92. Saudi Arabian Airlines vs. Court of Appeals, GR No.
122191,
:​. Torts and Crimes
91. People of the Philippines v. Wong Cheng
G.R. No. L-18924| 19 October 1922 | Tagacay
FACTS:
● Wong Cheng is accused of having illegally smoked opium,
aboard the merchant vessel Changsa of English nationality
while said vessel was anchored in Manila Bay 2 ½ miles from
the shores of the city.
● In the trial before CFI Manila, Wong Cheng filed a demurrer
alleging that the court has no jurisdiction. CFI sustained the
demurrer and dismissed the case.
● Attorney-General appeals the case.
ISSUE: ​WON PH courts have jurisdiction over crimes committed
aboard merchant vessels anchored in our jurisdiction waters ​(YES)
HELD:
2 Fundamental Rules:
1. FRENCH RULE: crimes committed aboard foreign merchant
vessels should not be prosecuted in the courts of the country
within whose territorial jurisdiction they were committed,
unless their commission affects the peace and security of the
territory;
2. ENGLISH RULE: based on the territorial principle and followed
by US, according to which, crimes perpetrated under such
circumstances are in general triable in the courts of the country
within territory they were committed.
It is the English Rule that applies, because at present, the
theories and jurisprudence prevailing in US on this matter are
authority in PH which is now a territory of US.
In ​US vs. Look Chaw​, although the mere possession of an
article of prohibited use in the Philippine Islands, aboard a foreign
vessel in transit in any local port, does not, as a general rule,
constitute a crime triable by the courts of the Islands, such vessels
being considered as an extension of its own nationality, the ​same
rule does not apply when the article, the use of which is prohibited
in the Islands, is landed from the vessels upon Philippine soil​; ​in
such a case an open violation of the laws of the land is committed
with respect to which, as it is a violation of the penal law in force at
the place of the commission of the crime​, no court other than that
established in the said place has jurisdiction of the offense, in the
absence of an agreement under an international treaty.
Although mere possession of opium aboard a foreign
vessel in transit was held by SC as not triable, it not being used in
our territory and not considered a disturbance of the public order,
to smoke opium within our territorial limits, even though aboard a
foreign merchant ship, is certainly a breach of the public order here
established, because it causes such drug to produce its pernicious
effects within our territory​. It seriously contravenes the purpose
that our Legislature has in mind in enacting the aforesaid repressive
statute. Moreover, as the Attorney-General aptly observes:
The idea of a person smoking opium securely on board a
foreign vessel at anchor in the port of Manila in open defiance of
the local authorities, who are impotent to lay hands on him, is
simply subversive of public order​. It requires no unusual stretch of
the imagination to conceive that a foreign ship may come into the
port of Manila and allow or solicit Chinese residents to smoke opium
on board.
CFI decision ​REVERSED​, and the case is ​REMANDED​ for trial.
October 8, 1998
GR No. 112191 | October 8, 1998 | J. Quisumbing | Quintana
FACTS:
● Milagros Morada (Morada) is a Flight Attendant for the Saudi
Arabian Airlines (SAUDI)
● While on a lay-over in Jakarta, Indonesia, Morada went to a disco
dance with fellow crew members Thamer Al-Gazzawi and Allah
Al-Gazzawi, Saudi Nationals
● After the disco they agreed to have breakfast at the room of
Thamer. In the room, Allah left and Thamer then tried to rape
Morada. She was saved by a roomboy and several security
personnel upon hearing her screams and cry for help. Thamer and
Allah were arrested by the Indonesian police.
● Upon return from Jeddah, SAUDI officials interrogated her about
the Jakarta incident. They requested her to go back to Jakarta to
help arrange the release of the two crew members but she
refused to cooperate.
● Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of detention. Eventually, they
were again put in service by defendant SAUDIA.
● In September 1990, defendant SAUDIA transferred plaintiff to
Manila.
● On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors requested her to
see MR. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah,
Saudi Arabia. When she saw him, he brought her to the police
station where the police took her passport and questioned her
about the Jakarta incident. Miniewy simply stood by as the police
put pressure on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to do so did the
police return her passport and allowed her to catch the afternoon
flight out of Jeddah.
● One year and a half later or on June 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila,
plaintiff was not allowed to board the plane and instead ordered
to take a later flight to Jeddah to see Mr. Meniewy, the Chief
Legal Officer of SAUDIA. When she did, a certain Khalid of the
SAUDIA office brought her to a Saudi court where she was asked
to sign a document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it turned
out, plaintiff signed a notice to her to appear before the court on
June 27, 1993. Plaintiff then returned to Manila.
● Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993 for
further investigation. Plaintiff did so after receiving assurance
from SAUDIAs Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
● In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on June
28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take that flight. At the Inflight Service
Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah,
at the crew quarters, until further orders.
● On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to
the same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing her to
five months imprisonment and to 286 lashes. Only then did she
realize that the Saudi court had tried her, together with Thamer
and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing, and listening to
the music in violation of Islamic laws; (3) socializing with the male
crew, in contravention of Islamic tradition.
● Because SAUDIA refused to lend her a hand in the case, plaintiff
sought the help of the Philippine Embassy in Jeddah. The latter
 helped her pursue an appeal from the decision of the court. To
pay for her upkeep, she worked on the domestic flights of
defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights
● Morada filed a complaint for damages against SAUDI based on
violation of NCC 19 and 21.
● SAUDI filed MTD for lack of jurisdiction
● RTC: Denied MTD and MR
○ RTC has jurisdiction based on the applicable PH law,
NCC 21.
● CA: Denied Petition for Issuance of Writ of Prelim Injunction.
Appellate court ruled that PH is the proper forum as the
complaint used NCC 21 as basis, within the jurisdiction of RTC-QC.
RELEVANT ISSUE:
WON Philippine law is applicable
HELD:
YES. Violations of Art. 19 and 21 are actionable with judicially enforceable
remedies in the municipal forum.
● Art. 19 declares the principle of the law and Article 21 gives flesh
to its provision.
● Choice-of-law problems seek to answer two important questions:
○ What legal system should control a given situation
where some of the significant facts occurred in two or
more states; and
○ To what extent should the chosen legal system
regulate the situation
● To determine the doctrine of qualification should be applied –
Process of deciding whether the fact related to the kind of
question specified in a conflicts rule.
● There are test factors or points of contact or connector factors to
determine the applicable law: In this case, the court placed
emphasis on – The place where an act has been done, the locus
actus, such as the place where a contract has been made, a
marriage celebrated, a will signed or a tort committed. The lex loci
actus is particularly important in contracts and torts.
● Applying the torts principle in a conflicts case, the PH is said to be
the situs of the tort. It is in the PH where Morada was deceived by
SAUDI. She was made to believe that SAUDI will protect her rights
and interest but failed to do so.
● The Court observed to keep abreast with modern rules on tort
liability and applies the most significant relationship rule. Contact
factors under the rule:
○ Place where the injury occurred;
○ The place where the conduct causing the injury
occurred
○ The domicile, residence, nationality, place of
incorporation and place of business of the parties
○ The place where the relationship, if any, between the
parties is centered
● Test factors or points of contact includes:
○ Xxx the place where an act has been done, the ​locus
actus​, such as the place where a contract has been
made, a marriage celebrated, a will signed or a tort
committed. The ​lex loci actus is particularly important
in contracts and torts; xxx
● Applying these factors, the PH is a proper forum and PH laws are
applicable.
● Morada’s complaint is based on PH law and she has no cause of
action based on Saudi laws. SAUDI failed to establish the
applicability of Saudi law. Thus, PH law will apply.
● Considering that the complaint in the court ​a ​quo is one involving
torts, the connecting factor or point of contact could be the place
or places where the tortious conduct or ​lex loci actus ​occurred.
And applying the torts principle in a conflicts case, we find that
the Philippines could be said as a ​situs of the tort (the place where
the alleged tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived private
respondent, a Filipina residing and working here. According to
her, she had honestly believed that petitioner would, in the
exercise of its rights and in the performance of its duties, act with
justice, give her her due and observe honesty and good faith.
Instead, petitioner failed to protect her, she claimed. That certain
acts or parts of the injury allegedly occurred in another country is
of no moment. For in our view what is important here is the place
where the over-all harm or the fatality of the alleged injury to the
person, reputation, social standing and human rights of
complainant, had lodged, according to the plaintiff below (herein
private respondent). All told, it is not without basis to identify the
Philippines as the ​situs​ of the alleged tort.
● The Philippines is the ​situs of the tort complaint of and the place
having the most interest in the problem, we find, by way of
recapitulation, that the Philippine law on tort liability should have
paramount application to and control in the resolution of the legal
issues arising out of this case. Further, we hold that the
respondent Regional Trial Court has jurisdiction over the parties
and the subject matter of the complaint; the appropriate venue is
in Quezon City, which could properly apply Philippine law.
OTHER ISSUE 1:
WON the RTC-Quezon City has jurisdiction
HELD:
YES. Violations of Art. 19 and 21 are actionable with judicially enforceable
remedies in the municipal forum.
● RTC has jurisdiction over the subject matter of the suit.
● It has authority to try and hear the case as provided Judiciary
Reorganization Act of 1980 and Revised Rules of Court.
● Venue: In favor of RTC-QC assuming jurisdiction. The PH is best to
hear the case than to force Morada to seek remedial action
elsewhere, such as the Kingdom of Saudi Arabia where she no
longer maintains substantial connections.
● Hearing the case in the Philippines presents no unnecessary
93. Wildvalley Shipping Co., Ltd. v. Court of Appeals, G.R. No.
119602 / 342 SCRA 213, 06 October 2000
Topic:Torts and Crimes
Facts:
Philippine Roxas (owned by Phil. Pres. Lines), vessel, arrived in
Venezuela to load iron ore. When vessel was ready to leave the port,
Mr. Vasquez (official pilot of Venezuela) was designated to navigate
the vessel through the Orinoco River.
The master of the vessel, Captain Colon, was at the bridge with the
pilot when the vessel left the port. Captain Colon left the bridge
when the vessel was underway.
The vessel experienced some vibrations but the pilot assured that
they were just a result of the shallowness of the vessel. The vessel
again experienced vibrations which led to the vessel being run
aground in the Orinoco River, obstructing the ingress and egress of
vessels.
As a result of the blockage, the Malandrinon (vessel owned by
Wildvalley Shipping) was unable to sail out that day. For this reason,
Wild Valley commenced an action for damages.
Issue​:
1. Whether or not fault can be attributed to the master(captain) of
Philippine Roxas for the grounding of said vessel.
2. Whether or not the doctrine of res ipsa loquitor applies.
Held:
Meron ding issue about proving foreign law, pero irrelevant sa topic
natin.
1. No. It's the pilot's fault!
There being no contractual obligation, the master was only required
to give ordinary diligence in accordance with Article 1173 of the New
Civil Code. In the case, the master exercised due diligence when the
vessel sailed only after the main engine, machine rise and other
auxiliaries were checked and found to be in good running condition
and when the master left a competent officer - the pilot who is
experienced in navigating the Orinoco River.
Philippine rules on pilotage enunciate the duties and responsibilities
of a master of a vessel and its pilot. The law is explicit in saying that
the master remains the overall commander of the vessel even when
there is a pilot on board. He remains in control despite the presence
of a pilot who is temporarily in charge of the vessel. It is NOT
required of him to be on bridge while the vessel is being navigated
by a pilot.
Furthermore, the Orinoco River being a compulsory pilotage channel
necessitated the engaging of a pilot who was presumed to be
knowledgeable of every shoal, bank, deep and shallow ends of the
river. Admitting his limited knowledge of the River, Captain Colon
deemed it best to rely on the knowledge and experience of pilot
Vasquez to guide the vessel safely.
The pilot should have been aware of the portions which are shallow
and which are not. His failure to determine the depth of the river
and his decision to plod on his set course, in all probability, caused
damage to the vessel. Thus, he is negligent and liable for the
grounding.
2. NO. The elements of res ipsa loquitor are:
-accident was of such character as to warrant inference that it would
not have happened except for defendant's negligence
-accident must have been caused by an agency/instrumentality
within the exclusive management or control of the person charged
with the negligence complained of
-accident must not have been due to any voluntary action or
contribution on the part of the person injured.
There was a temporary shift of control over the ship from the
master to the pilot on a compulsory pilotage channel. Thus,
requisites 1 and 2 (negligence and control) are not present in the
following situation.
94. Asahi Metal Industry Co. v. Superior Court, supra.
By: Cess
480 US 102 | February 24, 1987 | Justice O’Connor
DOCTRINE: ​While the possibility of being sued in California might
create an additional deterrent to petitioner's manufacture of unsafe
assemblies, the same effect would result from pressures placed on
petitioner by Cheng Shin, whose California sales would subject it to
state tort law.
FACTS
· Along Interstate Highway 80, Solano County, California, Gary
Zurcher lost control of his Honda motorcycle and collided with a
tractor.
o ​Zurcher was severely injured while his wife was killed.
o ​Zurcher filed a product liability action in the Superior Court of
the State of California in and for the County of Solano against Cheng
Shin Rubber Industrial Co., Ltd., the Taiwanese manufacturer of the
motorcycle tube.
o ​That the accident was caused by a sudden loss of air and an
explosion in the rear tire of the motorcycle, and that the tire, tube,
and sealant were defective.
o ​Eventually, the case was settled and dismissed.
· Cheng Shin filed a cross-complaint against co-defendant, Asahi,
the manufacturer of the tube’s valve assembly.
o ​No contract between the parties.
o ​Asahi is a Japanese corporation. It manufactures tire valve
assemblies in Japan and sells assemblies to Cheng Shin (Taiwanese),
and to several other tire manufacturers, for use as components in
finished tire tubes.
o ​The shipments from Asahi to Cheng Shin were sent from Japan
to Taiwan. From 1978 to 1982, Cheng Shin bought and incorporated
into its tire tubes 1,350,000 Asahi valve assemblies. Approximately,
20% of its sales in the US are in California.
o ​Asahi moved to quash the service of summons, arguing the
State could not exert jurisdiction over it consistent with the due
process clause of the Fourteenth Amendment.
§ SUPERIOR COURT denied the motion to quash summons, ruling
that, as it does business on an international scale, it is not
unreasonable that Asahi defend claims of defect in their product on
an international scale.
§ COURT OF APPEAL issued a peremptory writ of mandate
commanding that the service of summons be quashed.
§ SUPREME COURT reversed and discharged the writ issued by the
CA.
RELEVANT ISSUE: ​WON the mere awareness on the part of a foreign
defendant that the components it manufactured, sold, and delivered
outside the US would reach the forum State in the stream of
commerce constitutes “minimum contacts” between the defendant
and the forum State such that the exercise of jurisdiction “does not
offend traditional notions of fair play and substantial justice”?
HELD:
NO
· To determine whether an exercise of personal jurisdiction
conforms with due process, it must be shown that the defendant
purposefully established ​minimum contacts ​in the forum State.
o ​Minimum contacts ​must have a basis in “some act by which
the defendant purposefully avails itself of the conducting activities
within the forum State, thus invoking the benefits and protections of
its laws.” (“substantial connection”)
o ​World-Wide Volkswagen v. Woodson rejected the assertion
that a consumer’s unilateral act of bringing the defendant’s product
into the forum State was a sufficient minimum contact.
· ​Substantial connection between the defendant and the forum
State necessary for a finding of minimum contacts must come about
by an action of the defendant purposefully directed towards the
forum State.
o ​The placement of a product into the stream of commerce,
without more, is not an act of the defendant purposefully directed
toward the forum State. Additional conduct of the defendant may
indicate an intent or purpose to serve the market in the forum State,
for example, designing the product for the market in the forum
State, advertising in the forum State, establishing channels for
providing regular advice to customers in the forum State, or
marketing the product through a distributor who has agreed to
serve as the sales agent in the forum State.
o ​Assuming, arguendo, that respondents have established
Asahi's awareness that some of the valves sold to Cheng Shin would
be incorporated into tire tubes sold in California, respondents have
not demonstrated any action by Asahi to purposefully avail itself of
the California market. Asahi does not do business in California. It has
no office, agents, employees, or property in California. It does not
advertise or otherwise solicit business in California. It did not create,
control, or employ the distribution system that brought its valves to
California.
· Moreover, considering the heavy burden on the alien
defendant, and the slight interests of the plaintiff and the forum
State, the exercise of personal jurisdiction by a California court over
Asahi would be unreasonable and unfair.
o ​The possibility of being haled into a California court as a result
of an accident involving Asahi's components undoubtedly creates an
additional deterrent to the manufacture of unsafe components;
however, similar pressures will be placed on Asahi by the purchasers
of its components as long as those who use Asahi components in
their final products, and sell those products in California, are subject
to the application of California tort law.
DISPOSITIVE: ​Because the facts of this case do not establish
minimum contacts such that the exercise of personal jurisdiction is
consistent with fair play and substantial justice, the judgment of the
Supreme Court of California is reversed, and the case is remanded
for further proceedings not inconsistent with this opinion.
95. Worldwide Volkswagen Corporation v. Woodson, supra.
World-Wide Volkwagen Corp. v. Woodson, 444 U.S. 286 (1980)
FACTS:
Harry and Kay Robinson purchased a new ​Audi ​100 LS automobile
from Seaway Volkswagen, Inc. in ​Massena​, ​New York​, in 1976.
The following year, as Kay Robinson passed through ​Oklahoma on
Interstate 44 en route to the Robinsons' new home in ​Arizona​, the
Audi was struck from the rear by a drunk driver in a 1971 ​Ford
Torino​. The impact of the collision itself did not directly injure any of
the Robinsons, but the crash resulted in the Audi's doors jamming
shut and a puncture in the car's ​gas tank​. A fire then severely burned
the trapped Kay Robinson and her two children riding in the Audi,
Eva and Sam
The Robinsons brought a products liability action before the District
Court of Creek County Oklahoma, claiming that their injuries
resulted from defective design and placement of the Audi’s gas tank
and fuel system. The imploded in the case the manufacturer,
importer, regional distributor, petitioner, retail dealer of the case.
In addition, they claim that Oklahoma courts have jurisdiction over
them.
Petitioner World-Wide is incorporated and has its business office in
New York. It distributed vehicles, parts and accessories. One of its
retail dealers is Seaway, an independent dealer, whose relationship
with Volkswagen and Audi are contractual. World Wide and Seaway
submits that they do not have business in Oklahoma and as such,
the Oklahoma court does not have jurisdiction over them. Their
constitutional claim is that Oklahoma's exercise of jurisdiction over
them would offend the limitations on the State's jurisdiction
imposed by the Due Process Clause of the Fourteenth Amendment.
District court of Oklahoma denied the claim of the World-wide and
Seaway.
SC of Oklahoma denied the appeal holding that the personal
jurisdiction over petitioners was authorised by Oklahoma’s
“long-arm” statute. This provides that because the product is used
under the jurisdiction of Oklahoma and that substantial income was
derived, the court has jurisdiction.
ISSUE: WON the Oklahoma court may exercise in personal
jurisdiction over a nonresident automobile retailer and its wholesale
distributor in a products liability action, when the defendant’s only
connection with Oklahoma is the fact that an automobile sold in
new york to NY resident became involved in an accident in
Oklahoma?
HELD:
US SC reversed the decision of SC of Oklahoma because:
1. Oklahoma's exercise of jurisdiction over them would
offend the limitations on the State's jurisdiction imposed
by the Due Process Clause of the Fourteenth Amendment.
2. The concept of minimum contacts can be seen to perform
two related but distinguishable functions. It protects the
defendant against the burdens of litigating in a distant or
inconvenient forum and it acts to ensure that the States,
through their courts, do not reach out beyond the limits
imposed on them by their status as coequal sovereigns in a
federal system.
3. The 14th Amendment provides protection against
inconvenient litigation, typically described in terms of
“reasonableness” or “fairness”: “Does not offend
‘traditional notions of fair play and substantial justice.”
The relationship between the defendant and forum must
be “reasonable.” The burden on the defendant is to be
balanced against other factors, including the plaintiff’s
interest in obtaining convenient and effective relief.
4. 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.” Even if the defendant would
suffer minimal or no inconvenience from being forced to
litigate before the tribunals of another state, even if the
forum state has a strong inte​rest in applying its law to the
controversy, and even if the forum state is the most
convenient location for litigation, the Due Process Clause
may sometimes act to divest the state of its power to
render a valid judgment.
5. Both Seaway and World Wide does not do business in
Oklahoma, thus there is no minimum contacts in
Oklahoma, and therefore there is no jurisdiction
96. Bernabe Navida v. Hon. Teodoro A. Dizon, G.R. No. 125078, 30
May 2011
97. Agapita Trajano v. Ferdinand E. Marcos, 978 F.2d 493 / No.
91-15891, 21 October 1992
98. Alberto Guinto v. Marcos, 654 F. Supp 276 (S.D. Cal.), 1986
DOCTRINE:
· A violation of the law of nations arises only when there has been
a violation by one or more individuals of those standards, rules
or customs (a) affecting the relationship between states or
 between an individual and a foreign state, and (b) used by
those states for their common good and/or in dealings inter se.
· The Act of State doctrine forbids review by the United States
courts of the acts of a foreign head of state acting in his official
capacity.
· In order for plaintiffs to assert jurisdiction under the Alien Tort
Claims Act, they must allege that the tortious acts were official
acts or acts committed under color of law.
FACTS: ​Plaintiffs, both Philippine citizens, reside in the State of
California. Defendant, also a Philippine citizen, at present resides in
the State of Hawaii. In their first amended complaint, plaintiffs
allege that defendant and unnamed aides and associates violated
plaintiffs' rights arising under the First Amendment of the United
States Constitution by seizing and restraining distribution of a film
that plaintiffs produced and directed.
Plaintiffs allege that the film, entitled "100 DAYS IN SEPTEMBER,"
originally was endorsed by the Philippine government. Upon its
completion in 1975, however, the plaintiffs allege that the Philippine
government, at defendant's direction, seized the film. Plaintiffs
further allege that repeated requests for the return of their film
were refused, and in fact, that defendant arranged that plaintiffs be
arrested on conspiracy charges. Plaintiffs then fled the Philippines
before they could be arrested. At oral argument, counsel informed
the court that the film recently had been returned to plaintiffs and
at present is being shown throughout the Philippines.
As a result of defendant's actions, plaintiffs allege that they have
suffered general damages for economic loss in the amount of $100
million; and physical and emotional damages in the amount of $5
million. Because of the alleged deliberate, vexatious and malicious
nature of defendant's alleged actions, plaintiffs seek exemplary and
punitive damages in the amount of $1 billion, in addition to costs
and attorney's fees.
ISSUE:
1. Whether plaintiffs can assert jurisdiction under Sec. 1350
2. Whether plaintiffs can assert jurisdiction under the Alien Tort
Claims Act
HELD:
1. No. The 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.
Section 1350 provides a right to an ​alien, if a ​tort has been
committed against him or her in violation of a ​treaty of the United
States, or the ​"law of nations."
In the instant action, plaintiffs have alleged no treaty of the United
States under which their claim can be said to have arisen. Therefore,
if the plaintiffs are to have a claim under Sec. 1350, it must arise
under the "law of nations."
Section 1350 has been in existence since 1789, but it has been
described by one judge as "a kind of Lohengrin; ...no one seems to
know whence it came." Few courts have addressed the issue of
what constitutes a "law of nations," and there is no universally
accepted definition of this phrase.
However, in the ​IIT case, Judge Friendly, quoting from ​Lopes v.
Reederei Richard Schroder, ​posited the following as a "test" to aid in
determining when a violation of the law of nations has occurred:
A violation of the law of nations arises only when there has been “a
violation by one or more individuals of those standards, rules or
customs (a) affecting the relationship between states or between an
individual and a foreign state, and (b) used by those states for their
common good and/or in dealings ​inter se.
Subsequently, courts held that the law of nations "deals primarily
with the relationship among nations rather than among individuals,"
or that "if a controversy existing between individuals neither
involves internal relations nor impinges upon a nation's exercise of
its sovereignty, jurisdiction will not lie under."
However, the Second Circuit in ​Filartiga v. Pena-Irala, in holding that
"an act of torture committed by a state official against one held in
detention violates established norms of the international law of
human rights, and hence the law of nations," qualified the test set
out in ​IIT v. Vencap:
We have no quarrel with this formulation so long as it be
understood that the courts are not to prejudge the scope
of the issues that the nations of the world may deem
important to their interrelationships, and thus to their
common good.
Filartiga provides guidance insofar as it notes that the law of nations
should be interpreted not as it was in 1789, but as it has evolved and
exists among the nations of the world today, and to the extent that
international law today limits a state's power to torture. However,
there still is no consensus as to what constitutes a "law of nations."
Despite this absence of consensus, courts have relied on the opinion
of Judge Edwards in ​Tel-Oren in reaching the conclusion that the
plaintiffs have failed to assert conduct that constitutes a violation of
the law of nations. Judge Edwards lists some representative
violations of international law that are state-practiced, encouraged
or condoned: (a) genocide; (b) slavery or slave trade; (c) the murder
or causing the disappearance of individuals; (d) torture or other
cruel, inhuman or degrading treatment or punishment; (e)
prolonged arbitrary detention; (f) systematic racial discrimination;
(g) consistent patterns of gross violations of internationally
recognized human rights.
Accordingly, the plaintiffs cannot assert jurisdiction under Sec.1350.
Since the Sec. 1350 issue determines the issue of jurisdiction under
Sec.1331 (federal question), and it have beeen already ruled that
plaintiffs cannot claim jurisdiction under diversity of citizenship,
Sec.1332, this court does not have subject matter jurisdiction, and
the complaint must be dismissed.
2. No. Even if jurisdiction could be asserted under one of the
previously discussed statutory sections, I am convinced that the
Act of State doctrine would require the dismissal of this action.

The Act of State doctrine forbids review by the United States courts
of the acts of a foreign head of State acting in his official capacity.
In order for plaintiffs to assert jurisdiction under the Alien Tort
Claims Act, they must allege that the tortious acts were official acts
or acts committed under color of law. Moreover, it appears that
plaintiffs' theory of liability is that Marcos in his capacity as
President of the Philippines engaged in a systematic policy of
suppressing rights of free speech in the Philippines. This theory of
recovery requires precisely the type of inquiry in which the federal
courts have refused to engage under the Act of State doctrine. It is
beyond the capacity of the federal courts to subject the official acts
or policies of the head of a foreign state to traditional standards of
judicial review.
In sum, even if the plaintiffs had been able to claim jurisdiction, the
Act of State doctrine would preclude this court from hearing the
instant lawsuit.
This is not to say that I condone the acts that the plaintiffs have
alleged in their complaint. As I noted earlier, this country, and I
myself, hold First Amendment rights very dearly. Nevertheless, a
violation of First Amendment rights simply does not rise to the level
of a violation of a "law of nations." In the instant case, this court is
thrust into the very sensitive area of international law. Reciprocity is
a critical consideration. However much the acts of an official in
another country may offend our sense of what is right, we are
constrained to a large extent by the customs and usages of
international law.
D. Property
99. Gonzalo Chua Guan v. Samahang Magsasaka, G.R. No. 42091, 2
November 1935;
G.R. No. 42091 | November 2, 1935
Doctrine:
For the purposes of execution, attachment, and garnishment, it is
not the domicile of the owner of a certificate but the domicile of the
corporation which is decisive.
FACTS:
· Gonzalo Co Toco owns 5,894 shares of the capital stock of
defendant corporation Samahang Magsasaka, Inc. He
mortgaged said shares to Chua Chiu to guarantee the payment
of a debt.
· The certificates of stock were delivered with mortgage to Chua
Chiu. The mortgage was duly registered in the office of the
register of deeds of Manila and in the office of the corporation.
· Chua Chiu then assigned all his right and interest in said
mortgage to plaintiff Gonzalo Chua Guan and the assignment
was registered in the office of the register of deeds of Manila
and in the office of the corporation.
· When Co Toco defaulted in the payment of the debt, plaintiff
foreclosed the mortgage and delivered the certificates of stock
and copies of the mortgage and assignment to the sheriff of the
City of Manila in order to sell the shares at public auction.
· The sheriff auctioned the 5,894 shares of stock and plaintiff
having been the highest bidder, the sheriff executed in his favor
a certificate of sale of said shares.
· The plaintiff tendered the certificates of stocks standing’ in the
name of Co Toco to the proper officers of the corporation for
cancellation and demanded that they issue new certificates in
his name. The officers of the corporation refused to issue new
shares in the name of plaintiff.
· An action for writ of mandamus was filed praying that
defendants transfer the 5,894 shares of stock to the plaintiff by
cancelling the old certificates and issuing new ones.
· Defendants refused to cancel Co Toco’s certificates and to issue
new ones in the name of plaintiff because prior to the latter’s
demand, nine attachments had been issued and served and
noted on the books of the corporation against Co Toco’s shares
and Chua Guan objected to having these attachments noted on
the new certificates which he demanded.
ISSUE:
Whether the registration of the chattel mortgage in the office of the
register of deeds of Manila give constructive notice to the attaching
creditors
RULING:
Yes. The attaching creditors are entitled priority over the defectively
registered mortgage of the appellant.
Section 4 of the Chattel Mortgage Law (Act No. 1508) provides two
ways for executing a valid chattel mortgage which shall be effective
against third persons.
1. The possession of the property mortgaged must be
delivered to and retained by the mortgagee.
2. Without such delivery the mortgage must be recorded
in the proper office or offices of the register of deeds.
As to the proper place of registration of such mortgage, Section 4
provides that in such a case the mortgage shall be registered in the
province in which the mortgagor resides at the time of making the
same or, if he is a non-resident, in the province in which the
property is situated. It also provides that if the property is situated in
a different province from that in which the mortgagor resides, the
mortgage shall be recorded both in the province of the mortgagor’s
residence and in the province where the property is situated.
With respect to a chattel mortgage of shares of stock of a
corporation, registration in the province of the owner’s domicile
should be sufficient.
The situs of shares of stock may be at the domicile of the owner and
for others at the domicile of the corporation; and even elsewhere. It
is a general rule that for the purposes of execution, attachment, and
garnishment, it is not the domicile of the owner of a certificate but
the domicile of the corporation which is decisive.
By analogy with the foregoing and considering the ownership of
shares in a corporation as property distinct from the certificates, it
seems reasonable to hold that the property in the shares may be
deemed to be situated in the province in which the corporation has
its principal office or place of business.
100. Wells Fargo Bank & Union Trust Company v. Collector of
Internal Revenue, G.R. 101. No. 46720, 28 June 1940;
DOCTRINE: ​The actual situs of the shares of stock is in the
Philippines since the corporation is domiciled therein.
FACTS:
Birdie Lillian Eye, wife of Clyde Milton Eye, died at Los Angeles,
California. It was alleged to be her last residence and domicile.
Upon her death, she left ½ of her conjugal share in the 70,000 shares
of stock in Benguet Consolidated Mining Company organized under
the laws of the Philippines, and its principal office is located in the
City of Manila.
She left a will and was duly admitted in the probate court of
California, where her estate is administered and settled. The Federal
State of California subjected the said shares to inheritance taxes,
which was duly paid.
Petitioner, Wells Fargo Bank was the duly appointed trustee of the
trust created by the said will.
Respondent, CIR also sought to subject the shares of stock in the
Philippines to Philippine inheritance tax. Petitioner objected.
A petition for declaratory judgment was filed in the lower court on
whether the shares of stock are legally subject to inheritance tax of
the Philippines.
CFI ruled that the transmission by will of the 35,000 shares (half of
the conjugal property) are subject to Philippine inheritance tax.
Hence, this appeal.
Petitioner argues the following:
(1) Philippine inheritance tax is not a tax on property but upon
the transmission of inheritance
(2) As for ​intangible property​, like the shares of stock, the
situs is the domicile of the owner​. Therefore, their
transmission by death necessarily takes place under his
domiciliary laws.
ISSUE: W/N the situs of the shares of stock is in the Philippines.
HELD: Yes.
Originally, the settled law in the United States.is that intangibles
have only one situs for the purpose of inheritance tax, and that such
situs is in the domicile of the decedent at the time of his death. But
this rule has, of late, been relaxed. .
An examination of the adjudged cases will disclose that the
relaxation of the original rule rests on either of two fundamental
considerations: (1) upon the recognition of the inherent power of
each government to tax persons, properties and rights within its
jurisdiction and enjoying, thus, the protection of its laws; and (2)
upon the principle that as to intangibles, a single location in space is
hardly possible, considering, the multiple, distinct relationships
which may be entered into with respect thereto.
With regard the first consideration, the Federal Supreme Court of
the US in the case of ​Burnet vs. Brooks sustained the power of the
Government to impose inheritance tax upon transmission of shares
of stock in a domestic (American) corporation, regardless of the situs
of its certificates. It sustained the power of the Federal Government
to tax properties within its borders​, wherever its owner may have
been domiciled at the time of his death.
As regards the second consideration, another case named Cury vs.
McCanless ​was also Federal Supreme Court of the US, where it held
that ​intangibles are taxed at their situs and not elsewhere​. This
means that the identity or association of intangibles with the person
of the owner at his domicile gives jurisdiction to tac. BUT ​where the
taxpayer extends his activities with respect to his intangibles, so as
to avail himself of the protection and benefit of the laws of
another state, the single place of taxation no longer obtains​. The
state of domicile is not deprived, by the taxpayer's activities
elsewhere, of its constitutional jurisdiction to tax, and consequently
that there are many circumstances in which more than one state
may have jurisdiction to impose a tax and measure it by some or all
of the taxpayer's intangibles.
Shares of corporate stock may be taxed at the domicile of the
shareholder and also at that of the corporation which the taxing
state has created and controls; and income may be taxed both by
the state where it is earned and by the state of the recipient's
domicile. ​Protection, benefit, and power over the subject matter
are not confined to either state.
In the instant case, ​the actual situs of the shares of stock is in the
Philippines, the corporation being domiciled therein. And besides,
the certificates of stock have remained in this country up to the time
when the deceased died in California, and they were in possession of
one S. McK, secretary of the Benguet Consolidated Mining Company,
to whom they have been deli vered and indorsed in blank. This
indorsement gave S. McK. the right to vote the certificates at the
general meetings of the stockholders, to collect dividends thereon,
and dispose of the shares in the manner she may deem fit, without
prejudice to her liability to the owner for violation of instructions.
For all practical purposes, then, S. McK. had the legal title to the
certificates of stock held in trust for the true owner thereof. In other
words, the owner residing in California has extended here her
activities with respect to her intangibles so as to avail herself of the
protection and benefit of the Philippine laws. Accordingly, the
jurisdiction of the Philippine Government to tax must be upheld.
JUDGMENT AFFIRMED.
102. A.W. Beam v. A.L. Yatco, G.R. No. 48122, 29 October 1948;
G.R. No. 48122 | 29 OCTOBER 1948| J. Perfecto| Veluya
Doctrine: ​In the absence of proof as to what the foreign law is, it is
presumed that the same is the law of the forum
Emergency Recit:
Basically, the wife died. In light of her death, the transfers of
properties to the heirs, including the husband, according to the
collector of internal revenue, should be subjected to inheritance tax.
The heirs paid the tax under protest. They were claiming for refund
of such payment because according to them, the properties were
not transferred through succession and that those property belongs
to them separately. Also, being citizens of Utah, the laws of Utah
applies. According to the law of such state, properties acquired by
the spouses during marriage belong to them separately. Thus, there
should be no transfer through succession between A.W. Beam and
Lydia Beam. But, according to the court, the separation of property
between the plaintiffs and the deceased was not established by
evidence. The foreign law applicable (Utah) was also not established
by evidence. Hence, the properties should be subjected to
inheritance tax in light of California law (and or our law).
Facts:
● Plaintiffs (please see the 2​nd table for the names) filed a
complaint praying that the amount of P343,298.72, paid
by them as inheritance tax, be refunded to them.
● April 26, 1937 – the Collector of Internal Revenue declared
and assessed the following items of property of A.W.
Beam and Lydia McKee Beam at the time of the death of
the latter on October 18, 1934, at P8,100,544.91:
15,000 shares of stock of Beam Investment Company
88,163 shares of stock of Beam Investment Company
500 shares of stock of Benguet Consolidated Mining
Company
2,080 shares of stock of Balatoc Mining Company
severally. But, according to defendant, plaintiffs owned
the properties jointly with Lydia McKee Beam.
● A.W. Beam pleaded Utah citizenship to invoke the laws of
that state which, it is alleged, is to the effect that
properties acquired by the spouses during marriage belong
to them separately.
● The evidence of the plaintiff on the Utah citizenship
consists exclusively in the deposition of A.W. Beam
wherein he states that he was born in Nevada in 1878; he
lived with his parents in Nevada until 1883 and then in
Utah until 1898, when he enlisted in the army; and that
upon his discharge from the army in San Francisco in 1889
he returned to, and stayed in, Utah, until he came to the
Philippines in 1902.
● These properties were acquired in the Philippines during
and within the period from the marriage of A.W. Beam to
Lydia McKee Beam in 1913 to April 18, 1934
● Appellee: The inception of the action that the plaintiffs
were and continued to be California citizens and that they
are not entitled to recover on the ground that according to
California law the property acquired by A.W. Beam in
one-half thereof belongs to the deceased and passed by
succession to her heirs subject to the inheritance tax.

5,000 shares of stock of Beam Investment Company

Issue: ​Whether or not the plaintiffs are entitled to refund

2,933.18 Deposit in Manila Building and Loan Association

Held: No. The plaintiffs failed to establish that the properties
5,000 shares of stock of Beam Investment Company involved in this case were not transfer to them through succession.

2,933.18 Deposit in Manila Building and Loan Association Ruling:

The law of the State of California in effect at the time of the death of
Lydia McKee Beam provided that, upon the death of a wife, one-half
of the community property shall go to the surviving spouse, the
Heirs Share Tax other half being subject to the testamentary disposition of the
decedent, and that in the absence thereof, that half shall go to the
A.W. Beam (plaintiffs) 531,375.00 40,480.00 surviving spouse by inheritance.

A.W. Beam, Jr. (plaintiffs) 1,749,448.73 151,409.36 They had failed to establish that right based on their alleged Utah
citizenship. The evidence does not sufficiently prove the Utah
Eugenia Beam(plaintiffs) 1,749,443.73 151,409.36 citizenship claimed by said appellant. There is no evidence that he
ever returned to Utah, or has any interest in that state, or that he
ever intended to return there.
Syrena McKee 10,000.00 200.00

Appellants contend that no evidence whatsoever has been adduced

Rose T. Mckee 10,000.00 200.00
4,050,272.46 343,698.72
● They paid respectively the amounts assessed and
demanded by the collector, aggregating P343,698.72,
under protest.
● On her death in the State of California on October 8, 1934,
Lydia McKee Beam left a last will and testament which,
after due and regular proceedings, was admitted to
probate in the superior court of the State of California for
the County of Almeda.
● According to the plaintiffs, at the time of death of Lydia
McKee Beam, she and plaintiffs owned separately and
to prove the California law of community property and that the trial
court should not have taken into consideration the provision of said
law as quoted in the memorandum filed by the Solicitor General.
Appellee alleges that there is no dispute that California is a
community property state, citing 31 C.J., 12 and the decision in
Osorio ​vs. Posadas (56 Phil., 748 and 756), Appellants themselves
assert that, in the absence of proof as to what the California law is,
the presumption would militate against them, because when a
foreign law is pleaded and 110 evidence has been presented as to
said law it is presumed that the same is the law of the forum.
***just in case:
The finding of the lower court is fully supported by the testimonies
of A.W. Beam and John W. Haussermann (guardian ad litem of the
minor plantiffs) wherein the first stated that in 1923 he bought a
house in Oakland, California, and used it as a residence until
December, 1930 when he built another in Piedmont, California,
which he has used and occupied as a residence since then, and his
children were in school in California and Mrs. Beam wanted to be
with them and made a home for them, and it was his intention to
live in California and from 1923 on, his family spent most of their
time in California, where he himself used to take long vacations, and
that he never really intended to live permanently in the Philippines,
while Haussermann testified that A.W. Beam left the Philippines
somewhere along 1923 and 1924 when he established a home for
his wife and children on Kenmore Avenue, Oakland, and he went
there frequently.
As correctly stated by appellee, even granting appellant’s contention
that the deceased became a resident of California only in 1934, she
was a citizen of that state at the time of her death and her national
law applicable to the case, in accordance with article 10 of the Civil
Code, is the law of California which, in the absence of contrary
evidence, is to be presumed to be the same as the Philippine law.
The question raised by appellants regarding the ​situs of the
properties in question, has no merit in view of the express
provisions of section 1536 of the Revised Administrative Code,
specifying shares issued by any corporation or ​sociedad anónima,
organized in the Philippines among properties subject to inheritance
tax. The pronouncement of the lower court that the actual ​situs ​of
the shares in question is in the Philippines is fully supported by the
evidence as, according to the testimony of John W. Haussermann,
the corresponding certificates of stock were in the Philippines
before and after the death of Mrs. Beam, the owners were
represented by proxy at the stockholders’ meetings and their shares
voted by their attorney in fact who had the power to collect
dividends corresponding to the share.
103. National Development Company v. Court of Appeals, G.R. No.
L-49407/L-49469, 104. 19 August 1988;
G.R. Nos. L-49407 and L-49469 | August 19, 1988 | Manao
DOCTRINE: ​The law of the country to which the goods are to be
transported governs the liability of the common carrier in case of
their loss, destruction or deterioration.
FACTS:
● E. Philipp Corporation loaded on board the vessel Dona
Nati at San Francisco, California 1,200 bales of American
raw cotton consigned to the order of Riverside Mills
Corporation.
○ Also loaded thereafter at Tokyo, Japan were the
cargo of Kyo​kuto Boekui, Kaisa, Ltd. (sodium
lauryl sulfate and aluminum foil) consigned to
the order of Manila Banking Corporation.
● En route to Manila, Dona Nati figured in a collision at
Japan with SS Yasushima Maru, a Japanese vessel. As a
result, 550 bales of the raw cotton, as well as Kyokuto
Boekui’s cargo, were lost and/or destroyed. The collision
was proved to be due to the fault of the captain.
● Development Insurance & Surety Corporation (DISC), as
insurer, paid to Riverside Mills the value of the lost bales,
and to Guilcon, Manila (as holder of the bill of lading
endorsed) the value of Kyokuto Boekui’s cargo.
● DISC filed a complaint against the National Development
Corporation (NDC; owner of Dona Nati) and the Maritime
Company of the Philippines (MPC; ship agent of NDC) to
recover the amounts it had paid.
● NDC and MPC argue that they are not liable. Under the
Carriage of Goods by Sea Act (COGSA), the carrier is not
responsible for the loss/damage resulting from the
act/neglect/default of the master/mariner/pilot/servants
of the carrier in the navigation/management of the ship.
● CFI: Granted the complaint.
● CA: Affirmed the CIR.
RELEVANT ISSUE: ​Whether or not the COGSA applies in this case?
HELD
NO. The Code of Commerce applies in this case.
● Civil Code, Art. 1753: The law of the country to which the
goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or
deterioration. In the case at bar, the goods are transported
from San Francisco and Tokyo to the Philippines. It is
evident that the laws of the Philippines will apply.
● Art. 1766: For cargoes transported to the Philippines, the
liability of the carrier is governed primarily by the Civil
Code, and suppletorily by the Code of Com​merce and by
special laws.
● Collision, however, falls among matters not specifically
regulated by the Civil Code. Hence, the Code of
Commerce, which deals exclusively with collision of
vessels, shall apply.
● Art. 826: ​Where collision is imputable to the personnel of a
vessel, the owner of the vessel at fault, shall indemnify the
losses and damages incurred. The shipowner is thus not
exempt from liability for damages aris​ing from collision
due to the fault or negligence of the captain.
● The COGSA cannot apply because:
(1) It does not specifically provide for the subject of
collision; and
(2) While it applies to all contracts for the carriage of
goods by sea to and from Philippine ports in foreign
trade, nothing in the COGSA shall repeal any existing
provision of the Code of Commerce, or limit its
application.
105. ​The Holy See vs Hon. Eriberto Rosario, Jr., and Starbright Sales
Enterprises, Inc.
GR No. 101949 | December 1, 1994 | Quiason, J. | I.E.B.Z.
Petitioner is the Holy See who exercises sovereignty over the Vatican
City in Rome, Italy, and is represented in the Philippines by the Papal
Nuncio; Private respondent, Starbright Sales Enterprises, Inc., is a
domestic corporation engaged in the real estate business.
This petition arose from a controversy over a parcel of land
consisting of 6,000 square meters located in the Municipality of
Paranaque registered in the name of petitioner. Said lot was
contiguous with two other lots registered in the name of the
Philippine Realty Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A.
Cirilos, Jr., acting as agent to the sellers. Later, Licup assigned his
rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to
private respondent, a dispute arose as to who of the parties has the
responsibility of evicting and clearing the land of squatters.
Complicating the relations of the parties was the sale by petitioner
of Lot 5-A to Tropicana Properties and Development Corporation
(Tropicana).

Private respondent filed a complaint with the Regional Trial Court,
Branch 61, Makati, Metro Manila for annulment of the sale of the
three parcels of land, and specific performance and damages against
petitioner, represented by the Papal Nuncio, and three other
defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and
Tropicana.
Petitioner and Msgr. Cirilos separately moved to dismiss the
complaint — petitioner for lack of jurisdiction based on sovereign
immunity from suit, and Msgr. Cirilos for being an improper party.
An opposition to the motion was filed by private respondent.
The trial court issued an order denying, among others, petitioner’s
motion to dismiss after finding that petitioner “shed off [its]
sovereign immunity by entering into the business contract in
question” Petitioner forthwith elevated the matter to us. In its
petition, petitioner invokes the privilege of sovereign immunity only
on its own behalf and on behalf of its official representative, the
Papal Nuncio.
RELEVANT ISSUE:
Whether or not the Holy See has sovereign immunity or immunity
from suit filed by Starbright Enterprises, Inc?
HELD:
YES. ​As expressed in Section 2 of Article II of the 1987 Constitution,
we have adopted the generally accepted principles of International
Law. Even without this affirmation, such principles of International
Law are deemed incorporated as part of the law of the land as a
condition and consequence of our admission in the society of
nations. In the present case, if petitioner has bought and sold lands
in the ordinary course of real estate business, surely the said
transaction can be categorized as an act jure gestionis. However,
petitioner has denied that the acquisition and subsequent disposal
of the lot were made for profit but claimed that it acquired said
property for the site of its mission or the Apostolic Nunciature in the
Philippines.
The Holy See is immune from suit for the act of selling the lot of
concern is non-proprietary in nature. The lot was acquired by
petitioner as a donation from the Archdiocese of Manila. The
donation was made not for commercial purpose, but for the use of
petitioner to construct thereon the official place of residence of the
Papal Nuncio. The decision to transfer the property and the
subsequent disposal thereof are likewise clothed with a
governmental character. Petitioner did not sell the lot for profit or
gain. It merely wanted to dispose of the same because the squatters
living thereon made it almost impossible for petitioner to use it for
the purpose of the donation.
DISPOSITIVE:
WHEREFORE, the petition for certiorari is GRANTED and the
complaint in Civil Case No. 90-183 against petitioner is DISMISSED.
106. Karen E. Salvacion v. Central Bank of the Philippines, G.R. No.
94723, 21 August 1997; Property
DOCTRINE: ​Article 10 of the New Civil Code provides that "in case of
doubt in the interpretation or application of laws, it is presumed
that the lawmaking body intended right and justice to prevail.
FACTS:
1. Greg Bartelli Northcott, American tourist, lured Karen
Salvacion, 12 years old at the time of the incident, to go
with him to his apartment. He then detained Salvacion for
4 days and raped her 3 times each day. (The narration of
the rape incidents were so long and detailed and and
and… basta di ko kinaya. Just imagine her for 4 days,
locked, fed with a biscuit and coke, tied, raped, repeat. DI
BA! Shocking)
2. When Salvacion was rescued, Bartelli was arrested and
detained at the Makati Municipal Jail together with his
belongings (significantly, his bank accounts that contain his
foreign currency deposits).
3. Bartelli was then charged of the crime of Serious Illegal
Detention and 4 counts of rape. Salvacion, through her
parents, filed a civil case for damages with preliminary
attachment against Bartelli.
4. On the scheduled hearing of Bartelli’s petition for bail, he
escaped from jail. Warrant of arrest and Hold Departure
Order were then issued.
5. Meanwhile, the civil case filed by the Salvacions were
granted and the writ of preliminary attachment was
issued.
6. The Deputy Sheriff of Makati served a Notice of
Garnishment on China Banking Corporation (CBC) with
respect ot Bartelli’s account but it invoked the Bank
Secrecy Law.
a. The Sheriff replied that it does not violate the
Bank Secrecy Law as the disclosure is merely
incidental to a garnishment.
7. Later on, CBC invoked Central Bank Circ. No. 960 that
dollar deposits of Bartelli are exempted from attachment,
garnishment, or any other order or process of any court,
legislative body, government agency or any administrative
body, whatsoever.
8. The Salvacions went and clarified with the Central Bank
regarding the circular, to which the Director replied that
the circular is absolute and has no exemptions.
a. Thus, the dollar deposits on Bartelli were
exempted from garnishment.
9. Summons by publication was granted and Salvacions’
complaint was published in the Manila Times once a week
for 3 consecutive weeks. Since Bartelli failed to answer, he
was declared in default and the case was heard ex-parte.
a. RTC of Makati granted the damages the
Salvacions sought and hedl Bartelli liable for
moral and exemplary damages, attorney’s fees,
litigation expenses and costs of the suit.
10. A notice of the RTC’s decision was published in the Manila
Bulletin once a week for 3 consecutive weeks. After 15
days from the last publication of the notice of judgment
and the RTC’s decision, Salvacions tired to execute
Bartelli’s dollar deposits with CBC but the latter invoked
Sec. 113 of the Central Bank Circular No. 960.
ISSUE: ​Whether Section 113 of Central Bank Circular No. 960 and
Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise known
as the Foreign Currency Deposit Act -- ​(confidential nature of foreign
currency deposits and exempts it from attachment, garnishment, or
any other order or process of any court, legislative body, government
agency or any administrative body whatsoever.) be made applicable
to a foreign transient?
(YES; but partially granted as SC held that the present petition for
declaratory relief can only be entertained and treated as a petition
for mandamus to require respondents to honor and comply with
the writ of execution in Civil Case No. 89-3214. -- but since this
concerns far-reaching implications and raises questions that should
be resolved, it was treated by SC as one for mandamus
**procedural matters only**)
HELD: (setting aside the procedural matters) YES​, Karen Salvacion
deserves to receive the damages awarded to her by the RTC. SC
highlighted the traumatic and shocking experience Karen had
because of the heinous crime Bartelli committed against her. It was
only but just to award and have the dollar deposits be garnished in
order to satisfy the judgment rendered by the RTC of Makati in favor
the Salvacions.
SC made a brief explanation as to the enactment of the RA No. 6426.
That, such was enacted in 1983 or at a time when the country's
economy was in a shambles; when foreign investments were
minimal and presumably. In order to encourage the inflow of foreign
deposits in the banks operating in the Philippines, the protective
cloak of confidentiality was absolutely granted over such and even
furthered by exempting the same from any attachment,
garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever.
SC also mentioned the accorded protection over foreign
currency deposits by virtue of PD No. 1246 in order to assure the
development and speedy growth of the Foreign Currency Deposit
system and the Offshore Banking in the Philippines -- which was
again enacted under the same purpose of increasing the inflow of
desired foreign investments to the country and strengthening the
Philippine banking system.
That, it must now be resolved in favor and for the protection of
nationals who are victimized by foreigners who are merely passing
through the Philippines. The present case has reached a very
contentious matter which was prejudiced by the abovementioned
laws. SC stated that the application of the law depends on the
extent of its justice. This situation calls for fairness against legal
tyranny. It would be unthinkable, that the questioned Section 113 of
Central Bank No. 960 would be used as a device by Bartelli for
wrongdoing, and in so doing, acquitting him at the expense of Karen
Salvacion.
Therefore, SC amended the Sec. 8 of RA No. 6426 and was made
inapplicable due to its peculiar circumstances. The Respondents,
Central Bank, China Bank and Bartelli was ordered to comply with
the writ of execution issued in the civil case for damages and release
to the Salvacions the dollar deposits of Bartelli in China Bank to
satisfy said judgment.
107. Natividad P. Nazareno v. Court of Appeals|G.R. No. 131641
|23 February 2000|D. Property
FACTS:
1. Natividad Nazareno filed a complaint for Annulment of
Sale and Damages against Sps. Romeo and Eliza Nazareno.
2. Natividad avers that she is the sole and absolute owner of
a parcel of land located in Naic, Cavite covered by TCT No.
51798
3. Natividad’s brother Romeo convinced her to lend the TCT
No. 51798 to be used as a collateral to a loan proceeds
which would be used in the construction of Naic cinema
on the same subject property.
4. The arrangement was after the cinema is built, the TCT
would be returned to Natividad.
5. Accordingly, Natividad executed a Deed of Absolute sale in
favor of the spouses. However the sale was simulated
because Natividad did not receive any consideration
thereof.
6. However, after the cinema was built, the spouses did not
return the title to Natividad. After several demands by
Natividad, the spouses failed and refused to return the
title.
7. Instead they had the property transferred in their name.
Consequently, TCT No. T- 118276 was issued to them.
8. The spouses, in their defense, denied that the property
belonged to Natividad. They averred that said property
belong to the estate of Romeo and Natividad’s father.
9. According to Romeo, the property was his share in the
inheritance.
10. As for the deed of sale, Romeo said that it was only
resorted to for the purpose of carrying out the transfer of
property of the estate of the father to him.
TRIAL COURT
- Ruled in favor of the Spouses.
- Ruled that although the deed of sale was simulated, the
same could be treated as an adjudication and a
conveyance to Romeo of his share in the estate of his
Father.
COURT OF APPEALS
- Reversed the ruling
- It found that during pre-trial, the parties agreed that the
Deed of sale was simulated, thus the burden of proof
shifted to Romeo to prove the transfer was in reality a
conveyance of his share in the estate of his father
- But during trial, Romeo failed to proved so called
conveyance.
- On the other hand, Natividad was able to show that the
property was previously sold to her by their late Father.
- Held that the title in favor of the SPS as null and void and
restored the title in favor of Natividad.
11. The decision of the CA became final and executory as no appeal
was anymore interposed by the spouses.
12. Thereafter, Natividad filed a motion for the issuance of a writ of
execution as well as a writ of possession.
13. The spouses opposed said motion as the complaint never prayed
that Natividad be in possession of said properties, not the CA
ordered that Natividad be in possession of said properties.
14.The trial court granted the writ of execution but denied the writ
of possession as the complaint nor the CA ordered that possession
be with Natividad.
15. The CA affirmed and said that ​it is ​s a settled rule that a writ of
possession is improper to eject another from possession unless
sought in connection with (1) a land registration proceeding; (2) an
extrajudicial foreclosure of real property; (3) in a judicial foreclosure
of property provided that the mortgagor has possession and no third
party has intervened; and (4) in execution sales.
16. Moreover, the CA held that it is an undisputed fact that this case
is for the annulment of a private sale made by petitioner to private
respondent. This action is not land registration case nor a
foreclosure of mortgage whether judicially or extrajudicially nor was
the subject property sold in execution.
ISSUE: WON Natividad is entitled to a writ of possession even
though it was not prayed for in the complaint and the CA never
ordered anything about possession in the case which became final
and executory
HELD: No.
A writ of execution must conform to the judgment to be executed; it
may not vary the terms of the judgment it seeks to enforce. Nor may
it go beyond the terms of the judgment sought to be executed.
Where the execution is not in harmony with the judgment which
gives it life, and in fact exceeds it, it has pro tanto no validity. To
maintain otherwise would be to ignore the constitutional provision
against depriving a person of his property without due process of
law.
Natividad only prayed for the annulment of the deed of sale and the
restoration of her title over the land. She now cannot ask for a writ
of possession to place her in physical occupancy of the Naic Cinema.
Being declared owner of subject lot does not also mean that she is
automatically entitled to possession of all the improvements
therein. Otherwise, the actual possessor would be deprived of his
property without due process of law.
Moreover, the question for possession of subject properties may be
best answered in a full blown trial and or upon a proper proceeding,
a mere prayer for the issuance of a writ of possession will not
suffice.
108. SALVADOR H. LAUREL, vs. RAMON GARCIA, as head of the
Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of
Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary
187 SCRA 797| Gutierrez, Jr. J. | 25 July 1990| Soledad
CONFLICT OF LAWS DOCTRINE:
The respondent’s argument that the Japanese law and
not our Civil Code shall apply is incorrect.
There is no conflict of law in this situation. A conflict of
law arises only when:
a) There is a dispute over the title or ownership of an
immovable, such that the capacity to take and transfer
immovables, the formalities of conveyance, the essential
validity and effect of the transfer, or the interpretation
and effect of a conveyance, are to be determined.
b) A foreign law on land ownership and its conveyance
is asserted to conflict with a domestic law on the same
matters.
Hence, the need to determine which law should apply.
Both elements does not exist in the case. The issues are
not concerned with the validity of ownership or title.
There is no question that the property belongs to the
Philippines. The issue is the authority of the government
officials to validly dispose of property belonging to the
state and the validity of the procedures adopted to effect
the sale, which should be governed by Philippine law
The rule of lex situs does not apply.
FACTS:
1. These are 2 petitions consolidated in 27 March 1990.
(G.R. No. 92013 and G.R. No. 92047) for prohibition
seeking to enjoin respondents with the bidding of the
sale of the 3, 179m​2 ​land at Roppongi, ​5-Chrome
Minato-ku Tokyo, Japan. The Court granted the TRO
effective 20 Jan 1990. Petitioner in the 2​nd case prayed
for a writ of mandamus to compel the respondents to
fully disclose to the public the basis of their decision to
continue with the sale of the Roppongi property in spite
of public opposition which prevent the participation of
Filipinos in the bidding process.
2. The subject property- Roppongi- is one of the 4
properties in Japan acquired by the Philippines under
the Reparations Agreement with the former on 9 May
1956 to indemnify the Filipinos for their loss of property
and life and their suffering during WWII. The other lots
are Nampeidai Property (site of Philippine Embassy
Chancery), Kobe Commercial Property (commercial lot
building used as warehouse), and the Kobe Presidential
Property (vacant residential lot).
3. The Reparations Agreement provides that reparations
valued at $550M would be payable in (20) years in
accordance with annual schedules of procurements to
be fixed by the Philippine and Japanese governments.
Rep. Act No. 1789, the Reparations Law​, prescribes the
national policy on procurement and utilization of
reparations and development loans. The procurements
are to be divided into government sector and those for
private parties in projects, the latter shall be made
available only to Filipino citizens or to 100%
Filipino-owned entities in national development projects.
4. The Roppongi property was acquired under the
heading “Government Sector” for the
Chancery of the Philippine Embassy until the latter was
transferred to Nampeida due to the need for major
repairs. However, the Roppongi property has remained
underdeveloped since that time.
5. A proposal was presented to former Pres. Corazon
Aquino by former PH Ambassador Valdez to subject the
property for lease to a Japanese firm, Kajima
Corporation which shall built the 1 building in Nampeidai
and 2 in Roppongi. At the end of the lease period, these
buildings shall be occupied and use by the Philippine
government; and shall retain the title during the lease
period.
6. The proposal was not acted upon. Instead, on 11 Aug
1986, Pres. Aquino through A.O. No.3 created a
committee to study the utilization of these properties in
Tokyo.
7. ON 25 July 1987, Pres. Aquino issued E.O. No. 296
entitling non-Filipino citizens or entities to avail of
separation capital goods and services in the event of
sale, lease or disposition. The 4 properties were
mentioned in the “Whereas Clause.”
8. Amidst the opposition, the executive branch continue
with the sale of reparation properties, starting with the
Roppongi lot which was twice set for bidding at a
minimum of $225 million floor price. The first bidding
failed; and the last scheduled bidding on 29 Feb 1990
was restrained by the Court.
9.In G.R. No. 92013, the petitioner objects to the
alienation of the Roppongi property to anyone, while
petitioner in G.R. No. 92047 adds as a principal
objection the alleged unjustified bias of the PH
government in favor of selling the property to
non-Filipino citizens and entities.
ISSUES:
(1) Can the Roppongi property and others of its kind be
alienated by the Philippine Government?
(2) Does the Chief Executive, her officers and agents,
have the authority and jurisdiction, to sell the Roppongi
property?
RULING AND RATIO:
1) NO. They are properties of public dominion.
The four properties were acquired through reparation
agreements, and assigned to the government. The
Roppongi property was specifically designated to house
the Philippine Embassy for public service. As properties
of public dominion, it is on the respondents to show that
it is patrimonial which they failed to do so. The Roppongi
site is outside the commerce of man. Thus, it cannot be
alienated.
Its ownership is a special collective ownership for
general use and enjoyment, an application to the
satisfaction of collective needs, and resides in the social
group. The purpose is not to serve the State as a
juridical person, but the citizens; it is intended for the
common and public welfare and cannot be the object of
appropriation.
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of
private ownership.
ART. 420. The following things are property of public
dominion
(1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by
the State, banks shores roadsteads, and others of
similar character;
(2) Those which belong to the State, without being
for public use, and are intended for some public service
or for the development of the national wealth.
ART. 421. All other property of the State, which is
not of the character stated in the preceding article, is
patrimonial property.
The Roppongi property is correctly classified under
paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public
service.
The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such
conversion happens only if the property is withdrawn
from public use. A property continues to be part of the
public domain, not available for private appropriation or
ownership until there is a formal declaration on the part
of the government to withdraw it from being such
A mere transfer of the Philippine Embassy to Nampeidai
in 1976 is not relinquishment of the Roppongi property's
original purpose. Even the failure by the government to
repair the building in Roppongi is not abandonment
since as earlier stated, there simply was a shortage of
government funds.
The property is correctly classified under Art 420 of the
Civil Code as property belonging to the State and
intended for some public service. The fact that it has not
been used for actual Embassy service does not
automatically convert it to patrimonial property. Such
conversion happens only if property is withdrawn from
public use, through an abandonment of the intention to
use the Roppongi property for public service and to
make it patrimonial property. Abandonment must be a
certain and positive act based on correct legal premises.
The EO No. 296 does not declare that the properties lost
their public character, merely intending the properties to
be made available to foreigners and not to Filipinos
alone, in case of sale, lease or other disposition.
Furthermore, it is based on the wrong premise that the
Japan properties can be sold to end-users, when in fact
it cannot.
Neither does the CARP Law re-classify the properties
into patrimonial properties, merely stating that sources of
funds for its implementation be sourced from proceeds
of the disposition of the Government in foreign countries,
but not that the Roppongi property be withdrawn from
being classified as a property of public dominion.
(Insert Conflict of Law Doctrine here)
2) NO. A law or a formal declaration to withdraw the
Roppongi property from public domain to make it
alienable and a need for legislative authority to allow the
sale of the property is needed. None has been enacted
for this purpose.
There is no law authorizing its conveyance. t is not for
the President to convey valuable real property of the
government on his or her own sole will. Any such
conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and
legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989,
asking for the deferment of the sale of the Roppongi
property does not withdraw the property from public
domain much less authorize its sale. It is a mere
resolution; it is not a formal declaration abandoning the
public character of the Roppongi property. In fact, the
Senate Committee on Foreign Relations is conducting
hearings on Senate Resolution No. 734 which raises
serious policy considerations and calls for a fact-finding
investigation of the circumstances behind the decision to
sell the Philippine government properties in Japan.
NOTES: ​The resolution of this Court in Ojeda v.
Bidding Committee, et al., supra, ​did not pass upon
the constitutionality of Executive Order No. 296.
The sale in 1989 did not materialize. The petitions before
us question the proposed 1990 sale of the Roppongi
property. We are resolving the issues raised in these
petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to
withdraw the Roppongi property from public domain to
make it alienable and a need for legislative authority to
allow the sale of the property, we see no compelling
reason to tackle the constitutional issues raised by
petitioner Ojeda. The Court does not ordinarily pass
upon constitutional questions unless these questions are
properly raised in appropriate cases.
DISPOSITIVE: The petitions are GRANTED. A writ of
prohibition is issued enjoining the respondents from
proceeding with the sale of the Roppongi property in
Tokyo, Japan. The February 20, 1990 Temporary
Restraining Order is made PERMANENT.
109. Tayag vs. Benguet Consolidated Mining GR No.
109. Renato D. Tayag v. Benguet Consolidated, Inc.
G.R. No. L-23145 November 29, 1968
Fernando, J. | Lopez, A.
Doctrine: ​Since BCI is a Philippine corporation owing full allegiance
and subject to the unrestricted jurisdiction of local courts, its shares
of stock cannot be considered immune from lawful court orders.
Facts:
1. Idonah Perkins died in New York and left properties here
in the Philippines and abroad, which includes two stock
certificates covering 33,002 shares of stocks of Benguet
Consolidated, Inc. (BCI). Said stocks were in the possession of
the Country Trust Company of New York (CTC-NY), the
domiciliary administrator of the estate of Perkins in the US.
Renato Tayag was appointed as the ancillary administrator of
the properties of Perkins in the Philippines.
2. There was a dispute between CTC-NY and Tayag as to who
between them is entitled to possess the stock certificates.
3. The lower court ordered CTC-NY to produce or deposit the
stock certificates to Tayag but CTC-NY did not comply. Hence,
Tayag filed a petition to have said stock certificates be
declared lost and to compel BCI to issue new stock
certificates in replacement thereof.
4. BCI opposed the petition, arguing that the said stock
certificates are in existence, and are in the possession of
CTC-NY. Hence, the stock certificates cannot be considered
lost.
5. The lower court held in favor of Tayag, declaring the stock
certificates to be lost and ordering BCI to issue new
certificates to be delivered to Tayag.
6. Hence, BCI filed an appeal with the SC.
Issue: ​W/N BCI should be ordered to issue new stock
certificates.
Held:​ Yes!
1. It is a "general rule universally recognized" that
administration, whether principal or ancillary, certainly
"extends to the assets of a decedent found within the state
or country where it was granted," the corollary being "that
an administrator appointed in one state or country has no
power over property in another state or country.
2. It is often necessary to have more than one administration
of an estate. When a person dies intestate owning property
in the country of his domicile as well as in a foreign country,
administration is had in both countries. The reason for the
latter is because a grant of administration does not ​ex
proprio vigore ​have any effect beyond the limits of the
country in which it is granted.
3. It would follow then that the authority of the probate
court to require that ancillary administrator's right to "the
stock certificates covering the 33,002 BCI shares be
respected is beyond question. Since BCI is a Philippine
corporation owing full allegiance and subject to the
unrestricted jurisdiction of local courts, its shares of stock
cannot be considered immune from lawful court orders.
4. In this case, the actual situs of the shares of stock is in the
Philippines, the corporation being domiciled here. Since
there is a refusal, persistently adhered to by the domiciliary
administrator in New York, to deliver the shares of stocks of
BCI owned by the Perkins to Tayag 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.
5. Further, to concur with BCI’s opposition is to render the
court order against CTC-NY a mere scrap of paper. It will
leave Tayag without any remedy simply because CTC-NY, a
foreign entity refuses to comply with a valid court order.
110. Ramirez vs. Vda. De Ramirez 111 SCRA 704 (1982)
TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA
PALACIOS, Administratrix, ​petitioner-appellee,
vs.
MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and
ROBERTO RAMIREZ, ​legatees, oppositors- appellants.
G.R. No. L-27952 | February 15, 1982 | Abad Santos, J.
FACTS:
· ​The main issue in this appeal is the manner of partitioning the
testate estate of Jose Eugenio Ramirez among the principal
beneficiaries, ​namely: his widow Marcelle Demoron de
Ramirez; his two grandnephews Roberto and Jorge Ramirez;
and his companion Wanda de Wrobleski.
· ​JoseEugenio Ramirez, a Filipino national, died in Spain on
December 11, 1964, with only his widow as compulsory heir.
His will was admitted to probate by the Court of First Instance
of Manila, on July 27, 1965. Maria Luisa Palacios was ​appointed
administratrix of the estate​. The widow Marcelle is a ​French
who lives in Paris​, while the companion Wanda is an ​Austrian
who lives in Spain​. Moreover, the ​testator provided for
substitutions. ​On June 23, 1966, the administratrix submitted a
project of partition as follows: the property of the deceased is
to be divided into two parts. ​One part shall go to the widow ​in
satisfaction of her legitime​; the other part or "free portion"
shall go to ​Jorge and Roberto Ramirez. Furthermore, one third
(1/3) of the free portion is charged with the ​widow's usufruct
and ​the remaining two-thirds (2/3) with a usufruct in favor of
Wanda.
· ​Jorge and Roberto opposed the project of partition on the
grounds:
(a) that the provisions for vulgar substitution in favor of Wanda
de Wrobleski with respect to the widow's usufruct and in favor
of Juan Pablo Jankowski and Horacio V. Ramirez, with respect
to Wanda's usufruct are invalid because the first heirs Marcelle
and Wanda) survived the testator;
(b) that the provisions for fideicommissary substitutions are
also invalid because the first heirs are not related to the second
heirs or substitutes within the first degree, as provided in
Article 863 of the Civil Code;
(c) that the grant of a usufruct over real property in the
Philippines in favor of Wanda Wrobleski, who is an alien,
violates Section 5, Article III of the Philippine Constitution; and
that
(d) the proposed partition of the testator's interest in the Santa
Cruz (Escolta) Building between the widow Marcelle and the
appellants, violates the testator's express win to give this
property to them.
· ​ onetheless, the lower court approved the project of partition
N possession of the property and renamed the resort as Music
in its order dated May 3, 1967.
ISSUE:
WON the usufruct over real properties of the estate in favor of
Wanda is void because it violates the constitutional prohibition
against the acquisition of lands by aliens.
HELD: NO.
The 1935 Constitution which is controlling provides as follows: SEC.
5. Save in cases of hereditary succession, ​no private agricultural land
shall be transferred or assigned except to individuals, corporations,
or associations qualified to acquire or hold lands of the public
domain in the Philippines​. (Art. XIII.)
The court a quo upheld the ​validity of the usufruct given to Wanda
on the ground that the Constitution covers not only succession by
operation of law but also testamentary succession​. We are of the
opinion that the Constitutional provision which ​enables aliens to
acquire private lands does not extend to testamentary succession
for otherwise the pro​hibition will be for naught and meaningless​.
Any alien would be able to circumvent the prohibition by paying
money to a Philippine landowner in exchange for a devise of a piece
of land.
This opinion notwithstanding, we uphold the usufruct in favor of
Wanda because a usufruct, albeit a real right, does not vest title to
the land in the usufructuary and it is the vesting of title to land in
favor of aliens ​which is proscribed by the Constitution.
In view of the foregoing, the estate of Jose Eugenio Ramirez was
ordered distributed as follows:
One-half (1/2) thereof to ​his widow as her legitime​;
One-half (1/2) thereof which is the free portion to ​Roberto and Jorge
Ramirez in naked ownership and the ​usufruct to Wanda de
Wrobleski with a simple substitution in favor of Juan Pablo
Jankowski and Horace V. Ramirez​.
111. Matthews vs. Taylor GR No. 164584, June 22, 2009
FACTS:
respondent Benjamin A. Taylor (Benjamin), a British subject,
married Joselyn C. Taylor (Joselyn), a 17-year-old Filipina.
While their marriage was subsisting, Joselyn bought from
Diosa M. Martin a 1,294 square-meter lot (Boracay property
for and in consideration of P129,000.00.
The sale was allegedly financed by Benjamin. Joselyn and
Benjamin, also using the latter's funds, constructed
improvements thereon and eventually converted the property
to a vacation and tourist resort known as the Admiral Ben
Bow Inn. All required permits and licenses for the operation
of the resort were obtained in the name of Ginna Celestino,
Joselyn's sister.
However, Benjamin and Joselyn had a falling out, and
Joselyn ran away with Kim Philippsen.
Joselyn executed a Special Power of Attorney (SPA) in favor
of Benjamin, authorizing the latter to maintain, sell, lease,
and sub-lease and otherwise enter into contract with third
parties with respect to their Boracay property.
Joselyn as lessor and petitioner Philip Matthews as lessee,
entered into an Agreement of Lease involving the Boracay
property for a period of 25 years, with an annual rental of
P12,000.00. The agreement was signed by the parties and
executed before a Notary Public. Petitioner thereafter took
Garden Resort.
Claiming that the Agreement was null and void since it was
entered into by Joselyn without his (Benjamin's) consent,
Benjamin instituted an action for Declaration of Nullity of
Agreement of Lease with Damages against Joselyn and the
petitioner. Benjamin claimed that his funds were used in the
acquisition and improvement of the Boracay property, and
coupled with the fact that he was Joselyn's husband, any
transaction involving said property required his consent.
RTC rendered judgment declaring the Agreement null and
void.
The decision was, however, set aside by the CA in CA-G.R.
SP No. 34054. The CA also ordered the RTC to allow the
petitioner to file his Answer, and to conduct further
proceedings.
In his Answer, petitioner claimed good faith in transacting
with Joselyn. Since Joselyn appeared to be the owner of the
Boracay property, he found it unnecessary to obtain the
consent of Benjamin. Moreover, as appearing in the
Agreement, Benjamin signed as a witness to the contract,
indicating his knowledge of the transaction and, impliedly,
his conformity to the agreement entered into by his wife.
Benjamin was, therefore, estopped from questioning the
validity of the Agreement.
RTC: against the defendants
CA: affirmed
ISSUE:
WON the Agreement of Lease of a parcel of land entered
into by a Filipino wife without the consent of her British
husband is valid. (YES)
HELD​:
It is undisputed that Joselyn acquired the Boracay property.
Said acquisition was evidenced by a Deed of Sale with
Joselyn as the vendee. The property was also declared for
taxation purposes under her name. When Joselyn leased the
property to petitioner, Benjamin sought the nullification of the
contract on two grounds: first, that he was the actual owner
of the property since he provided the funds used in
purchasing the same; and second,​that Joselyn could not
enter into a valid contract involving the subject property
without his consent.​|||
Section 7. Save in cases of hereditary
succession, no private lands shall be
transferred or conveyed except to
individuals, corporations, or associations
qualified to acquire or hold lands of the
public domain.
Aliens, whether individuals or corporations, have been
disqualified from acquiring lands of the public domain. Hence,
by virtue of the aforecited constitutional provision, they are also
disqualified from acquiring private lands. The primary purpose
of this constitutional provision is the conservation of the
national patrimony. Our fundamental law cannot be any
clearer. The right to acquire lands of the public domain is
reserved only to Filipino citizens or corporations at least sixty
percent of the capital of which is owned by Filipinos.
The rule is clear and inflexible: aliens are absolutely not
allowed to acquire public or private lands in the Philippines,
save only in constitutionally recognized exceptions. There is
no rule more settled than this constitutional prohibition, as
more and more aliens attempt to circumvent the provision by
trying to own lands through another. In a long line of cases,
we have settled issues that directly or indirectly involve the
above constitutional provision. We had cases where aliens
wanted that a particular property be declared as part of their
father's estate; that they be reimbursed the funds used in
purchasing a property titled in the name of another; that an
implied trust be declared in their (aliens') favor; and that a
contract of sale be nullified for their lack of consent.
In light of the foregoing jurisprudence, Benjamin has no right
to nullify the Agreement of Lease between Joselyn and
petitioner. Benjamin, being an alien, is absolutely prohibited
from acquiring private and public lands in the Philippines.
Considering that Joselyn appeared to be the designated
"vendee" in the Deed of Sale of said property, she acquired
sole ownership thereto.
This is true even if we sustain Benjamin's claim that he
provided the funds for such acquisition. By entering into such
contract knowing that it was illegal, no implied trust was
created in his favor; no reimbursement for his expenses can
be allowed; and no declaration can be made that the subject
property was part of the conjugal/community property of the
spouses.
In any event, he had and has no capacity or personality to
question the subsequent lease of the Boracay property by
his wife on the theory that in so doing, he was merely
exercising the prerogative of a husband in respect of
conjugal property. To sustain such a theory would
countenance indirect controversion of the constitutional
prohibition. If the property were to be declared conjugal, this
would accord the alien husband a substantial interest and
right over the land, as he would then have a decisive vote as
to its transfer or disposition. This is a right that the
Constitution​ does not permit him to have. ​|||
|||
112 – Thomas Cheesman vs. IAC and Estelita Padilla
G.R. No. 74833 | 1991-01-21 | Narvasa, J.
FACTS:
· Thomas Cheesman and Criselda P. Cheesman were
married in 1970, but separated in 1981.
· In 1974, a "Deed of Sale and Transfer of
Possessory Rights" was executed by Armando
Altares conveying a parcel of land and the house
thereon in favor of ​Criselda P. Cheesman, of legal
age, Filipino citizen, married to Thomas
Cheesman​,.Thomas although aware of the deed, did
not object to the transfer being made only to his wife.
· Again with the knowledge of Thomas and without
any protest, tax declarations for the property
purchased were issued in the name only of Criselda.
· Criselda assumed exclusive management and
administration of said property, leasing it to tenants.
· In 1981, Criselda sold the property to Estelita
Padilla, without the knowledge or consent of Thomas
Cheesman. The deed described Criselda as being
"of legal age, married to an American citizen”
· Thomas filed a case in CFI Olongapo against
Criselda and Estelita praying for the annulment of
the sale on the ground that the transaction had been
executed without his knowledge and consent.
· An answer was filed in the names of both
defendants, Criselda alleged that:
1. The property was paraphernal since she
purchased it with her “own separate
money
2. Thomas, an American, is disqualified to
own a land
3. Estelita was a buyer in good faith
· In the pre-trial conference, they agreed that the sale
took place during the existence of their marriage.
· CFI ruled that the sale was void ab initio, and
ordered Estelita to deliver the property to Thomas as
administrator of the conjugal partnership property.
· However, judgment was set aside because Estelita
was not given a right to represent herself. In her
supplemental pleading, Estelita averred that in the
Deed of Sale, it was in favor of Criselda, and there
was no mention of Thomas.
· CFI ruled that the evidence on record satisfactorily
overcame the disputable presumption in Article 160
of the Civil Code that all property of the marriage
belongs to the conjugal partnership "unless it be
proved that it pertains exclusively to the husband or
to the wife" and that the immovable in question was
in truth Criselda's paraphernal property, and the
exercise by Criselda of exclusive acts of dominion
with the knowledge of her husband had led Estelita
to believe that the properties were the exclusive
properties of Criselda and she is a buyer in good
faith.
· Thomas appealed to the IAC, but the IAC affirmed
the ruling.
ISSUE: ​Whether or not the sale to Estelita Padilla is void
ab initio.
HELD:
As to the consent
As already observed, the finding that his wife had used
her own money to purchase the property cannot, and will
not, at this stage of the proceedings be reviewed and
overturned. But even if it were a fact that said wife had
used conjugal funds to make the acquisition, the
considerations just set out militate, on high constitutional
grounds, against his recovering and holding the property
so acquired, or any part thereof. And whether in such an
event, he may recover from his wife any share of the
money used for the purchase or charge her with
unauthorized disposition or expenditure of conjugal
funds is not now inquired into; that would be, in the
premises, a purely academic exercise. An equally
decisive consideration is that Estelita Padilla is a
purchaser in good faith, both the Trial Court and the
Appellate Court having found that Cheesman's own
conduct had led her to believe the property to be
exclusive property of the latter's wife, freely disposable
by her without his consent or intervention. An innocent
buyer for value, she is entitled to the protection of the
law in her purchase, particularly as against Cheesman,
who would assert rights to the property denied him by
both letter and spirit of the Constitution itself.
As to alien prohibition to own property
Finally, the fundamental law prohibits the sale to aliens
of residential land. Section 14, Article XIV of the 1973
Constitution ordains that, "Save in cases of hereditary
succession, no private land shall be transferred or
conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the
public domain." 30 Petitioner Thomas Cheesman was, of
course, charged with knowledge of this prohibition. Thus,
assuming that it was his intention that the lot in question
be purchased by him and his wife, he acquired no right
whatever over the property by virtue of that purchase;
and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the
Constitution; the sale as to him was null and void.
In any event, he had and has no capacity or personality
to question the subsequent sale of the same property by
his wife on the theory that in so doing he is merely
exercising the prerogative of a husband in respect of
conjugal property. To sustain such a theory would permit
indirect controversion of the constitutional prohibition. If
the property were to be declared conjugal, this would
accord to the alien husband a not insubstantial interest
and right over land, as he would then have a decisive
vote as to its transfer or disposition. This is a right that
the Constitution does not permit him to have.
WHEREFORE, the appealed decision is AFFIRMED,
with costs against petitioner.
113. Gregorio Llantino vs. Co Liong Chong aka Juan Molina (188
SCRA 592) 1990
FACTS:
● Llanito leased his property in Catanduanes to Chong, a
Chinese National for a period of 13 years.
● When the lease contract was about to expire, Llanito
informed Chong and from there the latter allege that his
lease was for a period of 60 years, he had constructed
property thereon, and he is now a Filipino citizen.
● Said statement of Chong was a surprise to Llanito who did
not remember agreeing to a lease period of 60 years, and
even so, at the time of their contract Chong was still
Chinese national who could not have validly possessed real
property in the Philippines.
● Despite Llanito’s demand, Chong continued possessing the
land.
● Llanito decided to file complaint with CFI for Quieting Title
● CFI ruled in favor of Chong, finding the lease contract valid
for 60 years although the possessor of the land was then a
Chinese National.
ISSUE: Whether a Chinese National (alien) may possess real property
in the Philippines through Lease
HELD: YES
● The constitutional prohibition against possession of lands
by aliens is the acquisition and thereby becoming owners
thereof. But it does not prohibit an alien to possess a real
property in the Philippines in temporary capacity.
Accordingly, if aliens temporarily reside here, they need a
place to stay in.
 ● In this case the possession of an alien was through a lease
contract and nothing therein indicates a permission or
option allowing the alien to buy the land.
● There is also nothing in the lease contract which divests
Llanito of his ownership over the land.
● In the same vein, the period of 60 years is valid. So is an
option giving the alien the right to buy the land provided
he acquires Filipino citizenship.
● Therefore, the contract here is valid and possession of an
alien in temporary capacity is valid.
Other chuchu:
● Assuming arguendo that the contract is prohibited, it could
no longer be questioned since it was rendered moot by
naturalization of Chong.
● Contract here is clear and not contrary to law, morals,
good customs, public policy or public order. Therefore, n
need to interpret but apply only.
● A contract with an alien could be considered invalid under
the following circumstances (which are not present here):
○ Prohibiting the owner to dispose of the land for
50 years while simultaneously giving the alien an
option to buy
○ Other circumstances to circumvent Constitution
RTC Decision affirmed.
G. Corporations
147. Cargill Inc. vs. Intra Strata Assurance Coporation GR No.
168266, March 15, 2010
Cargill, Inc. vs. Intra Strata Assurance Corporation
G.R. No. 168266, March 15, 2010
DOCTRINE
Where a foreign corporation does business in the Philippines
without the proper license, it cannot maintain any action or
proceeding before Philippine courts as provided under Section 133
of the Corporation Code.
FACTS
Petitioner and Northern Mindanao Corporation (NMC) executed a
contract whereby NMC agreed to sell to petitioner Cargill (a
Delaware USA corporation) 10,500 metric tons of molasses, to be
delivered at the price of $55 per metric ton. Petitioner would open a
Letter of Credit from which NMC is permitted to draw up to
$500,000.
An amendment to the contract provides that NMC is required to put
up a performance bond equivalent to $451,500, intended to
guarantee performance. Thus, respondent Intra Strata issued a
performance bond. In sum of P9M.
NMC only delivered 219.551 metric tons out of the agreed 10,500
metric tons. Demands remained unheeded. Hence, this complaint
for sum of money against NMC and respondent.
Trial court ordered respondent to solidarily pay petitioner.
CA reversed. It held that:
· ​Petitionerdoes not have the capacity to file this suit since it is a
foreign corporation doing business in the Philippines without
the requisite license.
· ​Petitioner’s purchases of molasses were in pursuance of its basic
business and not just mere isolated and incidental transactions.
ISSUE
1.​ W
​ hether petitioner is doing business in the Philippines
2.​ W
​ hether petitioner has capacity to sue
HELD
1.​ N
​ o.
2.​ Y​ es.
Rule on capacity to sue
Under Article 123 of the Corporation Code, a foreign corporation
must first obtain a license and a certificate from the appropriate
government agency before it can transact business in the
Philippines. Where a foreign corporation does business in the
Philippines without the proper license, it cannot maintain any action
or proceeding before Philippine courts as provided under Section
133 of the Corporation Code. But may be sued for any valid cause.
Doing business
Doing business means act or acts that imply a continuity of
commercial dealings or arrangements, and contemplate to that
extent the performance of acts or works, or the exercise of some of
the functions normally incident to, and in progressive prosecution
of, commercial gain or of the purpose and object of the business
organization (RA 5455).
Important element: continuity of commercial activities.
Case at bar
There is no showing that the transactions between petitioner and
NMC signify the intent of petitioner to establish a continuous
business or extend its operations in the Philippines.
In this case, the contract between petitioner and NMC involved the
purchase of molasses by petitioner from NMC. It was NMC, the
domestic corporation, which derived income from the transaction
and not petitioner. To constitute “doing business,” the activity
undertaken in the Philippines should involve profit-making. Besides,
under Section 3(d) of RA 7042, “soliciting purchases” has been
deleted from the enumeration of acts or activities which constitute
“doing business.”
Other factors:
(1)​ P
​ etitioner does not have an office in the Philippines;
(2) ​Petitioner imports products from the Philippines through its
non-exclusive local broker, whose authority to act on behalf of
 petitioner is limited to soliciting purchases of products from
suppliers engaged in the sugar trade in the Philippines; and
(3) ​The local broker is an independent contractor and not an agent
of petitioner
A foreign company that merely imports goods from a Philippine
exporter, without opening an office or appointing an agent in the
Philippines, is not doing business in the Philippines.
To be doing or transacting business in the Philippines for purposes of
Section 133 of the Corporation Code, the foreign corporation must
actually transact business in the Philippines​, that is, perform specific
business transactions within the Philippine territory on a continuing
basis in its own name and for its own account. Actual transaction of
business within the Philippine territory is an essential requisite for
the Philippines to acquire jurisdiction over a foreign corporation and
thus require the foreign corporation to secure a Philippine business
license.
Granted.
148. Steelcase vs. Design international Selections Inc. GR No
171995
FACTS
Steelcase, Inc. (Steelcase) granted Design International Selections,
Inc. (DISI) the right to market, sell, distribute, install, and service its
products to end-user customers within the Philippines.Steelcase
argues that Section 3(d) of R.A. No. 7042 or the Foreign Investments
Act of 1991 (FIA) expressly states that the phrase doing business
excludes the appointment by a foreign corporation of a local
distributor domiciled in the Philippines which transacts business in
its own name and for its own account. On the other hand, DISI
argues that it was appointed by Steelcase as the latter’s exclusive
distributor of Steelcase products. The dealership agreement
between Steelcase and DISI had been described by the owner
himself as basically a buy and sell arrangement.
ISSUE
Whether Steelcase had been doing business in the Philippines.
RULING
NO.
The appointment of a distributor in the Philippines is not sufficient
to constitute doing business unless it is under the full control of the
foreign corporation. On the other hand, if the distributor is an
independent entity which buys and distributes products, other than
those of the foreign corporation, for its own name and its own
account, the latter cannot be considered to be doing business in the
Philippines. Here, DISI was an independent contractor which sold
Steelcase products in its own name and for its own account. As a
result, Steelcase cannot be considered to be doing business in the
Philippines by its act of appointing a distributor as it falls under one
of the exceptions under R.A. No. 7042.
149. State Investment House Inc. vs Citibank
Facts:
T​he Foreign Banks involved in the case are Bank of America,
Citibank and Hongkong and Shanghai Banking Corporation, all of
whom are creditors of Consolidated Mines, Inc. (CMI).
On December 11, 1981, the three banks jointly filed with the RTC of
Rizal a petition for Involuntary Insolvency of CMI. Among the
grounds alleged by the foreign banks is CMI’s commission of specific
acts of insolvency, i.e that CMI suffered its property to remain under
attachment for three days for the purpose of hindering or delaying
or defrauding its creditors and that CMI has defaulted in the
payment of its current obligations for a period of thirty days
The petition for involuntary insolvency was opposed by herein
petitioner State Investment House, Inc. (SIHI) ​and State Financing
Center Inc. (SFCI). SIHI and SFCI claimed, among others, that the
court had no jurisdiction to take cognizance of the petition for
insolvency because the foreign banks are not resident creditors of
CMI as required under the Insolvency Law.
The RTC rendered judgment in favour of SIHI and SFCI for lack of
jurisdiction over the subject matter. The court ruled that the
insolvency court could not acquire jurisdiction to adjudicate the
debtor (CMI) as insolvent because the foreign banks are not
“resident of the Philippines”.
On petition for review, the CA rendered order reversing the
judgment of the RTC. The CA ruled that the three banks are
residents of the Philippines for the purpose of doing business in the
Philippines, and that the Insolvency Law was designed for the
benefit of both the creditors and debtors. The CA also reiterated
that the authority granted to the three banks by the SEC covers not
only transacting banking business, but also maintaining suits for the
recovery of any debt and claims.
Hence, SIHI and SFCI brought their appeal before the SC
Issue:
Whether or not foreign banks licensed to do business in the
Philippines, may be considered “residents of the Philippine
Islands” as contemplated in Sec 20 of Insolvency Law
Ruling:
The SC ruled that since the Insolvency Law did not mention of the
meaning of “residents of the Philippine Islands”, the better approach
would be to harmonize the provisions of the Corporation Code, the
General Banking Act, the offshore banking Law and the NIRC
Hence, the Court ruled that it is not really the grant of a license to a
foreign corporation to do business in the Philippines that makes it a
resident. The license merely gives legitimacy to its doing business in
the country. ​What effectively makes suh foreign corporation a
resident corporation in the Philippines is its actually being in the
Philippines and licitly doing business here, or the “locality of
existence”, which is the necessary element.
Suability of Foreign Corporations
No foreign corporation transacting business in the Philippines
without a license, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or administrative agency
in the Philippines.
Methods of Corporation Dissolution:
1.) Voluntary Dissolution - by filing proper papers with SEC
2.) Involuntary dissolution - upon verified complaint filed with
SEC on grounds authorized by law, i.e serious dissension /
non-user of franchise etc
3.) Expiration of the term of the corporation
4.) Shortening of corporate term
5.) Failure to organize and commence business within two
years from date of issuance of certificate of incorporation
or
6.) Legislative dissolution
Grounds for Involuntary Dissolution
1.) Fraud or misrepresentation as to the paid-up capital of the
corporation
2.) Misinterpretation
3.) Ultra Vires - mala prohibita but too numerous
infrastractions, which is persistent despite SEC warnings
4.) Continuous inactivity of the corporation for at least 5 years
5.) Refusal to adopt or approve by-laws
150. Rogers vs. Guaranty Trust Co.
288 U.S. 123, 124 | January 23, 1933 | Tagacay
FACTS:
● Richard Rogers owns 200 shares of the common stock of the
American Tobacco Company which he acquired prior to the
passage of New Jersey Laws. He also owns 400 shares of
common stock B.
○ American Tobacco was organized under the laws of New
Jersey, and maintains its 'principal and registered office'
as designated in its charter, holds the stockholders'
meetings, and does a substantial amount of business in
New Jersey.
○ It is authorized by the laws of New York to do business
there and has in New York City its principal place of
business where its directors usually meet, its executives
have their offices and most of its records are kept.
● He brought two suits in the Supreme Court of New York:
○ One against American Tobacco Company
○ One against a trust company, Junius Parker and others.
● The cases were consolidated. Roger’s complaint concerns the
issue of allotment, and sale of stock of the tobacco company.
○ BOD adopted a resolution recommending the reduction
by ½ of the par value and the doubling of the number of
shares of its common stock and common stock B.
○ By another resolution, the board advised approval by the
stockholders of a plan for the issue and sale of common
stock B to employees pursuant New Jersey Laws.
○ It accords employees and others actively engaged in the
conduct of the business as may be selected ​an
opportunity to purchase stock 'by way of additional
compensation for services to be rendered,' and allots
for subscription shares of unissued stock​.
○ The stockholders adopted the plan, and the board
authorized a sale of 56,712 shares of common stock B at
par value of $25/share.
○ There was accorded to 535 employees, including
directors and others active in the business, the right to
subscribe for the new stock on that basis. All the shares
allotted were sold to the trust company. The trust
company allowed each allottee to subscribe at the same
price. The agreement stated it is an additional
compensation for service to be rendered for year 1931,
and that until the end of the year no allottee could take
up his stock, they are entitled to dividends applied on the
purchase price, and that, if he should terminate his
employment before the end of the year, the trustees
were to decide whether he should have his allotment.
● Roger’s complaint attacked the transaction upon the following
grounds:
1. The directors being disqualified by reason of their interest
as allottees, the plan was not passed by a valid vote or
adopted as required by chapter 175.
2. The subsequent vote of the stockholders, required by the
statute to be predicated upon action by the board, was
likewise invalid.
3. The plan was ultra vires as the allotment 'by way of
additional compensation for services to be rendered'
violated chapter 195, p. 566, New Jersey Laws.
4. Under the Company's charter and the statutes of New
Jersey, Sec. 124, General Corporation Law, every
stockholder had the right according to the number of his
shares to have pro rata distribution of the stock in
question.
● As for American Tobacco and the trust company’s defense, they
alleged:
○ Plaintiff failed to comply with Equity Rule
○ The stockholders including plaintiff ratified the
allotments to the directors.
○ The suit is an attempt to regulate the internal affairs of a
corporation foreign to New York
○ U.S. District Court sitting therein should decline to take
jurisdiction.
○ The allotments were fair and reasonable and were made
in acc. with their by-laws and the statutes of New Jersey.
District Court: denied the complaints. It ruled that the legality of the
corporate proceedings which resulted in the issuance of this stock is
peculiarly a matter for determination by the New Jersey courts. It
may be noted that the American Tobacco Company is not a local
enterprise. While its chief office is in New York and carries on
business here, its activities are known to be world-wide. It has a
New Jersey charter, it refers to the New Jersey office as its principal
office, it holds its stockholders' meetings there. It is therefore not a
resident corporation.
Circuit Court of Appeals​: Affirmed the District Court ruling. It held
that the plan was authorized, and that the stock was lawfully issued
under New Jersey statutes. Hence, Petition.
ISSUE: ​WON the District Court erred in declining to exercise
jurisdiction. ​(NO)
HELD:
The controversy is solely between the plaintiff and other
stockholders not participating in the distribution on one side and the
purchasers of the new stock, the corporation, its directors, and
officers on the other. ​When, by acquisition of his stock, plaintiff
became a member of the corporation he, like every other
shareholder, impliedly agreed that, in respect of its internal affairs,
the company was to be governed by the laws of the state in which
it was organized. ​His rights, whatever the tribunal chosen for their
vindication, are to be determined upon the ascertainment and
proper application of New Jersey law.
It has long been settled doctrine that a court-state or federal-
sitting in one state will, as a general rule, decline to interfere with,
or control by injunction or otherwise, the management of the
injunction or otherwise, corporation organized under the laws of
another state but will leave controversies as to such matters to the
courts of the state of the domicile. Obviously no definite rule of
general application can be formulated by which it may be
determined under what circumstances a court will assume
jurisdiction of stockholders' suits relating to the conduct of internal
affairs of foreign corporations. ​But it safely may be said that
jurisdiction will be declined whenever considerations of
convenience, efficiency, and justice point to the courts of the state
of the domicile as appropriate tribunals for the determination of
the particular case.
The complaint shows that as of its date, seven directors of the
tobacco company were not residents of New York. Only six allottees
are before the court. The others, over 525, are not mentioned in the
complaint. It appears from the answer that many of them are
outside New York, and it may be inferred that a large number of
them reside in the other States and countries in which the company
does business. At the time, February 23, 1932, of the dismissal of the
bill the services of the employees, for which the allotments
constitute part compensation, had been fully performed and they
were entitled to have and presumably they, or at least some of
them, had secured the delivery of the shares so allotted to them. ​As
the tobacco company operates directly or through subsidiary
branch factories in New Jersey and carries on business there and in
other states and countries, it may not be deemed to have been
organized in that state as a mere matter of convenience for the
purpose of carrying on all its business in another state or be
deemed in New York to be a local concern.
So far as concerns the cancellation of the allotted shares and other
relief sought by plaintiff the situs of the stock is in New Jersey and
all questions relating to the validity of the plan, authorization,
issue, allotment, and sale of the same may be conveniently and
effectively determined in New Jersey courts, the authoritative and
final interpreters of the statutes of that state. ​The facts and
circumstances disclosed by the record clearly bring this case within
the general rule and abundantly justify the exercise of discretion on
the part of the District Court in dismissing the bills of complaint
without prejudice.
The case was ​REMANDED to the District Court to reinstate the
earlier judgment dismissing the bills of complaint without prejudice.
151. Hyatt Elevators vs. Goldstar Elevators GR No. 161026, October
24, 2005
HYATT ELEVATORS & ESCALATORS CORP. v. GOLDSTAR ELEVATORS
G.R. NO. 161026 | October 24, 2005 | J. Panganiban | Quintana
FACTS
· Hyatt Elevators and Escalators Co. (Hyatt) is a domestic
corporation engaged in the business of selling, installing and
maintaining/servicing elevators, escalators and parking equipment.
The address of its office as stated in its Articles of Incorporation
(AoI) was in Salcedo, Makati
· Goldstar Elevator Philippines, Inc. (Goldstar) is a domestic
corporation engaged in the similar business and had an address of
Guadalupe, Makati in its AoI.
· Hyatt filed a complaint for unfair trade practices and damages
under Articles 19, 20 and 21 of the NCC against LG Industrial System
Co. Ltd. (LGISC) and LG International Corp (LGIC).
· The basis of the complaint was LGISC had a Distributorship
Agreement with Hyatt that it will be the exclusive distributor of LG
elevators and escalators in the PH. Subsequently, there was a
proposal to have a joint venture partnership, however, the
negotiations turned sour and LGISC and LGIC terminated the
Agreement.
· Due to the termination Hyatt suffered P120M as actual
damages, representing earnings and business opportunities and
other damages.
· Hyatt filed a motion to amend its complaint alleging that it
learned that LGISC transferred all of its assets and good will, through
a joint venture with Otis Elevator Co, to LG Otis. In addition, Goldstar
was included as LG Otis was utilized the company for LG Otis’ alleged
unlawful and unjustified acts against Hyatt.
· Goldstar filed a motion to dismiss for improper venue as Hyatt
not Goldstar reside in Mandaluyong City, where the original case
was filed and for failure to state a cause of action.
RTC: Denied the MTD
CA: Reversed RTC. The venue was clearly improper because none of
the litigants resided in Mandaluyong City, where the case was filed.
Both of the corporations has the principal place of business as stated
in their Articles of Incorporation. The place was the controlling for
purpose of determining the proper venue.
ISSUE
WON the venue was improper
HELD
YES
· This case is a personal action and is governed by Sec. 2 of Rule 4
of the 1997 Revised Rules of Court, which provides that an action
may be commenced where the plaintiff resides or where the
defendant resides.
· Both parties are corporations and they go under the second type
of persons under the law which is juridical.
· Residence is the permanent home which is vital when dealing
with venue. For the purpose of a corporation, it has been
established that the residence of a corporation is the place where its
principal office is established.
· This was further defined in ​Young Auto Supply Co. v. CA​, where
in the Court ruled that a corporation in a metaphysical sense a
resident of the place where its principal office is located as stated in
the articles of incorporation.
· For the purpose of venue, the term residence is synonymous
with domicile.
· The residence or domicile of a juridical person is fixed by law
creating or recognizing it. Under Sec. 14(3) of the Corporation Code,
the place where the principal office of the corporation is to be
located is one of the required contents of the AoI, which shall be
filed with the SEC.
· In this case, there is no question on the residence of Goldstar. As
for Hyatt, the original principal place of its business was Makati. It
claimed to have closed its Makati office and relocated to
Mandaluyong City. However, its AoI still indicates Makati.
· It was Hyatt’s failure to amend its AoI to reflects its actual and
present principal office.
· Indeed, it is a legal truism that the rules on the venue of
personal actions are fixed for the convenience of the plaintiffs and
their witnesses. Equally settled, however, is the principle that
choosing the venue of an action is not left to a plaintiff’s caprice; the
matter is regulated by the Rules of Court
· Thus, the CA was correct in ruling that venue was improperly
laid.
WHEREFORE, the Petition is hereby DENIED, and the assailed
Decision and Resolution AFFIRMED.
152. Clavecill Radio System vs. Antillon GR No. L-22238, Febraruy
16, 1967
Topic: Corporations
Facts:
New Cagayan Grocery filed a complaint against the Clavecilla Radio
System alleging, in effect, that on March 12, 1963, the following
message, addressed to the former, was filed at the latter’s Bacolod
Branch Office for transmittal thru its branch office at Cagayan de Oro:
“NECAGRO CAGAYAND EORO (CLAVECILLA) REURTEL WASHED NOT
AVAILABLE REFINED TWENTY FIFTY IF AGREEABLE SHALL SHIP LATER REPLY
POHANG"
The Cagayan de Oro branch office having received the said message
omitted, in delivering the same to the New Cagayan Grocery, the word
“NOT" between the words “WASHED" and “AVAILABLE," thus
changing entirely the contents and purport of the same and causing the
said addressee to suffer damages. After service of summons, the
Clavecilla Radio System filed a motion to dismiss the complaint on the
grounds that it states no cause of action and that the venue is
improperly laid.
City Judge of CDO denied the MTD. Clavecilla filed a petition for
prohibition with preliminary Injunction with the CFI praying that the City
Judge be enjoined from further proceeding with the case because of
improper venue.
CFI – dismissed the case and held that Clavecilla may be sued either
in Manila (principal office) or in CDO (branch office).
Clavecilla appealed to the SC contending that the suit against it should
be filed in Manila where it holds its principal office.
Issue:
WON the present case against Clavecilla should be filed in Manila
where it holds its principal office.
Held:
YES
It is clear that the case from damages is based upon a written contract.
Under par. (b)(3) Sec. 1 Rule 4 of the New Rules of Court, when an
action is not upon a written contract then the case should be filed in the
municipality where the defendant or any of the defendant resides or
maybe served upon with summons.
In corpo. Law, the residence of the corporation is the place where the
principal office is established. Since Clavecilla’s principal office is in
Manila, then the suit against it may properly be file in the City of
Manila.
The residence of a corporation is the place where its principal office is
established. It can be sued in that place, not in the place where its
branch office is located. Where the action filed against a corporation in
the inferior court is based on tort, it should be filed in the place where
the corporation has its principal office, not in the place where it has its
branch office. To allow an action against a corporation to be instituted
in any place where a corporate entity has its branch offices would
create confusion and work untold inconvenience to the corporation.
As stated in Evangelista v. Santos, the laying of the venue of an action
is not left to plaintiff’s caprice because the matter is regulated by the
Rules of Court.
153. Tayag vs. Benguet Consolidated
GR No. L-23145 | November 29, 1968 | Fernando, J.
DOCTRINE: ​A corporation as known to Philippine jurisprudence is a
creature without any existence until it has received the imprimatur
of the state acting according to law. It is logically inconceivable
therefore that it will have rights and privileges of a higher priority
than that of its creator. More than that, it cannot legitimately refuse
to yield obedience to acts of its state organs, certainly not excluding
the judiciary, whenever called upon to do so.
FACTS
· Idonah Slade Perkins died in New York City, leaving two stock
certificates covering 33,002 shares of Benguet Consolidated, the
certificates being in the possession of the County Trust Company of
New York (CTC).
· Prospero Sanidad instituted ancillary administration
proceedings in CFI Manila.
o ​Lazaro Marquez was appointed ancillary administrator.
o ​He was substituted by Renato Tayag.
· CFI ordered deposit of stock certificates with Tayag or the Clerk
of Court, but CTC did not comply.
o ​Upon petition, the stock certificates were declared lost.
o ​Benguet Consolidated was ordered to issue new certificates in
lieu thereof; however, it opposed the court order.
RELEVANT ISSUE: ​WON it is proper to declare the stocks certificates
as lost despite existence of and possession by CTC?
HELD:
YES
· Since there is a refusal, persistently adhered to by CTC, to
deliver the stocks certificates owned by the decedent to Tayag as
ancillary administrator, there was nothing unreasonable or arbitrary
in considering them as lost and requiring Benguet Consolidated to
issue new certificates in lieu thereof.
· For Benguet Consolidated 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.
o ​It is unnecessary to apply the by-laws of Benguet
Consolidated. It would be a legal absurdity to impart to such by-laws
conclusiveness and finaility. Assuming that a contrariety exists
between the by-laws and the command of a court degree, the latter
is to be followed.
o ​Its obedience to a lawful court orer constitutes a valid defense,
assuming that such apprehension of a possible court action against it
could possible materialize.
DISPOSITIVE: ​WHEREFORE, the appealed order of the CFI is
affirmed.

154. Narra Nivkel Mining and Development Corporation vs.
Redmont Consolidated 155. Mines Corporation, GR No. 195580,
April 21, 2014
NARRA NICKEL MINING AND D EVELOPMENT
CORP., TESORO MINING AND DEVELOPMENT, INC., and MCARTHUR
MINING, INC., petitioners, vs. REDMONT CONSOLIDATED MINES
CORP., respondent.
FACTS:
1. Redmond Consolidated Mines, a domestic copy organised
and existing under the PH laws, took interest in mining and
exploring certain areas of the province of Palawan. It
found that the areas that it wanted to undertake were
already covered by Mineral Production Sharing Agreement
(MPSA) applications of petitioners Narra, Tesoro, and
McArthur. (NTM)
2. McArthur acquired MPSA from Sara Marie Mining; Narra
acquired its MPSA from Aplah Resources and Patricia
Louise Mining & Development Corporation; Tesoro
acquired its MPSA also from Sara Marie.
3. Redmond apposed the applications of McArthur, Narra
and Tesoro before the Panel of Arbitrators (POA) of the
DENR. It alleged that:
1. 60% of the capital stock of McArturs, Tesoro and
Narra are owned and controlled by MBMI
Resources, a 100% Canadian Corporation.
2. Because it is a 60% foreign owned corporation, it
cannot engage in mining activities through
MPSAs, because MPSAs are only reserved for
Filipino Citizens.
4. NTM avers that they are qualified persons because their
nationality as applicants is immaterial due to the fact that
they also applied for Financial or Technical Assistance
Agreements (FTAA) which deems foreign-owned
corporations qualified persons for purpose of granting an
exploration permit, financial or technical assistance
agreement or mineral processing permit.
5. NTM adds that 60% of their capital is owned by citizens of
the PH (MBMI owns 40% of PLMC which owns 5997 shares
of Narra; MBMI owns 40% shares of MMC which owns
5997 shares of McArthur; and MBMI owns 40% shares of
SLMC which also owns 5997 shares of Tesoro). And that
the best tool used in determining the nationality of a
corporation is the CONTROL TEST under Sec 3 of RA 7042
or the Foreign Investments Acts of 1991.
6. POA decided in favour of Redmonts and disqualified NTM
from gaining MPSAs because it considered NTM as foreign
corps being “effectively controlled” by MBMI. It also gave
due course to Redmont’s EPA.
7. NTM appealed asserting that they are qualified persons
under the law and that their MPSAs applications were
converted to FTAAs
8. Redmont filed a complaint with SEC seeking to revoke the
certificate of registration of NYM because they are
foreign-owned or controlled corps engaged in mining,
violating PH laws. Redmond also filed a motion to suspend
the FTAA application of NTM.
9. Redmond also filed before the RTC of QC a complaint for
injunction with application for issuance of a TRO praying
for the deferral of the MAB proceedings pending the
resolution of the Complaint before the SEC.
10. The Mines Adjudication Board decided in favor of NTM.
RTC granted Redmont’s application for a TRO and setting
the case for hearing.
11. Redmont filed an MR based on the order of MAB. MAB
denied Redmont’s appeal.
12. Redmont appealed before the CA. CA granted the appeal
and denied the MR for the reason that the nationality of
the NTM were foreign corporations and not PH
corporations. Using the grandfather rule, the CA
discovered that MBMI in effect owned majority of the
common stocks of the petitioners as well as at least 60%
equity interest of other majority shareholders of
petitioners through joint venture agreements. It founds
that through a "web of corporate layering, it is clear that
one common controlling investor in all mining
corporations involved . . . is MBMI." In addition, it found
that the conversion of the MPSA application to FTAA as
suspicious.
13. Office of the President cancelled NTM;s FTAAs for violating
and circumventing the Constitution, the small scale mining
law and environmental compliance certificate.
14. NTM posits that the control test should be used rather
than the grandfather rule because the grandfather rule is
not provided in FIA and has already been abandoned. FIA
also admits the application of a corporate layering scheme
of corporations
I.The Court of Appeals erred when it did not dismiss the case for
mootness despite the fact that the subject matter of the
controversy, the MPSA Applications, have already been converted
into FTAA applications and that the same have already been
granted.
Held: We find the petition to be without merit.This case not moot
and academic. We of this Court note that a grave violation of the
Constitution, specifically Section 2 of Article XII, is being committed
by a foreign corporation right under our country’s nose through a
myriad of corporate layering under different, allegedly, Filipino
corporations. The intricate corporate layering utilized by the
Canadian company, MBMI, is of exceptional character and involves
paramount public interest since it undeniably affects the
exploitation of our Country’s natural resources. The corresponding
actions of petitioners during the lifetime and existence of the instant
case raise questions as what principle is to be applied to cases with
similar issues. No definite ruling on such principle has been
pronounced by the Court; hence, the disposition of the issues or
errors in the instant case will serve as a guide "to the bench, the bar
and the public."35 Finally, the instant case is capable of repetition
yet evading review, since the Canadian company, MBMI, can keep
on utilizing dummy Filipino corporations through various schemes of
corporate layering and conversion of applications to skirt the
constitutional prohibition against foreign mining in Philippine soil.
the Grandfather Rule or the second part of the SEC Rule applies only
when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in
cases where the joint venture corporation with Filipino and foreign
stockholders with less than 60% Filipino stockholdings [or 59%]
invests in other joint venture corporation which is either 60-40%
Filipino-alien or the 59% less Filipino). Stated differently, where the
60-40 Filipino- foreign equity ownership is not in doubt, the
Grandfather Rule will not apply. (emphasis supplied)
the Court finds that this case calls for the application of the
grandfather rule since, as ruled by the POA and affirmed by the OP,
doubt prevails and persists in the corporate ownership of
petitioners. Also, as found by the CA, doubt is present in the 60-40
Filipino equity ownership of petitioners Narra, McArthur and Tesoro,
since their common investor, the 100% Canadian
corporation––MBMI, funded them. However, petitioners also claim
that there is "doubt" only when the stockholdings of Filipinos are
less than 60%.43
The assertion of petitioners that "doubt" only exists when the
stockholdings are less than 60% fails to convince this Court. DOJ
Opinion No. 20, which petitioners quoted in their petition, only
made an example of an instance where "doubt" as to the ownership
of the corporation exists. It would be ludicrous to limit the
application of the said word only to the instances where the
stockholdings of non-Filipino stockholders are more than 40% of the
total stockholdings in a corporation. The corporations interested in
circumventing our laws would clearly strive to have "60% Filipino
Ownership" at face value. It would be senseless for these applying
corporations to state in their respective articles of incorporation
that they have less than 60% Filipino stockholders since the
applications will be denied instantly. Thus, various corporate
schemes and layerings are utilized to circumvent the application of
the Constitution.
Obviously, the instant case presents a situation which exhibits a
scheme employed by stockholders to circumvent the law, creating a
cloud of doubt in the Court’s mind. To determine, therefore, the
actual participation, direct or indirect, of MBMI, the grandfather rule
must be used.
IV.The Court of Appeals’ ruling that Narra, Tesoro and McArthur are
foreign corporations based on the "Grandfather Rule" is contrary to
law, particularly the express mandate of the Foreign Investments Act
of 1991, as amended, and the FIA Rules.
We disagree. "Corporate layering" is admittedly allowed by the FIA;
but if it is used to circumvent the Constitution and pertinent laws,
then it becomes illegal. Further, the pronouncement of petitioners
that the grandfather rule has already been abandoned must be
discredited for lack of basis.
Art. XII, Sec. 2 of the Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State
may directly undertake such activities, or it may enter into
co-production, joint venture or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements
may be for a period not exceeding twenty-five years, renewable for
not more than twenty-five years, and under such terms and
conditions as may be provided by law.
The President may enter into agreements with Foreign-owned
corporations involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms
and conditions provided by law, based on real contributions to the
economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of
local scientific and technical resources. (emphasis supplied)
The emphasized portion of Sec. 2 which focuses on the State
entering into different types of agreements for the exploration,
development, and utilization of natural resources with entities who
are deemed Filipino due to 60 percent ownership of capital is
pertinent to this case, since the issues are centered on the utilization
of our country’s natural resources or specifically, mining. Thus, there
is a need to ascertain the nationality of petitioners since, as the
Constitution so provides, such agreements are only allowed
corporations or associations "at least 60 percent of such capital is
owned by such citizens."
Under the above-quoted SEC Rules, there are two cases in
determining the nationality of the Investee Corporation. The first
case is the ‘liberal rule’, later coined by the SEC as the Control Test in
its 30 May 1990 Opinion, and pertains to the portion in said
Paragraph 7 of the 1967 SEC Rules which states, ‘(s)hares belonging
to corporations or partnerships at least 60% of the capital of which is
owned by Filipino citizens shall be considered as of Philippine
nationality.’ Under the liberal Control Test, there is no need to
further trace the ownership of the 60% (or more) Filipino
stockholdings of the Investing Corporation since a corporation which
is at least 60% Filipino-owned is considered as Filipino.
The second case is the Strict Rule or the Grandfather Rule Proper
and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules
which states, "but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of
shares corresponding to such percentage shall be counted as of
Philippine nationality." Under the Strict Rule or Grandfather Rule
Proper, the combined totals in the Investing Corporation and the
Investee Corporation must be traced (i.e., "grandfathered") to
determine the total percentage of Filipino ownership.
Moreover, the ultimate Filipino ownership of the shares must first
be traced to the level of the Investing Corporation and added to the
shares directly owned in the Investee Corporation x x x.
Concluding from the above-stated facts, it is quite safe to say that
petitioners McArthur, Tesoro and Narra are not Filipino since MBMI,
a 100% Canadian corporation, owns 60% or more of their equity
interests. Such conclusion is derived from grandfathering
petitioners’ corporate owners, namely: MMI, SMMI and PLMDC.
Going further and adding to the picture, MBMI’s Summary of
Significant Accounting Policies statement– –regarding the "joint
venture" agreements that it entered into with the "Olympic" and
"Alpha" groups––involves SMMI, Tesoro, PLMDC and Narra.
Noticeably, the ownership of the "layered" corporations boils down
to MBMI, Olympic or corporations under the "Alpha" group wherein
MBMI has joint venture agreements with, practically exercising
majority control over the corporations mentioned. In effect,
whether looking at the capital structure or the underlying
relationships between and among the corporations, petitioners are
NOT Filipino nationals and must be considered foreign since 60% or
more of their capital stocks or equity interests are owned by MBMI.
VI.The Court of Appeals erred when it concluded that the conversion
of the MPSA Applications into FTAA Applications were of "suspicious
nature" as the same is based on mere conjectures and surmises
without any shred of evidence to show the same.
We disagree.
x x x The filing of the FTAA application on June 15, 2007, during the
pendency of the case only demonstrate the violations and lack of
qualification of the respondent corporations to engage in mining.
The filing of the FTAA application conversion which is allowed
foreign corporation of the earlier MPSA is an admission that indeed
the respondent is not Filipino but rather of foreign nationality who is
disqualified under the laws. Corporate documents of MBMI
Resources, Inc. furnished its stockholders in their head office in
Canada suggest that they are conducting operation only through
their local counterparts.36
Respondent Redmont, in its Comment dated October 10, 2011,
made known to the Court the fact of the OP’s Decision and
Resolution. In their Reply, petitioners chose to ignore the OP
Decision and continued to reuse their old arguments claiming that
they were granted FTAAs and, thus, the case was moot. Petitioners
filed a Manifestation and Submission dated October 19, 2012,40
wherein they asserted that the present petition is moot since, in a
remarkable turn of events, MBMI was able to sell/assign all its
shares/interest in the "holding companies" to DMCI Mining
Corporation (DMCI), a Filipino corporation and, in effect, making
their respective corporations fully-Filipino owned.

The only thing clear and proved in this Court is the fact that the OP
declared that petitioner corporations have violated several mining
laws and made misrepresentations and falsehood in their
applications for FTAA which lead to the revocation of the said FTAAs,
demonstrating that petitioners are not beyond going against or
around the law using shifty actions and strategies. Thus, in this
instance, we can say that their claim of mootness is moot in itself
because their defense of conversion of MPSAs to FTAAs has been
discredited by the OP Decision.

Selling of MBMI’s shares to DMCI -As stated before, petitioners’

Manifestation and Submission dated October 19, 2012 would want
us to declare the instant petition moot and academic due to the
transfer and conveyance of all the shareholdings and interests of
MBMI to DMCI, a corporation duly organized and existing under
Philippine laws and is at least 60% Philippine-owned.56 Petitioners
reasoned that they now cannot be considered as foreign-owned; the
transfer of their shares supposedly cured the "defect" of their
previous nationality. They claimed that their current FTAA contract
with the State should stand since "even wholly-owned foreign
corporations can enter into an FTAA with the State."57 Petitioners
stress that there should no longer be any issue left as regards their
qualification to enter into FTAA contracts since they are qualified to
engage in mining activities in the Philippines. Thus, whether the
"grandfather rule" or the "control test" is used, the nationalities of
petitioners cannot be doubted since it would pass both tests.The
sale of the MBMI shareholdings to DMCI does not have any bearing
in the instant case and said fact should be disregarded. The
manifestation can no longer be considered by us since it is being
tackled in G.R. No. 202877 pending before this Court.1âwphi1 Thus,
the question of whether petitioners, allegedly a Philippine-owned
corporation due to the sale of MBMI's shareholdings to DMCI, are
allowed to enter into FTAAs with the State is a non-issue in this
case.In ending, the "control test" is still the prevailing mode of
determining whether or not a corporation is a Filipino corporation,
within the ambit of Sec. 2, Art. II of the 1987 Constitution, entitled to
undertake the exploration, development and utilization of the
natural resources of the Philippines. When in the mind of the Court
there is doubt, based on the attendant facts and circumstances of
the case, in the 60-40 Filipino-equity ownership in the corporation,
then it may apply the "grandfather rule."WHEREFORE, premises
considered, the instant petition is DENIED. The assailed Court of
Appeals Decision dated October 1, 2010 and Resolution dated
February 15, 2011 are hereby AFFIRMED.

156. Gamboa vs. Teves GR No. 176579, June 28, 2011