CONFLICT OF LAWS (Case Digests) When an action is brought in a court of this country by a citizen of a foreign
country against one of our own citizens to recover a sum of money adjudged by
INTRODUCTION & JURISDICTION
1. HENRY HILTON vs. GUSTAVE BERTIN GUYOT, ET AL., 159 US 113, June 3,
1895
Facts:
Defendants, Henry Hilton and William Libbey, residents of New York and
trading as co-partners in Paris under the firm name A.T. Stewart & Co. were
sued in France for debts due to a French firm, Charles Fortich & Co. Gustave
Guyot, liquidator of the French firm, sued Hilton and Libbey on the French
judgment in the U.S. Circuit Court for the Southern District of New York seeking
an amount totaling over $195,000. The court held the judgment conclusive and
entered a decree in favor of the French firm without examining anew the merits
of the case.
Defendants question this decree on many grounds, foremost of which was that
French courts gave no force and effect to the duly rendered judgments of U.S.
Courts against French citizens.
Issue:
Whether or not a judgment of a foreign nation’s court entitled to full credit and
has a conclusive effect when sued to other nation.
Ruling:
No law has any effect, of its own force, beyond the limits of the sovereignty from
which its authority is derived. The extent to which the law of one nation, as put
in force within its territory, whether by executive order, by legislative act, or by
judicial decree shall be allowed to operate within the dominion of another
nation depends upon what our greatest jurists have been content to call "the
comity of nations." Although the phrase has been often criticized, no satisfactory
substitute has been suggested.
"Comity," in the legal sense, is neither a matter of absolute obligation, on the one
hand, nor of mere courtesy and goodwill, upon the other. But it is the
recognition which one nation allows within its territory to the legislative,
executive, or judicial acts of another nation, having due regard both to
international duty and convenience and to the rights of its own citizens or of
other persons was are under the protection of its laws.
a court of that country to be due from the defendant to the plaintiff, and the
foreign judgment appears to have been rendered by a competent court, having
jurisdiction of the cause and of the parties, and upon due allegations and proofs
and opportunity to defend against them, and its proceedings are according to
the course of a civilized jurisprudence, and are stated in a clear and formal
record, the judgment is prima facie evidence, at least, of the truth of the matter
adjudged, and it should be held conclusive upon the merits tried in the foreign
court unless some special ground is shown for impeaching the judgment, as by
showing that it was affected by fraud or prejudice or that, by the principles of
international law and by the comity of our own country, it should not be given
full credit and effect.
The reasonable, if not the necessary, conclusion appears to us to be that
judgments rendered in France, or in any other foreign country by the laws of
which our own judgments are reviewable upon the merits are not entitled to
full credit and conclusive effect when sued upon in this country, but are prima
facie evidence only of the justice of the plaintiffs' claim.
In holding such a judgment, for want of reciprocity, not to be conclusive
evidence of the merits of the claim, we do not proceed upon any theory of
retaliation upon one person by reason of injustice done to another, but upon the
broad ground that international law is founded upon mutuality and reciprocity,
and that by the principles of international law recognized in most civilized
nations, and by the comity of our own country, which it is our judicial duty to
known and to declare, the judgment is not entitled to be considered conclusive.
If we should hold this judgment to be conclusive, we should allow it an effect to
which, supposing the defendants' offers to be sustained by actual proof, it
would, in the absence of a special treaty, be entitled in hardly any other country
in Christendom except the country in which it was rendered. If the judgment
had been rendered in this country, or in any other outside of the jurisdiction of
France, the French courts would not have executed or enforced it except after
examining into its merits. The very judgment now sued on would be held
inconclusive in almost any other country than France. In England and in the
colonies subject to the law of England, the fraud alleged in its procurement
would be a sufficient ground for disregarding it. In the courts of nearly every
other nation, it would be subject to reexamination either merely because it was
a foreign judgment or because judgments of that nation would be reexaminable
in the courts of France.
For these reasons, in the action at law, the Judgment is reversed, and the cause
remanded to the circuit court, with directions to set aside the verdict and to
order a new trial.
For the same reasons, in the suit in equity between these parties, the foreign
judgment is not a bar, and therefore the Decree dismissing the bill is reversed
the plea adjudged bad, and the cause remanded to the circuit court for further
proceedings not inconsistent with this opinion.
2. SAUDI ARABIAN AIRLINES vs. COURT OF APPEALS, MILAGROS P.
MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge
of Branch 89, Regional Trial Court of Quezon City, 297 SCRA 469, G.R. No.
122191, October 8, 1998
Facts:
Herein private respondent Milagros P. Morada is a flight attendant for petitioner
SAUDIA airlines, where the former was tried to be raped by Thamer and Allah
AlGazzawi, both Sauidi nationals and fellow crew member, after a night of
dancing in their hotel while in Jakarta, Indonesia. She was rescued. After two
weeks of detention the accused were both deported to Saudi and they were
reinstated by Saudia. She was pressured by police officers to make a statement
and to drop the case against the accused; in return she will then be allowed to
return to Manila and retrieved her passport. For the second time, she was
asked by her superiors to again appear before the Saudi court. Without her
knowledge, she was already tried by Saudi court together with the accused and
was sentenced to five months imprisonment and to 286 lashes in connection
with Jakarta rape incident.
The court found her 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.
Issue:
Whether or not the Quezon City Regional Trial Court has jurisdiction to hear
and try the civil case based on Article 21 of the New Civil Code or the Kingdom
of Saudi Arabia court though there is the existence of foreign element.
Ruling:
The forms in which a foreign element may appear are many, such as the fact
that one party is a resident Philippine national, and that the other is a resident
foreign corporation. The forms in which this foreign element may appear are
many. The foreign element may simply consist in the fact that one of the parties
to a contract is an alien or has a foreign domicile, or that a contract between
nationals of one State involves properties situated in another State. In other
cases, the foreign element may assume a complex form. 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 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.
The forms in which a foreign element may appear are many, such as the fact
that one party is a resident Philippine national, and that the other is a resident
foreign corporation. The forms in which this foreign element may appear are
many. The foreign element may simply consist in the fact that one of the parties
to a contract is an alien or has a foreign domicile, or that a contract between
nationals of one State involves properties situated in another State. In other
cases, the foreign element may assume a complex form. 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 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.
Where the factual antecedents satisfactorily establish the existence of a foreign
element, the problem could present a “conflicts” case. Where the factual
antecedents satisfactorily establish the existence of a foreign element, we agree
with petitioner that the problem herein could present a “conflicts” case. 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.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case
No. Q-93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is
hereby REMANDED to Regional Trial Court of Quezon City, Branch 89 for
further proceedings.
3. HONGKONG AND SHANGHAI BANKING CORPORATION vs. JACK ROBERT
SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT,
176 SCRA 331, G.R. No. 72494, August 11, 1989
Facts:
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd.
(COMPANY), a company incorporated in Singapore applied with and was
granted by HSBC Singapore branch an overdraft facility in the maximum
amount of Singapore dollars 200,000 with interest at 3% over HSBC prime rate,
payable monthly, on amounts due under said overdraft facility.
As a security for the repayment by the COMPANY of sums advanced by HSBC to
it through the aforesaid overdraft facility, in 1982, both private respondents and
a certain Lowe, all of whom were directors of the COMPANY at such time,
executed a Joint and Several Guarantee in favor of HSBC whereby private
respondents and Lowe agreed to pay, jointly and severally, on demand all sums
owed by the COMPANY to petitioner BANK under the aforestated overdraft
facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall
be construed and determined under and may be enforced in accordance with
the laws of the Republic of Singapore. We hereby agree that the Courts of
Singapore shall have jurisdiction over all disputes arising under this guarantee.
The COMPANY failed to pay its obligation. Thus, HSBC demanded payment and
inasmuch as the private respondents still failed to pay, HSBC filed A complaint
for collection of a sum of money against private respondents Sherman and Reloj
before RTC of Quezon City.
Private respondents filed an MTD on the ground of lack of jurisdiction over the
subject matter. The trial court denied the motion. They then filed before the
respondent IAC a petition for prohibition with preliminary injunction and/or
prayer for a restraining order. The IAC rendered a decision enjoining the RTC
Quezon City from taking further cognizance of the case and to dismiss the same
for filing with the proper court of Singapore which is the proper forum. MR
denied, hence this petition.
Issue:
Do Philippine courts have jurisdiction over the suit, vis-a-vis the Guarantee
stipulation regarding jurisdiction?
Ruling:
Yes. One basic principle underlies all rules of jurisdiction in International Law: a
State does not have jurisdiction in the absence of some reasonable basis for
exercising it, whether the proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some minimum contacts
that will not offend traditional notions of fair play and substantial justice.
The defense of private respondents that the complaint should have been filed in
Singapore is based merely on technicality. They did not even claim, much less
prove, that the filing of the action here will cause them any unnecessary trouble,
damage, or expense. On the other hand, there is no showing that petitioner
BANK filed the action here just to harass private respondents.
In the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., where the stipulation
was “[i]n case of litigation, jurisdiction shall be vested in the Court of Davao
City.” We held:
Anent the claim that Davao City had been stipulated as the venue, suffice it to
say that a stipulation as to venue does not preclude the filing of suits in the
residence of plaintiff or defendant under Section 2 (b), Rule 4, ROC, in the
absence of qualifying or restrictive words in the agreement which would
indicate that the place named is the only venue agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate
that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction.
Neither did the clause in question operate to divest Philippine courts of
jurisdiction. In International Law, jurisdiction is often defined as the light of a
State to exercise authority over persons and things within its boundaries
subject to certain exceptions. Thus, a State does not assume jurisdiction over
travelling sovereigns, ambassadors and diplomatic representatives of other
States, and foreign military units stationed in or marching through State
territory with the permission of the latter’s authorities. This authority, which
finds its source in the concept of sovereignty, is exclusive within and throughout
the domain of the State. A State is competent to take hold of any judicial matter
it sees fit by making its courts and agencies assume jurisdiction over all kinds of
cases brought before them
Notes:
The respondent IAC likewise ruled that:
… In a conflict problem, a court will simply refuse to entertain the case if it is not
authorized by law to exercise jurisdiction. And even if it is so authorized, it may
still refuse to entertain the case by applying the principle of forum non
conveniens. …
However, whether a suit should be entertained or dismissed on the basis of the
principle of forum non conveniens depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. Thus,
the IAC should not have relied on such principle.
4. IN THE MATTER OF THE ESTATE OF CHEONG BOO, deceased, MORA
ADONG vs. CHEONG SENG GEE, 43 Phil. 43, G.R. No. 18081, March 3, 1922
Facts:
Cheong Boo, a native of China, died intestate in Zamboanga, Philippine Islands
and left property worth nearly P100,000. The estate of the deceased was
claimed by Cheong Seng Gee, an alleged legitimate child by a marriage
contracted by Cheong Boo with Tan Dit in China in 1895. On the other hand,
Mora Adong, the alleged lawful wife of the deceased who married him in 1896
in Basilan, Philippine Islands, and her daughters are also claiming as heirs of the
decedent.
The conflicting claims to the estate were ventilated in the Court of First Instance
of Zamboanga. The trial judge reached the conclusion that the proof of the
marriage of Tan Dit to the decedent was not sufficient. Cheong Seng Gee should
share in the estate as a natural child. On the other hand, the trial judge reached
the conclusion that the marriage between the Mora Adong and the deceased had
been adequately proved, but, under the laws of the Philippine Islands, it could
not be held to be a lawful marriage; thus, the daughters Payang and Rosalia
would inherit as natural children. The order of the trial judge, following these
conclusions, was that there should be a partition of the property of the deceased
Cheong Boo between the natural children, Cheong Seng Gee, Payang, and
Rosalia.
Thus, both parties appealed.
Issues:
1. W/N the marriage between Tan Dit and the decedent is valid.
2. W/N the marriage between Mora and the decedent is valid considering that
it is a Mohammedan marriage.
Ruling:
As to the first issue:
The Court ruled that to establish a valid foreign marriage pursuant to this
comity provision, it is first necessary to prove before the courts of the Islands
the existence of the foreign law as a question of fact, and it is then necessary to
prove the alleged foreign marriage by convincing evidence.
In this case, the proof presented in Court did not sustain the validity of the
marriage of Tan Bit and the decedent. The Court noted a strong inclination on
the part of the Chinese witnesses, especially the brother of Cheong Boo, to
protect the interests of the alleged son, Cheong Seng Gee, by overstepping the
limits of truthfulness. The Court also noted that reliable witnesses stated that in
the year 1895, when Cheong Boo was supposed to have been in China, he was in
reality in Jolo, in the Philippine Islands. We are not disposed to disturb this
appreciation of fact by the trial court. The immigration documents only go to
show the relation of parent and child existing between the deceased Cheong
Boo and his son Cheong Seng Gee and do not establish the marriage between
the deceased and the mother of Cheong Seng Gee.
Also, in the case at bar, there is no competent testimony as to what the laws of
China in the Province of Amoy concerning marriage were in 1895. As in the
Encarnacion case, there is lacking proof so clear, strong, and unequivocal as to
produce a moral conviction of the existence of the alleged prior Chinese
marriage. Substitute twenty-three years for forty years and the two cases are
the same.
Lastly, as to the testamentary rights of Cheong Seng Gee as an acknowledged
natural child, such was not pronounced as an error since the oppositors failed to
assigned it as an error and merely kept silence.
As to the second issue:
Yes. Marriage may be solemnized by either a judge of any court inferior to the
Supreme Court, justice of the peace, or priest or minister of the Gospel of any
denomination . . ." "Priest," according to the lexicographers, means one
especially consecrated to the service of a divinity and considered as the medium
through whom worship, prayer, sacrifice, or other service is to be offered to the
being worshipped, and pardon, blessing, deliverance, etc., obtained by the
worshipper, as a priest of Baal or of Jehovah; a Buddhist priest. "Minister of the
Gospel" means all clergymen of every denomination and faith. A "denomination"
is a religious sect having a particular name. A Mohammedan Iman is a "priest or
minister of the Gospel," and Mohammedanism is a "denomination," within the
meaning of the Marriage Law.
Next, "No particular form for the ceremony of marriage is required, but the
parties must declare, in the presence of the person solemnizing the marriage,
that they take each other as husband and wife." The law is quite correct in
affirming that no precise ceremonial is indispensable requisite for the creation
of the marriage contract. The two essentials of a valid marriage are capacity and
consent. The latter element may be inferred from the ceremony performed, the
acts of the parties, and habit or repute. In this instance, there is no question of
capacity. Nor do we think there can exist any doubt as to consent. While it is
true that during the Mohammedan ceremony, the remarks of the priest were
addressed more to the elders than to the participants, it is likewise true that the
Chinaman and the Mora woman did in fact take each other to be husband and
wife and did thereafter live together as husband and wife.
In the case, it was shown by evidence that the decedent was married to the
Mora Adong according to the ceremonies prescribed by the book on marriage of
the Koran, by the Mohammedan Iman (priest) Habubakar. That a marriage
ceremony took place is established by one of the parties to the marriage, the
Mora Adong, by the Iman who solemnized the marriage, and by other
eyewitnesses, one of whom was the father of the bride, and another, the chief of
the rancheria, now a municipal councilor. The groom complied with Quranic law
by giving to the bride a dowry of P250 in money and P250 in goods. From the
marriage day until the death of Cheong Boo, twenty-three years later, the
Chinaman and the Mora Adong cohabited as husband and wife. To them were
born five children, two of whom, Payang and Rosalia, are living. Both in his
relations with Mora Adong and with third persons during his lifetime, Cheong
Boo treated Adong as his lawful wife. He admitted this relationship in several
private and public documents. Thus, when different legal documents were
executed, including decrees of registration, Cheong Boo stated that he was
married to the Mora Adong while as late as 1918, he gave written consent to the
marriage of his minor daughter, Payang.
Thus, the Court ruled that the marriage was valid. The law of the Philippine
Islands has long recognized the right of the people to the free exercise of
religion. Various responsible officials have so oft announced the purpose of the
Government not to interfere with the customs of the Moros, especially their
religious customs.
5. CAYETANO LIM and MARCIANO LIM vs. THE INSULAR COLLECTOR OF
CUSTOMS, 36 Phil. 472, G.R. No. L-11759, March 16, 1917
Facts & Issue:
The real question raised on this appeal is whether the Insular Collector of
Customs may lawfully deny entry into the Philippine Islands to two children
aged 8 and 14 years, respectively, under and by authority of the Chinese
Immigration, Laws, it appearing that the children arrived at the Port of Manila
accompanied by and in the custody of their mother, a Filipino woman; that they
were born in China, out of lawful wedlock; and that their father was a Chinese
person.
Ruling:
The Court by analogous reasoning to that upon which the Supreme Court of the
United States held that the wives and minor children of Chinese merchants
domiciled in the United States may enter that country without certificates, these
children must be held to be entitled to enter the Philippine Islands with their
mother, for the purpose of taking up their residence here with her, it appearing
that she is natural guardian, entitled to their custody and charged with their
maintenance and education. (U. S. vs. Gue Lim, 176 U. S. 459.)
The court is not aware of any Chinese law which differentiates the status of
infant children, born out of lawful wedlock, from that of similar children under
the laws in force in the Philippine Islands. Thus the court assumes that in China
as well as in the Philippine Islands such children have the right to look to their
mother for their maintenance and education, and that she is entitled to their
custody and control in fulfilling the obligations towards them which are
imposed upon her, not only by the natural impulses of love and affection, but
also by the express mandate of the law. The court is of the opinion that the
Chinese Immigration Laws should not be construed so as to exclude infant
children of a Filipino mother, born out of lawful wedlock, seeking entrance to
the Philippine Islands for the purpose of taking up their residence with her in
her native land.
We conclude, therefore, that, it appearing that the respondent Collector of
Customs is detaining the petitioners under an erroneous construction of the
immigration laws, and it appearing from the facts disclosed by the
administrative proceedings that these children are entitled to admission into
the Philippine Islands, the order entered in the court below should be reversed,
and in lieu thereof an order should be entered directing the discharge of these
children from the custody of the Insular Collector of Customs, with the costs in
both instances, de officio.
6. KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO.,
LTD. vs. MINORU KITAMURA, 538 SCRA 26, G.R. No. 149177, November 23,
2007
Facts:
Nippon Engineering Consultants (Nippon), a Japanese consultancy firm
providing technical and management support in the infrastructure projects
national permanently residing in the Philippines. The agreement provides that
Kitamaru was to extend professional services to Nippon for a year. Nippon
assigned Kitamaru to work as the project manager of the Southern Tagalog
Access Road (STAR) project. When the STAR project was near completion,
DPWH engaged the consultancy services of Nippon, this time for the detailed
engineering & construction supervision of the Bongabon-Baler Road
Improvement (BBRI) Project. Kitamaru was named as the project manager in
the contract.
Hasegawa, Nippon’s general manager for its International Division, informed
Kitamaru 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.
Kitamaru demanded that he be assigned to the BBRI project. Nippon insisted
that Kitamaru’s contract was for a fixed term that had expired. Kitamaru then
filed for specific performance & damages w/ the RTC of Lipa City. Nippon filed a
MTD.
Nippon’s contention: The ICA had been perfected in Japan & executed by &
between Japanese nationals. Thus, the RTC of Lipa City has no jurisdiction. The
claim for improper pre-termination of Kitamaru’s ICA could only be heard &
ventilated in the proper courts of Japan following the principles of lex loci
celebrationis & lex contractus.
The RTC denied the motion to dismiss. 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. It held that the RTC was
correct in applying the principle of lex loci solutionis.
Issue:
W/N the subject matter jurisdiction of Philippine courts in civil cases for
specific performance & damages involving contracts executed outside the
country by foreign nationals may be assailed on the principles of lex loci
celebrationis, lex contractus, “the state of the most significant relationship rule,”
or forum non conveniens.
Ruling:
No. In the judicial resolution of conflicts problems, 3 consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of
judgments. Jurisdiction & choice of law are 2 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 w/c
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 1st 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/petitioner, over the
defendant/respondent, over the subject matter, over the issues of the case and,
in cases involving property, over the res or the thing w/c is the subject of the
litigation. In assailing the trial court's jurisdiction herein, Nippon is actually
referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the
sovereign authority w/c 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, Nippon, in its MTD, does not claim that the RTC is not
properly vested by law w/ jurisdiction to hear the subject controversy for a civil
case for specific performance & damages is one not capable of pecuniary
estimation & 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. 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 3 principles in conflict of laws make reference to the law applicable
to a dispute, they are rules proper for the 2 nd 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.
Further, Nippon’s premature invocation of choice-of-law rules is exposed by the
fact that they have not yet pointed out any conflict between the laws of Japan
and ours. Before determining which law should apply, 1 st there should exist a
conflict of laws situation requiring the application of the conflict of laws rules.
Also, when the law of a foreign country is invoked to provide the proper rules
for the solution of a case, the existence of such law must be pleaded and proved.
It should be noted that when a conflicts case, one involving a foreign element, is
brought before a court or administrative agency, there are 3 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.
Neither can the other ground raised, forum non conveniens, be used to deprive
the RTC of its jurisdiction. 1st, it is not a proper basis for a motion to dismiss
because Sec. 1, Rule 16 of the Rules of Court does not include it as a ground. 2nd,
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 RTC. In this case, the RTC decided to assume
jurisdiction. 3rd, 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.
WHEREFORE, premises considered, the petition for review on certiorari is
DENIED.
7. PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE
LIMITED, and ATHONA HOLDINGS, N.V. vs. THE HONORABLE COURT OF
APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R.
PERLAS, and WILLIAM H. CRAIG, 274 SCRA 102, G.R. No. 103493, June 19,
1997
Facts:
Ducat obtained two separate loans from Ayala and Philsec in the sum of $2.5M
secured by shares of stock owned by Ducat. In order to facilitate the payment of
the loans, 1488 Inc. undertook the obligation to pay by virtue of a Warranty
Deed with a Vendor’s Lien. Through the latter, 1488 Inc. sold to Athona
Holdings (“Athona”) a parcel of land in Texas while Philsec and Ayala extended
a $2.5M loan to Athona to partially cover the value of the $2.8M lot. Athona
executed a promissory note in favour of 1488 Inc. worth $.3M to complete the
payment for the lot. After all these transactions, Ducat was released by Philsec
and Ayala of his loan.
Athona thereafter failed to pay the $.3M promissory note. 1488 Inc. sued
Athona, Philsec and Ayala for the payment of the $.3M. The case was filed in
Texas. While the Texas case was pending, Philsec filed a complaint to recover a
sum of money with damages in a Makati RTC against Ducat. Ducat, on the other
hand, filed and was granted a motion to dismiss on the basis of litis pendentia
and forum non conveniens. The trial court also held that it had no jurisdiction
over 1488 Inc. because the action was neither in rem nor quasi in rem,
accompanied by the fact that the said defendant was a non-resident. The Court
of Appeals affirmed the decision.
Issues:
1. Does a judgment in a US court bar actions to be instituted in Philippine
courts? (i.e. Can the foreign judgment constitute res judicata?)
2. Did CA err in dismissing the case based on the principle of forum non
conveniens?
Ruling:
1. It depends. The foreign judgment cannot be given the effect of res judicata
without giving the adverse party an opportunity to impeach it on grounds
stated in Rule 39, §50 of the Rules of Court, to wit: “want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact.”
While this Court has given the effect of res judicata to foreign judgments in
several cases, it was after the parties opposed to the judgment had been given
ample opportunity to repel them on grounds allowed under the law. It is not
necessary for this purpose to initiate a separate action or proceeding for
enforcement of the foreign judgment. What is essential is that there is
opportunity to challenge the foreign judgment, in order for the court to properly
determine its efficacy. This is because in this jurisdiction, with respect to
actions in personam, as distinguished from actions in rem, a foreign judgment
merely constitutes prima facie evidence of the justness of the claim of a party
and, as such, is subject to proof to the contrary.
In the case at bar, it cannot be said that petitioners were given the opportunity
to challenge the judgment of the U.S. court as basis for declaring it res judicata
or conclusive of the rights of private respondents. The proceedings in the trial
court were summary. Neither the trial court nor the appellate court was even
furnished copies of the pleadings in the U.S. court or apprised of the evidence
presented thereat, to assure a proper determination of whether the issues then
being litigated in the U.S. court were exactly the issues raised in this case such
that the judgment that might be rendered would constitute res judicata.
2. Yes. First, a motion to dismiss is limited to the grounds under Rule 16, §1,
which does not include forum non conveniens. The propriety of dismissing a case
based on this principle requires a factual determination; hence, it is more
properly considered a matter of defense. Second, while it is within the
discretion of the trial court to abstain from assuming jurisdiction on this
ground, it should do so only after “vital facts are established, to determine
whether special circumstances” require the court’s desistance.
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 Philsec is a domestic corporation and 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.
8. PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES
HOLDINGS, and PHILIP J. KLEPZIG vs. ANTONIO D. TODARO, 524 SCRA 153,
G.R. No. 154830, June 8, 2007
Facts:
Antonio D. Todaro (Todaro) filed with the RTC of Makati City, a complaint for
Sum of Money and Damages with Preliminary Attachment against Pioneer
International Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer
Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J.
Klepzig (Klepzig).
Todaro alleged that PIL is a corporation duly organized and existing under the
laws of Australia and is principally engaged in the ready-mix concrete and
concrete aggregates business; PPHI is the company established by PIL to own
and hold the stocks of its operating company in the Philippines; PCPI is the
company established by PIL to undertake its business of ready-mix concrete,
concrete aggregates and quarrying operations in the Philippines; McDonald is
the Chief Executive of the Hongkong office of PIL; and, Klepzig is the President
and Managing Director of PPHI and PCPI; Todaro has been the managing
director of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-
mixed concrete and concrete aggregate production; he resigned from Betonval
in February 1996; in May 1996, PIL contacted Todaro and asked him if he was
available to join them in connection with their intention to establish a ready-
mix concrete plant and other related operations in the Philippines; Todaro
informed PIL of his availability and interest to join them; subsequently, PIL and
Todaro came to an agreement wherein the former consented to engage the
services of the latter as a consultant for two to three months, after which, he
would be employed as the manager of PIL's ready-mix concrete operations
should the company decide to invest in the Philippines; subsequently, PIL
started its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis. Instead of filing an
Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on
the grounds that the complaint states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint, as the same is within the
jurisdiction of the NLRC, and that the complaint should be dismissed on the
basis of the doctrine of forum non conveniens. RTC dismissed the MTD which
was affirmed by the CA.
Issue:
W/N the RTC should have dismissed the case on the basis of forum non
conveniens due to a presence of a foreign element.
Ruling:
NO. 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: (1) that the Philippine Court is one to which
the parties may conveniently resort to; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and, (3) that
the Philippine Court has or is likely to have power to enforce its decision."
The 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.
Note: the case was also being dismissed on the ground that there was no cause
of action but SC held that there was cause of action, to sustain a motion to
dismiss for lack of cause of action, the complaint must show that the claim for
relief does not exist, rather than that a claim has been defectively stated, or is
ambiguous, indefinite or uncertain. And it was also argued in this case that
jurisdiction is with the NLRC and not with the RTC. SC held it was with RTC, SC
has consistently held that where no employer-employee relationship exists
between the parties and no issue is involved which may be resolved by
reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the RTC that has jurisdiction.
9. MENANDRO B. LAUREANO vs. COURT OF APPEALS AND SINGAPORE
AIRLINES LIMITED, 324 SCRA 414, G.R. No. 114776, February 2, 2000
Facts:
Laureano, Director of Flight Operations and Chief Pilot of Air Manila, applied for
employment with Singapore Airlines [herein private respondent] through its
Area Manager in Manila. He was then accepted. Sometime in 1982, Singapore
Airline, hit by a recession, initiated cost-cutting measures. Seventeen (17)
expatriate captains in the Airbus fleet were found in excess of the defendant's
requirement. Consequently, defendant informed its expatriate pilots including
plaintiff of the situation and advised them to take advance leaves. Realizing that
the recession would not be for a short time, defendant decided to terminate its
excess. It did not, however, immediately terminate it's A-300 pilots. It reviewed
their qualifications for possible promotion to the B-747 fleet. Among the 17
excess Airbus pilots reviewed, twelve were found qualified. Unfortunately,
Laureano was not one of the twelve.
Laureano instituted a case for illegal dismissal before the Labor Arbiter.
Singapore Airline moved to dismiss on jurisdictional grounds. Before said
motion was resolved, the complaint was withdrawn.
Thereafter, Laureano filed the instant case for damages due to illegal
termination of contract of services before the RTC.
CA reversed the decision of the RTC, it held that the action has already
prescribe, the prescriptive period was 4 years and action was filed beyond the
prescriptive period.
Issues:
1. W/N Philippine law must be applied and not Singaporean law.
2. W/N action has already prescribe.
Ruling:
1. Philippine law must be applied. SC quoted the findings of the RTC, it says:
"Neither can the Court determine whether the termination of the plaintiff is
legal under the Singapore Laws because of the defendant's failure to show
which specific laws of Singapore Laws apply to this case. As substantially
discussed in the preceding paragraphs, the Philippine Courts do not take
judicial notice of the laws of Singapore. The defendant that claims the
applicability of the Singapore Laws to this case has the burden of proof. The
defendant has failed to do so. Therefore, the Philippine law should be applied."
Also Respondent Court of Appeals acquired jurisdiction when defendant filed its
appeal before said court. On this matter, respondent court was correct when it
barred defendant-appellant below from raising further the issue of jurisdiction.
2. YES. Neither Article 1144 nor Article 1146 of the Civil Code is here pertinent.
What is applicable is Article 291 of the Labor Code. n the light of Article 291,
aforecited, we agree with the appellate court's conclusion that petitioner's
action for damages due to illegal termination filed again on January 8, 1987 or
more than four (4) years after the effective date of his dismissal on November 1,
1982 has already prescribed. Where the money claim was based on a written
contract, the Collective Bargaining Agreement, the Court held that the language
of Art. 291 of the Labor Code does not limit its application only to 'money claims
specifically recoverable under said Code' but covers all money claims arising
from an employee-employer relations."
10. WILDVALLEY SHIPPING CO., LTD. vs. COURT OF APPEALS and
PHILIPPINE PRESIDENT LINES INC., 342 SCRA 213, G.R. No. 119602,
October 6, 2000
Facts:
Sometime in February 1988, 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. He was asked to pilot
the said vessel on February 11, 1988 boarding it that night at 11:00 p.m.
Captain of the Philippine Roxas, Captain Nicandro Colon, was at the bridge
together with the pilot Vasquez, the vessel's third mate, and a helmsman when
the vessel left the port at 1:40 a.m. on February 12, 1988. Captain Colon left the
bridge when the vessel was under way.
The Philippine Roxas experienced some vibrations. It was then that the watch
officer called the master to the bridge. At around 4:35 a.m., the Philippine Roxas
ran aground in the Orinoco River, thus obstructing the ingress and egress of
vessels.
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 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.
The trial court rendered its decision on October 16, 1991 in favor of the
petitioner, Wildvalley Shipping Co., Ltd.
Both parties appealed: the petitioner appealing the non-award of interest with
the private respondent questioning the decision on the merits of the case. After
the requisite pleadings had been filed, the Court of Appeals judgment is
reversed.
Issue:
Whether or not Venezuelan law is applicable to the case at bar.
Ruling:
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. The former falls under Section 24, Rule 132 of the Rules of Court,
as amended, the entire provision of which is quoted hereunder. 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."
The court has interpreted Section 25 (now Section 24) to include competent
evidence like the testimony of a witness to prove the existence of a written
foreign law.
For a copy of a foreign public document to be admissible, the following
requisites are mandatory: (1) It must be attested by the officer having legal
custody of the records or by his deputy; and (2) 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.
With respect to proof of written laws, parol proof is objectionable, for the
written law itself is the best evidence. According to the weight of authority,
when a foreign statute is involved, the best evidence rule requires that it be
proved by a duly authenticated copy of the statute.
There being no contractual obligation, the private respondent is obliged to give
only the diligence required of a good father of a family in accordance with the
provisions of Article 1173 of the New Civil Code, thus:
The law does provide that the master can countermand or overrule the order or
command of the harbor pilot on board. The master of the Philippine Roxas
deemed it best not to order him (the pilot) to stop the vessel, mayhap, because
the latter had assured him that they were navigating normally before the
grounding of the vessel. Moreover, the pilot had admitted that on account of his
experience he was very familiar with the configuration of the river as well as the
course headings, and that he does not even refer to river charts when navigating
the Orinoco River.
11. AUGUSTO BENEDICTO SANTOS III, represented by his father and legal
guardian, Augusto Benedicto Santos vs. NORTHWEST ORIENT AIRLINES
and COURT OF APPEALS, 210 SCRA 256, G.R. No. 101538, June 23, 1992
Facts:
This case involves the Proper interpretation of Article 28(1) of the Warsaw
Convention, reading as follows:
Art. 28. (1) An action for damage must be brought at the option of the
plaintiff, in the territory of one of the High Contracting Parties, either before
the court of the domicile of the carrier or of his principal place of business,
or where he has a place of business through which the contract has been
made, or before the court at the place of destination.
The petitioner is a minor and a resident of the Philippines purchased from NOA
a round-trip ticket in San Francisco. U.S.A., for his flight from San Francisco to
Manila via Tokyo and back. The scheduled departure date from Tokyo was
December 20, 1986. No date was specified for his return to San Francisco.
On December 19, 1986, the petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila. Despite a previous
confirmation and re-confirmation, he was informed that he had no reservation
for his flight from Tokyo to Manila. He therefore had to be wait-listed.
Petitioner sued NOA for damages in the RTC. NOA moved to dismiss the
complaint on the ground of lack of jurisdiction. it contended that the complaint
could be instituted only in the territory of one of the High Contracting Parties,
before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through which the contract
had been made;
4. the court of the place of destination.
The private respondent contended that the Philippines was not its domicile nor
was this its principal place of business. Neither was the petitioner's ticket issued
in this country nor was his destination Manila but San Francisco in the United
States.
Issues:
(1) The constitutionality of Article 28(1) of the Warsaw Convention; and
(2) The jurisdiction of Philippine courts over the case.
Ruling:
On the issue of Constitutionality:
The Republic of the Philippines is a party to the Convention for the Unification
of Certain Rules Relating to International Transportation by Air, otherwise
known as the Warsaw Convention. It took effect on February 13, 1933. The
Convention was concurred in by the Senate, through its Resolution No. 19, on
May 16, 1950. The Philippine instrument of accession was signed by President
Elpidio Quirino on October 13, 1950, and was deposited with the Polish
government on November 9, 1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23, 1955, President Ramon
Magsaysay issued Proclamation No. 201, declaring our formal adherence
thereto. "to the end that the same and every article and clause thereof may be
observed and fulfilled in good faith by the Republic of the Philippines and the
citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the
Philippine government and, as such, has the force and effect of law in this
country.
On the issue of Jurisdiction:
By its own terms, the Convention applies to all international transportation of
persons performed by aircraft for hire.
International transportation is defined in paragraph (2) of Article 1 as follows:
(2) For the purposes of this convention, the expression "international
transportation" shall mean any transportation in which, according to
the contract made by the parties, the place of departure and the place of
destination, whether or not there be a break in the transportation or a
transshipment, are situated [either] within the territories of two High
Contracting Parties . . .
Since the flight involved in the case at bar is international, the same
being from the United States to the Philippines and back to the United
States, it is subject to the provisions of the Warsaw Convention,
including Article 28(1), which enumerates the four places where an
action for damages may be brought.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over
which authorities are sharply divided. While the petitioner cites several cases
holding that Article 28(1) refers to venue rather than jurisdiction, there are
later cases cited by the private respondent supporting the conclusion that the
provision is jurisdictional.
In other words, where the matter is governed by the Warsaw Convention,
jurisdiction takes on a dual concept. Jurisdiction in the international sense must
be established in accordance with Article 28(1) of the Warsaw Convention,
following which the jurisdiction of a particular court must be established
pursuant to the applicable domestic law. Only after the question of which court
has jurisdiction is determined will the issue of venue be taken up. This second
question shall be governed by the law of the court to which the case is
submitted.
Notably, the domicile of the carrier is only one of the places where the
complaint is allowed to be filed under Article 28(1). By specifying the three
other places, to wit, the principal place of business of the carrier, its place of
business where the contract was made, and the place of destination, the article
clearly meant that these three other places were not comprehended in the term
"domicile."
12. INTERNATIONAL SHOE COMPANY vs. STATE OF WASHINGTON, OFFICE
OF UNEMPLOYMENT COMPENSATION & PLACEMENT, ET AL., 326 US 310,
December 3, 1945
Facts:
Appellant is a Delaware corporation, having its principal place of business in St.
Louis, Missouri, and is engaged in the manufacture and sale of shoes and other
footwear. It maintains places of business in several states, other than
Washington, at which its manufacturing is carried on and from which its
merchandise is distributed interstate through several sales units or branches
located outside the State of Washington.
Appellant has no office in Washington and makes no contracts either for sale or
purchase of merchandise there. It maintains no stock of merchandise in that
state and makes there no deliveries of goods in intrastate commerce. During the
years from 1937 to 1940, now in question, appellant employed 11 to 13
salesmen under direct supervision and control of sales managers located in St.
Louis. These salesmen resided in Washington; their principal activities were
confined to that state; and they were compensated by commissions based upon
the amount of their sales.
The authority of the salesmen is limited to exhibiting their samples and
soliciting orders from prospective buyers, at prices and on terms fixed by
appellant. The salesmen transmit the orders to appellant’s office in St. Louis for
acceptance or rejection, and when accepted, the merchandise for filling the
orders is shipped f.o.b. from points outside Washington to the purchasers
within the state. All the merchandise shipped into Washington is invoiced at the
place of shipment from which collections are made. No salesman has authority
to enter into contracts or to make collections.
The Supreme Court of Washington was of opinion that the regular and
systematic solicitation of orders in the state by appellant’s salesmen, resulting
in a continuous flow of appellant’s product into the state, was sufficient to
constitute doing business in the state so as to make appellant amenable to suit
in its courts. But it was also of opinion that there were sufficient additional
activities shown to bring the case within the rule frequently stated, that
solicitation within a state by the agents of a foreign corporation plus some
additional activities are sufficient to render the corporation amenable to suit
brought in the courts of the state to enforce an obligation arising out of its
activities there. The court found such additional activities in the salesmen’s
display of samples sometimes in permanent display rooms, and the salesmen’s
residence within the state, continued over a period of years, all resulting in
substantial volume of merchandise regularly shipped by appellant to
purchasers within the state.
Appellant also insists that its activities within the state were not sufficient to
manifest its “presence” there and that in its absence the state courts were
without jurisdiction, that consequently it was a denial of due process for the
state to subject appellant to suit.... And appellant further argues that since it was
not present within the state, it is a denial of due process to subject it to taxation
or other money exaction.
Issues:
1. Does the Washington court have jurisdiction over International Shoe?
2. Does International Shoe have “presence” in Washington?
Ruling:
Historically, the jurisdiction of courts to render judgment in personam is
grounded on their de facto power over the defendant’s person. Hence his
presence within the territorial jurisdiction of a court was prerequisite to its
rendition of a judgment personally binding him. But now that the capias ad
respondendum has given way to personal service of summons or other form of
notice, due process requires only that in order to subject a defendant to a
judgment in personam, if he be not present within the territory of the forum, he
should have certain minimum contacts with it such that the maintenance of the
suit does not offend “traditional notions of fair play and substantial justice.”
Since the corporate personality is a fiction although a fiction intended to be
acted upon as though it were a fact, it is clear that unlike an individual, its
“presence” without, as well as within, the state of its origin can be manifested
only by activities carried on its behalf by those who are authorized to act for it.
To say that the corporation is so far “present” there as to satisfy due process
requirements, for purposes of taxation or the maintenance of suits against it in
the courts of the state, is to beg the question to be decided. For the terms
“present” or “presence” are used merely to symbolize those activities of the
corporation’s agent within the state which courts will deem to be sufficient to
satisfy the demands of due process. Those demands may be met by such
contacts of the corporation with the state of the forum as to make it reasonable,
in the context of the federal system of government, to require the corporation to
defend the particular suit which is brought there. An “estimate of the
inconveniences” which would result to the corporation from a trial away from
its “home” or principal place of business is relevant in this connection.
“Presence” in the state in this sense has never been doubted when the activities
of the corporation there have not only been continuous and systematic, but also
give rise to the liabilities sued on, even though no consent to be sued or
authorization to an agent to accept service of process has been given.
Conversely, it has been generally recognized that the casual presence of the
corporate agent or even his conduct of single or isolated items of activities in a
state in the corporation’s behalf are not enough to subject it to suit on cause of
action unconnected with the activities. To require the corporation in such
circumstances to defend the suit away from its home or other jurisdiction
where it carries on more substantial activities has been thought to lay too great
and unreasonable a burden on the corporation to comport with due process.
There have been instances in which the continuous corporate operations within
a state were thought so substantial and of such a nature as to justify suit against
it on causes of action arising from dealings entirely distinct from those
activities.
We are likewise unable to conclude that the service of the process within the
state upon an agent whose activities establish appellant’s presence there was
not sufficient notice of the suit, or that the suit was so unrelated to those
activities as to make the agent an inappropriate vehicle for communicating the
notice. It is enough that appellant has established such contacts with the state
that the particular form of substituted service adopted there gives reasonable
assurance that the notice will be actual. Nor can we say that the mailing of the
notice of suit to appellant by registered mail at its home office was not
reasonably calculated to apprise appellant of the suit.
Appellant having rendered itself amendable to suit upon obligations arising out
of the activities of its salesmen in Washington, the state may maintain the
present suit in personam to collect the tax laid upon the exercise of the privilege
of employing appellant’s salesmen within the state. For Washington has made
one of those activities, which taken together establish appellant’s “presence”
there for purposes of suit, the taxable event by which the sate brings appellant
within the reach of its taxing power. The stat thus has constitutional power to
lay the tax and to subject appellant to a suit to recover it. The activities which
establish its “presence” subject it alike to taxation by the state and to suit to
recover the tax.
13. EL BANCO ESPAÑOL-FILIPINO vs. VICENTE PALANCA, administrator of
the estate of Engracio Palanca Tanquinyeng, 37 Phil. 921, G.R. No. L-11390,
March 26, 1918
Facts:
Engracio Palance Tanquinyeng y Limquingco mortgaged various parcels of real
property in Manila to El Banco Espanol-Filipino. Afterwards, Engracio returned
to China and there he died without returning again to the Philippines.
The mortgagor then instituted foreclosure proceeding but since defendant is a
non-resident, it was necessary to give notice by publication. The Clerk of Court
was also directed to send copy of the summons to the defendant’s last known
address, which is in Amoy, China. It is not shown whether the Clerk complied
with this requirement. Nevertheless, after publication in a newspaper of the City
of Manila, the cause proceeded and judgment by default was rendered. The
decision was likewise published and afterwards sale by public auction was held
with the bank as the highest bidder. This sale was confirmed by the court.
About seven years after the confirmation of this sale, a motion was made by
Vicente Palanca, as administrator of the estate of the original defendant,
wherein the applicant requested the court to set aside the order of default and
the judgment, and to vacate all the proceedings subsequent thereto. The basis of
this application was that the order of default and the judgment rendered
thereon were void because the court had never acquired jurisdiction over the
defendant or over the subject of the action.
Issue:
Did the lower court acquire jurisdiction over the defendant and the subject
matter of the action?
Ruling:
Yes. Jurisdiction may refer to (1) to the authority of the court to entertain a
particular kind of action or to administer a particular kind of relief, or it may
refer to the power of the court over the parties, or (2) over the property which
is the subject to the litigation.
Jurisdiction over the person is acquired by the voluntary appearance of a party
in court and his submission to its authority, or it is acquired by the coercive
power of legal process exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result
either from a seizure of the property under legal process, whereby it is brought
into the actual custody of the law, or it may result from the institution of legal
proceedings wherein, under special provisions of law, the power of the court
over the property is recognized and made effective. For properties the court
may not physically take into custody, the court may exercise an in rem
jurisdiction over such, at the instance of the person claiming to be the owner, in
order to adjudicate the title of the owner against the world.
The action to foreclose a mortgage is said to be a proceeding quasi in rem, by
which is expressed the idea that while it is not strictly speaking an action in rem
yet it partakes of that nature and is substantially such. The action quasi in rem
differs from the true action in rem in the circumstance that in the former 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. The
judgment entered in these proceedings is conclusive only between the parties.
The action being quasi in rem, the court has acquired jurisdiction over the
defendant and the subject matter. The failure of the clerk to mail the notice, if in
fact he did so fail in his duty, is not an irregularity that amounts to a denial of
due process of law and even if proved, would not avoid the judgment in this
case. Notice was given by publication in a newspaper and this is the only form of
notice which the law unconditionally requires. This is all that was absolutely
necessary to sustain the proceedings.
14. WILLIAM F. GEMPERLE vs. HELEN SCHENKER and PAUL SCHENKER as
her husband, 19 SCRA 45, G.R. No. L-18164, January 23, 1967
Facts:
Paul Schenker, acting through his wife and attorney-in-fact (Helen Schenker)
filed with the Court of First Instance of Rizal a complaint for the enforcement of
Paul's allegedly initial subscription to the shares of stock of the Philippines-
Swiss Trading Co., Inc. and the exercise of his alleged pre-emptive rights to the
then unissued original capital stock of said corporation and the increase thereof,
as well as for an accounting and damages. Mrs. Schenker published some
allegations thereof and other matters, which were impertinent, irrelevant and
immaterial. Those allegations were aside from being false and derogatory to the
reputation, good name and credit of Gemperle, "with the only purpose of
attacking" his" honesty, integrity and reputation" and of bringing him "into
public hatred, discredit, disrepute and contempt as a man and a businessman".
Gemperle commenced the present action against the Schenkers for the recovery
of damages and attorney’s fees and praying for a judgment ordering Mrs.
Schenker "to retract in writing the said defamatory expressions". The lower
court decided against Gemperle. Gemperle interposed an appeal alleging that
the lower court has not acquired jurisdiction over the person of Paul Schenker.
Issue:
W/N the lower court has acquired jurisdiction over the person of Paul Schenker
considering the fact that he is a Swiss citizen residing in Zurich, Switzerland and
has not been actually served with summons in the Philippines, although the
summons address to him and Mrs. Schenker had been served personally upon
her in the Philippines.
Ruling:
According to the Court, the lower court has acquired jurisdiction over the
person of Paul Schenker. Jurisdiction over the person of Paul has been secured
through voluntary appearance on his part, he not having made a special
appearance to assail the jurisdiction over his person, and an answer having
been filed in this case, stating that "the defendants, by counsel, answering the
plaintiff's complaint, respectfully aver", which is allegedly a general appearance
amounting to a submission to the jurisdiction of the court. Paul even set up a
counterclaim for damages his answer. Although the counterclaim was set up by
Mrs. Schenker alone, it is shown that she had authority to sue, and had actually
sued on behalf of her husband, so that she was, also, empowered to represent
him in suits filed against him, particularly in a case, like the of the one at bar,
which is consequence of the action brought by her on his behalf.
15. VICTORIA REGNER vs. CYNTHIA R. LOGARTA, TERESA R. TORMIS and
CEBU COUNTRY CLUB, Inc., 537 SCRA 277, G.R. No. 168747, October 19,
2007
Facts:
Luis Regner had three daughters with his first wife, namely Cynthia, Teresa and
Melinda (all of whom were based in California). The petitioner is Luis' second
wife, Victoria Regner.
During his lifetime, Luis acquired several properties, including the Cebu
Country Club. Sometime in 1998, Luis executed a Deed of Donation in favor of
respondents Cynthia and Teresa covering the country club. On 15 June 1999,
Victoria filed a Complaint of Order for Declaration of Nullity of the Deed
Donation with Prayer for Issuance of a Writ of Preliminary Injunction and
Temporary Restraining against Cynthia and Teresa with the RTC. 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.
She averred that on 15 May 1998, when Luis was already very ill and no longer
of sound and disposing mind, Cynthia and Teresa , conspired to make it appear
that Luis donated to them said property.
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.
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.
Subsequently, on 12 September 2002, Teresa filed a motion to dismiss the case
because of petitioner’s failure to prosecute her action for an unreasonable
length of time.
Petitioner opposed the motion and filed her own motion to set the case for pre-
trial, to which 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.
Issue:
(1) Whether a co-donee is an indispensable party in an action to declare the
nullity of the deed of donation, and
(2)Whether delay in the service of summons upon one of the defendants
constitutes failure to prosecute that would warrant dismissal of the complaint.
Ruling:
1) YES. It takes no great degree of legal sophistication to realize that Cynthia
and Teresa are indispensable parties to the civil case. Cynthia and Teresa
allegedly derived their rights to the subject property by way of donation from
their father Luis. The central thrust of the petitioner’s complaint in the civil
case was that Luis could not have donated Proprietary Ownership Certificate
No. 0272 to his daughters Cynthia and Teresa, as Luis was already very ill and
no longer of sound and disposing mind at the time of donation on 15 May 1997.
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.
Without the presence of indispensable parties, a judgment cannot
attain finality.
2) YES. 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
(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.
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.
As can be gleaned from the Sec 3 Rule 17 of the Rules of Civil Procedure, there
are three instances when the complaint may be dismissed due to the plaintiff's
fault: (1) if he fails to appear during a scheduled trial, especially on the date for
the presentation of his evidence in chief; (2) if he fails to prosecute his action for
an unreasonable length of time; and (3) if he fails to comply with the rules or
any order of the court.
Considering the circumstances of the case, it can be concluded that the
petitioner failed to prosecute the case for an unreasonable length of time. There
is failure to prosecute when the plaintiff, being present, is not ready or is
unwilling to proceed with the scheduled trial or when postponements in the
past were due to the plaintiff's own making, intended to be dilatory or caused
substantial prejudice on the part of the defendant.
16. EUROPEAN RESOURCES AND TECHNOLOGIES, INC. and DELFIN J.
WENCESLAO vs. INGENIEUBURO BIRKHAHN + NOLTE, Ingeniurgesellschaft
mbh and HEERS & BROCKSTEDT GMBH & CO., 435 SCRA 246, G.R. No.
159586, July 26, 2004
Facts:
Respondents were Germany Corporations (referred to as the German
Consortium) that submitted a bid to construct, operate, and manage the
Integrated Waste Management Center at the Clark Special Economic Zone
(CSEZ). The bid was submitted to the Clark Development Corporation which
awarded the bid to it. They executed a Contract for Services. The Contract
provided:
 German Consortium could enter contract or agreements for use of the
waste management center by corporations, LGUs, and persons inside
and outside the CSEZ.
 For waste inside CSEZ, they could impose a tipping fee per ton of waste
 For waste outside the CSEZ, they had to pay CDC $1.50 per ton of non-
hazardous solid waste.
 The CDC guaranteed 10,800 tons of solid waste would be collected from
inside and outside the CSEZ.
 The contract had a term of 25 years.
The German Consortium entered a joint venture with DM Wenceslao and LBV
and Associates. They agreed to jointly form a local corporation to which the
German Consortium would assign its rights under the contract for services.
European Resources and Technologies was incorporated. The terms were as
follows:
 They would prepare a Shareholders’ Agreement within 1 month from
the execution of the Memorandum of Understanding
 The German Consortium would own 15% of the equity
 DMWAI shall own 70%
 LBV&A would own 15%.
 In the event parties failed to execute such agreement, the MOU would
be considered null and void.
Without the Shareholder’s Agreement being executed, the German Consortium
entered into a MOA where the GC ceded its rights and obligations in favor of
ERTI and assigned unto ERTI its license from CDC to engage in the business of
providing environmental services needed in the CSEZ.
Four months after, ERTI received a letter from BN Consultants on behalf of the
GC, stating that the GC’s contract with DMWAI, LBV&A, and ERTI had been
terminated on the following grounds: a) the CDC did not give its approval to the
Consortium’s request for the approval of the assignment or transfer by the
German Consortium in favor of ERTI of its rights and interests under the
Contract for Services; b) the parties failed to prepare and finalize the
Shareholders’ Agreement pursuant to the provision of the MOU;(c) there was no
more factual or legal basis for the joint venture to continue; and d) with the
termination of the MOU, the MOA was also deemed terminated or extinguished.
The CDC also wrote that the GC’s assignment of an 85% majority interest to
another party violated its representation to undertake both the financial and
technical aspects of the project.
The GC filed a complaint for injunction against ERTI, claiming it continuously
misrepresented its right to accept solid waste from third parties for processing,
causing irreparable damage to the Consortium and its exclusive right to operate
the waste management center.
At the trial, petitioners objected on the ground of lack of jurisdiction because
the GC was composed of foreign corporations doing business in the Philippines
without a license. The MOA also provided the dispute should be referred to
arbitration. The injunction was granted.
Issue:
Was the German Consortium doing business without a license?
Ruling:
Yes. There is no general rule or governing principle as to what constitutes
doing business. It has been often held that a corporation does business when it
performs acts for which it was created or exercises some functions for which it
was organized. Participating in a bidding process constitutes doing business
because it shows the foreign corporation’s intention to engage in business in the
Philippines. It is performance and not volume that determines the necessity of a
license.
The GC did business without a license by participating in the bidding, showing
intent to transact business. Even though there was a local corporation
mentioned, it was to merely act as a conduit or extension of the German
Consortium.
Unlicensed foreign non-resident corporations cannot file suits in the
Philippines, as stated in 133 of the Corporation Code. This rule provides for
exceptions such as estoppel. A corporation doing business in the Philippines
may sue a citizen or entity that had contracted with and benefited from it.
However, petitioners had clearly not received any benefit from the GC, in fact
spending money to implement the MOA. They sought to implement their
agreement with the German Consortium and were not trying to back out of their
obligations.
To rule the GC has capacity to institute an action without breach on petitioner’s
part would be tantamount to an unlicensed foreign corporation gaining access
to our courts for protection. CA Reversed for lack of legal capacity of
respondents to institute the action.
17. ERIE RAILROAD COMPANY vs. HARRY J. TOMPKINS, 304 US 64, April
25, 1938
Facts:
Tompkins, a citizen of Pennsylvania, was injured on a dark night by a passing
freight train of the Erie Railroad Company while walking along its right of way
at Hughestown in that State. He claimed that the accident occurred through
negligence in the operation, or maintenance, of the train. He was rightfully on
the premises as licensee because on a commonly used beaten footpath which
ran for a short distance alongside the tracks, and that he was struck by
something which looked like a door projecting from one of the moving cars. To
enforce that claim, he brought an action in the federal court for southern New
York, which had jurisdiction because the company is a corporation of that State.
It denied liability, and the case was tried by a jury.
The Erie insisted that its duty to Tompkins was no greater than that owed to a
trespasser. It contended, among other things, that its duty to Tompkins, and
hence its liability, should be determined in accordance with the Pennsylvania
law; that, under the law of Pennsylvania, as declared by its highest court,
persons who use pathways along the railroad right of way -- that is, a
longitudinal pathway, as distinguished from a crossing -- are to be deemed
trespassers, and that the railroad is not liable for injuries to undiscovered
trespassers resulting from its negligence unless it be wanton or willful.
Tompkins denied the applicability of such rule since there was no statute of the
State on the subject. The railroad's duty and liability is to be determined in
federal courts as a matter of general law.
The trial judge refused to rule that the applicable law precluded recovery and
awarded a sum of money. The Circuit Trial Court affirmed the decision of the
trial court.
Erie’s had contended that application of the Pennsylvania rule was required by
§ 34 of the Federal Judiciary Act which provides:
"The laws of the several States, except where the Constitution, treaties,
or statutes of the United States otherwise require or provide, shall be
regarded as rules of decision in trials at common law, in the courts of
the United States, in cases where they apply."
Issue:
W/N such rule of Pennsylvania is required and should be considered by the
Court in deciding the present case.
Ruling:
The subject doctrine in this case is that of Swift v. Tyson. The case stated that a
federal court exercising jurisdiction over such a case on the ground of diversity
of citizenship, is not free to treat this question as one of so-called "general law,"
but must apply the state law as declared by the highest state court.
In deciding the present case, first, the Court held that federal courts exercising
jurisdiction on the ground of diversity of citizenship need not, in matters of
general jurisprudence, apply the unwritten law of the State as declared by its
highest court; that they are free to exercise an independent judgment as to what
the common law of the State is -- or should be. The statute is merely declarative
of the rule which would exist in the absence of the statute." The federal courts
assumed, in the broad field of "general law," the power to declare rules of
decision which Congress was confessedly without power to enact as statutes.
Second, the Court ruled that the application of Swift v. Tyson doctrine prevented
uniformity. Diversity of citizenship jurisdiction was conferred in order to
prevent apprehended discrimination in state courts against those not citizens of
the State. Swift v. Tyson introduced grave discrimination by noncitizens against
citizens. It made rights enjoyed under the unwritten "general law" vary
according to whether enforcement was sought in the state or in the federal
court, and the privilege of selecting the court in which the right should be
determined was conferred upon the noncitizen. Thus, the doctrine rendered
impossible equal protection of the law. In attempting to promote uniformity of
law throughout the United States, the doctrine had prevented uniformity in the
administration of the law of the State.
Third, except in matters governed by the Federal Constitution or by Acts of
Congress, the law to be applied in any case is the law of the State. And whether
the law of the State shall be declared by its Legislature in a statute or by its
highest court in a decision is not a matter of federal concern. There is no federal
general common law. Congress has no power to declare substantive rules of
common law applicable in a State, whether they be local in their nature or
"general," be they commercial law or a part of the law of torts. And no clause in
the Constitution purports to confer such a power upon the federal courts.
Thus, in the present case, the Circuit Court of Appeals ruled that the question of
liability is one of general law, and on that ground declined to decide the issue of
state law. The Court holds this was error, the judgment is reversed and the case
remanded to it for further proceedings in conformity with Court’s opinion – an
examination of the applicability of the said Pennsylvania law should be
considered.
18. K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING OIL CO., LTD.
vs. THE HONORABLE COURT OF APPEALS, ATLANTIC VENUS CO., S.A., and
THE VESSEL M/V "ESTELLA", G.R. Nos. 90306-06, July 30, 1990
Facts:
Kumagai Kaiun Kaisha, Ltd. (Kumagai), a corporation formed and existing under
the laws of Japan, filed a complaint for the collection of a sum of money with
preliminary attachment before RTC Manila against Atlantic Venus Co., S.A.
("Atlantic"), a corporation registered in Panama, the vessel MV Estella and
Crestamonte Shipping Corporation ("Crestamonte"), a Philippine corporation.
Atlantic is the owner of the MV Estella.
Manila alleged that Crestamonte, as bareboat charterer and operator of the MV
Estella, appointed N.S. Shipping Corporation ("NSS"), a Japanese corporation, as
its general agent in Japan. The appointment was formalized in an Agency
Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan.
Kumagai supplied the MV Estella with supplies and services but despite
repeated demands Crestamonte failed to pay the amounts due. NSS and Keihin
Narasaki Corporation (Keihin) filed complaints-in-intervention.
Fu Hing Oil Co., Ltd. (Fu Hing"), a corporation organized in Hong Kong and not
doing business in the Philippines, filed a motion for leave to intervene with an
attached complaint-in-intervention, alleging that Fu Hing supplied marine diesel
oil/fuel to the MV Estella and incurred barge expenses for the total sum of One
Hundred Fifty-two Thousand Four Hundred Twelve Dollars and Fifty-Six Cents
(US$152,412.56) but such has remained unpaid despite demand and that the
claim constitutes a maritime lien. The issuance of a writ of attachment was also
prayed for.
K.K. Shell Sekiyu Osaka Hatsubaisho (K.K. Shell"), a corporation organized in
Japan and not doing business in the Philippines, likewise filed a motion to
intervene with an attached complaint-in-intervention, alleging that upon
request of NSS, Crestamonte's general agent in Japan, K.K. Shell provided and
supplied marine diesel oil/fuel to the W Estella at the ports of Tokyo and
Mutsure in Japan and that despite previous demands Crestamonte has failed to
pay the amounts of Sixteen Thousand Nine Hundred Ninety-Six Dollars and
Ninety- Six Cents (US$16,996.96) and One Million Yen (Y1,000,000.00) and that
K.K. Shell's claim constitutes a maritime lien on the MV Estella. The complaint-
in-intervention sought the issuance of a writ of preliminary attachment. The
trial court allowed the intervention of Fu Hing and K.K. Shell. Writs of
preliminary attachment were issued and upon the posting of the counter-bonds,
writs of attachment were discharged.
Atlantic and MV Estella moved to dismiss the complaints-in-intervention and
Atlantic filed a petition in the Court of Appeals against the trial court judge,
Kumagai, NSS and Keihin seeking the annulment of the orders of the trial court.
the Court of Appeals annulled the orders of the trial court and directed it to
cease and desist from proceeding with the case. According to the Court of
Appeals, Fu Hing and K.K. Shell were not suppliers but sub-agents of NSS, hence
they were bound by the Agency Agreement between Crestamonte and NSS. The
trial court should have disallowed their motions to intervene.
Issues:
1. W/N Fu Hing and K.K. Shell should be allowed to intervene.
2. W/N the doctrine of forum non conveniens may be invoked.
Ruling:
As to the first issue:
No express reference to the contracting of sub-agents or the applicability of the
terms of the agreement, particularly the choice-of-forum clause, to sub-agents is
made in the text of the agreement. What the contract clearly states are NSS'
principal duties, i.e., that it shall provide for the necessary services required for
the husbanding of Crestamonte's vessels in Japanese ports (section 2.0) and
shall be responsible for fixing southbound cargoes with revenues sufficient to
cover ordinary expenses (section 3.0)
Moreover, the complaint-in-intervention filed by K.K. Shell merely alleges that it
provided and supplied the MV Estella with marine diesel oil/fuel, upon request
of NSS who was acting for and as duly appointed agent of Crestamonte. There is
no basis for the CA to state that K.K. Shell admitted in its intervention that it was
appointed as local agent/sub-agent or representatives by NSS by virtue of said
Agency Agreement. The CA was erroneously referring to another case involving
another ship in another court. Thus, additional evidence must be given to
establish such allegation.
As to the second issue:
Atlantic and MV Estella are invoking the doctrine of forum non conveniens to be
a valid ground for the dismissal of K.K. Shells’s complaint-in-intervention. K.K.
Shell, in turn, argued by invoking its right as maritime lienholder under
Presidential Decree No. 1521, the Ship Mortgage Decree of 1978.
SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-
Any person furnishing repairs, supplies, to wage, use of dry dock or
marine railway, or other necessaries, to any vessel, whether foreign
or domestic, upon the order of the owner of such vessel, or of a
person authorized by the owner, shall have a maritime lien on the
vessel, which may be enforced by suit in rem, and it shall be
necessary to allege or prove that credit was given to the vessel.
However, in order to invoke this, it must be established that the credit was
extended to the vessel itself. In other words, considering the dearth of evidence
due to the fact that the private respondents have yet to file their answer in the
proceedings below and trial on the merits is still to be conducted, whether or
not petitioners are indeed maritime lienholders and as such may enforce the
lien against the MV Estella are matters that still have to be established.
Neither are we ready to rule on the private respondents' invocation of the
doctrine of forum non conveniens, as the exact nature of the relationship of the
parties is still to be established. We leave this matter to the sound discretion of
the trial court judge who is in the best position to decide such.
It was clearly reversible error on the. part of the Court of Appeals to annul the
trial court's orders, insofar as K.K. Shell is concerned, and order the trial court
to cease and desist from proceeding with Civil Case No. 87-38930. There are
still numerous material facts to be established in order to arrive at a conclusion
as to the true nature of the relationship between Crestamonte and K.K. Shell and
between NSS and K.K. Shell. The best recourse would have been to allow the
trial court to proceed with Civil Case No. 87-38930 and consider whatever
defenses may be raised by private respondents after they have filed their
answer and evidence to support their conflicting claims has been presented.
The Court of Appeals, however, substituted its judgment for that of the trial
court and decided the merits of the case, even in the absence of evidence, on the
pretext of reviewing an interlocutory order.
19. HENRY HEINE vs. NEW YORK LIFE INSURANCE COMPANY, 45 F2d 426,
Dec. 1, 1930
Facts:
This is one of several cases brought against New York Life Insurance Company
and the Guardian Insurance Company to recover on some two hundred and
forty life insurance policies made and issued by the defendants in Germany, in
favour of German citizens and payable in German marks. Defendants were
incorporated in New York with statutory agents in Oregon, upon whom service
of summons can be made.
As a condition to the insurance companies’ right to do business in Germany,
they were compelled to accede to the supervision and control of German
insurance officials, to invest the proceeds arising from German policies in
German securities, and to establish an office there with an agent upon whom
service can be made.
The actions are brought in the name of the insured parties in the United States
and Germany for amounts due or owing under the policies.
Issue:
May the court exercise discretion in deciding whether to retain or not to retain
jurisdiction of a case where a court in another state has jurisdiction over the
case by taking into consideration external factors?
Ruling:
Yes. “The courts of Germany and New York are open and functioning and
competent to take jurisdiction of the controversies, and service can be made
upon the defendants in either of such jurisdictions. To require the defendants to
defend the actions in this district would impose upon them great and
unnecessary inconvenience and expense, and probably compel them to produce
here (three thousand miles from their home office) numerous records, books,
and papers , all of which are in daily use by it in taking care of current business.
In addition, it would no doubt consume months of the time of this court to try
and dispose of these cases, thus necessarily disarranging the calendar, resulting
in delay, inconvenience, and expense to other litigants who are entitled to
invoke its jurisdictions.
It is argued by the plaintiffs that, because the court has jurisdiction of the
subject matter and the parties, it has no discretion, but should proceed with the
case, regardless of where the cause of action arose, or the law by which it is
controlled, or the residence or convenience of the parties and witnesses, or the
difficulty the court would encounter in attempting to interpret and enforce a
foreign contract, or the interference with the other business of the court. But
that is a matter resting in its discretion. It may retain jurisdiction or it may, in
the exercise of a sound discretion, decline to do so, as the circumstances
suggest. The courts have repeatedly refused, in their discretion, to entertain
jurisdiction of causes of action arising in a foreign jurisdiction, where both
parties are non-residents of the forum.
The courts of this country (USA) are established and maintained primarily to
determine controversies between its own citizens and those having business
there, and manifestly the court may protect itself against a flood of litigation
over contracts made and to be performed in a foreign country, forum, and no
reason exists why the liability, if any, cannot be enforced in the courts of the
country where the cause of action arose, or in the state where the defendant
was organized and has its principal offices. True, the courts of New York have
declined to exercise jurisdiction over actions brought on insurance policies
similar to those in suit.
20. In the matter Estate of Edward Randolph Hix, deceased, A.W. FLUEMER
vs. ANNIE COUSHING HIX, 54 Phil. 610, G.R. No. L-32636, March 17, 1930
Facts:
Fleumer, the special administrator of the Estate of Edward R. Hix, appealed
from the decision of the lower court denying probate of a document alleged to
be the will of Hix. Fleumer, alleged that the will was executed in West Virginia
on November 3, 1925 by Hix who was residing there and therefore, the laws of
West Virginia should govern. He submitted a copy of section 3868 of Act 1882
as found in the West Virginia Code and certified by the Director of the National
Library.
Issue:
W/N the court should apply the West Virginia Code?
Ruling:
No. The laws of a foreign jurisdiction do not prove themselves in courts. The
courts of the Philippine Islands are not authorized to take judicial notice of laws
of the various States of the American Union. Such laws must be proved as facts.
Here the requirements of the law were not met. There was no showing that the
book from which an extract was taken was printed or published under the
authority of the State of West Virginia, as provided in section 300 of the Code of
Civil Procedure. Nor was the extract from the law attested by the certificate of
the officer having charge of the original, under the seal of the State of West
Virginia, as provided in Section 301 of the Code of Civil Procedure. No evidence
was introduced to show that the extract from the laws of West Virginia was in
force at the time the alleged was executed.
In addition, the due execution of the will was not established. The only evidence
on this point is to be found in the testimony of the petitioner. Aside from this,
there was nothing to indicate that the will was acknowledged by the testator in
the presence of two competent witnesses, or that these witnesses subscribed to
the will in the presence of the testator and of each other as the law of West
Virginia seems to require. On the supposition that the witnesses to the will
reside outside the Philippine Islands, it would then be the duty of the petitioner
to prove execution by some other means.
21. TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO.
vs. MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA
BOHANAN, 106 Phil. 997, G.R. No. L-12105, January 30, 1960
Facts:
In the order admitting to probate the will made by C.O. Bohanan, the CFI of
Manila declared him to be a citizen of Nevada, U.S.A. The Philippine Trust Co.,
named as executor of the will, was ordered by the CFI of Manila in its order
granting probate to “enter upon the execution and performance of its trust.”
In a subsequent hearing of the proposed project of partition of the estate,
Nevada law was not introduced. Magdalena Bohanan, widow and her two
children questioned the validity of the will which gave to a grandson P90,819.67
of the P211,639 and one half of all shares of stock of several mining companies.
He gave the same number of shares and the same amount in cash to his brother
and sister. Only P6,000 was left to each of his children.
Issue:
Which law will apply?
Ruling:
The old Civil Code, which is applicable to this case because the testator died in
1944, expressly provides that successional rights to personal property are to be
governed by the national law of the person whose succession is in question.
Says the law on this point:
Nevertheless legal and testamentary successions, in respect to
the order of succession as well as to the extent 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 and the country in which it is found.
In the proceedings for the probate of the will, it was found out and it was
decided that the testator was a citizen of the State of Nevada because he had
selected this as his domicile and his permanent residence. So the question at
issue is whether testamentary dispositions, especially those for the children
which are short of the legitime given them by the Civil Code of the Philippines,
are valid. It is not disputed that the laws of Nevada allow a testator to dispose of
all his properties by will. It does not appear that at the time of the hearing of the
project partition, the above-quoted provision was introduced in evidence, as it
was the executor’s duty to do. The law of Nevada, being a foreign law, can only
be proved in our courts in the form and manner provided for by our Rules,
which are as follows:
Sec. 41 Proof of public or official record. – An official record or
an entry therein, 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.
We have, however, consulted the records of the case in the court below and we
have found that during the hearing on October 4, 1954 of the motion of
Magdalena C. Bohanan for withdrawal of P20,000 as her share, the foreign law,
especially Section 9905, Compiled Nevada Laws, was introduced in evidence by
appellants’ counsel. Again said law was presented by the counsel for the
executor and admitted by the Court during the hearing of the case on January
23, 1950.
In addition, the other appellants, children of the testator, do not dispute the
above-quoted provision of the laws of the State of Nevada. Under all the above
circumstances, we are constrained to hold the pertinent law of Nevada can be
taken judicial notice of by us, without proof of such law having been offered at
the hearing of the project of partition.
As in accordance with Article 10 of the Old Civil Code, the validity of
testamentary dispositions are to be governed by the national law of the testator,
and as it has been decided and it is not disputed that the national law of the
testator is that of the State of Nevada which allows a testator to dispose of all his
property according to his will, as in the case at bar, the order of the court
approving the project of partition made in accordance with the testamentary
provisions, must be affirmed.
22. PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO,
SR. MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf
and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United
States District Court of Hawaii vs. HON. SANTIAGO JAVIER RANADA, in his
capacity as Presiding Judge of Branch 137, Regional Trial Court, Makati
City, and the ESTATE OF FERDINAND E. MARCOS, through its court
appointed legal representatives in Class Action MDL 840, United States
District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand Marcos,
Jr., G.R. No. 139325, April 12, 2005
Facts:
In 1991, a complaint was filed with the District Court of Hawaii, against the
Estate of former Philippine President Ferdinand E. Marcos. The action was
brought forth by ten Filipino citizens who each alleged having suffered human
rights abuses such as arbitrary detention, torture and rape in the hands of
police or military forces during the Marcos regime. The Alien Tort Act was
invoked as basis for the US District Court's jurisdiction over the complaint, as it
involved a suit by aliens for tortious violations of international law. These
plaintiffs brought the action on their own behalf and on behalf of a class of
similarly situated individuals (numbering around 10,000), particularly
consisting of all current civilian citizens of the Philippines, their heirs and
beneficiaries, who between 1972 and 1987 were tortured, summarily executed
or had disappeared while in the custody of military or paramilitary groups.
In 1995, the US District Court awarded a total of $1,964,005,859.90 to the
plaintiffs. The judgement was affirmed by the US Court of Appeals. The Marcos
Estate did not appeal the decision to the US Supreme Court.
In 1997, the present petitioners filed a Complaint with the Makati RTC for the
enforcement of the foreign judgment. The Marcos Estate filed a motion to
dismiss, raising, among others, the non-payment of the correct filing fees. It
alleged that petitioners had only paid Four Hundred Ten Pesos (P410.00) as
docket and filing fees, notwithstanding the fact that they sought to enforce a
monetary amount of damages in the amount of over Two and a Quarter Billion
US Dollars (US$2.25 Billion). In response, the petitioners claimed that an action
for the enforcement of a foreign judgment is not capable of pecuniary
estimation; hence, a filing fee of only P410.00 (now P600.00).
Judge Ranada dismissed the complaint without prejudice, saying that the action
was capable of pecuniary estimation and that the proper docket fees to be paid
amounted to 472 million. He also denied the motion for reconsideration.
Thus, petitioners filed a Petition for Certiorari under Rule 65 assailing the
orders of Judge Ranada. Petitioners argue that their action is incapable of
pecuniary estimation as the subject matter of the suit is the enforcement of a
foreign judgment, and not an action for the collection of a sum of money or
recovery of damages. They also invoke Section 11, Article III of the Bill of Rights
of the Constitution, which provides that "Free access to the courts and quasi-
judicial bodies and adequate legal assistance shall not be denied to any person
by reason of poverty," a mandate which is essentially defeated by the required
exorbitant filing fee. The filing fee of 472 million, as arrived at by the RTC, was
characterized as indisputably unfair, inequitable, and unjust.
Issue:
W/N the action is capable of pecuniary estimation. How much should the
plaintiffs pay as docket fees?
Ruling:
The action is CAPABLE OF PECUNIARY ESTIMATION, but the plaintiffs ended up
paying the correct amount as docket fees.
Rule 141 of the Rules of Court
SEC. 7. Clerk of Regional Trial Court.-
(a) For filing an action or a permissive counterclaim or money
claim against an estate not based on judgment, or for filing
with leave of court a third-party, fourth-party, etc., complaint,
or a complaint in intervention, and for all clerical services in
the same time, if the total sum claimed, exclusive of interest, or
the started value of the property in litigation, is: (a
corresponding docket fee is given for a certain range in the
amount of the sum claimed)
(b) For filing:
1. Actions where the value of the subject matter cannot be
estimated --- P 600.00
 2. Special civil actions except judicial foreclosure which shall
be governed by paragraph (a) above --- P 600.00
3. All other actions not involving property --- P 600.00
SEC. 48. Effect of foreign judgments. — The effect of a
judgment of a tribunal of a foreign country, having jurisdiction
to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is
conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title;
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
Judge Ranada opined that the “subject matter of the complaint was indeed
capable of pecuniary estimation, as it involved a judgment rendered by a foreign
court ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment.” Section 7(a) of Rule 141 of
the Rules of Civil Procedure relied upon by Judge Ranada prescribes a
corresponding filing fee based on total sum claimed for “ordinary actions,
permissive counterclaims, third-party, etc. complaints and complaints-in-
interventions, and money claims against estates which are not based on
judgment.” The SC said Section 7(a) was not applicable because although the
action was a claim against the estate of Marcos, it is one that is based on
judgment, which in this case, was a foreign judgment. But the SC said that where
the rule does not distinguish, ...
The plaintiffs argue that the action falls under Section 7(b) (1) of Tule 141 -
“actions where the value of the subject matter cannot be estimated”. The SC
disagreed saying,
“This is an intriguing argument, but ultimately it is self-evident
that while the subject matter of the action is undoubtedly the
enforcement of a foreign judgment, the effect of a providential
award would be the adjudication of a sum of money. Perhaps in
theory, such an action is primarily for "the enforcement of the
foreign judgment," but there is a certain obtuseness to that sort
of argument since there is no denying that the enforcement of
the foreign judgment will necessarily result in the award of a
definite sum of money.”
So the SC was saying that even if the action filed by the plaintiffs is capable of
pecuniary estimation, it cannot fall under Section 7(a) because it is based on a
judgment. According to the SC, the case falls under Section 7(b)(3) --- “other
actions not involving property”. As it turns out, the docket fees under this rule is
the same as the one for “cases not capable of pecuniary estimation” so the
plaintiffs ended up paying the correct amount as docket fees and the case
SHOULD NOT have been dismissed.
The SC also said (and I think this is the part that is related to Conflicts):
“There is another consideration of supreme relevance in this case, one which
should disabuse the notion that the doctrine affirmed in this decision is
grounded solely on the letter of the procedural rule. We earlier adverted to the
the internationally recognized policy of preclusion, as well as the principles of
comity, utility and convenience of nations as the basis for the evolution of the
rule calling for the recognition and enforcement of foreign judgments. The US
Supreme Court in Hilton v. Guyot relied heavily on the concept of comity, as
especially derived from the landmark treatise of Justice Story in his
Commentaries on the Conflict of Laws of 1834. Yet the notion of "comity" has
since been criticized as one "of dim contours" or suffering from a number of
fallacies. Other conceptual bases for the recognition of foreign judgments have
evolved such as the vested rights theory or the modern doctrine of obligation”.
xxx
“There is no obligatory rule derived from treaties or conventions that requires
the Philippines to recognize foreign judgments, or allow a procedure for the
enforcement thereof. However, generally accepted principles of international
law, by virtue of the incorporation clause of the Constitution, form part of the
laws of the land even if they do not derive from treaty obligations. The classical
formulation in international law sees those customary rules accepted as binding
result from the combination two elements: the established, widespread, and
consistent practice on the part of States; and a psychological element known as
the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the
latter element is a belief that the practice in question is rendered obligatory by
the existence of a rule of law requiring it.”
“Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether statutory
or jurisprudential, adopted in various foreign jurisdictions. In the Philippines,
this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which
has existed in its current form since the early 1900s. Certainly, the Philippine
legal system has long ago accepted into its jurisprudence and procedural rules
the viability of an action for enforcement of foreign judgment, as well as the
requisites for such valid enforcement, as derived from internationally accepted
doctrines. Again, there may be distinctions as to the rules adopted by each
particular state, but they all prescind from the premise that there is a rule of law
obliging states to allow for, however generally, the recognition and enforcement
of a foreign judgment. The bare principle, to our mind, has attained the status of
opinio juris in international practice.”
“This is a significant proposition, as it acknowledges that the procedure and
requisites outlined in Section 48, Rule 39 derive their efficacy not merely from
the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme Court, and
could very well be abrogated or revised by the high court itself. Yet the Supreme
Court is obliged, as are all State components, to obey the laws of the land,
including generally accepted principles of international law which form part
thereof, such as those ensuring the qualified recognition and enforcement of
foreign judgments.”
Thus, relative to the enforcement of foreign judgments in the Philippines, it
emerges that there is a general right recognized within our body of laws, and
affirmed by the Constitution, to seek recognition and enforcement of foreign
judgments, as well as a right to defend against such enforcement on the grounds
of want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this
country merely due to an exorbitant assessment of docket fees is alien to
generally accepted practices and principles in international law. Indeed, there
are grave concerns in conditioning the amount of the filing fee on the pecuniary
award or the value of the property subject of the foreign decision. Such
pecuniary award will almost certainly be in foreign denomination, computed in
accordance with the applicable laws and standards of the forum. The vagaries of
inflation, as well as the relative low-income capacity of the Filipino, to date may
very well translate into an award virtually unenforceable in this country,
despite its integral validity, if the docket fees for the enforcement thereof were
predicated on the amount of the award sought to be enforced. The theory
adopted by respondent judge and the Marcos Estate may even lead to
absurdities, such as if applied to an award involving real property situated in
places such as the United States or Scandinavia where real property values are
inexorably high. We cannot very well require that the filing fee be computed
based on the value of the foreign property as determined by the standards of
the country where it is located.
23. SYLVESTER PENNOYER vs. MARCUS NEFF, 95 US 714, May 13, 1878
Facts:
Mitchell, an Oregon lawyer, had won an Oregon default judgment against Neff
for $300 in attorney’s fees. Neff, who lived in California, had been served by
publication in an Oregon newspaper. Neff owned land in Oregon, which
Pennoyer acquired under a sheriff’s deed in satisfaction of the judgment. Neff
then sued Pennoyer in a federal court in Oregon to recover the land, contending
that the sale was invalid because the state court had not acquired jurisdiction
Issue:
W/N the sale of Neff’s property by the Oregon court is valid?
Ruling:
No. If, without personal service judgments in personam obtained ex parte
against non-residents and absent parties, upon mere publication of process
which in the great majority of cases would never be seen by the parties
interested, could be upheld and enforced, they would be the constant
instruments of fraud and oppression. Judgments for all sorts of claims upon
contracts and for torts, real or pretended, would be thus obtained, under which
property would be seized, when the evidence of the transactions upon “which
they were founded, if they ever had any existence, had perished.”
Substituted services by publication, or in any other authorized form, may be
sufficient to inform parties of the object of proceedings taken where property is
once brought under the control of the court by seizure or some equivalent act to
any proceedings authorized by law upon such seizure for its condemnation and
sale. Such service may also be sufficient in cases where the object of the action is
to reach and dispose of property in the State or of some interest therein, by
enforcing a contract or a lien respecting the same, or to partition it among
different owners; or, when the public is a party, to condemn and appropriate it
for a public purpose. In other words, such service may answer in all actions
which are substantially proceedings in rem. But where the entire object of the
action is to determine the personal rights and obligations of the defendants, that
is, where the suit is merely in personam, constructive service in this form upon a
non-resident is ineffectual for any purpose. Process from the tribunals of one
State cannot run into another State, and summon parties there domiciled to
leave its territory and respond to proceedings against them. Publication of
process or notice within the State where the tribunal sits cannot create any
greater obligation upon the non-resident to appear. Process sent to him out of
the State, and process published within it, are equally unavailing in proceedings
to establish his personal liability.
The want of authority of the tribunals of a State to adjudicate upon the
obligations of non-residents, where they have no property within its limits, is
not denied by the court below; but the position is assumed that, where they
have property within the State, it is immaterial whether the property is in the
first instance brought under the control of the court by attachment or some
other equivalent act, and afterwards applied by its judgment to the satisfaction
of demands against its owner; or such demands be first established in a
personal action, and the property of the non-resident be afterwards seized and
sold on execution. The jurisdiction of the court to inquire into and determine his
obligations at all is only incidental to its jurisdiction over the property. Its
jurisdiction in that respect cannot be made to depend upon facts to be
ascertained after it has tried the cause and rendered the judgment. If the
judgment be previously void, it will not become valid by the subsequent
discovery of property of the defendant, or by his subsequent acquisition of it.
The judgment, if void when rendered, will always remain void; it cannot occupy
the doubtful position of being valid if property be found, and void if there be none.
Even if the position assumed were confined to cases where the non-resident
defendant possessed property in the State at the commencement of the action, it
would still make the validity of the proceedings and judgment depend upon the
question whether, before the levy of the execution, the defendant had or had not
disposed of the property. If, before the levy, the property should be sold, then,
according to this position, the judgment would not be binding. This doctrine
would introduce a new element of uncertainty in judicial proceedings.
24. MULLANE, SPECIAL GUARDIAN vs. CENTRAL HANOVER BANK & TRUST
CO., TRUSTEE, et al., 399 US 306, April 24, 1950
Facts:
Section 100c of the New York State Banking Law provided for the pooling of
small trusts into a large common fund administered by a corporate fiduciary,
with the income, expenses, and capital gains and losses shared by the
constituent trusts in proportion to their contribution to the common fund. The
purpose of this legislation (and similar laws in other states) was to provide
corporate fiduciary services to modestly-sized trusts which would be too costly
to manage individually, promoting economies of scale in the trust management
industry and better risk management for smaller trusts. Central Hanover Bank
& Trust Co. in New York City was the manager & trustee of one such common
trust fund.
The common trust fund at issue in this case was established on January 17,
1946, and §100c provided for an accounting of each fund to be undertaken
twelve to fifteen months after the establishment of a fund, and then for every
three years thereafter.
In March of 1947, Central Hanover petitioned the New York Surrogate's Court
for a settlement of its first account as common trustee. By this time there were
approximately 113 trusts participating in the fund, about half inter vivos trusts
and half testamentary trusts, with combined gross capital assets of nearly three
million dollars.
The only notice of the settlement proceedings required by §100c to be given the
trusts’ beneficiaries was stated as follows:
“After filing such petition [for judicial settlement of its account] the
petitioner shall cause to be issued by the court in which the petition is
filed and shall publish not less than once in each week for four
successive weeks in a newspaper to be designated by the court a notice
or citation addressed generally without naming them to all parties
interested in such common trust fund and in such estates, trusts or
funds mentioned in the petition, all of which may be described in the
notice or citation only in the manner set forth in said petition and
without setting forth the residence of any such decedent or donor of
any such estate, trust or fund.”
When the fund had just been started, however, Central Hanover had sent notice
by mail of the future proceedings. Subsequent notice in the paper included only
the name of the trust, the date of establishment and the estates in the trust. The
names of beneficiaries were not included. Appellant Kenneth Mullane was
appointed special guardian and attorney for those parties known or unknown
who had any interest in the income of the fund, and James N. Vaughan was
appointed to represent those parties with interest in the principal.
Mullane appeared specially to object to the statutory provision for notice,
claiming that it was inadequate to afford the due process required by the
Fourteenth Amendment. The Surrogate overruled Mullane’s objections, and
entered a decree accepting the accounting and terminating any rights the
beneficiaries may have had against Central Hanover for mismanagement of the
trust. The New York Supreme Court Appellate Division subsequently affirmed,
as did the New York Court of Appeals. The U.S. Supreme Court then granted
certiorari.
Issue:
What are the constitutional requirements for notice of judicial proceedings to a
potential party under the Fourteenth Amendment to the United States
Constitution?
Ruling:
Justice Jackson began his examination of the issues of the case by discussing the
nature of the jurisdiction which the Surrogate’s Court was exercising. He
explained some of the differences in the service of process required in in rem,
quasi in rem, and in personam actions. Mullane had argued that this was
essentially an in personam action, and that under the doctrine announced in
Pennoyer v. Neff, the Surrogate could not exercise jurisdiction on out-of-state
residents upon whom personal service had not been made.
Jackson did not explicitly determine what type of jurisdiction was being
exercised here, but held that the Fourteenth Amendment applied to all of them
regardless of how the state classified the action. The beneficiaries’ property
rights were at stake here, and without proper notice, the “right to be heard”
provided by the Fourteenth Amendment was of no practical consequence.
Constructive service via newspaper publication, wrote Jackson, was an
unreliable method of giving notice, because newspapers have limited circulation
and even then, many people do not examine the legal notices, which are usually
in small typeface on the back pages. In this case, the legal notice at issue did not
even mention the names of the beneficiaries. Furthermore, under normal
circumstances, property holders are directly aware of legal proceedings
regarding their property, either directly or through a caretaker. But in this case,
the caretaker was the beneficiaries’ adversary - the trustee itself - which could
not be expected to give them reasonable notice, and the special guardian was
also not required to give notice.
Jackson held that notice must be “reasonably calculated” to inform known
parties affected by the proceedings. Thus, §100c(12), the section of the statute
which dealt with notice to beneficiaries, was unconstitutional. He further held
that notice by publication was acceptable for missing or unknown parties, for
those whose whereabouts could not be ascertained by due diligence, and for
those whose future interests were too conjectural to be known with any
certainty. However, Jackson noted that in many cases, notice to the known
parties would help the information of the proceedings to reach those who were
unknown by the trustee.
25. R. F. SHAFFER, et al. vs. ARNOLD HEITNER, 433 US 186, June 24, 1977
Facts:
Appellee, a nonresident of Delaware, filed a shareholder's derivative suit in a
Delaware Chancery Court, naming as defendants a corporation and its
subsidiary, as well as 28 present or former corporate officers or directors,
alleging that the individual defendants had violated their duties to the
corporation by causing it and its subsidiary to engage in actions (which
occurred in Oregon) that resulted in corporate liability for substantial damages
in a private antitrust suit and a large fine in a criminal contempt action.
Simultaneously, appellee filed a motion for sequestration of the Delaware
property of the individual defendants, all nonresidents of Delaware,
accompanied by an affidavit identifying the property to be sequestered as stock,
options, warrants, and various corporate rights of the defendants. A
sequestration order was issued pursuant to which shares and options belonging
to 21 defendants (appellants) were "seized" and "stop transfer" orders were
placed on the corporate books.
Appellants entered a special appearance to quash service of process and to
vacate the sequestration order, contending that the ex parte sequestration
procedure did not accord them due process; that the property seized was not
capable of attachment in Delaware; and that they did not have sufficient
contacts with Delaware to sustain jurisdiction of that State's courts.
In that case, the Court (after noting that the historical basis of in personam
jurisdiction was a court's power over the defendant's person, making his
presence within the court's territorial jurisdiction a prerequisite to its rendition
of a personally binding judgment against him, "due process requires only that,
in order to subject a defendant to a judgment in personam, if he be not present
within the territory of the forum, he have certain minimum contacts with it such
that the maintenance of the suit does not offend 'traditional notions of fair play
and substantial justice'". The Court rejected appellants’ arguments.
The court held that the limitation on the purpose and length of time for which
sequestered property is held comported with due process, and that the
statutory situs of the stock (under a provision making Delaware the situs of
ownership of the capital stock of all corporations existing under the laws of that
State) provided a sufficient basis for the exercise of quasi in rem jurisdiction by
a Delaware court. The Delaware Supreme Court affirmed, concluding that
International Shoe raised no constitutional barrier to the sequestration
procedure because "jurisdiction under § 366 remains . . . quasi in rem founded
on the presence of capital stock [in Delaware], not on prior contact by
defendants with this forum."
Issue:
W/N a State can assert jurisdiction over a nonresident must be evaluated
according to the minimum contacts standard of International Shoe Co. v.
Washington stating that the Due Process Clause affords protection against
"judgments without notice."
Ruling:
The Court stated in order to justify an exercise of jurisdiction in rem, the basis
for jurisdiction must be sufficient to justify exercising "jurisdiction over the
interests of persons in the thing." The presence of property in a State may bear
upon the existence of jurisdiction by providing contacts among the forum State,
the defendant, and the litigation, as for example, when claims to the property
itself are the source of the underlying controversy between the plaintiff and
defendant, where it would be unusual for the State where the property is
located not to have jurisdiction.
But where, as in the instant quasi in rem action, the property now serving as the
basis for state court jurisdiction is completely unrelated to the plaintiff's cause
of action, the presence of the property alone, i.e., absent other ties among the
defendant, the State, and the litigation, would not support the State's
jurisdiction.
Though the primary rationale for treating the presence of property alone as a
basis for jurisdiction is to prevent a wrongdoer from avoiding payment of his
obligations by removal of his assets to a place where he is not subject to an in
personam suit, that is an insufficient justification for recognizing jurisdiction
without regard to whether the property is in the State for that purpose.
Moreover, the availability of attachment procedures and the protection of the
Full Faith and Credit Clause also militate against that rationale.
Delaware's assertion of jurisdiction over appellants, based solely as it is on the
statutory presence of appellants' property in Delaware, violates the Due Process
Clause, which"does not contemplate that a state may make binding a judgment .
. . against an individual or corporate defendant with which the state has no
contacts, ties, or relations."
In relation to the case of International Shoe Co. v. Washington:
a) Appellants' holdings in the corporation, which are not the subject
matter of this litigation and are unrelated to the underlying cause of
action, do not provide contacts with Delaware sufficient to support
jurisdiction of that State's courts over appellants.
b) Nor is Delaware state court jurisdiction supported by that State's
interest in supervising the management of a Delaware corporation and
defining the obligations of its officers and directors, since Delaware
bases jurisdiction not on appellants' status as corporate fiduciaries, but
on the presence of their property in the State. Moreover, sequestration
has been available in any suit against a nonresident, whether against
corporate fiduciaries or not.
c) Though it may be appropriate for Delaware law to govern the
obligations of appellants to the corporation and stockholders, this does
not mean that appellants have "purposefully avail[ed themselves] of the
privilege of conducting activities within the forum State," Hanson v.
Denckla. Appellants, who were not required to acquire interests in the
corporation in order to hold their positions, did not, by acquiring those
interests, surrender their right to be brought to judgment in the States
in which they had "minimum contacts."
26. IDONAH SLADE PERKINS vs. MAMERTO ROXAS, ET AL., 72 Phil. 514,
G.R. No. 47517, June 27, 1941
Facts:
The private respondent Eugene Arthur Perkins, filed a complaint in the Court of
First Instance of Manila against the Benguet Consolidated Mining Company for
the recovery of the sum of P71,379.90, consisting of dividends which have been
declared and made payable on 52,874 shares of stock registered in his name,
payment of which was being withheld by the company, and for the recognition
of his right to the control and disposal of said shares, to the exclusion of all
others. To the complaint, the company filed its answer, alleging, by way of
defense, that the withholding of plaintiff's right to the disposal and control of
the shares was due to certain demands made with respect to said shares by the
petitioner herein. Idonah Slade Perkins (ISP), and by one George H. Engelhard
(GHE). Respondent amended his complaint to implede ISP and GHE as
additional defendants.
ISP filed an answer saying that there was a previous judgment in New York
saying that she is the owner of the shares, and such is res judicata.
Now, ISP files this petition for certiorari saying “the respondent judge is about question, which the petitioner here anticipates and seeks to prevent, is the
to and will render judgment in the above-mentioned case disregarding the exercise by that court — and the rightful exercise — of its jurisdiction.
constitutional rights of this petitioner; contrary to and annulling the final,
subsisting, valid judgment rendered and entered in this petitioner's favor by the
courts of the State of New York, ... which decision is res judicata on all the
questions constituting the subject matter of civil case No. 53317, of the Court of
First Instance of Manila; and which New York judgment the Court of First
Instance of Manila is without jurisdiction to annul, amend, reverse, or modify in
any respect whatsoever.”

Issue:

Whether or not the petition for certiorari will prosper?

Ruling:

No. By jurisdiction over the subject matter is meant the nature of the cause of
action and of the relief sought, and this is conferred by the sovereign authority
which organizes the court, and is to be sought for in general nature of its
powers, or in authority specially conferred.

Idonah Slade Perkins in her cross-complaint brought suit against Eugene Arthur
Perkins and the Benguet Consolidated Mining Company upon the alleged
judgment of the Supreme Court of the State of New York and asked the court
below to render judgment enforcing that New York judgment, and to issue
execution thereon. This is a form of action recognized by section 309 of the
Code of Civil Procedure (now section 47, Rule 39, Rules of Court) and which falls
within the general jurisdiction of the Court of First Instance of Manila, to
adjudicate, settled and determine.

The petitioner expresses the fear that the respondent judge may render
judgment "annulling the final, subsisting, valid judgment rendered and entered
in this petitioner's favor by the courts of the State of New York, ... which decision
is res judicata on all the questions constituting the subject matter of civil case
No. 53317," and argues on the assumption that the respondent judge is without
jurisdiction to take cognizance of the cause. Whether or not the respondent
judge in the course of the proceedings will give validity and efficacy to the New
York judgment set up by the petitioner in her cross-complaint is a question that
goes to the merits of the controversy and relates to the rights of the parties as
between each other, and not to the jurisdiction or power of the court. The test of
jurisdiction is whether or not the tribunal has power to enter upon the inquiry,
not whether its conclusion in the course of it is right or wrong. If its decision is
erroneous, its judgment case be reversed on appeal; but its determination of the