G.R. No.

112573

February 9, 1995

NORTHWEST ORIENT AIRLINES, INC. petitioner,

vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.:

This petition for review on certiorari seeks to set aside the decision of the
Court of Appeals affirming the dismissal of the petitioner's complaint to
enforce the judgment of a Japanese court. The principal issue here is whether
a Japanese court can acquire jurisdiction over a Philippine corporation doing
business in Japan by serving summons through diplomatic channels on the
Philippine corporation at its principal office in Manila after prior attempts to
serve summons in Japan had failed.

Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a

corporation organized under the laws of the State of Minnesota, U.S.A.,
sought to enforce in Civil Case No. 83-17637 of the Regional Trial Court (RTC),
Branch 54, Manila, a judgment rendered in its favor by a Japanese court
against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP),
a corporation incorporated under Philippine laws.

As found by the Court of Appeals in the challenged decision of 10 November

1993, 1 the following are the factual and procedural antecedents of this
controversy:

On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp &
Company, through its Japan branch, entered into an International Passenger
Sales Agency Agreement, whereby the former authorized the latter to sell its
air transportation tickets. Unable to remit the proceeds of the ticket sales

made by defendant on behalf of the plaintiff under the said agreement,

plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for collection of
the unremitted proceeds of the ticket sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th Civil
Department, Tokyo District Court of Japan against defendant at its office at
the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma,
Kanagawa Prefecture. The attempt to serve the summons was unsuccessful
because the bailiff was advised by a person in the office that Mr. Dinozo, the
person believed to be authorized to receive court processes was in Manila
and would be back on April 24, 1980.

On April 24, 1980, bailiff returned to the defendant's office to serve the
summons. Mr. Dinozo refused to accept the same claiming that he was no
longer an employee of the defendant.

After the two attempts of service were unsuccessful, the judge of the Tokyo
District Court decided to have the complaint and the writs of summons
served at the head office of the defendant in Manila. On July 11, 1980, the
Director of the Tokyo District Court requested the Supreme Court of Japan to
serve the summons through diplomatic channels upon the defendant's head
office in Manila.

On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit
the writ of summons (p. 276, Records). Despite receipt of the same,
defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court
proceeded to hear the plaintiff's complaint and on [January 29, 1981],
rendered judgment ordering the defendant to pay the plaintiff the sum of
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 (pp. 12-14, Records).

On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of
the judgment. Defendant not having appealed the judgment, the same
became final and executory.

Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983,

a suit for enforcement of the judgment was filed by plaintiff before the
Regional Trial Court of Manila Branch 54. 2

On July 16, 1983, defendant filed its answer averring that the judgment of the
Japanese Court sought to be enforced is null and void and unenforceable in
this jurisdiction having been rendered without due and proper notice to the
defendant and/or with collusion or fraud and/or upon a clear mistake of law
and fact (pp. 41-45, Rec.).

Unable to settle the case amicably, the case was tried on the merits. After the
plaintiff rested its case, defendant on April 21, 1989, filed a Motion for
Judgment on a Demurrer to Evidence based on two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of
jurisdiction and (2) the said judgment is contrary to Philippine law and public
policy and rendered without due process of law. Plaintiff filed its opposition
after which the court a quo rendered the now assailed decision dated June 21,
1989 granting the demurrer motion and dismissing the complaint (Decision,
pp. 376-378, Records). In granting the demurrer motion, the trial court held
that:

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 Japanese Court did not acquire jurisdiction
over the person of the defendant because jurisprudence requires that the
defendant be served with summons in Japan in order for the Japanese Court
to acquire jurisdiction over it, 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.
Boudard versus Tait 67 Phil. 170. The plaintiff contends that the Japanese
Court acquired jurisdiction because the defendant is a resident of Japan,
having four (4) branches doing business therein and in fact had a permit from
the Japanese government to conduct business in Japan (citing the exhibits
presented by the plaintiff); if this is so then service of summons should have
been made upon the defendant in Japan in any of these alleged four
branches; as admitted by the plaintiff the service of the summons issued by
the Japanese Court was made in the Philippines thru a Philippine Sheriff. This
Court agrees that if the defendant in a foreign court is a resident in the court
of that foreign court such court could acquire jurisdiction over the person of
the defendant but it must be served upon the defendant in the territorial

jurisdiction of the foreign court. Such is not the case here because the
defendant was served with summons in the Philippines and not in Japan.

Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional Notice of
Appeal, asking the court to treat the said notice of appeal "as in effect after
and upon issuance of the court's denial of the motion for reconsideration."

Defendant opposed the motion for reconsideration to which a Reply dated

August 28, 1989 was filed by the plaintiff.

On October 16, 1989, the lower court disregarded the Motion for
Reconsideration and gave due course to the plaintiff's Notice of Appeal. 3

In its decision, the Court of Appeals sustained the trial court. It agreed with
the latter in its reliance upon Boudard vs. Tait 4 wherein it was held that "the
process of the court has no extraterritorial effect and no jurisdiction is
acquired over the person of the defendant by serving him beyond the
boundaries of the state." To support its position, the Court of Appeals further
stated:

In an action strictly in personam, such as the instant case, personal service of

summons within the forum is required for the court to acquire jurisdiction
over the defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To
confer jurisdiction on the court, personal or substituted service of summons
on the defendant not extraterritorial service is necessary (Dial Corp vs.
Soriano, 161 SCRA 739).

But while plaintiff-appellant concedes that the collection suit filed is an action
in personam, it is its theory that a distinction must be made between an
action in personam against a resident defendant and an action in personam
against a non-resident defendant. Jurisdiction is acquired over a non-resident
defendant only if he is served personally within the jurisdiction of the court
and over a resident defendant if by personal, substituted or constructive
service conformably to statutory authorization. Plaintiff-appellant argues that
since the defendant-appellee maintains branches in Japan it is considered a

resident defendant. Corollarily, personal, substituted or constructive service

of summons when made in compliance with the procedural rules is sufficient
to give the court jurisdiction to render judgment in personam.

Such an argument does not persuade.

It is a general rule that processes of the court cannot lawfully be served

outside the territorial limits of the jurisdiction of the court from which it issues
(Carter vs. Carter; 41 S.E. 2d 532, 201) and this is regardless of the residence
or citizenship of the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150
Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual
service within the proper territorial limits on defendant or someone
authorized to accept service for him. Thus, a defendant, whether a resident
or not in the forum where the action is filed, must be served with summons
within that forum.

But even assuming a distinction between a resident defendant and nonresident defendant were to be adopted, such distinction applies only to
natural persons and not in the corporations. This finds support in the concept
that "a corporation has no home or residence in the sense in which those
terms are applied to natural persons" (Claude Neon Lights vs. Phil.
Advertising Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in
its brief:

Residence is said to be an attribute of a natural person, and can be

predicated on an artificial being only by more or less imperfect analogy.
Strictly speaking, therefore, a corporation can have no local residence or
habitation. It has been said that a corporation is a mere ideal existence,
subsisting only in contemplation of law an invisible being which can have,
in fact, no locality and can occupy no space, and therefore cannot have a
dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle v. Topeka, 88 370, 128
p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)

Jurisprudence so holds that the foreign or domestic character of a corporation

is to be determined by the place of its origin where its charter was granted
and not by the location of its business activities (Jennings v. Idaho Rail Light &
P. Co., 26 Idaho 703, 146 p. 101), A corporation is a "resident" and an

inhabitant of the state in which it is incorporated and no other (36 Am. Jur.
2d, p. 49).

Defendant-appellee is a Philippine Corporation duly organized under the

Philippine laws. Clearly, its residence is the Philippines, the place of its
incorporation, and not Japan. While defendant-appellee maintains branches in
Japan, this will not make it a resident of Japan. A corporation does not
become a resident of another by engaging in business there even though
licensed by that state and in terms given all the rights and privileges of a
domestic corporation (Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496, 38
L ed. 248, 4 S Ct. 401).

On this premise, defendant appellee is a non-resident corporation. As such,

court processes must be served upon it at a place within the state in which
the action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L
ed. 222, 1 S. Ct. 354). 5

It then concluded that the service of summons effected in Manila or beyond

the territorial boundaries of Japan was null and did not confer jurisdiction
upon the Tokyo District Court over the person of SHARP; hence, its decision
was void.

Unable to obtain a reconsideration of the decision, NORTHWEST elevated the

case to this Court contending that the respondent court erred in holding that
SHARP was not a resident of Japan and that summons on SHARP could only
be validly served within that country.

A foreign judgment is presumed to be valid and binding in the country from

which it comes, until the contrary is shown. It is also proper to presume the
regularity of the proceedings and the giving of due notice therein. 6

Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in

personam of a tribunal of a foreign country having jurisdiction to pronounce
the same is presumptive evidence of a right as between the parties and their
successors-in-interest by a subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of notice to the party,

collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule
131, a court, whether of the Philippines or elsewhere, enjoys the presumption
that it was acting in the lawful exercise of jurisdiction and has regularly
performed its official duty.

Consequently, the party attacking a foreign judgment has the burden of

overcoming the presumption of its validity. 7 Being the party challenging the
judgment rendered by the Japanese court, SHARP had the duty to
demonstrate the invalidity of such judgment. In an attempt to discharge that
burden, it contends that the extraterritorial service of summons effected at
its home office in the Philippines was not only ineffectual but also void, and
the Japanese Court did not, therefore acquire jurisdiction over it.

It is settled that matters of remedy and procedure such as those relating to

the service of process upon a defendant are governed by the lex fori or the
internal law of the forum. 8 In this case, it is the procedural law of Japan
where the judgment was rendered that determines the validity of the
extraterritorial service of process on SHARP. As to what this law is is a
question of fact, not of law. It may not be taken judicial notice of and must be
pleaded and proved like any other fact. 9 Sections 24 and 25, Rule 132 of the
Rules of Court provide that it may be evidenced by an official publication or
by a duly attested or authenticated copy thereof. It was then incumbent upon
SHARP to present evidence as to what that Japanese procedural law is and to
show that under it, the assailed extraterritorial service is invalid. It did not.
Accordingly, the presumption of validity and regularity of the service of
summons and the decision thereafter rendered by the Japanese court must
stand.

Alternatively in the light of the absence of proof regarding Japanese

law, the presumption of identity or similarity or the so-called processual
presumption 10 may be invoked. Applying it, the Japanese law on the matter
is presumed to be similar with the Philippine 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. 11

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; and (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 its home or principal office. The sending of such copy is a
necessary part of the service. 12

SHARP contends that the laws authorizing service of process upon the
Securities and Exchange Commission, the Superintendent of Banks, and the
Insurance Commissioner, as the case may be, presuppose a situation wherein
the foreign corporation doing business in the country no longer has any
branches or offices within the Philippines. Such contention is belied by the
pertinent provisions of the said laws. Thus, Section 128 of the Corporation
Code 13 and Section 190 of the Insurance Code 14 clearly contemplate two
situations: (1) if the corporation had left the Philippines or had ceased to
transact business therein, and (2) if the corporation has no designated agent.
Section 17 of the General Banking Act 15 does not even speak a corporation
which had ceased to transact business in the Philippines.

Nowhere in its pleadings did SHARP profess to having had a resident agent
authorized to receive court processes in Japan. This silence could only mean,
or least create an impression, that it had none. Hence, service on the
designated government official or on any of SHARP's officers or agents in
Japan could be availed of. The respondent, however, insists that only service
of any of its officers or employees in its branches in Japan could be resorted
to. We do not agree. As found by the respondent court, two attempts at
service were made at SHARP's Yokohama branch. Both were unsuccessful. On
the first attempt, Mr. Dinozo, who was believed to be the person authorized
to accept court process, was in Manila. On the second, Mr. Dinozo was
present, but to accept the summons because, according to him, he was no

longer an employee of SHARP. While it may be true that service could have
been made upon any of the officers or agents of SHARP at its three other
branches in Japan, the availability of such a recourse would not preclude
service upon the proper government official, as stated above.

As found by the Court of Appeals, it was the Tokyo District Court which
ordered that summons for SHARP be served at its head office in the
Philippine's after the two attempts of service had failed. 16 The Tokyo District
Court requested the Supreme Court of Japan to cause the delivery of the
summons and other legal documents to the Philippines. Acting on that
request, the Supreme Court of Japan sent the summons together with the
other legal documents to the Ministry of Foreign Affairs of Japan which, in
turn, forwarded the same to the Japanese Embassy in Manila . Thereafter, the
court processes were delivered to the Ministry (now Department) of Foreign
Affairs of the Philippines, then to the Executive Judge of the Court of First
Instance (now Regional Trial Court) of Manila, who forthwith ordered Deputy
Sheriff Rolando Balingit to serve the same on SHARP at its principal office in
Manila. This service is equivalent to 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. Hence, SHARP's contention that such manner of
service is not valid under Philippine laws holds no water. 17

In deciding against the petitioner, the respondent court sustained the trial
court's reliance on Boudard vs. Tait 18 where this Court held:

The fundamental rule is that jurisdiction in personam over nonresidents, so as

to sustain a money judgment, must be based upon personal service within
the state which renders the judgment.

xxx

xxx

xxx

The process of a court, has no extraterritorial effect, and no jurisdiction is

acquired over the person of the defendant by serving him beyond the
boundaries of the state. Nor has a judgment of a court of a foreign country
against a resident of this country having no property in such foreign country
based on process served here, any effect here against either the defendant
personally or his property situated here.

Process issuing from the courts of one state or country cannot run into
another, and although a nonresident defendant may have been personally
served with such process in the state or country of his domicile, it will not
give such jurisdiction as to authorize a personal judgment against him.

It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial
Corp. vs. Soriano, 20 as well as the principle laid down by the Iowa Supreme
Court in the 1911 case of Raher vs. Raher. 21

The first three cases are, however, inapplicable. Boudard involved the
enforcement of a judgment of the civil division of the Court of First Instance of
Hanoi, French Indo-China. The trial court dismissed the case because the
Hanoi court never acquired jurisdiction over the person of the defendant
considering that "[t]he, evidence adduced at the trial conclusively proves that
neither the appellee [the defendant] nor his agent or employees were ever in
Hanoi, French Indo-China; and that the deceased Marie Theodore Jerome
Boudard had never, at any time, been his employee." In Magdalena Estate,
what was declared invalid resulting in the failure of the court to acquire
jurisdiction over the person of the defendants in an action in personam was
the service of summons through publication against non-appearing resident
defendants. It was claimed that the latter concealed themselves to avoid
personal service of summons upon them. In Dial, the defendants were foreign
corporations which were not, domiciled and licensed to engage in business in
the Philippines and which did not have officers or agents, places of business,
or properties here. On the other hand, in the instant case, SHARP was doing
business in Japan and was maintaining four branches therein.

Insofar as to the Philippines is concerned, Raher is a thing of the past. In that

case, a divided Supreme Court of Iowa declared that the principle that there
can be no jurisdiction in a court of a territory to render a personal judgment
against anyone upon service made outside its limits was applicable alike to
cases of residents and non-residents. The principle was put at rest by the
United States Supreme Court when it ruled in the 1940 case of Milliken vs.
Meyer 22 that domicile in the state is alone sufficient to bring an absent
defendant within the reach of the state's jurisdiction for purposes of a
personal judgment by means of appropriate substituted service or personal
service without the state. This principle is embodied in section 18, Rule 14 of
the Rules of Court which allows service of summons on residents temporarily

out of the Philippines to be made out of the country. The rationale for this rule
was explained in Milliken as follows:

[T]he authority of a state over one of its citizens is not terminated by the
mere fact of his absence from the state. The state which accords him
privileges and affords protection to him and his property by virtue of his
domicile may also exact reciprocal duties. "Enjoyment of the privileges of
residence within the state, and the attendant right to invoke the protection of
its laws, are inseparable" from the various incidences of state citizenship. The
responsibilities of that citizenship arise out of the relationship to the state
which domicile creates. That relationship is not dissolved by mere absence
from the state. The attendant duties, like the rights and privileges incident to
domicile, are not dependent on continuous presence in the state. One such
incident of domicile is amenability to suit within the state even during
sojourns without the state, where the state has provided and employed a
reasonable method for apprising such an absent party of the proceedings
against him. 23

The domicile of a corporation belongs to the state where it was incorporated.

24 In a strict technical sense, such domicile as a corporation may have is
single in its essence and a corporation can have only one domicile which is
the state of its creation. 25

Nonetheless, a corporation formed in one-state may, for certain purposes, be

regarded a resident in another state in which it has offices and transacts
business. This is the rule in our jurisdiction and apropos thereto, it may be
necessery to quote what we stated in State Investment House, Inc, vs.
Citibank, N.A., 26 to wit:

The issue is whether these Philippine branches or units may be considered

"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they
were respectively incorporated. The answer cannot be found in the
Insolvency Law itself, which contains no definition of the term, resident, or
any clear indication of its meaning. There are however other statutes, albeit
of subsequent enactment and effectivity, from which enlightening notions of
the term may be derived.

The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business
within the Philippines," as distinguished from a "'non-resident foreign
corporation' . . . (which is one) not engaged in trade or bussiness within the
Philippines." [Sec. 20, pars. (h) and (i)].

The Offshore Banking Law, Presidential Decree No. 1034, states "that
branches, subsidiaries, affiliation, 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. [Sec. 1(e)].

The General Banking Act, Republic Act No. 337, places "branches and
agencies in the Philippines of foreign banks . . . (which are) called Philippine
branches," in the same category as "commercial banks, savings associations,
mortgage banks, development banks, rural banks, stock savings and loan
associations" (which have been formed and organized under Philippine laws),
making no distinction between the former and the latter in so far as the terms
"banking institutions" and "bank" are used in the Act [Sec. 2], declaring on
the contrary that in "all matters not specifically covered by special provisions
applicable only to foreign banks, or their branches and agencies in the
Philippines, said foreign banks or their branches and agencies lawfully doing
business in the Philippines "shall be bound by all laws, rules, and regulations
applicable to domestic banking corporations of the same class, except such
laws, rules and regulations as provided for the creation, formation,
organization, or dissolution of corporations or as fix the relation, liabilities,
responsibilities, or duties of members, stockholders or officers of corporation.
[Sec. 18].

This court itself has already had occasion to hold [Claude Neon Lights, Fed.
Inc. vs. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation
licitly doing business in the Philippines, which is a defendant in a civil suit,
may not be considered a non-resident within the scope of the legal provision
authorizing attachment against a defendant not residing in the Philippine
Islands; [Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil
Procedure; Sec. 1(f), Rule 59 of the Rules of 1940, Sec. 1(f), Rule 57, Rules of
1964] in other words, a preliminary attachment may not be applied for and
granted solely on the asserted fact that the defendant is a foreign corporation
authorized to do business in the Philippines and is consequently and
necessarily, "a party who resides out of the Philippines." Parenthetically, if it

may not be considered as a party not residing in the Philippines, or as a party

who resides out of the country, then, logically, it must be considered a party
who does reside in the Philippines, who is a resident of the country. Be this as
it may, this Court pointed out that:

. . . Our laws and jurisprudence indicate a purpose to assimilate foreign

corporations, duly licensed to do business here, to the status of domestic
corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs. Henry
W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 411) 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. . . .

Obviously, the assimilation of foreign corporations authorized to do business

in the Philippines "to the status of domestic corporations, subsumes their
being found and operating as corporations, hence, residing, in the country.

The same principle is recognized in American law: that the residence of a

corporation, if it can be said to have a residence, is necessarily where it
exercises corporate functions . . .;" that it is considered as dwelling "in the
place where its business is done . . .," as being "located where its franchises
are exercised . . .," and as being "present where it is engaged in the
prosecution of the corporate enterprise;" that a "foreign corporation licensed
to do business in a state is a resident of any country where it maintains an
office or agent for transaction of its usual and customary business for venue
purposes;" and that the "necessary element in its signification is locality of
existence." [Words and Phrases, Permanent Ed., vol. 37, pp. 394, 412, 493].

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. 27

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.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and

exemplary damages to be without merit. We find no evidence that would
justify an award for attorney's fees and litigation expenses under Article 2208
of the Civil Code of the Philippines. Nor is an award for exemplary damages
warranted. Under Article 2234 of the Civil Code, before the court may
consider the question of whether or not exemplary damages should be
awarded, the plaintiff must show that he is entitled to moral, temperate, or
compensatory damaged. There being no such proof presented by
NORTHWEST, no exemplary damages may be adjudged in its favor.

WHEREFORE, the 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 but REVERSED insofar as
in sustained the trial court's dismissal of NORTHWEST's complaint in Civil
Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and
another in its stead is hereby rendered ORDERING private respondent C.F.
SHARP L COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the
foreign judgment subject of said case, with interest thereon at the legal rate
from the filing of the complaint therein until the said foreign judgment is fully
satisfied.

Costs against the private respondent.

SO ORDERED.
G.R. No. L-45193

April 5, 1939

EMILIE ELMIRA RENEE BOUDARD, RAYMOND ANTONIN BOUDARD,

GINETTE ROSE ADELAIDE BOUDARD and MONIQUE VICTOIRE BOUDARD,
plaintiffs-appellants,
vs.

STEWART EDDIE TAIT, defendant-appellee.

Ramirez and Ortigas for appellants.

Gibbs, McDonough and Ozaeta for appellee.

DIAZ, J.:

Plaintiffs appeal from a judgment of the Court of First Instance of Manila

dismissing the case instituted by them, thereby overruling their complaint,
and sentencing them to pay the costs. They now contend in their brief that:

I. The lower court erred in not admitting Exhibits D, E, F and H to M-1 of

plaintiffs.

II. The lower court erred in declaring that it was indispensable for the
defendant to be served with summons in Hanoi.

III. The lower court erred in declaring that service by publication, with
personal notice by the French Consul in Manila, was not sufficient.

IV. The lower court erred in declaring that the Court of Hanoi had no
jurisdiction over the person of the defendant.

V. The lower court erred in dismissing this case, instead of sentencing the
defendant to pay to the plaintiffs the amounts claimed in the complaint as
adjudged by the Court of Hanoi; and

VI. The lower court erred in denying the motion for new trial on the ground
that the decision is contrary to the law and the evidence.

Briefly stated, the pertinent facts of the case, that we glean from the records,
are as follows: The appellant Emilie Elmira Renee Boudard, in her capacity as
widow of Marie Theodore Jerome Boudard and as guardian of her
coappellants, her children born during her marriage with the deceased,
obtained a judgment in their favor from the civil division of the Court of First
Instance of Hanoi, French Indo-China, on June 27, 1934, for the sum of 40,000
piastras, equivalent, according to the rate of exchange at the time of the
rendition of the judgment, to P56,905.77, Philippine currency, plus interest
the amount or rate of which is not given. The judgment was rendered against
Stewart Eddie Tait who had been declared in default for his failure to appear
at the trial before said court.

Appellants' action, by virtue of which they obtained the foregoing judgment,

was based on the fact that Marie Theodore Jerome Boudard, who was an
employee of Stewart Eddie Tait, was killed in Hanoi by other employees of
said Tait, although "outside of the fulfillment of a duty", according to the
English translation of a certified copy of the decision in French, presented by
the appellants. The dismissal of appellants' complaint by the lower court was
based principally on the lack of jurisdiction of the Court of Hanoi to render the
judgment in question, for the execution of which this action was instituted in
this jurisdiction. The lack of jurisdiction was discovered in the decision itself
of the Court of Hanoi which states that the appellee was not a resident of, nor
had a known domicile in, that country.

The evidence adduced at the trial conclusively proves that neither the
appellee nor his agent or employees were ever in Hanoi, French Indo-China;
and that the deceased Marie Theodore Jerome Boudard had never, at any
time, been his employee. The appellee's first intimation of his having been
sued and sentenced to pay a huge sum by the civil division of the Court of
First Instance of Hanoi was when he was served with summons in the present
case.

Passing now to the consideration of the errors assigned by the appellants, we

must say that it was really unnecessary for the lower court to admit Exhibit D,
E, F and H to M-1, nor can these exhibits be admitted as evidence, for, as to
the first point, the appellants failed to show that the proceedings against the
appellee in the Court of Hanoi were in accordance with the laws of France
then in force; and as to the second point, it appears that said documents are
not of the nature mentioned in sections 304 and 305 of Act No. 190. They are
not copies of the judicial record of the proceedings against the appellee in the

Court of Hanoi, duly certified by the proper authorities there, whose

signatures should be authenticated by the Consul or some consular agent of
the United States in said country. The appellants argue that the papers are
the original documents and that the Honorable French Consul in the
Philippines had confirmed this fact. Such argument is not sufficient to
authorize a deviation from a rule established and sanctioned by law. To
comply with the rule, the best evidence of foreign judicial proceedings is a
certified copy of the same with all the formalities required in said sections
304 and 305 for only thus can one be absolutely sure of the authenticity of
the record. On the other hand said exhibits or documents, if admitted, would
only corroborate and strengthen the evidence of the appellee which in itself is
convincing, and the conclusion of the lower court that the appellee is not
liable for the amount to which he was sentenced, as alleged, for he was not
duly tried or even summoned in conformity with the law. It is said that the
French law regarding summons, according to its English translation presented
by the appellants, is of the following tenor:

"SEC. 69 (par. 8). Those who have no known residence in France, in the place
of their present residence: if the place is unknown, the writ shall be posted at
the main door of the hall of the court where the complaint has been filed; a
second copy shall be given to the Attorney-General of the Republic who shall
visae the original." But then, Exhibits E, E-1, F and F-1 show that the
summons alleged to have been addressed to the appellee, was delivered in
Manila on September 18, 1933, to J. M. Shotwell, a representative or agent of
Churchill & Tait Inc., which is an entity entirely different from the appellee.

Moreover, the evidence of record shows that the appellee was not in Hanoi
during the time mentioned in the complaint of the appellants, nor were his
employees or representatives. The rule in matters of this nature 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.

The fundamental rule is that jurisdiction in personam over nonresidents, so as

to sustain a money judgment, must be based upon personal service within
the state which renders the judgment. (Pennoyer vs. Neff, 95 U. S., 714; 24
Law. ed., 565; Twining vs. New Jersy, 211 U. S., 78; 29 S. Ct., 14; 53 Law. ed.,
97; Continental National Bank of Boston vs. Thurber, 143 N. Y., 648; 37 N. E.,
828.)

The process of a court of one state cannot run into another and summon a
party there domiciled to respond to proceedings against him. (Hess vs.
Pawloski, 274 U. S., 352, 355; 47 S. Ct., 632, 633 [71 Law. ed., 109].) Notice
sent outside the state to a nonresident is unavailing to give jurisdiction in an
action against him personally for money recovery. (Pennoyer vs. Neff, 95 U.
S., 741 [24 Law. ed., 565].) There must be actual service within the State of
notice upon him or upon some one authorized to accept service for him.
(Goldey vs. Morning News, 156 U. S., 518 [15 S. Ct., 559; 39 Law. ed., 517].)
A personal judgment rendered against a nonresident, who has neither been
served with process nor appeared in the suit, is without validity. (McDonald
vs. Mabee, 243 U. S., 90 [37 S. Ct., 343; 61 Law, ed., 608; L. R. A. 1917F,
485].) The mere transaction of business in a state by nonresident natural
persons does not imply consent to be bound by the process of its courts.
(Flexner vs. Farson, 248 U. S., 289 [39 S. Ct., 97; 63 Law. ed., 250].)" (Cited in
Skandinaviska Granit Aktiebolaget vs. Weiss, 234 N. Y. S., 202, 206, 207.)

The process of a court has no extraterritorial effect, and no jurisdiction is

acquired over the person of the defendant by serving him beyond the
boundaries of the state. Nor has a judgment of a court of a foreign country
against a resident of his country having no property in such foreign country
based on process served here, any effect here against either the defendant
personally or his property situated here. (5 R. C. L., 912.)

Process issuing from the courts of one state or country cannot run into
another, and although a nonresident defendant may have been personally
served with such process in the state or country of his domicile, it will not
give such jurisdiction as to authorize a personal judgment against him. (23
Cyc., 688.)

It can not be said that the decision rendered by the Court of Hanoi should be
conclusive to such an extent that it cannot be contested, for it merely
constitutes, from the viewpoint of our laws, prima facie evidence of the
justness of appellants' claim, and, as such, naturally admits proof to the
contrary. This is precisely the provision of section 311 of Act No. 190, as
interpreted in the case of Ingenohl vs. Walter E. Olsen & Co. (47 Phil., 189):0

The effect of a judgment of any other tribunal of a foreign country, having

jurisdiction to pronounce the judgment, is as follows:

1. In case of a judgment against a specific thing, the judgment is conclusive

upon the title to the thing;

2. 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. (Sec. 311 of Act No. 190.)

In view of the foregoing considerations, our conclusion is that we find no

merit in the errors assigned to the lower court and the appealed judgment is
in accordance with the law.

Wherefore, the judgment is affirmed, with costs against the appellants. So

ordered.
G.R. No. L-11796

August 5, 1918

In the matter of estate of Samuel Bischoff Werthmuller. ANA M. RAMIREZ,

executrix-appellant,
vs.
OTTO GMUR, as guardian of the minors Esther Renate Mory, Carmen Maria
Mory, and Leontina Elizabeth, claimant-appellant.

C. Lozano for executrix-appellant.

Thos. D. Aitken for claimant-appellant.

STREET, J.:

Samuel Bischoff Werthmuller, native of the Republic of Switzerland, but for

many years a resident of the Philippine Islands, died in the city of Iloilo on
June 29, 1913, leaving a valuable estate of which he disposed by will. A few
days after his demise the will was offered for probate in the Court of First
Instance of Iloilo and, upon publication of notice, was duly allowed and
established by the court. His widow, Doa Ana M. Ramirez, was named as
executrix in the will, and to her accordingly letters testamentary were issued.
By the will everything was given to the widow, with the exception of a piece
of real property located in the City of Thun, Switzerland, which was devised to
the testator's brothers and sisters.

The first cause of the will contains a statement to the effect that inasmuch as
the testator had no children from his marriage with Ana M. Ramirez he was
therefore devoid of forced heirs. In making this statement the testator
ignored the possible claims of two sets of children, born to his natural
daughter, Leona Castro.

The pertinent biographical facts concerning Leona Castro are these: As

appears from the original baptismal entry made in the church record of
Bacolod, she was born in that pueblo on April 11, 1875, her mother being
Felisa Castro, and father "unknown." Upon the margin of this record there is
written in Spanish an additional annotation of the following tenor: "According
to a public document (escritura) which was exhibited, she was recognized by
Samuel Bischoff on June 22, 1877." This annotation as well as the original
entry is authenticated by the signature of Father Ferrero, whose deposition
was taken in this case. He testifies that the work "escritura" in this entry
means a public document; and he says that such document was exhibited to
him when the marginal note which has been quoted was added to the
baptismal record and supplied the basis for the annotation in question.

As the years passed Leona Castro was taken into the family of Samuel
Bischoff and brought up by him and his wife a a member of the family; and it
is sufficiently shown by the evidence adduced in this case that Samuel
Bischoff tacitly recognized Leona a his daughter and treated her as such. In
the year 1895 Leona Castro was married to Frederick von Kauffman, a British
subject, born in Hong Kong, who had come to live in the city of Iloilo. Three
children were born of this marriage, namely, Elena, Federico, and Ernesto, the
youngest having been born on November 10, 1898. In the month of April
1899, Leona Castro was taken by her husband from Iloilo to the City of Thun,
Switzerland, for the purpose of recuperating her health. She was there placed

in a sanitarium, and on August 20th the husband departed for the Philippine
Islands, where he arrived on October 10, 1899.

Leona Castro continued to remain in Switzerland, and a few years later

informed her husband, whom she had not seen again, that she desired to
remain free and would not resume life in common with him. As a
consequence, in the year 1904, Mr. Kauffman went to the City of Paris,
France, for the purpose of obtaining a divorce from his wife under the French
laws; and there is submitted in evidence in this case a certified copy of an
extract from the minutes of the Court of First Instance of the Department of
the Seine, from which it appears that a divorce was there decreed on January
5, 1905, in favor of Mr. Kauffman and against his wife, Leona, in default.
Though the record recites that Leona was then in fact residing at No. 6, Rue
Donizetti, Paris, there is no evidence that she had acquired a permanent
domicile in that city.

The estrangement between the von Kauffman spouses is explained by the

fact that Leona Castro had become attracted to Dr. Ernest Emil Mory, the
physician in charge of the sanatorium in Switzerland where she was originally
placed; and soon after the decree of divorce was entered, as aforesaid,
Doctor Mory and Leona Castro repaired to the City of London, England, and
on May 5, 1905, in the registrar's office in the district of Westminster, went
through the forms of a marriage ceremony before an officer duly qualified to
celebrate marriage under the English law. It appears that Doctor Mory himself
had been previously married to one Helena Wolpman, and had been divorced
from her; but how or under what circumstances this divorce had been
obtained does not appear.

Prior to the celebration of this ceremony of marriage a daughter, named

Leontina Elizabeth, had been born (July 21, 1900) to Doctor Mory and Leona
Castro, in Thun, Switzerland. On July 2, 1906, a second daughter, named
Carmen Maria, was born to them in Berne, Switzerland, now the place of their
abode; and on June 10, 1909, a third daughter was born, name Esther. On
October 6, 1910, the mother died.

In the present proceedings Otto Gmur has appeared as the guardian of the
three Mory claimants, while Frederick von Kauffman has appeared as the
guardian of his own three children, Elena, Federico, and Ernesto.

As will be surmised from the foregoing statement, the claims of both sets of
children are founded upon the contention that Leona Castro was the
recognized natural daughter of Samuel Bischoff and that as such she would, if
living, at the time of her father's death, have been a forced heir of his estate
and would have been entitled to participate therein to the extend of a onethird interest. Ana M. Ramirez, as the widow of Samuel Bischoff and residuary
legatee under his will, insists at least as against the Mory claimants, that
Leona Castro had never been recognized at all by Samuel Bischoff.

In behalf of Leontina, the oldest of the Mory claimants, it was originally

insisted in the court below, that, having been born while her mother still
passed as the wife of Frederick von Kauffman, she was to be considered as a
legitimate daughter of the wedded pair. This contention has been abandoned
on this appeal a untenable; and it is now contended here merely that, being
originally the illegitimate daughter of Doctor Mory and Leona Castro, she was
legitimated by their subsequent marriage.

In behalf of Carmen Maria and Esther Renate, the two younger of the Mory
claimants, it is argued that the bonds of matrimony which united Frederick
von Kauffman and Leona Castro were dissolved by the decree of divorce
granted by the Paris court on January 5, 1905; that the marriage ceremony
which was soon thereafter celebrated between Doctor Mory and Leona in
London was in all respects valid; and that therefore these claimants are to be
considered the legitimate offspring of their mother.

In behalf of the children of Frederick von Kauffman it is insisted that the

decree of divorce was wholly invalid, that all three of the Mory children are
the offspring of adulterous relations, and that the von Kauffman children, as
the legitimate offspring of Leona Castro, are alone entitled to participate in
the division of such part of the estate of Samuel Bischoff as would have been
inherited by their mother, if living.

We are of the opinion that the status of Leona Castro as recognized natural
daughter of Samuel Bischoff is fully and satisfactorily shown. It is proved that
prior to her marriage with Frederick von Kauffman she was in an
uninterrupted enjoyment of the de facto status of a natural child and was
treated as such by Samuel Bischoff and his kindred. The proof of tacit

recognition is full and complete.

From the memorandum made by Padre Ferrero in the record of the birth, as
well as from the testimony of this priest, taken upon the deposition, it also
appears that Samuel Bischoff had executed a document, authenticated by a
notarial act, recognizing Leona as his daughter, that said document was
presented to the priest, as custodian of the church records, and upon the
faith of that document the marginal note was added to the baptismal record,
showing the fact of such recognition. The original document itself was not
produced in evidence but it is shown that diligent search was made to
discover its whereabouts, without avail. This was sufficient to justify the
introduction of secondary evidence concerning its contents; and the
testimony of the priest show that the fact of recognition was therein stated.
Furthermore, the memorandum in the baptismal record itself constitutes
original and substantive proof of the facts therein recited.

It will be observed that the recognition of Leona Castro as the daughter of

Samuel Bischoff occurred prior to the date when the Civil Code was put in
force in these Islands; and consequently her rights as derived from the
recognition must be determined under the law as it then existed, that is,
under Law 11 of Toro, which afterwards became Law 1, title 5, book 10, of the
Novisima Recopilacion. (See Capistrano vs. Estate of Gabino, 8 Phil., 135,
139, where this statute is quoted in the opinion written by Mr. Justice Torres.)
Under that law recognition could be established by proof of acts on the part
of the parent unequivocally recognizing the status of his offspring. (Cosio vs.
Pili, 10 Phil., 72, 77.) In other words at tacit recognition was sufficient. Under
article 131 of the present Civil Code, the acknowledgment of a natural child
must be made in the record of birth, by will, or in other public instrument. We
are of the opinion that the recognition of Leona Castro is sufficiently shown
whether the case be judged by the one provision or the other.

But it is contended by counsel for Doa Ana Ramirez that only children born
of persons free to marry may possess the status of recognized natural
children, and there is no evidence to show that Felisa Catro was either a
single woman or widow at the time of the conception or birth of Leona. In the
absence of proof to the contrary, however, it must be presumed that she was
a single woman or a widow.

Relative to this presumption of the capacity of the parents to marry, the

author Sanchez Roman makes the following comment:

Furthermore, viewing the conception of natural child in connection with two

mutually interrelated circumstances, to wit, the freedom of the parents to
intermarry, with or without dispensation, at the time of the conception of the
offspring stigmatized as natural, the first of these, or freedom to marry, is a
point upon which there is, according to the jurisprudence of our former law,
whose spirit is maintained in the Code, an affirmative presumption which
places the burden of proving the contrary upon those who are interested in
impugning the natural filiation. (Vol. 5, Derecho Civil, pp. 1018-1019.)

The contrary presumption would be that Felisa Castro was guilty of adultery,
which cannot be entertained. If such had in fact been the case, the burden of
proving it would have been upon the persons impugning the recognition of
the child by her father. (Sec. 334, par. 1, Code of Civil Procedure.)

From the fact that Leona Castro was an acknowledged natural daughter of
her father, it follows that had she survived him she would have been his
forced heir, he having died after the Civil Code took effect. (Civil Code, article
807 [3], art. 939; Civil Code, first transitory disposition); and as such forced
heir she would have been entitled to one-third of the inheritance (art. 842,
Civil Code).

With reference to the right of the von Kauffman children, it is enough to say
that they are legitimate children, born to their parents in lawful wedlock; and
they are therefore entitled to participate in the inheritance which would have
devolved upon their mother, if he had survived the testator.

As regards the Mory claimants, it is evident that their rights principally

depend upon the effect to be given by this court to the decree of divorce
granted to von Kauffman by the Court of First Instance of the City of Paris. If
this decree is valid, the subsequent marriage of Doctor Mory and Leona
Castro must also be conceded to be valid; and as a consequence the two
younger children, born after said marriage, would be the legitimate offspring
of their mother, and would be entitle to participate in their mother's portion
of Mr. Bischoff's estate. With respect to Leontina Elizabeth, the older one of

the Mory claimants, there would in the case still be the insuperable obstacle
which results from the fact that she was the offspring of adulterous
intercourse and a such was incapable of legitimation (art. 119, Civil Code).

We are of the opinion that the decree of divorce upon which reliance is placed
by the representation of the Mory children cannot be recognized as valid in
the courts of the Philippine Islands. The French tribunal has no jurisdiction to
entertain an action for the dissolution of a marriage contracted in these
Islands by person domiciled here, such marriage being indissoluble under the
laws then prevailing in this country.

The evidence shows conclusively that Frederick von Kauffman at all times
since earliest youth has been, and is now, domiciled in the city of Iloilo in the
Philippine Islands; that he there married Leona Castro, who was a citizen of
the Philippine Islands, and that Iloilo was their matrimonial domicile; that his
departure from iloilo for the purpose of taking his wife to Switzerland was
limited to that purpose alone, without any intent to establish a domicile
elsewhere; and finally that he went to Paris in 1904, for the sole purpose of
getting a divorce, without any intention of establishing a permanent
residence in that city. The evidence shows that the decree was entered
against the defendant in default, for failure to answer, and there is nothing to
show that she had acquired, or had attempted to acquire, a permanent
domicile in the City of Paris. It is evident of course that the presence of both
the spouses in that city was due merely to the mutual desire to procure a
divorce from each other.

It is established by the great weight of authority that the court of a country in

which neither of the spouses is domiciled and to which one or both of them
may resort merely for the purpose of obtaining a divorce has no jurisdiction
to determine their matrimonial status; and a divorce granted by such a court
is not entitled to recognition elsewhere. (See Note to Succession of Benton,
59 L. R. A., 143.) The voluntary appearance of the defendant before such a
tribunal does not invest the court with jurisdiction. (Andrews vs. Andrews, 188
U. S., 14; 47 L. ed., 366.)

It follows that, to give a court jurisdiction on the ground of the plaintiff's

residence in the State or country of the judicial forum, his residence must be
bona fide. If a spouse leaves the family domicile and goes to another State

for the sole purpose of obtaining a divorce, and with no intention of

remaining, his residence there is not sufficient to confer jurisdiction on the
courts of that State. This is especially true where the cause of divorce is one
not recognized by the laws of the State of his own domicile. (14 Cyc., 817,
818.)

As have been well said by the Supreme Court of the United States marriage is
an institution in the maintenance of which in its purity the public is deeply
interested, for it is the foundation of the family and of society, without which
there could be neither civilization nor progress. (Maynard vs. Hill, 125 U. S.,
210; 31 L. ed., 659.) Until the adoption of Act No. 2710 by the Philippine
Legislature (March 11, 1917), it had been the law of these Islands that
marriage, validly contracted, could not be dissolved absolutely except by the
death of one of the parties; and such was the law in this jurisdiction at the
time when the divorce in question was procured. The Act to which we have
referred permits an absolute divorce to be granted where the wife has been
guilty of adultery or the husband of concubinage. The enactment of this
statute undoubtedly reflect a change in the policy of our laws upon the
subject of divorce, the exact effect and bearing of which need not be here
discussed. But inasmuch as the tenets of the Catholic Church absolutely deny
the validity of marriages where one of the parties is divorced, it is evident
that the recognition of a divorce obtained under the conditions revealed in
this case would be as repugnant to the moral sensibilities of our people as it
is contrary to the well-established rules of law.

As the divorce granted by the French court must be ignored, it results that
the marriage of Doctor Mory and Leona Castro, celebrated in London in 1905,
could not legalize their relations; and the circumstance that they afterwards
passed for husband and wife in Switzerland until her death is wholly without
legal significance. The claims of the Mory children to participate in the estate
of Samuel Bischoff must therefore be rejected. The right to inherit is limited
to legitimate, legitimated, and acknowledged natural children. The children of
adulterous relations are wholly excluded. The word "descendants," as used in
article 941 of the Civil Code cannot be interpreted to include illegitimates
born of adulterous relations.

An important question arises in connection with the time within which the
claims of the two sets of children were presented to the court. In this
connection it appears that the will of Samuel Bischoff was probated in August,
1913. A committee on claims was appointed and it report was field and

accepted February 20, 1914. About the same time Otto Gmur entered an
appearance for the Mory claimants and petitioned the court to enter a decree
establishing their right to participate in the distribution of the estate. The
executrix, Doa Ana Ramirez, answered the petition denying that said minors
were the legitimate children of Leona Castro and further denying that the
latter was the recognized natural daughter of Samuel Bischoff. Upon the
issues thus presented a trial was had before the Honorable Fermin Mariano,
and on December 29, 1915, he rendered a decision in which he held (1) that
Leona Castro was the recognized natural daughter of Samuel Bischoff; (2)
that the minor, Leontina Elizabeth, is a legitimate daughter of Leona Castro;
and (3) that the minors Carmen Maria and Esther Renate are illegitimate
children of Leona Castro.

From these facts the court drew the conclusion that Leontina Elizabeth was
entitled to one-third of the estate of the late Samuel Bischoff, and that his
widow, Doa Ana Ramirez, was entitled to the remaining two-thirds. From this
decision both Doa Ana Ramirez and Otto Gmur, as guardian, appealed.

Shortly after the appeals above-mentioned were taken, Mr. Frederick von
Kauffman made application to the Court of First Instance of Iloilo by petition
filed in the proceedings therein pending upon the estate of the late Samuel
Bischoff for appointment as guardian ad litem of his minor children, the von
Kauffman heirs, which petition was granted by order dated March 4, 1916.
Thereafter, on April 1, 1916, von Kauffman, on behalf of the said minors, filed
in the cause a petition setting forth their right to share in the estate. This
petition was answered by Mr. Otto Gmur, guardian, on April 26, 1916, the sole
contention of said answer being that the matter to which the petition relates
had been disposed of by the decision of the Court of First Instance rendered
in said proceedings by Judge Mariano on December 9, 1915. Doa Ana
Ramirez answered denying all the allegations of von Kauffman's petition.

The trial of the petition of von Kauffman, as guardian, came on for hearing
before the Court of First Instance of Iloilo on the 10th day of August, 1916.
Upon the evidence taken at that hearing the Honorable J. S. Powell, as judge
then presiding in the Court of First Instance of Iloilo, rendered a decision
under date of November 14, 1916, in which he found as a fact Leona Castro
was the acknowledged natural daughter of Samuel Bischoff and that the
minors, Elena, Fritz, and Ernesto, are the legitimate children of Frederick von
Kauffman and the said Leona Castro, born in lawful wedlock. Upon the facts
so found, Judge Powell based his conclusion that all that portion of the estate

of Samuel Bischoff pertaining to Leona Castro should be equally divided

among the children Federico, Ernesto, and Elena, thereby excluding by
inference the Mory claimants from all participation in the estate.

From this judgments an appeal was taken by Mr. Otto Gmur as guardian, no
appeal having taken by Doa Ama Ramirez.

Though the circumstance is now of no practical importance, it may be stated

in passing that the appeals of Doa Ana Ramirez and of Otto Gmur, guardian,
from the decision of Judge Mariano of December 9, 1915, and the appeal of
Otto Gmur, guardian from the decision of Judge Powell, of November 14,
1916, were brought to this court separately; but the causes were
subsequently consolidated and have been heard together. The parties to the
litigation have also stipulated that all the "evidence, stipulations and
admissions in each of the two proceedings above-mentioned may be
considered for all purposes by this court in the other." The case is therefore
considered here as though there had been but one trial below and all the
issues of law and fact arising from the contentions of the oppossing claimants
had been heard at the same time.

Upon the facts above stated it is insisted for Ana M. Ramirez that her rights to
the estate under the will of Samuel Bischoff were at the latest determined by
the final decree of December 29, 1915; and that it was thereafter
incompetent for the court to take cognizance of the application of the Mory
claimants. If this contention is sustainable, the same considerations would
operate to defeat the later application filed on behalf of the von Kauffman
children and indeed with even greater force, since this application was
not made until the appeals from the decree of December 9, 1915, had
actually been perfected and the cause had been transferred to the Supreme
Court.

Two questions are here involved, one as to the effect of the probate of a will
upon the rights of forced heirs who do not appear to contest the probate, and
the other as to the conclusiveness and finality of an order for the distribution
of an estate, as against persons who are not before the court.

Upon the first of these questions it is enough to say that the rights of forced

heirs to their legitime are not divested by the decree admitting a will to
probate, and this regardless of the fact that no provision has been made
for them in the will, for the decree of probate is conclusive only a regards the
due execution of the will, the question of its intrinsic validity not being
determined by such decree. (Code of Civil Procedure, sec. 625; Castaeda vs.
Alemany, 3 Phil., 426; Sahagun vs. De Gorostiza, 7 Phil., 347; JocSoy vs. Vao,
8 Phil., 119; Limjuco vs. Ganara, 11 Phil., 393, 395; Austria vs. Ventenilla, 21
Phil., 180.)

Indeed it is evident, under the express terms of the proviso to section 753 of
the Code of Civil Procedure, that the forced heirs cannot be prejudiced by the
failure of the testator to provide for them in his will; and regardless of the
intention of the testator to leave all his property, or practically all of it, to his
wife, the will is intrinsically invalid so far a it would operate to cut off their
rights.

The question as to the conclusiveness of the order of distribution can best be

considered with reference to the von Kauffman children, as the solution of the
problem as to them necessarily involves the disposition of the question as to
the Mory claimants.

It is evident that the von Kauffman children cannot be considered to have

been in any sense parties to the proceeding at the time Judge Mariano
rendered his decision. So far a the record shows the court was then unaware
even of their existence. No notice of any kind was served upon them; nor was
any person then before the court authorized to act in their behalf.
Nevertheless, as we have already shown, upon the death of Samuel Bischoff,
the right to participate in his estate vested immediately in this children, to
the extent to which their mother would have been entitled to participate had
she survived her father. If the right vested upon the death of Samuel Bischoff,
how has it been since divested?

The record shows that the decision of December 29, 1915, in which Judge
Mariano holds that the estate should be divided between Leontina Elizabeth
and the residuary legatee Doa Ana Ramirez, was made without publication
of notice, or service of any kind upon other persons who might consider
themselves entitled to participate in the estate.

The law in force in the Philippine Islands regarding the distribution of estates
of deceased persons is to be found in section 753 et seq., of the Code of Civil
Procedure. In general terms the law is that after the payment of the debts
and expenses of administration the court shall distribute the residue of the
estate among the persons who are entitled to receive it, whether by the
terms of the will or by operation of law. It will be noted that while the law
(sec. 754) provides that the order of distribution may be had upon the
application of the executor or administrator, or of a person interested in the
estate, no provision is made for notice, by publication or otherwise, of such
application. The proceeding, therefore, is to all intents and purposes ex parte.
A will be seen our law is very vague and incomplete; and certainly it cannot
be held that a purely ex parte proceeding, had without notice by personal
service or by publication, by which the court undertakes to distribute the
property of deceased persons, can be conclusive upon minor heirs who are
not represented therein.

Section 41 of the Code of Civil Procedure provides that ten years actual
adverse possession by "occupancy, grant, descent, or otherwise' shall vest
title in the possessor. This would indicate that a decree of distribution under
which one may be placed in possession of land acquired by descent, is not in
itself conclusive, and that, a held in Layre vs. Pasco (5 Rob. [La.], 9), the
action of revindication may be brought by the heir against the persons put in
possession by decree of the probate court at any time within the period
allowed by the general statute of limitations.

Our conclusion is that the application of the von Kauffman children was
presented in ample time and that the judgment entered in their favor by
Judge Powell was correct. The Mory claimants, as already stated, are debarred
from participation in the estate on other grounds.

So much of the judgment entered in the Court of First Instance, pursuant to

the decision of Judge Mariano of December 29, 1915, as admits Leontina
Elizabeth Mory to participate in the estate of Samuel Bischoff is reversed; and
instead the von Kauffman children will be admitted to share equally in onethird of the estate as provided in the decision of Judge Powell of November
14, 1916. In other respects the judgment of Judge Mariano is affirmed. The
costs of this instance will be paid out of the estate. So ordered.
G.R. No. L-57338

July 23, 1987

WILLIAM B. BORTHWICK, petitioner,

vs.
HON. FLORELIANA CASTRO-BARTOLOME, Presiding Judge, Br. XV, Makati, of
the Court of First Instance of Rizal; JOSEPH E. SCALLON, and JEWELL C.
SCALLON, respondents.

NARVASA, J.:

By action commenced in the Circuit Court of the First Circuit, State of Hawaii,
U.S.A.,1 Joseph E. Scallon sought to Compel payment by William B. Borthwick
on four (4) promissory notes2 in the amounts of $32,408.95, $29,584.94,
$2,832.59 and $40,000.00, plus stipulated interest. Scallon's complaint
alleged, inter alia, that Borthwick, an American citizen living in the
Philippines, owned real property interests in Hawaii where he last resided and
transacted business therein; that business dealings which transpired in
Honolulu, Hawaii had given rise to the promissory notes sued upon, and
Borthwick had failed to pay the sums thereunder owing upon maturity and
despite demand.3 Attached to the complaint were the promissory notes,
which although uniformly specifying the city of Palos Verdes, Los Angeles,
California as the place of payment, also provided that

in the event that payment *** shall not have been made in full on or before
the maturity date *** at *** (such) place ***, payee may select, at his option,
Manila, Philippines, or Honolulu, Hawaii as additional places for payment ***
and *** any court in any of said places having jurisdiction over the subject
matter shall be a proper Court for the trial of any action brought to enforce
payment of this note and the law of the place in which said action is brought
shall apply. 4

Borthwick being then in Monterey, California, summons5 was served upon

him personally in that place, pursuant to Hawaiian law allowing service of
process on a person outside the territorial confines of the State, if he had
otherwise submitted himself to the jurisdiction of its courts as to causes of
action arising from, among others, the act of transacting any business within
Hawaii6 alleged to consist as to Borthwick in the negotiation and dealings

regarding the promissory notes. Borthwick ignored the summons.1avvphi1

Default was entered against him, and in due course a default judgment was
rendered as follows:

DEFAULT JUDGMENT

That Defendant WILLIAM B. BORTHWICK having fatted to plead or otherwise

defend in the above-entitled action and his default having been duly entered
herein;

Now, upon the application of the Plaintiff JOSEPH E. SCALLON and upon the
affidavit that the Defendant WILLIAM B. BORTHWICK is indebted to said
Plaintiff in the sum of $104,817.48.

IT IS HEREBY ORDERED, ADJUDGED, and decreed that Plaintiff JOSEPH E.

SCALLON recover from Defendant WILLIAM B. BORTHWICK the sum of
$104,817.48 together with

(1) The transaction of any business within the State;

xxx

xxx

xxx

(3) The ownership, use or possession of any real estate situated in this State;

xxx

xxx

xxx

(b) Service of process upon any person who is subject to the jurisprudence of
the courts of this State, as provided in this section, may be made as provided
by sections 634-36, if he cannot be found in the State, with the same force
and effect as though summons had been personally served within this State.

[ 634-36] Manner of service under sections 634-33 to 35.

When service of summons is provided for by sections 634-33, 634-34, or 63435, service shall be made by leaving a certified copy thereof with the director
of regulatory agencies or his deputy, *** provided that notice of the service
and a certified copy of the summons are served upon the defendant
personally by any person authorized to serve process in the place which he
may be found or appointed by the court for that purpose, or sent by certified
or registered mail ***. The service shall be deemed complete upon delivery of
the required papers to the defendant outside the State, personally or by mail
as provided; Rollo, pp. 143-144 interest in the sum of $41,807.93, costs of
Court in the sum of $37.00 and attorney's fees in the sum of $4,290.64 for a
total sum of $150,953.05.

DATED: Honolulu, Hawaii, APR. 30, 1987.

(Sgd.)
V. CHING

Clerk of the above-entitled Court 7

However, Scallon's attempts to have the judgment executed in Hawaii and

California failed, because no assets of Borthwick could be found in those
states.8 Scallon and his wife, Jewell, then came to the Philippines and on
March 15, 1980 brought suit against Borthwick in the Court of First Instance
of Makati,9 seeking enforcement of the default judgment of the Hawaii Court
and asserting two other alternative causes of action.10

The sheriff's initial efforts to serve summons on Borthwick personally at his

address at 861 Richmond St., Greenhills, Mandaluyong, Metro Manila having
been unsuccessful Borthwick was "always out on official business" the
sheriff effected substituted service by leaving a copy of the summons and the
complaint with Borthwick's "house caretaker," a man named Fred Daniel.11

Borthwick filed no answer to the Scallons' complaint. He was declared in

default. After due proceedings judgment by default was rendered against
him, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1. The decision of the Court of Hawaii in Civil Case No. 56660 reading:

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Plaintiff JOSEPH E.

SCALLON recover from Defendant WILLIAM B. BORTHWICK the sum of
$104,817.48 together with interest in the sum of $41,807.93, costs of Court
in the sum of $37.00 and attorney's fees in the sum of $4,290.64 for a total
sum of $150,53.05.

may be, as it is hereby ordered, enforced in the Philippines.

2. The second alternative cause of action in the event that the satisfaction of
the said judgment becomes impossible, the rescission of the agreement (Exh.
L) of the parties is hereby granted. Defendant Borthwick is hereby ordered:

(a) To return and deliver to plaintiffs Joseph and Jewell Scallon their 800
shares of stock of Manila Memorial Park Cemetery, Inc. and 180 shares of
stock of Trans-Pacific Development Management Corporation, together with
any and/or all stock dividends, cash dividends and similar corporate
distributions accruing to said shares of stock from and after December 3,
1973 (the date of the Agreement, Exh. L);

(b) In the event that such shares cannot be returned and delivered, to pay to
plaintiff Scallon the value of the same from the execution of the agreement,
Exh. L, together with any increase in value from the said date to the finality of
this judgment.

SO ORDERED. 12

Again, it was with Fred Daniel, Identifying himself as Borthwick's "houseboy,"

that a copy of the decision was left.13

No response from Borthwick was forthcoming until after the Court

subsequently amended its judgment so as to make the sums due under the
Hawaii Court decision payable in their equivalent in Philippine currency.14
Notice of this amendatory order was somehow personally accepted by
Borthwick at this time. Borthwick then moved for a new trial, claiming that it
was by accident, mistake and excusable negligence that his "off and on
itinerant gardener," Daniel, failed to transmit the summons to him, which
omission consequently prevented Borthwick from knowing of the judicial
proceedings against him. Alleging too that "the promissory notes did not arise
from business dealings in Hawaii," nor "did (he) own real estate" therein,15
Borthwick contended that the judgment sought to be enforced was invalid for
want of jurisdiction of the Hawaii Court over the cause of action and over his
person.

The motion for new trial was denied by the Trial Court upon the factual
finding that "Fred Daniel is a responsible person" "of suitable age and
discretion" "resident of the address *** (of the) defendant" on whom
substituted service of summons had been duly made.16 As to Borthwick's
attack on the validity of the foreign judgment, the Trial Court ruled that
"under the ** (Hawaii Revised Statute) cited by the defendant the Hawaii
Court has jurisdiction" because the factual premises upon which the exercise
of such jurisdiction was based "had not been refuted by the defendant"
although he "appears to be a lawyer, and the summons in the Hawaii case
was served personally on him."17 Finally, the Trial Court disposed of
Borthwick's other defenses18 saying that the present action "is (for) the
enforcement of a foreign judgment" where the validity of his defenses to the
original action is immaterial.19 Borthwick proceeded directly to this Court and
filed a petition for review,20 raising issues of law, framed as follows:

1. Is a foreign judgment against a person rendered without jurisdiction over

the cause of action and without proper summons to the defendant
enforceable in the Philippines?

2. Has the respondent Judge acquired jurisdiction over the person of

defendant when summons was served on an itinerant gardener who did not
reside in defendant's house?

3. Where a motion for new trial was filed on time, duly supported with
affidavits to prove the grounds relied upon, should not the Court grant the
same? 21

It is true that a foreign judgment against a person is merely "presumptive

evidence of a right as between the parties," and rejection thereof may be
justified, among others, by "evidence of a want of jurisdiction" of the issuing
authority, under Rule 39 of the Rules of Court.22 In the case at bar, the
jurisdiction of the Circuit Court of Hawaii hinged entirely on the existence of
either of two facts in accordance with its State laws, i.e., either Borthwick
owned real property in Hawaii, or the promissory notes sued upon resulted
from his business transactions therein. Scallon's complaint clearly alleged
both facts. Borthwick was accorded opportunity to answer the complaint and
impugn those facts, but he failed to appear and was in consequence declared
in default. There thus exists no evidence in the record of the Hawaii case
upon which to lay a conclusion of lack of jurisdiction, as Borthwick now urges.

The opportunity to negate the foreign court's competence by proving the

non-existence of said jurisdictional facts established in the original action,
was again afforded to Borthwick in the Court of First Instance of Makati,
where enforcement of the Hawaii judgment was sought. This time it was the
summons of the domestic court which Borthwick chose to ignore, but with the
same result: he was declared in default. And in the default judgment
subsequently promulgated, the Court a quo decreed enforcement of the
judgment affirming among others the jurisdictional facts, that Borthwick
owned real property in Hawaii and transacted business therein.

In the light of these antecedents, it is plain that what Borthwick seeks in

essence is one more opportunity, a third, to challenge the jurisdiction of the
Hawaii Court and the merits of the cause of action which that Court had
adjudged to have been established against him. This he may obtain only if he
succeed in showing that the declaration of his default was incorrect. He has
unfortunately not been able to do that; hence, the verdict must go against
him.

It is not for this Court to disturb the express finding of the Court of First
Instance that Daniel was Borthwick's resident domestic houseboy, and of
sufficient age and discretion to accept substituted service of summons for
Borthwick. Under Rule 42 of the Rules of Court, a party appealling from the
Courts of First Instance (now the Regional Trial Courts) to the Supreme Court
may "raise only questions of law (and) no other question **,"23 and is thus
precluded from impugning the factual findings of the trial court, being
deemed to have admitted the correctness of such findings24 and waived his
right to open them to question.25

In any case, a review of the records shows that the Trial Court was correct in
refusing to believe Borthwick's representation that "Daniel gardens at the
residence of Borthwick, then goes home to La Union after gardening
itinerantly." As said Court observed, that situation is "ridiculous," it being I
"queer and hardly coincidental why on all papers served on the defendant, it
was Fred Daniel who signed and acknowledged receipt. "26

There was therefore no error committed by the Trial Court when it denied
Borthwick's motion to lift the order of default (which is what the motion for
new trial actually is) because Borthwick had failed to establish any proper
ground therefor.

WHEREFORE, the petition for review is denied, with costs against petitioner.

SO ORDERED.