Digest of Cases
Conflicts of Law
Compiled by: Maligad, Gian Antonio
Conflict of Laws; Defined; Elements in the Definition
Saudi Arabia Airlines vs. Court of Appeals
Doctrine: This is a conflicts case.
Foreign Element—A factual situation that cuts across
territorial lines and is affected by the diverse laws of two or
more states is said to contain a "foreign element
Facts:
Milagros P. Morada was hired as a flight attendant by SAUDIA
(Saudi Arabian Airlines) for its airline based in Jeddah Saudi
Arabia.
While on a lay-over in Indonesia, Morada went to a disco dance
with fellow crew members Thamer Al-Gazzawi and Allah
Al-Gazzawi, both Saudi nationals.
Because it was almost morning when they returned to their
hotels, they agreed to have breakfast together at the room of
Thamer. When they were in the room, Allah left on some
pretext. Shortly after he did, Thamer attempted to rape plaintiff.
Fortunately, a roomboy and several security personnel heard
her cries for help and rescued her. Later, the Indonesian police
came and arrested Thamer and Allah Al-Gazzawi, the latter as
an accomplice.
When Morada returned to Jeddah, several SAUDIA officials
interrogated her about the Jakarta incident. They then
requested her to go back to Jakarta to help arrange the release
of Thamer and Allah.
Morada learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to
deport Thamer and Allah after two weeks of detention.
Eventually, they were again put in service by defendant
SAUDIA. Morada was transferred to Manila.
One year and a half later, Morada was not allowed to board the
plane and instead she was ordered to take a later flight to
Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA.
When she did, a certain Khalid of the SAUDIA office brought her
to a Saudi court where she was asked to sign a document
written in Arabic. They told her that this was necessary to close
the case against Thamer and Allah. As it turned out, plaintiff
signed a notice to her to appear before the court on June 27,
1993.
On July 3, 1993, a SAUDIA legal officer escorted Morada to the
same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing
her to five months imprisonment and to 286 lashes.
Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta.
The court found plaintiff guilty of:
(1) Adultery;
(2) Going to a disco, dancing and listening to the music in
violation of Islamic laws; and
(3) Socializing with the male crew, in contravention of Islamic
tradition
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, Morada was terminated
from the service by SAUDIA, without her being informed of the
cause.
On November 23, 1993, Morada filed a Complaint for damages
against SAUDIA, and Khaled Al-Balawi ("Al- Balawi"), its
country manager.
SAUDIA filed an Omnibus Motion to Dismiss, which raised the
following grounds, to wit:
(1) That the Complaint states no cause of action against Saudia;
(2) That defendant Al-Balawi is not a real party in interest;
(3) That the claim or demand set forth in the Complaint has
been waived, abandoned or otherwise extinguished; and
(4) That the trial court has no jurisdiction to try the case.
The Trial Court issued an order denying the Motion to Dismiss
Amended Complaint filed by SAUDIA.
Consequently, SAUDIA filed a Motion for Reconsideration, in
which it alleged that the Trial Court has no jurisdiction to hear
and try the case on the basis of Article 21 of the Civil Code,
since the proper law that is applicable is the law of the Kingdom
of Saudi Arabia.
Judge Ortiz, subsequently issued an Order denying SAUDIA’s
Motion for Reconsideration, stating that the Amended
Complaint was one for the recovery of actual, moral and
exemplary damages plus attorney’s fees, upon the basis of the
applicable Philippine law, Article 21 of the New Civil Code of the
Philippines, such Complaint is within the jurisdiction of the
Philippine Court as regards the subject matter.
SAUDIA filed a Petition for Review with the Supreme Court with
Prayer for Temporary Restraining Order.
SAUDIA claims that before this Court is a conflict of laws that
must be settled at the outset. It maintains that Morada’s claim
for alleged abuse of rights occurred in the Kingdom of Saudi
Arabia.
It alleges that the existence of a foreign element qualifies the
instant case for the application of the law of the Kingdom of
Saudi Arabia, by virtue of the lex loci delicti commissi rule.
On the other hand, Morada contends that since her Amended
Complaint is based on Articles 19 and 21 of the Civil Code, then
the instant case is properly a matter of domestic law
Issue:
W/N the case is a domestic case or a conflicts case? A conflicts
case
Held:
This is a conflicts case.
Where the factual antecedents satisfactorily establish the
existence of a foreign element, the Court agrees with SAUDIA
that the problem herein could present a "conflicts" case.
Foreign Element: A factual situation that cuts across territorial
lines and is affected by the diverse laws of two or more states is
said to contain a "foreign element". The presence of a foreign
element is inevitable since social and economic affairs of
individuals and associations are rarely confined to the
geographic limits of their birth or conception.
In the instant case, the foreign element consisted in the fact
that private respondent Morada is a resident Philippine
national, and that petitioner SAUDIA is a resident foreign
corporation.
Also, by virtue of the employment of Morada with the petitioner
Saudia as a flight stewardess, events did transpire during her
1
many occasions of travel across national borders, particularly
from Manila, Philippines to Jeddah, Saudi Arabia, and vice
versa, that caused a "conflicts" situation to arise.
We thus find private respondent's assertion that the case is
purely domestic, imprecise. A conflicts problem presents itself
in this case.
Hasegawa vs. Kitamura
Doctrine: Three consecutive phases in a conflicts of law
problem:
1st Phase: Jurisdiction;
2nd Phase: Choice of Law;
3rd Phase: Recognition and enforcement of judgments
Facts:
Nippon Engineering Consultants Co., Ltd (Nippon) a Japanese
consultancy firm providing technical and management support
in the infrastructure projects of foreign governments entered
into an Independent Contractor Agreement (ICA) with
respondent Minoru Kitamura, a Japanese national permanently
residing in the Philippines.
The agreement provides that respondent was to extend
professional services to Nippon for a year starting on April 1,
1999.
Nippon then assigned respondent to work as the project
manager of the Southern Tagalog Access Road (STAR) Project in
the Philippines, following the company's consultancy contract
with the Philippine Government.
Subsequently, the DPWH engaged the consultancy services of
Nippon, on January 28, 2000, this time for the detailed
engineering and construction supervision of the
Bongabon-Baler Road Improvement (BBRI) Project. Kitamura
was named as the project manager.
Petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company
had no more intention of automatically renewing his ICA. His
services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000.
Kitmaura requested a negotiation conference and demanded
that he be assigned to the BBRI project. Nippon insisted that
respondent’s contract was for a fixed term that had already
expired, and refused to negotiate for the renewal of the ICA.
Kitamura initiated a civil case for specific performance and
damages with the Regional Trial Court of Lipa City.
For their part, Nippon contend that the ICA had been perfected
in Japan and executed by and between Japanese nationals,
moved to dismiss the complaint for lack of jurisdiction.
Basis of lack of jurisdiction of the RTC: They asserted that the
claim for improper pre-termination of respondent's ICA could
only be heard and ventilated in the proper courts of Japan
following the principles of lex loci celebrationis and lex
contractus.
The RTC denied the motion to dismiss on the ground that
matters connected with the performance of contracts are
regulated by the law prevailing at the place of performance,
Nippon filed with the CA a Petition for Certiorari under Rule 65.
Subsequently, the CA ruled that the principle of lex loci
celebrationis was not applicable to the case, because nowhere
in the pleadings was the validity of the written agreement put in
issue.
Asserting that the RTC of Lipa City is an inconvenient forum,
petitioners question its jurisdiction to hear and resolve the civil
case for specific performance and damages filed by the
respondent. The ICA subject of the litigation was entered into
and perfected in Tokyo, Japan, by Japanese nationals, and
written wholly in the Japanese language. Thus, petitioners posit
that local courts have no substantial relationship to the parties
following the [state of the] most significant relationship rule in
Private International Law.
Issue:
W/N this is a conflict of laws case? Yes.
Held: The Trial Court has jurisdiction over the case.
To elucidate, in the judicial resolution of conflicts problems,
three consecutive phases are involved:
1st Phase: Jurisdiction;
2nd Phase: Choice of law, and
3rd Phase: Recognition and enforcement of judgments.
Corresponding to these phases are the following questions:
(1) Where can or should litigation be initiated?
(2) Which law will the court apply? and
(3) Where can the resulting judgment be enforced?
Continental Mirconesia Inc. vs. Joseph Basso
Doctrine: This is a conflict of laws case.
 Foreign element: One party is an alien and the other is
domiciled in another State
Three consecutive phases in the judicial resolution of a conflict
of laws problem:
1st Phase: Jurisdiction;
2nd Phase: Choice of law, and
3rd Phase: Recognition and enforcement of judgments.
Facts:
Petitioner Continental Micronesia, Inc. (CMI) is a foreign
corporation organized and existing under the laws of and
domiciled in the United States of America (US). It is licensed to
do business in the Philippines.
Basso, a US citizen, resided in the Philippines prior to his
death.
Basso was offered the position of General Manager of the
Philippine Branch of Continental. Basso accepted the offer.
CMI took over the Philippine operations of Continental, with
Basso retaining his position as General Manager.
On December 20, 1995, Basso received a letter from Mr. Ralph
Schulz (Mr. Schulz), who was then CMI’s Vice President of
Marketing and Sales, informing Basso that he has agreed to
work in CMI as a consultant on an "as needed basis" effective
February 1, 1996 to July 31, 1996.
The letter also informed Basso that:
(1) He will not receive any monetary compensation but will
continue being covered by the insurance provided by CMI;
(2)
(3) He will enjoy travel privileges; and
(4) CMI will advance Php1,140,000.00 for the payment of
housing lease for 12 months
Basso wrote a counter-proposal to Mr. Schulz regarding his
employment status in CMI. However, the reply to his counter-
proposal stated that pursuant to the employment contract
dated February 1, 1991, Basso could be terminated at will upon
2
a thirty- day notice. This notice was allegedly the letter Basso
received from Mr. Schulz on December 20, 1995.
Consequently, Basso was informed that he was being
terminated effective January 31, 1996.
Basso filed a Complaint for Illegal Dismissal with Moral and
Exemplary Damages against CMI on December 19, 1996.
Alleging the presence of foreign elements, CMI filed a Motion to
Dismiss dated February 10, 1997 on the ground of lack of
jurisdiction over the person of CMI and the subject matter of
the controversy.
Labor Arbiter: The Labor Arbiter granted the motion to dismiss
of Continental. Applying the doctrine of lex loci contractus, the
Labor Arbiter held that the terms and provisions of the
employment contract show that the parties did not intend to
apply our Labor Code (Presidential Decree No. 442).
Labor Arbiter Madjayran H. Ajan: Likewise, the Labor Arbiter
Ajan dismissed the case for lack of jurisdiction. The Labor
Arbiter agreed with CMI that the employment contract was
executed in the US "since the letter-offer was under the Texas
letterhead and the acceptance of Complainant was returned
there." Thus, applying the doctrine of lex loci celebrationis, US
laws apply.
Also, applying lex loci contractus, the Labor Arbiter ruled that
the parties did not intend to apply Philippine laws.
However, the Labor Arbiter Ajan, found CMI to have voluntarily
submitted to his office’s jurisdiction. CMI participated in the
proceedings, submitted evidence on the merits of the case, and
sought affirmative relief through a motion to dismiss.
The Labor Arbiter also ruled that Basso was terminated for a
valid cause based on the allegations of CMI that Basso
committed a series of acts that constitute breach of trust and
loss of confidence
NLRC: The NLRC did not agree with the pronouncement of the
Labor Arbiter that his office has no jurisdiction over the
controversy. It ruled that the Labor Arbiter acquired jurisdiction
over the case when CMI voluntarily submitted to his office’s
jurisdiction by presenting evidence, advancing arguments in
support of the legality of its acts, and praying for reliefs on the
merits of the case.
CMI filed its own Petition for Certiorari dated May 13, 2004
docketed as CA-G.R. SP No. 84281,32 alleging that the NLRC
gravely abused its discretion when it assumed jurisdiction over
the person of CMI and the subject matter of the case.
It also alleges that the existence of foreign elements calls for the
application of US laws and the doctrines of lex loci celebrationis
(the law of the place of the ceremony), lex loci contractus (law of
the place where a contract is executed), and lex loci intentionis
(the intention of the parties as to the law that should govern
their agreement).
CMI also invokes the application of the rule of forum non
conveniens to determine the propriety of the assumption of
jurisdiction by the labor tribunals.
Issue:
W/N there is a conflicts of law issue in this case? Yes
Held:
The Court agrees with Continental that there is a conflict of
laws issue in this case, which is required to be resolved first.
Where the facts establish the existence of foreign elements, the
case presents a conflict-of-laws issue. The foreign element in a
case may appear in different forms, such as in this case, where
one of the parties is an alien and the other is domiciled in
another state.
In the precedent case of “Hasegawa vs. Kitamura”, it was stated
that in the judicial resolution of conflict-of-laws problems, three
consecutive phases are involved:
1.) Jurisdiction,
2.) Choice of law, and
3.) Recognition and enforcement of judgments
In resolving the conflicts problem, courts should ask the
following questions:
1. "Under the law, do I have jurisdiction over the subject matter
and the parties to this case?
2. "If the answer is yes, is this a convenient forum to the
parties, in light of the facts?
3. "If the answer is yes, what is the conflicts rule for this
particular problem?
4. "If the conflicts rule points to a foreign law, has said law been
properly pleaded and proved by the one invoking it?
5. "If so, is the application or enforcement of the foreign law in
the forum one of the basic exceptions to the application of
foreign law? In short, is there any strong policy or vital interest
of the forum that is at stake in this case and which should
preclude the application of foreign law?

CA: The Court of Appeals ruled that the Labor Arbiter and the
NLRC had jurisdiction over the subject matter of the case and
over the parties.

The Court of Appeals explained that jurisdiction over the

subject matter of the action is determined by the allegations of
the complaint and the law. Since the case filed by Basso is a
termination dispute that is "undoubtedly cognizable by the
labor tribunals", the Labor Arbiter and the NLRC had
jurisdiction to rule on the merits of the case.

On the issue of jurisdiction over the person of the parties, who

are foreigners, the Court of Appeals ruled that jurisdiction over
the person of Basso was acquired when he filed the complaint
for illegal dismissal, while jurisdiction over the person of CMI
was acquired through coercive process of service of summons to
its agent in the Philippines. The Court of Appeals also agreed
that the active participation of CMI in the case rendered moot
the issue on jurisdiction.

Contention of CMI: CMI maintains that there is a

conflict-of-laws issue that must be settled to determine proper
jurisdiction over the parties and the subject matter of the case.
3

Jurisdiction
Hahn vs. Court of Appeals
Doctrine: The Trial Court has jurisdiction over the case.
For the purpose of having summons served on a foreign
corporation in accordance with Rule 14; Section 14 it is
sufficient that it be alleged in the complaint that the foreign
corporation is doing business in the Philippines. The court need
not go beyond the allegations of the complaint in order to
determine whether it has Jurisdiction.
Facts:
Petitioner Alfred Hahn is a Filipino citizen doing business under
the name and style "Hahn-Manila." On the other hand, private
respondent Bayerische Motoren Werke Aktiengesellschaft
(BMW) is a nonresident foreign corporation existing under the
laws of the former Federal Republic of Germany, with principal
office at Munich, Germany.
Alfred Hahn and BMW entered into a Deed of Assignment with
Special Power of Attorney, wherein Hahn assigned to BMW the
said BMW trademark registered in the Philippines. Also, that
the two parties would continue their business with each other.
Per the agreement, the parties "continue[d] business relations
as has been usual in the past without a formal contract." But
on February 16, 1993, in a meeting with a BMW representative
and the president of Columbia Motors Corporation (CMC), Jose
Alvarez, petitioner was informed that BMW was arranging to
grant the exclusive dealership of BMW cars and products to
CMC, which had expressed interest in acquiring the same.
BMW expressed willingness to continue business relations with
the petitioner on the basis of a "standard BMW importer"
contract, otherwise, it said, if this was not acceptable to
petitioner, BMW would have no alternative but to terminate
petitioner's exclusive dealership effective June 30, 1993.
Hahn protested claiming that the termination of his exclusive
dealership would be a breach of the Deed of Assignment. Hahn
insisted that as long as the assignment of its trademark and
device subsisted, he remained BMW's exclusive dealer in the
Philippines because the assignment was made in consideration
of the exclusive dealership.
Because of Hahn's insistence on the former business relation,
BMW withdrew on March 26, 1993 its offer of a "standard
importer contract" and terminated the exclusive dealer
relationship effective June 30, 1993.
On May 14, 1993, Hahn filed a complaint for specific
performance and damages against BMW to compel it to
continue the exclusive dealership. Hahn alleged in his
complaint that BMW was doing business in the Philippines and
could be served summons through the Department of Trade and
Industry, in accordance with Rule 14, Section 14 of the Rules of
Civil Procedure.
Summons and copies of the complaint and amended complaint
were thereafter served on the private respondent through the
Department of Trade and Industry, pursuant to Rule 14, §14 of
the Rules of Court.
Trial Court: The Trial Court issued an order granting the writ of
preliminary injunction against BMW.
BMW moved to dismiss the case, contending that the trial court
did not acquire jurisdiction over it through the service of
summons on the Department of Trade and Industry, because it
(BMW) was a foreign corporation and it was not doing business
in the Philippines.
Alfred Hahn opposed the motion. He argued that BMW was
doing business in the Philippines through him as its agent, as
shown by the fact that BMW invoices and order forms were
used to document his transactions; that he gave warranties as
exclusive BMW dealer; that BMW officials periodically inspected
standards of service rendered by him; and that he was
described in service booklets and international publications of
BMW as a "BMW Importer" or "BMW Trading Company" in the
Philippines.
BMW filed a petition for certiorari with the Court of Appeals.
The Court of Appeals enjoined the trial court from hearing
petitioner's complaint. On December 20, 1993, it rendered
judgment finding the trial court guilty of grave abuse of
discretion in deferring resolution of the motion to dismiss.
CA: The CA ruled that BMW was not doing business in the
country and, therefore, jurisdiction over it could not be acquired
through service of summons on the DTI pursuant to Rule 14,
Section 14.
Issue:
W/N the Trial Court has jurisdiction over BMW through the
service of summons to the DTI, pursuant to Rule 14, Section 14
of the Rules of Court? Yes.
Held:
Rule 14; Section 14— Service upon private foreign
corporations. — If the defendant is a foreign corporation, or a
nonresident joint stock company or association, doing business
in the Philippines, service may be made on its resident agent
designated in accordance with law for that purpose, or, if there
be no such agent, on the government official designated by law
to that effect, or on any of its officers or agents within the
Philippines.
Doing business in the Philippines—The acts are considered
"doing business in the Philippines" are enumerated in §3(d) of
the Foreign Investments Act of 1991 (R.A. No. 7042) as follows:
d) the phrase "doing business" shall include soliciting orders,
service contracts, opening offices, whether called "liaison" offices
or branches; appointing representatives or distributors
domiciled in the Philippines or who in any calendar year stay in
the country for a period or periods totalling one hundred eighty
(180) days or more; participating in the management,
supervision or control of any domestic business, firm, entity or
corporation in the Philippines; and any other act or acts that
imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or
the exercise of some of the functions normally incident to, and
in progressive prosecution of, commercial gain or of the purpose
and object of the business organization: Provided, however,
That the phrase "doing business" shall not be deemed to include
mere investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business, and/or
the exercise of rights as such investor; nor having a nominee
director or officer to represent its interests in such corporation;
nor appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and for
its own account.
The question is whether petitioner Alfred Hahn is the agent or
distributor in the Philippines of private respondent BMW. If he
is, BMW may be considered doing business in the Philippines
and the trial court acquired jurisdiction over it (BMW) by virtue
of the service of summons on the Department of Trade and
Industry. Otherwise, if Hahn is not the agent of BMW but an
independent dealer, albeit of BMW cars and products, BMW, a
foreign corporation, is not considered doing business in the
Philippines within the meaning of the Foreign Investments Act
of 1991 and the IRR, and the trial court did not acquire
jurisdiction over it (BMW).
4
Hahn claimed he took orders for BMW cars and transmitted
them to BMW. Upon receipt of the orders, BMW fixed the
downpayment and pricing charges, notified Hahn of the
scheduled production month for the orders, and reconfirmed
the orders by signing and returning to Hahn the acceptance
sheets. Payment was made by the buyer directly to BMW. Title
to cars purchased passed directly to the buyer and Hahn never
paid for the purchase price of BMW cars sold in the Philippines.
Hahn was credited with a commission equal to 14% of the
purchase price upon the invoicing of a vehicle order by BMW.
Upon confirmation in writing that the vehicles had been
registered in the Philippines and serviced by him, Hahn received
an additional 3% of the full purchase price. Hahn performed
after-sale services, including warranty services, for which he
received reimbursement from BMW. All orders were on invoices
and forms of BMW.
These allegations were substantially admitted by BMW
which, in its petition for certiorari before the Court of
Appeals, stated:
9.4. As soon as the vehicles are fully manufactured and full
payment of the purchase prices are made, the vehicles are
shipped to the Philippines. (The payments may be made by the
purchasers or third-persons or even by Hahn.) The bills of
lading are made up in the name of the purchasers, but
Hahn-Manila is therein indicated as the person to be notified.
9.5. It is Hahn who picks up the vehicles from the Philippine
ports, for purposes of conducting pre-delivery inspections.
Thereafter, he delivers the vehicles to the purchasers.
9.6. As soon as BMW invoices the vehicle ordered, Hahn is
credited with a commission of fourteen percent (14%) of the full
purchase price thereof, and as soon as he confirms in writing
that the vehicles have been registered in the Philippines and
have been serviced by him, he will receive an additional three
percent (3%) of the full purchase prices as commission.
Contrary to the appellate court's conclusion, this arrangement
shows an agency.
It is now settled that, for purposes of having summons served
on a foreign corporation in accordance with Rule 14, §14, it is
sufficient that it be alleged in the complaint that the foreign
corporation is doing business in the Philippines. The court need
not go beyond the allegations of the complaint in order to
determine whether it has Jurisdiction.
Thus, BMW is doing business in the Philippines. Therefore,
through the service of summons to the DTI, the Philippine
Court has acquired jurisdiction over BMW.
Saudi Arabia Airlines vs. Court of Appeals (Repeated)
Doctrine:
Jurisdiction: Both the plaintiff and defendant have voluntary
submitted themselves to the jurisdiction of the Philippine
Courts.
 Doctrine of Qualification;
 Connecting Factors (7);
 Points of Contact;
 State of the Most Significant Relationship Rule
Facts:
Issue:
1.) W/N the Philippine Courts (Trial Court) has
jurisdiction to hear and try the case of Morada (Civil
Case No. Q-93-18394)? Yes
2.) What is the applicable law in this case? Philippine
law, the Law on Torts
Held:
First Issue: The Philippine Courts (Trial Court of Quezon City)
has jurisdiction to try the case by virtue of the fact that both
parties have voluntary submitted themselves to the jurisdiction
of the Trial Court.
Based on RA 7691: Based on the allegations in the Amended
Complaint, read in the light of the Rules of Court on jurisdiction
we find that the Regional Trial Court (RTC) of Quezon City
possesses jurisdiction over the subject matter of the suit.
Its authority to try and hear the case is provided for under
Section 1 of Republic Act No. 7691, to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise
known as the "Judiciary Reorganization Act of 1980", is hereby
amended to read as follows:
Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts
shall exercise exclusive jurisdiction:
x x x xx x x xx
(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses,
and cots or the value of the property in controversy exceeds One
hundred thousand pesos (P100,000.00) or, in such other cases in
Metro Manila, where the demand, exclusive of the
above-mentioned items exceeds Two hundred Thousand pesos
(P200,000.00).
Based on the Rules of Court: Following Section 2 (b), Rule 4
of the Revised Rules of Court — the venue, Quezon City, is
appropriate:
Sec. 2 Venue in Courts of First Instance. — [Now Regional
Trial Court]
(a) xxx xxx xxx
(b) Personal actions. — All other actions may be commenced
and tried where the defendant or any of the defendants resides
or may be found, or where the plaintiff or any of the plaintiff
resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the
parties, also weigh heavily in favor of the RTC Quezon City
assuming jurisdiction. Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained is quite
obvious. Relative advantages and obstacles to a fair trial are
equally important.
Plaintiff may not, by choice of an inconvenient forum, "vex",
"harass", or "oppress" the defendant, e.g. by inflicting upon him
needless expense or disturbance. But unless the balance is
strongly in favor of the defendant, the plaintiffs choice of forum
should rarely be disturbed.
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. That would have caused a
fundamental unfairness to her.
By virtue of Voluntary submission to the jurisdiction of the
Court: By filing her Complaint and Amended Complaint with
the trial court, private respondent has voluntary submitted
herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several
motions 50 praying for the dismissal of Morada's Amended
Complaint. 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. Undeniably, petitioner SAUDIA has
5
effectively submitted to the trial court's jurisdiction by praying
for the dismissal of the Amended Complaint on grounds other
than lack of jurisdiction.
Second Issue: The Philippine law on Torts applies.
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
Characterization or Doctrine of Qualification: Before a choice
can be made, it is necessary for us to determine under what
category a certain set of facts or rules fall. This process is
known as "characterization", or the "doctrine of qualification". It
is the "process of deciding whether or not the facts relate to the
kind of question specified in a conflicts rule."
The purpose of "characterization" is to enable the forum to
select the proper law.
Connecting Factor or Point of Contact: An essential element
of conflict rules is the indication of a "test" or "connecting
factor" or "point of contact". Choice-of-law rules invariably
consist of a factual relationship (such as property right,
contract claim) and a connecting factor or point of contact, such
as the situs of the res, the place of celebration, the place of
performance, or the place of wrongdoing.
Note that one or more circumstances may be present to serve as
the possible test for the determination of the applicable law.
Points of Contact: These "test factors" or "points of contact"
or "connecting factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence,
his place of sojourn, or his origin;
(2) The seat of a legal or juridical person, such as a
corporation;
(3) The situs of a thing, that is, the place where a thing is,
or is deemed to be situated. In particular, the lex situs
is decisive when real rights are involved;
(4) 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;
(5) The place where an act is intended to come into effect,
e.g., the place of performance of contractual duties, or
the place where a power of attorney is to be exercised;
(6) The intention of the contracting parties as to the law
that should govern their agreement, the lex loci
intentionis;
(7) The place where judicial or administrative proceedings
are instituted or done. The lex fori — the law of the
forum — is particularly important because, as we have
seen earlier, matters of "procedure" not going to the
substance of the claim involved are governed by it; and
because the lex fori applies whenever the content of
the otherwise applicable foreign law is excluded from
application in a given case for the reason that it falls
under one of the exceptions to the applications of
foreign law; and
(8) The flag of a ship, which in many cases is decisive of
practically all legal relationships of the ship and of its
master or owner as such. It also covers contractual
relationships particularly contracts of affreightment.
Connecting Factor in this case: Considering that the
complaint in the court a quo is one involving torts, the
"connecting factor" or "point of contact" could be the place or
places where the tortious conduct or lex loci actus occurred.
And applying the torts principle in a conflicts case, we find that
the Philippines could be said as a situs of the tort (the place
where the alleged tortious conduct took place). This is because
it is in the Philippines where petitioner allegedly deceived
private respondent, a Filipina residing and working here.
According to her, she had honestly believed that petitioner
would, in the exercise of its rights and in the performance of its
duties, "act with justice, give her due and observe honesty and
good faith." Instead, petitioner failed to protect her, she claimed.
State of the Most Significant Relationship Rule: 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.
Contacts: 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.
Philippine Law on Torts shall apply: 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.
Banco Do Brasil vs. CA & Urbino
Doctrine: The Court did not acquire jurisdiction over Banco Do
Brasil by way of serving summons to the Ambassador of Brazil.
The action was in rem, but because of the filing of a claim for
damages it became an action in personam.
Therefore, personal service must be had of the defendant, before
the court can acquire jurisdiction over the former.
Facts:
Poro Point Shipping Services, then acting as the local agent of
Omega Sea Transport Company of Honduras & Panama, a
Panamanian Company (hereafter referred to as Omega),
requested permission for its vessel M/V Star Ace, which had
engine trouble, to unload its cargo and to store it at the
Philippine Ports Authority (PPA) compound in San Fernando, La
Union while awaiting transhipment to Hongkong.
The request of Poro Point was granted by the Bureau of
Customs. However, the customs personnel boarded the vessel
when it docked on January 7, 1989, on suspicion that it was
the hijacked M/V Silver Med owned by Med Line Philippines
Co., and that its cargo would be smuggled into the country.
The district customs collector seized said vessel and its cargo
pursuant to Section 2301, Tariff and Customs Code.
6
While seizure proceedings were ongoing, La Union was hit by
three typhoons, and the vessel ran aground and was
abandoned.
Salvage Agreement: Frank Cadacio, the authorized
representative of Poro Point, entered into salvage agreement
with private respondent to secure and repair the vessel at the
agreed consideration of $1 million and "fifty percent (50%) [of]
the cargo after all expenses, cost and taxes."
Consequently, Customs Commissioner Salvador Mison forfeited
the vessel and its cargo in accordance with Section 2530 of the
Tariff and Customs Code.
To enforce its preferred salvor's lien, herein Private Respondent
Duraproof Services filed with the Regional Trial Court of Manila
a Petition for Certiorari, Prohibition and Mandamus assailing
the actions of Commissioner Mison and District Collector Sy.
Upon motion of Urbino, the trial court allowed summons by
publication to be served upon defendants who were not
residents and had no direct representative in the country.
Trial Court: Consequently, the trial court ruled that the
defendants are liable to Urbino in the amount as prayed for in
the petition.
 It ordered that Respondent M/V Star Ace, represented
by Capt. Nahum Rada, [r]elief [c]aptain of the vessel
and Omega Sea Transport Company, Inc., represented
by Frank Cadacio[,] is ordered to refrain from
alienating or [transferring] the vessel M/V Star Ace to
any third parties;
 Likewise, it held that Banco [Du] Brasil should pay
[Urbino] in the amount of $300,000.00 in damages
On April 10, 1991, petitioner Banco do Brasil filed, by special
appearance, an Urgent Motion to Vacate Judgement and to
Dismiss Case on the ground that the February 18, 1991
Decision of the trial court is void with respect to it for having
been rendered without validly acquiring jurisdiction over the
person of Banco do Brasil.
Petitioner subsequently amended its petition to specifically aver
that its special appearance is solely for the purpose of
questioning the Court's exercise of personal jurisdiction.
On May 20, 1991, the trial court issued an Order acting
favorably on petitioner's motion and set aside as against
petitioner the decision dated February 18, 1991 for having been
rendered without jurisdiction over Banco do Brasil's person.
Private respondent sought reconsideration of the Order dated
May 20, 1991. However, the trial court in an Order dated June
21, 1991 denied said motion.
CA: However, the Court of Appeals granted the petition of
Urbino and set-aside the decision of the Trial Court.
For its part, petitioner Banco do Brasil sought reconsideration,
insofar as its liability for damages, on the ground that there was
no valid service of summons as service was on the wrong party
— the ambassador of Brazil. Hence, it argued, the trial court did
not acquire jurisdiction over petitioner Banco do Brasil.
However, the appellate court denied the motion for
reconsideration filed by Banco Do Brasil. The appellate court
held that that the suit below is in rem, not in personam, thus,
service of summons by publication was sufficient for the court
to acquire jurisdiction over the person of petitioner Banco do
Brasil, and thereby liable to private respondent Cesar Urbino for
damages claimed, amounting to $300,000.00.
Banco do Brasil avers that the action filed against it is an action
for damages, as such it is an action in personam which requires
personal service of summons be made upon it for the court to
acquire jurisdiction over it. However, inasmuch as petitioner
Banco do Brasil is a non-resident foreign corporation, not
engaged in business in the Philippines, unless it has property
located in the Philippines which may be attached to convert the
action into an action in rem, the court cannot acquire
jurisdiction over it in respect of an action in personam.
Issue: W/N the Court has acquired jurisdiction over Banco Do
Brasil by way of service of summons to the Ambassador of
Brazil? No
Held:
The Court has not acquired jurisdiction over Banco Do Brasil by
way of summons to the ambassador of Brazil. The action is one
in personam and not in rem.
Rule 14; Section 17 of the Rules of Court: When the
defendant is a nonresident and he is not found in the country,
summons may be served extraterritorially in accordance with
Rule 14, Section 17 of the Rules of Court.
Four instances for extraterritorial service: Under this
provision, there are only four (4) instances when extraterritorial
service of summons is proper, namely:
(1) When the action affects the personal status of the
plaintiffs;
(2) When the action relates to, or the subject of which is
property, within the Philippines, in which the
defendant claims a lien or interest, actual or
contingent;
(3) When the relief demanded in such action consists,
wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; and
(4) When the defendant non-resident's property has been
attached within the Philippines."
Service of Summons to a Nonresident not found in the
Philippines: In these instances, service of summons may be
effected by
(a) Personal service out of the country, with leave of court;
(b) Publication, also with leave of court; or
(c) Any other manner the court may deem sufficient.
Clear from the foregoing, extrajudicial service of summons apply
only where the action is in rem, an action against the thing
itself instead of against the person, or in an action quasi in rem,
where an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation
or loan burdening the property.
Action in rem & Action quasi in rem: This is so inasmuch as,
in in rem and quasi in rem actions, jurisdiction over the person
of the defendant is not a prerequisite to confer jurisdiction on
the court provided that the court acquires jurisdiction over the
res.
Action in personam: However, where the action is in
personam, one brought against a person on the basis of his
personal liability, jurisdiction over the person of the defendant
is necessary for the court to validly try and decide the case.
When the defendant is a non-resident, personal service of
summons within the state is essential to the acquisition of
jurisdiction over the person. This cannot be done, however, if
the defendant is not physically present in the country, and
thus, the court cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case against him.
7

In the instant case, private respondent's suit against petitioner
is premised on petitioner's being one of the claimants of the
subject vessel M/V Star Ace. Thus, it can be said that private
respondent initially sought only to exclude petitioner from
claiming interest over the subject vessel M/V Star Ace.
By claiming damages the action became in personam:
However, private respondent testified during the presentation of
evidence that, for being a nuisance defendant, petitioner caused
irreparable damage to private respondent in the amount of
$300,000.00. Therefore, while the action is in rem, by claiming
damages, the relief demanded went beyond the res and sought
a relief totally alien to the action.
It must be stressed that any relief granted in rem or quasi in
rem actions must be confined to the res, and the court cannot
lawfully render a personal judgment against the defendant.
Clearly, the publication of summons effected by private
respondent is invalid and ineffective for the trial court to
acquire jurisdiction over the person of petitioner, since by
seeking to recover damages from petitioner for the alleged
commission of an injury to his person or property caused by
petitioner's being a nuisance defendant, private respondent's
action became in personam.
Personam in nature: Bearing in mind the in personam nature
of the action, personal or, if not possible, substituted service of
summons on petitioner, and not extraterritorial service, is
necessary to confer jurisdiction over the person of petitioner
and validly hold it liable to private respondent for damages.
Thus, the trial court had no jurisdiction to award damages
amounting to $300,000.00 in favor of private respondent and as
against herein petitioner.
Hasegawa vs. Kitamura (Repeated)
Doctrine: Jurisdiction over the subject matter is determined by
law and is given in the manner prescribed by law. Also, it is
further determined by the allegations of the complaint.
 The principle of lex loci celebracionis doesn’t determine
the jurisdiction over the subject matter—it refers to the
choice of law;
 The principle of lex contractus doesn’t determine the
jurisdiction over the subject matter—it refers to the
choice of law;
 The State of the most significant relationship rule
doesn’t determine the jurisdiction over the subject
matter—it refers to the choice of law
Facts:
Repeated
Issue: W/N the Trial Court has jurisdiction over the case,
despite the fact that the subject matter of the proceeding a quo
was entered into by fact and between two (2) Japanese
nationals, written wholly in the Japanese language and
executed in Tokyo, Japan? Yes
Held:
Jurisdiction and Choice of Law are distinct: Analytically,
jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to
travel to this state; choice of law asks the further question
whether the application of a substantive law, which will
determine the merits of the case, is fair to both parties.
The power to exercise jurisdiction does not automatically give a
state constitutional authority to apply forum law.
While jurisdiction and the choice of the lex fori will often
coincide, the "minimum contacts" for one do not always provide
the necessary "significant contacts" for the other.
The question of whether the law of a state can be applied to a
transaction is different from the question of whether the courts
of that state have jurisdiction to enter a judgment.
Jurisdiction: Jurisdiction, however, has various aspects. For a
court to validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff or the petitioner, over
the defendant or the respondent, over the subject matter, over
the issues of the case and, in cases involving property, over the
res or the thing, which is the subject of the litigation.
In assailing the trial court's jurisdiction herein, petitioners are
actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter: To determine the
jurisdiction of the subject matter—
 Jurisdiction over the subject matter in a judicial
proceeding is conferred by the sovereign authority,
which establishes and organizes the court.
 It is given only by law and in the manner prescribed by
law.
 It is further determined by the allegations of the
complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein.
 To succeed in its motion for the dismissal of an action
for lack of jurisdiction over the subject matter of the
claim,the movant must show that the court or tribunal
cannot act on the matter submitted to it because no
law grants it the power to adjudicate the claims.
In the instant case, petitioners, in their motion to dismiss, do
not claim that the trial court is not properly vested by law with
jurisdiction to hear the subject controversy for, indeed, Civil
Case No. 00-0264 for specific performance and damages is one
not capable of pecuniary estimation and is properly cognizable
by the RTC of Lipa City.
What they rather raise as grounds to question subject matter
jurisdiction are the principles of lex loci celebrationis and lex
contractus, and the "state of the most significant relationship
rule."
The Supreme Court finds the invocation of these rules in
relation to jurisdiction to be unsound.
Lex loci celebracionis: Lex loci celebrationis relates to the "law
of the place of the ceremony" or the law of the place where a
contract is made.
Lex Loci Contractus: The doctrine of lex contractus or lex loci
contractus means the "law of the place where a contract is
executed or to be performed." It controls the nature,
construction, and validity of the contract and it may pertain to
the law voluntarily agreed upon by the parties or the law
intended by them either expressly or implicitly.
State of the most significant relationship rule: To ascertain
what state law to apply to a dispute, the court should determine
which state has the most substantial connection to the
occurrence and the parties.
In a case involving a contract, the court should consider where
the contract was made, was negotiated, was to be performed,
and the domicile, place of business, or place of incorporation of
the parties.This rule takes into account several contacts and
evaluates them according to their relative importance with
respect to the particular issue to be resolved
8
Since these three principles in conflict of laws make reference to
the law applicable to a dispute, they are rules proper for the
second phase, the choice of law. They determine which state's
law is to be applied in resolving the substantive issues of a
conflicts problem.
Necessarily, as the only issue in this case is that of jurisdiction,
choice- of-law rules are not only inapplicable but also not yet
called for.
Three alternatives of a Court/Administrative Agency in a
Conflicts case: It should be noted that when a conflicts case,
one involving a foreign element, is brought before a court or
administrative agency, there are three alternatives open to the
latter in disposing of it:
(1) Dismiss the case, either because of lack of jurisdiction
or refusal to assume jurisdiction over the case;
(2) Assume jurisdiction over the case and apply the
internal law of the forum; or
(3) Assume jurisdiction over the case and take into
account or apply the law of some other State or States.
The court’s power to hear cases and controversies is derived
from the Constitution and the laws. While it may choose to
recognize laws of foreign nations, the court is not limited by
foreign sovereign law short of treaties or other formal
agreements, even in matters regarding rights provided by
foreign sovereigns.
Forum Non Conveniens doesn’t apply in this case as to
wrest jurisdiction from the Court: Neither can the other
ground raised, forum non conveniens, be used to deprive the
trial court of its jurisdiction herein.
(1) First, it is not a proper basis for a motion to dismiss because
Section 1, Rule 16 of the Rules of Court does not include it as a
ground.
(2) Second, whether a suit should be entertained or dismissed
on the basis of the said doctrine depends largely upon the facts
of the particular case and is addressed to the sound discretion
of the trial court. In this case, the RTC decided to assume
jurisdiction.
(3)Third, the propriety of dismissing a case based on this
principle requires a factual determination; hence, this conflicts
principle is more properly considered a matter of defense.
Accordingly, since the RTC is vested by law with the power to
entertain and hear the civil case filed by respondent and the
grounds raised by petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts correctly denied the
petitioners’ motion to dismiss.
Continental Mirconesia Inc. vs. Joseph Basso (Repeated)
Doctrine: The Labor Tribunals have jurisdiction over the case.
Jurisdiction over the subject matter: The case is an illegal
dismissal case.
Jurisdiction over the parties: Voluntary submission to the
jurisdiction of the Court.
Facts:
Repeated.
Issue: W/N the Labor Arbiter and the NLRC have jurisdiction to
try the case of illegal dismissal of Basso? Yes, the Labor
Tribunals have jurisdiction
Held:
Jurisdiction is defined as the power and authority of the courts
to hear, try and decide cases. Jurisdiction over the subject
matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or
not the plaintiff is entitled to recover all or some of the claims or
reliefs sought therein.
Jurisdiction over the subject matter: This case stemmed from
an illegal dismissal complaint. The Labor Code, under Article
217, clearly vests original and exclusive jurisdiction to hear and
decide cases involving termination disputes to the Labor
Arbiter.
Hence, the Labor Arbiter and the NLRC have jurisdiction over
the subject matter of the case.
Jurisdiction over the parties: As regards jurisdiction over the
parties, we agree with the Court of Appeals that the Labor
Arbiter acquired jurisdiction over the person of Basso,
notwithstanding his citizenship, when he filed his complaint
against CMI. On the other hand, jurisdiction over the person of
CMI was acquired through the coercive process of service of
summons. We note that CMI never denied that it was served
with summons.
CMI has, in fact, voluntarily appeared and participated in the
proceedings before the courts. Though a foreign corporation,
CMI is licensed to do business in the Philippines and has a local
business address here. The purpose of the law in requiring that
foreign corporations doing business in the country be licensed
to do so, is to subject the foreign corporations to the jurisdiction
of our courts.
Considering that the Labor Arbiter and the NLRC have
jurisdiction over the parties and the subject matter of this case,
these tribunals may proceed to try the case even if the rules of
conflict-of-laws or the convenience of the parties point to a
foreign forum, this being an exercise of sovereign prerogative of
the country where the case is filed.
Northwest Orient vs. CA & CF Sharp
Doctrine: The Court has jurisdiction over CF Sharp, there was
proper service under Rule 14; Section 14.
 Service on the proper government official
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.
Facts:
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.
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.
9
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.
The 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.
The defendant received from Deputy Sheriff Balingit copy of the
judgment.
Defendant CF Sharp not having appealed the judgment, the
same became final and executory.
Consequently, Northwest filed a suit for the enforcement of the
judgment.
CF Sharp 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.
CF Sharp filed a motion for Judgment on a Demurrer to
Evidence on the ground that the foreign judgment sought to be
enforced is null and void for want of jurisdiction.
Trial Court: The Trial Court granted the demurrer motion and
dismissing the complaint. The 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.
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.
Court of Appeals: The court of Appeals sustained the trial
court. 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.
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 and this is regardless of the
residence or citizenship of the party thus served.
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.
The Court of Appeals 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.
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.
Issue: W/N the Trial Court has acquired jurisdiction over CF
Sharp, upon the service of summons to its head office in
Manila? Yes.
Held:
Burden of Proof on the part of CF Sharp: 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. 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.
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.
Processual Presumption: Alternatively in the light of the
absence of proof regarding Japanese
law, the presumption of
identity or similarity or the so-called processual presumption
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.
Service of Summons to government officials: 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:
(d) The Insurance Commissioner in the case of a foreign
insurance company;
(e) The Superintendent of Banks, in the case of a foreign
banking corporation; and
10
(f) The Securities and Exchange Commission, in the case of
other foreign corporations duly licensed to do 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.
CF Sharp, 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.
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.
Process of Service of Summons for CF Sharp:
1.) 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.
2.) The Tokyo District Court requested the Supreme Court
of Japan to cause the delivery of the summons and
other legal documents to the Philippines.
3.) 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.
4.) 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.
Valmonte vs. CA
Doctrine: There was no proper service of summons to Lourdes
Valmonte.
 It is an action in rem
 As a nonresident, the service of summons to Lourdes
Valmonte must be through Rule 14; Section 17—
extraterritorial service of summons
Mode of Extraterritorial Service:
(1) By personal service;
(2) By publication in a newspaper of general circulation in
such places and for such time as the court may order,
in which case a copy of the summons and order of the
court should be sent by registered mail to the last
known address of the defendant; or
(3) In any other manner which the court may deem
sufficient.
Facts:
Address of Valmonte Spouses: South Seattle, Washington,
USA
Place of office/practice of Valmonte Spouses: Ermita, Manila
Address of Dimalanta: Missouri, USA
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are
husband and wife. They are both residents of 90222 Carkeek
Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D.
Valmonte, who is a member of the Philippine bar, however,
practices his profession in the Philippines, commuting for this
purpose between his residence in the state of Washington and
Manila, where he holds office at S-304 Gedisco Centre, 1564 A.
Mabini Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is
the sister of petitioner Lourdes A. Valmonte, filed a complaint
for partition of real property and accounting of rentals against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before
the Regional Trial Court of Manila, Branch 48. The subject of
the action is a three-door apartment located in Paco, Manila.
Apparently, Lourdes A. Valmonte previously sent a letter to
Dimalanta, stating that the counsel of Dimalanta is referred to
her husband Atty. Valmonte. According to Lourdes Valmonte,
her husband is the party to whom all communications intended
for her shall be sent.
Service of summons was then made upon petitioner Alfredo D.
Valmonte, who at the time, was at his office in Manila.
Petitioner Alfredo D. Valmonte accepted the summons, insofar
as he was concerned, but refused to accept the summons for
his wife, Lourdes A. Valmonte, on the ground that he was not
authorized to accept the process on her behalf.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with
Counterclaim. Petitioner Lourdes A. Valmonte, however, did not
file her Answer. For this reason Dimalanta moved to declare her
in default.
Trial Court: The trial court denied Dimalanta’s motion to
declare Lourdes Valmonte in default.
Whereupon, Dimalanta filed a petition for certiorari, prohibition
and mandamus with the Court of Appeals.
Court of Appeals: The Court of Appeals rendered a decision
granting the petition and declaring Lourdes A. Valmonte in
default. A copy of the appellate court's decision was received by
petitioner Alfredo D. Valmonte on January 15, 1993 at his
Manila office and on January 21, 1993 in Seattle, Washington.
Lourdes Valmonte assail the aforequoted decision, alleging
that the Court of Appeals erred:
(1) In refusing to apply the provisions of Rule 14, §17 of
the Revised Rules of Court and applying instead Rule
14, §8 when the fact is that petitioner Lourdes A.
Valmonte is a nonresident defendant; and
(2) Because even if Rule 14, §8 is the applicable provision,
there was no valid substituted service as there was no
strict compliance with the requirement by leaving a
copy of the summons and complaint with petitioner
Alfredo D. Valmonte.
Dimalanta, upon the other hand, asserts that petitioners are
invoking a technicality and that strict adherence to the rules
would only result in a useless ceremony.
Issue:
11
 1.) W/N there was valid service of summons to Lourdes
Valmonte? No
2.) W/N the service of summons to Atty. Valmonte was a
proper mode of service under Rule 14; Section 17? No
Held:
First Issue: The Court held that there was no valid service of
summons to Lourdes Valmonte.
It is important to determine the nature of the action filed
against the Valmonte spouses by Dimalanta.
Service of Summons in an action in personam: In an action
in personam, personal service of summons or, if this is not
possible and he cannot be personally served, substituted
service, as provided in Rule 14, Sections 7-8 is essential for the
acquisition by the court of jurisdiction over the person of a
defendant who does not voluntarily submit himself to the
authority of the court. If defendant cannot be served with
summons because he is temporarily abroad, but otherwise he is
a Philippine resident, service of summons may, by leave of
court, be made by publication.
Otherwise stated, a resident defendant in an action in
personam, who cannot be personally served with summons,
may be summoned either by means of substituted service in
accordance with Rule 14, Section 8 or by publication as
provided in Sections 17 and 18 of the same Rule.
In all of these cases, it should be noted, defendant must be a
resident of the Philippines, otherwise an action in personam
cannot be brought because jurisdiction over his person is
essential to make a binding decision.
Service of summons in an action in rem: If the action is in
rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so
long as the court acquires jurisdiction over the res.
If the defendant is a nonresident and he is not found in the
country, summons may be served exterritorially in accordance
with Rule 14, Section 17, which provides:
Section 17. Extraterritorial service. - When the defendant
does not reside and is not found in the Philippines and the action
affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or
in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property
of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines
by personal service as under section 7; or by publication in a
newspaper of general circulation in such places and for such time
as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less than sixty (60)
days after notice, within which the defendant must answer.
In such cases, what gives the court jurisdiction in an action in
rem or quasi in rem is that it has jurisdiction over the res, i.e.
the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached. Service of
summons in the manner provided in Section17 is not for the
purpose of vesting it with jurisdiction but for complying with the
requirements of fair play or due process.
Dimalanta’s action, which is for partition and accounting under
Rule 69, is in the nature of an action quasi in rem. Such an
action is essentially for the purpose of affecting the defendant's
interest in a specific property and not to render a judgment
against him.
As petitioner Lourdes A. Valmonte is a nonresident who is not
found in the Philippines, service of summons on her must be in
accordance with Rule 14, Section 17. Such service, to be
effective outside the Philippines, must be made either
1.) By personal service;
2.) By publication in a newspaper of general circulation in
such places and for such time as the court may order,
in which case a copy of the summons and order of the
court should be sent by registered mail to the last
known address of the defendant; or
3.) In any other manner which the court may deem
sufficient.
Since in the case at bar, the service of summons upon
petitioner Lourdes A. Valmonte was not done by means of any
of the modes under Rule 14; Section 17—then there was no
proper service of summons.
Second Issue:
Since, the service of summons doesn’t fall within either of the
first two modes of extraterritorial service, then can it be
considered under the third mode: “in any . . . manner the court
may deem sufficient."
The Court holds that such mode of service cannot be considered
as a manner of service that the court deems sufficient. This
mode of service, like the first two, must be made outside the
Philippines, such as through the Philippine Embassy in the
foreign country where the defendant resides.
Reasons why the service of summons on Atty. Alfredo D.
Valmonte cannot be considered a valid service of summons
on petitioner Lourdes A. Valmonte:
1st: In the first place, service of summons on petitioner Alfredo
D. Valmonte was not made upon the order of the court as
required by Rule 14, Section 17 and certainly was not a mode
deemed sufficient by the court which in fact refused to consider
the service to be valid and on that basis declare petitioner
Lourdes A. Valmonte in default for her failure to file an answer.
2nd: In the second place, service in the attempted manner on
petitioner was not made upon prior leave of the trial court as
required also in Rule 14, Section 17. As provided in Section 19,
such leave must be applied for by motion in writing, supported
by affidavit of the plaintiff or some person on his behalf and
setting forth the grounds for the application.
3rd: Finally, and most importantly, because there was no order
granting such leave, petitioner Lourdes A. Valmonte was not
given ample time to file her Answer which, according to the
rules, shall be not less than sixty (60) days after notice. It must
be noted that the period to file an Answer in an action against a
resident defendant differs from the period given in an action
filed against a nonresident defendant who is not found in the
Philippines. In the former, the period is fifteen (15) days from
service of summons, while in the latter, it is at least sixty (60)
days from notice.
Strict compliance with these requirements alone can assure
observance of due process.
12

Gomez vs. CA & Trocino
Doctrine: There was no proper service of summons. In an
action in personam the summons must be given personally or
through substitution to the defendant.
In all cases such service requires that the defendant be within
the Philippines. However, as an exception it may be served
outside the Philippines if the one receiving such summons is a
representative or an attorney-in-fact.
Substituted summons is only valid if it is only shown that there
is an impossibility as to personal service.
Facts:
The spouses Gomez filed an action for specific performance
and/or rescission against the heirs of Jesus J. Trocino, Sr.,
which include herein respondents and their mother Caridad
Trocino.
The action is in relation to the sale of a subject property by
Trocino to the Gomez spouses. However, the spouses Trocino,
refused to convey ownership of the properties to the spouses
Gomez.
The trial court’s Process Server served summons on
respondents. As stated, the summons and copies of the
complaint were served to the defendants Jacob, Jesus Jr.,
Adolfo, Mariano, Consolacion, Alice, Racheal thru defendant
Caridad Trocino at their given address at Maria Cristina
Extension (besides Sacred Heart School for Girls), Cebu City
The defendants, through their counsel Atty. Expedito P.
Bugarin, filed their Answer.
RTC: The RTC ruled in favor of the plaintiffs spouses Gomez.
Due to the defendants’ failure to deliver the owner’s duplicate of
TCT Nos. 10616 and 31856, the RTC issued an order on August
29, 1995 declaring said titles null and void, and ordering the
Register of Deeds of Cebu City to issue new titles in the name of
herein petitioners.
Thereafter, or on March 13, 1996, respondents Adolfo and
Mariano Trocino filed with the Court of Appeals, a petition for
the annulment of the judgment rendered by the RTC-Cebu
(Branch 10) in Civil Case No. CEB-11103. Private respondents
alleged that the trial court’s decision is null and void on the
ground that it did not acquire jurisdiction over their persons as
they were not validly served with a copy of the summons and
the complaint.
According to them, at the time summons was served on them,
Adolfo Trocino was already in Ohio, U.S.A., and has been
residing there for 25 years, while Mariano Trocino was in
Talibon, Bohol, and has been residing there since 1986.
They also refuted the receipt of the summons by Caridad A.
Trocino, and the representation made by Atty. Bugarin in their
behalf.
CA: The Court of appeals granted the petition of the
respondents and annulled the decision of the RTC.
Issue: W/N there was proper service of summons to the heirs
Trocino, so as to vest the court with jurisdiction over their
person? No
Held: It was an action in personam. There was no proper
service of summons to the non-resident defendants not found in
the Philippines. Likewise, there was no proper substituted
service to the defendant found in the Philippines.
To resolve whether there was valid service of summons on
respondents, the nature of the action filed against them must
first be determined.
Action in personam: In actions in personam, summons on the
defendant must be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive it, by tendering
it to him. This is specifically provided in Section 7, Rule 14 of
the Rules of Court,14 which states:
SEC. 7. Personal service of summons.-- The summons shall be
served by handing a copy thereof to the defendant in person or, if
he refuses to receive it, by tendering it to him.
If efforts to find defendant personally makes prompt service
impossible, substituted service may be effected by leaving copies
of the summons at the defendant's dwelling house or residence
with some person of suitable age and discretion then residing
therein, or by leaving the copies at the defendant's office or
regular place of business with some competent person in charge
thereof. In substituted service, it is mandated that the fact of
impossibility of personal service should be explained in the proof
of service.
GR: When the defendant in an action in personam is a
non-resident who does not voluntarily submit himself to the
authority of the court, personal service of summons within the
State is essential to the acquisition of jurisdiction over his
person. This cannot be done if the defendant is not physically
present in the country, and thus, the court cannot acquire
jurisdiction over his person and therefore cannot validly try and
decide the case against him.
Exception to the Rule: An exception was accorded in Gemperle
vs. Schenker wherein service of summons through the
non­resident’s wife, who was a resident of the Philippines, was
held valid, as the latter was his representative and
attorney-in-fact in a prior civil case filed by the non-resident,
and the second case was merely an offshoot of the first case.
Action in rem: Meanwhile, in actions in rem or quasi in rem,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the
court acquires jurisdiction over the res, although summons
must be served upon the defendant in order to satisfy the due
process requirements.
Thus, where the defendant is a non- resident who is not found
in the Philippines, and
(1) The action affects the personal status of the plaintiff;
(2) The action relates to, or the subject matter of which is
property in the Philippines in which the defendant has
or claims a lien or interest;
(3) The action seeks the exclusion of the defendant from
any interest in the property located in the Philippines;
or
(4) The property of the defendant has been attached in the
Philippines,
Summons may be served extraterritorially by
(a) Personal service out of the country, with leave of court;
(b) Publication, also with leave of court; or
(c) Any other manner the court may deem sufficient.
The action of spouses Gomez is an action in personam. The
objective sought in petitioners’ complaint was to establish a
claim against respondents for their alleged refusal to convey to
them the title to the two parcels of land that they inherited from
13
their father, Jesus Trocino, who was one of the sellers of the
properties to petitioners.
Hence, to repeat, Civil Case No. CEB-11103 is an action in
personam because it is an action against persons, namely,
herein respondents, on the basis of their personal liability. As
such, personal service of summons upon the defendants is
essential in order for the court to acquire of jurisdiction over
their persons.
A distinction, however, must be made with regard to service of
summons on respondents Adolfo Trocino and Mariano Trocino.
Adolfo Trocino, as records show, is already a resident of Ohio,
U.S.A. for 25 years. Being a non- resident, the court cannot
acquire jurisdiction over his person and validly try and decide
the case against him.
On the other hand, Mariano Trocino has been in Talibon, Bohol
since 1986. To validly acquire jurisdiction over his person,
summons must be served on him personally, or through
substituted service, upon showing of impossibility of personal
service. Such impossibility, and why efforts exerted towards
personal service failed, should be explained in the proof of
service. The pertinent facts and circumstances attendant to the
service of summons must be stated in the proof of service or
Officer’s Return.
The process server served the summons and copies of the
complaint on respondents Jacob, Jesus, Jr., Adolfo, Mariano,
Consolacion, Alice and Racheal, through their mother, Caridad
Trocino. The return did not contain any particulars as to the
impossibility of personal service on Mariano Trocino within a
reasonable time. Such improper service renders the same
ineffective.
Due process of law requires personal service to support a
personal judgment, and, when the proceeding is strictly in
personam brought to determine the personal rights and
obligations of the parties, personal service within the state or a
voluntary appearance in the case is essential to the acquisition
of jurisdiction so as to constitute compliance with the
constitutional requirement of due process.
Service to Atty. Bugarin doesn’t bind the defendants: The
fact that Atty. Expedito Bugarin represented all the respondents
without any exception does not transform the ineffective service
of summons into a valid one. It does not constitute a valid
waiver or even a voluntary submission to the trial court’s
jurisdiction. There was not even the slightest proof showing that
respondents authorized Atty. Bugarin’s appearance for and in
their behalf
Domagas vs. Jensen
Doctrine: It was an action in personam. There was no valid
substituted service. In a substituted service, it must be in the
dwelling place or place of work of the defendant. Likewise, it
must be given to a person of suitable age and discretion.
In the case, the substituted service was made in the place
where the defendant was merely a visitor and not her dwelling
place. Likewise, it was not the dwelling place of her
representative—the latter being merely a lessee.
Facts:
Petitioner Filomena Domagas filed a complaint for forcible entry
against respondent Vivian Jensen before the MTC alleging that
the respondent by means of force, strategy and stealth, gained
entry into the petitioner’s property by excavating a portion
thereof and thereafter constructing a fence thereon depriving
the petitioner of a 68-square meter portion of her property along
the boundary line.
The summons and the complaint were not served on the
respondent because the latter was apparently out of the
country. The Sheriff left the summons and complaint with
Oscar Layno (respondent's brother), who received the same.
The court rendered judgment against the respondent. The
respondent failed to appeal the decision. Consequently, a writ of
execution was issued.
The respondent then filed a complaint against the petitioner
before the RTC for the annulment of the decision of the MTC on
the ground that due to the Sheriff’s failure to serve the
complaint and summons on her because she was in Oslo,
Norway, the MTC never acquired jurisdiction over her person.
Respondent claimed she was a resident of Oslo, Norway and
although she owned the house where Oscar Layno received the
summons and the complaint, she had then leased it to Eduardo
Gonzales. She avers further that Oscar Layno was never
authorized to receive the summons and the complaint for and in
her behalf.
In her answer to the complaint, the petitioner alleged that the
respondent was a resident of Barangay Buenlag, Calasiao,
Pangasinan and was the owner of the subject premises where
Oscar Layno was when the Sheriff served the summons and
complaint; that the service of the complaint and summons by
substituted service on the respondent was proper since her
brother Oscar Layno, a resident and registered voter of
Barangay. Buenlag, Calasiao, Pangasinan, received the
complaint and summons for and in her behalf.
RTC: After due proceedings, the RTC rendered a decision in
favor of the respondent.
The trial court declared that there was no valid service of the
complaint and summons on the respondent considering that
she left the Philippines for Oslo, Norway, and her brother Oscar
Layno was never authorized to receive the said complaint and
summons for and in her behalf.
CA: The petitioner appealed the decision to the CA, which
affirmed the appealed decision with modifications. The CA ruled
that the complaint was one for ejectment, which is an action
quasi in rem. The appellate court ruled that since the defendant
therein was temporarily out of the country, the summons and
the complaint should have been served via extraterritorial
service under Section 15 in relation to Section 16, Rule 14 of
the Rules of Court, which likewise requires prior leave of court.
Considering that there was no prior leave of court and none of
the modes of service prescribed by the Rules of Court was
followed by the petitioner, the CA concluded that there was
really no valid service of summons and complaint upon the
respondent, the defendant in Civil Case No. 879.
Hence, the present petition for review on certiorari.
Issue:
1st Issue: What is the nature of the action of Domagas? Action
in personam
2nd Issue: W/N there was valid service of summons to
defendant Jensen? No
Held:
1st issue: The action is an action in personam.
The ruling of the CA that the petitioner’s complaint for forcible
entry of the petitioner against the respondent is an action quasi
in rem, is erroneous. The action of the petitioner for forcible
entry is a real action and one in personam because the plaintiff
seeks to enforce a personal obligation or liability on the
defendant under Article 539 of the New Civil Code, for the latter
to vacate the property subject of the action, restore physical
possession thereof to the plaintiff, and pay actual damages by
14
way of reasonable compensation for his use or occupation of the
property.
The purpose of a proceeding in personam is to impose, through
the judgment of a court, some responsibility or liability directly
upon the person of the defendant. Of this character are suits to
compel a defendant to specifically perform some act or actions
to fasten a pecuniary liability on him. An action in personam is
said to be one which has for its object a judgment against the
person, as distinguished from a judgment against the propriety
to determine its state. It has been held that an action in
personam is a proceeding to enforce personal rights or
obligations; such action is brought against the person. As far as
suits for injunctive relief are concerned, it is well-settled that it
is an injunctive act in personam. In Combs v. Combs, the
appellate court held that proceedings to enforce personal rights
and obligations and in which personal judgments are rendered
adjusting the rights and obligations between the affected parties
is in personam. Actions for recovery of real property are in
personam.
On the other hand, a proceeding quasi in rem is one brought
against persons seeking to subject the property of such persons
to the discharge of the claims assailed. In an action quasi in
rem, an individual is named as defendant and the purpose of
the proceeding is to subject his interests therein to the
obligation or loan burdening the property. Actions quasi in rem
deal with the status, ownership or liability of a particular
property but which are intended to operate on these questions
only as between the particular parties to the proceedings and
not to ascertain or cut off the rights or interests of all possible
claimants. The judgments therein are binding only upon the
parties who joined in the action.
2nd Issue: There was no valid service of summons.
In Asiavest Limited v. Court of Appeals , the Court had the
occasion to state:
In an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide the
case. Jurisdiction over the person of a resident defendant who
does not voluntarily appear in court can be acquired by
personal service of summons as provided under Section 7, Rule
14 of the Rules of Court.
Substituted Service: If he cannot be personally served with
summons within a reasonable time, substituted service may be
made in accordance with Section 8 of said Rule.
If he is temporarily out of the country, any of the following
modes of service may be resorted to:
(1) Substituted service set forth in Section 8;
(2) Personal service outside the country, with leave of
court;
(3) Service by publication, also with leave of court; or
(4) Any other manner the court may deem sufficient.
In the present case, the records show that the respondent,
before and after her marriage to Jarl Jensen on August 23,
1987, remained a resident of Barangay Buenlag, Calasiao,
Pangasinan. Considering that the respondent was in Oslo,
Norway, having left the Philippines on February 17, 1999, the
summons and complaint in Civil Case No. 879 may only be
validly served on her through substituted service under Section
7, Rule 14 of the Rules of Court, which reads:
SEC. 7. Substituted service. — If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided
in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant’s residence with some
person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendant’s office or regular place of
business with some competent person in charge thereof.
Strict compliance with the mode of service is required in order
that the court may acquire jurisdiction over the person of the
defendant. The statutory requirement of substituted service
must be followed faithfully and strictly and any substituted
service other than that authorized by the statute is rendered
ineffective.
As the Court held in Hamilton v. Levy :
… The pertinent facts and circumstances attendant to the
service of summons must be stated in the proof of service or
Officer’s Return; otherwise, any substituted service made in lieu
of personal service cannot be upheld. This is necessary because
substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and hence
may be used only as prescribed and in the circumstances
authorized by statute. Here, no such explanation was made.
Failure to faithfully, strictly, and fully comply with the
requirements of substituted service renders said service
ineffective.
In Keister v. Narcereo, the Court held that the term "dwelling
house" or "residence" are generally held to refer to the time of
service; hence, it is not sufficient to leave the summons at the
former’s dwelling house, residence or place of abode, as the case
may be. Dwelling house or residence refers to the place where
the person named in the summons is living at the time when
the service is made, even though he may be temporarily out of
the country at the time. It is, thus, the service of the summons
intended for the defendant that must be left with the person of
suitable age and discretion residing in the house of the
defendant. Compliance with the rules regarding the service of
summons is as much important as the issue of due process as
of jurisdiction.
As gleaned from the service return, there is no showing that the
house where the Sheriff found Oscar Layno was the latter’s
residence or that of the respondent herein. Neither is there any
showing that the Sheriff tried to ascertain where the residence
of the respondent was on the said date. It turned out that the
occupant of the house was a lessor, Eduardo Gonzales, and
that Oscar Layno was in the premises only to collect the rentals
from him.
The service of the summons on a person at a place where he
was a visitor is not considered to have been left at the residence
or place or abode, where he has another place at which he
ordinarily stays and to which he intends to return.
The Voter’s Registration Record of Oscar Layno wherein he
declared that he was a resident of No. 572 Barangay Buenlag,
Calasiao, Pangasinan, as well as the Joint Affidavit of Vicenta
Peralta and Orlando Macasalda cannot prevail over the Contract
of Lease the respondent had executed in favor of Eduardo
Gonzales showing that the latter had resided and occupied the
house of the respondent as lessee since November 24, 1997,
and the affidavit of Eduardo Gonzales that Oscar Layno was not
residing in the said house.
In sum, then, the respondent was not validly served with
summons and the complaint in Civil Case No. 879 on April 5,
1999, by substituted service. Hence, the MTC failed to acquire
jurisdiction over the person of the respondent; as such, the
decision of the MTC in Civil Case No. 879 is null and void.
Manotoc vs. CA
Doctrine: There was no proper substituted service of summons.
The Court didn’t acquired jurisdiction over Manotoc. The
plaintiff didn’t exhibit extraordinary effort to locate Manotoc
prior to resorting to substituted service of summons.
15
Requirements of a proper substituted service of summons: Held: The Trial Court didn’t acquire jurisdiction over Manotoc.
1.) Impossibility of prompt service There was no proper substituted service of summons.
2.) Specific details in the return;
3.) A person of suitable age and discretion In an action strictly in personam, personal service on the
4.) A competent person in charge defendant is the preferred mode of service, that is, by handing a
copy of the summons to the defendant in person. If defendant,
Facts: for excusable reasons, cannot be served with the summons
within a reasonable period, then substituted service can be
Respondent Trajano seeks the enforcement of a foreign court’s resorted to.
judgment rendered on May 1, 1991 by the United States District
Court of Honolulu, Hawaii, United States of America, in a case While substituted service of summons is permitted, "it is
entitled Agapita Trajano, et al. v. Imee Marcos-Manotoc a.k.a. extraordinary in character and in derogation of the usual
Imee Marcos, Civil Case No. 86-0207 for wrongful death of method of service." Hence, it must faithfully and strictly comply
deceased Archimedes Trajano committed by military intelligence with the prescribed requirements and circumstances authorized
officials of the Philippines allegedly under the command, by the rules. Indeed, "compliance with the rules regarding the
direction, authority, supervision, tolerance, sufferance and/or service of summons is as much important as the issue of due
influence of defendant Manotoc, pursuant to the provisions of process as of jurisdiction."
Rule 39 of the then Revised Rules of Court.
Based on paragraph two of the Complaint, the trial court issued Requirements for Substituted Service
a Summons on July 6, 1993 addressed to petitioner at
Alexandra Condominium Corporation or Alexandra Homes, E2 Section 8 of Rule 14 of the old Revised Rules of Court
Room 104, at No. 29 Meralco Avenue, Pasig City. which applies to this case provides:
On July 15, 1993, the Summons and a copy of the Complaint
were allegedly served upon (Mr.) Macky de la Cruz, an alleged SEC. 8. 21 Substituted service. – If the defendant cannot be
caretaker of petitioner at the condominium unit mentioned served within a reasonable time as provided in the preceding
earlier. When petitioner failed to file her Answer, the trial court section [personal service on defendant], service may be effected
declared her in default through an Order dated October 13, (a) By leaving copies of the summons at the defendant’s
1993. residence with some person of suitable age and
On October 19, 1993, petitioner, by special appearance of discretion then residing therein, or
counsel, filed a Motion to Dismiss on the ground of lack of
jurisdiction of the trial court over her person due to an invalid (b) By leaving the copies at defendant’s office or regular
substituted service of summons. place of business with some competent person in
charge thereof.
The grounds to support the motion were:
(1) The address of defendant indicated in the Complaint Requirements of a proper substituted service of summons
(Alexandra Homes) was not her dwelling, residence, or Requirement Description
regular place of business as provided in Section 8, 1.) Impossibility of  The party relying on
Rule 14 of the Rules of Court; prompt personal service substituted service or
the sheriff must show
(2) The party (de la Cruz), who was found in the unit, was that defendant cannot
neither a representative, employee, nor a resident of be served promptly or
the place; there is impossibility of
prompt service.
(3) The procedure prescribed by the Rules on personal
and substituted service of summons was ignored;  Section 8, Rule 14
provides that the
(4) Defendant was a resident of Singapore; and plaintiff or the sheriff is
given a "reasonable
(5) whatever judgment rendered in this case would be time" to serve the
ineffective and futile. summons to the
defendant in person, but
Trial Court: On October 11, 1994, the trial court rejected no specific time frame is
Manotoc’s Motion to Dismiss on the strength of its findings that mentioned.
her residence, for purposes of the Complaint, was Alexandra
Homes, Unit E-2104, No. 29 Meralco Avenue, Pasig, Metro  "Reasonable time" is
Manila, based on the documentary evidence of respondent defined as "so much
Trajano. The trial court relied on the presumption that the time as is necessary
sheriff’s substituted service was made in the regular under the
performance of official duty, and such presumption stood in the circumstances for a
absence of proof to the contrary. reasonably prudent and
diligent man to do,
Court of Appeals: The CA rendered the assailed Decision, conveniently, what the
dismissing the Petition for Certiorari and Prohibition. The court contract or duty
a quo adopted the findings of the trial court that petitioner’s requires that should be
residence was at Alexandra Homes, Unit E- 2104, at No. 29 done, having a regard
Meralco Avenue, Pasig, Metro Manila, which was also the for the rights and
residence of her husband, as shown by the testimony of Atty. possibility of loss, if
Robert Swift and the Returns of the registered mails sent to any[,] to the other
petitioner. party."

Issue: W/N the Trial Court acquired jurisdiction over Manotoc  To the plaintiff,
through substituted service of summons? (Rule 14; Section 8) "reasonable time" means
No no more than seven (7)
days since an

16

2.) Specific details in the
return
expeditious processing defendant personally
of a complaint is what a and the fact of failure.
plaintiff wants.
 Supreme Court
 To the sheriff, Administrative Circular
"reasonable time" means No. 5 dated November 9,
15 to 30 days because 1989 requires that
at the end of the month, "impossibility of prompt
it is a practice for the service should be shown
branch clerk of court to by stating the efforts
require the sheriff to made to find the
submit a return of the defendant personally
summons assigned to and the failure of such
the sheriff for service. efforts," which should be
made in the proof of
 The Sheriff’s Return service.
provides data to the 3.) A person of suitable  If the substituted service
Clerk of Court, which age and discretion will be effected at
the clerk uses in the defendant’s house or
Monthly Report of Cases residence, it should be
to be submitted to the left with a person of
Office of the Court "suitable age and
Administrator within the discretion then residing
first ten (10) days of the therein."
succeeding month.
 A person of suitable age
 Thus, one month from and discretion is one
the issuance of who has attained the
summons can be age of full legal capacity
considered "reasonable (18 years old) and is
time" with regard to considered to have
personal service on the enough discernment to
defendant. understand the
 The sheriff must importance of a
describe in the Return of summons. "
Summons the facts and
circumstances  Discretion" is defined as
surrounding the "the ability to make
attempted personal decisions which
service. represent a responsible
choice and for which an
 The efforts made to find understanding of what
the defendant and the is lawful, right or wise
reasons behind the may be presupposed".
failure must be clearly
narrated in detail in the  Thus, to be of sufficient
Return. discretion, such person
must know how to read
 The date and time of the and understand English
attempts on personal to comprehend the
service, the inquiries import of the summons,
made to locate the and fully realize the
defendant, the name/s need to deliver the
of the occupants of the summons and complaint
alleged residence or to the defendant at the
house of defendant and earliest possible time for
all other acts done, the person to take
though futile, to serve appropriate action.
the summons on
defendant must be  Thus, the person must
specified in the Return have the "relation of
to justify substituted confidence" to the
service. defendant, ensuring that
the latter would receive
 The form on Sheriff’s or at least be notified of
Return of Summons on the receipt of the
Substituted Service summons.
prescribed in the
Handbook for Sheriffs 4.) A competent person  If the substituted service
published by the in charge will be done at
Philippine Judicial defendant’s office or
Academy requires a regular place of
narration of the efforts business, then it should
made to find the be served on a
17
 competent person in
charge of the place.
 Thus, the person on
whom the substituted
service will be made
must be the one
managing the office or
business of defendant,
such as the president or
manager; and such
individual must have
sufficient knowledge to
understand the
obligation of the
defendant in the
summons, its
importance, and the
prejudicial effects
arising from inaction on
the summons.
There was invalid substituted service in the case at bar.
Plaintiff didn’t exhaust all efforts to locate Manotoc: A
meticulous scrutiny of the Return readily reveals the absence of
material data on the serious efforts to serve the Summons on
petitioner Manotoc in person.
There is no clear valid reason cited in the Return why those
efforts proved inadequate, to reach the conclusion that personal
service has become impossible or unattainable outside the
generally couched phrases of "on many occasions several
attempts were made to serve the summons x x x personally," "at
reasonable hours during the day," and "to no avail for the
reason that the said defendant is usually out of her place
and/or residence or premises."
Wanting in detailed information, the Return deviates from the
ruling—in Domagas v. Jensen and other related cases —that
the pertinent facts and circumstances on the efforts exerted to
serve the summons personally must be narrated in the Return.
It cannot be determined how many times, on what specific
dates, and at what hours of the day the attempts were made.
Given the fact that the substituted service of summons may be
assailed, as in the present case, by a Motion to Dismiss, it is
imperative that the pertinent facts and circumstances
surrounding the service of summons be described with more
particularity in the Return or Certificate of Service.
Besides, apart from the allegation of petitioner’s address in the
Complaint, it has not been shown that respondent Trajano or
Sheriff Cañelas, who served such summons, exerted
extraordinary efforts to locate petitioner. Certainly, the second
paragraph of the Complaint only states that respondents were
"informed, and so [they] allege" about the address and
whereabouts of petitioner.
Before resorting to substituted service, a plaintiff must
demonstrate an effort in good faith to locate the defendant
through more direct means.
To allow sheriffs to describe the facts and circumstances in
inexact terms would encourage routine performance of their
precise duties relating to substituted service—for it would be
quite easy to shroud or conceal carelessness or laxity in such
broad terms. Lastly, considering that monies and properties
worth millions may be lost by a defendant because of an
irregular or void substituted service, it is but only fair that the
Sheriff’s Return should clearly and convincingly show the
impracticability or hopelessness of personal service.
The summons were not left with a person of suitable age
and discretion residing in the house of the defendant:
Granting that such a general description be considered
adequate, there is still a serious nonconformity from the
requirement that the summons must be left with a "person of
suitable age and discretion" residing in defendant’s house or
residence.
Thus, there are two (2) requirements under the Rules:
(1) Recipient must be a person of suitable age and discretion;
and
(2) Recipient must reside in the house or residence of
defendant. Both requirements were not met. In this case, the
Sheriff’s Return lacks information as to residence, age, and
discretion of Mr. Macky de la Cruz, aside from the sheriff’s
general assertion that de la Cruz is the "resident caretaker" of
petitioner as pointed out by a certain Ms. Lyn Jacinto, alleged
receptionist and telephone operator of Alexandra Homes.
It is doubtful if Mr. de la Cruz is residing with petitioner
Manotoc in the condominium unit considering that a married
woman of her stature in society would unlikely hire a male
caretaker to reside in her dwelling.
With the petitioner’s allegation that Macky de la Cruz is not her
employee, servant, or representative, it is necessary to have
additional information in the Return of Summons. Besides, Mr.
Macky de la Cruz’s refusal to sign the Receipt for the summons
is a strong indication that he did not have the necessary
"relation of confidence" with petitioner.
To protect petitioner’s right to due process by being accorded
proper notice of a case against her, the substituted service of
summons must be shown to clearly comply with the rules.
It has been stated and restated that substituted service of
summons must faithfully and strictly comply with the
prescribed requirements and in the circumstances authorized
by the rules.
Respondent Trajano failed to demonstrate that there was strict
compliance with the requirements of the then Section 8, Rule
14 (now Section 7, Rule 14 of the 1997 Rules of Civil
Procedure).
Due to non-compliance with the prerequisites for valid
substituted service, the proceedings held before the trial court
perforce must be annulled.
Fong vs. Velayo
Doctrine: There was proper service of summons to Fong. Thus,
the Court has acquired jurisdiction over Fong.
There is a presumption of regularity of performance on the part
of the process server.
Extraterritorial service only applies if the action is an action in
rem or quasi in rem. It doesn’t apply if it is an action in
personam.
Facts:
Raymond Velayo (Raymond) and his wife, Maria Hedy Velayo
(respondents) filed a complaint for sum of money and damages
with prayer for preliminary attachment against Erlinda R.
Velayo-Fong (petitioner), Rodolfo R. Velayo, Jr. (Rodolfo Jr.) and
Roberto R. Velayo (Roberto).
In their complaint, the Velayo spouses allege the following:
 That petitioner Fong, a resident of 1860 Alamoana
Boulevard, Honolulu, Hawaii, USA, and her
co-defendants, who are residents of the Philippines,
made it appear that their common father, Rodolfo
Velayo, Sr. (Rodolfo Sr.) and petitioner had filed a
complaint against Raymond before the National
Bureau of Investigation (NBI), accusing Raymond
Velayo (respondent) of the crimes of estafa and
kidnapping a minor;
18
  That petitioner and her co- defendants also requested
that respondents be included in the Hold Departure
List of the Bureau of Immigration and Deportation
(BID) which was granted, thereby preventing them
from leaving the country and resulting in the
cancellation of respondents' trips abroad and caused
all of respondents' business transactions and
operations to be paralyzed to their damage and
prejudice;
 That petitioner and her co-defendants also filed a
petition before the Securities and Exchange
Commission (SEC) docketed as Case No. 4422 entitled
"Rodolfo Velayo Sr. et al. v. Raymond Velayo et al."
which caused respondents' funds to be frozen and
paralyzed the latters' business transactions and
operations to their damage and prejudice.
Since petitioner was a non-resident and not found in the
Philippines, respondents prayed for a writ of preliminary
attachment against petitioner's properties located in the
Philippines.
The spouses Velayo filed on September 10, 1993 an Urgent
Motion praying that the summons addressed to petitioner be
served to her at Suite 201, Sunset View Towers Condominium,
Roxas Boulevard, Pasay City and at No. 5040 P. Burgos Street,
T. Towers Condominium, Makati.
The Process Server submitted the Officer's Return, which
stated the following:
 Service in the lobby of Intercontinental Manila and
not at the two addresses aforementioned —That the
officer was able to SERVED (sic) personally upon
defendant Erlinda Velayo the copy of summons
together with the thereto attached copy of the
complaint, not at her two (2) given addresses, but at
the lobby of Intercontinental Hotel, Makati, Metro
Manila, right in the presence of lobby counter
personnel by the name of Ms. A. Zulueta
 Copy of summons was given in Las Piñas—Also,
copy of the same WAS SERVED personally upon the
other defendant Rodolfo R. Velayo, Jr., at No. Block
57, Lots 17 and 19, G. Sanchez Street, BF Resort
Village, Las Piñas, Metro Manila
RTC: On June 15, 1994, the RTC rendered its Decision in the
favor of the spouses Velayo.
Fong filed a Motion to Set Aside Order of Default claiming that
she was prevented from filing a responsive pleading and
defending herself against respondents' complaint because of
fraud, accident or mistake; that contrary to the Officer's Return,
no summons was served upon her; that she has valid and
meritorious defenses to refute respondents' material allegations.
Petitioner filed an appeal with the CA questioning the propriety
and validity of the service of summons made upon her.
CA: The CA rendered its Decision affirming the Decision and
Order of the RTC.
Fong argues that summons should have been served through
extraterritorial service since she is a non- resident. That she
does not remember having been served with summons during
the said date but remembers that a man hurled some papers at
her while she was entering the elevator and, not knowing what
the papers were all about, she threw back the papers to the
man before the elevator closed.
On the other hand, respondents contend that petitioner was
validly served with summons since the rules do not require that
service be made upon her at her place of residence as alleged in
the complaint or stated in the summons; that extraterritorial
service applies only when the defendant does not reside and is
not found in the Philippines;
Issue: W/N Fong was validly served with summons as to confer
jurisdiction over the Trial Court? Yes.
Held: There was proper service of summons.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service – When the defendant
does not reside and is not found in the Philippines and the action
affects the personal status of the plaintiff or relates to, or the
subject of which, is property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or
in which relief demanded consists, wholly or in part, in excluding
the defendant from any interest therein, or the property of the
defendant has been attached in the Philippines, service may, by
leave of court, be effected out of the Philippines by personal
service as under section 7; or by publication in a newspaper of
general circulation in such places and for such time as the court
may order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known address
of the defendant, or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a
reasonable time, which shall not be less than sixty (60) days
after notice, within which the defendant must answer.
Under this provision, when the defendant is a nonresident and
he is not found in the country, summons may be served
extraterritorially.
There are only four instances when extraterritorial service
of summons is proper, namely:
(a) When the action affects the personal status of
the plaintiffs;
(b) When the action relates to, or the subject of
which is property, within the Philippines, in
which the defendant claims a lien or interest,
actual or contingent;
(c) When the relief demanded in such action
consists, wholly or in part, in excluding the
defendant from any interest in property
located in the Philippines; and
(d) When the defendant's property has been
attached within the Philippines.
In these instances, service of summons may be effected by
(a) Personal service out of the country, with leave of court;
(b) Publication, also with leave of court; or
(c) Any other manner the court may deem sufficient.
Thus, extrajudicial service of summons apply only where the
action is in rem, that is, an action against the thing itself
instead of against the person, or in an action quasi in rem,
where an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation
or loan burdening the property.
The rationale for this is that in in rem and quasi in rem actions,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the
court acquires jurisdiction over the res.
Where the action is in personam, that is, one brought against a
person on the basis of her personal liability, jurisdiction over
the person of the defendant is necessary for the court to validly
try and decide the case. When the defendant is a non-resident,
19
personal service of summons within the state is essential to the
acquisition of jurisdiction over the person.
In the present case, respondents' cause of action in Civil Case
No. Q-93-17133 is an action in personam.
A process server's certificate of service is prima facie evidence of
the facts as set out in the certificate. Between the claim of
non-receipt of summons by a party against the assertion of an
official whose duty is to send notices, the latter assertion is
fortified by the presumption that official duty has been regularly
performed.
To overcome the presumption of regularity of performance of
official functions in favor of such Officer's Return, the evidence
against it must be clear and convincing. Fong having been
unable to come forward with the requisite quantum of proof to
the contrary, the presumption of regularity of performance on
the part of the process server stands.
Perkin Elmer Singapore vs. Dakila
Doctrine: There was no proper service of summons. The Court
didn’t acquire jurisdiction over Perkin Elmer Singapore. The
action is an action in personam.
The extraterritorial service of summons applies only where the
action is in rem or quasi in rem, but not if an action is in
personam.
Facts:
Petitioner Perkin Elmer Singapore (PES) is a corporation duly
organized and existing under the laws of Singapore. It is not
considered as a foreign corporation "doing business" in the
Philippines.
Herein respondent Dakila Trading Corporation is a corporation
organized and existing under Philippine laws, and engaged in
the business of selling and leasing out laboratory
instrumentation and process control instrumentation, and
trading of laboratory chemicals and supplies.
Distribution agreement with PEIA: Respondent entered into a
Distribution Agreement on 1 June 1990 with Perkin-Elmer
Instruments Asia Pte Ltd. (PEIA), a corporation duly organized
and existing under the laws of Singapore and engaged in the
business of manufacturing, producing, selling or distributing
various laboratory/analytical instruments. By virtue of the said
agreement, PEIA appointed the respondent as the sole
distributor of its products in the Philippines.
Under the same Distribution Agreement, respondent shall order
the products of PEIA, which it shall sell in the Philippines,
either from PEIA itself or from Perkin-Elmer Instruments
(Philippines) Corporation (PEIP), an affiliate of PEIA. PEIP is a
corporation duly organized and existing under Philippine laws,
and involved in the business of wholesale trading of all kinds of
scientific, biotechnological, and analytical instruments and
appliances. PEIA allegedly owned 99% of the shares of PEIP.
On 2 August 1997, however, PEIA unilaterally terminated the
Distribution Agreement, prompting respondent to file before the
RTC of Mandaluyong City, Branch 212, a Complaint6 for
Collection of Sum of Money and Damages with Prayer for
Issuance of a Writ of Attachment against PEIA and PEIP,
Respondent then filed Ex-Parte Motions for Issuance of
Summons and for Leave of Court to Deputize Respondent’s
General Manager, Richard A. Tee, to Serve Summons Outside of
the Philippines, which the RTC granted in its Order, dated 27
April 2000.
Summons were given to Perkin Elmer Asia, owned by PES;
distinct from PEIA: But the said Alias Summons was served
on 28 September 2000 and received by Perkinelmer Asia, a
Singaporean based sole proprietorship, owned by the petitioner
and, allegedly, a separate and distinct entity from PEIA.
Amended Complaint of Dakila stating that PEIA changed its
name to PerkinElmer Asia: Accordingly, respondent filed an
Ex-Parte Motion to Admit Amended Complaint, together with
the Amended Complaint claiming that PEIA had become a sole
proprietorship owned by the petitioner, and subsequently
changed its name to Perkinelmer Asia.
Being a sole proprietorship of the petitioner, a change in PEIA’s
name and juridical status did not detract from the fact that all
its due and outstanding obligations to third parties were
assumed by the petitioner.
Hence, in its Amended Complaint respondent sought to change
the name of PEIA to that of the petitioner. In an Order, dated 24
July 2001, the RTC admitted the Amended Complaint filed by
the respondent.
Respondent then filed another Motion for the Issuance of
Summons and for Leave of Court to Deputize Respondent’s
General Manager, Richard A. Tee, to Serve Summons Outside
the Philippines.
Summons were served to Perkin Elmer Singapore: In another
Order, dated 4 March 2002, the RTC deputized respondent’s
General Manager to serve summons on petitioner in Singapore.
The RTC thus issued summons to the petitioner. Acting on the
said Order, respondent’s General Manager went to Singapore
and served summons on the petitioner.
Petitioner PES subsequently filed with the RTC a Special
Appearance and Motion to Dismiss respondent’s Amended
Complaint on 30 May 2002 based on the grounds that the RTC
did not acquire jurisdiction over the person of the petitioner.
RTC: The RTC denied the motion to dismiss of Petitioner PES.
The RTC held that based on the allegations of Dakila it would
reveal that there is an allegation of personal property in the
Philippines. Shares of stocks represent personal property of the
shareholder. Thus, it follows that even though the Amended
Complaint is primarily for damages, it does relate to a property
of the [petitioner], to which the latter has a claim interest (sic),
or an actual or contingent lien, which will make it fall under one
of the requisite (sic) for extraterritorial service under Section 15,
Rule 14, of the Rules of Court. Thus, extraterritorial service of
summons to PES was proper.
CA: The Court of Appeals rendered a Decision affirming the RTC
Orders of 4 November 2002 and 20 June 2003.
Petitioner avers that extraterritorial service of summons stated
under Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure, is only proper in in rem and quasi in rem cases;
thus, resort to an extraterritorial service of summons in the
case at bar was erroneous. Petitioner asseverates that the
allegations in the respondent’s Amended Complaint that the
petitioner has personal properties within the Philippines does
not make the present case one that relates to, or the subject of
which is, property within the Philippines warranting the
extraterritorial service of summons under Section 15, Rule 14 of
the 1997 Revised Rules of Civil Procedure.
Likewise, the prayer in respondent’s Amended Complaint for the
issuance of a writ of attachment over the personal property of
PEIP, which is 99% owned by petitioner (as the supposed
successor of PEIA), did not convert the action from one in
personam to one that is quasi in rem.
Resultantly, the extraterritorial service of summons on the
petitioner was not validly effected, and did not give the RTC
jurisdiction over the petitioner.
Issue: W/N there was proper service of summons to Perkin
Elmer Singapore (Extraterritorial service of summons), so as to
confer jurisdiction with the Philippine courts? No
20

Held: There was no proper service of summons. Extra-territorial
service of summons is only available for action in rem or quasi
in rem. The action in the case at bar is an action in personam.
Jurisdiction is the power with which courts are invested for
administering justice; that is, for hearing and deciding cases. In
order for the court to have authority to dispose of the case on
the merits, it must acquire jurisdiction over the subject matter
and the parties.
Jurisdiction of the court over the subject matter is conferred
only by the Constitution or by law. It is determinable on the
basis of allegations in the complaint.
Courts acquire jurisdiction over the plaintiffs upon the filing of
the complaint, while jurisdiction over the defendants in a civil
case is acquired either through the service of summons upon
them in the manner required by law or through their voluntary
appearance in court and their submission to its authority. If the
defendants have not been summoned, unless they voluntarily
appear in court, the court acquires no jurisdiction over their
persons and a judgment rendered against them is null and void.
To be bound by a decision, a party should first be subjected to
the court’s jurisdiction.
Thus, one of the modes of acquiring jurisdiction over the person
of the defendant or respondent in a civil case is through service
of summons. It is intended to give notice to the defendant or
respondent that a civil action has been commenced against
him.
Under Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure, there are only four instances wherein a
defendant who is a non-resident and is not found in the
country may be served with summons by extraterritorial
service, to wit:
(1) When the action affects the personal status of the
plaintiff; (2) when the action relates to, or the subject
of which is property, within the Philippines, in which
the defendant claims a lien or an interest, actual or
contingent;
(2) When the relief demanded in such action consists,
wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; and
(3) When the defendant non­resident’s property has been
attached within the Philippines.
In these instances, service of summons may be effected by
(a) Personal service out of the country, with leave
of court;
(b) Publication, also with leave of court; or
(c) Any other manner the court may deem
sufficient.
Undoubtedly, extraterritorial service of summons applies only
where the action is in rem or quasi in rem, but not if an action
is in personam.
When the case instituted is an action in rem or quasi in rem,
Philippine courts already have jurisdiction to hear and decide
the case because, in actions in rem and quasi in rem,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court, provided that
the court acquires jurisdiction over the res. Thus, in such
instance, extraterritorial service of summons can be made upon
the defendant.
The said extraterritorial service of summons is not for the
purpose of vesting the court with jurisdiction, but for complying
with the requirements of fair play or due process, so that the
defendant will be informed of the pendency of the action against
him and the possibility that property in the Philippines
belonging to him or in which he has an interest may be
subjected to a judgment in favor of the plaintiff, and he can
thereby take steps to protect his interest if he is so minded.
On the other hand, when the defendant or respondent does not
reside and is not found in the Philippines,and the action
involved is in personam, Philippine courts cannot try any case
against him because of the impossibility of acquiring
jurisdiction over his person unless he voluntarily appears in
court.
In the case at bar, this Court sustains the contention of the
petitioner that there can never be a valid extraterritorial service
of summons upon it, because the case before the court a quo
involving collection of a sum of money and damages is, indeed,
an action in personam, as it deals with the personal liability of
the petitioner to the respondent by reason of the alleged
unilateral termination by the former of the Distribution
Agreement.
Thus, being an action in personam, personal service of
summons within the Philippines is necessary in order for the
RTC to validly acquire jurisdiction over the person of the
petitioner, and this is not possible in the present case because
the petitioner is a non-resident and is not found within the
Philippines. Respondent’s allegation in its Amended Complaint
that petitioner had personal property within the Philippines in
the form of shares of stock in PEIP did not make Civil Case No.
MC99-605 fall under any of the four instances mentioned in
Section 15, Rule 14 of the Rules of Court, as to convert the
action in personam to an action in rem or quasi in rem and,
subsequently, make the extraterritorial service of summons
upon the petitioner valid.
The petitioner is correct in saying that "mere allegations of
personal property within the Philippines does not necessarily
make the action as one that relates to or the subject of which is,
property within the Philippines as to warrant the extraterritorial
service of summons. For the action to be considered one that
relates to, or the subject of which, is the property within the
Philippines, the main subject matter of the action must be the
property itself of the petitioner in the Philippines." By analogy,
an action involving title to or possession of real or personal
property -- such as the foreclosure of real estate or chattel
mortgage where the mortgagor does not reside or is not found in
the Philippines -- can be considered as an action which relates
to, or the subject of which is, property within the Philippines, in
which the defendant claims a lien or interest, actual or
contingent; and in such instance, judgment will be limited to
the res.
As a rule, even if the service of summons upon the defendant or
respondent in a civil case is defective, the court can still acquire
jurisdiction over his person when he voluntary appears in court
or submits himself to its authority. Nonetheless, voluntary
appearance, as a mode of acquiring jurisdiction over the person
of the defendant, is likewise inapplicable in this case.
No Voluntary Appearance in the case at bar: It is settled that a
party who makes a special appearance in court for the purpose
of challenging the jurisdiction of said court, based on the
invalidity of the service of summons, cannot be considered to
have voluntarily submitted himself to the jurisdiction of the
court.
In the present case, petitioner has been consistent in all its
pleadings in assailing the service of summons upon it and the
jurisdiction of the RTC over its person. Thus, the petitioner
cannot be declared in estoppel when it filed an Answer ad
cautelam with compulsory counterclaim before the RTC while
the instant Petition was still pending before this Court. The
21
petitioner was in a situation wherein it had no other choice but
to file an Answer; otherwise, the RTC would have already
declared that petitioner had waived its right to file responsive
pleadings.
Neither can the compulsory counterclaim contained in
petitioner’s Answer ad cautelam be considered as voluntary
appearance of petitioner before the RTC. Petitioner seeks to
recover damages and attorney’s fees as a consequence of the
unfounded suit filed by respondent against it. Thus, petitioner’s
compulsory counterclaim is only consistent with its position
that the respondent wrongfully filed a case against it and the
RTC erroneously exercised jurisdiction over its person.
SEC. 20. Voluntary appearance. ­ The defendant’s voluntary
appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance.(Emphasis
supplied.)
In sum, this Court finds that the petitioner did not submit itself
voluntarily to the authority of the court a quo; and in the
absence of valid service of summons, the RTC utterly failed to
acquire jurisdiction over the person of the petitioner.
Pioneer vs. Guadiz
Doctrine: There was no proper service of summons.
Summons to a foreign judicial entity doing business in the
Philippines:
1.) Service on its resident agent designated in
accordance with law for that purpose,
2.) Service on the government official designated
by law to receive summons if the corporation
does not have a resident agent, and
3.) Service on any of the corporation’s officers or
agents within the Philippines.
Kleipzig is the authorized agent of PIL in the Philippines.
However, summons were not served on Kleipzig. The summons
were instead served on De Leon, an employee of Kleipzig.
De Leon is not the authorized agent of PIL. Thus, the Court
didn’t acquire jurisdiction over PIL
Facts:
Antonio D. Todaro (Todaro) filed a complaint for sum of money
and damages with preliminary attachment against PIL, Pioneer
Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings,
Inc. (PPHI), John G. McDonald (McDonald), and Philip J. Klepzig
(Klepzig).
PIL and its co-defendants were served copies of the summons
and of the complaint at PPHI and PCPI’s office in Alabang,
Muntinlupa, through Cecille L. De Leon (De Leon), who was
Klepzig’s Executive Assistant.
Todaro alleged that PIL is a corporation duly organized under
Australian laws, while PCPI and PPHI are corporations duly
organized under Philippine laws. PIL is engaged in the
ready-mix and concrete aggregates business and has
established a presence worldwide.
PIL established PPHI as the holding company of the stocks of its
operating company in the Philippines, PCPI. McDonald is the
Chief Executive Officer of PIL’s Hong Kong office while Klepzig is
the President and Managing Director of PPHI and PCPI.
For his part, Todaro further alleged that he was the managing
director of Betonval Readyconcrete, Inc. (Betonval) from June
1975 up to his resignation in February 1996.
According to Todaro, PIL contacted him in May 1996 and asked
if he could join it in establishing a pre-mixed concrete plant and
in overseeing its operations in the Philippines. In Todaro’s
remuneration package it was stated that after three months of
consultancy, Todaro shall be considered permanently employed
by Pioneer Intl.
However, Kleipzig in his letter stated that Todaro as not proven
possible for this company to meet with your expectations
regarding the conditions of your providing Pioneer with
consultancy services. Therefore, Kleipzig was withdrawing his
offer for Kleipzig to work with the company.
Todaro was not given a permanent position and his services
were terminated.
Thus, Todaro filed with case against Pioneer.
PIL filed, by special appearance, a motion to dismiss Todaro’s
complaint. PIL’s co­defendants, PCPI, PPHI, and Klepzig, filed a
separate motion to dismiss.
PIL asserted that the trial court has no jurisdiction over PIL
because PIL is a foreign corporation not doing business in the
Philippines.
PIL also questioned the service of summons on it. Assuming
arguendo that Klepzig is PIL’s agent in the Philippines, it was
not Klepzig but De Leon who received the summons for PIL. PIL
further stated that the National Labor Relations Commission
(NLRC), and not the trial court, has jurisdiction over the subject
matter of the action.
It claimed that assuming that the trial court has jurisdiction
over the subject matter of the action, the complaint should be
dismissed on the ground of forum non-conveniens.
Trial Court: On 4 January 1999, the trial court issued an
order, which ruled in favor of Todaro. The trial court denied the
motions to dismiss filed by PIL, PCPI, PPHI, and Klepzig. he trial
court also asserted its jurisdiction over PIL, holding that PIL did
business in the Philippines when it entered into a contract with
Todaro. Although PIL questions the service of summons on
Klepzig, whom PIL claims is not its agent, the trial court ruled
that PIL failed to adduce evidence to prove its contention.
Court of Appeals: The appellate court denied PIL’s petition and
affirmed the trial court’s ruling in toto.
Issue: W/N there was proper service of summons to PIL as to
vest jurisdiction on the Trial Court?
W/N the Philippines is the proper forum?
Held:
PIL questions the trial court’s exercise of jurisdiction over it on
two levels.
First, that PIL is a foreign corporation not doing business in the
Philippines and because of this, the service of summons on PIL
did not follow the mandated procedure.
PIL’s transaction of business in the Philippines and the service
of summons on PIL. Section 12, Rule 14 of the 1997 Rules of
Civil Procedure provides the manner by which summons may be
served upon a foreign juridical entity which has transacted
business in the Philippines.
Thus:
Service upon foreign private juridical entity. — When the
defendant is a foreign juridical entity which has transacted
business in the Philippines, service may be made on its resident
agent designated in accordance with law for that purpose, or, if
22
there be no such agent, on the government official designated by
law to that effect, or any of its officers or agents within the
Philippines.
PIL insists that its sole act of "transacting" or "doing business"
in the Philippines consisted of its investment in PPHI. Under
Philippine law, PIL’s mere investment in PPHI does not
constitute "doing business."
However, we affirm the lower courts’ ruling and declare that,
based on the allegations in Todaro’s complaint, PIL was doing
business in the Philippines when it negotiated Todaro’s
employment with PPHI
Section 3(d) of Republic Act No. 7042, Foreign Investments
Act of 1991, states:
The phrase "doing business" shall include soliciting orders,
service contracts, opening offices, whether called "liaison" offices
or branches; appointing representatives or distributors domiciled
in the Philippines or who in any calendar year stay in the country
for a period or periods totaling one hundred eighty [180] days or
more; participating in the management, supervision or control of
any domestic business, firm, entity or corporation in the
Philippines; and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that
extent the performance of acts or works, or the exercise of some
of the functions normally incident to, and in progressive
prosecution of commercial gain or of the purpose and object of the
business organization: Provided, however, That the phrase "doing
business" shall not be deemed to include mere investment as a
shareholder by a foreign entity in domestic corporations duly
registered to do business, and/or the exercise of rights as such
investor; nor having a nominee director or officer to represent its
interests in such corporation; nor appointing a representative or
distributor domiciled in the Philippines which transacts business
in its own name and for its own account;
The purpose of summons is not only to acquire jurisdiction over
the person of the defendant, but also to give notice to the
defendant that an action has been commenced against it and to
afford it an opportunity to be heard on the claim made against
it.
The requirements of the rule on summons must be strictly
followed; otherwise, the trial court will not acquire jurisdiction
over the defendant.
When summons is to be served on a natural person, service of
summons should be made in person on the defendant.
Substituted service is resorted to only upon the
concurrence of two requisites:
(1) When the defendant cannot be served personally
within a reasonable time and
(2) When there is impossibility of prompt service as shown
by the statement in the proof of service in the efforts
made to find the defendant personally and that such
efforts failed.
The statutory requirements of substituted service must be
followed strictly, faithfully, and fully, and any substituted
service other than by the statute is considered ineffective.
Substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and may be
used only as prescribed and in the circumstances authorized by
the statute.
The need for strict compliance with the requirements of the
rule on summons is also exemplified in the exclusive
enumeration of the agents of a domestic private juridical entity
who are authorized to receive summons.
At present, Section 11 of Rule 14 provides that when the
defendant is a domestic private juridical entity, service may be
made on the "president, managing partner, general manager,
corporate secretary, treasurer, or in-house counsel." The
previous version of Section 11 allowed for the service of
summons on the "president, manager, secretary, cashier, agent,
or any of its directors."
The present Section 11 qualified "manager" to "general
manager" and "secretary" to "corporate secretary." The present
Section 11 also removed "cashier, agent, or any of its directors"
from the exclusive enumeration.
When summons is served on a foreign juridical entity, there
are three prescribed ways:
(1) Service on its resident agent designated in accordance
with law for that purpose,
(2) Service on the government official designated by law to
receive summons if the corporation does not have a
resident agent, and
(3) Service on any of the corporation’s officers or agents
within the Philippines.
In the present case, service of summons on PIL failed to follow
any of the prescribed processes. PIL had no resident agent in
the Philippines.
Summons was not served on the Securities and Exchange
Commission (SEC), the designated government agency, since
PIL is not registered with the SEC. Summons for PIL was served
on De Leon, Klepzig’s Executive Assistant. Klepzig is PIL’s
"agent within the Philippines" because PIL authorized Klepzig to
notify Todaro of the cessation of his consultancy (Annexes "H"
and "I").
The authority given by PIL to Klepzig to notify Todaro implies
that Klepzig was likewise authorized to receive Todaro’s
response to PIL’s notice. Todaro responded to PIL’s notice by
filing a complaint before the trial court.
However, summons was not served personally on Klepzig as
agent of PIL. Instead, summons was served on De Leon,
Klepzig’s Executive Assistant. In this instance, De Leon was not
PIL’s agent but a mere employee of Klepzig. In effect, the sheriff
resorted to substituted service. For symmetry, we apply the rule
on substituted service of summons on a natural person and we
find that no reason was given to justify the service of PIL’s
summons on De Leon.
Thus, we rule that PIL transacted business in the Philippines
and Klepzig was its agent within the Philippines. However, there
was improper service of summons on PIL since summons was
not served personally on Klepzig.
Regner vs. Logarta
Doctrine: There was no proper service of summons to Cynthia.
Cynthia is a non-resident citizen not found in the Philippines.
Service of summons to a non-resident citizen not found in
the Philippines:
(1) By personal service;
(2) By publication in a newspaper of general circulation in
such places and for such time as the court may order,
in which case a copy of the summons and order of the
court should be sent by registered mail to the last
known address of the defendant; or
(3) In any other manner which the court may deem
sufficient. The third mode, like the first two, must be
made outside the Philippines, such as through the
Philippine Embassy in the foreign country where
Cynthia resides.
The service of summons didn’t follow any of these modes.
23

Facts:
Luis Regner (Luis) had three daughters with his first wife,
Anicita C. Regner, namely,
 Cynthia Logarta (Cynthia) and
 Teresa Tormis (Teresa), the respondents herein, and
 Melinda Regner-Borja (Melinda)
Herein petitioner Victoria Regner (Victoria) is the second wife of
Luis.
During the lifetime of Luis, he acquired several properties,
among which is a share at Cebu Country Club Inc., evidenced
by Proprietary Ownership Certificate No. 0272. On 15 May
1998, Luis executed a Deed2 of Donation in favor of
respondents Cynthia and Teresa covering Proprietary
Ownership Certificate No. 0272 of the Cebu Country Club, Inc.
Luis passed away on 11 February 1999.
On 15 June 1999, Victoria filed a Complaint for Declaration of
Nullity of the Deed of Donation with Prayer for Issuance of a
Writ of Preliminary Injunction and Temporary Restraining Order
against Cynthia and Teresa with the RTC, docketed as Civil
Case No. CEB. 23927.
Victoria alleged in her complaint that: on 17 March 1997, Luis
made a written declaration wherein he stated that due to his
illness and forgetfulness, he would not sign any document
without the knowledge of his lawyer, Atty. Francis Zosa; on 15
May 1998, when Luis was already very ill and no longer of
sound and disposing mind, Cynthia and Teresa , conspiring and
confederating with each other, fraudulently made or caused to
be fraudulently made a Deed of Donation whereby they made it
appear that Luis donated to them Proprietary Ownership
Certificate No. 0272; since Luis no longer had the ability to
write or affix his signature, Melinda, acting under the influence
of her sisters, Cynthia and Teresa, fraudulently manipulated
the hand of Luis so that he could affix his thumbmark on the
assailed Deed of Donation; on 8 February 1998, or three days
before the death of Luis, and when he was already in comatose
condition at the Cebu Doctors’ Hospital, Melinda, Teresa, and
Cynthia caused the preparation of an affidavit to the effect that
Luis affirmed the Deed of Donation he allegedly executed earlier
by lifting his hand to affix his thumbmark on the said affidavit.
Sheriff Melchor A. Solon served the summonses on Cynthia and
Teresa at the Borja Family Clinic in Tagbilaran City wherein
Melinda worked as a doctor, but Melinda refused to receive the
summonses for her sisters and informed the sheriff that their
lawyer, Atty. Francis Zosa, would be the one to receive the
same.
Upon her arrival in the Philippines, on 1 June 2000, Teresa was
personally served the summons at Room 304, Regency Crest
Condominium, Banilad, Cebu City.
Rejoinder because of indispensable party: Teresa filed her
rejoinder on the ground that their sister, Cynthia, an
indispensable party, had not yet been served a summons. Thus,
Teresa prayed for the dismissal of petitioner’s complaint, as the
case would not proceed without Cynthia’s presence.
RTC: On 9 November 2000, the RTC issued an Order6 granting
respondent Teresa’s motion to dismiss,
CA: On 6 May 2005, the Court of Appeals rendered a Decision
denying the appeal and affirming in toto the order of dismissal
of the complaint by the RTC and the denial of the motion for
reconsideration thereof. The Court of Appeals ratiocinated that
petitioner’s failure to move for an extraterritorial service of
summons constitutes failure to prosecute for an unreasonable
length of time
Issue: W/N there was proper service of summons to Cynthia as
to confer jurisdiction to the Trial Court?
Held:
In the case at bar, the Supreme Court held that Cynthia is
indeed an indispensable party.
An indispensable party has been defined as follows:
An indispensable party is a party who has such an interest in the
controversy or subject matter that a final adjudication cannot be
made, in his absence, without injuring or affecting that interest, a
party who has not only an interest in the subject matter of the
controversy, but also has an interest of such nature that a final
decree cannot be made without affecting his interest or leaving
the controversy in such a condition that its final determination
may be wholly inconsistent with equity and good conscience. It
has also been considered that an indispensable party is a person
in whose absence there cannot be a determination between the
parties already before the court which is effective, complete, or
equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward.
Applying the foregoing definitions and principles to the present
case, this Court finds that any decision in Civil Case No. CEB
23927 cannot bind Cynthia, and the Court cannot nullify the
donation of the property she now co-owns with Teresa, even if
limited only to the portion belonging to Teresa, to whom
summons was properly served, since ownership of the property
is still pro indiviso. Obviously, Cynthia is an indispensable
party in Civil Case No. CEB 23927 without whom the lower
court is barred from making a final adjudication as to the
validity of the entire donation. Without the presence of
indispensable parties to a suit or proceeding, a judgment
therein cannot attain finality.
Being an indispensable party in Civil Case No. CEB 23927, the
trial court must also acquire jurisdiction over Cynthia’s person
through the proper service of summons.
As to determine whether Cynthia was properly served a
summons, it will be helpful to determine first the nature of the
action filed against Cynthia and Teresa by petitioner Victoria,
whether it is an action in personam, in rem or quasi in rem.
This is because the rules on service of summons embodied in
Rule 14 apply according to whether an action is one or the other
of these actions.
Action in personam: In a personal action, the plaintiff seeks
the recovery of personal property, the enforcement of a contract
or the recovery of damages. In contrast, in a real action, the
plaintiff seeks the recovery of real property; or, as indicated
in Section 2(a), Rule 4 of the then Rules of Court, a real action
is an action affecting title to real property or for the recovery of
possession, or for partition or condemnation of, or foreclosure of
mortgage on, real property. An action in personam is an action
against a person on the basis of his personal liability, while an
action in rem is an action against the thing itself, instead of
against the person.
In an action in personam, personal service of summons or, if
this is not possible and he cannot be personally served,
substituted service, as provided in Section 7, Rule 14 of the
Rules of Court, is essential for the acquisition by the court of
jurisdiction over the person of a defendant who does not
voluntarily submit himself to the authority of the court. If
defendant cannot be served a summons because he is
temporarily abroad, but is otherwise a Philippine resident,
service of summons may, by leave of court, be made by
publication. Otherwise stated, a resident defendant in an action
in personam, who cannot be personally served a summons, may
be summoned either by means of substituted service in
accordance with Section 7, Rule 14 of the Rules of Court, or by
publication as provided in Sections 15 and 16 of the same Rule.
In all of these cases, it should be noted, defendant must be a
resident of the Philippines; otherwise an action in personam
cannot be brought because jurisdiction over his person is
essential to make a binding decision.
24

Action in rem/quasi in rem: On the other hand, if the action
is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so
long as the court acquires jurisdiction over the res. If the
defendant is a nonresident and he is not found in the country,
summons may be served extraterritorially in accordance with
Section 15, Rule 14 of the Rules of Court, which provides:
Section 15. Extraterritorial service. - When the defendant does
not reside and is not found in the Philippines, and the action
affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which
the defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or
in part, in excluding the defendant from any interest therein, or
the property of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under Section 6; or by
publication in a newspaper of general circulation in such places
and for such time as the court may order, in which case a copy
of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in
any other manner the court may deem sufficient. Any order
granting such leave shall specify a reasonable time, which shall
not be less than sixty (60) days after notice, within which the
defendant must answer.
As stated above, there are only four instances wherein a
defendant who is a non-resident and is not found in the
country may be served a summons by extraterritorial
service, to wit:
(1) when the action affects the personal status of the
plaintiff;
(2) when the action relates to, or the subject of which is
property within the Philippines, on which the
defendant claims a lien or an interest, actual or
contingent;
(3) when the relief demanded in such action consists,
wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; and
(4) when the defendant non­resident’s property has been
attached within the Philippines.
In these instances, service of summons may be effected by
(a) personal service out of the country, with leave of court;
(b) publication, also with leave of court; or
(c) any other manner the court may deem sufficient.
In such cases, what gives the court jurisdiction in an action in
rem or quasi in rem is that it has jurisdiction over the res, i.e.,
the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached. Service of
summons in the manner provided in Section 15, Rule 14 of the
Rules of Court is not for the purpose of vesting the court with
jurisdiction, but for complying with the requirements of fair play
or due process, so that the defendant will be informed of the
pendency of the action against him; and the possibility that
property in the Philippines belonging to him, or in which he has
an interest, might be subjected to a judgment in favor of the
plaintiff and he can thereby take steps to protect his interest if
he is so minded.
In petitioner’s Complaint in Civil Case No. CEB No. 23427, she
alleged that:
Cynthia is residing at 462 West Vine No. 201, Glendale,
California, 912041, U.S.A.; while Teresa is residing at 2408
South Hacienda Boulevard, Hacienda Heights, California, but
they usually visit here in the Philippines and can be served
summonses and other processes at the Borja Family Clinic,
Bohol. Pertinent portions of the Complaint read:
 Defendant Cynthia R. Logarta is a Filipino, of legal age,
married to Ramon Logarta, resident (sic) 463 West
Vine No.201, Glendale, California, 912041, USA. She
however usually visits in the Philippines and can be
served with summons and other processes of this
Honorable Court at Borja Family Clinic, Tagbilaran,
Bohol;
 Defendant Teresa R. Tormis is likewise a Filipino, of
legal age, married to Antonio Tormis, and a resident of
2408 South Hacienda Heights, California, 19745,
U.S.A. She however usually visits in the Philippines
and can be served with summons and other processes
of this Honorable Court at Borja Family Clinic,
Tagbilaran, Bohol.

Petitioner prayed for a declaration of nullity of the deed of
donation, to restrain Cebu Country Club, Inc. from transferring
title and ownership of Proprietary Ownership Certificate No.
0272 to Cynthia and Teresa, and for moral and exemplary
damages. Civil Case No. CEB 23927 is evidently an action
against Cynthia and Teresa on the basis of their personal
liability for the alleged fraudulent transfer of the subject
Country Club membership from Luis to their name. In this
sense, petitioner questions the participation and shares of
Cynthia and Teresa in the transferred Country Club
membership.
Moreover, the membership certificate from the Cebu Country
Club, Inc. is a personal property. Thus, the action instituted by
petitioner before the RTC is in personam.
Being an action in personam, the general rule requires the
personal service of summons on Cynthia within the Philippines,
but this is not possible in the present case because Cynthia is a
non-resident and is not found within the Philippines.
As Cynthia is a nonresident who is not found in the
Philippines, service of summons on her must be in
accordance with Section 15, Rule 14 of the Rules of Court.
Such service, to be effective outside the Philippines, must be
made either
(4) By personal service;
(5) By publication in a newspaper of general circulation in
such places and for such time as the court may order,
in which case a copy of the summons and order of the
court should be sent by registered mail to the last
known address of the defendant; or
(6) In any other manner which the court may deem
sufficient. The third mode, like the first two, must be
made outside the Philippines, such as through the
Philippine Embassy in the foreign country where
Cynthia resides.
Since in the case at bar, the service of summons upon Cynthia
was not done by any of the authorized modes, the trial court
was correct in dismissing petitioner’s complaint.
The trial court didn’t acquire jurisdiction over Cynthia. There
was no proper service of summons.
Palma vs. Judge Galvez
Doctrine: There was proper service of summons to Dr. Agudo.
A resident citizen who is temporarily outside the Philippines,
may be served summons through the following modes:
(1) Substituted service set forth in section 7 ( formerly
Section 8), Rule 14;
(2) Personal service outside the country, with leave of
court;
(3) Service by publication, also with leave of court; or
(4) In any other manner the court may deem sufficient.
25

The Rules of Court don’t mandate that service be made through
publication. It can be through any of the aforementioned
methods.
Consequently, there was proper substituted service of summons
to the husband of Dr. Agudo.
Facts:
On July 28, 2003, petitioner Leah Palma filed with the RTC an
action for damages against the Philippine Heart Center (PHC),
Dr. Danilo Giron and Dr. Bernadette O. Cruz, alleging that the
defendants committed professional fault, negligence and
omission for having removed her right ovary against her will,
and losing the same and the tissues extracted from her during
the surgery; and that although the specimens were
subsequently found, petitioner was doubtful and uncertain that
the same was hers as the label therein pertained that of
somebody else.
On February 17, 2004, the RTC's process server submitted his
return of summons stating that the alias summons, together
with a copy of the amended complaint and its annexes, were
served upon private respondent thru her husband Alfredo
Agudo, who received and signed the same as private respondent
Dr. Agudo was out of the country.
Private respondent Dr. Agudo filed a Motion to Dismiss on the
ground that the RTC had not acquired jurisdiction over her as
she was not properly served with summons, since she was
temporarily out of the country; that service of summons on her
should conform to Section 16, Rule 14 of the Rules of Court.
Palmar filed her Opposition to the motion to dismiss, arguing
that a substituted service of summons on private respondent's
husband was valid and binding on her; that service of summons
under Section 16, Rule 14 was not exclusive and may be
effected by other modes of service, i.e., by personal or
substituted service.
Consequently, the counel of Dr. Agudo filed two Motions for
extension of Time.
RTC: The RTC issued its assailed Order granting private
respondent's motion to dismiss. It found that while the
summons was served at private respondent's house and
received by respondent's husband, such service did not qualify
as a valid service of summons on her as she was out of the
country at the time the summons was served, thus, she was not
personally served a summons; and even granting that she knew
that a complaint was filed against her, nevertheless, the court
did not acquire jurisdiction over her person as she was not
validly served with summons; that substituted service could not
be resorted to since it was established that private respondent
was out of the country, thus, Section 16, Rule 14 provides for
the service of summons on her by publication.
Petitioner claims that the RTC committed a grave abuse of
discretion in ruling that Section 16, Rule 14, limits the service
of summons upon the defendant-resident who is temporarily
out of the country exclusively by means of extraterritorial
service, i.e., by personal service or by publication, pursuant to
Section 15 of the same Rule. Petitioner further argues that in
filing two motions for extension of time to file answer, private
respondent voluntarily submitted to the jurisdiction of the
court.
Issue: W/N the trial court acquired jurisdiction over Dr. Agudo
through substituted service of summons on her husband? Yes.
Held: Yes, there was proper substituted service of summons.
The service of summons to a resident temporarily outside the
Philippines doesn’t necessarily require that the mode be
through publication.
In civil cases, the trial court acquires jurisdiction over the
person of the defendant either by the service of summons or by
the latter’s voluntary appearance and submission to the
authority of the former. Private respondent was a Filipino
resident who was temporarily out of the Philippines at the time
of the service of summons; thus, service of summons on her is
governed by Section 16, Rule 14 of the Rules of Court, which
provides:
Sec. 16. Residents temporarily out of the Philippines. –
When an action is commenced against a defendant who
ordinarily resides within the Philippines, but who is temporarily
out of it, service may, by leave of court, be also effected out of the
Philippines, as under the preceding section. (Emphasis supplied)
The preceding section referred to in the above provision is
Section 15, which speaks of extraterritorial service, thus:
SEC. 15. Extraterritorial service. ─ When the defendant does
not reside and is not found in the Philippines, and the action
affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or
in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property
of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines
by personal service as under section 6; or by publication in a
newspaper of general circulation in such places and for such time
as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less than sixty (60)
days after notice, within which the defendant must answer.
The RTC found that since private respondent was abroad at the
time of the service of summons, she was a resident who was
temporarily out of the country; thus, service of summons may
be made only by publication.
We do not agree.
In Montefalcon v. Vasquez, we said that because Section 16 of
Rule 14 uses the words "may" and "also," it is not mandatory.
Other methods of service of summons allowed under the Rules
may also be availed of by the serving officer on a
defendant-resident who is temporarily out of the Philippines.
Thus, if a resident defendant is temporarily out of the country,
any of the following modes of service may be resorted to:
(1) Substituted service set forth in section 7 ( formerly Section
8), Rule 14;
(2) Personal service outside the country, with leave of court;
(3) Service by publication, also with leave of court; or
(4) In any other manner the court may deem sufficient.
Considering that private respondent was temporarily out of the
country, the summons and complaint may be validly served on
her through substituted service under Section 7, Rule 14 of the
Rules of Court which reads:
SEC. 7. Substituted service. — If, for justifiable causes, the
defendant cannot be served within a reasonable time as
provided in the preceding section, service may be effected
(a) By leaving copies of the summons at the defendant’s
residence with some person of suitable age and discretion
then residing therein, or
(b) By leaving the copies at defendant’s office or regular place
of business with some competent person in charge thereof.
26
We have held that a dwelling, house or residence refers to the
place where the person named in the summons is living at the
time when the service is made, even though he may be
temporarily out of the country at the time. It is, thus, the
service of the summons intended for the defendant that must be
left with the person of suitable age and discretion residing in
the house of the defendant. Compliance with the rules
regarding the service of summons is as important as the issue
of due process as that of jurisdiction.
Section 7 also designates the persons with whom copies of the
process may be left. The rule presupposes that such a relation
of confidence exists between the person with whom the copy is
left and the defendant and, therefore, assumes that such
person will deliver the process to defendant or in some way give
him notice thereof.
In this case, the Sheriff's Return stated that private respondent
was out of the country; thus, the service of summons was made
at her residence with her husband, Alfredo P. Agudo,
acknowledging receipt thereof. Alfredo was presumably of
suitable age and discretion, who was residing in that place and,
therefore, was competent to receive the summons on private
respondent's behalf.
Notably, private respondent makes no issue as to the fact that
the place where the summons was served was her residence,
though she was temporarily out of the country at that time, and
that Alfredo is her husband. In fact, in the notice of appearance
and motion for extension of time to file answer submitted by
private respondent's counsel, he confirmed the Sheriff's Return
by stating that private respondent was out of the country and
that his service was engaged by respondent's husband.
Voluntary Appearance through Counsel: In addition, we agree
with petitioner that the RTC had indeed acquired jurisdiction
over the person of private respondent when the latter's counsel
entered his appearance on private respondent's behalf, without
qualification and without questioning the propriety of the
service of summons, and even filed two Motions for Extension of
Time to File Answer. In effect, private respondent, through
counsel, had already invoked the RTC’s jurisdiction over her
person by praying that the motions for extension of time to file
answer be granted.
N.M. Rothschild vs. Lepanto
Doctrine: There was no proper service of summons.
 Undoubtedly, extraterritorial service of summons
applies only where the action is in rem or quasi in
rem, but not if an action is in personam.
However, the Court has jurisdiction over N.M. Rothschild by
virtue of voluntary appearance.
Facts:
On August 30, 2005, respondent Lepanto Consolidated Mining
Company filed with the Regional Trial Court (RTC) of Makati
City a Complaint against petitioner NM Rothschild & Sons
(Australia) Limited praying for a judgment declaring the loan
and hedging contracts between the parties void for being
contrary to Article 2018 of the Civil Code of the Philippines and
for damages.
Upon respondent’s (plaintiff’s) motion, the trial court authorized
respondent’s counsel to personally bring the summons and
Complaint to the Philippine Consulate General in Sydney,
Australia for the latter office to effect service of summons on
petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With
Motion to Dismiss praying for the dismissal of the Complaint on
the ground that the court has not acquired jurisdiction over the
person of petitioner due to the defective and improper service of
summon.
Trial Court: The trial court issued an Order denying the Motion
to Dismiss. According to the trial court, there was a proper
service of summons through the Department of Foreign Affairs
(DFA) on account of the fact that the defendant has neither
applied for a license to do business in the Philippines, nor filed
with the Securities and Exchange Commission (SEC) a Written
Power of Attorney designating some person on whom summons
and other legal processes maybe served.
CA: The CA ruled in favor of respondent Lepanto.
Petitioner N.M. Rothschild alleges that the RTC has not
acquired jurisdiction over its person on account of the improper
service of summons. Summons was served on petitioner
through the DFA, with respondent’s counsel personally bringing
the summons and Complaint to the Philippine Consulate
General in Sydney, Australia.
Issue:
1. W/N there was proper service of summons through the
Philippine Consulate General in Australia as to vest
the Court with jurisdiction over N.M. Rothschild? No,
extraterritorial service only applies to action in
rem/quasi in rem.
2. W/N the Court has jurisdiction over N.M. Rothschild?
Yes, by virtue of voluntary appearance
Held:
First Issue: There was no proper service of summons.
The provisions of the 1997 Rules of Civil Procedure govern the
service of summons. Section 12, Rule 14 of said rules provides:
Sec. 12. Service upon foreign private juridical entity. –
When the defendant is a foreign private juridical entity which has
transacted business in the Philippines, service may be made on
its resident agent designated in accordance with law for that
purpose, or, if there be no such agent, on the government official
designated by law to that effect, or on any of its officers or agents
within the Philippines. (Emphasis supplied.)
This is a significant amendment of the former Section 14 of said
rule, which previously provided:
Sec. 14. Service upon private foreign corporations. — If the
defendant is a foreign corporation, or a nonresident joint stock
company or association, doing business in the Philippines,
service may be made on its resident agent designated in
accordance with law for that purpose, or if there be no such
agent, on the government official designated by law to that effect,
or on any of its officers or agents within the Philippines.
(Emphasis supplied.)
The coverage of the present rule is thus broader.30 Secondly,
the service of summons to petitioner through the DFA by the
conveyance of the summons to the Philippine Consulate
General in Sydney, Australia was clearly made not through
the above-quoted Section 12, but pursuant to Section 15 of
the same rule which provides:
Sec. 15. Extraterritorial service. – When the defendant does
not reside and is not found in the Philippines, and the action
affects the personal status of the plaintiff or relates to, or the
subject of which is property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or
in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property
of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines
by personal service as under section 6; or by publication in a
27
newspaper of general circulation in such places and for such time
as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less than sixty (60)
days after notice, within which the defendant must answer.
Breaking down Section 15, Rule 14, it is apparent that there are
only four instances wherein a defendant who is a non-resident
and is not found in the country may be served with summons
by extraterritorial service, to wit:
(1) When the action affects the personal status of the
plaintiffs;
(2) When the action relates to, or the subject of which is
property, within the Philippines, in which the
defendant claims a lien or an interest, actual or
contingent;
(3) When the relief demanded in such action consists,
wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; and
(4) When the defendant non-resident's property has been
attached within the Philippines.
In these instances, service of summons may be effected by
(a) Personal service out of the country, with leave
of court;
(b) Publication, also with leave of court; or
(c) Any other manner the court may deem
sufficient.
Proceeding from this enumeration, we held in Perkin Elmer
Singapore Pte Ltd. v. Dakila Trading Corporation that:
Undoubtedly, extraterritorial service of summons applies only
where the action is in rem or quasi in rem, but not if an action
is in personam.
The Complaint in the case at bar is an action to declare the loan
and Hedging Contracts between the parties void with a prayer
for damages. It is a suit in which the plaintiff seeks to be freed
from its obligations to the defendant under a contract and to
hold said defendant pecuniarily liable to the plaintiff for
entering into such contract. It is therefore an action in
personam, unless and until the plaintiff attaches a property
within the Philippines belonging to the defendant, in which case
the action will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and
since the defendant, petitioner Rothschild/Investec, does not
reside and is not found in the Philippines, the Philippine courts
cannot try any case against it because of the impossibility of
acquiring jurisdiction over its person unless it voluntarily
appears in court.
Second Issue: The Court has acquired jurisdiction over N.M.
Rothschild by way of voluntary appearance.
In this regard, respondent Lepanto vigorously argues that
petitioner should be held to have voluntarily appeared before
the trial court when it prayed for, and was actually afforded,
specific reliefs from the trial court. Respondent Lepanto points
out that while petitioner’s Motion to Dismiss was still pending,
petitioner prayed for and was able to avail of modes of discovery
against respondent, such as written interrogatories, requests for
admission, deposition, and motions for production of
documents.
SEC. 20. Voluntary appearance. – The defendant's voluntary
appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance. (Emphasis
supplied.)
The new second sentence, it can be observed, merely mentions
other grounds in a Motion to Dismiss aside from lack of
jurisdiction over the person of the defendant.
This clearly refers to affirmative defenses, rather than
affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new
Section 20, Rule 20, this Court, in several cases, ruled that
seeking affirmative relief in a court is tantamount to voluntary
appearance therein.45 Thus, in Philippine Commercial
International Bank v. Dy Hong Pi,wherein defendants filed a
"Motion for Inhibition without submitting themselves to the
jurisdiction of this Honorable Court" subsequent to their filing
of a "Motion to Dismiss (for Lack of Jurisdiction)," we held:
Besides, any lingering doubts on the issue of voluntary
appearance dissipate when the respondents' motion for inhibition
is considered. This motion seeks a sole relief: inhibition of Judge
Napoleon Inoturan from further hearing the case. Evidently, by
seeking affirmative relief other than dismissal of the case,
respondents manifested their voluntary submission to the court's
jurisdiction. It is well-settled that the active participation of a
party in the proceedings is tantamount to an invocation of the
court's jurisdiction and a willingness to abide by the resolution of
the case, and will bar said party from later on impugning the
court's jurisdiction
In view of the above, we therefore rule that petitioner, by
seeking affirmative reliefs from the trial court, is deemed to have
voluntarily submitted to the jurisdiction of said court. A party
cannot invoke the jurisdiction of a court to secure affirmative
relief against his opponent and after obtaining or failing to
obtain such relief, repudiate or question that same jurisdiction
Express Padala Italia vs. Ocampo
Doctrine: Substituted service was not proper, it is because
such method is only resorted to if the whereabouts of the party-
defendant is known.
In the case at bar, the whereabouts of the residence or place of
work of the defendant is not known. Hence, the proper mode is
through publication.
Facts:
BDO Remittance, a corporation with principal office in Italy,
hired respondent Ocampo as a remittance processor in
September 2002. She was dismissed in February 2004 for
misappropriating the sum of €24,035.60 by falsifying invoices of
money payments relating to customers' money transfer orders
from February to December 2003.
Accordingly, BDO Remittance filed a criminal complaint against
Ocampo for the same acts before the Court of Turin, Italy.
Ocampo pleaded guilty to the offense charged. On April 13,
2005, the Honorable Court of Turin convicted and sentenced
her to suffer imprisonment of six months and a penalty of
€300.00, but granted her the benefit of suspension of the
enforcement of sentence on account of her guilty plea (the Court
of Turin Decision).
On September 22, 2008, BDO Remittance filed a petition for
recognition of foreign judgment with the RTC of Mandaluyong
City. BDO Remittance prayed for the recognition of the Court of
Turin Decision and the cancellation or restriction of Ocampo' s
Philippine passport by the Department of Foreign Affairs (DFA).
On November 21, 2008, the sheriff attempted to personally
serve the summons on Ocampo in her local address alleged in
the petition located in San Bernardo Village, Darasa, Tanauan,
Batangas.
28
However, since the address was incomplete, the sheriff sought
the help of barangay officials, who pointed him to the house
belonging to Ocampo's father, Nicasio Ocampo, Victor P.
Macahia (Macahia), uncle of Ocampo and present occupant,
informed the sheriff that Ocampo and her family were already in
Italy, and that he was only a caretaker of the house. The sheriff
then proceeded to serve the summons upon Macahia. After
Ocampo failed to file an answer, BDO Remittance filed a motion
to declare Ocampo in default.
RTC: On September 14, 2009, the RTC rendered a Decision in
favor of BDO Remittance (RTC Decision). It recognized as valid
and binding in the Philippines the Court of Turin Decision and
ordered the DFA to cancel or restrict Ocampo's Philippine
passport and not to allow its renewal until she has served her
sentence.
CA: The CA first settled the issue of procedural due process,
particularly whether Ocampo was properly served with
summons. It held that since Ocampo's whereabouts were
unknown, summons should have been served in accordance
with Section 14, Rule 14 of the Rules of Civil Procedure. The
sheriff however, erroneously effected the substituted service of
summons under Section 7 of Rule 14. Thus, the CA concluded
that the RTC did not acquire jurisdiction over Ocampo, and the
RTC Decision against her is null and void.
Issue: W/N the substituted service of summons on the uncle of
Ocampo conferred jurisdiction on the Trial Court? No.
We agree with the CA that substituted service is improper under
the facts of this case. Substituted service presupposes that the
place where the summons is being served is the defendant's
current residence or office/regular place of business.
Based on the sheriffs report, it is clear that Ocampo no longer
resides in San Bernardo Village, Darasa, Tanauan, Batangas.
The report categorically stated that "defendant Helen M.
Ocampo and her family were already in Italy," without, however,
identifying any specific address. Even BDO Remittance itself
admitted in its petition for recognition that Ocampo' s
"whereabouts in Italy are no longer certain." This, we note, is
the reason why in alleging the two addresses of Ocampo, one in
Italy and one in the Philippines, BDO Remittance used the
phrase "last known [address ]" instead of the usual "resident of."
Not being a resident of the address where the summons was
served, the substituted service of summons is ineffective.
Accordingly, the RTC did not acquire jurisdiction over the
person of Ocampo.
The service of summons is a vital and indispensable ingredient
of a defendant's constitutional right to due process. As a rule, if
a defendant has not been validly summoned, the court acquires
no jurisdiction over his person, and a judgment rendered
against him is void.Since the RTC never acquired jurisdiction
over the person of Ocampo, the judgment rendered by the court
could not be considered binding upon her.

Held:
The general rule in this jurisdiction is that summons must be
served personally on the defendant. Section 6, Rule 14 of the
Rules of Court provides:

Sec. 6. Service in person on defendant. - Whenever

practicable, the summons shall be served by handing a copy
thereof to the defendant in person, or, if he refuses to receive
and sign for it, by tendering it to him.

For justifiable reasons, however, other modes of serving

summons may be resorted to. When the defendant cannot be
served personally within a reasonable time after efforts to locate
him have failed, the rules allow summons to be served by
substituted service. Substituted service is effected by leaving
copies of the summons at the defendant's residence with some
person of suitable age and discretion then residing therein, or
by leaving the copies at defendant's office or regular place of
business with some competent person in charge thereof.
When the defendant's whereabouts are unknown, the rules
allow service of summons by publication.

As an exception to the preferred mode of service, service of

summons by publication may only be resorted to when the
whereabouts of the defendant are not only unknown, but
cannot be ascertained by diligent inquiry.

The diligence requirement means that there must be prior

resort to personal service under Section 7 and substituted
service under Section 8, and proof that these modes were
ineffective before summons by publication may be allowed. This
mode also requires the plaintiff to file a written motion for leave
of court to effect service of summons by publication, supported
by affidavit of the plaintiff or some person on his behalf, setting
forth the grounds for the application.

In the present case, the sheriff resorted to substituted service

upon Ocampo through her uncle, who was the caretaker of
Ocampo's old family residence in Tanauan, Batangas. The CA
held that substituted service was improperly resorted to. It
found that since Ocampo' s "whereabouts are unknown and
cannot be ascertained by diligent inquiry x x x service may be
effected only by publication in a newspaper of general
circulation."
29

Forum Non Conveniens
Communication Materials vs. CA
Doctrine: The Philippines is the proper forum for the case.
 The Philippine Court may refuse to assume
jurisdiction in spite of its having acquired jurisdiction.
Requisites for the Philippines to be considered as the
proper forum of the case:
(1) That the Philippine Court is one to which the parties
may conveniently resort to;
(2) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
(3) That the Philippine Court has or is likely to have power
to enforce its decision.
Facts:
COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI, for
brevity) and ASPAC MULTI- TRADE INC., (ASPAC, for brevity)
are both domestic corporations, while petitioner Francisco S.
Aguirre is their President and majority stockholder.
ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC, for
brevity) are corporations duly organized and existing under the
laws of the State of Alabama, United States of America.
There is no dispute that ITEC is a foreign corporation not
licensed to do business in the Philippines.
TEC entered into a contract with petitioner ASPAC referred to
as "Representative Agreement". Pursuant to the contract, ITEC
engaged ASPAC as its "exclusive representative" in the
Philippines for the sale of ITEC's products, in consideration of
which, ASPAC was paid a stipulated commission. The said
agreement was initially for a term of twenty-four months. After
the lapse of the agreed period, the agreement was renewed for
another twenty-four months.
Through a "License Agreement"entered into by the same parties
on November 10, 1988, ASPAC was able to incorporate and use
the name "ITEC" in its own name. Thus , ASPAC Multi-Trade,
Inc. became legally and publicly known as ASPAC-ITEC
(Philippines).
By virtue of said contracts, ASPAC sold electronic products,
exported by ITEC, to their sole customer, the Philippine Long
Distance Telephone Company, (PLDT, for brevity).
One year into the second term of the parties' Representative
Agreement, ITEC decided to terminate the same, because
petitioner ASPAC allegedly violated its contractual commitment
as stipulated in their agreements.
ITEC charges the petitioners and another Philippine
Corporation, DIGITAL BASE COMMUNICATIONS, INC.
(DIGITAL, for brevity), the President of which is likewise
petitioner Aguirre, of using knowledge and information of ITEC's
products specifications to develop their own line of equipment
and product support, which are similar, if not identical to
ITEC's own, and offering them to ITEC's former customer.
ITEC filed a civil case against the defendants DIGITAL, CMDI &
Aguirre and their agents and associates with the Regional Trial
Court in Makati.
 To cease and desist from selling or attempting to sell to
PLDT the products;
 To cease and desist from using its corporate name.
The defendants filed a motion to dismiss on the ground that
ITEC has no legal capacity to sue as it is a foreign corporation
doing business in the Philippines without the required BOI
authority and SEC license.
Trial Court: The Trial Court denied the motion to dismiss for
being void of legal merit.
Court of Appeals: The Court of Appeals upheld the decision of
the Trial Court.
It is the Petitioner ASPAC’s et al submission that private
respondents are foreign corporations actually doing business in
the Philippines without the requisite authority and license from
the Board of Investments and the Securities and Exchange
Commission, and thus, disqualified from instituting the present
action in our courts.
Likewise, the Petitioners argue that since ITEC has no capacity
to bring suit here, the Philippines is not the "most convenient
forum" because the trial court is devoid of any power to enforce
its orders issued or decisions rendered in a case that could not
have been commenced to begin with.
ITEC echoes the respondent court's finding that the lower court
did not commit grave abuse of discretion nor acted in excess of
jurisdiction when it found that the ground relied upon by the
petitioners in their motion to dismiss does not appear to be
indubitable.
Issue:
(1) W/N the Philippine court (Trial Court) have
jurisdiction over the complaint filed by ITEC? Yes
(2) W/N the Philippine court (Trial Court) should refuse to
assume jurisdiction over the case, based on the
principle of forum non conveniens?
Held:
First Issue: The Philippine Courts have jurisdiction over the
person of ITEC by virtue of voluntary appearance or by filing of
the complaint.
According to petitioner, the Philippine Court has no venue to
apply its discretion whether to give cognizance or not to the
present action, because it has not acquired jurisdiction over the
person of the plaintiff in the case, the latter allegedly having no
personality to sue before Philippine Courts.
This argument is misplaced because the court has already
acquired jurisdiction over the plaintiff in the suit, by virtue of
his filing the original complaint. And as we have already
observed, petitioner is not at liberty to question plaintiff's
standing to sue, having already acceded to the same by virtue of
its entry into the Representative Agreement referred to earlier.
Second Issue: The Philippines is the proper forum.
Thus, having acquired jurisdiction, it is now for the Philippine
Court, based on the facts of the case, whether to give due
course to the suit or dismiss it, on the principle of forum non
convenience.
Hence, the Philippine Court may refuse to assume jurisdiction
in spite of its having acquired jurisdiction.
Conversely, the court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met:
(4) That the Philippine Court is one to which the parties
may conveniently resort to;
(5) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
(6) That the Philippine Court has or is likely to have power
to enforce its decision.
30
The aforesaid requirements having been met, and in view of the
court's disposition to give due course to the questioned action.
Philsec vs. CA
Doctrine: The doctrine of forum non conveniens doesn’t apply
in the case at bar.
Facts:
Private respondent Ventura O. Ducat obtained separate loans
from petitioners Ayala International Finance Limited (hereafter
called AYALA) and Philsec Investment Corporation (hereafter
called PHILSEC) in the sum of US$2,500,000.00, secured by
shares of stock owned by Ducat with a market value of
P14,088,995.00.
In order to facilitate the payment of the loans, private
respondent 1488, Inc., through its president, private
respondent Drago Daic, assumed Ducat's obligation under an
Agreement, dated January 27, 1983, whereby 1488, Inc.
executed a Warranty Deed with Vendor's Lien by which it sold
to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a
parcel of land in Harris County, Texas, U.S.A., for
US$2,807,209.02, while PHILSEC and AYALA extended a loan
to ATHONA in the amount of US$2,500,000.00 as initial
payment of the purchase price.
The balance of US$307,209.02 was to be paid by means of a
promissory note executed by ATHONA in favor of 1488, Inc.
Subsequently, upon their receipt of the US$2,500,000.00 from
1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock
in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of
US$307,209.02, the entire amount covered by the note became
due and demandable.
Complaint of 1488 Inc. against Petitioners: Accordingly, on
October 17, 1985, private respondent 1488, Inc. sued
petitioners PHILSEC, AYALA, and ATHONA in the United States
for payment of the balance of US$307,209.02 and for damages
for breach of contract and for fraud allegedly perpetrated by
petitioners in misrepresenting the marketability of the shares of
stock delivered to 1488, Inc. under the Agreement.
Originally instituted in the United States District Court of
Texas, 165th Judicial District, where it was docketed as Case
No. 85-57746, the venue of the action was later transferred to
the United States District Court for the Southern District of
Texas, where 1488, Inc.
PHILSEC and AYALA filed a motion to dismiss on the ground of
lack of jurisdiction over their person, but, as their motion was
denied, they later filed a joint answer with counterclaim against
private respondents and Edgardo V. Guevarra, PHILSEC's own
former president, for the rescission of the sale on the ground
that the property had been overvalued.
Complaint of Petitioners against 1488 Inc. & Respondents:
While Civil Case No. H-86-440 was pending in the United
States, petitioners filed a complaint "For Sum of Money with
Damages and Writ of Preliminary Attachment" against private
respondents in the Regional Trial Court of Makati, where it was
docketed as Civil Case No. 16563. The complaint reiterated the
allegation of petitioners in their respective counterclaims in Civil
Action No. H-86-440 of the United States District Court of
Southern Texas that private respondents committed fraud by
selling the property at a price 400 percent more than its true
value of US$800,000.00.
Petitioners claimed that, as a result of private respondents'
fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA
were induced to enter into the Agreement and to purchase the
Houston property. Petitioners prayed that private respondents
be ordered to return to ATHONA the excess payment of
US$1,700,000.00 and to pay damages.
Private respondent Ducat moved to dismiss Civil Case No.
16563 on the ground of forum non conveniens.
Trial Court: The trial court granted Ducat's motion to dismiss,
stating that "the evidentiary requirements of the controversy
may be more suitably tried before the forum of the litis
pendentia in the U.S., under the principle in private
international law of forum non conveniens.
Petitioners appealed to the Court of Appeals, arguing that the
trial court erred in applying the principle of litis pendentia and
forum non conveniens and in ruling that it had no jurisdiction
over the defendants, despite the previous attachment of shares
of stocks belonging to 1488, Inc. and Daic.
Court of Appeals: The Court of Appeals affirmed the dismissal
of Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on
the ground of litis pendentia.
The dismissal of Civil Case No. 16563 on the ground of forum
non conveniens was likewise affirmed by the Court of Appeals
on the ground that the case can be better tried and decided
by the U.S. court:
The U.S. case and the case at bar arose from only one main
transaction, and involve foreign elements, to wit:
(1) The property subject matter of the sale is situated in
Texas, U.S.A.;
(2) The seller, 1488 Inc. is a non-resident foreign
corporation;
(3) Although the buyer, Athona Holdings, a foreign
corporation which does not claim to be doing business
in the Philippines, is wholly owned by Philsec, a
domestic corporation, Athona Holdings is also owned
by BPI-IFL, also a foreign corporation;
(4) The Warranty Deed was executed in Texas, U.S.A.
Issue: W/N the principle of forum non conveniens relied by the
Court of Appeals as a basis of dismissing the civil case,
applicable in the case at bar? No
Held:
The trial court's refusal to take cognizance of the case justifiable
under the principle of forum non conveniens.
While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after
"vital facts are established, to determine whether special
circumstances" require the court's desistance.
In this case, the trial court abstained from taking jurisdiction
solely on the basis of the pleadings filed by private respondents
in connection with the motion to dismiss. It failed to consider
that one of the plaintiffs (PHILSEC) is a domestic corporation
and one of the defendants (Ventura Ducat) is a Filipino, and
that it was the extinguishment of the latter's debt which was
the object of the transaction under litigation. The trial court
arbitrarily dismissed the case even after finding that Ducat was
not a party in the U.S. case.
Manila Hotel vs. NLRC & Santos
Doctrine: The NLRC (Philippines) is not the proper forum.
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do
so provided:
1. That the Philippine court is one to which the parties
31
 may conveniently resort to;
2. That the Philippine court is in a position to make an
intelligent decision as to the law and the facts; and
3. That the Philippine court has or is likely to have power
to enforce its decision.
None of the elements are present in the case at bar.
Facts:
Petitioners are the Manila Hotel Corporation (hereinafter
referred to as "MHC") and the Manila Hotel International
Company, Limited (hereinafter referred to as "MHICL")
MHICL is a corporation duly organized and existing under the
laws of Hong Kong. MHC is an "incorporator" of MHICL, owning
50% of its capital stock.
By virtue of a "management agreement" with the Palace Hotel
(Wang Fu Company Limited), MHICL trained the personnel and
staff of the Palace Hotel at Beijing, China.
Private respondent Marcelo Santos (hereinafter referred to as
"Santos") was an overseas worker employed as a printer at the
Mazoon Printing Press, Sultanate of Oman.
During his employment with the Mazoon Printing Press in the
Sultanate of Oman, respondent Santos received a letter dated
May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager,
Palace Hotel, Beijing, China. Mr. Schmidt informed respondent
Santos that he was recommended by one Nestor Buenio, a
friend of his.
Mr. Shmidt offered respondent Santos the same position as
printer, but with a higher monthly salary and increased
benefits.
Santos accepted the offer and Mr. Henk the Palace Hotel
Manager sent him a ready to sign employment contract.
Santos wrote the Palace Hotel and acknowledged Mr. Henk's
letter. Respondent Santos enclosed four (4) signed copies of the
employment contract (dated June 4, 1988) and notified them
that he was going to arrive in Manila during the first week of
July 1988.
The employment contract of June 4, 1988 stated that his
employment would commence September 1, 1988 for a period of
two years. It provided for a monthly salary of nine hundred
dollars (US$900.00) net of taxes, payable fourteen (14) times a
year.
Respondent Santos resigned from the Mazoon Printing Press,
effective June 30, 1988, under the pretext that he was needed
at home to help with the family's piggery and poultry business.
Respondent Santos left for Beijing, China. He started to work at
the Palace Hotel.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain
Joanna suggested in a handwritten note that respondent
Santos be given one (1) month notice of his release from
employment.
The Palace Hotel informed respondent Santos by letter signed
by Mr. Shmidt that his employment at the Palace Hotel print
shop would be terminated due to business reverses brought
about by the political upheaval in China.
The Palace Hotel terminated the employment of respondent
Santos and paid all benefits due him, including his plane fare
back to the Philippines.
On February 20, 1990, respondent Santos filed a complaint for
illegal dismissal with the Arbitration Branch, National Capital
Region, National Labor Relations Commission (NLRC).
He prayed for an award of nineteen thousand nine hundred and
twenty three dollars (US$19,923.00) as actual damages, forty
thousand pesos (P40,000.00) as exemplary damages and
attorney's fees equivalent to 20% of the damages prayed for.
The Palace Hotel and Mr. Shmidt were not served with
summons and neither participated in the proceedings before the
Labor Arbiter.
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, ruled in
favor of Marcelo Santos.
On July 23, 1991, petitioners appealed to the NLRC, arguing
that the POEA, not the NLRC had jurisdiction over the case. The
NLRC declared the June 27, 1991 decision to be null and void
for want of jurisdiction.
On September 18, 1992, respondent Santos moved for
reconsideration of the afore-quoted resolution. He argued that
the case was not cognizable by the POEA as he was not an
"overseas contract worker.
On May 31, 1993, the NLRC granted the motion and reversed
itself.
On November 25, 1994, Labor Arbiter de Vera submitted his
report. He found that respondent Santos was illegally dismissed
from employment and recommended that he be paid actual
damages equivalent to his salaries for the unexpired portion of
his contract.
On December 15, 1994, the NLRC ruled in favor of private
respondent Santos.
On October 9, 1995, petitioners filed with this Court an urgent
motion for the issuance of a temporary restraining order and/or
writ of preliminary injunction and a motion for the annulment
of the entry of judgment of the NLRC dated July 31, 1995.
Issue: W/N the NLRC is the convenient forum for the case at
bar (Forum non conveniens) ? No
Held: The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two
foreign jurisdictions and the case involves purely foreign
elements.
The only link that the Philippines has with the case is that
respondent Santos is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Not all cases involving our
citizens can be tried here.
The employment contract. — Respondent Santos was hired
directly by the Palace Hotel, a foreign employer, through
correspondence sent to the Sultanate of Oman, where
respondent Santos was then employed. He was hired without
the intervention of the POEA or any authorized recruitment
agency of the government.
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do
so provided:
4. That the Philippine court is one to which the parties
may conveniently resort to;
5. That the Philippine court is in a position to make an
intelligent decision as to the law and the facts; and
6. That the Philippine court has or is likely to have power
to enforce its decision.
The conditions are unavailing in the case at bar.
32
Not Convenient. — We fail to see how the NLRC is a convenient
forum given that all the incidents of the case — from the time of
recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that
the proper defendants, the Palace Hotel and MHICL are not
nationals of the Philippines. Neither .are they "doing business in
the Philippines." Likewise, the main witnesses, Mr. Shmidt and
Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. — Neither can an
intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign soil. This
calls to fore the application of the principle of lex loci contractus
(the law of the place where the contract was made).
The employment contract was not perfected in the Philippines.
Respondent Santos signified his acceptance by writing a letter
while he was in the Republic of Oman. This letter was sent to
the Palace Hotel in the People's Republic of China.
No power to determine the facts. — Neither can the NLRC
determine the facts surrounding the alleged illegal dismissal as
all acts complained of took place in Beijing, People's Republic of
China. The NLRC was not in a position to determine whether
the Tiannamen Square incident truly adversely affected
operations of the Palace Hotel as to justify respondent Santos'
retrenchment.
Principle of effectiveness, no power to execute decision. —
Even assuming that a proper decision could be reached by the
NLRC, such would not have any binding effect against the
employer, the Palace Hotel.
The Palace Hotel is a corporation incorporated under the laws of
China and was not even served with summons. Jurisdiction
over its person was not acquired.
This is not to say that Philippine courts and agencies have no
power to solve controversies involving foreign employers. Neither
are we saying that we do not have power over an employment
contract executed in a foreign country.
If Santos were an "overseas contract worker", a Philippine
forum, specifically the POEA, not the NLRC, would protect him.
He is not an "overseas contract worker" a fact which he admits
with conviction.
Even assuming that the NLRC was the proper forum, even on
the merits, the NLRC's decision cannot be sustained.
Puyat vs. Zabarte
Doctrine: The Philippines (RTC) is the proper forum.
Under the principle of forum non conveniens, even if the
exercise of jurisdiction is authorized by law, courts may
nonetheless refuse to entertain a case for any of the following
practical reasons:
(1) The belief that the matter can be better tried and
decided elsewhere, either because the main aspects of
the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;
(2) The belief that the non-resident plaintiff sought the
forum[,] a practice known as forum shopping[,] merely
to secure procedural advantages or to convey or
harass the defendant;
(3) The unwillingness to extend local judicial facilities to
non-residents or aliens when the docket may already
be overcrowded;
(4) The inadequacy of the local judicial machinery for
effectuating the right sought to be maintained; and
The difficulty of ascertaining foreign law.
Facts:
On 24 January 1994, [Respondent] Ron Zabarte commenced
[an action] to enforce the money judgment rendered by the
Superior Court for the State of California, County of Contra
Costa, U.S.A, against Petitioner Puyat.
On 1 August 1994, Zabarte filed a [M]otion for [S]ummary
[J]udgment under Rule 34 of the Rules of Court alleging that
the [A]nswer filed by [petitioner] failed to tender any genuine
issue as to the material facts.
Puyat filed an Opposition to Zabarte’s motion for summary
judgment.
On 6 April 1995, the court a quo issued an [O]rder granting
Zabarte’s [M]otion for [S]ummary [J]udgment [and] likewise
granting [petitioner] ten (10) days to submit opposing affidavits,
after which the case would be deemed submitted for resolution.
Puyat filed a [M]otion for [R]econsideration of the aforesaid
[O]rder and [respondent] filed [C]omment. On 30 June 1995,
[petitioner] filed a [M]otion to [D]ismiss on the ground of lack of
jurisdiction over the subject matter of the case and
forum-non-conveniens.
RTC: The RTC ruled in favor of Zabarte and ordered Puyat to
pay the former.
Court of Appeals: Affirming the trial court, the Court of
Appeals held that petitioner was estopped from assailing the
judgment that had become final and had, in fact, been partially
executed. The CA also rejected petitioner’s argument that the
RTC should have dismissed the action for the enforcement of a
foreign judgment, on the ground of forum non conveniens. It
reasoned out that the recognition of the foreign judgment was
based on comity, reciprocity and res judicata.
Puyat argues that the RTC should have refused to entertain the
Complaint for enforcement of the foreign judgment on the
principle of forum non conveniens. He claims that the trial
court had no jurisdiction, because the case involved partnership
interest, and there was difficulty in ascertaining the applicable
law in California. All the aspects of the transaction took place in
a foreign country, and respondent is not even Filipino.
Issue: W/N the Philippine courts (RTC) is the proper forum for
the case at bar—in relation to the Doctrine of Forum Non
Conveniens? Yes.
Held:
Under the principle of forum non conveniens, even if the
exercise of jurisdiction is authorized by law, courts may
nonetheless refuse to entertain a case for any of the following
practical reasons:
(5) The belief that the matter can be better tried and
decided elsewhere, either because the main aspects of
the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;
(6) The belief that the non-resident plaintiff sought the
forum[,] a practice known as forum shopping[,] merely
to secure procedural advantages or to convey or
harass the defendant;
(7) The unwillingness to extend local judicial facilities to
non-residents or aliens when the docket may already
be overcrowded;
(8) The inadequacy of the local judicial machinery for
effectuating the right sought to be maintained; and
(9) The difficulty of ascertaining foreign law.”
None of the aforementioned reasons barred the RTC from
exercising its jurisdiction. In the present action, there was no
more need for material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the local machinery
33
to enforce the foreign judgment, and no question raised as to
the application of any foreign law.
Authorities agree that the issue of whether a suit should be
entertained or dismissed on the basis of the above- mentioned
principle depends largely upon the facts of each case and on the
sound discretion of the trial court.
Since the present action lodged in the RTC was for the
enforcement of a foreign judgment, there was no need to
ascertain the rights and the obligations of the parties based on
foreign laws or contracts. The parties needed only to perform
their obligations under the Compromise Agreement they had
entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure,
a judgment in an action in personam rendered by a foreign
tribunal clothed with jurisdiction is presumptive evidence of a
right as between the parties and their successors-in-interest by
a subsequent title.
Also, under Section 5(n) of Rule 131, a court -- whether in the
Philippines or elsewhere -- enjoys the presumption that it is
acting in the lawful exercise of its jurisdiction, and that it is
regularly performing its official duty.
Its judgment may, however, be assailed if there is evidence of
want of jurisdiction, want of notice to the party, collusion, fraud
or clear mistake of law or fact. But precisely, this possibility
signals the need for a local trial court to exercise jurisdiction.
Clearly, the application of forum non coveniens is not called for.
The grounds relied upon by petitioner are contradictory.
On the one hand, he insists that the RTC take jurisdiction over
the enforcement case in order to invalidate the foreign
judgment; yet, he avers that the trial court should not exercise
jurisdiction over the same case on the basis of forum non
conveniens. Not only do these defenses weaken each other, but
they bolster the finding of the lower courts that he was merely
maneuvering to avoid or delay payment of his obligation.
Bank of America vs. CA
Doctrine: The Philippines (trial court) is the proper forum for
the case at bar.
Philippine Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met:
(1) That the Philippine Court is one to which the parties
may conveniently resort to;
(2) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
(3) That the Philippine Court has or is likely to have power
to enforce its decision."
Facts:
Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for
brevity) filed a Complaint before the Regional Trial Court of
Pasig against the Bank of America NT&SA and Bank of America
International, Ltd. (defendant banks for brevity) alleging that:
 They were engaged in the shipping business;
 They owned two vessels: Don Aurelio and El
Champion, through their wholly-owned corporations;
 They deposited their revenues from said business
together with other funds with the branches of said
banks in the United Kingdom and Hongkong up to
1979;
 With their business doing well, the defendant banks
induced them to increase the number of their ships in
operation, offering them easy loans to acquire said
vessels;
 Thereafter, the defendant banks acquired, through
their (Litonjuas') corporations as the borrowers: (a) El
Carrier; (b) El General; (c) El Challenger; and (d) El
Conqueror (Vessels) ;
 The vessels were registered in the names of their
corporations;
 The operation and the funds derived therefrom were
placed under the complete and exclusive control and
disposition of the petitioners; and
 The possession the vessels was also placed by
defendant banks in the hands of persons selected and
designated by them (defendant banks).
 The Litonjuas claimed that defendant banks as
trustees did not fully render an account of all the
income derived from the operation of the vessels as
well as of the proceeds of the subsequent foreclosure
sale;
 Because of the breach of their fiduciary duties and/or
negligence of the petitioners and/or the persons
designated by them in the operation of private
respondents' six vessels, the revenues derived from the
operation of all the vessels declined drastically;
 The loans acquired for the purchase of the four
additional vessels then matured and remained unpaid,
prompting defendant banks to have all the six vessels,
including the two vessels originally owned by the
private respondents, foreclosed and sold at public
auction to answer for the obligations incurred for and
in behalf of the operation of the vessels;
 They (Litonjuas) lost sizeable amounts of their own
personal funds equivalent to ten percent (10%) of the
acquisition cost of the four vessels and were left with
the unpaid balance of their loans with defendant
banks.
The Litonjuas prayed for the accounting of the revenues derived
in the operation of the six vessels and of the proceeds of the sale
thereof at the foreclosure proceedings instituted by petitioners;
damages for breach of trust; exemplary damages and attorney's
fees.
Defendant banks filed a Motion to Dismiss on grounds of forum
non conveniens and lack of cause of action against them.
Trial Court: On December 3, 1993, the trial court issued an
Order denying the Motion to Dismiss.
The defendant banks went to the Court of Appeals on a "Petition
for Review on Certiorari" which was aptly treated by the
appellate court as a petition for certiorari. They assailed the
above- quoted order as well as the subsequent denial of their
Motion for Reconsideration.
Court of Appeals: The appellate court dismissed the petition
and denied petitioners' Motion for Reconsideration.
Petitioners Bank of America et. al posit that while the
application of the principle of forum non conveniens is
discretionary on the part of the Court, said discretion is limited
by the guidelines pertaining to the private as well as public
interest factors in determining whether plaintiffs' choice of
forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert and Piper Aircraft Co. vs. Reyno, to wit:
"Private interest factors include:
(a) The relative ease of access to sources of proof;
(b) The availability of compulsory process for the attendance of
unwilling witnesses;
(c) The cost of obtaining attendance of willing witnesses; or
(d) All other practical problems that make trial of a case easy,
expeditious and inexpensive.
Public interest factors include:
(a) The administrative difficulties flowing from court congestion;
34
(b) The local interest in having localized controversies decided at
home;
(c) The avoidance of unnecessary problems in conflict of laws or
in the application of foreign law; or
(d) The unfairness of burdening citizens in an unrelated forum
with jury duty."
In support of their claim that the local court is not the
proper forum, petitioners allege the following:
i. "The Bank of America Branches involved, as clearly
mentioned in the Complaint, are based in Hongkong
and England. As such, the evidence and the witnesses
are not readily available in the Philippines;
ii. The loan transactions were obtained, perfected,
performed, consummated and partially paid outside
the Philippines;
iii. The monies were advanced outside the Philippines.
Furthermore, the mortgaged vessels were part of an
offshore fleet, not based in the Philippines;
iv. All the loans involved were granted to the Private
Respondents' foreign CORPORATIONS;
v. The Restructuring Agreements were ALL governed by
the laws of England;
vi. The subsequent sales of the mortgaged vessels and the
application of the sales proceeds occurred and
transpired outside the Philippines, and the deliveries
of the sold mortgaged vessels were likewise made
outside the Philippines;
vii. The revenues of the vessels and the proceeds of the
sales of these vessels were ALL deposited to the
Accounts of the foreign CORPORATIONS abroad; and
viii. Bank of America International Ltd. is not licensed nor
engaged in trade or business in the Philippines."
Petitioners argue further that the loan agreements, security
documentation and all subsequent restructuring agreements
uniformly, unconditionally and expressly provided that they will
be governed by the laws of England; that Philippine Courts
would then have to apply English law in resolving whatever
issues may be presented to it in the event it recognizes and
accepts herein case; that it would then be imposing a significant
and unnecessary expense and burden not only upon the parties
to the transaction but also to the local court.
Petitioners insist that the inconvenience and difficulty of
applying English law with respect to a wholly foreign
transaction in a case pending in the Philippines may be avoided
by its dismissal on the ground of forum non conveniens.
On the other hand, private respondents contend that certain
material facts and pleadings are omitted and/or misrepresented
in the present petition for certiorari; that the prefatory
statement failed to state that part of the security of the foreign
loans were mortgages on a 39-hectare piece of real estate
located in the Philippines; that while the complaint was filed
only by the stockholders of the corporate borrowers, the latter
are wholly-owned by the private respondents who are Filipinos
and therefore under Philippine laws, aside from the said
corporate borrowers being but their alter-egos, they have
interests of their own in the vessels.
Litonjua posit that as upheld by the Court of Appeals, the
decision of the trial court in not applying the principle of forum
non conveniens is in the lawful exercise of its discretion.
Issue: W/N the complaint of the Litonjuas (Private Respondent)
should be dismissed on the ground of forum non conveniens?
No.
Held: The complaint should not be dismissed because the
Philippines (Trial Court) is the proper forum.
The doctrine of forum non-conveniens, literally meaning 'the
forum is inconvenient', emerged in private international law to
deter the practice of global forum shopping, that is to prevent
non-resident litigants from choosing the forum or place wherein
to bring their suit for malicious reasons, such as to secure
procedural advantages, to annoy and harass the defendant, to
avoid overcrowded dockets, or to select a more friendly venue.
Under this doctrine, a court, in conflicts of law cases, may
refuse impositions on its jurisdiction where it is not the most
"convenient" or available forum and the parties are not
precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis
of said doctrine depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court.
In the case of Communication Materials and Design, Inc. vs.
Court of Appeals, this Court held that "xxx [a Philippine Court
may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met:
(4) That the Philippine Court is one to which the parties
may conveniently resort to;
(5) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
(6) That the Philippine Court has or is likely to have power
to enforce its decision."
Evidently, all these requisites are present in the instant
case.
Moreover, this Court enunciated in Philsec. Investment
Corporation vs. Court of Appeals, that the doctrine of forum
non conveniens should not be used as a ground for a motion to
dismiss because Sec. 1, Rule 16 of the Rules of Court does not
include said doctrine as a ground.
This Court further ruled that while it is within the discretion of
the trial court to abstain from assuming jurisdiction on this
ground, it should do so only after vital facts are established, to
determine whether special circumstances require the court's
desistance; and that the propriety of dismissing a case based on
this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of
defense.
Pacific vs. Schonfeld
Doctrine: The principle of forum non conveniens doesn’t apply
in the case at bar.
The Labor Arbiter has jurisdiction of the case at bar.
A Philippine Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met:
(1) That the Philippine Court is one to which the parties
may conveniently resort to;
(2) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
(3) That the Philippine Court has or is likely to have power
to enforce its decision
Facts:
Respondent Schonfeld is a Canadian citizen and was a resident
of New Westminster, British Columbia, Canada.
Pacicon Philippines, Inc. (PPI) is a corporation duly established
and incorporated in accordance with the laws of the Philippines.
The primary purpose of PPI was to engage in the business of
providing specialty and technical services both in and out of the
Philippines.
35
 It is a subsidiary of Pacific Consultants International of Japan
(PCIJ). The president of PPI, Jens Peter Henrichsen, who was
also the director of PCIJ, was based in Tokyo, Japan.
PCIJ decided to engage in consultancy services for water and
sanitation in the Philippines. In October 1997, respondent was
employed by PCIJ, through Henrichsen, as Sector Manager of
PPI in its Water and Sanitation Department. However, PCIJ
assigned him as PPI sector manager in the Philippines. His
salary was to be paid partly by PPI and PCIJ.
In the Letter of Employment of Schonfeld it was provided that
for any question of interpretation, understanding or fulfillment
of the conditions of employment, as well as any question arising
between the Employee and the Company which is in
consequence of or connected with his employment with the
Company and which can not be settled amicably, is to be finally
settled, binding to both parties through written submissions, by
the Court of Arbitration in London.
Respondent arrived in the Philippines and assumed his position
as PPI Sector Manager. He was accorded the status of a resident
alien.
Subsequently, Schonfeld was given an Alien Employment
Permit. Respondent Schonfeld received his compensation from
PPI for the following periods: February to June 1998, November
to December 1998, and January to August 1999. He was also
reimbursed by PPI for the expenses he incurred in connection
with his work as sector manager.
On May 5, 1999, respondent received a letter from Henrichsen
informing him that his employment had been terminated
effective August 4, 1999 for the reason that PCIJ and PPI had
not been successful in the water and sanitation sector in the
Philippines.
However, on July 24, 1999, Henrichsen, by electronic mail,
requested respondent to stay put in his job after August 5,
1999, until such time that he would be able to report on certain
projects and discuss all the opportunities he had developed.
Respondent continued his work with PPI until the end of
business hours on October 1, 1999.
Respondent filed with PPI several money claims, including
unpaid salary, leave pay, air fare from Manila to Canada, and
cost of shipment of goods to Canada.
PPI partially settled some of his claims (US$5,635.99), but
refused to pay the rest.
On December 5, 2000, Schonfeld filed a Complaint for Illegal
Dismissal against petitioners PPI and Henrichsen with the
Labor Arbiter.
Petitioners PPI filed a Motion to Dismiss the complaint on the
following grounds:
(1) The Labor Arbiter had no jurisdiction over the subject
matter; and
(2) Venue was improperly laid.
It averred that respondent was a Canadian citizen, a transient
expatriate who had left the Philippines. He was employed and
dismissed by PCIJ, a foreign corporation with principal office in
Tokyo, Japan.
Since respondent’s cause of action was based on his letter of
employment executed in Tokyo, Japan dated January 7, 1998,
under the principle of lex loci contractus, the complaint should
have been filed in Tokyo, Japan.
Petitioners claimed that respondent did not offer any
justification for filing his complaint against PPI before the NLRC
in the Philippines.
Moreover, under Section 12 of the General Conditions of
Employment appended to the letter of employment dated
January 7, 1998, complainant and PCIJ had agreed that any
employment-related dispute should be brought before the
London Court of Arbitration. Since even the Supreme Court had
already ruled that such an agreement on venue is valid,
Philippine courts have no jurisdiction.
Respondent Schonfeld opposed the Motion, contending that he
was employed by PPI to work in the Philippines under contract
separate from his January 7, 1998 contract of employment with
PCIJ.
He insisted that his employer was PPI, a Philippine-registered
corporation; it is inconsequential that PPI is a wholly-owned
subsidiary of PCIJ because the two corporations have separate
and distinct personalities; and he received orders and
instructions from Henrichsen who was the president of PPI.
He further insisted that the principles of forum non conveniens
and lex loci contractus do not apply, and that although he is a
Canadian citizen, Philippine Labor Laws apply in this case.
The Labor Arbiter rendered a decision granting petitioners’
Motion to Dismiss.
On appeal, the NLRC agreed with the disquisitions of the Labor
Arbiter and affirmed the latter’s decision in toto
The CA found the petition meritorious. Applying the four-fold
test of determining an employer-employee relationship, the CA
declared that respondent was an employee of PPI. On the issue
of venue, the appellate court declared that, even under the
January 7, 1998 contract of employment, the parties were not
precluded from bringing a case related thereto in other venues.
Petitioners PPI aver that since respondent is a Canadian citizen,
the CA erred in ignoring their claim that the principlesof forum
non conveniens and lex loci contractus are applicable. They also
point out that the principal office, officers and staff of PCIJ are
stationed in Tokyo, Japan; and the contract of employment of
respondent was executed in Tokyo, Japan.
Moreover, under Section 21 of the General Conditions for
Employment incorporated in respondent’s January 7, 1998
letter of employment, the dispute between respondent and PCIJ
should be settled by the court of arbitration of London.
Petitioners claim that the words used therein are sufficient to
show the exclusive and restrictive nature of the stipulation on
venue.
Petitioners insist that the U.S. Labor-Management Act applies
only to U.S. workers and employers, while the Labor Code of the
Philippines applies only to Filipino employers and
Philippine-based employers and their employees, not to PCIJ. In
fine, the jurisdictions of the NLRC and Labor Arbiter do not
extend to foreign workers who executed employment
agreements with foreign employers abroad, although "seconded"
to the Philippines.
Issue:
W/N the principle of forum non conveniens applies in the case
at bar? No
W/N the Labor Arbiter has jurisdiction over the case at bar?
Yes
Held: The principle of forum non conveniens doesn’t apply in
the case at bar.
Petitioners’ insistence on the application of the principle of
forum non conveniens must be rejected. The bare fact that
respondent is a Canadian citizen and was a repatriate does not
warrant the application of the principle for the following
reasons:
36
First—The Labor Code of the Philippines does not include
forum non conveniens as a ground for the dismissal of the
complaint.
Second—The propriety of dismissing a case based on this
principle requires a factual determination; hence, it is properly
considered as defense.
Third—In Bank of America, NT&SA, Bank of America
International, Ltd. v. Court of Appeals, this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the case
if it chooses to do so; provided, that the following requisites are
met:
(4) That the Philippine Court is one to which the parties
may conveniently resort to;
(5) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
(6) That the Philippine Court has or is likely to have power
to enforce its decision. x x x
Admittedly, all the foregoing requisites are present in this case.
Pioneer vs. Guadiz (Repeated)
Doctrine: The application of forum non conveniens requires an
examination of the truthfulness of the allegations in the
complaint.
The propriety of dismissing a case based on forum
non-conveniens requires a factual determination; hence, it is
more properly considered a matter of defense.
Facts:
Antonio D. Todaro (Todaro) filed a complaint for sum of money
and damages with preliminary attachment against PIL, Pioneer
Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings,
Inc. (PPHI), John G. McDonald (McDonald), and Philip J. Klepzig
(Klepzig).
PIL and its co-defendants were served copies of the summons
and of the complaint at PPHI and PCPI’s office in Alabang,
Muntinlupa, through Cecille L. De Leon (De Leon), who was
Klepzig’s Executive Assistant.
Todaro alleged that PIL is a corporation duly organized under
Australian laws, while PCPI and PPHI are corporations duly
organized under Philippine laws. PIL is engaged in the
ready-mix and concrete aggregates business and has
established a presence worldwide.
PIL established PPHI as the holding company of the stocks of its
operating company in the Philippines, PCPI. McDonald is the
Chief Executive Officer of PIL’s Hong Kong office while Klepzig is
the President and Managing Director of PPHI and PCPI.
For his part, Todaro further alleged that he was the managing
director of Betonval Readyconcrete, Inc. (Betonval) from June
1975 up to his resignation in February 1996.
According to Todaro, PIL contacted him in May 1996 and asked
if he could join it in establishing a pre-mixed concrete plant and
in overseeing its operations in the Philippines. In Todaro’s
remuneration package it was stated that after three months of
consultancy, Todaro shall be considered permanently employed
by Pioneer Intl.
However, Kleipzig in his letter stated that Todaro has not proven
possible for this company to meet with your expectations
regarding the conditions of your providing Pioneer with
consultancy services. Therefore, Kleipzig was withdrawing his
offer for Kleipzig to work with the company.
Todaro was not given a permanent position and his services
were terminated.
Thus, Todaro filed with case against Pioneer.
PIL filed, by special appearance, a motion to dismiss Todaro’s
complaint. PIL’s co­defendants, PCPI, PPHI, and Klepzig, filed a
separate motion to dismiss.
PIL asserted that the trial court has no jurisdiction over PIL
because PIL is a foreign corporation not doing business in the
Philippines.
PIL also questioned the service of summons on it. Assuming
arguendo that Klepzig is PIL’s agent in the Philippines, it was
not Klepzig but De Leon who received the summons for PIL. PIL
further stated that the National Labor Relations Commission
(NLRC), and not the trial court, has jurisdiction over the subject
matter of the action.
It claimed that assuming that the trial court has jurisdiction
over the subject matter of the action, the complaint should be
dismissed on the ground of forum non-conveniens.
Trial Court: On 4 January 1999, the trial court issued an
order, which ruled in favor of Todaro. The trial court denied the
motions to dismiss filed by PIL, PCPI, PPHI, and Klepzig. he trial
court also asserted its jurisdiction over PIL, holding that PIL did
business in the Philippines when it entered into a contract with
Todaro. Although PIL questions the service of summons on
Klepzig, whom PIL claims is not its agent, the trial court ruled
that PIL failed to adduce evidence to prove its contention.
Court of Appeals: The appellate court denied PIL’s petition and
affirmed the trial court’s ruling in toto.
Issue: W/N the complaint of Todaro should be dismissed on the
grounds of the principle of forum non-conveniens? No.
Held:
The doctrine of forum non-conveniens requires an examination
of the truthfulness of the allegations in the complaint.
Section 1, Rule 16 of the 1997 Rules of Civil Procedure does not
mention forum non-conveniens as a ground for filing a motion
to dismiss.
The propriety of dismissing a case based on forum
non-conveniens requires a factual determination; hence, it is
more properly considered a matter of defense. While it is within
the discretion of the trial court to abstain from assuming
jurisdiction on this ground, the trial court should do so only
after vital facts are established to determine whether special
circumstances require the court’s desistance
Hasegawa vs. Kitamura (Repeated)
Doctrine: The Principle of Forum Non Conveniens
(1) It is not the proper basis for a motion to dismiss under
Section 1, Rule 16 of the Rules of Court
(2) Whether a suit should be entertained or dismissed on
the basis of the said doctrine depends largely upon the
facts of the particular case and is addressed to the
sound discretion of the trial court.
(3) The propriety of dismissing a case based on this
principle requires a factual determination
Facts:
Nippon Engineering Consultants Co., Ltd (Nippon) a Japanese
consultancy firm providing technical and management support
in the infrastructure projects of foreign governments entered
into an Independent Contractor Agreement (ICA) with
respondent Minoru Kitamura, a Japanese national permanently
residing in the Philippines.
37
The agreement provides that respondent was to extend
professional services to Nippon for a year starting on April 1,
1999.
Nippon then assigned respondent to work as the project
manager of the Southern Tagalog Access Road (STAR) Project in
the Philippines, following the company's consultancy contract
with the Philippine Government.
Subsequently, the DPWH engaged the consultancy services of
Nippon, on January 28, 2000, this time for the detailed
engineering and construction supervision of the
Bongabon-Baler Road Improvement (BBRI) Project. Kitamura
was named as the project manager.
Petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company
had no more intention of automatically renewing his ICA. His
services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000.
Kitmaura requested a negotiation conference and demanded
that he be assigned to the BBRI project. Nippon insisted that
respondent’s contract was for a fixed term that had already
expired, and refused to negotiate for the renewal of the ICA.
Kitamura initiated a civil case for specific performance and
damages with the Regional Trial Court of Lipa City.
For their part, Nippon contend that the ICA had been perfected
in Japan and executed by and between Japanese nationals,
moved to dismiss the complaint for lack of jurisdiction.
Basis of lack of jurisdiction of the RTC: They asserted that the
claim for improper pre-termination of respondent's ICA could
only be heard and ventilated in the proper courts of Japan
following the principles of lex loci celebrationis and lex
contractus.
The RTC denied the motion to dismiss on the ground that
matters connected with the performance of contracts are
regulated by the law prevailing at the place of performance,
Nippon filed with the CA a Petition for Certiorari under Rule 65.
Subsequently, the CA ruled that the principle of lex loci
celebrationis was not applicable to the case, because nowhere
in the pleadings was the validity of the written agreement put in
issue.
Asserting that the RTC of Lipa City is an inconvenient forum,
petitioners question its jurisdiction to hear and resolve the civil
case for specific performance and damages filed by the
respondent. The ICA subject of the litigation was entered into
and perfected in Tokyo, Japan, by Japanese nationals, and
written wholly in the Japanese language. Thus, petitioners posit
that local courts have no substantial relationship to the parties
following the [state of the] most significant relationship rule in
Private International Law.
Issue: W/N the Philippines is the proper forum in the case at
bar? Yes.
W/N the Principle of Forum no conveniens applies in the case
at bar? No.
Held:
The ground raised, forum non conveniens cannot be used to
deprive the trial court of its jurisdiction herein.
First, it is not a proper basis for a motion to dismiss because
Section 1, Rule 16 of the Rules of Court does not include it as a
ground.
Second, whether a suit should be entertained or dismissed on
the basis of the said doctrine depends largely upon the facts of
the particular case and is addressed to the sound discretion of
the trial court.
In this case, the RTC decided to assume jurisdiction.
Third, the propriety of dismissing a case based on this principle
requires a factual determination; hence, this conflicts principle
is more properly considered a matter of defense.
Accordingly, since the RTC is vested by law with the power to
entertain and hear the civil case filed by respondent and the
grounds raised by petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts correctly denied the
petitioners’ motion to dismiss.
Raython vs. Rouzie
Doctrine: The propriety of dismissing a case based on the
principle of forum non conveniens requires a factual
determination; hence, it is more properly considered as a matter
of defense.
Facts:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a
corporation duly organized and existing under the laws of the
State of Connecticut, United States of America, and respondent
Stockton W. Rouzie, Jr., an American citizen, entered into a
contract whereby BMSI hired respondent as its representative
to negotiate the sale of services in several government projects
in the Philippines for an agreed remuneration of 10% of the
gross receipts. On 11 March 1992, respondent secured a service
contract with the Republic of the Philippines on behalf of BMSI
for the dredging of rivers affected by the Mt. Pinatubo eruption
and mudflows.
On 16 July 1994, respondent filed before the Arbitration
Branch of the National Labor Relations Commission (NLRC) a
suit against BMSI and Rust International, Inc. (RUST), Rodney
C. Gilbert and Walter G. Browning for alleged nonpayment of
commissions, illegal termination and breach of employment
contract.
Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering
BMSI and RUST to pay respondent’s money claims.
Upon appeal by BMSI, the NLRC reversed the decision of the
Labor Arbiter and dismissed respondent’s complaint on the
ground of lack of jurisdiction.
Respondent elevated the case to this Court but was dismissed
in a Resolution dated 26 November 1997.
On 8 January 1999, respondent, then a resident of La Union,
instituted an action for damages before the Regional Trial Court
(RTC) of Bauang, La Union. The Complaint,7 docketed as Civil
Case No. 1192-BG, named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case.
In its Answer, petitioner Raytheon alleged that contrary to
respondent’s claim, it was a foreign corporation duly licensed to
do business in the Philippines and denied entering into any
arrangement with respondent or paying the latter any sum of
money.
Petitioner Raytheon sought the dismissal of the complaint on
grounds of failure to state a cause of action and forum non
conveniens and prayed for damages by way of compulsory
counterclaim.
On 18 May 1999, petitioner Raytheon filed an Omnibus Motion
for Preliminary Hearing Based on Affirmative Defenses and for
Summary Judgment seeking the dismissal of the complaint on
grounds of forum non conveniens and failure to state a cause of
action.
38
RTC: In an Order dated 13 September 2000, the RTC denied
petitioner’s omnibus motion.
It also ruled that the principle of forum non conveniens was
inapplicable because the trial court could enforce judgment on
petitioner, it being a foreign corporation licensed to do business
in the Philippines.
In an Order dated 31 July 2001,the trial court denied
petitioner’s motion.
Court of Appeals: On 28 August 2003, the Court of Appeals
denied the petition for certiorari for lack of merit. Moreover, the
appellate court deferred to the discretion of the trial court when
the latter decided not to desist from assuming jurisdiction on
the ground of the inapplicability of the principle of forum non
conveniens.
Petitioner Raytheon mainly asserts that the written contract
between respondent and BMSI included a valid choice of law
clause, that is, that the contract shall be governed by the laws
of the State of Connecticut.
It also mentions the presence of foreign elements in the dispute
– namely, the parties and witnesses involved are American
corporations and citizens and the evidence to be presented is
located outside the Philippines – that renders our local courts
inconvenient forums. Petitioner Raytheon theorizes that the
foreign elements of the dispute necessitate the immediate
application of the doctrine of forum non conveniens.
Issue: W/N the Court of Appeals erred in refusing to dismiss
the complaint on the ground of forum non conveniens? No
Held: The Court has jurisdiction over the case. Therefore, it was
proper for the Court of Apepals to refuse the dismissal of the
case.
Under the doctrine of forum non conveniens, a court, in
conflicts-of-laws cases, may refuse impositions on its
jurisdiction where it is not the most "convenient" or available
forum and the parties are not precluded from seeking remedies
elsewhere.
Petitioner’s averments of the foreign elements in the instant
case are not sufficient to oust the trial court of its jurisdiction
over Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the
principle of forum non conveniens requires a factual
determination; hence, it is more properly considered as a matter
of defense.
While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special
circumstances require the court’s desistance.
Finding no grave abuse of discretion on the trial court, the
Court of Appeals respected its conclusion that it can assume
jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound
discretion of the lower courts because their findings are binding
on this Court.
Navida vs. Judge Dizon
Doctrine: The Philippine courts are the proper forum for the
cases at bar. It is because the cause of action is based on tort
(Art. 2176 and 2187), which is within the purview of the Civil
Code of the Philippines.
Facts:
Proceedings before the Texas Courts
A number of personal injury suits were filed in different Texas
state courts by citizens of twelve foreign countries, including the
Philippines. The thousands of plaintiffs sought damages for
injuries they allegedly sustained from their exposure to
dibromochloropropane (DBCP), a chemical used to kill
nematodes (worms), while working on farms in 23 foreign
countries.
The cases were eventually transferred to, and consolidated in,
the Federal District Court for the Southern District of Texas,
Houston Division.
The cases therein that involved plaintiffs from the Philippines
were "Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al.,"
which was docketed as Civil Action No. H- 94-1359, and "Juan
Ramon Valdez, et al. v. Shell Oil Co., et al.," which was docketed
as Civil Action No. H-95-1356. The defendants in the
consolidated cases prayed for the dismissal of all the actions
under the doctrine of forum non conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal
District Court conditionally granted the defendants’ motion to
dismiss. As stated in the Order:
“Notwithstanding the dismissals that may result from this
Memorandum and Order, in the event that the highest court of
any foreign country finally affirms the dismissal for lack of
jurisdiction of an action commenced by a plaintiff in these actions
in his home country or the country in which he was injured, that
plaintiff may return to this court and, upon proper motion, the
court will resume jurisdiction over the action as if the case had
never been dismissed for [forum non conveniens]”
Civil Case No. 5617 before the RTC of General Santos City
In accordance with the above Memorandum and Order, a total
of 336 plaintiffs from General Santos City (the petitioners in
G.R. No. 125078, hereinafter referred to as NAVIDA, et al.) filed
a Joint Complaint in the RTC of General Santos City on August
10, 1995.
Navida, et al., prayed for the payment of damages in view of the
illnesses and injuries to the reproductive systems, which they
allegedly suffered because of their exposure to DBCP. They
claimed, among others, that they were exposed to this chemical
during the early 1970’s up to the early 1980’s when they used
the same in the banana plantations where they worked at;
and/or when they resided within the agricultural area where
such chemical was used. Navida, et al., claimed that their
illnesses and injuries were due to the fault or negligence of each
of the defendant companies in that they produced, sold and/or
otherwise put into the stream of commerce DBCP- containing
products. According to NAVIDA, et al., they were allowed to be
exposed to the said products, which the defendant companies
knew, or ought to have known, were highly injurious to the
former’s health and well­being.
The RTC of General Santos City issued an Order dismissing
the complaint.
1) The Trial Court determined that it didn’t have
jurisdiction to hear the case. The Trial Court stated
that the substance of the cause of action as stated in
the complaint against the defendant foreign companies
cites activity on their part which took place abroad and
had occurred outside and beyond the territorial
domain of the Philippines. These acts of defendants
cited in the complaint included the manufacture of
pesticides, their packaging in containers, their
distribution through sale or other disposition,
resulting in their becoming part of the stream of
commerce. Accordingly, the subject matter stated in
the complaint and which is uniquely particular to the
present case, consisted of activity or course of conduct
engaged in by foreign defendants outside Philippine
territory, hence, outside and beyond the jurisdiction of
Philippine Courts, including the present Regional Trial
Court.
39
 2) The RTC of General Santos City declared that the tort
alleged by Navida, et al., in their complaint is a tort
category that is not recognized in Philippine laws. The
specific tort asserted against defendant foreign
companies in the present complaint is product liability
tort. When the averments in the present complaint are
examined in terms of the particular categories of tort
recognized in the Philippine Civil Code, it becomes
stark clear that such averments describe and identify
the category of specific tort known as product liability
tort. It is clear, therefore, that the Regional Trial Court
has jurisdiction over the present case, if and only if the
Civil Code of the Philippines, or a suppletory special
law prescribes a product liability tort, inclusive of and
comprehending the specific tort described in the
complaint of the plaintiff workers.
3) The RTC of General Santos city adjudged that Navida
et. al were coerced into submitting their case to the
Philippine courts,
4) The trial court ascribed little significance to the
voluntary appearance of the defendant companies
therein. Defendants have appointed their agents
authorized to accept service of summons/processes in
the Philippines pursuant to the agreement in the U.S.
court that defendants will voluntarily submit to the
jurisdiction of this court. While it is true that this
court acquires jurisdiction over persons of the
defendants through their voluntary appearance, it
appears that such voluntary appearance of the
defendants in this case is conditional. The
appointment of agents by the defendants, being
subject to a suspensive condition, thus produces no
legal effect and is ineffective at the moment.
5) The act of Navida et. al of filing the case in the
Philippine courts violated the rules on forum shopping
and litis pendencia.
6) Moreover, the filing of the case in the U.S. courts
divested this court of its own jurisdiction. This court
takes note that the U.S. District Court did not decline
jurisdiction over the cause of action. The case was
dismissed on the ground of forum non conveniens,
which is really a matter of venue.
In an Order dated July 9, 1996, the RTC of General Santos City
declared that it had already lost its jurisdiction over the case as
it took into consideration the Manifestation of the counsel of
NAVIDA, et al., which stated that the latter had already filed a
petition for review on certiorari before this Court.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition
for Review on Certiorari, challenging the orders of the RTC of
General Santos City dated May 20, 1996, June 4, 1996 and
July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of
General Santos City erred in ruling that it has no jurisdiction
over the subject matter of the case as well as the persons of the
defendant companies.
Civil Case No. 24,251-96 before the RTC of Davao City
Another joint complaint for damages against SHELL, DOW,
OCCIDENTAL, DOLE, DEL MONTE, and CHIQUITA was filed
before Branch 16 of the RTC of Davao City by 155 plaintiffs
from Davao City.
Similar to the complaint of NAVIDA, et al., ABELLA, et al.,
alleged that, as workers in the banana plantation and/or as
residents near the said plantation, they were made to use
and/or were exposed to nematocides, which contained the
chemical DBCP. According to ABELLA, et al., such exposure
resulted in "serious and permanent injuries to their health,
including, but not limited to, sterility and severe injuries to their
reproductive capacities."39 ABELLA, et al., claimed that the
defendant companies manufactured, produced, sold,
distributed, used, and/or made available in commerce, DBCP
without warning the users of its hazardous effects on health,
and without providing instructions on its proper use and
application, which the defendant companies knew or ought to
have known, had they exercised ordinary care and prudence.
The RTC of Davao City, however, junked Civil Case No.
24,251-96 in its Order dated October 1, 1996.
The Court however is constrained to dismiss the case at bar not
solely on the basis of the above but because it shares the
opinion of legal experts given in the interview made by the
Inquirer in its Special report "Pesticide Cause Mass Sterility," to
wit:
a. Former Justice Secretary Demetrio Demetria
in a May 1995 opinion said: The Philippines
should be an inconvenient forum to file this
kind of damage suit against foreign
companies since the causes of action alleged
in the petition do not exist under Philippine
laws. There has been no decided case in
Philippine Jurisprudence awarding to those
adversely affected by DBCP. This means there
is no available evidence which will prove and
disprove the relation between sterility and
DBCP.
b. Retired Supreme Court Justice Abraham
Sarmiento opined that while a class suit is
allowed in the Philippines the device has been
employed strictly. Mass sterility will not
qualify as a class suit injury within the
contemplation of Philippine statute.
c. Retired High Court Justice Rodolfo Nocom
stated that there is simply an absence of
doctrine here that permits these causes to be
heard. No product liability ever filed or tried
here.
ABELLA, et al., claim that the RTC of Davao City erred in
dismissing Civil Case No. 24,251-96 on the ground of lack of
jurisdiction.
According to ABELLA, et al., the RTC of Davao City has
jurisdiction over the subject matter of the case since Articles
2176 and 2187 of the Civil Code are broad enough to cover the
acts complained of and to support their claims for damages.
ABELLA, et al., further aver that the dismissal of the case,
based on the opinions of legal luminaries reported in a
newspaper, by the RTC of Davao City is bereft of basis.
According to them, their cause of action is based on quasi-
delict under Article 2176 of the Civil Code. They also maintain
that the absence of jurisprudence regarding the award of
damages in favor of those adversely affected by the DBCP does
not preclude them from presenting evidence to prove their
allegations that their exposure to DBCP caused their sterility
and/or infertility.
CHIQUITA filed a Petition for Review dated March 5, 1997,
questioning the Orders dated October 1, 1996 and December
16, 1996 of the RTC of Davao City. This case was docketed as
G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City
erred in dismissing the case motu proprio as it acquired
jurisdiction over the subject matter of the case as well as over
the persons of the defendant companies which voluntarily
appeared before it. CHIQUITA also claims that the RTC of Davao
City cannot dismiss the case simply on the basis of opinions of
alleged legal experts appearing in a newspaper article.
40
DEL MONTE also filed its petition for review on certiorari before
this Court assailing the above- mentioned orders of the RTC of
Davao City. Its petition was docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction
over Civil Case No. 24,251-96, as defined under the law and
that the said court already obtained jurisdiction over its person
by its voluntary appearance and the filing of a motion for bill of
particulars and, later, an answer to the complaint. According to
DEL MONTE, the RTC of Davao City, therefore, acted beyond its
authority when it dismissed the case motu proprio or without
any motion to dismiss from any of the parties to the case.
Issue: W/N the Philippine courts don’t have jurisdiction over
the civil cases by virtue of the principle of forum non
conveniens? Philippine courts have jurisdiction
Held: The Philippine courts have jurisdiction.
The rule is settled that jurisdiction over the subject matter of a
case is conferred by law and is determined by the allegations in
the complaint and the character of the relief sought, irrespective
of whether the plaintiffs are entitled to all or some of the claims
asserted therein. Once vested by law, on a particular court or
body, the jurisdiction over the subject matter or nature of the
action cannot be dislodged by anybody other than by the
legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the
RTC in civil cases under Batas Pambansa Blg. 129, as amended
by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts
shall exercise exclusive original jurisdiction: x xx x
(8) In all other cases in which the demand, exclusive of interest,
damages of whatever kind, attorney’s fees, litigation expenses,
and costs or the value of the property in controversy exceeds One
hundred thousand pesos (₱100,000.00) or, in such other cases in
Metro Manila, where the demand, exclusive of the
abovementioned items exceeds Two hundred thousand pesos
(₱200,000.00).
Corollary thereto, Supreme Court Administrative Circular No.
09-94, states:
2. The exclusion of the term "damages of whatever kind" in
determining the jurisdictional amount under Section 19 (8) and
Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691,
applies to cases where the damages are merely incidental to or a
consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one
of the causes of action, the amount of such claim shall be
considered in determining the jurisdiction of the court.
Quite evidently, the allegations in the Amended
Joint-Complaints of NAVIDA, et al., and ABELLA, et al.,
attribute to defendant companies certain acts and/or omissions
which led to their exposure to nematocides containing the
chemical DBCP. According to NAVIDA, et al., and ABELLA, et
al., such exposure to the said chemical caused ill effects,
injuries and illnesses, specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause
of action of plaintiff claimants – a quasi-delict, which under the
Civil Code is defined as an act, or omission which causes
damage to another, there being fault or negligence.
To be precise, Article 2176 of the Civil Code provides:
Article 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
As specifically enumerated in the amended complaints,
NAVIDA, et al., and ABELLA, et al., point to the acts and/or
omissions of the defendant companies in manufacturing,
producing, selling, using, and/or otherwise putting into the
stream of commerce, nematocides which contain DBCP,
"without informing the users of its hazardous effects on health
and/or without instructions on its proper use and application."
Verily, in Citibank, N.A. v. Court of Appeals, this Court has
always reminded that jurisdiction of the court over the subject
matter of the action is determined by the allegations of the
complaint, irrespective of whether or not the plaintiffs are
entitled to recover upon all or some of the claims asserted
therein. The jurisdiction of the court cannot be made to depend
upon the defenses set up in the answer or upon the motion to
dismiss, for otherwise, the question of jurisdiction would almost
entirely depend upon the defendants. What determines the
jurisdiction of the court is the nature of the action pleaded as
appearing from the allegations in the complaint. The averments
therein and the character of the relief sought are the ones to be
consulted.
Clearly then, the acts and/or omissions attributed to the
defendant companies constitute a quasi-delict which is the
basis for the claim for damages filed by NAVIDA, et al., and
ABELLA, et al., with individual claims of approximately ₱2.7
million for each plaintiff claimant, which obviously falls within
the purview of the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and
ABELLA, et al., allegedly suffered resulted from their exposure
to DBCP while they were employed in the banana plantations
located in the Philippines or while they were residing within the
agricultural areas also located in the Philippines. The factual
allegations in the Amended Joint- Complaints all point to their
cause of action, which undeniably occurred in the Philippines.
The RTC of General Santos City and the RTC of Davao City
obviously have reasonable basis to assume jurisdiction over the
cases.
It is, therefore, error on the part of the courts a quo when they
dismissed the cases on the ground of lack of jurisdiction on the
mistaken assumption that the cause of action narrated by
NAVIDA, et al., and ABELLA, et al., took place abroad and had
occurred outside and beyond the territorial boundaries of the
Philippines, i.e., "the manufacture of the pesticides, their
packaging in containers, their distribution through sale or other
disposition, resulting in their becoming part of the stream of
commerce," and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where
territoriality, or the situs of the act complained of, would be
determinative of jurisdiction and venue for trial of cases. In
personal civil actions, such as claims for payment of damages,
the Rules of Court allow the action to be commenced and tried
in the appropriate court, where any of the plaintiffs or
defendants resides, or in the case of a non-resident defendant,
where he may be found, at the election of the plaintiff.
It is well to stress again that none of the parties claims that the
courts a quo lack jurisdiction over the cases filed before them.
All parties are one in asserting that the RTC of General Santos
City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies in the
action below. All parties voluntarily, unconditionally and
knowingly appeared and submitted themselves to the
jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure
provides that "[t]he defendant’s voluntary appearance in the
action shall be equivalent to service of summons." In this
connection, all the defendant companies designated and
authorized representatives to receive summons and to represent
them in the proceedings before the courts a quo. All the
defendant companies submitted themselves to the jurisdiction
of the courts a quo by making several voluntary appearances,
by praying for various affirmative reliefs, and by actively
participating during the course of the proceedings below.
41
In line herewith, this Court, in Meat Packing Corporation of the
Philippines v. Sandiganbayan, held that jurisdiction over the
person of the defendant in civil cases is acquired either by his
voluntary appearance in court and his submission to its
authority or by service of summons. Furthermore, the active
participation of a party in the proceedings is tantamount to an
invocation of the court’s jurisdiction and a willingness to abide
by the resolution of the case, and will bar said party from later
on impugning the court or body’s jurisdiction.
Thus, the RTC of General Santos City and the RTC of Davao
City have validly acquired jurisdiction over the persons of the
defendant companies, as well as over the subject matter of the
instant case. What is more, this jurisdiction, which has been
acquired and has been vested on the courts a quo, continues
until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different
from the "exercise of jurisdiction." Jurisdiction refers to the
authority to decide a case, not the orders or the decision
rendered therein. Accordingly, where a court has jurisdiction
over the persons of the defendants and the subject matter, as in
the case of the courts a quo, the decision on all questions
arising therefrom is but an exercise of such jurisdiction. Any
error that the court may commit in the exercise of its
jurisdiction is merely an error of judgment, which does not
affect its authority to decide the case, much less divest the
court of the jurisdiction over the case.
Saudi Arabia Airlines vs. Rebesencio
Doctrine: The principle of forum non conveniens doesn’t apply
in the case at bar.
Two factors to determine the propriety of a forum:
(1) The availability and adequacy of recourse to a foreign
tribunal; and
(2) The question of where, as between the forum court
and a foreign court, the balance of interests inhering
in a dispute weighs more heavily.
Facts:
Petitioner Saudi Arabian Airlines (Saudia) is a foreign
corporation established and existing under the laws of Jeddah,
Kingdom of Saudi Arabia. It has a Philippine office located at
4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati
City.3
In its Petition filed with this court, Saudia identified itself as
follows:chanroblesvirtuallawlibrary
1. Petitioner SAUDIA is a foreign corporation established and
existing under the Royal Decree No. M/24 of 18.07.1385H
(10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its
Philippine Office is located at 4/F Metro House Building, Sen, Gil
J. Puyat Avenue, Makati City (Philippine Office). It may be served
with orders of this Honorable Court through undersigned
counsel at 4th and 6th Floors, Citibank Center Bldg., 8741 Paseo
de Roxas, Makati City.
Respondents (complainants before the Labor Arbiter) were
recruited and hired by Saudia as Temporary Flight Attendants
with the accreditation and approval of the Philippine Overseas
Employment Administration. After undergoing seminars
required by the Philippine Overseas Employment
Administration for deployment overseas, as well as training
modules offered by Saudia (e.g., initial flight attendant/training
course and transition training), and after working as Temporary
Flight Attendants, respondents became Permanent Flight
Attendants. They then entered into Cabin Attendant contracts
with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May
16, 1990;6 Montassah B. Sacar-Adiong (Montassah) and Rouen
Ruth A. Cristobal (Rouen Ruth) on May 22, 1993; and Loraine
Schneider-Cruz (Loraine) on August 27, 1995.8
Respondents continued their employment with Saudia until
they were separated from service on various dates in 2006.9
Respondents contended that the termination of their
employment was illegal. They alleged that the termination was
made solely because they were pregnant.
As respondents alleged, they had informed Saudia of their
respective pregnancies and had gone through the necessary
procedures to process their maternity leaves. Initially, Saudia
had given its approval but later on informed respondents that
its management in Jeddah, Saudi Arabia had disapproved their
maternity leaves. In addition, it required respondents to file
their resignation letters.11
Respondents were told that if they did not resign, Saudia would
terminate them all the same. The threat of termination entailed
the loss of benefits, such as separation pay and ticket discount
entitlements.
Saudia anchored its disapproval of respondents' maternity
leaves and demand for their resignation on its "Unified
Employment Contract for Female Cabin Attendants" (Unified
Contract).17 Under the Unified Contract, the employment of a
Flight Attendant who becomes pregnant is rendered void. It
provides:chanroblesvirt
uallawlibrary
(H) Due to the essential nature of the Air Hostess functions to
be physically fit on board to provide various services required in
normal or emergency cases on both domestic/international
flights beside her role in maintaining continuous safety and
security of passengers, and since she will not be able to
maintain the required medical fitness while at work in case of
pregnancy, accordingly, if the Air Hostess becomes pregnant
at any time during the term of this contract, this shall
render her employment contract as void and she will be
terminated due to lack of medical fitness.
In their Comment on the present Petition,19 respondents
emphasized that the Unified Contract took effect on September
23, 2006 (the first day of Ramadan),20 well after they had filed
and had their maternity leaves approved. Ma. Jopette filed her
maternity leave application on September 5, 2006.21 Montassah
filed her maternity leave application on August 29, 2006, and
its approval was already indicated in Saudia's computer system
by August 30, 2006.22 Rouen Ruth filed her maternity leave
application on September 13, 2006,23 and Loraine filed her
maternity leave application on August 22, 2006.24
Rather than comply and tender resignation letters, respondents
filed separate appeal letters that were all rejected.
Faced with the dilemma of resigning or totally losing their
benefits, respondents executed handwritten resignation letters.
In Montassah's and Rouen Ruth's cases, their resignations were
executed on Saudia's blank letterheads that Saudia had
provided. These letterheads already had the word
"RESIGNATION" typed on the subject portions of their headings
when these were handed to respondents.27
On November 8, 2007, respondents filed a Complaint against
Saudia and its officers for illegal dismissal and for
underpayment of salary, overtime pay, premium pay for holiday,
rest day, premium, service incentive leave pay, 13th month pay,
separation pay, night shift differentials, medical expense
reimbursements, retirement benefits, illegal deduction, lay-over
expense and allowances, moral and exemplary damages, and
attorney's fees.
The case was initially assigned to Labor Arbiter Hermino V.
Suelo and docketed as NLRC NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter.29 It
42
claimed that all the determining points of contact referred to
foreign law and insisted that the Complaint ought to be
dismissed on the ground of forum non conveniens. It added that
respondents had no cause of action as they resigned
voluntarily.
On December 12, 2008, Executive Labor Arbiter Fatima
Jambaro-Franco rendered the Decision dismissing respondents'
Complaint.
On respondents' appeal, the National Labor Relations
Commission's Sixth Division reversed the ruling of Executive
Labor Arbiter Jambaro-Franco. It explained that "[considering
that complainants-appellants are OFWs, the Labor Arbiters and
the NLRC has [sic] jurisdiction to hear and decide their
complaint for illegal termination."
On the matter of forum non conveniens, it noted that there were
no special circumstances that warranted its abstention from
exercising jurisdiction.
In the Resolution dated February 11, 2010, the National Labor
Relations Commission denied petitioners' Motion for
Reconsideration.
In the June 16, 2011 Decision, the Court of Appeals denied
petitioners' Rule 65 Petition and modified the Decision of the
National Labor Relations Commission with respect to the award
of separation pay and backwages.
Saudia asserts that Philippine courts and/or tribunals are not
in a position to make an intelligent decision as to the law and
the facts. This is because respondents' Cabin Attendant
contracts require the application of the laws of Saudi Arabia,
rather than those of the Philippines. It claims that the difficulty
of ascertaining foreign law calls into operation the principle
of forum non conveniens, thereby rendering improper the
exercise of jurisdiction by Philippine tribunals.
Issue:
1. W/N the Labor Arbiter and the NLRC are not in the
position to make an intelligent decision as to the law
and the facts—in relation to the principle of forum non
conveniens?
2. W/N the principle of forum non conveniens applies in
the case at bar? No
Held:
First Issue:
Saudia asserts that Philippine courts and/or tribunals are not
in a position to make an intelligent decision as to the law and
the facts. This is because respondents' Cabin Attendant
contracts require the application of the laws of Saudi Arabia,
rather than those of the Philippines. It claims that the difficulty
of ascertaining foreign law calls into operation the principle
of forum non conveniens, thereby rendering improper the
exercise of jurisdiction by Philippine tribunals.51
A choice of law governing the validity of contracts or the
interpretation of its provisions does not necessarily imply forum
non conveniens. Choice of law and forum non conveniens are
entirely different matters.
Choice of law provisions are an offshoot of the fundamental
principle of autonomy of contracts. Article 1306 of the Civil
Code firmly ensconces this:ch
anroblesvirtuallawlibrary
Article 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule
against forum shopping. It is designed to frustrate illicit means
for securing advantages and vexing litigants that would
otherwise be possible if the venue of litigation (or dispute
resolution) were left entirely to the whim of either party.
Contractual choice of law provisions factor into transnational
litigation and dispute resolution in one of or in a combination of
four ways: (1) procedures for settling disputes, e.g., arbitration;
(2) forum, i.e., venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is not
subsumed by, the second of these.
Likewise, contractual choice of law is not determinative of
jurisdiction. Stipulating on the laws of a given jurisdiction as
the governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is equally true:
The assumption of jurisdiction by tribunals does not ipso
factomean that it cannot apply and rule on the basis of the
parties' stipulation.
In Hasegawa v. Kitamura: Analytically, jurisdiction and choice
of law are two distinct concepts. Jurisdiction considers whether
it is fair to cause a defendant to travel to this state; choice of
law asks the further question whether the application of a
substantive law V'hich will determine the merits of the case is
fair to both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply
forum law. While jurisdiction and the choice of the lex fori will
often, coincide, the "minimum contacts" for one do not always
provide the necessary "significant contacts" for the other. The
question of whether the law of a state can be applied to a
transaction is different from the question of whether the courts
of that state have jurisdiction to enter a judgment.
lawlawlibrary
As various dealings, commercial or otherwise, are facilitated by
the progressive ease of communication and travel, persons from
various jurisdictions find themselves transacting with each
other. Contracts involving foreign elements are, however,
nothing new. Conflict of laws situations precipitated by disputes
and litigation anchored on these contracts are not totally novel.
Transnational transactions entail differing laws on the
requirements Q for the validity of the formalities and
substantive provisions of contracts and their interpretation.
These transactions inevitably lend themselves to the possibility
of various fora for litigation and dispute resolution. As observed
by an eminent expert on transnational
law:chanroblesvirtuallawlibrary
The more jurisdictions having an interest in, or merely even a
point of contact with, a transaction or relationship, the greater
the number of potential fora for the resolution of disputes
arising out of or related to that transaction or relationship. In a
world of increased mobility, where business and personal
transactions transcend national boundaries, the jurisdiction of
a number of different fora may easily be invoked in a single or a
set of related disputes.
cralawlawlibrary
Philippine law is definite as to what governs the formal or
extrinsic validity of contracts. The first paragraph of Article 17
of the Civil Code provides that "[t]he forms and solemnities of
contracts . . . shall be governed by the laws of the country in
which they are executed"55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established mode of settling
conflict of laws situations on matters pertaining to substantive
content of contracts. It has been noted that three (3) modes
have emerged: (1) lex loci contractus or the law of the place of
the making; (2) lex loci solutionis or the law of the place of
performance; and (3) lex loci intentionis or the law intended by
the parties.56
Given Saudia's assertions, of particular relevance to resolving
the present dispute is lex loci intentionis.
43
An author observed that Spanish jurists and commentators
"favor lex loci intentionis."57 These jurists and commentators
proceed from the Civil Code of Spain, which, like our Civil Code,
is silent on what governs the intrinsic validity of contracts, and
the same civil law traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign
Loan Guarantee v. V.P. Eusebio Construction, Inc.,58 manifested
preference for allowing the parties to select the law applicable to
their contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of contracts is expressly
provided for in our laws. The rule followed by most legal
systems, however, is that the intrinsic validity of a contract
must be governed by the lex contractus or "proper law of the
contract." This is the law voluntarily agreed upon by the parties
(the lex loci voluntatis) or the law intended by them either
expressly or implicitly (the lex loci intentionis). The law selected
may be implied from such factors as substantial connection
with the transaction, or the nationality or domicile of the
parties. Philippine courts would do well to adopt the first and
most basic rule in most legal systems, namely, to allow the
parties to select the law applicable to their contract, subject to the
limitation that it is not against the law, morals, or public policy of
the forum and that the chosen law must bear a substantive
relationship to the transaction.59(Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant
contracts require the application of the laws of Saudi Arabia. It
insists that the need to comply with these stipulations calls into
operation the doctrine of forum non conveniens and, in turn,
makes it necessary for Philippine tribunals to refrain from
exercising jurisdiction.
As mentioned, contractual choice of laws factors into
transnational litigation in any or a combination of four (4) ways.
Moreover, forum non conveniens relates to one of these:
choosing between multiple possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora
— along with the host of difficulties it poses — is not unique to
transnational litigation. It is a difficulty that similarly arises in
disputes well within the bounds of a singe jurisdiction.
When parallel litigation arises strictly within the context of a
single jurisdiction, such rules as those on forum shopping, litis
pendentia, and res judicata come into operation. Thus, in the
Philippines, the 1997 Rules on Civil Procedure provide for
willful and deliberate forum shopping as a ground not only for
summary dismissal with prejudice but also for citing parties
and counsels in direct contempt, as well as for the imposition of
administrative sanctions.60 Likewise, the same rules expressly
provide that a party may seek the dismissal of a Complaint or
another pleading asserting a claim on the ground "[t]hat there is
another action pending between the same parties for the same
cause," i.e., litis pendentia, or "[t]hat the cause of action is
barred by a prior judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis
pendentia, and res judicata, is a means of addressing the
problem of parallel litigation. While the rules of forum
shopping, litis pendentia, and res judicata are designed to
address the problem of parallel litigation within a single
jurisdiction, forum non conveniens is a means devised to
address parallel litigation arising in multiple jurisdictions.
Forum non conveniens literally translates to "the forum is
inconvenient."62 It is a concept in private international law and
was devised to combat the "less than honorable" reasons and
excuses that litigants use to secure procedural advantages,
annoy and harass defendants, avoid overcrowded dockets, and
select a "friendlier" venue.63 Thus, the doctrine of forum non
conveniens addresses the same rationale that the rule against
forum shopping does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a concept
originating in common law.65 However, unlike the rule on res
judicata, as well as those on litis pendentia and forum
shopping, forum non conveniens finds no textual anchor,
whether in statute or in procedural rules, in our civil law
system. Nevertheless, jurisprudence has applied forum non
conveniens as basis for a court to decline its exercise of
jurisdiction.66
Forum non conveniens is soundly applied not only to address
parallel litigation and undermine a litigant's capacity to vex and
secure undue advantages by engaging in forum shopping on an
international scale. It is also grounded on principles of comity
and judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance
in exercising jurisdiction on account of forum non conveniens is
a deferential gesture to the tribunals of another sovereign. It is
a measure that prevents the former's having to interfere in
affairs which are better and more competently addressed by the
latter. Further, forum non conveniens entails a recognition not
only that tribunals elsewhere are better suited to rule on and
resolve a controversy, but also, that these tribunals are better
positioned to enforce judgments and, ultimately, to dispense
justice. Forum non conveniens prevents the embarrassment of
an awkward situation where a tribunal is rendered incompetent
in the face of the greater capability — both analytical and
practical — of a tribunal in another jurisdiction.
The wisdom of avoiding conflicting and unenforceable
judgments is as much a matter of efficiency and economy as it
is a matter of international courtesy. A court would effectively
be neutering itself if it insists on adjudicating a controversy
when it knows full well that it is in no position to enforce its
judgment. Doing so is not only an exercise in futility; it is an act
of frivolity. It clogs the dockets of a.tribunal and leaves it to
waste its efforts on affairs, which, given transnational
exigencies, will be reduced to mere academic, if not trivial,
exercises.
Accordingly, under the doctrine of forum non conveniens, "a
court, in conflicts of law cases, may refuse impositions on its
jurisdiction where it is not the most 'convenient' or available
forum and the parties are not precluded from seeking remedies
elsewhere."
In Puyat v. Zabarte,68 this court recognized the following
situations as among those that may warrant a court's
desistance from exercising jurisdiction:ch
1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case
transpired in a foreign jurisdiction or the material witnesses
have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,]
a practice known as forum shopping[,] merely to secure
procedural advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non
residents or aliens when the docket may already be
overcrowded;
4) The inadequacy of the local judicial machinery for
effectuating the right sought to be maintained; and
5) The difficulty of ascertaining foreign law.69
In Bank of America, NT&SA, Bank of America
International, Ltd. v. Court of Appeals,70 this court
underscored that a Philippine court may properly assume
jurisdiction over a case if it chooses to do so to the extent:
"(1) that the Philippine Court is one to which the parties may
conveniently resort to;
(2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and
(3) that the Philippine Court has or is likely to have power to
enforce its decision."71
The use of the word "may" (i.e., "may refuse impositions on its
44
jurisdiction"72) in the decisions shows that the matter of
jurisdiction rests on the sound discretion of a court.
Neither the mere invocation of forum non conveniens nor the
averment of foreign elements operates to automatically divest a
court of jurisdiction. Rather, a court should renounce
jurisdiction only "after 'vital facts are established, to determine
whether special circumstances' require the court's
desistance."73 As the propriety of applying forum non
conveniens is contingent on a factual determination, it is,
therefore, a matter of defense.74
The second sentence of Rule 9, Section 1 of the 1997 Rules of
Civil Procedure is exclusive in its recital of the grounds for
dismissal that are exempt from the omnibus motion rule: (1)
lack of jurisdiction over the subject matter; (2) litis pendentia;
(3) res judicata; and (4) prescription. Moreover, dismissal on
account offorum non conveniens is a fundamentally
discretionary matter. It is, therefore, not a matter for a
defendant to foist upon the court at his or her own convenience;
rather, it must be pleaded at the earliest possible opportunity.
On the matter of pleading forum non conveniens, we state the
rule, thus: Forum non conveniens must not only be clearly
pleaded as a ground for dismissal; it must be pleaded as such at
the earliest possible opportunity. Otherwise, it shall be deemed
waived.
This court notes that in Hasegawa,76 this court stated
that forum non conveniens is not a ground for a motion to
dismiss. The factual ambience of this case however does not
squarely raise the viability of this doctrine. Until the
opportunity comes to review the use of motions to dismiss for
parallel litigation, Hasegawa remains existing doctrine.
Consistent with forum non conveniens as fundamentally a
factual matter, it is imperative that it proceed from & factually
established basis. It would be improper to dismiss an action
pursuant to forum non conveniens based merely on a perceived,
likely, or hypothetical multiplicity of fora. Thus, a defendant
must also plead and show that a prior suit has, in fact, been
brought in another jurisdiction.
The existence of a prior suit makes real the vexation engendered
by duplicitous litigation, the embarrassment of intruding into
the affairs of another sovereign, and the squandering of judicial
efforts in resolving a dispute already lodged and better resolved
elsewhere.
As has been noted:chanroblesvirtuallawlibrary
A case will not be stayed o dismissed on [forum] non
conveniens grounds unless the plaintiff is shown to have an
available alternative forum elsewhere. On this, the moving party
bears the burden of proof.
A number of factors affect the assessment of an alternative
forum's adequacy. The statute of limitations abroad may have
run, of the foreign court may lack either subject matter or
personal jurisdiction over the defendant. . . . Occasionally,
doubts will be raised as to the integrity or impartiality of the
foreign court (based, for example, on suspicions of corruption or
bias in favor of local nationals), as to the fairness of its judicial
procedures, or as to is operational efficiency (due, for example,
to lack of resources, congestion and delay, or interfering
circumstances such as a civil unrest). In one noted case, [it was
found] that delays of 'up to a quarter of a century' rendered the
foreign forum... inadequate for these purposes.
ralawlawlibrary
We deem it more appropriate and in the greater interest of
prudence that a defendant not only allege supposed dangerous
tendencies in litigating in this jurisdiction; the defendant must
also show that such danger is real and present in that litigation
or dispute resolution has commenced in another
jurisdiction and that a foreign tribunal has chosen to exercise
jurisdiction.
Second Issue:
Forum non conveniens finds no application and does not operate
to divest Philippine tribunals of jurisdiction and to require the
application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate
the stipulations of the Cabin Attendant contracts that require
the application of the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of
governing law. The forum non conveniens may ultimately result
in the application of foreign law is merely an incident of its
application. In this strict sense, forum non conveniens is not
applicable. It is not the primarily pivotal consideration in this
case.
In any case, even a further consideration of the applicability
of forum non conveniens on the incidental matter of the law
governing respondents' relation with Saudia leads to the
conclusion that it is improper for Philippine tribunals to divest
themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a
forum and'its incidents must grapple with two (2) considerations:
first, the availability and adequacy of recourse to a foreign
tribunal; and second, the question of where, as between the
forum court and a foreign court, the balance of interests inhering
in a dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of
ceding jurisdiction to a foreign tribunal and can be resolved by
juxtaposing the competencies and practical circumstances of
the tribunals in alternative fora. Exigencies, like the statute of
limitations, capacity to enforce orders and judgments, access to
records, requirements for the acquisition of jurisdiction, and
even questions relating to the integrity of foreign courts, may
render undesirable or even totally unfeasible recourse to a
foreign court. As mentioned, we consider it in the greater
interest of prudence that a defendant show, in pleading forum
non conveniens, that litigation has commenced in another
jurisdiction and that a foieign tribunal has, in fact, chosen to
exercise jurisdiction.
Two (2) factors weigh into a court's appraisal of the balance of
interests inhering in a dispute: first, the vinculum which the
parties and their relation have to a given jurisdiction; and
second, the public interest that must animate a tribunal, in its
capacity as an agent of the sovereign, in choosing to assume or
decline jurisdiction. The first is more concerned with the
parties, their personal circumstances, and private interests; the
second concerns itself with the state and the greater social
order.
In considering the vinculum, a court must look into the
preponderance of linkages which the parties and their
transaction may have to either jurisdiction. In this respect,
factors, such as the parties' respective nationalities and places
of negotiation, execution, performance, engagement or
deployment, come into play.
In considering public interest, a court proceeds with a
consciousness that it is an organ of the state. It must, thus,
determine if the interests of the sovereign (which acts through
it) are outweighed by those of the alternative jurisdiction. In this
respect, the court delves into a consideration of public policy.
Should it find that public interest weighs more heavily in favor
of its assumption of jurisdiction, it should proceed in
adjudicating the dispute, any doubt or .contrary view arising
from the preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of contractual
choice of law provisions. Where such provisions exist, Philippine
tribunals, acting as the forum court, generally defer to the
parties' articulated choice.
45

This is consistent with the fundamental principle of autonomy
of contracts. Article 1306 of the Civ:l Code expressly provides
that "[t]he contracting parties may establish 'such stipulations,
clauses, terms and conditions as they may deem convenient."
Nevertheless, while a Philippine tribunal (acting as the forum
court) is called upon to respect the parties' choice of governing
law, such respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public order, or
public policy that underlie the contract central to the
controversy.
Continental Micronesia vs. Basso (Repeated)
Doctrine: The Philippines is the proper forum in the case at
bar.
Under the doctrine of forum non conveniens, a Philippine court
in a conflict-of-laws case may assume jurisdiction if it chooses
to do so, provided, that the following requisites are met:
(1) That the Philippine Court is one to which the parties may
conveniently resort to;
(2) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and
(3) That the Philippine Court has or is likely to have power to
enforce its decision.
Facts:
Petitioner Continental Micronesia, Inc. (CMI) is a foreign
corporation organized and existing under the laws of and
domiciled in the United States of America (US). It is licensed to
do business in the Philippines.
Basso, a US citizen, resided in the Philippines prior to his
death.
Basso was offered the position of General Manager of the
Philippine Branch of Continental. Basso accepted the offer.
CMI took over the Philippine operations of Continental, with
Basso retaining his position as General Manager.
On December 20, 1995, Basso received a letter from Mr. Ralph
Schulz (Mr. Schulz), who was then CMI’s Vice President of
Marketing and Sales, informing Basso that he has agreed to
work in CMI as a consultant on an "as needed basis" effective
February 1, 1996 to July 31, 1996.
The letter also informed Basso that:
(1) He will not receive any monetary compensation but will
continue being covered by the insurance provided by CMI;
(2)
(3) He will enjoy travel privileges; and
(4) CMI will advance Php1,140,000.00 for the payment of
housing lease for 12 months
Basso wrote a counter-proposal to Mr. Schulz regarding his
employment status in CMI. However, the reply to his counter-
proposal stated that pursuant to the employment contract
dated February 1, 1991, Basso could be terminated at will upon
a thirty-day notice. This notice was allegedly the letter Basso
received from Mr. Schulz on December 20, 1995.
Consequently, Basso was informed that he was being
terminated effective January 31, 1996.
Basso filed a Complaint for Illegal Dismissal with Moral and
Exemplary Damages against CMI on December 19, 1996.
Alleging the presence of foreign elements, CMI filed a Motion to
Dismiss dated February 10, 1997 on the ground of lack of
jurisdiction over the person of CMI and the subject matter of
the controversy.
Labor Arbiter: The Labor Arbiter granted the motion to dismiss
of Continental. Applying the doctrine of lex loci contractus, the
Labor Arbiter held that the terms and provisions of the
employment contract show that the parties did not intend to
apply our Labor Code (Presidential Decree No. 442).
Labor Arbiter Madjayran H. Ajan: Likewise, the Labor Arbiter
Ajan dismissed the case for lack of jurisdiction. The Labor
Arbiter agreed with CMI that the employment contract was
executed in the US "since the letter-offer was under the Texas
letterhead and the acceptance of Complainant was returned
there." Thus, applying the doctrine of lex loci celebrationis, US
laws apply.
Also, applying lex loci contractus, the Labor Arbiter ruled that
the parties did not intend to apply Philippine laws.
However, the Labor Arbiter Ajan, found CMI to have voluntarily
submitted to his office’s jurisdiction. CMI participated in the
proceedings, submitted evidence on the merits of the case, and
sought affirmative relief through a motion to dismiss.
The Labor Arbiter also ruled that Basso was terminated for a
valid cause based on the allegations of CMI that Basso
committed a series of acts that constitute breach of trust and
loss of confidence
NLRC: The NLRC did not agree with the pronouncement of the
Labor Arbiter that his office has no jurisdiction over the
controversy. It ruled that the Labor Arbiter acquired jurisdiction
over the case when CMI voluntarily submitted to his office’s
jurisdiction by presenting evidence, advancing arguments in
support of the legality of its acts, and praying for reliefs on the
merits of the case.
CMI filed its own Petition for Certiorari dated May 13, 2004
docketed as CA-G.R. SP No. 84281,32 alleging that the NLRC
gravely abused its discretion when it assumed jurisdiction over
the person of CMI and the subject matter of the case.
CA: The Court of Appeals ruled that the Labor Arbiter and the
NLRC had jurisdiction over the subject matter of the case and
over the parties.
The Court of Appeals explained that jurisdiction over the
subject matter of the action is determined by the allegations of
the complaint and the law. Since the case filed by Basso is a
termination dispute that is "undoubtedly cognizable by the
labor tribunals", the Labor Arbiter and the NLRC had
jurisdiction to rule on the merits of the case.
On the issue of jurisdiction over the person of the parties, who
are foreigners, the Court of Appeals ruled that jurisdiction over
the person of Basso was acquired when he filed the complaint
for illegal dismissal, while jurisdiction over the person of CMI
was acquired through coercive process of service of summons to
its agent in the Philippines. The Court of Appeals also agreed
that the active participation of CMI in the case rendered moot
the issue on jurisdiction.
Contention of CMI: CMI maintains that there is a
conflict-of-laws issue that must be settled to determine proper
jurisdiction over the parties and the subject matter of the case.
It also alleges that the existence of foreign elements calls for the
application of US laws and the doctrines of lex loci celebrationis
(the law of the place of the ceremony), lex loci contractus (law of
the place where a contract is executed), and lex loci intentionis
(the intention of the parties as to the law that should govern
their agreement).
CMI also invokes the application of the rule of forum non
conveniens to determine the propriety of the assumption of
jurisdiction by the labor tribunals.
Issue: W/N the Philippines is the convenient forum in light of
the facts of the case? Yes.
Held:
46
The Philippines is the proper forum.

CMI contends that the Philippines is an inconvenient forum.

Under the doctrine of forum non conveniens, a Philippine court

in a conflict-of-laws case may assume jurisdiction if it chooses
to do so, provided, that the following requisites are met:
(1) That the Philippine Court is one to which the parties may
conveniently resort to;
(2) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and
(3) That the Philippine Court has or is likely to have power to
enforce its decision.

All these requisites are present here.

Basso may conveniently resort to our labor tribunals as he and

CMI had physical presence in the Philippines during the
duration of the trial. CMI has a Philippine branch, while Basso,
before his death, was residing here.

Thus, it could be reasonably expected that no extraordinary

measures were needed for the parties to make arrangements in
advocating their respective cases.

The labor tribunals can make an intelligent decision as to the

law and facts. The incident subject of this case (i.e. dismissal of
Basso) happened in the Philippines, the surrounding
circumstances of which can be ascertained without having to
leave the Philippines. The acts that allegedly led to loss of trust
and confidence and Basso’s eventual dismissal were committed
in the Philippines.

As to the law, we hold that Philippine law is the proper law of

the forum, as we shall discuss shortly. Also, the labor tribunals
have the power to enforce their judgments because they
acquired jurisdiction over the persons of both parties.

47

Choice of Law; Choice of Law Principles; Nature &
Characterization
Gibbs vs. Government of P.I.
Doctrine: It is the Philippine law that applies. The law that
governs real property is the law of the State where the real
property is situated.
 Lex rae sitae
Facts:
Eva Johnson Gibbs died intestate in California and at the time
of her death, she and her husband Allison Gibbs (Gibbs),were
citizens of California and domiciled therein. Gibbs filed a
petition with the trial court for him to be issued a transfer
certificate of title over 3 parcels of land formerly belonging to the
conjugal partnership of Allison Gibbs and Eva Gibbs.
The CFI of Manila issued a final order requiring the register of
deeds of the Manila to cancel the certificates of title covering the
parcels of lands located in the City of Manila, and issue in lieu
thereof new certificates of titles in favour of Gibbs.
The register of deeds of the City of Manila, declined to accept as
binding the said decree of court, and refused to register the
transfer of title of the said conjugal property to Gibbs, on the
ground that the corresponding inheritance tax had not been
paid.
The trial court ruled in favor of Gibbs, thus this appeal. The
trial court found that under the law of California, upon the
death of the wife, the entire community property without
administration belongs to the surviving husband; that he is the
absolute owner of all the community property from the moment
of the death of his wife, not by virtue of succession, but by
virtue of the fact that when the death of the wife precedes that
of the husband he acquires the community property, not as an
heir or as the beneficiary of his deceased wife, but because she
never had more than an inchoate interest which is extinguished
upon her death. (So if California law were to govern, as Gibbs
insists, there will be no need for him to pay inheritance tax).
Gibbs’ contention: That the law of California should determine
the nature and extent of the title, if any, that vested in Eva
Johnson Gibbs under the three certificates of title, citing article
9 of the Civil Code. But that, even if the nature and extent of
her title under said certificates be governed by the law of the
Philippine Islands, the laws of California govern the succession
to such title, citing the second paragraph of article 10 of the
Civil Code.
a. Article 9 of the Civil Code:
“The laws relating to family rights and duties, or to the status,
condition, and legal capacity of persons, are binding upon
Spaniards even though they reside in a foreign country.”
Gibbs argued that the conjugal right of the California wife in
community real estate in the Philippine Islands is a personal
right and must, therefore, be settled by the law governing her
personal status, that is, the law of California.
Government’s contention: Article 9 of the Civil Code relied upon
by Gibbs treats of purely personal relations and status and
capacity for juristic acts. Furthermore, article 9, by its very
terms, is applicable only to "Spaniards" (now, by construction,
to citizens of the Philippine Islands). The rules relating to
property, both personal and real, are governed not by Article 9
but by article 10 of the Civil Code.
The second paragraph Article 10 of the Civil Code provides:
“Nevertheless, legal and testamentary successions, in respect to
the order of succession as well as to the amount of the
successional rights and the intrinsic validity of their provisions,
shall be regulated by the national law of the person whose
succession is in question, whatever may be the nature of the
property or the country in which it may be situated.”
The second paragraph of article 10 applies when a legal or
testamentary succession has taken place in the Philippines and
in accordance with the law of the Philippine Islands; and the
foreign law is consulted only in regard to the order of
succession or the extent of the successional rights; in other
words, the second paragraph of article 10 can be invoked only
when the deceased was vested with a descendible interest in
property within the jurisdiction of the Philippine Islands.
Issue:
(1) WON the Government of the Philippines (at the time,
was still a colony of the United States) can apply
conflict of law rules.
(2) WON Californian or Philippine Law should apply to the
case at bar. (WON Eva Johnson Gibbs at the time of
her death is the owner of a descendible interest in the
Philippine lands.)
Held:
First Issue:
Yes, The Philippines can apply conflict of law rules.
The Organic Act of the Philippine Islands (Act of Congress,
August 29, 1916, known as the "Jones Law") as regards the
determination of private rights, grants practical autonomy to
the Government of the Philippine Islands. This Government,
therefore, may apply the principles and rules of private
international law (conflicts of laws) on the same footing as an
organized territory or state of the United States.
Second Issue: Philippine law applies.
Philippine law applies, Eva Johnson Gibbs at the time of her
death is the owner of a descendible interest in the Philippine
lands. (Thus, inheritance taxes must be paid).
In the case of Clarke vs. Clarke (178 US 186, 191), the court
said: It is principle firmly established that to the law of the state
in which the land is situated we must look for the rules which
govern its descent, alienation, and transfer, and for the effect
and construction of wills and other conveyances.
This fundamental principle is stated in the first paragraph of
article 10 of our Civil Code as follows: "Personal property is
subject to the laws of the nation of the owner thereof; real
property to the laws of the country in which it is situated.”
It is stated in 5 Cal. Jur., 478: In accord with the rule that real
property is subject to the lex rei sitae, the respective rights of
husband and wife in such property, in the absence of an
antenuptial contract, are determined by the law of the place
where the property is situated, irrespective of the domicile of the
parties or to the place where the marriage was celebrated.
Under this broad principle, the nature and extent of the title
which vested in Mrs. Gibbs at the time of the acquisition of the
community lands here in question must be determined in
accordance with lex rae sitae (law where the property is
situated). It is admitted that the Philippine lands here in
question were acquired as community property of the conjugal
partnership of the appellee Gibbs and his wife.
Under the law of the Philippine Islands, she was vested of a title
equal to that of her husband. It results that the wife of Gibbs
was, by the law of the Philippine Islands, vested of a
descendible interest, equal to that of her husband, in the
Philippine lands covered by certificates of title Nos. 20880,
28336 and 28331, from the date of their acquisition to the date
of her death.
The descendible interest of Eva Johnson Gibbs in the lands
aforesaid was transmitted to her heirs by virtue of inheritance
and this transmission plainly falls within the language of
48
section 1536 of Article XI of Chapter 40 of the Administrative
Code which levies a tax on inheritances.
The judgment of the trial court is reversed with directions to
dismiss the petition.
Cadalin vs. POEA
Doctrine:
GR: Procedural matters, such as service of process, joinder of
actions, period and requisites for appeal and so forth, are
governed by the laws of the forum.
 This is true even if the action is based upon a foreign
substantive law;
XPN: However, the characterization of a statute into a
procedural or substantive law becomes becomes irrelevant
when the country of the forum has a "borrowing statute”
 A "borrowing statute" directs the state of the forum to
apply the foreign statute of limitations to the pending
claims based on a foreign law.
Facts:
Cadalin et al. are Filipino workers recruited by Asia Int’l
Builders Co. (AIBC), a domestic recruitment corporation, for
employment in Bahrain to work for Brown & Root Int’l Inc.
(BRII) which is a foreign corporation with headquarters
in Houston, Texas.
Cadalin et al. instituted a class suit with the POEA for money
claims arising from the unexpired portion of their employment
contract which was prematurely terminated. They worked
in Bahrain for BRII and they filed the suit after 1 yr. from the
termination of their employment contract.
AIBC and BRII, insists that the actions have prescribed under
the Amiri Decree No. 23 of 1976 (foreign law of Bahrain),
arguing that there is in force in the Philippines a "borrowing
law," which is Section 48 of the Code of Civil Procedure
(Philippine law) and that where such kind of law exists, it takes
precedence over the common-law conflicts rule.
Article 156 of the Amiri Decree No. 23 of 1976
provides:
A claim arising out of a contract of employment shall
not be actionable after the lapse of one year from the
date of the expiry of the contract.
Section 48 of the Code of Civil Procedure provides:
If by the laws of the state or country where the cause
of action arose, the action is barred, it is also barred in
the Philippine Islands.
For Cadalin et al. and POEA, the prescriptive period was 10
years, applying Article 1144 of the Civil Code of the Philippines
since this is a money claim arising from contract. For POEA, the
respondents violated the provisions of the Amiri Decree No. 23
issued in Bahrain, which ipso facto amended the worker’s
contracts of employment.
NLRC, however, believes that the prescriptive period should be
3 years as provided in Article 291 of the Labor Code of the
Philippines since this is a money claim arising from employer-
employee relations. It disagreed with POEA’s stance that Article
291 of the Labor Code applies only to money claims specifically
recoverable under the Philippine Labor Code since the provision
itself does not give such indication. Moreover, Cadalin et al.’s
claims arose from the benefits of the law of the country where
they worked; thus it cannot be said that the cause of action
accrued from a violation of their employment contracts.
The Solicitor General’s personal view is that the prescriptive
period was 1 year as prescribed by the Amiri Decree, but he
deferred to the ruling of the NLRC that Article 291 of the Labor
Code was operative.
Issue: What is the applicable prescriptive period for the filing of
the claims in the instant case?
- 3 years, as provided in Article 291 of the Labor Code
of the Philippines;
-10 years as provided in Article 1144 of the Civil Code
of the Philippines; or
-1 year as provided in the Amiri Decree No. 23 of 1976
Held:
The 3-year prescriptive period of Article 291 of the Labor Code
of the Philippines is applicable since the claim arose from labor
employment.
As a GENERAL RULE, a foreign procedural law will not be
applied in the forum. Procedural matters, such as service of
process, joinder of actions, period and requisites for appeal, and
so forth, are governed by the laws of the forum. This is true
even if the action is based upon a foreign substantive law.
A law on prescription of actions is sui generis in Conflict of
Laws in the sense that it may be viewed either as procedural or
substantive, depending on the characterization given such a
law.
Thus in Bournias v. Atlantic Maritime Company, supra, the
American court applied the statute of limitations of New York,
instead of the Panamanian law, after finding that there was no
showing that the Panamanian law on prescription was intended
to be substantive. Being considered merely a procedural law
even in Panama, it has to give way to the law of the forum on
prescription of actions.
However, the characterization of a statute into a procedural
or substantive law becomes irrelevant when the country of
the forum has a "borrowing statute." Said statute has the
practical effect of treating the foreign statute of limitation as one
of substance. A "borrowing statute" directs the state of the
forum to apply the foreign statute of limitations to the pending
claims based on a foreign law.
While there are several kinds of "borrowing statutes," one
form provides that an action barred by the laws of the place
where it accrued, will not be enforced in the forum even
though the local statute has not run against it. Section 48
of our Code of Civil Procedure is of this kind. Said Section
provides:
If by the laws of the state or country
where the cause of action arose, the
action is barred, it is also barred in the
Philippines Islands.
Section 48 has not been repealed or amended by the Civil Code
of the Philippines. Article 2270 of said Code repealed only those
provisions of the Code of Civil Procedures as to which were
inconsistent with it. There is no provision in the Civil Code of
the Philippines, which is inconsistent with or contradictory to
Section 48 of the Code of Civil Procedure.
In the light of the 1987 Constitution, however, Section 48
cannot be enforced ex proprio vigore insofar as it ordains
the application in this jurisdiction of Section 156 of the Amiri
Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim
obnoxious to the forum's public policy (Canadian Northern
Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713
49
[1920]). To enforce the one-year prescriptive period of the Amiri
Decree No. 23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor.
Bank of America vs. American Realty Corporation
Doctrine: Philippine law applies.
 Under the Philippine jurisdiction, the courts don’t take
judicial notice of foreign laws;
 A foreign law must be pleaded and proven;
 Hence, by virtue of the Doctrine of Processual
Presumption, the law assumes that the foreign law
and the Philippine law are the same
Facts:
 Bank of America NT & SA (BANTSA) is an international
banking and financing institution duly licensed to do
business in the Philippines, organized and existing under
and by virtue of the laws of the State of California, USA
while
 American Realty Corporation (ARC) is a domestic
corporation.
 Bank of America International Limited (BAIL), on the other
hand, is a limited liability company organized and existing
under the laws of England.
BANTSA and BAIL on several occasions granted three
major multi-million (US) Dollar loans to corporate borrowers:
(1) Liberian Transport Navigation, S.A.;
(2) El Challenger S.A. and
(3) Eshley Compania Naviera S.A. (hereinafter collectively
referred to as borrowers), all of which are existing
under and by virtue of the laws of the Republic of
Panama and are foreign affiliates of ARC.
Due to the default in the payment of the loan
amortizations, BANTSA and the corporate borrowers signed and
entered into restructuring agreements. As additional security
for the restructured loans, ARC as 3rd party mortgagor executed
two real estate mortgages (REMs) over its parcels of land
including improvements thereon, located in Philippines.
Eventually, the corporate borrowers defaulted in the
payment of the restructured loans prompting BANTSA to file
civil actions before foreign courts for the collection of the
principal loan in England and in Hongkong. In these cases
instituted before the foreign courts against the borrowers, ARC,
being a third party mortgagor, was not impleaded as party-
defendant.
Subsequently, BANTSA filed before the Office of the
Provincial Sheriff of Bulacan, Philippines, an application for
extrajudicial foreclosure the REM. The properties were then sold
at public auction in an extrajudicial foreclosure sale.
Thereafter, ARC filed an action for damages against
BANTSA, for its foreclosure of the properties despite the
pendency of civil suits before foreign courts for the collection of
the principal loan.
For its part, BANTSA alleged that the rule prohibiting the
mortgagee from foreclosing the mortgage after an ordinary suit
for collection has been filed, is not applicable in the present
case, claiming that:
 There is actually no civil suit for sum of money filed in the
Philippines since the civil actions were filed in Hongkong
and England. As such, any decisions (sic) which may be
rendered in the abovementioned courts are not (sic)
enforceable in the Philippines unless a separate action to
enforce the foreign judgments is first filed in the
Philippines, pursuant to Rule 39, Section 50 of the Revised
Rules of Court.
 Under English Law, which is the governing law under the
principal agreements, the mortgagee does not lose its
security interest by filing civil actions for sums of money.
RTC: The filing in foreign courts by the defendant of collection
suits against the principal debtors operated as a waiver of the
security of the mortgages. Consequently, the ARC’s rights as
owner and possessor of the properties were violated when the
defendant caused the extrajudicial foreclosure of the mortgages
constituted thereon. CA reversed, hence the petition before SC.
BANTSA submits that
(1) a waiver of the remedy of foreclosure requires the
concurrence of two requisites: an ordinary civil action
for collection should be filed and subsequently a final
judgment be correspondingly rendered therein.
Furthermore, the mere filing of a personal action to
collect the principal loan does not suffice; a final
judgment must be secured and obtained in the
personal action so that waiver of the remedy of
foreclosure may be appreciated. To put it differently,
absent any of the two requisites, the mortgagee-
creditor is deemed not to have waived the remedy of
foreclosure.
(2) Under English Law, which according to BANTSA is the
governing law with regard to the principal agreements,
the mortgagee does not lose its security interest by
simply filing civil actions for sums of money
Issue:
Whether or not the petitioners act of filing a collection suit
against the principal debtors for the recovery of the loan before
foreign courts constituted a waiver of the remedy of foreclosure.
Held:
THE FILING OF A COLLECTION SUIT BARRED THE
FORECLOSURE OF THE MORTGAGE.
In our jurisdiction, the remedies available to the mortgage
creditor are deemed alternative and not cumulative. BANTSA
may opt to exercise only one of two remedies so as not to violate
the rule against splitting a cause of action. In the instant case,
petitioners contention that the requisites of filing the action for
collection and rendition of final judgment therein should
concur, is untenable.
By the mere filing of the ordinary action for collection against
the principal debtors, the petitioner in the present case is
deemed to have elected a remedy, as a result of which a waiver
of the other necessarily must arise. Corollarily, no final
judgment in the collection suit is required for the rule on waiver
to apply.
In this case, BANTSA necessarily abandoned the remedy to
foreclose the real estate mortgages constituted over the
properties of third-party mortgagor ARC by the expediency of
filing four civil suits before foreign courts,. Moreover, by filing
the four civil actions and by eventually foreclosing
extrajudicially the mortgages, it in effect transgressed the
rules against splitting a cause of action well-enshrined in
jurisprudence and our statute books. Hence, a suit brought
before a foreign court having competence and jurisdiction
to entertain the action is deemed, for this purpose, to be
within the contemplation of the remedy available to the
mortgagee-creditor.
CHOICE OF LAW
Incidentally, BANTSA alleges that under English Law,
which according to petitioner is the governing law with regard to
the principal agreements, the mortgagee does not lose its
security interest by simply filing civil actions for sums of money.
50
In the case at bench, Philippine law shall apply notwithstanding
the evidence presented by petitioner to prove the English law on
the matter. In a long line of decisions, this Court adopted the
well-imbedded principle in our jurisdiction that there is no
judicial notice of any foreign law. A foreign law must be properly
pleaded and proved as a fact. Thus, if the foreign law involved is
not properly pleaded and proved, our courts will presume that
the foreign law is the same as our local or domestic or internal
law. This is what we refer to as the doctrine of processual
presumption.
In the instant case, assuming arguendo that the English Law on
the matter were properly pleaded and proved in accordance with
Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales
,said foreign law would still not find applicability. Thus, when
the foreign law, judgment or contract is contrary to a sound and
established public policy of the forum, the said foreign law,
judgment or order shall not be applied.
Additionally, prohibitive laws concerning
persons, their acts or property, and those which have
for their object public order, public policy and good
customs shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or
conventions agreed upon in a foreign country.
The public policy sought to be protected in the instant case is
the principle imbedded in our jurisdiction proscribing the
splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is
pertinent -
If two or more suits are instituted on the basis of the
same cause of action, the filing of one or a judgment
upon the merits in any one is available as a ground for
the dismissal of the others.
Moreover, foreign law should not be applied when its
application would work undeniable injustice to the citizens or
residents of the forum. To give justice is the most important
function of law; hence, a law, or judgment or contract that is
obviously unjust negates the fundamental principles of Conflict
of Laws.
Clearly then, English Law is not applicable.
Saudi Arabia Airlines vs. CA (Repeated)
Doctrine:
Questions as to the choice of applicable law:
(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
Doctrine of Qualification— It is the "process of deciding
whether or not the facts relate to the kind of question specified
in a conflicts rule." The purpose of "characterization" is to
enable the forum to select the proper law.
Connecting Factor/ Point of Contact—Choice-of-law rules
invariably consist of a factual relationship (such as property
right, contract claim) and a connecting factor or point of
contact, such as the situs of the res, the place of celebration,
the place of performance, or the place of wrongdoing.
These "test factors" or "points of contact" or "connecting
factors" could be any of the following:
1. The nationality of a person, his domicile, his residence,
his place of sojourn, or his origin;
2. the seat of a legal or juridical person, such as a
corporation;
3. the situs of a thing, that is, the place where a thing is, or
is deemed to be situated. In particular, the lex situs is
decisive when real rights are involved;
4. 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;
5. the place where an act is intended to come into effect,
e.g., the place of performance of contractual duties xxx.
6. the intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;
7. the place where judicial or administrative proceedings
are instituted or done. The lexfori — the law of the
forum xxx.
The flag of a ship, which in many cases is decisive of practically
all legal relationships of the ship and of its master or owner as
such
Facts:
On January 21, 1988, SAUDI ARABIAN AIRLINES or SAUDIA
(foreign airlines corporation doing business in the Philippines)
hired MORADA as a Flight Attendant for its airlines based in
Jeddah, Saudi Arabia. On April 27, 1990, while on a lay-over in
Jakarta, Indonesia, Morada went to a disco dance with fellow
crewmembers Thamer Al-Gazzawi and Allah Al-Gazzawi, both
Saudi nationals. Because it was almost morning when they
returned to their hotels, they agreed to have breakfast together
at the room of Thamer. After Allah left, Thamer attempted to
rape Morada. A roomboy and several security personnel heard
Morada’s cries for help and rescued her. The Indonesian police
came and arrested Thamer and Allah Al-Gazzawi, the latter as
an accomplice.
In September 1990, defendant SAUDIA transferred Morada to
Manila.On January 14, 1992, 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. The police put pressure on her to make a statement
dropping the case against Thamer and Allah. She agreed so the
police returned her passport and allowed her to catch the
afternoon flight out of Jeddah.
On June 16, 1993, Morada was ordered to take a later flight to
Jeddah. When she did, a certain Khalid of the SAUDIA office
brought her to a Saudi court where she was asked to sign a
document written in Arabic purportedly to close the case
against Thamer and Allah. As it turned out, plaintiff signed a
notice to her to appear before the court on June 27, 1993.
Morada then returned to Manila.
On June 28, 1993, a Saudi judge interrogated Morada for 1
hour through an interpreter about the Jakarta incident. At the
airport, the airline had forbidden her to take flight, her passport
was taken away and told her to remain in Jeddah.
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 sentencing her to five months
imprisonment and to 286 lashes. 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. Because
she was wrongfully convicted, the Prince of Makkah dismissed
the case against her and allowed her to leave Saudi Arabia.
51
Shortly before her return to Manila, she was terminated from
the service by SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a Complaint for damages
against SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country
manager. SAUDIA filed an Omnibus Motion To Dismiss, which
was denied, by the trial court. Consequently, SAUDIA filed its
Petition for Certiorari and Prohibition xxx. The Court of
Appeals ruled that the Philippines is an appropriate forum
considering that the Amended Complaint's basis for recovery of
damages is Article 21 of the Civil Code, and thus, clearly within
the jurisdiction of respondent Court.
SAUDIA claimed: that the trial court has no jurisdiction to hear
and try based on Article 21 of the New Civil Code since the
proper law applicable is the law of the Kingdom of Saudi Arabia
inasmuch as this case involves what is known in private
international law as a "conflicts problem". Otherwise, the
Republic of the Philippines will sit in judgment of the acts done
by another sovereign state, which is abhorred. That this is a
conflict of laws, which must be settled at the outset. That
Morada’s claim for alleged abuse of rights occurred in the
Kingdom of Saudi Arabia. The existence of a foreign element
qualifies the instant case for the application of the law of the
Kingdom of Saudi Arabia, by virtue of the lex loci
delicticommissi rule.
Issue:
W/N the Philippine law should govern this case? Yes
Held:
YES. As to the choice of applicable law, there are 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.
Before a choice can be made, it is necessary for us to determine
under what category a certain set of facts or rules fall. This
process is known as "characterization", or the "doctrine of
qualification". It is the "process of deciding whether or not the
facts relate to the kind of question specified in a conflicts
rule." The purpose of "characterization" is to enable the forum
to select the proper law. Our starting point of analysis here is
not a legal relation, but a factual situation, event, or operative
fact.
An essential element of conflict rules is the indication of a "test"
or "connecting factor" or "point of contact". Choice-of-law
rules invariably consist of a factual relationship (such as
property right, contract claim) and a connecting factor or point
of contact, such as the situs of the res, the place of
celebration, the place of performance, or the place of
wrongdoing. 58
These "test factors" or "points of contact" or "connecting factors"
could be any of the following:
8. The nationality of a person, his domicile, his residence,
his place of sojourn, or his origin;
9. the seat of a legal or juridical person, such as a
corporation;
10. the situs of a thing, that is, the place where a thing is, or
is deemed to be situated. In particular, the lex situs is
decisive when real rights are involved;
11. 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;
12. the place where an act is intended to come into effect,
e.g., the place of performance of contractual duties xxx.
13. the intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;
14. the place where judicial or administrative proceedings
are instituted or done. The lexfori — the law of the
forum xxx.
15. the flag of a ship, which in many cases is decisive of
practically all legal relationships of the ship and of its
master or owner as such. Xxx.
Although Morada was already working in Manila, SAUDIA
brought her to Jeddah on the pretense that she would merely
testify in an investigation of the charges against her SAUDIA
crewmembers. As it turned out, she was the one made to face
trial for very serious charges, including adultery and violation of
Islamic laws and tradition.
Considering that the complaint in the court a quo is one
involving torts, the "connecting factor" or "point of contact"
could be the place or places where the tortious conduct or lex
loci actus occurred. And applying the torts principle in a
conflicts case, we find that the Philippines could be said as a
situs of the tort (the place where the alleged tortious conduct
took place). This is because it is in the Philippines where
SAUDIA allegedly deceived Morada, a Filipina residing and
working here.
In applying the State of the most significant relationship
rule 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. 62
As already discussed, there is basis for the claim that over-all
injury occurred and lodged in the Philippines. Also, Morada is a
resident Filipina national, working with SAUDIA, 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.
Philippine law on tort liability should have paramount
application to and control in the resolution of the legal issues
arising out of this case. Further, the Regional Trial Court has
jurisdiction over the parties and the subject matter of the
complaint; the appropriate venue is in Quezon City, which
could properly apply Philippine law.
Lastly, Morada has "no obligation to plead and prove the law of
the Kingdom of Saudi Arabia since her cause of action is based
on Articles 19 and 21" of the Civil Code of the Philippines and
never alleged that Saudi law should govern this case. And as
correctly held by the respondent appellate court, "considering
that it was SAUDIA who was invoking the applicability of the
law of Saudi Arabia, then the burden was on it to plead and to
establish what the law of Saudi Arabia is".
52

Hasegawa vs. Kitamura (Repeated)
Doctrine: The issue on jurisdiction and choice of law are not
the same. They are two distinct concepts.
 Jurisdiction—considers whether it is fair to cause a
defendant to travel to this State;
 Choice of law—asks whether the application of a
substantive law which will determine the merits of the
case is fair to both parties.
Facts:
Nippon Engineering Consultants Co., Ltd (Nippon) a Japanese
consultancy firm providing technical and management support
in the infrastructure projects of foreign governments entered
into an Independent Contractor Agreement (ICA) with
respondent Minoru Kitamura, a Japanese national permanently
residing in the Philippines.
The agreement provides that respondent was to extend
professional services to Nippon for a year starting on April 1,
1999.
Nippon then assigned respondent to work as the project
manager of the Southern Tagalog Access Road (STAR) Project in
the Philippines, following the company's consultancy contract
with the Philippine Government.
Subsequently, the DPWH engaged the consultancy services of
Nippon, on January 28, 2000, this time for the detailed
engineering and construction supervision of the
Bongabon-Baler Road Improvement (BBRI) Project. Kitamura
was named as the project manager.
Petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company
had no more intention of automatically renewing his ICA. His
services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000.
Kitmaura requested a negotiation conference and demanded
that he be assigned to the BBRI project. Nippon insisted that
respondent’s contract was for a fixed term that had already
expired, and refused to negotiate for the renewal of the ICA.
Kitamura initiated a civil case for specific performance and
damages with the Regional Trial Court of Lipa City.
For their part, Nippon contend that the ICA had been perfected
in Japan and executed by and between Japanese nationals,
moved to dismiss the complaint for lack of jurisdiction.
Basis of lack of jurisdiction of the RTC: They asserted that the
claim for improper pre-termination of respondent's ICA could
only be heard and ventilated in the proper courts of Japan
following the principles of lex loci celebrationis and lex
contractus.
The RTC denied the motion to dismiss on the ground that
matters connected with the performance of contracts are
regulated by the law prevailing at the place of performance,
Nippon filed with the CA a Petition for Certiorari under Rule 65.
Subsequently, the CA ruled that the principle of lex loci
celebrationis was not applicable to the case, because nowhere
in the pleadings was the validity of the written agreement put in
issue.
Asserting that the RTC of Lipa City is an inconvenient forum,
petitioners question its jurisdiction to hear and resolve the civil
case for specific performance and damages filed by the
respondent. The ICA subject of the litigation was entered into
and perfected in Tokyo, Japan, by Japanese nationals, and
written wholly in the Japanese language. Thus, petitioners posit
that local courts have no substantial relationship to the parties
following the [state of the] most significant relationship rule in
Private International Law.
Issue: W/N the issue on the choice of law is applicable in the
case at bar? No.
Held:
Analytically, jurisdiction and choice of law are two distinct
concepts. Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will
determine the merits of the case is fair to both parties.
The power to exercise jurisdiction does not automatically give a
state constitutional authority to apply forum law. While
jurisdiction and the choice of the lex fori will often coincide, the
"minimum contacts" for one do not always provide the
necessary "significant contacts" for the other. The question of
whether the law of a state can be applied to a transaction is
different from the question of whether the courts of that state
have jurisdiction to enter a judgment.
In this case, only the first phase is at issue—jurisdiction.
Jurisdiction, however, has various aspects. For a court to
validly exercise its power to adjudicate a controversy, it must
have jurisdiction over the plaintiff or the petitioner, over the
defendant or the respondent, over the subject matter, over the
issues of the case and, in cases involving property, over the res
or the thing which is the subject of the litigation.
In assailing the trial court's jurisdiction herein, petitioners are
actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority, which establishes and
organizes the court. It is given only by law and in the manner
prescribed by law. It is further determined by the allegations of
the complaint irrespective of whether the plaintiff is entitled to
all or some of the claims asserted therein.
To succeed in its motion for the dismissal of an action for lack
of jurisdiction over the subject matter of the claim, the movant
must show that the court or tribunal cannot act on the matter
submitted to it because no law grants it the power to adjudicate
the claims.
In the instant case, petitioners, in their motion to dismiss, do
not claim that the trial court is not properly vested by law with
jurisdiction to hear the subject controversy for, indeed, Civil
Case No. 00-0264 for specific performance and damages is one
not capable of pecuniary estimation and is properly cognizable
by the RTC of Lipa City. What they rather raise as grounds to
question subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the "state of the most
significant relationship rule."
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the "law of the place of the
ceremony" or the law of the place where a contract is made.The
doctrine of lex contractus or lex loci contractus means the "law
of the place where a contract is executed or to be performed." It
controls the nature, construction, and validity of the contract
and it may pertain to the law voluntarily agreed upon by the
parties or the law intended by them either expressly or
implicitly.
Under the "state of the most significant relationship rule," to
ascertain what state law to apply to a dispute, the court should
determine which state has the most substantial connection to
the occurrence and the parties. In a case involving a contract,
the court should consider where the contract was made, was
negotiated, was to be performed, and the domicile, place of
business, or place of incorporation of the parties.
53
This rule takes into account several contacts and evaluates
them according to their relative importance with respect to the
particular issue to be resolved.
Since these three principles in conflict of laws make reference to
the law applicable to a dispute, they are rules proper for the
second phase, the choice of law. They determine which state's
law is to be applied in resolving the substantive issues of a
conflicts problem.
Necessarily, as the only issue in this case is that of jurisdiction,
choice- of-law rules are not only inapplicable but also not yet
called for.
Raytheon vs. Rouzie
Doctrine: Jurisdiction and choice of law are two distinct
concepts.
 Jurisdiction—considers whether it is fair to cause a
defendant to travel to this State;
 Choice of law—asks whether the application of a
substantive law which will determine the merits of the
case is fair to both parties.
The choice of law stipulation will become relevant only when the
substantive issues of the instant case develop, that is, after
hearing on the merits proceeds before the trial court.
Facts:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a
corporation duly organized and existing under the laws of the
State of Connecticut, United States of America, and respondent
Stockton W. Rouzie, Jr., an American citizen, entered into a
contract whereby BMSI hired respondent as its representative
to negotiate the sale of services in several government projects
in the Philippines for an agreed remuneration of 10% of the
gross receipts. On 11 March 1992, respondent secured a service
contract with the Republic of the Philippines on behalf of BMSI
for the dredging of rivers affected by the Mt. Pinatubo eruption
and mudflows.
On 16 July 1994, respondent filed before the Arbitration
Branch of the National Labor Relations Commission (NLRC) a
suit against BMSI and Rust International, Inc. (RUST), Rodney
C. Gilbert and Walter G. Browning for alleged nonpayment of
commissions, illegal termination and breach of employment
contract.
Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering
BMSI and RUST to pay respondent’s money claims.
Upon appeal by BMSI, the NLRC reversed the decision of the
Labor Arbiter and dismissed respondent’s complaint on the
ground of lack of jurisdiction.
Respondent elevated the case to this Court but was dismissed
in a Resolution dated 26 November 1997.
On 8 January 1999, respondent, then a resident of La Union,
instituted an action for damages before the Regional Trial Court
(RTC) of Bauang, La Union. The Complaint,7 docketed as Civil
Case No. 1192-BG, named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case.
In its Answer, petitioner Raytheon alleged that contrary to
respondent’s claim, it was a foreign corporation duly licensed to
do business in the Philippines and denied entering into any
arrangement with respondent or paying the latter any sum of
money.
Petitioner Raytheon sought the dismissal of the complaint on
grounds of failure to state a cause of action and forum non
conveniens and prayed for damages by way of compulsory
counterclaim.
On 18 May 1999, petitioner Raytheon filed an Omnibus Motion
for Preliminary Hearing Based on Affirmative Defenses and for
Summary Judgment seeking the dismissal of the complaint on
grounds of forum non conveniens and failure to state a cause of
action.
RTC: In an Order dated 13 September 2000, the RTC denied
petitioner’s omnibus motion.
It also ruled that the principle of forum non conveniens was
inapplicable because the trial court could enforce judgment on
petitioner, it being a foreign corporation licensed to do business
in the Philippines.
In an Order dated 31 July 2001,the trial court denied
petitioner’s motion.
Court of Appeals: On 28 August 2003, the Court of Appeals
denied the petition for certiorari for lack of merit. Moreover, the
appellate court deferred to the discretion of the trial court when
the latter decided not to desist from assuming jurisdiction on
the ground of the inapplicability of the principle of forum non
conveniens.
Petitioner Raytheon mainly asserts that the written contract
between respondent and BMSI included a valid choice of law
clause, that is, that the contract shall be governed by the laws
of the State of Connecticut.
It also mentions the presence of foreign elements in the dispute
– namely, the parties and witnesses involved are American
corporations and citizens and the evidence to be presented is
located outside the Philippines – that renders our local courts
inconvenient forums. Petitioner Raytheon theorizes that the
foreign elements of the dispute necessitate the immediate
application of the doctrine of forum non conveniens.
Issue: W/N the fact the subject contract contains a stipulation
stating that the same shall be governed by the laws of the State
of Connecticut preclude the Philippine Courts from hearing the
case? No.
Held: The Philippine courts can hear the case because such
courts have jurisdiction over the case. The stipulation regarding
the governing law shall not preclude the Philippine courts from
hearing the case.
As regards jurisdiction over the parties, the trial court acquired
jurisdiction over herein respondent (as party plaintiff) upon the
filing of the complaint. On the other hand, jurisdiction over the
person of petitioner (as party defendant) was acquired by its
voluntary appearance in court.
That the subject contract included a stipulation that the same
shall be governed by the laws of the State of Connecticut does
not suggest that the Philippine courts, or any other foreign
tribunal for that matter, are precluded from hearing the civil
action. Jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to
travel to this state; choice of law asks the further question
whether the application of a substantive law which will
determine the merits of the case is fair to both parties.
The choice of law stipulation will become relevant only when the
substantive issues of the instant case develop, that is, after
hearing on the merits proceeds before the trial court.
54
 LWV Construction vs. Dupo
Doctrine:
The courts of the forum will not enforce any foreign claim
obnoxious to the forums public policy. To enforce the one-year
prescriptive period of the Amiri Decree No. 23 of 1976 as
regards the claims in question would contravene the public
policy on the protection to labor.
Facts:
LWV CONSTRUCTION CORPORATION (LWV for brevity), a
domestic corporation which recruits Filipino workers, hired
MARCELO B. DUPO (MARCELO) as Civil Structural
Superintendent to work in Saudi Arabia for its principal,
Mohammad Al-Mojil Group/Establishment (MMG). MARCELO
signed his first overseas employment contract, renewable after
one year. It was renewed five times. All were fixed-period
contracts for one year.
The sixth and last contract stated that MARCELO’s employment
starts upon reporting to work and ends when he leaves the work
site. MARCELO left Saudi Arabia on April 30, 1999 and arrived in
the Philippines on May 1, 1999.
On May 28, 1999, MARCELO informed MMG, through the LWV,
that he needs to extend his vacation because his son was
hospitalized. In reply, MMG informed MARCELO that his
services are still needed; that he was issued a plane ticket for
his return flight to Saudi Arabia on May 31, 1999; and that his
decision regarding his employment must be made within seven
days, otherwise, MMG will be compelled to cancel [his] slot.
On July 6, 1999, MARCELO resigned. In his letter to MMG, he
also claimed for a long service award.
When he followed up his claim LWV informed him that MMG
did not respond.
On December 11, 2000, MARCELO filed a complaint for
payment of service award against LWV before the National
Labor Relations Commission (NLRC), Regional Arbitration
Branch, Cordillera Administrative Region, Baguio City.
MARCELO’s CLAIM: Under the Law of Saudi Arabia, an
employee who rendered at least five (5) years in a company
within the jurisdiction of Saudi Arabia, is entitled to the so-
called long service award which is known to others as longevity
pay of at least one half month pay for every year of service. In
excess of five years an employee is entitled to one month pay for
every year of service. In both cases inclusive of all benefits and
allowances.
This benefit was offered to him before he went on vacation,
hence, this was engrained in his mind. He reconstructed the
computation of his long service award or longevity pay and he
arrived at the following computation exactly the same with the
amount he was previously offered [which is US$12,640.33].
MARCELO said that he did not grab the offer for he intended to
return after his vacation.
LWS’s DEFENSE: For its part, LWV offered payment and
prescription as defenses. LWV maintained that MMG pays its
workers their Service Award or Severance Pay every conclusion
of their Labor Contracts pursuant to Article 87 of the [Saudi
Labor Law]. Under Article 87, payment of the award is at the
end or termination of the Labor Contract concluded for a
specific period. Based on the payroll, MARCELO was already
paid his service award or severance pay for his latest (sixth)
employment contract.
LWV added that under Article 13 of the Saudi Labor Law, the
action to enforce payment of the service award must be filed
within one year from the termination of a labor contract for a
specific period. MARCELO’s sixth contract ended when he left
Saudi Arabia on April 30, 1999. LWV concluded that the one-
year prescriptive period had lapsed because MARCELO filed his
complaint on December 11, 2000 or one year and seven months
after his sixth contract ended.
LABOR ARBITER (NOT IMPORTANT, JUST IN CASE ASKED BY
ATTY.):
The Labor Arbiter ordered LWV to pay MARCELO longevity pay
of US$12,640.33 or P648,562.69 and attorneys fees of
P64,856.27 or a total of P713,418.96.
MARCELO’s seven-year employment with MMG had sufficiently
oriented him on the benefits given to workers; that LWV was
unable to convincingly refute MARCELO’s claim that MMG
offered him longevity pay before he went on vacation on May 1,
1999; and that MARCELO’s claim was not barred by
prescription since his claim on July 6, 1999, made a month
after his cause of action accrued, interrupted the prescriptive
period under the Saudi Labor Law until his claim was
categorically denied.
NLRC (NOT IMPORTANT, JUST IN CASE ASKED BY ATTY.):
NLRC dismissed the appeal and affirmed the Labor Arbiters
decision. The NLRC ruled that MARCELO is entitled to longevity
pay which is different from severance pay.
COURT OF APPEALS (NOT IMPORTANT, JUST IN CASE
ASKED BY ATTY.): The Court of Appeals denied the petition and
affirmed the NLRC. The Court of Appeals ruled that service
award is the same as longevity pay, and that the severance pay
received by MARCELO cannot be equated with service award
Issue: Whether MARCELO is entitled to a service award or
longevity pay under the provisions of the Saudi Labor Law. NO,
IT WAS ALREADY PAID
Held:
Related to this issue are LWV’s defenses of payment and
prescription. THERE IS NO PRESCRIPTION
The issue related to conflict of laws is PRESCRIPTION. Skip
discussion on Payment at your own risk.
RULING: ON THE MATTER OF PAYMENT (NOT IMPORTANT
JUST IN CASE ASKED BY ATTY.): We find that MARCELO’s
service award under Article 87 of the Saudi Labor Law has
already been paid. Our computation will show that the
severance pay received by MARCELO was his service award.
Article 87 clearly grants a service award. It reads:
Article 87 Where the term of a labor contract
concluded for a specified period comes to an end or
where the employer cancels a contract of unspecified
period, the employer shall pay to the workman an
award for the period of his service to be computed on
the basis of half a month’s pay for each of the first five
years and one month’s pay for each of the subsequent
years. The last rate of pay shall be taken as basis for
the computation of the award. For fractions of a year,
the workman shall be entitled to an award which is
proportionate to his service period during that year.
Furthermore, the workman shall be entitled to the
service award provided for at the beginning of this
article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or
childbirth.
C. If the workman is leaving the work as a result of a
force majeure beyond his control.
MARCELO, however, has called the benefit other names such as
long service award and longevity pay.
55
MARCELO’s position paper mentioned how his long service
award or longevity pay is computed: half-months pay per year of
service and one-months pay per year after five years of service.
Article 87 has the same formula to compute the service award.
The payroll submitted by LWV showed that MARCELO received
severance pay of SR2,786 for his sixth employment contract
covering the period April 21, 1998 to April 29, 1999. The
computation below shows that MARCELO’s severance pay of
SR2,786 was his service award under Article 87.
Service Award = (SR5,438) + (9 days/365 days) x (SR5,438)
Service Award = SR2,786.04
MARCELO’s service award for the sixth contract is equivalent
only to half-months pay plus the proportionate amount for the
additional nine days of service he rendered after one year.
MARCELO’s employment contracts expressly stated that his
employment ended upon his departure from work. Each year he
departed from work and successively new contracts were
executed before he reported for work anew. We also said in that
case that under American law, [w]here a contract specifies the
period of its duration, it terminates on the expiration of such
period. A contract of employment for a definite period
terminates by its own terms at the end of such period. As it is,
Article 72 of the Saudi Labor Law is also of similar import. It
reads:
A labor contract concluded for a specified period shall
terminate upon the expiry of its term. If both parties
continue to enforce the contract, thereafter, it shall be
considered renewed for an unspecified period.
Regarding MARCELO’s claim that he was offered US$12,640.33
as longevity pay before he returned to the Philippines on May 1,
1999, we find that he was not candid on this particular point.
His categorical assertion about the offer being engrained in his
mind such that he reconstructed the computation and arrived
at the computation exactly the same with the amount he was
previously offered is not only beyond belief. Such assertion is
also a stark departure from his July 6, 1999 letter to MMG
where he could only express his hope that he was entitled to a
long service award and where he never mentioned the supposed
previous offer. Moreover, MARCELO’s claim that his monthly
compensation is SR10,248.92 is belied by the payroll which
shows that he receives SR5,438 per month.
We therefore emphasize that such payroll should have
prompted the lower tribunals to examine closely MARCELO’s
computation of his supposed longevity pay before adopting that
computation as their own.
ON THE MATTER OF PRESCRIPTION (VERY IMPORTANT TO
CONFLICT OF LAWS): We cannot agree with LWV that
MARCELO’s action has prescribed under Article 13 of the Saudi
Labor Law. What applies is Article 291 of our Labor Code which
reads:
ART. 291. Money claims. All money claims arising from
employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued;
otherwise they shall be forever barred.
In Cadalin v. POEAs Administrator, we held that Article 291
covers all money claims from employer-employee relationship
and is broader in scope than claims arising from a specific law.
It is not limited to money claims recoverable under the Labor
Code, but applies also to claims of overseas contract workers.
The following ruling in Cadalin v. POEAs Administrator is
instructive:
First to be determined is whether it is the Bahrain law on
prescription of action based on the Amiri Decree No. 23 of 1976
or a Philippine law on prescription that shall be the governing
law.
GR: As a general rule, a foreign procedural law will not be
applied in the forum. Procedural matters, such as service of
process, joinder of actions, period and requisites for appeal, and
so forth, are governed by the laws of the forum. This is true
even if the action is based upon a foreign substantive law
(Restatement of the Conflict of Laws, Sec. 685; Salonga, Private
International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws
in the sense that it may be viewed either as procedural or
substantive, depending on the characterization given such a
law.
However, the characterization of a statute into a procedural or
substantive law becomes irrelevant when the country of the
forum has a borrowing statute. Said statute has the practical
effect of treating the foreign statute of limitation as one of
substance (Goodrich, Conflict of Laws, 152-153 [1938]). A
borrowing statute directs the state of the forum to apply the
foreign statute of limitations to the pending claims based on a
foreign law (Siegel, Conflicts, 183 [1975]). While there are
several kinds of borrowing statutes, one form provides that an
action barred by the laws of the place where it accrued, will not
be enforced in the forum even though the local statute has not
run against it (Goodrich and Scoles, Conflict of Laws, 152-153
[1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides:
If by the laws of the state or country where the cause of action
arose, the action is barred, it is also barred in the Philippine
Islands.
Section 48 has not been repealed or amended by the Civil Code
of the Philippines. Article 2270 of said Code repealed only those
provisions of the Code of Civil Procedure as to which were
inconsistent with it. There is no provision in the Civil Code of
the Philippines, which is inconsistent with or contradictory to
Section 48 of the Code of Civil Procedure (Paras, Philippine
Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the
Code of Civil Procedure] cannot be enforced ex propriovigore (by
their or Its own force.) insofar as it ordains the application in
this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of
1976.
The courts of the forum will not enforce any foreign claim
obnoxious to the forums public policy x xx. To enforce the
one-year prescriptive period of the Amiri Decree No. 23 of
1976 as regards the claims in question would contravene the
public policy on the protection to labor.
x xxx
Thus, in our considered view, MARCELO’s complaint was filed
well within the three-year prescriptive period under Article 291
of our Labor Code. This point, however, has already been
mooted by our finding that MARCELO’s service award had been
paid, albeit the payroll termed such payment as severance pay.
56

Dacasin vs. Dacasin
Doctrine: The foreign divorce decree is valid and binding on the
foreigner-alien, provided that it was done in accordance with
the law of his nationality.
Facts:
HERALD, an American, was married to SHARON, a Filipino, in
Manila. They have one daughter named Stephanie. SHARON
was able to acquire from the Illinois court a divorce decree
against HERALD and awarded sole custody of Stephanie and
retained jurisdiction over the case for enforcement purposes.
Subsequently, both executed an agreement for the joint custody
of Stephanie in Manila and chose Philippine courts as exclusive
forum to adjudicate disputes arising from the Agreement. She
also undertook to obtain from the Illinois court an order
relinquishing jurisdiction to Philippine courts.
In 2002, HERALD sued SHARON in the RTC of Makati for the
enforcement of the agreement as SHARON allegedly violated the
agreement when the latter exercised sole custody of the child.
SHARON however sought the dismissal of the complaint
averring that there is lack of jurisdiction on the part of RTC
because the Illinois courts retained the jurisdiction to enforce
the divorce decree.
Issue:
WON the RTC has jurisdiction to take cognizance of HERALD’s
suit and enforce the Agreement on the joint custody of the
parties child.
Held:
The RTC has jurisdiction to entertain HERALD’s suit but not to
enforce the Agreement, which is void.
RTC VESTED WITH JURISDICTION TO ENFORCE
CONTRACTS
At the time HERALD filed his suit in the trial court, statutory
law vests on RTC exclusive original jurisdiction over civil actions
incapable of pecuniary estimation including the action for
specific performance, such a suit to enforce the Agreement on
joint child custody.
Indeed, Illinois court retained jurisdiction for the purpose
of enforcing all and sundry the various provisions of [its]
Judgment for Dissolution. However, HERALD’s suit seeks the
enforcement not of the various provisions of the divorce decree
but of the post-divorce Agreement on joint child custody. Thus,
the action lies beyond the zone of the Illinois courts so-called
retained jurisdiction.
HERALD’S SUIT LACKS CAUSE OF ACTION
In this jurisdiction, parties to a contract are free to stipulate the
terms of agreement subject to the minimum ban on stipulations
contrary to law, morals, good customs, public order, or public
policy. Otherwise, the contract is denied legal existence,
deemed inexistent and void from the beginning. For lack of
relevant stipulation in the Agreement, these and other ancillary
Philippine substantive law serve as default parameters to
test the validity of the Agreements joint child custody
stipulations.
THE AGREEMENT IS VOID AB INITIO FOR BEING
CONTRARY TO LAW. Under the Philippine law on child
custody for spouses separated in fact or in law, no child under
seven years of age shall be separated from the mother (Article
213 Par 2 of the FC). Clearly then, the Agreements object to
establish a post-divorce joint custody regime between HERALD
and SHARON over their child under seven years old contravenes
Philippine law.
The Agreement would be valid if the spouses have not divorced
or separated because the law provides for joint parental
authority when spouses live together. For a child within this
age bracket (and for commonsensical reasons), the law decides
for the separated or divorced parents how best to take care of
the child and that is to give custody to the separated mother.
It will not do to argue that the second paragraph of Article 213
of the Family Code applies only to judicial custodial agreements
based on its text that No child under seven years of age shall be
separated from the mother, unless the court finds compelling
reasons to order otherwise. To limit this provisions
enforceability to court sanctioned agreements while placing
private agreements beyond its reach is to sanction a double
standard in custody regulation of children under seven years
old of separated parents.
Further, the imposed custodial regime under the second
paragraph of Article 213 is limited in duration, lasting only until
the child’s seventh year. From the eighth year until the child’s
emancipation, the law gives the separated parents freedom,
subject to the usual contractual limitations, to agree on custody
regimes they see fit to adopt.
Lastly, even supposing that the spouses are not barred from
entering into the Agreement for the joint custody of Stephanie,
SHARON repudiated the Agreement by asserting sole custody
over Stephanie. Her act effectively brought the parties back to
ambit of the default custodial regime in the second paragraph of
Article 213 of the Family Code vesting on respondent sole
custody of Stephanie.
SHARON cannot rely on the divorce decrees alleged invalidity -
not because the Illinois court lacked jurisdiction or that the
divorce decree violated Illinois law, but because the divorce was
obtained by his Filipino spouse - to support the Agreements
enforceability. An alien spouse of a Filipino is bound by a
divorce decree obtained abroad. There, we dismissed the alien
divorcees Philippine suit for accounting of alleged post-divorce
conjugal property and rejected his submission that the foreign
divorce (obtained by the Filipino spouse) is not valid in this
jurisdiction in this wise:
There can be no question as to the validity of that
Nevada divorce in any of the States of the United
States. The decree is binding on private respondent as
an American citizen. For instance, private respondent
cannot sue petitioner, as her husband, in any State of the
Union. What he is contending in this case is that the
divorce is not valid and binding in this jurisdiction, the
same being contrary to local law and public policy.
It is true that owing to the nationality principle embodied in
Article 15 of the Civil Code, only Philippine nationals are
covered by the policy against absolute divorces the same
being considered contrary to our concept of public policy
and morality. However, aliens may obtain divorces
abroad, which may be recognized in the Philippines,
provided they are valid according to their national law.
In this case, the divorce in Nevada released private
respondent from the marriage from the standards of
American law, under which divorce dissolves the
marriage. x x x x
Thus, pursuant to his national law, private respondent is
no longer the husband of petitioner. He would have no
standing to sue in the case below as petitioners husband
entitled to exercise control over conjugal assets. As he is
bound by the Decision of his own country’s Court, which
validly exercised jurisdiction over him, and whose decision
he does not repudiate, he is estopped by his own
representation before said Court from asserting his right
over the alleged conjugal property.
57
Thus, it should be clear by now that a foreign divorce decree
carries as much validity against the alien divorcee in this
jurisdiction as it does in the jurisdiction of the alien’s
nationality, irrespective of who obtained the divorce.
Proof of Foreign Law & Exceptions; Processual Presumption
Willamette Iron & Steel vs. Muzzal
Doctrine: The California Civil Code is applicable in the case at
bar.
 The California Civil Code was already existing and in
force at the time of the incurring of the obligation of
Muzzal;
 Muzzal has notice of the existence of the California
Civil Code & as to the liability of stockholders, such as
himself.
Facts:
This case involves the liability of the defendant, a former
resident of the State of California, now residing in the Philippine
Islands, for obligations contracted by a California corporation of
which he was a stockholder at the time said obligations were
contracted with the plaintiff-appellee in this case.
The section of the Civil Code of California under which the
plaintiff seeks to recover reads:
SEC. 322. Each stockholder of a corporation is individually and
personally liable for such proportion of all its debts and liabilities
contracted or incurred during the time he was a stockholder as
the amount of stock or shares owned by him bears to the whole
of the subscribed capital stock or shares of the corporation.
Any creditor of the corporation may institute joint or several
actions against any of its stockholders, for the proportion of his
claim payable by each, and in such action the court must
(1) Ascertain the proportion of the claim or debt for which each
defendant is liable, and
(2) A several judgment must be rendered against each, in
conformity therewith.
If any stockholder pays his proportion of any debt due from the
corporation, incurred while he was such stockholder, he is
relieved from any further personal liability for such debt, and if
an action has been brought against him upon such debt, it must
be dismissed, as to him, upon his paying the costs, or such
proportion thereof as may be properly chargeable against him.
The liability of each stockholder is determined by the amount of
stock or shares owned by him at the time the debt or liability was
incurred; and such liability is not released by any subsequent
transfer of stock.
The CFI of Zamboanga ruled in the following:
In view of the considerations above stated, judgment is hereby
entered in favor of the plaintiff, ordering the defendant, for the
first cause of action, to pay to plaintiff the sum of P2,837.34, with
interest thereon at the rate of 6 per cent per annum from March
11, 1929, until paid, and to pay also the amount of P1,590.63,
for the second cause of action, with interest thereon at 7 per cent
per annum from April 8, 1929, until paid. The defendant is
further ordered to pay the amount of P500 as reasonable
attorney's fees in prosecuting this action, and to pay the costs of
these proceedings.
Muzzal argues that since the law of California, as to the liability
of stockholders of a corporation, is different from and
inconsistent with the Philippine Corporation Law the courts
here should not impose liability provided in that law upon a
resident of these Islands who is a stockholder of a California
corporation.
Issue:
(1) W/N the lower court erred in finding that Willamette
Iron & Steel has proven the existence of the foreign law
involved in this action? No.
(2) W/N the lower court erred in enforcing the law of
California? No.
Held:
First Issue: The lower Court was correct in holding that
plaintiff was able to prove the existence of a foreign law.
Mr. Arthur W. Bolton, an attorney-at-law of San Francisco,
California, since the year 1918, under oath, quoted verbatim
section 322 of the California Civil Code and stated that said
section was in force at the time the obligations of the defendant
to the plaintiff were incurred, i. e., on November 5, 1928 and
December 22, 1928.
This evidence sufficiently established the fact that the section in
question was the law of the State of California on the above
dates. A reading of sections 300 and 301 of our Code of Civil
Procedure will convince one that these sections do not exclude
the presentation of other competent evidence to prove the
existence of a foreign law.
"The foreign law is a matter of fact ... You ask the witness what
the law is; he may from his recollection, or on producing and
referring to books, say what it is."
(Lord Campbell concurring in an opinion of Lord Chief Justice
Denman in a well known English case where a witness was
called upon to prove the Roman laws of marriage and was
permitted to testify, though he referred to a book containing the
decrees of the Council of Trent as controlling, Jones on
Evidence, Second Edition, Volume 4, pages 3148-3152.)
Aside from the testimony of Attorney Bolton Ragland's
Annotated Civil Code of California was presented as evidence.
This book contains that State's Civil Code as adopted March 21,
1872, with the subsequent official statute amendments to and
including the year 1929.
Second issue: The laws of California are applicable in the case
at bar.
The herein defendant is chargeable with notice of the law of
California as to the liability of stockholders for debt of a
corporation proportionate to their stock holdings, in view of the
fact that he was one of the incorporators of the Meyer-Muzzal
Company in the year 1924 and was still a stockholder in that
company in the year 1928.
Exhibit 10 of the plaintiff is a certified company of the articles of
incorporation of Meyer-Muzzal Company in which it appears
that that company was incorporated on August 22, 1924, and
that the incorporators were A.H. Muzzal, Leo W. Meyer and
James Rolph, Jr., "all of whom are residents and citizens of the
State of California." The defendant cannot now escape liability
by alleging that the California law is unjust and different from
the inconsistent with the Philippine Corporation Law.
58
 CIR vs. Fisher
Doctrine:
(1) Processual Presumption—If the foreign law is not
sufficiently proven in the Philippine Courts, then the
Philippine law shall assume that the foreign law and
the Philippine law in such subject matter are the
same.
(2) Philippine courts don’t take judicial notice of
foreign law—Therefore, a foreign law must be pleaded
and proven in the Philippine courts
(3) Reciprocity of laws must be whole and must not be
partial.
Facts:
This case relates to the determination and settlement of the
hereditary estate left by the deceased Walter G. Stevenson, and
the laws applicable thereto. Walter G. Stevenson (born in the
Philippines on August 9, 1874 of British parents and married in
the City of Manila on January 23, 1909 to Beatrice Mauricia
Stevenson another British subject) died on February 22, 1951
in San Francisco, California, U.S.A. whereto he and his wife
moved and established their permanent residence since May 10,
1945. In his will executed in San Francisco on May 22, 1947,
and which was duly probated in the Superior Court of
California on April 11, 1951, Stevenson instituted his wife
Beatrice as his sole heiress to the following real and personal
properties acquired by the spouses while residing in the
Philippines.
On May 22, 1951, ancillary administration proceedings were
instituted in the Court of First Instance of Manila for the
settlement of the estate in the Philippines.
In due time Stevenson's will was duly admitted to probate by
our court and Ian Murray Statt was appointed ancillary
administrator of the estate, who on July 11, 1951, filed a
preliminary estate and inheritance tax return with the
reservation of having the properties declared therein finally
appraised at their values six months after the death of
Stevenson.
On September 7, 1953, the ancillary administrator filed a
second amended estate and inheritance tax return (Exh. "M-N").
This return declared the same assets of the estate stated in the
amended return of September 22, 1952, except that it contained
new claims for additional exemption and deduction to wit:
(1) Deduction in the amount of P4,000.00 from the gross
estate of the decedent as provided for in Section 861
(4) of the U.S. Federal Internal Revenue Code which
the ancillary administrator averred was allowable by
way of the reciprocity granted by Section 122 of the
National Internal Revenue Code, as then held by the
Board of Tax Appeals in case No. 71 entitled
"Housman vs. Collector," August 14, 1952; and
(2) Exemption from the imposition of estate and
inheritance taxes on the 210,000 shares of stock in
the Mindanao Mother Lode Mines, Inc. also pursuant
to the reciprocity proviso of Section 122 of the National
Internal Revenue Code.
In this last return, the estate claimed that it was liable only for
the amount of P525.34 for estate tax and P238.06 for
inheritance tax and that, as a consequence, it had overpaid the
government. The refund of the amount of P15,259.83, allegedly
overpaid, was accordingly requested by the estate.
The Collector denied the claim. For this reason, action was
commenced in the Court of First Instance of Manila by
respondents, as assignees of Beatrice Mauricia Stevenson, for
the recovery of said amount.
The Court of Tax Appeals ruled on the action. However, the
parties appealed.
The Collector of Internal Revenue, hereinafter called petitioner
assigned four errors allegedly committed by the trial court,
while the assignees, Douglas and Bettina Fisher hereinafter
called respondents, made six assignments of error. Together,
the assigned errors raise the following main issues for
resolution by this Court:
Issues:
(1) Whether or not, in determining the taxable net estate
of the decedent, one­half (1⁄2) of the net estate should
be deducted therefrom as the share of tile surviving
spouse in accordance with our law on conjugal
partnership and in relation to section 89 (c) of the
National Internal revenue Code? Yes it should be
deducted.
(2) Whether or not the estate can avail itself of the
reciprocity proviso embodied in Section 122 of the
National Internal Revenue Code granting exemption
from the payment of estate and inheritance taxes on
the 210,000 shares of stock in the Mindanao Mother
Lode Mines Inc.? Yes, the estate can avail of the
exemption, because the existence of the foreign
law was sufficiently proven.
(3) W/N there is reciprocity between Philippine law and
California law, as to result to the exemption of death or
transfer taxes? There is no reciprocity. ;
Held:
First Issue:
The lower court applied a well-known doctrine in our civil law
that in the absence of any ante-nuptial agreement, the
contracting parties are presumed to have adopted the system of
conjugal partnership as to the properties acquired during their
marriage.
The application of this doctrine to the instant case is being
disputed, however, by petitioner Collector of Internal Revenue,
who contends that pursuant to Article 124 of the New Civil
Code, the property relation of the spouses Stevensons ought not
to be determined by the Philippine law, but by the national law
of the decedent husband, in this case, the law of England. It is
alleged by petitioner that English laws do not recognize legal
partnership between spouses, and that what obtains in that
jurisdiction is another regime of property relation, wherein all
properties acquired during the marriage pertain and belong
Exclusively to the husband. In further support of his stand,
petitioner cites Article 16 of the New Civil Code (Art. 10 of the
old) to the effect that in testate and intestate proceedings, the
amount of successional rights, among others, is to be
determined by the national law of the decedent.
In this connection, let it be noted that since the mariage of the
Stevensons in the Philippines took place in 1909, the applicable
law is Article 1325 of the old Civil Code and not Article 124 of
the New Civil Code which became effective only in 1950. It is
true that both articles adhere to the so-called nationality theory
of determining the property relation of spouses where one of
them is a foreigner and they have made no prior agreement as
to the administration disposition, and ownership of their
conjugal properties. In such a case, the national law of the
husband becomes the dominant law in determining the
property relation of the spouses.
There is, however, a difference between the two articles in that
Article 124 of the new Civil Code expressly provides that it shall
be applicable regardless of whether the marriage was celebrated
59
in the Philippines or abroad while Article 1325 of the old Civil
Code is limited to marriages contracted in a foreign land.
It must be noted, however, that what has just been said refers
to mixed marriages between a Filipino citizen and a foreigner. In
the instant case, both spouses are foreigners who married in
the Philippines.
The law determinative of the property relation of the
Stevensons, married in 1909, would be the English law even if
the marriage was celebrated in the Philippines, both of them
being foreigners. But, as correctly observed by the Tax Court,
the pertinent English law that allegedly vests in the decedent
husband full ownership of the properties acquired during the
marriage has not been proven by petitioner.
Except for a mere allegation in his answer, which is not
sufficient, the record is bereft of any evidence as to what
English law says on the matter. In the absence of proof, the
Court is justified, therefore, in indulging in what Wharton calls
"processual presumption," in presuming that the law of England
on this matter is the same as our law.
Nor do we believe petitioner can make use of Article 16 of the
New Civil Code (art. 10, old Civil Code) to bolster his stand. A
reading of Article 10 of the old Civil Code, which incidentally is
the one applicable, shows that it does not encompass or
contemplate to govern the question of property relation between
spouses. Said article distinctly speaks of amount of
successional rights and this term, in speaks in our opinion,
properly refers to the extent or amount of property that each
heir is legally entitled to inherit from the estate available for
distribution.
It needs to be pointed out that the property relation of spouses,
as distinguished from their successional rights, is governed
differently by the specific and express provisions of Title VI,
Chapter I of our new Civil Code (Title III, Chapter I of the old
Civil Code.) We, therefore, find that the lower court correctly
deducted the half of the conjugal property in determining the
hereditary estate left by the deceased Stevenson.
Second Issue:
Petitioner disputes the action of the Tax Court in the exempting
the respondents from paying inheritance tax on the 210,000
shares of stock in the Mindanao Mother Lode Mines, Inc. in
virtue of the reciprocity proviso of Section 122 of the National
Internal Revenue Code, in relation to Section 13851 of the
California Revenue and Taxation Code, on the ground that:
(1) The said proviso of the California Revenue and
Taxation Code has not been duly proven by the
respondents;
(2) The reciprocity exemptions granted by section 122 of
the National Internal Revenue Code can only be
availed of by residents of foreign countries and not of
residents of a state in the United States; and
(3) There is no "total" reciprocity between the Philippines
and the state of California in that while the former
exempts payment of both estate and inheritance taxes
on intangible personal properties, the latter only
exempts the payment of inheritance tax
To prove the pertinent California law, Attorney Allison Gibbs,
counsel for herein respondents, testified that as an active
member of the California Bar since 1931, he is familiar with the
revenue and taxation laws of the State of California.
When asked by the lower court to state the pertinent California
law as regards exemption of intangible personal properties, the
witness cited article 4, section 13851 (a) and (b) of the
California Internal and Revenue Code as published in Derring's
California Code, a publication of the Bancroft-Whitney
Company inc. And as part of his testimony, a full quotation of
the cited section was offered in evidence as Exhibits "V-2" by
the respondents.
It is well-settled that foreign laws do not prove themselves in
our jurisdiction and our courts are not authorized to take
judicial notice of them. Like any other fact, they must be alleged
and proved.
Section 41, Rule 123 of our Rules of Court prescribes the
manner of proving foreign laws before our tribunals. However,
although we believe it desirable that these laws be proved in
accordance with said rule, we held in the case of Willamette
Iron and Steel Works v. Muzzal, 61 Phil. 471, that "a reading of
sections 300 and 301 of our Code of Civil Procedure (now
section 41, Rule 123) will convince one that these sections do
not exclude the presentation of other competent evidence to
prove the existence of a foreign law."
In that case, we considered the testimony of an attorney-at-law
of San Francisco, California who quoted verbatim a section of
California Civil Code and who stated that the same was in force
at the time the obligations were contracted, as sufficient
evidence to establish the existence of said law.
In line with this view, we find no error, therefore, on the part of
the Tax Court in considering the pertinent California law as
proved by respondents' witness.
Third Issue:
Section 122 of our National Internal Revenue Code, in
pertinent part, provides:
... And, provided, further, That no tax shall be collected under
this Title in respect of intangible personal property (a) if the
decedent at the time of his death was a resident of a foreign
country which at the time of his death did not impose a transfer
of tax or death tax of any character in respect of intangible
personal property of citizens of the Philippines not residing in that
foreign country, or (b) if the laws of the foreign country of which
the decedent was a resident at the time of his death allow a
similar exemption from transfer taxes or death taxes of every
character in respect of intangible personal property owned by
citizens of the Philippines not residing in that foreign country."
(Emphasis supplied).
On the other hand, Section 13851 of the California
Inheritance Tax Law, insofar as pertinent, reads:.
"SEC. 13851, Intangibles of nonresident: Conditions. Intangible
personal property is exempt from the tax imposed by this part if
the decedent at the time of his death was a resident of a territory
or another State of the United States or of a foreign state or
country which then imposed a legacy, succession, or death tax in
respect to intangible personal property of its own residents, but
either:.
(a) Did not impose a legacy, succession, or death tax of any
character in respect to intangible personal property of residents of
this State, or
(b) Had in its laws a reciprocal provision under which intangible
personal property of a non-resident was exempt from legacy,
succession, or death taxes of every character if the Territory or
other State of the United States or foreign state or country in
which the nonresident resided allowed a similar exemption in
respect to intangible personal property of residents of the
Territory or State of the United States or foreign state or country
of residence of the decedent." (Id.)
It is clear from both these quoted provisions that the reciprocity
must be total, that is, with respect to transfer or death taxes of
any and every character, in the case of the Philippine law, and
to legacy, succession, or death taxes of any and every character,
in the case of the California law. Therefore, if any of the two
states collects or imposes and does not exempt any transfer,
death, legacy, or succession tax of any character, the reciprocity
60
does not work. This is the underlying principle of the reciprocity
clauses in both laws.
In the Philippines, upon the death of any citizen or resident, or
non-resident with properties therein, there are imposed upon
his estate and its settlement, both an estate and an inheritance
tax. Under the laws of California, only inheritance tax is
imposed. On the other hand, the Federal Internal Revenue Code
imposes an estate tax on non- residents not citizens of the
United States,7 but does not provide for any exemption on the
basis of reciprocity. Applying these laws in the manner the
Court of Tax Appeals did in the instant case, we will have a
situation where a Californian, who is non-resident in the
Philippines but has intangible personal properties here, will the
subject to the payment of an estate tax, although exempt from
the payment of the inheritance tax.
This being the case, will a Filipino, non-resident of California,
but with intangible personal properties there, be entitled to the
exemption clause of the California law, since the Californian has
not been exempted from every character of legacy, succession,
or death tax because he is, under our law, under obligation to
pay an estate tax?
Upon the other hand, if we exempt the Californian from paying
the estate tax, we do not thereby entitle a Filipino to be exempt
from a similar estate tax in California because under the
Federal Law, which is equally enforceable in California he is
bound to pay the same, here being no reciprocity recognized in
respect thereto. In both instances, the Filipino citizen is always
at a disadvantage. We do not believe that our legislature has
intended such an unfair situation to the detriment of our own
government and people. We, therefore, find and declare that the
lower court erred in exempting the estate in question from
payment of the inheritance tax.
We are not unaware of our ruling in the case of Collector of
Internal Revenue vs. Lara (G.R. Nos. L-9456 & L-9481, prom.
January 6, 1958, 54 O.G. 2881) exempting the estate of the
deceased Hugo H. Miller from payment of the inheritance tax
imposed by the Collector of Internal Revenue.
It will be noted, however, that the issue of reciprocity between
the pertinent provisions of our tax law and that of the State of
California was not there squarely raised, and the ruling therein
cannot control the determination of the case at bar. Be that as
it may, we now declare that in view of the express provisions of
both the Philippine and California laws that the exemption
would apply only if the law of the other grants an exemption
from legacy, succession, or death taxes of every character, there
could not be partial reciprocity. It would have to be total or
none at all.
With respect to the question of deduction or reduction in the
amount of P4,000.00 based on the U.S. Federal Estate Tax Law
which is also being claimed by respondents, we uphold and
adhere to our ruling in the Lara case (supra) that the amount of
$2,000.00 allowed under the Federal Estate Tax Law is in the
nature of a deduction and not of an exemption regarding which
reciprocity cannot be claimed under the provision of Section
122 of our National Internal Revenue Code. Nor is reciprocity
authorized under the Federal Law.
Asiavest Limited vs. CA
Doctrine:
Facts:
In issue is the enforceability in the Philippines of a foreign
judgment. The antecedents are summarized in the 24 August
1990 Decision[1] of Branch 107 of the Regional Trial Court of
Quezon City in Civil Case No. Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on December 3,
1987 against the defendant Antonio Heras praying that said
defendant be ordered to pay to the plaintiff the amounts
awarded by the Hong Kong Court Judgment dated December
28, 1984 and amended on April 13, 1987, to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at
the time of payment with legal interest from December 28, 1984
until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum
from October 31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney’s fees, litigation
expenses and cost, with interest thereon from the date of the
judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss.
However, before the court could resolve the said motion, a fire
which partially razed the Quezon City Hall Building on June 11,
1988 totally destroyed the office of this Court, together with all
its records, equipment and properties. On July 26, 1988, the
plaintiff, through counsel filed a Motion for Reconstitution of
Case Records. The Court, after allowing the defendant to react
thereto, granted the said Motion and admitted the annexes
attached thereto as the reconstituted records of this case per
Order dated September 6, 1988. Thereafter, the Motion to
Dismiss, the resolution of which had been deferred, was denied
by the Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was
then set for pre-trial conference. At the conference, the parties
could not arrive at any settlement. However, they agreed on the
following stipulations of facts:
1) The defendant admits the existence of the judgment dated
December 28, 1984 as well as its amendment dated April 13,
1987, but not necessarily the authenticity or validity thereof;
2) The plaintiff is not doing business and is not licensed to do
business in the Philippines;
3) The residence of defendant, Antonio Heras, is New Manila,
Quezon City.
The only issue for this Court to determine is, whether or not the
judgment of the Hong Kong Court has been repelled by evidence
of want of jurisdiction, want of notice to the party, collusion,
fraud or clear mistake of law or fact, such as to overcome the
presumption established in Section 50, Rule 39 of the Rules of
Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the
aforementioned judgment (Pls. See Stipulations of Facts in the
Order dated January 5, 1989 as amended by the Order of
January 18, 1989), as well as the legal presumption in favor of
the plaintiff as provided for in paragraph (b), Sec. 50, (Ibid.), the
plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by
the proper officials concerned (Pls. See Exhibits “A” thru “B”,
with their submarkings). In addition, the plaintiff presented
testimonial and documentary evidence to show its entitlement
to attorney’s fees and other expenses of litigation….
On the other hand, the defendant presented two witnesses,
namely, Fortunata dela Vega and Russel Warren Lousich.
The gist of Ms. dela Vega’s testimony is to the effect that no writ
of summons or copy of a statement of claim of Asiavest Limited
was ever served in the office of the Navegante Shipping Agency
Limited and/or for Mr. Antonio Heras, and that no service of the
writ of summons was either served on the defendant at his
residence in New Manila, Quezon City. Her knowledge is based
on the fact that she was the personal secretary of Mr. Heras
during his JD Transit days up to the latter part of 1972 when
he shifted or diversified to shipping business in Hong Kong; that
61
she was in-charge of all his letters and correspondence,
business commitments, undertakings, conferences and
appointments, until October 1984 when Mr. Heras left Hong
Kong for good; that she was also the Officer-in-Charge or Office
Manager of Navegante Shipping Agency LTD, a Hong Kong
registered and based company acting as ships agent, up to and
until the company closed shop sometime in the first quarter of
1985, when shipping business collapsed worldwide; that the
said company held office at 34-35 Connaught Road, Central
Hong Kong and later transferred to Caxton House at Duddel
Street, Hong Kong, until the company closed shop in 1985; and
that she was certain of such facts because she held office at
Caxton House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong
Kong, and as a representative of the law office of the defendant’s
counsel who made a verification of the record of the case filed
by the plaintiff in Hong Kong against the defendant, as well as
the procedure in serving Court processes in Hong Kong.
In his affidavit (Exh. “2”) which constitutes his direct testimony,
the said witness stated that:
The defendant was sued on the basis of his personal guarantee
of the obligations of Compania Hermanos de Navegacion S.A.
There is no record that a writ of summons was served on the
person of the defendant in Hong Kong, or that any such attempt
at service was made. Likewise, there is no record that a copy of
the judgment of the High Court was furnished or served on the
defendant; anyway, it is not a legal requirement to do so under
Hong Kong laws;
a) The writ of summons or claim can be served by the solicitor
(lawyer) of the claimant or plaintiff. In Hong Kong there are no
Court personnel who serve writs of summons and/or most
other processes.
b) If the writ of summons or claim (or complaint) is not
contested, the claimant or the plaintiff is not required to present
proof of his claim or complaint nor present evidence under oath
of the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or
decision rendered by the Court in Hong Kong [to] make a
recitation of the facts or the law upon which the claim is based.
d) There is no necessity to furnish the defendant with a copy of
the Judgment or decision rendered against him.
e) In an action based on a guarantee, there is no established
legal requirement or obligation under Hong Kong laws that the
creditor must first bring proceedings against the principal
debtor. The creditor can immediately go against the guarantor.
On cross examination, Mr. Lousich stated that before he was
commissioned by the law firm of the defendant’s counsel as an
expert witness and to verify the records of the Hong Kong case,
he had been acting as counsel for the defendant in a number of
commercial matters; that there was an application for service of
summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service
upon Heras outside of Hong Kong, particularly in Manila or any
other place in the Philippines (p. 9, TSN, 2/14/90); that there
must be adequate proof of service of summons, otherwise the
Hong Kong Court will refuse to render judgment (p. 10, ibid);
that the mere fact that the Hong Kong Court rendered
judgment, it can be presumed that there was service of
summons; that in this case, it is not just a presumption
because there was an affidavit stating that service was effected
in [sic] a particular man here in Manila; that such affidavit was
filed by one Jose R. Fernandez of the firm Sycip Salazar on the
21st of December 1984, and stated in essence that “on Friday,
the 23rd of November 1984 he served the 4th defendant at No.
6 First Street, Quezon City by leaving it at that address with Mr.
Dionisio Lopez, the son-in-law of the 4th defendant the copy of
the writ and Mr. Lopez informed me and I barely believed that
he would bring the said writ to the attention of the 4th
defendant” (pp. 11-12, ibid.); that upon filing of that affidavit,
the Court was asked and granted judgment against the 4th
defendant; and that if the summons or claim is not contested,
the claimant of the plaintiff is not required to present proof of
his claim or complaint or present evidence under oath of the
claim in order to obtain judgment; and that such judgment can
be enforced in the same manner as a judgment rendered after
full hearing.
The trial court held that since the Hong Kong court judgment
had been duly proved, it is a presumptive evidence of a right as
between the parties; hence, the party impugning it had the
burden to prove want of jurisdiction over his person. HERAS
failed to discharge that burden. He did not testify to state
categorically and under oath that he never received summons.
Even his own witness Lousich admitted that HERAS was served
with summons in his Quezon City residence. As to De la Vega’s
testimony regarding non-service of summons, the same was
hearsay and had no probative value.
As to HERAS’ contention that the Hong Kong court judgment
violated the Constitution and the procedural laws of the
Philippines because it contained no statements of the facts and
the law on which it was based, the trial court ruled that since
the issue related to procedural matters, the law of the forum,
i.e., Hong Kong laws, should govern. As testified by the expert
witness Lousich, such legalities were not required under Hong
Kong laws. The trial court also debunked HERAS’ contention
that the principle of excussion under Article 2058 of the Civil
Code of the Philippines was violated. It declared that matters of
substance are subject to the law of the place where the
transaction occurred; in this case, Hong Kong laws must
govern.
The trial court concluded that the Hong Kong court judgment
should be recognized and given effect in this jurisdiction for
failure of HERAS to overcome the legal presumption in favor of
the foreign judgment. It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant
to pay to the plaintiff the following sums or their equivalents in
Philippine currency at the time of payment: US$1,810,265.40
plus interest on the sum of US$1,500,000.00 at 9.875% per
annum from October 31, 1984 to December 28, 1984, and
HK$905 as fixed cost, with legal interests on the aggregate
amount from December 28, 1984, and to pay attorney’s fees in
the sum of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It
sought an award of judicial costs and an increase in attorney’s
fees in the amount of US$19,346.45 with interest until full
payment of the said obligations. On the other hand, HERAS no
longer opposed the motion and instead appealed the decision to
the Court of Appeals, which docketed the appeal as CA-G.R. CV
No. 29513.
In its order[2] November 1990, the trial court granted
ASIAVEST’s motion for reconsideration by increasing the award
of attorney’s fees to "US$19,345.65 OR ITS EQUIVALENT IN
PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS
SUIT," provided that ASIAVEST would pay the corresponding
filing fees for the increase. ASIAVEST appealed the order
requiring prior payment of filing fees. However, it later withdrew
its appeal and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision[3]
reversing the decision of the trial court and dismissing
ASIAVEST’s complaint without prejudice. It underscored the
fact that a foreign judgment does not of itself have any
extraterritorial application. For it to be given effect, the foreign
tribunal should have acquired jurisdiction over the person and
the subject matter. If such tribunal has not acquired
jurisdiction, its judgment is void.
62

The Court of Appeals agreed with the trial court that matters of
remedy and procedure such as those relating to service of
summons upon the defendant are governed by the lex fori,
which was, in this case, the law of Hong Kong. Relative thereto,
it gave weight to Lousich’s testimony that under the Hong Kong
law, the substituted service of summons upon HERAS effected
in the Philippines by the clerk of Sycip Salazar Hernandez &
Gatmaitan firm would be valid provided that it was done in
accordance with Philippine laws. It then stressed that where the
action is in personam and the defendant is in the Philippines,
the summons should be personally served on the defendant
pursuant to Section 7, Rule 14 of the Rules of Court.[4]
Substituted service may only be availed of where the defendant
cannot be promptly served in person, the fact of impossibility of
personal service should be explained in the proof of service. It
also found as persuasive HERAS’ argument that instead of
directly using the clerk of the Sycip Salazar Hernandez &
Gatmaitan law office, who was not authorized by the judge of
the court issuing the summons, ASIAVEST should have asked
for leave of the local courts to have the foreign summons served
by the sheriff or other court officer of the place where service
was to be made, or for special reasons by any person authorized
by the judge.
The Court of Appeals agreed with HERAS that "notice sent
outside the state to a non-resident is unavailing to give
jurisdiction in an action against him personally for money
recovery." Summons should have been personally served on
HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS
was physically present in Hong Kong for nearly 14 years. Since
there was not even an attempt to serve summons on HERAS in
Hong Kong, the Hong Kong Supreme Court did not acquire
jurisdiction over HERAS. Nonetheless, it did not totally foreclose
the claim of ASIAVEST; thus:
While We are not fully convinced that [HERAS] has a
meritorious defense against [ASIAVEST’s] claims or that
[HERAS] ought to be absolved of any liability, nevertheless, in
view of the foregoing discussion, there is a need to deviate from
the findings of the lower court in the interest of justice and fair
play. This, however, is without prejudice to whatever action
[ASIAVEST] might deem proper in order to enforce its claims
against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it
was necessary that evidence supporting the validity of the
foreign judgment be submitted, and that our courts are not
bound to give effect to foreign judgments which contravene our
laws and the principle of sound morality and public policy.
Issue:
I.
... IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT
EVIDENCE ‘SUPPORTING THE VALIDITY OF THE JUDGMENT’;
II.
... THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE
UNDER PHILIPPINE LAW;
III.
... SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED
ON HERAS IN HONG KONG;
IV.
... THE HONG KONG SUMMONS SHOULD HAVE BEEN
SERVED WITH LEAVE OF PHILIPPINE COURTS;
V.
... THE FOREIGN JUDGMENT ‘CONTRAVENES PHILIPPINE
LAWS, THE PRINCIPLES OF SOUND MORALITY, AND THE
PUBLIC POLICY OF THE PHILIPPINES.Being interrelated, we
shall take up together the assigned errors.
Held:
Under paragraph (b) of Section 50, Rule 39 of the Rules of
Court,[5] which was the governing law at the time this case was
decided by the trial court and respondent Court of Appeals, a
foreign judgment against a person rendered by a court having
jurisdiction to pronounce the judgment is presumptive evidence
of a right as between the parties and their successors in interest
by the subsequent title. However, the judgment may be repelled
by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence
provides that in the absence of proof to the contrary, a court, or
judge acting as such, whether in the Philippines or elsewhere, is
presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved,
the burden to repel it on grounds provided for in paragraph (b)
of Section 50, Rule 39 of the Rules of Court is on the party
challenging the foreign judgment -- HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the
Hong Kong judgment. On the other hand, ASIAVEST presented
evidence to prove rendition, existence, and authentication of the
judgment by the proper officials. The judgment is thus
presumed to be valid and binding in the country from which it
comes, until the contrary is shown.[6] Consequently, the first
ground relied upon by ASIAVEST has merit. The presumption of
validity accorded foreign judgment would be rendered
meaningless were the party seeking to enforce it be required to
first establish its validity.
The main argument raised against the Hong Kong judgment is
that the Hong Kong Supreme Court did not acquire jurisdiction
over the person of HERAS. This involves the issue of whether
summons was properly and validly served on HERAS. It is
settled that matters of remedy and procedure such as those
relating to the service of process upon the defendant are
governed by the lex fori or the law of the forum,[7] i.e., the law
of Hong Kong in this case. HERAS insisted that according to his
witness Mr. Lousich, who was presented as an expert on Hong
Kong laws, there was no valid service of summons on him.
In his counter-affidavit,[8] which served as his direct testimony
per agreement of the parties,[9] Lousich declared that the record
of the Hong Kong case failed to show that a writ of summons
was served upon HERAS in Hong Kong or that any such
attempt was made. Neither did the record show that a copy of
the judgment of the court was served on HERAS. He stated
further that under Hong Kong laws
(a) a writ of summons could be served by the solicitor of the
claimant or plaintiff; and
(b) where the said writ or claim was not contested, the claimant
or plaintiff was not required to present proof under oath in
order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich
testified that the Hong Kong court authorized service of
summons on HERAS outside of its jurisdiction, particularly in
the Philippines. He admitted also the existence of an affidavit of
one Jose R. Fernandez of the Sycip Salazar Hernandez &
Gatmaitan law firm stating that he (Fernandez) served
summons on HERAS on 13 November 1984 at No. 6, 1st St.,
Quezon City, by leaving a copy with HERAS’s son-in-law
Dionisio Lopez.[10] On redirect examination, Lousich declared
63
that such service of summons would be valid under Hong Kong
laws provided that it was in accordance with Philippine
laws.[11]
We note that there was no objection on the part of ASIAVEST on
the qualification of Mr. Lousich as an expert on the Hong Kong
law. Under Sections 24 and 25, Rule 132 of the New Rules of
Evidence, the record of public documents of a sovereign
authority, tribunal, official body, or public officer may be proved
by
(1) an official publication thereof or
(2) a copy attested by the officer having the legal custody
thereof, which must be accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the
custody. The certificate may be issued by a secretary of the
embassy or legation, consul general, consul, vice consul, or
consular agent, or 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. The
attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may
be, and must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed
to prove a foreign law. An authority[12] on private international
law thus noted:
Although it is desirable that foreign law be proved in accordance
with the above rule, however, the Supreme Court held in the
case of Willamette Iron and Steel Works v. Muzzal,[13] that
Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules
of Court) does not exclude the presentation of other competent
evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an
attorney-at-law of San Francisco, California, who quoted
verbatim a section of California Civil Code and who stated that
the same was in force at the time the obligations were
contracted, as sufficient evidence to establish the existence of
said law. Accordingly, in line with this view, the Supreme Court
in the Collector of Internal Revenue v. Fisher et al.,[14] upheld
the Tax Court in considering the pertinent law of California as
proved by the respondents’ witness. In that case, the counsel
for respondent "testified that as an active member of the
California Bar since 1951, he is familiar with the revenue and
taxation laws of the State of California. When asked by the
lower court to state the pertinent California law as regards
exemption of intangible personal properties, the witness cited
Article 4, Sec. 13851 (a) & (b) of the California Internal and
Revenue Code as published in Derring’s California Code, a
publication of Bancroft-Whitney Co., Inc. And as part of his
testimony, a full quotation of the cited section was offered in
evidence by respondents." Likewise, in several naturalization
cases, it was held by the Court that evidence of the law of a
foreign country on reciprocity regarding the acquisition of
citizenship, although not meeting the prescribed rule of
practice, may be allowed and used as basis for favorable action,
if, in the light of all the circumstances, the Court is "satisfied of
the authenticity of the written proof offered."[15] Thus, in a
number of decisions, mere authentication of the Chinese
Naturalization Law by the Chinese Consulate General of Manila
was held to be competent proof of that law.[16]
There is, however, nothing in the testimony of Mr. Lousich that
touched on the specific law of Hong Kong in respect of service of
summons either in actions in rem or in personam, and where
the defendant is either a resident or nonresident of Hong Kong.
In view of the absence of proof of the Hong Kong law on this
particular issue, the presumption of identity or similarity or the
so-called processual presumption shall come into play. It will
thus be presumed that the Hong Kong law on the matter is
similar to the Philippine law.[17]
As stated in Valmonte vs. Court of Appeals,[18] it will be helpful
to determine first whether the action is in personam, in rem, or
quasi in rem because the rules on service of summons under
Rule 14 of the Rules of Court of the Philippines apply according
to the nature of the action.
An action in personam is an action against a person on the
basis of his personal liability. An action in rem is an action
against the thing itself instead of against the person.[19] An
action quasi in rem is one wherein an individual is named as
defendant and the purpose of the proceeding is to subject his
interest therein to the obligation or lien burdening the
property.[20]
In an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide the
case. Jurisdiction over the person of a resident defendant who
does not voluntarily appear in court can be acquired by
personal service of summons as provided under Section 7, Rule
14 of the Rules of Court. If he cannot be personally served with
summons within a reasonable time, substituted service may be
made in accordance with Section 8 of said Rule. If he is
temporarily out of the country, any of the following modes of
service may be resorted to:
(1) substituted service set forth in Section 8;[21]
(2) personal service outside the country, with leave of court;
(3) service by publication, also with leave of court;[22] or
(4) any other manner the court may deem sufficient.[23]
However, in an action in personam wherein the defendant is a
non-resident who does not voluntarily submit himself to the
authority of the court, personal service of summons within the
state is essential to the acquisition of jurisdiction over her
person.[24] This method of service is possible if such defendant
is physically present in the country. If he is not found therein,
the court cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case against him.[25]
An exception was laid down in Gemperle v. Schenker[26]
wherein a non-resident was served with summons through his
wife, who was a resident of the Philippines and who was his
representative and attorney-in-fact in a prior civil case filed by
him; moreover, the second case was a mere offshoot of the first
case.
On the other hand, in a proceeding in rem or quasi in rem,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the
court acquires jurisdiction over the res. Nonetheless, summons
must be served upon the defendant not for the purpose of
vesting the court with jurisdiction but merely for satisfying the
due process requirements.[27] Thus, where the defendant is a
non-resident who is not found in the Philippines and
(1) the action affects the personal status of the plaintiff;
(2) the action relates to, or the subject matter of which is
property in the Philippines in which the defendant has or claims
a lien or interest;
(3) the action seeks the exclusion of the defendant from any
interest in the property located in the Philippines; or
(4) the property of the defendant has been attached in the
Philippines -- service of summons may be effected by
(a) personal service out of the country, with leave of court;
(b) publication, also with leave of court; or
(c) any other manner the court may deem sufficient.[28]
In the case at bar, the action filed in Hong Kong against HERAS
was in personam, since it was based on his personal guarantee
of the obligation of the principal debtor. Before we can apply the
foregoing rules, we must determine first whether HERAS was a
resident of Hong Kong.
64
Fortunata de la Vega, HERAS’s personal secretary in Hong Kong
since 1972 until 1985,[29] testified that HERAS was the
President and part owner of a shipping company in Hong Kong
during all those times that she served as his secretary. He had
in his employ a staff of twelve.[30] He had "business
commitments, undertakings, conferences, and appointments
until October 1984 when [he] left Hong Kong for good."[31]
HERAS’s other witness, Russel Warren Lousich, testified that he
had acted as counsel for HERAS "for a number of commercial
matters."[32]ASIAVEST then infers that HERAS was a resident
of Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss,[33] as well as in
his Answer[34] to ASIAVEST’s complaint for the enforcement of
the Hong Kong court judgment, HERAS maintained that the
Hong Kong court did not have jurisdiction over him because the
fundamental rule is that jurisdiction in personam over non-
resident defendants, so as to sustain a money judgment, must
be based upon personal service of summons within the state
which renders the judgment.[35]
For its part, ASIAVEST, in its Opposition to the Motion to
Dismiss[36] contended: "The question of Hong Kong court’s
‘want of jurisdiction’ is therefore a triable issue if it is to be
pleaded by the defendant to ‘repel’ the foreign judgment. Facts
showing jurisdictional lack (e.g. that the Hong Kong suit was in
personam, that defendant was not a resident of Hong Kong
when the suit was filed or that he did not voluntarily submit to
the Hong Kong court’s jurisdiction) should be alleged and
proved by the defendant."[37]
In his Reply (to the Opposition to Motion to Dismiss),[38]
HERAS argued that the lack of jurisdiction over his person was
corroborated by ASIAVEST’s allegation in the complaint that he
"has his residence at No. 6, 1st St., New Manila, Quezon City,
Philippines." He then concluded that such judicial admission
amounted to evidence that he was and is not a resident of Hong
Kong.
Significantly, in the pre-trial conference, the parties came up
with stipulations of facts, among which was that "the residence
of defendant, Antonio Heras, is New Manila, Quezon City."[39]
We note that the residence of HERAS insofar as the action for
the enforcement of the Hong Kong court judgment is concerned,
was never in issue. He never challenged the service of summons
on him through a security guard in his Quezon City residence
and through a lawyer in his office in that city. In his Motion to
Dismiss, he did not question the jurisdiction of the Philippine
court over his person on the ground of invalid service of
summons. What was in issue was his residence as far as the
Hong Kong suit was concerned. We therefore conclude that the
stipulated fact that HERAS "is a resident of New Manila, Quezon
City, Philippines" refers to his residence at the time jurisdiction
over his person was being sought by the Hong Kong court. With
that stipulation of fact, ASIAVEST cannot now claim that
HERAS was a resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and
the action against him was, indisputably, one in personam,
summons should have been personally served on him in Hong
Kong. The extraterritorial service in the Philippines was
therefore invalid and did not confer on the Hong Kong court
jurisdiction over his person. It follows that the Hong Kong court
judgment cannot be given force and effect here in the
Philippines for having been rendered without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong
Kong, he was no longer so in November 1984 when the
extraterritorial service of summons was attempted to be made
on him. As declared by his secretary, which statement was not
disputed by ASIAVEST, HERAS left Hong Kong in October 1984
"for good."[40] His absence in Hong Kong must have been the
reason why summons was not served on him therein; thus,
ASIAVEST was constrained to apply for leave to effect service in
the Philippines, and upon obtaining a favorable action on the
matter, it commissioned the Sycip Salazar Hernandez &
Gatmaitan law firm to serve the summons here in the
Philippines.
In Brown v. Brown,[41] the defendant was previously a resident
of the Philippines. Several days after a criminal action for
concubinage was filed against him, he abandoned the
Philippines. Later, a proceeding quasi in rem was instituted
against him. Summons in the latter case was served on the
defendant’s attorney-in-fact at the latter’s address. The Court
held that under the facts of the case, it could not be said that
the defendant was "still a resident of the Philippines because he
ha[d] escaped to his country and [was] therefore an absentee in
the Philippines." As such, he should have been "summoned in
the same manner as one who does not reside and is not found
in the Philippines."
Similarly, HERAS, who was also an absentee, should have been
served with summons in the same manner as a non-resident
not found in Hong Kong. Section 17, Rule 14 of the Rules of
Court providing for extraterritorial service will not apply
because the suit against him was in personam. Neither can we
apply Section 18, which allows extraterritorial service on a
resident defendant who is temporarily absent from the country,
because even if HERAS be considered as a resident of Hong
Kong, the undisputed fact remains that he left Hong Kong not
only "temporarily" but "for good."
Wildvalley vs. POEA Administrator
Doctrine: Venezuelan law doesn’t apply in the case at bar. By
virtue of processual presumption the Philippine law applies.
 Foreign laws are not given judicial notice in the
Philippines, such laws must be pleaded and proven;
 A foreign law is considered to be pleaded if there is an
allegation in the pleading about the existence of the
foreign law, its import and legal consequence on the
event or transaction in issue;
 Processual Presumption—If the foreign law is not
properly pleaded and proven, then it is assumed that
the foreign law is the same with Philippine law.
For a copy of a foreign public document to be admissible,
the following requisites are mandatory:
(1) Attestation—It must be attested by the officer having
legal custody of the records or by his deputy; and
(2) Required certification—It must be accompanied by a
certificate by a secretary of the embassy or legation,
consul general, consul, vice consular or consular agent
or foreign service officer, and with the seal of his office.
Facts:
The Philippine Roxas, a vessel owned by Philippine President
Lines, Inc., private respondent herein, arrived in Puerto Ordaz,
Venezuela, to load iron ore. Upon the completion of the loading
and when the vessel was ready to leave port, Mr. Ezzar del Valle
Solarzano Vasquez, an official pilot of Venezuela, was
designated by the harbour authorities in Puerto Ordaz to
navigate the Philippine Roxas through the Orinoco River.
The master (captain) of the Philippine Roxas, Captain Nicandro
Colon, was at the bridge together with the pilot (Vasquez), the
vessel's third mate (then the officer on watch), and a helmsman
when the vessel left the port at 1:40 a.m. on February 12, 1988.
At around 4:35 a.m., the Philippine Roxas ran aground in the
Orinoco River, thus obstructing the ingress and egress of
vessels.
65
As a result of the blockage, the Malandrinon, a vessel owned by
herein petitioner Wildvalley Shipping Company, Ltd., was
unable to sail out of Puerto Ordaz on that day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a suit
with the Regional Trial Court of Manila, Branch III against
Philippine President Lines, Inc. and Pioneer Insurance Company
(the underwriter/insurer of Philippine Roxas) for damages in the
form of unearned profits, and interest thereon amounting to US
$400,000.00 plus attorney's fees, costs, and expenses of
litigation.
Trial Court: The trial court rendered its decision on October 16,
1991 in favor of the petitioner, Wildvalley Shipping Co., Ltd.
Court of Appeals: The Court of Appeals reversed the decision of
the Trial Court and held that Wildvalley’s complaint was
dismissed and it is ordered to pay defendant-appellant the
amount of Three Hundred Twenty-three Thousand, Forty-two
Pesos and Fifty-three Centavos (₱323,042.53) as and for
attorney's fees plus cost of suit.
Issue: W/N the Venezuelan law is applicable in the case at bar?
No, the Venezuelan Law is not applicable.
Held: The Venezuelan law is not applicable in the case at bar.
It is well-settled that foreign laws do not prove themselves in
our jurisdiction and our courts are not authorized to take
judicial notice of them. Like any other fact, they must be alleged
and proved.
A distinction is to be made as to the manner of proving a
written and an unwritten law.
Written Laws—The former falls under Section 24, Rule 132 of
the Rules of Court, as amended, the entire provision of which
is quoted hereunder.
Unwritten Laws—Where the foreign law sought to be proved is
"unwritten," the oral testimony of expert witnesses is
admissible, as are printed and published books of reports of
decisions of the courts of the country concerned if proved to be
commonly admitted in such courts.
Section 24 of Rule 132 of the Rules of Court, as amended,
provides:
"Sec. 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 a 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."
(Underscoring supplied)
The court has interpreted Section 24 to include competent
evidence like the testimony of a witness to prove the existence of
a written foreign law.
We take note that these written laws were not proven in the
manner provided by Section 24 of Rule 132 of the Rules of
Court.
The Reglamento General de la Ley de Pilotaje was published in
the Gaceta Oficial of the Republic of Venezuela. A photocopy of
the Gaceta Oficial was presented in evidence as an official
publication of the Republic of Venezuela.
The Reglamento Para la Zona de Pilotaje N 1 del Orinoco is
published in a book issued by the Ministerio de
Comunicaciones of Venezuela. Only a photocopy of the said
rules was likewise presented as evidence.
Both of these documents are considered in Philippine
jurisprudence to be public documents for they are the written
official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers of
Venezuela.
For a copy of a foreign public document to be admissible,
the following requisites are mandatory:
(3) Attestation—It must be attested by the officer having
legal custody of the records or by his deputy; and
(4) Required certification—It must be accompanied by a
certificate by a secretary of the embassy or legation,
consul general, consul, vice consular or consular agent
or foreign service officer, and with the seal of his office.
The latter requirement is not a mere technicality but is intended
to justify the giving of full faith and credit to the genuineness of
a document in a foreign country.
It is not enough that the Gaceta Oficial, or a book published by
the Ministerio de Comunicaciones of Venezuela, was presented
as evidence with Captain Monzon attesting it.
It is also required by Section 24 of Rule 132 of the Rules of
Court that a certificate that Captain Monzon, who attested the
documents, is the officer who had legal custody of those records
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 Venezuela, and
authenticated by the seal of his office accompanying the copy of
the public document. No such certificate could be found in the
records of the case.
At this juncture, we have to point out that the Venezuelan law
was not pleaded before the lower court.
A foreign law is considered to be pleaded if there is an allegation
in the pleading about the existence of the foreign law, its import
and legal consequence on the event or transaction in issue.
A review of the Complaint revealed that it was never alleged or
invoked despite the fact that the grounding of the M/V
Philippine Roxas occurred within the territorial jurisdiction of
Venezuela.
We reiterate that under the rules of private international law, a
foreign law must be properly pleaded and proved as a fact. In
the absence of pleading and proof, the laws of a foreign country,
or state, will be presumed to be the same as our own local or
domestic law and this is known as processual presumption.
EDI-Staff Builders vs. NLRC & Elazar Gran
Doctrine: The Philippine labor laws shall apply.
 In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden
of proving the foreign law.
 The foreign law is treated as a question of fact to be
properly pleaded and proved as the judge or labor
arbiter cannot take judicial notice of a foreign law.
 Philippine courts shall not take judicial notice of
foreign laws—the latter must be pleaded and proven.
 EDI was not able to prove the applicable Saudi Labor
Law. Hence, the Philippine labor laws shall apply by
virtue of Processual Presumption;
 Processual Presumption— Where a foreign law is not
pleaded or, even if pleaded, is not proved, the
presumption is that foreign law is the same as ours.
66

Gran was illegally dismissed and he was not afforded due
process—based on Philippine laws.
Facts:
Petitioner EDI is a corporation engaged in recruitment and
placement of Overseas Filipino Workers (OFWs). ESI is another
recruitment agency, which collaborated with EDI to process the
documentation and deployment of private respondent to Saudi
Arabia.
Private respondent Gran was an OFW recruited by EDI, and
deployed by ESI to work for OAB, in Riyadh, Kingdom of Saudi
Arabia.
OAB asked EDI for qualified applicants in the position of
computer specialist. Consequently, OAB informed EDI that it
selected Respondent Gran for the position of computer
specialist. Additionally, it was provided that if Gran agrees to
the terms and conditions of employment contained in it, one of
which was a monthly salary of SR (Saudi Riyal) 2,250.00 (USD
600.00).
After accepting OAB's offer of employment, Gran signed an
employment contract that granted him a monthly salary of USD
850.00 for a period of two years. Gran was then deployed to
Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his
monthly salary—his employment contract stated USD 850.00;
while his Philippine Overseas Employment Agency (POEA)
Information Sheet indicated USD 600.00 only. However,
through the assistance of the EDI office in Riyadh, OAB agreed
to pay Gran USD 850.00 a month.
After Gran had been working for about five months for OAB, his
employment was terminated, on the following grounds:
a. Non-compliance to contract requirements by
the recruitment agency primarily on your
salary and contract duration.
b. Non-compliance to pre-qualification
requirements by the recruitment agency[,]
vide OAB letter ref. F-5751-93, dated October
3, 1993.
c. Insubordination or disobedience to Top
Management Order and/or instructions
(non-submittal of daily activity reports
despite several instructions).
Gran received from OAB the total amount of SR 2,948.00
representing his final pay, and on the same day, he executed a
Declaration releasing OAB from any financial obligation or
otherwise, towards him.
Consequently, Gran instituted a complaint, on July 21, 1994,
against ESI/EDI, OAB, Country Bankers Insurance
Corporation, and Western Guaranty Corporation with the
NLRC, National Capital Region, Quezon City, which was
docketed as POEA ADJ (L) 94-06-2194 for underpayment of
wages/salaries and illegal dismissal.
Ruling of the Labor Arbiter: Labor Arbiter Manuel R. Caday, to
whom Gran's case was assigned, ruled that there was neither
underpayment nor illegal dismissal. Accordingly, the Labor
Arbiter decided that Gran was validly dismissed from his work
due to insubordination, disobedience, and his failure to submit
daily activity reports.
Ruling of the NLRC: The NLRC held that EDI's seemingly
harmless transfer of Gran's contract to ESI is actually
"reprocessing," which is a prohibited transaction under Article
34 (b) of the Labor Code. This scheme constituted
misrepresentation through the conspiracy between EDI and ESI
in misleading Gran and even POEA of the actual terms and
conditions of the OFW's employment. In addition, it was found
that Gran did not commit any act that constituted a legal
ground for dismissal. The NLRC reversed the Labor Arbiter's
Decision and held EDI and OAB jointly and severally liable to
Gran.
Ruling of the Court of Appeals: The CA held that Gran was
not afforded due process, given that OAB did not abide by the
twin notice requirement. The court found that Gran was
terminated on the same day he received the termination letter,
without having been apprised of the bases of his dismissal or
afforded an opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not
bar him from demanding benefits to which he was entitled. The
appellate court found that the Declaration was in the form of a
quitclaim, and as such is frowned upon as contrary to public
policy especially where the monetary consideration given in the
Declaration was very much less than what he was legally
entitled to—his backwages amounting to USD 16,150.00.
Issue:
(1) Which law shall prevail in the case at bar—Philippine
Labor law or Saudi Labor Laws? Philippine Labor
Laws
(2) W/N the dismissal of Gran was justifiable by reason of
incompetence, insubordination, and disobedience?
(3) W/N Gran was afforded due process?
Held:
First Issue: The Philippine labor laws shall apply.
In cases involving OFWs, the rights and obligations among and
between the OFW, the local recruiter/agent, and the foreign
employer/principal are governed by the employment contract. A
contract freely entered into is considered law between the
parties; and hence, should be respected.
In formulating the contract, the parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract, Saudi
Labor Laws should govern all matters relating to the
termination of the employment of Gran.
In international law, the party who wants to have a foreign law
applied to a dispute or case has the burden of proving the
foreign law. The foreign law is treated as a question of fact to be
properly pleaded and proved as the judge or labor arbiter
cannot take judicial notice of a foreign law. He is presumed to
know only domestic or forum law.
Unfortunately for petitioner, it did not prove the pertinent Saudi
laws on the matter; thus, the International Law doctrine of
presumed-identity approach or processual presumption comes
into play. Where a foreign law is not pleaded or, even if pleaded,
is not proved, the presumption is that foreign law is the same as
ours. Thus, we apply Philippine labor laws in determining the
issues presented before us.
Second Issue:
67
Petitioner EDI claims that it had proven that Gran was legally
dismissed due to incompetence and insubordination or
disobedience.
Petitioner claims that private respondent Gran was validly
dismissed for just cause, due to incompetence and
insubordination or disobedience.
To prove its allegations, EDI submitted two letters as evidence.
The first is the July 9, 1994 termination letter, addressed to
Gran, from Andrea E. Nicolaou, Managing Director of OAB. The
second is an unsigned April 11, 1995 letter from OAB addressed
to EDI and ESI, which outlined the reasons why OAB had
terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer
Specialist position because he had "insufficient knowledge in
programming and zero knowledge of [the] ACAD system."
Petitioner also claims that Gran was justifiably dismissed due to
insubordination or disobedience because he continually failed
to submit the required "Daily Activity Reports."
In illegal dismissal cases, it has been established by Philippine
law and jurisprudence that the employer should prove that the
dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code states that:
ART. 277. MISCELLANEOUS PROVISIONS
(c) Subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal
except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of
this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice
containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if
he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the
workers to contest the validity or legality of his dismissal by
filing a complaint with the regional branch of the National
Labor Relations Commission. The burden of proving that the
termination was for a valid or authorized cause shall rest
on the employer. Xxx
In many cases, it has been held that in termination disputes or
illegal dismissal cases, the employer has the burden of proving
that the dismissal is for just and valid causes; and failure to do
so would necessarily mean that the dismissal was not justified
and therefore illegal. Taking into account the character of the
charges and the penalty meted to an employee, the employer is
bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is valid and legal. This is
consistent with the principle of security of tenure as guaranteed
by the Constitution and reinforced by Article 277 (b) of the
Labor Code of the Philippines.
Petitioner EDI had clearly failed to overcome the burden of
proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private respondent
due to his "insufficient knowledge in programming and zero
knowledge of the ACAD system" based only on the above
mentioned letters, without any other evidence, cannot be given
credence.
An allegation of incompetence should have a factual foundation.
Incompetence may be shown by weighing it against a standard,
benchmark, or criterion. However, EDI failed to establish any
such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of
insubordination or willful disobedience to prosper were not
present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the
following twin elements must concur:
(1) The employee's assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude;
and
(2) The order violated must have been reasonable, lawful,
made known to the employee and must pertain to the
duties which he had been engaged to discharge.
EDI failed to discharge the burden of proving Gran's
insubordination or willful disobedience.
As indicated by the second requirement provided for in Micro
Sales Operation Network, in order to justify willful disobedience,
we must determine whether the order violated by the employee
is reasonable, lawful, made known to the employee, and
pertains to the duties which he had been engaged to discharge.
In the case at bar, petitioner failed to show that the order of the
company, which was, violated—the submission of "Daily Activity
Reports"—was part of Gran's duties as a Computer Specialist.
Before the Labor Arbiter, EDI should have provided a copy of
the company policy, Gran's job description, or any other
document that would show that the "Daily Activity Reports"
were required for submission by the employees, more
particularly by a Computer Specialist.
Third Issue:
Petitioner EDI claims that private respondent Gran was afforded
due process, since he was allowed to work and improve his
capabilities for five months prior to his termination.
In Agabon v. NLRC, this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought a hearing or
an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal
is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of
his separation.
Under the twin notice requirement, the employees must be
given two (2) notices before their employment could be
terminated:
(1) A first notice to apprise the employees of their fault,
and
(2) A second notice to communicate to the employees that
their employment is being terminated. In between the
first and second notice, the employees should be given
a hearing or opportunity to defend themselves
personally or by counsel of their choice.
A careful examination of the records revealed that, indeed,
OAB's manner of dismissing Gran fell short of the two notice
requirement. While it furnished Gran the written notice
informing him of his dismissal, it failed to furnish Gran the
written notice apprising him of the charges against him, as
prescribed by the Labor Code. Consequently, he was denied the
opportunity to respond to said notice. In addition, OAB did not
schedule a hearing or conference with Gran to defend himself
and adduce evidence in support of his defenses. Moreover, the
July 9, 1994 termination letter was effective on the same day.
This shows that OAB had already condemned Gran to
68
dismissal, even before Gran was furnished the termination
letter. Obviously, Gran was not afforded due process.
Norse Management vs. National Seamen Board & Restituta
Abordo
Doctrine: In relation to what was stipulated in the
“Employment Agreement”, Singaporean law is applicable in the
case at bar.
Judicial Notice: The Philippine courts shall take judicial notice
of foreign laws that it is familiar with.
Facts:
Napoleon B. Abordo, the deceased husband of private
respondent Restituta C. Abordo, was the Second Engineer of
M.T. "Cherry Earl" when he died from an apoplectic stroke in
the course of his employment with petitioner NORSE
MANAGEMENT COMPANY (PTE). The M.T. "Cherry Earl" is a
vessel of Singaporean Registry. The late Napoleon B. Abordo at
the time of his death was receiving a monthly salary of
US$850.00
In her complaint for "death compensation benefits, accrued
leave pay and time-off allowances, funeral expenses, attorney's
fees and other benefits and reliefs available in connection with
the death of Napoleon B. Abordo," filed before the National
Seamen Board, Restituta C. Abordo alleged that the amount of
compensation due her from petitioners Norse Management Co.
(PTE) and Pacific Seamen Services, Inc., principal and agent,
respectively, should be based on the law where the vessel is
registered—specifically in Singapore.
The Hearing Officer III, Rebene C. Carrera of the Ministry of
Labor and Employment, after hearing the case, rendered
judgment on June 20, 1979, ordering herein petitioners Norse
Management "to pay Restituta Abordo jointly and severally.
Petitioners appealed to the Ministry of Labor. On December 11,
1979, the Ministry rendered its decision stating that the law of
Singapore should be applied in the case at bar.
Norse Management filed a petition for Certiorari under Rule 65,
with the Supreme Court.
Restituta Abordo argues that the amount of compensation due
her should be based on the law where the vessel is registered,
which is Singapore law.
On the other hand, Norse Management strongly argue that the
law of Singapore should not be applied in the case considering
that their responsibility was not alleged in the complaint that
no proof of the existence of the Workmen's Insurance Law of
Singapore was ever presented and that the Board cannot take
judicial notice of the Workmen's Insurance Law of Singapore.
As an alternative, they offered to pay complainant the amount
of Thirty Thousand Pesos (P30,000.00) as death benefits based
on this Board's Memorandum Circular No. 25 which, they
maintained, should apply in this case.
Issue: W/N the law of Singapore shall apply in the case at bar?
Yes.
Held:
In Section 5(B) of the "Employment Agreement" between
Norse Management Co. (PTE) and the late Napoleon B. Abordo,
which is Annex "C" of the Supplemental Complaint, it was
stipulated that:
In the event of illness or injury to Employee arising out of and in
the course of his employment and not due to his own willful
misconduct and occurring whilst on board any vessel to which he
may be assigned, but not any other time, the EMPLOYER win
provide employee with free medical attention, including hospital
treatment, also essential medical treatment in the course of
repatriation and until EMPLOYEE's arrival at his point of origin.
If such illness or injury incapacitates the EMPLOYEE to the extent
the EMPLOYEE's services must be terminated as determined by a
qualified physician designated by the EMPLOYER and provided
such illness or injury was not due in part or whole to his willful
act, neglect or misconduct compensation shall be paid to
employee in accordance with and subject to the limitations of the
Workmen's Compensation Act of the Republic of the Philippines or
the Workmen's Insurance Law of registry of the vessel whichever
is greater. (Emphasis supplied)
In the aforementioned "Employment Agreement" between
petitioners and the late Napoleon B. Abordo, it is clear that
compensation shall be paid under Philippine Law or the law of
registry of petitioners' vessel, whichever is greater.
Since private respondent Restituta C. Abordo was offered
P30,000.00 only by the petitioners, Singapore law was properly
applied in this case.
As it is familiar with Singapore Law, the National Seamen Board
is justified in taking judicial notice of and in applying that law.
HSBC vs. Sherman
Doctrine: A State does not have jurisdiction in the absence of
some reasonable basis for exercising it, whether the proceedings
are in rem quasi in rem or in personam.
 In International Law, jurisdiction is often defined as
the light of a State to exercise authority over persons
and things within its boundaries subject to certain
exceptions.
 Thus, a State does not assume jurisdiction over
travelling sovereigns, ambassadors and diplomatic
representatives of other States, and foreign military
units stationed in or marching through State territory
with the permission of the latter's authorities.
Facts:
In 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter
referred to as COMPANY), a company incorporated in Singapore
applied with, and was granted by, the Singapore branch of
petitioner BANK an overdraft facility in the maximum amount of
Singapore dollars 200,000.00 (which amount was subsequently
increased to Singapore dollars 375,000.00) with interest at 3%
over petitioner BANK prime rate, payable monthly, on amounts
due under said overdraft facility; as a security for the
repayment by the COMPANY of sums advanced by petitioner
BANK to it through the aforesaid overdraft facility, on October
7, 1982, both private respondents and a certain Robin de Clive
Lowe, all of whom were directors of the COMPANY at such time,
executed a Joint and Several Guarantee in favor of petitioner
BANK whereby private respondents and Lowe agreed to pay,
jointly and severally, on demand all sums owed by the
COMPANY to petitioner BANK under the aforestated overdraft
facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts of Singapore shall
have jurisdiction over all disputes arising under this guarantee.
The COMPANY failed to pay its obligation. Thus, petitioner
BANK demanded payment of the obligation from private
respondents, conformably with the provisions of the Joint and
Several Guarantee.
Inasmuch as the private respondents still failed to pay,
petitioner BANK filed a complaint for collection of a sum of
money against private respondents Jack Robert Sherman and
69
Deodato Reloj, docketed as Civil Case No. Q-42850 before the
Regional Trial Court of Quezon City, Branch 84.
On December 14,1984, private respondents filed a motion to
dismiss. They seek for the dismissal of the complaint ont two
grounds, namely:
1. That the court has no jurisdiction over the
subject matter of the complaint; and
2. That the court has no jurisdiction over the
persons of the defendants.
The trial court denied the motion to dismiss of the Respondents.
Private respondents then filed before the respondent
Intermediate Appellate Court (now Court of Appeals) a petition
for prohibition with preliminary injunction and/or prayer for a
restraining order.
Issue: W/N the Philippine courts have jurisdiction over the
suit? Yes.
Held:
The controversy stems from the interpretation of a provision in
the Joint and Several Guarantee, to wit:
(Reiteration) This guarantee and all rights, obligations and
liabilites arising hereunder shall be construed and determined
under and may be enforced in accordance with the laws of the
Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising under
this guarantee. ...
While it is true that "the transaction took place in Singaporean
setting" and that the Joint and Several Guarantee contains a
choice-of-forum clause, the very essence of due process dictates
that the stipulation that "[t]his guarantee and all rights,
obligations and liabilities arising hereunder shall be construed
and determined under and may be enforced in accordance with
the laws of the Republic of Singapore. We hereby agree that the
Courts in Singapore shall have jurisdiction over all disputes
arising under this guarantee" be liberally construed.
One basic principle underlies all rules of jurisdiction in
International Law: a State does not have jurisdiction in the
absence of some reasonable basis for exercising it, whether the
proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some
minimum contacts that will not offend traditional notions of fair
play and substantial justice (J. Salonga, Private International
Law, 1981, p. 46).
Indeed, as pointed-out by petitioner BANK at the outset, the
instant case presents a very odd situation. In the ordinary
habits of life, anyone would be disinclined to litigate before a
foreign tribunal, with more reason as a defendant. However, in
this case, private respondents are Philippine residents (a fact
which was not disputed by them) who would rather face a
complaint against them before a foreign court and in the
process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve
the case.
Private respondents' stance is hardly comprehensible, unless
their ultimate intent is to evade, or at least delay, the payment
of a just obligation.
The defense of private respondents that the complaint should
have been filed in Singapore is based merely on technicality.
They did not even claim, much less prove, that the filing of the
action here will cause them any unnecessary trouble, damage,
or expense.
On the other hand, there is no showing that petitioner BANK
filed the action here just to harass private respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No.
L-27033, October 31, 1969, 30 SCRA 187, it was ruled:
... An accurate reading, however, of the stipulation, 'The parties
agree to sue and be sued in the Courts of Manila,' does not
preclude the filing of suits in the residence of plaintiff or
defendant. The plain meaning is that the parties merely
consented to be sued in Manila. Qualifying or restrictive words
which would indicate that Manila and Manila alone is the venue
are totally absent therefrom. We cannot read into that clause
that plaintiff and defendant bound themselves to file suits with
respect to the last two transactions in question only or
exclusively in Manila. For, that agreement did not change or
transfer venue. It simply is permissive. The parties solely agreed
to add the courts of Manila as tribunals to which they may
resort. They did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2(b) of Rule 4.
Renuntiatio non praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis
Ents., et al. v. Lagamon, etc., et al., G.R. No. 57250,
October 30, 1981, 108 SCRA 740, where the stipulation was
"[i]n case of litigation, jurisdiction shall be vested in the
Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the
venue, suffice it to say that a stipulation as to venue does not
preclude the filing of suits in the residence of plaintiff or
defendant under Section 2 (b), Rule 4, Rules of Court, in the
absence of qualifying or restrictive words in the agreement
which would indicate that the place named is the only venue
agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not
thereby stipulate that only the courts of Singapore, to the
exclusion of all the rest, has jurisdiction. Neither did the clause
in question operate to divest Philippine courts of jurisdiction.
In International Law, jurisdiction is often defined as the light of
a State to exercise authority over persons and things within its
boundaries subject to certain exceptions. Thus, a State does not
assume jurisdiction over travelling sovereigns, ambassadors
and diplomatic representatives of other States, and foreign
military units stationed in or marching through State territory
with the permission of the latter's authorities.
This authority, which finds its source in the concept of
sovereignty, is exclusive within and throughout the domain of
the State.
A State is competent to take hold of any judicial matter it sees
fit by making its courts and agencies assume jurisdiction over
all kinds of cases brought before them.
Garcia-Recio vs. Recio
Doctrine: Foreign divorce decrees (Foreign judgments) are not
given judicial notice by the Philippine courts. Hence, the mere
presentation of the divorce decree in Court will not make such
foreign decree admissible.
A foreign decree must be presented and admitted in evidence in
Court by virtue of Sections 24 and 25 of Rule 132.
However: In the case at bar, Petitioner Garcia failed to object as
to the admissibility of the Australian divorce decree. Hence, the
said foreign judgment was deemed admissible.
Facts:
Rederick Recio, a Filipino, was married to Editha Samson, an
Australian citizen, in Malabon, Rizal, on March 1, 1987. They
lived together as husband and wife in Australia.
70

On May 18, 1989,Rederick Recio obtianed a decree of divorce,
purportedly dissolving the marriage, was issued by an
Australian family court.
In 1992, Rederick Recio (respondent) also became an Australian
citizen.
In 1994, Rederick Recio married Grace Garcia (petitioner), a
Filipina, in Cabanatuan City. In their application for a marriage
license, Rederick was declared as "single" and "Filipino. Not long
after however, the couple was living separately in Australia
without prior judicial dissolution of their marriage.
In 1998, Grace filed a Complaint for Declaration of Nullity of
Marriage against Rederick on the ground of bigamy for he
allegedly had a prior subsisting marriage at the time he married
her in 1994. She claimed that she learned of his marriage to
Editha Samson only in November, 1997.
Rederick contended that his first marriage to Editha Samson
had been validly dissolved by a divorce decree obtained in
Australia in 1989, thus, he was legally capacitated to marry
petitioner in 1994.
While the suit for the declaration of nullity was pending,
Rederick was able to secure a divorce decree in Australia
because the "marriage had irretrievably broken down.”
Consequently, he prayed in his Answer that the Complaint be
dismissed on the ground that it stated no cause of action.
Trial Court: The Trial Court declared that the marriage
dissolved on the ground that the divorce issued in Australia was
valid and recognized in the Philippines. It deemed the marriage
ended, but not on the basis of any defect in an essential
element of the marriage; that is, respondent's alleged lack of
legal capacity to remarry.
Petitioner Garcia assails the trial court's recognition of the
divorce between respondent and Editha Samson. Citing Adong
v. Cheong Seng Gee, petitioner Garcia argues that the divorce
decree, like any other foreign judgment, may be given
recognition in this jurisdiction only upon proof of the existence
of
(1) The foreign law allowing absolute divorce and
(2) The alleged divorce decree itself.
She adds that respondent miserably failed to establish these
elements.
Petitioner Garcia adds that, based on the first paragraph of
Article 26 of the Family Code, marriages solemnized abroad are
governed by the law of the place where they were celebrated (the
lex loci celebrationist). In effect, the Code requires the
presentation of the foreign law to show the conformity of the
marriage in question to the legal requirements of the place
where the marriage was performed.
Petitioner Garcia insists that before a divorce decree can be
admitted in evidence, it must first comply with the registration
requirements under Articles 11, 13 and 52 of the Family Code.
These articles read as follows:
"ART. 11. Where a marriage license is required, each of the
contracting parties shall file separately a sworn application for
such license with the proper local civil registrar which shall
specify the following:
x x x x xx x x x
"(5) If previously married, how, when and where
the previous marriage was dissolved or annulled;
xx x xxx xxx
"ART. 13. In case either of the contracting parties has been
previously married, the applicant shall be required to furnish,
instead of the birth of baptismal certificate required in the last
preceding article, the death certificate of the deceased spouse or
the judicial decree of annulment or declaration of nullity of his or
her previous marriage. x x x.
"ART. 52. The judgment of annulment or of absolute nullity of the
marriage, the partition and distribution of the properties of the
spouses, and the delivery of the children's presumptive legitimes
shall be recorded in the appropriate civil registry and registries of
property; otherwise, the same shall not affect their persons."
Respondent Recio, on the other hand, argues that the
Australian divorce decree is a public document – a written
official act of an Australian family court. Therefore, it requires
no further proof of its authenticity and due execution.
Issue:
(1) W/N the Australian divorce decree (Foreign Judgment)
should be given presumptive evidentiary value by the
Philippine courts? Yes.
(2) W/N Petitioner Garcia has the burden of proof in
relation to the Australian divorce decree? No.
Held:
Basic Legal Principles as laid down by the Court:
 Philippine law does not provide for absolute divorce;
hence, our courts cannot grant it.
 A marriage between two Filipinos cannot be dissolved
even by a divorce obtained abroad, because of Articles
15 and 17 of the Civil Code.
 In mixed marriages involving a Filipino and a
foreigner, Article 26 of the Family Code allows the
former to contract a subsequent marriage in case the
divorce is "validly obtained abroad by the alien spouse
capacitating him or her to remarry."
 A divorce obtained abroad by a couple, who are both
aliens, may be recognized in the Philippines, provided
it is consistent with their respective national laws.
 A comparison between marriage and divorce, as far as
pleading and proof are concerned, can be made. Van
Dorn v. Romillo Jr. decrees that "aliens may obtain
divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their
national law."
 Therefore, before a foreign divorce decree can be
recognized by our courts, the party pleading it must
prove the divorce as a fact and demonstrate its
conformity to the foreign law allowing it. Presentation
solely of the divorce decree is insufficient.
First Issue: A foreign judgment is not given judicial notice by
the Philippine courts. The said judgment must be pleaded and
proven before it shall be given presumptive evidentiary value.
However, in the case at bar there was failure on the part of
Garcia to object as to the admissibility of Australian divorce
decree (Foreign Judgment). Hence the divorce decree is
rendered admissible in Court.
Before a foreign judgment is given presumptive evidentiary
value, the document must first be presented and admitted in
evidence. A divorce obtained abroad is proven by the divorce
decree itself. Indeed the best evidence of a judgment is the
judgment itself. The decree purports to be a written act or
record of an act of an officially body or tribunal of a foreign
country.
71
Under Sections 24 and 25 of Rule 132, on the other hand, a
writing or document may be proven as a public or official record
of a foreign country by either
(1) An official publication or
(2)
(3) A copy thereof attested by the officer having legal
custody of the document.
If the record is not kept in the Philippines, such copy must be
(a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the
record is kept and
(b) authenticated by the seal of his office.
The divorce decree between respondent and Editha Samson
appears to be an authentic one issued by an Australian family
court. However, appearance is not sufficient; compliance with
the aforemetioned rules on evidence must be demonstrated.
Fortunately for respondent's cause, when the divorce decree of
May 18, 1989 was submitted in evidence, counsel for petitioner
objected, not to its admissibility, but only to the fact that it had
not been registered in the Local Civil Registry of Cabanatuan
City.
The trial court ruled that it was admissible, subject to
petitioner's qualification. Hence, it was admitted in evidence
and accorded weight by the judge. Indeed, petitioner's failure to
object properly rendered the divorce decree admissible as a
written act of the Family Court of Sydney, Australia.
Second Issue: Petitioner Garcia doesn’t have the burden of
proof to prove the foreign judgment. The burden of proof lies on
the Respondent Recio.
Respondent Recio contends that the burden to prove Australian
divorce law falls upon petitioner Garcia, because she is the
party challenging the validity of a foreign judgment.
He contends that petitioner was satisfied with the original of the
divorce decree and was cognizant of the marital laws of
Australia, because she had lived and worked in that country for
quite a long time. Besides, the Australian divorce law is
allegedly known by Philippine courts: thus, judges may take
judicial notice of foreign laws in the exercise of sound
discretion.
We are not persuaded. The burden of proof lies with "the party
who alleges the existence of a fact or thing necessary in the
prosecution or defense of an action." In civil cases, plaintiffs
have the burden of proving the material allegations of the
complaint when those are denied by the answer; and
defendants have the burden of proving the material allegations
in their answer when they introduce new matters.
Since the divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law validating it falls
squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take
judicial notice of foreign laws. Like any other facts, they must
be alleged and proved. Australian marital laws are not among
those matters that judges are supposed to know by reason of
their judicial function. The power of judicial notice must be
exercised with caution, and every reasonable doubt upon the
subject should be resolved in the negative.
Manufacturers Hanover vs. Guerrero
Doctrine: The New York Law has not been sufficiently proven in
Court.
 Foreign laws are not a matter of judicial notice;
 Foreign laws must be pleaded and proven in Court.
Under Section 24 of Rule 132, the record of public documents
of a sovereign authority or tribunal may be proved by
(1) An official publication thereof or
(2) A copy attested by the officer having the legal custody
thereof.
Such official publication or copy must be accompanied, if the
record is not kept in the Philippines, with a certificate that the
attesting officer has the legal custody thereof. The certificate
may be issued by any of the authorized Philippine embassy or
consular officials stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office. The
attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may
be, and must be under the official seal of the attesting officer.
XPN: Willamette Iron and Steel Works v. Muzzal &
Collector of Internal Revenue v. Fisher et al.—A said foreign
law or foreign judgment may be deemed admissible by the Court
if such was testified on by attorneys in Court. Also, the
particular foreign law was quoted during such trial.
Facts:
Rafael Ma. Guerrero ("Guerrero" for brevity) filed a complaint for
damages against petitioner Manufacturers Hanover Trust Co.
and/or Chemical Bank ("the Bank" for brevity) with the Regional
Trial Court of Manila ("RTC" for brevity).
Guerrero sought payment of damages allegedly for
(1) Illegally withheld taxes charged against interests on
his checking account with the Bank;
(2) A returned check worth US$18,000.00 due to
signature verification problems; and
(3) Unauthorized conversion of his account.
The Bank filed its Answer alleging, inter alia, that by stipulation
Guerrero’s account is governed by New York law and this law
does not permit any of Guerrero’s claims except actual
damages.
Motion for Partial Summary Judgment: Subsequently, the
Bank filed a Motion for Partial Summary Judgment seeking the
dismissal of Guerrero’s claims for consequential, nominal,
temperate, moral and exemplary damages as well as attorney’s
fees on the same ground alleged in its Answer. The Bank
contended that the trial should be limited to the issue of actual
damages.
The affidavit of Alyssa Walden, a New York attorney,
supported the Bank’s Motion for Partial Summary Judgment.
Alyssa Walden’s affidavit ("Walden affidavit" for brevity) stated
that Guerrero’s New York bank account stipulated that the
governing law is New York law and that this law bars all of
Guerrero’s claims except actual damages.
RTC: The RTC denied the motion.
CA: The CA affirmed the RTC’s order ruling that the Walden
affidavit does not serve as proof of the New York law and
jurisprudence relied on by the Bank to support its motion.
The Bank argues that in moving for partial summary judgment,
it was entitled to use the Walden affidavit to prove that the
stipulated foreign law bars the claims for consequential, moral,
temperate, nominal and exemplary damages and attorney’s fees.
Issue: W/N the New York Law has been sufficiently proven? No.
72
Held: The New York has not been sufficiently proven in the case
at bar.
General Rule: There can be no summary judgment where
questions of fact are in issue or where material allegations of
the pleadings are in dispute. The resolution of whether a foreign
law allows only the recovery of actual damages is a question of
fact as far as the trial court is concerned since foreign laws do
not prove themselves in our courts.
Foreign laws are not a matter of judicial notice. Like any other
fact, they must be alleged and proven.
Certainly, the conflicting allegations as to whether New York law
or Philippine law applies to Guerrero’s claims present a clear
dispute on material allegations, which can be resolved only by a
trial on the merits.
Under Section 24 of Rule 132, the record of public documents
of a sovereign authority or tribunal may be proved by
(1) An official publication thereof or
(2) A copy attested by the officer having the legal custody
thereof.
Such official publication or copy must be accompanied, if the
record is not kept in the Philippines, with a certificate that the
attesting officer has the legal custody thereof. The certificate
may be issued by any of the authorized Philippine embassy or
consular officials stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office. The
attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may
be, and must be under the official seal of the attesting officer.
Exceptions: In Willamette Iron and Steel Works v. Muzzal,
it was held that Section 41, Rule 123 (Section 25, Rule 132
of the Revised Rules of Court) does not exclude the
presentation of other competent evidence to prove the existence
of a foreign law.
The Supreme Court considered the testimony under oath of an
attorney-at-law of San Francisco, California, who quoted
verbatim a section of California Civil Code and who stated that
the same was in force at the time the obligations were
contracted, as sufficient evidence to establish the existence of
said law.
Also in Collector of Internal Revenue v. Fisher et al., it was
held that the counsel for respondent "testified that as an active
member of the California Bar since 1951, he is familiar with the
revenue and taxation laws of the State of California. When
asked by the lower court to state the pertinent California law as
regards exemption of intangible personal properties, the witness
cited Article 4, Sec. 13851 (a) & (b) of the California Internal and
Revenue Code as published in Derring’s California Code, a
publication of Bancroft-Whitney Co., Inc. And as part of his
testimony, a full quotation of the cited section was offered in
evidence by respondents."
Likewise, in several naturalization cases, it was held by the
Court that evidence of the law of a foreign country on
reciprocity regarding the acquisition of citizenship, although not
meeting the prescribed rule of practice, may be allowed and
used as basis for favorable action, if, in the light of all the
circumstances, the Court is "satisfied of the authenticity of the
written proof offered."
The Bank, however, cannot rely on Willamette Iron and Steel
Works v. Muzzal or Collector of Internal Revenue v. Fisher to
support its cause.
These cases involved attorneys testifying in open court during
the trial in the Philippines and quoting the particular foreign
laws sought to be established.
Exception doesn’t apply in the case at bar: On the other
hand, the Walden affidavit was taken abroad ex parte and the
affiant never testified in open court. The Walden affidavit cannot
be considered as proof of New York law on damages not only
because it is self-serving but also because it does not state the
specific New York law on damages.
The portions of the affidavit are as follows:
(1) In New York, [n]ominal damages are damages in name only,
trivial sums such as six cents or $1. Such damages are
awarded both in tort and contract cases when the plaintiff
establishes a cause of action against the defendant, but is
unable to prove actual damages. Dobbs, Law of Remedies, 3.32
at 294 (1993). Since Guerrero is claiming for actual damages, he
cannot ask for nominal damages.
(2) There is no concept of temperate damages in New York law. I
have reviewed Dobbs, a well-respected treatise, which does not
use the phrase temperate damages in its index. I have also
done a computerized search for the phrase in all published New
York cases, and have found no cases that use it. I have never
heard the phrase used in American law.
(3) The Uniform Commercial Code (UCC) governs many aspects of a
Banks relationship with its depositors. In this case, it governs
Guerreros claim arising out of the non-payment of the $18,000
check. Guerrero claims that this was a wrongful dishonor.
However, the UCC states that justifiable refusal to pay or accept
as opposed to dishonor, occurs when a bank refuses to pay a
check for reasons such as a missing indorsement, a missing or
illegible signature or a forgery, 3-510, Official Comment 2. .. to
the Complaint, MHT returned the check because it had no
signature card on . and could not verify Guerreros signature. In
my opinion, consistent with the UCC, that is a legitimate and
justifiable reason not to pay.
(4) Consequential damages are not available in the ordinary case
of a justifiable refusal to pay. UCC 1-106 provides that neither
consequential or special or punitive damages may be had except
as specifically provided in the Act or by other rule of law. UCC
4-103 further provides that consequential damages can be
recovered only where there is bad faith. This is more restrictive
than the New York common law, which may allow
consequential damages in a breach of contract case (as does the
UCC where there is a wrongful dishonor).
(5) Under New York law, requests for lost profits, damage to
reputation and mental distress are considered consequential
damages. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312,
319, 540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif Construction
Corp. v. Buffalo Savings Bank, 50 A.D.2d 718, 374 N.Y.S..2d
868, 869-70 (4th Dept 1975) damage to reputation); Dobbs, Law
of Remedies 12.4(1) at 63 (emotional distress)
(6) As a matter of New York law, a claim for emotional distress
cannot be recovered for a breach of contract. Geler v. National
Westminster Bank U.S.A., 770 F. Supp. 210, 215 (S.D.N.Y.
1991); Pitcherello v. Moray Homes, Ltd., 150 A.D.2d 860,540
N.Y.S.2d 387, 390 (3d Dept 1989) Martin v. Donald Park Acres,
54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dept 1976). Damage
to reputation is also not recoverable for a contract. Motif
Construction Corp. v. Buffalo Savings Bank, 374 N.Y.S.2d at
869-70.
(7) In cases where the issue is the breach of a contract to purchase
stock, New York courts will not take into consideration the
performance of the stock after the breach. Rather, damages will
be based on the value of the stock at the time of the breach,
Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th
Dept 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463
N.Y.S.2d 1023 (1983).
(8) Under New York law, a party can only get consequential
damages if they were the type that would naturally arise from
the breach and if they were brought within the contemplation of
parties as the probable result of the breach at the time of or
prior to contracting. Kenford Co., Inc. v. Country of Erie, 73
N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v.
Fargo, 223 N.Y. 32, 36 (1918).
73
 (9) Under New York law, a plaintiff is not entitled to attorneys fees
unless they are provided by contract or statute. E.g., Geler v.
National Westminster Bank, 770 F. Supp. 210, 213 (S.D.N.Y.
1991); Camatron Sewing Mach, Inc. v. F.M. Ring Assocs., Inc.,
179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dept 1992); Stanisic v.
Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281
(1st Dept 1991). There is no statute that permits attorneys fees
in a case of this type.
(10) Exemplary, or punitive damages are not allowed for a breach of
contract, even where the plaintiff claims the defendant acted
with malice. Geler v. National Westminster Bank, 770 F.Supp.
210, 215 (S.D.N.Y. 1991); Catalogue Service of chesterv.
Insurance Co. of North America, 74 A.D.2d 837, 838, 425
N.Y.S.2d 635, 637 (2d Dept 1980); Senior v. Manufacturers
Hanover Trust Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d
Dept 1985).
(11) Exemplary or punitive damages may be recovered only where it
is alleged and proven that the wrong supposedly committed by
defendant amounts to a fraud aimed at the public generally and
involves a high moral culpability. Walker v. Sheldon, 10 N.Y.2d
401, 179 N.E.2d 497, 223 N.Y.S.2d 488 (1961).
(12) Furthermore, it has been consistently held under New York law
that exemplary damages are not available for a mere breach of
contract for in such a case, as a matter of law, only a private
wrong and not a public right is involved. Thaler v.The North
Insurance Company, 63 A.D.2d 921, 406 N.Y.S.2d 66 (1st Dept
1978).
The Walden affidavit states conclusions from the affiant’s
personal interpretation and opinion of the facts of the case vis a
vis the alleged laws and jurisprudence without citing any law in
particular.
The citations in the Walden affidavit of various U.S. court
decisions do not constitute proof of the official records or
decisions of the U.S. courts.
While the Bank attached copies of some of the U.S. court
decisions cited in the Walden affidavit, these copies do not
comply with Section 24 of Rule 132 on proof of official records
or decisions of foreign courts.
Because of the failure to comply with Section 24 of Rule 132 on
how to prove a foreign law and decisions of foreign courts, the
Walden affidavit did not prove the current state of New York law
and jurisprudence. Thus, the Bank has only alleged, but has
not proved, what New York law and jurisprudence are on the
matters at issue.
ATCI vs. Etchin
Doctrine: The Kuwaiti Civil Service Laws are not applicable in
the case at bar. The petitioners were not able to sufficiently
plead and prove the said foreign laws with the Courts.
Foreign laws/judgments aren’t given judicial notice.
They must be pleaded and proven in accordance with Sections
24 and 25 of Rule 132 of the Revised Rules of Court.
Facts:
Respondent Josefina Echin (Echin) was hired by petitioner ATCI
Overseas Corporation in behalf of its principal-co-petitioner, the
Ministry of Public Health of Kuwait (the Ministry), for the
position of medical technologist under a two-year contract,
denominated as a Memorandum of Agreement (MOA), with a
monthly salary of US$1,200.
Under the MOA, all newly-hired employees undergo a
probationary period of one (1) year and are covered by Kuwait’s
Civil Service Board Employment Contract.
Echin was deployed on February 17, 2000 but was terminated
from employment on February 11, 2001, she not having
allegedly passed the probationary period.
As the Ministry denied respondent’s request for reconsideration,
she returned to the Philippines on March 17, 2001, shouldering
her own air fare.
On July 27, 2001, Echin filed with the NLRC a complaint for
illegal dismissal against ATCI as the local recruitment
agency, represented by petitioner, Amalia Ikdal (Ikdal), and the
Ministry, as the foreign principal.
The Labor Arbiter ruled in favor of Echin and ordered ATCI,
Ikdal, and the Ministry to pay her US$3,600.00, representing
her salary for the three months unexpired portion of her
contract. On appeal, the NLRC affirmed the Labor Arbiter’s
ruling.
On appeal before the Court of Appeals, petitioners argued that:
1. Their principal, the Ministry, is immune from suit,
being a foreign government agency, and, as such, the
immunity extended to them as agents; and
2. Echin was validly dismissed for her failure to meet the
performance rating within the one-year period as
required under Kuwait’s Civil Service Laws. Petitioners
further contended that Ikdal should not be liable as an
officer of petitioner ATCI.
The Court of Appeals denied the appeal and still ruled in
favor of Echin. The appellate court noted that under the law, a
private employment agency shall assume all responsibilities for
the implementation of the contract of employment of an
overseas worker, hence, it can be sued jointly and severally with
the foreign principal for any violation of the recruitment
agreement or contract of employment.
As to Ikdal’s liability, the appellate court held that under Sec.
10 of Republic Act No. 8042, the "Migrant and Overseas
Filipinos’ Act of 1995," corporate officers, directors and partners
of a recruitment agency may themselves be jointly and solidarily
liable with the recruitment agency for money claims and
damages awarded to overseas workers. Hench, this petition for
review before the Supreme Court.
Issue:
1. Whether or not the Ministry of Public Health of Kuwait
is not liable given that it is a foreign government
agency, which is immune from suit. Thus, ATCI and
Ikdal are also not jointly and solidarily liable? No, it is
liable.
2. Whether or not Philippine Labor Laws are inapplicable
because respondent’s employment contract specifically
stipulates that her employment shall be governed by
Kuwaiti Civil Service Laws and Regulations as in fact
POEA Rules accord respect to such rules, customs and
practices of the host country? No, the Philippine
labor laws are applicable.
Held:
First Issue: No. In providing for the joint and solidary liability of
private recruitment agencies with their foreign principals,
Republic Act No. 8042 precisely affords the OFWs with recourse
and assures them of immediate and sufficient payment of what
is due them.
The obligations covenanted in the recruitment agreement
entered into by and between the local agent and its foreign
74
principal are not coterminous with the term of such agreement
so that if either or both of the parties decide to end the
agreement, the responsibilities of such parties towards the
contracted employees under the agreement do not at all end,
but the same extends up to and until the expiration of the
employment contracts of the employees recruited and employed
pursuant to the said recruitment agreement.
Otherwise, this will render nugatory the very purpose for which
the law governing the employment of workers for foreign jobs
abroad was enacted (United Pacific v. Maguad).
service laws. Instead of submitting a copy of the pertinent
Kuwaiti labor laws duly authenticated and translated by
Embassy officials thereat, as required under the Rules, what
petitioners submitted were mere certifications attesting only to
the correctness of the translations of the MOA and the
termination letter which does not prove at all that Kuwaiti civil
service laws differ from Philippine laws and that under such
Kuwaiti laws, respondent was validly terminated.

The imposition of joint and solidary liability is in line with the

policy of the state to protect and alleviate the plight of the
working class.

Verily, to allow petitioners to simply invoke the immunity from

suit of its foreign principal or to wait for the judicial
determination of the foreign principal’s liability before petitioner
can be held liable renders the law on joint and solidary liability
inutile.

Respecting Ikdal’s joint and solidary liability as a corporate

officer, the same is pursuant to Sec. 10 of R.A. 8042 on money
claims. The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall
be a condition precedent for its approval. The performance bond
to be filed by the recruitment/placement agency, as provided by
law, shall be answerable for all money claims or damages that
may be awarded to the workers. If the recruitment/placement
agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly
and solidarily liable with the corporation or partnership for the
aforesaid claims and damages.

Second Issue: No. It is hornbook principle that the party

invoking the application of a foreign law has the burden of
proving the law, under the doctrine of processual presumption
which, in this case, petitioners failed to discharge.

The Philippines does not take judicial notice of foreign laws,

hence, they must not only be alleged; they must be proven. To
prove a foreign law, the party invoking it must present a copy
thereof and comply with Sections 24 and 25 of Rule 132 of
the Revised Rules of Court.

To prove the Kuwaiti law, petitioners submitted the

following:
 MOA between respondent and the Ministry, as
represented by ATCI, which provides that the employee
is subject to a probationary period of one (1) year and
that the host country’s Civil Service Laws and
Regulations apply;

 A translated copy (Arabic to English) of the termination

letter to respondent stating that she did not pass the
probation terms, without specifying the grounds
therefor, and a translated copy of the certificate of
termination, both of which documents were certified
by Mr. Mustapha Alawi, Head of the Department of
Foreign Affairs-Office of Consular Affairs Islamic
Certification and Translation Unit; and

 Respondent’s letter of reconsideration to the Ministry,

wherein she noted that in her first eight (8) months of
employment, she was given a rating of "Excellent"
albeit it changed due to changes in her shift of work
schedule.

These documents, whether taken singly or as a whole, do

not sufficiently prove that respondent was validly
terminated as a probationary employee under Kuwaiti civil

75
 Catalan vs. Catalan-Lee
Doctrine:

Facts:

Issue:

Held:

Makati Shangri-La Hotel vs. Harper

Doctrine:

Facts:

Issue:

Held:

Noveras vs. Noveras

Doctrine:

Facts:

Issue:

Held:

Nedlloyd Lijnen B.V. Rotterdam vs. Glow Laks Enterprises

Doctrine:

Facts:

Issue:

Held:

Koike vs. Koike

Doctrine:

Facts:

Issue:

Held:

Govt. of Hong Kong vs. Muñoz

Doctrine:

Facts:

Issue:

Held:

76