5.

Torts and Crimes

b. Modern Theories on Foreign Tort Liability
SAUDI ARABIAN AIRLINES vs CA
1998 | Quisumbing
Petitioners: Saudi Arabian Airline
Respondents: Court of Appeals, Milagros P. Morada and Hon. Rodolfo Ortiz, in his
capacity as Presiding Judge of Branch 89 of RTC of Quezon City
SUMMARY: Respondent Morado sued petitioner for damages, when the latter
subjected her to humiliating and degrading treatment by allowing her to be prosecuted
for a case when she herself was really the victim. The Court ruled that the Philippine
has jurisdiction and its law should be applied, since it is the state with the most
significant relationship in the case at hand.
FACTS:
1. Petitioner SAUDIA (Saudi Arabian Airlines) hired respondent Morada as a flight
attendant for its airlines based in Jeddah, Saudi Arabia.
2. A fellow crew member, Al-Gazzawi attempted to rape respondent while they
were on a lay-over in Jakarta, Indonesia.
a. The Indonesian police arrested this crew member who was a Saudi
National.
3. When she returned to Jeddah, SAUDIA officers requested her to return to
Indonesia too negotiate Al-Gazzawis release. When she returned there, she did
not cooperate because she was afraid to sign a blank piece of paper and a
document written in the local dialect because she did not understand it.
4. Plaintiff learned that the crew member who attempted to rape her was relased
quickly through the intercession of Saudi authorities.
a. 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.
5. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah
once again and see Miniewy on June 27, 1993 for further investigation.
6. 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.
a. Only then did she realize that the Saudi court had tried her, together with
Thamer and Allah, for what happened in Jakarta.

b. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing
and listening to the music in violation of Islamic laws; and (3) socializing
with the male crew, in contravention of Islamic tradition.
7. Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to
Manila, she was terminated from the service by SAUDIA, without her being
informed of the cause.
8. On November 23, 1993, Morada filed a Complaint for damages against SAUDIA,
and Khaled Al-Balawi ("Al-Balawi"), its country manager.
ISSUES:
1.) Whether Philippines has jurisdiction? Yes.
2.) Whether Philippine law on torts should apply? Yes.
HELD: Petition for Certiorari is dismissed. Case is remanded back to RTC for further
proceedings.
1.) The choice of forum of the plaintiff (now private respondent) should be upheld.
Weighing the relative claims of the parties, the court a quo found it best to hear
the case in the Philippines. Had it refused to take cognizance of the case, it
would be forcing plaintiff (private respondent now) to seek remedial action
elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains
substantial connections.
Undeniably, petitioner SAUDIA has effectively submitted to the trial court's
jurisdiction by praying for the dismissal of the Amended Complaint on grounds
other than lack of jurisdiction.
o The records show that petitioner SAUDIA has filed several motions 50
praying for the dismissal of Morada's Amended Complaint.
o SAUDIA also filed an Answer In Ex Abundante Cautelam dated February
20, 1995. What is very patent and explicit from the motions filed, is that
SAUDIA prayed for other reliefs under the premises.
2.) Prescinding from this premise that the Philippines is the situs of the tort complained
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.
As to the choice of applicable law, we note that choice-of-law problems seek to
answer two important questions: (1) What legal system should control a given
situation where some of the significant facts occurred in two or more states; and
(2) to what extent should the chosen legal system regulate the situation.
Our starting point of analysis here is not a legal relation, but a factual situation,
event, or operative fact. Note that one or more circumstances may be present to
serve as the possible test for the determination of the applicable law. These "test
factors" or "points of contact" or "connecting factors" could be:
o 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;

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).
o This is because it is in the Philippines where petitioner allegedly deceived
private respondent, a Filipina residing and working here.
o For in our view what is important here is the place where the over-all harm
or the totality 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.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability have been advanced to offer
fresh judicial approaches to arrive at just results. In keeping abreast with the
modern theories on tort liability, we find here an occasion to apply the "State of
the most significant relationship" rule, which in our view should be appropriate to
apply now, given the factual context of this case.
In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated
according to their relative importance with respect to the particular issue: (a) the
place where the injury occurred; (b) the place where the conduct causing the
injury occurred; (c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any,
between the parties is centered.
As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is
a resident Filipina national, working with petitioner, a resident foreign corporation
engaged here in the business of international air carriage. Thus, the
"relationship" between the parties was centered here, although it should be
stressed that this suit is not based on mere labor law violations. From the record,
the claim that the Philippines has the most significant contact with the matter in
this dispute, raised by private respondent as plaintiff below against defendant
(herein petitioner), in our view, has been properly established.

BABCOCK vs JACKSON
12 NY2d 473 | May 9, 1963 | FULD, J. (Court of Appeals of New York)| Digester: JM
Arcilla
Appellant: Georgia W. Babcock
Respondents: Mabel B. Jackson, as Executrix of William H. Jackson, Deceased
SUMMARY:
Husband and wife Jackson from New York went on a car trip with a friend Babcock to
Ontario. While in Ontario they had a motor vehicle accident. Babcock sued Jackson, the

driver, claiming his negligence caused the car crash. This case brought up a question of
choice of law; if the law of the place of residence of the accident victims (New York) be
applied, or, should the law of the place of the tort (Ontario) be applied. Under the old
conflict rules, the law of the place of the accident should apply. However, Ontario had a
law that prohibited passengers from suing the driver.
The court rejected a traditional fixed method of determining which law should apply, and
instead, a process of weighing factors such as relationship between the party, the
decision to take the trip, and connections to the locality. Thus, the Court held that the
parties did not have substantial connection with Ontario and so it would be unfair to
apply the law as the location was largely fortuitous. The Court found that the jurisdiction
with the most connections was New York and so New York law should apply.
DOCTRINE:
In the most recent revision of the Conflict of Laws Restatement in the field of torts, "The
local law of the state which has the most significant relationship with the occurrence and
with the parties determines their rights and liabilities in tort", and the relative importance
of the relationships or contacts of the respective jurisdictions is to be evaluated in the
light of "the issues, the character of the tort and the relevant purposes of the tort rules
involved".
FACTS:
On September 16, 1960, Miss Georgia Babcock and Mr. and Mrs. William Jackson, all
residents of Rochester, left that city in Mr. Jackson's automobile for a week-end trip to
Canada. As Mr. Jackson was driving in the Province of Ontario, he lost control of the car
and Miss Babcock was seriously injured when the car hit a stone wall. She brought in
New York an action against William Jackson, alleging negligence on his part in
operating his automobile.
At the time of the accident, there was in force in Ontario a statute providing that "the
owner or driver of a motor vehicle, other than a vehicle operated in the business of
carrying passengers for compensation, is not liable for any loss or damage resulting
from bodily injury to, or the death of any person being carried in xxx the motor vehicle".
The defendant moved to dismiss the complaint on the ground that the law of the place
where the accident occurred governs and that Ontario's guest statute bars recovery.
ISSUE: Which law should govern, Ontario or New York?
HELD: New York.
RATIO:
The vested rights doctrine has long since been discredited because it fails to take
account of underlying policy considerations in evaluating the significance to be ascribed
to the circumstance that an act had a foreign situs in determining the rights and
liabilities which arise out of that act. As applied to torts, the theory ignores the interest

which jurisdictions other than that where the tort occurred may have in the resolution of
particular issues.
In Auten v. Auten, the court applied what has been termed the "center of gravity" or
"grouping of contacts" theory of the conflict of laws. "Under this theory," we declared in
the Auten case, "the courts, instead of regarding as conclusive the parties' intention or
the place of making or performance, lay emphasis rather upon the law of the place
'which has the most significant contacts with the matter in dispute'.
In Kilberg v. Northeast Airlines, this court declined to apply the law of the place of the
tort as respects the issue of the quantum of the recovery in a death action arising out of
an airplane crash, where the decedent had been a New York resident and his
relationship with the defendant airline had originated in this State.
The emphasis in Kilberg was plainly that the merely fortuitous circumstance that the
wrong and injury occurred in Massachusetts did not give that State a controlling concern
or interest in the amount of the tort recovery as against the competing interest of New
York in providing its residents or users of transportation facilities there originating with
full compensation for wrongful death. Although the Kilberg case did not expressly adopt
the "center of gravity" theory, its weighing of the contacts or interests of the respective
jurisdictions to determine their bearing on the issue of the extent of the recovery is
consistent with that approach.
Other similar cases rejected the inexorable application of the law of the place of the tort
where that place has no reasonable or relevant interest in the particular issue involved.
And in each of these cases the courts, after examining the particular circumstances
presented, applied the law of some jurisdiction other than the place of the tort because it
had a more compelling interest in the application of its law to the legal issue involved.
The "center of gravity" or "grouping of contacts" doctrine adopted by this court in
conflicts cases involving contracts impresses us as likewise affording the appropriate
approach for accommodating the competing interests in tort cases with multi-State
contacts. Justice, fairness and "the best practical result" may best be achieved by giving
controlling effect to the law of the jurisdiction which, because of its relationship or
contact with the occurrence or the parties, has the greatest concern with the specific
issue raised in the litigation. The merit of such a rule is that "it gives to the place 'having
the most interest in the problem' paramount control over the legal issues arising out of a
particular factual context" and thereby allows the forum to apply "the policy of the
jurisdiction 'most intimately concerned with the outcome of [the] particular litigation.' "
In the most recent revision of the Conflict of Laws Restatement in the field of torts, "The
local law of the state which has the most significant relationship with the occurrence and
with the parties determines their rights and liabilities in tort", and the relative importance
of the relationships or contacts of the respective jurisdictions is to be evaluated in the
light of "the issues, the character of the tort and the relevant purposes of the tort rules
involved".

Comparison of the relative "contacts" and "interests" of New York and Ontario in this
litigation, vis-a-vis the issue here presented, makes it clear that the concern of New
York is unquestionably the greater and more direct and that the interest of Ontario is at
best minimal. The present action involves injuries sustained by a New York guest as the
result of the negligence of a New York host in the operation of an automobile, garaged,
licensed and undoubtedly insured in New York, in the course of a week-end journey
which began and was to end there. In sharp contrast, Ontario's sole relationship with the
occurrence is the purely adventitious circumstance that the accident occurred there.
Ontario has no conceivable interest in denying a remedy to a New York guest against
his New York host for injuries suffered in Ontario by reason of conduct which was
tortious under Ontario law. The object of Ontario's guest statute, it has been said, is "to
prevent the fraudulent assertion of claims by passengers, in collusion with the drivers,
against insurance companies" and, quite obviously, the fraudulent claims intended to be
prevented by the statute are those asserted against Ontario defendants and their
insurance carriers, not New York defendants and their insurance carriers.
The issue here, however, is not whether the defendant offended against a rule of the
road prescribed by Ontario for motorists generally or whether he violated some standard
of conduct imposed by that jurisdiction, but rather whether the plaintiff, because she
was a guest in the defendant's automobile, is barred from recovering damages for a
wrong concededly committed. As to that issue, it is New York, the place where the
parties resided, where their guest- host relationship arose and where the trip began and
was to end, rather than Ontario, the place of the fortuitous occurrence of the accident,
which has the dominant contacts and the superior claim for application of its law.
VAN VOORHIS, J. (dissent)
Auten v. Auten dealt with contracts, the agreement was held to be governed by the law
of the country where it was mainly to be performed, which had previously been the law,
and the salient expressions "center of gravity", "grouping of contacts", and similar
catchwords were employed as a shorthand reference to the reconciliation of such rigid
concepts in the conflict of laws as the formulae making applicable the place where the
contract was signed or where it was to be performed rules which themselves were
occasionally in conflict with one another. In the course of the opinion it was stated that
"even if we were not to place our emphasis on the law of the place with the most
significant contacts, but were instead simply to apply the rule that matters of
performance and breach are governed by the law of the place of performance, the same
result would follow". The decision in Auten v. Auten rationalized and rendered more
workable the existing law of contracts. The name "grouping of contacts" was simply a
label to identify the rationalization of existing decisions on the conflict of laws in contract
cases which were technically inconsistent, in some instances. The difference between
the present case and Auten v. Auten is that Auten did not materially change the law, but
sought to formulate what had previously been decided. The present case makes
substantial changes in the law of torts. The expressions "center of gravity", "grouping of
contacts," and "significant contacts" are catchwords which were not employed to define
and are inadequate to define a principle of law, and were neither applied to nor are they
applicable in the realm of torts.

Attempts to make the law or public policy of New York State prevail over the laws and
policies of other States where citizens of New York State are concerned are simply a
form of extraterritoriality which can be turned against us wherever actions are brought in
the courts of New York which involve citizens of other States. Importing the principles of
extraterritoriality into the conflicts of laws between the States of the United States can
only make confusion worse confounded. If extraterritoriality is to be the criterion, what
would happen, for example, in case of an automobile accident where some of the
passengers came from or were picked up in States or countries where causes of action
against the driver were prohibited, others where gross negligence needed to be shown,
some, perhaps, from States where contributory negligence and others where
comparative negligence prevailed?

c. Foreign Tort Claims

ASAHI METAL INDUSTRY vs SUPERIOR COURT OF CALI
480 U.S. 102 (1987)
FACTS:
Petitioner manufactures tire valve assemblies in Japan and sells them to several tire
manufacturers, including Cheng Shin Rubber Industrial Co. (Cheng Shin). The sales to
Cheng Shin, which amounted to at least 100,000 assemblies annually from 1978 to
1982, took place in Taiwan, to which the assemblies were shipped from Japan. Cheng
Shin incorporates the assemblies into its finished tires, which it sells throughout the
world, including the United States, where 20 percent of its sales take place in California.
Affidavits indicated that petitioner was aware that tires incorporating its assemblies
would end up in California, but, on the other hand, that it never contemplated that its
sales to Cheng Shin in Taiwan would subject it to lawsuits in California. Nevertheless, in
1979, a product liability suit was brought in California Superior Court arising from a
motorcycle accident allegedly caused by defects in a tire manufactured by Cheng Shin,
which in turn filed a cross-complaint seeking indemnification from petitioner. Although
the main suit was eventually settled and dismissed, the Superior Court denied
petitioner's motion to quash the summons issued against it. The State Court of Appeal
then ordered that the summons be quashed, but the State Supreme Court reversed,
finding that petitioner's intentional act of placing its assemblies into the stream of
commerce by delivering them to Cheng Shin in Taiwan, coupled with its awareness that
some of them would eventually reach California, were sufficient to support state court
jurisdiction under the Due Process Clause.
ISSUE:
Whether the mere awareness on the part of a foreign defendant that the components it
manufactured, sold, and delivered outside the United States would reach the forum

State in the stream of commerce constitutes "minimum contacts" between the

defendant and the forum State such that the exercise of jurisdiction "does not
offend traditional notions of fair play and substantial justice.
HELD:
The state court's exercise of personal jurisdiction over petitioner would be unreasonable
and unfair, in violation of the Due Process Clause.
The lower court is reversed, case remanded.
DISCUSSION:
(a) The burden imposed on petitioner by the exercise of state court jurisdiction would be
severe, since petitioner would be required not only to traverse the distance between
Japan and California, but also to submit its dispute with Cheng Shin to a foreign judicial
system. Such unique burdens should have significant weight in assessing the
reasonableness of extending personal jurisdiction over national borders.
(b) The interests of Cheng Shin and the forum State in the exercise of jurisdiction over
petitioner would be slight, and would be insufficient to justify the heavy burdens placed
on petitioner. The only surviving question is whether a Japanese corporation should
indemnify a Taiwanese corporation on the bases of a sale made in Taiwan and a
shipment of goods from Japan to Taiwan. The facts do not demonstrate that it would be
more convenient for Cheng Shin to litigate its claim in California, rather than in Taiwan
or Japan, while California's interests are diminished by Cheng Shin's lack of a California
residence and by the fact that the dispute is primarily about indemnity, rather than the
safety of consumers. While the possibility of being sued in California might create an
additional deterrent to petitioner's manufacture of unsafe assemblies, the same effect
would result from pressures placed on petitioner by Cheng Shin, whose California sales
would subject it to state tort law.
(c) The procedural and substantive policies of other nations whose interests are
affected by the forum State's assertion of jurisdiction over an alien defendant must be
taken into account, and great care must be exercised when considering personal
jurisdiction in the international context. Although other nations' interests will differ from
case to case, those interests, as well as the Federal Government's interest in its foreign
relations policies, will always be best served by a careful inquiry into the
reasonableness of the particular assertion of jurisdiction, and an unwillingness to find an
alien defendant's serious burdens outweighed where, as here, the interests of the
plaintiff and the forum State are minimal.
Even assuming, arguendo, that petitioner was aware that some of the assemblies it sold
to Cheng Shin would be incorporated into tires sold in California, the facts do not
establish minimum contacts sufficient to render the State's exercise of personal
jurisdiction consistent with fair play and substantial justice, as required by the Due
Process Clause. Since petitioner does not do business, have an office, agents,
employees, or property, or advertise or solicit business in California, and since it did not
create, control, or employ the distribution system that brought its assemblies to, or
design them in anticipation of sales in, California, it did not engage in any action to

purposely avail itself of the California market. The "substantial connection" between a
defendant and the forum State necessary for a finding of minimum contacts must derive
from an action purposely directed toward the forum State, and the mere placement of a
product into the stream of commerce is not such an act, even if done with an awareness
that the stream will sweep the product into the forum State absent additional conduct
indicating an intent to serve the forum state market.

6. Corporations and other Juridical Entities

a. Corporations
i. Personal Law of a Corporation
M.E. GRAY vs INSULAR LUMBER COMPANY
G.R. No. L-45144 | April 3, 1939. | Concepcion, J.
Petitioner(s): M.E. Gray (Plaintiff-Appellant).
Respondent(s): Insular Lumber Company (Defendant-Appellee).
SUMMARY: Defendant Insular Lumber Company (Insular) was and is a corporation
organized and existing under the laws of the State of New York, licensed to engage in
business in the Philippines, with offices in the City of Manila, in Fabrica, Occidental
Negros, in New York and in Philadelphia. M.E. Gray contends that, in accordance with
our Corporation Law, under which Insular company was registered to do business in the
Philippines, plaintiff M.E. Gray, as stockholder, is entitled to inspect the record of the
transactions of Insular corporation (Sec. 51, Act No. 1459) and this right, which is
recognized in the common law, has not been altered by Section 77 of the Stock
Corporation Law of New York and can be enforced by mandamus. The lower court
denied the mandamus against Insular Lumber Company. The SC affirmed this. It held
that plaintiff M.E. Gray did not ask to have the stipulation of facts altered or changed.
Thus, he cannot now, for the first time on appeal, raise the question that aside from the
right conferred upon him by Section 77 of the Stock Corporation Law of New York, he is
also entitled under the common law to examine and inspect the books and records of
the defendant corporation. Neither can this right under the common law be granted the
defendant in the present case, since the same can only be granted at the discretion of
the court. The appellant has made no effort to prove or even allege that the information
he desired to obtain through the examination and inspection of defendant's books was
necessary to protect his interests as stockholder of the corporation, or that it was for a
specific and honest purpose, and not to gratify curiosity, nor for speculative or vexatious
purposes.
FACTS:
1. The defendant Insular Lumber Company (Insular) was and is a corporation:
organized and existing under the laws of the State of New York,
licensed to engage in business in the Philippines,

with offices in the City of Manila, in Fabrica, Occidental Negros, in New York
and in Philadelphia.
2. The plaintiff M.E. Gray was and is the owner and possessor of 57 shares of the
capital stock of the defendant corporation, registered in his name in the books thereof.
3. The parties stipulated to the following facts:
That M.E. Gray does not own 3% of the total capital stock of the corporation, nor
does he represent stockholders who own 3% of its capital;
That during the years 1932 and 1933, M.E. Gray asked the offices of the
defendant in Manila and in Fabrica to permit him to examine the books and
records of the business of Insular, but he was not allowed to do so;
That under the law of New York, the right of a stockholder to examine the
books and records of a corporation organized under the laws of that State,
have been, during the entire period material to this action, only those
provided in Section 77 of the Stock Corporation Law.1
That neither M.E. Gray nor any other stockholder of Insular corporation has
asked its treasurer or any of its officers for a statement of its affairs, as provided
in the statutes of New York; and
Neither did M.E. Gray ask to be allowed to examine any of the statements
prepared by Insular and existing in its files, as provided by the statutes of New
York.
4. In accordance with Section 77 of the Stock Corporation Law of New York, which
is conceded to be the law that governs the right of a stockholder to examine the books
and papers of a corporation, it is fully settled that M.E. Gray not being a stockholder
owning at least 3% of the capital stock of the defendant corporation, has no right to
examine the books and records of the corporation nor to require a statement of its
affairs embracing a particular account of its assets and liabilities.
5. However, M.E. Gray contends that, in accordance with our Corporation Law,
under which Insular company was registered to do business in the Philippines,
plaintiff M.E. Gray, as stockholder, is entitled to inspect the record of the
transactions of Insular corporation (Sec. 51, Act No. 1459) and this right, which
is recognized in the common law, has not been altered by Section 77 of the
Stock Corporation Law of New York and can be enforced by mandamus.
6. The lower court denied the mandamus against defendant Insular and absolved it from
the complaint.

ISSUE/s: W/N the plaintiff-appellant M.E. Gray is entitled, as stockholder of the

defendant-appellee Insular Lumber Company, to inspect and examine the books
records of the transactions of said defendant. (NO.)
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1

"Financial" Statement" to" Stockholders:" Stockholders" owning" three" per" centum" of" the" shares" of" any" corporation" other" than" a" moneyed"
corporation"may"make"a"written"request"to"the"treasurer"or"other"fiscal"officer"thereof"for"a"statement"of"its"affairs,"under"oath,"embracing"a"
particular"account"of"all"its"assets"and"liabilities,"and"the"treasurer"shall"make"such"statement"and"deliver"it"to"the"person"making"the"request"
within"thirty"days"thereafter,"and"keep"on"file"in"the"office"of"the"corporation"for"twelve"months"thereafter"a"copy"of"such"statement,"which"shall"
at"all"times"during"business"hours"be"exhibited"to"any"stockholders"demanding"an"examination"thereof;"but"the"treasurer"shall"not"be"required"to"
deliver"more"than"one"such"statement"in"any"one"year."The"Supreme"Court,"or"any"justice"thereof,"may"upon"application,"for"good"cause"shown,"
extend" the" time" for" making" and" delivering" such" statement." For" every" neglect" or" refusal" to" comply" with" the" provisions" of" this" section" the"
corporation"shall"and"pay"to"the"person"making"such"request"the"sum"of"Fifty"Dollars,"and"the"further"sum"of"ten"dollars"for"every"twentyEfour"
hours"thereafter"until"such"statement"shall"be"furnished."(S."C."L.,"sec."77.)"

RATIO:
Judgment of the lower court affirmed.
The stipulation of facts is finding upon both parties and cannot be altered by either of
them.
On the strength of this principle, plaintiff-appellant M.E. Gray is bound to adhere to the
agreement made by him with the defendant corporation in paragraph four of the
stipulation of facts, to the effect that the rights of a stockholder, under the law of New
York, to examine the books and records of a corporation organized under the laws of
said State, and during the entire period material to this action, are only those provided
in Section 77 Stock Corporation Law of New York.
o Under this law, M.E. Gray has the right to be furnished by the treasurer or
other fiscal officer of the corporation with statement of its affairs embracing
a particular account of all its assets and liabilities.
Inasmuch as plaintiff, either at the hearing or in his motion for new trial, did not ask to
have the stipulation of facts altered or changed, he cannot now, for the first time on
appeal, raise the question that aside from the right conferred upon him by Section 77
of the Stock Corporation Law of New York, he also entitled under the common law to
examine and inspect the books and records of the defendant corporation.
Neither can this right under the common law be granted the defendant in the present
case, since the same can only be granted at the discretion of the court, under certain
conditions, to wit:
o (a) That the stockholder of a corporation in New York has the right to
inspect its books and records if it can be shown that he seeks information
for an honest purpose, or to protect his interest as stockholder.
o (b) That said right to examine and inspect the books of the corporation
must be exercised in good faith, for a specific and honest purpose, and
not to gratify curiosity, or for speculative or vexatious purposes.
o The appellant has made no effort to prove or even allege that the
information he desired to obtain through the examination and inspection of
defendant's books was necessary to protect his interests as stockholder of
the corporation, or that it was for a specific and honest purpose, and not to
gratify curiosity, nor for speculative or vexatious purposes.
Digest by: Shelan Teh
ii. Exceptions to the Rule of Incorporation Test
PEDRO PALTING v. SAN JOSE PETROLEUM INC.
G.R. No. L-14441 / 17 December 1966
Barrera
FACTS:
SAN JOSE PETROLEUM (PETROLEUM) is a corporation organized and existing in the
Republic of Panama. PETROLEUM filed with SEC a sworn registration statement, for
the registration and licensing for sale in the Philippines of Voting Trust Certificates

representing 2 million shares of its capital stock of a par value of $0.35 a share, at
P1.00 per share.2
It was alleged that the proceeds of the sale thereof will be used exclusively to
finance the operations of domestic corporation San Jose Oil Company (OIL)
which has 14 petroleum exploration concessions, located in various provinces.
Express condition:Every purchaser shall not receive a stock certificate, but a
registered or bearer-voting-trust certificate from the voting trustees named
therein.
PedroPalting, et al. (alleged prospective investors in the shares of PETROLEUM) filed
an opposition to registration and licensing of the securities on the following grounds:
The tie-up between the issuer, PETROLEUM, a Panamanian corporation and
OIL, a domestic corporation, violates the Constitution of the Philippines, the
Corporation Law and the Petroleum Act of 1949
The issuer PETROLEUM has not been licensed to transact business in the
Philippines
The sale of the shares of the issuer is fraudulent, and works or tends to work a
fraud upon Philippine purchasers; and
The issuer PETROLEUM as an enterprise, as well as its business, is based upon
unsound business principles.
PETROLEUM argued:
Since the order of Registration/Licensing took effect 30 days from September 3,
1958, and since no stay order has been issued by the Supreme Court,
PETROLEUMs shares became registered and licensed under the law as of
October 3, 1958. Consequently, it is asserted, the present appeal has become
academic.
It was a "business enterprise" enjoying parity rights under the Ordinance
appended to the Constitution, which parity right, with respect to mineral
resources in the Philippines, may be exercised, pursuant to the Laurel-Langley
Agreement, only through the medium of a corporation organized under the laws
of the Philippines.
It refused the contention that the Corporation Law was being violated, by alleging
that Section 13 thereof applies only to foreign corporations doing business in the
Philippines, and registrant was not doing business here. The mere fact that it was
a holding company of SAN JOSE OIL and that registrant undertook the financing
of and giving technical assistance to said corporation did not constitute
transaction of business in the Philippines.
Registrant also denied that the offering for sale in the Philippines of its shares of
capital stock was fraudulent or would work or tend to work fraud on the investors.
SEC issued orders allowing the registration of the said securities and licensing their
sale.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2

Later, PETROLEUM filed an amended statement: from 2 million to 5 million; offering price reduced from $1.00 to $0.70; par
value went down from $0.35 to $0.01.

ISSUES AND HOLDING

1. WON prospective investor Palting has personality to file the petition for review
of the SEC orders. YES
2. WON the issue is already moot and academic. NO
3. WON the tie-up between PETROLEUM (foreign) and OIL (domestic mining
corporation) is violative of the laws, which inhibit a mining corporation from
acquiring an interest in another mining corporation. YES
4. WON the sale of securities is fraudulent, or would work or tend to work fraud to
purchasers of securities in PH. YES
RULING
ISSUE #1
Our Securities Act in Section 7(c) thereof, requires the publication and notice of the
registration statement. Any person (who may not be "aggrieved" or "interested" within
the legal acceptation of the word) is allowed or permitted to file an opposition to the
registration of securities for sale in the Philippines. This is in consonance with the
generally accepted principle that Blue Sky Laws are enacted to protect investors and
prospective purchasers and to prevent fraud and preclude the sale of securities which
are in fact worthless or worth substantially less than the asking price. Under the New
Rules of Court, such a party can appeal from a final order, ruling or decision of the SEC.
ISSUE #2
The fact is that because of the authority to sell, the securities are still being traded in the
open market. Consequently the issue is much alive as to whether PETROLEUMs
securities should continue to be the subject of sale. The real and ultimate controversy
here would actually call for the construction of the constitutional provisions governing
the disposition, utilization, exploitation and development of our natural resources.
ISSUE #3
VERY IMPORTANT: OIL is a domestic mining corporation, 90% of the outstanding
capital stock of which is owned by PETROLEUM, a foreign (Panamanian) corporation,
the majority interest of which is owned by OIL INVESTMENTS, Inc., another foreign
(Panamanian) company. This latter corporation in turn is wholly (100%) owned by
PANTEPEC OIL COMPANY, C.A., and PANCOASTAL PETROLEUM COMPANY, C.A.,
both organized and existing under the laws of Venezuela. In the two lists of
stockholders, there is no indication of the citizenship of these stockholders, or of the
total number of authorized stocks of each corporation, for the purpose of determining
the corresponding percentage of these listed stockholders in relation to the respective
capital stock of said corporation.
(At this point, the case cited the provisions of the Philippine Constitution (Art. XIII, Sec.
1), the 1946 Ordinance Appended to the Constitution, and the Laurel-Langley
Agreement embodied in Republic Act No. 1355.)

Re-stated, the privilege to utilize, exploit, and develop the natural resources of
this country was granted, by Article XIII of the Constitution, to Filipino citizens or
to corporations or associations 60% of the capital of which is owned by such
citizens. With the Parity Amendment to the Constitution, the same right was
extended to citizens of the United States and business enterprises owned or
controlled directly or indirectly, by citizens of the United States.
The right was granted to 2 types of persons: natural persons (Filipino or
American citizens) and juridical persons (corporations 60% of which capital is
owned by Filipinos and business enterprises owned or controlled directly or
indirectly, by citizens of the United States). In American law, "citizen" has been
defined as "one who, under the constitution and laws of the United States, has a right to
vote for representatives in congress and other public officers, and who is qualified to fill
offices in the gift of the people. A citizen is: one of the sovereign people; constituent
member of the sovereignty, synonymous with the people; a member of the civil state
entitled to all its privileges.
Is PETROLEUM, an American business enterprise entitled to parity rights in the
Philippines? NO!
It is not owned or controlled directly by citizens of the United States, because it is
owned and controlled by a corporation, the OIL INVESTMENTS, another foreign
(Panamanian) corporation.
Neither can it be said that it is indirectly owned and controlled by American
citizens through the OIL INVESTMENTS, for this latter corporation is in turn
owned and controlled, not by citizens of the United States, but still by two foreign
(Venezuelan) corporations, the PANTEPEC OIL COMPANY and PANCOASTAL
PETROLEUM.
Although it is claimed that these two last corporations are owned and controlled
respectively by 12,373 and 9,979 stockholders residing in the different American
states, there is no showing in the certification furnished by respondent that the
stockholders of PANCOASTAL or those of them holding the controlling stock, are
citizens of the United States.
Granting that these individual stockholders are American citizens, it is necessary
to establish that the different states of which they are citizens, allow Filipino
citizens to engage in the exploitation, etc. of the natural resources of these
states. Respondent has presented no proof to this effect.
Even if the requirements mentioned are satisfied, nevertheless to hold that the
set-up comes within the purview of the Parity Amendment regarding business
enterprises indirectly owned or controlled by citizens of the United States, is to
unduly stretch and strain the language and intent of the law. For, to what extent
must the word "indirectly" be carried? Must we trace the ownership or control of
these various corporations ad infinitum for the purpose of determining whether
the American ownership-control-requirement is satisfied?
ISSUE #4

Looking at the provisions, the directors and officers of the company can do anything,
short of actual fraud, with the affairs of the corporation even to benefit themselves
directly or other persons or entities in which they are interested, and with immunity
because of the advance condonation or relief from responsibility by reason of such acts.
This and the other provision which authorizes the election of non-stockholders as
directors, completely disassociate the stockholders from the government and
management of the business in which they have invested.
Dispositive:
MTD appeal is DENIED; SEC orders allowing registration of securities and licensing
their sale is SET ASIDE; Case REMANDED to SEC
FILIPINAS COMPANIA DE SEGURAS vs CHRISTERN
A corporation borrows its citizenship from the citizenship of majority of its
stockholders, regardless of the country under whose laws it was organized and
created.
FACTS:
Christern Huenefeld Corporation bought a fire insurance policy from Filipinas Compania
de Seguros to cover merchandise contained in a building. During the Japanese military
occupation, this same merchandise and the building were burned, so Huenefeld filed a
claim under the policy.
Filipinas Compania refused to pay, alleging that the policy had ceased to be in force
when the US declared war against Germany. Filipinas Compania contended that
Huenefeld, although organized and created under Philippine laws, is a German subject,
and hence, a public enemy, since majority of its stockholders are Germans. On the
other hand, FilipinasCompania is under American jurisdiction.
However, the Director of Bureau of Financing, Philippine Executive Commission
ordered Filipinas Compania to pay, soFilipinas Compania did pay. The case at bar is
about the recovery of that sum paid.
ISSUES:
W/N Christern Huenefeld is a German subject because majority of its stockholders
are under German jurisdiction, despite the fact that it was organized and created
under Philippine laws
If so, W/N the fire insurance policy is enforceable against an enemy state
HELD:
The Court of Appeals ruled that a private corporation is a citizen of the country or state
by and under the laws of which it was created or organized. It rejected the theory that
nationality of a private corporation is determined by the character or citizenship of its
controlling stockholders.

But the Supreme Court held that Christern Huenefeld is an enemy corporation since
majority of its stockholders are German subjects. The two American cases relied up by
the Court of Appeals have lost their force in view of a newer case where the control test
was adopted.
The Philippine Insurance Law provides that anyone, except a public enemy, may be
insured. It stands to reason that an insurance policy ceases to be allowable as soon as
the insured becomes a public enemy.
Since Christern Huenefeld became a public enemy on Dec. 10, 1941, then the policy
has ceased to be enforcible and therefore Huenefeld is not entitled to indemnity.
However, elementary rules of justice require that the premium paid from Dec. 11, 1941
should be returned.
Thus, Filipinas Compania is allowed to recover the sum paid but only its equivalent in
actual Philippine currency, minus the premium that Huenefeld paid after Dec. 11.
iii. Domicile or residence of Foreign Corporation
STATE INVESTMENT HOUSE INC vs CITIBANK
G.R. No. 79926-27, Oct. 17, 1991
FACTS:
Consolidated Mines, Inc. (CMI) obtained loans from Citibank, Bank of America and
HSBC, all foreign corporations but with branches in the Philippines. Meanwhile, State
Investment House, Inc. (SIHI) and State Financing Center, Inc. (SFCI), also creditors of
CMI, filed collection suits against the latter with writs of preliminary attachment.
Subsequently, the three banks jointly filed with the court a petition for involuntary
insolvency of CMI. SHI and SFCI opposed the petition on the ground that the petitioners
are not resident creditors in contemplation of the Insolvency Law.
ISSUE: Whether or not a foreign corporation with a branch in the Philippines and
doing business therein can be considered a resident
HELD:
Foreign corporations duly licensed to do business in the Philippines are considered
residents of the Philippines, as the word is understood in Sec. 20 of the Insolvency
Law, authorizing at least three resident creditors of the Philippines to file a petition to
declare a corporation insolvent. The Tax Code declares that the term resident foreign
corporation applies to foreign corporation engaged in trade or business within the
Philippines as distinguished from a non-resident foreign corporation which is not
engaged in trade or business within the Philippines. The Offshore Banking Law sates
that: Branches, subsidiaries, affiliates, extension offices or any other units of
corporation or juridical person organized under the laws of any foreign country operating

in the Philippines shall be considered residents of the Philippines. The General

Banking Act places branches and agencies in the Philippines of foreign banks in the
category as commercial banks, rural banks, stock savings and loan association making
no distinction between the former ad the latter in so far as the terms banking
institutions and banks are used in said Act.

IV. RECOGNITION AND

ARBITRAL AWARDS

ENFORCEMENT

OF

FOREIGN

JUDGMENT

AND

Section 24. Proof of official record. The record of public documents referred to in
paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an
official publication thereof or by a copy attested by the officer having the legal custody of
the record, or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. If the office in which the
record is kept is in foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice consul, or consular agent or by any
officer in the foreign service of the Philippines stationed in the foreign country in which
the record is kept, and authenticated by the seal of his office. (25a)
Section 48. Effect of foreign judgments or final orders. The effect of a judgment or
final order of a tribunal of a foreign country, having jurisdiction to render the judgment or
final order is as follows:
(a)
In case of a judgment or final order upon a specific thing, the judgment or final
order, is conclusive upon the title to the thing, and
(b) In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors in interest
by a subsequent title.
In either case, the judgment or final order 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.
(50a)

PERKINS vs BENGUET CONSOLIDATED MINING

Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952) was a United
States Supreme Court case which held that an Ohio state court could exercise
general personal jurisdiction over a foreign corporation on the basis of that company's
"continuous and systematic" contacts with the state of Ohio.[1] Benguet Consolidated
Mining Co. was aPhilippine mining corporation, owned by American John W.
Hausermann, that temporarily stopped its mining operations and relocated its president
to Ohio during the World War IIJapanese occupation of the Philippines. The Court held
that the president's use of his office in Ohio to carry on continuous business activities
during this period allowed Ohio to properly assert general jurisdiction over his company.
The Supreme Court case consolidated the two original suits into one. One suit had been
brought by the petitioner Ms. Perkins for approximately $68,400 in dividends that she
alleged were due her as a stockholder. The second suit was for $2,500,000 damages
claimed as a result of the company's failure to issue to her certificates for 120,000
shares of its stock.
The trial court had sustained a motion to quash the summons in each case because the
defendant was a foreign corporation and, as such, the Court did not have personal
jurisdiction over it. Neither its corporate headquarters nor its principal place of business
were in Ohio, and it had not applied for the required license to transact business in Ohio
nor appointed an agent for service of process in state. Additionally, the claims Ms.
Perkins sued upon did not arise from anything the defendant did in the state of Ohio.
The Ohio State Supreme Court affirmed the decision and the plaintiff appeal to the U.S.
Supreme Court.
The Supreme Court reversed on the basis of the defendant president's "continuous and
systematic supervision of the necessarily limited wartime activities of the
company" [1] in Ohio. It was thus not a violation of the Fourteenth Amendment due
process clause for Ohio to assertgeneral jurisdiction over the company on the plaintiff's
claim, even though the claim arose from activities conducted outside the forum state
and entirely distinct from those activities conducted inside the forum state.
The judgment of the Supreme Court of Ohio was vacated and the cause of action
remanded for further proceedings consistent with the opinion.
This is a notable United States civil procedure case in the area of general jurisdiction. It
represents one of the rare instances in which a state's exercise of general (as opposed
to specific) personal jurisdiction over a non-resident will be deemed to comport with the
requirements of due process, due to the non-resident's extensive activities within the
state.

GODARD vs. GRAY

Plaintiffs Godar are Frenchmen sued the defendants, who are Englishmen, on a charter

party made atSunderland, which charter party contained the following clause: "Penalty
for non-performance of this agreement,estimated amount of freight." The French Court
below, treating this clause as fixing the amount of liquidated dam-ages, gave judgment
against the defendants for the amount of freight on two voyages. On appeal, the
superior Courtreduced the amount to the estimated freight of one voyage, giving as their
reason that the charter party itself and thetribunal proceeds to observe that the amount
thus decreed was after all more than sufficient to cover all the plaintiffs'loss. All parties
in France seem to have taken the word for granted in the charter party which is to be
understood intheir natural meaning,
However in English law is accurately expressed that passage been brought to the notice
of the French tribunal,it would have known that in an English charter party, as is there
stated, "Such a clause is not the absolute limit of damages on either side; the party
may, if he thinks fit, ground his action upon the other clauses or covenants, andmay, in
such action, recover damages beyond the amount of the penalty, if in justice they shall
be found to exceed it.On the other hand, if the party sue on such a penal clause, he
cannot, in effect, recover more than the damageactually sustained." But it was not
brought to the notice of the French tribunal that according to the interpretation putby the
English law on such a contract, a penal clause of this sort was in fact idle and
inoperative. If it had been, theywould, probably, have interpreted the English contract
made in England according to the English construction.
ISSUE: whether this is a bar to the action brought in England to enforce that
judgment.HELD:"It is not an admitted principle of the law of nations that a State is
bound to enforce within its territories the judgment of a foreign tribunal. Several of the
continental nations (including France) do not enforce the judgments of other countries,
unless where there are reciprocal treaties to that effect.However in England and in
those States which are governed by the common Iaw, such judgments are enforced,not
by virtue of any treaty, nor by virtue of any statute, but upon a principle very well stated
by Parke, B., in Williamsv. Jones (13 M. & W. 628; 14 L.J. Exch. 145):
"Where a Court of competent jurisdiction has adjudicated a certain sum to be due from
one person to another, alegal obligation aribes to pay the sum, on which an action of
debt to enforce the judgment may be maintained. It is inthis way that the judgments of
foreign and colonial Courts are supported and enforced."
A judgment in personam of a foreign court of competent jurisdiction cannot be
questioned by the parties on themerits when recognition or enforcement of the judgment
is sought in England, notwithstanding that it may have beenwrong either in fact or law.
This derived from the mode of pleading an action on a foreign judgment in debt, and
notmerely as evidence of the obligation to pay the underlying liability.

NORTHWEST ORIENT AIRLINES vs CA

FACTS:
Northwest Airlines (Northwest) and C.F. Sharp & Company (C.F.), through its Japan
branch, entered into an International Passenger Sales Agency Agreement,
whereby the Northwest authorized the C.F. to sell its air transportation tickets
March 25, 1980: Unable to remit the proceeds of the ticket sales, Northwest sued C.F.
in Tokyo, Japan, for collection of the unremitted proceeds of the ticket sales, with
claim for damages
April 11, 1980: writ of summons was issued by the 36th Civil Department, Tokyo
District Court of Japan

The attempt to serve the summons was unsuccessful because Mr. Dinozo was
in Manila and would be back on April 24, 1980
April 24, 1980: Mr. Dinozo returned to C.F. Office to serve the summons but he
refused to receive claiming that he no longer an employee
After the 2 attempts of service were unsuccessful, Supreme Court of Japan sent the
summons together with the other legal documents to the Ministry of Foreign
Affairs of Japan> Japanese Embassy in Manila>Ministry (now Department) of
Foreign Affairs of the Philippines>Executive Judge of the Court of First Instance
(now Regional Trial Court) of Manila who ordered Deputy Sheriff Rolando
Balingit>C.F. Main Office
August 28, 1980: C.F. received from Deputy Sheriff Rolando Balingit the writ of
summons but failed to appear at the scheduled hearing.
January 29, 1981: Tokyo Court rendered judgment ordering the C.F. to pay
83,158,195 Yen and damages for delay at the rate of 6% per annum from August
28, 1980 up to and until payment is completed
March 24, 1981: C.F. received from Deputy Sheriff Balingit copy of the judgment. C.F.
did not appeal so it became final and executory
May 20, 1983: Northwest filed a suit for enforcement of the judgment a RTC
July 16, 1983: C.F. averred that the Japanese Court sought to be enforced is null and
void and unenforceable in this jurisdiction having been rendered without due and
proper notice and/or with collusion or fraud and/or upon a clear mistake of law
and fact. The foreign judgment in the Japanese Court sought in this action is null
and void for want of jurisdiction over the person of the defendant considering that
this is an action in personam. The process of the Court in Japan sent to the
Philippines which is outside Japanese jurisdiction cannot confer jurisdiction over
the defendant in the case before the Japanese Court of the case at bar
CA sustained RTC: Court agrees that if the C.F. in a foreign court is a resident in the
court of that foreign court such court could acquire jurisdiction over the person of
C.F. but it must be served in the territorial jurisdiction of the foreign court
ISSUE: W/N the Japanese Court has jurisdiction over C.F.
HELD: YES. instant petition is partly GRANTED, and the challenged decision is
AFFIRMED insofar as it denied NORTHWEST's claims for attorneys fees, litigation
expenses, and exemplary damages
Consequently, the party attacking (C.F.) a foreign judgment has the burden of
overcoming the presumption of its validity
Accordingly, the presumption of validity and regularity of the service of summons and

the decision thereafter rendered by the Japanese court must stand.

Applying it, the Japanese law on the matter is presumed to be similar with
thePhilippine law on service of summons on a private foreign corporation doing
business in the Philippines. Section 14, Rule 14 of the Rules of Court provides
that if the defendant is a foreign corporation doing business in the Philippines,
service may be made:
(1) on its resident agent designated in accordance with law for that purpose, or,
(2) if there is no such resident agent, on the government official designated by
law to that effect; or
(3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the
designation is exclusive, and service of summons is without force and
gives the court no jurisdiction unless made upon him.
Where the corporation has no such agent, service shall be made on the
government official designated by law, to wit:
(a) the Insurance Commissioner in the case of a foreign insurance
company
(b) the Superintendent of Banks, in the case of a foreign banking
corporation
(c) the Securities and Exchange Commission, in the case of other
foreign corporations duly licensed to do business in the Philippines.
Whenever service of process is so made, the government office or
official served shall transmit by mail a copy of the summons or
other legal proccess to the corporation at itshome or principal
office. The sending of such copy is a necessary part of the service.
The service on the proper government official under Section 14, Rule 14 of the Rules
of Court, in relation to Section 128 of the Corporation Code
Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly
licensed to do business here, to the status of domestic corporations
We think it would be entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner, and subject its
property to the harsh writ of seizure by attachment when it has complied not only
with every requirement of law made specially of foreign corporations, but in
addition with every requirement of law made of domestic corporations
In as much as SHARP was admittedly doing business in Japan through its four duly
registered branches at the time the collection suit against it was filed, then in the
light of the processual presumption, SHARP may be deemed a resident of
Japan, and, as such, was amenable to the jurisdiction of the courts therein and
may be deemed to have assented to the said courts' lawful methods of serving
process.
Accordingly, the extraterritorial service of summons on it by the Japanese Court was
valid not only under the processual presumption but also because of the
presumption of regularity of performance of official duty.

BOUDARD vs TAIT
FACTS:

Emilie Boudard, as widow of Marie Theodore Boudard and as guardian of her children
born during their marriage obtained a judgment in their favor from CFI Hanoi, French
Indo-China for the sum of 40,000 piastras plus interest. The judgment was against
Stewart Tait who had been declared in default for his failure to appear at the trial before
court.
Theodore Boudard, who was an employee of Stewart Tait, was killed in Hanoi by other
employees of Tait, although "outside of the fulfillment of a duty", according to the
English translation of a certified copy of the French decision. The dismissal of the
complaint was based principally on the lack of jurisdiction of the CFI Hanoi to render
judgment. It was found that the Tait was not a resident of, nor domiciled in that country.
Also, the evidence adduced at the trial proves that neither Tait nor his agent or
employees were ever in Hanoi and that Theodore had never, at any time, been his
employee.
ISSUE:
1. Whether or not court erred in admitting evidence for judicial foreign records (in this
case, it was the Hanoi decision).
2. Whether or not the court erred in declaring that it was indispensable for Tait to be
served with summons in Hanoi.
3. Whether or not the decision of CFI Hanoi was already conclusive.
HELD:
1. Yes, Boudard failed to show that the proceedings against Tait in CFI Hanoi were in
accordance with the laws of France then in force.
Further, Boudard failed to show that they are certified copies of judicial records. They
argue that the papers are the original documents and that the French consul in the
Philippines has confirmed this fact. This is not sufficient to authorize a deviation from
the rule established by law. The best evidence of a foreign judicial proceeding is a
certified copy with all the formalities required.
2. No. French law regarding summons states that: those who have no known residence
in France shall be served summons in the place of their present residence; if the place
is unknown, writ shall be placed at the main door of the hall of the court where the
complaint is filed.
In the case, it was shown that summons were delivered in Manila to J.M. Shotwell, a
representative or agent of Churchill and Tait, Inc. which is an entity entirely different
from Tait. Also, evidence shows that Tait was not in Hanoi during the time the complaint
was filed by Boudard. The rule is that judicial proceedings in a foreign country,regarding
payment of money, are only effective against a party if summons is duly served on him
within such foreign country before the proceedings.

3. No. The decision cannot be conclusive to such an extent that it cannot be contested.
It merely constitutes prima facie evidence of the justness of Boudard's claim and admits
proof to the contrary.
The effect of a judgment of any tribunal of a foreign country is:
- In case of judgment against a specific thing, the judgment is conclusive upon the title
to the thing.
- In case of 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:
-> want of jurisdiction
-> want of notice to the party
-> collusion
-> fraud
-> clear mistake of law or fact