III.
JURISDICTION AND CHOICE OF LAW
A. Choice of Forum
1. Sweet Lines Inc. vs. Teves, et.al., G.R. No. L-37750 (May 19,
1978)
FACTS:
 Private Respondents, ATTY. LEOVIGILDO TANDOG AND
ROGELIO TIRO
- Contractor by profession
- Dec. 31, 1971: bought tickets for Voyage 90 at the branch
office of Sweet Lines
 Sweet Lines
- a shipping company transporting inter-island
passengers and cargoes at Cagayan De
Oro City
- were to board M/S “Sweet Hope” bound for Tagbilaran via
the port of Cebu
 Upon learning that the vessel was not proceeding to Bohol,
since many passengers were bound for Surigao, private
respondents per advice, went to the branch office for proper
relocation to M/S "Sweet Town". Because the said vessel was
already filled to capacity, they were forced to agree "to hide at
the cargo section to avoid inspection of the officers of the
Philippine Coastguard."
 Private Respondents’ Allegations:
1. during the trip," "exposed to the scorching heat of the sun
and the dust coming from the ship's cargo of corn grits,"
2. the tickets they bought at Cagayan de Oro City for
Tagbilaran were not honored and they were constrained to
pay for other tickets
 Complaint for Damages and Breach of Contract of
Carriage in the sum of PhP 10k at CFI Misamis Oriental
 Sweet Lines: moved to dismissed on the ground of improper
venue, alleging that based on Condition No. 14 of the ticket,
actions arising out of the conditions in the ticket shall be
brought in the courts of Cebu
 Trial Court: MTD was denied
 MR: denied
 Hence, this Petition for Prohibition for Preliminary Injunction
 1973 Resolution: restrained the judge from proceeding the
case
 1974: gave due course to the Petition
ISSUES:
1. W/N the stipulations thru condition printed at the back of
passage tickets to its vessels that any and all actions
arising out of the ocntract of carriage should be filed only
in a particular province or city, in this case the City of
Cebu, to the exclusion of all others?
HELD:
There is no question that there was a valid contract of carriage
entered into by petitioner and private respondents and that the
passage tickets, upon which the latter based their complaint, are
the best evidence thereof. All the essential elements of a valid
contract, i.e., consent, cause or consideration and object, are
present.
It should be borne in mind, however, that with respect to the
fourteen (14) conditions — one of which is "Condition No. 14"
which is in issue in this case — printed at the back of the passage
tickets, these are commonly known as "contracts of adhesion," the
validity and/or enforceability of which will have to be determined by
the peculiar circumstances obtaining in each case and the nature
of the conditions or terms sought to be enforced. For, "(W)hile
generally, stipulations in a contract come about after deliberate
drafting by the parties thereto, ... there are certain contracts almost
all the provisions of which have been drafted only by one party,
usually a corporation. Such contracts are called contracts of
adhesion, because the only participation of the party is the signing
of his signature or his 'adhesion' thereto. Insurance contracts, bills
of lading, contracts of make of lots on the installment plan fall into
1
this category" 16
Page
1
 By the peculiar circumstances under which contracts of
adhesion are entered into — namely, that it is drafted only by one
party, usually the corporation, and is sought to be accepted or
adhered to by the other party, in this instance the passengers,
private respondents, who cannot change the same and who are
thus made to adhere thereto on the "take it or leave it" basis —
certain guidelines in the determination of their validity and/or
enforceability have been formulated in order to that justice and fan
play characterize the relationship of the contracting parties.
We find and hold that Condition No. 14 printed at the back
of the passage tickets should be held as void and
unenforceable for the following reasons first, under
circumstances obligation in the inter-island ship. ping
industry, it is not just and fair to bind passengers to the terms
of the conditions printed at the back of the passage tickets, on
which Condition No. 14 is Printed in fine letters, and second,
Condition No. 14 subverts the public policy on transfer of
venue of proceedings of this nature, since the same will
prejudice rights and interests of innumerable passengers in
different s of the country who, under Condition No. 14, will
have to file suits against petitioner only in the City of Cebu.
1. It is a matter of public knowledge, of which We can take
judicial notice, that there is a dearth of and acute shortage in inter-
island vessels plying between the country's several islands, and
the facilities they offer leave much to be desired. Thus, even under
ordinary circumstances, the piers are congested with passengers
and their cargo waiting to be transported. The conditions are even
worse at peak and/or the rainy seasons, when Passengers literally
scramble to whatever accommodations may be availed of, even
through circuitous routes, and/or at the risk of their safety — their
immediate concern, for the moment, being to be able to board
vessels with the hope of reaching their destinations. The schedules
are — as often as not if not more so — delayed or altered. This
was precisely the experience of private respondents when they
were relocated to M/S "Sweet Town" from M/S "Sweet Hope" and
then any to the scorching heat of the sun and the dust coming from
2
the ship's cargo of corn grits, " because even the latter was filed to
capacity.
Under these circumstances, it is hardly just and proper to expect
the passengers to examine their tickets received from
crowded/congested counters, more often than not during rush
hours, for conditions that may be printed much charge them with
having consented to the conditions, so printed, especially if there
are a number of such conditions m fine print, as in this case. 20
Again, it should be noted that Condition No. 14 was prepared
solely at the ms of the petitioner, respondents had no say in its
preparation. Neither did the latter have the opportunity to take the
into account prior to the purpose chase of their tickets. For, unlike
the small print provisions of contracts — the common example of
contracts of adherence — which are entered into by the insured in
his awareness of said conditions, since the insured is afforded the
op to and co the same, passengers of inter-island v do not have
the same chance, since their alleged adhesion is presumed only
from the fact that they purpose chased the tickets.
It should also be stressed that slapping companies are franchise
holders of certificates of public convenience and therefore, posses
a virtual monopoly over the business of transporting passengers
between the ports covered by their franchise. This being so,
shipping companies, like petitioner, engaged in inter-island
shipping, have a virtual monopoly of the business of transporting
passengers and may thus dictate their terms of passage, leaving
passengers with no choice but to buy their tickets and avail of their
vessels and facilities. Finally, judicial notice may be taken of the
fact that the bulk of those who board these inter-island vested
come from the low-income groups and are less literate, and who
have little or no choice but to avail of petitioner's vessels.
2. Condition No. 14 is subversive of public policy on transfers of
venue of actions. For, although venue may be changed or
transferred from one province to another by agreement of the
2
parties in writing t to Rule 4, Section 3, of the Rules of Court, such
Page
an agreement will not be held valid where it practically negates the
action of the claimants, such as the private respondents herein.
The philosophy underlying the provisions on transfer of venue of
actions is the convenience of the plaintiffs as well as his witnesses
and to promote 21 the ends of justice. Considering the expense and
trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably
decide not to file the action at all. The condition will thus defeat,
instead of enhance, the ends of justice. Upon the other hand,
petitioner has branches or offices in the respective ports of call of
its vessels and can afford to litigate in any of these places. Hence,
the filing of the suit in the CFI of Misamis Oriental, as was done in
the instant case, will not cause inconvenience to, much less
prejudice, petitioner.
Public policy is ". . . that principle of the law which holds that no
subject or citizen can lawfully do that which has a tendency to be
injurious to the public or against the public good ... 22 Under this
principle" ... freedom of contract or private dealing is restricted by
law for the good of the public. 23 Clearly, Condition No. 14, if
enforced, will be subversive of the public good or interest, since it
will frustrate in meritorious cases, actions of passenger cants
outside of Cebu City, thus placing petitioner company at a decided
advantage over said persons, who may have perfectly legitimate
claims against it. The said condition should, therefore, be declared
void and unenforceable, as contrary to public policy — to make the
courts accessible to all who may have need of their services.
2. HSBC vs. Jack Robert Sherman, et.al., G.R. No. 72494
(August 11, 1989)
Facts: A complaint for collection of a sum of money was filed by
HSBC against private respondents Jack Robert Sherman and
Deodato Reloj.
It appears that sometime in 1981, Eastern Book Supply Service
PTE, Ltd. (hereinafter referred to as COMPANY), a company
incorporated in Singapore applied with, and was granted by, the
Singapore branch of petitioner HSBC an overdraft facility in the
3
maximum amount of Singapore dollars 200,000.00 (which amount
was subsequently increased to Singapore dollars 375,000.00) with
interest at 3% over petitioner BANK prime rate.
both private respondents and a certain Robin de Clive Lowe, all of
whom were directors of the COMPANY at such time, executed a
Joint and Several Guarantee in favor of HSBC whereby private
respondents and Lowe agreed to pay, jointly and severally, on
demand all sums owed by the COMPANY to petitioner HSBC
under the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the Courts of Singapore shall have
jurisdiction over all disputes arising under this guarantee.
The COMPANY failed to pay its obligation. Thus, petitioner BANK
demanded payment of the obligation from private respondents,
conformably with the provisions of the Joint and Several
Guarantee. Inasmuch as the private respondents still failed to pay,
petitioner BANK filed the above-mentioned complaint.
Private Respondents filed a motion to dismiss, stating that:
1. That the court has no jurisdiction over the subject matter of the
complaint; and
2. That the court has no jurisdiction over the persons of the
defendants.
TC: Denied the motion to dismiss and denied MR
IAC: Granted prohibition with preliminary injunction and dismissed
the case for filing with the proper court of Singapore which is the
proper forum. HSBC's MR Denied.
3
Page
Issue: WON Philippine courts have jurisdiction over the suit.

Held: Yes.
The controversy stems from the interpretation of a provision in the
Joint and Several Guarantee, to wit:
(14) This guarantee and all rights, obligations and liabilites arising
hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the Courts in Singapore shall have
jurisdiction over all disputes arising under this guarantee.
While it is true that "the transaction took place in Singaporean
setting" and that the Joint and Several Guarantee contains a
choice-of-forum clause, the very essence of due process dictates
that the stipulation that "[t]his guarantee and all rights, obligations
and liabilities arising hereunder shall be construed and determined
under and may be enforced in accordance with the laws of the
Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising under this
guarantee" be liberally construed. One basic principle underlies all
rules of jurisdiction in International Law: a State does not have
jurisdiction in the absence of some reasonable basis for exercising
it, whether the proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some
minimum contacts that will not offend traditional notions of fair play
and substantial justice. Indeed, as pointed-out by petitioner BANK
at the outset, the instant case presents a very odd situation. In the
ordinary habits of life, anyone would be disinclined to litigate before
a foreign tribunal, with more reason as a defendant. However, in
this case, private respondents are Philippine residents (a fact
which was not disputed by them) who would rather face a
complaint against them before a foreign court and in the process
incur considerable expenses, not to mention inconvenience, than
to have a Philippine court try and resolve the case. Private
respondents' stance is hardly comprehensible, unless their ultimate
intent is to evade, or at least delay, the payment of a just
obligation.
4
The parties did not thereby stipulate that only the courts of
Singapore, to the exclusion of all the rest, has jurisdiction. Neither
did the clause in question operate to divest Philippine courts of
jurisdiction. In International Law, jurisdiction is often defined as the
light of a State to exercise authority over persons and things within
its boundaries subject to certain exceptions. Thus, a State does not
assume jurisdiction over travelling sovereigns, ambassadors and
diplomatic representatives of other States, and foreign military units
stationed in or marching through State territory with the permission
of the latter's authorities. This authority, which finds its source in
the concept of sovereignty, is exclusive within and throughout the
domain of the State. A State is competent to take hold of any
judicial matter it sees fit by making its courts and agencies assume
jurisdiction over all kinds of cases brought before them.
The respondent Court likewise ruled that:
... In a conflict problem, a court will simply refuse to entertain the
case if it is not authorized by law to exercise jurisdiction. And even
if it is so authorized, it may still refuse to entertain the case by
applying the principle of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on the
basis of the principle of forum non conveniens depends largely
upon the facts of the particular case and is addressed to the sound
discretion of the trial court. Thus, the respondent Court should not
have relied on such principle.
ACCORDINGLY, the decision of the respondent Court is hereby
REVERSED and the decision of the Regional Trial Court is
REINSTATED,
3. Unimasters Conglomeration Inc vs. CA, G.R. No. 119657
(February 7, 1997)
FACTS: On October 8, 1988, KUBOTA and UNIMASTERS
4
entered into a Dealership Agreement for Sales and Services of
Page
KUBOTA’s products in Samar and Leyte. The contract contained:
1. a stipulation reading: “All suits arising out of this Agreement shall
be filed in the proper Courts of Quezon City;” 2. a provision binding
UNIMASTERS to obtain a credit line with METROBANK in the
amount of 2M pesos to answer for its obligations to KUBOTA.
Five years later, UNIMASTERS filed an action in RTC- Tacloban
City against KUBOTA, a certain Reynaldo Go, and METROBANK
for damages for breach of contract, and injunction with prayer for
temporary restraining order. On the same day, RTC issued a
restraining order enjoining METROBANK from authorizing or
effecting payment of any alleged obligation of UNIMASTERS to
KUBOTA arising out of or in connection with purchases made by
Go against the credit line of 2M pesos.
On January 4, 1994, KUBOTA filed two motions, one of which was
a motion to dismiss the case on the ground of improper venue.
Thereafter, the RTC denied the said motion. The trial court said
that UNIMASTERS was holding its principal place of business in
Tacloban City, while KUBOTA was holding its principal place of
business in Quezon City. The proper venue therefore, pursuant to
the Rules of Court (ROC), was either Quezon City or Tacloban City
at the election of the plaintiff. Quezon City, as agreed upon by the
parties in the Dealership Agreement, was an additional place
stated in the ROC. The filing, therefore, of the complaint in
Tacloban City was proper.
Upon appeal, the CA reversed RTC’s decision. The CA agreed
with KUBOTA that the stipulation respecting venue in its
Dealership Agreement with UNIMASTERS did in truth limit the
venue of all suits arising thereunder only and exclusively to the
proper courts in Quezon City. It further held that the participation of
KUBOTA’s counsel at the hearing on the injunction incident did not
operate as a waiver or abandonment of its objection to venue.
ISSUE: W/N the stipulation in the Dealership Agreement had the
effect of effectively eliminating Tacloban City as an optional venue
and limiting litigation between UNIMASTERS and KUBOTA only
and exclusively to Quezon City.
5
HELD: No. Absent additional words and expressions definitely and
unmistakably denoting the parties' desire and intention that actions
between them should be ventilated only at the place selected by
them, Quezon City — or other contractual provisions clearly
evincing the same desire and intention — the stipulation should be
construed, not as confining suits between the parties only to that
one place, Quezon City, but as allowing suits either in Quezon City
or Tacloban City, at the option of the plaintiff, which is
UNIMASTERS in this case.
Rule 4 of the Rules of Court sets forth the principles generally
governing the venue of actions, whether real or personal, or
involving persons who neither reside nor are found in the
Philippines or otherwise. Agreements on venue are explicitly
allowed. "By written agreement of the parties the venue of an
action may be changed or transferred from one province to
another." Parties may by stipulation waive the legal venue and
such waiver is valid and effective being merely a personal privilege,
which is not contrary to public policy or prejudicial to third persons.
It is a general principle that a person may renounce any right which
the law gives unless such renunciation would be against public
policy.
Written stipulations as to venue may be restrictive in the sense that
the suit may be filed only in the place agreed upon, or merely
permissive in that the parties may file their suit not only in the place
agreed upon but also in the places fixed by law (Rule 4,
specifically). As in any other agreement, what is essential is the
ascertainment of the intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue, it is
easy to accept the proposition that normally, venue stipulations
should be deemed permissive merely, and that interpretation
should be adopted which most serves the parties' convenience. In
other words, stipulations designating venues other than those
assigned by Rule 4 should be interpreted as designed to make it
more convenient for the parties to institute actions arising from or in
5
relation to their agreements; that is to say, as simply adding to or
Page
expanding the venues indicated in said Rule 4.
On the other hand, because restrictive stipulations are in
derogation of this general policy, the language of the parties must
be so clear and categorical as to leave no doubt of their intention to
limit the place or places, or to fix places other than those indicated
in Rule 4, for their actions. This is easier said than done, however,
as an examination of precedents involving venue covenants will
immediately disclose.
In at least 13 cases, the SC construed the venue stipulations
involved as merely permissive. One of these cases includes:
Polytrade Corporation v. Blanco, decided in 1969. In this case, the
venue stipulation was as follows: The parties agree to sue and be
sued in the Courts of Manila. This Court ruled that such a provision
"does not preclude the filing of suits in the residence of the plaintiff
or the defendant. The plain meaning is that the parties merely
consented to be sued in Manila. Qualifying or restrictive words
which would indicate that Manila and Manila alone is the venue are
totally absent therefrom. It simply is permissive. The parties
solely agreed to add the courts of Manila as tribunals to which they
may resort. They did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2(b) of Rule 4."
On the other hand, there were some cases where stipulations on
venue were held to be restrictive, or mandatory. An example of this
is Bautista vs. De Borja, decided in 1966. In this case, the contract
provided that in case of any litigation arising therefrom or in
connection therewith, the venue of the action shall be in the City of
Manila. This Court held that without either party reserving the right
to choose the venue of action as fixed by law, it can reasonably be
inferred that the parties intended to definitely fix the venue of the
action, in connection with the contract sued upon in the proper
courts of the City of Manila only, notwithstanding that neither party
is a resident of Manila.
Of the essence is the ascertainment of the parties' intention in their
agreement governing the venue of actions between them. That
ascertainment must be done keeping in mind that convenience is
the foundation of venue regulations, and that construction
should be adopted which most conduces thereto. Hence, the
6
invariable construction placed on venue stipulations is that they do
not negate but merely complement or add to the codal standards of
Rule 4 of the Rules of Court. In other words, unless the parties
make very clear, by employing categorical and suitably limiting
language, that they wish the venue of actions between them to be
laid only and exclusively at a definite place, and to disregard the
prescriptions of Rule 4, agreements on venue are not to be
regarded as mandatory or restrictive, but merely permissive, or
complementary of said rule. The fact that in their agreement the
parties specify only one of the venues mentioned in Rule 4, or
fix a place for their actions different from those specified by
said rule, does not, without more, suffice to characterize the
agreement as a restrictive one. There must be accompanying
language clearly and categorically expressing their purpose
and design that actions between them be litigated only at the
place named by them, regardless of the general precepts of Rule
4; and any doubt or uncertainty as to the parties' intentions must be
resolved against giving their agreement a restrictive or mandatory
aspect. Any other rule would permit of individual, subjective judicial
interpretations without stable standards, which could well result in
precedents in hopeless inconsistency.
DISPOSITIVE PORTION: WHEREFORE, the appealed judgment
of the Court of Appeals is REVERSED, the Order of the Regional
Trial Court of Tacloban City, Branch 6, dated February 3, 1994, is
REINSTATED and AFFIRMED, and said Court is DIRECTED to
forthwith proceed with Civil Case No. 93-12-241 in due course. SO
ORDERED.
4. NM Rotschild & Sons vs. Lepanto, G.R. No. 175799
(November 28, 2011)
FACTS:
On August 30, 2005, Lepanto Consolidated Mining Company filed
with the Regional Trial Court of Makati City a Complaint against
NM Rothschild & Sons (Australia) Limited praying for a judgment
6
declaring the loan and hedging contracts between the parties void
Page
for being contrary to Article 2018 of the Civil Code of the
Philippines and for damages.
Upon respondent’s motion, the trial court authorized respondent’s
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.
On October 20, 2005, petitioner filed a Special Appearance With
Motion to Dismiss praying for the dismissal of the Complaint on the
grounds that the court has not acquired jurisdiction over the person
of petitioner due to the defective and improper service of
summons; the Complaint failed to state a cause of action;
respondent does not have any against petitioner; and other
grounds.
On December 9, 2005, the trial court issued an Order denying the
Motion to Dismiss providing that there was a proper service of
summons through the Department of Foreign Affairs 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 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 April 3, 2006, petitioner sought redress via a Petition
for Certiorari with the Court of Appeals, alleging that the trial court
committed grave abuse of discretion in denying its Motion to
Dismiss.
On September 8, 2006, the Court of Appeals rendered the assailed
Decision dismissing the Petition for Certiorari.
Hence, petitioner filed the present petition assailing the Decision
and Resolution of the Court of Appeals.
ISSUE:
7
Whether or not the RTC is 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 its failure to
acquire jurisdiction over the person of the defendant.
HELD:
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 respondent’s
counsel personally bringing the summons and Complaint to the
Philippine Consulate General in Sydney, Australia.
Respondent argues that extraterritorial service of summons upon
foreign private juridical entities is not proscribed under the Rules of
Court.
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.
Breaking down Section 15, Rule 14, it is apparent that there are
only four instances wherein a defendant who is a non-resident 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 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) any other manner the court may deem sufficient.
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. . On the other hand, when the defendant or respondent
7
does not reside and is not found in the Philippines, and the action
Page
involved is in personam, Philippine courts cannot try any case
against him because of the impossibility of acquiring jurisdiction
over his person unless he voluntarily appears in court
It is likewise settled that an 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 person’s interest in a property to a 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 onequasi
in rem.
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 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 reliefs from the trial
court.
The Court 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 jurisdiction
Consequently, the trial court cannot be considered to have
committed grave abuse of discretion amounting to lack or excess
8
of jurisdiction in the denial of the Motion to Dismiss on account of
failure to acquire jurisdiction over the person of the defendant.
Petition is DENIED
B. Choice of Law
5. Bellis vs. Bellis, G.R. No. L-23678 (June 6, 1967)
AMOS G. BELLIS was a citizen and resident of Texas at the time
of his death. He executed a will in the Philippines, in which he
directed that after all taxes, obligations, and expenses of
administration are paid for, his distributable estate should be
divided, in trust, in the following order and manner
a) $240,000.00 to his first wife MARY E. MALLEN
b) $120,000.00 to his three illegitimate childrenAMOS BELLIS, JR.,
MARIA CRISTINA BELLIS, MIRIAM PALMA BELLIS,or $40,000.00
each, and
c) After foregoing the two items have been satisfied, the remainder
shall go to his seven surviving children by his first and second
wives EDWARD A. BELLIS, HENRY A. BELLIS, ALEXANDER
BELLIS, and ANNA BELLIS-ALLSMAN, EDWARD G. BELLIS, WA
LTER S. BELLIS, and DOROTHY E. BELLIS in equal shares.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS filed their
respective oppositions to the project of partition on the ground that
they were deprived of their legitimes as illegitimate children and,
therefore, compulsory heirs of the deceased.
The LOWER COURT issued an order overruling the oppositions
and approving the executor’s final account, report and
administration, and project of partition. Relying upon Article 16 of
the Civil Code, it applied the national law of the decedent, which in
8
this case is which did not provide for legitimes
Page
ISSUE:
Which law must apply in executing the will of the deceased –
Texas Law or Philippine Law?
HELD:
It is not disputed that the decedent was both a national of Texas
and a domicile thereof at the time of his death. So that even
assuming Texan has a conflict of law rule providing that the same
would not result in a reference back (renvoi) to Philippine Law, but
would still refer to Texas Law.
Nonetheless, if Texas has conflict rule adopting the situs theory
(lex rei sitae) calling for the application of the law of the place
where the properties are situated, renvoi would arise, since the
properties here involved are found in the Philippines. In the
absence, however of proofs as to the conflict of law rule of Texas, it
should not be presumed different from our appellants, position is
therefore not rested on the doctrine of renvoi.
The parties admit that the decedent, Amos Bellis, was a citizen of
the State of Texas, USA and that under the Laws of Texas, there
are no forced heirs or legitimates. Accordingly, since the intrinsic
validity of the provision of the will and the amount of successional
rights has to be determined under Texas Law, the Philippine Law
on legitimates can not be applied to the testate of Amos Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto,
with costs against appellants. So ordered.
6. Tayag Renato vs. Benguet Consolidated, Inc., G.R. No.
23145 (November 29, 1968)
Facts: Idonah Slade Perkins was domiciled and died in New York
City on March 27, 1960. She left as part of her estate, two stock
certificates owned by her in Benguet Consolidated, Inc. which is a
Philippine Corporation. Country Trust Company of New York was
9
the domiciliary administrator of the estate of deceased Perkins. On
the other hand, Prospero Sanidad later substituted by Renato
Tayag was instituted as ancillary administrator.
A dispute arose between the domiciliary administrator and the
ancillary administrator as to which of them was entitled to the
possession of the stock certificates in question. On January 27,
1964, the CFI of Manila ordered the domiciliary administrator to
'produce and deposit' them with the ancillary administrator or with
the Clerk of Court. The domiciliary administrator, however, did not
comply with the order, prompting the ancillary administrator to
petition the court to issue an order declaring the certificate or
certificates of stocks be declared or considered as lost. Such
petition was granted. In addition to the declaration of lost, the Court
ordered Benguet Consolidated to have the original certificates
cancelled and to issue new ones in lieu thereof.
Benguet Consolidated, Inc. opposed the petition interposing that
the stock certificates are in existence and are in the possession of
the domiciliary administrator. Hence, these cannot be declared or
considered lost.
Issue: Whether or not the ancillary administrator has the right to
possess newly-issued stock certificates due to the court's order to
have the original certificates cancelled and declared lost by reason
of domiciliary administrator's refusal to comply with the court's
order to have the latter deposited in the Philippines.
Held: Yes. Appellant Benguet Consolidated, Inc. did not dispute
the power of the ancillary administrator to gain control and
possession of all assets of the decedent within the jurisdiction of
the Philippines. Nor could it. Such a power is inherent in his duty to
settle her estate and satisfy the claims of local creditors. As Justice
Tuason speaking for this Court made clear, it is a "general rule
universally recognized" that administration, whether principal or
ancillary, certainly "extends to the assets of a decedent found
9
within the state or country where it was granted," the corollary
Page
being "that an administrator appointed in one state or country has
no power over property in another state or country."
A grant of administration does not ex proprio rigore have any effect
beyond the limits of the country in which it is granted. Hence, an
administrator appointed in a foreign state has no authority in the
Philippines. The ancillary administration is proper, whenever a
person dies, leaving in a country other than that of his last domicile,
property to be administered in the nature of assets of the deceased
liable for his individual debts or to be distributed among his heirs. It
would follow then that the authority of the probate court to require
that ancillary administrator's right to the stock certificates be
respected is equally beyond question. For appellant is a Philippine
corporation owing full allegiance and subject to the unrestricted
jurisdiction of local courts. Its shares of stock cannot therefore be
considered in any wise as immune from lawful court orders.
Since there is a refusal, persistently adhered to by the domiciliary
administrator in New York, to deliver the shares of stocks of
appellant corporation owned by the decedent to the ancillary
administrator in the Philippines, there was nothing unreasonable or
arbitrary in considering them as lost and requiring the appellant to
issue new certificates in lieu thereof. Thereby, the task incumbent
under the law on the ancillary administrator could be discharged
and his responsibility fulfilled.
Any other view would result in the compliance to a valid judicial
order being made to depend on the uncontrolled discretion of the
party or entity, in this case domiciled abroad, which thus far has
shown the utmost persistence in refusing to yield obedience.
Certainly, appellant would not be heard to contend in all
seriousness that a judicial decree could be treated as a mere scrap
of paper, the court issuing it being powerless to remedy its flagrant
disregard.
7. Pakistan International Airlines vs. Ople, 190 SCRA 1990,
G.R. No. 61594, Sept. 28, 1990)
10
Facts:Pakistan International Airlines Corporation (PIA), a foreign
corporation licensed to do business in the Philippines, executed in
Manila 2 separate contracts of employment with private
respondents Ethelynne B. Farrales and Ma. M.C. Mamasig. The
contracts provided that (1) the agreement is for a period of three
(3) years, but can be extended by the mutual consent of the
parties; (2) PIA reserves the right to terminate this agreement at
any time by giving the EMPLOYEE notice in writing in advance one
month before the intended termination or in lieu thereof, by paying
the EMPLOYEE wages equivalent to one month's salary; and (3)
that the agreement shall be construed and governed under and by
the laws of Pakistan, and only the Courts of Karachi, Pakistan shall
have the jurisdiction to consider any matter arising out of or under
the agreement.
Respondents then commenced training in Pakistan. After their
training period, they began discharging their job functions as flight
attendants, with base station in Manila and flying assignments to
different parts of the Middle East and Europe. One (1) year and
four (4) months prior to the expiration of the contracts of
employment, PIA sent separate letters to private respondents
advising both that their services as flight stewardesses would be
terminated. Private respondents jointly instituted a complaint, for
illegal dismissal against PIA with the then Ministry of Labor and
Employment (MOLE). PIA claimed that both private respondents
were habitual absentees; that both were in the habit of bringing in
from abroad sizeable quantities of "personal effects". PIA further
claimed that the services of both private respondents were
terminated pursuant to the provisions of the employment contract.
Regional Director of MOLE ordered the reinstatement of
private respondents with full backwages or, in the alternative, the
payment to them of the amounts equivalent to their salaries for the
remainder of the fixed three-year period of their employment
contracts. The Order stated that private respondents had attained
the status of regular employees after they had rendered more than
10
a year of continued service; that the stipulation limiting the period
of the employment contract to three (3) years was null and void as
Page
violative of the provisions of the Labor Code and its implementing
rules and regulations on regular and casual employment; and that
the dismissal, having been carried out without the requisite
clearance from the MOLE, was illegal and entitled private
respondents to reinstatement with full backwages.
Deputy Minister, MOLE, adopted the findings of fact and
conclusions of the Regional Director.
ISSUE: Whether or not the contracts of employment shall be
governed by the laws of Pakistan instead of the Labor Code, and
only Pakistan shall have the jurisdiction to consider any matter
arising out of or under the agreement. (No)
HELD:A contract freely entered into should, of course, be
respected since a contract is the law between the parties. The
principle of party autonomy in contracts is not, however, an
absolute principle. The rule in Article 1306, of our Civil Code is that
the contracting parties may establish such stipulations as they may
deem convenient, "provided they are not contrary to law, morals,
good customs, public order or public policy." Thus, counter-
balancing the principle of autonomy of contracting parties is the
equally general rule that provisions of applicable law, especially
provisions relating to matters affected with public policy, are
deemed written into the contract. Put a little differently, the
governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest. The law relating to
labor and employment is clearly such an area and parties are not
at liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with
each other.
The net effect of the agreement here involved is to render the
employment of private respondents basically employment at the
pleasure of petitioner PIA. The Court considers that those
provisions were intended to prevent any security of tenure from
accruing in favor of private respondents even during the limited
period of three (3) years, and thus to escape completely the thrust
of Articles 280 and 281 of the Labor Code (on security of tenure).
11
PIA cannot take refuge in its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the
agreement and, secondly, lays the venue for settlement of any
dispute arising out of or in connection with the agreement "only [in]
courts of Karachi Pakistan". The first clause cannot be invoked
to prevent the application of Philippine labor laws and
regulations to the subject matter of this case, i.e., the
employer-employee relationship between petitioner PIA and
private respondents.We have already pointed out that the
relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to
govern their relationship.
Neither may petitioner invoke the second clause,
specifying the Karachi courts as the sole venue for the
settlement of dispute; between the contracting parties.Even a
cursory scrutiny of the relevant circumstances of this case will
show the multiple and substantive contacts between Philippine law
and Philippine courts, on the one hand, and the relationship
between the parties, upon the other: the contract was not only
executed in the Philippines, it was also performed here, at least
partially; private respondents are Philippine citizens and
respondents, while petitioner, although a foreign corporation, is
licensed to do business (and actually doing business) and hence
resident in the Philippines; lastly, private respondents were based
in the Philippines in between their assigned flights to the Middle
East and Europe. All the above contacts point to the Philippine
courts and administrative agencies as a proper forum for the
resolution of contractual disputes between the parties.
Under these circumstances, provisions of the employment
agreement cannot be given effect so as to oust Philippine
agencies and courts of the jurisdiction vested upon them by
Philippine law. Finally, and in any event, the petitioner PIA did not
undertake to plead and prove the contents of Pakistan law on the
11
matter; it must therefore be presumed that the applicable
provisions of the law of Pakistan are the same as the applicable
Page
provisions of Philippine law.
 We conclude that private respondents Farrales and Mamasig
were illegally dismissed and that public respondent Deputy
Minister, MOLE, had not committed any grave abuse of discretion
nor any act without or in excess of jurisdiction in ordering their
reinstatement with backwages.
8. Zalamea vs. CA and Transworld Airlines Inc., G.R. No.
104235 (November 18, 1993)
FACTS:
Spouses Cesar and Suthira Zalamea, and their daughter, Liana
Zalamea, purchased three (3) airline tickets from the Manila agent
of respondent TransWorld Airlines, Inc. (TWA) for a flight from New
York to Los Angeles on June 6, 1984. The tickets of the spouses
were purchased at a discount of 75% while that of their daughter
was a full fare ticket. All three tickets represented confirmed
reservations.
While in New York, on June 4, 1984, the spouses Zalamea and
their daughter received a notice of reconfirmation of their
reservations for said flight. On the appointed date, however, the
spouses Zalamea and their daughter checked in at 10:00 am, an
hour earlier than the scheduled flight at 11:00 am but were placed
on the wait-list because the number of passengers who checked in
before tem had already taken all the seats available on the flight.
Out of the 42 names on the wait-list, the first 22 names were
eventually allowed to board the flight to Los Angeles, including
Cesar Zalamea. The two others, on the other hand, being ranked
lower than 22, were not able to fly. As it were, those holding full-
fare ticket were given first priority among the wait-listed
passengers. Mr. Zalamea, who was holding the full-fare ticket of
his daughter, was allowed to board the plane; while his wife and
daughter, who presented the discounted tickets were denied
boarding. Even in the next TWA flight to Los Angeles, Mrs.
Zalamea and her daughter, could not be accommodated because it
12
was full booked. Thus, they were constrained to book in another
flight and purchased two tickets from American Airlines.
Upon their arrival in the Philippines, the spouses Zalamea filed an
action for damages based on breach of contract of air carriage
before the RTC of Makati which rendered a decision in their favor
ordering the TWA to pay the price of the tickets bought from
American Airlines together with moral damages and attorney’s
fees. On appeal, the CA held that moral damages are recoverable
in a damage suit predicated upon a breach of contract of carriage
only where there is fraud or bad faith. It further stated that since it
is a matter of record that overbooking of flights is a common and
accepted practice of airlines in the United States and is specifically
allowed under the Code of Federal Regulations by the Civil
Aeronautics Board, neither fraud nor bad faith could be imputed on
TWA.
ISSUE:
Whether or not the CA erred in accepting the finding that
overbooking is specifically allowed by the US Code of Federal
Regulations and in holding that there was no fraud or bad faith on
the part of TWA ?
HELD:
The CA was in error. There was fraud or bad faith on the part of
TWA when it did not allow Mrs. Zalamea and her daughter to board
their flight for Los Angeles in spite of confirmed tickets. The US law
or regulation allegedly authorizing overbooking has never been
proved.
1.) Foreign laws do not prove themselves nor can the court take
judicial notice of them. Like any other fact, they must be alleged
12
and proved. Written law may be evidenced by an official publication
thereof or by a copy attested by the officers having legal custody of
Page
the record, or by his deputy and accompanied with a certificate that
such officer has custody. The certificate may be made by a
secretary of an embassy or legation, consul-general, consul, vice-
consul, or consular agent or by any officer in the foreign service of
the Phil. stationed in the foreign country in which the record is kept
and authenticated by the seal of his office. Here, TWA relied solely
on the testimony of its customer service agent in her deposition
that the Code of Federal Regulations of the Civil Aeronautic Board
allows overbooking. Aside from said statement, no official
publication of said code was presented as evidence. Thus, the
CA’s finding that overbooking is specifically allowed by the US
Code of Federal Regulations has no basis in fact.
"That there was fraud or bad faith on the part of respondent airline
when it did not allow petitioners to board their flight for Los Angeles
in spite of confirmed tickets cannot be disputed. The U.S. law or
regulation allegedly authorizing overbooking has never been
proved. Foreign laws do not prove themselves nor can the courts
take judicial notice of them. Like any other fact, they must be
alleged and proved. Written law may be evidenced by an official
publication thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and accompanied
with a certificate that such officer has custody. The certificate may
be made by a secretary of an embassy or legation, consul general,
consul, vice-consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in
which the record is kept, and authenticated by the seal of his office.
Respondent TWA relied solely on the statement of Ms. Gwendolyn
Lather, its customer service agent, in her deposition
9. United Airlines Inc vs. CA, G.R. No. 124110 (April 20, 2001)
Facts:
The cause of the non-boarding of the Fontanillas on United Airlines
Flight No. 1108 makes up the bone of contention of this
controversy.
13
--
Respondent Aniceto Fontanilla purchased from petitioner United
Airlines, through the Philippine Travel Bureau in Manila three (3)
“Visit the U.S.A.” tickets for himself, his wife and his minor son with
the following routes:
(a) San Francisco to Washington (15 April 1989);
(b) Washington to Chicago (25 April 1989);
(c) Chicago to Los Angeles (29 April 1989);
(d) Los Angeles to San Francisco (1 and 5 May 1989)
The Fontanillas proceeded to the US as planned. To extend the
trip, Aniceto bought additional coupons: San Francisco to
Washington. After paying the penalty for rewriting their tickets, the
Fontanillas were issued tickets with corresponding boarding
passes with the words “CHECK-IN REQUIRED,” for a United
Airlines flight. However, at the junction of their trip of LA-San
Francisco, the Fontanillas were not able to board said flight
because allegedly, they did not have assigned seat numbers.
Fontanilla's account: Upon arrival at the airport in LA, they went to
the counter where they were attended by a woman with nameplate
"LINDA". The attendant examined their tickets, punched something
in the computer and told them the flight is in 15 mins. When the
flight was called, they were refused to board the plane because
they had no seating assignment, and are asked to go back to the
check-in counter where Linda informed them that the flight is
overbooked. When they tried to explain their situation, they claimed
that they were subjected to coarse and harsh treatment by the
ground crew of United Airlines where Linda was alleged to have
told them: "Who do you think you are? You lousy Flips are good for
13
nothing beggars. You always ask for American aid..." "Dont worry
about your baggage. Anyway there is nothing in there. What are
Page
you doing here anyway? I will report you to immigration. You
Filipinos should go home."
United Airlines account: The Fontanillas did not initially go to the
check-in counter to get their seat assignments for UA Flight
1108. They instead proceeded to join the queue boarding the
aircraft without first securing their seat assignments as required in
their ticket and boarding passes. Having no seat assignments, the
stewardess at the door of the plane instructed them to go to the
check-in counter. When the Fontanillas proceeded to the check-in
counter, Linda Allen, the United Airlines Customer Representative
at the counter informed them that the flight was overbooked. She
booked them on the next available flight and offered them denied
boarding compensation. Allen vehemently denies uttering the
derogatory and racist words attributed to her by the Fontanillas.
RTC - Sided with United Airlines. Respondents failed to prove their
allegations.
CA - Reversed RTC. The appellate court said the Fontanillas did
comply with the check in requirement and gave credence to the
claim that they were subjected to harsh treatment. Awarded moral
and exemplary damages.
Issue:
Whether or not the Fontanillas were able to prove with adequate
evidence his allegations of breach of contract in bad faith. (No.)
Held:
Firstly, the Fontanillas failed to prove that they complied with the
check-in requirements where they are suppose to obtain their
seating assignments. Whether or not the Fontanillas complied is
well within the knowledge of the petitioner Airline. The RTC ruling
14
as to the demeanor of the parties during the trial should not be
disturbed. The determination of the other issues raised is
dependent on whether or not there was a breach of contract in bad
faith on the part of the petitioner in not allowing the Fontanillas to
board United Airlines Flight 1108.
Secondly, Existing jurisprudence (Alitalia Airways vs. CA) explicitly
states that overbooking amounts to bad faith, entitling passengers
concerned to an award of moral damages. But it is necessary first
to determine which law applies, Philippine Law or US Law. The SC
held that Philippine law should apply because of the doctrine of lex
loci contractus - as a general rule, the law of the place where a
contract is made or entered into governs with respect to its nature
and validity, obligation and interpretation. Hence, the court should
apply the law of the place where the airline ticket was issued, when
the passengers are residents and nationals of the forum and the
ticket is issued in such State by the defendant airline (citing
Zalamea vs. CA).
With that in mind, the applicable law is Economic Regulations No.
7 of the Civil Aeronautics Board which provides that overbooking
not exceeding 10% of the seating capacity of the aircraft shall not
be considered as a deliberate and willful act of non-
accommodation - and hence, will not amount to fraud or bad faith,
entitling respondents for damages.
The CA is faulted for applying US Law: Code of Federal Regulation
Part on Oversales - where private respondents' failure to comply
with the check-in requirement will not defeat his claim as the
denied boarding rules were not complied with. Although, the
contract of carriage was to be performed in the United States, the
tickets were purchased through petitioners agent in Manila. It is
true that the tickets were rewritten in Washington, D.C. However,
14
such fact did not change the nature of the original contract of
Page
carriage entered into by the parties in Manila.

WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals in CA-G.R. CV No. 37044 is hereby REVERSED
and SET ASIDE. The decision of the Regional Trial Court of Makati
City in Civil Case No. 89-4268 dated April 8, 1991 is hereby
REINSTATED.
10. Cadalin vs. POEA Administrator, 238 SCRA 721, 774-775
(1994)
FACTS
Bienvenido M.. Cadalin, Rolando M. Amul and Donato B.
Evangelista, in their own behalf and on behalf of 728 other
overseas contract workers (OCWs) instituted a class suit by filing
an "Amended Complaint" with the Philippine Overseas
Employment Administration (POEA) for money claims arising from
their recruitment by AIBC and employment by BRII. BRII is a
foreign corporation with headquarters in Houston, Texas, and is
engaged in construction; while AIBC is a domestic corporation
licensed as a service contractor to recruit, mobilize and deploy
Filipino workers for overseas employment on behalf of its foreign
principals. The complaint principally sought the payment of the
unexpired portion of the employment contracts, which was
terminated prematurely, and secondarily, the payment of the
interest of the earnings of the Travel and Reserved Fund, interest
on all the unpaid benefits; area wage and salary differential pay;
fringe benefits; refund of SSS and premium not remitted to the
SSS; refund of withholding tax not remitted to the BIR; penalties for
committing prohibited practices; as well as the suspension of the
license of AIBC and the accreditation of BRII.
It appears that the complainants-appellants allege that they were
recruited by respondent-appellant AIBC for its accredited foreign
principal, Brown & Root, on various dates from 1975 to 1983. They
were all deployed at various projects undertaken by Brown & Root
in several countries in the Middle East, such as Saudi Arabia,
Libya, United Arab Emirates and Bahrain, as well as in Southeast
Asia, in Indonesia and Malaysia. Having been officially processed
15
as overseas contract workers by the Philippine Government, all the
individual complainants signed standard overseas employment
contracts with AIBC before their departure from the Philippines.
NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on
Evidence governing the pleading and proof of a foreign law and
admitted in evidence a simple copy of the Bahrain's Amiri Decree
No. 23 of 1976. NLRC agreed with the POEA Administrator that the
Amiri Decree No. 23, being more favorable and beneficial to the
workers, should form part of the overseas employment contract of
the complainants. NLRC ruled that the prescriptive period for the
filing of the claims of the complainants was three years, as
provided in Article 291 of the Labor Code of the Philippines, and
not ten years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No. 23 of
1976. NLRC agreed with the POEA Administrator that the labor
cases cannot be treated as a class suit for the simple reason that
not all the complainants worked in Bahrain and therefore, the
subject matter of the action, the claims arising from the Bahrain
law, is not of common or general interest to all the complainants.
ISSUES
1. Whether or not complainants are entitled to the benefits provided
by Amiri Decree No. 23 of Bahrain (WON the foreign law should
govern or the contract of the parties
2. Whether it is the Bahrain law on prescription of action based on
the Amiri Decree No. 23 of 1976 or a Philippine law on prescription
that shall be the governing law.
3. Whether the prescriptive period governing the filing of the claims
is three years, as provided by the Labor Code or ten years, as
provided by the Civil Code of the Philippines.
4. Claimants insist that all their claims could properly be
15
consolidated in a "class suit" because "all the named complainants
Page
have similar money claims and similar rights sought irrespective of
whether they worked in Bahrain, United Arab Emirates or in Abu
Dhabi, Libya or in any part of the Middle East.
RULING
1. Yes. The overseas-employment contracts, which were prepared
by AIBC and BRII themselves, provided that the laws of the host
country became applicable to said contracts if they offer terms and
conditions more favorable that those stipulated therein.
The parties to a contract may select the law by which it is to be
governed. In such a case, the foreign law is adopted as a "system"
to regulate the relations of the parties, including questions of their
capacity to enter into the contract, the formalities to be observed by
them, matters of performance, and so forth. Instead of adopting the
entire mass of the foreign law, the parties may just agree that
specific provisions of a foreign statute shall be deemed
incorporated into their contract "as a set of terms." By such
reference to the provisions of the foreign law, the contract does not
become a foreign contract to be governed by the foreign law. The
said law does not operate as a statute but as a set of contractual
terms deemed written in the contract. A basic policy of contract is
to protect the expectation of the parties. Such party expectation is
protected by giving effect to the parties' own choice of the
applicable law. The choice of law must, however, bear some
relationship to the parties or their transaction. There is no question
that the contracts sought to be enforced by claimants have a direct
connection with the Bahrain law because the services were
rendered in that country.
2. The applicable law on prescription is the Philippine law.As a
general rule, a foreign procedural law will not be applied in the
forum. Procedural matters, such as service of process, joinder of
actions, period and requisites for appeal, and so forth, are
governed by the laws of the forum. This is true even if the action is
based upon a foreign substantive. A law on prescription of actions
is sui generis in Conflict of Laws in the sense that it may be viewed
either as procedural or substantive, depending on the
characterization given such a law.
16
The characterization of a statute into a procedural or substantive
law becomes irrelevant when the country of the forum has a
"borrowing statute." Said statute has the practical effect of treating
the foreign statute of limitation as one of substance A "borrowing
statute" directs the state of the forum to apply the foreign statute of
limitations to the pending claims based on a foreign law. While
there are several kinds of "borrowing statutes," one form provides
that an action barred by the laws of the place where it accrued, will
not be enforced in the forum even though the local statute has not
run against it. Section 48 of our Code of Civil Procedure is of this
kind. Said Section provides: If by the laws of the state or country
where the cause of action arose, the action is barred, it is also
barred in the Philippines Islands. In the light of the 1987
Constitution, however, Section 48 cannot be enforced ex proprio
vigore insofar as it ordains the application in this jurisdiction of
Section 156 of the
Amiri Decree No. 23 of 1976. The courts of the forum will not
enforce any foreign claim obnoxious to the forum's public policy. To
enforce the one-year prescriptive period of the Amiri Decree No. 23
of 1976 as regards the claims in question would contravene the
public policy on the protection to labor. In the Declaration of
Principles and State Policies, the 1987 Constitution emphasized
that: The state shall promote social justice in all phases of national
development. (Sec. 10); The state affirms labor as a primary social
economic force. It shall protect the rights of workers and promote
their welfare (Sec. 18). In article XIII on Social Justice and Human
Rights, the 1987 Constitution provides: Sec. 3. The State shall
afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of
employment opportunities for al
3. The applicable provision is Article 291 of the Labor Code of the
Philippines providing for the three years prescriptive period. The
contention of the POEA Administrator, that the three-year
prescriptive period under Article 291 of the Labor Code of the
16
Philippines applies only to money claims specifically recoverable
under said Code, does not find support in the plain language of the
Page
provision. Neither is the contention of the claimants in G.R. Nos.
104911-14 that said Article refers only to claims "arising from the
employer's violation of the employee's right," as provided by the
Labor Code supported by the facial reading of the provision.
4. No. A class suit is proper where the subject matter of the
controversy is one of common or general interest to many and the
parties are so numerous that it is impracticable to bring them all
before the court (Revised Rules of Court, Rule 3, Sec. 12).
11. Asiavest Merchant Bankers vs. CA, G.R. No. 110263 (July
20, 2001)
FACTS:
 Petitioner: Asiavest Merchant Bankers (M) Berhad is a
corporation organized under the laws of Malaysia
 Respondent: Philippine National Construction Corporation is a
corporation duly incorporated and existing under Philippine laws.
 Sometime in 1983, Asiavest initiated a suit for collection
against PNCC, then known as Construction and Development
Corporation of the Philippines(CDCP), before the High Court of
Malaya in Kuala Lumpur.
(to recover the indemnity of the performance bond it had put up in
favor of private respondent to guarantee the completion of the
Felda Project and the non-payment of the loan it extended to
Asiavest-CDCP Sdn. Bhd. for the completion of Paloh Hanai and
Kuantan By-Pass Project)
 High Court of Malaya (Commercial Division) rendered
judgment in favor of Asiavest.
 Following unsuccessful attempts[6] to secure payment from
private respondent under the judgment, petitioner initiated on
September 5, 1988 the complaint before Regional Trial Court of
Pasig, Metro Manila, to enforce the judgment of the High Court of
Malaya.[7]
 PNCC sought the dismissal of the case via a Motion to
Dismiss, contending that the alleged judgment of the High Court of
Malaya should be denied recognition or enforcement since on its
face, it is tainted with want of jurisdiction, want of notice to private
17
respondent, collusion and/or fraud, and there is a clear mistake of
law or fact.
 RTC dismissed Asiavest’s complaint.
ISSUE: W/N the judgment rendered by High Court of Malaya
with respect to Asiavest and PNCC is enforceable in the
Philippines
HELD: YES
A foreign judgment is presumed to be valid and binding in the
country from which it comes, until a contrary showing, on the basis
of a presumption of regularity of proceedings and the giving of due
notice in the foreign forum. Under Section 50(b), Rule 39 of the
Revised Rules of Court, which was the governing law at the time
the instant case was decided by the trial court and respondent
appellate court, a judgment, against a person, of a tribunal of a
foreign country having jurisdiction to pronounce the same is
presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title. The judgment may,
however, be assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or
fact. In addition, under Section 3(n), Rule 131 of the Revised Rules
of Court, a court, whether in the Philippines or elsewhere, enjoys
the presumption that it was acting in the lawful exercise of its
jurisdiction. Hence, once the authenticity of the foreign judgment is
proved, the party attacking a foreign judgment, is tasked with the
burden of overcoming its presumptive validity. In this case,
Asiavest sufficiently proved the existence and authenticity of the
foreign judgment and PNCC failed to overcome the presumption of
validity of the foreign judgment.
There is no merit to the argument that the foreign judgment is not
enforceable in view of the absence of any statement of facts and
law upon which the award in favor of the petitioner was based. lex
fori or the internal law of the forum governs matters of remedy and
procedure. Considering that under the procedural rules of the High
17
Court of Malaya, a valid judgment may be rendered even without
stating in the judgment every fact and law upon which the judgment
Page
is based, then the same must be accorded respect and the courts
in this jurisdiction cannot invalidate the judgment of the foreign
court simply because our rules provide otherwise.
12. Garcia v. Recio, G.R. No. 138322 (October 2, 2001)
FACTS:
• Rederick Recio, a Filipino, was married to Editha Samson an
Australian citizen, on March 1, 1987 in Malabon, Rizal. On May 18,
1989 a decree of divorce dissolving the marriage was issued by the
Australian Family Court.
• On June 26, 1992, Recio became an Australian citizen.
• Subsequently, Recio entered into marriage with Grace Garcia,
a Filipina, on January 12, 1994 in Cabanatuan City. However,
starting October 22, 1995, Recio and Garcia lived separately
without prior judicial dissolution of their marriage.
• On March 3, 1998, Garcia filed a complaint for Declaration of
Nullity of Marriage on the ground of bigamy. She alleged that she
had no prior knowledge to the first marriage contracted by Recio.
• Recio contended that his prior marriage had been validly
dissolved by a decree of divorce obtained in Australia thus he is
legally capacitated to marry Garcia.
Trial Court: Declared that the marriage between Garcia and Recio
dissolved and both parties can now remarry.
ISSUE #1: Whether the divorce between respondent and Editha
Samson was proven
GARCIA Argued: Garcia contends that RTC erred in recognizing
the divorce between Recio and Samson. Petitioner argues that the
divorce decree, like any other foreign judgment, may be given
recognition in this jurisdiction only upon proof of the existence of
(1) the foreign law allowing absolute divorce and (2) the alleged
divorce decree itself, which Recio failed to provide. Presentation of
the foreign law to show the conformity of the marriage in question
to the legal requirements of the place where the marriage was
performed.
18
HELD: Recio failed to sufficiently prove the existence of Divorce on
his marriage with Samson, however, document presented by Recio
is still admissible as evidence.
The divorce decree between respondent and Editha Samson
appears to be an authentic one issued by an Australian family
court. However, appearance is not sufficient; compliance with
Sections 24 and 25 of Rule 132 must be demonstrated, stated as
follows:
A writing or document may be proven as a public or official record
of a foreign country by either (1) an official publication or (2) a copy
thereof attested by the officer having legal custody of the
document. If the record is not kept in the Philippines, such copy
must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office
However, such document is still admissible as evidence to prove
that Recio had a legal capacity to contract subsequent marriage
since petitioner Garcia failed to object to its admissibility. Indeed,
petitioners failure to object properly rendered the divorce decree
admissible as a written act of the Family Court of Sydney,
Australia.
ISSUE #2: Whether respondent Recio was proven to be legally
capacitated to marry petitioner Garcia.
GARCIA Argued: Recio insufficiently proved his legal capacity to
contract marriage, thus, the marriage subsequently obtained
between Garcia and Recio is Void Ab Initio.
RECIO Argued: Since the divorce decree is validly admitted in
evidence, he adequately established, through such document, that
18
he has capacity to contract marriage with Garcia under Australian
Law.
Page
HELD: Recio failed to prove that he has legal capacity to contract
marriage under Australian Law.
Divorces are of different types. The two basic ones are (1) absolute
divorce and (2) limited divorce. The first kind terminates the
marriage, while the second suspends it and leaves the bond in full
force. There is no showing, through the document presented by
Recio which type of divorce was procured by respondent.
Court ruled that the document is only a conditional or provisional
judgment of divorce. It is in effect the same as a separation from
bed and board, although an absolute divorce may follow after the
lapse of the prescribed period during which no reconciliation is
effected.On its face, the herein Australian divorce decree contains
a restriction that reads:
1. A party to a marriage who marries again before this decree
becomes absolute (unless the other party has died) commits the
offence of bigamy.
Thus, it did not absolutely establish his legal capacity to remarry
according to his national law. Court a quo erred in finding that the
divorce decree ipso facto clothed respondent with the legal
capacity to remarry without requiring him to adduce sufficient
evidence to show the Australian personal law governing his status;
or at the very least, to prove his legal capacity to contract the
second marriage.
WHEREFORE, it is ordered by SC to remand the case to the trial
court to receive evidence, if any, which show petitioners legal
capacity to marry petitioner.
13. Corpuz vs. Sto. Tomas, G.R. No. 186751 (August 11, 2010)
FACTS: Petitioner Gerbert R. Corpuz was a former Filipino
citizen who acquired Canadian citizenship through naturalization
on November 29, 2000. On January 18, 2005, Gerbert married
respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig City. Due to
19
work and other professional commitments, Gerbert left for Canada
soon after the wedding. He returned to the Philippines around April
2005 only to find his wife having an affair with another man. Hurt
and disappointed, Gerbert returned to Canada and filed a petition
for divorce. His petition was granted on December 8, 2005 and
took effect on January 8, 2006.
2 years later, Gerbert found another Filipina to woman and
was desirous to marry her. He then went to Pasig City Civil
Registry Office and registered the Canadian divorce decree on his
and Daisylyn’s marriage certificate. Despite the registration of the
divorce decree, an official of the National Statistics Office (NSO)
informed Gerbert that the marriage between him and Daisylyn still
subsists under Philippine law; to be enforceable, the foreign
divorce decree must first be judicially recognized by a competent
Philippine court, pursuant to NSO Circular No. 4, series of 1982.
Accordingly, Gerbert filed a petition for judicial recognition of
foreign divorce and/or declaration of marriage as dissolved
(petition) with the RTC.
RTC RULING: Such, however, was denied. The RTC
concluded that Gerbert was not the proper party to institute the
action for judicial recognition of the foreign divorce decree as he is
a naturalized Canadian citizen. It ruled that only the Filipino spouse
can avail of the remedy, under the second paragraph of Article 26
of the Family Code, in order for him or her to be able to remarry
under Philippine law.
Gerbert elevated the case to the Supreme Court through a
petition for review on certiorari. He asserts that his petition before
the RTC is essentially for declaratory relief, similar to that filed in
Orbecido; he, thus, similarly asks for a determination of his rights
under the second paragraph of Article 26 of the Family Code.
Taking into account the rationale behind the second paragraph of
Article 26 of the Family Code, he contends that the provision
applies as well to the benefit of the alien spouse. He claims that the
19
RTC ruling unduly stretched the doctrine in Orbecido by limiting the
standing to file the petition only to the Filipino spouse an
Page
interpretation he claims to be contrary to the essence of the second
paragraph of Article 26 of the Family Code. He considers himself
as a proper party, vested with sufficient legal interest, to institute
the case, as there is a possibility that he might be prosecuted for
bigamy if he marries his Filipina fiance in the Philippines since two
marriage certificates, involving him, would be on file with the Civil
Registry Office.
ISSUE: WON the 2nd paragraph of Article 26 of the Family
Code extends to aliens the right to petition a court of this
jurisdiction for the recognition of a foreign divorce decree
HELD:
1. The alien spouse can claim no right under the second
paragraph of Article 26 of the Family Code as the substantive
right it establishes is in favor of the Filipino spouse.
Article 26 of the Family Code states:
Art. 26. All marriages solemnized outside the Philippines, in
accordance with the laws in force in the country where they
were solemnized, and valid there as such, shall also be
valid in this country, except those prohibited under Articles
35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a
foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse
shall likewise have capacity to remarry under
Philippine law.
As the RTC correctly stated, the provision was included in the
law to avoid the absurd situation where the Filipino spouse remains
married to the alien spouse who, after obtaining a divorce, is no
longer married to the Filipino spouse.[23] The legislative intent is
for the benefit of the Filipino spouse, by clarifying his or her marital
status, settling the doubts created by the divorce decree.
Essentially, the second paragraph of Article 26 of the Family Code
20
provided the Filipino spouse a substantive right to have his or her
marriage to the alien spouse considered as dissolved, capacitating
him or her to remarry. Without the second paragraph of Article 26
of the Family Code, the judicial recognition of the foreign decree of
divorce, whether in a proceeding instituted precisely for that
purpose or as a related issue in another proceeding, would be of
no significance to the Filipino spouse since our laws do not
recognize divorce as a mode of severing the marital bond; Article
17 of the Civil Code provides that the policy against absolute
divorces cannot be subverted by judgments promulgated in a
foreign country. The inclusion of the second paragraph in Article 26
of the Family Code provides the direct exception to this rule and
serves as basis for recognizing the dissolution of the marriage
between the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26
of the Family Code is not limited to the recognition of the foreign
divorce decree. If the court finds that the decree capacitated the
alien spouse to remarry, the courts can declare that the Filipino
spouse is likewise capacitated to contract another marriage. No
court in this jurisdiction, however, can make a similar declaration
for the alien spouse (other than that already established by the
decree), whose status and legal capacity are generally governed
by his national law.
Given the rationale and intent behind the enactment, and the
purpose of the second paragraph of Article 26 of the Family
Code, the RTC was correct in limiting the applicability of the
provision for the benefit of the Filipino spouse. In other words,
only the Filipino spouse can invoke the second paragraph of
Article 26 of the Family Code; the alien spouse can claim no
right under this provision.
Guys, the issues discussed after the line are beyond the main
issue tackled in the case. Isinama ko na rin kasi baka itanong
20
ni Atty. Nash dahil may involvement of conflicts of Philippine
and Canadian laws. 
Page
2. The foreign divorce decree is presumptive evidence of a
right that clothes the party with legal interest to petition for its
recognition in this jurisdiction
The unavailability of the second paragraph of Article 26 of the
Family Code to aliens does not necessarily strip Gerbert of legal
interest to petition the RTC for the recognition of his foreign divorce
decree. The foreign divorce decree itself, after its authenticity and
conformity with the aliens national law have been duly proven
according to our rules of evidence, serves as a presumptive
evidence of right in favor of Gerbert, pursuant to Section 48, Rule
39 of the Rules of Court which provides for the effect of foreign
judgments.
Direct involvement or being the subject of the foreign judgment is
sufficient to clothe a party with the requisite interest to institute an
action before our courts for the recognition of the foreign judgment.
In a divorce situation, we have declared, no less, that the divorce
obtained by an alien abroad may be recognized in the Philippines,
provided the divorce is valid according to his or her national law.
The starting point in any recognition of a foreign divorce judgment
is the acknowledgment that our courts do not take judicial notice of
foreign judgments and laws. Justice Herrera explained that, as a
rule, no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country. This means
that the foreign judgment and its authenticity must be proven as
facts under our rules on evidence, together with the aliens
applicable national law to show the effect of the judgment on the
alien himself or herself. The recognition may be made in an action
instituted specifically for the purpose or in another action where a
party invokes the foreign decree as an integral aspect of his claim
or defense.
In Gerbert’s case, since both the foreign divorce decree and the
national law of the alien, recognizing his or her capacity to obtain a
divorce, purport to be official acts of a sovereign authority, Section
24, Rule 132 of the Rules of Court comes into play. This Section
requires proof, either by (1) official publications or (2) copies
21
attested by the officer having legal custody of the documents. If the
copies of official records are not kept in the Philippines, these must
be (a) accompanied by a certificate issued by the proper diplomatic
or consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by
the seal of his office.
3. Considerations beyond the recognition of the foreign
divorce decree
We note that the Pasig City Civil Registry Office has already
recorded the divorce decree on Gerbert and Daisylyn’s marriage
certificate based on the mere presentation of the decree. We
consider the recording to be legally improper; hence, the need to
draw attention of the bench and the bar to what had been done.
Article 407 of the Civil Code states that [a]cts, events and judicial
decrees concerning the civil status of persons shall be recorded in
the civil register. The law requires the entry in the civil registry of
judicial decrees that produce legal consequences touching upon a
person’s legal capacity and status, i.e., those affecting all his
personal qualities and relations, more or less permanent in nature,
not ordinarily terminable at his own will, such as his being
legitimate or illegitimate, or his being married or not.
While the law requires the entry of the divorce decree in the civil
registry, the law and the submission of the decree by themselves
do not ipso facto authorize the decrees registration. The law should
be read in relation with the requirement of a judicial recognition of
the foreign judgment before it can be given res judicata effect. In
the context of the present case, no judicial order as yet exists
recognizing the foreign divorce decree. Thus, the Pasig City Civil
Registry Office acted totally out of turn and without authority of law
when it annotated the Canadian divorce decree on Gerbert and
Daisylyn’s marriage certificate, on the strength alone of the foreign
21
decree presented by Gerbert.
Page
Another point we wish to draw attention to is that the recognition
that the RTC may extend to the Canadian divorce decree does not,
by itself, authorize the cancellation of the entry in the civil registry.
A petition for recognition of a foreign judgment is not the proper
proceeding, contemplated under the Rules of Court, for the
cancellation of entries in the civil registry.
Article 412 of the Civil Code declares that no entry in a civil register
shall be changed or corrected, without judicial order. The Rules of
Court supplements Article 412 of the Civil Code by specifically
providing for a special remedial proceeding by which entries in the
civil registry may be judicially cancelled or corrected. Rule 108 of
the Rules of Court sets in detail the jurisdictional and procedural
requirements that must be complied with before a judgment,
authorizing the cancellation or correction, may be annotated in the
civil registry. It also requires, among others, that the verified
petition must be filed with the RTC of the province where the
corresponding civil registry is located; that the civil registrar and all
persons who have or claim any interest must be made parties to
the proceedings; and that the time and place for hearing must be
published in a newspaper of general circulation.[40] As these basic
jurisdictional requirements have not been met in the present case,
we cannot consider the petition Gerbert filed with the RTC as one
filed under Rule 108 of the Rules of Court.
14. Raytheon International vs. Rouzie, G.R. No. 162894
(February 26, 2008)
FACTS: Respondent, then a resident of La Union, instituted an
action for damages before the Regional Trial Court (RTC) of La
Union. Named as defendants herein petitioner Raytheon
International, Inc. as well as BMSI and RUST, the two corporations
impleaded in the previous labor case, wherein SC favored the
dismissal of the case before NLRC due to lack of jurisdiction . The
complaint essentially reiterated the allegations in the labor case
that BMSI verbally employed respondent to negotiate the sale of
services in government projects and that respondent was not paid
22
the commissions due him from the Pinatubo dredging project which
he secured on behalf of BMSI.
Petitioner mainly asserts that the written contract between
respondent and BMSI included a valid choice of law clause, that is,
that the contract shall be governed by the laws of the State of
Connecticut. It also mentions the presence of foreign elements
in the dispute – namely, the parties and witnesses involved are
American corporations and citizens and the evidence to be
presented is located outside the Philippines – that renders our local
courts inconvenient forums. Petitioner theorizes that the foreign
elements of the dispute necessitate the immediate application of
the doctrine of forum non conveniens.
RTC: denied the motion to dismiss
CA:affirmed the decision
Issues:WHETHER OR NOT THE COURT OF APPEALS ERRED
IN REFUSING TO DISMISS THE COMPLAINT ON THE GROUND
OF FORUM NON CONVENIENS.
Held: The instant petition lacks merit.
The Court outlined three consecutive phases involved in judicial
resolution of conflicts-of-laws problems, namely: jurisdiction, choice
of law, and recognition and enforcement of judgments. Thus, in the
instances where the Court held that the local judicial machinery
was adequate to resolve controversies with a foreign element, the
following requisites had to be proved: (1) that the Philippine Court
is one to which the parties may conveniently resort; (2) that the
Philippine Court is in a position to make an intelligent decision as to
the law and the facts; and (3) that the Philippine Court has or is
likely to have the power to enforce its decision.
On the matter of jurisdiction over a conflicts-of-laws problem
22
where the case is filed in a Philippine court and where the court
has jurisdiction over the subject matter, the parties and the res, it
Page
may or can proceed to try the case even if the rules of conflict-of-
laws or the convenience of the parties point to a foreign forum. This
is an exercise of sovereign prerogative of the country where the
case is filed.
Jurisdiction over the nature and subject matter of an action is
conferred by the Constitution and the law and by the material
allegations in the complaint, irrespective of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs
sought therein. The is an action for damages arising from an
alleged breach of contract. Undoubtedly, the nature of the action
and the amount of damages prayed are within the jurisdiction of the
RTC.
As regards jurisdiction over the parties, the trial court acquired
jurisdiction over herein respondent (as party plaintiff) upon the filing
of the complaint. On the other hand, jurisdiction over the person of
petitioner (as party defendant) was acquired by its voluntary
appearance in court.
That the subject contract included a stipulation that the same shall
be governed by the laws of the State of Connecticut does not
suggest that the Philippine courts, or any other foreign tribunal for
that matter, are precluded from hearing the civil action. Jurisdiction
and choice of law are two distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to travel to this state; choice
of law asks the further question whether the application of a
substantive law which will determine the merits of the case is fair to
both parties. The choice of law stipulation will become relevant only
when the substantive issues of the instant case develop, that is,
after hearing on the merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-
laws cases, may refuse impositions on its jurisdiction where it is not
the most "convenient" or available forum and the parties are not
precluded from seeking remedies elsewhere. Petitioner’s
averments of the foreign elements in the instant case are not
23
sufficient to oust the trial court of its jurisdiction over Civil Case
and the parties involved.
Moreover, the propriety of dismissing a case based on the principle
of forum non conveniens requires a factual determination; hence, it
is more properly considered as a matter of defense. While it is
within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require
the court’s desistance.
Finding no grave abuse of discretion on the trial court, the Court of
Appeals respected its conclusion that it can assume jurisdiction
over the dispute notwithstanding its foreign elements. In the same
manner, the Court defers to the sound discretion of the lower
courts because their findings are binding on this Court.
WHEREFORE, the instant petition for review on certiorari is
DENIED.
C. Minimum Contact
15. HSBC vs. Sherman, G.R. No. 72494 (August 11, 1989)
 See 2nd case above
16. Saudi Arabian Airlines vs. CA, G.R. No. 122191 (October 8,
1998)
17. Hasegawa vs. Kitamura, G.R. No. 149177 (November 23,
2007)
 See previous cases under Part I
D. Jurisdiction over the Person
23
18. International Shoe Co vs. Washington, 326 U.S. 310 (1945)
Page
FACTS:International Shoe Company was an American shoe
company incorporated in Delaware with its principal place of
business in Missouri. In the State of Washington, International
Shoe hired 13 people to solicit orders for the shoes. But the
salesmen did not actually sell any shoes in Washington. Once the
orders were taken, the salesmen sent the order forms back to
headquarters in Missouri. It was in Missouri where the decision
was made on whether or not to sell the shoes. This method insured
that all shoe sales occurred in Missouri rather than in Washington.
The company thus had no permanent "situs" of business in the
State The reason for this sales method was primarily to avoid
paying state corporate income taxes. But the State of Washington
was not trying to enforce its corporate income taxes. Washington
was only trying to enforce its unemployment insurance tax as
applied to the International Shoe salesmen.
ISSUE:Does the Due Process clause allow a State court to
exercise in personam jurisdiction over an out-of-state defendant
who does not have a permanent presence in the State?
RULING: The Supreme Court held the fact that the corporation is
engaged in interstate commerce does not relieve it from liability for
payments to the state unemployment compensation fund.
The tax imposed by the state unemployment compensation statute
is a tax on the privilege of employing salesmen within the State.
In reaching its decision the Court stated that throughout American
history, the jurisdiction of courts to render judgment in personam
has been 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 him. 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.
24
In such a suit to recover payments due to the unemployment
compensation fund, service of process upon one of the
corporation's salesmen within the State, and notice sent by
registered mail to the corporation at its home office, satisfies the
requirements of due process.
19. Perkins vs. Benguet Consolidated Mining Co., 342 U.S.
437 (1952)
FACTS: From that summary, the following facts are substantially
beyond controversy: the company's mining properties were in the
Philippine Islands. Its operations there were completely halted
during the occupation of the Islands by the Japanese. During that
interim, the president, who was also the general manager and
principal stockholder of the company, returned to his home in
Clermont County, Ohio. There, he maintained an office which he
conducted his personal affairs and did many things on behalf of the
company. He kept there office files of the company. He carried on
there correspondence relating to the business of the company and
to its employees. He drew and distributed there salary checks on
behalf of the company, both in his own favor as president and in
favor of two company secretaries who worked there with him. He
used and maintained in Clermont County, Ohio, two active bank
accounts carrying substantial balances of company funds. A bank
in Hamilton County, Ohio, acted as transfer agent for the stock of
the company. Several directors' meetings were held at his office or
home in Clermont County. From that office, he supervised policies
dealing with the rehabilitation of the corporation's properties in the
Philippines, and he dispatched funds to cover purchases of
machinery for such rehabilitation.
Petitioner, Idonah Slade Perkins, a nonresident of Ohio, filed two
actions in personam in the Court of Common Pleas of Clermont,
County, Ohio, against the several respondents. Among those sued
is the Benguet Consolidated Mining Company, here called the
mining company. It is styled a "sociedad anonima" under the laws
of the Philippine Islands, where it owns and has operated profitable
24
gold and silver mines. In one action, petitioner seeks approximately
$68,400 in dividends claimed to be due her as a stockholder. In the
Page
other, she claims $2,500,000 damages, largely because of the
company's failure to issue to her certificates for 120,000 shares of
its stock.
In each case, the trial court sustained a motion to quash the
service of summons on the mining company. The Court of Appeals
of Ohio affirmed that decision, as did the Supreme Court of Ohio.
The cases were consolidated, and we granted certiorari in order to
pass upon the conclusion voiced within the court below that federal
due process required the result there reached.
ISSUE: Whether the Due Process Clause of the Fourteenth
Amendment to the Constitution of the United States precludes Ohio
from subjecting a foreign corporation to the jurisdiction of its courts
in this action in personam.
RULING: No. The essence of the issue here, at the constitutional
level, is a like one of general fairness to the corporation.
Appropriate tests for that are discussed in International Shoe Co. v.
Washington, supra, at 326 U. S. 317-320. The amount and kind of
activities which must be carried on by the foreign corporation in the
state of the forum so as to make it reasonable and just to subject
the corporation to the jurisdiction of that state are to be determined
in each case. The corporate activities of a foreign corporation
which, under state statute, make it necessary for it to secure a
license and to designate a statutory agent upon whom process
may be served provide a helpful, but not a conclusive, test. For
example, the state of the forum may by statute require a foreign
mining corporation to secure a license in order lawfully to carry on
there such functional intrastate operations as those of mining or
refining ore. On the other hand, if the same corporation carries on,
in that state, other continuous and systematic corporate activities
as it did here -- consisting of directors' meetings, business
correspondence, banking, stock transfers, payment of salaries,
purchasing of machinery, etc. -- those activities are enough to
make it fair and reasonable to subject that corporation to
proceedings in personam in that state, at least insofar as the
proceedings in personam seek to enforce causes of action relating
to those very activities or to other activities of the corporation within
the state.
25
Respondent carried on in Ohio a continuous and systematic
supervision of the necessarily limited wartime activities of the
company. He there discharged his duties as president and general
manager, both during the occupation of the company's properties
by the Japanese and immediately thereafter. While no mining
properties in Ohio were owned or operated by the company, many
of its wartime activities were directed from Ohio and were being
given the personal attention of its president in that State at the time
he was served with summons. Consideration of the circumstances
which, under the law of Ohio, ultimately will determine whether the
courts of that State will choose to take jurisdiction over the
corporation is reserved for the courts of that State. Without
reaching that issue of state policy, we conclude that, under the
circumstances above recited, it would not violate federal due
process for Ohio either to take or decline jurisdiction of the
corporation in this proceeding.
Accordingly, the judgment of the Supreme Court of Ohio is
vacated, and the cause is remanded to that court for further
proceedings in the light of this opinion.
20. World-Wide Volkswagen Corp. vs. Woodson, 444 U.S. 286
(1980)
FACTS: A products liability action was instituted in an Oklahoma
state 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
25
then sought, but were denied, a writ of prohibition in the Oklahoma
Supreme Court to restrain respondent trial judge from exercising in
Page
personam jurisdiction over them.
 supported on the theory that petitioners earn substantial revenue
ISSUE: WON Oklahoma may exercise in personam jurisdiction. from goods used in Oklahoma.

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."
(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 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

26
connection with the forum are such that he should reasonably

Page
anticipate being haled into court there. Nor can jurisdiction be

26
21. Calder vs. Jones, 465 U.S. 783 (1984)
FACTS:
Respondent Shirley Jones brought suit in California Superior Court
claiming that she had been libeled in an article written and edited
by petitioners in Florida. The article was published in a national
magazine with a large circulation in California.
Respondent lives and works in California. She and her husband
brought this suit against the National Enquirer, Inc., its local
distributing company, and petitioners for libel, invasion of privacy,
and intentional infliction of emotional harm.
The Enquirer is a Florida corporation with its principal place of
business in Florida. It publishes a national weekly newspaper with
a total circulation of over 5 million. About 600,000 of those copies,
almost twice the level of the next highest State, are sold in
California.
Petitioner South is a reporter employed by the Enquirer. He is a
resident of Florida, though he frequently travels to California on
business. South wrote the first draft of the challenged article, and
his byline appeared on it. Aside from his frequent trips and phone
calls, South has no other relevant contacts with California.
Petitioner Calder is also a Florida resident. He has been to
California only twice — once, on a pleasure trip, prior to the
publication of the article and once after to testify in an unrelated
trial.
Calder is president and editor of the Enquirer. He "oversee[s] just
about every function of the Enquirer. He reviewed and approved
the initial evaluation of the subject of the article and edited it in its
final form. He also declined to print a retraction requested by
respondent. Calder has no other relevant contacts with California.
In considering petitioners' motion to quash service of process, the
Superior Court surmised that the actions of petitioners in Florida,
27
causing injury to respondent in California, would ordinarily be
sufficient to support an assertion of jurisdiction over them in
California. But the court felt that special solicitude was necessary
because of the potential "chilling effect" on reporters and editors
which would result from requiring them to appear in remote
jurisdictions to answer for the content of articles upon which they
worked. The Superior Court, therefore, granted the motion.
California Court of Appealreversed. The court agreed that neither
petitioner's contacts with California would be sufficient for an
assertion of jurisdiction on a cause of action unrelated to those
contacts. "). But the court concluded that a valid basis for
jurisdiction existed on the theory that petitioners intended to, and
did, cause tortious injury to respondent in California. The fact that
the actions causing the effects in California were performed outside
the State did not prevent the State from asserting jurisdiction over
a cause of action arising out of those effects. The court rejected the
Superior Court's conclusion that First Amendment considerations
must be weighed in the scale against jurisdiction.
ISSUE:
Whether or not, California has jurisdiction over the case.
RULING:
YES. The Due Process Clause of the Fourteenth Amendment to
the United States Constitution permits personal jurisdiction over a
defendant in any State with which the defendant has "certain
minimum contacts . . . such that the maintenance of the suit does
not offend `traditional notions of fair play and substantial justice. In
judging minimum contacts, a court properly focuses on "the
relationship among the defendant, the forum, and the litigation. The
plaintiff's lack of "contacts" will not defeat otherwise proper
jurisdiction but they may be so manifold as to permit jurisdiction
when it would not exist in their absence.
27
The article was drawn from California sources, 789*789and the
Page
brunt of the harm, in terms both of respondent's emotional distress
and the injury to her professional reputation, was suffered in
California. In sum, California is the focal point both of the story and
of the harm suffered. Jurisdiction over petitioners is therefore
proper in California based on the "effects" of their Florida conduct
in California.
Petitioner South wrote and petitioner Calder edited an article that
they knew would have a potentially devastating impact upon
respondent. And they knew that the brunt of 790*790 that injury
would be felt by respondent in the State in which she lives and
works and in which the National Enquirer has its largest circulation.
Under the circumstances, petitioners must "reasonably anticipate
being haled into court there" to answer for the truth of the
statements made in their article.
An individual injured in California need not go to Florida to seek
redress from persons who, though remaining in Florida, knowingly
cause the injury in California.
In this case, petitioners are primary participants in an alleged
wrongdoing intentionally directed at a California resident, and
jurisdiction over them is proper on that basis.
We also reject the suggestion that First Amendment concerns
enter into the jurisdictional analysis. The infusion of such
considerations would needlessly complicate an already imprecise
inquiry.
We hold that jurisdiction over petitioners in California is
proper because of their intentional conduct in Florida
calculated to cause injury to respondent in California. The
judgment of the California Court of Appeal is Affirmed.
22. Philsec Investment et.al., CA, G.R. No. 103493, June 19,
1997
28
Facts: Private respondent Ventura O. Ducat obtained separate
loans from petitioners AYALA and PHILSEC in the sum of
US$2,500,000.00, secured by shares of stock owned by Ducat.
In order to facilitate the payment of the loans, private respondent
1488, Inc., through its president, private respondent Drago Daic,
assumed Ducats obligation under an Agreement whereby 1488,
Inc. executed a Warranty Deed with Vendors Lien by which it sold
to petitioner ATHONA a parcel of land in Texas, U.S.A., for
US$2,807,209.02, while PHILSEC and AYALA extended a loan to
ATHONA in the amount of US$2,500,000.00 as initial payment of
the purchase price.
The balance of US$307,209.02 was to be paid by means of a
promissory note executed by ATHONA in favor of 1488, Inc.
Subsequently, upon their receipt of the US$2,500,000.00 from
1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock in
their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of
US$307,209.02, the entire amount covered by the note became
due and demandable. Accordingly private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and ATHONA in Texas in the
United States for payment of the balance of US$307,209.02 and
for damages for breach of contract and for fraud allegedly
perpetrated by petitioners in misrepresenting the marketability of
the shares of stock delivered to 1488, Inc. under the Agreement.
ATHONA filed an answer with counterclaim, impleading private
respondents herein as counterdefendants, for allegedly conspiring
in selling the property at a price over its market value. ATHONA
sought the recovery of damages and excess payment allegedly
made to 1488, Inc. and, in the alternative, the rescission of sale of
the property.
Thereafter, while Civil Case No. H-86-440 was pending in the
United States, petitioners filed a complaint For Sum of Money with
28
Damages and Writ of Preliminary Attachment against private
respondents in the Regional Trial Court of Makati.
Page
The complaint reiterated the allegation of petitioners in their
respective counterclaims in Civil Action No. H-86-440 of the United
States District Court of Southern Texas that private respondents
committed fraud by selling the property at a price 400 percent more
than its true value. Petitioners claimed that, as a result of private
respondents fraudulent misrepresentations, ATHONA, PHILSEC,
and AYALA were induced to enter into the Agreement and to
purchase the Houston property. The trial court issued a writ of
preliminary attachment against the real and personal properties of
private respondents.
Private respondent Ducat moved to dismiss Civil Case contending
that the action being in personam, extraterritorial service of
summons by publication was ineffectual and did not vest the court
with jurisdiction over 1488, Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident alien.
TC - Granted MTD.
CA - Affirmed TC’s ruling.
While the present case was pending in the Court of Appeals, the
United States District Court for the Southern District of Texas
rendered judgment in the case before it. The judgment, which was
in favor of private respondents, was affirmed on appeal by the
Circuit Court of Appeals.
Private respondents contend that for a foreign judgment to be
pleaded as res judicata, a judgment admitting the foreign decision
is not necessary. On the other hand, petitioners argue that the
foreign judgment cannot be given the effect of res judicata without
giving them an opportunity to impeach it.
Issue: 1) WON US judgment can be regarded as res judicata.
2) WON TC has jurisdiction over 1488, Inc. and Daic’s person.
Ruling: CA’s ruling reversed. 1) No.
Petitioners contention is meritorious. While this Court has given the
effect of res judicata to foreign judgments in several cases, it was
after the parties opposed to the judgment had been given ample
29
opportunity to repel them on grounds allowed under the law. It is
not necessary for this purpose to initiate a separate action or
proceeding for enforcement of the foreign judgment. What is
essential is that there is opportunity to challenge the foreign
judgment, in order for the court to properly determine its efficacy.
This is because in this jurisdiction, with respect to actions in
personam, as distinguished from actions in rem, a foreign judgment
merely constitutes prima facie evidence of the justness of the claim
of a party and, as such, is subject to proof to the contrary. Rule 39,
50 provides:
SEC. 50. Effect of foreign judgments. - The effect of a judgment of
a tribunal of a foreign country, having jurisdiction to pronounce the
judgment is as follows:
xxx
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title; but the judgment may
be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.
In the case at bar, it cannot be said that petitioners were given the
opportunity to challenge the judgment of the U.S. court as basis for
declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary.
Neither the trial court nor the appellate court was even furnished
copies of the pleadings in the U.S. court or apprised of the
evidence presented thereat, to assure a proper determination of
whether the issues then being litigated in the U.S. court were
exactly the issues raised in this case such that the judgment that
might be rendered would constitute res judicata.
2) Yes. It was error we think for the Court of Appeals and the trial
court to hold that jurisdiction over 1488, Inc. and Daic could not be
obtained because this is an action in personam and summons
were served by extraterritorial service.
29
Rule 14, 17 on extraterritorial service provides that service of
Page
summons on a non-resident defendant may be effected out of the
Philippines by leave of Court where, among others, the property of
the defendant has been attached within the Philippines. It is not
disputed that the properties, real and personal, of the private
respondents had been attached prior to service of summons under
the Order of the trial court.

30
Page
30

Facts:
Vicente Pantaleon instituted an action to recover the sum of P 2,000.00 with
interest and attorney’s fees against Asuncion. A summons was issued with the
statement that Asuncion was residing in B-24 Tala Estate, Caloocan, Rizal. When
provincial sheriff of Rizal served the summons upon the person of Asuncion, he
learned that Asuncion had left the Tala Estate and that diligent efforts to locate
him proved to no avail. Thus, the summons was returned by the sheriff unserved.
Upon motion of Pantaleon, the court ordered that defendant be summoned by
publication on a newspaper of general circulation in Nueva Ecija. Having failed to
appear or answer the complaint within the prescribed period, Asuncion was
declared in default. Subsequently, after hearing in the absence of Asuncion and
without notice to him, the court rendered judgment for Pantaleon and against
Asuncion.
About forty-six days later, Asuncion filed a petition for relief from said decision on
the ground of mistake and excusable negligence. Asuncion stated that he was
resided at 34 Pitimine Street, San Francisco del Monte, Quezon City. He received
notice of a registered letter at the Post Office in San Jose, Nueva Ecija. The letter
contained the order and judgment by the court. He contends that he had not been
summoned nor notified of the hearing regarding of his case and that had copy of
the summons and of the order for its publication been sent to him by mail, as
provided in Rule 7, Section 21, of ROC said summons and order would have
received him, and that his failure to appear before the court is excusable by
reason of mistake of the authorities concerned in not complying with the said
rules. In other words, the copy of the summons and of the order for publication
were not deposited in the post office, postage prepaid, directed to the defendant
by ordinary mail to his last known address.
Issue:
WON, by summons by publication, the court has acquired jurisdiction over the
person of Asuncion.
Held:
No.
The Rules of Court prescribes the proof of service by publication, regardless
whether defendant is a resident of the Philippines or not. We conceive of no
31
23. Pantaleon vs. Asuncion, 105 Phil 761 (1959)
reason that plaintiff has suggested none, why copy of the summons and of the
order for its publication should be mailed to non-resident defendants, but not to
resident defendants. We can not even say that defendant herein, who, according
to the return of the Sheriff of Nueva Ecija, was reportedly residing in Rizal —
where he, in fact he is in San Francisco del Monte and Quezon City used to be
part of Rizal - could reasonably be expected to read and summons published in
an newspaper said to be a general circulation.
Apart from the foregoing, it is a well-settled principle of Constitutional Law that, in
an action strictly in personam, like the one at bar, personal service of summons,
within the forum, is essential to the acquisition of jurisdiction over the person of
the defendant, who does not voluntarily submit himself to the authority of the
court. In other words, summons by publication cannot — consistently with the due
process clause in the Bill of Rights — confer upon the court jurisdiction over said
defendant.
Due process of law requires personal service to support a personal judgment,
and, when the proceeding is strictly in personam brought to determine the
personal rights and obligations of the parties, personal service within the state or
a voluntary appearance in the case is essential to the acquisition of jurisdiction so
as to constitute compliance with the constitutional requirement of due process. . . .
Although a state legislature has more control over the form of service on its own
residents than nonresidents, it has been held that in action in personam . . .
service by publication on resident defendants, who are personally within the state
and can be found therein is not "due process of law", and a statute allowing it is
unconstitutional.
24. Santos vs. PNOC. G.R. No. 170943 (September 23, 2008)
FACTS:
 Respondent PNOC Exploration Corporation filed a complaint for a sum of
money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of
Pasig City, Branch 167 representing petitioners unpaid balance of the car
loan advanced to him by respondent when he was still a member of its board
31
of directors.
Page
 Since personal service of summons cannot be served to Santos due to his
absence and his last known address cannot be located, respondent seek for
Court’s approval to summons by publication.
 Upon court’s approval, respondent submitted the affidavit of publication of the
advertising manager of Remate and an affidavit of service of respondents
employee to the effect that he sent a copy of the summons by registered mail
to petitioners last known address.
 When petitioner failed to file his answer within the prescribed period,
respondent proceeded with the exparte presentation and formal offer of its
evidence. Then, it was submitted for decision.
 Before the decision was rendered, petitioner filed an Omnibus Motion for
Reconsideration and to Admit Attached Answer. He sought reconsideration of
the September 11, 2003 order, alleging that the affidavit of service submitted
by respondent failed to comply with Section 19, Rule 14 of the Rules of Court
as it was not executed by the clerk of court. He also claimed that he was
denied due process as he was not notified of the September 11, 2003 order.
He prayed that respondents evidence ex parte be stricken off the records and
that his answer be admitted.
o The trial court denied petitioners motion for reconsideration of the
September 11, 2003 order. It held that the rules did not require the
affidavit of complementary service by registered mail to be executed
by the clerk of court. Hence, the case was elevated to CA.
 During the pendency of the petition in the Court of Appeals, the trial court
rendered its decision in Civil Case No. 69262. It ordered petitioner to
pay P698,502.10 plus legal interest and costs of suit. Meanwhile, the CA
affirmed the trial court’s decision in sustaining the dismissal of the petition.
ISSUE: WON there is lack of jurisdiction over his person due to improper service
of summons, failure of the trial court to furnish him with copies of its orders and
processes
HELD: The petition lacks merit, the Court affirmed the decision of CA that the
trial court acquired jurisdiction over Santos.
32
 Under Section 14, Rule 14 of ROC, “In any action where the defendant is
designated as an unknown owner, or the like, or whenever his whereabouts
are unknown and cannot be ascertained by diligent inquiry, service
may, by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such times as
the court may order”.
 Since petitioner could not be personally served with summons despite diligent
efforts to locate his whereabouts, respondent sought and was granted leave
of court to effect service of summons upon him by publication in a newspaper
of general circulation. Thus, petitioner was properly served with summons by
publication.
 Further, the in rem/in personam distinction was significant under the old rule
because it was silent as to the kind of action to which the rule was
applicable. Because of this silence, the Court limited the application of the old
rule to in rem actions only.
 Regarding the matter of the affidavit of service, Section 19, Rule 14 of ROC
states that “an affidavit showing the deposit of a copy of the summons and
order for publication in the post office, postage prepaid, directed to the
defendant by registered mail to his last known address.
 Said rule does not require that the affidavit of complementary service be
executed by the clerk of court. Service of summons by publication is proved
by the affidavit of the printer, his foreman or principal clerk, or of the editor,
business or advertising manager of the newspaper which published the
summons. The service of summons by publication is complemented by
service of summons by registered mail to the defendants last known address.
This complementary service is evidenced by an affidavit showing the deposit
of a copy of the summons and order for publication in the post office, postage
prepaid, directed to the defendant by registered mail to his last known
address.
 Moreover, even assuming that the service of summons was defective, the
trial court acquired jurisdiction over the person of petitioner by his own
voluntary appearance in the action against him.
ENTITLEMENT TO NOTICE OF PROCEEDINGS
32
 The Court ruled that if the defendant fails to file his answer on time, he may
be declared in default upon motion of the plaintiff with notice to the said
Page
defendant. In case he is declared in default, the court shall proceed to render
 judgment granting the plaintiff such relief as his pleading may warrant, unless
the court in its discretion requires the plaintiff to submit evidence. The
defaulting defendant may not take part in the trial but shall be entitled to
notice of subsequent proceedings.
 In this case, even petitioner himself does not dispute that he failed to file his
answer on time. That was in fact why he had to file an Omnibus Motion for
Reconsideration and to Admit Attached Answer. But respondent moved
only for the ex parte presentation of evidence, not for the declaration of
petitioner in default.
EL BANCO ESPAŇOL-FILIPINO vs VICENTE PALANCE
GR No. L-11390, March 26, 1918
FACTS:
 El Banco Espaňol-Filipino
- March 31, 1908: Instituted an action to foreclose a mortgage upon various
parcels of real property situated in the city of Manila
- Mortgage: dated June 16, 1906, and was executed by the original defendant
herein, Engracio Palanca Tanquinyeng y Limquingco, as security for a
debt owing by him to the bank.
- Upon March 31, 1906, the debt amounted to P218,294.10 and was drawing
interest at the rate of 8 per centum per annum, payable at the end of each
quarter.
 After the execution of the document: Mortgagor Palanca returned to China
which appears to have been his native country
- He thereafter died therein, without again, returning to the PH
 As the defendant was a nonresident at the time of the institution of the present
action, it was necessary for the plaintiff in the foreclosure proceeding to give
notice to the defendant by publication pursuant to section 399 of the Code of Civil
Procedure
- An order for publication was accordingly obtained from the court, and
publication was made in due form in a newspaper of the city of Manila. At the
same time that the order of the court should deposit in the post office in a
stamped envelope a copy of the summons and complaint directed to the
defendant at his last place of residence, to wit, the city of Amoy, in the Empire
of China.
33
- Whether the clerk complied with this order does not affirmatively appear.
 There is, however, among the papers pertaining to this case, an affidavit, dated
April 4, 1908, signed by Bernardo Chan y Garcia, an employee of the attorneys
of the bank, showing that upon that date he had deposited in the Manila post-
office a registered letter, addressed to Engracio Palanca Tanquinyeng, at Manila,
containing copies of the complaint, the plaintiff's affidavit, the summons, and the
order of the court directing publication as aforesaid. It appears from the
postmaster's receipt that Bernardo probably used an envelope obtained from the
clerk's office, as the receipt purports to show that the letter emanated from the
office.
 CFI: default against the Defendant
- Publication was properly made
- Court ordered the sale of the property, and such was brought by the bank
 After 7 yrs: Motion was made by Vicente Palanca (administrator) of Engracio,
asking the court to set aside the order of default
- Ground: Judgment was void because the court never acquired jurisdiction
over the subject matter of the action
- MR: denied
ISSUES:
1. W/N the court acquired jurisdiction to enable it to proceed with the foreclosure
of the mortgage?
HELD:
The word "jurisdiction," as applied to the faculty of exercising judicial power, is used
in several different, though related, senses since it may have reference (1) to the
authority of the court to entertain a particular kind of action or to administer a
particular kind of relief, or it may refer to the power of the court over the parties, or
(2) over the property which is the subject to the litigation.
The sovereign authority which organizes a court determines the nature and extent of
its powers in general and thus fixes its competency or jurisdiction with reference to
the actions which it may entertain and the relief it may grant.
Jurisdiction over the person is acquired by the voluntary appearance of a party in
33
court and his submission to its authority, or it is acquired by the coercive power of
legal process exerted over the person.
Page
Jurisdiction over the property which is the subject of the litigation may result either
from a seizure of the property under legal process, whereby it is brought into the
actual custody of the law, or it may result from the institution of legal proceedings
wherein, under special provisions of law, the power of the court over the property is
recognized and made effective. In the latter case the property, though at all times
within the potential power of the court, may never be taken into actual custody at all.
An illustration of the jurisdiction acquired by actual seizure is found in attachment
proceedings, where the property is seized at the beginning of the action, or some
subsequent stage of its progress, and held to abide the final event of the litigation.
An illustration of what we term potential jurisdiction over the res, is found in the
proceeding to register the title of land under our system for the registration of land.
Here the court, without taking actual physical control over the property assumes, at
the instance of some person claiming to be owner, to exercise a jurisdiction in rem
over the property and to adjudicate the title in favor of the petitioner against all the
world.
In the terminology of American law the action to foreclose a mortgage is said to
be a proceeding quasi in rem, by which is expressed the idea that while it is
not strictly speaking an action in rem yet it partakes of that nature and is
substantially such. The expression "action in rem" is, in its narrow application, used
only with reference to certain proceedings in courts of admiralty wherein the property
alone is treated as responsible for the claim or obligation upon which the
proceedings are based. The action quasi rem differs from the true action in rem in
the circumstance that in the former an individual is named as defendant, and the
purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property. All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by attachment, foreclosure, or
other form of remedy, are in a general way thus designated. The judgment entered in
these proceedings is conclusive only between the parties.
Passing now to a consideration of the jurisdiction of the Court of First Instance in a
mortgage foreclosure, it is evident that the court derives its authority to entertain the
action primarily from the statutes organizing the court. The jurisdiction of the court, in
this most general sense, over the cause of action is obvious and requires no
comment. Jurisdiction over the person of the defendant, if acquired at all in such an
action, is obtained by the voluntary submission of the defendant or by the personal
service of process upon him within the territory where the process is valid. If,
however, the defendant is a nonresident and, remaining beyond the range of the
personal process of the court, refuses to come in voluntarily, the court never
34
acquires jurisdiction over the person at all. Here the property itself is in fact the
sole thing which is impleaded and is the responsible object which is the
subject of the exercise of judicial power. It follows that the jurisdiction of the
court in such case is based exclusively on the power which, under the law, it
possesses over the property; and any discussion relative to the jurisdiction of
the court over the person of the defendant is entirely apart from the case. The
jurisdiction of the court over the property, considered as the exclusive object of such
action, is evidently based upon the following conditions and considerations, namely:
(1) that the property is located within the district; (2) that the purpose of the litigation
is to subject the property by sale to an obligation fixed upon it by the mortgage; and
(3) that the court at a proper stage of the proceedings takes the property into
custody, if necessary, and expose it to sale for the purpose of satisfying the
mortgage debt. An obvious corollary is that no other relief can be granted in this
proceeding than such as can be enforced against the property.
We may then, from what has been stated, formulated the following proposition
relative to the foreclosure proceeding against the property of a nonresident
mortgagor who fails to come in and submit himself personally to the
jurisdiction of the court: (I) That the jurisdiction of the court is derived from the
power which it possesses over the property; (II) that jurisdiction over the
person is not acquired and is nonessential; (III) that the relief granted by the
court must be limited to such as can be enforced against the property itself.
It is important that the bearing of these propositions be clearly apprehended, for
there are many expressions in the American reports from which it might be inferred
that the court acquires personal jurisdiction over the person of the defendant by
publication and notice; but such is not the case. In truth the proposition that
jurisdiction over the person of a nonresident cannot be acquired by publication and
notice was never clearly understood even in the American courts until after the
decision had been rendered by the Supreme Court of the United States in the
leading case of Pennoyer vs. Neff (95 U. S. 714; 24 L. ed., 565). In the light of that
decision, and of other decisions which have subsequently been rendered in that and
other courts, the proposition that jurisdiction over the person cannot be thus acquired
by publication and notice is no longer open to question; and it is now fully established
that a personal judgment upon constructive or substituted service against a
nonresident who does not appear is wholly invalid. This doctrine applies to all kinds
34
of constructive or substituted process, including service by publication and personal
service outside of the jurisdiction in which the judgment is rendered; and the only
Page
exception seems to be found in the case where the nonresident defendant has
expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher,
35 L. R. A. [N. S. ], 292; see also 50 L .R. A., 585; 35 L. R. A. [N. S.], 312
The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the
process from the tribunals of one State cannot run into other States or countries and
that due process of law requires that the defendant shall be brought under the power
of the court by service of process within the State, or by his voluntary appearance, in
order to authorize the court to pass upon the question of his personal liability. The
doctrine established by the Supreme Court of the United States on this point, being
based upon the constitutional conception of due process of law, is binding upon the
courts of the Philippine Islands. Involved in this decision is the principle that in
proceedings in rem or quasi in rem against a nonresident who is not served
personally within the state, and who does not appear, the relief must be confined to
the res, and the court cannot lawfully render a personal judgment against him.
(Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil
Cloth Co., 112 U. S., 294; 28 L. ed., 729.) Therefore in an action to foreclose a
mortgage against a nonresident, upon whom service has been effected exclusively
by publication, no personal judgment for the deficiency can be entered. (Latta vs.
Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.)
It is suggested in the brief of the appellant that the judgment entered in the court
below offends against the principle just stated and that this judgment is void because
the court in fact entered a personal judgment against the absent debtor for the full
amount of the indebtedness secured by the mortgage. We do not so interpret the
judgment.
In a foreclosure proceeding against a nonresident owner it is necessary for the court,
as in all cases of foreclosure, to ascertain the amount due, as prescribed in section
256 of the Code of Civil Procedure, and to make an order requiring the defendant to
pay the money into court. This step is a necessary precursor of the order of sale. In
the present case the judgment which was entered contains the following words:
Because it is declared that the said defendant Engracio Palanca
Tanquinyeng y Limquingco, is indebted in the amount of P249,355.32, plus
the interest, to the 'Banco Espanol-Filipino' . . . therefore said appellant is
ordered to deliver the above amount etc., etc.
This is not the language of a personal judgment. Instead it is clearly intended merely
as a compliance with the requirement that the amount due shall be ascertained and
35
that the evidence of this it may be observed that according to the Code of Civil
Procedure a personal judgment against the debtor for the deficiency is not to be
rendered until after the property has been sold and the proceeds applied to the
mortgage debt. (sec. 260).
The conclusion upon this phase of the case is that whatever may be the effect
in other respects of the failure of the clerk of the Court of First Instance to mail
the proper papers to the defendant in Amoy, China, such irregularity could in
no wise impair or defeat the jurisdiction of the court, for in our opinion that
jurisdiction rest upon a basis much more secure than would be supplied by
any form of notice that could be given to a resident of a foreign country.
PERKINS V. DIZON
Perkins v Dizon; G.R. No. 46631
Petitioner/s: Idonah Slade Perkins
Respondent/s: Arsenio Dizon, Judge CFI, Eugene Arthur Perkins and Benguet
Consolidated Mining Company | Date of Promulgation: November 16, 1939
Ponente: Moran, J.
Facts: On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in
the Court of First Instance of Manila against the Benguet Consolidated Mining
Company for dividends amounting to P71,379.90 on 52,874 shares of stock
registered in his name, payment of which was being withheld by the company; and,
for the recognition of his right to the control and disposal of said shares, to the
exclusion of all others.
The company filed its answer alleging, by way of defense, that the withholding of
such dividends and the non-recognition of plaintiff's right to the disposal and control
of the shares were due to certain demands made with respect to said shares by the
petitioner herein, Idonah Slade Perkins, and by one George H. Engelhard.
On September 5, 1938, the trial court ordered respondent Eugene Arthur Perkins to
include in his complaint as parties defendant petitioner, Idonah Slade Perkins, and
George H. Engelhard.
35
The complaint was accordingly amended and in addition to the relief prayed for in the
Page
original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins
and George Engelhard be adjudged without interest in the shares of stock in
question and excluded from any claim they assert thereon.
Thereafter, summons by publication were served upon the non-resident defendants,
Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial
court.
Petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled
"objection to venue, motion to quash, and demurrer to jurisdiction" wherein she
challenged the jurisdiction of the lower court over her person. Petitioner's objection,
motion and demurrer having been overruled as well as her motion for
reconsideration of the order of denial, she now brought the present petition for
certiorari, praying that the summons by publication issued against her be declared
null and void, and that, with respect to her, respondent Judge be permanently
prohibited from taking any action on the case.
Issue: WON the said court has jurisdiction
Held: Yes, the court has jurisdiction over the res.
In the instant case, there can be no question that the action brought by Eugene
Arthur Perkins in his amended complaint against the petitioner, Idonah Slade
Perkins, seeks to exclude her from any interest in a property located in the
Philippines. That property consists in certain shares of stocks of the Benguet
Consolidated Mining Company, a sociedad anonima, organized in the Philippines
under the provisions of the Spanish Code of Commerce, with its principal office in the
City of Manila and which conducts its mining activities therein. The situs of the
shares is in the jurisdiction where the corporation is created, whether the certificated
evidencing the ownership of those shares are within or without that jurisdiction.
Under these circumstances, the court held that the action thus brought is quasi in
rem, for while the judgment that may be rendered therein is not strictly a judgment in
rem, "it fixes and settles the title to the property in controversy and to that extent
partakes of the nature of the judgment in rem."
It is true that, in a strict sense, a proceeding in rem is one taken directly against
property, and has for its object the disposition of the property, without reference to
the title of individual claimants; but, in a large and more general sense, the terms are
36
applied to actions between parties, where the direct object is to reach and dispose of
property owned by them, or of some interest therein.
The action being in quasi in rem, The Court of First Instance of Manila has
jurisdiction over the person of the non-resident. In order to satisfy the constitutional
requirement of due process, summons has been served upon her by publication.
There is no question as to the adequacy of publication made nor as to the mailing of
the order of publication to the petitioner's last known place of residence in the United
States. But, of course, the action being quasi in rem and notice having be made by
publication, the relief that may be granted by the Philippine court must be confined to
the res, it having no jurisdiction to render a personal judgment against the non-
resident. In the amended complaint filed by Eugene Arthur Perkins, no money
judgment or other relief in personam is prayed for against the petitioner. The only
relief sought therein is that she be declared to be without any interest in the shares in
controversy and that she be excluded from any claim thereto.
Petitioner contends that the proceeding instituted against her is one of interpleading
and is therefore an action in personam. Section 120 of our Code of Civil Procedure
provides that whenever conflicting claims are or may be made upon a person for or
relating to personal property, or the performance of an obligation or any portion
thereof, so that he may be made subject to several actions by different persons, such
person may bring an action against the conflicting claimants, disclaiming personal
interest in the controversy, and the court may order them to interplead with one
another and litigate their several claims among themselves, there upon proceed to
determine their several claims. Here, The Benguet Consolidated Mining Company, in
its answer to the complaint filed by Eugene Arthur Perkins, averred that in
connection with the shares of stock in question, conflicting claims were being made
upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and
one named George H. Engelhard, and prayed that these last two be made parties to
the action and served with summons by publication, so that the three claimants may
litigate their conflicting claims and settle their rights among themselves. The court
has not issued an order compelling the conflicting claimants to interplead with one
another and litigate their several claims among themselves, but instead ordered the
plaintiff to amend his complaint including the other two claimants as parties
36
defendant. The plaintiff did so, praying that the new defendants thus joined be
excluded from any interest in the shares in question, and it is upon this amended
Page
complaint that the court ordered the service of the summons by publication. It is
therefore, clear that the publication of the summons was ordered not in virtue of an
interpleading, but upon the filing of the amended complaint wherein an action quasi
in rem is alleged.
Had not the complaint been amended, including the herein petitioner as an additional
defendant, and had the court, upon the filing of the answer of the Benguet
Consolidated Mining Company, issued an order under section 120 of the Code of
Civil Procedure, calling the conflicting claimants into court and compelling them to
interplead with one another, such order could not perhaps have validly been served
by publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the
proceeding would be purely one of interpleading. Such proceeding is a personal
action, for it merely seeks to call conflicting claimants into court so that they may
interplead and litigate their several claims among themselves, and no specific relief
is prayed for against them, as the interpleader have appeared in court, one of them
pleads ownership of the personal property located in the Philippines and seeks to
exclude a non-resident claimant from any interest therein, is a question which we do
not decide not. Suffice it to say that here the service of the summons by publication
was ordered by the lower court by virtue of an action quasi in rem against the non-
resident defendant.
Travelers Health Association v. Commonwealth of Virginia State Corporation
Commission
Decided: June 5, 1950
Ponente: JUSTICE BLACK
Facts: The Virginia "Blue Sky Law" requires those selling or offering certificates of
insurance and other forms of securities to obtain a permit from the State Corporation
Commission for the protection of the citizens from unfairness, imposition, or fraud
resulting from such transaction. Applicants for permits must meet comprehensive
conditions.
6 of the Virginia "Blue Sky Law” provides: After notice and a hearing "on the merits,"
the State Corporation Commission is authorized to issue a cease and desist order
restraining violations of the Act. The section also provides for service by registered
mail where other types of service are unavailable because the offering is by
37
advertisement and/or solicitation through periodicals, mail, telephone, telegraph,
radio, or other means of communication from beyond the limits of the State.
In a proceeding under 6 of the "Blue Sky Law," the State Corporation Commission
ordered Travelers Health Association (Association), incorporated and located in
Nebraska and engaged in the mail-order health insurance business, to cease and
desist from further offerings or sales of certificates of insurance to Virginia residents
until the Association had complied with the Act by furnishing information as to its
financial condition, consenting to suit against it by service of process on the
Secretary of the Commonwealth, and obtaining a permit. Notice of the proceeding
was served on Association by registered mail, as authorized by the “Blue Sky Law”
when other forms of service are unavailable. The Association challenged the
jurisdiction of the State, and moved to quash the service of summons. The
Commission overruled appellants' objection to jurisdiction and their motion to quash
service. This order was affirmed by the Virginia Court of Appeals. This order was
also affirmed by the Supreme Court of Appeals.
Issue: Whether or not Virginia has power to reach the Association in cease and
desist proceedings to enforce any part of its regulatory law.
Held: Yes. Virginia has power to issue a cease and desist order to enforce at least
the requirement that the Association consent to suit against it by service of process
on the Secretary of the Commonwealth. The contacts and ties of the Association with
Virginia residents, together with that State's interest in faithful observance of the
certificate obligations, justify the subjecting of the Association to cease and desist
proceedings under 6. In fact, the Association for many years had been issuing
insurance certificates to residents of Virginia, and it had approximately 800 members
there. It had caused claims for losses to be investigated, and the Virginia courts were
open to it for the enforcement of obligations of certificate holders. The Court found
the circumstances under which the insurance transactions took place are sufficient to
support such an implication. Where business activities reach out beyond one state
and create continuing relationships and obligations with citizens of another state,
courts need not resort to a fictional consent in order to sustain the jurisdiction of
regulatory agencies in the latter state.
37
Moreover, the power of the State to subject the Association to the jurisdiction of the
State Commission and to authorize a cease and desist order under 6 is not vitiated
Page
by the fact that business activities carried on outside of the State are affected.
Note: There’s a discussion about due process in this case. However, I decided
not to include it because it’s not relevant in our class discussion in Conflicts.
Happy reading!
KIOBEL V. ROYAL DUTCH PETROLEUM CO. (2013)
Facts: Petitioners were residents of Ogoniland, an area of 250 square miles located
in the Niger delta area of Nigeria and populated by roughly half a million people.
When the complaint was filed, respondents Royal Dutch Petroleum Company and
Shell Transport and Trading Company, p.l.c., were holding companies incorporated
in the Netherlands and England, respectively. Their joint subsidiary, respondent Shell
Petroleum Development Company of Nigeria, Ltd. (SPDC), was incorporated in
Nigeria, and engaged in oil exploration and production in Ogoniland.
According to the complaint, after concerned residents of Ogoniland began protesting
the environmental effects of SPDC's practices, respondents enlisted the Nigerian
Government to violently suppress the burgeoning demonstrations. Throughout the
early 1990's, the complaint alleges, Nigerian military and police forces attacked
Ogoni villages, beating, raping, killing, and arresting residents and destroying or
looting property. Petitioners further allege that respondents aided and abetted these
atrocities by, among other things, providing the Nigerian forces with food,
transportation, and compensation, as well as by allowing the Nigerian military to use
respondents' property as a staging ground for attacks. Following the alleged
atrocities, petitioners moved to the United States where they have been granted
political asylum and now reside as legal residents. They filed suit in the United States
District Court for the Southern District of New York, alleging jurisdiction under the
Alien Tort Statute and requesting relief under customary international law.
The ATS provides that “[t]he district courts shall have original jurisdiction of any civil
action by an alien for a tort only, committed in violation of the law of nations or a
treaty of the United States.” the District Court dismissed several of petitioners’
claims, but on interlocutory appeal, the Second Circuit dismissed the entire
complaint, reasoning that the law of nations does not recognize corporate liability.
This Court granted certiorari, and ordered supplemental briefing on whether and
under what circumstances courts may recognize a cause of action under the ATS,
for violations of the law of nations occurring within the territory of a sovereign other
than the United States.
38
Issue: Whether or not a claim may reach conduct occurring in the territory of a
foreign sovereign
Held: No. The Supreme Court held that, with very limited exceptions, the Alien Tort
Statute, 28 U.S.C. § 1350 ("ATS"), does not apply extraterritorially to conduct that
occurs outside the United States. 133 S.Ct. at 1665. The actions that form the basis
of this case occurred far from the United States and many decades ago. It is beyond
question—and defendants do not dispute—that plaintiffs allege shocking violations of
internationally accepted norms. But it is also beyond question that, based on the
Supreme Court's interpretation of the ATS, most of plaintiffs' claims are not
cognizable in an American court.
(a) Passed as part of the Judiciary Act of 1789, the ATS is a jurisdictional statute
that creates no causes of action. It permits federal courts to “recognize private claims
[for a modest number of international law violations] under federal common law.”
Sosa v. Alvarez-Machain, 542 U. S. 692 . In contending that a claim under the ATS
does not reach conduct occurring in a foreign sovereign’s territory, respondents rely
on the presumption against extraterritorial application, which provides that
“[w]hen a statute gives no clear indication of an extraterritorial application, it has
none,”. The presumption “serves to protect against unintended clashes between our
laws and those of other ations which could result in international discord.” It is
typically applied to discern whether an Act of Congress regulating conduct applies
abroad, but its underlying principles similarly constrain courts when considering
causes of action that may be brought under the ATS. Indeed, the danger of
unwarranted judicial interference in the conduct of foreign policy is magnified in this
context, where the question is not what Congress has done but what courts may do.
These foreign policy concerns are not diminished by the fact that Sosa limited federal
courts to recognizing causes of action only for alleged violations of international law
norms that are “ ‘specific, universal, and obligatory,” 542 U. S., at 732. Pp. 3–6.
(b) The presumption is not rebutted by the text, history, or purposes of the ATS.
Nothing in the ATS’s text evinces a clear indication of extraterritorial reach. Violations
of the law of nations affecting aliens can occur either within or outside the United
States. And generic terms, like “any” in the phrase “any civil action,” do not rebut the
presumption against extraterritoriality. Petitioners also rely on the common-law
“transitory torts” doctrine, but that doctrine is inapposite here; as the Court has
38
explained, “the only justification for allowing a party to recover when the cause of
action arose in another civilized jurisdiction is a well-founded belief that it was a
Page
cause of action in that place,” The question under Sosa is not whether a federal court
has jurisdiction to entertain a cause of action provided by foreign or even
international law. The question is instead whether the court has authority to
recognize a cause of action under U. S. law to enforce a norm of international law.
That question is not answered by the mere fact that the ATS mentions torts.
The historical background against which the ATS was enacted also does not
overcome the presumption. When the ATS was passed, “three principal offenses
against the law of nations” had been identified by Blackstone: violation of safe
conducts, infringement of the rights of ambassadors, and piracy. Prominent
contemporary examples of the first two offenses—immediately before and after
passage of the ATS—provide no support for the proposition that Congress expected
causes of action to be brought under the statute for violations of the law of nations
occurring abroad. And although the offense of piracy normally occurs on the high
seas, beyond the territorial jurisdiction of the United States or any other country,
applying U. S. law to pirates does not typically impose the sovereign will of the
United States onto conduct occurring within the territorial jurisdiction of another
sovereign, and therefore carries less direct foreign policy consequences. A 1795
opinion of Attorney General William Bradford regarding the conduct of U. S. citizens
on both the high seas and a foreign shore is at best ambiguous about the ATS’s
extraterritorial application; it does not suffice to counter the weighty concerns
underlying the presumption against extraterritoriality. Finally, there is no indication
that the ATS was passed to make the United States a uniquely hospitable forum for
the enforcement of international norms. Pp. 6–14.
FRENCH V. BANCO NATIONAL DE CUBA (1968)
FACTS:
An action was brought against Banco de Cuba for breach of contract arising from the
bank’s refusal to redeem in American dollars per the eight certificates of tax
exemption worth $150,000 which had been issued to plaintiff’s assignor. The
assignor, an American national now living in Florida, resided in Cuba between 1957
and 1959 and had invested in property there on terms that he could convert his
proceeds into dollars and that such proceeds would be exempted from the Cuban
Tax on the exportation of currency.
However in June 1959, six months after the establishment of the Castro Regime, the
eight certificates of tax exemption were issued to the assignor. In July, the Cuban
Currency Stabilization Fund issued a “Decision” or order suspending the
39
redemption of such certificates as a means of controlling the foreign currency
reserves of the country.
In December, the assignor was refused redemption of his certificates in pursuance of
the order of the court. The plaintiff, as assignee, now brought an action in 1960
against the bank in the Supreme Court in New York County, and obtained a
judgment for $150,000 with interest, which the appellate division of the SC affirmed,
rejecting the bank’s contentions that as a government enterprise it was entitled to
sovereign immunity from suit and that the currency control order was an act of
state the validity of which must be recognized by United States courts. The CA
reversed this decision and dismissed this complaint.
ISSUES:
1 - whether the defendant is entitled to sovereign immunity (no)
2 - whether the defendant may invoke the "act of state" doctrine (no)
The CA rejected the defense of sovereign immunity on the basis of a
communication from the Department of State to the effect that the present
action arose out of a commercial transaction for which immunity could not be
recognized.
According to Chief Judge Fuld - American Courts “will not inquire into the validity of
the acts of a foreign government done within its own territory,” nor will they
“…examine a foreign law to determine whether it was adopted in conformity with the
internal procedures and requirements of the enacting state.” There was no doubt that
the currency control order constituted an act of state which prevented defendant from
performing the contractual commitment contained in the exemption certificates. The
situation presented in this case was distinguishable from that presented in Banco
Nacional de Cuba v Sabbatino, for the latter involved an exchange control regulation
which did not constitute an expropriation or confiscation.
“In an area of international law where, for instance, there is a wide divergence
‘between the national interests of capital importing and capital exporting nations
between the social ideologies of those countries that favor state control of a
considerable portion of the means of production.
39
United States Court of Appeals, Ninth Circuit.
Page
IN RE: PHILIPPINE NATIONAL BANK, Philippine National Bank, Petitioner, v.
United States District Court for the District of Hawaii, Respondent, Maximo
Hilao;  Estate of Ferdinand Marcos;  Imelda R. Marcos;  Ferdinand R. Marcos, Jr.,
Real Parties in Interest.
No. 04-71843.
Decided: February 04, 2005
FACTS. In an earlier case (Credit Suisse case), the US Court of Appeals dealt with
the attempt of a class of plaintiffs to reach assets of the Marcos estate located in
Swiss banks. The Swiss assets had been frozen by the Swiss government at the
request of the Republic of the Philippines, which was seeking to recover them. The
class plaintiffs obtained an injunction from the US district court requiring the Swiss
banks to hold the assets for the benefit of the class plaintiffs.
Thereafter, the Swiss government released the funds frozen in Switzerland for
transfer to the Philippine National Bank in escrow pending a determination of proper
disposal by a competent court in the Philippines. The Philippine National Bank
deposited the funds in Singapore. The Philippine Supreme Court subsequently held
that the assets were forfeited to the Republic of the Philippines.
The US district court ruled that the Philippine Supreme Court had violated “due
process by any standard” and that its judgment was entitled to no deference. The
district court then issued an Order to Show Cause against the Philippine
Bankrequiring the Bank to show why it should not be held in contempt for violating
the court's injunction against transfer of assets by the estate.
The Bank then filed the present petition for mandamus in this court (US CA), seeking
to restrain the district court from enforcing its Order to Show Cause. The Bank
asserts that it has transferred nearly all of the funds in issue to the Republic pursuant
to the judgment of the Philippine courts. More important, the Bank contends that the
entire proceeding against the Bank for its transfer of funds violated the act of state
doctrine.
ISSUE. Whether the act of state doctrine applies to invalidate the orders issued by
the Hawaii District Court. (Yes)
40
HELD. We conclude that the district court's orders violated the act of state doctrine,
and we accordingly issue the writ.
The act of state doctrine. Every sovereign state is bound to respect the
independence of every other sovereign state, and the courts of one country
will not sit in judgment on the acts of the government of another, done within
its own territory. Redress of grievances by reason of such acts must be
obtained through the means open to be availed of by sovereign powers as
between themselves.
The act of state doctrine originally was deemed to arise from international law,
but more recently has been viewed as a function of our constitutional
separation of powers.So viewed, the doctrine reflects “ ‘the strong sense of
the Judicial Branch that its engagement in the task of passing on the validity
of foreign acts of state may hinder’ the conduct of foreign affairs.”
The district court's orders in issue violated this principle. In order to obtain assets
from the Philippine Bank, or to hold the Bank in contempt for the transfer of those
assets to the Republic, the district court necessarily (and expressly) held invalid the
forfeiture judgment of the Philippine Supreme Court.
Although the act of state doctrine is normally inapplicable to court judgments arising
from private litigation, there is no inflexible rule preventing a judgment sought by a
foreign government from qualifying as an act of state. “A judgment of a court may
be an act of state.” There is no question that the judgment of the Philippine
Supreme Court gave effect to the public interest of the Philippine government. The
forfeiture action was not a mere dispute between private parties;  it was an action
initiated by the Philippine government pursuant to its “statutory mandate to recover
property allegedly stolen from the treasury.”  The subject matter of the forfeiture
action thus qualifies for treatment as an act of state.
Generally, the act of state doctrine applies to official acts of foreign sovereigns
40
“performed within [their] own territory.”The act of the Philippine Supreme Court
Page
was not wholly external, however. Its judgment, which the district court declared
invalid, was issued in the Philippines and much of its force upon the Philippine Bank
arose from the fact that the Bank is a Philippine corporation. Evenwhen an act of a
foreign state affects property outside of its territory, “the considerations
underlying the act of state doctrine may still be present.” Because the
Republic's “interest in the enforcement of its laws does not end at its
borders.”The fact that the escrow funds were deposited in Singapore does not
preclude the application of the act of state doctrine. The underlying governmental
interest of the Republic supports treatment of the judgment as an act of state.
The Philippine forfeiture judgment is an act of state. The Swiss government did not
repudiate its freeze order, and the Swiss banks did not transfer the funds in the
ordinary course of business. They delivered the funds into escrow with the
approval of the Swiss courts in order to permit the very adjudication of the Philippine
courts that the district court considered invalid. To permit the district court to
frustrate the procedure chosen by the Swiss and Philippine governments to
adjudicate the entitlement of the Republic to these assets would largely nullify the
effect of our decision in Credit Suisse.
WRIT OF MANDAMUS ISSUED directing dismissal of the US district court's order,
and ordering the district court to refrain from taking any further action or any other
case involving any or all of the class plaintiffs and any assets of the Estate of
Ferdinand E. Marcos held or claimed to be held by the Banks.
REPUBLIC VS. MARCOS
FACTS:
The Republic of the Philippines (the Republic) brought a civil suit against former
president, Ferdinand Marcos, and his wife Imelda (the Marcoses), asserting claims
under the Racketeer Influenced and Corrupt Organizations Act (RICO) and other
applicable law. The Republic sought an injunction preventing the Marcoses from
disposing their assets until after trial.
District court: Granted preliminary injunction.
Appeal:
Panel of circuit court (2nd circuit court): Reversed (injunction barred by act of
state doctrine)
41
En banc (this case 9th circuit court): Affirmed with the District Court (failure to
prove acts as covered by act of state doctrine)
Republic's claims are predicated on its allegation that the former president Marcos
stole public money during its incumbency and used position of power and authority to
convert and cause to be converted to his use and that of his friends, family, and
associates, money, funds, and property belonging to the Philippines and its people.
The Republic alleged that the Marcoses:
1. were engaged in mail fraud, wire fraud, and the transportation of stolen property in
the foreign or interstate commerce of the United States which are acts punishable
under USC laws (Non-RICO claims);
2. those acts are repeated, forming a pattern of predicate acts under RICO thereby
giving rise to civil liability.
Marcoses' contend that:
1. their acts are insulated because they were acts of state NOTreviewable by the
circuit (US) courts;
2. any adjudication of these acts would involve the investigation of political questions
beyond US courts' competence.
ISSUE:
Whether or not the acts being alleged against the Marcoses are considered Acts of
State therefore not subject to judicial review of the Circuit Court?
HELD:
No. The Marcoses offered NO evidence to support the classification of their acts as
acts of state. The burden of proving acts of state rested upon them.
ACT OF STATE DOCTRINE:
41
Every sovereign state is bound to respect the independence of every other sovereign
Page
state, and the courts of one country will not sit in judgment on the acts of the
government of another, done within its own territory. Redress of grievances by
reason of such acts must be obtained through the means open to be availed of by
sovereign powers as between themselves.
The classification of certain acts as "acts of state" with the consequence that
their validity will be treated as beyond judicial review is a pragmatic device,
not required by the nature of sovereign authority and inconsistently applied in
international law.
The "continuing vitality" of the doctrine depends on "its capacity to reflect the proper
distribution of functions between the judicial and political branches of the
Government on matters bearing upon foreign relations." Consequently, there are
"constitutional underpinnings" to the classification. A court that passes on the
validity of an "act of state" intrudes into the domain of the political branches.
As a practical tool for keeping the judicial branch out of the conduct of foreign affairs,
the classification of "act of state" is not a promise to the ruler of any foreign country
that his conduct, if challenged by his own country after his fall, may not become the
subject of scrutiny in our courts. No estoppel exists insulating a deposed dictator
from accounting. No guarantee has been granted that immunity may be acquired by
an ex-chief magistrate invoking the magic words "act of state" to cover his or her
past performance.
The act of state doctrine is supple, flexible, ad hoc. The doctrine is meant to
facilitate the foreign relations of the United States, not to furnish the equivalent of
sovereign immunity to a deposed leader.
CONCLUSION:
Not all acts of foreign government are free from the court scrutiny under the act of
state doctrine. The doctrine prevents inquiry into public, governmental acts but not
into private or commercial conduct. Officials are shielded only when they act in their
SOVEREIGN CAPACITY FOR THE PUBLIC INTEREST. Moreover, the doctrine is
particularly inappropriate in cases in which the government invoking the doctrine is
no longer in power.
Both “official acts” and “foreign policy interference” requirements prevent the
use of act of state defense by government (and government officials) that are no
42
longer recognized as sovereign.
GULF OIL VS. GILBERT
ASSUMPTION OF JURISDICTION VS FORUM NON-CONVENIENS
Syllabus: A federal district court has power to dismiss an action at law pursuant to
the doctrine of forum non conveniens -- at least where its jurisdiction is based on
diversity of citizenship and the state courts have such power.
Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947)
FACTS:The respondent-plaintiff brought this action in the Southern District New
York, but resides at Lynchburg, Virginia, where he operated a public warehouse.
He alleges that the petitioner-defendant, in violation of the ordinances of Lynchburg,
so carelessly handled a delivery of gasoline to his warehouse tanks and pumps as
to cause an explosion and fire which consumed the warehouse building to his
damage, destroyed merchandise and fixtures, caused injury to his business and
profits, and burned the property of customers in his custody under warehousing
agreements. He asks judgment of $365,529.77. The action clearly is one in tort.
The petitioner-defendant is a corporationorganized under the laws of
Pennsylvania, qualified to do business in both Virginia and New York, and it has
designated officials of each state as agents to receive service of process. When
sued in New York, the defendant, invoking the doctrine of forum non conveniens,
claimed that the appropriate place for trial is Virginia, where the plaintiff lives and
defendant does business, where all events in litigation took place, where most of the
witnesses reside, and where both state and federal courts are available to plaintiff,
and are able to obtain jurisdiction of the defendant.
The District Court dismissed the case.The Circuit Court of Appeals reversed.
The case is here on certiorari.
ISSUES:
1. Whether or not the United States District Court has inherent power to dismiss a
suit pursuant to the doctrine of forum non conveniens. (Yes)
42
2. Whether or not this case calls for the application ofdoctrine of forum non
conveniens.(No)
Page
HELD:
1. This Court, has repeatedly recognized the existence of the power to decline
jurisdiction in exceptional circumstances. As formulated by Mr. Justice
Brandeis, the rule is: x xxCourts of equity and of law also occasionally decline, in
the interest of justice, to exercise jurisdiction where the suit is between aliens or
nonresidents, or where, for kindred reasons, the litigation can more appropriately
be conducted in a foreign tribunal."
In Canada Malting Co., Ltd. v. Paterson Steamships: We later expressly said
that a state court "may, in appropriate cases, apply the doctrine of forum non
conveniens.". Even where federal rights binding on state courts under the
Constitution are sought to be adjudged, this Court has sustained state courts in a
refusal to entertain a litigation between a nonresident and a foreign corporation or
between two foreign corporations.
2. The principle of forum non conveniens is simply that a court may resist
imposition upon its jurisdiction even when jurisdiction is authorized by the letter of
a general venue statute. These statutes are drawn with a necessary generality,
and usually give a plaintiff a choice of courts, so that he may be quite sure of
some place in which to pursue his remedy. But the open door may admit those
who seek not simply justice, but perhaps justice blended with some harassment.
A plaintiff sometimes is under temptation to resort to a strategy of forcing the trial
at almost inconvenient place for an adversary, even at some inconvenience to
himself.
It has not been attempted to catalogue the circumstances which will justify or
require either grant or denial of remedy. The doctrine leaves much to the discretion
of the court to which plaintiff resorts, and experience has not shown a judicial
tendency to renounce one's own jurisdiction so strong as to result in many abuses.
One of the factors to be considered in application of the doctrine is the
private interest of the litigant such as relative ease of access to sources of proof;
availability of compulsory process for attendance of unwilling, and the cost of
obtaining attendance of willing, witnesses; possibility of view of premises, if view
would be appropriate to the action, and all other practical problems that make trial of
a case easy, expeditious, and inexpensive. There may also be questions as to the
enforceability of a judgment if one is obtained. The court will weigh relative
advantages and obstacles to fair trial. It is often said that the plaintiff may not, by
choice of an inconvenient forum, "vex," "harass," or "oppress" the defendant by
inflicting upon him expense or trouble not necessary to his own right to pursue his
43
remedy.But, unless the balance is strongly in favor of the defendant, the plaintiff's
choice of forum should rarely be disturbed.
Factors of public interest also have place in applying the doctrine.
Administrative difficulties follow for courts when litigation is piled up in congested
centers instead of being handled at its origin. Jury duty is a burden that ought not to
be imposed upon the people of a communitywhich has no relation to the litigation. In
cases which touch the affairs of many persons, there is reason for holding the trial in
their view and reach, rather than in remote parts of the country where they can learn
of it by report only. There is a local interest in having localized controversies decided
at home. There is an appropriateness, too, in having the trial of a diversity case in a
forum that is at home with the state law that must govern the case, rather than
having a court in some other forum untangle problems in conflict of laws, and in law
foreign to itself.
Turning to the question whether this is one of those rather rare cases where
the doctrine should be applied, we look first to the interests of the litigants.
The plaintiff himself is not a resident of New York, nor did any event
connected with the case take place there, nor does any witness with the possible
exception of experts live there. No one connected with that side of the case save
counsel for the plaintiff resides there, and he has candidly told us that he was
retained by insurance companies interested presumably because of subrogation. His
affidavits and argument are devoted to controverting claims as to defendant's
inconvenience, rather than to showing that the present forum serves any
convenience of his own,with one exception: that the amount claimed which is close
to $400,000, is one which may stagger the imagination of a local jury which is surely
unaccustomed to dealing with amounts of such a nature, and that, the respondent
will have an opportunity to try this case free from local influences and preconceived
notions of Lynchburg.
But the Court disagree with the contention of plaintiff. It is a strange argument
on behalf of a Virginia plaintiff that the community which gave him patronage to make
his business valuable is not capable of furnishing jurors who know the value of the
goods they store, the building they are stored in, or the business their patronage
creates. And there is no specification of any local influence, other than accurate
knowledge of local conditions, that would make a fair trial improbable.
43
The court likewise could well have concluded that the task of the trial
court would be simplified by trial in Virginia.If trial was in a state court, it could
Page
apply its own law to events occurring there. If in federal court by reason of diversity
of citizenship, the court would apply the law of its own state in which it is likely to be
experienced. The course of adjudication in New York federal court might be
beset with conflict of laws problems all avoided if the case is litigated in
Virginia, where it arose.
We are convinced that the District Court did not exceed its powers or
the bounds of its discretion in dismissing plaintiff's complaint and remitting
him to the courts of his own community. The Circuit Court of Appeals took too
restrictive a view of the doctrine as approved by this Court. Its judgment is Reversed.
K.K. SHELL SEKIYU OSAKA VS. CA
K.K. Shell Sekiyu Osaka Hatsubaisho v CA
On January 7,1987, Kumagai Kaiun Kaisha, Ltd., a corporation formed and
existing under the laws of Japan, filed a complaint for the collection of a sum of
money with preliminary attachment against Atlantic Venus Co., S.A. a corporation
registered in Panama, the vessel MV Estella and Crestamonte Shipping Corporation
(Crestamonte ), a Philippine corporation. Atlantic is the owner of the MV Estella.
The complaint, docketed as Civil Case No. 8738930 of the Regional Trial
Court, Branch XIV, Manila alleged that Crestamonte, as bareboat charterer and
operator of the MV Estella, appointed N.S. Shipping Corporation (NSS) a Japanese
corporation, as its general agent in Japan. The appointment was formalized in an
Agency Agreement. NSS in turn appointed Kumagai as its local agent in Osaka,
Japan. Kumagai supplied the MV Estella with supplies and services but despite
repeated demands Crestamonte failed to pay the amounts due. NSS and Keihin
Narasaki Corporation (Keihin) filed complaints-in-intervention.
On May 19,1987, petitioner Fu Hing Oil Co., Ltd. (Fu hing ), a corporation
organized in Hong Kong and not doing business in the Philippines, filed a motion for
leave to intervene with an attached complaint-in-intervention, alleging that Fu Hing
supplied marine diesel oil/fuel to the MV Estella and incurred barge expenses for the
total sum of US$152,412.56 but such has remained unpaid despite demand and that
44
the claim constitutes a maritime lien. The issuance of a writ of attachment was also
prayed for.
On July 16, 1987, petitioner K.K. Shell Sekiyu Osaka Hatsubaisho (K.K. Shell
), a corporation organized in Japan and not doing business in the Philippines,
likewise filed a motion to intervene with an attached complaint-in-intervention,
alleging that upon request of NSS, Crestamonte's general agent in Japan, K.K. Shell
provided and supplied marine diesel oil/fuel to the W Estella at the ports of Tokyo
and Mutsure in Japan and that despite previous demands Crestamonte has failed to
pay the amounts of US$16,996.96 and One Million Yen (Y1,000,000.00) and that
K.K. Shell's claim constitutes a maritime lien on the MV Estella. The complaint-in-
intervention sought the issuance of a writ of preliminary attachment.
Issue: Whether the court has acquired jurisdiction?
Ruling:
Private respondents have anticipated the possibility that the courts will not
find that K.K. Shell is expressly bound by the Agency Agreement, and thus they fall
back on the argument that even if this were so, the doctrine of forum non conveniens
would be a valid ground to cause the dismissal of K.K. Shell's complaint-in-
intervention. K.K. Shell counters this argument by invoking its right as maritime
lienholder. It cites Presidential Decree No. 1521, the Ship Mortgage Decree of 1978,
which provides: SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-
Any person furnishing repairs, supplies, to wage, use of dry dock or marine railway,
or other necessaries, to any vessel, whether foreign or domestic, upon the order of
the owner of such vessel, or of a person authorized by the owner, shall have a
maritime lien on the vessel, which may be enforced by suit in rem, and it shall be
necessary to allege or prove that credit was given to the vessel. Private respondents
on the other hand argue that even if P.D. No. 1521 is applicable, K.K. Shell cannot
rely on the maritime lien because the fuel was provided not exclusively for the
benefit of the MV Estella, but for the benefit of Crestamonte in general. Under the
law it must be established that the credit was extended to the vessel itself. Now, this
is a defense that calls precisely for a factual determination by the trial court of who
benefitted from the delivery of the fuel. Hence, again, the necessity for the reception
44
of evidence before the trial court. In other words, considering the dearth of evidence
due to the fact that the private respondents have yet to file their answer in the
Page
proceedings below and trial on the merits is still to be conducted, whether or not
petitioners are indeed maritime lienholders and as such may enforce the lien against
the MV Estella are matters that still have to be established. Neither are we ready to
rule on the private respondents' invocation of the doctrine of forum non conveniens,
as the exact nature of the relationship of the parties is still to be established. We
leave this matter to the sound discretion of the trial court judge who is in the best
position, after some vital facts are established, to determine whether special
circumstances require that his court desist from assuming jurisdiction over the suit.
COMMUNICATION MATERIALS AND DESIGN, INC vs. CA
G.R. No. 102223; August 22, 1996
FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI)
and ASPAC MULTI-TRADE INC., (ASPAC) are both domestic corporations.. Private
Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC) are
corporations duly organized and existing under the laws of the State of Alabama,
USA. There is no dispute that ITEC is a foreign corporation not licensed to do
business in the Philippines.
ITEC entered into a contract with ASPAC referred to as “Representative Agreement”.
Pursuant to the contract, ITEC engaged ASPAC as its “exclusive representative” in
the Philippines for the sale of ITEC’s products, in consideration of which, ASPAC
was paid a stipulated commission. Through a “License Agreement” entered into by
the same parties later on, ASPAC was able to incorporate and use the name “ITEC”
in its own name. Thus , ASPAC Multi-Trade, Inc. became legally and publicly known
as ASPAC-ITEC (Philippines).
One year into the second term of the parties’ Representative Agreement, ITEC
decided to terminate the same, because petitioner ASPAC allegedly violated its
contractual commitment as stipulated in their agreements. ITEC charges the
petitioners and another Philippine Corporation, DIGITAL BASE COMMUNICATIONS,
INC. (DIGITAL), the President of which is likewise petitioner Aguirre, of using
knowledge and information of ITEC’s products specifications to develop their own
line of equipment and product support, which are similar, if not identical to ITEC’s
own, and offering them to ITEC’s former customer.
45
The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a MTD
the complaint on the following grounds: (1) That plaintiff has no legal capacity to sue
as it is a foreign corporation doing business in the Philippines without the required
BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum
shopping which justifies the application against it of the principle of “forum non
conveniens”. The MTD was denied.
Petitioners elevated the case to the respondent CA on a Petition for Certiorari and
Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied,
hence this Petition for Review on Certiorari under Rule 45.
ISSUES:
1. Did the Philippine court acquire jurisdiction over the person of the petitioner corp,
despite allegations of lack of capacity to sue because of non-registration?
2. Can the Philippine court give due course to the suit or dismiss it, on the principle
of forum non convenience?
HELD: Petition dismissed.
1. YES; We are persuaded to conclude that ITEC had been “engaged in” or “doing
business” in the Philippines for some time now. This is the inevitable result after a
scrutiny of the different contracts and agreements entered into by ITEC with its
various business contacts in the country. Its arrangements, with these entities
indicate convincingly that ITEC is actively engaging in business in the country.
A foreign corporation doing business in the Philippines may sue in Philippine Courts
although not authorized to do business here against a Philippine citizen or entity who
had contracted with and benefited by said corporation. To put it in another way, a
party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. And the doctrine of
estoppel to deny corporate existence applies to a foreign as well as to domestic
corporations. One who has dealt with a corporation of foreign origin as a corporate
entity is estopped to deny its corporate existence and capacity.
In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over this
45
commonly used scheme of defaulting local companies which are being sued by
Page
unlicensed foreign companies not engaged in business in the Philippines to invoke
the lack of capacity to sue of such foreign companies. Obviously, the same ploy is
resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin
petitioner from using knowledge possibly acquired in violation of fiduciary
arrangements between the parties.
2. YES; Petitioner’s insistence on the dismissal of this action due to the application,
or non application, of the private international law rule of forum non conveniens
defies well-settled rules of fair play. According to petitioner, the Philippine Court has
no venue to apply its discretion whether to give cognizance or not to the present
action, because it has not acquired jurisdiction over the person of the plaintiff in the
case, the latter allegedly having no personality to sue before Philippine Courts. This
argument is misplaced because the court has already acquired jurisdiction over the
plaintiff in the suit, by virtue of his filing the original complaint. And as we have
already observed, petitioner is not at liberty to question plaintiff’s standing to sue,
having already acceded to the same by virtue of its entry into the Representative
Agreement referred to earlier.
Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the
facts of the case, whether to give due course to the suit or dismiss it, on the principle
of forum non convenience. Hence, the Philippine Court may refuse to assume
jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may
assume jurisdiction over the case if it chooses to do so; provided, that the following
requisites are met:
1) That the Philippine Court is one to which the parties may conveniently resort to;
2) That the Philippine Court is in a position to make an intelligent decision as to the
law and the facts; and,
3) That the Philippine Court has or is likely to have power to enforce its decision.
The aforesaid requirements having been met, and in view of the court’s disposition to
give due course to the questioned action, the matter of the present forum not being
the “most convenient” as a ground for the suit’s dismissal, deserves scant
consideration.
IN VIEW OF THE FOREGOING PREMISES, the instant Petition is hereby
DISMISSED. The decision of the Court of Appeals dated June 7, 1991, upholding the
46
RTC Order dated February 22, 1991, denying the petitioners Motion to Dismiss, and
ordering the issuance of the Writ of Preliminary Injunction is hereby affirmed in toto.
SO ORDERED.
FIRST PHILIPPINE INTERNATIONAL BANK (FORMERLY PRODUCERS BANK
OF THE PHILIPPINES) AND MERCURIO RIVERA, PETITIONERS, VS. COURT OF
APPEALS, CARLOS EJERCITO, IN SUBSTITUTION OF DEMETRIO DEMETRIA,
AND JOSE JANOLO, RESPONDENTS
G.R. No. 115849, January 24, 1996
FACTS:
Producer Bank of the Philippines acquired six parcels of land with a total area of 101
hectares located at Don Jose, Sta. Rosa, Laguna. Demetrio Demetria and Jose O.
Janolo, (later on substituted by Ejercito as assignee) wanted to purchase the
property and thus initiated negotiations for that purpose. Respondents met with
defendant Mercurio Rivera, Manager of the Property Management Department of the
defendant bank. The meeting was held pursuant to respondents’ plan to buy the
property. After the meeting, Janolo, made a formal purchase offer to the bank in the
amount of in the amount of P3.5M in cash. The bank’s counter-offer is at P5.5M.
Respondents amended their previous offer and propose to buy the land for P4.250
million in cash. The bank did not reply, what took place was a meeting on between
the respondents and Luis Co, the Senior Vice-President of defendant bank. Two
days after such meeting, plaintiff Janolo sent to the bank, through Rivera, a letter
informing the bank that they are accepting the bank’s offer for a total price of P5.5M.
In the meantime, the conservator of the bank was replaced by an Acting Conservator
in the person of defendant Leonida T. Encarnacion. Later on Rivera wrote plaintiff
Demetria that the proposal is under study by the newly created committee for
submission to the newly designated Acting Conservator of the bank. What thereafter
transpired was a series of demands by the plaintiffs for compliance by the bank with
what plaintiff considered as a perfected contract of sale, which demands were in one
form or another refused by the bank. Respondents twice made tender of payment
but the bank refused to accept. Instead, the parcels of land involved in the
transaction were advertised by the bank for sale to any interested buyer. Plaintiffs
demanded the execution by the bank of the documents on what was considered as a
"perfected agreement."
46
Respondents sent a final demand to the bank. The bank through Acting Conservator
Page
Encarnacion repudiated the authority of defendant Rivera and claimed that his
dealings with the plaintiffs, particularly his counter-offer of P5.5 Million are
unauthorized or illegal. On that basis, the petitioner justified the refusal of the tenders
of payment and the non-compliance with the obligations under what the respondents
considered to be a perfected contract of sale. Respondents filed a suit for specific
performance with damages against the bank. Henry L. Co (the brother of Luis Co)
filed a motion to intervene in the trial court, alleging that as owner of 80% of the
Bank’s outstanding shares of stock, he had a substantial interest in resisting the
complaint.
RTC: Denied the motion to intervene
CA: Affirmed the denial
During the pendency of the proceedings in the Court of Appeals, Henry Co and
several other stockholders of the Bank, filed an action (hereafter, the "Second Case")
- purportedly a "derivative suit against Encarnacion, Demetria and Janolo "to declare
any perfected sale of the property as unenforceable and to stop Ejercito from
enforcing or implementing the sale." Janolo argued that the Second Case was barred
by litis pendentia by virtue of the case then pending in the Court of Appeals.
ISSUES:
1) Was there forum-shopping on the part of petitioner Bank? YES
RULING:
Forum-shopping originated as a concept in private international law, where non-
resident litigants are given the option to choose the forum or place wherein to bring
their suit for various reasons or excuses, including to secure procedural advantages,
to annoy and harass the defendant, to avoid overcrowded dockets, or to select a
more friendly venue. To combat these less than honorable excuses, the principle
of forum non conveniens was developed whereby a court, in conflicts of law cases,
may refuse impositions on its jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded from seeking remedies elsewhere.
Forum-shopping occurs when a party attempts to have his action tried in a particular
court or jurisdiction where he feels he will receive the most favorable judgment or
verdict. In the Philippines, forum-shopping has acquired a connotation encompassing
not only a choice of venues, as it was originally understood in conflicts of laws, but
also to a choice of remedies. In either of these situations, the litigant actually shops
for a forum of his action. This was the original concept of the term forum shopping.
Eventually, however, instead of actually making a choice of the forum of their
47
actions, litigants, through the encouragement of their lawyers, file their actions in all
available courts, or invoke all relevant remedies simultaneously. This practice had
not only resulted to (sic) conflicting adjudications among different courts and
consequent confusion enimical to an orderly administration of justice. It had created
extreme inconvenience to some of the parties to the action.
Thus, ‘forum-shopping’ had acquired a different concept - which is unethical
professional legal practice and this necessitated or had given rise to the formulation
of rules and canons discouraging or altogether prohibiting the practice. What
therefore originally started both in conflicts of laws and in our domestic law as a
legitimate device for solving problems has been abused and misused to assure
scheming litigants of dubious reliefs.
To avoid or minimize this unethical practice of subverting justice, the Supreme Court,
promulgated Revised Circular No. 28-91 requiring that a party "must certify under
oath x x x [that] (a) he has not theretofore commenced any other action or
proceeding involving the same issues in the Supreme Court, the Court of Appeals, or
any other tribunal or agency; (b) to the best of his knowledge, no such action or
proceeding is pending" in said courts or agencies. A violation of the said circular
entails sanctions that include the summary dismissal of the multiple petitions or
complaints. To be sure, petitioners have included a
VERIFICATION/CERTIFICATION in their Petition stating involving a derivative suit
filed by stockholders of petitioner Bank against the conservator and other defendants
but which is the subject of a pending Motion to Dismiss without Prejudice.
The test for determining whether a party violated the rule against forum-shopping is
where the elements of litis pendentia are present or where a final judgment in one
case will amount to res judicata in the other.
Applying the foregoing principles in the case, it is obvious that there exist identity of
parties or interests represented, identity of rights or causes and identity of reliefs
sought. In the Second Case, the majority stockholders, in representation of the Bank,
are seeking to accomplish what the Bank itself failed to do in the original case in the
trial court. In brief, the objective or the relief being sought, though worded differently,
is the same, namely, to enable the petitioner Bank to escape from the obligation to
sell the property to respondent. In a settled case decided by the SC, it ruled that the
filing by a party of two apparently different actions, but with the same
47
objective, constituted forum shopping. In the instant case before us, there is also
Page
identity of parties, or at least, of interests represented. Although the plaintiffs in the
Second Case (Henry L. Co. et al.) are not name parties in the First Case, they
represent the same interest and entity, namely, petitioner Bank.
Ultimately, what is truly important to consider in determining whether forum-shopping
exists or not is the vexation caused the courts and parties-litigant by a party who
asks different courts and/or administrative agencies to rule on the same or related
causes and/or to grant the same or substantially the same reliefs, in the process
creating the possibility of conflicting decisions being rendered by the different fora
upon the same issue. In this case, this is exactly the problem: a decision recognizing
the perfection and directing the enforcement of the contract of sale will directly
conflict with a possible decision in the Second Case barring the parties from
enforcing or implementing the said sale. Indeed, a final decision in one would
constitute res judicata in the other.
MANILA HOTEL CORP v. NLRC
FACTS:
 Marcelo Santos was an overseas worker employed as a printer at the
Mazoon Printing Press, Sultanate of Oman. Petitioners are the Manila Hotel
Corporation (hereinafter referred to as MHC) and the Manila Hotel
International Company, Limited (hereinafter referred to as MHICL).
 When the case was filed in 1990, MHC was still a GOCC Philippine
Corporation. MHICL is a Hong Kong Corporation. MHC is an incorporator of
MHICL, owning 50% of its capital stock.
 By virtue of a management agreement with the Palace Hotel (Wang Fu
Company Limited), MHICL trained the personnel and staff of the Palace Hotel
at Beijing, China.
 During his employment with the Mazoon Printing Press, Santos received a
letter from Mr. Shmidt, General Manager, Palace Hotel, Beijing, China
informing him that he was recommended by one Buenio, a friend of his.
 Mr. Shmidt offered Santos the same position as printer, but with a higher
monthly salary and increased benefits. Santos accepted of the offer. The
employment contract was for a period of two years.
 Prior to the expiration of his contract, Palace Hotel informed respondent
Santos by letter signed by Mr. Shmidt that his employment at the Palace
Hotel print shop would be terminated due to retrenchment.
48
 Santos filed a complaint for illegal dismissal with the Arbitration Branch, NCR,
NLRC. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt
as respondents.
 The Palace Hotel and Mr. Shmidt were not served with summons and neither
participated in the proceedings before the Labor Arbiter.
 Labor Arbiter decided the case against petitioners
 Petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had
jurisdiction over the case.
 NLRC: in favour of petitioners
 Santos moved for reconsideration. He argued that the case was not
cognizable by the POEA as he was not an overseas contract worker. NLRC
granted the motion and reversed itself.
ISSUE: W/N NLRC was a seriously inconvenient forum.
HELD: Yes
We note that the main aspects of the case transpired in two foreign jurisdictions and
the case involves purely foreign elements. The only link that the Philippines has with
the case is that respondent Santos is a Filipino citizen.The Palace Hotel and MHICL
are foreign corporations. Not all cases involving our citizens can be tried here.
The employment contract.-- Respondent Santos was hired directly by the
Palace Hotel, a foreign employer, through correspondence sent to the Sultanate of
Oman, where respondent Santos was then employed. He was hired without the
intervention of the POEA or any authorized recruitment agency of the government.[36]
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do so provided: (1)
that the Philippine court is one to which the parties may conveniently resort to; (2)
that the Philippine court is in a position to make an intelligent decision as to the law
and the facts; and (3) that the Philippine court has or is likely to have power to
enforce its decision.[37] The conditions are unavailing in the case at bar.
Not Convenient.-- We fail to see how the NLRC is a convenient forum given
48
that all the incidents of the case - from the time of recruitment, to employment to
dismissal occurred outside the Philippines. The inconvenience is compounded by the
Page
fact that the proper defendants, the Palace Hotel and MHICL are not nationals of the
Philippines.Neither are they doing business in the Philippines. Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law.--Neither can an intelligent decision be
made as to the law governing the employment contract as such was perfected in
foreign soil. This calls to fore the application of the principle of lex loci contractus (the
law of the place where the contract was made).[38]
The employment contract was not perfected in the Philippines. Respondent
Santos signified his acceptance by writing a letter while he was in the Republic of
Oman. This letter was sent to the Palace Hotel in the Peoples Republic of China.
No power to determine the facts.-- Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in
Beijing, Peoples Republic of China. The NLRC was not in a position to determine
whether the Tiannamen Square incident truly adversely affected operations of the
Palace Hotel as to justify respondent Santos retrenchment.
Principle of effectiveness, no power to execute decision.-- Even assuming
that a proper decision could be reached by the NLRC, such would not have any
binding effect against the employer, the Palace Hotel. The Palace Hotel is a
corporation incorporated under the laws of China and was not even served with
summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers.Neither are we saying that we do not have
power over an employment contract executed in a foreign country. If Santos were
an overseas contract worker, a Philippine forum, specifically the POEA, not the
NLRC, would protect him.[39] He is not an overseas contract worker a fact which he
admits with conviction.[40]
Even assuming that the NLRC was the proper forum, even on the merits, the
NLRCs decision cannot be sustained. MHC is not liable because it is a separate
juridical entity from MHICL. MHICL is also not liable since there was no employer-
employee relationship between MHICL and Santos.
PACIFIC CONSULTANTS vs SCHONFELD
PETITIONERS: Pacific Consultants International
Asia, Inc. and Jens Peter Henrichsen
RESPONDENTS: Klaus K. Schonfeld
49
DOCKET NO.: GR No. 166920
DATE: February 19, 2007
PONENTE: CALLEJO, SR., J.
TOPIC: Assumption of Jurisdiction vs Forum Non-Conveniens
FACTS:
• Respondent Schonfeld is a Canadian citizen and was a resident of Canada.
• Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated
in accordance with the laws of the Philippines. The primary purpose of PPI was to
engage in the business of providing specialty and technical services both in and
out of the Philippines.It is a subsidiary of Pacific Consultants International of
Japan (PCIJ).
• The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ,
was based in Tokyo, Japan.
• In 1997, PCIJ decided to engage in consultancy services for water and sanitation
in the Philippines. Respondent was employed by PCIJ as consultant, through
Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department.
However, PCIJ assigned him as PPI sector manager in the Philippines. His salary
was to be paid partly by PPI and PCIJ.
• Section 21 of the General Conditions of Employment appended to the letter
of employment provides that any question of interpretation, understanding
or fulfillment of the conditions of employment is to be finally settledby the
Court of Arbitration in London.
• Schonfeld arrived in the philippines and attained the status of a Resident Alien.
PPI applied for an Alien Employment Permit (Permit) for respondent before
DOLE and such was granted.
• Schonfeld received a letter from Henrichsen informing him that his employment
had been terminated effective August 4, 1999 for the reason that PCIJ and PPI
had not been successful in the water and sanitation sector in the Philippines.
However, Henrichsen, by electronic mail,requested respondent to stay put in his
job. Respondent continued his work with PPI until the end of business hours on
October 1, 1999.
• Respondent filed with PPI several money claimsbut later refused to pay a portion.
Respondent filed a Complaintfor Illegal Dismissal against petitioners PPI and
Henrichsen with the Labor Arbiter
49
PETITIONERS’ ANSWER: Petitioners filed a Motion to Dismiss the complaint on the
following grounds:
Page
• the Labor Arbiter had no jurisdiction over the subject matter;
• and venue was improperly laid.
It averred that respondent was a Canadian citizen, a transient expatriate who had left
the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with
principal office in Tokyo, Japan. Since respondents cause of action was based on his
letter of employment executed in Tokyo, Japan, the complaint should have been filed
in Tokyo, Japan.
Under Section 12 of General Conditions of Employment, complainant and PCIJ had
agreed that any employment-related dispute should be brought before the London
Court of Arbitration.
RESPONDENT’S CLAIMS: Respondent contends that he was employed by PPI to
work in the Philippines under contract separate from his contract of employment with
PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is
inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two
corporations have separate and distinct personalities; and he received orders and
instructions from Henrichsen who was the president of PPI. He further insisted that
the principles of forum non conveniens and lex loci contractus do not apply, and that
although he is a Canadian citizen, Philippine Labor Laws apply in this case. Also,
Section 21 of the Arbitration Clause in the General Conditions of Employment does
not provide for an exclusive venue where the complaint against PPI for violation of
the Philippine Labor Laws may be filed.
• LA and NLRC DECISION:
o Upheld the claims of Henrichsen.
o Since the parties had agreed that any differences regarding employer-
employeerelationship should be submitted to the jurisdiction of the court of
arbitration in London, this agreement is controlling.
• CA DECISION:
o Reversed. Under control test to determine employer and employee relationship,
CA declared that respondent was an employee of PPI.
o Venue in Sec. 12 is not exclusive, since there is no stipulation that the
complaint cannot be filed in any other forum other than in the Philippines.
ISSUE #1: W/N the respondent is an employee of PPI. (irrelevant sa topic, baka lang
itanong)
HELD: Yes.
50
• Petitioner PPI applied for the issuance of an AEP to respondent before the
DOLE. In said application, PPI averred that respondent is its employee.
Otherwise, DOLE will not grant the issuance of said permit.
• DOLE may issue an alien employment permit based only on the following:
(a) Compliance by the applicant and his employer with the requirements of Section 2
hereof;
(b) Report of the Bureau Director as to the availability or non-availability of any
person in the Philippines who is competent and willing to do the job for which the
services of the applicant are desired;
(c) His assessment as to whether or not the employment of the applicant will
redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and
Deportation;
(e) The recommendation of the Board of Investments or other appropriate
government agencies if the applicant will be employed in preferred areas of
investments or in accordance with the imperative of economic development.
• There was an employer-employee relationship between petitioner PPI and
respondent using the four-fold test.
ISSUE #2: W/N the Labor Arbiter has Jurisdiction to try and decide on the merits of
the case at bar.
HELD: Yes.
• The settled rule on stipulations regarding venueis that while they are
considered valid and enforceable, venue stipulations in a contract do not, as a
rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court
in the absence of qualifying or restrictive words.
• They should be considered merely as an agreement or additional forum, not as
limiting venue to the specified place. They are not exclusive but, rather
permissive. If the intention of the parties were to restrict venue, there must be
accompanying language clearly and categorically expressing their purpose and
design that actions between them be litigated only at the place named by them.
• the instant case, no restrictive words like only, solely, exclusively in this court,
In
in no other court save , particularly, nowhere else but/except , or words of equal
import were stated in the contract. It cannot be said that the court of arbitration in
London is an exclusive venue to bring forth any complaint arising out of the
employment contract.
50
• Petitioners insistence on the application of the principle of forum non
conveniens must be rejected. The bare fact that respondent is a Canadian
Page
 citizen and was a repatriate does not warrant the application of the principle for
the following reasons:
First. The Labor Code of the Philippines does not include forum non conveniens as a
ground for the dismissal of the complaint.
Second. The propriety of dismissing a case based on this principle requires a factual
determination; hence, it is properly considered as defense.
Third. Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met:
(1) that the Philippine Court is one to which the parties may conveniently resort to;
(2) that the Philippine Court is in a position to make an intelligent decision as to the
law and the facts; and
(3) that the Philippine Court has or is likely to have power to enforce its decision.
Admittedly, all the foregoing requisites are present in this case.
RAYTHEON INTERNATIONAL V ROUZIE
G.R. No. 162894, February 26, 2008
FACTS: Sometime in 1990, Brand Marine Services, Inc. (BMSI), a
corporation duly organized and existing under the laws of the State of Connecticut,
United States of America, and respondent Stockton W. Rouzie, Jr., an American
citizen, entered into a contract whereby BMSI hired respondent as its representative
to negotiate the sale of services in several government projects in the Philippines for
an agreed remuneration of 10% of the gross receipts. ROUZIE then secured a
service contract with the Republic of the PH on behalf of BMSI for the dredging of
rivers affected by the Mt. Pinatubo eruption and mudflows.
ROUZIE filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST),
Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions,
illegal termination and breach of employment contract.Labor Arbiter Pablo C.
Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay respondent’s money
claims. On BMSI’s appeal, the NLRC reversed the LA’s decision and dismissed
ROUZIE’s complaint on lack of jurisdiction. ROUZIE elevated said case to the
Supreme Court but was dismissed in a Resolution dated 26 November 1997. The
Resolution became final and executory on 09 November 1998.
51
On January 8, 1999, ROUZIE, then a resident of La Union, instituted an
action for damages before the Regional Trial Court (RTC) of Bauang, La Union. The
Complaint named as defendants herein petitioner Raytheon International, Inc. as
well as BMSI and RUST. It reiterated the allegations in the labor case that BMSI
verbally employed respondent to negotiate the sale of services in government
projects and that respondent was not paid the commissions due him from the
Pinatubo dredging project which he secured on behalf of BMSI. It also averred that
BMSI and RUST as well as petitioner itself had combined and functioned as one
company.
In its Answer, RAYTHEON alleged that contrary to respondent’s claim, it was
a foreign corporation duly licensed to do business in the Philippines and denied
entering into any arrangement with respondent or paying the latter any sum of
money. It also denied combining with BMSI and RUST for the purpose of assuming
the alleged obligation of the said companies.
RAYTHEON filed an Omnibus Motion for Preliminary Hearing Based on
Affirmative Defenses and for Summary Judgment seeking the dismissal of the
complaint on grounds of forum non conveniens and failure to state a cause of action.
It was denied by the RTC. The trial court held that the factual allegations in the
complaint, assuming the same to be admitted, were sufficient for the trial court to
render a valid judgment thereon. It also ruled that the principle of forum non
conveniens was inapplicable because the trial court could enforce judgment on
petitioner, it being a foreign corporation licensed to do business in the Philippines.
RAYTHEON filed an MR, and the same was again denied by the RTC. Thus,
it filed a petition for certiorari to the Court of Appeals. The CA denied said petition for
lack of merit. Moreover, the CA deferred to the discretion of the RTC when the latter
decided not to desist from assuming jurisdiction on the ground of the inapplicability of
the principle of forum non conveniens. Hence, this petition.
ISSUE: WON the CA erred in refusing to dismiss the complaint on ground of
forum non conveniens
NO.
51
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may
refuse impositions on its jurisdiction where it is not the most “convenient” or available
Page
forum and the parties are not precluded from seeking remedies elsewhere.
RAYTHEON’s averments of the foreign elements in the instant case are not sufficient
to oust the trial court of its jurisdiction over the complaint and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as
a matter of defense. While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court’s
desistance.
Finding no grave abuse of discretion on the trial court, the CA respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound discretion of the lower
courts because their findings are binding on this Court.
RAYTHEON also contends that the complaint failed to state a cause of action
against petitioner. Failure to state a cause of action refers to the insufficiency of
allegation in the pleading. As a general rule, the elementary test for failure to state a
cause of action is whether the complaint alleges facts which if true would justify the
relief demanded.
The complaint alleged that RAYTHEON had combined with BMSI and RUST to
function as one company. As correctly pointed out by the CA, the question of
whether RAYTHEON, BMSI and RUST merged together requires the presentation of
further evidence, which only a full-blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby
AFFIRMED. Costs
HAZEGAWA V. NIPPON
FACTS:
Petitioner Nippon Engineering, a Japanese consultancy firm providing technical and
management support in the infrastructure projects of foreign governments, entered
into an Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a
Japanese national permanently residing in the Philippines. Nippon then assigned
respondent to work as the project manager of the Southern Tagalog Access Road
(STAR) Project in the Philippines, following the company's consultancy contract with
the Philippine Government.
52
When the STAR Project was near completion, the Department of Public Works and
Highways (DPWH) engaged the consultancy services of Nippon, this time for the
detailed engineering and construction supervision of the Bongabon-Baler Road
Improvement (BBRI) Project.
Petitioner Kazuhiro Hasegawa, Nippon's general manager for its International
Division, informed respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged by the company only
up to the substantial completion of the STAR Project.
Respondent consequently initiated a civil case for specific performance and
damages with the Regional Trial Court of Lipa City.
Petitioners, contending that the ICA had been perfected in Japan and executed by
and between Japanese nationals, moved to dismiss the complaint for lack of
jurisdiction. They asserted that the claim for improper pre-termination of respondent's
ICA could only be heard and ventilated in the proper courts of Japan following the
principles of lex loci celebrationis and lexcontractus.
RTC: Denied motion to dismiss
CA: affirmed RTC’s decision
Issue: Whether the subject matter jurisdiction of Philippine courts in civil cases for
specific performance and damages involving contracts executed outside the country
by foreign nationals may be assailed on the principles of lex loci celebrationis,
lexcontractus, the state of the most significant relationship rule, or forum non
conveniens.
HELD:
To elucidate, in the judicial resolution of conflicts problems, three consecutive
phases are involved: jurisdiction, choice of law, and recognition and enforcement of
judgments. Corresponding to these phases are the following questions: (1) Where
can or should litigation be initiated? (2) Which law will the court apply? and (3)
Where can the resulting judgment be enforced?
Analytically, jurisdiction and choice of law are two distinct concepts. Jurisdiction
considers whether it is fair to cause a defendant to travel to this state; choice of law
52
asks the further question whether the application of a substantive law which will
determine the merits of the case is fair to both parties. The power to exercise
Page
jurisdiction does not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lexfori will often coincide, the minimum
contacts for one do not always provide the necessary significant contacts for the
other. The question of whether the law of a state can be applied to a transaction is
different from the question of whether the courts of that state have jurisdiction to
enter a judgment.[56]
In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy,
it must have jurisdiction over the plaintiff or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of the case and, in cases
involving property, over the res or the thing which is the subject of the litigation. In
assailing the trial court's jurisdiction herein, petitioners are actually referring to
subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the
sovereign authority which establishes and organizes the court. It is given only by law
and in the manner prescribed by law. It is further determined by the allegations of the
complaint irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein.to succeed in its motion for the dismissal of an action for lack of
jurisdiction over the subject matter of the claim, the movant must show that the court
or tribunal cannot act on the matter submitted to it because no law grants it the
power to adjudicate the claims.
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial
court is not properly vested by law with jurisdiction to hear the subject controversy
for, indeed, the Civil Case or specific performance and damages is one not capable
of pecuniary estimation and is properly cognizable by the RTC of Lipa City. What
they rather raise as grounds to question subject matter jurisdiction are the principles
of lex loci celebrationis and lexcontractus, and the state of the most significant
relationship rule.
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the law of the place of the ceremony or the law of the
place where a contract is made. The doctrine of lexcontractus or lex loci contractus
means the law of the place where a contract is executed or to be performed. It
controls the nature, construction, and validity of the contractand it may pertain to the
law voluntarily agreed upon by the parties or the law intended by them either
expressly or implicitly.Under the state of the most significant relationship rule, to
ascertain what state law to apply to a dispute, the court should determine which state
53
has the most substantial connection to the occurrence and the parties. In a case
involving a contract, the court should consider where the contract was made, was
negotiated, was to be performed, and the domicile, place of business, or place of
incorporation of the parties. This rule takes into account several contacts and
evaluates them according to their relative importance with respect to the particular
issue to be resolved.
Since these three principles in conflict of laws make reference to the law applicable
to a dispute, they are rules proper for the second phase, the choice of law. They
determine which state's law is to be applied in resolving the substantive issues of a
conflicts problem.Necessarily, as the only issue in this case is that of jurisdiction,
choice-of-law rules are not only inapplicable but also not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is exposed by the
fact that they have not yet pointed out any conflict between the laws of Japan and
ours. Before determining which law should apply, first there should exist a conflict of
laws situation requiring the application of the conflict of laws rules. Also, when the
law of a foreign country is invoked to provide the proper rules for the solution of a
case, the existence of such law must be pleaded and proved.
The courts power to hear cases and controversies is derived from the Constitution
and the laws. While it may choose to recognize laws of foreign nations, the court is
not limited by foreign sovereign law short of treaties or other formal agreements,
even in matters regarding rights provided by foreign sovereigns.
Neither can the other ground raised, forum non conveniens, be used to deprive the
trial court of its jurisdiction herein. First, it is not a proper basis for a motion to
dismiss because Section 1, Rule 16 of the Rules of Court does not include it as a
ground. Second, whether a suit should be entertained or dismissed on the basis of
the said doctrine depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court In this case, the RTC decided to
assume jurisdiction. Third, the propriety of dismissing a case based on this principle
requires a factual determination; hence, this conflicts principle is more properly
considered a matter of defense.
Accordingly, since the RTC is vested by law with the power to entertain and hear the
53
civil case filed by respondent and the grounds raised by petitioners to assail that
jurisdiction are inappropriate, the trial and appellate courts correctly denied the
Page
petitioners motion to dismiss.

WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, LTD.,
petitioners,
vs.
COURT OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR.,
and AURELIO K. LITONJUA, JR., respondents.
G.R. No. 120135. March 31, 2003
FACTS: Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity)were
engaged in the shipping business; they owned 2 vessels: Don Aurelio and El
Champion, through their wholly-owned corporations; they deposited their revenues
from said business together with other funds with the branches of Bank of America
NT&SA and Bank of America International, Ltd. (defendant banks for brevity) in the
United Kingdom and Hongkong up to 1979; with their business doing well, the
defendant banks induced them to increase the number of their ships in operation,
offering them easy loans to acquire said vessels; thereafter, the defendant banks
acquired, through their (Litonjuas) corporations as the borrowers: (a) El Carrier; (b)
El General; (c) El Challenger; and (d) El Conqueror; the vessels were registered in
the names of their corporations; the operation and the funds derived therefrom were
placed under the complete and exclusive control and disposition of the petitioners;
and the possession the vessels was also placed by defendant banks in the hands of
persons selected and designated by them (defendant banks)
On May 10, 1993, Litonjuas filed a Complaint before the RTC Pasig against the Bank
of America NT&SA and Bank of America International, Ltd. claiming that during its
operations and the foreclosure sale, BA as trutees failed to fully render an account of
the income. They lost all their 6 vessels and 10% of their personal funds and they
still have an unpaid balance of their loans.
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniensand
lack of cause of action against them. Trial court denied the Motion to Dismiss.
Banks went to the CA on a Petition for Review on Certiorari, but denied the petition.
ISSUES:
54
1. CA failed to realize that dismissal of the case on the ground of Forum non-
conveniens is more appropriate and proper.
2. That the private respondents are guilty of forum shopping
RULING:
1. No. The doctrine of forum non-conveniens,literally meaning the forum is
inconvenient, emerged in private international law to deter the practice of global
forum shopping[ that is to prevent non-resident litigants from choosing the forum
or place wherein to bring their suit for malicious reasons, such as to secure
procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a
court, in conflicts of law cases, may refuse impositions on its jurisdiction where it
is not the most convenient or available forum and the parties are not precluded
from seeking remedies elsewhere.
Said doctrine depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court.[44] In the case of
Communication Materials and Design, Inc. vs. Court of Appeals,[45] this Court
held that xxx [a] Philippine Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2) that
the Philippine Court is in a position to make an intelligent decision as to the law
and the facts; and, (3) that the Philippine Court has or is likely to have power to
enforce its decision.[46] Evidently, all these requisites are present in the instant
case.
2. No. Forum shopping exists where the elements of litis pendentia are present and
where a final judgment in one case will amount to res judicata in the other.[49]
Parenthetically, for litis pendentia to be a ground for the dismissal of an action
there must be: (a) identity of the parties or at least such as to represent the same
interest in both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same acts; and (c) the identity in the two cases
should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other.
In case at bar, not all the requirements for litis pendentia are present. While there
54
may be identity of parties, notwithstanding the presence of other respondents,[51]
as well as the reversal in positions of plaintiffs and defendants[52], still the other
Page
requirements necessary for litis pendentia were not shown by petitioner. It merely
 mentioned that civil cases were filed in Hongkong and England without however
showing the identity of rights asserted and the reliefs sought for as well as the
presence of the elements of res judicata should one of the cases be adjudged.
[G.R. No. 103493. June 19, 1997]
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE
LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE
COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT,
PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents.
This case presents for determination the conclusiveness of a foreign judgment upon
the rights of the parties under the same cause of action asserted in a case in our
local court.
FACTS: On January 15, 1983, private respondent Ventura O. Ducat obtained
separate loans from petitioners Ayala International Finance Limited (hereafter called
AYALA)[1] and Philsec Investment Corporation (hereafter called PHILSEC), secured
by shares of stock owned by Ducat. In order to facilitate the payment of the loans,
private respondent 1488, Inc., through its president, private respondent DragoDaic,
assumed Ducats obligation under an Agreement, dated January 27, 1983, whereby
1488, Inc. executed a Warranty Deed with Vendors Lien by which it sold to petitioner
Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County,
Texas, U.S.A. while PHILSEC and AYALA extended a loan to ATHONA as initial
payment of the purchase price. The balance of was to be paid by means of
a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon
their receipt of the from 1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock in their possession
belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire
amount covered by the note became due and demandable. Accordingly, on October
17, 1985, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and
ATHONA in the United States for payment of the balance and for damages for
breach of contract and for fraud. ATHONA filed an answer with counterclaim,
impleading private respondents herein as counterdefendants. For their part,
PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction
over their person but their motion was denied.
55
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary
Attachment against private respondents in the Regional Trial Court of Makati. On
April 20, 1987, the trial court issued a writ of preliminary attachment against the real
and personal properties of private respondents.[2]
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of
(1) litispendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in
the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-
IFL to state a cause of action. On January 26, 1988, the trial court granted Ducats
motion to dismiss, stating that the evidentiary requirements of the controversy may
be more suitably tried before the forum of the litispendentia in the U.S., under the
principle in private international law of forum non conveniens, even as it noted that
Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daics motion to
dismiss. On March 9, 1988, the trial court[3] granted the motion to dismiss filed by
1488, Inc. and Daic on the ground of litispendentia considering that under the
doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate
matters needed to determine the assessment and/or fluctuations of the fair market
value of real estate situated in Houston, Texas, U.S.A.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in
applying the principle of litispendentia and forum non conveniens and in ruling that it
had no jurisdiction over the defendants, despite the previous attachment of shares of
stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals[4] affirmed the dismissal of Civil Case No.
16563 against Ducat, 1488, Inc., and Daic on the ground of litispendentia. Hence,
this petition for review on certiorari.
ISSUE: WON the CA erred in affirming the decision of the trial court in dismissing the
case on the ground of litispendentia/forum non conveniens.
RULING: Petitioners contention is meritorious. While this Court has given the effect
of res judicata to foreign judgments in several cases,[7] it was after the parties
55
opposed to the judgment had been given ample opportunity to repel them on
grounds allowed under the law.This is because in this jurisdiction, with respect to
Page
actions in personam, as distinguished from actions in rem, a foreign judgment merely
constitutes prima facie evidence of the justness of the claim of a party and, as such,
is subject to proof to the contrary.[9] Rule 39, 50 provides:
SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of a
foreign country, having jurisdiction to pronounce the judgment is as follows:
(b) In case of a judgment against a person, the judgment is presumptive evidence of
a right as between the parties and their successors in interest by a subsequent title;
but the judgment may be repelled by evidence of a want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact.
It was error therefore for the Court of Appeals to summarily rule that petitioners
action is barred by the principle of res judicata. Petitioners in fact questioned the
jurisdiction of the U.S. court over their persons, but their claim was brushed aside by
both the trial court and the Court of Appeals.[13]
To sustain the appellate courts ruling that the foreign judgment constitutes res
judicata and is a bar to the claim of petitioners would effectively preclude petitioners
from repelling the judgment in the case for enforcement. An absurdity could then
arise: a foreign judgment is not subject to challenge by the plaintiff against whom it is
invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by the
defendant if the foreign judgment is sought to be enforced against him in a separate
proceeding. This is plainly untenable.
Second. Nor is the trial courts refusal to take cognizance of the case justifiable under
the principle of forum non conveniens. First, a motion to dismiss is limited to the
grounds under Rule 16, 1, which does not include forum non conveniens.[16] The
propriety of dismissing a case based on this principle requires a factual
determination, hence, it is more properly considered a matter of defense.Second,
while it is within the discretion of the trial court to abstain from assuming jurisdiction
on this ground, it should do so only after vital facts are established, to determine
whether special circumstances require the courts desistance.[17]
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action
in personam and summons were served by extraterritorial service. Rule 14, 17 on
extraterritorial service provides that service of summons on a non-resident defendant
may be effected out of the Philippines by leave of Court where, among others, the
property of the defendant has been attached within the Philippines.[18] It is not
56
disputed that the properties, real and personal, of the private respondents had been
attached prior to service of summons under the Order of the trial court dated April 20,
1987.[19]
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case
No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with
Civil Case No. 92-1070 and for further proceedings in accordance with this
decision. The temporary restraining order issued on June 29, 1994 is hereby
LIFTED.
GIL MIGUEL T. PUYAT, petitioner, v. RON ZABARTE, respondent.
G.R. No. 1411536. February 26, 2001
FACTS: Gil Miguel Puyat, a foreigner, lost a collection suit filed against him by Ron
Zabarte in a court in California, USA. The California court ordered Puyat to pay the
amount of $241k. Puyat was only able to pay $5k.
In January 1994, Zabarte filed an action to enforce the California judgment here in
the Philippines against Puyat. Puyat filed an Answer where he alleged, among
others, that the California court had no jurisdiction over the case, hence, the foreign
judgment is void. He likewise averred that the trial court had no jurisdiction because
the issue involved are partnership matters which are under the jurisdiction of the
Securities and Exchange Commission (SEC).
Zabarte then filed a motion for summary judgment as he argued that Puyat’s Answer
tendered no issue. The trial court granted the motion and eventually gave a favorable
judgment for Zabarte. The Court of Appeals affirmed the decision of the trial court.
On appeal, Puyat now avers that the trial court should have never taken cognizance
of the case because it had no jurisdiction over the case pursuant to the forum non
conveniens rule. He averred that under this principle, since all the transaction
involved in this case occurred in California, he being a foreigner, and the California
law was not properly determined, the trial court had no jurisdiction. He also assailed
the validity of the trial court’s act in granting the motion for summary judgment filed
by Zabarte.
56
ISSUE: Whether pr not the principle of forum non conveniens is applicable in this
case.
Page
HELD: NO. Since the present action lodged in the RTC was for the enforcement of a
foreign judgment, there was no need to ascertain the rights and the obligations of the
parties based on foreign laws or contracts. The parties needed only to perform their
obligations under the Compromise Agreement they had entered into. Also, under
Sec. 5 (n) of Rule 131, a court – whether in the Philippines or elsewhere – enjoys the
presumption that it is acting in the lawful exercise of jurisdiction, and that it is
regularly performing its official duty.
The petitioner claims that the trial court had no jurisdiction, because the case
involved partnership interest, and there was difficulty in ascertaining the applicable
law in California. All the aspects of the transaction took place in a foreign country,
and respondent is not even a Filipino.
The Supreme Court disagreed and ruled that in the absence of proof of California
law on the jurisdiction of courts, it is presumed that such law, if any, is similar to
Philippine law. This conclusion is based on the presumption of identity or similarity,
also known as processual presumption.
The grounds relied upon by the petitioner are contradictory. On the one hand, he
insists that the RTC take jurisdiction over the enforcement case in order to invalidate
the foreign judgment; yet, he avers that the trial court should not exercise jurisdiction
over the same case on the basis of forum non conveniens. Not only these defenses
weaken each other, but they bolster the finding of the lower courts that he was
merely maneuvering to avoid or delay payment of his obligation.
Under the principle of forum non conveniens, even if the exercise of
jurisdiction is authorized by law, courts may nonetheless refuse to entertain a
case for any of the following practical reasons:
1) The belief that the matter can be better tried and decided elsewhere, either
because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice
known as forum shopping[,] merely to secure procedural advantages or to
convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-residents or aliens
when the docket may already be overcrowded;
57
4) The inadequacy of the local judicial machinery for effectuating the right
sought to be maintained; and
5) The difficulty of ascertaining foreign law.
None of the aforementioned reasons barred the RTC from exercising its jurisdiction.
In the case at bar, there was no more need for material witnesses, no forum
shopping or harassment of petitioner, no inadequacy in the local machinery to
enforce the foreign judgment, and no question raised as to the application of any
foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed
on the basis of the above-mentioned principle depends largely upon the facts of each
case and on the sound discretion of the trial court.
The petiton is DENIED.
PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS,
and PHILIP J. KLEPZIG, petitioners,
vs.
ANTONIO D. TODARO, respondent.
FACTS:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed
with the RTC of Makati City, a complaint for Sum of Money and Damages with
Preliminary Attachment against Pioneer International Limited (PIL), Pioneer Concrete
Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G.
McDonald (McDonald) and Philip J. Klepzig (Klepzig). In his complaint, Todoro
alleged that PIL is a corporation duly organized and existing under the laws of
Australia and is principally engaged in the ready-mix concrete and concrete
aggregates business.
 PPHI is the company established by PIL to own and hold the stocks of
its operating company in the Philippines;
 PCPI is the company established by PIL to undertake its business of
57
ready-mix concrete, concrete aggregates and quarrying operations in
the Philippines;
Page
 McDonald is the Chief Executive of the Hongkong office of PIL;
  Klepzig is the President and Managing Director of PPHI and PCPI;
 Todaro has been the managing director of BetonvalReadyconcrete,
Inc. (Betonval), a company engaged in pre-mixed concrete and
concrete aggregate production.
In February 1996, Todaro resigned from Bentoval. Thereafter, in May 1996,
PIL contacted him and asked him if he was available to join them in connection with
their intention to establish a ready-mix concrete plant and other related operations in
the Philippines. Todaro informed PIL of his availability and interest to join them;
subsequently, PIL and Todaro came to an agreement wherein the former consented
to engage the services of the latter as a consultant for two to three months, after
which, he would be employed as the manager of PIL's ready-mix concrete operations
should the company decide to invest in the Philippines; subsequently, PIL started its
operations in the Philippines; however, it refused to comply with its undertaking to
employ Todaro on a permanent basis.
PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the
grounds that the complaint states no cause of action, that the RTC has no jurisdiction
over the subject matter of the complaint, as the same is within the jurisdiction of the
NLRC, and that the complaint should be dismissed on the basis of the doctrine of
forum non conveniens.
RTC denied their Motion to Dismiss; RTC, likewise, denied their Urgent
Omnibus Motion for Reconsideration.
CA denied their Petition for Certiorari; CA, likewise, denied MR.
ISSUE:
WON, complaint should be dismissed on the basis of the doctrine of forum
non conveniens.
RULING:
With respect to the applicability of the principle of forum non conveniens in
the present case, this Court's ruling in Bank of America NT & SA v. Court of
Appeals21 is instructive, to wit:
The doctrine of forum non conveniens, literally meaning ‘the forum is
inconvenient’, emerged in private international law to deter the practice of global
58
forum shopping, that is to prevent non-resident litigants from choosing the forum or
place wherein to bring their suit for malicious reasons, such as to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to
select a more friendly venue. Under this doctrine, a court, in conflicts of law cases,
may refuse impositions on its jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said
doctrine depends largely upon the facts of the particular case and is addressed to
the sound discretion of the trial court. In the case of Communication Materials and
Design, Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine Court may
assume jurisdiction over the case if it chooses to do so; provided, that the following
requisites are met: (1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court has
or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court
of Appeals, that the doctrine of forum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does
not include said doctrine as a ground. This Court further ruled that while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this ground, it
should do so only after vital facts are established, to determine whether special
circumstances require the court’s desistance; and that the propriety of dismissing a
case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense. (emphasis
supplied)
In the present case, the factual circumstances cited by petitioners which
would allegedly justify the application of the doctrine of forum non conveniens are
matters of defense, the merits of which should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
WING ON COMPANY V. SYYAP, 64 O.G. 8311 (1967)
58
Facts: Wing On Company is a foreign partnership, with business address in New
Page
York County, New York, U.S.A.
Sometime in the year 1948, the defendant, A. Syyap & Co., Inc., thru its agent,
Murray Kern, in New York, negotiated with the plaintiff for the purchase of clothing
materials under the agreement that the defendant would pay the plaintiff the value
thereof after the sale of the goods by the defendant and that the profits derived from
such sale would be divided between them.
Accordingly, in the said year, 1948, the plaintiff shipped to the defendant the clothing
materials in question which were received by the latter and eventually sold by it. The
defendant, however, was able to pay the plaintiff only a part of the sum on account of
the value of the merchandise in question, leaving a balance.
Despite plaintiff’s demands on the defendant and its agents, Murray Kern, and the
promises of the defendant to pay the account in full, the defendant failed to settle the
said account. Neither was there any accounting or division of the profits made by the
defendant as agreed upon by the parties; hence, the present action for recovery of
sum of money was instituted.
As a special defense, defendant alleged that the plaintiff had no legal capacity to sue
and be sued, it being a foreign corporation not duly licensed to transact business in
the Philippines. The defendant prayed that the complaint be dismissed.
Defendant contends, too, that the trial court should decline jurisdiction over the
present suit, pursuant to the principle of forum non-conveniens in Private
International Law “that where the ends of justice strongly indicate that the
controversy may be more suitably tried elsewhere, then jurisdiction should be
declined and the parties relegated to relief to be sought in another forum.”
TC- In favor of plaintiff.
Defendant appealed in SC.
Issue: 1) WON plaintiff had legal capacity to sue.
2) WON trial court should decline jurisdiction over the present suit, pursuant to the
principle of non-forum conveniens.
Ruling: 1) Yes. In the case at bar, the facts show that the transaction in question
was an isolated act, contract or transaction. As such, it does not constitute .“doing or
transacting business” within the meaning of the law; (Sections 68 and 6 9 ,the
Corporations Law.)
59
Consequently, the plaintiff, although a foreign juridical person or entity, not duly
licensed to transact business in the Philippines, has the legal personality to bring and
maintain the present suit arising from the transaction in question.
In short, in this particular case, the obtaining of a license to transact business is not a
condition precedent to the institution of- the action. It is only when the foreign
corporation is doing or transacting business within the purview of the law-that it has
to have a license before it can sue in our courts.
2) No. There, is no merit in this contention. We believe that the facts surrounding the
present case do not warrant the application of any recognized rules of Private
International Law.
It is a well-established practice in the application of the principle of forum non-
conveniens that unless the balance is strongly in favor of the defendant, the plaintiff’s
choice of forum should rarely be disturbed, and that, furthermore, the consideration
of inadequacy to enforce the judgment, which is one of the important factors to be
considered in the application of said principle, would precisely constitute a problem
to the plaintiff if the local courts decline to assume jurisdiction on the basis of said
principle, considering that the defendant is a resident of the Philippines.
It is true that the agreement in question involving the purchase of clothing materials
was entered into in New York, U.S.A. The goods, however, were delivered to, and
received and sold by the defendant in this jurisdiction.
Considering that, as above-stated, the Wing On Company of New York may sue in
Philippine courts in connection with the transaction in question and, considering,
further, that the present suit arising from said transaction is in the nature of a
personal action, the case may be commenced and tried where the defendant-resides
or may be found, or where the plaintiff resides, at the election of the plaintiff. (Section
2b, Rule 4 of the Rules of Court.) Consequently, venue in the instant case was not
improperly laid and the court a quo did not err in taking cognizance of the case.
Wherefore, finding the judgment appealed from to be in accordance with-Jaw and
the evidence, the same is hereby affirmed in toto, with costs against defendant-
appellant.
IN RE: UNION V. CARBIDE
59
Facts:
Page
On the night of December 2-3, 1984 the most tragic industrial disaster in history
occurred in the city of Bhopal, state of Madhya Pradesh, Union of India. Located
there was a chemical plant owned and operated by Union Carbide India Limited
("UCIL"). The plant, situated in the northern sector of the city, had numerous
hutments adjacent to it on its southern side which were occupied by impoverished
squatters. UCIL manufactured the pesticides Sevin and Temik at the Bhopal plant at
the request of, and with the approval of, the Government of India. UCIL was
incorporated under Indian law in 1934. 50.9% of its stock is owned by the defendant,
Union Carbide Corporation, a New York corporation. (MacDonald Aff. at 1). Methyl
isocyanate (MIC), a highly toxic gas, is an ingredient in the production of both Sevin
and Temik. On the night of the tragedy MIC leaked from the plant in substantial
quantities for reasons not yet determined.
The prevailing winds on the early morning of December 3, 1984 were from Northwest
to Southeast. They blew the deadly gas into the overpopulated hutments adjacent to
the plant and into the most densely occupied parts of the city. The results were
horrendous. Estimates of deaths directly attributable to the leak range as high as
2,100. No one is sure exactly how many perished. Over 200,000 people suffered
injuriessome serious and permanent some mild and temporary. Livestock were killed
and crops damaged. Businesses were interrupted.
On December 7, 1984 the first lawsuit was filed by American lawyers in the United
States on behalf of thousands of Indians. Dawani et al. v. Union Carbide Corp.,
S.D.W.Va. (84-2479). Since then 144 additional actions have been commenced in
federal courts in the United States. The actions have all been joined and assigned by
the Judicial Panel on Multidistrict Litigation to the Southern District of New York by
order of February 6, 1985, 601 F. Supp. 1035.
The individual federal court complaints have been superseded by a consolidated
complaint filed on June 28, 1985.
The Indian Government on March 29, 1985 enacted legislation, the Bhopal Gas Leak
Disaster (Processing of Claims) Act (21 of 1985) ("Bhopal Act"), providing that the
Government of India has the exclusive right to represent Indian plaintiffs in India and
elsewhere in connection with the tragedy. Pursuant to the Bhopal Act, the Union of
India, on April 8, 1985, filed a complaint with this Court setting forth claims for relief
similar to those in the consolidated complaint of June 28, 1985.
By order of April 25, 1985 this Court established a Plaintiffs' Executive Committee,
comprised of F. Lee Bailey and Stanley M. Chesley, Esqs., who represented
individual plaintiffs and Michael V. Ciresi, Esq., whose firm represents the Union of
60
India. Jack S. Hoffinger, Esq., who represents individual plaintiffs, was appointed
liaison counsel for the Plaintiffs' Executive Committee.
On September 24, 1985, pursuant to the Bhopal Act, the Central Government of
India framed a "scheme" for the Registration and Processing of Claims arising out of
the disaster. According to the Union of India's counsel, over 487,000 claims have
been filed in India pursuant to the "scheme."
There presently are 145 actions filed in the United States District Court for the
Southern District of New York under the Judicial Panel for Multidistrict Litigation's
order of February 6, 1985, involving approximately 200,000 plaintiffs.
Before this Court is a motion by the defendant Union Carbide Corporation ("Union
Carbide") to dismiss the consolidated action on the grounds of forum non
conveniens.
The district court granted the motion on three conditions, namely, that UCC: (1)
consent to the jurisdiction of Indian courts and waive defenses based on the Statute
of Limitations; (2) agree to the satisfy the judgement of the Indian court, provided it
complied with the requirements of due process; and (3) be subject to discovery
under the Federal Rules of Civil Procedure of the US. Consequently, the Indian
government filed sued the UCIL and the UCC before the a district court in India. The
UCC appealed the conditions.
Arguments for the Defendant While Indian courts may provide an adequate
alternative forum, they adhere to standards of due process much lower than that
followed in the US. Hence, US courts must supervise the proceedings before Indian
courts.
Issue:
Should the case be dismissed on the ground of forum non conveniens?
Held:
Yes.
It is difficult to imagine how a greater tragedy could occur to a peacetime population
than the deadly gas leak in Bhopal on the night of December 2-3, 1984. The
survivors of the dead victims, the injured and others who suffered, or may in the
60
future suffer due to the disaster, are entitled to compensation. This Court is firmly
convinced that the Indian legal system is in a far better position than the American
Page
courts to determine the cause of the tragic event and thereby fix liability. Further, the
Indian courts have greater access to all the information needed to arrive at the
amount of the compensation to be awarded the victims.
The presence in India of the overwhelming majority of the witnesses and evidence,
both documentary and real, would by itself suggest that India is the most convenient
forum for this consolidated case. The additional presence in India of all but the less
than handful of claimants underscores the convenience of holding trial in India. All of
the private interest factors described in Piper and Gilbert weigh heavily toward
dismissal of this case on the grounds of forum non conveniens.
The public interest factors set forth in Piper and Gilbert also favor dismissal. The
administrative burden of this immense litigation would unfairly tax this or any
American tribunal. The cost to American taxpayers of supporting the litigation in the
United States would be excessive. When another, adequate and more convenient
forum so clearly exists, there is no reason to press the United States judiciary to the
limits of its capacity. No American interest in the outcome of this litigation outweighs
the interest of India in applying Indian law and Indian values to the task of resolving
this case.
The Bhopal plant was regulated by Indian agencies. The Union of India has a very
strong interest in the aftermath of the accident which affected its citizens on its own
soil. Perhaps Indian regulations were ignored or contravened. India may wish to
determine whether the regulations imposed on the chemical industry within its
boundaries were sufficiently stringent. The Indian interests far outweigh the interests
of citizens of the United States in the litigation.
Plaintiffs, including the Union of India, have argued that the courts of India are not up
to the task of conducting the Bhopal litigation. They assert that the Indian judiciary
has yet to reach full maturity due to the restraints placed upon it by British colonial
rulers who shaped the Indian legal system to meet their own ends. Plaintiffs allege
that the Indian justice system has not yet cast off the burden of colonialism to meet
the emerging needs of a democratic people.
The Court thus finds itself faced with a paradox. In the Court's view, to retain the
litigation in this forum, as plaintiffs request, would be yet another example of
imperialism, another situation in which an established sovereign inflicted its rules, its
standards and values on a developing nation. This Court declines to play such a role.
The Union of India is a world power in 1986, and its courts have the proven capacity
to mete out fair and equal justice. To deprive the Indian judiciary of this opportunity to
stand tall before the world and to pass judgment on behalf of its own people would
be to revive a history of subservience and subjugation from which India has
61
emerged. India and its people can and must vindicate their claims before the
independent and legitimate judiciary created there since the Independence of 1947.
This Court defers to the adequacy and ability of the courts of India. Their interest in
the sad events of December 2-3, 1984 at the UCIL plant in the City of Bhopal, State
of Madhya Pradesh, Union of India, is not subject to question or challenge. The
availability of the probative, relevant, material and necessary evidence to Indian
courts is obvious and has been demonstrated in this opinion.
Therefore, the consolidated case is dismissed on the grounds of forum non
conveniens under the following conditions:
1. Union Carbide shall consent to submit to the jurisdiction of the courts of India, and
shall continue to waive defenses based upon the statute of limitations;
2. Union Carbide shall agree to satisfy any judgment rendered against it by an Indian
court, and if applicable, upheld by an appellate court in that country, where such
judgment and affirmance comport with the minimal requirements of due process;
3. Union Carbide shall be subject to discovery under the model of the United States
Federal Rules of Civil Procedure after appropriate demand by plaintiffs.
PIPER AIRCRAFT V. REYNO
FACTS: A British company, flying an airplane manufactured by Piper, a
Pennsylvania company, equipped with propellers made by Hartzell, an Ohio
company, conducted a charter flight in Scotland for five Scottish citizens. When the
plane crashed, killing all on board, the pilot and all of the decedents' heirs and next of
kin were Scottish subjects and citizens, had a Los Angeles-based lawyer sue Piper
and Hartzell for wrongful death.
Respondent sought to recover from petitioners on the basis of negligence or strict
liability (not recognized by Scottish law), and admitted that the action was filed in the
United States because its laws regarding liability, capacity to sue, and damages are
more favorable to respondent's position than those of Scotland. The suit was filed in
a California state court, then removed to Federal District Court in California, and
finally transferred to Federal District Court in Pennsylvania. There it was dismissed
for forum non conveniens under the determination that the case should be tried in
Scotland: the crash had occurred, the crash investigation had been conducted there
61
by British authorities, and the pilot's estate, the plane's owners, and the charter
company were all located there. However, respondents successfully appealed,
Page
claiming that substantive law in Scotland would be unfavorable to their case.
Scotland, unlike Pennsylvania, had no strict liability law, which, along with
negligence, respondents were relying upon in order to prevail.
ISSUE: WON A CHANGE IN SUBSTANTIVE LAW BETWEEN VENUES IS A
SUFFICIENT GROUND FOR DENYING A MOTION TO DISMISS ON GROUNDS
OF FORUM NON CONVENIENS.
HELD: No. Plaintiffs may not defeat a motion to dismiss on the ground of forum non
conveniens merely by showing that the substantive law that would be applied in the
alternative forum is less favorable to the plaintiffs than that of the chosen forum. The
possibility of a change in substantive law should ordinarily not be given conclusive or
even substantial weight in the forum non conveniens inquiry. A plaintiff’s choice of
forum is given greater weight when the plaintiff has chosen the home forum. The
forum non conveniens determination is committed to the sound discretion of the trial
court, and may be overturned only when there has been a clear abuse of discretion.
Here, the District Court did not abuse its discretion in weighing the private and public
interests under the Gilbert analysis, and thereby determining that the trial should be
held in Scotland. In analyzing the private interest factors, the District Court did not
act unreasonably in concluding that fewer evidentiary problems would be posed if the
trial were held in Scotland, a large proportion of the relevant evidence being located
there. The District Court also correctly concluded that the problems posed by the
petitioners' inability to implead potential Scottish third-party defendants -- the pilot's
estate, the plane's owners, and the charter company -- supported holding the trial in
Scotland.
SAUDI ARABIAN AIRLINES VS. REBESENCIO
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners, v.
MA.JOPETTE M. REBESENCIO, MONTASSAH B. SACAR-ADIONG, ROUEN
RUTH A. CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ, Respondents.
Facts:
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and
existing under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine office
located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati City.
Respondents (complainants before the Labor Arbiter) were recruited and hired by
Saudia as Temporary Flight Attendants with the accreditation and approval of the
Philippine Overseas Employment Administration.
62
After undergoing seminars required by the POEA for deployment overseas, as well
as training modules offered by Saudia,and after working as Temporary Flight
Attendants, respondents became Permanent Flight Attendants. They then entered
into Cabin Attendant contracts with Saudia.
Respondents continued their employment with Saudia until they were separated from
service on various dates in 2006.
Respondents contended that the termination of their employment was illegal. They
alleged that the termination was made solely because they were pregnant.
As respondents alleged, they had informed Saudia of their respective pregnancies
and had gone through the necessary procedures to process their maternity leaves.
Initially, Saudia had given its approval but later on informed respondents that its
management in Jeddah, Saudi Arabia had disapproved their maternity leaves. In
addition, it required respondents to file their resignation letters
Respondents were told that if they did not resign, Saudia would terminate them all
the same. The threat of termination entailed the loss of benefits, such as separation
pay and ticket discount entitlements.
Saudia anchored its disapproval of respondents' maternity leaves and demand for
their resignation on its "Unified Employment Contract for Female Cabin Attendants"
(Unified Contract).Under the Unified Contract, the employment of a Flight Attendant
who becomes pregnant is rendered void and shall be terminated due to lack of
medical fitness.
Rather than comply and tender resignation letters, respondents filed separate appeal
letters that were all rejected.
Faced with the dilemma of resigning or totally losing their benefits, respondents
executed handwritten resignation letters. In Montassah's and Rouen Ruth's cases,
their resignations were executed on Saudia's blank letterheads that Saudia had
provided. These letterheads already had the word "RESIGNATION" typed on the
subject portions of their headings when these were handed to respondents.
62
Respondents filed a Complaint before a Labor Arbiter against Saudia and its officers
for illegal dismissal and for underpayment of salary, overtime pay, premium pay for
Page
holiday, rest day, premium, service incentive leave pay, 13th month pay, separation
pay, night shift differentials, medical expense reimbursements, retirement benefits,
illegal deduction, lay-over expense and allowances, moral and exemplary damages,
and attorney's fees.
Saudia assailed the jurisdiction of the Labor Arbiter. It claimed that all the
determining points of contact referred to foreign law and insisted that the Complaint
ought to be dismissed on the ground of forum non conveniens.It added that
respondents had no cause of action as they resigned voluntarily.
LA- dismissed the complaint for lack of jurisdiction.
NLRC- reversed the ruling of Executive Labor Arbiter.
CA- denied petitioner’s petition for appeal and modified the Decision of the NLRC
with respect to the award of separation pay and backwages.
Issues:
1. whether the Labor Arbiter and the National Labor Relations Commission may
exercise jurisdiction over Saudi Arabian Airlines and apply Philippine law in
adjudicating the present dispute; and
2. whether respondents' voluntarily resigned or were illegally terminated.
Ruling:
I. Summons were validly served on Saudia and jurisdiction over it
validly acquired.
There is no doubt that the pleadings and summons were served on Saudia through
its counsel.Saudia, however, claims that the Labor Arbiter and the National Labor
Relations Commission had no jurisdiction over it because summons were never
served on it but on "Saudia Manila." Referring to itself as "Saudia Jeddah," it claims
that "Saudia Jeddah" and not "Saudia Manila" was the employer of respondents.
Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its
bare allegation, there is no basis for concluding that "Saudia Jeddah" is distinct from
63
"Saudia Manila."By its own admission, Saudia, while a foreign corporation, has a
Philippine office.
A plain application of Section 3(d) of the Foreign Investments Act leads to no other
conclusion than that Saudia is a foreign corporation doing business in the
Philippines. As such, Saudia may be sued in the Philippines and is subject to the
jurisdiction of Philippine tribunals.
Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia
Manila" — the latter being nothing more than Saudia's local office — service of
summons to Saudia's office in Manila sufficed to vest jurisdiction over Saudia's
person in Philippine tribunals.
II. A choice of law governing the validity of contracts or the
interpretation of its provisions dees not necessarily imply forum non
conveniens. Choice of law and forum non conveniens are entirely
different matters.
Saudia asserts that Philippine courts and/or tribunals are not in a position to make an
intelligent decision as to the law and the facts. This is because respondents' Cabin
Attendant contracts require the application of the laws of Saudi Arabia, rather than
those of the Philippines. It claims that the difficulty of ascertaining foreign law calls
into operation the principle of forum non conveniens, thereby rendering improper the
exercise of jurisdiction by Philippine tribunals.
Choice of law provisions are an offshoot of the fundamental principle of autonomy
of contracts.
In contrast, forum non conveniens is a device akin to the rule against forum
shopping. It is designed to frustrate illicit means for securing advantages and vexing
litigants that would otherwise be possible if the venue of litigation (or dispute
resolution) were left entirely to the whim of either party.
Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on
63
the laws of a given jurisdiction as the governing law of a contract does not preclude
the exercise of jurisdiction by tribunals elsewhere.
Page
There is no statutorily established mode of settling conflict of laws situations on
matters pertaining to substantive content of contracts. It has been noted that three
(3) modes have emerged: (1) lex loci contractus or the law of the place of the
making; (2) lex loci solutionis or the law of the place of performance; and (3) lex loci
intentionis or the law intended by the parties.
Under the doctrine of forum non conveniens, "a court, in conflicts of law
cases, may refuse impositions on its jurisdiction where it is not the most 'convenient'
or available forum and the parties are not precluded from seeking remedies
elsewhere.”
In Puyat v. Zabarte,68 this court recognized the following situations as among those
that may warrant a court's desistance from exercising jurisdiction:
1) The belief that the matter can be better tried and decided elsewhere, either
because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known
as forum shopping[,] merely to secure procedural advantages or to convey or
harass the defendant;
3) The unwillingness to extend local judicial facilities to non residents or aliens
when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to
be maintained; and
5) The difficulty of ascertaining foreign law
The use of the word "may" in the decisions shows that the matter of jurisdiction rests
on the sound discretion of a court. Neither the mere invocation of forum non
conveniens nor the averment of foreign elements operates to automatically divest a
court of jurisdiction. Rather, a court should renounce jurisdiction only "after 'vital facts
are established, to determine whether special circumstances' require the court's
desistance." As the propriety of applying forum non conveniens is contingent on a
factual determination, it is, therefore, a matter of defense.
III. Forum non conveniens finds no application and does not operate to
divest Philippine tribunals of jurisdiction and to require the
application of foreign law.
64
Saudia invokes forum non conveniens to supposedly effectuate the stipulations of
the Cabin Attendant contracts that require the application of the laws of Saudi
Arabia.
Forum non conveniens relates to forum, not to the choice of governing law.
Thai forum non conveniensmay ultimately result in the application of foreign law is
merely an incident of its application. In this strict sense, forum non conveniens is not
applicable. It is not the primarily pivotal consideration in this case.
Any evaluation of the propriety of contracting parties' choice of a forum and'its
incidents must grapple with two (2) considerations: first, the availability and
adequacy of recourse to a foreign tribunal; and second, the question of where, as
between the forum court and a foreign court, the balance of interests inhering in a
dispute weighs more heavily.The first is more concerned with the parties, their
personal circumstances, and private interests; the second concerns itself with the
state and the greater social order.
Our law on contracts recognizes the validity of contractual choice of law provisions.
Where such provisions exist, Philippine tribunals, acting as the forum court, generally
defer to the parties' articulated choice.This is consistent with the fundamental
principle of autonomy of contracts. Article 1306 of the Civ:l Code expressly provides
that "[t]he contracting parties may establish 'such stipulations, clauses, terms and
conditions as they may deem convenient." Nevertheless, while a Philippine tribunal
(acting as the forum court) is called upon to respect the parties' choice of governing
law, such respect must not be so permissive as to lose sight of considerations of law,
morals, good customs, public order, or public policy that underlie the contract central
to the controversy.
Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall
ensure the fundamental equality before the law of women and men." Contrasted with
Article II, Section 1 of the 1987 Constitution's statement that "[n]o person shall ... be
denied the equal protection of the laws," Article II, Section 14 exhorts the State to
"ensure."
It is, therefore, the bounden duty of this court, in rendering judgment on the disputes
64
brought before it, to ensure that no discrimination is heaped upon women on the
mere basis of their being women. This is a point so basic and central that all our
Page
discussions and pronouncements — regardless of whatever averments there may be Saudia.
of foreign law — must proceed from this premise.
Third, there is no indication of "unwillingness to extend local judicial facilities to non-
So informed and animated, we emphasize the glaringly discriminatory nature of
residents or aliens."93That Saudia has managed to bring the present controversy all
Saudia's policy. As argued by respondents, Saudia's policy entails the termination of
the way to this court proves this.
employment of flight attendants who become pregnant. At the risk of stating the
obvious, pregnancy is an occurrence that pertains specifically to women. Saudia's
Fourth, it cannot be said that the local judicial machinery is inadequate for
policy excludes from and restricts employment on the basis of no other consideration
effectuating the right sought to be maintained. Summons was properly served on
but sex.
Saudia and jurisdiction over its person was validly acquired.
Apart from the constitutional policy on the fundamental equality before the law of
men and women, it is settled that contracts relating to labor and employment are Lastly, there is not even room for considering foreign law. Philippine law properly
impressed with public interest. Article 1700 of the Civil Code provides that "[t]he governs the present dispute.
relation between capital and labor are not merely contractual. They are so impressed
As the question of applicable law has been settled, the supposed difficulty of
with public interest that labor contracts must yield to the common good."
ascertaining foreign law (which requires the application of forum non conveniens)
As the present dispute relates to (what the respondents allege to be) the illegal provides no insurmountable inconvenience or special circumstance that will justify
termination of respondents' employment, this case is immutably a matter of public depriving Philippine tribunals of jurisdiction.
interest and public policy. Consistent with clear pronouncements in law and
IV. Respondents were illegally terminated
jurisprudence, Philippine laws properly find application in and govern this case.
'Moreover, as this premise for Saudia's insistence on the application forum non This court defined voluntary resignation as "the voluntary act of an employee who is
conveniens has been shattered, it follows that Philippine tribunals may properly in a situation where one believes that personal reasons cannot be sacrificed in favor
assume jurisdiction over the present controversy. Philippine jurisprudence provides of the exigency of the service, and one has no other choice but to dissociate oneself
ample illustrations of when a court's renunciation of jurisdiction on account of forum from employment.
non conveniens is proper or improper.'
On the other hand, constructive dismissal has been defined as "cessation of work
The case now before us does not entail a preponderance of linkages that favor a because 'continued employment is rendered impossible, unreasonable or unlikely, as
foreign jurisdiction. an offer involving a demotion in rank or a diminution in pay' and other benefits."In the
same case, it was noted that "[t]he gauge for constructive dismissal is whether a
First, there is no basis for concluding that the case can be more conveniently tried
reasonable person in the employee's position would feel compelled to give up his
elsewhere. As established earlier, Saudia is doing business in the Philippines. For
employment under the prevailing circumstances.”
their part, all four (4) respondents are Filipino citizens maintaining residence in the
Philippines and, apart from their previous employment with Saudia, have no other Applying the cited standards on resignation and constructive dismissal, it is clear that
connection to the Kingdom of Saudi Arabia. It would even be to respondents' respondents were constructively dismissed. Hence, their termination was illegal.
inconvenience if this case were to be tried elsewhere.
The termination of respondents' employment happened when they were pregnant

65
and expecting to incur costs on account of child delivery and infant rearing. As noted
Second, the records are bereft of any indication that respondents filed their
by the Court of Appeals, pregnancy is a time when they need employment to sustain

Page
Complaint in an effort to engage in forum shopping or to vex and inconvenience
their families.It is clear that respondents intended to remain employed with Saudia.
65
All they did was avail of their maternity leaves. Evidently, the very nature of a
maternity leave means that a pregnant employee will not report for work only
temporarily and that she will resume the performance of her duties as soon as the
leave allowance expires.
Respondents also adduced a copy of the "Unified Employment Contract for Female
Cabin Attendants."111This contract deemed void the employment of a flight attendant
who becomes pregnant and threatened termination due to lack of medical
fitness.The threat of termination (and the forfeiture of benefits that it entailed) is
enough to compel a reasonable person in respondents' position to give up his or her
employment.
Having been illegally and unjustly dismissed, respondents are entitled to full
backwages and benefits from the time of their termination until the finality of this
Decision. They are likewise entitled to separation pay in the amount of one (1)
month's salary for every year of service until the fmality of this Decision, with a
fraction of a year of at least six (6) months being counted as one (1) whole year.
Having been illegally and unjustly dismissed, respondents are entitled to full
backwages and benefits from the time of their termination until the finality of this
Decision. They are likewise entitled to separation pay in the amount of one (1)
month's salary for every year of service until the fmality of this Decision, with a
fraction of a year of at least six (6) months being counted as one (1) whole year.
Respondents are entitled to full backwages and benefits from the time of their
termination until the finality of this Decision. They are likewise entitled to separation
pay in the amount of one (1) month's salary for every year of service until the fmality
of this Decision, with a fraction of a year of at least six (6) months being counted as
one (1) whole year. Moreover, moral damages and exemplary damages as well as
attorney’s fees shall also be awarded.
AZNAR VS. CHRISTENSEN-GARCIA
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN,
DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased
66
vs.
HELEN CHRISTENSEN GARCIA G.R. No. L-16749 January 31,
1963
Facts: Edward Christensen executed a will, instituting his only child, Maria Lucy,
who was residing in California, to inherit what remains of his estate after giving a
legacy of P3600 to Maria Helen Christensen Garcia, whom he declared not to be in
any way related to him. The executor, Adolfo Aznar, in his final account and project
of partition, ratified the payment of only P3,600 to Helen Christensen Garcia and
proposed that the residue of the estate be transferred to his daughter, Maria Lucy
Christensen. This was opposed by Helen, insofar as it allegedly deprives her of her
legitime as an acknowledged natural child, she having been declared by the
Supreme Court an acknowledged natural child of the deceased. The legal grounds of
opposition are (a) that the distribution should be governed by the laws of the
Philippines, and (b) that said order of distribution is contrary thereto insofar as it
denies to Helen Christensen, one of two acknowledged natural children, one-half of
the estate in full ownership. She further alleged that first, Philippine law should apply
being the domiciliary law. Should it not be applicable, the internal law of California
shall not be the law solely applied but the entire law of the United States, considered
in its entirety. Maria Lucy and Aznar asserted that the only the laws of the State of
California will apply.
TC: The deceased was a citizen of the United States and of the State of California
at the time of his death, the successional rights and intrinsic validity of the provisions
in his will are to be governed by the law of California, in accordance with which a
testator has the right to dispose of his property in the way he desires, because the
right of absolute dominion over his property is sacred and inviolable
Issue: Which law shall apply in the case at bar?
Held: Philippine laws shall apply.
There is no question that the deceased was a citizen of the United States and of the
State of California at the time of his death. But there is also no question that at the
time of his death he was domiciled in the Philippines. He was born in New York,
migrated to California and resided there for nine years, and since he came to the
66
Philippines in 1913 he returned to California very rarely and only for short visits, and
considering that he appears never to have owned or acquired a home or properties
Page
in that state, which would indicate that he would ultimately abandon the Philippines
and make home in the State of California. (“Residence means more than physical
presence”).
As to his citizenship, the citizenship that he acquired in California when he resided in
Sacramento, California from 1904 to 1913, was never lost by his stay in the
Philippines, for the latter was a territory of the United States (not a state) until 1946
and the deceased appears to have considered himself as a citizen of California by
the fact that when he executed his will in 1951 he declared that he was a citizen of
that State; so that he appears never to have intended to abandon his California
citizenship by acquiring another.
"Residence simply requires bodily presence of an inhabitant in a given place,
while domicile requires bodily presence in that place and also an intention to
make it one's domicile."
Article 16 of the Civil Code states that intestate and testamentary successions, both
with respect to the order of succession and to the amount of successional rights and
to the intrinsic validity of testamentary provisions, shall be regulated by the national
law of the deceased, whatever may be the nature of the property and regardless of
the country where said property may be found. This national law can refer only to the
law of the State of California because there is no single American law governing the
validity of testamentary provisions in the United States, each state having its own
private law applicable to its citizens only and in force only within the state.
conflict of laws rules of California are to be enforced jointly, each in its own intended
and appropriate sphere, the principle cited In re Kaufman should apply to citizens
living in the State, but Article 946 should apply to such of its citizens as are not
domiciled in California but in other jurisdictions. The New York court has said on the
point: 'The general principle that a dispostiton of a personal property, valid at the
domicile of the owner, is valid anywhere, is one of the universal application.’
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out
as the national law is the internal law of California. But as above explained the laws
of California have prescribed two sets of laws for its citizens, one for residents
therein and another for those domiciled in other jurisdictions, i.e., apply the internal
law for residents therein, and its conflict-of-laws rule for those domiciled abroad.
As the domicile of the deceased Christensen, a citizen of California, is the
Philippines, the validity of the provisions of his will depriving his acknowledged
natural child, the appellant, should be governed by the Philippine Law, the domicile,
pursuant to Art. 946 of the Civil Code of California, not by the internal law of
California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned
to the lower court with instructions that the partition be made as the Philippine law on
succession provides. Judgment reversed, with costs against appellees.

Under the California Probate Code, a testator may dispose of his property by will in
the form and manner he desires (petitioners’ argument). Helen, on the other hand,
insists that assuming arguendo that California laws shall apply, Article 946 of the
California Civil Code (If there is no law to the contrary, in the place where personal
property is situated, it is deemed to follow the person of its owner, and is governed
by the law of his domicile.)still tilts to her favor. The said provision talks about the
doctrine of the renvoi, the question of the validity of the testamentary provision in
question should be referred back to the law of the decedent's domicile, which is the
Philippines.The recognition of the renvoi theory implies that the rules of the conflict of
laws are to be understood as incorporating not only the ordinary or internal law of the
foreign state or country, but its rules of the conflict of laws as well. According to this
theory 'the law of a country' means the whole of its law.

67
Article 946 of the California Civil Code is its conflict of laws rule, while the rule

Page
applied in In re Kaufman, Supra, its internal law. If the law on succession and the
67