Jurisdiction

 Judicial – power or authority of a court to try a case, render judgment and execute it in
accordance with law
 Legislative – ability of the state to promulgate laws and enforce them on all persons and
property within its territory

4 questions

1. Has the court jurisdiction over the person of the defendant or over his property?
2. Has the court jurisdiction over the subject matter, usually referred to as competency?
3. Has the suit been brought in the proper venue in cases where a foreign element is involved?
4. Is there a statute or doctrine under which a court otherwise qualified to try the case may or may
not refuse to entertain it?

Basis of exercise of judicial jurisdiction

1. Jurisdiction over the person which is based on FORUM-DEFENDANT CONTACTS

2. Jurisdiction over the res based on FORUM-PROPERTY CONTACTS
3. Jurisdiction over the subject matter

Jurisdiction over the person – acquired by the voluntary appearance of a party and his submission to
authority; court acquires jurisdiction OF THE PLAINTIFF the moment he invokes the aid of the court by
filing a suit; court acquires jurisdiction OF THE DEFENDANT when he enters his appearance or is served
with the legal process within the state.

Jurisdiction over the property – the subject matter of litigation results either from the seizure of the
property under a legal process or from the institution of legal proceedings wherein the court’s power
over the property is recognized and made effective.

 This kind of jurisdiction is referred to as in rem jurisdiction where the situs could bind the world
and not just the interest of specific persons
 Quasi in rem – affects only interests of particular persons in that thing
 In proceedings in rem and quasi in rem, all that due process requires is that the defendant be
given adequate notice and opportunity to be heard. Both are met in SERVICE OF SUMMONS BY
PUBLICATION.

Jurisdiction over the subject matter – it is not enough that a court has a power in abstract to try and
decide the class of litigation to which a case belongs; it is necessary that said power be properly invoked,
by filing a petition; 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.

Ways of dealing with a conflicts problem

1. Dismiss the case for lack of jurisdiction or on the ground of forum non conveniens
2. Assume jurisdiction and apply either forum or foreign law
Doctrine of forum non conveniens

It emerged in private international law to deter the practice of global forum shopping, that is to prevent
non-resident litigants from choosing the forum or place wherein to bring their suit for malicious
reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts of
law cases, may refuse impositions on its jurisdiction where it is not the most "convenient" or available
forum and the parties are not precluded from seeking remedies elsewhere. (Bank of America v CA, G.R.
No. 120135, March 31, 2003)

B. WAYS OF DEALING WITH CONFLICTS PROBLEM

 When a court faced conflict of laws problem it may :

1. Dismiss the case for lack of jurisdiction or on the ground of forum non convenience ;

2. Assume jurisdiction and apply either forum or foreign law.

 Dismiss the Case

1. Doctrine of Forum non conveniens

 The court may still decline to try the case on the ground that the controversy may be more
suitably tried elsewhere even if the court assumes jurisdiction oer the parties and subject
matter.

 Jurisdiction should be decline because “the forum is inconvenient”; “the ends of justice
would be best be served by trial another forum.”

 The court, in conflict of laws, may refuse imposition on its jurisdiction where it is not the
most “convenient” or available forum and the parties are not precluded from seeking
remedies.

 Purposes

 to prevent abuse of the court’s processes

 To avoid global forum shopping, which filing of repetitious suits in courts of different
jurisdictions.

 When is a court considered inappropriate court

 when its local machinery was inadequate to effectuate a right such as when it had no way
of securing evidence and the attendance of willing witnesses

 Forum Shopping

 It is where non-resident litigants are given the option to bring heir suit for various reasons
of excuses, including to secure procedural advantages,

 to annoy and harass the defendant

  To avoid overcrowded dockets or,

 To select a more friendly venue

2. Assume Jurisdiction

 A court may choose to assume jurisdiction over a conflicts problem and apply forum or foreign
law.

 It (assume jurisdiction) should be applied whenever there is a good reason to dp so.

 The presence of any of the following factors would justify the application of internal law:

1. A specific law of the forum decrees that internal law should apply;

2. The proper foreign law was not properly pleaded and proved; or

3. The case falls under any of the exceptions to the application of foreign law.

 Forum law decrees application of internal law

 Provisions in the Civil Code when our court has to apply forum law:

 Article 16 - which makes real or personal property subject to the law of the country where
they are situated while intestate and testamentary succession is governed by lex nationale
of the person whose succession is under consideration.

 Article 829 - which makes revocation done outside the Philippines valid according to the
law of the place where the will was made or lex domicilii;

 Article 819 - which prohibits Filipinos from making joint wills even if valid in the country
where they were executed.

 Foreign law was not properly pleaded and proved.

 Effect: failure to plead and prove foreign law leads to the presumption that it is the same
as forum law.

 Rules 132, Sec. 25 and Rule 130, Sec. 45 of RRC

 Prescribe the rules of evidence for written and unwritten law.

 Foreign law cannot be applied

General Rule: Forum law should be applied if the case falls under the exceptions to the
applications of the foreign law.

Exceptions:

1. When the foreign law is contrary to an important public policy of the forum;

2. When the foreign law is penal in nature;

 3. When the foreign law is procedural in nature;

4. When the foreign law is purely fiscal or administrative in nature;

5. 5. when the application of the foreign law will work undeniable injustice to the citizens
of the forum;

6. When the case involves a real or personal property situated in the forum;

7. When the application of the foreign law might endanger the vital interest of the state;

8. When the foreign law is contrary to good morals.

Choice of law

The exercise of jurisdiction and choice of law decisions are related in three important ways:

1. The factors that will determine the forum court’s exercise of judicial jurisdiction may be the same
factors that will determine whether or not it is proper for the forum to apply its internal law;

2. If the forum does apply its internal law because it has real interest in the case, then the outcome
of the case will be foreordained by the forum where the suit is brought; and

3. Since in practice the forum will most likely apply its own law rather displace it in favor of a foreign
law, the plaintiff will predictably bring his claim in the courts of the state the internal law of which
is favorable to him.

Q: Is jurisdiction and choice of law the same?

A: No. The forum court may exercise jurisdiction but may not apply its own law.

All choice of law problems seek to answer two important question:

1. What legal system should control a case where some of the significant facts occurred in two or
more states?

2. To what extent should the chosen legal system regulate the situation?

There are two approaches to the abovementioned questions:

1. Traditional approach

a. Vested-rights theory – an act done in a foreign jurisdiction gives rise to the existence of a
right if the laws of that state provides so. The law of the place of the wrong will govern.

i. Weakness: Failure to resolve conflicts cases with reference to considerations of

policy and fairness.

b. Local law theory - His view is that direction on how a case will probably proceed and be
decided should be based on past judicial approaches to similar matters. This method
which stresses practice by the courts rather than theoretical statements has been
described as ‘scientific empiricism.
 c. Caver’s principles of preference – choice of law decisions should be made with reference
to principles of preference which are conceived to provide a fair accommodation of
conflicting state policies and afford fair treatment to the parties who are caught up in the
hazards of conflicting state policies.

2. Modern approach

a. Place of the most significant relationship – apply local law of the state which has “the
most significant relationship” to the occurrence and the parties.

i. For example in torts, the contacts to be taken into account are:

1. The place where the injury incurred;

2. The place where the negligent conduct occurred;

3. The domicile, residence or nationality of the parties; and

4. The place where the relationship between the parties is entered.

b. Comparative impairment – to weigh conflicting interest and apply the law of the state
whose interest would be more impaired if its laws were not followed.

c. Functional analysis – the courts should consider whether the law of a state reflects an
emerging or regressing policy.

d. Choice-influencing considerations - courts will prefer rules of law whether they are forum
law or another state’s law as long as they make good socio economic sense for the time
the court speaks and are sound in view of the present day conditions.

i. Five major choice-influencing considerations that would lead the court to the
choice-of-law decision:

1. Predictability of results;

2. Maintenance of interstate and international order;

3. Simplification of the judicial task;

4. Application of the better rules of law; and

5. Advancement of the forum’s governmental interest.

Chapter 8

Notice and Proof of Foreign Law

A. Extent of Judicial Notice

- The party whose cause of action or defense depended upon the foreign law has the burden of
proving the foreign law.
- Such foreign law is treated as a question of fact to be properly pleaded and proved in
conformity with the law of evidence
- Judge is only presumed to know only domestic law. He cannot decide a case on the basis of his
own knowledge and information

B. Proof of Foreign Law

- Foreign law may be proved by presenting:
o Official publication of the law
o Copy of the law attested by the officer having the legal custody of the record or by his
deputy
- Proof documents executed abroad must be duly authenticated by the Philippine consul
attaching his consular seal. This must be complied with before it will be received by the court
- Section 11, Rule 23 of the Rules of Court (list of persons before whom depositions may be taken
in foreign countries)
o On notice before a secretary of embassy or legation, consul general, consul, vice consul,
or consular agent of the Philippines
o Before such person or officer as may be appointed by commission or under letters
rogatory
o Before such person which the parties have stipulated in writing

Philippine Commercial and Industrial Bank vs. Escolin

- Case should be returned to a court a quo so that the parties may prove what said law provides,
it is premature for the court to make any specific ruling now on either the validity of the
testamentary dispositions herein involved or the amount of inheritance to which the heirs are
entitled.
- The laws of Texas governing the matters here in issue is one of fact, not of law. Elementary is
the rule that foreign laws may not be taken judicial notice of and have to be proven like any
other fact in dispute between the parties in any proceeding, with the rare exception in instances
when the said laws are already within the actual knowledge of the court, such as when they are
well and generally known or they have been actually ruled upon in other cases before it and
none of the parties concerned claim otherwise

In Re Estate of Johnson
 - Our courts may take judicial notice of matters of public knowledge. The proper rule is to require
proof of the statutes of the states of the American Union whenever their provisions are
determinative of the issues in any action litigated in the Philippine courts.

Effects of failure to plead and prove foreign law

3 alternatives:

1. Dismiss the case for inability to establish a cause of action

2. Assume that the foreign law is the same as the law of the forum
3. Apply the law of the forum

First option – rest on the party relying on the foreign law the burden of introducing proof of the
contents of such law. Considered as the traditional approach wherein the forum court would, upon
proof of law, enforce a right existing under that foreign law.

Walton vs. Arabian American Oil

- New York rules of conflict of laws is applied.

- Substantive law applicable to an alleged tort is the law of the place where the alleged tort
occurred. The general federal rule is that the law of a foreign country is a fact which must be
proved.
- Parties who fail to introduce proof as to the content of a foreign law acquiesce to the
application of the forum law.
- Basic law is the law of the forum and when the claimed applicable foreign law is not proved,
then the court has no reason to displace the basic law.

Leary vs. Gledhill

- Transaction took place in France. Our courts may properly take judicial knowledge that France is
not a common law but rather a civil jurisdiction. It would, therefore, be inappropriate and
indeed contrary to elementary knowledge to presume that the principles of the common law
prevail there.
- 3 presumptions: 1) law of France recognizes certain fundamental principles
- The court based the decision upon the presumption that the law of France in common with that
of other civilized countries recognizes a liability to make repayment under the facts here
present, and its decision is not without substantial merit in reason and support in the
authorities.

Zalamea vs. Court of Appeals

 - The court applied the rule requiring proof of foreign law and held that the respondent court’s
finding that such law, which was pleaded but not proven, excused private respondent’s conduct,
has no basis in fact.
- Foreign laws do not prove themselves nor can the courts take judicial notice of them, they must
be alleged and proved.
- The third consequence of failure to establish foreign law is for the forum to presume that the
foreign law is the same as forum law. OW known as PROCESSUAL PRESUMPTION OR THE
PRESUMED IDENTITY APPROACH.

Miciano vs. Brimo

- In the absence of evidence on such law, they are presumed to be the same as those of the
Philippines
- The refusal to give the oppositor another opportunity to prove such laws does not constitute an
error it is discretionary with the trial court, and, taking into consideration that the oppositor was
granted ample opportunity to introduce competent evidence, court finds no abuse of discretion
on the part of the court in this particular.
- As a result of failure by the oppositor to prove Turkish law, the court indulged a presumption
that Turkish law was the same as Philippine law.
- The use of the MOST SIGNIFICANT RELATIONSHIP THEORY or disingenuous characterization
would have led the court to arrive at the same conclusion without flouting the testator’s
intentions.

Suntay vs. Suntay

- Wills proved and allowed in a foreign country, according to the laws of such country, may be
allowed, filed, and recorded by the proper CFI in the Philippines
- It is a proceeding in rem and for the validity of such proceedings personal notice or by
publication or both to all interested parties must be made

CIR vs. Fisher

- CTA ruled that in our civil law, in the absence of any ante-nuptial agreement, the contracting
parties are presumed to have adopted the system of conjugal partnership as to the properties
acquired during their marriage, and hence the taxable net estate is reduced to ½
- Since the marriage took place in 1909, the applicable law is Art 1325 of the old civil code and not
art 124 of the new civil code

CID vs. Dela Rosa

 - In the absence of evidence to the contrary, foreign laws on a particular subject are presumed to
be the same as those of the Philippines. In the case at bar, there being no proof of Chinese law
relating to marriage, there arises the presumption that it is the same as that of Philippine law.
- Art 267. In the absence of a record of birth, authentic document, final judgment or possession of
status, legitimate filiation may be proved by any other means allowed by the ROC and special
laws.
- Philippine law, following the lex loci celebrationis, adheres to the rule that a marriage formally
valid where celebrated is valid everywhere.
- Art 71 now art 26 provides that all marriages performed outside of the Philippines in accordance
with the laws in force in the country where they were performed and valid there as such, shall
also be valid in this country.

C. Exceptions to the Application of Foreign Law

- Under the principles of comity and reciprocity, the court or administrative agency should look
into the application of foreign law and apply it.
o When the local law expressly so provides
o When there is failure to plead and prove the foreign law or judgment
o When the case falls under any of the exceptions to the rule of comity
- Art 17 (3) Civil Code provides that prohibitive laws concerning persons, their acts or property,
and those which have for their object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by determinations or conventions
agreed upon in a foreign country.

1. The foreign law is contrary to an important public policy on the forum

- Public policy – principle of law which holds that no subject or citizen can lawfully commit any act
which has a tendency to be injurious to the public or against the public good
- Public policy technique – situation in which the court declines to give due course to a claim
existing under a foreign law because it considers the nature of the claim unconscionable or its
enforcement would violate a fundamental principle of justice, some prevalent conception of
good morals, some deep-rooted tradition of the commonweal
- Dismissal of a case on grounds of public policy is not a dismissal on the merits and the plaintiff
can go elsewhere to file another suit.

Pakistan International Airlines Corporation vs. Ople

- The relationship (employer-employee) is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties
agreeing upon some other law to govern their relationship
- The contract was not only executed in the Philippines, it was also performed here, at least
partially
- Respondents are Philippine citizens and residents, while petitioner, although a foreign
corporation, is licensed to do business and hence resident in the Philippines
- All point to the Philippine courts and administrative agencies as a proper forum for the
resolution of contractual disputes between the parties
- Goodrich contends that it should take an extraordinary case to justify an argument founded
upon public policy of the forum

2. The foreign law is procedural in nature

- Procedural or remedial laws are purely internal matters peculiar only to the state
- Procedural or adjective law is the law that prescribes forms of remedies in order that courts
applying them are able to administer justice

3. Issues are related to property (lex situs)

- Questions relating to immovable property are governed by the law of the place where it is
located
- Real property as well as personal property is subject to the law of the country where it is
situated
- Lex situs rule applies in cases of sale, exchange, barter, mortgage, or any form of alienation of
property
- 3 reasons why this rule applies: 1) land and everything attached to it are within the exclusive
control of the state 2) following a policy-centered approach, immovables are of greatest concern
to the state in which they are situated 3) demands of certainty and convenience

4. The issue involved in the enforcement of foreign claim is fiscal or administrative

- State is not obliged to enforce the revenue law of another
- Judge Learned Hand said: revenue laws fall within the same reasoning (as penal laws); they
affect a state in matters as vital to its existence as its criminal laws. No court ought to undertake
an inquiry which it cannot prosecute without determining whether these laws are consonant
with its own notions of what is proper

5. The foreign law or judgment is contrary to good morals (contra bonos mores)
- Acts having mischievous or pernicious consequences or against true principles or morality
- Hiring for killing, bribery of public officers, marriage between ascendants and descendants
- The determination of what is contra bonos mores is better left to the forum court trying a
particular case

6. The application of foreign law will work undeniable injustice to the citizens of the forum
7. The foreign law is penal in character
- US SC CJ Marshall: the courts of no country execute the penal laws of another
- A statute is penal not by what the statute is called by legislature or the courts of the state in
which it was passed, but whether it appears to the tribunal which is called upon to enforce it to
be, in its essential character and effect, a punishment of an offense against the public (US)
- A statute is penal when it imposes punishment for an offense committed against the state
which, under the constitution, the executive has the power to pardon (Philippines)

8. The application of the foreign law might endanger the vital interests of the state
Canillo - 205 to 229

Chapter X
DOMICILE

A. Definition

Domicile is defined by municipal law, Philippine law and private international law.
● Municipal - article 50 of the civil code “for the exercise of civil rights and the fulfillment
of civil obligations, the domicile of natural persons is the place of htei habitual
residence.” For juridical persons, domicile is determined by the law creating or
recognizing it. In the absence thereof, it shall be understood to be the place where
their legal representation or place of business is.
● Restatement definition - domicile is the place with which a person as a settled
connection for certain legal purposes, either because his home is there or because
that place is assigned to him by law.
● Justice Story definition - place of his true, fixed permanent home and principal
establishment, and to which, whenever he is absent, he has the intention of
returning.

To acquire a domicile, there must be concurrence of intention to make it one’s domicile and
physical presence. Residence simply requires bodily presence of an inhabitant in a given
place.

Koh vs. CA
● Court ruled that the term domicile is not exactly synonymous in legal contemplation
with the term residence, for it is an established principle in COL that domicile refers
to the relatively more permanent abode of a person while residence applies to a
temporary stay of a person in a given place.

Caasi vs. CA
● To be qualified to run for elective office in the Philippines, the law requires that the
candidate who is a green card holder must have waived his status as a permanent
resident or immigrant of a foreign country.
● An act of filing a cert of candidacy for elective office in the Philippines, did not itself
constitute a waiver of his status as a permanent resident or immigrant of the US.
Waiver should be manifested by some act independent of and done prior to filing his
candidacy for elective office in this country. Without such prior waiver, he was
disqualified to run for any elective office.
● Section 68 of the Omnibus Election Code states that residence in the municipality
where he intends to run for elective office for at least 1 year at the time of filing his
cert of candidacy, is one of the qualifications that a candidate for elective public office
must possess.
● In banning from elective public office Philippine citizens who are permanent residents
or immigrants of a foreign country, the Omnibus Election Code has laid down a clear
policy of excluding from the right to hold elective public office those Philippine
citizens who possess dual loyalties and allegiance.
Uytengsu vs. Republic
● Although the words residence and domicile are often used interchangeably, each
has, in strict legal parlance, a meaning distinct and different from that of the other.
● There is a decided preponderance of authority to the effect that residence and
domicile are not synonymous in connection with citizenship, jurisdiction, limitations,
school privileges, probate and succession.
● To be a resident, one must be physically present in that place for a longer or shorter
period of time. The essential distinction between residence and domicile is this : the
first involves the intent to leave when the purpose for which he has taken up his
abode ceases; the other has no such intent, the abiding is animo manendi.
● One may seek a place for purposes of pleasure, of business, or of health. If his intent
be to remain it becomes his domicile; if his intent is to leave as soon as his purpose
is accomplished, it is his residence.
● Residence is an act. Domicile is an act coupled with an intent.
● The question of domicile is not involved in determining whether a person is a resident
of a state or country.
● A home (domus) is something more than a temporary place of remaining (residendi)
however long such stay may continue.
● Residence combined with intention to remain, constitutes domicile while an
established abode, fixed permanently for a time for business or other purposes,
constitutes a residence, though there may be an intent, existing all the while, to
return to the true domicile.
● The court decided in this case that “actual and substantial residence within the
Philippines, not legal residence” or “domicile” alone, is essential to the enjoyment of
the benefits.

B. Merits and Demerits of Domicile

In common law countries, domicile is the preferred primary connection between a person
and a state because it satisfies the very purpose for having a personal law.

Lawrence vs. State Tax Commission

● The US Supreme Court stated: “enjoyment of the privileges of residence within the
state and the attendant right to invoke the protection of its laws are inseparable from
the responsibility of sharing the costs of government”

3 significant demerits:
1. One’s domicile is not ascertainable without first resorting to the courts to establish
whether or not there is animo manendi
2. The notion of domicile differs widely with some states distinguishing between
residence and domicile or attributing different meanings of domicile for different
purposes
3. If the law of the domicile of origin is given overriding significance, then it may create
the same problem of attenuated connection we saw in the use of nationality as
personal law.
Although the Philippines follows the nationality law theory, there are instances when our
courts refer to the domicile of an individual in order to determine his rights or obligations. For
example:
1. In cases where the litigant is an alien who comes from a country following the
domiciliary principle, his personal status, capacity, condition and family rights are
governed by the law of his domicile.
2. Stateless persons or those with dual or multiple nationalities, in which case the court
will have to refer to their domicile
3. When an alien domiciled in the Philippines executes a will abroad. He may follow the
law governing formalities of the will in accordance with the law of his domicile.

C. General rules on domicile

1. The first rule of general application is that no person shall be without a domicile.
Hence, a person’s domicile of origin prevails until he acquires a new domicile
2. A person cannot have 2 simultaneous domiciles since the very purpose for identifying
one’s domicile is to establish a connection between the person and a definite legal
system

A more accurate statement is that “a person can have only one domicile for a given purpose
or a given time under the law of a particular state, but it should not be assumed that that
determination will be binding on other states or on the same state for other purposes.

A person may have a residence in different places but he is domiciled only in the place
where he intends to make a permanent home.

3. The third principle relating to domicile is that it establishes a connection between a

person and a particular territorial unit.
4. The burden of proving a change of domicile is upon whoever alleges that a change
has been secured. Without overwhelming evidence to show a change of domicile, the
courts will decide in favor of the continuance of an existing domicile.

Romualdez-Marcos vs. COMELEC

● Constitution provides that an aspirant for election to the House must be a “registered
voter in the district in which he shall be elected, and a resident thereof for a period of
not less than one year immediately preceding the election.”
● Contention: Marcos lacked the one year residency requirement on the evidence of
declarations made by her in the voter Registration Record and in her COC.
● COMELEC ruled that Marcos’ claim that she thought what was asked of her was
“actual and physical” presence in Tolosa is of no merit. Her transfer from Tacloban to
Tolosa is proof of this. Besides, the COC only asks for RESIDENCE. Since, on the
basis of her answer, she was quite aware of “residence of origin” which she interprets
to be Tacloban City, it is curious why she did not cite Tacloban City in her COC.
● Court ruled that while the COMELEC seems to be in agreement with the general
proposition that for the purposes of election law, residence is synonymous with
domicile, the Resolution reveals a tendency to substitute or mistake the concept of
domicile for actual residence, a conception not intended for the purposes of
 determining a candidate’s qualifications for election to the House of Representatives
as required by the Constitution.
● In Nuval vs. Guray, the court held that the term residence is synonymous with
domicile which imports not only intention to reside in a fixed place, but also personal
presence in that place, coupled with conduct indicative of such intention. Faypon vs.
Quirino held that absence from residence to pursue studies or practice a profession
or registration as a voter other than in the place where one is elected does not
constitute loss of residence.
● An individual does not lose his domicile even if he has lived and maintained
residence in different places. The COMELEC was obviously referring to petitioner’s
various places of (actual) residence, not her domicile.
● A minor follows the domicile of her parent.
● Domicile of origin is not easily lost, to successfully effect a change of domicile, one
must demonstrate:
○ An actual removal from domicile
○ A bonafide intention of abandoning the former place of residence and
establishing a new one
○ Acts which correspond with purpose
● It cannot be correctly argued that petitioner lost her domicile of origin by operation of
law as a result of her marriage to Marcos. For there is a clearly established
distinction between the civil code concepts of domicile and residence. The
presumption that the wife automatically gains the husband’s domicile by operation of
law upon marriage cannot be inferred from the use of the term residence in art 110 of
the civil code because the civil code is one area where the two concepts are well
delineated.

Ujano vs. Republic

● The Court made the following comment: “one of the qualifications of reacquiring
Philippine citizenship is that the applicant shall have resided in the Philippines at
least 6 months before he applies for naturalization. (SECTION 3(1)
COMMONWEALTH ACT NO. 63). This “residence” requirement in cases of
naturalization, has already been interpreted to mean the actual or constructive
permanent home otherwise known as legal residence or domicile.
● A place in a country or state where he lives and stays permanently, and to which he
intends to return after a temporary absence, no matter how long, is his domicile.
● Domicile is characterized by animus manendi. So an alien who has been admitted
into this country as a temporary visitor, either for business or pleasure, or for reasons
of health, though actually present in this country cannot be said to have established
his domicile here because the period of his stay is only temporary in nature and must
leave when the purpose of his coming is accomplished.

In re Dorrance’s Estate
● The law is generally settled that, as regards the determination of domicile, a person’s
expression of desire may not supersede the effect of his conduct. Apart from possible
exceptions, a man cannot retain a domicile in one place when he has moved to
another, and intends to reside there for the rest of his life, by any wish, declaration, or
intent inconsistent with the dominant facts of where he actually lives and what he
actually means to do.
 ● A declaration (as to domicile) that is self serving and not followed by acts in
accordance with the declaration will not be regarded as conclusive, but will yield to
the intent which the acts and conduct of the person clearly indicate.
● If a person changes his domicile without any present intention of removing therfrom,
it is none the less his domicile, although he may entertain a floating intention to
return, or to move somewhere else at some future period. If there be both actual
residence and an intention of remaining, then a domicile is established.

D. Kinds of domicile

1. Domicile of origin - refers to a person’s domicile at birth. Traditionally, a legitimate

child’s domicile of origin is that of his father and illegitimate child’s is that of his
mother. Upon emancipation, the child may acquire a domicile of choice.
2. Domicile of choice - also called voluntary domicile, place freely chosen by a person
sui juris. To acquire a domicile of choice there must be concurrence of physical
presence in the new place and unqualified intention to make that place one’s home.
3. Constructive domicile

Difference of domicile of origin and domicile of choice

Domicile of origin Domicile of choice

Enjoys the staunchest presumption in favor Its character is more enduring, its hold
of its continuance stronger and less easily shaken off

Domicile of origin is not lost by mere Since domicile of choice is acquired upon
abandonment and remains until replaced by concurrence of anime et facto, it is deemed
a domicile of choice extinguished by removal of intent even prior
to the acquisition of a new domicile

The reverter or revival doctrine has drawn criticism for violating the well settled principles of
domicile: that a person retains his domicile until a new domicile of choice is secured and that
a new domicile is established upon concurrence of fact and intention.

The motive that prompted the person to change his domicile is immaterial in determining
whether or not a new domicile has been acquired. Once proved that the person established
his permanent abode in the new place, the courts will not weigh the ethical values of his
motives. Motives are relevant only to gauge the genuineness of the intent to acquire a new
domicile.

Velilla vs. Posadas

● Art 40 of the civil code defines the domicile of natural persons as the place of their
usual residence. The record before us leaves no doubt in our minds that the usual
residence of this unfortunate man, whom appellant describes as a fugitive and
outcast, was in Manila where he had lived and toiled for more than a quarter of a
century, rather than in any foreign country he visited during his wanderings up to the
date of his death in Calcutta.
 ● To effect the abandonment of one’s domicile, there must be deliberate and provable
choice of a new domicile, coupled with actual residence in the place chosen, with a
declared or provable intent that it should be one’s fixed and permanent place of
abode, one’s home

Lambayan - 230 to 254

White vs. Tennant

Facts:

A and B were married. A was legally domiciled in West Virginia. A asked his parents to sell
his farm and occupy the land in Pennsylvania. A and B left West Virginia to go to
Pennsylvania. A died in West Virginia because of illness. C, the father of A, was appointed
administrator of A’s estate. Under the law of West Virginia, B will receive all A’s personal
property by way of intestate succession. Under the law of Pennsylvania, she would receive
only half. C and A’s brothers allege that Pennsylvania law should be applied because A was
domiciled there.

Issue:

Will the succession and distribution of a decedent’s personal estate be controlled by the law
of the state where the decedent was domiciled at the time of death?

Ruling:

Yes. The succession and distribution of a decedent’s personal estate is controlled by the law
of the state where the decedent was domiciled at the time of death. A domicile is a
residence, actual or developing, with the lack of any intent to make a domicile elsewhere.
The facts reveal that A left his West Virginia residence with no plans to return and with the
intent and purpose of making his permanent home in Pennsylvania. Therefore, at the
moment A and B arrived at their new home, their domicile became Pennsylvania.

CARABALLO V. REPUBLIC

Facts:

A, american citizen, is married to B, a filipina. They live in the Philippines and decided to
adopt a child named C. A was previously in the Philippines because of his assignment as a
staff sergeant in the United states air force. Hence, his stay was temporary. Nonetheless, A
filed a petition for adoption of C but it was dismissed on the ground that A was prohibited by
the laws of the Philippines because he was a non-resident alien.

Issue:
Is A considered as a resident in the Philippines.
Ruling:

No. A person is deemed a resident of a place in a country or state where he has his abode
and lives there permanently. In the case at the bar, A’s stay in the Philippines is temporary
because of his assignment as staff sergeant in the United states air force.

GO CHEN AND GO LEK V. COLLECTOR OF CUSTOMS OF CEBU (China numbawan)

Facts:

A and B chinese bros. C, their father, died. D, their mother, married another man named E. D
went to the Philippines with D and she was admitted as the wife of a chinese merchant and
has been residing in the Philippines for 8 years. A and B remained in China until D asked
them to travel to Cebu and join her.

Issue:

Whether a chinese widow, D, who was admitted to and acquired a residence in the
Philippines as the wife of a chinese merchant, E, was entitled to bring in A and B.

Ruling:

No, because D did not enter the Philippines by her own right. Rather, she entered the
Philippines by virtue of E’s right, who is a resident in the Philippines. The law provides that a
man’s domicile is also the domicile of his wife and minor children and that he is duty bound
to protect, support and keep them in his company. In the case at bar, D had no right to bring
A and B in the Philippines because in the first place, her stay in the Philippines is by virtue of
the right of E as a resident in the Philippines.

DE LA VINA V. VILLAREAL AND GEOPANO

Facts:

A filed a complaint against B alleging that she was a resident of Iloilo and that the defendant
was a resident of negros oriental. A was the legitimate wife of B having been married to him
in negros oriental. B had been committing acts of adultery with C and that because of said
illicit relations, B ejected A from the conjugal home such that she was obliged to live in iloilo
where she had since established her habitual residence. A filed a petition for divorce, the
partition of conjugal property in iloilo. B filed a petition on the ground that iloilo has no
jurisdiction because B was a resident of negros oriental and A was also a resident of negros
oriental because under the law, the domicile of the husband is also the domicile of the wife.

Issue:

Whether or not A is a resident of iloilo.

Ruling:

Yes. The wife may acquire another and separate domicile from that of her husband where
the theoretical unity of husband and wife is dissolved, as it is by the institution of divorce
proceedings or where the husband has given cause for divorce; or where there is a
separation of the parties by agreement or a permanent separation due to desertion of the
wife by the husband or attributable to cruel treatment on the part of the husband; or where
there has been a forfeiture by the wife of the benefit of the husband’s domicile.

PRINCIPLES ON PERSONAL STATUS AND CAPACITY

Status - taken from the roman doctrine status libertates (freedom), status civitates
(citizenship), and status familiae (position as head of the house or as free person subject to
the pater familia).

Capacity - is the fitness of a man to be the subject of legal relations while capacity to act is
the power to do acts with juridical effects.

Juridical capacity - is the fitness to be the subject of legal relations, is inherent in every
natural person and is lost only through death.

Capacity to act - it is the power to do acts with legal effect and it is acquired and may be
lost.

Complete civil capacity - it is the union of both juridical capacity and capacity to act.

Article 15 of the civil code - determination of status and capacity of a person. It

follows the nationality principle.

RECTO V. HARDEN

Facts:

A engaged the services of C to appear as her counsel in an action against B, her husband.
The suit was to secure an increase in the amount of support she was receiving and preserve
her rights in the properties of the conjugal partnership, in contemplation of the divorce suit
which she intended to file against him. A and B mutually released and discharged each other
from all actions and claims. C then filed a motion and alleged that the purpose of the
aforesaid discharge was to defeat his claim of attorney’s fees. A and B moved to dismiss the
case on the ground that invalidity of the contract services executed for the reason that it was
to secure a divorece decree in violation of the laws in the Philippines.

Issue:

Was the contention of A and B correct?

Ruling:

No, because the contract services was not to secure a divorce, rather it was to protect the
interest of A in the conjugal partnership, during the pendency of a divorce suit she intended
to file in the United States. A also is a american citizen and in accordance with Article 15 of
the civil code, the nationality of the person will govern his legal status. Hence, A is governed
under the laws of the United States which sanctions divorce. Hence, the contract of service
entered into between A and C are not contrary to law, morals, good customs or public policy.

BARNUEVO V. FUSTER

Facts:

A and B were married in Spain. They made an agreement in a public document by which
they resolved to separate and live apart. B commence divorced proceedings against her
husband alleging his adultery. She prayed that the decree of divorce be granted; the
conjugal society be liquidated.

Issue:

Whether the courts of the Philippines are competent or have jurisdiction to decree the
divorce now on appeal.

Ruling:

Yes. The authority of jurisdictional power of courts to decree a divorce is not comprised
within the personal status of the husband and wife, simply because the whole theory of the
statutes and of the rights which belong to everyone does not go beyond the sphere of private
law, andthe authority and jurisdiction of the courts are not a matter of the private law of
persons, but of the public or political law of the nation. "The jurisdiction of courts and other
questions relating to procedure are considered to be of a public nature and consequently are
generally submitted to the territorial principle. The provisions of article 80 of the Civil Law of
Spain is only binding within the dominions of Spain. It does not accompany the persons of
the Spanish subject wherever he may go. He could not successfully invoke it if he resided in
Japan, in China, in Hongkong or in any other territory not subject to the dominion of Spain.
Foreign Catholics domiciled in Spain,subject to the ecclesiastical courts in actions for divorce
according to the said article 80 of theCivil Code, could not allege lack of jurisdiction by
invoking, as the law of their personal statute, alaw of their nation which gives jurisdiction in
such a case to territorial courts, or to a certain court within or without the territory of their
nation. In the present action for divorce the Court of FirstInstance of the city of Manila did
not lack jurisdiction over the persons of the litigants, for, although Spanish Catholic
subjects, they were residents of this city and had their domicile herein.

THE BEGINNING AND END OF PERSONALITY

Determination of the exact moment personality begins: It is based on the individual’s

personal law.

Article 40. Birth determines personality; but the conceived child shall be considered born for
all purposes that are favorable to it, provided it be born later with the conditions specified in
the following article. (29a)

Article 41. For civil purposes, the fetus is considered born if it is alive at the time it is
completely delivered from the mother's womb. However, if the fetus had an intra-uterine life
of less than seven months, it is not deemed born if it dies within twenty-four hours after its
complete delivery from the maternal womb.

Civil personality - it is commenced at birth and is extinguished by death.

ABSENCE

The following are three suggested ways of dealing with the problem of the differences
of domestic laws in treating absentees:

1. There is a rebuttable presumption that a person is dead when he has been absent for a
number of years;

2. A person’s unexplained absence is judicially investigated and established which results in

legal effects similar to those of death; and

3. A judicial decree shall have to be issued declaring the person dead before legal effects of
death take place.

Under Philippine laws:

Article 390. After an absence of seven years, it being unknown whether or not the absentee
still lives, he shall be presumed dead for all purposes, except for those of succession.

The absentee shall not be presumed dead for the purpose of opening his succession till after
an absence of ten years. If he disappeared after the age of seventy-five years, an absence
of five years shall be sufficient in order that his succession may be opened. (n)

Article 391. The following shall be presumed dead for all purposes, including the division of
the estate among the heirs:

(1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing,
who has not been heard of for four years since the loss of the vessel or aeroplane;

(2) A person in the armed forces who has taken part in war, and has been missing for four
years;

(3) A person who has been in danger of death under other circumstances and his existence
has not been known for four years. (n)

For purposes of remarriage under article 41 of the family code, the periods in articles 390
and 391 were reduced to 4 and 2 years.

Art. 41. A marriage contracted by any person during subsistence of a previous marriage
shall be null and void, unless before the celebration of the subsequent marriage, the prior
spouse had been absent for four consecutive years and the spouse present has a
well-founded belief that the absent spouse was already dead. In case of disappearance
where there is danger of death under the circumstances set forth in the provisions of Article
391 of the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting the subsequent marriage under the preceding paragraph the
spouse present must institute a summary proceeding as provided in this Code for the
declaration of presumptive death of the absentee, without prejudice to the effect of
reappearance of the absent spouse.

NAME

The prevalent view is that a person’s name is determined by law and cannot be changed
without judicial intervention/judicial authority.

Case law shows that courts have allowed petitions on grounds that the name:

1. Is ridiculous or tainted with dishonor or extremely difficult to pronounce; or

2. When the change is necessary to avoid confusion;

3. When the right to a new name is a consequence of a change in status; or

4. A sincere desire to adopt a filipino name to erase signs of a former alien nationality which
unduly hamper social and business life.

AGE OF MAJORITY

- personal law will determine the age of majority of a person.

- age of majority 18 years.

- parental consent for contracting marriage is required until the age of 21.

CAPACITY

- a person’s ability to act with legal effects is governed by his personal law.

- the incapacities attached to his legal status go with him wherever he is.

INSULAR GOVERNMENT V. FRANK

Facts:

A entered into a contract with B in the state of illinoise. B decided to not comply with the
contract. A filed a petition to recover a sum of money against B. B alleged that he was a
minor at the time the contract was entered into and was therefore not responsible under the
law.

Issue:
Is B’s argument meritorious?

Ruling:

No. In this case, the court applied the law of the place of contract or lex loci contractus and
concluded that B was capacitated at the time he entered into the contract. The record
discloses that at the time the contract was entered into in the state of illinois, he was an adult
under the laws of that state and had full authority to contract.

PART FOUR: CHOICE OF LAW PROBLEMS

MARRIAGE - it is a special contract of permanent union between a man and a woman

entered into in accordance with law for the establishment of conjugal and family life. It is the
foundation of the family and an inviolable social institution whose nature, consequences, and
incidents are governed by law and not subject to stipulation, except that marriage
settlements may fix the property relations during the marriage within the limits provided by
this Code.

Marriage is a special contract distinguished from an ordinary contract in that:

1. It is entered into by a man and a woman;

2. Both are at least 18 years of age;

3. It is solemnized by a person specifically authorized by law;

4. It is a permanent union unless one of the parties dies, or the marriage is annulled or
declared void in special circumstances;

5. It cannot be abrogated, amended or terminated by one or both parties at will;

6. In marriage the nature and consequences as well as the incidents are governed by law
and not subject to stipulation by the parties unlike in ordinary contracts; and

7. Violation of marital obligations may give rise to penal or civil sanctions while breach of the
conditions of an ordinary contract can be a ground for an action for damages.

PHILIPPINE POLICY ON MARRIAGE AND THE FAMILY

In order to give stability to the institution of marriage especially in conflict of law

problems - Philippine laws establish a presumption of validity of marriage.

Article 220. In case of doubt, all presumptions favor the solidarity of the family. Thus,
every intendment of law or facts leans toward the validity of marriage, the
indissolubility of the marriage bonds, the legitimacy of children, the community of
property during marriage, the authority of parents over their children, and the validity
of defense for any member of the family in case of unlawful aggression.

EXTRINSIC VALIDITY OF MARRIAGE

Lex loci celebrationis - law of the place of celebration. This covers questions relating to the
formalities or external conduct required of the parties or third persons especially of public
officers, necessary to the formation of a legally valid marriage.

Malazarte - 255 to 279

2. EXTRINSIC VALIDITY OF MARRIAGE (lex loci celebrationis or law of the place of

celebration)
● Covers questions relating to the formalities or “external conduct required of the
parties or third persons especially of public officers, necessary to the formation of a
legally valid marriage”

➢ Hague Convention on Celebration and Recognition of the Validity of Marriages

○ Article 2 - formal requirements for marriage are governed by the law of the
state celebration, a reiteration of a recognized principle of conflict of laws.
○ General Rule: all states recognize as valid marriages celebrated in foreign
countries if they complied with the formalities prescribed there.

➢ FORMAL requirements of marriage in the Philippines:

○ Article 3 of Family Code:
1. Authority of the Solemnizing Officer
2. A valid marriage license except in the cases provided in Chap. 2 of
this Title
3. A marriage ceremony which takes place with the appearance of the
contracting parties before the solemnizing officer and their personal
declaration that they take each other as husband and wife in the
presence of not less than witnesses of legal age.

➢ Lex loci celebrationis

○ Article 26 of the FC - “ All marriages solemnized outside the Philippines in
accordance with the laws in force in the country where they were solemnized,
and valid there as such, shall also be valid in this country. . .”

Adong v. Cheong Seng Gee

● Cheong Boo, a native of China, died intestate in Zamboanga.
● His estate was claimed by
○ Cheong Seng Gee - alleged legitimate child by a marriage between Cheong
Boo and Tan Dit in China
○ Mora Adong - from Basilan who alleged to be lawfully married to Cheong Boo
and had daughters by him - Payang and Rosalia.

Ruling:
● To establish a valid foreign marriage pursuant to comity provision:
 1. To prove before the courts of the Islands (Philippines) the existence of the
foreign law as a question of fact
2. To prove the alleged foreign marriage by convincing evidence

People v. Mora Dumpo

● Moro Hassan and Mora Dumpo were legally married according to the rites and
practices of the Mohammedan religion.
● Dumpo alleged contracted another marriage with one Sabdapal without her previous
marriage with Hassan being dissolved
● Dumbo was prosecuted and convicted of Bigamy
● Dumpo alleged that her second marriage was null and void according to
Mohammedan rites on the ground that her father had not given his consent thereto.

Ruling:
● Wa ko kasabot sa ruling basta kay gi acquit si Dumpo

Wong Woo Yu vs. Vivo

● Wong woo Yu came to the Philippines to join her Filipino husband, Perfecto Blas to
whom she was married in China in a ceremony celebrated by Cua Tio, a village
leader.
Ruling:
● Art. 71 of the New Civil Code: a marriage contracted outside the Philippines which is
valid under the law of the country in which it was celebrated is also valid in the
Philippines
● HOWEVER, no validity can be given to this contention because no proof was
presented relative to the law of marriage in China.
● General rule: in the absence of proof of the law of a foreign country it should be
presumed that it is the same as our own.
● Married solemnized by a Village leader cannot be recognized since it is not one of
the officers mentioned in our law

Apt vs. Apt

● Both petitioners are German nationals of Jewish origin.
● While petitioner was in England, her domicile, a marriage ceremony was celebrated
in Argentina and the respondent. She was represented by a person whom, by power
of attorney she had named as her representative to contract marriage.
● It was proved that the ceremony was valid and effectual by law of the Argentine,
which recognizes proxy marriages, but the petitioner contends that it is not a
marriage recognized by English law.

Ruling:
● If a marriage is good by the laws of the country where it is effected, it is good all the
world over, no matter whether the proceeding or ceremony which constituted
marriage according to the law of the place would or would not constitute marriage in
the country of domicile of one or other of the spouses.
● Article 26 of FC - if a foreign marriage although valid in the foreign country where it
was entered into will be void in the Philippines if:
a. Either or both parties are below 18 years of age
 b. Bigamous or polygamous
c. Subsequent marriage is performed without recording in the Civil
Registry and Registry of Properties the judgment of annulment or
declaration of the properties of the spouses and the delivery of the
children’s presumptive legitimes
d. There was a mistake as to the identity of the contracting party
e. One of the parties was psychologically incapacitated to comply with
the essential marital obligations
f. Marriage is incestuous
g. Marriage is void by reason of public policy

● Those enumerated above are exceptions to lex loci celebrationis because they are
controlled by lex nationalii.

3. INTRINSIC VALIDITY OF MARRIAGE

● Refers to capacity or “the general ability of a person to marry, for instances
defined by requirements of age and parental consent, but it does not refer
clearly to an individual’s being permitted to marry a specific person or a
person of a determinate class.”
● Intrinsic requirements are controlled by the parties’ personal laws which may
either be their domicile or nationality
➢ ESSENTIAL/SUBSTANTIVE REQUISITES/:
1. As to legal capacity:
a. must be at least 18 years of age; and
b. Not barred by any impediment to marry each other
2. Consent freely given in the presence of an authorized solemnizing
officer
● In mixed marriages - the law that governs the substantive
validity of marriage is the national law of the parties.

➢ Marriages VOID in the Philippines on grounds of Public Policy (Art. 38)

1. Between collateral blood relatives, whether legitimate or illegitimate up to 4th
civil degree
2. Step parents and step children
3. Parents-in;law and children-in-law
4. Adopting parent and adopted child
5. Surviving spouse of the adopting children and the adopted child
6. Surviving spouse of the adopted child and the adopter
7. Adopted child and legitimate child of the adopter
8. Adopted children of the same adopter
9. Parties where one, with the intention to marry the other, killed that other
person’s spouse or his or her own spouse.
● Marriage between first cousins - void under public policy

Sottomayor vs. De Barros

● Sottomayor and de Barros were Portuguese subjects who were at the same time
domiciled and residing in Portugal
 ● They were first cousins who were incapable of contracting marriage in accordance
with the Portuguese law.
● Any marriage between these parties is null and void EXCEPT if solemnized under
the authority of a Papal dispensation
● They went to London where the marriage was contracted

Ruling:
● Personal capacity to contract marriage must depend on the law of domicile, and if the
laws of any country prohibit its subjects within certain degrees of consanguinity from
contracting marriage, and stamp a marriage between persons within prohibited
degrees as incestuous, this in our opinion imposes on the subjects of that country a
personal incapacity which continues to affect them so long as long as they are
domiciled in the country where the law prevails and renders invalid a marriage
between persons.

In Re May’s Estate
● Sam and Fannie May both adherents of Jewish faith and residents of New York, went
to Rhode Island to get married.
● Fannie was Sam’s niece by half blood and their marriage was valid in Rhode Island
but prohibited by New York Law.
● In the administration of the estate of Fannie, one of their six children petitioned for
the letters of administration, contending that her father, Sam, was not the surviving
spouse of her mother because their marriage never had validity in New York

Ruling:
● Marriage was valid as it was in accord of with the ritual of the Jewish faith in a State
whose legislative body has declared such marriage to be “good and valid in law”, was
not offensive to the public sense of morality to a degree regarded generally with
abhorrence and thus was not within the inhibitions of natural law.

MARRIAGE CELEBRATED by a CONSULAR OFFICIAL

● Hague Convention - marriage celebrated by a diplomatic agent or consular official in
accordance with his estate law shall be considered valid as long as it is not prohibited
by the state of celebration
● Philippine law - allows marriage of Filipino nationals to be officiated by the Philippine
consul, consul or vice consul
● Also applies to mixed marriage provided that the alien:
○ complies with the marriage requisites under his national law.
○ Submits certificate of legal capacity to contract marriage issued by his
diplomatic or consular office
● Stateless persons or refugees from other countries
○ Instead of the certificate of legal capacity, shall submit an affidavit stating the
circumstances showing such legal capacity to contract marriage.

4. EFFECTS OF MARRIAGE
➢ Personal Relations Between the Spouse
○ Mutual fidelity
○ Respect
 ○ Cohabitation
○ Support
○ Right of the wife to use the husband’s family name

● If spouses are of different nationalities

○ The national law of the husband may prevail as long as said law is not
contrary to law, customs and good morals of the forum.

➢ Family Domicile
○ GR: Fixed by both husband and wife
○ EXP: the court may find valid and compelling reasons to exempt spouse from
living with the other - legal impediment of continued residence in the
Philippines of the foreigner spouse.

Djumantan v. Domingo
● Marriage of an alien woman to a Filipino husband does not ipso facto make her a
Filipino citizen and does not excuse her from her failure to depart from the country
upon expiration of her extended stay here as an alien.

➢ Property Relations of Spouses

○ Article 80 of FC - in the absence of a contrary stipulation in a marriage
settlement, the property relations of the spouses shall be governed by
Philippines laws, regardless of the place of the celebration of the marriage
and their residence.
■ This rule shall not apply:
1. If both spouses are aliens
2. With respect to the extrinsic validity if contracts affecting
property not situated in the Philippines and executed in the
country where the property is located
3. With respect to the extrinsic validity of contracts entered into in
the Philippines but affecting property situated in a foreign
country whose laws require different formalities for its extrinsic
validity
● PRINCIPLE OF IMMUTABILITY - Change of nationality of one of the spouse
subsequent to the marriage - Property regime will remain UNCHANGED

DIVORCE AND SEPARATION

➢ Divorce - may be absolute or limited

○ Absolute Divorce - The termination of the legal relationship between the
spouses by an act of law

➢ Relative Divorce/ Legal Separation

○ Refers to separation from bed and board which does not effect the dissolution
of the marital ties.
○ Does not modify the incidents of the marriage relationship by relieving the
spouses of the duty of living with each other.
 ○ Does not necessarily affect their economic rights and duties, since the court
may order one to provide for the support of the other or of their common
children

● Most countries exercise divorce jurisdiction on the basis of domicile of one of the
parties or matrimonial domicile.
○ Rationale: Divorce, being a matter of concern of the state, should be
controlled by the “law of the place with which the person is most
intimately concerned, the place where he dwelleth and hath home.”

➢ Divorce Decrees Obtained by Filipinos

○ Decrees of Absolute Divorce - obtained by Filipinos abroad have NO
VALIDITY and are NOT RECOGNIZED in the Philippine jurisdiction.
○ Mixed Marriage - susceptible to divorce of the divorce is “validly obtained
abroad by the alien spouse capacitating him or her to remarry… (thus) the
Filipino spouse shall likewise have the capacity to remarry under Philippine
law.

Tenchavez v. Escano
● Escano, 27 yrs old, exchanged vows with Pastor Tenchvez, 32 yrs old, without the
knowledge of Escano’s parents.
● Escano’s parents, alarmed about the scandal that would ensue from the clandestine
marriage sought priestly advise.
● Escano flew to US and sued for divorce on the ground of extreme marital cruelty.
● Nevada District Court issued a “final and absolute” decree of divorce
● Escano married an American and subsequently acquired American citizenship

Ruling:
● The marriage between Tenchcavez and Escano remained subsiting and undissolved
under Philippine law, notwithstanding the decree of absolute divorce that the wife
sought and obtained.
● At the time divorce decree was issued, Escano, like her husband, was still a Filipino
citizen. She was then subject to Philippine law
● In the present Civil Code, instead of divorce, it provides only for legal separation -
“the marriage bonds shall not be severed”
Remoreras - 280 to 300

Van Dorn v. Romillo

● Van Dorn is a Filipino citizen while private respondent Upton is an American citizen.
They were married in Hongkong.
● They were divorced in the United States.
● Upton filed a suit against petitioner in the RTC of Pasay City stating that petitioner’s
business in Ermita, the Galleon Shop, is conjugal property of the parties.Petitioner
moved for dismissal on ground that the cause of action is barred by a previous
judgement in the divorce proceedings before the Nevada Court wherein respondent
had acknowledged that he and petitioner had no community property.
● It is true that owing to the nationality principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered by the policy against absolute divorces
the same being considered contrary to our concept of public policy and morality.
However, aliens may obtain divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their national law. In this case, the
divorce in Nevada released private respondent from the marriage from the standards
of American law, under which divorce dissolves the marriage.
● Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioner’s
husband entitled to exercise control over conjugal assets.

Pilapil v. Ibay-Somera
● Pilapil,a Filipino citizen, and private respondent Erich Ekkehard Geiling, a German
national, were married in Germany, but lived together for some time in Manila.
● Geiling initiated a divorce decree in Germany. While petitioner filed an action for legal
separation, support and separation of property before the RTC of Manila.
● Private respondent filed 2 complaints for adultery before the CFI of Manila.
● The fact that private respondent obtained a valid divorce in his country, Germany, is
admitted. Said divorce and its legal effects may be recognized in the Philippines
insofar as private respondent is concerned in view of the nationality principle in our
civil law on the matter of status of persons.
● Private respondent, being no longer the husband of petitioner, had no legal standing
to commence the adultery case under the imposture that he was the offended
spouse at the time he filed suit.

Quita v. CA
● Fe Quita and Arturo Padlan, both Filipinos, were married in the Philippines.
● Fe obtained a divorce decree in California, USA.
● Arturo died leaving no will. Blandina Dandan claimed to be his surviving spouse and
her 6 children as surviving children of Arturo. They submitted certified copies of the
final judgement of divorce between Fe and Arturo.
● Both petitioner and Arturo were Filipino citizens and were married in the Philippines.
Their divorce decree obtained in San Francisco, California, USA was not valid in
Philippine jurisdiction.
 ● No dispute exists as to the right of the six Padlan children to inherit from the
decedent because there are proofs that they have been duly acknowledged by him
and petitioner herself even recognizes them as heirs of Arturo Padlan, nor as to their
respective hereditary shares.
● Private respondent is not a surviving spouse that can inherit from him as this status
presupposes a legitimate relationship. Her marriage to Arturo being a bigamous
marriage considered void ab initio under Articles 80 and 83 of the Civil Code renders
her not a surviving spouse.

2. Validity of Foreign Divorce Between Foreigners

● The Hague Convention states that a foreign divorce will be recognized in all
contracting states if, at the date of the institution of the proceedings, (a) the
respondent or petitioner had his habitual residence there, or (b) both spouses were
nationals of that state, or (c) if only the petitioner was a national, he should have his
habitual residence there.
● While there is no law requiring Philippine courts to recognize a foreign divorce decree
between non-Filipinos such will be recognized under the principle of international
comity, provided that it does not violate a strongly held policy of the Philippines.

C. Annulment and Declaration of Nullity

● Annulment and declaration of nullity, as in divorce, affect the status and domestic
relations of the parties. For states which choice-of-law approach is traditional, the
grounds for annulment and nullity follow the lex loci celebrationis.
● In many states that employ a policy-centered approach, the applicable law is the law
of the state of marital domicile because it is considered to have the most significant
interest in the status of the spouses.
● The state where the marriage was celebrated as well as the place of marital domicile
can claim adequate jurisdictional basis to hear a conflicts annulment or nullity case.
● In Whealton v. Whealton however, it was held that even a court which acquires only
personal jurisdiction over the parties can grant an annulment decree.

D. Parental Relations
● The determination of the legitimacy of a child is submitted to the personal law of the
parents which may either be their domicile or nationality.
● The law on parental relations includes paternity, that is the civil status of the father or
the mother with respect to the child begotten by him or her as well as filiation which is
the status of the child in relation to his parents.
● In the Philippines, the legitimacy of a child is governed by the national law of the
parents. If the parents of the child belong to different nationalities, the legitimacy of
the child is determined by the national law of the father.

Determination of Legitimacy of a Child

● The pertinent Philippine laws on the status of children are found in the Family Code:
Article 163, Article 164, Article 165, Section 287 and Section 288

Parental Authority Over the Child

 ● Derived from the Roman law concept of patria potestas. The personal law of the
father controls the rights and duties of parents and children, a principle recognized by
most countries.
● Reference to the personal law of the father may, however, result in joint exercise of
parental authority by father and mother as exemplified in Article 211 of our Family
Code. Likewise, the father’s personal law could grant parental authority to the mother
of the illegitimate children as in article 176 of the Family Code.

E. Adoption
● The act by which relations of paternity and affiliation are recognized as legally
existing between persons not so related by nature.
● It is a judicial act which creates between 2 persons a relationship similar to that which
results from legitimate paternity and affiliation.
● It is the child’s personal law, his domicile or nationality, which could best ensure that
his well-being is protected. Hence, the validity of adoption at the child’s domicile is
recognized in that state and in all others even when the adopting parents were
domiciled elsewhere.
● Whether or not an alien may adopt a child in the Philippines?
GR: No because they have very different family orientation, cultures, customs and
traditions which could pose a problem for Filipino children to adapt themselves to a
complete strange environment.
EXP: Enumerated in Article 184 are aliens who have some relationship with the
adopted child by consanguinity or affinity.

Republic of the Philippines v. CA

● James Anthony Hughes, a natural born American citizen, married Lenita Mabuhay
Hughes, a Filipino citizen, who herself was later naturalized as a citizen of that
country.
● Spouses jointly filed a petition with the RTC of Angeles City, to adopt Ma. Cecilia,
Neil and Mario, minor niece and nephews of Lenita, who had been living with the
couple even prior to the filing of the petition.
● It is clear that James Anthony Hughes is not qualified to adopt. Executive Order No.
209, otherwise known as "The Family Code of the Philippines," is explicit.
Art. 184. The following persons may not adopt :
(1) The guardian with respect to the ward prior to the approval of the final accounts
rendered upon the termination of their guardianship relation;
(2) Any person who has been convicted of a crime involving moral turpitude;
(3) An alien, except:
(a) A former Filipino citizen who seeks to adopt a relative by consanguinity;
(b) One who seeks to adopt the legitimate child of his or her Filipino spouse; or
(c) One who is married to a Filipino citizen and seeks to adopt jointly with his or her
Filipino spouse a relative by consanguinity of the latter.
● While James Anthony unquestionably is not permitted to adopt under any of the
exceptional cases enumerated in paragraph (3) of the aforequoted article, Lenita,
however, can qualify pursuant to paragraph (3)(a). The problem in her case lies,
instead, with Article 185 of Executive Order No. 209, expressing as follows:
● Art. 185. Husband and wife must jointly adopt, except in the following cases:
 (1) When one spouse seeks to adopt his own illegitimate child; or(2) When one
spouse seeks to adopt the legitimate child of the other.
● Lenita may not thus adopt alone since Article 185 requires a joint adoption by the
husband and the wife, a condition that must be read along together with Article 184.

Effects of Adoption
● The body of rights enjoyed by the adopted child and other effects of legal adoption
are governed by 2 different legal orders depending on which law governed the
creation of the adoption.
● If the adopters’ personal law applied, then it is the same law which governs the
effects of the adoption. On the other hand, where the personal law of the child
determined the creation of the legal relationship then such law will cease to regulate
the resultant parent-child relations and yield to the personal law of the adopting
parents.

Uggi Lindamand Therkelsen v. Republic

● Petitioners are husband and wife seeking to adopt minor Charles Blancaflor Weeks,
who is a natural-child of the petitioner-wife.
● Petitioner-husband is a Danish subject who has been granted permanent residence
in the Philippines.
● If we understand the decision correctly, the adoption was denied solely because the
same would not result in the loss of the minor's Filipino citizenship and the acquisition
by him of the citizenship of his adopter. Unfortunately, the Juvenile and Domestic
Relations Court did not expound the reasons for its opinion; but it is clear that, if
pursued to its logical consequences, the judgment appealed from would operate to
impose a further prerequisite on adoptions by aliens beyond those required by law.
As pointed out by the Solicitor General in his brief, the present Civil Code in force
(Article 335) only disqualifies from being adopters those aliens that are either (a)
non-resident or (b) who are resident but the Republic of the Philippines has broken
diplomatic relations with their government. Outside of these two cases, alienage by
itself alone does not disqualify a foreigner from adopting a person under our law.
Petitioners admittedly do not fall in either class.
● The criterion adopted by the Court a quo would demand as a condition for the
approval of the adoption that the process should result in the acquisition, by the
person adopted, of the alien citizenship of the adopting parent. This finds no support
in the law, for, as observed by this Court in Clung Leng vs. Galang, G. R. No.
L-11931, promulgated on 27 October 1958, the citizenship of the adopter is a matter
political, and not civil, in nature, and the ways in which it should be conferred lay
outside the ambit of the Civil Code. It is not within the province of our civil law to
determine how or when citizenship in a foreign state is to be acquired. The
disapproval of an adoption of an alien child in order to forestall circumvention of our
exclusion laws does not warrant denial of the adoption of a Filipino minor by qualified
alien adopting parents, since it is not shown that our public policy would be thereby
subverted.

Ng Hian v. Collector of Customs

● Marcosa S. Dy Jiongco, together with 2 children, Ng Tio and Ng Hian, arrived at the
port of Manila.
 ● Jiongco was born in the Philippines of a Filipino mother and a Chinese father. She
was married to a Chinese by the name of Ng Chion Tue, who before his marriage to
her, had been married to a Chinese woman with whom he had 2 children, Ng Hian
and Ng Guan.
● After the death of the Chinese wife, the latter was legally married to Jiongco. Being
the stepmother of Ng Hian, adopted and brought him to the Philippines to study.
● The question whether or not Marcosa S. Dy Jiongco could bring Ng Hian into the
territory of the Philippine Islands as her adopted son has been discussed by the
Federal Courts of the United States. In the case of Ex parte Fong Yim (134 Fed.
Rep., 938), the court held that:
A Chinese merchant domiciled in the United States has the right to bring into this
country with his wife minor children legally adopted by him in China, where it is
shown that the adoption was bona fide, and that the children have lived as members
of his family and have been supported by him for several years.
● The court further said:
Of course, the question whether the adoption is a genuine one is a question of fact,
open to investigation . . . . The evidence shows that the practice of adopting children
in China is very common, that it takes place substantially without legal formalities, but
that the rights and obligations of children adopted and recognized as such are similar
to those of natural children. Under these circumstances I can see no difference
between the legal status of adopted children and of natural children. The Supreme
Court (of the United States) having decided that a Chinese merchant domiciled in this
country has the right to bring into it his natural children, I think that the same decision
is authority for the proposition that he has the right to introduce his adopted children.
● Upon the theory, therefore, that Ng Hian had been adopted by his stepmother, and
upon the theory that she has a right to enter territory of the United States, without
objection, we are of the opinion and so hold that Ng Hian has a right to enter the
territory of the Philippine Islands as her adopted son. Therefore the judgment of the
lower court is hereby affirmed.

Canillo - 301 to 307

Chapter XIII
CHOICE OF LAW IN PROPERTY

A. The Controlling Law

In most cases, the first task of a court in a conflicts case involving property is to resolve
whether it is a movable or an immovable.
● Immovable property
○ Regulated by the lex situs
○ Reason for this is the characterization of immovable property as an isolated
object of rights so that the interests of various persons such as one who
acquired it by purchase, or spouse through marriage to the owner or a
mortgagee after foreclosure is determined by the law of the place where the
land is situated
● Movable property
 ○ May be controlled by the lex domicilii, the lex situs, the lex loci actus or the
proper law of transfer
○ Old law was “mobilia sequuntur personam” which meant that the rights over
movables were governed by the law of the owner’s domicile
○ These objects could be moved from place to place
○ Lex situs - exercise of power; the state where the property is situated having
the sole power to decide the validity and effects of the transfer of property
○ Lex loci actus - the law of the place where the transaction was completed and
the proper law of the forum. Proper law refers to the law of the state which
has the most real connection with the transfer

Article 414 of the Civil Code defines “property” as follows: “All things which are or may be the
object of appropriation are considered either:
1. Immovable or real property;
2. Movable or personal property

Article 16 of the Civil Code states that real property and personal property are “subject to the
law of the country where it is situated.” The only time a Philippine court has to settle a
problem of classifying property is when it is located in a foreign country which has a law that
distinguishes between real and personal property.

Lex situs rule covers all transactions involving sale, mortgage, barter, exchange, lease
assignment, or any form of alienation. It also governs such issues as the effects of
co-ownership, quieting of title, taxation, registration and the rules on prescription.

B. Capacity to transfer or acquire property

The capacity of the person to transfer or acquire real property is governed by the law of the
place where the property is located.

Llantino vs. Co Liong Chong

● Aliens are not completely excluded by the Constitution from use of lands for
residential purposes. Since their residence in the Philippines is temporary, they may
be granted temporary rights such as a lease contract which is not forbidden by the
Constitution. Should they desire to remain here forever and share our fortune and
misfortune, Filipino citizenship is not impossible to acquire.
● The only instance where a contract of lease may be considered invalid, is, if there are
circumstances attendant to its execution, which are used as a scheme to circumvent
the constitutional prohibition.
● If an alien is given not only a lease of, but also an option to buy, a piece of land, by
virtue of which the Filipino owner cannot sell or otherwise dispose of his property, this
to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of
ownership whereby the owner divests himself in stages not only of the right to enjoy
the land rights, the sum of which make up ownership.
● The sale of a residential land to an alien which is now in the hands of a naturalized
Filipino citizen is valid.
 ● A contract is the law between the contracting parties, and when there is nothing in it
which is contrary to law, morals, good customs, public policy or public order, the
validity of the contract must be sustained.

Cheesman vs. Intermediate Appellate Court

● Fundamental law prohibits the sale to aliens of residential land. Section 14, Article
XIV of the 1873 Constitution ordains that, “Save in cases of hereditary succession,
no private land shall be transferred or conveyed except to individuals, corporations,
or associations qualified to acquire or hold lands of the public domain.”
● Petitioner, Thomas (AMERICAN) was charged with knowledge of this prohibition.
Thus, assuming that it was his intention that the lot in question be purchased by him
and his wife, he acquired no right whatever over the property by virtue of that
purchase; and in attempting to acquire a right or interest in land, vicariously and
clandestinely, he knowingly violated the Constitution; the sale as to ahim was null
and void.
● If the property were to be declared conjugal, this would accord to the alien husband a
not insubstantial interest and right over land, as he would then have a decisive vote
as to its transfer or disposition. This is a right that the Constitution does not permit
him to have.
● An innocent buyer for value is entitled to the protection of the law in her purchase.

Lambayan - 308 to 314

C. EXTRINSIC AND INTRINSIC VALIDITY OF CONVEYANCES

Lex situs - it is the doctrine that the law governing the transfer of title to property is
dependent upon and varies with the location of the property, for the purposes of the
conflict of laws.

Lex situs governs the following:

1. Formalities of a contract to convey property;

2. Essential validity of the transfer; and
a. Exception: If lex intentionis is clearly established. (the intention of the
parties as to the law that should govern their agreement)
3. Effects of the conveyance of properties

D. EXCEPTIONS TO LEX SITUS RULE

The following are the three exceptions to the application of lex situs rule:

1. Where the transaction does not affect transfer of title to or ownership of the
land. In this case the proper law of the transfer which is the lex intentionis or
lex voluntatis is the governing law.

Liljedahl v. Glassgow
Facts:

A held a mortgage on a land in Colorado which was issued as security for a debt
payable in Iowa. B, the mortgagor, sold the land to C and delivered to him a deed
containing a blank space for the insertion of the name of the grantee and which
stated that the grantee assumed and agreed to pay A’s mortgage. C never inserted
his name as grantee but transferred the deed for consideration to another. Under the
law of Iowa, C became bound to pay the mortgage upon his acceptance of the deed,
but no such liability was imposed upon him by law of Colorado since he had never
inserted his name as grantee.

Issue:

Is C liable?

Ruling:

Yes.

2. In contracts where real property is offered by way of security for the

performance of an obligation such as loan, the principal contract is the loan
while the mortgage of the land is only an accessory. The mortgage of the land
is governed by the rule of lex situs but the loan contract is governed by the
rules on ordinary contracts.

3. Testate or intestate succession and capacity to succeed are governed by the

national law of the decedent.

Other exceptions:

1. Under the policy-centered approach, the forum court is not bound to look to
the law of the situs when the situs of the movable property at the time of
transfer was insignificant or accidental.
2. Where the issue involves considerations other than the validity and effect of
the transfer itself.

E. SITUS OF CERTAIN PROPERTIES

1. SITUS OF CERTAIN PROPERTIES

Mobilia sequuntur personam

- It means that movables follow the law of the person.

 - It has been viewed as a mere “fiction of law”. Hence, it cannot be applied to
limit the right of the state to tax property within its jurisdiction.
- It yields to established facts of legal ownership, actual presence and control
elsewhere and cannot be applied if it would result in inescapable and patent
injustices.

Asiatic Petroleum v. Co Quico

Facts:

A entered into a contract of agency with B by virtue of which A became the sales
agent on commission of the latter. A was in default left China without rendering
account to B. B filed a complaint (in the PH) seeking to recover the unremitted sum
and prayed for preliminary attachment of A’s properties (located in the PH). After
summons by publication, A was declared in default and judgement was rendered
against him. Consequently, A made an appearance solely for the purpose of having
all the proceedings declared null and void on the ground that the court had not
acquired jurisdiction over the person of A because he was a non-resident who was
summoned by publication and did not appear.

Issue:

Is the contention of A correct?

Ruling:

No. It is well to emphasize in this connection the general proposition that all property
within a state is subject to the jurisdiction of its courts, and they have the right
adjudicate title thereto, to enforce liens thereupon, and to subject it to the payment of
the debts of its owners whether resident or not.

2. SITUS OF MONEY

Leon v. Manufacturers

- The court held that the funds in question were outside the jurisdiction of the probate
court of Manila.
- This is based on the reason that it was endorsed in an annuity in Canada under a
contract executed in that country. Hence, Canada was the situs of the money.
- In order for the situs to change, the funds or money must be transferred to another
place. Holding the money in possession of a branch or agency of the company is not
sufficient.

3. SITUS OF DEBTS
Two kinds of movable property:

1. Choses in possession - which embraces all types of tangible physical objects; and

2. Choses in action - which refers to intangible objects.

a. Can be further classified into rights which are mere rights of actions.

Example:

Debt arising from a loan and rights which are represented by a

document that is both capable of delivery and susceptible to
negotiation as a separate legal entity.

Malazarte - 315 to 322

Case: Harris vs Balk

Facts:
• Harris and Balk are North Carolina domiciliaries.
• Balk owed more than $300 to Epstein, who lived in Baltimore, Maryland.
• In accordance with the Maryland practice, process against Balk was delivered to a
Baltimore sheriff and then placed at the court house door.
• Harris did not contest the garnishment action and consented to the entry against him
of a payment for $180 which he paid.
• In North Carolina, Balk sued Harris to recover the $180.
• Harry pleaded the Maryland judgment and contended that since it was a valid
judgment it was entitled to full faith and credit in North Carolina.
Ruling:
• If there be a law of the State providing for the attachment of the debt, then if the
garnishee be found in that State, and process be personally served upon him therein, we
think the court thereby acquires jurisdiction over him, and can garnish the debt due from him
to the debtor or the plaintiff and condemn it. Provided the garnishee could himself be sued
by his creditor in that State.
• Power over the person of the garnishee confers jurisdiction on the courts of the State
where the writ issues.
• If, while temporary there, his creditor might sue him there and recover the debt, then
he is liable to process of no merely voluntary payment within the meaning of that phrase as
applicable here.

CONCLUSION:
1. A debt, though intangible, is subject to seizure like tangible property, and
2. The debt is “located” where the debtor is because it is where he can be sued and the
debt collected.
SITUS OF CORPORATE SHARES OF STOCKS
• The Corporation Code of the Philippines reads:
o Sec. 63. The capital stock of corporation shall be divided into shares for which
certificates signed by the President or Vice-President x x x
Case: CIR vs Anglo California National Bank
Facts:
• Respondent Calamba Sugar Estate, represented by its trustee, the Anglo California
National Bank is a foreign corporation duly licensed to do business in the Philippines, and
has continuously filed its income tax returns here.
• CIR notified CSEI of an assessment for an alleged deficiency income taxes for the
years 1953-1955.
• It was stipulated that it was in San Francisco California where the sale took place and
the payments were made
• That The sale was made under and in accordance with California Law
• That CSEI license was cancelled by SEC and CSEI was dissolved in accordance
with the laws of that state.

Ruling:
• Share of stock of a corporation represent equities that may consist of real as wel as
personal properties therein – intangible personal properties (Article 417 (2) Civil Code)
• “gains, profit, and income derived from the purchase of personal property within its
sale without the Philippines or from the purchase of personal property without and its sale
within the Philippines shall be treated as derived entirely from sources within country in
which sold.”
• In this case, Negotiation, perfection and consummation of the contract od sale were
all done in California, USA.
• It follows that title to the shares of stock passed from the vendor to the vendee at
said place, from which from time the incidents of ownership were vested on the buyer.
• Sec. 35 of Corpo Law – the transfer to benoted and entered upon the books of the
corporation, such requirement does not invalidate the transfer between the parties nor is it
essential to vest ttle upon venedee/

PATENT, TRADEMARK, TRADE NAME, and COPYRIGHT

• Art.8 of UCPIP – “trade name” (c
orporation name) shall be protected in all countries of the Union without the obligation of
filing of registration, whether or not it forms part of the trade name.

Western Electric Company Case

Ruling: although the company has not done business in the Philippines it has the right to
protect its reputation.
Right to use of the company’s corporate and trade name is a property right which may be
asserted against the whole world.

Philips Export B.V v Court of Appeals

Facts:
• Philips Exports, a foreign corpo under the laws of Netherlands
• Not registered in the Philippines

Ruling:

• Corporation’s right to use its corporate and trade name is a property right, a right in
rem, which it may assert and protect against the whole world
• It is regarded as a property right and which cannot be impaired or defeated by
subsequent appropriation by anothet corporation on the same field.
• A NAME is peculiarly imporatant as necessary to the very existence of a corporation,

Remoreras - 323 to 328

Emerald Garment Manufacturing Corporation v. CA

● Private respondent H.D. Lee Co., Inc. filed with the Bureau of Patents, Trademarks &
Technology Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054
for the trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs,
jackets, jogging suits, dresses, shorts, shirts and lingerie under Class 25, issued on
27 October 1980 in the name of petitioner Emerald Garment Manufacturing
Corporation.
● Private respondent averred that petitioner's trademark "so closely resembled its own
trademark, 'LEE' as previously registered and used in the Philippines cause
confusion, mistake and deception on the part of the purchasing public as to the origin
of the goods.
● W/N CA erred when it considered private respondents prior registration of its
trademark and disregarded the fact that private respondent had failed to prove
commercial use thereof before filing of application for registration?
● Petitioner’s trademark is the whole "STYLISTIC MR. LEE." Although on its label the
word "LEE" is prominent, the trademark should be considered as a whole and not
piecemeal. The dissimilarities between the two marks become conspicuous,
noticeable and substantial enough to matter especially in the light of the following
variables that must be factored in.
● In addition to the foregoing, we are constrained to agree with petitioner's contention
that private respondent failed to prove prior actual commercial use of its "LEE"
trademark in the Philippines before filing its application for registration with the
BPTTT and hence, has not acquired ownership over said mark.
● Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166)
● Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has been made part of the law
of the land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as applied in
most countries, rules of international law are given a standing equal, not superior, to
national legislative enactments.
● In other words, (a foreign corporation) may have the capacity to sue for infringement
irrespective of lack of business activity in the Philippines on account of Section 21-A
of the Trademark Law but the question of whether they have an exclusive right over
their symbol as to justify issuance of the controversial writ will depend on actual use
of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law.
It is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement, the entity
need not be actually using its trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for infringement but it may
not necessarily be entitled to protection due to absence of actual use of the emblem
in the local market.
Canillo (329-348)

CHAPTER XIV
CHOICE OF LAW IN CONTRACTS

Contract - meeting of the minds between 2 persons whereby one binds himself, with respect
to the other, to giver something or render some service. It is perfected by mere consent, and
from that moment the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.

GR: A contract is obligatory in whatever form it may have been entered into provided that all
the essential requisites for its validity are present.
XPT: Unless provided by law or in the agreement.

A. Contracts involving a foreign element

By reason of differing rules, the forum court presented with a contracts case involving a
foreign element must be aware of the likelihood that the parties may have entered into the
contract with a particular State law in mind, expecting it to govern questions that may arise
from the contract. As a result, the forum court should be ready to replace its law with that
earlier relied on by the parties.

B. Extrinsic validity of contracts

Lex loci celebrationis - governs the formal or extrinsic validity of contracts.

A contract is valid as to form if in accordance with any form recognized as valid by the law of
the country where made, and that no contract is valid which is not made in accordance with
the local form. If the contract does not comply with the requirements of the lex loci
celebrationis then it does not come into existence.

Section 9 of the Restatement Second

- Considers acceptable formalities which meet the requirements of the place the
parties executed the contract

Article 17 of the Civil Code

- The forms and solemnities of contracts, wills, and other public instruments shall be
governed by the laws of the country in which they are executed.
- Locus regit actum - place governs the act

Article 1319 (2) of the Civil Code

- Acceptance made by letter or telegram does not bind the offeror except from the time
it came to his knowledge. The contract in such case, is presumed to have been
entered into the place where the offer was made

Engel vs. Velasco

 ● It was held that where telegraphic communications are followed by letters expressly
referring to the telegrams and confirming the same, such telegrams become
admissible as part of the correspondence between the parties.

C. Intrinsic validity of contracts

This refers to the nature, content and effects of the agreement.

Article 1318 of the Civil Code

- The following requisites must concur for there to be a contract: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract; and
(3) cause of the obligation which is established.

Three possible laws that could govern the questions relating to the intrinsic validity of
contracts:
1. The law of the place of making
2. The law of the place of performance
3. The law intended by the parties.

I. Lex loci contractus (law of the place of making)

- Refers to the law of the palace where the contract is made.
- To determine where the contract is made, we look to the place where the last act is
done which is necessary to bring the binding agreement into being so far as the acts
of the parties are concerned.
- Advantage of lex loci contractus is the relative ease in establishing the place of
contracting.

II. Lex loci solutionis (law of the place of performance)

- Calls for the reference to a law other than the place where the acts of offer and
acceptance took place.
- All matters relating to the time, place and manner of performance, sufficiency of
performance and valid excuses for non performance are determined by lex loci
solutionis which is useful because it is undoubtedly always connected to the contract
in a significant way.

Macmillan and Bloedel vs. TH Valderama and Sons

● A principal within one state may authorize his agent in another state to enter into a
contract valid in that state, although invalid under the law of the state in which the
principal resides. Where an agent is authorized to enter into a contract in a state
other than that of his principal, the place where the agent exercises his authority is
the place of contract, unless a contrary intention of the parties is shown, or clearly
appears from the nature of the transaction or the obligations thereby created.
● If the agent has authority to make a binding contract of sale and undertakes to do
som it is clear that the place of the executory contract is the place where he
exercises such authority, notwithstanding the vendor does business in another state
and the stock from which the contract is to be filled is in that state.
● APPLYING THE RULE OF LEX LOCI CONTRACTUS: As a general rule, the law of
the place where a contract is made or entered into governs with respect to its nature,
 validity, obligation, and interpretation. This has been said to be the rule even though
the place where the contract was made is different than the place where it is to be
performed, and particularly so, if the place of making and the place of performance
are the same.
● A contract valid where made is, as a rule, valid everywhere, and a contract invalid
where made is invalid everywhere.
● APPLYING THE RULE OF LEX LOCI SOLUTIONIS: Generally, where the contract is
to be performed in a place other than the place where it is made that the law of the
place where the contract is to be performed will determine the validity, nature,
obligation and effect of the contract or, in other words, in case of conflict, the lex loci
solutionis will prevail over the lex loci contractus
● The general rule governing the validity and construction of a contract and the rights
and liabilities thereunder, is that the law of the place of performance, the lex loci
solutionis, applies, which place, it has also been said is presumed to be the place
where the contract is made if a contrary showing is not made.
● Moreover, as the general rule that when a contract is to be performed at a place
other than where it is made, the place of performance or execution will govern with
respect to the nature, validity and construction of the contract.
● Questions as to the elements and amount of damages procurable for a breach of
contract or a violation of a duty growing out of a contract pertain to the right, and not
to the remedy, and are governed by the lex loci contractus.

III. Lex loci intentionis

- Intrinsic validity of a contract should be governed by the law intended by the parties.
The intention may be expressed in a choice of law provision in the contract.
- Article 1306 of the Civil Code
- The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order, or public policy.
- If the terms of the contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control. If the words
appear to be contrary to the evident intention of the parties, the latter shall prevail
over the former and that the intentions of the contracting parties are judged by their
contemporaneous and subsequent acts.

D. Capacity to enter into contracts

The capacity to enter into contracts is governed by the rules on status and capacity. In the
countries which follow the nationality law principle, the capacity to enter into a contract is
governed by their national laws (Art. 15 Civil Code). In countries that follow the domiciliary
law theory, the law of their domicile shall govern.

E. Choice of law issues in conflicts contracts cases

Principle of freedom of contract

- Parties may stipulate on the law to govern their contract agreement. Questions on
the validity of choice of law regarding venue in litigation and arbitration and contracts
with adhesion clauses have been identified as most troublesome.
 1. Choice of forum clause
2. Contracts with arbitration clause
3. Adhesion contracts
4. Special contracts

CHOICE OF FORUM CLAUSE

Compagnie de Commerce vs. Hamburg Amerika

● A contractual stipulation for a general arbitration cannot be invoked to oust our courts
of their jurisdiction. This doctrine should be applied in the case at bar,
notwithstanding the fact that the contract was executed in England, in the absence of
averment and proof that under the law of England compliance with, or an offer to
comply with such a stipulation constitutes a condition precedent to the institution of
judicial proceeding for the enforcement of the contract.

King Mau vs. Sycip

● A non resident may sue a resident in the courts of this country where the defendant
may be summoned and his property leviable upon execution in case of a favorable,
final and executory judgment.

Hong Kong and Shanghai Banking Corporation vs. Sherman

● In international law, jurisdiction is often defined as the right 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.
● 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.

CONTRACTS WITH ARBITRATION CLAUSE

A multi state or multinational contract that contains an arbitration clause gives rise to the
issue of whether one of the parties can compel the other to submit to arbitration.

Malazarte (348-367)

Case: Puromines, Inc. v. Court of Appeals

● Puromines and Makati Agro Trade entered into a contract with Philip Brothers
Oceanic, Inc. for the sale of prilled Urea in bulk.
● The contract provided an ARBITRATION CLAUSE which stated that disputes arising
therefrom shall be settled in arbitration in London.
● M/V “Liliana Dimitriva” loaded on board at Yuzhny, USSR a shipment of 15,500
metric tons of Urea for transport to be delivered for Puromines.
● About 13,500 metric tons were discharged in Manila in bad order and condition.
Damaged were valued at P683,056.29
 ● Puromines filed a complaint with RTC, Manila for breach of contract of carriage
against Maritime Factors, Inc. as ship agent of the vessel in the Philippines while
Philip Brothers was impleaded as charter of the vessel.
● It filed a motion to dismiss asserting the application of the arbitration clause

Ruling:
● Assuming arguendo that the liability of respondent is not based on the sales contract,
but rather on the contract of carriage, being the charterer of the vessel MV Liliana
Dimitrova, it would therefore be material to show what kind of charter party the
respondent had with the shipowner to determine respondent’s liability.
● CHARTER PARTY - a contract by which an entire ship or some principal part thereof
is let by the owner to another person for a specified time or use.
● Charter of demise or bareboat vs contracts of affreightment.

Charter of Demise Contract of Affreightment

- The charter will generally be - One in which the owner of the

considered as owner for the vessel leases part or all of its
voyage or service stipulated. space to haul goods for others.

- The charter means the vessel - It is a contract for a special

with his own people and service to be rendered by the
becomes, in effect, the owner owner of the vessel and under
pro hac vice, subject to liability such contract the general owner
to others for damages caused by retains in possession, command
negligence and navigation of the ship, the
charter or freighter merely
- To create a demise the owner of having use of the space in the
a vessel must completely and vessel in return for his payment
exclusively relinquish of the charter hire.
possession, command and
navigation thereof to the charter - The rights, responsibilities of
ownership rest on the owner and
- Anything short of such a the charterer is usually free from
complete transfer is a contract of liability to 3rd persons in respect
affreightment (time or voyage of the ship.
charter party) or nor a charter
party at all.

● Responsibility to 3rd persons for goods shipped on board a vessel follows the
vessel’s possession and employment.
● If possession is transferred to the charterer by virtue of a demise, the charterer, and
not the owner, is liable as carrier on the contract of affreightment made by himself or
by the master with 3rd persons, and is answerable for loss, damage or non-delivery
of goods received for transportation.
● An owner who retains possession of the ship, though the hold is the property of the
charterer, remains liable as carrier and must answer for any breach of duty as to the
care, loading, unloading of the cargo.
 ● Assuming that in the present case, the charter party is a demise or bareboat charter,
then Philipp Brothers is liable to Puromines, Inc. subject to the terms and conditions
of the sales contract.
● If the contract between respondent and the owner of MV Liliana, was merely that of
affreightment, then it cannot be held liable for the damages caused by the breach of
contract of carriage, the evidence of which is the bill of lading.
● The parties nevertheless obligated to respect the arbitration provisions on the sales
contract and/or the bill of lading.
● Petitioner being a signatory and party to the sales contract cannot escape from his
obligation under the arbitration clause
● The rule now on ARBITRATION - unless the agreement is such as absolutely to
close the doors of the courts against the parties, which agreement would be void,,
the courts will look with favor upon such amicable arrangements and will only
interfere with great reluctance to anticipate or nullify the action of the arbitrator.
● COURT UPHELD THE VALIDITY & APPLICABILITY OF THE ARBITRATION
CLAUSE

Case: The Bremen, et al. vs Zapata Off-shore Company

● Zapata, a Houston-based corporation, contracted with petitioner Unterweser, a

German corporation, for the towing of Zapata’s ocean-going, self-elevating drilling rig
Chaparral from Louisiana to Ravena, Italy, where the respondents was to drill certain
wells.
● The contract contained a forum-selection clause providing that “any dispute arising
must be treated before the London Court of Justice.”
● A severe storm arose seriously damaging Chaparral.
● Zapata commence a suid inn admiralty in the United States District Court of Tampa,
seeking damages against Unterweser alleging negligent towage and breach of
contract.
● Unterweser invoked the forum clause and moved to dismiss for lack of jurisdiction or
on the ground of forum non conveniens

Ruling:

● Forum clause should control absent showing that it should be set aside.
● The correct approach would have been to enforce the forum clause specifically
unless Zapata could clearly show that enforcement would be unreasonable and
unjust, or that the clause was invalid for such reasons as fraud or overreaching.

➢ ADHESION CONTRACTS
➢
○ Is one that is not negotiated by the parties, having been drafted by the
dominant party and usually embodied in a standardized form.
○ It is called such because then only participation of the other party is in
affixing her signature or adhering thereto.
 ○ Likewise refer to “TAKE IT OR LEAVE IT” contract.
○ Examples of adhesion contract
■ Insurance contract
■ Bills of lading
■ Contract of sale of land from real estate firms
■ Airline tickets

Case: Pan Am World Airways vs Rapadas

● Jose Rapdas, while standing in line to board a flight from Guam to Manila,
was ordered by a Pan Am control agent to check in his samsonite attache
case.
● He instead went to the tail end of the line to try to get through without having
to check in his attache case.
● He was again spotted and for fear that he would miss the plane, he checked it
in without declaring its contents and value.
● Unfortunately, it never arrived in Manila and Pan Am offered to settle the claim
for $160.00.
● Rapdas refused and filed the case, pacing the value of the lost attache case
and its contents $43, 403.90
● Pan Am acknowledge the responsibility for the loss but asserted that the claim
was subject to the “Notice of Baggage Liability Limitations” forming part of the
passenger’s ticket.

Ruling:
● The court finds sufficient basis under the particular facts of this case for the
availment of the liability limitations under the Warsaw Convention.
● The Convention governs the availment of the liability limitations where the
baggage check is combined with or incorporated in the passenger’s ticket
which complies with the provisions of Article 3, par. 1(c).
● Plane ticket is known as a contract of adhesion.
● Contracts of adhesion are not entirely prohibited, neither is a blind reliance on
them encouraged.
● The court finds the provisions in the plane ticket sufficient to govern the
limitations of liabilities of the airline for the loss of luggage.
● If the passenger fails to adduce evidence to overcome the stipulations,he
cannot avoid the application of the liability limitations.

Case: Philippine airlines v. Court of Appeals

● Gilda Mejia, shipped through PAL one unit microwave oven from San
Francisco, CA to Manila.
● Upon arrival of the unit, Mejia discovered that the front glass door was broken
and the damage rendered it unserviceable.
 ● Oral and written demands were made for reimbursement of the value of the
oven and transportation paid, which the latter ignored.
● PAL alleges that there was no valid cause of action since it acted in good faith
and in compliance with the Warsaw Convention and had exercised due
diligence in the selection, hiring and supervision of its employees.

Ruling:
● The front portion of the airway bill contains a simple warning that the shipment
is subject to the conditions of the contract on the dorsal portion thereof
regarding the limited liability of the carrier unless a higher valuation is
declared, as well as the reglementary period within which to submit a written
claim to the carrier in case of damage or loss to the cargo.
● Granting that the airway bill is a contract of adhesion, such contracts are not
entirely prohibited and are not in fact binding regardless of whether or not
respondent herein read the provisions thereof.

● Saludo vs. CA - contract of adhesion must be construed strictly against the

party who drafted it.
- Contract of adhesion may be struck down as void and
unenforceable, for being subversive of public policy, only
when the weaker party is imposed upon in dealing with
the dominant bargaining party and is reduced to the
alternative of taking it or leaving it, completely deprived of
the opportunity to bargain on equal footing.

➢ SPECIAL CONTRACTS

○ A simple loan granted by financial institutions is governed by

the law of the permanent place of business.

○ If the loan is granted by private individual or if the subject matter

of the loan is personal, it is governed by the law of the place
where the loan was obtained
○ The intrinsic and extrinsic validity of the contracts are governed
by lex situs for the following:
■ Contracts of pledge
■ Chattel mortgage
■ Antichresis

➢ CARRIAGE OF GOODS by SEA

Case: American President Line, LTD v. Klepper

 ● Klepper shipped on board the S.S. President Cleveland at Yokohama,
Japan, one lift under bill of lading containing personal and household
effects.
● Upon arrival on the port of Manila, while the lift van was being loaded
by the Gantry crane operated by Delgado Brother, Inc., it fell on the
pier and the contents were spilled and scattered.
● Klepper suffered damages

Ruling:
● Article 1753 provides that the law of the country to which the goods are
to be transported shall govern the liability of the common carrier in
case of loss, destruction or deterioration.

● Article 1766 - “in all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of
Commerce and by special laws.”
● Although Sec. 4(5) of the Carriage of Goods by Sea Act states that the
carrier shall not be liable in an amount exceeding $500 per package
unless the value of the goods have been declared by the shipper and
inserted in the bill of lading said section is merely suppleotry to the
provisions of the Civil Code.

➢ CONTRACTS FOR INTERNATIONAL AIR TRANSPORTATION

● Claims for damages arising from contract of international air

transportation is a comparatively new subject in Conflict of Law.
● The Warsaw Convention which applies to all international
transportation of persons, baggage or goods performed by aircraft for
hire, enumerates instances when the carrier is liable, fixing the
maximum amount of damages to be included in each case.
● The carrier and the passenger may agree by a special contract, to a
higher content of the liability for loss or damage of luggage or cargo.
● The carrier is liable for damages for loss or damage to check in
luggage if the damage took place during the transportation by air.
● The period of responsibility includes the time during which the baggage
or goods are in any place whatsoever.
● However, the limits of liability shall not apply if it is proved that the
damaged resulted from an act or omission of the carrier, his servants or
agents, done with intent to cause damage or recklessly and with
knowledge that damage would probably result, provided that in such
case, it is proved that the servant or agent was acting within the scope
of his employment.
● PRESCRIPTION - the action will prescribe if not brought within 2
YEARS from date of arrival at the destination or from the date on which
 the aircraft ought to have arrived or from the date on which the
transportation stopped.
● The method of counting the period of limitation is in accordance
with the law of the forum.
● In case the passenger takes several carriers in his journey, each of the
successive carriers is bound by the rules set in the Convention.
● Philippine Supreme Court in cases involving international air
transportation declined to apply the Warsaw Convention.

Lambayan (367-386)

LOPEZ v. PAN AM

FACTS:

First class tickets were issued to A and his family for a Pan Am flight from Tokyo to San
Francisco. Upon arrival in Tokyo, A requested B to confirm with Pan Am their first class
accommodations for that evening’s flight. However, Pan am informed B that it could not
accommodate A and his family because first class seats were all booked. As a result, A and
his family were forced to take Pan Am’s flight as tourist passengers.

A filed a suit for damages against Pan Am in the CFI. CFI decided in favor of A. A was not
satisfied with the amount of the damages so he filed an appeal to increase the damages.
Defendant Pan am also appealed against the case.

ISSUE:

Whether or not Pan am is liable.

RULING:

Yes. No one among the defendant’s agents notified A and his family that their reservations
had been cancelled, a precaution that could have averted their entering with the defendant
into contracts that the latter had already placed beyond its power to perform. Defendant
made plaintiffs belief that their reservation had not been cancelled.

KLM ROYAL, DUTCH AIRLINES v. COURT OF APPEALS

FACTS:

A and B went on a world tour. When they left the Philippines, they were issued KLM tickets
for their entire trip. However, their coupon was marked “on request”. A and B obtained
confirmation through the help of KLM that seat reservations were now offered. However,
upon checking in at the airport, the respondents were off-loaded by the manager in an
inhumane manner. As a result, they had to take the train to go to their next destination.

A and B filed a complaint against KLM for damages arising from breach of contract of
carriage and for the humiliating treatment they had received. KLM argued that the liability of
a carrier for damages shall be limited to cases of accident or delay only and to occurences
on its own lines. Subsequently, KLM argued that they should not be held liable because of
the provision printed on the A and B’s tickets expressly limiting the KLM’s liability for
damages only to occurrence on its own lines.

ISSUE:

Is the contention of KLM correct?

RULING:

No. The claim of KLM cannot be sustained because of the occurrence of either an accident,
or a delay, neither of which took place at the airport. What is manifested is that the KLM
refused to transport the respondents to their planned and contracted destination.

As to the tickets, the court ruled that it was unacceptable. The condition was printed in letters
so small that one would have to use a magnifying glass to read the words. It would be unfair
and inequitable to charge the respondents with automatic knowledge of the said condition.
The KLM wsa chargeable with the duty and responsibility of specifically informing the
respondents of conditions prescribed in their tickets.

SANTOS III v. NORTHWEST ORIENT AIRLINES

FACTS:

A is a minor and a resident of the Philippines. Respondent is a foreign corporation and

licensed to do business in the Philippines. A purchased from the respondent a round-trip
ticket. At the airport, A was informed that he had no reservation for his flight. A therefore had
to be wait-listed. As a result, A sued the respondent for damages in the RTC of Makati.
Respondent moved to dismiss the complaint for lack of jurisdiction. Respondent contended
that the Philippines was not its domicile nor was this its principal place of business and the
ticket issued was executed not in the Philippines.

ISSUES:
 1. Whether or not the lower court erred in not ruling that under Article 28 (1) of the
warsaw convention, this case was properly filed in the Philippines, because Manila
was the destination of the plaintiff.

2. Whether or not the lower court erred in not ruling that under Article 28 (1) of the
Warsaw convention, this case was properly filed in the Philippines because the
defendant has its domicile in the Philippines.

RULING:

1. No. The place of destination is determined by the terms of the contract of carriage -
in this case is the ticket between the passenger and the carrier. The ticket shows
that the ultimate destination is San Francisco and not the Philippines. It is the
destination and not an agreed stopping place that controls for purposes of
ascertaining jurisdiction under the Convention.

2. No. The domicile of a corporation is customarily regarded as the place where it is

incorporated, and the courts have given the meaning to the term as it is used in the
convention.

THE APPLICABLE LAW IN THE ABSENCE OF AN EFFECTIVE CHOICE

In the absence of an effective choice of law by the parties, consideration will be given
to the following factors in determining the state with which the contract has its most
significant relationship:

1. The place of contracting;

2. The place of negotiating of the contract;
3. The place of performance;
4. The situs of the subject matter of the contract;
5. The domicile, residence, nationality, place of incorporation and place of business of
the parties;
6. The place under whose local law the contract will be most effective.

TN: If numbers 1, 2 and 3 are in the same state, the local law of the state ordinarily
determines the validity of the contract. The exception is in the case of usury.

Example:

Mr. X, resident of state A, borrows money from Bank Y, incorporated and doing
business in state B. The rate of interest is 21 percent which is allowed by state B but
considered usurious by state A law. Bank Y sues Mr. X in state A for payment of this
debt. Although state A has an interest in protecting its citizen, Bank Y could
reasonably rely on state B laws when he entered into the contract coupled with the
fact that the loan was negotiated and transacted entirely in state B.
Duty of the forum court in choice-of-law decisions in conflicts contracts cases: To
single out the state of the most significant relationship with the contract as a whole or with a
specific issue arising therefrom.

Example:

As to contracts involving liability for deterioration or destruction of goods in transit,

the state of the most significant relationship is presumptively the state of destination.

LIMITATIONS TO CHOICE OF LAW

General rule: The parties may not select a law to govern their contract if said law selected
has no connection at all with the transaction or the parties. If the law selected should
change, the law as changed will govern.

Exception: If the change is so revolutionary that it was never contemplated by the parties. In
such a case, the law to govern is that originally intended.

Example of limits to choice-of-law is the use of cognovit clauses(confession-of-judgment

clause). In a cognovit clause, the debtor may agree to be subject to the jurisdiction of a
specific court or courts in case he breaches the contract or defaults in payment.

CHAPTER 15: CHOICE OF LAW IN WILLS, SUCCESSION AND ADMINISTRATION OF

ESTATE

Will or testament - it is an act whereby a person is permitted, with the formalities prescribed
by law, to determine to a certain extent the distribution of his estate to take effect after his
death.

From a conflict of laws perspective - a will or testament is an involuntary transfer of

property because although the act of executing one’s last will and testament is a voluntary
act, that in itself, does not transfer title.

TN: It is only upon the death of the owner that the will comes into effect and since death is
involuntary, making a will becomes an involuntary transfer of property.

Governing law: In common law countries, it is the law of the domicile of the testator. In civil
law countries, it is his national law.

A. EXTRINSIC VALIDITY OF WILLS

If a filipino makes a will abroad, he may comply with the formalities prescribed under the
following:

1. Philippine law (lex nationality) - impliedly included in the civil code.

2. The law of the country where the will is executed (lex loci celebrationis) - general
rule.
An alien has three (3) laws to choose from in cases of wills and testaments:

1. His national law (lex nationality)

2. Philippine law (lex domicilii)
3. The law of the place where he makes the will (lex loci celebrationis)

IN RE ESTATE OF JOHNSON

A, a native sweden and a naturalized US citizen, died in Manila, leaving a holographic will by
which he disposed of his estate. The document was a written instrument signed by the
testator and two witnesses, instead of 3, as required by the code of civil procedure, thus
could not be proved under this provision.

A petition was filed with CFI Manila for the probate of the will on the ground that A was, at
the time of his death, a citizen of Illinois, USA. Accordingly, the will was executed in
accordance with the laws of that state.

Q: Is the will valid in the Philippines?

A: Yes. Johnson was at the time of his death a citizen of the US and of the state of
Illinois, his will was provable under this section in the courts of the Philippines,
provided the instrument was so executed as to be admissible to probate under laws
of the State of Illinois.

In accordance with the law applicable in this case, “Section 636: authorizes probate
by our courts of a will made within the Philippine Islands by a citizen or subject of
another state or country, when such will is executed in accordance with the law of
the state or country of which the testator is a citizen of subject, and which might be
proved under the law of such state or country.”

Extrinsic validity of Joint Wills

Joint wills whether executed by Filipinos in the Philippines or abroad, even if such foreign
country allows it, are considered void in the Philippines on grounds of public policy.

The following are the reasons for the prohibition:

1. A will is a purely personal and unilateral act and this is defeated if two or more
persons make their will in the same instrument;

2. It is contrary to the revocable character of a will;

a. If one testator revokes his will, the other testator would have no instrument
left containing his testamentary dispositions.
 3. A joint will, if mutual or reciprocal, may expose a testator to undue influence and may
even tempt one of the testators to kill the other.

The supreme court’s reason why joint will is prohibited: It is to prevent potential
overreaching especially between the husband and wife.

TN: PH law is silent about joint wills executed in the Philippines by aliens whose national
laws do not prohibit it.

Extrinsic Validity of Holographic Wills

Holographic will - one entirely written, dated and signed by the hand of the testator himself.
It is not subject to any other form, need not be witnessed and may be made in or out of the
Philippines.

Problem with Holographic will: Its validity depends exclusively on the authenticity of the
handwriting. Its simplicity is an invitation to forgery.

Remoreras (386-406)

A. Extrinsic Validity of Holographic Wills

● Wills made by aliens abroad or in the Philippines, apply to holographic wills.

● Article 810 of the Civil Code defines a holographic will as one entirely written, dated
and signed by the hand of the testator himself. It is not subject to any other form,
need not be witnessed and may be made in or out of the Philippines.
● One of the means to facilitate the secret expression of the desire by the testator.
● According to Justice Jose BL Reyes, holographic wills are peculiarly dangerous in
the case of persons who have written very little since the validity of these wills
depends exclusively on the authenticity of the handwriting.

Babcock Templeton v. Rider Babcock

● The petition in this case was filed in the Court of First Instance of Manila on
September 8, 1926, by Beatrice Babcock Templeton to secure probate of a paper
writing purporting to express the wishes of Jennie Rider Babcock, deceased, with
reference to the post mortem disposition of all her property, consisting of corporate
stock, jewelry, personal effects and money.
● The purport of the paper is to the effect that the writer leaves her stock and money to
her three grandchildren, but the writer further states that all interest and dividends are
to be given to her only daughter, Mrs. Templeton, as well as her jewelry and personal
effects "for their support until the youngest is of age.
● The aforesaid instrument is admittedly of a testamentary character, but it is not
executed as a will under the provisions of law generally governing the execution of
the wills made in the Philippine Islands. The instrument therefore is not offered for
probate under section 618 and related provisions of the Code of Civil Procedure but
under section 636, which authorizes probate by our courts of a will made within the
Philippine Islands by a citizen or subject of another state or country, when such will is
 executed in accordance with the law of the state or country of which the testator is a
citizen of subject, and which might be proved under the law of such state or country.
● It is alleged in the petition that the testatrix was at the time of her death a resident of
the State of California, though temporarily residing in Manila at the time of her death;
and the parties have agreed that this paper could be proved in the State of California
as the holographic will of the deceased.
● Issue: whether the testatrix, at the time will was made, had the status of a citizen of
the State of California, as required by section 636 of our Code of Civil Procedure?
● Ruling: The finding of the trial court to the effect that the deceased had acquired a
domicile in the State of California is in our opinion based upon facts which sufficiently
support said finding. In particular, we are of the opinion that the trial court committed
no error in attaching importance to the circumstance that the deceased had voted in
California elections. Though not of course conclusive of acquisition of domicile,
voting in a place is an important circumstance and, where the evidence is scanty,
may have decisive weight. The exercise of the franchise is one of the highest
prerogatives of citizenship, and in no other act of his life does the citizen identify his
interests with the state in which he lives more than in the act of voting.
● This record supplies no material with which to refute the conclusion of the trial court
that a domicile was thus acquired by the testatrix in the state of California; and what
we consider the more critical question is whether or not the domicile thus acquired
was subsequently lost by removal from said state. But upon this point also, we are of
the opinion that the conclusion of the trial court, to the effect that acquired domicile
had not been lost, is in conformity with the evidence. It is a recognized rule that the
intention with which removal is made from a particular state determines whether or
not the domicile is abandoned; and intention is revealed only in the acts and
declaration of the person concerned.
● In the case before us there are no declarations of the testatrix in evidence which
would tend to show that, upon removal to New York, she had any intention of
acquiring a legal domicile in that state. On the contrary her short stay there and her
repeated statements made thereafter show that she could not possibly have had any
intention of making that state a place of permanent abode. As was pointed out by this
court in In Re Estate of Johnson (39 Phil., 156), a person transferring his domicile
from one state of the American Union to another loses his domicile in the state of his
earlier abode upon acquiring a domicile, or citizenship, in the state of his new abode.
The acquisition of the new legal domicile extinguishes the old. Certainly in this case it
cannot be said with any propriety that the domicile of the testatrix in California was
suppressed by the acquisition on a new domicile in New York State.
● But it is said that, even supposing that the testatrix had not acquired a domicile in
New York, yet she was a resident of the Philippine Islands at the same time of her
death, and that, having established herself in these Islands as a place of permanent
abode, her will should not be admitted to probate as the will of a citizen of another
state. But the proof shows that however long the testatrix had resided in the
Philippine Islands, she at no time had any intention of residing here permanently. In
the contrary, her repeated declarations reveal a fixed intention of returning ultimately
to the United States.
● Again, it is a rule that a citizen of the United States cannot acquire citizenship in the
Philippine Islands by residence here, however long continued (In Re Estate of
Johnson, 39 Phil., 156). The testatrix therefore remained at the time of her death a
 citizen of the United States. Her will is therefore provable under section 636 of the
Code of Civil Procedure as the will of a citizen of another state or country; and the
only question to be determined in this case is, which state of the American Union has
the best claim to her citizenship, a question, which, as we have already seen, turns
upon domicile; and there is no other state whose citizenship she can claim, according
the evidence in this record, with as good right as the State of California.
Massachusetts, the place of her marital abode, has not been entered in the
competition, and we must decide between California and New York. As between
these two states, California was surely the state of her legal domicile, acquired by
choice and by residing therein. Furthermore, this California domicile has not been
supplanted by a later domicile acquired in New York. It results that the trial court
committed no error in considering the testatrix a citizen of the State of California, for
the purpose of admitting this will to probate.

B. Intrinsic Validity of Wills

● The intrinsic validity of wills is governed by the national law of the decedent.
● Article 16, paragraph 2 of the Civil Code: “However, intestate and testamentary
succession, both with respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary provisions shall be
regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country where said
property may be found.

Cayetano v. Leonidas

● Adoracion C. Campos died, leaving her father, petitioner Hermogenes Campos and
her sisters, private respondent Nenita C. Paguia, Remedios C. Lopez and Marieta C.
Medina as the surviving heirs. As Hermogenes Campos was the only compulsory
heir, he executed an Affidavit of Adjudication under Rule 74, Section I of the Rules of
Court whereby he adjudicated unto himself the ownership of the entire estate of the
deceased Adoracion Campos.
● Nenita C. Paguia filed a petition for the reprobate of a will of the deceased, Adoracion
Campos, which was allegedly executed in the United States and for her appointment
as administratrix of the estate of the deceased testatrix.
● Nenita alleged that the testatrix was an American citizen at the time of her death and
was a permanent resident of Pennsylvania, U.S.A.; that the testatrix died in Manila
while temporarily residing with her sister; that during her lifetime, the testatrix made
her last will and testament according to the laws of Pennsylvania, U.S.A.
● Issue: The third issue raised deals with the validity of the provisions of the will. As a
general rule, the probate court’s authority is limited only to the extrinsic validity of the
will, the due execution thereof, the testatrix’s testamentary capacity and the
compliance with the requisites or solemnities prescribed by law. The intrinsic validity
of the will normally comes only after the court has declared that the will has been
duly authenticated. However, where practical considerations demand that the intrinsic
validity of the will be passed upon, even before it is probated, the court should meet
the issue.
● lthough on its face, the will appeared to have preterited the petitioner and thus, the
respondent judge should have denied its reprobate outright, the private respondents
 have sufficiently established that Adoracion was, at the time of her death, an
American citizen and a permanent resident of Philadelphia, Pennsylvania, U.S.A.
● The law which governs Adoracion Campo’s will is the law of Pennsylvania, U.S.A.,
which is the national law of the decedent. Although the parties admit that the
Pennsylvania law does not provide for legitimes and that all the estate may be given
away by the testatrix to a complete stranger, the petitioner argues that such law
should not apply because it would be contrary to the sound and established public
policy and would run counter to the specific provisions of Philippine Law.
● It is a settled rule that as regards the intrinsic validity of the provisions of the will, as
provided for by Article 16 (2) and 1039 of the Civil Code, the national law of the
decedent must apply. This was squarely applied in the case of Bellis v. Bellis wherein
we ruled:
“It is therefore evident that whatever public policy or good customs may be involved
in our system of legitimes, Congress has not intended to extend the same to the
succession of foreign nationals. For it has specifically chosen to leave, inter alia, the
amount of successional rights, to the decedent’s national law. Specific provisions
must prevail over general ones.”

C. Interpretation of Wills

● Must be governed by the rules of interpretation of the decedent's national law.

● In contracts, the principal rule in wills is that where the terms are clear and
unambiguous, the lex intentionis of the party should be followed.

D. Revocation

● Being a unilateral and purely personal act, a will is revocable at any time before the
death of the testator. Any waiver or restriction of this right is void.
● Under Article 829 of the Civil Code, a revocation done outside the Philippines, by a
person who does not have a domicile in this country, is valid when it is done
according to (1) the law of the place where the will was made (lex loci celebrationis),
or (2) the law of the place where the testator had his domicile at that time (lex
domicilii).
● If the revocation is done outside the Philippines by one domiciled in the Philippines,
the law of the domicile, which is Philippine law or the law of the place of the
revocation (lex loci actus) controls.
● If the revocation takes place in this country it is valid when it is in accordance with the
provisions of our Civil Code.
● Under Philippine law, wills are not deemed revoked except, in the following cases: (1)
By implication of law; or (2) By some will, codicil, or other writing, executed as
provided in the case of wills; or (3) By burning, tearing, cancelling, or obliterating the
will with the intention of revoking it, by the testator himself, or by some other persons
in his presence, and by his express direction.

E. Probate

● An adjudication that the last will and testament of a person was executed with all the
formalities required by law.
 ● It does not pass upon the validity of the provision of the will.
● The disallowance of a will being essentially procedural in character, the law of the
forum will govern on procedural matter. However, the court will look into the law of
the foreign state where the suit was made as to whether the extrinsic requirements in
the execution of the will have been complied with in view of Articles 17, 816 and 817
of the Civil Code.
● Under Rule 70, Section 9 of the Rules of Court of the Philippines, a will shall be
disallowed in any of the following cases: (a) If not executed and attested as required
by law; (b) If the testator was insane, or otherwise incapable to make a will, at the
time of its execution; (c) If it was executed under duress, the influence of fear, or
threats; (d) If it was produced by undue and improper pressure and influence on the
part of the beneficiary, or some other person for his benefits; (e) If the signature of
the testator was procured by fraud or trick, and he didn't intend that the instruments
should be his will at the time of fixing his signature thereat.

Suntay v. Suntay

● Jose Suntay, a Filipino citizen, died in China leaving real and personal properties in
the Philippines and a house in Amoy. He was survived by his children by his first
marriage to Manuela Cruz, one of whom is appellee Fedrico, and appellant Silvino, a
child by his marriage to Natividad Billian.
● After the latter's death Federico C. Suntay was appointed administrator of the estate.
The surviving widow filed a petition in the Court of First Instance of Bulacan for the
probate of a last will and testament claimed to have been executed and signed in the
Philippines by the late Jose B. Suntay. This petition was denied because of the loss
of said will after the filing of the petition and before the hearing thereof and of the
insufficiency of the evidence to establish the loss of the said will.
● There is no merit in the contention that the petitioner Silvino Suntay and his mother
Maria Natividad Lim Billian are estopped from asking for the probate of the lost will or
of the foreign will because of the transfer or assignment of their share right, title and
interest in the estate of the late Jose B. Suntay to Jose G. Gutierrez and the spouses
Ricardo Gutierrez and Victoria Goño and the subsequent assignment thereof by the
assignees to Francisco Pascual and by the latter to Federico C. Suntay, for the
validity and legality of such assignments cannot be threshed out in this proceedings
which is concerned only with the probate of the will and testament executed in the
Philippines on November 1929 or of the foreign will allegedly executed in Amoy on 4
January 1931 and claimed to have been probated in the municipal district court of
Amoy, Fookien province, Republic of China.

Vda. De Perez v. Tolete

● Dr. Jose F. Cunanan and his wife, Dr. Evelyn Perez-Cunanan, who became American
citizens, established a successful medical practice in New York, U.S.A. The
Cunanans lived at No. 2896 Citation Drive, Pompey, Syracuse, New York, with their
children, Jocelyn, 18; Jacqueline, 16; and Josephine, 14.
● Dr. Cunanan executed a last will and testament, bequeathing to his wife "all the
remainder" of his real and personal property at the time of his death "wheresoever
situated" (Rollo, p. 35). In the event he would survive his wife, he bequeathed all his
 property to his children and grandchildren with Dr. Rafael G. Cunanan, Jr. as trustee.
He appointed his wife as executrix of his last will and testament and Dr. Rafael G.
Cunanan, Jr. as substitute executor.
● Four days later, on August 27, Dr. Evelyn P. Cunanan executed her own last will and
testament containing the same provisions as that of the will of her husband.
● Dr. Cunanan and his entire family perished when they were trapped by fire that
gutted their home. Thereafter, Dr. Rafael G. Cunanan, Jr. as trustee and substitute
executor of the two wills, filed separate proceedings for the probate thereof with the
Surrogate Court of the County of Onondaga, New York.
● The respective wills of the Cunanan spouses, who were American citizens, will only
be effective in this country upon compliance with the following provision of the Civil
Code of the Philippines:
● Art. 816. The will of an alien who is abroad produces effect in the Philippines if made
with the formalities prescribed by the law of the place in which he resides, or
according to the formalities observed in his country, or in conformity with those which
this Code prescribes.
● Thus, proof that both wills conform with the formalities prescribed by New York laws
or by Philippine laws is imperative.
● The evidence necessary for the reprobate or allowance of wills which have been
probated outside of the Philippines are as follows: (1) the due execution of the will in
accordance with the foreign laws; (2) the testator has his domicile in the foreign
country and not in the Philippines; (3) the will has been admitted to probate in such
country; (4) the fact that the foreign tribunal is a probate court, and (5) the laws of a
foreign country on procedure and allowance of wills (III Moran Commentaries on the
Rules of Court, 1970 ed., pp. 419-429; Suntay v. Suntay, 95 Phil. 500 [1954];
Fluemer v. Hix, 54 Phil. 610 [1930]). Except for the first and last requirements, the
petitioner submitted all the needed evidence.
● The necessity of presenting evidence on the foreign laws upon which the probate in
the foreign country is based is impelled by the fact that our courts cannot take judicial
notice of them
● There is merit in petitioner’s insistence that the separate wills of the Cunanan
spouses should be probated jointly. Respondent Judge’s view that the Rules on
allowance of wills is couched in singular terms and therefore should be interpreted to
mean that there should be separate probate proceedings for the wills of the Cunanan
spouses is too literal and simplistic an approach. Such view overlooks the provisions
of Section 2, Rule 1 of the Revised Rules of Court, which advise that the rules shall
be "liberally construed in order to promote their object and to assist the parties in
obtaining just, speedy, and inexpensive determination of every action and
proceeding."

F. Administration of Estates

● Consists of the duties to manage and settle the decedent’s debts and distribute the
residuum of the estateto the deceased’s heirs.
● When the will has been proved and allowed, it is the duty of the probate court to
issue letters testamentary thereon to the person so named in the will upon the latter’s
application.
G. Trusts

● A right of property, real or personal, held by one party for the benefit of another.
CANILLO: 407-421

Chapter XVI
Choice of Law in Torts and Crimes

Tort - derived from the french word toquere or to twist. It is an act or omission producing an
injury to another without any previous existing lawful relation of which the act or omission may
be said to be a natural outgrowth or incident.

Under Arts 20 and 2176 of the Civil Code, a tortfeasor is one who, contrary to law, by his act or
omission wilfully or negligently causes damage to another and shall indemnify the latter for the
same.

A. Policies behind conflicts tort law

2 important policies
1. To deter socially undesirable or wrongful conduct
2. To rectify the consequences of the tortious act by distributing the losses that result form
accident and products liability.

In determining the applicable law in conflicts torts cases the specific policies behind substantive
tort law should be evaluated in the light of the needs of the interstate and international systems
including the policies of upholding the justified expectation of parties and of minimizing the
adverse consequences that might follow from subjecting a party to the law of more than one
state.

Conflicts torts cases arise when the tortious conduct and place of resulting injury are different
and one state imposes higher standards that the other state.

Interstate accidents - the concerned states are those where the victims and tortfeasor reside or
where the enterprise has business activity since it is in these states where the effects of granting
or denying damages will be greatly felt.

B. Lex Loci Delicti Commissi

● The law of the place where the alleged tort was committed. This determines the tort
liability in matters affecting conduct and safety.
● Difficulty has been encountered in determining this where the liability producing conduct
happens in one state but the injuries are sustained in another.
● The common law concept of place of wrong looks to the place where the last event
necessary to make an actor liable for an alleged tort occurs. Negligence or omission is
not in itself actionable unless it results in injury to another.
 ● Civil law countries view the situs of the tort as the place where the tortious conduct was
committed. The legality of or illegality of a person’s act should be determined by the law
of the state where he is at the time he does such act.
● Whether the situs of the tort is the place of conduct or injury, the traditional view is that
an actor liable by the lex loci delicti is liable everywhere.
● The lex loci delicti will not be enforced in the forum court where the proper law
contravenes the law or public policy of the forum.

Alabama Great Southern Railroad vs. Carroll

● The negligent act of failure to inspect the links attaching the cars occurred in Alabama
where recovery was allowed under its Employer’s Liability Act but the defective link
broke and injured Carroll in Mississippi which had no similar law in force, the court held
that the negligent infliction of an injury here, under statutory circumstances, creates a
right of action here, which may be enforced in any other state or country the comity of
which adits of it; but for an injury inflicted elsewhere than in Alabama our statute gives no
right of recovery, and the aggrieved party must look to the local law to ascertain what his
rights are.

Loucks vs. Standards Oil Co.

● If a person or corporation by his or its negligence, or by the negligence of his or its
agents or servants while engaged in his or its business, causes the death of a person
who is in the exercise of due care, and not in his or its employment or service, he or it
shall be liable in damages.
● A foreign statute is not law in this state, but it gives rise to an obligation, which, if
transitory, follows the person and may be enforced wherever the person may be found.
● A right of action is property. If a foreign statute gives the right, the mere fact that we do
not give a like right is no reason for refusing to help the plaintiff in getting what belongs
to him.
● The fundamental public policy is perceived to be that rights lawfully vested shall be
everywhere maintained.
● The application of lex loci delicti commissi as proper law achieved the traditional
objective of uniformity of results.

C. Modern theories on foreign tort liability

1. The most significant relationship
2. Interest analysis
3. Caver’s principle of preference

The most significant relationship

● Considers the state’s contacts with the occurrence and the parties.
● Does not call for a mechanical counting of factual contacts where strength is drawn in
numbers. Instead, the court localizes the state of the most significant relation and
assesses the event or transaction in the light of the relevant policy considerations of the
interested states and their underlying policies.
Saudi Arabian Airlines vs. CA
● Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree that violations of Arts 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.
● The court a quo found it best to hear the case in the Philippines. No unnecessary
difficulties and inconvenience have been shown by either of the parties. The choice fo
forum of the plaintiff should be upheld.
● As to the choice of applicable law, we note that choice of law problems seek to answer 2
important questions: (1) what legal system should control a given situation where some
of the significant facts occurred in two or more states; (2) to what extent should the
chosen legal system regulate the situation.
● Before a choice can be made, it is necessary for us to determine under what category a
certain set of facts or rules fall. This process is known as characterization or the doctrine
of qualification. It is the process of deciding whether or not the facts relate to the kind of
question specified in a conflicts rule. The purpose of characterization is to enable the
forum to select the proper law.
● In applying said principle to determine the state which has the most significant
relationship, the ff contacts are to be taken into account and evaluated according to their
relative importance with respect to the particular issue:
○ The palace where the injury occurred
○ The place where the conduct causing the injury occurred
○ The domicile, residence, nationality, place of incorporation and place of business
of the parties
○ The place where the relationship, if any, between the parties is centered.

Interest Analysis
● Considers the relevant concerns the state may have in the case and its interest in having
its law applied on that issue. The first task of a court before which a conflicts tort case is
filed, is to determine whether the case involves a false or true conflict.
● There is a false conflict if only one state has an interest in having its law applied and
failure to apply the other state’s law would not impair the policy reflected in that law.
● If more than one state has an apparent interest in applying its law to the case there is an
apparent conflict.
● If only one state has a real interest in the case and the other state’s interest is
insubstantial then there is a false conflict. However, if both states have a real interest in
applying their law then the apparent conflict becomes a true conflict.

Cavers’ Principle of Preference

● Cavers’ third principle of preference in torts deals with rules that sanction some kinds of
conduct engaged in by a defendant in one state and extends the benefit of this higher
standard of conduct and financial protection to the plaintiff even if the state of injury does
not create analogous liabilities.
LAMBAYAN: 422-436

Schmidt vs. Driscoll Hotel

Facts:

Plaintiff Schmidt sued Driscoll Hotel, doing business in Minnesota, for damages alleged to have
resulted from the defendant’s illegal sale of liquor to Johnson Sorrensen. As a result, Johnson
Sorrensen became intoxicated and shortly thereafter, plaintiff sustained injuries when an
automobile driver by Sorrensen, in which the plaintiff was a passenger, turned over near
Wisconsin.

Defendant moved to dismiss the action on the ground that the pleadings failed to state a claim
against the defendant and that the court lacked jurisdiction.

Issue:

Can the plaintiff recover from Defendant?

Ruing:

Yes.

General rule is, the place of wrong is in the state where the last event necessary to make an
actor liable for an alleged tort takes place. The law of the place of wrong determines whether a
person has sustained a legal injury.

The exception is when the interest or policy behind the laws would be rendered ineffective.

In the case at the bar, Wisconsin law will not apply because the defendant did not consent to be
bound by the Wisconsin law. The result would be that both the interest of Wisconsin in affording
remedies it deems proper for those injured there as the result of foreign violations of liquor laws
and the interest of Minnesota in admonishing a liquor dealer whose violation of its statutes was
the cause of such injuries would become ineffective. Hence, in conformity with principles and
justice, the court will apply the Minnesota law instead. This reasoning is founded on the ground
that all parties involved were residents of Minnesota, the defendant was licensed under
Minnesota’s laws and its wrongful conduct was complete within Minnesota when Sorrenson
became intoxicated.

American Contributions to conflicts tort law

Major contribution: The determination of whether the law where the tort was committed or the
law of the domicile of the parties is the controlling law.
The law of the tort is deemed as the proper law in questions involving regulation of conduct
while the law of the domicile of the parties governs in matters that relate to loss-distribution or
financial protection.

D. FOREIGN TORT CLAIMS

Tortious liability - it is transitory.

Effect: The liability resulting from the conduct is deemed personal to the perpetrator of the
wrong, following him whithersoever he may go, so that compensations may be exacted from him
in any proper tribunal which may obtain jurisdiction of the defendant’s person, the right to sue
not being confined to the place where the cause of action arises.

1. CONDITIONS FOR THE ENFORCEMENT OF TORT CLAIMS

In general, claims for damages arising from torts committed abroad may be given due
course in the forum court if:

1. The foreign tort is based on a civil action and not on a crime;

2. The foreign tort is not contrary to public policy of the forum; and
3. The judicial machinery of the forum is adequate to satisfy the claim.

TN: In contrast to the law on contracts where the jurisdiction of the forum court is based
on the consent of the parties, the defendant in a transnational tort is often sued in a
foreign court against his will.

2. PRODUCTS LIABILITY OF THE FOREIGN MANUFACTURER

a. ASAHI METAL INDUSTRY CO. V. SUPERIOR COURT OF CALIFORNIA

Facts:

Plaintiff manufactures tire valve assemblies in Japan and sells them to several
tire manufacturers, including a Taiwanese company. The sales took place in
Taiwan which incorporates the assemblies into finished tires which it sells
throughout the world including the U.S.

Sometime in 1978, a California driver lost control of his vehicle that caused
injuries and the death of his wife. He filed a product liability action in California
against the Taiwanese company alleging that the accident was caused by a
defect in the make of the motorcycle. The Taiwanese company then filed a
cross-complaint seeking indemnification from the Japanese company, herein
plaintiff.
The Japanese company moved to quash the cross-complaint of the Taiwanese
company claiming that the state (california) could not exert jurisdiction over it.

Issue:

Is the claim of the Japanese company meritorious?

Ruling:

Yes, because the facts of this case do not establish minimum contacts
such that the exercise of personal jurisdiction is consistent with fair play and
substantial justice.

The due process clause of the 14th amendment limits the power of a
state court to exert personal jurisdiction over a nonresident defendant. In
the absence of minimum contact in the forum state that is established by
a substantial connection purposefully availed by the defendant within the
forum state, the court has no jurisdiction over the case.

In the case at bar, the placement of a product into the stream of

commerce, without more, is not an act of the defendant to purposefully be
directed toward the forum state. There must be additional conducts of the
defendant that may indicate an intent to purposefully serve the market, such as
marketing the product through a distributor who has agreed to serve as the sales
agent in the forum state. Here, such conduct is absent. The mere act of placing
the product into the stream of commerce is not enough to prove substantial
connection between the defendant and the forum state.

Other illustrations:

A helicopter, manufactured by A, a French company, owned by B an English

company and operated and serviced by C, a Malaysian company, crashed in
Brunei, killing E who was a Brunei resident. His widow and the administrators of
his estate brought proceedings against C, A and other associated companies in
Texas.

The court ruled that Texas cannot exercise jurisdiction over the case. Texas law
did not recognize the doctrine of forum non conveniens in suits for personal
injury. The deceased had no connection with Texas. The natural forum would be
in Brunei.

A, a Dutch market gardener, who operated nurseries using water from the Rhine
river, filed an action in the Dutch court alleging that a french mining company, B,
was discharging toxic substances into the Rhine river causing pollution damage.
 The Ducth court held that it had no jurisdiction but, when the case was referred to
the European court, the latter ruled that the plaintiff could at its election sue
either:

1. At the place where the damage occurred; or

2. At the place of commission of the acts giving rise to it.

i. Sovereignty as basis of jurisdiction

Jurisdiction is an aspect of sovereignty and refers to judicial, legislative

and administrative competence.

Tag jurisdiction - The sovereignty model has been accepted in common law
courts both to justify any exercise of jurisdiction over a defendant present within
the territory. It is a way for a court in one state to constitutionally assert personal
jurisdiction over an out-of-state defendant who visits the state where the court
presides. The court will have personal jurisdiction if the defendant is properly
served while in the state. “Properly served” means receiving proper notification
of the lawsuit.

Every state possesses exclusive jurisdiction and sovereignty over person and
property within its territory. No state can exercise direct jurisdiction and authority
over persons and property not within its territory.

b. WORLDWIDE VOLKSWAGEN CORPORATION V. CHARLES WOODSON

Facts:

Spouses Robinsons, residents of New York, who had purchased a car from
Seaway Volkswagen, a retailer in New York, brought a suit against the retailer
and its wholesale distributor in Oklahoma. The spouses claim that the injuries
that they suffered were caused by the defective design of their product.

Seaway Volkswagen and Worldwide Volkswagen asserted that Oklahoma has no

jurisdiction over the case.

Issue:

Is the claim of worldwide Volkswagen tenable?

Ruling:

Yes.
 It is settled that a forum court may exercise personal jurisdiction over a
nonresident defendant only so long as there exist minimum contacts between the
defendant and the forum state.

In the case at bar, there is absence of any circumstances that establishes

minimum contact between the worldwide volkswagen and the forum court.
Worldwide Volkswagen carries no activity whatsoever in Oklahoma. They close
no sales and perform no services there. They avail themselves of none of the
privileges and benefits of Oklahoma law.

TN: It was argued in this case that since it was an automobile, it was foreseeable
that such a car would cause injury in another place. The court ruled that,
foreseeability alone is never a sufficient benchmark for personal jurisdiction
under the due process clause.

TN: However, A state might assert personal jurisdiction over a foreign corporation
that delivers its products into the stream of commerce with the expectation that
they will be purchased by consumers in the forum state.

3. THE ALIEN TORT ACT

Alien tort statute (1789) - it grants the U.S. district courts original jurisdiction over any
civil action by an alien for a tort committed in violation of the law of nations or a treaty of
the United States.

This was enacted by the U.S. to: Protect aliens from tort, a duty imposed by the law of
nations. Compliance with the law of nations was a fundamental concomitant of
nationhood.

Purposes:

1. Stability of commercial relations and national security which assured all

foreigners that they were under the protection of just laws; and

2. To recognize the obligation of every state to the law of nations as a means to

avert war and chaos.

a. HILAO V. ESTATE OF FERDINAND MARCOS

Facts:
 This case arises from the action by the plaintiffs (Hilao family members)
against Ferdinand Marcos on the grounds that they suffered torture,
disappearance and summary execution during the defendants tenure as the
President of the Philippines. Eventually, Hilao obtained a verdict of liability and an
award of nearly 2 billion in damages.

Thereafter, Marcos arrived in the U.S. after fleeing the Philippines. He

was served with complaints by a number of parties seeking damages.

Issue:

Does the foreign court acquire jurisdiction over the case?

Ruling:

➢ Statute of Limitations

● Alien Tort Claims Act does not contain a statute of limitations.

● The court need not decide which statute of limitations applies because
Hilao’s suit was timely under any of the proposed statutes when equitable
tolling principles are applied.
● Section 1983 generally borrows its statutes of limitations from state laws
and incorporates equitable-tolling principles of either state or federal law
in cases where a defendant’s wrongful conduct, or extraordinary
circumstances outside a plaintiff’s control, prevented a plaintiff from timely
asserting a claim,
● Hawaii courts have allowed equitable tolling in similar situations.
● Any actions against Marcos for torture, “disapperances” or summary
execution was tolled during the time Marcos was president.
● Given these extraordinary conditions, any claims against Marcos for injury
from, “disappearance,” or summary execution were tolled until he left
office in February 1986.
● The principle of “command responsibility” that holds a superior
responsible for the actions of subordinates appear to be well accepted in
U.S and international law in connection with acts committed in wartime
● IN RE YAMASHITA: the fact that a breach of the Conventions or of this
Protocol was committed by a subordinate does not absolve his superiors
from penal or disciplinary responsibility… if they know, or had information
which should have enabled them to conclude in the circumstances at the
time, that he was committing or was going to commit such a breach and if
they did not take all feasible measure within their power to prevent or
repress the breach.
● Higher official need not have personally performed or ordered the abuses
in order to be held liable.
 ● Under international law, the responsibility for torture, summary
execution, or disappearances extends beyond the person or
persons actually committed those acts- anyone with higher authority
who authorized, tolerated or knowingly ignored those acts is liable
for them.

➢ Torture Victim Protection Act (TVPA)

❏ Exhaustion

● The Act provides that a court shall decline to hear a claim under
this section of the claimant has not exhausted adequate and
available remedies in the place in which the conduct giving rise to
the claim occurred.

TN: This case illustrates that the tort liability is transitory.

MALAZARTE: 437-451 (Eden, ipadayon lang ang Hilao case dapit sa statute of limitations.
Salamat)

➔ FILARTIGA v PENA-IRALA

Facts:
● Plaintiffs are citizens of Republic of Paraguay, who arrived in the U.S under a
visitor’s visa and have since applied for permanent political asylum.
● Defendant is also a citizen of Paraguay, who entered U.S likewise under a
visitor’s visa.
● Plaintiffs alleged that defendant kidnapped and tortured to death Joelito,
Plaintiff’s son, in retaliation for his father’s political activities.
● Pena was then Inspector General of Police in Asuncion Paraguay.
● Prior to filing this suit, Plaintiff commenced a criminal action in the Paraguay
courts against defendant for the murder of his son but Plaintiff’s attorney was
arrested and threatened with death.
● The plaintiffs caused defendant to be served with summons and civil complaint at
Brooklyn, where he was pending deportation.
● The cause of action is stated as arising under “wrongful death statutes; the UN
Charter; UDHR, etc and other pertinent declarations.
● Jurisdiction, is claimed under the general federal question provision and
principally on the appeal, under the Alien Tort Statute.
● Defendant Pena moved to dismiss the complaint on the grounds that subject
matter jurisdiction was absent and for forum non conveniens, since Paraguay law
provides a full and adequate civil remedy for the wrong alleged.
 ● The complaint was dismissed on jurisdictional ground

Issue: WON the requirements of jurisdiction are met

Ruling:

● The usage of nations, judicial opinions and the works of jurists - the court
concludes that official torture is now prohibited by the law of nations.
● Prohibition is clear and unambiguous, and admits of no distinction between
treatment of aliens and citizens.
● The treaties and accords as well as the express foreign policy of our own
government, all make it clear that international law confers fundamental rights
upon all people vis-a-vis their own governments.

➢ JURISDICTION (Federal Jurisdiction may properly be exercised over Plaintiff’s

claim)

● Common law courts of general jurisdiction regularly adjudicate transitory tort

claims between individuals over whom they exercise personal jurisdiction,
whenever the tort occurred.
● First Judiciary Act , Sec. 9 (b) - for federal jurisdiction over suits by aliens where
principles of international law are in issue
● BASIS for the ALIEN TORT LAW is the LAW OF NATIONS, which has always
been part of the federal common law.
● A state or nation has a legitimate interest in the orderly resolution of disputes
among those within its orders, and where the lex loci delicti commissi is applied,
it is an expression of comity to give effect tot h laws of the state where the wrong
occurred.
● Where in personam jurisdiction has been obtained over defendant, the parties
agree that the acts alleged would violate Paraguayan law, and the policies of the
forum are consistent with the foreign law, state court jurisdiction would be
proper.
● violations of Right of Free Speech - excluded from Alien Torts Acts

➔ GUINTO v. MARCOS

Facts:
● Guinto and Suarez are both Filipino citizens residing in California, while Marcos,
also a Filipino citizen, was then in Hawaii.
● Guinto and Suarez alleged that their rights arising under First Amendment of the
US Constitution were violated by Marcos and his unnamed aides and associates
by seizing and restraining distribution of a film, “100 Days in September” that they
produced and directed
● Plaintiffs suffered general damages for economic loss
 ● Marcos filed a motion to dismiss on the grounds of Head of State Immunity,
Personal Jurisdiction and Forum non Conveniens

Ruling: NO JURISDICTION

● In general, subject matter jurisdiction cannot be waived by the parties to a federal

lawsuit.
● The plaintiff must affirmatively allege facts showing the existence of jurisdiction.
● Burden of Proof -on the party claiming jurisdiction to demonstrate that the court
has jurisdiction over the subject matter.

➢ Federal Question Jurisdiction

● The U.S Constitution does not apply to foreign officials acting within their
own territory
● where a federal question exists, the lack of private cause of action, either
express or implied, requires the dismissal of the lawsuit.

● Inquiry as to jurisdiction under the Alien Torts Claims Act, 28 U.S.C, Sec. 1350,
necessarily decides the issue of federal jurisdiction. If Section 1350 confers
cause of action on the plaintiffs, then plaintiffs have a claim “arising under”
Federal law. (plaintiffs have not successfully raised any other source of a private
cause of action under Sec. 1331.

➢ Jurisdiction Under the Alien Tort Claims Act

● 28 U.S.C. Section 1350 provides a right to an alien, if tort has been
committed against him or her in violation of a treaty of the United States
or the law of nations.

● A violation of the law of nations arises only when there has been a violation by
one or more individuals of those standards, rules or customs

(a) affecting the relationship between states and between an individual

and a foreign state; and
(b) used by those states for their common good and/or in dealings
inter se.

➢ VIOLATIONS OF INTERNATIONAL LAW that are state-practiced, encouraged

and condoned (Judge Edwards’ lists):

a. Genocide
b. Slavery or slave trade
c. The murder or causing the disappearance of individual
d. Torture or other cruel, inhuman or degrading treatment or punishment
e. Prolonged arbitrary detention
 f. Systematic racial discrimanation
g. Consistent pattern of gross violations of internationally recognized human rights

➢ Act of State Doctrine

● Forbids the review by the US Courts of the acts of a foreign head of State
acting in his official capacity.
● In order for plaintiffs to assert jurisdiction under the Alien Tort Claims Act,
they must allege that the tortious acts were official acts or acts committed
under the color of law.

➢ Alien Tort Statute - justifies exercise of court jurisdiction over completely foreign
tort cases because of the universally evil exemplified by human rights violations.
○ There is a need to establish that the taurus conduct violated an
internationally protected human right.

REMORERAS: 452-468

4. PHILIPPINE RULE ON FOREIGN TORTS

● No specific statutory law governing the enforcement of claims for damages arising from
foreign torts.
● The English Rule may be followed such that the tort committed abroad is actionable in
the country where it was committed and also under Philippine law. Under this rule, there
will be no problem of choice of law because Philippine law on torts will be applied
wherever the suit is brought.

Time, Inc. v. Reyes, et al.

● Plaintiffs (herein respondents) Antonio J. Villegas and Juan Ponce Enrile seek to recover
from the herein petitioner damages upon an alleged libel arising from a publication of
Time (Asia Edition) magazine, in its issue of 18 August 1967, of an essay, entitled
"Corruption in Asia"
● Defendants, conspiring and confederating, published a libelous article, publicly, falsely
and maliciously imputing to Plaintiffs the commission of the crimes of graft, corruption
and nepotism; that said publication particularly referred to Plaintiff Mayor Antonio J.
Villegas as a case in point in connection with graft, corruption and nepotism in Asia
● Petitioner received the summons and a copy of the complaint at its offices in New York
on 13 December 1967 and, on 27 December 1967, it filed a motion to dismiss the
complaint for lack of jurisdiction and improper venue, relying upon the provisions of
Republic Act 4363
● Issues: (1) Whether or not, under the provisions of Republic Act No. 4363 the
respondent Court of First Instance of Rizal has jurisdiction to take cognizance of the civil
suit for damages arising from an allegedly libelous publication, considering that the
action was instituted by public officers whose offices were in the City of Manila at the
 time of the publication; (2) Whether or not Republic Act 4363 is applicable to action
against a foreign corporation or non-resident defendant?
● Ruling: Under the first proviso in section 1, the venue of a civil action for damages in
cases of written defamations is localized upon the basis of, first, whether the offended
party or plaintiff is a public officer or a private individual; and second, if he is a public
officer, whether his office is in Manila or not in Manila, at the time of the commission of
the offense. If the offended party is a public officer in the office in the City of Manila, the
proviso limits him to two (2) choices of venue, namely, in the Court of First instance of
the City of Manila or in the city or province where the libelous article is printed and first
published.
● The complaint lodged in the court of Rizal by respondents does not allege that the
libelous article was printed and first published in the province of Rizal and, since the
respondents-plaintiffs are public officers with offices in Manila at the time of the
commission of the alleged offense, it is clear that the only place left for them wherein to
file their action, is the Court of First Instance of Manila.
● The limitation of the choices of venue, as introduced into the Penal Code through its
amendments by Republic Act 4363, was intended "to minimize or limit the filing of
out-of-town libel suits" to protect an alleged offender from "hardships, inconveniences
and harassments" and, furthermore, to protect "the interest of the public service" where
one of the offended parties is a public officer."4 The intent, of the law is clear: a libeled
public official might sue in the court of the locality where he holds office, in order that the
prosecution of the action should interfere as little as possible with the discharge of his
official duties and labors. The only alternative allowed him by law is to prosecute those
responsible for the libel in the place where the offending article was printed and first
published. Here, the law tolerates the interference with the libeled officer's duties only for
the sake of avoiding unnecessary harassment of the accused. Since the offending
publication was not printed in the Philippines, the alternative venue was not open to
respondent Mayor Villegas of Manila and Undersecretary of Finance Enrile, who were
the offended parties.
● The assertion that a foreign corporation or a non-resident defendant is not
inconvenienced by an out-of-town suit is irrelevant and untenable, for venue and
jurisdiction are not dependent upon convenience or inconvenience to a party; and
moreover, venue was fixed under Republic Act No. 4363, pursuant to the basic policy of
the law that is, as previously stated, to protect the interest of the public service when the
offended party is a public officer, by minimizing as much as possible any interference
with the discharge of his duties.
● That respondents-plaintiffs could not file a criminal case for libel against a non-resident
defendant does not make Republic Act No. 4363 incongruous of absurd, for such
inability to file a criminal case against a non-resident natural person equally exists in
crimes other than libel. It is a fundamental rule of international jurisdiction that no state
can by its laws, and no court which is only a creature of the state, can by its judgments
or decrees, directly bind or affect property or persons beyond the limits of the state.5 Not
only this, but if the accused is a corporation, no criminal action can lie against it,6
 whether such corporation or resident or non-resident. At any rate, the case filed by
respondents-plaintiffs is case for damages.

E. DISTINGUISHING BETWEEN TORTS AND CRIMES

● A tort is transitory in character and as such, liability is deemed personal to the tortfeasor
and makes him amenable to suit in whatever jurisdiction he is found. Whereas, a crime
is local in that the perpetrator of the wrong can be sued only in the state wherein he
commits the crime.
● While a tort is an injury to an individual who may be situated in any place, a crime is an
injury to the state where it is committed.
● Penal laws are promulgated to punish and reform the perpetrators and deter them and
others from violating the law while torts law assign liability to the perpetrators in order to
indemnify the victim for injuries he sustained.

F. LEX LOCI DELICTI

● Nulum crimen sine lege principle - requires that in order for a person to be punished for
an act, such act should have been made punishable as a crime by law. Law in this
context has traditionally meant the municipal law of the sovereign state.
● However, nulum crimen principle can be satisfied if the act is considered a crime under
international law.
● Nevertheless under territorial principle, crimes committed within the Philippines by all
persons, whether Filipino citizens or aliens, are prosecuted and penalized under
Philippine law.
● Lex loci delicti - or the law of the place where the crime was committed is the controlling
law since it determines the specific law by which the criminal is to be penalized and at
the same time designate the state that has the jurisdiction to punish him..
● 3 exceptions to the territorial rule:
(1) crimes committed by state officials;
(2) crimes committed by diplomatic representatives; or
(3) crimes committed by officials of recognized international organizations.
● Jure imperii - sovereign acts
Jure gestionis - private, commercial, or proprietary acts

Liang v. People of the Philippines

● Petitioner is an economist working with the Asian Development Bank (ADB). Sometime
in 1994, for allegedly uttering defamatory words against fellow ADB worker Joyce Cabal,
he was charged before the Metropolitan Trial Court (MeTC) of Mandaluyong City with
two counts of grave oral defamation
● Petitioner was arrested by virtue of a warrant issued by the MeTC. After fixing
petitioner's bail at P2,400.00 per criminal charge, the MeTC released him to the custody
of the Security Officer of ADB. The next day, the MeTC judge received an "office of
 protocol" from the Department of Foreign Affairs (DFA) stating that petitioner is covered
by immunity from legal process under Section 45 of the Agreement between the ADB
and the Philippine Government regarding the Headquarters of the ADB (hereinafter
Agreement) in the country
● Ruling:
First, courts cannot blindly adhere and take on its face the communication from the DFA
that petitioner is covered by any immunity. The DFA's determination that a certain person
is covered by immunity is only preliminary which has no binding effect in courts. In
receiving ex-parte the DFA's advice and in motu propio dismissing the two criminal
cases without notice to the prosecution, the latter's right to due process was violated. It
should be noted that due process is a right of the accused as much as it is of the
prosecution. The needed inquiry in what capacity petitioner was acting at the time of the
alleged utterances requires for its resolution evidentiary basis that has yet to be
presented at the proper time.1 At any rate, it has been ruled that the mere invocation of
the immunity clause does not ipso facto result in the dropping of the charges
● Second, under Section 45 of the Agreement which provides:

Officers and staff of the Bank including for the purpose of this Article experts and
consultants performing missions for the Bank shall enjoy the following privileges and
immunities:

a.) immunity from legal process with respect to acts performed by them in their official
capacity except when the Bank waives the immunity.

the immunity mentioned therein is not absolute, but subject to the exception that the acts
was done in "official capacity." It is therefore necessary to determine if petitioner's case
falls within the ambit of Section 45(a). Thus, the prosecution should have been given the
chance to rebut the DFA protocol and it must be accorded the opportunity to present its
controverting evidence, should it so desire.
● Third, slandering a person could not possibly be covered by the immunity agreement
because our laws do not allow the commission of a crime, such as defamation, in the
name of official duty.3 The imputation of theft is ultra vires and cannot be part of official
functions. It is well-settled principle of law that a public official may be liable in his
personal private capacity for whatever damage he may have caused by his act done with
malice or in bad faith or beyond the scope of his authority or jurisdiction.4 It appears that
even the government's chief legal counsel, the Solicitor General, does not support the
stand taken by petitioner and that of the DFA.
● Fourth, under the Vienna Convention on Diplomatic Relations, a diplomatic agent,
assuming petitioner is such, enjoys immunity from criminal jurisdiction of the receiving
state except in the case of an action relating to any professional or commercial activity
exercised by the diplomatic agent in the receiving state outside his official functions.5 As
already mentioned above, the commission of a crime is not part of official duty.
● Other exception: relates to crimes committed on board a foreign vessel even if it is within
the territorial waters of the coastal state.

Article 37 (Criminal, jurisdiction on board a foreign ship

Criminal jurisdiction of the coastal State should not be exercised on board a foreign ship
passing to the territorial seato arrest any person or to conduct any investigation in
connection with any crime committed on board the ship during its passage, save only in
the following cases:
(a) if the consequences of the crime extend to the coastal State;
(b) if the crime is of a kind to disturb the peace of the country or the good order of the
territorial sea;
(c) if the assistance of the local authorities has been requested by the master of the ship
or by a diplomatic agent or consular office of the flag State;
(d) if such measures are necessary for the suppression of elicit traffic in narcotic drugs or
psycho trophic substances.

US v. Fowler

● The two defendants have been accused of the theft of sixteen bottles of
champagne of the value of $20, on the 12th August, 1901, while on board the
transport Lawton, then navigating the high seas, which said bottles of
champagne formed part of the cargo of the said vessel and were the property of
Julian Lindsay, and which were taken lucri causa, and with the intent to
appropriate the same, without violence or intimidation, and without the consent of
the owner, against the statute in the case made and provided.
● The accused having been brought before the court, the prosecuting attorney
being present on behalf of the Government, counsel for the defendants
presented a demurrer, alleging that the Court of First Instance was without
jurisdiction to try the crime charged, inasmuch as it appeared from the
information that the crime was committed on the high seas, and not in the city of
Manila, or within the territory comprising the Bay of Manila, or upon the seas
within the 3-mile limit to which the jurisdiction of the court extends, and asked,
upon these grounds, that the case be dismissed.
● This contention was opposed by the prosecuting attorney, who argued that in
accordance with the orders of the Military Governor and the Civil Commission,
admiralty jurisdiction over crimes committed on board vessels flying the flag of
the US has been vested in the CFIs of Manila.
● The court held that the court was without jurisdiction to try the accused for the
theft alleged to have been committed on the high seas
● This case deals with a theft committed on board a transport while navigating the
high seas. Act No. 136 of the organic law, as well as Act No. 186 passed by the
Civil Commission, and which repealed the former law, Act No. 76, do not
expressly confer jurisdiction or authority upon this court to take cognizance of all
crimes committed on board vessels on the high seas. While the provisions of the
 law are clear and precise with respect to civil admiralty or maritime cases, this is
not true with respect to criminal cases. If any doubt could arise concerning the
true meaning of the law applicable to the case, Act No. 400 effectively dissipates
such doubts.
● This law, which is an addition to Act No. 136, by which the courts of justice of the
Philippine Islands were organized, in article 1 adds to article 56, consisting of
seven paragraphs, another paragraph numbered 8, which reads as follows: "Of
all crimes and offenses committed on the high seas or beyond the jurisdiction of
any country, or within any of the navigable waters of the Philippine Archipelago,
on board a ship or water craft of any kind registered or licensed in the Philippine
Islands in accordance with the laws thereof." The purpose of this law was to
define the jurisdiction of the courts of First Instance in criminal cases for crimes
committed on board vessels registered or licensed in the Philippine Islands. The
transport Lawton not being a vessel of this class, our courts are without
jurisdiction to take cognizance of a crime committed on board the same.

People v. Wong Cheng

● Wong Cheng is accused of having illegally smoked opium aboard the English merchant
vessel, Changsha, while it was anchored in Manila Bay, two and a half miles from the
shores in Manila.
● Wong Cheng presented a demurrer alleging lack of jurisdiction of the lower court, which
held so and dismissed the case.
● Issue: whether the courts of the Philippines have jurisdiction over crime, like the one
herein involved, committed aboard merchant vessels anchored in our jurisdiction
waters?
● Ruling: There are two fundamental rules on this particular matter in connection with
International Law; to wit, the French rule, according to which crimes committed aboard a
foreign merchant vessels should not be prosecuted in the courts of the country within
whose territorial jurisdiction they were committed, unless their commission affects the
peace and security of the territory; and the English rule, based on the territorial principle
and followed in the United States, according to which, crimes perpetrated under such
circumstances are in general triable in the courts of the country within territory they were
committed. Of this two rules, it is the last one that obtains in this jurisdiction, because at
present the theories and jurisprudence prevailing in the United States on this matter are
authority in the Philippines which is now a territory of the United States.

US v. Look Chaw

● The chief of the department of the port of Cebu and an internal revenue agent went
aboard the steamship Erroll to inspect and search its cargo, and found two sacks which
contained cans of opium.
● The hold was under the control of defendant Look Chaw who freely admitted that he had
bought the sacks in Hongkong with the intention of selling them as contraband in Mexico
or Vera Cruz.
● It was established that the steamship Erroll was of English nationality, that it came from
Hongkong, and that it was bound for Mexico via the call ports of Manila and Cebu.
● The defense presented a demurrer and moved for the dismissal of the case on the
grounds that the court had no jurisdiction to try the same, and the facts concerned
therein did not constitute a crime.
● Ruling: The court ruled that it did not lack jurisdiction, inasmuch as the crime had been
committed within its district, on the wharf of Cebu.
● That, although the mere possession of a thing of prohibited use in these Islands, aboard
a foreign vessel in transit, in any of their ports, does not, as a general rule, constitute a
crime triable by the courts of this country, on account of such vessel being considered as
an extension of its own nationality, the same rule does not apply when the article, whose
use is prohibited within the Philippine Islands, in the present case a can of opium, is
landed from the vessel upon Philippine soil, thus committing an open violation of the
laws of the land, with respect to which, as it is a violation of the penal law in force at the
place of the commission of the crime, only the court established in that said place itself
had competent jurisdiction, in the absence of an agreement under an international treaty.
Canillo - 469 to 493
Chapter XVII
Choice of Law Affecting Corporations and other Juridical Entities

A. Corporations
● It is an artificial being created by operation of law, having the right of succession and
the powers, attributes and properties expressly authorized by law or incident to its
existence.
● Foreign corporation - is one formed, organized and existing under the laws of a state
other than those of the Philippines

1. Personal Law of a Corporation

● Law of the State where it is incorporated.
● Corporation possesses only the rights and powers conferred upon it in its charter

ME Gray vs. Insular Lumber Company

Facts:
Insular is a corporation organized and existing under the laws of New York and is licensed to
engage in business in the Philippines.
ME Gray is the owner and possessor of 57 shares of the capital stock of the corporation.
However, he does not own 3% of the total capital stock of the corporation, nor does he
represent stockholders who own 3% of its capital. He asked to allow him to examine their
books and records of the business but he was not allowed (under New York Law).

Ruling:
1. The stipulation of facts is binding upon both parties and cannot be altered by either of
them
2. Plaintiff-appellant is bound to adhere to the agreement made by him with the
corporation under the law of New York, to the effect that the rights of a stockholder to
examine the books and records of a corporation organized under the laws of said
Sate, and during the entire period material to this action, are only those provided in
Sec. 77 of the Stock Corporation Law of New York.
3. Plaintiff did not ask to have the stipulation of facts altered, he cannot now, for the first
time on appeal, raise the question.
4. Neither can this right under the common law be granted the defendant in the present
case, since the same can only be granted at the discretion of the court.

Bank of Augusta vs. Earle

Issue: WON, by comity of nations, foreign corporations are permitted to make contracts
within their jurisdiction, and we can perceive no sufficient reason for excluding them, when
they are not contrary to the known policy of the State, or injurious to its interests.

Ruling:
It is well settled that by the law of comity among nations, a corporation created by one
sovereignty is permitted to make contracts in another, and to sue in its courts; and that the
same law of comity prevails among the several sovereignties of this Union. The public and
well unknown and long continued usages of trade; the general acquiescence of the States;
the particular legislation of some of them, as well as the legislation of Congress, all concur in
proving the truth of this proposition.

In making contracts, a corporation no doubt exercises its corporate franchise. But it must do
this whenever it acts as a corporation, for its existence is a franchise. It has been held that a
corporation of another state may sue in its courts; and the decision is put directly on the
ground of national comity.

The four basic theories drawn from this case are:

1. A corporation, being a creature of law, has no legal status beyond the bounds of the
sovereignty within which it was created
2. A corporation cannot exercise powers not granted by its corporate charter or by the
laws of the state of incorporation
3. No state is under any obligation to adhere to the doctrine of comity. Every state has
the power to refuse to recognize or prevent the foreign corporation from acting within
its jurisdiction
4. A state is not obliged to grant to a foreign corporation the privileges and immunities
common to the citizen of that state.

Although a foreign corporation is a person, it is not deemed a citizen entitled to privileges

given by the state to its individual citizens.

2. Exceptions to the rule of incorporation test.

a. Constitutional and statutory restrictions
● A state, if it sees fit, may by legislation exclude a foreign corporation
altogether, subject to constitutional limitations, or prescribe any conditions it
may see fit as prerequisite to the corporation’s right to do business within its
territory. (TN of Art. XII, Sec. 2, Philippine Constitution)

Pedro Palting vs. San Jose Petroleum Inc

● The privilege to utilize, exploit and develop the natural resources of this country was
granted, by Art. XIII of the Constitution, to Filipino citizens or to corporations or
associations 60% of the capital of which is owned by such citizens. With the Parity
Amendment to the Constitution, the same right was extended to citizens of the US
and business enterprises owned and controlled, directly or indirectly by citizens of the
US.
● The right was granted to 2 types of persons: natural and juridical. In american law,
citizen has been defined as one who, under the constitution and laws of the US, has
a right to vote for representatives in congress and other public officers, and who is
qualified to fill offices in the gift of the people. He is one of the sovereign people, a
constituent member of the sovereignty, synonymous with the people.

Issue: Is San Jose Petroleum an american business enterprise entitled to parity rights in the
Philippines? NO

Ruling:
1. It is not owned or controlled directly by citizens of the US, because it is owned and
controlled by a corporation, the OIL INVESTMENTS, another foreign corporation.
 2. Neither can it be said that it is indirectly owned and controlled by American citizens
through the OIL INVESTMENTS<, for this latter corporation is in turn owned and
controlled, not by citizens of the US, but still by 2 foreign corporations, PANTEPEC
OIL and PANCOASTAL PETROLEUM.
3. Although it is claimed that these two last corporations are owned and controlled
respectively by stockholders residing in the different american states, there is no
showing in the certification furnished by respondent that the stockholders of
Pancoatal or those of them holding the controlling stock, are citizens of the US.
4. Granting that these individual stockholders are american citizens, it is yet necessary
to establish that the different states of which they are citizens, allow Filipino citizens
or corporations or associations owned or controlled by Filipino citizens, to engage in
the exploitation, etc of the natural resources of these states.
5. But even if the requirements mentioned are satisfied, with a long chain of intervening
foreign corporations, comes within the purview of the Parity Amendment regarding
business enterprises indirectly owned or controlled by citizens of the US, is to unduly
stretch and strain the language and intent of the law.

b. Control test during war

● In wartime, the courts may pierce the veil of corporation identity and look into
the nationality of the controlling stockholders to determine the citizenship of
the corporation.

Filipinas Compania de Seguros vs. Christern, Huenefeld and Co. Inc.

● There is no question that majority of the stockholders of the respondent corporation
were German subjects. This being so, we have to rule that said respondent became
an enemy corporation upon the outbreak of the war between the US and Germany.

3. Domicile or residence of foreign corporations

● Art. 51 of the Civil Code provides, then the law creating or recognizing them, or any
other provision does not fix the domicile of juridical persons, the same shall be
understood to be the place where their legal representation is established or where
they exercise their principal functions.
● A foreign corporation that has been granted license to operate in the Philippines
acquires domicile in the Philippines.

State Investment House Inc vs. Citibank

Issue: WON these Philippine branches or unit may be considered residents of the Philippine
Islands or residents of the state under the laws of which they were respectively incorporated

Ruling:
The National Internal Revenue Code declares that the term resident foreign corporations
applies to a foreign corporation engaged in trade or business within the Philippines as
distinguished from a non resident foreign corporation which is one not engaged in trade or
business within the Philippines.

The Offshore Banking Law states that branches, subsidiaries, affiliation, extension offices or
any other units of corporation or judicial person organized under the laws of any foreign
country operating in the Philippines shall be considered residents of the Philippines.
The General Banking Act places branches and agencies in the Philippines of foreign banks
which are called Philippin branches in the same category as commercial banks, savings
associations, mortgage banks, development banks, rural banks, stock savings and loan
associations, making no distinction between the former and the latter insofar as the terms
“banking institutions” and “bank” are used in the Act, declaring on the contrary that in “all
matters not specifically covered by special provisions applicable only to foreign banks, or
their branches and agencies in the Philippines, said foreign banks or their branches and
agencies lawfully doing business in the Philippines shall be bound by all laws, rules and
regulations applicable to domestic banking corporations of the same class, except such
laws, rules and regulations as provided for the creation, formation, organization or
dissolution of corporations or as fix the relation, liabilities, responsibilities, or duties of
members, stockholders or officers of corporation.

The court has held that a foreign corporation licitly doing business in the Philippines, which is
a defendant in a civil suit, may not be considered a non resident within the scope of the legal
provision authorizing attachment against a defendant not residing in the Philippine Islands.

Obviously, the assimilation of foreign corporations authorized to do business in the

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

4. Jurisdiction over foreign corporations

● The dictum that a corporation as a creation of law has force only in the incorporating
state and has no existence outside that state has been abandoned due to the
expansion of investments made in many countries.
● The prevailing rule is that with the consent of a state, a foreign corporation shall be
recognized and will be allowed to transact business in any state which gives its
consent. The consent doctrine is established in Secs 125, 126, 127 and 128 of the
Corporation Code of the Philippines.

Foreign corporations doing business are bound by Philippine law

● Art 129 of the Corporation Code mandates that all foreign corporations lawfully doing
business in the Philippines shall be bound by all laws, rules and regulations
applicable to domestic corporations. The exception for this rule refers to provisions
for the creation, formation, organization or dissolution of corporations or those which
fix the relations, liabilities, responsibilities or duties of stockholders, members or
officers of corporations to each other or to the corporation.
● Rule 14 Sec 14 of the Rules of Court provides that service upon foreign corporations
doing business in the Philippines may be made on:
○ Its resident agent
○ In absence thereof, process will be served on the government official
designated by law or any of its officers or agent within the Philippines
○ On any officer or agent of said corporation in the Philippines
○ By serving summons through diplomatic channels.

Lambayan - 493 to 517

Foreign Corporations doing business are bound by Philippine law

General rule: All foreign corporations lawfully doing business in the Philippines shall be
bound by all laws, rules and regulations applicable to domestic corporations.

Exception: Provisions for the creation, formation, organization or dissolution of corporations

or those which fix the relations, liabilities, responsibilities or duties of stockholders, members
or officers of corporations to each other or to the corporation. (PH law not applicable)

Service upon foeign corporations doing business in the Philippines may be made on:

1. Its resident agent;

2. In the absence thereof, process will be served on the government official designated
by law or any of its officers or agent within the Philippines; and
3. On any officer or agent of said corporation in the Philippines.

TN: The fourth method can be made by serving summons through diplomatic channels.

International Shoe Co. v. Washington

● Territorial emphasis of jurisdiction has been set aside in the United states.
● Instead, the exercise of minimum contacts between the defendant and the state are
now indispensable.

RIGHT OF FOREIGN CORPORATION TO BRING SUIT

Essential requisite: A foreign corporation, doing business in the Philippines, must have
license to transact business in the Philippines for filing a suit before the courts.

Home Insurance Company v. Eastern Shipping Lines

FACTS:

Home insurance company filed suits for recovery of the sum of money. The lower court
dismissed the case because, at the time the contracts were made, Home insurance
company had not yet secured license to do business in the Philippines.

ISSUE:

Whether or not the dismissal of the case was valid.

RULING:

No. When the complaints in these two cases were filed, the petitioner had already secured
the necessary license to conduct its insurance business in the Philippines.
Effects if a foreign corporation has no license to do business in the Philippines:

1. Penal sanction
2. Denial of access to Philippine courts and administrative bodies

TN: Even though a foreign corporation has no license, it does not render null and void the
contracts which it entered here in the Philippines. The registration requirement affects only
the capacity to sue and not the capacity to contract.

Atlantic Mutual Insurance Co. v. Cebu Stevedoring Co., Inc.

FACTS:

Atlantic mutual insurance corporation, a foreign corporation existing under the laws of the
United States, sued Cebu stevedoring corporation, a domestic corporation, for the recovery
of a sum of money.

Cebu stevedoring corporation moved to dismiss the case on grounds that Atlantic mutual
insurance had no legal personality to appear before Philippine courts and had no capacity to
sue.

ISSUE:

Is the contention of Cebu stevedoring corporation meritorious?

RULING:

Yes. The law is clear when it provides that no foreign corporation shall be permitted to
transact business in the Philippines, unless it shall have the license required by law, and,
until it complies with this law, shall not be permitted to maintain any suit in the local courts.

If the law prohibits a corporation based on its incapacity to sue, the corporation must include
it in its averments that such corporation has the necessary legal capacity to maintain a suit in
the Philippines.

EXCEPTIONS TO THE LICENSE REQUIREMENT

1. Isolated Transactions - one which is occasional, incidental, and causal, not of a

character to indicate a purpose to engage in business. This is when there is no
continuity of conduct and intention on the part of the foreign corporation to establish a
continuous business within the state.

Eastboard Navigation, LTD v. Juan Ysmael and company

FACTS:

Eastboard Navigation, a corporation in Canada, agreed to charter its vessel to defendant

Juan Ysmael, a corporation in Manila, to load a cargo of scrap iron in the Philippines for
Buenos Aires. They agreed that in case of dispute, it shall be settled in New York for
arbitration.

A dispute arose and the plaintiff won. Plaintiff brought the action in the Philippines for the
enforcement of the decision of the arbitration. Defendant claimed that it cannot be enforced
since New York court had no jurisdiction over the person of the defendant and that plaintiff,
being a foreign corporation, is without license to transact business in the Philippines, hence
no capacity to sue.

ISSUE:

Is the contention of the defendant meritorious?

RULING:

No, because the plaintiff is not engaged in business in the Philippines. In fact, the
transaction herein involved is the first business undertaken by plaintiff in the Philippines. This
transaction does not constitute engaging in business in the Philippines within the purview of
sections 68 and 69 of the corporation law so as to bar the plaintiff from seeking redress in
our courts.

2. Action to protect trademark, trade name, goodwill, patent or for unfair

competition - a foreign corporation engaging in business without a license may file a
complaint for unfair competition. This rule is based on equity considerations.

Converse Rubber Corp v. Jacinto Rubber and Plastic company

● The disability of a foreign corporation from suing in the Philippines is limited to suits
to enforce legal or contract rights arising from, or growing out, of any business which
it has transacted in the Philippines.

● Where the purpose of a suit is to protect its reputation, corporate name, and goodwill,
whenever that reputation, its corporate name or goodwill have, through the natural
development of its trade, established themselves, an unlicensed foreign corporation
may sue in the Philippines.

● The convention of Paris for the protection of industrial property provides on a

reciprocal basis that citizens of a union member may file an action for unfair
competition and infringement of trademark, patents in any of the union members.

Leviton Industries v. Salvador

FACTS:
Leviton Manufacturing corporation, a foreign corporation organized and existing under the
laws of New york USA, filed a complaint before the Philippine court for unfair competition
against Leviton Industries. It alleged that the latter was manufacturing and selling products
under the trademark Leviton and trade name Leviton.

Leviton Industries moved to dismiss the complaint for failure to state a cause of action and
failure to allege its capacity to sue.

ISSUE:

Is the contention of Leviton Industries tenable?

RULING:

Yes. The law in the Philippines grants to a foreign corporation, whether or not licensed to do
business in the Philippines, the right to seek redress for unfair competition before Philippine
courts. But the said law provides for requisites, namely:

● That there must be the registration of the trademark of the suing foreign corporation
with the Philippine Patent office, or it be an assignee of such registered trademark.

● That the country of the foreign corporation must grant a Filipino corporation the same
reciprocal treatment either through a treaty, convention or law.

In the case at bar, Leviton Manufacturing corporation only alleged that it is a foreign
corporation. Such averment not only fails to comply with the requisites above mentioned, but
also violates the rules of court which provides that, “Facts showing the capacity of a party to
sue or be sued must be averred”

3. Agreements fully transacted outside the Philippines - a foreign corporation is

allowed to maintain an action on a transaction wholly celebrated and consummated
abroad. It is not the lack of prescribed license to do business in the Philippines, but
doing business without such license, which bars a foregn corporation from access to
our courts.

Hang Lung Bank, LTD v. Saulog

FACTS:

Petitioner Hang lung bank, not doing business in the Philippines, entered a contract with
Cordova Chin San in Hongkong. The latter defaulted and so the petitioner filed a collection
suit against Cordova Chin San. Petitioner sent a demand letter to Chin San at his Philippine
address but no response was made.

Petitioner then instituted an action in RTC of Makati against Chin San, a local resident,
seeking the enforcement of its claim based on the transaction that was perfected in
Hongkong. Chin San raised as affirmative defenses lack of cause of action, incapacity to
sue, and improper venue.
ISSUE:

Is the contention of Chin San tenable?

RULING:

No. Since petitioner foreign corporation was not doing business in the Philippines, it may not
be denied the privilege of pursuing its claims against private respondent for a contract which
was entered into and consummated outside the Philippines.

4. Petition filed is merely a corollary defense in a suit against it - a foreign

corporation is not maintaining a suit in Philippine cours but is merely defending itself
when it files a complaint for the sole purpose of preventing the court from exercising
jurisdiction over the case.

TN: Filing of a counterclaim by a Philippine corporation does not constitute an implied

recognition of the foreign corporation’s legal capacity because the foreign corporation in the
main case becomes the defendant.

Philippine Columbia Enterprises Co v. Lantin

FACTS:

Katoh and company, a corporation duly organized and existing under the laws of Japan, filed
a complaint against Philippine Columbia Enterprises. Philippine Columbia Enterprises
moved to dismiss the complaint on the ground that Katoh company had no legal capacity to
sue. Petitioners also questioned the effect of filing a counterclaim.

ISSUE:

Whether or not filing a counterclaim would recognize the legal capacity of a corporation.

RULING:

No. A counterclaim partakes of the nature of a complaint against the plaintiff. So if the
defendant files a counterclaim against the petitioner, the petitioner would become defendant
thereto, in which case the foregin corporation would not be maintaining a suit. Actions by
foreign corporations are governed by rules different from those in action against them.

DEFINITION AND SCOPE OF TRANSACTING BUSINESS

A corporation has the capacity to act and contract, through its agent, in a state or country
other than that which it was created with the express or implied consent of that country or
state.
A foreign corporation can do business therein, the state consent being presumed,
except:

1. Where it is prohibited by express statutory authority or constitutional enactment;

2. Where it is seeking to perform acts which are contrary to the public policy of the
state;

3. Where it is seeking to exercise extraordinary and special franchises; and

4. Where it is seeking to perform acts which are not authorized by the law of the state of
its incorporation.

The foregin business registration act (RA 5455) and foreign investments act (RA 7042)
enumerate the acts that constitute doing business as follows:

1. Soliciting orders
2. Service contracts
3. Opening offices
4. Appointing representatives or distributors domiciled in the Philippines
5. Participating in the management, supervision or control of any domestic business,
firm, entity or corporation in the Philippines
6. Any other acts that imply a continuity of commercial dealings or arrangements and
contemplate to the extent of the performance of acts or works etc.

TN: “Doing business” serves as the basis for the court’s exercise of adjudicatory jurisdiction
over corporations. The quantum of activities necessary to establish “doing business” is
determined by the law of the state.

In general, “Doing business” is different from a single or isolated business transaction. As an

exception, a single or isolated business transaction is similar to “doing business” if it is not
merely incidental or causal but indicates the foreign corporation’s intention to do other
business in the Philippines.

Avon Insurance PLC v. Court of Appeals

● A reinsurance company is not doing business in a state because the property or lives
which are insured by the original insurer company are located in that state since the
reinsurance contract is usually a separate and distinct arrangement from the original
insurance contract.

Wang Laboratories, Inc. v. Mendoza

FACTS:

Wang Laboratories Inc (WLI) is a corporation duly organized under the laws of the US, and
doing business in Massachusetts. WLI sells its products to its exclusive distributor, ETC, a
domestic corporation.
ETC contracted a business with ACCRA. A breach was committed by ETC. ACCRA filed a
complaint against WLI. WLI filed a motion to dismiss the complaint on the ground that
service of summons cannot bind the petitioner as it is not doing business in the Philippines
nor licensed to do business in the country.

ISSUE:

Is the contention of WLI meritorious?

RULING:

No. Petitioner is doing business in the Philippines. Based on the record, it has installed, at
least 26 different products in several corporations in the Philippines since 1976; it has
registered its trade name with the Philippine Patents office and petitioner’s controller in asia
has visited the office of its distributor for at least 4 times where he conducted training
programs in the Philippines. Furthermore, although a foreign corporation is not doing
business in the Philippines, it may be sued for acts done against persons in the Philippines.

Commissioner of Internal Revenue v. Japan airlines, inc.

FACTS:

Respondent Japan Airlines (JAL) is a foreign corporation. JAL had an office in Manila which
did not sell tickets but was maintained merely for the promotion of the company’s public
relations. JAL constituted PAL as its general sales agent in the Philippines in which PAL sold
for and on behalf of JAL, place tickets.

Petitioner sent a deficiency income tax assessment notice and demand letter to JAL. JAL
protested saying that it is a non-resident foreign corporation, hence it was only taxable on
income from Philippine sources.

ISSUE:

Is the contention of the respondent tenable?

RULING:

No.

In order that a foreign corporation may be regarded as doing business within a state, there
must be continuity of conduct and intention to establish a continuous business and not one
of a temporary character.

In the case at the bar, JAL is a resident foreign corporation since it constituted PAL as a
local agent to sell its airline tickets. Such activity shows continuity of commercial dealings or
arrangements and performance of acts or works. As defined, a resident foreign corporation
is a foreign corporation engaged in trade or business within the Philippines or having an
office or place of business therein.

TN: There is no specific criterion as to what constitutes “doing” or “engaging in” or

“transacting” business. Each case must be judged in the light of its peculiar environmental
circumstances.

Revocation of license to transact business

The SEC may suspend or revoke the license of a foreign corporation upon any of the
following grounds:

1. Failure to appoint and maintain a resident agent in the Philippines as required by this
title;

2. failure , after change of its resident agent or of his address, to submit to the SEC a
statement of such change as required by this title;

3. Transacting business in the Philippines outside of the purpose or purposes for which
such corporation is authorized under its license;

4. Transacting business in the Philippines as agent of or acting for and in behalf of any
foreign corporation or entity not duly licensed to do business in the Philippines; or

5. Any other grounds as would render it unfit to transact business in the Philippines.

TN: The SEC is required to give the foreign corporation due notice and a fair hearing.

Effect of failure to secure license to transact business: The foreign corporation has no
right to sue but can still be sued. Although the contracts entered into may be valid as
between the parties, it may not be enforced in Philippine courts.

Malazarte - 517 to 541

Merrill Lynch Futures, Inc. v. CA

Facts:
● MLIF, a non resident corpo not doing business in the PH and duly organized and
existing under and by virtue of the laws of Delaware, USA.
● MLIF entered into a Futures Customer Agreement with spouses Lawa in which it
agreed to act as the latter’s broker for the purchase and sale of futures contracts
● Orders were transmitted to MLIF by the Lara spouses thru the facilities of Merrill
Lynch Philippines, Inc., a Ph corpo and a company servicing MLFI’s customers
● Because of a loss incurred in 3 transactions, Spouses Lara became indebted to MLIF
for the ensuing balance which the latter asked them to pay.
● The Lara’s refused to pay alleging that the transactions were null and void because
Merrill Lynch PH had no license to operate as a commodity or financial futures
broker.
 ● Hence, MLIF filed a complaint with RTC for recovery of said debt and interest plus
damages
● Laras filed a MtD averring that MLIF is prohibited by law to maintain and intervene in
any action, suit or proceeding in any court of administrative agency of the PH
● That Laras were not aware that Merrill Lynch PH had no license to do business in this
country

Issue: WON ML Futures may sue in the PH Courts its rights against spouses Lara
WON Lara Spouses are estopped to impugn MF’s capacity to sue them in the courts
of the forum.

Ruling:

● The fact that ML FUTURES did deal with futures contracts in exchanges in the US on
behalf and for the account of the Lara Spouses, and that on several occasions the
latter received account documents and money in connection with those transactions.
● The rule is that a party is estopped to challenge the personality of a corporation
having acknowledged the same by entering into a contract with it.
● Doctrine of Estoppel to deny corporate existence applied to foreign as well as to
domestic corporations - ONE WHO HAS DEALT WITH A CORPORATION OF
FOREIGN ORIGIN AS A CORPORATE ENTITY IS ESTOPPED TO DENY ITS
CORPORATE EXISTENCE AND CAPACITY
● The principle will be applied to prevent a person contracting with a foreign corpo from
later taking advantage of its noncompliance with the statutes, chiefly in cases where
such person has received benefits of the contract, where such person has acted as
agent for the corporation and has violated his fiduciary obligations, and the statute
does not provide that the contract shall be void but merely fixes a special pernlty for
violation of the statute

Granger Associates v. Microwave Systems, inc.

Facts:

● Granger Associates, organized in the US has no license to do business in the PH

● It sued MSI, a domestic corpo, for recovery of sum allegedly due from it to the
petitioner
● Granger licensed MSI to manufacture and sell its products in the PH and extended to
the latter certain loans, equipment and parts.
● MSI alleged that Granger had no capacity to sue being an unlicensed corpo.

Ruling:

● The terms and conditions of their contract indicates that they established within our
country a continuous business and not merely one of a temporary character.
● It is now settled that even one single transaction may be construed as transacting
business in the PH
● The purpose of the rule requiring foreign corporations to secure a license to do
business in the PH is to enable the courts to exercise jurisdiction over them for the
regulation of their activities in the country.
● If a foreign corporation operates in the PH without submitting to our laws, it is only
just that it not be allowed to invoke them in our courts when it should need them later
for its own protection
● DENIED

SPECIAL CORPORATIONS

1. Religious Societies and the Corporation Sole

● SC held that a religious society, the trustee of which are composed of
Chinese nationals may not acquire and register an agricultural land in view of
the Constitutional provision requiring at least 60% of the capital to be owned
by Filipino citizens.
○ In Ung Siu Si Temple, a religious non-stock corpo composed of
Chinese nationals, the court ruled that in the absence of capital stock,
the controlling membership should be Filipino citizens,
○ To permit religious societies controlled by aliens to acquire agricultural
lands would be to drive the opening wedge to revive religious holdings
in this country

Corporation Sole - is an incorporated office composed of only 1 person.

● Article 110 of the Corpo COde states that the chief archbishop, bishop,
priest, minister or other presiding elder of a religious sect may form a
corporation sole for the purpose of managing its affairs, property and
temporalities.
○ Catholic Apostolic Administrator of Davao vs Land
Registration Commissioner - the Roman Catholic
Administrator of Davao, a Canadian citizen, acting in his
capacity as corporation sole, was allowed to acquire a parcel
of land in his name without being required to satisfy the 60%
membership of Filipino citizens.

SC ruled that the requirement of at least 60% Filipino capital

was never intended to apply to a corporation sole because,
unlike ordinary corporations, the corporation sole is composed
of one person usually the head or bishop of the diocese.

The corporation sole is only the administrator and not the

owner of the temporalities in the diocese. As such the
citizenship of the incumbent administrator or bishop has
nothing to do with the operation and management of the
corporation.

2. Transnational Corporations
 ● Transnational Corporations are clusters of several corporations, each with a
separate entity, existing and spread out in several countries, but controlled by
the headquarters in a developed state where it was originally organized.
● They are NOT ORGANIZED under International law, as in a treaty.
● They are established under and governed by each host country’s national
laws.
● Transnational Corporations eventually becomes a LOCAL Corpo in any of the
host states by assisting with local entrepreneurs and incorporating them
under its local laws.
● THE PERSONAL LAW OF THE TRANSNATIONAL IS THAT OF THE HOST
COUNTRY, however the major decisions regarding its operation and
management come from the parent corporation in the industrialized state.
● MAIN CHARACTERISTIC - all the locally incorporated branches are joined
together by the common control and management of higher officials in the
home state.

➢ Derivative Jurisdiction Over Foreign Corporations

● Restatement Second on Conflict of Laws suggests that jurisdiction over

the parent corporation will exist if the parent controls and dominates the
subsidiary.
● To determine whether the separate corporate existence of the subsidiary has
been adequately preserved, the courts will consider whether the subsidiary
has its own records, assets, advertising, employees, payroll and accounting
and whether its directors and headquarters are different from those of the
parent.
● The activities of the subsidiary in the state will provide a basis for jurisdiction
over the parent if these activities (a) provide a basis for jurisdiction over the
subsidiary, and (b) can be said to have been done in the course for the parent
corporation or on its behalf.
● Such agency relationships are found in the case of consignment
arrangements, control of prices, merchandising or advertising.
● Jurisdiction over the parent corporation may give jurisdiction over the
subsidiary if the separate corporate existence of each has not been
adequately maintained or if the parent has acted within the state as the
subsidiary’s agent.

PARTNERSHIPS

● Partnership is formed by 2 or more persons who bind themselves to contribute

money, property or industry to a common fund with the intention of dividing the profits
among themselves.
● Philippine internal law provides that if the domicile of the partnership is not identified
by the law creating it, it is deemed domiciled in the place where its legal
representation is established or where it exercises its principal functions.
● The legal capacity to contract of a partnership formed abroad is dictated by its
personal law with the Philippines law retaining applicability in the creation of their
establishments in PH territory of the courts of the nation.
● Personal law of the partnership - determines WON a partnership has been
constituted. It provides the conditions and formalities required for it to come into
existence and once these are complied with, a partnership is formed and should be
recognized as such even in other states which imposes a different set fo
requirements.
● The grounds for dissolution and termination of the partnership are fixed by the
partnership’s personal law.
● SC held that decisions of American courts can have no application in this jurisdiction
● Under PH Law, the liability of the partners may be general or limited.
○ LIMITED - the limited partners are not bound by the obligation of the
partnership.
○ King vs. Sarria - limited partnership was organized in Cuba, whose laws, like
the PH, consider only general partners as liable for the obligations of the
partnership. An action against the partnership was filed in New York
impleading a limited partner, Sarria, who was domiciled in Cuba.

It was found that he never participated in managing business nor held himself
out as a general partner.
The New York Court ruled that the limited partner was not liable following the
law of its creation and not the lex loci contractus of the transaction.

➢ Extraterritorial Enforcement of In Personam Judgments Against Partnerships

● If the firm is owned by an individual, his presence in the state might be

sufficient basis for a valid personal judgment that could be enforced
against the firm’s property elsewhere.
● If the nonresident firm was incorporated, mere presence of a shareholder,
officer or director on personal business would not furnish a basis for an
action in personam judgment against the corporation.

➢ The Restatement Second, Conflict of Laws reads:

● Partnership or other Unincorporated Associations

1. A state in which a partnership or other unincorporated
associations is subject to suit in the firm or common name has
power to exercise judicial jurisdiction over the partnership or
association if under the circumstance it would exercise judicial
jurisdiction over an individual.
2. A valid judgment rendered against a partnership or association is
a binding adjudication as to the liability of the partnership or
association with respect to its assets in every state.

FOREIGN JUDGMENTS
Recognition and Enforcement of Foreign judgments

➢ Distinction between Recognition And Enforcement

 ● FOREIGN JUDGMENTS - refers to all decisions rendered outside the forum
and encompasses judgments, decrees and orders of courts of foreign
countries as well as those of sister states in a deferral system of government.
○ If the successful plaintiff fails to obtain satisfaction of a judgment in the
court which granted it, he may try to enforce it in another state where
the defendant can be located.
○ Likewise, a case for recognition may arise if the defendant wins and
asserts that decision to preclude the plaintiff from filing a suit on the
same claim in another forum.
○ Recognition and enforcement of foreign judgments are analogous,
there are conceptual and procedural differences between the two.

RECOGNITION

- Passive act of giving effect to a judgment in Forum-1 without

necessarily filing an action in Forum-2.

➢ Base of Recognition and Enforcement of Foreign Judgments

● Was based on comity.

● Cheshire - an eminent COL commentator - the theory of comity would appear
to mean that in order to obtain reciprocal treatment from the court of other
countries, we are compelled to take froreign judgements as they stand and to
give them Full Faith and Credit.
● Effect of recognition: Reciprocity between the concerned jurisdictions.
● Doctrine of obligation
○ derived from the rigid and unyielding vested rights theory.
○ It considers a judgment of a foreugn court of competent jurisdiction as
imposing a duty or obligation on the losing litigant.

➢ Policies underlying Recognition and Enforcement

● Many courts recognize and enforce foreign judgements on the ground of res
judicata.
● Those who have contested an issue shall be bound by the result of the
contest and that matters once tried and decided with finality in one jurisdiction
shall be considered settled as between the parties.
● Parties are prevented from litigating issues that have been determined
between them by a valid local judgment.
● This principal seeks to accomplish a policy common to all states which is to
give finality to litigation.

● Public policy dictates diminishing the judicial energy invested in deciding

individual suits, encouraging confidence in and defence to court decrees, and
securing the legitimate expectation of the successful plaintiff or defendant that
he will no longer be harassed into protecting his interest.
 ● Rule 39, Sec. 40 of Revised Rule of Court, a judgment of a tribunal of a
foreign country, having jurisdiction to pronounce the judgment renders it
conclusive upon the turtle to the thing,while a judgment against a person is
presumptive evidence of a right as between the parties and their successors
in interest.

● Doctrine of collateral estoppel - renders conclusive all essential issues of

fact actually litigated in the suit decided in by the foreign court. Barring
relitigation of an issue already litigated on in a prior proceeding.

● RES JUDICATA - seeks to end litigation by disallowing a suit on the same

claim

➢ Requisites for Recognition or Enforcement

1. The foreign judgment was rendered by a judicial or a quasi-judicial tribunal

which had jurisdiction over the parties and the case in the proper judicial
proceedings.

A court validly asserts jurisdictions in proceedings in personam based on the

consent of the parties or the relation of the parties or events to the forum,
thereby satisfying the minimum standards of fair lay and substantial justice.

In in rem, proceedings, jurisdiction is anchored on the power of the state over

the property found within the territory

When there is disregard for due process, the foreun judgement will be denied
recognition and enforcement.

Northwest Orient Airlines, Inc. vs CA and CF Sharp Company, Inc.

Facts:
● Northwest authorized Sharp to sell the former’s airlines tickets.
● Sharp failed to remit its proceeds of the ticket sales it made on nelgal of Northwest
under the agreement which led the latter to sue on Tokyo for collection of unremitted
amount.
● Tokyo District Court issued a writ of summons at Sharp head office in Manila but it
failed to appear at the hearings.
● The District Court rendered judgment ordering Sharp to pay Northwest.
● Northwest failed to execute the decision in Japan, hence it filed a suit for
enforcement of judgment before RTC Manila.

Ruling:
● A foreign judgment is presumed to be valid and binding in the country from which it
comes until the contrary is shown.
● It is also proper to presume the regularity of the proceedings and the giving of due
notice therein.
 ● Rule 39, Sec. 50 ROC - a judgment in an action in personam of a tribunal of a foreign
country having jurisdiction to pronounce the same is presumptive evidence of a right
as between the parties and their successors-in- interest by a subsequent title.
● Rule 131, Sec. 3 - a court, whether of the PH or elsewhere, enjoys the presumption
that it was acting in the lawful exercise of jurisdiction and has regularly performed its
official duty.
● A party attacking a foreign judgment has the burden of overcoming the presumption
of its validity.
● Sharp has the duty to demonstrate the invalidity of such judgment.
● SERVICE OF PROCESS upon a defendant are governed by the LEX FORI or the
internal law of the forum.
● Section 14 ROC, if the defendant is a foreign corporation doing business in the
Philippines, service may be made:
1. On its resident agent designated in accordance with law for that purpose or
2. If there is no such resident agent, on the government official designated by
law to that effect or
3. On any of its officers or agents within the PH
● The extraterritorial service of summons on it by the Japanese Court was valid not
only under the processual presumption but also because of the presumption of
regularity of performance of official duty.

Boudard vs Tait

Facts:
● Boudard, widow of Jerome Boudard and as a guardian of their children, obtained a
favorable judgment from the CFI of Hanoi against Eddie Tait who had been declared
in default for his failure to appear at the trial.
● Boudard was an employee of Tait who was killed in Hanoi by co-employees.
● Emilie Boudard filed a petition with CFI Manila for the execution of the Hanoi
judgment but the court dismissed for lack of jurisdiction of Hanoi Court, Tait not
being a resident of that country.
Ruling:
● Judicial proceedings in a foreign country, regarding the payment of money, are only
effective against a party if summons is duly served on him within such foreign country
before the proceedings.
● The fundamental rule is that jurisdiction in personam over nonresidents, so as to
sustain a money judgment must be based upon personal service within the state
which renders the judgment, must be based upon personal service within the state
which renders the judgment.
● DENIED

Remoreras - 541 to 564

Ramirez v. Gmur

● Samuel Bischoff Werthmuller, native of the Republic of Switzerland, but for many
years a resident of the Philippine Islands, died in the city of Iloilo on June 29, 1913,
 leaving a valuable estate of which he disposed by will. A few days after his demise
the will was offered for probate in the Court of First Instance of Iloilo and, upon
publication of notice, was duly allowed and established by the court.
● The first cause of the will contains a statement to the effect that inasmuch as the
testator had no children from his marriage with Ana M. Ramirez he was therefore
devoid of forced heirs. In making this statement the testator ignored the possible
claims of two sets of children, born to his natural daughter, Leona Castro.
● It was shown that in 1895, Castro was married to Frederick Von Kauffman, a british
subject. Three children were born of this marriage, namely, Elena, Federico and
Ernesto. In 1904, Kauffman went to Paris, France for the purpose of obtaining a
divorce from Castro under French law. On January 5, 1905, a decree of divorce ws
issued. On May 5, 1905, Castro married Dr. Ernest Emil Mory, in Westminster,
England. Two children were born of that marriage, namely Carmen and Esther, and
Leontina who was born before they were married.
● On October 6, 1910, Castro died. Both set of children claim that Leona Castro was
the recognized natural daughter of Bischoff and as such would have been his forced
heir had she been alive at the time of her father’s death.
● Ruling: With reference to the right of the von Kauffman children, it is enough to say
that they are legitimate children, born to their parents in lawful wedlock; and they are
therefore entitled to participate in the inheritance which would have devolved upon
their mother, if he had survived the testator. As regards the Mory claimants, it is
evident that their rights principally depend upon the effect to be given by this court to
the decree of divorce granted to von Kauffman by the Court of First Instance of the
City of Paris.
● We are of the opinion that the decree of divorce upon which reliance is placed by the
representation of the Mory children cannot be recognized as valid in the courts of the
Philippine Islands. The French tribunal has no jurisdiction to entertain an action for
the dissolution of a marriage contracted in these Islands by person domiciled here,
such marriage being indissoluble under the laws then prevailing in this country.
● t is established by the great weight of authority that the court of a country in which
neither of the spouses is domiciled and to which one or both of them may resort
merely for the purpose of obtaining a divorce has no jurisdiction to determine their
matrimonial status; and a divorce granted by such a court is not entitled to
recognition elsewhere. (See Note to Succession of Benton, 59 L. R. A., 143.) The
voluntary appearance of the defendant before such a tribunal does not invest the
court with jurisdiction. (Andrews vs. Andrews, 188 U. S., 14; 47 L. ed., 366.)
● As the divorce granted by the French court must be ignored, it results that the
marriage of Doctor Mory and Leona Castro, celebrated in London in 1905, could not
legalize their relations; and the circumstance that they afterwards passed for
husband and wife in Switzerland until her death is wholly without legal significance.
The claims of the Mory children to participate in the estate of Samuel Bischoff must
therefore be rejected. The right to inherit is limited to legitimate, legitimated, and
acknowledged natural children. The children of adulterous relations are wholly
excluded. The word "descendants," as used in article 941 of the Civil Code cannot be
interpreted to include illegitimates born of adulterous relations.

Borthwick v. Castro
 ● Petitioner William Borthwick, an American citizen living in the Philippines, owned real
property interests in Hawaii. In his business dealings with private respondent, Joseph
Scallon, Borthwick issued the promissory notes now sued upon, but failed to pay the
sums owing upon maturity and despite demands. The promissory notes provided that
upon default, action may be brought for collection in Los Angeles, California, or at
Scallon’s option, in Manila or Honolulu.
● Borthwick was served with summons when he was in California, pursuant to
Hawaiian law allowing service of process on a person outside the territorial confines
of the State. Because Borthwick ignored the summons, a judgement by default was
entered against him.
● However, Scallon’s attempt to have the judgement executed in Hawaii and California
failed because Borthwick had no assets in those states. Scallon then came to the
Philippines and brought suit against Borthwick seeking enforcement of the default
judgement of the Hawaii court. Again, after due proceedings, judgement by default
was rendered against him, ordering Borthwick to pay Scallon the amount prayed for.
● The court issued an amendatory order and upon receipt by Borthwick, he moved for
a new trial, alleging that the promissory notes did not arise from business dealings in
Hawaii, nor did he own real estate therein. He contended that the judgement of the
court of Hawaii is unenforceable in the Philippines because it was invalid for want of
jurisdiction over the cause of action and over his person.
● Ruling: It is true that a foreign judgment against a person is merely "presumptive
evidence of a right as between the parties," and rejection thereof may be justified,
among others, by "evidence of a want of jurisdiction" of the issuing authority, under
Rule 39 of the Rules of Court.22 In the case at bar, the jurisdiction of the Circuit
Court of Hawaii hinged entirely on the existence of either of two facts in accordance
with its State laws, i.e., either Borthwick owned real property in Hawaii, or the
promissory notes sued upon resulted from his business transactions therein.
Scallon's complaint clearly alleged both facts. Borthwick was accorded opportunity to
answer the complaint and impugn those facts, but he failed to appear and was in
consequence declared in default. There thus exists no evidence in the record of the
Hawaii case upon which to lay a conclusion of lack of jurisdiction, as Borthwick now
urges.
● The opportunity to negate the foreign court's competence by proving the
non-existence of said jurisdictional facts established in the original action, was again
afforded to Borthwick in the Court of First Instance of Makati, where enforcement of
the Hawaii judgment was sought. This time it was the summons of the domestic court
which Borthwick chose to ignore, but with the same result: he was declared in
default. And in the default judgment subsequently promulgated, the Court a quo
decreed enforcement of the judgment affirming among others the jurisdictional facts,
that Borthwick owned real property in Hawaii and transacted business therein.
● In the light of these antecedents, it is plain that what Borthwick seeks in essence is
one more opportunity, a third, to challenge the jurisdiction of the Hawaii Court and the
merits of the cause of action which that Court had adjudged to have been established
against him. This he may obtain only if he succeed in showing that the declaration of
his default was incorrect. He has unfortunately not been able to do that; hence, the
verdict must go against him.

2. The judgement must be valid under the laws of the court that rendered it.
3. The judgement must be final and executory to constitute res judicata in another
action.

● If the judgement is interlocutory or provisional in character which “contemplates that

a fuller investigation leading to a final decision may later be held, it creates no
obligation” on the forum court to recognize or enforce it.

Nouvion v. Freeman

● Henderson, during his lifetime, purchased certain properties in the district of Seville,
Spain from Nouvion. The deeds by which those properties were conveyed contained
an obligation to make certain payments, and they were registered in the registry of
the district of San Roman. According to the law of Spain, the person who is entitled to
payment under such deeds can obtain what is called an “executive” judgement.
● Nouvion brought this action for the administration of the estate of the deceased
Henderson. In order to secure to the administration of said estate, it was necessary
for him to show that he was a creditor of the deceased.
● In the presentation of his case, Nouvion alleged that he obtained a judgement of a
foreign court upon which he was entitled to sue in that country, and which in that
country established the existence of a debt. The question now is whether such
judgement or decree can be sustained under the English jurisdiction.
● Lord Herschell stated on the question of finality or conclusiveness of a foreign
judgment: ‘in order to establish that such a judgment has been pronounced it must be
shown that in the court by which it was pronounced it conclusively, finally, and for
ever established the existence of the debt of which it is sought to be made conclusive
evidence in this country, so as to make it res judicata between the parties. If it is not
conclusive in the same court which pronounced it, so that notwithstanding such a
judgment the existence of the debt may between the same parties be afterwards
contested in that Court, and upon proper proceedings being taken and such contest
being adjudicated upon, it may be declared that there existed no obligation to pay the
bet at all, then I do not think that a judgment which is of that character can be
regarded as finally and conclusively evidencing the debt, as so entitling the person
who has obtained the judgment to claim a decree from our Courts for the payment of
that debt.’

Querubin v. Querubin

● In 1934, Silvestre Querubin, a Filipino, married petitioner Margaret Querubin, in

Albuquerque, New Mexico. 'They had a daughter, Querubina. Margaret filed for
divorce in 1948 alleging "mental cruelty." Silvestre filed a countersuit for divorce
alleging Margaret's infidelity. In 1949, the Superior Court of Los Angeles granted the
divorce and awarded "joint custody" of the child. Querubina was to be kept in a
neutral home subject to reasonable visits by both parties. Both parents were
restrained from taking Querubina out of California without the permission of the
Court.
● In 1950, Margaret, through counsel, presented to the CFI a petition for habeas
corpus for the custody of Querubina under the interlocutory decree of the California
 Court. She claims that under Art. 48 of Rule 39, the decree of the Los Angeles Court,
granting her the child's custody, must be complied within the Philippines.
● Issue: W/N the decree of a foreign court may be complied with in the Philippines?
● Ruling: The decree is by no means final. It is subject to change with the
circumstances. The first decree awarded the custody of the child to the father,
prohibiting the mother from taking the child to her (Margaret's) home because of her
adulterous relationship with another man. The decree was amended when Margaret
was not in Los Angeles.
● Because the decree is interlocutory, it cannot be implemented in the Philippines.
Where the judgment is merely interlocutory, the determination of the question by the
Court which rendered it did not settle and adjudge finally the rights of the parties.
● In general, a decree of divorce awarding custody of the child to one of the spouses is
respected by the Courts of other states "at the time and under the circumstances of
its rendition" but such a decree has no controlling effects in another state as to facts
and conditions occurring subsequently to the date of the decree; and the Court of
another state may, in proper proceedings, award custody otherwise upon proof of
matters subsequent to the decree which justify the decree to the interest of the child.
● In the case at bar, the circumstances have changed. Querubina is not in Los
Angeles, she is in Cagayan, Ilocos Sur, under her father's care. It is a long way from
one place to the other. Neither can Margaret prove that she can pay the cost of
passage for the minor. She is not a packet of cigarettes one can send by mail.
Neither can she answer for Querubina's support, care and education. In comparison,
the father has shown both interest in the child and capacity to provide for the needs
of the child."

4. The state where the foreign judgement was obtained allows recognition or
enforcement of Philippine judgements.

● This principle is a reiteration of international comity as a basis for recognition and

enforcement of a foreign-state or foreign-country decree.

Cowans, et al. v. Ticonderoga Pulp & Paper Co.

● The action is brought to recover on a money judgment which these plaintiffs
recovered in the Province of Quebec, Canada. The Quebec court had jurisdiction of
the action and of the defendant. The case was there tried on the merits and the
judgment is not tainted with fraud, nor with an offense against our public policy. The
presumption is that a judgment so rendered determined the rights and liabilities of the
defendant according to the law and procedure of the court where it was rendered.
● The question presented here is whether this Quebec judgment is in our court merely
prima facie proof of liability, against which any defense which could have been used
at the trial in the Quebec court is available to defeat recovery here, or is it conclusive,
subject only to the recognized exceptions. The respondent's proposition is that the
judgment is only prima facie evidence, because, under the Quebec law (Code Civ.
Proc. of Quebec, § 210): "Any defense which was or might have been set up to the
original action may be pleaded to an action brought upon a judgment rendered out of
Canada." In other words, that the courts of New York State should not recognize the
judgments of the Province of Quebec as adjudications of the issues because the
courts of Quebec do not reciprocate as to judgments of the State of New York.
 ● The general rule in this State is settled as follows: A judgment recovered in a foreign
country, when sued upon in the courts of this State, is conclusive so far as to
preclude a retrial of the merits of the case, subject, however, to certain
well-recognized exceptions, namely, where the judgment is tainted with fraud, or with
an offense against the public policy of the State, or the foreign court had not
jurisdiction.
● The respondent does not question the general rule as above stated, but urges that
the denial of reciprocity in the Province of Quebec furnishes a further exception to the
general rule. It rests its contention confidently on the decision in Hilton v. Guyot ( 159
U.S. 113). In that case the action had been brought in the Circuit Court of the United
States for the Southern District of New York to recover on a judgment obtained by the
plaintiff in a court of France having jurisdiction. The United States Supreme Court
rendered its decision by the vote of five judges, four judges dissenting. The prevailing
opinion recognized the general rule as above stated, but held that the courts of this
country should recognize the judgment of the French court as prima facie evidence
only and not as conclusive on the merits, because such only is the effect which
France gives to a judgment of our courts; that is, because of lack of reciprocity
between the two countries.
● Of course comity adds nothing to the strength, worth, or, as Judge Pound calls it,
"persuasiveness" of the foreign judgment. The same persuasiveness is present with
or without comity, or with or without reciprocity; and, without reciprocity, the United
States Supreme Court still gives the foreign judgment recognition. It is to be received
in evidence as prima facie proof of the cause of action. If no defense on the merits is
made it is sufficient proof on which to render judgment. Still, if there is want of
reciprocity between the two countries, that court would deny to the foreign judgment
the persuasiveness it really possesses. Our Court of Appeals has, we think, definitely
refused to accept that holding as the policy of this State; and, without reciprocity,
would give to the foreign judgment the full effect to which its persuasiveness entitles
it. The decision in the Hilton case would deprive a party of the private rights he has
acquired by reason of a foreign judgment because the country in whose courts that
judgment was rendered has a rule of evidence different from that which we have and
does not give the same effect as this State gives to a foreign judgment.
● We think the general rule as above stated must be applied to this case, and that the
proposition which the respondent would maintain is in conflict with the policy and law
of this State.

5. The judgement must be for a fixed sum of money.

● Unless the foreign judgement specifies performance or delivery, there is nothing for
the forum court to enforce.
● Sadler v. Roberis - the English court held that until taxation, the plaintiff could not
enforce his claim there because the Jamaican court decided that from the sum due
him should first be subtracted the costs incurred by the defendant which was to be
taxed. Hence, the amount decreed was not fixed.

6. The foreign judgment must not be contrary to the public policy or the good morals
of the country where it is to be enforced.
 ● The public policy exception traces its inception to Joseph Story’s comments on
commity as a choice-of-law mechanism. He wrote that the forum was not under any
duty to apply foreign law when such was repugnant to its internal policies or
prejudicial to its interests.
● The then prevailing choice-of-law method was the inflexible vested rights theory
which often gave rise to absurd and unjust judicial decisions; a problem the public
policy exception sought to avoid. Frequent recourse to this exception in order to
nullify a foreign judgement has been assailed for its lack of analytical accuracy and
inability to arrive at objective standards.

Querubin v. Querubin

● The Court cannot give effect to a foreign judgement that contravenes our laws,
customs and public morals. If we concede to the petition of the mother and allow
custody and care of the child, the child shall live under the control of the man who
dishonored her mother and offended her father. Upon reaching puberty, she may get
the idea that an unfaithful mother can keep her chi;d; she will be impressed with
inferior morals which will result in incalculable consequences.

7. The judgement must not have been obtained by fraud, collusion, mistake of fact or
mistake of law.

● Whether or not there was fraud is decided by the court where enforcement of the
foreign judgement is sought on the basis of its own internal law. A conflicts problem
may arise because this internal law may not be in agreement with notions of equity
held by the foreign state.
● Rule 39, Section 50 does not refer to intrinsic fraud which goes to the merits of the
case. It is not a defense in the enforcement of a foreign judgement, otherwise it might
result in a trial de novo. In contrast, extrinsic fraud signifies that the party had been
deprived of his day in court.

E. Grounds for non-recognition

Section 4 of the Uniform Money---Judgement Recognition Act of the US:

(a) Except as otherwise provided in subsections (b) and (c), a court of this state shall
recognize a foreign-country judgment to which this [act] applies.
(b) A court of this state may not recognize a foreign-country judgment if:
(1) the foreign-country judgment was rendered under a judicial system that does not provide
impartial tribunals or procedures compatible with the requirements of due process of law;
(2) the foreign court did not have personal jurisdiction over the defendant; or
(3) the foreign court did not have jurisdiction over the subject matter.
(c) A court of this state need not recognize a foreign-country judgment if:
(1) the defendant in the proceeding in the foreign court did not receive
notice of the proceeding in sufficient time to enable the defendant to defend;
(2) the foreign-country judgment was obtained by fraud that deprived the
losing party of an adequate opportunity to present its case;
(3) the foreign-country judgment or the [cause of action] [claim for relief] on which the
foreign-country judgment is based is repugnant to the public policy of this state or of the
United States;
(4) the foreign-country judgment conflicts with another final and conclusive judgment;
(5) the proceeding in the foreign court was contrary to an agreement between the parties
under which the dispute in question was to be determined otherwise than by proceedings in
that foreign court;
(6) in the case of jurisdiction based only on personal service, the foreign court was a
seriously inconvenient forum for the trial of the action;
(7) the foreign-country judgment was rendered in circumstances that raise substantial doubt
about the integrity of the rendering court with respect to the foreign-country judgment; or
(8) the specific proceeding in the foreign court leading to the foreigncountry judgment was
not compatible with the requirements of due process of law.
(d) The party resisting recognition of the foreign-country judgment has the burden of
establishing that one of the grounds for non-recognition stated in subsection (b) or (c) exists.

F. Modern Developments in Enforcement of Foreign Judgements

Treaties and multilateral conventions to regulate recognition and enforcement practices:

1. The Hague Conference on Private International Law
● The Convention on the Recognition and Enforcement of Foreign Judgements in Civil
and Commercial Matters, established the condition and pre-requisites under which
the contracting states would recognize and enforce each other’s judgement.
2.. The EEC Convention of 1968
● Six countries are signatories to a Convention relating to the Jurisdiction of Courts and
Enforcement of Decisions in Civil and Commercial Matters. The Convention extends
to the entire Common Market area the reach of jurisdictionally improper for a
presently available against non-residents under the procedural systems of four
member states.
3. Uniform Foreign Money-Judgements Recognition Act
● Seek to inspire more confidence in the stability of American law and coalesce into
one statute all the common law rules of recognition derived from jurisprudence.
● The Act is applicable to any foreign country judgement that is final and conclusive
and enforceable when rendered even though an appeal therefrom is pending or it is
subject to appeal. It explicitly excludes judgements from taxes, penalties and for child
or spousal support.

G. Procedure for enforcement

● In common law countries, when a foreign judgement is recognized, it is not

instantaneously executed as a judgement. The Philippines has adopted this and our
laws require that a petition should be filed in the proper court attaching an
authenticated copy of the foreign judgement to be enforced.

Ingenohl v. Olsen & Co.

● Petitioner Ingenohl brought a suit against defendant Walter Olsen and Co. in
Hongkong for infringement of trademark. The court ruled in favor of palintiff.
 Petitioner brought this present suit to recover the costs adjudged against Olsen & Co.
by the Hongkong court, which the CFI of Manila granted. On appeal, the SC reversed
the decision on the ground that by the provision of the Code of Civil Procedure, a
judgement against a person may be repelled by evidence of want of jurisdiction, want
of notice to the party, collusion, fraud, clear mistake of law or fact, and that the
judgement of the SC of Hongkong showed such clear mistake.
● Ruling: A trademark, started elsewhere, has only such validity and protection in a
foreign country as the foreign law accords it. When then the judge who, in the
absence of an appeal to the Privy Council, is the final exponent of that law
authoritatively declares that the assignment by the Custodian of the assets of the
Manila firm cannot and will not be allowed to affect the rights of the party concerned
in Hongkong, we do not see how it is possible for a foreign Court to pronounce his
decision wrong. It will be acted on, and settles the rights of the parties in Hongkong,
and, in view of that fact, it seems somewhat paradoxical to say that it is not the law. If
the Alien Property Custodian purported to convey rights in English territory valid as
against those whom the English law protects, he exceeded the powers that were or
could be given to him by the United States.
● U.S. Supreme Court
● Ingenohl v. Olsen & Co., 273 U.S. 541 (1927)
● Ingenohl v. Olsen & Company
●
● No. 174
●
● Argued March 1, 1927
●
● Decided March 14, 1927
●
● 273 U.S. 541
●
●
● CERTIORARI TO THE SUPREME COURT
●
● OF THE PHILIPPINE ISLANDS
●
● Syllabus
●
● 1. A trademark, started elsewhere, has only such validity and protection in a foreign
country as the foreign law accords it. P. 273 U. S. 544.
●
● Page 273 U. S. 542
●
● 2. Section 311(2) of the Philippine Code of Civil Procedure, which provides that a
judgment "may be repelled by evidence of clear mistake of law or fact," does not
justify refusal to enforce a judgment for costs rendered by the Supreme Court of
Hongkong in a trademark suit upon the ground that that court mistakenly denied
effect in Hongkong to a sale of the trademark with the business of the plaintiff in the
Philippine Islands, made by the Alien Property Custodian to the defendant. P. 273 U.
S. 544.
●
● 3. The Alien Property Custodian, under the Trading with the Enemy Act, had no
power to transfer trademark rights in a foreign country contrary to the foreign law. P.
273 U. S. 544.
●
● 4. This Court has jurisdiction by certiorari to review a case from the Supreme Court of
the Philippine Islands in which the validity of a section of the Philippine Code of Civil
Procedure and a construction of the Trading with the Enemy Act are drawn in
question. P 273 U. S. 545.
●
● 47 P.I. 189 reversed.
●
● Certiorari (269 U.S. 542) to a judgment of the Supreme Court of the Philippine
Islands which reversed a judgment recovered by the plaintiff, Ingenohl, in the Court
of First Instance. The action was based on a judgment for costs, awarded to the
plaintiff by the Supreme Court of Hongkong, in a suit to restrain the defendant, Walter
E. Olsen & Company Inc., from infringing the plaintiff's trademark.
●
● MR. JUSTICE HOLMES delivered the opinion of the Court.
●
● This is a suit to recover the costs adjudged to the plaintiff, the petitioner here, in a
former suit that was brought by him against the defendant in the British Colony of
Hongkong and was determined in his favor by the supreme
●
● Page 273 U. S. 543
●
● court there. The judgment declared the plaintiff to be the owner of certain trademarks
and tradenames and entitled to the exclusive use of them in connection with his
business as a cigar manufacturer. It restrained the defendants from selling cigars
under these trademarks and awarded the costs now sued for. The Court of First
Instance of Manila gave judgment for the plaintiff. On appeal, the Supreme Court of
the Philippine Islands reversed this decision on the ground that, by § 311(2) of the
Code of Civil Procedure, a judgment against a person "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," and that the judgment of the Supreme Court of Hongkong showed
such a clear mistake.
●
● The supposed mistake consisted in denying effect in Hongkong to a sale of business
and trademarks by the Alien Property Custodian to the defendant, the circumstances
and nature of which may be stated in few words so far as they concern the present
case. The plaintiff Ingenohl had built up a great business as a cigar manufacturer and
exporter, having his factory at Manila. In 1908, he established a factory at Hongkong,
and thereafter goods from both factories were sold under the same trademarks, the
outside box or package of the Hongkong goods having a label indicating that they
came from there. The trademarks were registered in Hongkong, and the cigars
covered by them had acquired a reputation. In 1918, the Alien Property Custodian
seized and sold all the property
●
● "wheresoever situate in the Philippine Islands . . . including the business as going
concern, and the goodwill, tradenames and trademarks thereof, of Syndicat Oriente,"
●
● being the above mentioned business of the plaintiff in the Philippines. The Supreme
Court of the Philippines held that it was plain error in the Supreme Court of the British
Colony to hold that this sale did not
●
● Page 273 U. S. 544
●
● carry the exclusive right to use the trademarks in the latter place.
●
● A trademark started elsewhere would depend for its protection in Hongkong upon the
law prevailing in Hongkong, and would confer no rights except by the consent of that
law. Hanover Star Milling Co. v. Metcalf, 240 U. S. 403; United Drug Co. v. Theodore
Rectanus Co., 248 U. S. 90. When then the judge who, in the absence of an appeal
to the Privy Council, is the final exponent of that law authoritatively declares that the
assignment by the Custodian of the assets of the Manila firm cannot and will not be
allowed to affect the rights of the party concerned in Hongkong, we do not see how it
is possible for a foreign Court to pronounce his decision wrong. It will be acted on,
and settles the rights of the parties in Hongkong, and, in view of that fact, it seems
somewhat paradoxical to say that it is not the law. If the Alien Property Custodian
purported to convey rights in English territory valid as against those whom the
English law protects, he exceeded the powers that were or could be given to him by
the United States.
● It is not necessary to consider whether the section of the Code of Civil Procedure
relied upon was within the power of the Philippine Commission to pass. In any event,
as interpreted, it involved delicate considerations of international relations, and
therefore we should not hold ourselves bound to that deference that we show to the
judgment of the local court upon matters of only local concern. We are of opinion that
whatever scope may be given to the section, it is far from warranting the refusal to
enforce this English judgment for costs, obtained after a fair trial before a court
having jurisdiction of the parties, when the judgment is unquestionably valid and in
other respects will be enforced. Of course, a foreign state might accept the
Custodian's transfer as good within its jurisdiction, if there were no opposing local
interest or right, and that may be the fact for China outside of Hongkong, as seems to
have been held in another case not yet finally disposed of, but no principle requires
the transfer to be given effect outside of the United States, and when, as here, it has
been decided to have been ineffectual, it is unnecessary to inquire whether, in the
other event, the Alien Property Custodian was authorized by the statute to use, or did
use in fact, words purporting to have that effect, or what the effect, if any, would be.