstate highways, or make an appearance on one of them, or observe the variety of license plates present not only on those highways but in any metropolitan area, to realize that any automobile is likely to wander far from its place of licensure or from its place of distribution and retail sale. Miles per gallon on the highway (as well as in the city) and mileage per tankful are familiar allegations in manufacturers' advertisements today. To expect that any new automobile will remain in the vicinity of its retail sale -- like the 1914 electric car driven by the proverbial "little old lady" -- is to blink at reality. The automobile is intended for distance, as well as for transportation within a limited area. It therefore seems to me not unreasonable -- and certainly not unconstitutional and beyond the reach of the principles laid down in International Shoe Co. v. Washington, 326 U. S. 310 (1945), and its progeny -- to uphold Oklahoma jurisdiction over this New York distributor and this New York dealer when the accident happened in Oklahoma. I see nothing more unfair for them than for the manufacturer and the importer. All are in the business of providing vehicles that spread out over the highways of our several States. It is not too much to anticipate, at the time of distribution and at the time of retail sale, that this Audi would be in Oklahoma. Moreover, in assessing "minimum contacts," foreseeable use in another State seems to me to be little different from foreseeable resale Page 444 U. S. 319 in another State: yet the Court declares this distinction determinative. Ante at 444 U. S. 297-299. MR. JUSTICE BRENNAN points out in his dissent, ante at 444 U. S. 307, that an automobile dealer derives substantial benefits from States other than its own. The same is true of the regional distributor. Oklahoma does its best to provide safe roads. Its police investigate accidents. It regulates driving within the State. It provides aid to the victim, and thereby, it is hoped, lessens damages. Accident reports are prepared and made available. All this contributes to and enhances the business of those engaged professionally in the distribution and sale of automobiles. All this also may benefit defendants in the very lawsuits over which the State asserts jurisdiction. My position need not now take me beyond the automobile and the professional who does business by way of distributing and retailing automobiles. Cases concerning other instrumentalities will be dealt with as they arise, and in their own contexts. I would affirm the judgment of the Supreme Court of Oklahoma. Because the Court reverses that judgment, it will now be about parsing every variant in the myriad of motor vehicle fact situations that present themselves. Some will justify jurisdiction and others will not. All will depend on the "contact" that the Court sees fit to perceive in the individual case. U.S. Supreme Court Asahi Metal Indus. v. Superior Court, 480 U.S. 102 (1987) Asahi Metal Indus. Co., Ltd. v. Superior Ct. of California No. 85-693 Argued November 5, 1986 Decided February 24, 1987 480 U.S. 102 CERTIORARI TO THE SUPREME COURT OF CALIFORNIA Syllabus

Petitioner manufactures tire valve assemblies in Japan and sells them to several tire manufacturers, including Cheng Shin Rubber Industrial Co. (Cheng Shin). The sales to Cheng Shin, which amounted to at least 100,000 assemblies annually from 1978 to 1982, took place in Taiwan, to which the assemblies were shipped from Japan. Cheng Shin incorporates the assemblies into its finished tires, which it sells throughout the world, including the United States, where 20 percent of its sales take place in California. Affidavits indicated that petitioner was aware that tires incorporating its assemblies would end up in California, but, on the other hand, that it never contemplated that its sales to Cheng Shin in Taiwan would subject it to lawsuits in California. Nevertheless, in 1979, a product liability suit was brought in California Superior Court arising from a motorcycle accident allegedly caused by defects in a tire manufactured by Cheng Shin, which in turn filed a crosscomplaint seeking indemnification from petitioner. Although the main suit was eventually settled and dismissed, the Superior Court denied petitioner's motion to quash the summons issued against it. The State Court of Appeal then ordered that the summons be quashed, but the State Supreme Court reversed, finding that petitioner's intentional act of placing its assemblies into the stream of commerce by delivering them to Cheng Shin in Taiwan, coupled with its awareness that some of them would eventually reach California, were sufficient to support state court jurisdiction under the Due Process Clause. Held: The judgment is reversed, and the case is remanded. 39 Cal.3d 35, 702 P.2d 543, reversed and remanded. JUSTICE O'CONNOR delivered the opinion of the Court as to Parts I and II-B, concluding that the state court's exercise of personal jurisdiction over petitioner would be unreasonable and unfair, in violation of the Due Process Clause. Pp. 480 U. S. 113-116. (a) The burden imposed on petitioner by the exercise of state court jurisdiction would be severe, since petitioner would be required not only to traverse the distance between Japan and California, but also to submit Page 480 U. S. 103 its dispute with Cheng Shin to a foreign judicial system. Such unique burdens should have significant weight in assessing the reasonableness of extending personal jurisdiction over national borders. Pp. 480 U. S. 113-114. (b) The interests of Cheng Shin and the forum State in the exercise of jurisdiction over petitioner would be slight, and would be insufficient to justify the heavy burdens placed on petitioner. The only surviving question is whether a Japanese corporation should indemnify a Taiwanese corporation on the bases of a sale made in Taiwan and a shipment of goods from Japan to Taiwan. The facts do not demonstrate that it would be more convenient for Cheng Shin to litigate its claim in California, rather than in Taiwan or Japan, while California's interests are diminished by Cheng Shin's lack of a California residence and by the fact that the dispute is primarily about indemnity, rather than the safety of consumers. While the possibility of being sued in California might create an additional deterrent to petitioner's manufacture of unsafe assemblies, the same effect would result from pressures placed on petitioner by Cheng Shin, whose California sales would subject it to state tort law. Pp. 480 U. S. 114-115. (c) The procedural and substantive policies of other nations whose interests are affected by the forum State's assertion of jurisdiction over an alien defendant must be taken into account, and great care must be exercised when considering personal jurisdiction in the international context. Although other nations'

interests will differ from case to case, those interests, as well as the Federal Government's interest in its foreign relations policies, will always be best served by a careful inquiry into the reasonableness of the particular assertion of jurisdiction, and an unwillingness to find an alien defendant's serious burdens outweighed where, as here, the interests of the plaintiff and the forum State are minimal. P. 480 U. S. 115. JUSTICE O'CONNOR, joined by THE CHIEF JUSTICE, JUSTICE POWELL, and JUSTICE SCALIA, concluded in Parts II-A and III that, even assuming, arguendo, that petitioner was aware that some of the assemblies it sold to Cheng Shin would be incorporated into tires sold in California, the facts do not establish minimum contacts sufficient to render the State's exercise of personal jurisdiction consistent with fair play and substantial justice, as required by the Due Process Clause. Since petitioner does not do business, have an office, agents, employees, or property, or advertise or solicit business in California, and since it did not create, control, or employ the distribution system that brought its assemblies to, or design them in anticipation of sales in, California, it did not engage in any action to purposely avail itself of the California market. The "substantial connection" between a defendant and the forum State necessary for a finding of minimum contacts must derive from an action purposely directed toward the forum State, and the mere placement of a product Page 480 U. S. 104 into the stream of commerce is not such an act, even if done with an awareness that the stream will sweep the product into the forum State absent additional conduct indicating an intent to serve the forum state market. Pp. 480 U. S. 108-113, 116. JUSTICE BRENNAN, joined by JUSTICE WHITE, JUSTICE MARSHALL, and JUSTICE BLACKMUN, agreed with the Court's conclusion in Part II-B that the exercise of jurisdiction over petitioner would not comport with "fair play and substantial justice," but disagreed with Part II-A's interpretation of the stream-of-commerce theory, and with the conclusion that petitioner did not purposely avail itself of the California market. As long as a defendant is aware that the final product is being marketed in the forum State, jurisdiction premised on the placement of a product into the stream of commerce is consistent with the Due Process Clause, and no showing of additional conduct is required. Here, even though petitioner did not design or control the distribution system that carried its assemblies into California, its regular and extensive sales to a manufacturer it knew was making regular sales of the final product in California were sufficient to establish minimum contacts with California. Pp. 480 U. S. 116-121. JUSTICE STEVENS, joined by JUSTICE WHITE and JUSTICE BLACKMUN, agreed that the California Supreme Court's judgment should be reversed for the reasons stated in Part II-B of the Court's opinion, but did not join Part II-A, for the reasons that (1) the Court's holding that the State's exercise of jurisdiction over petitioner would be "unreasonable and unfair" alone requires reversal, and renders any examination of minimum contacts unnecessary; and (2) even assuming that the "purposeful availment" test should be formulated here, Part II-A misapplies it to the facts of this case, since, in its dealings with Cheng Shin, petitioner has arguably engaged in a higher quantum of conduct than the mere placement of a product into the stream of commerce. Pp. 480 U. S. 121-122. O'CONNOR, J., announced the judgment of the Court and delivered the opinion for a unanimous Court with respect to Part I, the opinion of the Court with respect to Part II-B, in which REHNQUIST, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, POWELL, and STEVENS, JJ., joined, and an opinion with respect to Parts II-A and III, in

which REHNQUIST, C.J., and POWELL and SCALIA, JJ., joined. BRENNAN, J., filed an opinion concurring in part and concurring in the judgment, in which WHITE, MARSHALL, and BLACKMUN, JJ., joined, post, p. 480 U. S. 116. STEVENS, J., filed an opinion concurring in part and concurring in the judgment, in which WHITE and BLACKMUN, JJ., joined, post, p. 480 U. S. 121. Page 480 U. S. 105 JUSTICE O'CONNOR announced the judgment of the Court and delivered the unanimous opinion of the Court with respect to Part I, the opinion of the Court with respect to Part II-B, in which THE CHIEF JUSTICE, JUSTICE BRENNAN, JUSTICE WHITE, JUSTICE MARSHALL, JUSTICE BLACKMUN, JUSTICE POWELL, and JUSTICE STEVENS join, and an opinion with respect to Parts II-A and III, in which THE CHIEF JUSTICE, JUSTICE POWELL, and JUSTICE SCALIA join. This case presents the question whether the mere awareness on the part of a foreign defendant that the components it manufactured, sold, and delivered outside the United States would reach the forum State in the stream of commerce constitutes "minimum contacts" between the defendant and the forum State such that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945), quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). I On September 23, 1978, on Interstate Highway 80 in Solano County, California, Gary Zurcher lost control of his Honda motorcycle and collided with a tractor. Zurcher was severely injured, and his passenger and wife, Ruth Ann Moreno, was killed. In September 1979, Zurcher filed a product liability action in the Superior Court of the State of Page 480 U. S. 106 California in and for the County of Solano. Zurcher alleged that the 1978 accident was caused by a sudden loss of air and an explosion in the rear tire of the motorcycle, and alleged that the motorcycle tire, tube, and sealant were defective. Zurcher's complaint named, inter alia, Cheng Shin Rubber Industrial Co., Ltd. (Cheng Shin), the Taiwanese manufacturer of the tube. Cheng Shin in turn filed a cross-complaint seeking indemnification from its codefendants and from petitioner, Asahi Metal Industry Co., Ltd. (Asahi), the manufacturer of the tube's valve assembly. Zurcher's claims against Cheng Shin and the other defendants were eventually settled and dismissed, leaving only Cheng Shin's indemnity action against Asahi. California's long-arm statute authorizes the exercise of jurisdiction "on any basis not inconsistent with the Constitution of this state or of the United States." Cal.Civ.Proc.Code Ann. 410.10 (West 1973). Asahi moved to quash Cheng Shin's service of summons, arguing the State could not exert jurisdiction over it consistent with the Due Process Clause of the Fourteenth Amendment. In relation to the motion, the following information was submitted by Asahi and Cheng Shin. Asahi is a Japanese corporation. It manufactures tire valve assemblies in Japan and sells the assemblies to Cheng Shin, and to several other tire manufacturers, for use as components in finished tire tubes. Asahi's sales to Cheng Shin took place in Taiwan. The shipments from Asahi to Cheng Shin were sent from Japan to Taiwan. Cheng Shin bought and incorporated into its tire tubes 150,000 Asahi valve assemblies in 1978; 500,000 in 1979; 500,000 in 1980;100,000 in 1981; and 100,000 in 1982. Sales

to Cheng Shin accounted for 1.24 percent of Asahi's income in 1981 and 0.44 percent in 1982. Cheng Shin alleged that approximately 20 percent of its sales in the United States are in California. Cheng Shin purchases valve assemblies from other suppliers as well, and sells finished tubes throughout the world. Page 480 U. S. 107 In 1983, an attorney for Cheng Shin conducted an informal examination of the valve stems of the tire tubes sold in one cycle store in Solano County. The attorney declared that, of the approximately 115 tire tubes in the store, 97 were purportedly manufactured in Japan or Taiwan, and of those 97, 21 valve stems were marked with the circled letter "A", apparently Asahi's trademark. Of the 21 Asahi valve stems, 12 were incorporated into Cheng Shin tire tubes. The store contained 41 other Cheng Shin tubes that incorporated the valve assemblies of other manufacturers. Declaration of Kenneth B. Shepard in Opposition to Motion to Quash Subpoena, App. to Brief for Respondent 5-6. An affidavit of a manager of Cheng Shin whose duties included the purchasing of component parts stated: "In discussions with Asahi regarding the purchase of valve stem assemblies, the fact that my Company sells tubes throughout the world and specifically the United States has been discussed. I am informed and believe that Asahi was fully aware that valve stem assemblies sold to my Company and to others would end up throughout the United States and in California." 39 Cal.3d 35, 48, n. 4, 702 P.2d 543, 549-550, n. 4 (1985). An affidavit of the president of Asahi, on the other hand, declared that Asahi "has never contemplated that its limited sales of tire valves to Cheng Shin in Taiwan would subject it to lawsuits in California." Ibid. The record does not include any contract between Cheng Shin and Asahi. Tr. of Oral Arg. 24. Primarily on the basis of the above information, the Superior Court denied the motion to quash summons, stating: "Asahi obviously does business on an international scale. It is not unreasonable that they defend claims of defect in their product on an international scale." Order Denying Motion to Quash Summons, Zurcher v. Dunlop Tire & Rubber Co., No. 76180 (Super. Ct., Solano County, Cal., Apr. 20, 1983). The Court of Appeal of the State of California issued a peremptory writ of mandate commanding the Superior Court to quash service of summons. The court concluded that "it Page 480 U. S. 108 would be unreasonable to require Asahi to respond in California solely on the basis of ultimately realized foreseeability that the product into which its component was embodied would be sold all over the world, including California." App. to Pet. for Cert. B5-B6. The Supreme Court of the State of California reversed and discharged the writ issued by the Court of Appeal. 39 Cal.3d 35, 702 P.2d 543 (1985). The court observed: "Asahi has no offices, property or agents in California. It solicits no business in California, and has made no direct sales [in California]."

Id. at 48, 702 P.2d at 549. Moreover, "Asahi did not design or control the system of distribution that carried its valve assemblies into California." Id. at 49, 702 P.2d at 549. Nevertheless, the court found the exercise of jurisdiction over Asahi to be consistent with the Due Process Clause. It concluded that Asahi knew that some of the valve assemblies sold to Cheng Shin would be incorporated into tire tubes sold in California, and that Asahi benefited indirectly from the sale in California of products incorporating its components. The court considered Asahi's intentional act of placing its components into the stream of commerce -- that is, by delivering the components to Cheng Shin in Taiwan -- coupled with Asahi's awareness that some of the components would eventually find their way into California, sufficient to form the basis for state court jurisdiction under the Due Process Clause. We granted certiorari, 475 U.S. 1044 (1986), and now reverse. II B The Due Process Clause of the Fourteenth Amendment limits the power of a state court to exert personal jurisdiction over a nonresident defendant. "[T]he constitutional touchstone" of the determination whether an exercise of personal jurisdiction comports with due process "remains whether the defendant purposefully established minimum contacts' in the Page 480 U. S. 109 forum State." Burger King Corp. v. Rudzewicz, 471 U. S. 462, 471 U. S. 474 (1985), quoting International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 316. Most recently, we have reaffirmed the oft-quoted reasoning of Hanson v. Denckla, 357 U. S. 235, 357 U. S. 253 (1958), that minimum contacts must have a basis in "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Burger King, 471 U.S. at 471 U. S. 475. "Jurisdiction is proper . . . where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State." Ibid., quoting McGee v. International Life Insurance Co., 355 U. S. 220, 355 U. S. 223 (1957) (emphasis in original). Applying the principle that minimum contacts must be based on an act of the defendant, the Court in World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286 (1980), rejected the assertion that a consumer's unilateral act of bringing the defendant's product into the forum State was a sufficient constitutional basis for personal jurisdiction over the defendant. It had been argued in World-Wide Volkswagen that, because an automobile retailer and its wholesale distributor sold a product mobile by design and purpose, they could foresee being haled into court in the distant States into which their customers might drive. The Court rejected this concept of foreseeability as an insufficient basis for jurisdiction under the Due Process Clause. Id. at 444 U. S. 295-296. The Court disclaimed, however, the idea that "foreseeability is wholly irrelevant" to personal jurisdiction, concluding that "[t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." Id. at 444 U. S. 297-298 (citation omitted). The Court reasoned:

Page 480 U. S. 110 "When a corporation 'purposefully avails itself of the privilege of conducting activities within the forum State,' Hanson v. Denckla, 357 U.S. [235,] 357 U. S. 253 [(1958)], it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence, if the sale of a product of a manufacturer or distributor . . . is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owners or to others." Id. at 444 U. S. 297. In World-Wide Volkswagen itself, the state court sought to base jurisdiction not on any act of the defendant, but on the foreseeable unilateral actions of the consumer. Since WorldWide Volkswagen, lower courts have been confronted with cases in which the defendant acted by placing a product in the stream of commerce, and the stream eventually swept defendant's product into the forum State, but the defendant did nothing else to purposefully avail itself of the market in the forum State. Some courts have understood the Due Process Clause, as interpreted in World-Wide Volkswagen, to allow an exercise of personal jurisdiction to be based on no more than the defendant's act of placing the product in the stream of commerce. Other courts have understood the Due Process Clause and the above-quoted language in World-Wide Volkswagen to require the action of the defendant to be more purposefully directed at the forum State than the mere act of placing a product in the stream of commerce. The reasoning of the Supreme Court of California in the present case illustrates the former interpretation of World-Wide Volkswagen. The Supreme Court of California held that, because the stream of commerce eventually brought Page 480 U. S. 111 some valves Asahi sold Cheng Shin into California, Asahi's awareness that its valves would be sold in California was sufficient to permit California to exercise jurisdiction over Asahi consistent with the requirements of the Due Process Clause. The Supreme Court of California's position was consistent with those courts that have held that mere foreseeability or awareness was a constitutionally sufficient basis for personal jurisdiction if the defendant's product made its way into the forum State while still in the stream of commerce. See Bean Dredging Corp. v. Dredge Technology Corp., 744 F.2d 1081 (CA5 1984); Hedrick v. Daiko Shoji Co., 715 F.2d 1355 (CA9 1983). Other courts, however, have understood the Due Process Clause to require something more than that the defendant was aware of its product's entry into the forum State through the stream of commerce in order for the State to exert jurisdiction over the defendant. In the present case, for example, the State Court of Appeal did not read the Due Process Clause, as interpreted by World-Wide Volkswagen, to allow "mere foreseeability that the product will enter the forum state [to] be enough by itself to establish jurisdiction over the distributor and retailer." App. to Pet. for Cert. B5. In Humble v. Toyota Motor Co., 727 F.2d 709 (CA8 1984), an injured car passenger brought suit against Arakawa Auto Body Company, a Japanese corporation that manufactured car seats for Toyota. Arakawa did no

business in the United States; it had no office, affiliate, subsidiary, or agent in the United States; it manufactured its component parts outside the United States and delivered them to Toyota Motor Company in Japan. The Court of Appeals, adopting the reasoning of the District Court in that case, noted that, although it "does not doubt that Arakawa could have foreseen that its product would find its way into the United States," it would be "manifestly unjust" to require Arakawa to defend itself in the United States. Id. at 710-711, quoting 578 F.Supp. 530, 533 (ND Iowa 1982). See also Hutson v. Fehr Bros., Page 480 U. S. 112 Inc., 584 F.2d 833 (CA8 1978); see generally Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 299 (CA3 1985) (collecting "stream of commerce" cases in which the "manufacturers involved had made deliberate decisions to market their products in the forum state"). We now find this latter position to be consonant with the requirements of due process. The "substantial connection," Burger King, 471 U.S. at 471 U. S. 475; McGee, 355 U.S. at 355 U. S. 223, between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State. Burger King, supra, at 471 U. S. 476; Keeton v. Hustler Magazine, Inc., 465 U. S. 770, 465 U. S. 774 (1984). The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State. Assuming, arguendo, that respondents have established Asahi's awareness that some of the valves sold to Cheng Shin would be incorporated into tire tubes sold in California, respondents have not demonstrated any action by Asahi to purposefully avail itself of the California market. Asahi does not do business in California. It has no office, agents, employees, or property in California. It does not advertise or otherwise solicit business in California. It did not create, control, or employ the distribution system that brought its valves to California. Cf. Hicks v. Kawasaki Heavy Industries, Page 480 U. S. 113 452 F.Supp. 130 (MD Pa. 1978). There is no evidence that Asahi designed its product in anticipation of sales in California. Cf. Rockwell International Corp. v. Costruzioni Aeronautiche Giovanni Agusta, 553 F.Supp. 328 (ED Pa. 1982). On the basis of these facts, the exertion of personal jurisdiction over Asahi by the Superior Court of California exceeds the limits of due process. B The strictures of the Due Process Clause forbid a state court to exercise personal jurisdiction over Asahi under circumstances that would offend "traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 316, quoting Milliken v. Meyer, 311 U.S. at 311 U. S. 463.

We have previously explained that the determination of the reasonableness of the exercise of jurisdiction in each case will depend on an evaluation of several factors. A court must consider the burden on the defendant, the interests of the forum State, and the plaintiff's interest in obtaining relief. It must also weigh in its determination "the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies." World-Wide Volkswagen, 444 U.S. at 444 U. S. 292 (citations omitted). Page 480 U. S. 114 A consideration of these factors in the present case clearly reveals the unreasonableness of the assertion of jurisdiction over Asahi, even apart from the question of the placement of goods in the stream of commerce. Certainly the burden on the defendant in this case is severe. Asahi has been commanded by the Supreme Court of California not only to traverse the distance between Asahi's headquarters in Japan and the Superior Court of California in and for the County of Solano, but also to submit its dispute with Cheng Shin to a foreign nation's judicial system. The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders. When minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant. In the present case, however, the interests of the plaintiff and the forum in California's assertion of jurisdiction over Asahi are slight. All that remains is a claim for indemnification asserted by Cheng Shin, a Tawainese corporation, against Asahi. The transaction on which the indemnification claim is based took place in Taiwan; Asahi's components were shipped from Japan to Taiwan. Cheng Shin has not demonstrated that it is more convenient for it to litigate its indemnification claim against Asahi in California, rather than in Taiwan or Japan. Because the plaintiff is not a California resident, California's legitimate interests in the dispute have considerably diminished. The Supreme Court of California argued that the State had an interest in "protecting its consumers by ensuring that foreign manufacturers comply with the state's safety standards." 39 Cal.3d at 49, 702 P.2d at 550. The State Supreme Court's definition of California's interest, however, was overly broad. The dispute between Cheng Shin and Asahi is primarily about indemnification, rather than safety Page 480 U. S. 115 standards. Moreover, it is not at all clear at this point that California law should govern the question whether a Japanese corporation should indemnify a Taiwanese corporation on the basis of a sale made in Taiwan and a shipment of goods from Japan to Taiwan. Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 472 U. S. 821-822 (1985); Allstate Insurance Co. v. Hague, 449 U. S. 302, 449 U. S. 312-313 (1981). The possibility of being haled into a California court as a result of an accident involving Asahi's components undoubtedly creates an additional deterrent to the manufacture of unsafe components; however, similar pressures will be placed on Asahi by the purchasers of its components as long as those who use Asahi components in their final products, and sell

those products in California, are subject to the application of California tort law. World-Wide Volkswagen also admonished courts to take into consideration the interests of the "several States," in addition to the forum State, in the efficient judicial resolution of the dispute and the advancement of substantive policies. In the present case, this advice calls for a court to consider the procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction by the California court. The procedural and substantive interests of other nations in a state court's assertion of jurisdiction over an alien defendant will differ from case to case. In every case, however, those interests, as well as the Federal Government's interest in its foreign relations policies, will be best served by a careful inquiry into the reasonableness of the assertion of jurisdiction in the particular case, and an unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State. "Great care and reserve should be exercised when extending our notions of personal jurisdiction into the international field." United States v. First National City Bank, 379 U. S. 378, 379 U. S. 404 (1965) (Harlan, J., dissenting). See Born, Reflections on Judicial Jurisdiction in International Cases, to be published in 17 Ga.J.Int'l & Comp.L. 1 (1987). Page 480 U. S. 116 Considering the international context, the heavy burden on the alien defendant, and the slight interests of the plaintiff and the forum State, the exercise of personal jurisdiction by a California court over Asahi in this instance would be unreasonable and unfair. III Because the facts of this case do not establish minimum contacts such that the exercise of personal jurisdiction is consistent with fair play and substantial justice, the judgment of the Supreme Court of California is reversed, and the case is remanded for further proceedings not inconsistent with this opinion. It is so ordered. * We have no occasion here to determine whether Congress could, consistent with the Due Process Clause of the Fifth Amendment, authorize federal court personal jurisdiction over alien defendants based on the aggregate of national contacts, rather than on the contacts between the defendant and the State in which the federal court sits. See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293-295 (CA3 1985); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 283 (CA3 1981); see also Born, Reflections on Judicial Jurisdiction in International Cases, to be published in 17 Ga. J. Int'l & Comp. L. 1 (1987); Lilly, Jurisdiction Over Domestic and Alien Defendants, 69 Va.L.Rev. 85, 127-145 (1983). JUSTICE BRENNAN, with whom JUSTICE WHITE, JUSTICE MARSHALL, and JUSTICE BLACKMUN join, concurring in part and concurring in the judgment. I do not agree with the interpretation in Part II-A of the streamof-commerce theory, nor with the conclusion that Asahi did not "purposely avail itself of the California market." Ante at 480 U. S. 112. I do agree, however, with the Court's conclusion in Part II-B that the exercise of personal jurisdiction over Asahi in this case would not comport with "fair play and substantial justice," International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 320 (1945). This is one of those rare cases in which "minimum requirements inherent in the concept of 'fair play and substantial justice' . . . defeat the reasonableness of jurisdiction

even [though] the defendant has purposefully engaged in forum activities." Burger King Corp. v. Rudzewicz, 471 U. S. 462, 471 U. S. 477478 (1985). I therefore join Parts I and II-B of the Court's opinion, and write separately to explain my disagreement with Part II-A. Part II-A states that "a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward Page 480 U. S. 117 the forum State." Ante at 480 U. S. 112. Under this view, a plaintiff would be required to show "[a]dditional conduct" directed toward the forum before finding the exercise of jurisdiction over the defendant to be consistent with the Due Process Clause. Ibid. I see no need for such a showing, however. The stream of commerce refers not to unpredictable currents or eddies, but to the regular and anticipated flow of products from manufacture to distribution to retail sale. As long as a participant in this process is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise. Nor will the litigation present a burden for which there is no corresponding benefit. A defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State's laws that regulate and facilitate commercial activity. These benefits accrue regardless of whether that participant directly conducts business in the forum State, or engages in additional conduct directed toward that State. Accordingly, most courts and commentators have found that jurisdiction premised on the placement of a product into the stream of commerce is consistent with the Due Process Clause, and have not required a showing of additional conduct. [Footnote 1] Page 480 U. S. 118 The endorsement in Part II-A of what appears to be the minority view among Federal Courts of Appeals [Footnote 2] represents a marked retreat from the analysis in World-Wide Volkswagen v. Woodson, 444 U. S. 286 (1980). In that case, "respondents [sought] to base jurisdiction on one isolated occurrence and whatever inferences can be drawn therefrom: the fortuitous circumstance that a single Audi automobile, sold in New York to New York residents, happened to suffer an accident while passing through Oklahoma." Id. at 444 U. S. 295. The Court held that the possibility of an accident in Oklahoma, while to some extent foreseeable in light of the inherent mobility of the automobile, was not enough to establish Page 480 U. S. 119 minimum contacts between the forum State and the retailer or distributor. Id. at 444 U. S. 295-296. The Court then carefully explained: "[T]his is not to say, of course, that foreseeability is wholly irrelevant. But the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into Court there."

Id. at 444 U. S. 297. The Court reasoned that, when a corporation may reasonably anticipate litigation in a particular forum, it cannot claim that such litigation is unjust or unfair, because it "can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to consumers, or, if the risks are too great, severing its connection with the State." Ibid. To illustrate the point, the Court contrasted the foreseeability of litigation in a State to which a consumer fortuitously transports a defendant's product (insufficient contacts) with the foreseeability of litigation in a State where the defendant's product was regularly sold (sufficient contacts). The Court stated: "Hence, if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased Page 480 U. S. 120 by consumers in the forum State." Id. at 444 U. S. 297-298 (emphasis added). The Court concluded its illustration by referring to Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), a well known stream-of-commerce case in which the Illinois Supreme Court applied the theory to assert jurisdiction over a component parts manufacturer that sold no components directly in Illinois, but did sell them to a manufacturer who incorporated them into a final product that was sold in Illinois. 444 U.S. at 444 U. S. 297-298. The Court in World-Wide Volkswagen thus took great care to distinguish "between a case involving goods which reach a distant State through a chain of distribution and a case involving goods which reach the same State because a consumer . . . took them there." Id. at 444 U. S. 306-307 (BRENNAN, J., dissenting). [Footnote 3] The California Supreme Court took note of this distinction, and correctly concluded that our holding in World-Wide Volkswagen preserved the stream-of-commerce theory. See App. to Pet. for Cert. C-9, and n. 3, C-13-C-15; cf. Comment, Federalism, Due Process, and Minimum Contacts: World-Wide Volkswagen Corp v. Woodson, 80 Colum.L.Rev. 1341, 13591361, and nn. 140-146 (1980). Page 480 U. S. 121 In this case, the facts found by the California Supreme Court support its finding of minimum contacts. The court found that, "[a]lthough Asahi did not design or control the system of distribution that carried its valve assemblies into California, Asahi was aware of the distribution system's operation, and it knew that it would benefit economically from the sale in California of products incorporating its components." App. to Pet. for Cert. C-11. [Footnote 4] Accordingly, I cannot join the determination in Part II-A that Asahi's regular and

extensive sales of component parts to a manufacturer it knew was making regular sales of the final product in California is insufficient to establish minimum contacts with California.

U.S. Supreme Court Societe Nationale v. District Court, 482 U.S. 522 (1987) Societe Nationale Industrielle Aerospatiale v. United States District Court for the Southern District of Iowa No. 85-1695 Argued January 14, 1987 Decided June 15, 1987 482 U.S. 522 CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT Syllabus The United States, France, and 15 other countries have acceded to the Hague Evidence Convention, which prescribes procedures by which a judicial authority in one contracting state may request evidence located in another. Plaintiffs brought suits (later consolidated) in Federal District Court for personal injuries resulting from the crash of an aircraft built and sold by petitioners, two corporations owned by France. Petitioners answered the complaints without questioning the court's jurisdiction, and engaged in initial discovery without objection. However, when plaintiffs served subsequent discovery requests under the Federal Rules of Civil Procedure, petitioners filed a motion for a protective order, alleging that the Convention dictated the exclusive procedures that must be followed since petitioners are French and the discovery sought could only be had in France. A Magistrate denied the motion, and the Court of Appeals denied petitioners' mandamus petition, holding, inter alia, that, when a district court has jurisdiction over a foreign litigant, the Convention does not apply even though the information sought may be physically located within the territory of a foreign signatory to the Convention. Held: 1. The Convention does not provide exclusive or mandatory procedures for obtaining documents and information located in a foreign signatory's territory. The Convention's plain language, as well as the history of its proposal and ratification by the United States, unambiguously supports the conclusion that it was intended to establish optional procedures for obtaining evidence abroad. Its preamble speaks in nonmandatory terms, specifying its purpose to "facilitate" discovery and to "improve mutual judicial cooperation." Similarly, its text uses permissive language, and does not expressly modify the law of contracting states or require them to use the specified procedures or change their own procedures. The Convention does not deprive the District Court of its jurisdiction to order, under the Federal Rules, a foreign national party to produce evidence physically located within a signatory nation. Pp. 482 U. S. 529540. Page 482 U. S. 523 2. The Court of Appeals erred in concluding that the Convention "does not apply" to discovery sought from a foreign

litigant that is subject to an American court's jurisdiction. Although they are not mandatory, the Convention's procedures are available whenever they will facilitate the gathering of evidence, and "apply" in the sense that they are one method of seeking evidence that a court may elect to employ. Pp. 482 U. S. 640-641. 3. International comity does not require in all instances that American litigants first resort to Convention procedures before initiating discovery under the Federal Rules. In many situations, Convention procedures would be unduly timeconsuming and expensive, and less likely to produce needed evidence than direct use of the Federal Rules. The concept of comity requires, in this context, a more particularized analysis of the respective interests of the foreign and requesting nations than a blanket "first resort" rule would generate. Thus, the determination whether to resort to the Convention requires prior scrutiny in each case of the particular facts, sovereign interests, and likelihood that such resort will prove effective. Pp. 482 U. S. 541-546. 782 F.2d 120, vacated and remanded. STEVENS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, POWELL, and SCALIA, JJ., joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, in which BRENNAN, MARSHALL, and O'CONNOR, JJ., joined, post, p. 482 U. S. 547. Page 482 U. S. 524 JUSTICE STEVENS delivered the opinion of the Court. The United States, the Republic of France, and 15 other Nations have acceded to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, opened for signature, Mar. 18, 1970, 23 U.S.T. 2555, T.I.A.S. No. 7444. [Footnote 1] This Convention -- sometimes referred to as the "Hague Convention" or the "Evidence Convention" -prescribes certain procedures by which a judicial authority in one contracting state may request evidence located in another contracting state. The question presented in this case concerns the extent to which a federal district court must employ the procedures set forth in the Convention when litigants seek answers to interrogatories, the production of documents, and admissions from a French adversary over whom the court has personal jurisdiction. I The two petitioners are corporations owned by the Republic of France. [Footnote 2] They are engaged in the business of designing, Page 482 U. S. 525 manufacturing, and marketing aircraft. One of their planes, the "Rallye," was allegedly advertised in American aviation publications as "the World's safest and most economical STOL plane." [Footnote 3] On August 19, 1980, a Rallye crashed in Iowa, injuring the pilot and a passenger. Dennis Jones, John George, and Rosa George brought separate suits based upon this accident in the United States District Court for the Southern District of Iowa, alleging that petitioners had manufactured and sold a defective plane, and that they were guilty of negligence and breach of warranty. Petitioners answered the complaints, apparently without questioning the jurisdiction of the District Court. With the parties' consent, the cases were consolidated and referred to a Magistrate. See 28 U.S.C. 636(c)(1). Initial discovery was conducted by both sides pursuant to the Federal Rules of Civil Procedure without objection. [Footnote 4] When plaintiffs [Footnote 5] served a second request for the

production of documents pursuant to Rule 34, a set of interrogatories pursuant to Rule 33, and requests for admission pursuant to Rule 36, however, petitioners filed a motion for a protective order. App. 27-37. The motion alleged that, because petitioners are "French corporations, and the discovery sought Page 482 U. S. 526 can only be found in a foreign state, namely France," the Hague Convention dictated the exclusive procedures that must be followed for pretrial discovery. App. 2. In addition, the motion stated that, under French penal law, the petitioners could not respond to discovery requests that did not comply with the Convention. Ibid. [Footnote 6] The Magistrate denied the motion insofar as it related to answering interrogatories, producing documents, and making admissions. [Footnote 7] After reviewing the relevant cases, the Magistrate explained: "To permit the Hague Evidence Convention to override the Federal Rules of Civil Procedure would frustrate the courts' interests, which particularly arise in products liability Page 482 U. S. 527 cases, in protecting United States citizens from harmful products and in compensating them for injuries arising from use of such products." App. to Pet. for Cert. 25a. The Magistrate made two responses to petitioners' argument that they could not comply with the discovery requests without violating French penal law. Noting that the law was originally "inspired to impede enforcement of United States antitrust laws,'" [Footnote 8] and that it did not appear to have been strictly enforced in France, he first questioned whether it would be construed to apply to the pretrial discovery requests at issue. [Footnote 9] Id. at 22a-24a. Second, he balanced the interests in the "protection of United States citizens from harmful foreign products and compensation for injuries caused by such products" against France's interest in protecting its citizens "from intrusive foreign discovery procedures." The Magistrate concluded that the former interests were stronger, particularly because compliance with the requested discovery will "not have to take place in France," and will not be greatly intrusive or abusive. Id. at 23a-25a. Petitioners sought a writ of mandamus from the Court of Appeals for the Eighth Circuit under Federal Rule of Appellate Procedure 21(a). Although immediate appellate review of an interlocutory discovery order is not ordinarily available, See Kerr v. United States District Court, 426 U. S. 394, Page 482 U. S. 528 426 U. S. 402-403 (1976), the Court of Appeals considered that the novelty and the importance of the question presented, and the likelihood of its recurrence, made consideration of the merits of the petition appropriate. 782 F.2d 120 (1986). It then held that "when the district court has jurisdiction over a foreign litigant, the Hague Convention does not apply to the production of evidence in that litigant's possession, even though the documents and information sought may physically be located within the territory of a foreign signatory to the Convention." Id. at 124. The Court of Appeals disagreed with petitioners' argument that this construction would render the entire Hague Convention "meaningless," noting that it would still serve the purpose of providing an improved procedure for obtaining evidence from nonparties. Id. at 125. The court also rejected petitioners' contention that considerations of international

comity required plaintiffs to resort to Hague Convention procedures as an initial matter ("first use"), and correspondingly to invoke the federal discovery rules only if the treaty procedures turned out to be futile. The Court of Appeals believed that the potential overruling of foreign tribunals' denial of discovery would do more to defeat than to promote international comity. Id. at 125-126. Finally, the Court of Appeals concluded that objections based on the French penal statute should be considered in two stages: first, whether the discovery order was proper even though compliance may require petitioners to violate French law; and second, what sanctions, if any, should be imposed if petitioners are unable to comply. The Court of Appeals held that the Magistrate properly answered the first question, and that it was premature to address the second. [Footnote 10] The court Page 482 U. S. 529 therefore denied the petition for mandamus. We granted certiorari. 476 U.S. 1168 (1986). II In the District Court and the Court of Appeals, petitioners contended that the Hague Evidence Convention "provides the exclusive and mandatory procedures for obtaining documents and information located within the territory of a foreign signatory." 782 F.2d at 124. [Footnote 11] We are satisfied that the Court of Appeals correctly rejected this extreme position. We believe it is foreclosed by the plain language of the Convention. Before discussing the text of the Convention, however, we briefly review its history. The Hague Conference on Private International Law, an association of sovereign states, has been conducting periodic sessions since 1893. S.Exec.Doc. A, 92d Cong., 2d Sess., p. v (1972) (S. Exec. Doc. A). The United States participated in those sessions as an observer in 1956 and 1960, and as a member beginning in 1964 pursuant to congressional authorization. [Footnote 12] In that year, Congress amended the Judicial Code to grant foreign litigants, without any requirement of reciprocity, special assistance in obtaining evidence in the Page 482 U. S. 530 United States. [Footnote 13] In 1965, the Hague Conference adopted a Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Service Convention), 20 U.S.T. 361, T.I.A.S. No. 6638, to which the Senate gave its advice and consent in 1967. The favorable response to the Service Convention, coupled with the longstanding interest of American lawyers in improving procedures for obtaining evidence abroad, motivated the United States to take the initiative in proposing that an evidence convention be adopted. Statement of Carl F. Salans, Deputy Legal Adviser, Department of State, Convention on Taking of Evidence Abroad, S.Exec.Rep. No. 92-25, p. 3 (1972). The Conference organized a special commission to prepare the draft convention, and the draft was approved without a dissenting vote on October 26, 1968. S.Exec.Doc. A, p. v. It was signed on behalf of the United States in 1970, and ratified by a unanimous vote of the Senate in 1972. [Footnote 14] The Convention's purpose was to establish a system for obtaining evidence located abroad that would be "tolerable" to the state executing the request and would produce evidence "utilizable" in the requesting state. Amram, Explanatory Report on the Convention on the Taking of Evidence Page 482 U. S. 531

Abroad in Civil or Commercial Matters, in S.Exec.Doc. A, p. 11. In his letter of transmittal recommending ratification of the Convention, the President noted that it was "supported by such national legal organizations as the American Bar Association, the Judicial Conference of the United States, the National Conference of Commissions on Uniform State Laws, and by a number of State, local, and specialized bar associations." S.Exec.Doc. A, p. III. There is no evidence of any opposition to the Convention in any of those organizations. The Convention was fairly summarized in the Secretary of State's letter of submittal to the President: "The willingness of the Conference to proceed promptly with work on the evidence convention is perhaps attributable in large measure to the difficulties encountered by courts and lawyers in obtaining evidence abroad from countries with markedly different legal systems. Some countries have insisted on the exclusive use of the complicated, dilatory and expensive system of letters rogatory or letters of request. Other countries have refused adequate judicial assistance because of the absence of a treaty or convention regulating the matter. The substantial increase in litigation with foreign aspects arising, in part, from the unparalleled expansion of international trade and travel in recent decades had intensified the need for an effective international agreement to set up a model system to bridge differences between the common law and civil law approaches to the taking of evidence abroad." "Civil law countries tend to concentrate on commissions rogatoires, while common law countries take testimony on notice, by stipulation and through commissions to consuls or commissioners. Letters of request for judicial assistance from courts abroad in securing needed evidence have been the exception, rather than the rule. The civil law technique results normally in a resume of Page 482 U. S. 532 evidence, prepared by the executing judge and signed by the witness, while the common law technique results normally in a verbatim transcript of the witness's testimony certified by the reporter." "Failure by either the requesting state or the state of execution fully to take into account the differences of approach to the taking of evidence abroad under the two systems and the absence of agreed standards applicable to letters of request have frequently caused difficulties for courts and litigants. To minimize such difficulties in the future, the enclosed convention, which consists of a preamble and forty-two articles, is designed to:" "1. Make the employment of letters of request a principal means of obtaining evidence abroad;" "2. Improve the means of securing evidence abroad by increasing the powers of consuls and by introducing in the civil law world, on a limited basis, the concept of the commissioner;" "3. Provide means for securing evidence in the form needed by the court where the action is pending; and" "4. Preserve all more favorable and less restrictive practices arising from internal law, internal rules of procedure and bilateral or multilateral conventions." "What the convention does is to provide a set of minimum standards with which contracting states agree to comply. Further, through articles 27, 28 and 32, it provides a flexible framework within which any future liberalizing changes in

policy and tradition in any country with respect to international judicial cooperation may be translated into effective change in international procedures. At the same time, it recognizes and preserves procedures of every country which now or hereafter may provide international cooperation in the taking of evidence on more liberal and less restrictive bases, whether this is effected by supplementary agreements or by municipal law and practice." Id. p. VI. Page 482 U. S. 533 III In arguing their entitlement to a protective order, petitioners correctly assert that both the discovery rules set forth in the Federal Rules of Civil Procedure and the Hague Convention are the law of the United States. Brief for Petitioners 31. This observation, however, does not dispose of the question before us; we must analyze the interaction between these two bodies of federal law. Initially, we note that at least four different interpretations of the relationship between the federal discovery rules and the Hague Convention are possible. Two of these interpretations assume that the Hague Convention, by its terms, dictates the extent to which it supplants normal discovery rules. First, the Hague Convention might be read as requiring its use to the exclusion of any other discovery procedures whenever evidence located abroad is sought for use in an American court. Second, the Hague Convention might be interpreted to require first, but not exclusive, use of its procedures. Two other interpretations assume that international comity, rather than the obligations created by the treaty, should guide judicial resort to the Hague Convention. Third, then, the Convention might be viewed as establishing a supplemental set of discovery procedures, strictly optional under treaty law, to which concerns of comity nevertheless require first resort by American courts in all cases. Fourth, the treaty may be viewed as an undertaking among sovereigns to facilitate discovery to which an American court should resort when it deems that course of action appropriate, after considering the situations of the parties before it as well as the interests of the concerned foreign state. In interpreting an international treaty, we are mindful that it is "in the nature of a contract between nations," Trans World Airlines, Inc. v. Franklin Mint Corp., 466 U. S. 243, 466 U. S. 253 (1984), to which "[g]eneral rules of construction apply." Id. at 466 U. S. 262. See Ware v. Hilton, 3 Dall.199, 3 U. S. 240241(1796) Page 482 U. S. 534 (opinion of Chase, J.). We therefore begin "with the text of the treaty and the context in which the written words are used." Air France v. Saks, 470 U. S. 392, 470 U. S. 397 (1985). The treaty's history, "'the negotiations, and the practical construction adopted by the parties'" may also be relevant. Id. at 470 U. S. 396 (quoting Choctaw Nation of Indians v. United States, 318 U. S. 423, 318 U. S. 431-432 (1943)). We reject the first two of the possible interpretations as inconsistent with the language and negotiating history of the Hague Convention. The preamble of the Convention specifies its purpose "to facilitate the transmission and execution of Letters of Request" and to "improve mutual judicial cooperation in civil or commercial matters." 23 U.S.T. at 2557, T.I.A.S. No. 7444. The preamble does not speak in mandatory terms which would purport to describe the procedures for all permissible transnational discovery and exclude all other existing practices. [Footnote 15] The text of the Evidence Convention itself does not modify the law of any contracting state, require any

contracting state to use the Convention procedures, either in requesting evidence or in responding to such requests, or compel any contracting state to change its own evidencegathering procedures. [Footnote 16] Page 482 U. S. 535 The Convention contains three chapters. Chapter I, entitled "Letters of Requests," and chapter II, entitled "Taking of Evidence by Diplomatic Officers, Consular Agents and Commissioners," both use permissive, rather than mandatory, language. Thus, Article 1 provides that a judicial authority in one contracting state "may" forward a letter of request to the competent authority in another contracting state for the purpose of obtaining evidence. [Footnote 17] Similarly, Articles 15, 16, and 17 provide that diplomatic officers, consular agents, and commissioners "may . . . without compulsion," take evidence under certain conditions. [Footnote 18] The absence of any command that a contracting state must use Convention procedures when they are not needed is conspicuous. [Footnote 19] Page 482 U. S. 536 Two of the Articles in chapter III, entitled "General Clauses," buttress our conclusion that the Convention was intended as a permissive supplement, not a preemptive replacement, for other means of obtaining evidence located abroad. [Footnote 20] Article 23 expressly authorizes a contracting state to declare that it will not execute any letter of request in aid of pretrial discovery of documents in a common law country. [Footnote 21] Surely, if the Convention had been intended to replace completely the broad discovery powers that the common law courts in the United States previously exercised over foreign litigants subject to their jurisdiction, it would have been most anomalous for the common law contracting parties to agree to Page 482 U. S. 537 Article 23, which enables a contracting party to revoke its consent to the treaty's procedures for pretrial discovery. [Footnote 22] In the absence of explicit textual support, we are unable to accept the hypothesis that the common law contracting states abjured recourse to all preexisting discovery procedures at the same time that they accepted the possibility that a contracting party could unilaterally abrogate even the Convention's procedures. [Footnote 23] Moreover, Article 27 plainly states that Page 482 U. S. 538 the Convention does not prevent a contracting state from using more liberal methods of rendering evidence than those authorized by the Convention. [Footnote 24] Thus, the text of the Evidence Convention, as well as the history of its proposal and ratification by the United States, unambiguously supports the conclusion that it was intended to establish optional procedures that would facilitate the taking of evidence abroad. See Amram, The Proposed Convention on the Taking of Evidence Abroad, 55 A.B.A.J. 651, 655 (1969); President's Letter of Transmittal, Sen.Exec.Doc. A, p. III. Page 482 U. S. 539 An interpretation of the Hague Convention as the exclusive means for obtaining evidence located abroad would effectively subject every American court hearing a case involving a national of a contracting state to the internal laws of that state. Interrogatories and document requests are staples of international commercial litigation, no less than of other suits, yet a rule of exclusivity would subordinate the court's supervision of even the most routine of these pretrial

proceedings to the actions or, equally, to the inactions of foreign judicial authorities. As the Court of Appeals for the Fifth Circuit observed in In re Anschuetz & Co., GmbH, 754 F.2d 602, 612 (1985), cert. pending, No. 85-98: "It seems patently obvious that, if the Convention were interpreted as preempting interrogatories and document requests, the Convention would really be much more than an agreement on taking evidence abroad. Instead, the Convention would amount to a major regulation of the overall conduct of litigation between nationals of different signatory states, raising a significant possibility of very serious interference with the jurisdiction of United States courts." "* * * *" "While it is conceivable that the United States could enter into a treaty giving other signatories control over litigation instituted and pursued in American courts, a treaty intended to bring about such a curtailment of the rights given to all litigants by the federal rules would surely state its intention clearly and precisely identify crucial terms." The Hague Convention, however, contains no such plain statement of a preemptive intent. We conclude accordingly that the Hague Convention did not deprive the District Court of the jurisdiction it otherwise possessed to order a foreign Page 482 U. S. 540 national party before it to produce evidence physically located within a signatory nation. [Footnote 25] IV While the Hague Convention does not divest the District Court of jurisdiction to order discovery under the Federal Rules of Civil Procedure, the optional character of the Convention procedures sheds light on one aspect of the Court of Appeals' opinion that we consider erroneous. That court concluded that the Convention simply "does not apply" to discovery sought from a foreign litigant that is subject to the jurisdiction of an American court. 782 F.2d at 124. Plaintiffs argue that this conclusion is supported by two considerations. First, the Federal Rules of Civil Procedure provide Page 482 U. S. 541 ample means for obtaining discovery from parties who are subject to the court's jurisdiction, while before the Convention was ratified it was often extremely difficult, if not impossible, to obtain evidence from nonparty witnesses abroad. Plaintiffs contend that it is appropriate to construe the Convention as applying only in the area in which improvement was badly needed. Second, when a litigant is subject to the jurisdiction of the district court, arguably the evidence it is required to produce is not "abroad" within the meaning of the Convention, even though it is in fact located in a foreign country at the time of the discovery request and even though it will have to be gathered or otherwise prepared abroad. See In re Anschuetz & Co., GmbH, 754 F.2d at 611; In re Messerschmitt Bolkow Blohm GmbH, 757 F.2d 729, 731 (CA5 1985), cert. vacated, 476 U.S. 1168 (1986); Daimler-Benz Aktiengesellschaft v. United States District Court, 805 F.2d 340, 341-342 (CA10 1986). Nevertheless, the text of the Convention draws no distinction between evidence obtained from third parties and that obtained from the litigants themselves; nor does it purport to draw any sharp line between evidence that is "abroad" and evidence that is within the control of a party subject to the jurisdiction of the requesting court. Thus, it appears clear to us that the optional Convention procedures are available whenever they will facilitate the gathering of evidence by the means authorized in

the Convention. Although these procedures are not mandatory, the Hague Convention does "apply" to the production of evidence in a litigant's possession in the sense that it is one method of seeking evidence that a court may elect to employ. See Briefs of Amici Curiae for the United States and the SEC 9-10, the Federal Republic of Germany 5-6, the Republic of France 8-12, and the Government of the United Kingdom and Northern Ireland 8. V Petitioners contend that even if the Hague Convention's procedures are not mandatory, this Court should adopt a rule Page 482 U. S. 542 requiring that American litigants first resort to those procedures before initiating any discovery pursuant to the normal methods of the Federal Rules of Civil Procedure. See, e.g., Laker Airways, Ltd. v. Pan American World Airways, 103 F.R.D. 42 (DC 1984); Philadelphia Gear Corp. v. American Pfauter Corp., 100 F.R.D. 58 (ED Pa.1983). The Court of Appeals rejected this argument because it was convinced that an American court's order ultimately requiring discovery that a foreign court had refused under Convention procedures would constitute "the greatest insult" to the sovereignty of that tribunal. 782 F.2d at 125-126. We disagree with the Court of Appeals' view. It is well known that the scope of American discovery is often significantly broader than is permitted in other jurisdictions, and we are satisfied that foreign tribunals will recognize that the final decision on the evidence to be used in litigation conducted in American courts must be made by those courts. We therefore do not believe that an American court should refuse to make use of Convention procedures because of a concern that it may ultimately find it necessary to order the production of evidence that a foreign tribunal permitted a party to withhold. Nevertheless, we cannot accept petitioners' invitation to announce a new rule of law that would require first resort to Convention procedures whenever discovery is sought from a foreign litigant. Assuming, without deciding, that we have the lawmaking power to do so, we are convinced that such a general rule would be unwise. In many situations, the Letter of Request procedure authorized by the Convention would be unduly time-consuming and expensive, as well as less certain to produce needed evidence than direct use of the Federal Rules. [Footnote 26] A rule of first resort in all cases would Page 482 U. S. 543 therefore be inconsistent with the overriding interest in the "just, speedy, and inexpensive determination" of litigation in our courts. See Fed.Rule Civ.Proc. 1. Petitioners argue that a rule of first resort is necessary to accord respect to the sovereignty of states in which evidence is located. It is true that the process of obtaining evidence in a civil law jurisdiction is normally conducted by a judicial officer, rather than by private attorneys. Petitioners contend that, if performed on French soil, for example, by an unauthorized person, such evidence-gathering might violate the "judicial sovereignty" of the host nation. Because it is only through the Convention that civil law nations have given their consent to evidence-gathering activities within their borders, petitioners argue, we have a duty to employ those procedures whenever they are available. Brief for Petitioners 27-28. We find that argument unpersuasive. If such a duty were to be inferred from the adoption of the Convention itself, we believe it would have been described in the text of that document. Moreover, the concept of international comity [Footnote 27] requires in this context a more particularized analysis of Page 482 U. S. 544

the respective interests of the foreign nation and the requesting nation than petitioners' proposed general rule would generate. [Footnote 28] We therefore decline to hold, as a blanket matter, that comity requires resort to Hague Evidence Convention procedures without prior scrutiny in each case of the particular facts, sovereign interests, and likelihood that resort to those procedures will prove effective. [Footnote 29] Page 482 U. S. 545 Some discovery procedures are much more "intrusive" than others. In this case, for example, an interrogatory asking petitioners to identify the pilots who flew flight tests in the Rallye before it was certified for flight by the Federal Aviation Administration, or a request to admit that petitioners authorized certain advertising in a particular magazine, is certainly less intrusive than a request to produce all of the "design specifications, line drawings and engineering plans and all engineering change orders and plans and all drawings concerning the leading edge slats for the Rallye type aircraft manufactured by the Defendants." App. 29. Even if a court might be persuaded that a particular document request was too burdensome or too "intrusive" to be granted in full, with or without an appropriate protective order, it might well refuse to insist upon the use of Convention procedures Page 482 U. S. 546 before requiring responses to simple interrogatories or requests for admissions. The exact line between reasonableness and unreasonableness in each case must be drawn by the trial court, based on its knowledge of the case and of the claims and interests of the parties and the governments whose statutes and policies they invoke. American courts, in supervising pretrial proceedings, should exercise special vigilance to protect foreign litigants from the danger that unnecessary, or unduly burdensome, discovery may place them in a disadvantageous position. Judicial supervision of discovery should always seek to minimize its costs and inconvenience, and to prevent improper uses of discovery requests. When it is necessary to seek evidence abroad, however, the district court must supervise pretrial proceedings particularly closely to prevent discovery abuses. For example, the additional cost of transportation of documents or witnesses to or from foreign locations may increase the danger that discovery may be sought for the improper purpose of motivating settlement, rather than finding relevant and probative evidence. Objections to "abusive" discovery that foreign litigants advance should therefore receive the most careful consideration. In addition, we have long recognized the demands of comity in suits involving foreign states, either as parties or as sovereigns with a coordinate interest in the litigation. See Hilton v. Guyot, 159 U. S. 113 (1895). American courts should therefore take care to demonstrate due respect for any special problem confronted by the foreign litigant on account of its nationality or the location of its operations, and for any sovereign interest expressed by a foreign state. We do not articulate specific rules to guide this delicate task of adjudication. [Footnote 30] Page 482 U. S. 547 VI In the case before us, the Magistrate and the Court of Appeals correctly refused to grant the broad protective order that petitioners requested. The Court of Appeals erred, however, in stating that the Evidence Convention does not apply to the pending discovery demands. This holding may be read as

indicating that the Convention procedures are not even an option that is open to the District Court. It must be recalled, however, that the Convention's specification of duties in executing states creates corresponding rights in requesting states; holding that the Convention does not apply in this situation would deprive domestic litigants of access to evidence through treaty procedures to which the contracting states have assented. Moreover, such a rule would deny the foreign litigant a full and fair opportunity to demonstrate appropriate reasons for employing Convention procedures in the first instance, for some aspects of the discovery process. Accordingly, the judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion. It is so ordered. G.R. No. 158857 November 11, 2005 PFEGER R. DULAY, GODOFREDO S. DULAY, SR., ROWENA R. DULAY, ENDZELIUS R. DULAY, GODOFREDO R. DULAY, JR., JIMPSEY R. DULAY, SHERYL R. DULAY, FLORDELIZA R. DULAY, BENITA R. DULAY, and MARICOR L. DULAY, represented by their Attorney-In-Fact, PFEGER R. DULAY, Petitioners, vs. RODRIGO S. DULAY, Respondent. DECISION Tinga, J.: The instant petition seeks the review of the Decision dated 30 2 May 2002 and Resolution dated 28 May 2003 of the Court of Appeals in CA-G.R. SP No. 66993 entitled "Pfeger R. Dulay v. Hon. Alicia B. Gonzales-Decano, etc. and Rodrigo S. Dulay." In a complaint for recovery of his bank deposit with prayer for a writ of attachment and damages, Rodrigo S. Dulay, a naturalized American citizen, alleged that upon his petition sometime in October of 1996, his brother Godofredo S. Dulay, Sr. and nephew Pfeger R. Dulay immigrated to the United States of America. The two stayed with him in his house at Claremont, Massachusetts. Godofredo, however, decided to return to the Philippines because he could not endure the weather. Pfeger stayed behind to take care of Rodrigo. Having nurtured affection, love and trust for his nephew Pfeger, Rodrigo opened a trust account with the Bank of Boston on 27 January 1997 with a deposit of Two Hundred Thirty Thousand U.S. Dollars ($230,000.00), naming Pfeger as trustee thereof. Five months later, Pfeger left Rodrigos house allegedly to j oin his girlfriend in California. Rodrigo learned only later that Pfeger actually went back to the Philippines. Pfeger returned to the United States in November of 1997, but after a brief stay returned again to the Philippines where he went on a spending binge. Upon knowing this, Rodrigo verified the status of his account with the Bank of Boston, and to his shock and dismay discovered that Pfeger had already emptied the account. Rodrigo additionally claimed that Pfeger used the money from said account to buy several vehicles, loan money to several people, open bank accounts for his siblings, and buy a house and lot and jewelry for his wife. Whatever was left of the account was allegedly transferred to Pfegers father, 4 Godofredo. Denying the accusations, respondent claimed that the money deposited in the name of Pfeger was his own money and not Rodrigos. They assailed the admissibility of the Statement of Account and the supporting Affidavit attached to the Complaint. 5 For his part, Pfeger asserted that he spent his own money.
3 1

Rodrigo filed a petition for the issuance of letters rogatory in order to get the depositions of several witnesses residing 6 abroad. Petitioners, on the other hand, moved to be allowed to file cross-examination questions to respondents written 7 interrogatories, which the trial court granted. In an order dated 1 December 1999, the trial court stated: These are petitions for letters Rogatory dated November 11, 1999 and November 22, 1999 respectively praying that this Court order the Clerk of Court to issue any order requiring the Clerk of Court in Boston Ma., USA to conduct the examination of the following parties: 1. Mr. Rodrigo S. Dulay of 38 Claremont St. Malden, Ma., USA, and 2. Manager or authorized representative of the Bank of Boston, Ma., USA and for the above-named persons to answer the attached questions (direct and cross) attached to each petition, and for the Clerk of Court of Boston to forward the same questions and answers as soon as the same were already properly answered. SO ORDERED.
8

which brushed aside the letters rogatory issued by the trial court. Putting premium on merit rather than on technicality, the Court of Appeals held that "laxity in the application of the procedure is not tantamount to laxity in the rendition of justice when equitable 19 circumstances exist to warrant the same." Petitioners filed a motion for reconsideration to no avail as it was denied by the 20 Court of Appeals. In the present petition for review, petitioners argue that the Court of Appeals erred when it refused to dismiss the case at the trial court level despite respondents failure to prosecute his case with reasonable diligence. According to petitioners, the major delays in the litigation of the case were caused by respondents failure to send on time the needed documents to 21 the trial court. In addition, petitioners allege that contrary to the ruling of the Court of Appeals the documents submitted by respondent were not taken in substantial compliance with the directive of the trial court itself but in violation of Sections 11, 22 12, and 14, Rule 23 of the Rules of Court. The Court is not persuaded. Deposition is chiefly a mode of discovery, the primary function of which is to supplement the pleadings for the purpose of disclosing the real points of dispute between the parties and affording an adequate factual basis during the preparation for trial. It may be taken with leave of court after jurisdiction has been obtained over any defendant or over property that is the subject of the action; or, without such leave, after an answer has been served. A partys right to avail itself of this procedure is "well-nigh unrestricted" if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made 23 in good faith and within the bounds of the law. Nevertheless, the use of discovery procedures is directed to the sound 24 discretion of the trial courts, which, in general, are given wide latitude in granting motions for discovery in order to enable the parties to prepare for trial or otherwise to settle the controversy 25 prior thereto. While the letters rogatory issued by the trial court specifically directed the Clerk of Court of Boston to take the depositions needed in the case, it became impossible to follow the directive since the Clerk of Court of Boston merely brushed it aside and refused to cooperate. Respondent cannot be faulted for the resultant delay brought about by this circumstance. Neither can the trial court be faulted for allowing the admission of the depositions taken not in strict adherence to its original directive, nor for directing the petitioner to have the depositions authenticated. Obviously, it was not within the trial courts power, much less the respondents to force the Clerk of Court of Boston to have the deposition taken before it. It would be illogical and unreasonable to expect respondent to comply with the letters rogatory without the cooperation of the very institution or personality named in the letters rogatory and requested to examine the witnesses. After all, while a court had the authority to entertain a discovery request, it is not 26 required to provide judicial assistance thereto. This reality was recognized by the trial court when it ordered respondent to have the questioned depositions authenticated by the Philippine consulate. Indeed, refusing the allowance of the depositions in issue would be going directly against the purpose of taking the depositions in the first place, that is, the disclosure of facts which are relevant to the proceedings in court. More importantly, the Court finds that respondent substantially complied with the requirements for depositions taken in foreign countries.

Meanwhile, petitioners filed a motion to dismiss the complaint 9 on the ground of failure to prosecute. This was however denied by the trial court, which instead allowed Rodrigo to 10 complete his depositions. As it turned out, however, the depositions could not be taken before the Clerk of Court of Massachusetts, but were taken instead before a notary public in New York. On 2 February 2000, Rodrigo submitted to the trial court his answers to the interrogatories and cross interrogatories of petitioners given before a notary public in the United States. Thereafter, petitioners filed their Motion Reiterating Motion to 11 Dismiss Dated July 10, 2000, which the trial court denied in 12 its 28 September 2000 Order. In the same Order, the trial court directed respondent to have the written and cross interrogatories taken by the notary public authenticated by the consulate. Thus, respondent filed a motion to withdraw the answers so that he could have them authenticated by a 13 Philippine consul in the United States. On 10 January 2001, petitioners filed an Omnibus Motion, praying that the written interrogatories be declared inadmissible and reiterating their prayer for the dismissal of the complaint. The lower court denied the motion on 20 February 2001, at the same time directing the archival of the case while 15 waiting for the documents from the United States. According to the trial court, the dismissal of the case is improper considering that Rodrigo had already commenced presenting his evidence and that it is mandated to hear the evidence on the counterclaims of the petitioners. Anent the objection to the admission of the answers to the written interrogatories, the trial court stated that the deposition taken before the Notary Public from New York, whose authority was duly certified by the Philippine Consul in New York, substantially complied with the 16 Rules of Court. Thus, on 31 August 2001, the trial court ordered the admission of the assailed documents. Petitioners moved for the reconsideration of the order but the motion was 17 denied. Imputing grave abuse of discretion on the part of the trial judge, petitioners filed before the Court of Appeals an original action for certiorari on 7 October 2001. The appellate court dismissed the petition, finding that the questioned depositions were accomplished in substantial compliance with the Rules of 18 Court. According to the Court of Appeals, Rodrigo could not be faulted for the incidental delays in the proceedings, which were after all caused by the refusal of the American tribunal
14

In our jurisdiction, depositions in foreign countries may be taken: (a) on notice before a secretary of embassy or legation, consul general, consul, vice consul, or consular agent of the Republic of the Philippines; (b) before such person or officer as may be appointed by commission or under letters rogatory; or (c) before any person authorized to administer oaths as 27 stipulated in writing by the parties. While letters rogatory are requests to foreign tribunals, commissions are directives to 28 officials of the issuing jurisdiction. Generally, a commission is an instrument issued by a court of justice, or other competent tribunal, directed to a magistrate by his official designation or to an individual by name, authorizing him to take the depositions of the witnesses named therein, while a letter rogatory is a request to a foreign court to give its aid, backed by its power, to secure desired information. Commissions are taken in accordance with the rules laid down by the court issuing the commission, while in letters rogatory, the methods of 30 procedure are under the control of the foreign tribunal. Leave of court is not required when the deposition is to be taken before a secretary of embassy or legation, consul general, consul, vice-consul or consular agent of the Republic of the Philippines and the defendants answer has already 31 been served. However, if the deposition is to be taken in a foreign country where the Philippines has no secretary of embassy or legation, consul general, consul, vice-consul or consular agent, it may be taken only before such person or officer as may be appointed by commission or under letters 32 rogatory. In the instant case, the authentication made by the consul was a ratification of the authority of the notary public who took the questioned depositions. The deposition was, in effect, obtained through a commission, and no longer through letters rogatory. It must be noted that this move was even sanctioned by the 33 trial court by virtue of its Order dated 28 September 2000. With the ratification of the depositions in issue, there is no more impediment to their admissibility. Besides, the allowance of the deposition can not be said to have caused any prejudice to the adverse party. They were given the opportunity to cross-examine the witnesses through their cross-interrogatories, which were in turn answered by the deponents. Save for the complaint of delay in the proceedings, petitioners were unable to point out any injury they suffered as a result of the trial courts action. The ends of justice are reached not only through the speedy disposal of cases, but more importantly, through a meticulous and comprehensive evaluation of the merits of the case. The parties right to be given full opportunity to ventilate their cases should not be hindered by a strict adherence to technicalities. After all, as this Court has so often enunciated, rules of procedure are not inflexible tools designed to hinder or delay, 34 but to facilitate and promote the administration of justice. A strict and rigid application of rules, resulting in technicalities that tend to frustrate rather than promote substantial justice, 35 must be avoided. WHEREFORE, premises considered, the petition is DENIED. Costs against petitioners. SO ORDERED.
29

Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court, which arose out of two civil cases that were filed in different courts but whose factual background and issues are closely intertwined. The petitions in G.R. Nos. 125078 and 125598 both assail 3 the Order dated May 20, 1996 of the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil Case No. 5617. The said Order decreed the dismissal of the case in view of the perceived lack of jurisdiction of the RTC over the subject matter of the complaint. The petition in G.R. No. 125598 also 4 5 challenges the Orders dated June 4, 1996 and July 9, 1996, which held that the RTC of General Santos City no longer had jurisdiction to proceed with Civil Case No. 5617. On the other hand, the petitions in G.R. Nos. 126654, 7 8 9 127856, and 128398 seek the reversal of the Order dated October 1, 1996 of the RTC of Davao City, Branch 16, in Civil Case No. 24,251-96, which also dismissed the case on the ground of lack of jurisdiction.
6 1 2

G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were 10 consolidated in the Resolutions dated February 10, 1997, 11 12 April 28, 1997 and March 10, 1999. The factual antecedents of the petitions are as follows: Proceedings before the Texas Courts Beginning 1993, a number of personal injury suits were filed in different Texas state courts by citizens of twelve foreign countries, including the Philippines. The thousands of plaintiffs sought damages for injuries they allegedly sustained from their exposure to dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while working on farms in 23 foreign countries. The cases were eventually transferred to, and consolidated in, the Federal District Court for the Southern District of Texas, Houston Division. The cases therein that involved plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action No. H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action No. H95-1356. The defendants in the consolidated cases prayed for the dismissal of all the actions under the doctrine of forum non conveniens. In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally granted the defendants motion to dismiss. Pertinently, the court ordered that: Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days after the entry of this Memorandum and Order provided that defendants and third- and fourth-party defendants have: (1) participated in expedited discovery in the United States xxx; (2) either waived or accepted service of process and waived any other jurisdictional defense within 40 days after the entry of this Memorandum and Order in any action commenced by a plaintiff in these actions in his home country or the country in which his injury occurred. Any plaintiff desiring to bring such an action will do so within 30 days after the entry of this Memorandum and Order; (3) waived within 40 days after the entry of this Memorandum and Order any limitations-based defense that has matured since the commencement of these actions in the courts of Texas; (4) stipulated within 40 days after the entry of this Memorandum and Order that any discovery conducted during the pendency of these actions may be used in any foreign

Navida v. Dizon Jr LEONARDO-DE CASTRO, J.:

proceeding to the same extent as if it had been conducted in proceedings initiated there; and (5) submitted within 40 days after the entry of this Memorandum and Order an agreement binding them to satisfy any final judgment rendered in favor of plaintiffs by a foreign court. xxxx Notwithstanding the dismissals that may result from this Memorandum and Order, in the event that the highest court of any foreign country finally affirms the dismissal for lack of jurisdiction of an action commenced by a plaintiff in these actions in his home country or the country in which he was injured, that plaintiff may return to this court and, upon proper motion, the court will resume jurisdiction over the action as if the case had never been dismissed for [forum non 13 conveniens]. Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078 and 125598 In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA, et al.) 14 filed a Joint Complaint in the RTC of General Santos City on August 10, 1995. The case was docketed as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co. (SHELL); Dow Chemical Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter collectively referred to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are hereinafter collectively referred to as defendant companies.) Navida, et al., prayed for the payment of damages in view of the illnesses and injuries to the reproductive systems which they allegedly suffered because of their exposure to DBCP. They claimed, among others, that they were exposed to this chemical during the early 1970s up to the early 1980s when they used the same in the banana plantations where they worked at; and/or when they resided within the agricultural area where such chemical was used. Navida, et al., claimed that their illnesses and injuries were due to the fault or negligence of each of the defendant companies in that they produced, sold and/or otherwise put into the stream of commerce DBCP-containing products. According to NAVIDA, et al., they were allowed to be exposed to the said products, which the defendant companies knew, or ought to have known, were highly injurious to the formers health and well -being. Instead of answering the complaint, most of the defendant companies respectively filed their Motions for Bill of 15 Particulars. During the pendency of the motions, on March 16 13, 1996, NAVIDA, et al., filed an Amended Joint Complaint, excluding Dead Sea Bromine Co., Ltd., Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants. Again, the remaining defendant companies filed their various 17 Motions for Bill of Particulars. On May 15, 1996, DOW filed 18 an Answer with Counterclaim. On May 20, 1996, without resolving the motions filed by the parties, the RTC of General Santos City issued an Order dismissing the complaint. First, the trial court determined that it did not have jurisdiction to hear the case, to wit:

THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT SHOULD BE DISMISSED FOR LACK OF JURISDICTION xxxx The substance of the cause of action as stated in the complaint against the defendant foreign companies cites activity on their part which took place abroad and had occurred outside and beyond the territorial domain of the Philippines. These acts of defendants cited in the complaint included the manufacture of pesticides, their packaging in containers, their distribution through sale or other disposition, resulting in their becoming part of the stream of commerce. Accordingly, the subject matter stated in the complaint and which is uniquely particular to the present case, consisted of activity or course of conduct engaged in by foreign defendants outside Philippine territory, hence, outside and beyond the jurisdiction of Philippine Courts, including the present Regional 19 Trial Court. Second, the RTC of General Santos City declared that the tort alleged by Navida, et al., in their complaint is a tort category that is not recognized in Philippine laws. Said the trial court: THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST DEFENDANT FOREIGN COMPANIES IS NOT WITHIN THE SUBJECT MATTER JURISDICTION OF THE REGIONAL TRIAL COURT, BECAUSE IT IS NOT A TORT CATEGORY WITHIN THE PURVIEW OF THE PHILIPPINE LAW The specific tort asserted against defendant foreign companies in the present complaint is product liability tort. When the averments in the present complaint are examined in terms of the particular categories of tort recognized in the Philippine Civil Code, it becomes stark clear that such averments describe and identify the category of specific tort known as product liability tort. This is necessarily so, because it is the product manufactured by defendant foreign companies, which is asserted to be the proximate cause of the damages sustained by the plaintiff workers, and the liability of the defendant foreign companies, is premised on being the manufacturer of the pesticides. It is clear, therefore, that the Regional Trial Court has jurisdiction over the present case, if and only if the Civil Code of the Philippines, or a suppletory special law prescribes a product liability tort, inclusive of and comprehending the 20 specific tort described in the complaint of the plaintiff workers. Third, the RTC of General Santos City adjudged that Navida, et al., were coerced into submitting their case to the Philippine courts, viz: FILING OF CASES IN THE PHILIPPINES - COERCED AND ANOMALOUS The Court views that the plaintiffs did not freely choose to file the instant action, but rather were coerced to do so, merely to comply with the U.S. District Courts Order dated July 11, 1995, and in order to keep open to the plaintiffs the opportunity 21 to return to the U.S. District Court. Fourth, the trial court ascribed little significance to the voluntary appearance of the defendant companies therein, thus: THE DEFENDANTS SUBMISSION TO JURISDICTION IS CONDITIONAL AS IT IS ILLUSORY Defendants have appointed their agents authorized to accept service of summons/processes in the Philippines pursuant to the agreement in the U.S. court that defendants will voluntarily submit to the jurisdiction of this court. While it is true that this

court acquires jurisdiction over persons of the defendants through their voluntary appearance, it appears that such voluntary appearance of the defendants in this case is conditional. Thus in the "Defendants Amended Agreement Regarding Conditions of Dismissal for Forum Non Conveniens" (Annex to the Complaint) filed with the U.S. District Court, defendants declared that "(t)he authority of each designated representative to accept service of process will become effective upon final dismissal of these actions by the Court". The decision of the U.S. District Court dismissing the case is not yet final and executory since both the plaintiffs and defendants appealed therefrom (par. 3(h), 3(i), Amended Complaint). Consequently, since the authority of the agent of the defendants in the Philippines is conditioned on the final adjudication of the case pending with the U.S. courts, the acquisition of jurisdiction by this court over the persons of the defendants is also conditional. x x x. The appointment of agents by the defendants, being subject to a suspensive condition, thus produces no legal effect and is 22 ineffective at the moment. Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the case in the Philippine courts violated the rules on forum shopping and litis pendencia. The trial court expounded: THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING This court frowns upon the fact that the parties herein are both vigorously pursuing their appeal of the decision of the U.S. District court dismissing the case filed thereat. To allow the parties to litigate in this court when they are actively pursuing the same cases in another forum, violates the rule on forum shopping so abhorred in this jurisdiction. x x x. xxxx THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN JURISDICTION Moreover, the filing of the case in the U.S. courts divested this court of its own jurisdiction. This court takes note that the U.S. District Court did not decline jurisdiction over the cause of action. The case was dismissed on the ground of forum non conveniens, which is really a matter of venue. By taking cognizance of the case, the U.S. District Court has, in essence, concurrent jurisdiction with this court over the subject matter of this case. It is settled that initial acquisition of jurisdiction divests another of its own jurisdiction. x x x. xxxx THIS CASE IS BARRED BY THE RULE OF "LITIS PENDENCIA" Furthermore, the case filed in the U.S. court involves the same parties, same rights and interests, as in this case. There exists litis pendencia since there are two cases involving the same parties and interests. The court would like to emphasize that in accordance with the rule on litis pendencia x x x; the subsequent case must be dismissed. Applying the foregoing [precept] to the case-at-bar, this court concludes that since the case between the parties in the U.S. is still pending, then this 23 case is barred by the rule on "litis pendencia." In fine, the trial court held that: It behooves this Court, then to dismiss this case. For to continue with these proceedings, would be violative of the constitutional provision on the Bill of Rights guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III, Constitution). The court has no other choice. To insist on

further proceedings with this case, as it is now presented, might accord this court a charming appearance. But the same insistence would actually thwart the very ends of justice which it seeks to achieve. This evaluation and action is made not on account of but rather with due consideration to the fact that the dismissal of this case does not necessarily deprive the parties especially the plaintiffs of their possible remedies. The court is cognizant that the Federal Court may resume proceedings of that earlier case between the herein parties involving the same acts or omissions as in this case. WHEREFORE, in view of the foregoing considerations, this 24 case is now considered DISMISSED. On June 4, 1996, the RTC of General Santos City likewise 25 issued an Order, dismissing DOWs Answer with Counterclaim. CHIQUITA, DEL MONTE and SHELL each filed a motion for 26 reconsideration of the RTC Order dated May 20, 1996, while 27 DOW filed a motion for reconsideration of the RTC Order dated June 4, 1996. Subsequently, DOW and OCCIDENTAL 28 also filed a Joint Motion for Reconsideration of the RTC Order dated May 20, 1996. In an Order dated July 9, 1996, the RTC of General Santos City declared that it had already lost its jurisdiction over the case as it took into consideration the Manifestation of the counsel of NAVIDA, et al., which stated that the latter had already filed a petition for review on certiorari before this Court. CHIQUITA and SHELL filed their motions for reconsideration of the above order.
30 29

On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to assail the RTC Order dated May 20, 1996, which was docketed as G.R. No. 125078. The RTC of General Santos City then issued an Order dated August 14, 1996, which merely noted the incidents still pending in Civil Case No. 5617 and reiterated that it no longer had any jurisdiction over the case. On August 30, 1996, DOW and OCCIDENTAL filed their 32 Petition for Review on Certiorari, challenging the orders of the RTC of General Santos City dated May 20, 1996, June 4, 1996 and July 9, 1996. Their petition was docketed as G.R. No. 125598. In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City erred in ruling that it has no jurisdiction over the subject matter of the case as well as the persons of the defendant companies. In a Resolution dated October 7, 1996, this Court resolved to consolidate G.R. No. 125598 with G.R. No. 125078. CHIQUITA filed a Petition for Review on Certiorari, which sought the reversal of the RTC Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was docketed 35 as G.R. No. 126018. In a Resolution dated November 13, 1996, the Court dismissed the aforesaid petition for failure of CHIQUITA to show that the RTC committed grave abuse of 36 discretion. CHIQUITA filed a Motion for Reconsideration, but 37 the same was denied through a Resolution dated January 27, 1997. Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos. 126654, 127856, and 128398 Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155 plaintiffs
34 33 31

from Davao City. This case was docketed as Civil Case No. 24,251-96. These plaintiffs (the petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et al.) amended their Joint38 Complaint on May 21, 1996. Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in the banana plantation and/or as residents near the said plantation, they were made to use and/or were exposed to nematocides, which contained the chemical DBCP. According to ABELLA, et al., such exposure resulted in "serious and permanent injuries to their health, including, but not limited to, sterility and severe injuries to their 39 reproductive capacities." ABELLA, et al., claimed that the defendant companies manufactured, produced, sold, distributed, used, and/or made available in commerce, DBCP without warning the users of its hazardous effects on health, and without providing instructions on its proper use and application, which the defendant companies knew or ought to have known, had they exercised ordinary care and prudence. Except for DOW, the other defendant companies filed their respective motions for bill of particulars to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed their respective Answers dated May 17, 1996 and June 24, 1996. The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated October 1, 1996, which, in its entirety, reads: Upon a thorough review of the Complaint and Amended Complaint For: Damages filed by the plaintiffs against the defendants Shell Oil Company, DOW Chemicals Company, Occidental Chemical Corporation, Standard Fruit Company, Standard Fruit and Steamship, DOLE Food Company, DOLE Fresh Fruit Company, Chiquita Brands, Inc., Chiquita Brands International, Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruits Co., all foreign corporations with Philippine Representatives, the Court, as correctly pointed out by one of the defendants, is convinced that plaintiffs "would have this Honorable Court dismiss the case to pave the way for their getting an affirmance by the Supreme Court" (#10 of Defendants Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Co., Reply to Opposition dated July 22, 1996). Consider these: 1) In the original Joint Complaint, plaintiffs state that: defendants have no properties in the Philippines; they have no agents as well (par. 18); plaintiffs are suing the defendants for tortuous acts committed by these foreign corporations on their respective countries, as plaintiffs, after having elected to sue in the place of defendants residence, are now compelled by a decision of a Texas District Court to file cases under torts in this jurisdiction for causes of actions which occurred abroad (par. 19); a petition was filed by same plaintiffs against same defendants in the Courts of Texas, USA, plaintiffs seeking for payment of damages based on negligence, strict liability, conspiracy and international tort theories (par. 27); upon defendants Motion to Dismiss on Forum non [conveniens], said petition was provisionally dismissed on condition that these cases be filed in the Philippines or before 11 August 1995 (Philippine date; Should the Philippine Courts refuse or deny jurisdiction, the U. S. Courts will reassume jurisdiction.) 11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995, the Federal District Court issued a Memorandum and Order conditionally dismissing several of the consolidated actions including those filed by the Filipino complainants. One of the conditions imposed was for the plaintiffs to file actions in their home countries or the countries in which they were injured x x x. Notwithstanding, the Memorandum and [O]rder further provided that should the highest court of any foreign country affirm the dismissal for lack of jurisdictions over these

actions filed by the plaintiffs in their home countries [or] the countries where they were injured, the said plaintiffs may return to that court and, upon proper motion, the Court will resume jurisdiction as if the case had never been dismissed for forum non conveniens. The Court however is constrained to dismiss the case at bar not solely on the basis of the above but because it shares the opinion of legal experts given in the interview made by the Inquirer in its Special report "Pesticide Cause Mass Sterility," to wit: 1. Former Justice Secretary Demetrio Demetria in a May 1995 opinion said: The Philippines should be an inconvenient forum to file this kind of damage suit against foreign companies since the causes of action alleged in the petition do not exist under Philippine laws. There has been no decided case in Philippine Jurisprudence awarding to those adversely affected by DBCP. This means there is no available evidence which will prove and disprove the relation between sterility and DBCP. 2. Retired Supreme Court Justice Abraham Sarmiento opined that while a class suit is allowed in the Philippines the device has been employed strictly. Mass sterility will not qualify as a class suit injury within the contemplation of Philippine statute. 3. Retired High Court Justice Rodolfo Nocom stated that there is simply an absence of doctrine here that permits these causes to be heard. No product liability ever filed or tried here. Case ordered dismissed.
40

Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by ABELLA, et al., assails before this Court the above-quoted order of the RTC of Davao City. ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No. 24,251-96 on the ground of lack of jurisdiction. According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject matter of the case since Articles 2176 and 2187 of the Civil Code are broad enough to cover the acts complained of and to support their claims for damages. ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis. According to them, their cause of action is based on quasidelict under Article 2176 of the Civil Code. They also maintain that the absence of jurisprudence regarding the award of damages in favor of those adversely affected by the DBCP does not preclude them from presenting evidence to prove their allegations that their exposure to DBCP caused their sterility and/or infertility. SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of the Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its motion for reconsideration, which contained an additional motion for the inhibition of the presiding judge. The presiding judge of Branch 16 then issued an Order dated December 2, 1996, voluntarily inhibiting himself from trying the case. Thus, the case was re-raffled to Branch 13 of the RTC of Davao City. In an Order dated December 16, 1996, the RTC of Davao City affirmed the Order dated October 1, 1996, and denied the respective motions for reconsideration filed by defendant companies. Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the Orders dated October 1, 1996 and
42 41

December 16, 1996 of the RTC of Davao City. This case was docketed as G.R. No. 128398. In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the case motu proprio as it acquired jurisdiction over the subject matter of the case as well as over the persons of the defendant companies which voluntarily appeared before it. CHIQUITA also claims that the RTC of Davao City cannot dismiss the case simply on the basis of opinions of alleged legal experts appearing in a newspaper article. Initially, this Court in its Resolution dated July 28, 1997, dismissed the petition filed by CHIQUITA for submitting a defective certificate against forum shopping. CHIQUITA, however, filed a motion for reconsideration, which was granted 44 by this Court in the Resolution dated October 8, 1997. On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this Court assailing the abovementioned orders of the RTC of Davao City. Its petition was docketed as G.R. No. 127856. DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No. 24,251-96, as defined under the law and that the said court already obtained jurisdiction over its person by its voluntary appearance and the filing of a motion for bill of particulars and, later, an answer to the complaint. According to DEL MONTE, the RTC of Davao City, therefore, acted beyond its authority when it dismissed the case motu proprio or without any motion to dismiss from any of the parties to the case. In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this Court consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398. The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as Party-Respondents filed by NAVIDA, et al. and ABELLA, et al. On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a Consolidated Motion (to Drop Party45 Respondents). The plaintiff claimants alleged that they had amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in July 1997. This settlement agreement was evidenced by facsimiles of the "Compromise Settlement, Indemnity, and Hold Harmless Agreement," which were attached to the said motion. Pursuant to said agreement, the plaintiff claimants sought to withdraw their petitions as against DOW, OCCIDENTAL, and SHELL. DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the settlement entered into between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL. The Memoranda of the Parties Considering the allegations, issues, and arguments adduced by the parties, this Court, in a Resolution dated June 22, 46 1998, required all the parties to submit their respective memoranda. CHIQUITA filed its Memorandum on August 28, 1998; SHELL asked to be excused from the filing of a memorandum alleging that it had already executed a compromise agreement 48 with the plaintiff claimants. DOLE filed its Memorandum on 49 October 12, 1998 while DEL MONTE filed on October 13, 50 1998. NAVIDA, et al., and ABELLA, et al., filed their 51 Consolidated Memorandum on February 3, 1999; and DOW and OCCIDENTAL jointly filed a Memorandum on December 52 23, 1999.
47 43

The Motion to Withdraw Petition for Review in G.R. No. 125598 On July 13, 2004, DOW and OCCIDENTAL filed a Motion to 53 Withdraw Petition for Review in G.R. No. 125598, explaining that the said petition "is already moot and academic and no longer presents a justiciable controversy" since they have already entered into an amicable settlement with NAVIDA, et al. DOW and OCCIDENTAL added that they have fully complied with their obligations set forth in the 1997 Compromise Agreements. DOLE filed its Manifestation dated September 6, 2004, interposing no objection to the withdrawal of the petition, and further stating that they maintain their position that DOW and OCCIDENTAL, as well as other settling defendant companies, should be retained as defendants for purposes of prosecuting the cross-claims of DOLE, in the event that the complaint below is reinstated. NAVIDA, et al., also filed their Comment dated September 14, 55 2004, stating that they agree with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has become moot and academic because Civil Case No. 5617 had already been amicably settled by the parties in 1997. On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition for Review Filed by Petitioners in 56 G.R. No. 125598, stating that it has no objections to the withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598. In a Resolution dated October 11, 2004, this Court granted, among others, the motion to withdraw petition for review filed by DOW and OCCIDENTAL. THE ISSUES In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the following issues for our consideration: IN REFUTATION I. THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION. a) The court did not simply dismiss the case because it was filed in bad faith with petitioners intending to have the same dismissed and returned to the Texas court. b) The court dismissed the case because it was convinced that it did not have jurisdiction. IN SUPPORT OF THE PETITION II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE CASE. a. The acts complained of occurred within Philippine territory. b. Art. 2176 of the Civil Code of the Philippines is broad enough to cover the acts complained of. c. Assumption of jurisdiction by the U.S. District Court over petitioner[s] claims did not divest Philippine [c]ourt s of jurisdiction over the same. d. The Compromise Agreement and the subsequent Consolidated Motion to Drop Party Respondents Dow, Occidental and Shell does not unjustifiably prejudice remaining 58 respondents Dole, Del Monte and Chiquita. DISCUSSION On the issue of jurisdiction
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Essentially, the crux of the controversy in the petitions at bar is whether the RTC of General Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617 and 24,251-96, respectively, for lack of jurisdiction. Remarkably, none of the parties to this case claims that the courts a quo are bereft of jurisdiction to determine and resolve the above-stated cases. All parties contend that the RTC of General Santos City and the RTC of Davao City have jurisdiction over the action for damages, specifically for approximately P2.7 million for each of the plaintiff claimants. NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or omissions of defendant companies occurred within Philippine territory. Specifically, the use of and exposure to DBCP that was manufactured, distributed or otherwise put into the stream of commerce by defendant companies happened in the Philippines. Said fact allegedly constitutes reasonable basis for our courts to assume jurisdiction over the case. Furthermore, NAVIDA, et al., and ABELLA, et al., assert that the provisions of Chapter 2 of the Preliminary Title of the Civil Code, as well as Article 2176 thereof, are broad enough to cover their claim for damages. Thus, NAVIDA, et al., and ABELLA, et al., pray that the respective rulings of the RTC of General Santos City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and that the said cases be remanded to the courts a quo for further proceedings. DOLE similarly maintains that the acts attributed to defendant companies constitute a quasi-delict, which falls under Article 2176 of the Civil Code. In addition, DOLE states that if there were no actionable wrongs committed under Philippine law, the courts a quo should have dismissed the civil cases on the ground that the Amended Joint-Complaints of NAVIDA, et al., and ABELLA, et al., stated no cause of action against the defendant companies. DOLE also argues that if indeed there is no positive law defining the alleged acts of defendant companies as actionable wrong, Article 9 of the Civil Code dictates that a judge may not refuse to render a decision on the ground of insufficiency of the law. The court may still resolve the case, applying the customs of the place and, in the absence thereof, the general principles of law. DOLE posits that the Philippines is the situs of the tortious acts allegedly committed by defendant companies as NAVIDA, et al., and ABELLA, et al., point to their alleged exposure to DBCP which occurred in the Philippines, as the cause of the sterility and other reproductive system problems that they allegedly suffered. Finally, DOLE adds that the RTC of Davao City gravely erred in relying upon newspaper reports in dismissing Civil Case No. 24,251-96 given that newspaper articles are hearsay and without any evidentiary value. Likewise, the alleged legal opinions cited in the newspaper reports were taken judicial notice of, without any notice to the parties. DOLE, however, opines that the dismissal of Civil Case Nos. 5617 and 24,251-96 was proper, given that plaintiff claimants merely prosecuted the cases with the sole intent of securing a dismissal of the actions for the purpose of convincing the U.S. Federal District Court to re-assume jurisdiction over the cases. In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject matter of the cases filed before them. The Amended Joint-Complaints sought approximately P2.7 million in damages for each plaintiff claimant, which amount falls within the jurisdiction of the RTC. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP, not the place of manufacture, packaging, distribution, sale, etc., of the said chemical. This is in consonance with the lex loci delicti commisi theory in determining the situs of a tort, which states that the law of the place where the alleged wrong was committed will govern the

action. CHIQUITA and the other defendant companies also submitted themselves to the jurisdiction of the RTC by making voluntary appearances and seeking for affirmative reliefs during the course of the proceedings. None of the defendant companies ever objected to the exercise of jurisdiction by the courts a quo over their persons. CHIQUITA, thus, prays for the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City, respectively. The RTC of General Santos City and the RTC of Davao City have jurisdiction over Civil Case Nos. 5617 and 24,251-96, respectively The rule is settled that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiffs are entitled to all or some 59 of the claims asserted therein. Once vested by law, on a particular court or body, the jurisdiction over the subject matter or nature of the action cannot be dislodged by anybody other than by the legislature through the enactment of a law. At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was: SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction: xxxx (8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred 60 thousand pesos (P200,000.00). Corollary thereto, Supreme Court Administrative Circular No. 09-94, states: 2. The exclusion of the term "damages of whatever kind" in determining the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court. Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended Joint-Complaints filed before the courts a quo, the following prayer: PRAYER WHEREFORE, premises considered, it is most respectfully prayed that after hearing, judgment be rendered in favor of the plaintiffs ordering the defendants: a) TO PAY EACH PLAINTIFF moral damages in the amount of One Million Five Hundred Thousand Pesos (P1,500,00.00); b) TO PAY EACH PLAINTIFF nominal damages in the amount of Four Hundred Thousand Pesos (P400,000.00) each; c) TO PAY EACH PLAINTIFF exemplary damages in the amount of Six Hundred Thousand Pesos (P600,000.00); d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand Pesos (P200,000.00); and e) TO PAY THE COSTS of the suit.
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From the foregoing, it is clear that the claim for damages is the main cause of action and that the total amount sought in the complaints is approximately P2.7 million for each of the plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in General Santos City and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview of the definition of the jurisdiction of the RTC under Batas Pambansa Blg. 129. Moreover, the allegations in both Amended Joint-Complaints narrate that: THE CAUSES OF ACTION 4. The Defendants manufactured, sold, distributed, used, AND/OR MADE AVAILABLE IN COMMERCE nematocides containing the chemical dibromochloropropane, commonly known as DBCP. THE CHEMICAL WAS USED AGAINST the parasite known as the nematode, which plagued banana plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT, DBCP not only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF PERSONS EXPOSED TO IT AFFECTING the human reproductive system as well. 5. The plaintiffs were exposed to DBCP in the 1970s up to the early 1980s WHILE (a) they used this product in the banana plantations WHERE they were employed, and/or (b) they resided within the agricultural area WHERE IT WAS USED. As a result of such exposure, the plaintiffs suffered serious and permanent injuries TO THEIR HEALTH, including, but not limited to, STERILITY and severe injuries to their reproductive capacities. 6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN THAT THEY MANUFACTURED, produced, sold, and/or USED DBCP and/or otherwise, PUT THE SAME into the stream of commerce, WITHOUT INFORMING THE USERS OF ITS HAZARDOUS EFFECTS ON HEALTH AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER USE AND APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-containing materials which THEY knew, or in the exercise of ordinary care and prudence ought to have known, were highly harmful and injurious to the Plaintiffs health and well-being. 7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD, DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM OF COMMERCE were negligent OR AT FAULT in that they, AMONG OTHERS: a. Failed to adequately warn Plaintiffs of the dangerous characteristics of DBCP, or to cause their subsidiaries or affiliates to so warn plaintiffs; b. Failed to provide plaintiffs with information as to what should be reasonably safe and sufficient clothing and proper protective equipment and appliances, if any, to protect plaintiffs from the harmful effects of exposure to DBCP, or to cause their subsidiaries or affiliates to do so; c. Failed to place adequate warnings, in a language understandable to the worker, on containers of DBCPcontaining materials to warn of the dangers to health of coming into contact with DBCP, or to cause their subsidiaries or affiliates to do so; d. Failed to take reasonable precaution or to exercise reasonable care to publish, adopt and enforce a safety plan and a safe method of handling and applying DBCP, or to cause their subsidiaries or affiliates to do so; e. Failed to test DBCP prior to releasing these products for sale, or to cause their subsidiaries or affiliates to do so; and

f. Failed to reveal the results of tests conducted on DBCP to each plaintiff, governmental agencies and the public, or to cause their subsidiaries or affiliate to do so. 8. The illnesses and injuries of each plaintiff are also due to the FAULT or negligence of defendants Standard Fruit Company, Dole Fresh Fruit Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita Brands International, Inc. in that they failed to exercise reasonable care to prevent each plaintiffs harmful exposure to DBCP-containing products which defendants knew or should have known were hazardous to each plaintiff in that they, AMONG OTHERS: a. Failed to adequately supervise and instruct Plaintiffs in the safe and proper application of DBCP-containing products; b. Failed to implement proper methods and techniques of application of said products, or to cause such to be implemented; c. Failed to warn Plaintiffs of the hazards of exposure to said products or to cause them to be so warned; d. Failed to test said products for adverse health effects, or to cause said products to be tested; e. Concealed from Plaintiffs information concerning the observed effects of said products on Plaintiffs; f. Failed to monitor the health of plaintiffs exposed to said products; g. Failed to place adequate labels on containers of said products to warn them of the damages of said products; and h. Failed to use substitute nematocides for said products or to 62 cause such substitutes to [be] used. (Emphasis supplied and words in brackets ours.) Quite evidently, the allegations in the Amended JointComplaints of NAVIDA, et al., and ABELLA, et al., attribute to defendant companies certain acts and/or omissions which led to their exposure to nematocides containing the chemical DBCP. According to NAVIDA, et al., and ABELLA, et al., such exposure to the said chemical caused ill effects, injuries and illnesses, specifically to their reproductive system. Thus, these allegations in the complaints constitute the cause of action of plaintiff claimants a quasi-delict, which under the Civil Code is defined as an act, or omission which causes damage to another, there being fault or negligence. To be precise, Article 2176 of the Civil Code provides: Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et al., point to the acts and/or omissions of the defendant companies in manufacturing, producing, selling, using, and/or otherwise putting into the stream of commerce, nematocides which contain DBCP, "without informing the users of its hazardous effects on health and/or without instructions on its proper use and application."
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Verily, in Citibank, N.A. v. Court of Appeals, this Court has always reminded that jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all or some of the claims asserted therein. The jurisdiction of the court cannot be made to depend upon the defenses set up in the answer or upon the motion to

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dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the defendants. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted. Clearly then, the acts and/or omissions attributed to the defendant companies constitute a quasi-delict which is the basis for the claim for damages filed by NAVIDA, et al., and ABELLA, et al., with individual claims of approximately P2.7 million for each plaintiff claimant, which obviously falls within the purview of the civil action jurisdiction of the RTCs. Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al., allegedly suffered resulted from their exposure to DBCP while they were employed in the banana plantations located in the Philippines or while they were residing within the agricultural areas also located in the Philippines. The factual allegations in the Amended Joint-Complaints all point to their cause of action, which undeniably occurred in the Philippines. The RTC of General Santos City and the RTC of Davao City obviously have reasonable basis to assume jurisdiction over the cases. It is, therefore, error on the part of the courts a quo when they dismissed the cases on the ground of lack of jurisdiction on the mistaken assumption that the cause of action narrated by NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside and beyond the territorial boundaries of the Philippines, i.e., "the manufacture of the pesticides, their packaging in containers, their distribution through sale or other disposition, resulting in their becoming part of the stream of 65 commerce," and, hence, outside the jurisdiction of the RTCs. Certainly, the cases below are not criminal cases where territoriality, or the situs of the act complained of, would be determinative of jurisdiction and venue for trial of cases. In personal civil actions, such as claims for payment of damages, the Rules of Court allow the action to be commenced and tried in the appropriate court, where any of the plaintiffs or defendants resides, or in the case of a non-resident defendant, 66 where he may be found, at the election of the plaintiff. In a very real sense, most of the evidence required to prove the claims of NAVIDA, et al., and ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are all residents of the Philippines, either in General Santos City or in Davao City. Second, the specific areas where they were allegedly exposed to the chemical DBCP are within the territorial jurisdiction of the courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their claims for damages. Third, the testimonial and documentary evidence from important witnesses, such as doctors, co-workers, family members and other members of the community, would be easier to gather in the Philippines. Considering the great number of plaintiff claimants involved in this case, it is not far-fetched to assume that voluminous records are involved in the presentation of evidence to support the claim of plaintiff claimants. Thus, these additional factors, coupled with the fact that the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the defendant companies for damages occurred in the Philippines, demonstrate that, apart from the RTC of General Santos City and the RTC of Davao City having jurisdiction over the subject matter in the instant civil cases, they are, indeed, the 67 convenient fora for trying these cases. The RTC of General Santos City and the RTC of Davao City validly acquired jurisdiction over the persons of all the defendant companies

It is well to stress again that none of the parties claims that the courts a quo lack jurisdiction over the cases filed before them. All parties are one in asserting that the RTC of General Santos City and the RTC of Davao City have validly acquired jurisdiction over the persons of the defendant companies in the action below. All parties voluntarily, unconditionally and knowingly appeared and submitted themselves to the jurisdiction of the courts a quo. Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he defendants voluntary appearance in the action shall be equivalent to service of summons." In this connection, all the defendant companies designated and authorized representatives to receive summons and to represent them in the proceedings before the courts a quo. All the defendant companies submitted themselves to the jurisdiction of the courts a quo by making several voluntary appearances, by praying for various affirmative reliefs, and by actively participating during the course of the proceedings below. In line herewith, this Court, in Meat Packing Corporation of the 68 Philippines v. Sandiganbayan, held that jurisdiction over the person of the defendant in civil cases is acquired either by his voluntary appearance in court and his submission to its authority or by service of summons. Furthermore, the active participation of a party in the proceedings is tantamount to an invocation of the courts jurisdiction and a willingness to abide by the resolution of the case, and will bar said party from later 69 on impugning the court or bodys jurisdiction. Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired jurisdiction over the persons of the defendant companies, as well as over the subject matter of the instant case. What is more, this jurisdiction, which has been acquired and has been vested on the courts a quo, continues until the termination of the proceedings. It may also be pertinently stressed that "jurisdiction" is different from the "exercise of jurisdiction." Jurisdiction refers to the authority to decide a case, not the orders or the decision rendered therein. Accordingly, where a court has jurisdiction over the persons of the defendants and the subject matter, as in the case of the courts a quo, the decision on all questions arising therefrom is but an exercise of such jurisdiction. Any error that the court may commit in the exercise of its jurisdiction is merely an error of judgment, which does not affect its authority to decide the case, much less divest the 70 court of the jurisdiction over the case. Plaintiffs purported bad faith in filing the subject civil cases in Philippine courts Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith merely to procure a dismissal of the same and to allow them to return to the forum of their choice, this Court finds such argument much too speculative to deserve any merit. It must be remembered that this Court does not rule on allegations that are unsupported by evidence on record. This Court does not rule on allegations which are manifestly conjectural, as these may not exist at all. This Court deals with facts, not fancies; on realities, not appearances. When this Court acts on appearances instead of realities, justice and law 71 will be short-lived. This is especially true with respect to allegations of bad faith, in line with the basic rule that good 72 faith is always presumed and bad faith must be proved. In sum, considering the fact that the RTC of General Santos City and the RTC of Davao City have jurisdiction over the subject matter of the amended complaints filed by NAVIDA, et

al., and ABELLA, et al., and that the courts a quo have also acquired jurisdiction over the persons of all the defendant companies, it therefore, behooves this Court to order the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City, respectively. On the issue of the dropping of DOW, OCCIDENTAL and SHELL as respondents in view of their amicable settlement with NAVIDA, et al., and ABELLA, et al. NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and SHELL be dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617 and 24,251-96. The non-settling defendants allegedly manifested that they intended to file their cross-claims against their co-defendants who entered into compromise agreements. NAVIDA, et al., and ABELLA, et al., argue that the non-settling defendants did not aver any cross-claim in their answers to the complaint and that they subsequently sought to amend their answers to plead their cross-claims only after the settlement between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL were executed. NAVIDA, et al., and ABELLA, et al., therefore, assert that the cross-claims are already barred. In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA, et al., and ABELLA, et al., since the latters Amended Complaints cited several instances of tortious conduct that were allegedly committed jointly and severally by the defendant companies. This solidary obligation on the part of all the defendants allegedly gives any co-defendant the statutory right to proceed against the other co-defendants for the payment of their respective shares. Should the subject motion of NAVIDA, et al., and ABELLA, et al., be granted, and the Court subsequently orders the remand of the action to the trial court for continuance, CHIQUITA and DOLE would allegedly be deprived of their right to prosecute their crossclaims against their other co-defendants. Moreover, a third party complaint or a separate trial, according to CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA and DOLE similarly insist that the motion of NAVIDA, et al., and ABELLA, et al., to drop DOW, SHELL and OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617 and 24,251-96, be denied. Incidentally, on April 2, 2007, after the parties have submitted their respective memoranda, DEL MONTE filed a Manifestation 73 and Motion before the Court, stating that similar settlement agreements were allegedly executed by the plaintiff claimants with DEL MONTE and CHIQUITA sometime in 1999. Purportedly included in the agreements were Civil Case Nos. 5617 and 24,251-96. Attached to the said manifestation were copies of the Compromise Settlement, Indemnity, and Hold Harmless Agreement between DEL MONTE and the settling plaintiffs, as well as the Release in Full executed by the 74 latter. DEL MONTE specified therein that there were "only four (4) plaintiffs in Civil Case No. 5617 who are claiming 75 against the Del Monte parties" and that the latter have executed amicable settlements which completely satisfied any claims against DEL MONTE. In accordance with the alleged compromise agreements with the four plaintiffs in Civil Case No. 5617, DEL MONTE sought the dismissal of the Amended Joint-Complaint in the said civil case. Furthermore, in view of the above settlement agreements with ABELLA, et al., in Civil Case No. 24,251-96, DEL MONTE stated that it no longer wished to pursue its petition in G.R. No. 127856 and accordingly prayed that it be allowed to withdraw the same. Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC of General Santos City and the RTC of Davao City, respectively, the Court deems that the

Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et al., should likewise be referred to the said trial courts for appropriate disposition. Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced." Like any other contract, an extrajudicial compromise agreement is not excepted from rules and principles of a contract. It is a consensual contract, perfected by mere consent, the latter being manifested by the meeting of the offer and the acceptance upon the thing and the cause 76 which are to constitute the contract. Judicial approval is not 77 required for its perfection. A compromise has upon the 78 parties the effect and authority of res judicata and this holds 79 true even if the agreement has not been judicially approved. In addition, as a binding contract, a compromise agreement 80 determines the rights and obligations of only the parties to it. In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of Davao City should first receive in evidence and examine all of the alleged compromise settlements involved in the cases at bar to determine the propriety of dropping any party as a defendant therefrom. The Court notes that the Consolidated Motions (to Drop PartyRespondents) that was filed by NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and SHELL in view of the latter companies alleged compromise agreements with the plaintiff claimants. However, in subsequent developments, DEL MONTE and CHIQUITA supposedly reached their own amicable settlements with the plaintiff claimants, but DEL MONTE qualified that it entered into a settlement agreement with only four of the plaintiff claimants in Civil Case No. 5617. These four plaintiff claimants were allegedly the only ones who were asserting claims against DEL MONTE. However, the said allegation of DEL MONTE was simply stipulated in their Compromise Settlement, Indemnity, and Hold Harmless Agreement and its truth could not be verified with certainty based on the records elevated to this Court. Significantly, the 336 plaintiff claimants in Civil Case No. 5617 jointly filed a complaint without individually specifying their claims against DEL MONTE or any of the other defendant companies. Furthermore, not one plaintiff claimant filed a motion for the removal of either DEL MONTE or CHIQUITA as defendants in Civil Case Nos. 5617 and 24,251-96. There is, thus, a primary need to establish who the specific parties to the alleged compromise agreements are, as well as their corresponding rights and obligations therein. For this purpose, the courts a quo may require the presentation of additional evidence from the parties. Thereafter, on the basis of the records of the cases at bar and the additional evidence submitted by the parties, if any, the trial courts can then determine who among the defendants may be dropped from the said cases. It is true that, under Article 2194 of the Civil Code, the responsibility of two or more persons who are liable for the same quasi-delict is solidary. A solidary obligation is one in which each of the debtors is liable for the entire obligation, and each of the creditors is entitled to demand the satisfaction of 81 the whole obligation from any or all of the debtors. In solidary obligations, the paying debtors right of reimbursement is provided for under Article 1217 of the Civil Code, to wit: Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.1avvphil The above right of reimbursement of a paying debtor, and the corresponding liability of the co-debtors to reimburse, will only arise, however, if a solidary debtor who is made to answer for an obligation actually delivers payment to the creditor. As succinctly held in Lapanday Agricultural Development 82 Corporation v. Court of Appeals, "[p]ayment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to seek reimbursement for 83 the share which corresponds to each of the [other] debtors." In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the merits must necessarily be conducted first in order to establish whether or not defendant companies are liable for the claims for damages filed by the plaintiff claimants, which would necessarily give rise to an obligation to pay on the part of the defendants. At the point in time where the proceedings below were prematurely halted, no cross-claims have been interposed by any defendant against another defendant. If and when such a cross-claim is made by a non-settling defendant against a settling defendant, it is within the discretion of the trial court to determine the propriety of allowing such a cross-claim and if the settling defendant must remain a party to the case purely in relation to the cross claim. In Armed Forces of the Philippines Mutual Benefit Association, 84 Inc. v. Court of Appeals, the Court had the occasion to state that "where there are, along with the parties to the compromise, other persons involved in the litigation who have not taken part in concluding the compromise agreement but are adversely affected or feel prejudiced thereby, should not be precluded from invoking in the same proceedings an adequate 85 relief therefor." Relevantly, in Philippine International Surety Co., Inc. v. 86 Gonzales, the Court upheld the ruling of the trial court that, in a joint and solidary obligation, the paying debtor may file a third-party complaint and/or a cross-claim to enforce his right to seek contribution from his co-debtors. Hence, the right of the remaining defendant(s) to seek reimbursement in the above situation, if proper, is not affected by the compromise agreements allegedly entered into by NAVIDA, et al., and ABELLA, et al., with some of the defendant companies. WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R. Nos. 125078, 126654, and 128398. We REVERSE and SET ASIDE the Order dated May 20, 1996 of the Regional Trial Court of General Santos City, Branch 37, in Civil Case No. 5617, and the Order dated October 1, 1996 of the Regional Trial Court of Davao City, Branch 16, and its subsequent Order dated December 16, 1996 denying reconsideration in Civil Case No. 24,251-96, and REMAND the records of this case to the respective Regional Trial Courts of origin for further and appropriate proceedings in line with the ruling herein that said courts have jurisdiction over the subject matter of the amended complaints in Civil Case Nos. 5617 and 24,251-96.

The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R. No. 127856. In view of the previous grant of the motion to withdraw the petition in G.R. No. 125598, both G.R. Nos. 127856 and 125598 are considered CLOSED AND TERMINATED. No pronouncement as to costs. G.R. No. 179232 August 23, 2012

DEL MONTE FRESH PRODUCE N.A. and DEL MONTE FRESH PRODUCE COMPANY, Petitioners, vs. DOW CHEMICAL COMPANY, OCCIDENTAL CHEMICAL *** CORPORATION, CECILIO G. ABENION, et al., DOLE FOOD COMPANY, INC., DOLE FRESH FRUIT COMPANY, STANDARD FRUIT COMPANY, STANDARD FRUIT AND STEAMSHIP COMPANY, CHIQUITA BRANDS, INC., and CHIQillTA BRANDS INTERNATIONAL, INC., Respondents. x-----------------------x G.R. No. 179290 THE DOW CHEMICAL COMPANY and OCCIDENTAL CHEMICAL CORPORATION, Petitioners, vs. HON. JESUS L. GRAGEDA, Presiding Judge, Regional Trial Court of Panabo City, Branch 4, Panabo City, Davao del Norte; CECILIO G. ABENION, et al.; DOLE FRESH FRUIT COMPANY; STANDARD FRUIT COMPANY; STANDARD FRUIT AND STEAMSHIP COMPANY; DEL MONTE FRESH PRODUCE, N.A.; DEL MONTE TROPICAL **** FRUIT COMPANY; CHIQUITA BRANDS, INC.; and CHIQUITA BRANDS INTERNATIONAL, INC., Respondents. DECISION VILLARAMA, J.: Before this Court are consolidated petitions for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, 1 as amended, assailing the May 23, 2006 Decision and August 2 8, 2007 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 77287. The antecedents of the case follow: On August 11, 1995, a Joint Complaint for damages based on quasi-delict was filed before the Regional Trial Court (RTC) of Panabo City, Davao del Norte, by 1,185 individuals against Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Company, petitioners in G.R. No. 179232; Dow Chemical Company and Occidental Chemical Corporation, petitioners in G.R. No. 179290; Shell Oil Company; Standard Fruit and Steamship Company; Standard Fruit Company, Dole Food Company, Inc.; Dole Fresh Fruit Company; Chiquita Brands, Inc.; Chiquita Brands International, Inc.; Dead Sea Bromine Company, Ltd.; Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac Chemical Corporation. The Joint Complaint, docketed as Civil Case No. 95-45, alleged that said corporations were negligent in the manufacture, distribution, and/or sale, or in not informing users of the hazardous effects, of the chemical dibromochloropropane (DBCP). The plaintiffs, claiming to be banana plantation workers and residents of Davao del Norte, alleged that they were exposed to DBCP in the early 1970s and 1980s and as a result, suffered serious and permanent injuries to their health. The plaintiffs sought to be jointly and solidarily recompensed by the defendant corporations in the total amount of P2,700,000. Prior to the filing of the defendants Answer, the Joint Complaint was amended to implead other plaintiffs, increasing their number to 1,843 and to drop Dead Sea Bromine

Company, Ltd., Ameribrom, Inc., Bromine Compounds, Ltd., 3 and Amvac Chemical Corporation as party-defendants. Some of the remaining defendantsDel Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Company (Del Monte defendants), Dow Chemical Company and Occidental Chemical Corporation (Dow/Occidental defendants), Dole Food Company, Inc. and Dole Fresh Fruit Company (Dole defendants), Chiquita Brands, Inc. and Chiquita Brands International, Inc. (Chiquita defendants)filed their respective Answers with Counterclaim on separate dates. On September 2, 1997, the Dow/Occidental defendants jointly moved for the dismissal of the complaint against them, as well as their counterclaim against the plaintiffs. They alleged that 4 they have already entered into a compromise agreement with 5 the plaintiffs. They likewise filed a Motion for Partial Judgment Based on Compromise. Both motions were opposed by their co-defendants. The Chiquita defendants, on even date, filed their Motion for Leave to Admit Amended Answer with Counterclaims and 6 Cross-claims, citing inadvertence, oversight, and excusable neglect as grounds for amendment. The Del Monte defendants also filed a Motion to Admit 7 Amended Answer with Cross-Claim and Amended Answer 8 with Cross-Claim attached thereto, alleging that they inadvertently failed to include in their answer their cross-claims against their co-defendants. The Dole defendants, on October 1, 1997, filed a Motion to 9 Admit Amended Answer with the Amended Answer with 10 Cross-Claim Ad Cautelam. They alleged that since they were in imminent danger of being the only defendants left, they were constrained to file a cross-claim against their co-defendants in order to adequately secure their right to contribution and reimbursement as potential solidary debtors. The parties thereafter filed numerous oppositions/motions to the pleadings filed by each. Replies and comments were likewise filed in response thereto. On June 4, 2001, the Del Monte defendants filed a Motion to 11 Dismiss praying that as to them, the Amended Joint Complaint be dismissed in its entirety and with prejudice, on the ground, among others, that the claims or demands of the 12 plaintiffs (except for 16 of them) had been paid, waived, abandoned and extinguished. Attached to its Motion is a copy 13 of the settlement agreement entitled "Release in Full." The 14 Dow/Occidental defendants filed a Manifestation stating that they do not object to Del Montes Motion to Dismiss. On July 31, 2001, the Chiquita defendants filed a Motion for 15 Partial Dismissal of the Amended Joint Complaint on the ground that all the plaintiffs, except for James Bagas and Dante Bautista, have settled their claims with them, for which each has executed a quitclaim styled "Release in Full." Attached to the motion were copies of some of the individual 16 settlement agreements entitled "Release in Full" signed by those who have settled their claims. On June 4, 2002, the Dow/Occidental defendants filed a 17 Request for Admissions addressed to the plaintiffs seeking from them the admission that payments were already made to them by the Dow/Occidental defendants. On December 20, 2002, the RTC issued the assailed Omnibus 18 Order. The portions of the fallo of the order pertinent to the instant petitions read: WHEREFORE, the court, hereby resolves:

Under No. 1, supra, to admit: x x x the amended answer dated September 2, 1997 of the Chiquita defendants; x x x the motion to admit new amended answer and the amended answer with cross-claims dated November 3, 1997, noting as well the manifestation of even date of the Del Monte defendants; x x x Doles motion to admit amended answer and the amended answer itself dated October 1, 1997; x x x xxxx Under No. 3, supra, the joint motion to dismiss and motion for partial judgment between the plaintiffs and defendants Dow and Occidental under the provisions of "compromise settlement, indemnity and hold harmless agreement(s)," embodied in annexes "A" and "B," which documents by reference are, hereby, incorporated, adopted, and made integral parts hereof, not being contrary to law, good morals, public order or policy are, hereby, approved by way of judgment on compromise and the causes of action of the plaintiffs in their joint amended complaint as well as the counter-claims of defendants Dow and Occidental are dismissed; xxxx The cross-claims of all the co-defendants in the above-entitled case between and among themselves, in effect leaving all the said co-defendants cross-claimants ("plaintiffs") and cross defendants ("defendants") against each other shall continue to be taken cognizance of by the court. xxxx All other motions filed by the parties in relation to or in connection to the issues hereinabove resolved but which have been wittingly or unwittingly left unresolved are hereby considered moot and academic; likewise, all previous orders contrary to or not in accordance with the foregoing resolutions are hereby reconsidered, set aside and vacated. SO ORDERED.
19

The Dow/Occidental defendants filed a Motion for Partial 20 Reconsideration of said omnibus order but the same was denied. On December 26, 2002, the plaintiffs who entered into 21 compromise agreements filed a Motion for Execution alleging: 1. Earlier on, certain plaintiffs had been compelled to file a Motion for Execution because defendants DOW, Shell, Occidental, Del Monte and Chiquita had failed to abide by the terms and conditions of the Compromise Agreements which they entered into with the above named defendants as early as 1997 or five (5) years ago, more or less; 2. Consequently, the said motion for execution dated March 4, 2002 faced stiff opposition from defendants. Almost unending exchanges of comments ensued touching on certain plaintiffs Motion for Execution. In effect, all parties have been given the chance to be heard. As such, due process of law has been complied with. On their part, defendants DOW and Occidental opposed said motion because the compromise agreements in question have not yet been approved by this Honorable Court; 3. On December 20, 2002, the Honorable Court issued its Omnibus Order approving the compromise agreements in question executed by defendants Dow, Shell, Occidental, Del Monte and Chiquita x x x; 4. Pursuant to the Omnibus Order dated 20 December 2002, the provisions of "Compromise Settlement, Indemnity and Hold Harmless Agreements" entered into by and between plaintiffs and defendants DOW, Shell, Occidental, Del Monte and

Chiquita have been approved by way of judgment on compromise. Significantly, the dispositive portion of the Omnibus Order which provides that: "The foregoing parties are, hereby, enjoined to strictly abide by the terms and conditions of their respective settlements" is adequate for purposes of execution x x x; 5. In view of the fact that this Honorable Court has already approved by way of judgment on compromise entered into by and between plaintiffs and defendants DOW, Shell, Occidental, Del Monte and Chiquita, the same is immediately executory. It then becomes ministerial for this Honorable Court to order the execution of its final executory judgment against above named 22 defendants. x x x (Emphasis in the original; underscoring supplied.) On April 23, 2003, the RTC issued a Writ of Execution which declared that the Compromise Agreements entered into by the Dow/Occidental, Del Monte and Chiquita defendants with the compromising plaintiffs are immediately final and executory. The dispositive portion of the writ reads: NOW THEREFORE, you are hereby commanded to cause the execution of the Omnibus Order of this court dated December 20, 2002 specifically to collect or demand from each of the herein defendants the following amounts to wit: 1. Defendants Dow Chemical Company ("Dow") and Occidental Chemical Corporation ("Occidental") the amount of: a. $22 million or such amount equivalent to the plaintiffs claim in this case in accordance with their Compromise Settlement, Indemnity, and Hold Harmless Agreement (Annex "A"); and b. The amount of $20 million or such amount equivalent to the plaintiffs claim in this case in accordance with their Compromise Settlement, Indemnity, and Hold Harmless Agreement (Annex "B") 2. Defendants Del Monte Fresh Produce, N.A. and Del Monte Fresh Produce Company (formerly Del Monte Tropical Fruit, Co.) (collectively, the "Del Monte defendants") the amount of One Thousand Eight and No/100 Dollars ($1,008.00) for each plaintiff in accordance with their Release in Full Agreement; 3. Defendants Chiquita Brands, Inc. and Chiquita Brands, International, Inc. (collectively the "Chiquita Defendants") the amount of Two Thousand One Hundred Fifty Seven and No/100 Dollars ($2,157.00) for each plaintiff in accordance with 24 their Release in Full Agreement. The Dow/Occidental defendants then filed a petition for certiorari with the CA seeking the annulment of the omnibus order in so far as it: (1) Admitted the amended answers with cross-claims filed by the Dole defendants, Del Monte defendants and Chiquita defendants; (2) Ruled that it shall continue to take cognizance of the cross-claims of the Dole, Del Monte and Chiquita defendants against petitioners; and (3) Ruled that all the other motions filed by the parties in relation to the issues which have been left unresolved are considered moot and academic relative to the Dow/Occidental defendants Request for Admission. The Dow/Occidental defendants argue, among others, that the RTC gravely abused its discretion when it did not dismiss the cross-claims filed by the Dole, Del Monte and Chiquita defendants despite the following: (1) the cross-claims were already filed beyond the reglementary period; and (2) the
23

complaint against them and the Del Monte and Chiquita defendants, including their respective counterclaims, were already dismissed on the bases of the compromise agreements they each had with the plaintiffs. On May 23, 2006, the appellate court issued the assailed decision, disposing as follows: WHEREFORE, above premises considered, the instant Petition is partially GRANTED. The December 20, 2002 Omnibus Order issued by the Regional Trial Court, Branch 4, Panabo City, Davao del Norte is hereby AFFIRMED with MODIFICATION. As modified, the cross-claims filedby the Chiquita defendants, except as to the claims of James Bagas and Dante Bautista, and by the Del Monte defendants, except as to the claims of Romeo Acelo, Jesus Aguelo, Manuel Apas, Antonio Cabulang, Rodrigo Catulong, Enrique Dinoy, Fidel Ebrano, Cairus B. Francisco, Primo Magpatoc, Peter Manica, Ernesto Olleque, Teodoro Pardillo, Federico Pesaa, Desiderio G. Rivas, Patricio Villotes, Ireneo P. Yaras, are hereby DISMISSED. No costs. SO ORDERED.
25

The CA ruled that the cross-claims of the Dole, Del Monte and Chiquita defendants, which were all filed with leave of court, on the grounds provided under said rule, and before judgment was rendered, clearly complied with the requirements of the law. It held that cross-claims filed at any time before judgment is rendered cannot be considered belatedly filed especially in this case when the compromise agreement submitted by the plaintiffs and the Dow/Occidental defendants has yet to be approved. The CA also held that the dismissal of the complaint as regards the Dow/Occidental defendants in the civil case did not carry with it the dismissal of the cross-claims filed against said defendants. It ruled that the dismissal of the complaint against the Dow/Occidental defendants was not due to any finding by the RTC that the complaint therein was without basis. In fact, the dismissal was because of the compromise agreement the parties entered into. The appellate court likewise held that the Dow/Occidental defendants and the Dole, Del Monte and Chiquita defendants were sought to be held solidarily liable by the plaintiffs. Yet, despite the compromise agreements entered into by the Dow/Occidental, Del Monte, and Chiquita defendants with majority of the plaintiffs below, the civil case was not dismissed nor the amount of damages sought by plaintiffs therein reduced. Thus, if the remaining defendants are made liable to the plaintiffs for the full amount of damages sought, said remaining defendants have a right to proceed against the Dow/Occidental defendants through their crossclaims. The CA, however, ruled that the RTC gravely abused its discretion when it admitted the cross-claims against the Dow/Occidental defendants without any qualification. It held that only the cross-claims filed by the Dole defendants, the Chiquita defendants (with respect to the claims of James Bagas and Dante Bautista) and the Del Monte defendants (with respect to the 16 non-compromising plaintiffs) against the Dow/Occidental defendants can be rightly admitted by the RTC. Since the Del Monte and Chiquita defendants can no longer be held liable by the compromising plaintiffs, no reason existed for them anymore to sue the Dow/Occidental defendants as far as the compromising plaintiffs are concerned under the cross-claim. The case, however, is different with the Dole defendants. Since the Dole defendants did not enter into a compromise agreement with any of the plaintiffs, their crossclaims against the Dow/Occidental, Chiquita and Del Monte defendants are still viable in its entirety.

With respect to the Request for Admission served by the Dow/Occidental defendants on the compromising plaintiffs, the CA ruled that their belated resort to such mode of discovery was clearly improper since it was made only after a writ of execution was issued against them. Moreover, the questions propounded pertain to matters that are within the knowledge of the Dow/Occidental defendants. Thus, the best evidence to prove that payments had been made were the receipts which the Dow/Occidental defendants themselves claim to be in the possession of their U.S. counsels. Unsatisfied, the Dow/Occidental defendants, as petitioners in G.R. No. 179290, come to this Court arguing that the CA committed reversible error in not finding that the cross-claims of the Dole, Del Monte and Chiquita defendants should all be dismissed and the Request for Admission was timely filed and proper. The Del Monte defendants, as petitioners in G.R. No. 179232, are also before this Court seeking a partial reversal of the CA decision. They submit that their cross-claims against the Dow/Occidental defendants should extend to all the plaintiffs, that is, the 16 plaintiffs who did not settle, as well as those who have settled with them. Essentially, the issues to be resolved are: (1) Does the dismissal of the civil case against the Dow/Occidental defendants carry with it the dismissal of cross-claims against them? (2) Is the Request for Admission by the Dow/Occidental defendants proper? We deny the petitions. Section 10, Rule 11 of the 1997 Rules of Civil Procedure, as amended, provides: SEC. 10. Omitted counterclaim or cross-claim. When a pleader fails to set up a counterclaim or a cross-claim through oversight, inadvertence, or excusable neglect, or when justice requires, he may, by leave of court, set up the counterclaim or cross-claim by amendment before judgment. Based on the above-quoted provision, there are two requisites for a court to allow an omitted counterclaim or cross-claim by amendment: (1) there was oversight, inadvertence, or excusable neglect, or when justice requires; and (2) the amendment is made before judgment. The CA correctly held that there is basis for allowing the crossclaims of the Dole, Del Monte and Chiquita defendants against the Dow/Occidental defendants as they complied with the rules. It is undisputed that the Dole, Del Monte and Chiquita defendants sought to amend their answers to include their cross-claims before judgment. More importantly, justice requires that they be allowed to do so in consonance with the policy against multiplicity of suits. We further agree with the appellate court when it ruled that the dismissal of the complaint against the Dow/Occidental defendants does not carry with it the dismissal of the crossclaims against them. The ruling in Ruiz, Jr. v. Court of 26 Appeals that the dismissal of the complaint divested the cross-claimants of whatever appealable interest they might have had before, and made the cross-claim itself no longer viable, is not applicable in the instant case because in Ruiz, the dismissal of the complaint was based on the ground that it lacked merit. In the case at bar, the dismissal of the complaint against the Dow/Occidental defendants resulted from the settlement with the plaintiffs, which is in effect an admission of liability on the part of the Dow/Occidental defendants. As held 27 in Baez v. Court of Appeals:

A third-party complaint is indeed similar to a cross-claim, except only with respect to the persons against whom they are directed. However, the ruling in Ruiz cannot be successfully invoked by petitioners. In Ruiz we declared that the dismissal of the main action rendered the cross-claim no longer viable only because the main action was categorically dismissed for lack of cause of action. Hence, since defendants could no longer be held liable under the main complaint, no reason existed for them anymore to sue their co-party under the cross-claim. In sharp contrast thereto, the termination of the main action between PESALA and PNB-RB was not due to any finding that it was bereft of any basis. On the contrary, further proceedings were rendered unnecessary only because defendant (thirdparty plaintiff) PNB-RB, to avoid a protracted litigation, voluntarily admitted liability in the amount of P20,226,685.00. Hence, the termination of the main action between PESALA and PNB-RB could not have rendered lifeless the third-party complaint filed against petitioners, as it did the cross-claim in Ruiz, Jr. v. Court of Appeals, since it involved a finding of liability on the part of PNB-RB even if it be by compromise. And as correctly observed by the CA, the plaintiffs are seeking to hold all defendant companies solidarily liable. 1wphi1 Thus, even with the compromise agreements entered into by the Dow/Occidental, Del Monte and Chiquita defendants with majority of the plaintiffs below, the civil case was not dismissed nor the amount of damages sought by plaintiffs therein reduced. Therefore, the remaining defendants can still be made liable by plaintiffs for the full amount. If that happens, the remaining defendants can still proceed with their cross-claims against the compromising defendants, including the Dow/Occidental defendants, for their respective shares. We also uphold the appellate courts ruling that the RTC gravely abused its discretion when it admitted the cross-claims against the Dow/Occidental defendants without any qualification. The Del Monte and Chiquita defendants cross claims against the Dow/Occidental defendants cannot extend to the plaintiffs with whom they had settled, but only with respect to those plaintiffs who refused to enter into a compromise agreement with them, that is, with respect only to James Bagas and Dante Bautista for the Chiquita defendants and the 16 plaintiffs for the Del Monte defendants. Simply put, as the compromising plaintiffs can no longer hold the Del Monte and Chiquita defendants liable, there is no more reason for the latter to sue the Dow/Occidental defendants as far as the compromising plaintiffs are concerned under the crossclaim. With respect to the Dole defendants, however, as the Dole defendants did not enter into a compromise agreement with any of the plaintiffs, their cross-claims against the Dow/Occidental, Del Monte and Chiquita defendants should be admitted in its totality. As to the Request for Admission served by the Dow/Occidental defendants, this Court finds that the issue on its propriety has been rendered moot by the compromising plaintiffs' motion for execution and the subsequent issuance of the writ of execution by the R TC on April 23, 2003. The Request for Admission was seeking the compromising plaintiffs' admission that they have received the payments as agreed upon in the compromise agreement. However, in the plaintiffs' Motion for Execution dated December 26, 2002, they alleged that the compromising defendants still have not complied with the terms. and conditions of the compromise agreements, thereby forcing said. plaintiffs to file the motion. Thus, the admission sought by the Dow/Occidental defendants has already been impliedly responded to by a denial of receipt of payment under the

compromise agreement. With said denial, the RTC did not commit grave abuse of discretion in not resolving the Request for Admission. It is incumbent upon the Dow/Occidental defendants to prove that payments have been made to the compromising plaintiffs. WHEREFORE, the present petitions for review on certiorari are DENIED for lack of merit. The assailed May 23, 2006 Decision and August 8, 2007 Resolution of the Court of Appeals in CAG.R. SP No. 77287 are AFFIRMED and UPHELD. With costs against the petitioners. SO ORDERED.