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MHC AND MHICL VS.

NLRC
MARCH 28, 2013 ~ LEAVE A COMMENT

MHC AND MHICL vs. NLRC et al


G.R. No. 120077
October 13, 2000
FACTS: private respondent Santos was an overseas worker employed as a printer at
the Mazoon Printing Press, Sultanate of Oman. Subsequently he was directly hired by
the Palace Hotel, Beijing, People’s Republic of China and later terminated due to
retrenchment.
Petitioners are the Manila Hotel Corporation (“MHC”) and the Manila Hotel
International Company, Limited (“MHICL”).

When the case was filed in 1990, MHC was still a government-owned and controlled
corporation duly organized and existing under the laws of the Philippines. MHICL is a
corporation duly organized and existing under the laws of Hong Kong. MHC is an
“incorporator” of MHICL, owning 50% of its capital stock.

By virtue of a “management agreement” with the Palace Hotel, MHICL trained the
personnel and staff of the Palace Hotel at Beijing, China.

Now the facts.

During his employment with the Mazoon Printing Press, respondent Santos received a
letter from Mr. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt
informed respondent Santos that he was recommended by one Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher
monthly salary and increased benefits. Respondent Santos wrote to Mr. Shmidt and
signified his acceptance of the offer.
The Palace Hotel Manager, Mr. Henk mailed a ready to sign employment contract to
respondent Santos. Santos resigned from the Mazoon Printing Press. Santos wrote the
Palace Hotel and acknowledged Mr. Henk’s letter. The employment contract stated
that his employment would be for a period of two years. He then started to work at the
Palace Hotel.

Subsequently, respondent Santos signed an amended “employment agreement” with


the Palace Hotel. In the contract, Mr. Shmidt represented the Palace Hotel. The Vice
President (Operations and Development) of petitioner MHICL Cergueda signed the
employment agreement under the word “noted”.

After working in the Palace hotel for less than 1 year, the Palace Hotel informed
respondent Santos by letter signed by Mr. Shmidt that his employment at the Palace
Hotel print shop would be terminated due to business reverses brought about by the
political upheaval in China. The Palace Hotel terminated the employment of Santos
and paid all benefits due him, including his plane fare back to the Philippines. Santos
was repatriated to the Philippines.

Santos filed a complaint for illegal dismissal with the Arbitration Branch, NCR,
NLRC. He prayed for an award of AD, ED and AF for. The complaint named MHC,
MHICL, the Palace Hotel and Mr. Shmidt as respondents. The Palace Hotel and Mr.
Shmidt were not served with summons and neither participated in the proceedings
before the LA.

The LA decided the case against petitioners. Petitioners appealed to the NLRC,
arguing that the POEA, not the NLRC had jurisdiction over the case. The NLRC
promulgated a resolution, stating that the appealed Decision be declared null and void
for want of jurisdiction

Santos moved for reconsideration of the afore-quoted resolution. He argued that the
case was not cognizable by the POEA as he was not an “overseas contract worker.
The NLRC granted the motion and reversed itself. The NLRC directed another LA to
hear the case on the question of whether private respondent was retrenched or
dismissed. The La found that Santos was illegally dismissed from employment and
recommended that he be paid actual damages equivalent to his salaries for the
unexpired portion of his contract. The NLRC ruled in favor of private respondent.
Petitioners filed an MR arguing that the LA’s recommendation had no basis in law
and in fact, however it was denied. Hence, this petition.

ISSUE: Is the NLRC a proper forum to decide this case?


HELD: petition granted; the orders and resolutions of the NLRC are annulled.

NO
Forum Non-Conveniens

The NLRC was a seriously inconvenient forum.

We note that the main aspects of the case transpired in two foreign jurisdictions and
the case involves purely foreign elements. The only link that the Philippines has with
the case is that Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be tried here.

The employment contract. — Respondent Santos was hired directly by the Palace
Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman,
where respondent Santos was then employed. He was hired without the intervention
of the POEA or any authorized recruitment agency of the government.

Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court
is one to which the parties may conveniently resort to; (2) that the Philippine court is
in a position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine court has or is likely to have power to enforce its decision. The conditions
are unavailing in the case at bar.

Not Convenient. — We fail to see how the NLRC is a convenient forum given that all
the incidents of the case — from the time of recruitment, to employment to dismissal
occurred outside the Philippines. The inconvenience is compounded by the fact that
the proper defendants, the Palace Hotel and MHICL are not nationals of the
Philippines. Neither .are they “doing business in the Philippines.” Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines.

No power to determine applicable law. — Neither can an intelligent decision be made


as to the law governing the employment contract as such was perfected in foreign soil.
This calls to fore the application of the principle of lex loci contractus (the law of the
place where the contract was made).

The employment contract was not perfected in the Philippines. Santos signified his
acceptance by writing a letter while he was in the Republic of Oman. This letter was
sent to the Palace Hotel in the People’s Republic of China.

No power to determine the facts. — Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in
Beijing, People’s Republic of China. The NLRC was not in a position to determine
whether the Tiannamen Square incident truly adversely affected operations of the
Palace Hotel as to justify Santos’ retrenchment.

Principle of effectiveness, no power to execute decision. — Even assuming that a


proper decision could be reached by the NLRC, such would not have any binding
effect against the employer, the Palace Hotel. The Palace Hotel is a corporation
incorporated under the laws of China and was not even served with summons.
Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers. Neither are we saying that we do not have
power over an employment contract executed in a foreign country. If Santos were an
“overseas contract worker”, a Philippine forum, specifically the POEA, not the
NLRC, would protect him. He is not an “overseas contract worker” a fact which he
admits with conviction.

__
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC’s
decision cannot be sustained.

II. MHC Not Liable

Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and
(2) that MHICL was liable for Santos’ retrenchment, still MHC, as a separate and
distinct juridical entity cannot be held liable.

True, MHC is an incorporator of MHICL and owns 50% of its capital stock. However,
this is not enough to pierce the veil of corporate fiction between MHICL and MHC. In
Traders Royal Bank v. CA, we held that “the mere ownership by a single stockholder
or by another corporation of all or nearly all of the capital stock of a corporation is not
of itself a sufficient reason for disregarding the fiction of separate corporate
personalities.”

It is basic that a corporation has a personality separate and distinct from those
composing it as well as from that of any other legal entity to which it may be related.
Clear and convincing evidence is needed to pierce the veil of corporate fiction. In this
case, we find no evidence to show that MHICL and MHC are one and the same entity.

III. MHICL not Liable


Santos predicates MHICL’s liability on the fact that MHICL “signed” his employment
contract with the Palace Hotel. This fact fails to persuade us.

First, we note that the Vice President (Operations and Development) of MHICL,
Cergueda signed the employment contract as a mere witness. He merely signed under
the word “noted”.

When one “notes” a contract, one is not expressing his agreement or approval, as a
party would. In Sichangco v. Board of Commissioners of Immigration, the Court
recognized that the term “noted” means that the person so noting has merely taken
cognizance of the existence of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter.
Second, and more importantly, there was no existing employer-employee relationship
between Santos and MHICL. In determining the existence of an employer-employee
relationship, the following elements are considered:

“(1) the selection and engagement of the employee;


“(2) the payment of wages;
“(3) the power to dismiss; and
“(4) the power to control employee’s conduct.”

MHICL did not have and did not exercise any of the aforementioned powers. It did
not select respondent Santos as an employee for the Palace Hotel. He was referred to
the Palace Hotel by his friend, Buenio. MHICL did not engage respondent Santos to
work. The terms of employment were negotiated and finalized through
correspondence between Santos, Mr. Schmidt and Mr. Henk, who were officers and
representatives of the Palace Hotel and not MHICL. Neither did Santos adduce any
proof that MHICL had the power to control his conduct. Finally, it was the Palace
Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos’
services.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and
the same entity. The fact that the Palace Hotel is a member of the “Manila Hotel
Group” is not enough to pierce the corporate veil between MHICL and the Palace
Hotel.

Considering that the NLRC was forum non-conveniens and considering further that
no employer-employee relationship existed between MHICL, MHC and Santos, the
LA clearly had no jurisdiction over respondent’s claim in the NLRC case. In all the
cases under the exclusive and original jurisdiction of the LA, an employer-employee
relationship is an indispensable jurisdictional requirement.

COMMUNICATION MATERIALS VS. CA


MARCH 28, 2013 ~ LEAVE A COMMENT

COMMUNICATION MATERIALS AND DESIGN, INC et al vs.CA et al.


G.R. No. 102223
August 22, 1996
FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN, INC.,
(CMDI) and ASPAC MULTI-TRADE INC., (ASPAC) are both domestic
corporations.. Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL,
INC. (ITEC) are corporations duly organized and existing under the laws of the State
of Alabama, USA. There is no dispute that ITEC is a foreign corporation not licensed
to do business in the Philippines.
ITEC entered into a contract with ASPAC referred to as “Representative Agreement”.
Pursuant to the contract, ITEC engaged ASPAC as its “exclusive representative” in
the Philippines for the sale of ITEC’s products, in consideration of which, ASPAC
was paid a stipulated commission. Through a “License Agreement” entered into by
the same parties later on, ASPAC was able to incorporate and use the name “ITEC” in
its own name. Thus , ASPAC Multi-Trade, Inc. became legally and publicly known as
ASPAC-ITEC (Philippines).
One year into the second term of the parties’ Representative Agreement, ITEC
decided to terminate the same, because petitioner ASPAC allegedly violated its
contractual commitment as stipulated in their agreements. ITEC charges the
petitioners and another Philippine Corporation, DIGITAL BASE
COMMUNICATIONS, INC. (DIGITAL), the President of which is likewise
petitioner Aguirre, of using knowledge and information of ITEC’s products
specifications to develop their own line of equipment and product support, which are
similar, if not identical to ITEC’s own, and offering them to ITEC’s former customer.

The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a
MTD the complaint on the following grounds: (1) That plaintiff has no legal capacity
to sue as it is a foreign corporation doing business in the Philippines without the
required BOI authority and SEC license, and (2) that plaintiff is simply engaged in
forum shopping which justifies the application against it of the principle of “forum
non conveniens”. The MTD was denied.

Petitioners elevated the case to the respondent CA on a Petition for Certiorari and
Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied,
hence this Petition for Review on Certiorari under Rule 45.

ISSUE:
1. Did the Philippine court acquire jurisdiction over the person of the petitioner corp,
despite allegations of lack of capacity to sue because of non-registration?
2. Can the Philippine court give due course to the suit or dismiss it, on the principle of
forum non convenience?
HELD: petition dismissed.
1. YES; We are persuaded to conclude that ITEC had been “engaged in” or “doing
business” in the Philippines for some time now. This is the inevitable result after a
scrutiny of the different contracts and agreements entered into by ITEC with its
various business contacts in the country. Its arrangements, with these entities indicate
convincingly that ITEC is actively engaging in business in the country.
A foreign corporation doing business in the Philippines may sue in Philippine Courts
although not authorized to do business here against a Philippine citizen or entity who
had contracted with and benefited by said corporation. To put it in another way, a
party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. And the doctrine of
estoppel to deny corporate existence applies to a foreign as well as to domestic
corporations. One who has dealt with a corporation of foreign origin as a corporate
entity is estopped to deny its corporate existence and capacity.

In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over this
commonly used scheme of defaulting local companies which are being sued by
unlicensed foreign companies not engaged in business in the Philippines to invoke the
lack of capacity to sue of such foreign companies. Obviously, the same ploy is
resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin
petitioner from using knowledge possibly acquired in violation of fiduciary
arrangements between the parties.

2. YES; Petitioner’s insistence on the dismissal of this action due to the application, or
non application, of the private international law rule of forum non conveniens defies
well-settled rules of fair play. According to petitioner, the Philippine Court has no
venue to apply its discretion whether to give cognizance or not to the present action,
because it has not acquired jurisdiction over the person of the plaintiff in the case, the
latter allegedly having no personality to sue before Philippine Courts. This argument
is misplaced because the court has already acquired jurisdiction over the plaintiff in
the suit, by virtue of his filing the original complaint. And as we have already
observed, petitioner is not at liberty to question plaintiff’s standing to sue, having
already acceded to the same by virtue of its entry into the Representative Agreement
referred to earlier.

Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the
facts of the case, whether to give due course to the suit or dismiss it, on the principle
of forum non convenience. Hence, the Philippine Court may refuse to assume
jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may
assume jurisdiction over the case if it chooses to do so; provided, that the following
requisites are met:

1) That the Philippine Court is one to which the parties may conveniently resort to;
2) That the Philippine Court is in a position to make an intelligent decision as to the
law and the facts; and,
3) That the Philippine Court has or is likely to have power to enforce its decision.
The aforesaid requirements having been met, and in view of the court’s disposition to
give due course to the questioned action, the matter of the present forum not being the
“most convenient” as a ground for the suit’s dismissal, deserves scant consideration.

PHILSEC VS. CA
MARCH 28, 2013 ~ LEAVE A COMMENT

PHILSEC INVESTMENT et al vs.CA et al


G.R. No. 103493
June 19, 1997
FACTS: Private respondent Ducat obtained separate loans from petitioners Ayala
International Finance Limited (AYALA) and Philsec Investment Corp (PHILSEC),
secured by shares of stock owned by Ducat.
In order to facilitate the payment of the loans, private respondent 1488, Inc., through
its president, private respondent Daic, assumed Ducat’s obligation under an
Agreement, whereby 1488, Inc. executed a Warranty Deed with Vendor’s Lien by
which it sold to petitioner Athona Holdings, N.V. (ATHONA) a parcel of land in
Texas, U.S.A., while PHILSEC and AYALA extended a loan to ATHONA as initial
payment of the purchase price. The balance was to be paid by means of a promissory
note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of
the money from 1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock in their possession
belonging to Ducat.

As ATHONA failed to pay the interest on the balance, the entire amount covered by
the note became due and demandable. Accordingly, private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment
of the balance and for damages for breach of contract and for fraud allegedly
perpetrated by petitioners in misrepresenting the marketability of the shares of stock
delivered to 1488, Inc. under the Agreement.

While the Civil Case was pending in the United States, petitioners filed a complaint
“For Sum of Money with Damages and Writ of Preliminary Attachment” against
private respondents in the RTC Makati. The complaint reiterated the allegation of
petitioners in their respective counterclaims in the Civil Action in the United States
District Court of Southern Texas that private respondents committed fraud by selling
the property at a price 400 percent more than its true value.

Ducat moved to dismiss the Civil Case in the RTC-Makati on the grounds of (1) litis
pendentia, vis-a-vis the Civil Action in the U.S., (2) forum non conveniens, and (3)
failure of petitioners PHILSEC and BPI-IFL to state a cause of action.

The trial court granted Ducat’s MTD, stating that “the evidentiary requirements of the
controversy may be more suitably tried before the forum of the litis pendentia in the
U.S., under the principle in private international law of forum non conveniens,” even
as it noted that Ducat was not a party in the U.S. case.

Petitioners appealed to the CA, arguing that the trial court erred in applying the
principle of litis pendentia and forum non conveniens.

The CA affirmed the dismissal of Civil Case against Ducat, 1488, Inc., and Daic on
the ground of litis pendentia.
ISSUE: is the Civil Case in the RTC-Makati barred by the judgment of the U.S.
court?
HELD: CA reversed. Case remanded to RTC-Makati
NO
While this Court has given the effect of res judicata to foreign judgments in several
cases, it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law. This is because in this
jurisdiction, with respect to actions in personam, as distinguished from actions in rem,
a foreign judgment merely constitutes prima facie evidence of the justness of the
claim of a party and, as such, is subject to proof to the contrary. Rule 39, §50
provides:

Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a


foreign country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the
title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a
right as between the parties and their successors in interest by a subsequent title; but
the judgment may be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.

In the case at bar, it cannot be said that petitioners were given the opportunity to
challenge the judgment of the U.S. court as basis for declaring it res judicata or
conclusive of the rights of private respondents. The proceedings in the trial court were
summary. Neither the trial court nor the appellate court was even furnished copies of
the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure
a proper determination of whether the issues then being litigated in the U.S. court
were exactly the issues raised in this case such that the judgment that might be
rendered would constitute res judicata.
Second. Nor is the trial court’s refusal to take cognizance of the case justifiable under
the principle of forum non conveniens:

First, a MTD is limited to the grounds under Rule 16, sec.1, which does not include
forum non conveniens. The propriety of dismissing a case based on this principle
requires a factual determination, hence, it is more properly considered a matter of
defense.
Second, while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after “vital facts are established, to
determine whether special circumstances” require the court’s desistance.

HSBC VS. SHERMAN


MARCH 28, 2013 ~ LEAVE A COMMENT

HONGKONG AND SHANGHAI BANKING CORPORATION (HSBC) vs.


SHERMAN et al
G.R. No. 72494
August 11, 1989
FACTS: It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd.
(COMPANY), a company incorporated in Singapore applied with and was granted by
HSBC Singapore branch an overdraft facility in the maximum amount of Singapore
dollars 200,000 with interest at 3% over HSBC prime rate, payable monthly, on
amounts due under said overdraft facility.
As a security for the repayment by the COMPANY of sums advanced by HSBC to it
through the aforesaid overdraft facility, in 1982, both private respondents and a
certain Lowe, all of whom were directors of the COMPANY at such time, executed a
Joint and Several Guarantee in favor of HSBC whereby private respondents and Lowe
agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to
petitioner BANK under the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws of
the Republic of Singapore. We hereby agree that the Courts of Singapore shall have
jurisdiction over all disputes arising under this guarantee. …

The COMPANY failed to pay its obligation. Thus, HSBC demanded payment and
inasmuch as the private respondents still failed to pay, HSBC filed A complaint for
collection of a sum of money against private respondents Sherman and Reloj before
RTC of Quezon City.
Private respondents filed an MTD on the ground of lack of jurisdiction over the
subject matter. The trial court denied the motion. They then filed before the
respondent IAC a petition for prohibition with preliminary injunction and/or prayer
for a restraining order. The IAC rendered a decision enjoining the RTC Quezon City
from taking further cognizance of the case and to dismiss the same for filing with the
proper court of Singapore which is the proper forum. MR denied, hence this petition.

ISSUE: Do Philippine courts have jurisdiction over the suit, vis-a-vis the Guarantee
stipulation regarding jurisdiction?
HELD: YES
One basic principle underlies all rules of jurisdiction in International Law: a State
does not have jurisdiction in the absence of some reasonable basis for exercising it,
whether the proceedings are in rem quasi in rem or in personam. To be reasonable, the
jurisdiction must be based on some minimum contacts that will not offend traditional
notions of fair play and substantial justice
The defense of private respondents that the complaint should have been filed in
Singapore is based merely on technicality. They did not even claim, much less prove,
that the filing of the action here will cause them any unnecessary trouble, damage, or
expense. On the other hand, there is no showing that petitioner BANK filed the action
here just to harass private respondents.
**

In the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., where the stipulation
was “[i]n case of litigation, jurisdiction shall be vested in the Court of Davao City.”
We held:

Anent the claim that Davao City had been stipulated as the venue, suffice it to say that
a stipulation as to venue does not preclude the filing of suits in the residence of
plaintiff or defendant under Section 2 (b), Rule 4, ROC, in the absence of qualifying
or restrictive words in the agreement which would indicate that the place named is the
only venue agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that
only the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither
did the clause in question operate to divest Philippine courts of jurisdiction. In
International Law, jurisdiction is often defined as the light of a State to exercise
authority over persons and things within its boundaries subject to certain exceptions.
Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors
and diplomatic representatives of other States, and foreign military units stationed in
or marching through State territory with the permission of the latter’s authorities. This
authority, which finds its source in the concept of sovereignty, is exclusive within and
throughout the domain of the State. A State is competent to take hold of any judicial
matter it sees fit by making its courts and agencies assume jurisdiction over all kinds
of cases brought before them

NOTES:
The respondent IAC likewise ruled that:
… In a conflict problem, a court will simply refuse to entertain the case if it is not
authorized by law to exercise jurisdiction. And even if it is so authorized, it may still
refuse to entertain the case by applying the principle of forum non conveniens. …
However, whether a suit should be entertained or dismissed on the basis of the
principle of forum non conveniens depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court. Thus, the IAC should
not have relied on such principle.

AZNAR VS GARCIA
MARCH 28, 2013 ~ LEAVE A COMMENT

AZNAR vs. GARCIA


G.R. No. L-16749
January 31, 1963
FACTS: EDWARD Christensen died testate. The estate was distributed by
Executioner Aznar according to the will, which provides that: Php 3,600 be given to
HELEN Christensen as her legacy, and the rest of his estate to his daughter LUCY
Christensen, as pronounced by CFI Davao.
Opposition to the approval of the project of partition was filed by Helen, insofar as it
deprives her of her legitime as an acknowledged natural child, she having been
declared by Us an acknowledged natural child of the deceased Edward in an earlier
case.

As to his citizenship, we find that the citizenship that he acquired in California when
he resided in Sacramento from 1904 to 1913, was never lost by his stay in the
Philippines, and the deceased appears to have considered himself as a citizen of
California by the fact that when he executed his will he declared that he was a citizen
of that State; so that he appears never to have intended to abandon his California
citizenship by acquiring another. But at the time of his death, he was domiciled in the
Philippines.

ISSUE: what law on succession should apply, the Philippine law or the California
law?
HELD: WHEREFORE, the decision appealed from is hereby reversed and the case
returned to the lower court with instructions that the partition be made as the
Philippine law on succession provides.
The law that governs the validity of his testamentary dispositions is defined in Article
16 of the Civil Code of the Philippines, which is as follows:

ART. 16. Real property as well as personal property is subject to the law of the
country where it is situated.

However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and
regardless of the country where said property may be found.

The application of this article in the case at bar requires the determination of the
meaning of the term “national law” is used therein.

The next question is: What is the law in California governing the disposition of
personal property?
The decision of CFI Davao, sustains the contention of the executor-appellee that
under the California Probate Code, a testator may dispose of his property by will in
the form and manner he desires. But HELEN invokes the provisions of Article 946 of
the Civil Code of California, which is as follows:

If there is no law to the contrary, in the place where personal property is situated, it is
deemed to follow the person of its owner, and is governed by the law of his domicile.

It is argued on executor’s behalf that as the deceased Christensen was a citizen of the
State of California, the internal law thereof, which is that given in the Kaufman case,
should govern the determination of the validity of the testamentary provisions of
Christensen’s will, such law being in force in the State of California of which
Christensen was a citizen. Appellant, on the other hand, insists that Article 946 should
be applicable, and in accordance therewith and following the doctrine of the renvoi,
the question of the validity of the testamentary provision in question should be
referred back to the law of the decedent’s domicile, which is the Philippines.

We note that Article 946 of the California Civil Code is its conflict of laws rule, while
the rule applied in In re Kaufman, its internal law. If the law on succ ession and the
conflict of laws rules of California are to be enforced jointly, each in its own intended
and appropriate sphere, the principle cited In re Kaufman should apply to citizens
living in the State, but Article 946 should apply to such of its citizens as are not
domiciled in California but in other jurisdictions. The rule laid down of resorting to
the law of the domicile in the determination of matters with foreign element involved
is in accord with the general principle of American law that the domiciliary law
should govern in most matters or rights which follow the person of the owner.

Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out
as the national law is the internal law of California. But as above explained the laws
of California have prescribed two sets of laws for its citizens, one for residents therein
and another for those domiciled in other jurisdictions.

It is argued on appellees’ (Aznar and LUCY) behalf that the clause “if there is no law
to the contrary in the place where the property is situated” in Sec. 946 of the
California Civil Code refers to Article 16 of the Civil Code of the Philippines and that
the law to the contrary in the Philippines is the provision in said Article 16 that the
national law of the deceased should govern. This contention can not be sustained.

As explained in the various authorities cited above, the national law mentioned in
Article 16 of our Civil Code is the law on conflict of laws in the California Civil
Code, i.e., Article 946, which authorizes the reference or return of the question to the
law of the testator’s domicile. The conflict of laws rule in California, Article 946,
Civil Code, precisely refers back the case, when a decedent is not domiciled in
California, to the law of his domicile, the Philippines in the case at bar. The court of
the domicile can not and should not refer the case back to California; such action
would leave the issue incapable of determination because the case will then be like a
football, tossed back and forth between the two states, between the country of which
the decedent was a citizen and the country of his domicile. The Philippine court must
apply its own law as directed in the conflict of laws rule of the state of the decedent, if
the question has to be decided, especially as the application of the internal law of
California provides no legitime for children while the Philippine law, Arts. 887(4) and
894, Civil Code of the Philippines, makes natural children legally acknowledged
forced heirs of the parent recognizing them.

We therefore find that as the domicile of the deceased Edward, a citizen of California,
is the Philippines, the validity of the provisions of his will depriving his
acknowledged natural child, the appellant HELEN, should be governed by the
Philippine Law, the domicile, pursuant to Art. 946 of the Civil Code of California, not
by the internal law of California..

NOTES: There is no single American law governing the validity of testamentary


provisions in the United States, each state of the Union having its own private law
applicable to its citizens only and in force only within the state. The “national law”
indicated in Article 16 of the Civil Code above quoted can not, therefore, possibly
mean or apply to any general American law. So it can refer to no other than the
private law of the State of California.
INGENOHL VS OLSEN
MARCH 28, 2013 ~ LEAVE A COMMENT
INGENOHL vs. OLSEN AND COMPANY, INC
G.R. No. L-22288
January 12, 1925
FACTS: In 1919, the acting Alien Property Custodian of the United States, by virtue
of the Trading with the Enemy Act as amended, required and caused to be conveyed
to him the property and business then belonging to the company known as Syndicat
Oriente, formed under the laws of Belgium, of which the plaintiff was the “gestor,”
and an enemy as defined in said Act. The primary purpose of the proceeding was to
seize, sell and convey any and all of the property owned and held by the company
within the jurisdiction of the United States, as a war measure, upon the ground that
they were alien enemies of the United States.
During the public sale, defendant corporation was the highest bidder. The said Alien
Property Custodian of the United States having thereafter accepted said bid and
received from the defendant corporation in cash the amount of said bid, did execute in
favor of the defendant corporation a deed of conveyance. The defendant paid in good
faith, and took over the property and assets of the company, including its trade-marks
and trade names and its business as a going concern

After obtaining the proceeds from the sale, the plaintiff in violation of the
conveyance, wrongfully instituted an action in the Supreme Court of Hongkong
against the defendant in which the plaintiff claimed to be the sole owner of the trade-
marks for the exports of the business. The Supreme Court of Hongkong ruled in favor
of the plaintiff, allegedly through misrepresentation, ordering defendant to pay the
former for costs and AF. The Court ruled that the deed of conveyance limited the sale
of the business to the trademarks within the Philippines, implying that the plaintiff is
still entitled to the sell the cigars under the same trademarks through exporting, which
accounts to 95% of the total sales of the company. (This means that the plaintiff paid
the cash equivalent of the whole of the business but only entitled to 5% of the such,
the sales within the Philippines)- UNFAIR TALAGA!
The CFI rendered judgment for the plaintiff for the full amount of his claim, with
interest, from which the defendant appeals. Defendant company alleges that when he
purchased the property and business, all trademarks are included; that the subject of
the sale is not only those trademarks for sales within the Philippines.

ISSUE: Should the judgment rendered by the Hongkong court be enforced by


Philippine courts?
HELD: NO; we do not hesitate to say that the judgment rendered in the Hongkong
court was a clear mistake of both law and fact, and that it ought not to be enforced in
the Philippine Islands.
The business of the plaintiff is almost exclusively an export business, and that the
transfer of the goodwill thereof necessarily carried with it the transfer of said export
business and of the trade-marks and trade names which could not be disconnected
therefrom
—- It is conceded that the Hongkong court had jurisdiction and that the defendant
appeared in the action and contested the case on its merits. Hence, there was no
collusion. Neither is it claimed that there was any fraud, but it is vigorously contended
that the Hongkong judgment was a clear mistake of both law and fact. Exclusive of
the provisions of section 311 of the Code of Civil Procedure, it is very doubtful
whether it could be sustained upon the ground of comity or the Law of Nations. As
between allied nations and under the law of comity, their mutual policy should be to
sustain and enforce the spirit and intention with which the seizure and sale of any
property of an alien enemy was made rather than to minimize, destroy or defeat them.

We are construing a deed of conveyance from the United States to the defendant. The
primary purpose of the whole proceeding was to seize and convey all of the property
of the plaintiff or his company within the jurisdiction of the United States, including
trade names and trade-marks as those of an alien enemy. To now give the defendant
the use and benefit of only 5 per cent of such trade names and trade-marks, and to
permit the plaintiff to have and retain the other 95 per cent to his own use and benefit
after he has ratified and confirmed the sale, would impugn the honor and good name
of the United States in the whole proceeding and defeat the very purpose for which it
seized and sold the property of an alien enemy, to wipe Ingenohl and his company out
of existence and put them out of business in so far as the United States had the power
to do so

Be that as it may, this court is bound be section 311 of the Code of Civil Procedure.
That law was enacted by the Legislature of the Philippine Islands, and as to the
Philippine Islands, it is the law of the land. In the absence of that statute, no matter
how wrongful the judgment of the Hongkong court may be, there would be strong
reasons for holding that it should be enforced by this court.

PILAPIL VS IBAY-SOMERA
MARCH 28, 2013 ~ LEAVE A COMMENT

PILAPIL vs. HON IBAY-SOMERA, VICTOR AND GEILING et al


G.R. No. 80116
June 30, 1989
FACTS: Petitioner Imelda Pilapil, a Filipino citizen, and private respondent Erich
Geiling, a German national, were married in Germany. After about three and a half
years of marriage, such connubial disharmony eventuated in Geiling initiating a
divorce proceeding against Pilapil in Germany. The Local Court, Federal Republic of
Germany, promulgated a decree of divorce on the ground of failure of marriage of the
spouses.
More than five months after the issuance of the divorce decree, Geiling filed two
complaints for adultery before the City Fiscal of Manila alleging in one that, while
still married to said Geiling, Pilapil “had an affair with a certain William Chia.” The
Assistant Fiscal, after the corresponding investigation, recommended the dismissal of
the cases on the ground of insufficiency of evidence. However, upon review, the
respondent city fiscal Victor approved a resolution directing the filing of 2 complaint
for adultery against the petitioner. The case entitled “PP Philippines vs. Pilapil and
Chia” was assigned to the court presided by the respondent judge Ibay-Somera.
A motion to quash was filed in the same case which was denied by the respondent.
Pilapil filed this special civil action for certiorari and prohibition, with a prayer for a
TRO, seeking the annulment of the order of the lower court denying her motion to
quash.

As cogently argued by Pilapil, Article 344 of the RPC thus presupposes that the
marital relationship is still subsisting at the time of the institution of the criminal
action for adultery.

ISSUE: Did Geiling have legal capacity at the time of the filing of the complaint for
adultery, considering that it was done after obtaining a divorce decree?
HELD: WHEREFORE, the questioned order denying petitioner’s MTQ is SET
ASIDE and another one entered DISMISSING the complaint … for lack of
jurisdiction. The TRO issued in this case … is hereby made permanent.
NO
Under Article 344 of the RPC, the crime of adultery cannot be prosecuted except upon
a sworn written complaint filed by the offended spouse. It has long since been
established, with unwavering consistency, that compliance with this rule is a
jurisdictional, and not merely a formal, requirement.

Corollary to such exclusive grant of power to the offended spouse to institute the
action, it necessarily follows that such initiator must have the status, capacity or legal
representation to do so at the time of the filing of the criminal action. This is a logical
consequence since the raison d’etre of said provision of law would be absent where
the supposed offended party had ceased to be the spouse of the alleged offender at the
time of the filing of the criminal case.

Stated differently, the inquiry would be whether it is necessary in the commencement


of a criminal action for adultery that the marital bonds between the complainant and
the accused be unsevered and existing at the time of the institution of the action by the
former against the latter.
In the present case, the fact that private respondent obtained a valid divorce in his
country, the Federal Republic of Germany, is admitted. Said divorce and its legal
effects may be recognized in the Philippines insofar as private respondent is
concerned in view of the nationality principle in our civil law on the matter of status
of persons Under the same considerations and rationale, private respondent, being no
longer the husband of petitioner, had no legal standing to commence the adultery case
under the imposture that he was the offended spouse at the time he filed suit.

BENGSON VS. HRET AND CRUZ


MARCH 28, 2013 ~ LEAVE A COMMENT

BENGSON vs. HRET and CRUZ


G.R. No. 142840
May 7, 2001
FACTS: The citizenship of respondent Cruz is at issue in this case, in view of the
constitutional requirement that “no person shall be a Member of the House of
Representatives unless he is a natural-born citizen.”
Cruz was a natural-born citizen of the Philippines. He was born in Tarlac in 1960 of
Filipino parents. In 1985, however, Cruz enlisted in the US Marine Corps and without
the consent of the Republic of the Philippines, took an oath of allegiance to the USA.
As a Consequence, he lost his Filipino citizenship for under CA No. 63 [(An Act
Providing for the Ways in Which Philippine Citizenship May Be Lost or Reacquired
(1936)] section 1(4), a Filipino citizen may lose his citizenship by, among other,
“rendering service to or accepting commission in the armed forces of a foreign
country.”

Whatever doubt that remained regarding his loss of Philippine citizenship was erased
by his naturalization as a U.S. citizen in 1990, in connection with his service in the
U.S. Marine Corps.
In 1994, Cruz reacquired his Philippine citizenship through repatriation under RA
2630 [(An Act Providing for Reacquisition of Philippine Citizenship by Persons Who
Lost Such Citizenship by Rendering Service To, or Accepting Commission In, the
Armed Forces of the United States (1960)]. He ran for and was elected as the
Representative of the 2nd District of Pangasinan in the 1998 elections. He won over
petitioner Bengson who was then running for reelection.

Subsequently, petitioner filed a case for Quo Warranto Ad Cautelam with respondent
HRET claiming that Cruz was not qualified to become a member of the HOR since he
is not a natural-born citizen as required under Article VI, section 6 of the Constitution.
HRET rendered its decision dismissing the petition for quo warranto and declaring
Cruz the duly elected Representative in the said election.

ISSUE: WON Cruz, a natural-born Filipino who became an American citizen, can
still be considered a natural-born Filipino upon his reacquisition of Philippine
citizenship.
HELD: petition dismissed
YES
Filipino citizens who have lost their citizenship may however reacquire the same in
the manner provided by law. C.A. No. 63 enumerates the 3 modes by which
Philippine citizenship may be reacquired by a former citizen:

1. by naturalization,
2. by repatriation, and
3. by direct act of Congress.
**

Repatriation may be had under various statutes by those who lost their citizenship due
to:
1. desertion of the armed forces;
2. services in the armed forces of the allied forces in World War II;
3. service in the Armed Forces of the United States at any other time,
4. marriage of a Filipino woman to an alien; and
5. political economic necessity

Repatriation results in the recovery of the original nationality This means that a
naturalized Filipino who lost his citizenship will be restored to his prior status as a
naturalized Filipino citizen. On the other hand, if he was originally a natural-born
citizen before he lost his Philippine citizenship, he will be restored to his former status
as a natural-born Filipino.

R.A. No. 2630 provides:


Sec 1. Any person who had lost his Philippine citizenship by rendering service to, or
accepting commission in, the Armed Forces of the United States, or after separation
from the Armed Forces of the United States, acquired United States citizenship, may
reacquire Philippine citizenship by taking an oath of allegiance to the Republic of the
Philippines and registering the same with Local Civil Registry in the place where he
resides or last resided in the Philippines. The said oath of allegiance shall contain a
renunciation of any other citizenship.

Having thus taken the required oath of allegiance to the Republic and having
registered the same in the Civil Registry of Magantarem, Pangasinan in accordance
with the aforecited provision, Cruz is deemed to have recovered his original status as
a natural-born citizen, a status which he acquired at birth as the son of a Filipino
father. It bears stressing that the act of repatriation allows him to recover, or return to,
his original status before he lost his Philippine citizenship.

VAN DORN VS. ROMILLO AND UPTON


MARCH 28, 2013 ~ LEAVE A COMMENT
VAN DORN vs. HON. ROMILLO and RICHARD UPTON
G.R. No. L-68470
October 8, 1985
FACTS: Petitioner Alice Van Dorn is a citizen of the Philippines while private
respondent Richard Upton is a citizen of the USA. They were married in Hongkong in
1972 and begot two children. The parties were divorced in Nevada, USA in 1982.
Alice has then re-married also in Nevada, this time to Theodore Van Dorn.
In 1983, Richard filed suit against Alice in the RTC-Pasay, stating that Alice’s
business in Ermita, Manila is conjugal property of the parties, and asking that Alice be
ordered to render an accounting of that business, and that Richard be declared with
right to manage the conjugal property.

Alice moved to dismiss the case on the ground that the cause of action is barred by
previous judgment in the divorce proceedings before the Nevada Court wherein
respondent had acknowledged that he and petitioner had “no community property” as
of June 11, 1982.
The Court below (presiding judge: Judge Romillo) denied the MTD in the mentioned
case on the ground that the property involved is located in the Philippines so that the
Divorce Decree has no bearing in the case. The denial is now the subject of this
certiorari proceeding.

ISSUE: What is the effect of the foreign divorce on the parties and their alleged
conjugal property in the Philippines?
HELD: Petition is granted, and respondent Judge is hereby ordered to dismiss the
Complaint…
For the resolution of this case, it is not necessary to determine whether the property
relations between Alice and Richard, after their marriage, were upon absolute or
relative community property, upon complete separation of property, or upon any other
regime. The pivotal fact in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over
petitioner who appeared in person before the Court during the trial of the case. It also
obtained jurisdiction over private respondent who authorized his attorneys in the
divorce case to agree to the divorce on the ground of incompatibility in the
understanding that there were neither community property nor community obligations.

As explicitly stated in the Power of Attorney he executed in favor of the law firm of
KARP & GRAD LTD. to represent him in the divorce proceedings:

xxx xxx xxx


You are hereby authorized to accept service of Summons, to file an Answer, appear
on my behalf and do all things necessary and proper to represent me, without further
contesting, subject to the following:

1. That my spouse seeks a divorce on the ground of incompatibility.


2. That there is no community of property to be adjudicated by the Court.
3. That there are no community obligations to be adjudicated by the court.
xxx xxx xxx

There can be no question as to the validity of that Nevada divorce in any of the States
of the United States. The decree is binding on private respondent as an American
citizen. What he is contending in this case is that the divorce is not valid and binding
in this jurisdiction, the same being contrary to local law and public policy.

It is true that owing to the nationality principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered by the policy against absolute divorces
the same being considered contrary to our concept of public police and morality.
However, aliens may obtain divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their national law. In this case, the
divorce in Nevada released private respondent from the marriage from the standards
of American law, under which divorce dissolves the marriage.
Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioner’s husband
entitled to exercise control over conjugal assets. As he is bound by the Decision of his
own country’s Court, which validly exercised jurisdiction over him, and whose
decision he does not repudiate, he is estopped by his own representation before said
Court from asserting his right over the alleged conjugal property.

GOVERNMENT VS. FRANK


MARCH 28, 2013 ~ LEAVE A COMMENT

THE GOVT OF THE PHILIPPINE ISLANDS vs. FRANK


G. R. No. 2935
March 23, 1909
FACTS: In 1903, in the city of Chicago, Illinois, Frank entered into a contract for a
period of 2 years with the Plaintiff, by which Frank was to receive a salary as a
stenographer in the service of the said Plaintiff, and in addition thereto was to be paid
in advance the expenses incurred in traveling from the said city of Chicago to Manila,
and one-half salary during said period of travel.

Said contract contained a provision that in case of a violation of its terms on the part
of Frank, he should become liable to the Plaintiff for the amount expended by the
Government by way of expenses incurred in traveling from Chicago to Manila and the
one-half salary paid during such period.

Frank entered upon the performance of his contract and was paid half-salary from the
date until the date of his arrival in the Philippine Islands.

Thereafter, Frank left the service of the Plaintiff and refused to make a further
compliance with the terms of the contract.
The Plaintiff commenced an action in the CFI-Manila to recover from Frank the sum
of money, which amount the Plaintiff claimed had been paid to Frank as expenses
incurred in traveling from Chicago to Manila, and as half-salary for the period
consumed in travel.

It was expressly agreed between the parties to said contract that Laws No. 80 and No.
224 should constitute a part of said contract.

The Defendant filed a general denial and a special defense, alleging in his special
defense that
(1) the Government of the Philippine Islands had amended Laws No. 80 and No. 224
and had thereby materially altered the said contract, and also that
(2) he was a minor at the time the contract was entered into and was therefore not
responsible under the law.
the lower court rendered a judgment against Frank and in favor of the Plaintiff for the
sum of 265. 90 dollars

ISSUE:
1. Did the amendment of the laws altered the tenor of the contract entered into
between Plaintiff and Defendant?
2. Can the defendant allege minority/infancy?

HELD: the judgment of the lower court is affirmed


1. NO; It may be said that the mere fact that the legislative department of the
Government of the Philippine Islands had amended said Acts No. 80 and No. 224 by
Acts No. 643 and No. 1040 did not have the effect of changing the terms of the
contract made between the Plaintiff and the Defendant. The legislative department of
the Government is expressly prohibited by section 5 of the Act of Congress of 1902
from altering or changing the terms of a contract. The right which the Defendant had
acquired by virtue of Acts No. 80 and No. 224 had not been changed in any respect by
the fact that said laws had been amended. These acts, constituting the terms of the
contract, still constituted a part of said contract and were enforceable in favor of the
Defendant.

2. NO; The Defendant alleged in his special defense that he was a minor and therefore
the contract could not be enforced against him. The record discloses that, at the time
the contract was entered into in the State of Illinois, he was an adult under the laws of
that State and had full authority to contract. Frank claims that, by reason of the fact
that, under that laws of the Philippine Islands at the time the contract was made, made
persons in said Islands did not reach their majority until they had attained the age of
23 years, he was not liable under said contract, contending that the laws of the
Philippine Islands governed.

It is not disputed — upon the contrary the fact is admitted — that at the time and place
of the making of the contract in question the Defendant had full capacity to make the
same. No rule is better settled in law than that matters bearing upon the execution,
interpretation and validity of a contract are determined b the law of the place where
the contract is made. Matters connected with its performance are regulated by the law
prevailing at the place of performance. Matters respecting a remedy, such as the
bringing of suit, admissibility of evidence, and statutes of limitations, depend upon the
law of the place where the suit is brought.