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CONFLICT OF LAWS

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I.

BASIC PRINCIPLES

return her passport and allowed her to catch


the afternoon flight out of Jeddah.

Topic: In General
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, petitioner,
vs.
COURT OF APPEALS, MILAGROS P.
MORADA and HON. RODOLFO A.
ORTIZ, in his capacity as Presiding Judge of
Branch 89, Regional Trial Court of Quezon
City, respondents.
Facts: Milagros Morada is a flight attendant
of Saudi Arabian Airlines (SAUDIA). While on
a lay-over in Jakarta, she went to a disco dance
with a fellow crew members, Thamer and
Allah Al-Gazzawi who are both Saudi
nationals. After the party, they returned to the
hotel and decided to have breakfast at the
room of Thamer. For some reason, Allah left
the room and shortly after he did, Thamer
attempted to rape Milagros. Fortunately, a
roomboy and several security personnel heard
her cries for help and rescued her. Later, the
Indonesian police came and arrested Thamer
and Allah Al-Gazzawi, the latter as an
accomplice.
When Milagros returned to Jeddah a few days
later, several SAUDIA officials interrogated
her about the Jakarta incident. They then
requested her to go back to Jakarta to help
arrange the release of Thamer and Allah. In
Jakarta, SAUDIA officials negotiated with the
police for the immediate release of the
detained crew members but did not succeed
because Milagros refused to cooperate.
Later on, she learned that, through the
intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of
detention. Eventually, they were again put in
service by SAUDIA while Milagros was
transferred to Manila.
Just when Milagros thought that the Jakarta
incident was already behind her, her superiors
requested her to see Mr. Ali Meniewy, Chief
Legal Officer of SAUDIA, in Jeddah, Saudi
Arabia. When she saw him, he brought her to
the police station where the police took her
passport and questioned her about the Jakarta
incident. Miniewy simply stood by as the
police put pressure on her to make a statement
dropping the case against Thamer and Allah.
Not until she agreed to do so did the police

One year and a half later in Riyadh, Saudi


Arabia, a few minutes before the departure of
her flight to Manila, Milagros was not allowed
to board the plane and instead ordered to take
a later flight to Jeddah to see Mr. Miniewy, the
Chief Legal Officer of SAUDIA. When she did,
a certain Khalid of the SAUDIA office brought
her to a Saudi court where she was asked to
sign a document written in Arabic. They told
her that this was necessary to close the case
against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before
the court on June 27, 1993. She then returned
to Manila.
Shortly afterwards, SAUDIA summoned
Milagros to report to Jeddah once again and
see Miniewy for further investigation. She did
so after receiving assurance from SAUDIA's
Manila manager, AslamSaleemi, that the
investigation was routinary and that it posed
no danger to her.
In Jeddah, a SAUDIA legal officer brought her
to the same Saudi court where a Saudi judge
interrogated her through an interpreter about
the Jakarta incident. After one hour of
interrogation, they let her go. At the airport,
however, just as her plane was about to take
off, a SAUDIA officer told her that the airline
had forbidden her to take flight. At the Inflight
Service Office where she was told to go, the
secretary of Mr. YahyaSaddick took away her
passport and told her to remain in Jeddah, at
the crew quarters, until further orders.
Subsequently, SAUDIA legal officer again
escorted plaintiff to the same court where the
judge, to her astonishment and shock,
rendered a decision, translated to her in
English, sentencing her to five months
imprisonment and to 286 lashes.
Only then did she realize that the Saudi court
had tried her, together with Thamer and Allah,
for what happened in Jakarta. The court found
plaintiff guilty of (1) adultery; (2) going to a
disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing
with the male crew, in contravention of Islamic
tradition.
Facing conviction, Milagros sought the help of
her employer, SAUDIA. Unfortunately, she
was denied any assistance. She then asked the
Philippine Embassy in Jeddah to help her

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while her case is on appeal. Eventually, the
Prince of Makkah dismissed the case against
her and allowed her to leave Saudi Arabia.
Shortly before her return to Manila, she was
terminated from the service by SAUDIA,
without her being informed of the cause.
Morada filed a Complaint for damages against
SAUDIA.
SAUDIAs contention: The trial court has no
jurisdiction to hear and try the civil case based
on Article 21 of the New Civil Code since the
proper law applicable is the law of the
Kingdom of Saudi Arabia inasmuch as this
case involves what is known in private
international law as a "conflicts problem".
Otherwise, the Republic of the Philippines will
sit in judgment of the acts done by another
sovereign state which is abhorred.

2. Petitioner SAUDIA is a resident


foreign corporation.
3. Also, by virtue of the employment of
Morada with the petitioner Saudia as a
flight stewardess, events did transpire
during her many occasions of travel
across national borders, particularly
from Manila, Philippines to Jeddah,
Saudi Arabia, and vice versa, that
caused a "conflicts" situation to arise.
A conflicts problem presents itself here, and
the question of jurisdiction 43 confronts the
court a quo.

What law should apply in the

Philippines is the situs of the tort


complained of and the place "having the
most interest in the problem", we find,
that the Philippine law on tort liability
should have paramount application to
and control in the resolution of the legal
issues arising out of this case.

Ruling: It is Philippine Law that should


apply.

As to the choice of applicable law, we note that


choice-of-law problems seek to answer two
important questions:

Issue:
case?

Foreign element
Where the factual antecedents satisfactorily
establish the existence of a foreign element, we
agree with petitioner that the problem herein
could present a "conflicts" case.

(1) What legal system should control a given


situation where some of the significant facts
occurred in two or more states; and
(2) To what extent should the chosen legal
system regulate the situation.

A factual situation that cuts across territorial


lines and is affected by the diverse laws of two
or more states is said to contain a "foreign
element". The presence of a foreign element is
inevitable since social and economic affairs of
individuals and associations are rarely
confined to the geographic limits of their birth
or conception.

Several theories have been propounded in


order to identify the legal system that should
ultimately control. Although ideally, all choiceof-law theories should intrinsically advance
both notions of justice and predictability, they
do not always do so. The forum is then faced
with the problem of deciding which of these
two important values should be stressed.

The forms in which this foreign element may


appear are many. The foreign element may
simply consist in the fact that one of the
parties to a contract is an alien or has a foreign
domicile, or that a contract between nationals
of one State involves properties situated in
another State. In other cases, the foreign
element may assume a complex form.

Doctrine of Qualification

In the instant case, the foreign element


consisted in the fact that:
1.

Private respondent Morada is a


resident Philippine national, and that

Before a choice can be made, it is necessary for


us to determine under what category a certain
set of facts or rules fall. This process is known
as "characterization", or the "doctrine of
qualification". It is the "process of
deciding whether or not the facts relate
to the kind of question specified in a
conflicts
rule."
The
purpose
of
"characterization" is to enable the forum to
select the proper law.
Our starting point of analysis here is not a
legal relation, but a factual situation, event, or

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operative fact. An essential element of conflict
rules is the indication of a "test" or "connecting
factor" or "point of contact". Choice-of-law
rules invariably consist of a factual
relationship (such as property right, contract
claim) and a connecting factor or point of
contact, such as the situs of the res, the place
of celebration, the place of performance, or the
place of wrongdoing.
Test Factors, Points of Contact, Connecting
Factors
Note that one or more circumstances may be
present to serve as the possible test for the
determination of the applicable law. These
"test factors" or "points of contact" or
"connecting factors" could be any of the
following:
(1)
The nationality of a person, his
domicile, his residence, his place of sojourn, or
his origin;
(2)
the seat of a legal or juridical person,
such as a corporation;
(3)
thesitus of a thing, that is, the place
where a thing is, or is deemed to be situated.
In particular, the lexsitus is decisive when real
rights are involved;
(4)
the place where an act has been done,
the locus actus, such as the place where a
contract has been made, a marriage
celebrated, a will signed or a tort committed.
The lex loci actus is particularly important in
contracts and torts;
(5)
the place where an act is intended to
come into effect, e.g., the place of performance
of contractual duties, or the place where a
power of attorney is to be exercised;
(6)
the intention of the contracting parties
as to the law that should govern their
agreement, the lex loci intentionis;
(7)
the
place
where
judicial
or
administrative proceedings are instituted or
done. The lexfori the law of the forum is
particularly important because, as we have
seen earlier, matters of "procedure" not going
to the substance of the claim involved are
governed by it; and because the lexfori applies
whenever the content of the otherwise
applicable foreign law is excluded from
application in a given case for the reason that

it falls under one of the exceptions to the


applications of foreign law; and
(8)
the flag of a ship, which in many cases
is decisive of practically all legal relationships
of the ship and of its master or owner as such.
It also covers contractual relationships
particularly contracts of affreightment.
Considering that the complaint in the court a
quo is one involving torts, the "connecting
factor" or "point of contact" could be the place
or places where the tortious conduct or lex loci
actus occurred. And applying the torts
principle in a conflicts case, we find that the
Philippines could be said as a situs of the tort
(the place where the alleged tortious conduct
took place). This is because it is in the
Philippines where SAUDIA allegedly deceived
Milagros, a Filipina residing and working here.
According to her, she had honestly believed
that SAUDIA would, in the exercise of its
rights and in the performance of its duties, "act
with justice, give her due and observe honesty
and good faith." Instead, SAUDIA failed to
protect her, she claimed. That certain acts or
parts of the injury allegedly occurred in
another country is of no moment. For in our
view what is important here is the place where
the over-all harm or the totality of the alleged
injury to the person, reputation, social
standing and human rights of complainant,
had lodged, according to Milagros. All told, it
is not without basis to identify the Philippines
as the situs of the alleged tort.
Principle of lex loci delicticommissi
Moreover, with the widespread criticism of the
traditional rule of lex loci delicticommissi,
modern theories and rules on tort liability
have been advanced to offer fresh judicial
approaches to arrive at just results. In keeping
abreast with the modern theories on tort
liability, we find here an occasion to apply the
"State of the most significant relationship"
rule, which in our view should be appropriate
to apply now, given the factual context of this
case.
In applying said principle to determine the
State which has the most significant
relationship, the following contacts are to be
taken into account and evaluated according to
their relative importance with respect to the
particular issue: (a) the place where the injury
occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile,
residence, nationality, place of incorporation

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and place of business of the parties, and (d)
the place where the relationship, if any,
between the parties is centered.
As already discussed, there is basis for the
claim that over-all injury occurred and lodged
in the Philippines. There is likewise no
question that private respondent is a resident
Filipina national, working with petitioner, a
resident foreign corporation engaged here in
the business of international air carriage.
Thus, the "relationship" between the parties
was centered here, although it should be
stressed that this suit is not based on mere
labor law violations. From the record, the
claim that the Philippines has the most
significant contact with the matter in this
dispute, raised by private respondent as
plaintiff below against defendant (herein
petitioner), in our view, has been properly
established.
Prescinding from this premise that the
Philippines is the situs of the tort complained
of and the place "having the most interest in
the problem", we find, by way of
recapitulation, that the Philippine law on tort
liability should have paramount application to
and control in the resolution of the legal issues
arising out of this case.
Burden of proving the applicable law
rests on SAUDIA and not Milagros
Further, we hold that the respondent Regional
Trial Court has jurisdiction over the parties
and the subject matter of the complaint; the
appropriate venue is in Quezon City, which
could properly apply Philippine law. Moreover,
we find untenable SAUDIA's insistence that
"[s]ince Milagros instituted this suit, she has
the burden of pleading and proving the
applicable Saudi law on the matter." As aptly
said by private respondent, she has "no
obligation to plead and prove the law of the
Kingdom of Saudi Arabia since her cause of
action is based on Articles 19 and 21" of the
Civil Code of the Philippines. And as correctly
held by the respondent appellate court,
"considering that it was the petitioner who was
invoking the applicability of the law of Saudi
Arabia, then the burden was on it [petitioner]
to plead and to establish what the law of Saudi
Arabia is".
Indubitably, the Philippines is the state
intimately concerned with the ultimate
outcome of the case below, not just for the
benefit of all the litigants, but also for the

vindication of the country's system of law and


justice in a transnational setting. With these
guidelines in mind, the trial court must
proceed to try and adjudge the case in the light
of relevant Philippine law, with due
consideration of the foreign element or
elements involved. Nothing said herein, of
course, should be construed as prejudging the
results of the case in any manner whatsoever.

II.

JURISDICTION

Topic: Subject Matter


SAUDI ARABIAN AIRLINES, petitioner,
vs. COURT OF APPEALS, MILAGROS P.
MORADA and HON. RODOLFO A.
ORTIZ, in his capacity as Presiding
Judge of Branch 89, Regional Trial
Court of Quezon City, respondents.
FACTS:
Petitioner
SAUDIA
hired
private respondent MORADA (a Filipina) as a
flight attendant in 1988, based in Jeddah. On
1990, while on a lay-over in Jakarta,
Indonesia, she went to a disco party with
fellow crew members Thamer Al-Gazzawi and
Allah Al-Gazzawi, both Saudi nationals and on
the following morning in their hotel, one of the
male attendants attempted to rape her. She
was rescued by hotel attendants who heard her
cry for help. The Indonesian police arrested
the two.
MORADA returned to Jeddah, but was asked
by the company to go back to Jakarta and help
arrange the release of the 2 male attendants.
MORADA did not cooperate because was
afraid that she might be tricked into something
she did not want because of her inability to
understand the local dialect.
On January 14, 1992, just when plaintiff
thought that the Jakarta incident was
already behind her, her superiors
requested her to see Mr. Ali Meniewy,
Chief Legal Officer of SAUDIA, in Jeddah,
Saudi Arabia. When she saw him, he
brought her to the police station where the
police took her passport and questioned
her about the Jakarta incident. Miniewy
simply stood by as the police put pressure
on her to make a statement dropping the
case against Thamer and Allah. Not until
she agreed to do so did the police return

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her passport and allowed her to catch the
afternoon flight out of Jeddah.
One year and a half later or on June 16,
1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight
to Manila, plaintiff was not allowed to
board the plane and instead ordered to
take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of
SAUDIA. When she did, a certain Khalid
of the SAUDIA office brought her to a
Saudi court where she was asked to sign a
document written in Arabic. They told her
that this was necessary to close the case
against Thamer and Allah. As it turned
out, plaintiff signed a notice to her to
appear before the court on June 27, 1993.
Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA
summoned plaintiff to report to Jeddah
once again and see Miniewy on June 27,
1993 for further investigation. Plaintiff did
so after receiving assurance from
SAUDIAs Manila manager, AslamSaleemi,
that the investigation was routinary and
that it posed no danger to her.
In 1993, she was surprised, upon being
ordered by SAUDIA to go to the Saudi court,
that she was being convicted of (1) adultery;
(2) going to a disco, dancing and listening to
the music in violation of Islamic laws; and (3)
socializing with the male crew, in
contravention of Islamic tradition, sentencing
her to five months imprisonment and to 286
lashes. Only then did she realize that the Saudi
court had tried her, together with the 2, for
what happened in Jakarta.
SAUDIA denied her the assistance she
requested. But because she was wrongfully
convicted, Prince of Makkah dismissed the
case against her and allowed her to leave Saudi
Arabia. Shortly before her return to Manila,
she was terminated from the service by
SAUDIA, without her being informed of the
cause.
On November 23, 1993, Morada filed a
Complaint for damages against SAUDIA, and
Khaled Al-Balawi (Al-Balawi), its country
manager.
SAUDIA ALLEGES: Private respondents
claim for alleged abuse of rights occurred in
the Kingdom of Saudi Arabia. It alleges that
the existence of a foreign element qualifies the
instant case for the application of the law of

the Kingdom of Saudi Arabia, by virtue of the


lex loci delicticommissi rule.
MORADA ALLEGES: Since her Amended
Complaint is based on Articles 19 and 21 of the
Civil Code, then the instant case is properly a
matter of domestic law.
ISSUES: 1. WON the RTC of Quezon City has
jurisdiction to hear and try civil case for
recovery of damages under Article 21 of the
Civil Code
2. WON Philippine law should govern in the
case
HELD: 1 and 2.YES.On the presence of a
Foreign Element in the case: A factual
situation that cuts across territorial lines and is
affected by the diverse laws of two or more
states is said to contain a foreign element.
The presence of a foreign element is inevitable
since social and economic affairs of individuals
and associations are rarely confined to the
geographic limits of their birth or conception.
In the instant case, the foreign element
consisted in the fact that private respondent
Morada is a resident Philippine national, and
that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment
of Morada with the petitioner Saudia as a
flight stewardess, events did transpire during
her many occasions of travel across national
borders, particularly from Manila, Philippines
to Jeddah, Saudi Arabia, and vice versa, that
caused a conflicts situation to arise.
COURT disagrees with MORADA that his is
purely a domestic case. However, the court
finds that the RTC of Quezon City possesses
jurisdiction over the subject matter of the suit.
Its authority to try and hear the case is
provided for under Section 1 of Republic Act
No. 7691, to wit:
BP129 Sec. 19.Jurisdiction in Civil Cases.
Regional Trial Courts shall exercise exclusive
jurisdiction:
xxx xxxxxx
(8) In all other cases in which demand,
exclusive of interest, damages of whatever
kind, attorney`ys fees, litigation expenses, and
cots or the value of the property in controversy
exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the
above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00). (Emphasis

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ours)
xxx xxxxxx
Section 2 (b), Rule 4 of the Revised Rules of
Court the venue, Quezon City, is
appropriate:
Sec. 2 Venue in Courts of First Instance.
[Now Regional Trial Court]
(a) xxx xxxxxx
(b) Personal actions. All other actions may
be commenced and tried where the defendant
or any of the defendants resides or may be
found, or where the plaintiff or any of the
plaintiff resides, at the election of the plaintiff.
Weighing the relative claims of the parties, the
court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance
of the case, it would be forcing plaintiff
(private respondent now) to seek remedial
action elsewhere, i.e. in the Kingdom of Saudi
Arabia where she no longer maintains
substantial connections. That would have
caused a fundamental unfairness to her.
Moreover, by hearing the case in the
Philippines no unnecessary difficulties and
inconvenience have been shown by either of
the parties. The choice of forum of the plaintiff
(now private respondent) should be upheld.
Considering that the complaint in the court
aquo is one involving torts, the connecting
factor or point of contact could be the place or
places where the tortious conduct or lex loci
actusoccurred. And applying the torts
principle in a conflicts case, we find that the
Philippines could be said as a situs of the tort
(the place where the alleged tortious conduct
took place). This is because it is in the
Philippines
where
petitioner
allegedly
deceived private respondent, a Filipina
residing and working here. According to her,
she had honestly believed that petitioner
would, in the exercise of its rights and in the
performance of its duties, act with justice, give
her her due and observe honesty and good
faith. Instead, petitioner failed to protect her,
she claimed. That certain acts or parts of the
injury allegedly occurred in another country is
of no moment. For in our view what is
important here is the place where the over-all
harm or the fatality of the alleged injury to the
person, reputation, social standing and human
rights of complainant, had lodged, according
to the plaintiff below (herein private
respondent). All told, it is not without basis to
identify the Philippines as the situs of the
alleged tort.
As already discussed, there is basis for the
claim that over-all injury occurred and lodged

in the Philippines. There is likewise no


question that private respondent is a resident
Filipina national, working with petitioner, a
resident foreign corporation engaged here in
the business of international air carriage.
Thus, the relationship between the parties was
centered here, although it should be stressed
that this suit is not based on mere labor law
violations. From the record, the claim that the
Philippines has the most significant contact
with the matter in this dispute, raised by
private respondent as plaintiff below against
defendant (herein petitioner), in our view, has
been properly established.
KAZUHIRO HASEGAWA and NIPPON
ENGINEERING CONSULTANTS CO.,
LTD. vs. MINORU KITAMURA
November 23, 2007
FACTS: Nippon Engineering Consultants Co.,
Ltd. (Nippon), a Japanese consultancy firm
providing technical and management support
in the infrastructure projects of foreign
governments, entered into an Independent
Contractor Agreement (ICA) with respondent
Minoru Kitamura, a Japanese national
permanently residing in the Philippines.
The ICA provides that Kitamura was to extend
professional services to Nippon for a year
starting on April 1, 1999. Nippon then assigned
respondent to work as the project manager of
the Southern Tagalog Access Road (STAR)
Project in the Philippines. When the STAR
Project was near completion, DPWH engaged
the
consultancy
services
of Nippon,
on January 28, 2000, this time for the detailed
engineering and construction supervision of
the Bongabon-Baler Road Improvement
(BBRI) Project. Kitamura was named as the
project manager in the contract's Appendix
3.1. However, on Feb 28 2000, Hasegawa,
Nippons general manager for its International
Division informed Kitamura that the company
had no more intention of automatically
renewing his ICA. His services would be
engaged by the company only up to the
substantial completion of the STAR Project
on March 31, 2000, just in time for the ICA's
expiry.
Kitamura requested for a negotiation
conference but Nippon refused to do so. This
prompted Kitamura to file a civil case for
specific performance and damages with
the Regional Trial Court of Lipa City. Nippon
moved to dismiss the case for lack of
jurisdiction since the ICA had been perfected

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in Japan and executed
Japanese nationals.

by

and

between

RTC (Lipa) denied the MTD and ruled that the


matters connected with the performance of
contracts are regulated by the law prevailing at
the place of performance. The subsequent MR
was also denied. Hence Nippon filed with the
CA their first Petition for Certiorari under Rule
65 but it was denied. Note that petitioners
adopted an additional but different theory
when they elevated the case to the appellate
court. In the Motion to Dismiss filed with the
trial court, petitioners never contended that
the RTC is an inconvenient forum.
A second Petition for Certiorari under Rule 65
was filed but the same was denied. The CA
ruled, among others, that the principle of lex
loci celebrationis was not applicable to the
case, because nowhere in the pleadings was
the validity of the written agreement put in
issue. The CA thus declared that the trial court
was correct in applying instead the principle
of lex loci solutionis.
Hence this petition for review before this
Court where Nippon dropped their other
arguments,
maintained
the forum
non
conveniens defense, and introduced their new
argument that the applicable principle is the
[state of the] most significant relationship rule.
ISSUE: WON RTC has jurisdiction over the
subject case.
HELD: Yes
To elucidate, in the judicial resolution of
conflicts problems, three consecutive phases
are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments.
Corresponding to these phases are the
following questions: (1) Where can or should
litigation be initiated? (2) Which law will the
court apply? and (3) Where can the resulting
judgment be enforced?
Analytically, jurisdiction and choice of law are
two distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to travel
to this state; choice of law asks the further
question whether the application of a
substantive law which will determine the
merits of the case is fair to both parties. The
power to exercise jurisdiction does not
automatically give a state constitutional
authority to apply forum law. While
jurisdiction and the choice of the lex fori will
often coincide, the minimum contacts for one

do not always provide the necessary significant


contacts for the other. The question of whether
the law of a state can be applied to a
transaction is different from the question of
whether the courts of that state have
jurisdiction to enter a judgment.
In this case, only the first phase is at issue --jurisdiction. Jurisdiction, however, has various
aspects. For a court to validly exercise its
power to adjudicate a controversy, it must
have jurisdiction over the plaintiff or the
petitioner, over the defendant or the
respondent, over the subject matter, over the
issues of the case and, in cases involving
property, over the res or the thing which is the
subject of the litigation. In assailing the
trial
court's
jurisdiction
herein,
petitioners are actually referring to
subject matter jurisdiction.
Jurisdiction over the subject matter in a
judicial proceeding is conferred by the
sovereign authority which establishes and
organizes the court. It is given only by law and
in the manner prescribed by law. It is further
determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled
to all or some of the claims asserted therein.
To succeed in its motion for the dismissal of an
action for lack of jurisdiction over the subject
matter of the claim, the movant must show
that the court or tribunal cannot act on the
matter submitted to it because no law grants it
the power to adjudicate the claims.
In the instant case, petitioners, in their motion
to dismiss, do not claim that the trial court is
not properly vested by law with jurisdiction to
hear the subject controversy for, indeed, Civil
Case No. 00-0264 for specific performance
and damages is one not capable of pecuniary
estimation and is properly cognizable by the
RTC of Lipa City. What they rather raise as
grounds to question subject matter jurisdiction
are
the
principles
of lex
loci
celebrationis and lex contractus, and the state
of the most significant relationship rule.
The Court finds the invocation of these
grounds unsound.
Lex loci celebrationis relates to the law of the
place of the ceremony or the law of the place
where a contract is made. The doctrine of lex
contractus or lex loci contractus means the
law of the place where a contract is executed or
to be performed. It controls the nature,
construction, and validity of the contract and it
may pertain to the law voluntarily agreed upon

CONFLICT OF LAWS
1st exam cases |8
by the parties or the law intended by them
either expressly or implicitly. Under the state
of the most significant relationship rule, to
ascertain what state law to apply to a dispute,
the court should determine which state has the
most substantial connection to the occurrence
and the parties. In a case involving a contract,
the court should consider where the contract
was made, was negotiated, was to be
performed, and the domicile, place of
business, or place of incorporation of the
parties. This rule takes into account several
contacts and evaluates them according to their
relative importance with respect to the
particular issue to be resolved.
Since these three principles in conflict of laws
make reference to the law applicable to a
dispute, they are rules proper for the second
phase, the choice of law. They determine
which state's law is to be applied in resolving
the substantive issues of a conflicts
problem. Necessarily, as the only issue in this
case is that of jurisdiction, choice-of-law rules
are not only inapplicable but also not yet called
for.
Further, petitioners' premature invocation of
choice-of-law rules is exposed by the fact that
they have not yet pointed out any conflict
between the laws of Japan and ours. Before
determining which law should apply, first
there should exist a conflict of laws situation
requiring the application of the conflict of laws
rules. Also, when the law of a foreign country
is invoked to provide the proper rules for the
solution of a case, the existence of such law
must be pleaded and proved.
It should be noted that when a conflicts case,
one involving a foreign element, is brought
before a court or administrative agency, there
are three alternatives open to the latter in
disposing of it: (1) dismiss the case, either
because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume
jurisdiction over the case and apply the
internal law of the forum; or (3) assume
jurisdiction over the case and take into account
or apply the law of some other State or
States. The courts power to hear cases and
controversies is derived from the Constitution
and the laws. While it may choose to recognize
laws of foreign nations, the court is not limited
by foreign sovereign law short of treaties or
other formal agreements, even in matters
regarding rights provided by foreign
sovereigns.
Neither can the other ground raised, forum
non conveniens, be used to deprive the trial

court of its jurisdiction herein. First, it is not a


proper basis for a motion to dismiss because
Section 1, Rule 16 of the Rules of Court does
not include it as a ground. Second, whether a
suit should be entertained or dismissed on the
basis of the said doctrine depends largely upon
the facts of the particular case and is addressed
to the sound discretion of the trial court. In
this case, the RTC decided to assume
jurisdiction. Third, the propriety of dismissing
a case based on this principle requires a factual
determination; hence, this conflicts principle is
more properly considered a matter of defense.
Dacasin vs Dacasin
Facts: Petitioner Herald Dacasin, American,
and respondent Sharon delMundo Dacasin,
Filipino, were married in Manila in April 1994.
They have a daughter, Stephanie. In 1999
respondent obtained from Illinois court a
divorce decree and awarded respondent sole
custody of Stephanie.
In 2002, petitioner and respondent executed
in Manila an Agreement for the joint custody
of Stephanie. They chose Phil courts as
exclusive forum to adjudicate disputes arising
from the Agreement.
In 2004, petitioner sued respondent to
enforce the Agreement. He alleged that
respondent exercised sole custody in violation
of their Agreement.
Trial court dismissed complaint for lack of
jurisdiction stating that Illinois court retained
jurisdiction, divorce decree is binding on
petitioner following the nationality rule and
Agreement is void contravening Art 2035(5)
Civil
Code
(prohibiting
compromise
agreements on jurisdiction).
Issue: Whether or not trial court has
jurisdiction to take cognizance of petitioners
suit and enforce the Agreement on the joint
custody of the parties child.
Ruling:
The trial court has jurisdiction
to entertain to entertain petitioners suit but
not to enforce the Agreement which is void.
Subject matter jurisdiction is conferred by law.
An action for specific performance, such as
petitioners suit to enforce the Agreement on
joint child custody, is an action incapable of

CONFLICT OF LAWS
1st exam cases |9
pecuniary estimation which is under RTCs
jurisdiction. Thus, jurisdiction-wise, petitioner
went to the right court.
What the Illinois court retained was
jurisdiction
x
xx
for
the
purpose
of enforcing all
and
sundry the
various
provisions
of
[its]
Judgment for
Dissolution.[11]Petitioners suit seeks the
enforcement not of the various provisions of
the divorce decree but of the post-divorce
Agreement on joint child custody. Thus, the
action lies beyond the zone of the Illinois
courts so-called retained jurisdiction.
The foregoing notwithstanding, the trial court
cannot enforce the Agreement which is
contrary to law. Upon separation of the
spouses, the mother takes sole custody under
the law if the child is below 7yo and any
agreement to the contrary is void. The
Agreement made by the parties seek to
establish a post-divorce joint custody regime
which contravenes Phil law.
However, instead of ordering the dismissal of
petitioners suit, the logical end is to remand
the case to settle Stephanies custody. She is
now 15yo, removing the case outside the ambit
of mandatory maternal custody regime.

Topic: How Acquired Over the Person


NORTHWEST
ORIENT
AIRLINES,
INC. vs.COURT OF APPEALS and C.F.
SHARP & COMPANY INC., (G.R. No.
112573 February 9, 1995)
FACTS: Petitioner Northwest Orient Airlines,
Inc. (NORTHWEST), a corporation organized
under the laws of the State of Minnesota,
U.S.A., sought to enforce in the RTC- Manila, a
judgment rendered in its favor by a Japanese
court against private respondent C.F. Sharp &
Company, Inc., (SHARP), a corporation
incorporated under Philippine laws.
On May 9, 1974, Northwest Airlines and
Sharp, through its Japan branch, entered into
an International Passenger Sales Agency
Agreement, whereby the former authorized the
latter to sell its air transportation tickets.
Unable to remit the proceeds of the ticket sales
made by defendant on behalf of the plaintiff

under the said agreement, plaintiff on March


25, 1980 sued defendant in Tokyo, Japan, for
collection of the unremitted proceeds of the
ticket sales, with claim for damages.
On April 11, 1980, a writ of summons was
issued by the 36th Civil Department, Tokyo
District Court of Japan against defendant at its
office at the Taiheiyo Building, 3rd floor, 132,
Yamashita-cho,
Naka-ku,
Yokohoma,
Kanagawa Prefecture. The attempt to serve the
summons was unsuccessful because the bailiff
was advised by a person in the office that Mr.
Dinozo, the person believed to be authorized
to receive court processes was in Manila and
would be back on April 24, 1980.
On April 24, 1980, bailiff returned to the
defendants office to serve the summons. Mr.
Dinozo refused to accept the same claiming
that he was no longer an employee of the
defendant.
After the two attempts of service were
unsuccessful, the judge of the Tokyo District
Court decided to have the complaint and the
writs of summons served at the head office of
the defendant in Manila. On July 11, 1980, the
Director of the Tokyo District Court requested
the Supreme Court of Japan to serve the
summons through diplomatic channels upon
the defendants head office in Manila.
On August 28, 1980, defendant received from
Deputy Sheriff Rolando Balingit the writ of
summons (p. 276, Records). Despite receipt of
the same, defendant failed to appear at the
scheduled hearing. Thus, the Tokyo Court
proceeded to hear the plaintiffs complaint and
on [January 29, 1981], rendered judgment
ordering the defendant to pay the plaintiff the
sum of 83,158,195 Yen and damages for delay
at the rate of 6% per annum from August 28,
1980 up to and until payment is completed
(pp. 12-14, Records).
On March 24, 1981, defendant received from
Deputy Sheriff Balingit copy of the judgment.
Defendant not having appealed the judgment,
the same became final and executory.
Plaintiff was unable to execute the decision in
Japan, hence, on May 20, 1983, a suit for
enforcement of the judgment was filed by
plaintiff before the Regional Trial Court of
Manila Branch 54.
Defendant filed its answer averring that the
judgment of the Japanese Court: (1) the
foreign judgment sought to be enforced is null

CONFLICT OF LAWS
1 s t e x a m c a s e s | 10
and void for want of jurisdiction and (2) the
said judgment is contrary to Philippine law
and public policy and rendered without due
process of law.
In its decision, the Court of Appeals sustained
the trial court. It agreed with the latter in its
reliance upon Boudard vs. Tait wherein it was
held that the process of the court has no
extraterritorial effect and no jurisdiction is
acquired over the person of the defendant by
serving him beyond the boundaries of the
state. To support its position, the Court of
Appeals further stated:
In an action strictly in personam, such as the
instant case, personal service of summons
within the forum is required for the court to
acquire jurisdiction over the defendant
(Magdalena Estate Inc. vs. Nieto, 125 SCRA
230). To confer jurisdiction on the court,
personal or substituted service of summons on
the defendant not extraterritorial service is
necessary.
ISSUE: Whether a Japanese court can acquire
jurisdiction over a Philippine corporation
doing business in Japan by serving summons
through diplomatic channels on the Philippine
corporation at its principal office in Manila
after prior attempts to serve summons in
Japan had failed.
HELD: YES
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.
The judgment may, however, be assailed by
evidence of want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake
of law or fact.(See Sec. 50, R 39)
Being the party challenging the judgment
rendered by the Japanese court, SHARP had
the duty to demonstrate the invalidity of such
judgment.
It is settled that matters of remedy and
procedure such as those relating to the service
of process upon a defendant are governed by
the lexfori or the internal law of the forum. 8
In this case, it is the procedural law of Japan
where the judgment was rendered that
determines the validity of the extraterritorial
service of process on SHARP. As to what this
law is is a question of fact, not of law.

It was then incumbent upon SHARP to present


evidence as to what that Japanese procedural
law is and to show that under it, the assailed
extraterritorial service is invalid. It did not.
Accordingly, the presumption of validity and
regularity of the service of summons and the
decision thereafter rendered by the Japanese
court must stand.
Alternatively in the light of the absence of
proof
regarding
Japanese
law,
the
presumption of identity or similarity or the socalled processual presumption may be
invoked. Applying it, the Japanese law on the
matter is presumed to be similar with the
Philippine law on service of summons on a
private foreign corporation doing business in
the Philippines.
Section 14, Rule 14 of the Rules of Court
provides that if the defendant is a foreign
corporation doing business in the Philippines,
service may be made: (1) on its resident agent
designated in accordance with law for that
purpose, or, (2) if there is no such resident
agent, on the government official designated
by law to that effect; or (3) on any of its
officers or agents within the Philippines.
Where the corporation has no such agent,
service shall be made on the government
official designated by law, to wit: (a) the
Insurance Commissioner in the case of a
foreign
insurance
company;
(b)
the
Superintendent of Banks, in the case of a
foreign banking corporation; and (c) the
Securities and Exchange Commission, in the
case of other foreign corporations duly
licensed to do business in the Philippines.
Nowhere in its pleadings did SHARP profess
to having had a resident agent authorized to
receive court processes in Japan.
While it may be true that service could have
been made upon any of the officers or agents
of SHARP at its three other branches in Japan,
the availability of such a recourse would not
preclude service upon the proper government
official, as stated above.
As found by the respondent court, two
attempts at service were made at SHARPs
Yokohama branch. Both were unsuccessful.
The Tokyo District Court requested the
Supreme Court of Japan to cause the delivery
of the summons and other legal documents to
the Philippines. Acting on that request, the
Supreme Court of Japan sent the summons

CONFLICT OF LAWS
1 s t e x a m c a s e s | 11
together with the other legal documents to the
Ministry of Foreign Affairs of Japan which, in
turn, forwarded the same to the Japanese
Embassy in Manila. Thereafter, the court
processes were delivered to the Ministry (now
Department) of Foreign Affairs of the
Philippines, then to the Executive Judge of the
Court of First Instance (now Regional Trial
Court) of Manila, who forthwith ordered
Deputy Sheriff Rolando Balingit to serve the
same on SHARP at its principal office in
Manila. This service is equivalent to service on
the proper government official under Section
14, Rule 14 of the Rules of Court, in relation to
Section 128 of the Corporation Code. Hence,
SHARPs contention that such manner of
service is not valid under Philippine laws holds
no water.

rentals against petitioners Lourdes A.


Valmonte and Alfredo D. Valmonte. The
subject of the action is a three-door apartment
located in Paco,Manila. Private respondent
alleged that the complaint may be served with
summons at Mabini St., Ermita, Manila where
defendant Alfredo D. Valmonte as defendant
Lourdes Arreola Valmontes spouse holds office
and where he can be found.

In as much as SHARP was admittedly


doing business in Japan through its
four duly registered branches at the
time the collection suit against it was
filed, then in the light of the
processual presumption, SHARP may
be deemed a resident of Japan, and, as
such, was amenable to the jurisdiction
of the courts therein and may be
deemed to have assented to the said
courts' lawful methods of serving
process.

Service of summons was then made upon


petitioner Alfredo D. Valmonte, who at the
time, was at his office in Manila. Petitioner
Alfredo D. Valmonte accepted the summons,
insofar as he was concerned, but refused to
accept the summons for his wife, Lourdes A.
Valmonte, on the ground that he was not
authorized to accept the process on her behalf.
Accordingly the process server left without
leaving a copy of the summons and complaint
for petitioner Lourdes A. Valmonte.

Accordingly, the extraterritorial service of


summons on it by the Japanese Court was
valid not only under the processual
presumption but also because of the
presumption of regularity of performance of
official duty.
LOURDES A. VALMONTE and
ALFREDO D. VALMONTE vs. THE
HONORABLE COURT OF APPEALS,
THIRD DIVISION and ROSITA
DIMALANTA [G.R. No.
108538. January 22, 1996]
Facts: Petitioners Lourdes A. Valmonte and
Alfredo D. Valmonte are husband and wife.
They are both residents of Carkeek Drive
South Seattle, Washington, U.S.A. Petitioner
Alfredo D. Valmonte, who is a member of the
Philippine bar, however, practices his
profession in the Philippines, commuting for
this purpose between his residence in the state
of Washington and Manila, where he holds
office at Mabini, Ermita, Manila.
On March 9, 1992, private respondent Rosita
Dimalanta, who is the sister of petitioner
Lourdes A. Valmonte, filed a complaint for
partition of real property and accounting of

The averment was based on a letter previously


sent by petitioner Lourdes A. Valmonte to
private respondents counsel in which, in
regard to the partition of the property in
question, she referred private respondents
counsel to her husband as the party to whom
all communications intended for her should be
sent.

Petitioner Alfredo D. Valmonte thereafter filed


his Answer with Counterclaim. Petitioner
Lourdes A. Valmonte, however, did not file her
Answer. For this reason private respondent
moved to declare her in default. Petitioner
Alfredo D. Valmonte entered a special
appearance in behalf of his wife and opposed
the private respondents motion.
Issue: whether petitioner Lourdes A.
Valmonte was validly served with summons.
NO.
Held: To provide perspective, it will be helpful
to determine first the nature of the action filed
against petitioners Lourdes A. Valmonte and
Alfredo D. Valmonte by private respondent,
whether it is an action in personam, in rem or
quasi in rem. This is because the rules on
service of summons embodied in Rule 14 apply
according to whether an action is one or the
other of these actions.
In an action in personam, personal service of
summons or, if this is not possible and he
cannot be personally served, substituted
service, as provided in Rule 14, 7-8[2] is
essential for the acquisition by the court of
jurisdiction over the person of a defendant
who does not voluntarily submit himself to the

CONFLICT OF LAWS
1 s t e x a m c a s e s | 12
authority of the court.[3] If defendant cannot be
served with summons because he is
temporarily abroad, but otherwise he is a
Philippine resident, service of summons may,
by
leave
of
court,
be
made
by
publication.[4] Otherwise stated, a resident
defendant in an action in personam, who
cannot be personally served with summons,
may be summoned either by means of
substituted service in accordance with Rule 14,
8 or by publication as provided in 17 and 18 of
the same Rule.[5]
In all of these cases, it should be noted,
defendant
must
be
a
resident
of
the Philippines,
otherwise
an
action in
personam cannot
be
brought
because
jurisdiction over his person is essential to
make a binding decision.
On the other hand, if the action is in
rem or quasi in rem, jurisdiction over the
person of the defendant is not essential for
giving the court jurisdiction so long as the
court acquires jurisdiction over the res. If the
defendant is a nonresident and he is not found
in the country, summons may be served
extraterritorially in accordance with Rule 14,
17, which provides:
17. Extraterritorial service. - When the
defendant does not reside and is not found in
the Philippines and the action affects the
personal status of the plaintiff or relates to, or
the subject of which is, property within the
Philippines, in which the defendant has or
claims a lien or interest, actual or contingent,
or in which the relief demanded consists,
wholly or in part, in excluding the defendant
from any interest therein, or the property of
the defendant has been attached within the
Philippines, service may, by leave of court, be
effected out of the Philippines by personal
service as under Section 7; or by publication in
a newspaper of general circulation in such
places and for such time as the court may
order, in which case a copy of the summons
and order of the court shall be sent by
registered mail to the last known address of
the defendant, or in any other manner the
court may deem sufficient. Any order granting
such leave shall specify a reasonable time,
which shall not be less than sixty (60) days
after notice, within which the defendant must
answer.
In such cases, what gives the court jurisdiction
in an action in rem or quasi in rem is that it
has jurisdiction over the res, i.e. the personal
status of the plaintiff who is domiciled in the
Philippines or the property litigated or

attached. Service of summons in the manner


provided in 17 is not for the purpose of vesting
it with jurisdiction but for complying with the
requirements of fair play or due process, so
that he will be informed of the pendency of the
action against him and the possibility that
property in the Philippines belonging to him or
in which he has an interest may be subjected
to a judgment in favor of the plaintiff and he
can thereby take steps to protect his interest if
he is so minded.[6]
Applying the foregoing rules to the case at bar,
private respondents action, which is for
partition and accounting under Rule 69, is in
the nature of an action quasi in rem. Such an
action is essentially for the purpose of affecting
the defendants interest in a specific property
and not to render a judgment against him. As
explained in the leading case of Banco Espaol
Filipino v. Palanca :[7]
[An action quasi in rem is] an action which
while not strictly speaking an action in
rem partakes of that nature and is
substantially such. . . . The action quasi in
rem differs from the true action in rem in the
circumstance that in the former an individual
is named as defendant and the purpose of the
proceeding is to subject his interest therein to
the obligation or lien burdening the property.
All proceedings having for their sole object the
sale or other disposition of the property of the
defendant,
whether
by
attachment,
foreclosure, or other form of remedy, are in a
general way thus designated. The judgment
entered in these proceedings is conclusive only
between the parties.
As petitioner Lourdes A. Valmonte is a
nonresident who is not found in the
Philippines, service of summons on her must
be in accordance with Rule 14, 17. Such
service, to be effective outside the Philippines,
must be made either (1) by personal service;
(2) by publication in a newspaper of general
circulation in such places and for such time as
the court may order, in which case a copy of
the summons and order of the court should be
sent by registered mail to the last known
address of the defendant; or (3) in any other
manner which the court may deem sufficient.
Since in the case at bar, the service of
summons upon petitioner Lourdes A.
Valmonte was not done by means of any of the
first two modes, the question is whether the
service on her attorney, petitioner Alfredo D.
Valmonte, can be justified under the third
mode, namely, in any . . . manner the court
may deem sufficient.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 13
We hold it cannot. This mode of service, like
the first two, must be made outside
the Philippines, such as through the Philippine
Embassy in the foreign country where the
defendant resides.[8] Moreover, there are
several reasons why the service of summons
on Atty. Alfredo D. Valmonte cannot be
considered a valid service of summons on
petitioner Lourdes A. Valmonte. In the first
place, service of summons on petitioner
Alfredo D. Valmonte was not made upon the
order of the court as required by Rule 14, 17
and certainly was not a mode deemed
sufficient by the court which in fact refused to
consider the service to be valid and on that
basis declare petitioner Lourdes A. Valmonte
in default for her failure to file an answer.
In the second place, service in the attempted
manner on petitioner was not made upon prior
leave of the trial court as required also in Rule
14, 17. As provided in 19, such leave must be
applied for by motion in writing, supported by
affidavit of the plaintiff or some person on his
behalf and setting forth the grounds for the
application.
Finally, and most importantly, because there
was no order granting such leave, petitioner
Lourdes A. Valmonte was not given ample
time to file her Answer which, according to the
rules, shall be not less than sixty (60) days
after notice. It must be noted that the period to
file an Answer in an action against a resident
defendant differs from the period given in an
action filed against a nonresident defendant
who is not found in the Philippines. In the
former, the period is fifteen (15) days from
service of summons, while in the latter, it is at
least sixty (60) days from notice.
Strict compliance with these requirements
alone can assure observance of due process.
That is why in one case,[9] although the Court
considered publication in the Philippines of
the summons (against the contention that it
should be made in the foreign state where
defendant was residing) sufficient, nonetheless
the service was considered insufficient because
no copy of the summons was sent to the last
known correct address in the Philippines.
Private respondent cites the ruling in De Leon
v. Hontanosas, 67 SCRA 458,462-463 (1975),
in which it was held that service of summons
upon the defendants husband was binding on
her. But the ruling in that case is justified
because summons were served upon
defendants husband in their conjugal home in
Cebu City and the wife was only temporarily
absent, having gone to Dumaguete City for a

vacation. The action was for collection of a


sum of money. In accordance with Rule 14, 8,
substituted service could be made on any
person of sufficient discretion in the dwelling
place of the defendant, and certainly
defendants husband, who was there, was
competent to receive the summons on her
behalf. In any event, it appears that defendant
in that case submitted to the jurisdiction of the
court by instructing her husband to move for
the dissolution of the writ of attachment issued
in that case.
On the other hand, in the case of Gemperle v.
Schenker,[10] it was held that service on the
wife of a nonresident defendant was found
sufficient because the defendant had
appointed his wife as his attorney-in-fact. It
was held that although defendant Paul
Schenker was a Swiss citizen and resident of
Switzerland, service of summons upon his wife
Helen Schenker who was in the Philippines
was sufficient because she was her husbands
representative and attorney-in-fact in a civil
case, which he had earlier filed against William
Gemperle. In fact Gemperles action was for
damages arising from allegedly derogatory
statements contained in the complaint filed in
the first case. As this Court said, i]n other
words, Mrs. Schenker had authority to sue,
and had actually sued, on behalf of her
husband, so that she was, also, empowered to
represent him in suits filed against him,
particularly in a case, like the one at bar, which
is a consequence of the action brought by her
on his behalf.[11] Indeed, if instead of filing an
independent
action
Gemperle
filed
a counterclaim in the action brought by Mr.
Schenker against him, there would have been
no doubt that the trial court could have
acquired jurisdiction over Mr. Schenker
through his agent and attorney-in-fact, Mrs.
Schenker.
In contrast, in the case at bar, petitioner
Lourdes A. Valmonte did not appoint her
husband as her attorney-in-fact. Although she
wrote private respondent s attorney that all
communications intended for her should be
addressed to her husband who is also her
lawyer at the latters address in Manila, no
power of attorney to receive summons for her
can be inferred therefrom. In fact the letter
was written seven months before the filing of
this case below, and it appears that it was
written in connection with the negotiations
between her and her sister, respondent Rosita
Dimalanta, concerning the partition of the
property in question. As is usual in
negotiations of this kind, the exchange of
correspondence was carried on by counsel for

CONFLICT OF LAWS
1 s t e x a m c a s e s | 14
the parties. But the authority given to
petitioners husband in these negotiations
certainly cannot be construed as also including
an authority to represent her in any litigation.
HAHN vs. CA

Nature of the case:


This is a petition for review of the
decision of the Court of Appeals dismissing a
complaint for specific performance which
petitioner had filed against private respondent
on the ground that the Regional Trial Court of
Quezon City did not acquire jurisdiction over
private respondent Bayerische Motoren Werke
Aktiengesellschaft (BMW), a nonresident
foreign corporation, and of the appellate
court's order denying petitioner's motion for
reconsideration.

FACTS:

Petitioner Alfred Hahn (Hahn) is a


Filipino citizen doing business under
the name and style "Hahn-Manila."
On the other hand, private respondent
Bayerische
Motoren
Werke
Aktiengesellschaft
(BMW)
is
a
nonresident
foreign
corporation
existing under the laws of the former
Federal Republic of Germany, with
principal office at Munich, Germany.
Hahn executed in favor of BMW a
"Deed of Assignment with Special
Power of Attorney," where he ceded
his rights over the BMW Trademark
in the Philippines in favor of BMW so
that the latter can proceed to also
become a dealer of BMW cars on the
condition that Hahn remain in close
business relation with BMW (i.e. Hahn
remains exclusive dealer of BMW
cars)
Later, Hahn was informed that BMW
was arranging to grant the exclusive
dealership of BMW cars and products
to another entity accordingly due to
BMWs dissatisfaction to the various
aspects of Hahns (decline in sales,
deteriorating services, and inadequate
showroom and warehouse facilities,
and petitioner's alleged failure to
comply with the standards for an
exclusive BMW dealer).
Nonetheless,
BMW
expressed
willingness to continue business
relations with the petitioner on the
basis of a "standard BMW importer"

contract, otherwise, it said, if this was


not acceptable to petitioner, BMW
would have no alternative but to
terminate
petitioner's
exclusive
dealership.
Hahn protested, claiming that the
termination of his exclusive dealership
would be a breach of the Deed of
Assignment. Hahn insisted that as
long as the assignment of its
trademark and device subsisted, he
remained BMW's exclusive dealer in
the
Philippines
because
the
assignment was made in consideration
of the exclusive dealership.
Because of Hahn's insistence on the
former business relation, BMW
withdrew its offer of a "standard
importer contract" and terminated the
exclusive dealer relationship.
Hahn filed a complaint for specific
performance and damages against
BMW to compel it to continue the
exclusive dealership. He also filed
application for temporary restraining
order and for writs of preliminary,
mandatory and prohibitory injunction
to enjoin BMW from terminating his
exclusive dealership.
Quezon City Regional Trial Court
issued a temporary restraining order.
Summons and copies of the complaint
were thereafter served on BMW
through the Department of Trade and
Industry, pursuant to Rule 14, 14 of
the Rules of Court which forwarded to
BMW Germany via registered mail.
However, without proof of service on
BMW the hearing on the on the
application for the writ of preliminary
injunction proceeded ex parte.
Thereafter, BMW moved to dismiss
the case, contending that the trial
court did not acquire jurisdiction over
it through the service of summons on
the Department of Trade and
Industry, because it (BMW) was a
foreign corporation and it was not
doing business in the Philippines.
BMW also pointed out that the
execution of the Deed of Assignment
was an isolated transaction; that Hahn
was not its agent because the latter
undertook to assemble and sell BMW
cars and products without the
participation of BMW and sold other
products; and that Hahn was an
indentor or middleman transacting
business in his own name and for his
own account.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 15

Hahn opposed the motion. He argued


that BMW was doing business in the
Philippines through him as its agent,
as shown by the fact that BMW
invoices and order forms were used to
document his transactions; that he
gave warranties as exclusive BMW
dealer; that BMW officials periodically
inspected
standards
of
service
rendered by him; and that he was
described in service booklets and
international publications of BMW as
a "BMW Importer" or "BMW Trading
Company" in the Philippines.
The trial court deferred resolution of
the Motion to dismiss until after trial
on the merits for the reason that the
grounds advanced by BMW in its
motion did not seem to be indubitable.
Without seeking reconsideration of the
trial court order, BMW filed a petition
for certiorari with the Court of
Appeals primarily assailing the trial
courts jurisdiction.
The Court of Appeals enjoined the trial
court from hearing Hahn's complaint.
It rendered judgment finding the trial
court guilty of grave abuse of
discretion in deferring resolution of
the motion to dismiss. The CA also
proceeded to decide on the merits of
the specific performance case (stating
that any ruling which the trial court
might make on the motion to dismiss
would anyway be elevated to it on
appeal). It ruled that BMW was not
doing business in the country and,
therefore, jurisdiction over it could not
be acquired through service of
summons on the DTI pursuant to Rule
14, Section 14.
The court upheld BMWs contention
that Hahn acted in his own name and
for his own account and independently
of BMW, based on Alfred Hahn's
allegations that he had invested his
own money and resources in
establishing BMW's goodwill in the
Philippines and on BMW's claim that
Hahn sold products other than those
of BMW. It held that Hahn was a mere
indentor or broker and not an agent
through whom private respondent
BMW transacted business in the
Philippines. Consequently, the Court
of Appeals dismissed petitioner's
complaint against BMW.

ISSUE: (these two issues are tightly


intertwined)

1) WON trial court gravely abused


its discretion in deferring action
on the motion to dismiss and

Suffice it to say that trial court acted with


competent authority in entering its assailed
order deferring resolution of BMWs motion to
dismiss pending trial on the merits. Rule 16, 3
authorizes courts to defer the resolution of a
motion to dismiss until after the trial if the
ground on which the motion is based does not
appear to be indubitable. Here (as to be
discussed below) the record of the case bristles
with factual issues and it is not at all clear
whether some allegations correspond to the
proof if only pleadings without the benefit of
full blown trial are considered. In any case,
there seems to be a significant issue that had
to be resolved first via full trial (presentation
of evidence, etc,)-WON Hahn is truly an agent
of BMW.
On the issue of jurisdiction, Rule 14,S 14 1
read in conjunction with the provisions of
Foreign Investments Act of 1991 (R.A. No.
7042)2 confers jurisdiction on the trial court
over foreign corporations like BMW.
Fundamentally, the aforementioned statute
authorities read together allow the trial court
to serve summons to foreign companies via
DTI (hence gain over jurisdiction thereover) as
long as they are considered to be doing
business in the Phils.- this includes
1

14. Service upon foreign corporations. If the defendant is a


foreign corporation, or a nonresident joint stock company or
association, doing business in the Philippines, service may be
made on its resident agent designated in accordance with law
for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on any
of its officers or agents within the Philippines. (Emphasis
added)
2
d) the phrase "doing business" shall include soliciting orders,
service contracts, opening offices, whether called "liaison"
offices or branches, appointing representatives or distributors
domiciled in the Philippines or who in any calendar year stay in
the country for a period or periods totalling one hundred eighty
(180) days or more; participating in the management,
supervision or control of any domestic business, firm, entity or
corporation in the Philippines; and any other act or acts that
imply a continuity of commercial dealings or arrangements
and contemplate to that extent the performance of acts or
works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of, commercial
gain or of the purpose and object of the business
organization: Provided, however, That the phrase "doing
business" shall not be deemed to include mere investment as
a shareholder by a foreign entity in domestic corporations duly
registered to do business, and/or the exercise of rights as such
investor; nor having, a nominee director or officer to represent
its interests in such corporation; nor appointing a
representative or distributor domiciled in the Philippines
which transacts business in its own name and for its own
account. (Emphasis supplied)

CONFLICT OF LAWS
1 s t e x a m c a s e s | 16
"appointing representatives or distributors in
the Philippines" but not when the
representative or distributor "transacts
business in its name and for its own account."The question then is whether petitioner Alfred
Hahn is the agent or distributor in the
Philippines of private respondent BMW. If he
is, BMW may be considered doing business in
the Philippines and the trial court acquired
jurisdiction over it (BMW) by virtue of the
service of summons on the Department of
Trade and Industry. Otherwise, if Hahn is not
the agent of BMW but an independent dealer,
albeit of BMW cars and products, BMW, a
foreign corporation, is not considered doing
business in the Philippines within the meaning
of the Foreign Investments Act of 1991 and the
IRR, and the trial court did not acquire
jurisdiction over it (BMW).

2) WON Hahn is BMWs agent


The Court of Appeals held that
petitioner Alfred Hahn acted in his
own name and for his own account
and not as agent or distributor in the
Philippines of BMW on the ground
that "he alone had contacts with
individuals or entities interested in
acquiring BMW vehicles. To support
this conclusion, the CA relied heavily
on Hahns allegation that he alone
invested a lot of money and resources
in order to single-handedly compete
against other motorcycle and car
companies and that he has built
buildings and other infrastructures
such as service centers and
showrooms to maintain and promote
the car and products of defendant
BMW.- this conclusion by the CA is
flawed.
There is nothing to support the
appellate court's finding that Hahn
solicited orders alone and for his own
account and without "interference
from, let alone direction of, BMW."
To the contrary, Hahns full
allegations in his complaint show the
opposite.
Hahn, in his complete allegations
pointed out that he placed orders
made with him directly with the
BMW. It is the BMW that fixed the
down payment and pricing charges,
notified Hahn of the scheduled
production month for the orders, and
reconfirmed the orders by signing

and returning to Hahn the acceptance


sheets and the payment was made
directly to BMW. Hahn was merely
credited with commissions from the
total purchase price upon invoicing of
a vehicle order by BMW. All orders
were on invoices and forms of BMW.
And
these
allegations
were
substantially admitted by BMW
which in its petition for certiorari
before the CA.
Contrary to CAs conclusion this
arrangement shows an agency.
An agent receives a commission
upon the successful conclusion
of a sale. On the other hand, a
broker earns his pay merely by
bringing the buyer and the seller
together, even if no sale is
eventually made.
As to the service centers and
showrooms which he said he had put
up at his own expense, Hahn said that
he had to follow BMW specifications
as exclusive dealer of BMW in the
Philippines. According to Hahn,
BMW periodically inspected the
service centers to see to it that BMW
standards were maintained.- this
illustrates BMWs control over
Hahns activities! More so, these
allegations as to BMW extensice
control over Hahns activities were
also admitted in its letter to Hahn
terminating exclusive dealership. In
any case, the fact that Hahn invested
his own money to put up these service
centers and showrooms does not
necessarily prove that he is not agent
of BMW.
Finally, BMWs fear that by
responding to the summons it would
be waiving its objection to the trial
court's jurisdiction- it is now settled
that for purposes of having
summons served on a foreign
corporation in accordance with
Rule 14, 14, it is sufficient that it
be alleged in the complaint that
the foreign corporation is doing
business in the Philippines. The
court need not go beyond the
allegations of the complaint in
order to determine whether it
has
jurisdiction. A
determination that the foreign
corporation is doing business is
only tentative and is made only
for the purpose of enabling the

CONFLICT OF LAWS
1 s t e x a m c a s e s | 17
local
court
to
acquire
jurisdiction over the foreign
corporation through service of
summons pursuant to Rule 14,
14. Such determination does not
foreclose a contrary finding
should evidence later show that
it is not transacting business in
the country. (in other words, the
right to question the courts
jurisdiction is not deemed foreclosed
by active participation in trial)

Far from committing an abuse of


discretion, the trial court properly deferred
resolution of the motion to dismiss and thus
avoided prematurely deciding a question
which requires a factual basis, with the same
result if it had denied the motion and
conditionally assumed jurisdiction. It is the
Court of Appeals which, by ruling that BMW is
not doing business on the basis merely of
uncertain allegations in the pleadings,
disposed of the whole case with finality and
thereby deprived petitioner of his right to be
heard on his cause of action. Nor was there
justification for nullifying the writ of
preliminary injunction issued by the trial
court. Although the injunction was issued ex
parte, the fact is that BMW was subsequently
heard on its defense by filing a motion to
dismiss.
Asiavest vs. CA
September 25, 1998
Facts:
Asiavest Limited filed a complaint against
Antonio Heras praying that he be ordered to
pay the amount awarded by the Hong Kong
Court sometime in December 1984, which was
judgment was later amended in April 1987.
Antonio Heras admits the existence of the
judgment, but cites that Asiavest is not doing
business in the Philippines. He also cites that
he resides in New Manila, Quezon City.
Heras presented two witnesses:
1. His personal secretary who claimed
that no writ of summons was served
upon Heras office in Hong Kong or at
his residence in New Manila.
2. A representative from the law office of
Antonios counsel who verified that
there was no record of a writ of
summons served on the person of
Antonio. The witness said that the
service is not a legal requirement to do
so under Hong Kong laws.

The trial court ruled that the Hong Kong court


judgment should be given effect for Heras had
failed to overcome the legal presumption in
favor of the foreign judgment.
The Court of Appeals reversed the trial courts
decision, ruling that a foreign judgment does
not itself have any extraterritorial application,
and to be given effect, the foreign tribunal
should have acquired jurisdiction over the
person and the subject matter. Otherwise, the
judgment is void.
The Court of Appeals agreed with Heras that
notice sent outside the state to a non-resident
is unavailing to give jurisdiction in an action
against
him
personally
for
money
recovery. Summons
should
have
been
personally served on Heras in Hong Kong, for,
as claimed by ASIAVEST, Heras was physically
present in Hong Kong for nearly 14
years. Since there was not even an attempt to
serve summons on Heras in Hong Kong, the
Hong Kong Supreme Court did not acquire
jurisdiction over Heras.
Issue: Whether the Hong Kong court had
acquired jurisdiction over Heras. NO
Ruling:
Since there was failure to prove specifically
any piece of Hong Kong law regarding service
of summons, the Supreme Court applied the
doctrine of processual presumption. It then
proceeded to identify whether the action filed
in Hong Kong against Heras was one in
personam, in rem, or quasi in rem. (If sir asks
for the distinctions, see end of case)
In the case at bar, the action filed in Hong
Kong against HERAS was in personam, since it
was based on his personal guarantee of the
obligation of the principal debtor.
The Supreme Court then relied on the
stipulation of facts agreed upon by the parties,
whereby Heras referred to New Manila,
Quezon City as his residence at the time
jurisdiction over his person was being sought
by the Hong Kong court.
Thus, since Heras was not a resident of Hong
Kong and the action against him was one in
personam, summons should have been
personally served on him in Hong Kong. The
extraterritorial service in the Philippines was
invalid and did not confer on the Hong Kong
court jurisdiction over his person. It follows
that the Hong Kong court judgment cannot be

CONFLICT OF LAWS
1 s t e x a m c a s e s | 18
given force and effect in the Philippines for
having been rendered without jurisdiction.
Even assuming Heras had been a resident of
Hong Kong, he was no longer such when the
extraterritorial service of summons was
attempted to be made on him.
Taking from the case of Brown vs. Brown
where a proceeding quasi in rem was
instituted against a suspect who fled the
Philippines, the Supreme Court ruled that
Heras, who was also an absentee, should have
been served with summons in the same
manner as a non-resident not found in Hong
Kong. Section 17, Rule 14 of the Rules of Court
providing for extraterritorial service will not
apply because the suit against him was in
personam. Neither does Section 18, which
allows extraterritorial service on a resident
defendant who is temporarily absent from the
country, because even if Heras be considered
as a resident of Hong Kong, the undisputed
fact remains that he left Hong Kong not only
temporarily but for good.
Just in case:
An action in personam is an action against a
person on the basis of his personal liability. An
action in rem is an action against the thing
itself instead of against the person.[19] An
action quasi in rem is one wherein an
individual is named as defendant and the
purpose of the proceeding is to subject his
interest therein to the obligation or lien
burdening the property.
In an action in personam, jurisdiction over the
person of the defendant is necessary for the
court to validly try and decide the case.
Jurisdiction over the person of a resident
defendant who does not voluntarily appear in
court can be acquired by personal service of
summons as provided under Section 7, Rule 14
of the Rules of Court. If he cannot be
personally served with summons within a
reasonable time, substituted service may be
made in accordance with Section 8 of said
Rule. If he is temporarily out of the country,
any of the following modes of service may be
resorted to: (1) substituted service set forth in
Section 8; (2) personal service outside the
country, with leave of court; (3) service by
publication, also with leave of court; or (4) any
other manner the court may deem sufficient.
However, in an action in personam wherein
the defendant is a non-resident who does not
voluntarily submit himself to the authority of
the court, personal service of summons within

the state is essential to the acquisition of


jurisdiction over her person. This method of
service is possible if such defendant is
physically present in the country. If he is not
found therein, the court cannot acquire
jurisdiction over his person and therefore
cannot validly try and decide the case against
him. An exception was laid down in Gemperle
v. Schenker wherein a non-resident was served
with summons through his wife, who was a
resident of the Philippines and who was his
representative and attorney-in-fact in a prior
civil case filed by him; moreover, the second
case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or
quasi in rem, jurisdiction over the person of
the defendant is not a prerequisite to confer
jurisdiction on the court provided that the
court acquires jurisdiction over the res.
Nonetheless, summons must be served upon
the defendant not for the purpose of vesting
the court with jurisdiction but merely for
satisfying the due process requirements. Thus,
where the defendant is a non-resident who is
not found in the Philippines and (1) the action
affects the personal status of the plaintiff; (2)
the action relates to, or the subject matter of
which is property in the Philippines in which
the defendant has or claims a lien or interest;
(3) the action seeks the exclusion of the
defendant from any interest in the property
located in the Philippines; or (4) the property
of the defendant has been attached in the
Philippines -- service of summons may be
effected by (a) personal service out of the
country, with leave of court; (b) publication,
also with leave of court; or (c) any other
manner the court may deem sufficient.
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, petitioner,
vs.
COURT OF APPEALS, MILAGROS P.
MORADA and HON. RODOLFO A.
ORTIZ, in his capacity as Presiding Judge of
Branch 89, Regional Trial Court of Quezon
City, respondents.
Facts: (Note: the most important facts in this
topic is found at the last part before the issue)
Milagros Morada is a flight attendant of Saudi
Arabian Airlines (SAUDIA). While on a layover in Jakarta, she went to a disco dance with
a fellow crew members, Thamer and Allah AlGazzawi who are both Saudi nationals. After
the party, they returned to the hotel and
decided to have breakfast at the room of

CONFLICT OF LAWS
1 s t e x a m c a s e s | 19
Thamer. For some reason, Allah left the room
and shortly after he did, Thamer attempted to
rape Milagros. Fortunately, a roomboy and
several security personnel heard her cries for
help and rescued her. Later, the Indonesian
police came and arrested Thamer and Allah AlGazzawi, the latter as an accomplice.

Shortly afterwards, SAUDIA summoned


Milagros to report to Jeddah once again and
see Miniewy for further investigation. She did
so after receiving assurance from SAUDIA's
Manila manager, AslamSaleemi, that the
investigation was routinary and that it posed
no danger to her.

When Milagros returned to Jeddah a few days


later, several SAUDIA officials interrogated
her about the Jakarta incident. They then
requested her to go back to Jakarta to help
arrange the release of Thamer and Allah. In
Jakarta, SAUDIA officials negotiated with the
police for the immediate release of the
detained crew members but did not succeed
because Milagros refused to cooperate.

In Jeddah, a SAUDIA legal officer brought her


to the same Saudi court where a Saudi judge
interrogated her through an interpreter about
the Jakarta incident. After one hour of
interrogation, they let her go. At the airport,
however, just as her plane was about to take
off, a SAUDIA officer told her that the airline
had forbidden her to take flight. At the Inflight
Service Office where she was told to go, the
secretary of Mr. YahyaSaddick took away her
passport and told her to remain in Jeddah, at
the crew quarters, until further orders.

Later on, she learned that, through the


intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of
detention. Eventually, they were again put in
service by SAUDIA while Milagros was
transferred to Manila.
Just when Milagros thought that the Jakarta
incident was already behind her, her superiors
requested her to see Mr. Ali Meniewy, Chief
Legal Officer of SAUDIA, in Jeddah, Saudi
Arabia. When she saw him, he brought her to
the police station where the police took her
passport and questioned her about the Jakarta
incident. Miniewy simply stood by as the
police put pressure on her to make a statement
dropping the case against Thamer and Allah.
Not until she agreed to do so did the police
return her passport and allowed her to catch
the afternoon flight out of Jeddah.
One year and a half later in Riyadh, Saudi
Arabia, a few minutes before the departure of
her flight to Manila, Milagros was not allowed
to board the plane and instead ordered to take
a later flight to Jeddah to see Mr. Miniewy, the
Chief Legal Officer of SAUDIA. When she did,
a certain Khalid of the SAUDIA office brought
her to a Saudi court where she was asked to
sign a document written in Arabic. They told
her that this was necessary to close the case
against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before
the court on June 27, 1993. She then returned
to Manila.

Subsequently, SAUDIA legal officer again


escorted plaintiff to the same court where the
judge, to her astonishment and shock,
rendered a decision, translated to her in
English, sentencing her to five months
imprisonment and to 286 lashes.
Only then did she realize that the Saudi court
had tried her, together with Thamer and Allah,
for what happened in Jakarta. The court found
plaintiff guilty of (1) adultery; (2) going to a
disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing
with the male crew, in contravention of Islamic
tradition.
Facing conviction, Milagros sought the help of
her employer, SAUDIA. Unfortunately, she
was denied any assistance. She then asked the
Philippine Embassy in Jeddah to help her
while her case is on appeal. Eventually, the
Prince of Makkah dismissed the case against
her and allowed her to leave Saudi Arabia.
Shortly before her return to Manila, she was
terminated from the service by SAUDIA,
without her being informed of the cause.
MOST IMPORTANT FACTS RELATED
TO THE TOPIC: On November 3, 1993,
Morada filed a Complaint for damages against
SAUDIA. On January 19,1994, SAUDIA filed
for an Omnibus Motion to Dismiss, with the
following contentions:

CONFLICT OF LAWS
1 s t e x a m c a s e s | 20
1.

That the complaint states no cause of


action against SAUDIA
2. The defendant Al-balawi is not a real
party in interest.
3. That the claim or demand set forth in
the complaint has been waived,
abandoned, or otherwise extinguished.
4. That the trial court has no jurisdiction
to try the case
ISSUE: Did the court acquired jurisdiction
over the parties?
RULING: Yes, the court acquired jurisdiction
over the parties.
The trial court possesses jurisdiction over the
person of the parties.
The trial court acquired jurisdiction over
(respondent) Morada through her act of filing
the complaint and amended complaint. On the
other hand, the court acquired jurisdiction
over the (Petitioner) SAUDIA by praying for
the dismissal of the Amended Complaint.
(from full text)
By filing her Complaint and Amended
Complaint with the trial court, private
respondent has voluntary submitted herself to
the jurisdiction of the court.
The records show that petitioner SAUDIA has
filed several motionspraying for the dismissal
of Moradas Amended Complaint. SAUDIA also
filed
an
Answer
InEx
AbundanteCautelamdated February 20, 1995.
What is very patent and explicit from the
motions filed, is that SAUDIA prayed for other
reliefs under the premises. Undeniably,
petitioner SAUDIA has effectively submitted to
the trial courts jurisdiction by praying for the
dismissal of the Amended Complaint on
grounds other than lack of jurisdiction.
Supreme Court quoted the following rulings.
(only if sir Juan asks)
Republic vs. Ker and Company, Ltd.:
We observe that the motion to dismiss filed on
April 14, 1962, aside from disputing the lower
courts jurisdiction over defendants person,
prayed for dismissal of the complaint on the

ground that plaintiffs cause of action has


prescribed. By interposing such second ground
in its motion to dismiss, Ker and Co., Ltd.
availed of an affirmative defense on the basis
of which it prayed the court to resolve
controversy in its favor. For the court to validly
decide the said plea of defendant Ker & Co.,
Ltd., it necessarily had to acquire jurisdiction
upon the latters person, who, being the
proponent of the affirmative defense, should
be deemed to have abandoned its special
appearance and voluntarily submitted itself to
the jurisdiction of the court.
De Midgely vs. Ferandos, held that:
When the appearance is by motion for the
purpose of objecting to the jurisdiction of the
court over the person, it must be for the sole
and separate purpose of objecting to the
jurisdiction of the court. If his motion is for
any other purpose than to object to the
jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of
the court. A special appearance by motion
made for the purpose of objecting to the
jurisdiction of the court over the person will be
held to be a general appearance, if the party in
said motion should, forexample, ask for a
dismissal of the action upon the further
ground that the court had no jurisdiction over
the subject matter.
[G.R. Nos. 121576-78. June 16, 2000]
BANCO DO BRASIL, petitioner, vs. THE
COURT OF APPEALS, HON. ARSENIO
M. GONONG, and CESAR S. URBINO,
SR., respondents.
Facts: In 1989, Duraproof services as
represented by its manager Cesar Urbino,
Sr.sued Poro Point Shipping Services for
damages the former incurred when one of the
latters ship ran aground because of a typhoon
causing losses to Urbino. Urbino impleaded
Banco Do Brasil (BDB), a foreign corporation
not engaged in business in the Philippines nor
does it have any office here or any agent. BDB
was impleaded simply because it has a claim
over the sunken ship. BDB however failed to
appear multiple times. Eventually, a judgment
was rendered and BDB was adjudged to pay
$300,000.00 in damages in favor of Urbino
for BDB being a nuisance defendant.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 21
BDB assailed the said decision as it argued
that there was no valid service of summons
because the summons was issued to the
ambassador of Brazil. Further, the other
summons which were made through
publication is not applicable to BDB as it
alleged that the action against them is in
personam.
Petitioner avers that the action filed against it
is an action for damages, as such it is an action
in personam which requires personal service
of summons be made upon it for the court to
acquire jurisdiction over it. However,
inasmuch as petitioner Banco do Brasil is a
non-resident
foreign
corporation,
not
engaged in business in the Philippines, unless
it has property located in the Philippines
which may be attached to convert the action
into an action in rem, the court cannot acquire
jurisdiction over it in respect of an action in
personam.
ISSUE: Whether or not the court acquired
jurisdiction over Banco Do Brasil?
HELD: No. Banco Do Brasil is correct.
First. When the defendant is a nonresident
and he is not found in the country, summons
may be served extraterritorially in accordance
with Rule 14, Section 17of the Rules of Court.
Under this provision, there are only four (4)
instances when extraterritorial service of
summons is proper, namely: "(1) when the
action affects the personal status of the
plaintiffs; (2) when the action relates to, or the
subject of which is property, within the
Philippines, in which the defendant claims a
lien or interest, actual or contingent; (3) when
the relief demanded in such action consists,
wholly or in part, in excluding the defendant
from any interest in property located in the
Philippines; and (4) when the defendant nonresidents property has been attached within
the Philippines."In these instances, service of
summons may be effected by (a) personal
service out of the country, with leave of court;
(b) publication, also with leave of court; or (c)
any other manner the court may deem
sufficient.
Clear from the foregoing, extrajudicial service
of summons apply only where the action is in
rem, an action against the thing itself instead
of against the person, or in an action quasi in
rem, where an individual is named as
defendant and the purpose of the proceeding is
to subject his interest therein to the obligation

or loan burdening the property. This is so


inasmuch as, in in rem and quasi in rem
actions, jurisdiction over the person of the
defendant is not a prerequisite to confer
jurisdiction on the court provided that the
court acquires jurisdiction over the res.
However, where the action is in personam,
one brought against a person on the basis of
his personal liability, jurisdiction over the
person of the defendant is necessary for the
court to validly try and decide the case. When
the defendant is a non-resident, personal
service of summons within the state is
essential to the acquisition of jurisdiction over
the person.This cannot be done, however, if
the defendant is not physically present in the
country, and thus, the court cannot acquire
jurisdiction over his person and therefore
cannot validly try and decide the case against
him.
In the instant case, Urbinos suit against
petitioner is premised on petitioners being one
of the claimants of the subject vessel M/V Star
Ace. Thus, it can be said that private
respondent initially sought only to exclude
petitioner from claiming interest over the
subject vessel M/V Star Ace. However, private
respondent testified during the presentation of
evidence that, for being a nuisance defendant,
petitioner caused irreparable damage to
private respondent in the amount of
$300,000.00.Therefore, while the action is in
rem, by claiming damages, the relief
demanded went beyond the res and sought a
relief totally alien to the action.
It must be stressed that any relief granted in
rem or quasi in rem actions must be confined
to the res, and the court cannot lawfully render
a
personal
judgment
against
the
defendant.Clearly, the publication of summons
effected by private respondent is invalid and
ineffective for the trial court to acquire
jurisdiction over the person of petitioner, since
by seeking to recover damages from petitioner
for the alleged commission of an injury to his
person or property caused by petitioners being
a nuisance defendant, private respondents
action became in personam. Bearing in mind
the in personam nature of the action, personal
or, if not possible, substituted service of
summons
on
petitioner,
and
not
extraterritorial service, is necessary to confer
jurisdiction over the person of petitioner and
validly hold it liable to private respondent for
damages. Thus, the trial court had no
jurisdiction to award damages amounting to

CONFLICT OF LAWS
1 s t e x a m c a s e s | 22
$300,000.00 in favor of private respondent
and as against herein petitioner.

Respondent was given sixty (60) days after


publication to file a responsive pleading.

WHEREFORE, the subject petition is hereby


GRANTED. The Decision and the Resolution
of
the
Court
29317
are
hereby
REVERSEDandSETASIDEinsofar as they
affect petitioner Banco do Brasil.

On July 15, 1991, Process Server, Maximo B.


Dela Rosa, submitted his Officers Return
quoted hereunder:

G.R. No. 150656

THIS IS TO CERTIFY that on July 3, 1991, I


have served a copy of summons and
complaint with annexes together with order
dated June 28, 1991 issued by the Court in the
above-entitled
case
upon
defendant
Margarita Romualdez-Licaros c/o DFA. (sent
by Mail) thru Pat G. Martines receiving Clerk
of Department of Foreign Affairs a person
authorized to receive this kind of process who
acknowledged the receipt thereof at ADB
Bldg., Roxas Blvd., Pasay City, Metro
Manila."

April 29, 2003

MARGARITA
ROMUALDEZLICAROS, petitioner,
vs.
ABELARDO B. LICAROS, respondent.
FACTS: Abelardo Licaros (Abelardo, for
short) and Margarita Romualdez-Licaros
(Margarita, hereafter) were lawfully married
on December 15, 1968. Ironically, marital
differences, squabbles and irreconcilable
conflicts transpired between the spouses, such
that sometime in 1979, they agreed to separate
from bed and board.
In 1982, Margarita left for the United States
and there, to settle down with her two (2)
children. In the United States, on April 26,
1989, Margarita applied for divorce before the
Superior Court of California, County of San
Mateo. On August 6, 1990, Margarita was
granted the decree of divorce together with a
distribution of properties between her and
Abelardo.
For his part, on June 24, 1991, Abelardo
commenced Civil Case No. 91-1757, for the
declaration of nullity of his marriage with
Margarita, based on psychological incapacity
under the New Family Code. As Margarita was
then residing at 96 Mulberry Lane, Atherton,
California, U.S.A., Abelardo initially moved
that summons be served through the
International Express Courier Service. The
court a quo denied the motion. Instead, it
ordered that summons be served by
publication in a newspaper of general
circulation once a week for three (3)
consecutive weeks, at the same time furnishing
respondent a copy of the order, as well as the
corresponding summons and a copy of the
petition at the given address in the United
States through the Department of Foreign
Affairs, all at the expense of Abelardo.

"OFFICERS RETURN

On November 8, 1991, the Decision as handed


down in Civil Case No. 91-1757 declaring the
marriage between Abelardo and Margarita null
and void.
Almost nine (9) years later, on April 28, 2000,
the petition at bench was commenced when
Margarita received a letter dated November
18, 1991 from a certain Atty. Angelo Q.
Valencia informing her that she no longer has
the right to use the family name "Licaros"
inasmuch as her marriage to Abelardo had
already been judicially dissolved by the
Regional Trial Court of Makati on November
8, 1991.
Margarita insists that the trial court never
acquired jurisdiction over her person in the
petition for declaration of nullity of marriage
since she was never validly served with
summons. Neither did she appear in court to
submit voluntarily to its jurisdiction.
On the other hand, Abelardo argues that
jurisdiction over the person of a non-resident
defendant in an action in rem or quasi in
rem is not necessary. The trial and appellate
courts made a clear factual finding that there
was proper summons by publication effected
through the Department of Foreign Affairs as
directed by the trial court. Thus, the trial court

CONFLICT OF LAWS
1 s t e x a m c a s e s | 23
acquired jurisdiction to render the decision
declaring the marriage a nullity.
ISSUE: Whether Margarita was validly served
with summons in the case for declaration of
nullity of her marriage with Abelardo?
HELD: YES. Summons is a writ by which the
defendant is notified of the action brought
against him. Service of such writ is the means
by which the court acquires jurisdiction over
his person.
As a rule, when the defendant does not reside
and is not found in the Philippines, Philippine
courts cannot try any case against him because
of the impossibility of acquiring jurisdiction
over his person unless he voluntarily appears
in court. But when the case is one of actions in
rem or quasi in rem enumerated in Section 15,
Rule 14 of the Rules of Court, Philippine courts
have jurisdiction to hear and decide the case.
In such instances, Philippine courts have
jurisdiction over the res, and jurisdiction over
the person of the non-resident defendant is
not essential.
Actions in
personam
and
actions in
rem or quasi in rem differ in that actions in
personam are directed against specific persons
and seek personal judgments. On the other
hand, actions in rem or quasi in rem are
directed against the thing or property or status
of a person and seek judgments with respect
thereto as against the whole world.
At the time Abelardo filed the petition for
nullity of the marriage in 1991, Margarita was
residing in the United States. She left the
Philippines in 1982 together with her two
children. The trial court considered Margarita
a non-resident defendant who is not found in
the Philippines. Since the petition affects the
personal status of the plaintiff, the trial court
authorized extraterritorial service of summons
under Section 15, Rule 14 of the Rules of Court.
The term "personal status" includes family
relations, particularly the relations between
husband and wife.
Under Section 15 of Rule 14, a defendant who
is a non-resident and is not found in the
country may be served with summons by
extraterritorial service in four instances:

(1) when the action affects the personal


status of the plaintiff; (2) when the action
relates to, or the subject of which is property
within the Philippines, in which the defendant
has or claims a lien or interest, actual or
contingent; (3) when the relief demanded
consists, wholly or in part, in excluding the
defendant from any interest in property
located in the Philippines; or (4) when the
property of the defendant has been attached
within the Philippines.
In these instances, extraterritorial service of
summons may be effected under any of three
modes: (1) by personal service out of the
country, with leave of court; (2) by publication
and sending a copy of the summons and order
of the court by registered mail to the
defendants last known address, also with
leave of court; or (3) by any other means
the judge may consider sufficient.
Applying the foregoing rule, the trial court
required extraterritorial service of summons to
be effected on Margarita in the following
manner:
x x x, service of Summons by way of
publication in a newspaper of general
circulation once a week for three (3)
consecutive weeks, at the same time,
furnishing respondent copy of this Order as
well as the corresponding Summons and copy
of the petition at her given address at No. 96
Mulberry
Lane,
Atherton,
California,
U.S.A., thru the Department of Foreign
Affairs, all at the expense of petitioner.
The trial courts prescribed mode of
extraterritorial service does not fall under the
first or second mode specified in Section 15 of
Rule 14, but under the third mode. This refers
to "any other means that the judge may
consider sufficient.
The Process Servers Return of 15 July 1991
shows that the summons addressed to
Margarita together with the complaint and its
annexes were sent by mail to the Department
of Foreign Affairs with acknowledgment of
receipt. The Process Servers certificate of
service of summons is prima facie evidence of
the facts as set out in the certificate. Before
proceeding to declare the marriage between

CONFLICT OF LAWS
1 s t e x a m c a s e s | 24
Margarita and Abelardo null and void, the trial
court stated in its Decision dated 8 November
1991
that
"compliance
with
the
jurisdictional
requirements
hav(e)(sic) been duly established." We
hold that delivery to the Department of
Foreign Affairs was sufficient compliance with
the rule. After all, this is exactly what the trial
court required and considered as sufficient to
effect service of summons under the third
mode of extraterritorial service pursuant to
Section 15 of Rule 14.
G.R. No. 127692

March 10, 2004

respondent heirs to execute a Deed of Sale and


to deliver the titles to Sps. Gomez. Due to the
respondents failure to deliver the title, the
RTC declared the said titles null and void,
ordering the Register of Deeds of Cebu City to
issue new titles in the name of Sps. Gomez.
Thereafter, respondents Adolfo and Mariano
Trocino filed with the Court of Appeals, a
petition for the annulment of the judgment,
alleging that the trial courts decision is null
and void on the ground that it did not acquire
jurisdiction over their persons as they were not
validly served with a copy of the summons and
the complaint. The CA granted the petition,
thereby annulling the decision of the RTC.

FORTUNATO GOMEZ and AURORA


GOMEZ v.
COURT OF APPEALS, ADOLFO
TROCINO and MARIANO TROCINO

Issue: Whether or not summons was


effectively served on respondents. YES as to
Caridad Trocino; NO as to respondents
Mariano and Adolfo Trocino

Facts: Spouses
Jesus
and
CaridadTrocinomortgaged two parcels of land
to Dr. Yujuico, which was subsequently
foreclosed and sold at a public auction. Before
the expiration of the redemption period, Sps.
Trocino sold the said property to Spouses
Gomez who redeemed the same from Dr.
Yujuico. Sps. Trocino, however, refused to
convey ownership of the properties to Sps.
Gomez. This prompted Sps. Gomez to file an
action for specific performance and/or
rescission against the heirs of Jesus J. Trocino,
Sr., which include herein respondents and
their mother Caridad Trocino.

Ruling:
The action instituted by Sps.
Gomez affect the parties alone, not the whole
world. Hence, it is an action in personam, i.e.,
any judgment therein is binding only upon the
parties properly impleaded. It is an action
against persons, namely, herein respondents,
on the basis of their personal liability. As
such, personal service of summons
upon the defendants is essential in
order for the court to acquire of
jurisdiction over their persons. In
actions in personam, summons on the
defendant must be served by handing a copy
thereof to the defendant in person, or, if he
refuses to receive it, by tendering it to him.
This is specifically provided in Section 7, Rule
14 of the Rules of Court, which states:

On January 10, 1992, the trial courts Process


Server served summons on respondents, in the
manner described in his "Return of Service," to
wit:
Respectfully returned to the Branch Clerk of
Court, Regional Trial Court of Cebu, Branch
10, the herein attached original summons
issued in the above-entitled case with the
information that on January 8, 1992
summons and copies of the complaint
were served to the defendants Jacob,
Jesus
Jr.,
Adolfo,
Mariano,
Consolacion,
Alice,
Racheal
thru
defendant Caridad Trocino at their given
address at Maria Cristina Extension (besides
Sacred Heart School for Girls), Cebu City,
evidence by her signature found at the lower
portion of the original summons.
After trial on the merits, the RTC rendered its
decision in favor of Sps. Gomez, ordering the

SEC. 7. Personal service of summons.-- The


summons shall be served by handing a copy
thereof to the defendant in person or, if he
refuses to receive it, by tendering it to him.
In this case, summons were not served on
Adolfo and Mariano. Adolfo Trocino is already
a resident of Ohio, U.S.A. for 25 years. Being a
non-resident, the court cannot acquire
jurisdiction over his person and validly try and
decide the case against him.On the other hand,
Mariano Trocino has been in Talibon, Bohol
since 1986. To validly acquire jurisdiction over
his person, summons must be served on him
personally, or through substituted service,
upon showing of impossibility of personal
service.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 25
The process server served the summons and
copies of the complaint on respondents Jacob,
Jesus, Jr., Adolfo, Mariano,Consolacion, Alice
and Racheal, through their mother, Caridad
Trocino.The return did not contain any
particulars as to the impossibility of
personal service on Mariano Trocino
within
a reasonable time. Such
improper service renders the same
ineffective. Inasmuch as the sheriffs return
failed to state the facts and circumstances
showing the impossibility of personal service
of summons upon respondents within a
reasonable time, petitioners should have
sought the issuance of an alias summons.
Under Section 5, Rule 14 of the Rules of Court,
alias summons may be issued when the
original summons is returned without being
served
on
any
or
all
of
the
defendants.28 Petitioners, however, did not do
so, and they should now bear the
consequences of their lack of diligence.
Consequently, the judgment sought to be
executed against respondents were rendered
without jurisdiction as there was neither a
proper service of summons nor was there any
waiver or voluntary submission to the trial
courts jurisdiction. Hence, the same is void,
with regard to private respondents except
Caridad Trocino.When the process server
personally served the summons on Caridad
Trocino, the trial court validly acquired
jurisdiction over her person alone. Hence, the
trial courts decision is valid and binding with
regard to her, but only in proportion to
Caridad Trocinos share. Hence, the petition
for review is DENIED.
St.
Aviation
Services
vs.
International Airways, Inc.
G.R. No. 140288 October 23, 2006

Grand

Facts:

St. Aviation Services (petitioner)


is a foreign corporation based in
Singapore and is engaged in the
manufacture, repair, and maintenance
of airplanes and aircrafts.
Grand International Airways
(respondent)
is
domestic
corporation engaged in airtime
operations.
January
1996,
petitioner
and
respondent executed an Agreement for
the Maintenance and Modification of
Airbus
A
300
B4-103
(First
Agreement).

They agreed that the construction,


validity and performance thereof shall
be
governed
by
the
laws
of Singapore. They further agreed to
submit any suit arising from their
agreement to the non-exclusive
jurisdiction of the Singapore courts.
Petitioner undertook the contracted
works and thereafter promptly
delivered the aircrafts to respondent.
Petitioner billed respondent in the
total amount of US$303,731.67 or
S$452,560 for the period of March
1996 to October 1997.
Despite repeated demands respondent
failed to pay.
December 12, 1997, petitioner filed
before the High Court of the Republic
of Singapore an action for the sum
S$452,560.
Upon petitioners motion, the court
issued a Writ of Summons to be served
extraterritorially
or
outside Singapore upon
respondent. The court sought the
assistance
of
the
sheriff
of Pasay City to effect service of the
summons upon respondent. However,
despite
receipt
of
summons,
respondent failed to answer the claim.
On February 17, 1998, on motion of
petitioner, the Singapore High Court
rendered a judgment by default
against respondent.
On August 4, 1998, petitioner filed
with the RTC, Branch 117, Pasay City,
a Petition for Enforcement of
Judgment, docketed as Civil Case No.
98-1389.

Respondent: Moved to dismiss the petition on


2 grounds:
1. The Singapore High Court did not
acquire jurisdiction over its person;
and
2. The foreign judgment sought to be
enforced is void for having been
rendered in violation of its right to due
process. (This was denied by the RTC
saying that these are not grounds for a
motion to dismiss under the Rules on
Civil Procedure)
They appealed to the CA and was granted
saying that the complaint does not involve the
personal status of plaintiff, nor any property
in which the defendant has a claim or interest,
or which the private respondent has attached
but purely an action for collection of debt. It is
a personal action as well as an

CONFLICT OF LAWS
1 s t e x a m c a s e s | 26
action in personam,
not
an
action in
rem or quasi in rem. As a personal action, the
service of summons should be personal or
substituted, not extraterritorial, in order to
confer jurisdiction on the court.
Issues:
1. Whether the Singapore High
Court has acquired jurisdiction
over
the
person
of
the
respondent by the service of
summons upon its office in the
Philippines.
2. Whether the judgment by default
in Suit No. 2101 by the Singapore
High Court is enforceable in
the Philippines.
Ruling:
Generally, in the absence of a
special contract, no sovereign is bound to give
effect within its dominion to a judgment
rendered by a tribunal of another country;
however, under the rules of comity, utility and
convenience, nations have established a usage
among civilized states by which final
judgments of foreign courts of competent
jurisdiction are reciprocally respected and
rendered efficacious under certain conditions
that may vary in different countries. Certainly,
the Philippine legal system has long ago
accepted into its jurisprudence and procedural
rules the viability of an action for enforcement
of foreign judgment, as well as the requisites
for such valid enforcement, as derived from
internationally accepted doctrines. (General
Principle)
The conditions for the recognition and
enforcement of a foreign judgment in our legal
system are contained in Section 48, Rule 39 of
the 1997 Rules of Civil Procedure, as amended,
thus:
SEC. 48. Effect of foreign judgments. The
effect of a judgment or final order of a tribunal
of a foreign country, having jurisdiction to
render the judgment or final order is as
follows:
a) In case of a judgment or final order
upon a specific thing, the judgment or
final order is conclusive upon the title
to the thing; and
b) In case of a judgment or final order
against a person, the judgment or final
order is presumptive evidence of a
right as between the parties and their

successors in interest by a subsequent


title;
In either case, the judgment or final order may
be repelled by evidence of a want of
jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
Under the above Rule, a foreign judgment or
order against a person is merely presumptive
evidence of a right as between the parties. The
party attacking a foreign judgment has the
burden of overcoming the presumption of its
validity.
Generally, matters of remedy and procedure
such as those relating to the service of process
upon a defendant are governed by the lex fori
or the internal law of the forum, which in this
case is the law of Singapore.
In an Order dated December 24, 1997, the
Singapore High Court granted leave to serve a
copy of the Writ of Summons on the
Defendant by a method of service
authorized by the law of the Philippines
for service of any originating process
issued by the Philippines at ground floor,
APMC Building, 136 Amorsolo corner Gamboa
Street, 1229 Makati City, or elsewhere in
the Philippines.
This service of summons outside Singapore is
in accordance with Order 11, r. 4(2) of the
Rules of Court 1996 of Singapore, which
provides.
(2) Where in accordance with these Rules, an
originating process is to be served on a
defendant in any country with respect to which
there does not subsist a Civil Procedure
Convention providing for service in that
country of process of the High Court, the
originating process may be served
a) through the government of that
country, where that government is
willing to effect service;
b) through
a
Singapore
Consular
authority in that country, except
where service through such an
authority is contrary to the law of the
country; or
c) by
a
method
of
service
authorized by the law of that
country for service of any
originating process issued by
that country.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 27
In the Philippines, jurisdiction over a party is
acquired by service of summons by the
sheriff, his deputy or other proper court officer
either personally by handing a copy thereof to
the defendant or by substituted service.
In this case, the Writ of Summons issued by
the Singapore High Court was served upon
respondent
at
its
office
located
at Mercure Hotel (formerly Village Hotel),
MIA Road, Pasay City. The Sheriffs Return
shows that it was received on May 2, 1998 by
Joyce T. Austria, Secretary of the General
Manager
of
respondent
company. But
respondent completely ignored the summons,
hence, it was declared in default.
Considering that the Writ of Summons was
served upon respondent in accordance with
our Rules, jurisdiction was acquired by the
Singapore High Court over its person. The
judgment of default rendered by that court
against respondent is valid.
G.R. No. 172242
August 14, 2007
PERKIN ELMER SINGAPORE PTE
LTD., Petitioner, vs. DAKILA TRADING
CORPORATION, Respondent.
Facts: Perkin Elmer Singapore Pte. Ltd. is a
corporation duly organized and existing under
the laws of Singapore. It is not considered as a
foreign corporation "doing business" in the
Philippines. Herein respondent Dakila Trading
Corporation is a corporation organized and
existing under Philippine laws, and engaged in
the business of selling and leasing out
laboratory instrumentation and process
control instrumentation, and trading of
laboratory chemicals and supplies.
Respondent entered into a Distribution
Agreement on 1 June 1990 with PerkinElmer Instruments Asia Pte Ltd. (PEIA),
a corporation duly organized and existing
under the laws of Singapore and engaged in
the business of manufacturing, producing,
selling
or
distributing
various
laboratory/analytical instruments. By virtue of
the said agreement, PEIA appointed the
respondent as the sole distributor of its
products in the Philippines. The respondent
was likewise granted the right to purchase and
sell the products of PEIA subject to the terms
and conditions set forth in the Distribution
Agreement. PEIA, on the other hand, shall give
respondent a commission for the sale of its
products in the Philippines.

Under the same Distribution Agreement,


respondent shall order the products of PEIA,
which it shall sell in the Philippines, either
from PEIA itself or from Perkin-Elmer
Instruments (Philippines) Corporation
(PEIP), an affiliate of PEIA. PEIP is a
corporation duly organized and existing under
Philippine laws, and involved in the business
of wholesale trading of all kinds of scientific,
biotechnological, and analytical instruments
and appliances. PEIA allegedly owned 99% of
the shares of PEIP.
On 2 August 1997, however, PEIA unilaterally
terminated the Distribution Agreement,
prompting respondent to file before the RTC of
Mandaluyong
City,
Branch
212,
a
Complaint for Collection of Sum of Money and
Damages with Prayer for Issuance of a Writ of
Attachment against PEIA and PEIP, docketed
as Civil Case No. MC99-605.
Respondent then filed Ex-Parte Motions for
Issuance of Summons and for Leave of Court
to Deputize Respondents General Manager,
Richard A. Tee, to Serve Summons Outside of
the Philippines, which the RTC granted in its
Order, dated 27 April 2000. Thus, an Alias
Summons, dated 4 September 2000, was
issued by the RTC to PEIA. But the said Alias
Summons was served on 28 September 2000
and received by Perkinelmer Asia, a
Singaporean based sole proprietorship, owned
by the petitioner and, allegedly, a separate and
distinct entity from PEIA.
Accordingly, respondent filed an Ex-Parte
Motion to Admit Amended Complaint,
together with the Amended Complaint
claiming that PEIA had become a sole
proprietorship owned by the petitioner, and
subsequently changed its name to Perkinelmer
Asia. Being a sole proprietorship of the
petitioner, a change in PEIAs name and
juridical status did not detract from the fact
that all its due and outstanding obligations to
third parties were assumed by the petitioner.
Hence, in its Amended Complaint respondent
sought to change the name of PEIA to that of
the petitioner. In an Order, dated 24 July
2001, the RTC admitted the Amended
Complaint
filed
by
the
respondent.
Respondent then filed another Motion for the
Issuance of Summons and for Leave of Court
to Deputize Respondents General Manager,
Richard A. Tee, to Serve Summons Outside the
Philippines. In another Order, dated 4 March
2002, the RTC deputized respondents General
Manager to serve summons on petitioner in
Singapore. The RTC thus issued summons to

CONFLICT OF LAWS
1 s t e x a m c a s e s | 28
the petitioner. Acting on the said Order,
respondents General Manager went to
Singapore and served summons on the
petitioner.

Undoubtedly, extraterritorial service of


summons applies only where the action
is in rem or quasi in rem, but not if an
action is in personam.

Issue: Whether there is proper service of


summons and acquisition of jurisdiction by the
RTC over the person of the petitioner;

When the case instituted is an action in rem or


quasi in rem, Philippine courts already have
jurisdiction to hear and decide the case
because, in actions in rem and quasi in rem,
jurisdiction over the person of the defendant is
not a prerequisite to confer jurisdiction on the
court, provided that the court acquires
jurisdiction over the res. Thus, in such
instance, extraterritorial service of summons
can be made upon the defendant. The said
extraterritorial service of summons is not for
the purpose of vesting the court with
jurisdiction, but for complying with the
requirements of fair play or due process, so
that the defendant will be informed of the
pendency of the action against him and the
possibility that property in the Philippines
belonging to him or in which he has an interest
may be subjected to a judgment in favor of the
plaintiff, and he can thereby take steps to
protect his interest if he is so minded. On the
other hand, when the defendant or
respondent does not reside and is not
found in the Philippines, and the action
involved is in personam, Philippine
courts cannot try any case against him
because of the impossibility of acquiring
jurisdiction over his person unless he
voluntarily appears in court.

Ruling: NO, because the action is one in


personam.
One of the modes of acquiring jurisdiction over
the person of the defendant or respondent in a
civil case is through service of summons. It is
intended to give notice to the defendant or
respondent that a civil action has been
commenced against him. The defendant or
respondent is thus put on guard as to the
demands of the plaintiff or the petitioner.
The proper service of summons differs
depending on the nature of the civil case
instituted by the plaintiff or petitioner:
whether it is in personam, in rem, or quasi in
rem. Actions in personam, are those
actions brought against a person on the basis
of his personal liability; actions in rem are
actions against the thing itself instead of
against the person; and actions are quasi in
rem, where an individual is named as
defendant and the purpose of the proceeding is
to subject his or her interest in a property to
the obligation or loan burdening the property.
Under Section 15, Rule 14 of the 1997 Revised
Rules of Civil Procedure, there are only
four instances wherein a defendant who
is a non-resident and is not found in the
country may be served with summons
by extraterritorial service, to wit: (1) when
the action affects the personal status of the
plaintiff; (2) when the action relates to, or the
subject of which is property, within the
Philippines, in which the defendant claims a
lien or an interest, actual or contingent; (3)
when the relief demanded in such action
consists, wholly or in part, in excluding the
defendant from any interest in property
located in the Philippines; and (4) when the
defendant non-residents property has been
attached within the Philippines. In these
instances, service of summons may be effected
by (a) personal service out of the country, with
leave of court; (b) publication, also with leave
of court; or (c) any other manner the court
may deem sufficient.

In the case at bar, this Court sustains


the contention of the petitioner that
there
can
never
be
a
valid
extraterritorial service of summons
upon it, because the case before the
court a quo involving collection of a sum
of money and damages is, indeed, an
action in personam, as it deals with the
personal liability of the petitioner to the
respondent by reason of the alleged
unilateral termination by the former of
the Distribution Agreement. Even the
Court of Appeals, in its Decision dated 4 April
2004, upheld the nature of the instant case as
an action in personam.
Thus, being an action in personam, personal
service of summons within the Philippines is
necessary in order for the RTC to validly
acquire jurisdiction over the person of the
petitioner, and this is not possible in the
present case because the petitioner is a nonresident and is not found within the
Philippines.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 29
G.R. No. 156848 October 11, 2007
PIONEER INTERNATIONAL,
LTD., petitioner, vs. HON. TEOFILO
GUADIZ, JR., in his capacity as
Presiding Judge of Regional Trial Court,
Branch 147, Makati City, and ANTONIO
D. TODARO, respondents.
Facts:
Antonio D. Todaro was the managing
director of Betonval Readyconcrete, Inc.
(Betonval) from June 1975 up to his
resignation in February 1996.
According to Todaro, PIL contacted him in
May 1996 and asked if he could join it in
establishing a pre-mixed concrete plant and
in overseeing its operations in the
Philippines.
Todaro
confirmed
his
availability and expressed interest in joining
PIL. Todaro met with several of PILs
representatives and even gave PIL the names
of three of his subordinates in Betonval
whom he would like to join him in PIL.
Several letters were exchanged between
Todaro and PIL on the formers willingness
to serve as consultant of PIL on a permanent
basis should the company establish itself on
a permanent basis in the Philippines.
Todaros request for permanent employment
with PPHI, however, was unsuccessful.
PILs Executive General Manager (Folwell)
authorized Klepzig (President and Managing
Director of PPHI and PCPI) to terminate the
association of PIL and Todaro.
Todaro then filed a complaint for sum of
money and damages with preliminary
attachment against Pioneer Intl, LTD (PIL),
Pioneer Concrete Philippines, Inc. (PCPI),
Pioneer Philippines Holdings, Inc. (PPHI),
John G. McDonald (McDonald), and Philip
J. Klepzig (Klepzig).
Copies of the summons and of the complaint
were served to PIL and its co-defendants at
PPHI and PCPIs office in Alabang,
Muntinlupa, through Cecille L. De Leon (De
Leon), who was Klepzigs Executive
Assistant.
Todaro alleged that PIL is a corporation duly
organized under Australian laws, while PCPI
and PPHI are corporations duly organized
under Philippine laws. PIL is engaged in the
ready-mix and concrete aggregates business.

PIL established PPHI as the holding


company of the stocks of its operating
company in the Philippines, PCPI.
PIL filed, by special appearance, a motion to
dismiss Todaros complaint. PILs codefendants, PCPI, PPHI, and Klepzig, filed a
separate motion to dismiss.
PILs contention:
o The trial court has no jurisdiction over
PIL because PIL is a foreign corporation
not doing business in the Philippines;
and
o It questioned the service of summons on
it. Assuming arguendo that Klepzig is
PILs agent in the Philippines, it was not
Klepzig but De Leon who received the
summons for PIL;
Lower court ruled in favor of Todaro and
asserted that it had jurisdiction over PIL.
Issue: W/N the trial court has jurisdiction
over the person of PIL. NO due to improper
service of summons
Ruling:
Jurisdiction over PIL
PIL questions the trial courts exercise of
jurisdiction over it on two levels.
1) That PIL is a foreign corporation not doing
business in the Philippines and because of this,
the service of summons on PIL did not follow
the mandated procedure; and
2) That Todaros claims are based on an
alleged breach of an employment contract so
Todaro should have filed his complaint before
the NLRC and not before the trial court.
Transacting Business in the Philippine
Section 12, Rule 14 of the 1997 Rules of
Civil Procedure
Service upon foreign private juridical
entity. When the defendant is a foreign
juridical entity which has transacted
business in the Philippines, service may be
made on its resident agent designated in
accordance with law for that purpose, or, if
there be no such agent, on the government
official designated by law to that effect, or
any of its officers or agents within the
Philippines.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 30
PIL insists that its sole act of "transacting" or
"doing business" in the Philippines consisted
of its investment in PPHI. Under Philippine
law, PILs mere investment in PPHI does not
constitute "doing business."
However, we affirm the lower courts ruling
and declare that, based on the allegations in
Todaros complaint, PIL was doing business in
the Philippines when it negotiated Todaros
employment with PPHI.
Section 3(d) of Republic Act No. 7042, Foreign
Investments Act of 1991, states:
The phrase "doing business" shall
include
soliciting orders, service
contracts, opening offices, xxx ; and any
other act or acts that imply a
continuity of commercial dealings or
arrangements and contemplate to that
extent the performance of acts or
works, or the exercise of some of the
functions normally incident to, and in
progressive
prosecution
of
commercial gain or of the purpose
and
object
of
the
business
organization: Provided, however, That the
phrase "doing business" shall not be deemed
to include mere investment as a shareholder
by a foreign entity in domestic corporations
duly registered to do business, and/or the
exercise of rights as such investor; xxx
PILs alleged acts in actively negotiating
to employ Todaro to run its pre-mixed
concrete operations in the Philippines, which
acts are hypothetically admitted in PILs
motion to dismiss, are not mere acts of a
passive
investor
in
a
domestic
corporation. Such are managerial and
operational acts in directing and establishing
commercial operations in the Philippines. The
annexes (referring to the letters exchanged
between the parties) that Todaro attached to
his complaint give us an idea on the extent of
PILs involvement in the negotiations
regarding Todaros employment.
In Annex "E," McDonald of Pioneer Concrete
Group HK confirmed his offer to engage
Todaro as a consultant of PIL. In Annex "F,"
Todaro accepted the consultancy. In Annex
"H," Klepzig of PPHI stated that PIL
authorized him to tell Todaro about the

cessation of his consultancy. Finally, in


Annex "I," Folwell of PIL wrote to Todaro to
confirm that "Pioneer" no longer wishes to
be associated with Todaro and that Klepzig
is authorized to terminate this association.
In fact, in the letters to Todaro, the word
"Pioneer" was used to refer not just to PIL
alone but also to all corporations negotiating
with Todaro under the Pioneer name.
In this sense, the various Pioneer corporations
were not acting as separate corporations. The
various Pioneer corporations were all working
in concert to negotiate an employment
contract between Todaro and PPHI, a
domestic corporation.
Finally, the phrase "doing business in the
Philippines" in the former version of Section
12, Rule 14 now reads "has transacted business
in the Philippines." The scope is thus broader
in that it is enough for the application of the
Rule that the foreign private juridical entity
"has transacted business in the Philippines."
Purpose of the summons
The purpose of summons is not only to acquire
jurisdiction over the person of the defendant,
but also to give notice to the defendant that an
action has been commenced against it and to
afford it an opportunity to be heard on the
claim made against it. The requirements of the
rule on summons must be strictly followed;
otherwise, the trial court will not acquire
jurisdiction over the defendant.
When summons is served on a foreign juridical
entity, there are three prescribed ways:
(1) Service on its resident agent designated in
accordance with law for that purpose,
(2) Service on the government official
designated by law to receive summons if the
corporation does not have a resident agent,
and
(3) Service on any of the corporations officers
or agents within the Philippines.
In the present case, service of summons on
PIL failed to follow any of the
prescribed processes. PIL had no resident
agent in the Philippines. Summons was not
served on the Securities and Exchange
Commission
(SEC),
the
designated

CONFLICT OF LAWS
1 s t e x a m c a s e s | 31
government agency, since PIL is not registered
with the SEC.
Summons for PIL was served on De
Leon, Klepzigs Executive Assistant.
Klepzig is PILs "agent within the
Philippines" because PIL authorized
Klepzig to notify Todaro of the cessation
of his consultancy. The authority given by
PIL to Klepzig to notify Todaro implies that
Klepzig was likewise authorized to receive
Todaros response to PILs notice. Todaro
responded to PILs notice by filing a complaint
before the trial court.
However, summons was not served
personally on Klepzig as agent of PIL.
Instead, summons was served on De Leon,
Klepzigs Executive Assistant. In this instance,
De Leon was not PILs agent but a mere
employee of Klepzig. In effect, the sheriff
resorted to substituted service. For symmetry,
we apply the rule on substituted service of
summons on a natural person and we find that
no reason was given to justify the service of
PILs summons on De Leon.
Thus, we rule that PIL transacted business in
the Philippines and Klepzig was its agent
within the Philippines. However, there was
improper service of summons on PIL since
summons was not served personally on
Klepzig.

void because Luis thumbmark was placed


without the his free will and voluntariness
considering his physical state; that it was done
without Luiss lawyer; that the ratification
made before he died is likewise void because of
similar circumstances.
In the same year, Victoria filed a complaint to
annul said deed.
The sheriff could not deliver the summons
against
Cynthia
and
Teresa
because
apparently, although they are Filipinos, they
are in California and not in the PH.
It was only in the year 2000 that one of the
summons was served to one of the sisters,
Teresa, when she came back to the Philippines.
Teresa immediately filed a motion to dismiss
on the ground of
-

Failure to prosecute her case for an


unreasonable length of time.

Alleged that the case should be


dismissed because Cynthia, who is an
indispensable party, was not issued
any summons, hence, since an
indispensable party is not served with
summons, without her who has such
an interest in the controversy or
subject matter there can be no proper
determination of the case.

The trial court ruled in favour of Teresa; this


was affirmed by the Court of Appeals.
ISSUE: WON the court acquired jurisdiction.
HELD: NO. Dismissal of Victorias complaint
is correct.
Cynthia is an indispensable party

Case was remanded to the lower court for


proper service of summons and trial.
G.R. No. 168747 October 19, 2007
VICTORIA REGNER, Petitioner,
vs.
CYNTHIA R. LOGARTA, TERESA R.
TORMIS and CEBU COUNTRY CLUB,
Inc., Respondents
Luis Regner had 3 daughters with 1st wife:
Cynthia Logarta, Teresa Tormis (and Melinda
Borja). Victoria Regner is the second wife of
Luis.
After Luis died, Victoria alleged that Cynthia
and Teresa defrauded Luis (who was then very
ill and was unable to write) into placing his
thumbmark into a Deed of Donation. In said
Deed, Luis purportedly donated a Proprietary
Ownership Certificate for Cebu Country Club
membership shares. Victoria alleged that it is

Rule 3, Section 7 of the Rules of Court, defines


indispensable parties as parties-in-interest
without whom there can be no final
determination of an action. As such, they must
be joined either as plaintiffs or as defendants.
Cynthia and Teresa are indispensable parties.
They allegedly derived their rights to the
subject property by way of donation from their
father Luis. The country club membership
certificate is undivided and it is impossible to
pinpoint which specific portion of the property
belongs to either Teresa or Cynthia, thus,
making them indispensable parties.
Action filed was a personal action
There are generally two types of actions:
actions in rem and actions in personam. An
action in personam is an action against a
person on the basis of his personal liability,

CONFLICT OF LAWS
1 s t e x a m c a s e s | 32
while an action in rem is an action against the
thing itself, instead of against the person.

July 28, 2003 - petitioner Leah Palma


filed with the RTC an action for damages
against the Philippine Heart Center
(PHC), Drs. Giron and Cruz, alleging that
the defendants committed professional
fault, negligence and omission for having
removed her right ovary against her will.
Defendants filed their respective Answers.
Petitioner subsequently filed a Motion for
Leave to Admit Amended Complaint,
praying for the inclusion of additional
defendants who were all nurses at the
PHC, namely, Karla Reyes, Myra
Mangaser and herein private respondent
Agudo. Thus, summons were subsequently
issued to them.

February 17, 2004 - RTC's process server


submitted his return of summons stating
that the alias summons, together with a
copy of the amended complaint and its
annexes, were served upon private
respondent thru her husband Alfredo
Agudo, who received and signed the same
as private respondent was out of the
country.

March 1, 2004 - counsel of private


respondent filed a Notice of Appearance
and a Motion for Extension of Time to File
Answer stating that he was just engaged by
private respondent's husband as she was
out of the country and the Answer was
already due.

March 15, 2004 - private respondent's


counsel filed a Motion for Another
Extension of Time to File Answer,[5] and
stating that while the draft answer was
already finished, the same would be sent
to
private
respondent
for
her
clarification/verification
before
the
Philippine Consulate in Ireland; thus, the
counsel prayed for another 20 days to file
the Answer.

March 30, 2004, private respondent filed


a Motion to Dismiss on the ground that
the RTC had not acquired jurisdiction over
her as she was not properly served with
summons, since she was temporarily out
of the country; that service of summons on
her should conform to Section 16, Rule 14
of the Rules of Court.

The certificate, subject of the donation, is a


personal property. The action filed by Victoria
is therefore a personal action. So in order for
the court to acquire jurisdiction over the
respondents, summons must be served upon
them.
Proper service of summons
In personal actions, if the respondents are
residents of the Philippines, they may be
served summons in the following order:
1.

Personal Service;

2. If not possible, Substituted Service;


3. If respondent cant be found because
he is abroad but still a resident of the
Philippines, by publication with leave
of court.
In personal actions still, if the respondents
are non-residents, they may be served
summons in the following manner:
1.

Personal service
Philippine embassy;

through

the

2. By publication in a newspaper of
general circulation in such places
and for such time as the court may
order, in which case a copy of the
summons and order of the court
should be sent by registered mail to
the last known address of the
defendant; or
3. In any other manner which the
court may deem sufficient.
Conclusion
Cynthia was never served any summons in any
of the manners authorized by the Rules of
Court. The summons served to Teresa cannot
bind Cynthia. It is incumbent upon Victoria to
compel the court to authorize the
extraterritorial service of summons against
Cynthia. Her failure to do so for a long period
of time constitutes a failure to prosecute on
her part.
G.R. No. 165273, March 10, 2010
LEAH PALMA vs. HON. DANILO P.
GALVEZ, in his capacity as PRESIDING
JUDGE of the REGIONAL TRIAL COURT OF
ILOILO CITY, BRANCH 24; and PSYCHE
ELENA AGUDO,
FACTS:

CONFLICT OF LAWS
1 s t e x a m c a s e s | 33
Petitioner filed her Opposition ] to the
motion to dismiss, arguing that a
substituted service of summons on private
respondent's husband was valid and
binding on her; that service of summons
under Section 16, Rule 14 was not
exclusive and may be effected by other
modes of service, i.e., by personal or
substituted service.

RTC Ruling: RTC granted private


respondent's motion to dismiss. It found
that while the summons was served at
private respondent's house and received
by respondent's husband, such service did
not qualify as a valid service of summons
on her as she was out of the country at the
time the summons was served, thus, she
was not personally served a summons; and
even granting that she knew that a
complaint was filed
against her,
nevertheless, the court did not acquire
jurisdiction over her person as she was not
validly served with summons; that
substituted service could not be resorted
to since it was established that private
respondent was out of the country, thus,
Section 16, Rule 14 provides for the service
of summons on her by publication.

Petitioners MR was denied. Petitioner is


now before us alleging that the public
respondent committed a grave abuse of
discretion amounting to lack or excess of
jurisdiction when he ruled that:
I.

II.

III.

Substituted service of
summons upon private
respondent, a defendant
residing
in
the Philippines but
temporarily outside the
country is invalid;
Section 16, Rule 14, of the
1997 Rules of Civil
Procedure limits the mode
of service of summons
upon a defendant residing
in the Philippines, but
temporarily
outside the
country, exclusively to
extraterritorial service of
summons under section
15 of the same rule;
In not ruling that by filing
two (2) motions for
extension of time to file

Answer,
private
respondent
had
voluntarily
submitted
herself to the jurisdiction
of
respondent
court,
pursuant to Section 20,
Rule 14 of the 1997 Rules
of Civil Procedure, hence,
equivalent to having been
served with summons;
xxx

Petitioners claims: RTC committed a


grave abuse of discretion in ruling that
Section 16, Rule 14, limits the service of
summons upon the defendant-resident
who is temporarily out of the country
exclusively by means of extraterritorial
service, i.e., by personal service or by
publication, pursuant to Section 15 of the
same Rule. Petitioner further argues that
in filing two motions for extension of time
to file answer, private respondent
voluntarily submitted to the jurisdiction of
the court.

private respondents claims: She insists


that since she was out of the country at the
time the service of summons was made,
such service should be governed by
Section 16, in relation to Section 15, Rule
14 of the Rules of Court; that there was no
voluntary appearance on her part when
her counsel filed two motions for
extension of time to file answer, since she
filed her motion to dismiss on the ground
of lack of jurisdiction within the period
provided under Section 1, Rule 16 of the
Rules of Court.

ISSUE: WON there was a valid service of


summons on private respondent. YES

HELD:
In civil cases, the trial court
acquires jurisdiction over the person of the
defendant either by the service of summons or
by the latters voluntary appearance and
submission to the authority of the
former.[16] Private respondent was a Filipino
resident who was temporarily out of
the Philippines at the time of the service of
summons; thus, service of summons on her is

CONFLICT OF LAWS
1 s t e x a m c a s e s | 34
governed by Section 16, Rule 14 of the Rules of
Court, which provides:

Sec. 16. Residents temporarily


out of the Philippines. When an
action is commenced against a
defendant who ordinarily resides
within the Philippines, but who is
temporarily out of it, servicemay, by
leave of court, be also effected out of
the Philippines,
as
under
the
preceding
section.
(Emphasis
supplied)

The preceding section referred to in


the above provision is Section 15, which
speaks of extraterritorial service, thus:
SEC. 15. Extraterritorial service. When
the defendant does not reside and is not found
in the Philippines, and the action affects the
personal status of the plaintiff or relates to, or
the subject of which is, property within the
Philippines, in which the defendant has or
claims a lien or interest, actual or contingent,
or in which the relief demanded consists,
wholly or in part, in excluding the defendant
from any interest therein, or the property of
the defendant has been attached within the
Philippines, service may, by leave of court, be
effected out of the Philippines by personal
service as under section 6; or by publication in
a newspaper of general circulation in such
places and for such time as the court may
order, in which case a copy of the summons
and order of the court shall be sent by
registered mail to the last known address of
the defendant, or in any other manner the
court may deem sufficient. Any order granting
such leave shall specify a reasonable time,
which shall not be less than sixty (60) days
after notice, within which the defendant must
answer.
The RTC found that since private
respondent was abroad at the time of the
service of summons, she was a resident who
was temporarily out of the country; thus,
service of summons may be made only by
publication.

We do not agree.
In Montefalcon v. Vasquez,[17] we said
that because Section 16 of Rule 14 uses the
words may and also, it is not mandatory. Other
methods of service of summons allowed under
the Rules may also be availed of by the serving
officer on a defendant-resident who is
temporarily out of the Philippines. Thus, if a
resident defendant is temporarily out of the
country, any of the following modes of service
may be resorted to: (1) substituted service set
forth in section 7 ( formerly Section 8), Rule
14; (2) personal service outside the country,
with leave of court; (3) service by publication,
also with leave of court; or (4) in any other
manner the court may deem sufficient.[18]
In Montalban v. Maximo,[19] we held
that substituted service of summons under the
present Section 7, Rule 14 of the Rules of Court
in a suit in personam against residents of
the Philippines temporarily absent therefrom
is the normal method of service of summons
that will confer jurisdiction on the court over
such defendant. In the same case, we
expounded on the rationale in providing for
substituted service as the normal mode of
service for residents temporarily out of
the Philippines.
x x x A man temporarily absent from
this country leaves a definite place of
residence, a dwelling where he lives, a local
base, so to speak, to which any inquiry about
him may be directed and where he is bound to
return. Where one temporarily absents
himself, he leaves his affairs in the hands of
one who may be reasonably expected to act in
his place and stead; to do all that is necessary
to protect his interests; and to communicate
with him from time to time any incident of
importance that may affect him or his business
or his affairs. It is usual for such a man to leave
at his home or with his business associates
information as to where he may be contacted
in the event a question that affects him crops
up. If he does not do what is expected of him,
and a case comes up in court against him, he
cannot just raise his voice and say that he is
not subject to the processes of our courts. He
cannot stop a suit from being filed against him
upon a claim that he cannot be summoned at

CONFLICT OF LAWS
1 s t e x a m c a s e s | 35
his dwelling house or residence or his office or
regular place of business.
Not that he cannot be reached within a
reasonable time to enable him to contest a suit
against him. There are now advanced facilities
of communication. Long distance telephone
calls and cablegrams make it easy for one he
left behind to communicate with him.[20]
Considering
that
private
respondent was temporarily out of the
country, the summons and complaint
may be validly served on her through
substituted service under Section 7,
Rule 14 of the Rules of Court which reads:

SEC.
7. Substituted
service. If, for justifiable causes, the
defendant cannot be served within a
reasonable time as provided in the
preceding section, service may be
effected (a) by leaving copies of the
summons at the defendants residence
with some person of suitable age and
discretion then residing therein, or (b)
by leaving the copies at defendants
office or regular place of business with
some competent person in charge
thereof.
We have held that a dwelling, house or
residence refers to the place where the person
named in the summons is living at the time
when the service is made, even though he may
be temporarily out of the country at the
time.[21] It is, thus, the service of the summons
intended for the defendant that must be left
with the person of suitable age and discretion
residing
in
the
house
of
the
defendant. Compliance
with
the
rules
regarding the service of summons is as
important as the issue of due process as that of
jurisdiction.[22]
Section 7 also designates the persons with
whom copies of the process may be left. The
rule presupposes that such a relation of
confidence exists between the person with
whom the copy is left and the defendant and,
therefore, assumes that such person will
deliver the process to defendant or in some
way give him notice thereof.[23]

In this case, the Sheriff's Return stated that


private respondent was out of the country;
thus, the service of summons was made at her
residence with her husband, Alfredo P. Agudo,
acknowledging receipt thereof. Alfredo was
presumably of suitable age and discretion, who
was residing in that place and, therefore, was
competent to receive the summons on private
respondent's behalf.
Notably, private respondent makes no issue as
to the fact that the place where the summons
was served was her residence, though she was
temporarily out of the country at that time,
and that Alfredo is her husband. In fact, in the
notice of appearance and motion for extension
of time to file answer submitted by private
respondent's counsel, he confirmed the
Sheriff's Return by stating that private
respondent was out of the country and that his
service was engaged by respondent's
husband. In his motion for another extension
of time to file answer, private respondent's
counsel stated that a draft of the answer had
already been prepared, which would be
submitted to private respondent, who was in
Ireland for her clarification and/or verification
before the Philippine Consulate there. These
statements establish the fact that private
respondent had knowledge of the case filed
against her, and that her husband had told her
about the case as Alfredo even engaged the
services of her counsel.
In addition, we agree with petitioner that the
RTC had indeed acquired jurisdiction over the
person of private respondent when the latter's
counsel entered his appearance on private
respondent's behalf, without qualification and
without questioning the propriety of the
service of summons, and even filed two
Motions for Extension of Time to File Answer.
In effect, private respondent, through counsel,
had already invoked the RTCs jurisdiction over
her person by praying that the motions for
extension of time to file answer be granted. We
have held that the filing of motions seeking
affirmative relief, such as, to admit answer, for
additional time to file answer, for
reconsideration of a default judgment, and to
lift order of default with motion for
reconsideration, are considered voluntary
submission to the jurisdiction of the

CONFLICT OF LAWS
1 s t e x a m c a s e s | 36
court.[24] When private respondent earlier
invoked the jurisdiction of the RTC to secure
affirmative relief in her motions for additional
time to file answer, she voluntarily submitted
to the jurisdiction of the RTC and is thereby
estopped from asserting otherwise.[25]
Considering the foregoing, we find that the
RTC committed a grave abuse of discretion
amounting to excess of jurisdiction in issuing
its assailed Orders.

Topic: Forum Non-Conveniens


COMMUNICATION MATERIALS AND
DESIGN, INC., ASPAC MULTI-TRADE,
INC.,
(formerly
ASPAC-ITEC
PHILIPPINES, INC.) and FRANCISCO S.
AGUIRRE, petitioners,
vs.
THE COURT OF APPEALS, ITEC
INTERNATIONAL, INC., and ITEC,
INC., respondents.
G.R. No. 102223 August 22, 1996
Facts: COMMUNICATION
MATERIALS
AND DESIGN, INC., (CMDI, for brevity) and
ASPAC MULTI-TRADE INC., (ASPAC, for
brevity) are both domestic corporations. ITEC,
INC. and/or ITEC, INTERNATIONAL, INC.
(ITEC, for brevity) are corporations duly
organized and existing under the laws of the
State of Alabama, United States of America.
ITEC is a foreign corporation not licensed to
do business in the Philippines.
ITEC entered into a contract with ASPAC
referred
to
as
"Representative
Agreement". Pursuant to the contract, ITEC
engaged
ASPAC
as
its
"exclusive
representative" in the Philippines for the sale
of ITEC's products, in consideration of which,
ASPAC was paid a stipulated commission. The
said agreement was initially for a term of
twenty-four months. After the lapse of the
agreed period, the agreement was renewed for
another twenty-four months.
One year into the second term of the parties'
Representative Agreement, ITEC decided to
terminate the same, because ASPAC allegedly
violated its contractual commitment as
stipulated in their agreements.ITEC charges
the
ASPAC
and
another
Philippine
Corporation,
DIGITAL
BASE
COMMUNICATIONS, INC. (DIGITAL, for
brevity) of using knowledge and information of

ITEC's products specifications to develop their


own line of equipment and product support,
which are similar, if not identical to ITEC's
own, and offering them to ITEC's former
customer.
A complaint was filed with the RTC of Makati
by ITEC, INC. ITEC sought to enjoin (1) to
cease and desist from selling or attempting to
sell to PLDT and to any other party, products
which have been copied or manufactured "in
like manner, similar or identical to the
products, wares and equipment of plaintiff,"
and (2) ASPAC, to cease and desist from using
in its corporate name, letter heads, envelopes,
sign boards and business dealings, plaintiff's
trademark, internationally known as ITEC;
and the recovery from defendants in solidum,
damages of at least P500,000.00, attorney's
fees and litigation expenses.
Defendants filed a motion to dismiss the
complaint on the ground that (1) That plaintiff
has no legal capacity to sue as it is a foreign
corporation doing business in the Philippines
without the required BOI authority and SEC
license, and (2) that plaintiff is simply engaged
in forum shopping which justifies the
application against it of the principle of
"forum non conveniens".
After conducting hearings on the prayer for
preliminary injunction, the court issued its
Order: (1) denying the motion to dismiss for
being devoid of legal merit with a rejection of
both grounds relied upon by the defendants in
their motion to dismiss, and (2) directing the
issuance of a writ of preliminary injunction on
the same day.The respondent appellate court
affirmed the trial courts order.
It is the ASPAC's submission that ITECs are
foreign corporations actually doing business in
the Philippines without the requisite authority
and license from the Board of Investments and
the Securities and Exchange Commission, and
thus, disqualified from instituting the present
action in our courts. It is their contention that
the provisions of the Representative
Agreement, ASPAC executed with ITEC, are
similarly "highly restrictive" in nature as those
found in the agreements which confronted the
Court
in
the
case
of Top-Weld
Manufacturing, Inc. vs. ECED S.A. et al., as to
reduce petitioner ASPAC to a mere conduit or
extension of private respondents in the
Philippines.
ASPAC likewise argues that since ITEC has no
capacity to bring suit here, the Philippines is
not the "most convenient forum" because the

CONFLICT OF LAWS
1 s t e x a m c a s e s | 37
trial court is devoid of any power to enforce its
orders issued or decisions rendered in a case
that could not have been commenced to begin
with, such that in insisting to assume and
exercise jurisdiction over the case below, the
trial court had gravely abused its discretion
and even actually exceeded its jurisdiction.
As against petitioner's insistence that private
respondent is "doing business" in the
Philippines, the latter maintains that it is not.
Private respondent argues that a scrutiny of its
Representative Agreement with the Petitioners
will show that although ASPAC was named as
representative of ITEC., ASPAC actually acted
in its own name and for its own account.
Issues:
1) Whether ITEC is an unlicensed corporation
doing business in the Philippines; YES
2) Whether or not this fact bars it from
invoking the injunctive authority of our courts.
NO
Held:
Section 133 of the Corporation
Code, provides that "No foreign corporation,
transacting business in the Philippines without
a license, or its successors or assigns, shall be
permitted to maintain or intervene in any
action, suit or proceeding in any court or
administrative agency of the Philippines; but
such corporation may be sued or proceeded
against
before
Philippine
Courts
or
administrative tribunals on any valid cause of
action recognized under Philippine laws."
Generally, a "foreign corporation" has no legal
existence within the state in which it is foreign.
This proceeds from the principle that juridical
existence of a corporation is confined within
the territory of the state under whose laws it
was incorporated and organized, and it has no
legal status beyond such territory. Such foreign
corporation may be excluded by any other
state from doing business within its limits, or
conditions may be imposed on the exercise of
such privileges. Before a foreign corporation
can transact business in this country, it must
first obtain a license to transact business in the
Philippines, and a certificate from the
appropriate government agency. If it transacts
business in the Philippines without such a
license, it shall not be permitted to maintain or
intervene in any action, suit, or proceeding in
any court or administrative agency of the
Philippines, but it may be sued on any valid
cause of action recognized under Philippine
laws.

The purpose of the law in requiring that


foreign corporations doing business in the
Philippines be licensed to do so and that they
appoint an agent for service of process is to
subject the foreign corporation doing business
in the Philippines to the jurisdiction of its
courts. The object is not to prevent the foreign
corporation from performing single acts, but
to prevent it from acquiring a domicile for the
purpose of business without taking steps
necessary to render it amenable to suit in the
local courts. The implication of the law is that
it was never the purpose of the legislature to
exclude a foreign corporation which happens
to obtain an isolated order for business from
the Philippines, and thus, in effect, to permit
persons to avoid their contracts made with
such foreign corporations.
The true test as to what constitutes "doing" or
"engaging" or "transacting" business, however,
seems to be whether the foreign corporation is
continuing the body or substance of the
business or enterprise for which it was
organized.
These foregoing instances should be
distinguished from a single or isolated
transaction or occasional, incidental, or casual
transactions, which do not come within the
meaning of the law, for in such case, the
foreign corporation is deemed not engaged in
business in the Philippines.
Where a single act or transaction, however, is
not merely incidental or casual but indicates
the foreign corporation's intention to do other
business in the Philippines, said single act or
transaction constitutes "doing" or "engaging
in" or "transacting" business in the
Philippines.
We are persuaded to conclude that ITEC had
been "engaged in" or "doing business" in the
Philippines for some time now. This is the
inevitable result after a scrutiny of the
different contracts and agreements entered
into by ITEC with its various business contacts
in the country, particularly ASPAC and
Telephone Equipment Sales and Services, Inc.
(TESSI, for brevity). The latter is a local
electronics firm engaged by ITEC to be its local
technical representative, and to create a
service center for ITEC products sold locally.
Its arrangements, with these entities indicate
convincingly ITEC's purpose to bring about the
situation among its customers and the general
public that they are dealing directly with ITEC,
and that ITEC is actively engaging in business
in the country.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 38
[Note: Forum non-conveniens issue but
read above ruling to understand]

ignore or even presumptively take advantage


of the same.

Notwithstanding such finding that ITEC


is doing business in the country, ASPAC
is nonetheless estopped from raising
this fact to bar ITEC from instituting
this injunction case against it.

Petitioner's insistence on the dismissal of this


action due to the application, or non
application, of the private international law
rule of forum non conveniens defies wellsettled rules of fair play. According to
petitioner, the Philippine Court has no venue
to apply its discretion whether to give
cognizance or not to the present action,
because it has not acquired jurisdiction over
the person of the plaintiff in the case, the latter
allegedly having no personality to sue before
Philippine Courts. This argument is misplaced
because the court has already acquired
jurisdiction over the plaintiff in the suit,
by virtue of his filing the original
complaint. And as we have already observed,
petitioner is not at liberty to question
plaintiff's standing to sue, having already
acceded to the same by virtue of its entry into
the Representative Agreement referred to
earlier.

A foreign corporation doing business in the


Philippines may sue in Philippine Courts
although not authorized to do business here
against a Philippine citizen or entity who had
contracted with and benefited by said
corporation. To put it in another way, a party
is estopped to challenge the personality of a
corporation after having acknowledged the
same by entering into a contract with it. And
the doctrine of estoppel to deny corporate
existence applies to a 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 corporation from
later taking advantage of its noncompliance
with the statutes chiefly in cases where such
person has received the benefits of the
contract.
The rule is deeply rooted in the time-honored
axiom of Commodum ex injuria sua non
haberedebet no person ought to derive any
advantage of his own wrong. This is as it
should be for as mandated by law, "every
person must in the exercise of his rights and in
the performance of his duties, act with justice,
give everyone his due, and observe honesty
and good faith."
The doctrine of lack of capacity to sue based on
the failure to acquire a local license is based on
considerations of sound public policy. The
license requirement was imposed to subject
the foreign corporation doing business in the
Philippines to the jurisdiction of its courts. It
was never intended to favor domestic
corporations who enter into solitary
transactions with unwary foreign firms and
then repudiate their obligations simply
because the latter are not licensed to do
business in this country.
By entering into the "Representative
Agreement" with ITEC, ASPAC is charged with
knowledge that ITEC was not licensed to
engage in business activities in the country,
and is thus estopped from raising in defense
such incapacity of ITEC, having chosen to

Thus, having acquired jurisdiction, it is now


for the Philippine Court, based on the facts of
the case, whether to give due course to the suit
or dismiss it, on the principle of forum non
convenience. Hence, the Philippine Court may
refuse to assume jurisdiction in spite of its
having acquired jurisdiction. Conversely, the
court may assume jurisdiction over the case if
it chooses to do so; provided, that the
following requisites are met: 1) That the
Philippine Court is one to which the parties
may conveniently resort to; 2) That the
Philippine Court is in a position to make an
intelligent decision as to the law and the facts;
and, 3) That the Philippine Court has or is
likely to have power to enforce its decision.
Dismissed, Denial of MTD is affirmed.
PHILSEC INVESTMENT
CORPORATION, BPI-INTERNATIONAL
FINANCE LIMITED, and ATHONA
HOLDINGS, N.V., petitioners, vs. THE
HONORABLE COURT OF APPEALS,
1488, INC., DRAGO DAIC, VENTURA O.
DUCAT, PRECIOSO R. PERLAS, and
WILLIAM H. CRAIG, respondents.[G.R.
No. 103493. June 19, 1997]
FACTS: On January 15, 1983, private
respondent Ventura O. Ducat obtained
separate loans from petitioners Ayala
International Finance Limited (hereafter

CONFLICT OF LAWS
1 s t e x a m c a s e s | 39
called AYALA)[1] and Philsec Investment
Corporation (hereafter called PHILSEC) in the
sum of US$2,500,000.00, secured by shares of
stock owned by Ducat. In order to facilitate the
payment of the loans, private respondent
1488, Inc., through its president, private
respondent DragoDaic, assumed Ducats
obligation under an Agreementwhereby 1488,
Inc. executed a Warranty Deed with Vendors
Lien by which it sold to petitioner Athona
Holdings, N.V. (hereafter called ATHONA) a
parcel of land in Harris County, Texas, U.S.A.,
for US$2,807,209.02, while PHILSEC and
AYALA extended a loan to ATHONA in the
amount of US$2,500,000.00 as initial
payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of
a promissory note executed by ATHONA in
favor of 1488, Inc. Subsequently, upon their
receipt of the US$2,500,000.00 from 1488,
Inc., PHILSEC and AYALA released Ducat
from his indebtedness and delivered to 1488,
Inc. all the shares of stock in their possession
belonging to Ducat.

on PHILSEC and AYALA and ordered them to


pay damages to Guevarra.

As ATHONA failed to pay the interest on


the balance of US$307,209.02, the entire
amount covered by the note became due and
demandable. Accordingly, on October 17, 1985,
private respondent 1488, Inc. sued petitioners
PHILSEC, AYALA, and ATHONA in the
United States for payment of the balance of
US$307,209.02 and for damages for breach of
contract and for fraud allegedly perpetrated by
petitioners
in
misrepresenting
the
marketability of the shares of stock delivered
to 1488, Inc. under the Agreement. Originally
instituted in the United States District Court of
Texas, 165th Judicial District (Case No. 8557746), the venue of the action was later
transferred to the United States District Court
for the Southern District of Texas, where 1488,
Inc. filed an amended complaint, reiterating
its allegations in the original complaint.

Private respondent Ducat moved to


dismiss Civil Case No. 16563 on the grounds of
(1) litispendentia, vis-a-vis Civil Action No. H86-440 filed by 1488, Inc. and Daic in the U.S.,
(2)forum non conveniens, and (3) failure of
petitioners PHILSEC and BPI-IFL to state a
cause of action. On the other hand, private
respondents 1488, Inc. and its president Daic
filed a joint Special Appearance and Qualified
Motion to Dismiss, contending that the action
being in personam, extraterritorial service of
summons by publication was ineffectual and
did not vest the court with jurisdiction over
1488, Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident
alien.

For their part, PHILSEC and AYALA filed


a motion to dismiss on the ground of lack of
jurisdiction over their person, but, as their
motion was denied, they later filed a joint
answer with counterclaim against private
respondents and Edgardo V. Guevarra,
PHILSECs own former president, for the
rescission of the sale on the ground that the
property had been overvalued. On March 13,
1990, the United States District Court for the
Southern District of Texas dismissed the
counterclaim against Edgardo V. Guevarra on
the ground that it was frivolous and [was]
brought against him simply to humiliate and
embarrass him. For this reason, the U.S. court
imposed so-called
Rule 11 sanctions

On April 10, 1987, while Civil Case No. H86-440 was pending in the United States,
petitioners filed a complaint For Sum of
Money with Damages and Writ of Preliminary
Attachment against private respondents in the
Regional Trial Court of Makati (Civil Case No.
16563). The complaint reiterated the allegation
of petitioners in their respective counterclaims
in Civil Action No. H-86-440 of the United
States District Court of Southern Texas that
private respondents committed fraud by
selling the property at a price 400 percent
more than its true value of US$800,000.00.
Petitioners claimed that, as a result of private
respondents fraudulent misrepresentations,
ATHONA, PHILSEC, and AYALA were
induced to enter into the Agreement and to
purchase the Houston property. On April 20,
1987, the trial court issued a writ of
preliminary attachment against the real and
personal properties of private respondents.[2]

On January 26, 1988, the trial court


granted Ducats motion to dismiss, stating that
the
evidentiary
requirements
of
the
controversy may be more suitably tried before
the forum of the litispendentia in the U.S.,
under the principle in private international law
of forum non conveniens, even as it noted that
Ducat was not a party in the U.S. case.
The trial court also held itself without
jurisdiction over 1488, Inc. and Daic because
they were non-residents and the action was
not an action in rem or quasi in rem, so that
extraterritorial service of summons was
ineffective. The trial court subsequently lifted
the writ of attachment it had earlier issued
against the shares of stocks of 1488, Inc. and
Daic.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 40
The dismissal of Civil Case No. 16563 on
the ground of forum non conveniens was
likewise affirmed by the Court of Appeals on
the ground that the case can be better tried
and decided by the U.S. court:
The U.S. case and the case at bar arose
from only one main transaction, and involve
foreign elements, to wit: 1) the property
subject matter of the sale is situated in Texas,
U.S.A.; 2) the seller, 1488 Inc. is a nonresident foreign corporation; 3) although the
buyer, Athona Holdings, a foreign corporation
which does not claim to be doing business in
the Philippines, is wholly owned by Philsec, a
domestic corporation, Athona Holdings is also
owned by BPI-IFL, also a foreign corporation;
4) the Warranty Deed was executed in Texas,
U.S.A.
ISSUE: W/N the Principle of Forum Non
Conveniens relied upon by the CA in affirming
the dismissal by the trial court of the civil
action is applicable.
RULING: Nor is the trial courts refusal to
take cognizance of the case justifiable under
the principle of forum non conveniens. First, a
motion to dismiss is limited to the grounds
under Rule 16, 1, which does not include forum
non conveniens.[16] The propriety of dismissing
a case based on this principle requires a factual
determination, hence, it is more properly
considered a matter of defense. Second, while
it is within the discretion of the trial court to
abstain from assuming jurisdiction on this
ground, it should do so only after vital facts are
established, to determine whether special
circumstances require the courts desistance.[17]
In this case, the trial court abstained from
taking jurisdiction solely on the basis of the
pleadings filed by private respondents in
connection with the motion to dismiss. It
failed to consider that one of the plaintiffs
(PHILSEC) is a domestic corporation and one
of the defendants (Ventura Ducat) is a
Filipino, and that it was the extinguishment of
the latters debt which was the object of the
transaction under litigation. The trial court
arbitrarily dismissed the case even after
finding that Ducat was not a party in the U.S.
case.

of the rights of private respondents. The


proceedings in the trial court were
summary. Neither the trial court nor the
appellate court was even furnished copies of
the pleadings in the U.S. court or apprised of
the evidence presented thereat, to assure a
proper determination of whether the issues
then being litigated in the U.S. court were
exactly the issues raised in this case such that
the judgment that might be rendered would
constitute res judicata.
It was error therefore for the Court of
Appeals to summarily rule that petitioners
action is barred by the principle of res
judicata. Petitioners in fact questioned the
jurisdiction of the U.S. court over their
persons, but their claim was brushed aside by
both the trial court and the Court of
Appeals.[13]
Accordingly,
to
insure
the
orderly
administration of justice, this case and Civil
Case
No.
92-1070
should
be
[15]
consolidated. After all, the two have been
filed in the Regional Trial Court of Makati,
albeit in different salas. In such proceedings,
petitioners should have the burden of
impeaching the foreign judgment and only in
the event they succeed in doing so may they
proceed with their action against private
respondents.
THE MANILA HOTEL CORP. AND
MANILA HOTEL INTL. LTD., petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION, ARBITER CEFERINA J.
DIOSANA
AND
MARCELO
G.
SANTOS,respondents.
PARDO, J.:
Facts:

In May, 1988, private respondent


Marcelo Santos (hereinafter referred
to as "Santos") was an overseas worker
employed as a printer at the Mazoon
Printing Press, Sultanate of Oman.
Subsequently, in June 1988, he was
directly hired by the Palace Hotel,
Beijing, People's Republic of China
and
later
terminated
due
to
retrenchment.

During his employment with the


Mazoon Printing Press in the
Sultanate of Oman, respondent Santos
received a letter dated May 2, 1988

ISSUE: W/N the doctrine of litispendentia is


applicable.
RULING: In the case at bar, it cannot be said
that petitioners were given the opportunity to
challenge the judgment of the U.S. court as
basis for declaring it res judicata or conclusive

CONFLICT OF LAWS
1 s t e x a m c a s e s | 41
from Mr. Gerhard R. Shmidt, General
Manager, Palace Hotel, Beijing, China.
Mr. Schmidt informed respondent
Santos that he was recommended by
one Nestor Buenio, a friend of his.

Mr. Shmidt offered respondent Santos


the same position as printer, but with
a higher monthly salary and increased
benefits. The position was slated to
open on October 1, 1988.

On May 8, 1988, respondent Santos


wrote to Mr. Shmidt and signified his
acceptance of the offer.

On May 19, 1988, the Palace Hotel


Manager, Mr. Hans J. Henk mailed a
ready to sign employment contract to
respondent Santos. Mr. Henk advised
respondent Santos that if the contract
was acceptable, to return the same to
Mr. Henk in Manila, together with his
passport and two additional pictures
for his visa to China.
On May 30, 1988, respondent Santos
resigned from the Mazoon Printing
Press, effective June 30, 1988, under
the pretext that he was needed at
home to help with the family's piggery
and poultry business.
On June 4, 1988, respondent Santos
wrote
the
Palace
Hotel
and
acknowledged Mr. Henk's letter.
Respondent Santos enclosed four (4)
signed copies of the employment
contract (dated June 4, 1988) and
notified them that he was going to
arrive in Manila during the first week
of July 1988.

The employment contract of June 4,


1988 stated that his employment
would commence September 1, 1988
for a period of two years.12 It provided
for a monthly salary of nine hundred
dollars (US$900.00) net of taxes,
payable fourteen (14) times a year.13

On November 5, 1988, respondent


Santos left for Beijing, China. He
started to work at the Palace Hotel.14

Subsequently, respondent Santos


signed an amended "employment
agreement" with the Palace Hotel,
effective November 5, 1988. In the
contract, Mr. Shmidt represented the

Palace Hotel. The Vice President


(Operations and Development) of
petitioner MHICL Miguel D. Cergueda
signed the employment agreement
under the word "noted".

On July 22, 1989, Mr. Shmidt's


Executive Secretary, a certain Joanna
suggested in a handwritten note that
respondent Santos be given one (1)
month notice of his release from
employment.

On August 10, 1989, the Palace Hotel


informed respondent Santos by letter
signed by Mr. Shmidt that his
employment at the Palace Hotel print
shop would be terminated due to
business reverses brought about by the
political upheaval in China.

On September 5, 1989, the Palace


Hotel terminated the employment of
respondent Santos and paid all
benefits due him, including his plane
fare back to the Philippines.

On October 24, 1989, respondent


Santos, through his lawyer, Atty.
Ednave wrote Mr. Shmidt, demanding
full compensation pursuant to the
employment agreement.

On February 20, 1990, respondent


Santos filed a complaint for illegal
dismissal with the Arbitration Branch,
National Capital Region, National
Labor Relations Commission (NLRC).
He prayed for an award of nineteen
thousand nine hundred and twenty
three dollars (US$19,923.00) as actual
damages, forty thousand pesos
(P40,000.00) as exemplary damages
and attorney's fees equivalent to 20%
of the damages prayed for. The
complaint named MHC, MHICL, the
Palace Hotel and Mr. Shmidt as
respondents.

On June 27, 1991, Labor Arbiter


Ceferina J. Diosana, decided the case
against petitioners.

On July 23, 1991, petitioners appealed


to the NLRC, arguing that the POEA,
not the NLRC had jurisdiction over the
case.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 42

On August 28, 1992, the NLRC


promulgated a resolution, stating:20
"WHEREFORE, let the appealed
Decision be, as it is hereby, declared
null and void for want of jurisdiction.
Complainant is hereby enjoined to file
his complaint with the POEA.

On September 18, 1992, respondent


Santos moved for reconsideration of
the afore-quoted resolution. He
argued that the case was not
cognizable by the POEA as he was not
an "overseas contract worker."21

On May 31, 1993, the NLRC granted


the motion and reversed itself. The
NLRC directed Labor Arbiter Emerson
Tumanon to hear the case on the
question
of
whether
private
respondent
was
retrenched
or
dismissed.22

Subsequently, Labor Arbiter Tumanon


was re-assigned as trial Arbiter of the
National Capital Region, Arbitration
Branch, and the case was transferred
to Labor Arbiter Jose G. de Vera.24

On November 25, 1994, Labor Arbiter


de Vera submitted his report.25 He
found that respondent Santos was
illegally dismissed from employment
and recommended that he be paid
actual damages equivalent to his
salaries for the unexpired portion of
his contract.26

Issue: W/N the NLRC is the proper


forum? No

employer, through correspondence


sent to the Sultanate of Oman, where
respondent
Santos
was
then
employed. He was hired without the
intervention of the POEA or any
authorized recruitment agency of the
government.36

Under the rule of forum non


conveniens, a Philippine court or
agency may assume jurisdiction over
the case if it chooses to do
so provided: (1) that the Philippine
court is one to which the parties may
conveniently resort to; (2) that the
Philippine court is in a position to
make an intelligent decision as to the
law and the facts; and (3) that the
Philippine court has or is likely to have
power to enforce its decision.37 The
conditions are unavailing in the case at
bar.

Not Convenient. We fail to see how


the NLRC is a convenient forum given
that all the incidents of the case
from the time of recruitment, to
employment to dismissal occurred
outside
the
Philippines.
The
inconvenience is compounded by the
fact that the proper defendants, the
Palace Hotel and MHICL are not
nationals of the Philippines. Neither
are they "doing business in the
Philippines." Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk
are non-residents of the Philippines.

No power to determine applicable


law. Neither can an intelligent
decision be made as to the law
governing the employment contract as
such was perfected in foreign soil. This
calls to fore the application of the
principle of lex loci contractus (the law
of the place where the contract was
made).38

The employment contract was not


perfected
in
the
Philippines.
Respondent Santos signified his
acceptance by writing a letter while he
was in the Republic of Oman. This
letter was sent to the Palace Hotel in
the People's Republic of China.

No power to determine the facts.


Neither can the NLRC determine the
facts surrounding the alleged illegal
dismissal as all acts complained of

Held: I. Forum Non-Conveniens

The
NLRC
was
inconvenient forum.

We note that the main aspects of the


case transpired in two foreign
jurisdictions and the case involves
purely foreign elements. The only link
that the Philippines have with the case
is that respondent Santos is a Filipino
citizen. The Palace Hotel and MHICL
are foreign corporations. Not all cases
involving our citizens can be tried
here.

seriously

The
employment
contract.

Respondent Santos was hired directly


by the Palace Hotel, a foreign

CONFLICT OF LAWS
1 s t e x a m c a s e s | 43
took place in Beijing, People's
Republic of China. The NLRC was not
in a position to determine whether the
Tiannamen Square incident truly
adversely affected operations of the
Palace Hotel as to justify respondent
Santos' retrenchment.

Principle of effectiveness, no power to


execute decision. Even assuming
that a proper decision could be
reached by the NLRC, such would not
have any binding effect against the
employer, the Palace Hotel. The Palace
Hotel is a corporation incorporated
under the laws of China and was not
even
served
with
summons.
Jurisdiction over its person was not
acquired.
This is not to say that Philippine
courts and agencies have no power to
solve controversies involving foreign
employers. Neither are we saying that
we do not have power over an
employment contract executed in a
foreign country. If Santos were an
"overseas
contract
worker",
a
Philippine forum, specifically the
POEA, not the NLRC, would protect
him.39 He is not an "overseas contract
worker" a fact which he admits with
conviction.40

Even assuming that the NLRC was the proper


forum, even on the merits, the NLRC's
decision cannot be sustained.
G.R. No. 141536. February 26, 2001
GIL MIGUEL T. PUYAT, petitioner,
vs.
RON ZABARTE, respondent.
PANGANIBAN, J.:
Facts: On 24 January 1994, Ron Zabarte
commenced [an action] to enforce the money
judgment rendered by the Superior Court for
the State of California, County of Contra Costa,
U.S.A. On 18 March 1994, [petitioner Puyat]
filed his Answer with the following special and
affirmative defenses:
xxx

xxx

xxx

8) The Superior Court for the State of


California, County of Contra Costa[,]
did not properly acquire jurisdiction
over the subject matter of and over the

persons involved in [C]ase #C2100265.


9) The Judgment on Stipulations for
Entry in Judgment in Case #C2100265 dated December 12, 1991 was
obtained without the assistance of
counsel for [petitioner] and without
sufficient notice to him and therefore,
was rendered in clear violation of
[petitioners] constitutional rights to
substantial and procedural due
process.
10) was procured by means of fraud
or collusion or undue influence and/or
based on a clear mistake of fact and
law.
11) is contrary to the laws, public
policy and canons of morality
obtaining in the Philippines and the
enforcement of such judgment in the
Philippines would result in the unjust
enrichment of [respondent] at the
expense of [petitioner] in this case.
12) is null and void and unenforceable
in the Philippines.
13) In the transaction, which is the
subject matter in Case #C21-00265,
[petitioner] is not in any way liable, in
fact and in law, to [respondent] in this
case.
14) [Respondent] is guilty of
misrepresentation or falsification in
the filing of his Complaint in this case
dated December 6, 1993. Worse,
[respondent] has no capacity to sue in
the Philippines.
15) Venue has been improperly laid in
this case.
On 1 August 1994, [respondent] filed
a [M]otion for [S]ummary [J]udgment
under Rule 34 of the Rules of Court
alleging that the [A]nswer filed by
[petitioner] failed to tender any
genuine issue as to the material facts.
In his [O]pposition to [respondents]
motion, [petitioner] demurred as
follows:
2) [Petitioner] begs to disagree[;] in
support hereof, [he] wishes to mention

CONFLICT OF LAWS
1 s t e x a m c a s e s | 44
that in his Answer with Special and
Affirmative Defenses dated March 16,
1994 [petitioner] has interposed that
the Judgment on Stipulations for
Entry in Judgment is null and void,
fraudulent, illegal and unenforceable,
the same having been obtained by
means of fraud, collusion, undue
influence and/or clear mistake of fact
and law. In addition, [he] has
maintained that said Judgment on
Stipulations for Entry in Judgment
was obtained without the assistance of
counsel for [petitioner] and without
sufficient notice to him and therefore,
was rendered in violation of his
constitutional rights to substantial and
procedural due process.
On 6 April 1995, the court a quo issued an
[O]rder granting [respondents] [M]otion for
[S]ummary
[J]udgment
[and]
likewise
granting [petitioner] ten (10) days to submit
opposing affidavits, after which the case would
be deemed submitted for resolution.
[Petitioner]
filed
a
[M]otion
for
[R]econsideration of the aforesaid [O]rder and
[respondent] filed [C]omment.
On 30 June 1995, [petitioner] filed a
[M]otion to [D]ismiss on the ground of
lack of jurisdiction over the subject
matter of the case and forum-nonconveniens. In his [O]pposition to the
[M]otion
[respondent]
contended
that
[petitioner could] no longer question the
jurisdiction of the lower court on the ground
that [the latters] Answer had failed to raise
the issue of jurisdiction. [Petitioner] countered
by asserting in his Reply that jurisdiction
[could] not be fixed by agreement of the
parties. The lower court dismissed [his]
[M]otion for [R]econsideration and [M]otion
[to] [D]ismiss.

damages, not having been substantiated, it is


hereby denied.
Citing Ingenohl v. Olsen, the CA rejected
petitioners argument that the RTC should
have dismissed the action for the enforcement
of a foreign judgment, on the ground of forum
non conveniens. It reasoned out that the
recognition of the foreign judgment was based
on comity, reciprocity and res judicata.
Issue: Whether or not the principle of forum
non conveniens was inapplicable to the instant
case. It was inapplicable.
Petitioner argues that the RTC should have
refused to entertain the Complaint for
enforcement of the foreign judgment on the
principle of forum non conveniens. He claims
that the trial court had no jurisdiction, because
the case involved partnership interest, and
there was difficulty in ascertaining the
applicable law in California. All the aspects of
the transaction took place in a foreign country,
and respondent is not even Filipino.
Ruling: The principle of forum non
conveniens is inapplicable.
Under
the
principle
of forum
non
conveniens, even if the exercise of jurisdiction
is authorized by law, courts may nonetheless
refuse to entertain a case for any of the
following practical reasons:
1) The belief that the matter can be better
tried and decided elsewhere, either because
the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses
have their residence there;

The RTC eventually rendered its February 21,


1997 Decision, which disposed as follows:

2) The belief that the non-resident plaintiff


sought the forum[,] a practice known as forum
shopping[,] merely to secure procedural
advantages or to convey or harass the
defendant;

WHEREFORE, judgment is hereby rendered,


ordering [petitioner] to pay [respondent] the
following amounts:

3) The unwillingness to extend local judicial


facilities to non-residents or aliens when the
docket may already be overcrowded;

1. The amount of U.S. dollars $241,991.33,


with the interest of legal rate from October 18,
1991, or its peso equivalent, pursuant to the
[J]udgment of [S]tipulation for [E]ntry in
[J]udgment dated December 19, 1991; 2. The
amount of P30,000.00 as attorneys fees; 3. To
pay the costs of suit. The claim for moral

4) The inadequacy of the local judicial


machinery for effectuating the right sought to
be maintained; and
5) The difficulty of ascertaining foreign law.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 45
None of the aforementioned reasons barred
the RTC from exercising its jurisdiction. In the
present action, there was no more need for
material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the
local machinery to enforce the foreign
judgment, and no question raised as to the
application of any foreign law.
Authorities agree that the issue of whether a
suit should be entertained or dismissed on the
basis of the above-mentioned principle
depends largely upon the facts of each case
and on the sound discretion of the trial court.
Since the present action lodged in the
RTC was for the enforcement of a
foreign judgment, there was no need to
ascertain the rights and the obligations
of the parties based on foreign laws or
contracts. The parties needed only to
perform their obligations under the
Compromise Agreement they had
entered into. 1wphi1.nt

Bank of America v CA
Facts:

Eduardo K. Litonjua, Sr. and Aurelio


J. Litonjua (Litonjuas, for brevity)
filed a Complaint before the Regional
Trial Court of Pasig against the Bank
of America NT&SA and Bank of
America
International,
Ltd.
(defendant banks for brevity).
The plaintiffs (Litonjuas, for
brevity) alleged that:
o They were engaged in the shipping
business and owned two vessels:
Don Aurelio and El Champion,
through
their
wholly-owned
corporations;
o They deposited their revenues
from said business together with
other funds with the branches of
said banks in the United Kingdom
and Hongkong up to 1979.
(Note: The Lintonjuas, through
the inducement of the defendant
banks acquired additional ships
in operation. The Lintonjuas
obtained loan from the defendant
banks to finance the acquisition of
additional ships.)

Under Section 48, Rule 39 of the 1997 Rules of


Civil Procedure, a judgment in an action in
personam rendered by a foreign tribunal
clothed with jurisdiction is presumptive
evidence of a right as between the parties and
their successors-in-interest by a subsequent
title.
Also, under Section 5(n) of Rule 131, a court -whether in the Philippines or elsewhere -enjoys the presumption that it is acting in the
lawful exercise of its jurisdiction, and that it is
regularly performing its official duty. Its
judgment may, however, be assailed if there is
evidence of want of jurisdiction, want of notice
to the party, collusion, fraud or clear mistake
of law or fact. But precisely, this possibility
signals the need for a local trial court to
exercise jurisdiction. Clearly, the application of
forum non coveniens is not called for.
The grounds relied upon by petitioner are
contradictory. On the one hand, he insists that
the RTC take jurisdiction over the enforcement
case in order to invalidate the foreign
judgment; yet, he avers that the trial court
should not exercise jurisdiction over the same
case on the basis of forum non conveniens. Not
only do these defenses weaken each other, but
they bolster the finding of the lower courts that
he was merely maneuvering to avoid or delay
payment of his obligation.

Thereafter, the defendant banks


acquired,
through
their
(Litonjuas) corporations as the
borrowers: (a) El Carrier; (b) El
General; (c) El Challenger; and (d)
El Conqueror;
The vessels were registered in the
names of their corporations; the
operation and the funds derived
therefrom were placed under the
complete and exclusive control
and disposition of the petitioners
(defendants);and the possession
the vessels was also placed by
defendant banks in the hands of
persons selected and designated
by them (defendant banks)
(Note: The corporations are
wholly owned by the Lintonjuas
and prior to the incorporation of
such entities, they were clients of
petitioners which induced them to
acquire
loans
from
said
petitioners to invest on the
additional ships.)

CONFLICT OF LAWS
1 s t e x a m c a s e s | 46
o

The loans acquired for the


purchase of the four additional
vessels
then
matured
and
remained
unpaid,
prompting
defendant banks to have all the six
vessels, including the two vessels
originally owned by the private
respondents, foreclosed and sold
at public auction to answer for the
obligations incurred for and in
behalf of the operation of the
vessels;
The Litonjuas prayed for the
accounting of the revenues derived
in the operation of the six vessels
and of the proceeds of the sale
thereof
at
the
foreclosure
proceedings
instituted
by
petitioners; damages for breach of
trust; exemplary damages and
attorneys fees.

Defendant banks filed a Motion to


Dismiss on grounds of forum non
conveniens and lack of cause of action
against them.
The trial court denied the motion to
dismiss

Issue: WON the complaint should be


dismissed on the ground of forum nonconveniens.
Held: No. All the requisites in order for the
court to assume jurisdiction are present and
Sec. 1, Rule 16 of the Rules of Court does not
include said doctrine as a ground for motion to
dismiss.
Explanation of doctrine of forum nonconveniens
The doctrine of forum non-conveniensliterally
meaning the forum is inconvenient, emerged
in private international law to deter the
practice of global forum shopping,[42] 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.[43]
Application of the doctrine of non-conveniens
depends on the discretion of the court,
provided that all the requisites are present
Whether a suit should be entertained or
dismissed on the basis of said doctrine
depends largely upon the facts of the particular
case and is addressed to the sound discretion
of the trial court.[44] In the case of
Communication Materials and Design, Inc. vs.
Court of Appeals,[45] this Court held that xxx
[a] Philippine Court may assume jurisdiction
over the case if it chooses to do so; provided,
that the following requisites are met: (1) that
the Philippine Court is one to which the parties
may conveniently resort to; (2) that the
Philippine Court is in a position to make an
intelligent decision as to the law and the facts;
and, (3) that the Philippine Court has or is
likely to have power to enforce its
decision.[46] Evidently, all these requisites are
present in the instant case.
The doctrine of forum non-conveniens is not
one of the grounds of Motion to dismiss
Moreover, this Court enunciated in Philsec.
Investment Corporation vs. Court of
Appeals,[47] that the doctrine of forum non
conveniens should not be used as a ground for
a motion to dismiss because Sec. 1, Rule 16 of
the Rules of Court does not include said
doctrine as a ground. This Court further ruled
that while it is within the discretion of the trial
court to abstain from assuming jurisdiction on
this ground, it should do so only after vital
facts are established, to determine whether
special circumstances require the courts
desistance; and that the propriety of
dismissing a case based on this principle of
forum non conveniens requires a factual
determination, hence it is more properly
considered a matter of defense.[48]
Additional info, just in case i-ask:

No forum shopping because not all the


requirements for litispendentia are
present. While there may be identity of
parties, notwithstanding the presence
of other respondents,[51] as well as
the reversal in positions of plaintiffs

CONFLICT OF LAWS
1 s t e x a m c a s e s | 47
and defendants[52], still the other
requirements
necessary
for
litispendentia were not shown by
petitioner. It merely mentioned that
civil cases were filed in Hongkong and
England without however showing the
identity of rights asserted and the
reliefs sought for as well as the
presence of the elements of res
judicata should one of the cases be
adjudged.
[T]hedefendant banks enumerated the civil
actions instituted abroad (Hongkong and
England) involving the parties herein. The
petitioners in their motion for reconsideration
(CA Rollo, p. 72), after enumerating the
various civil actions instituted abroad, did aver
that Copies of the foreign judgments are
hereto attached and made integral parts hereof
as Annexes B, C, D and E, they failed, wittingly
or inadvertently, to include a single foreign
judgment in their pleadings submitted to this
Court as annexes to their petition. How then
could We have been expected to rule on this
issue even if We were to hold that foreign
judgments could be the basis for the
application of the aforementioned principle of
res judicata.
G.R. No. 166920, February 19, 2007
PACIFIC
CONSULTANTS
INTERNATIONAL ASIA, INC. and JENS
PETER HENRICHSEN, Petitioners,
vs.
KLAUS K. SCHONFELD, Respondent.
Facts: Klaus K. Schonfeld is a Canadian
citizen and was a resident of New
Westminster, British Columbia, Canada. He
had been a consultant in the field of
environmental engineering and water supply
and sanitation.
Pacicon Philippines, Inc. (PPI) is a corporation
engaged in the business of providing specialty
and technical services both in and out of the
Philippines. It is a subsidiary of Pacific
Consultants International of Japan (PCIJ).
The president of PPI, Jens Peter Henrichsen,
who was also the director of PCIJ, was based
in Tokyo, Japan.
In 1997, PCIJ decided to engage in consultancy
services in the Philippines. Respondent was
employed by PCIJ, through Henrichsen, as
Sector Manager of PPI in its Water and

Sanitation Department in the Philippines. His


salary was to be paid partly by PPI and PCIJ.
Respondent arrived in the Philippines and
assumed his position as PPI Sector Manager.
He was accorded the status of a resident
alien.As required by the Omnibus Rules
Implementing the Labor Code, PPI applied for
an Alien Employment Permit (Permit) for
respondent before the Department of Labor
and Employment (DOLE). It appended
respondents contract of employment to the
application. DOLE granted the application and
issued the Permit to respondent.
On May 5, 1999, respondent received a letter
from Henrichsen informing him that his
employment had been terminated effective
August 4, 1999. However, on July 24, 1999,
Henrichsen, by electronic mail, requested
respondent to stay put in his job after August
5, 1999, until such time that he would be able
to report on certain projects and discuss all the
opportunities he had developed.
Respondent filed with PPI several money
claims, including unpaid salary, leave pay, air
fare, and cost of shipment of goods to Canada.
Respondent then filed a Complaint for Illegal
Dismissal against petitioners PPI and
Henrichsen with the Labor Arbiter.
Respondent alleged that he was illegally
dismissed; PPI had not notified the DOLE of
its decision to close one of its departments,
which resulted in his dismissal; and they failed
to notify him that his employment was
terminated.
Petitioners filed a Motion to Dismiss the
complaint on the following grounds: (1) the
Labor Arbiter had no jurisdiction over the
subject matter; and (2) venue was improperly
laid. It averred that respondent was a
Canadian citizen, a transient expatriate who
had left the Philippines. He was employed and
dismissed by PCIJ, a foreign corporation with
principal office in Tokyo, Japan.
Since respondents cause of action was based
on his letter of employment executed in
Tokyo,under the principle of lex loci
contractus, the complaint should have been
filed in Tokyo, Japan. Petitioners claimed that
respondent did not offer any justification for
filing his complaint against PPI before the
NLRC in the Philippines. Moreover, under
Section 12 of the General Conditions of
Employment appended to the letter of
employment, Schonfeld and PCIJ had agreed

CONFLICT OF LAWS
1 s t e x a m c a s e s | 48
that any employment-related dispute should
be brought before the London Court of
Arbitration.
Respondent opposed the Motion, contending
that he was employed by PPI to work in the
Philippines under contract separate from his
contract of employment with PCIJ. He insisted
that PPI is a Philippine-registered corporation;
it is inconsequential that PPI is a whollyowned subsidiary of PCIJ as the two have
separate and distinct personalities; and he
received orders and instructions from
Henrichsen who was the president of PPI.
According to respondent, the material
allegations of the complaint, not petitioners
defenses, determine which quasi-judicial body
has jurisdiction. Section 21 of the Arbitration
Clause in the General Conditions of
Employment does not provide for an exclusive
venue where the complaint against PPI for
violation of the Philippine Labor Laws may be
filed.
The Labor Arbiter granted thepetitioners
Motion to Dismiss. NLRC affirmed the NLRCs
decision in toto.Respondent then filed a
petition for certiorari under Rule 65 with the
CA.The CA found the petition meritorious. A
motion for the reconsideration of the above
decision was filed by PPI and Henrichsen,
which was denied. Hence the present recourse.
Issue: WON Philippines has jurisdiction over
respondent's claim despite the fact that
respondent, a foreign national, was hired
abroad by a foreign corporation, executed his
employment contract abroad, and agreed that
disputes be settled in the London.
Held: As claimed by respondent that he had
an employment contract with petitioner PPI;
otherwise, petitioner PPI would not have filed
an application for a Permit with the DOLE.
Petitioners are thus estopped from alleging
that the PCIJ, not petitioner PPI, had been the
employer of respondent all along.
The SC agreed with the conclusion of the CA
that there was an employer-employee
relationship between petitioner PPI and
respondent
using
the
four-fold
test.
Jurisprudence is firmly settled that whenever
the existence of an employment relationship is
in dispute, four elements constitute the
reliable yardstick: (a) the selection and
engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d)
the employers power to control the employees

conduct. Stated otherwise, an employeremployee relationship exists where the person


for whom the services are performed reserves
the right to control not only the end to be
achieved but also the means to be used in
reaching such end.
The SC quote with approval the following
ruling of the CA:
[T]here is, indeed, substantial evidence on
record which would erase any doubt that the
respondent company is the true employer of
petitioner. In the case at bar, the power to
control and supervise petitioners work
performance devolved upon the respondent
company. Likewise, the power to terminate the
employment relationship was exercised by the
President of the respondent company. It is not
the letterhead used by the company in the
termination letter which controls, but the
person who exercised the power to terminate
the employee. It is also inconsequential if the
second letter of employment executed in the
Philippines was not signed by the petitioner.
An employer-employee relationship may
indeed exist even in the absence of a written
contract, so long as the four elements
mentioned in the Mafinco case are all present.
The settled rule on stipulations regarding
venue, as held by this Court in the vintage case
of Philippine Banking Corporation v. Tensuan,
is that while they are considered valid and
enforceable, venue stipulations in a contract
do not, as a rule, supersede the general rule set
forth in Rule 4 of the Revised Rules of Court in
the absence of qualifying or restrictive words.
They should be considered merely as an
agreement or additional forum, not as limiting
venue to the specified place. They are not
exclusive but, rather permissive. If the
intention of the parties were to restrict venue,
there must be accompanying language clearly
and categorically expressing their purpose and
design that actions between them be litigated
only at the place named by them.
In the instant case, no restrictive words like
"only," "solely," "exclusively in this court," "in
no other court save ," "particularly,"
"nowhere else but/except ," or words of
equal import were stated in the contract. It
cannot be said that the court of arbitration in
London is an exclusive venue to bring forth
any complaint arising out of the employment
contract.
Petitioners contend that respondent should
have filed his Complaint in his place of

CONFLICT OF LAWS
1 s t e x a m c a s e s | 49
permanent residence, or where the PCIJ holds
its principal office, at the place where the
contract of employment was signed, in London
as stated in their contract. By enumerating
possible venues where respondent could have
filed his complaint, however, petitioners
themselves admitted that the provision on
venue in the employment contract is indeed
merely permissive.
Petitioners insistence on the application of the
principle of forum non conveniens must be
rejected. The bare fact that respondent is a
Canadian citizen and was a repatriate does not
warrant the application of the principle for the
following reasons:
First. The Labor Code of the Philippines does
not include forum non conveniens as a ground
for the dismissal of the complaint.
Second. The propriety of dismissing a case
based on this principle requires a factual
determination; hence, it is properly considered
as defense.
Third. In Bank of America, NT&SA, Bank of
America International, Ltd. v. Court of
Appeals, this Court held that:
x xx [a] Philippine Court may assume
jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met:
(1) that the Philippine Court is one to which
the parties may conveniently resort to; (2) that
the Philippine Court is in a position to make
an intelligent decision as to the law and the
facts; and, (3) that the Philippine Court has or
is likely to have power to enforce its decision. x
xx

G.R. No. 156848

October 11, 2007

PIONEER
INTERNATIONAL,
LTD., petitioner,
vs.
HON. TEOFILO GUADIZ, JR., in his
capacity as Presiding Judge of Regional
Trial Court, Branch 147, Makati City,
and ANTONIO D. TODARO, respondents.
FACTS
Todaro filed a complaint for
sum of money and damages with preliminary
attachment against PIL, PCPI, PPHI,
McDonald, and Klepzig.
Todaro alleged that PIL is a corporation duly
organized under Australian laws, while PCPI

and PPHI are corporations duly organized


under Philippine laws. PIL is engaged in the
ready-mix and concrete aggregates business
and has established a presence worldwide. PIL
established PPHI as the holding company of
the stocks of its operating company in the
Philippines, PCPI. McDonald is the Chief
Executive Officer of PILs Hong Kong office
while Klepzig is the President and Managing
Director of PPHI and PCPI. For his part,
Todaro further alleged that he was the
managing director of Betonval Readyconcrete,
Inc. (Betonval) from June 1975 up to his
resignation in February 1996.
Before Todaro filed his complaint, there were
several meetings and exchanges of letters
between Todaro and the officers of Pioneer
Concrete (Hong Kong) Limited, Pioneer
Concrete Group HK, PPHI, and PIL. According
to Todaro, PIL contacted him and asked if he
could join it in establishing a pre-mixed
concrete plant and in overseeing its operations
in the Philippines. Todaro confirmed his
availability and expressed interest. Todaro met
with several of PILs representatives and even
gave PIL the names of three of his
subordinates in Betonval whom he would like
to join him in PIL.
After series of letters Klepzig withdrew its offer
and also Annex "I" shows the letter of K.M.
Folwell (Folwell), PILs Executive General
Manager of Australia and Asia, to Todaro.
Folwell confirmed the contents of Klepzigs
letter. Folwells message reads:
Thank you for your letter to Dr.
Schubert dated 29th September 1997
regarding the alleged breach of
contract with you. Dr. Schubert has
asked me to investigate this matter.
I have discussed and examined the
material regarding your association
with Pioneer over the period from mid
1996 through to September 1997.
Clearly your consultancy services to
Pioneer Hong Kong are well
documented
and
have
been
appropriately rewarded. However, in
regard to your request and expectation
to
be given
permanent
employment
with
Pioneer
Philippines Holdings, Inc. I am
informed that negotiations to reach
agreement on appropriate terms and
conditions have not been successful.

CONFLICT OF LAWS
1 s t e x a m c a s e s | 50
The employment conditions you
specified in your letter to John
McDonald dated 11th September are
well beyond our expectations.

The Ruling of the Appellate Court

Mr. Todaro, I regret that we do not


wish to pursue our association with
you any further. Mr. Klepzig was
authorized
to
terminate
this
association and the letter he sent to
you dated 18th September has my
support.

The Issues

Thank you for your involvement with


Pioneer. I wish you all the best for the
future.
PIL filed, a motion to dismiss Todaros
complaint. PILs co-defendants, PCPI, PPHI,
and Klepzig, filed a separate motion to
dismiss.17 PIL asserted that the trial court has
no jurisdiction over PIL because PIL is a
foreign corporation not doing business in the
Philippines. PIL also questioned the service of
summons on it. Assuming arguendo that
Klepzig is PILs agent in the Philippines, it was
not Klepzig but De Leon who received the
summons for PIL. PIL further stated that the
National
Labor
Relations
Commission
(NLRC), and not the trial court, has
jurisdiction over the subject matter of the
action. It claimed that assuming that the
trial court has jurisdiction over the
subject matter of the action, the
complaint should be dismissed on the
ground
of forum
nonconveniens. Finally, PIL maintained that the
complaint does not state a cause of action
because there was no perfected contract, and
no personal judgment could be rendered by
the trial court against PIL because PIL is a
foreign corporation not doing business in the
Philippines and there was improper service of
summons on PIL.
The Ruling of the Trial Court
On 4 January 1999, the trial court issued an
order18 which ruled in favor of Todaro. The
trial court denied the motions to dismiss filed
by PIL, PCPI, PPHI, and Klepzig.
on the issue of forum non-conveniens, the trial
court found that it is more convenient to hear
and decide the case in the Philippines because
Todaro resides in the Philippines and the
contract
allegedly
breached
involves
employment in the Philippines.

The appellate court denied PILs petition and


affirmed the trial courts ruling in toto.

WON Pursuant to the principle of forum nonconveniens, [the trial court] committed grave
abuse of discretion when it took cognizance of
the case? NO

The Ruling of the Court


Forum Non-Conveniens
The
doctrine
of forum
nonconveniens requires an examination of the
truthfulness of the allegations in the
complaint. Section 1, Rule 16 of the 1997 Rules
of
Civil
Procedure
does
not
mention forum non-conveniens as a ground
for filing a motion to dismiss. The propriety of
dismissing a case based on forum nonconveniens requires a factual determination;
hence, it is more properly considered a matter
of defense. While it is within the discretion of
the trial court to abstain from assuming
jurisdiction on this ground, the trial court
should do so only after vital facts are
established to determine whether special
circumstances require the courts desistance.25
Other Issues in case i-ask:
A. [The trial court] did not and cannot
acquire jurisdiction over the person of
[PIL] considering that:
A.1. [PIL] is a foreign
corporation
"not
doing
business" in the Philippines.
A.2. Moreover, the complaint
does not contain appropriate
allegations of ultimate facts
showing that [PIL] is doing or
transacting business in the
Philippines.
A.3. Assuming arguendo that
jurisdiction may be acquired
over the person of [PIL], [the
trial court] still failed to
acquire jurisdiction since
summons was improperly
served on [PIL].
B. [Todaro] does not have a cause of
action and the complaint fails to state
a cause of action. Jurisprudence is
settled in that in resolving a motion to

CONFLICT OF LAWS
1 s t e x a m c a s e s | 51
dismiss, a court can consider all the
pleadings filed in the case, including
annexes, motions and all evidence on
record.
C. [The trial court] did not and cannot
acquire jurisdiction over the subject
matter of the complaint since the
allegations
contained
therein
indubitably show that [Todaro] bases
his claims on an alleged breach of an
employment contract. Thus, exclusive
jurisdiction is vested with the [NLRC].
As to other issues: cause of action, naa
Jurisdiction over PIL: wala, because summons
were not properly served. Failed to follow
prescribed processes.
KAZUHIRO HASEGAWA and NIPPON
ENGINEERING CONSULTANTS CO.,
LTD.,Petitioners, v.MINORU
KITAMURA, Respondent. G.R. No.
149177; November 23, 2007
FACTS: On March 30, 1999, petitioner
Nippon Engineering Consultants Co., Ltd.
(Nippon), a Japanese consultancy firm
providing technical and management support
in the infrastructure projects of foreign
governments, entered into an Independent
Contractor Agreement (ICA) with respondent
Minoru Kitamura, a Japanese national
permanently residing in the Philippines. The
agreement provides that respondent was to
extend professional services to Nippon for a
year starting on April 1, 1999. Nippon then
assigned respondent to work as the project
manager of the Southern Tagalog Access Road
(STAR) Project in the Philippines, following
the company's consultancy contract with the
Philippine Government. Subsequently, the
DPWH engaged the services of Nippon for the
detailed
engineering
and
construction
supervision of the Bongabon-Baler Road
Improvement (BBRI) Project. Petitioner
Kazuhiro
Hasegawa
(Nippon's
general
manager) informed respondent that the
company had no more intention of
automatically renewing his ICA. Threatened
with impending unemployment, respondent
requested a negotiation conference but to no
avail. Hence, he consequently initiated on
June 1, 2000 Civil Case No. 00-0264 for

specific performance and damages with the


Regional Trial Court of Lipa City. Petitioners
moved to dismiss the complaint for lack of
jurisdiction contending that the ICA had been
perfected in Japan and executed by and
between Japanese nationals. They asserted
that the claim for improper pre-termination of
respondent's ICA could only be heard and
ventilated in the proper courts of Japan
following the principles of lex loci celebrationis
and lexcontractus.
RTC: Held that matters connected with the
performance of contracts are regulated by the
law prevailing at the place of performance.
Hence, it denied the motion to dismiss. CA:
Held, among others, that the principle of lex
loci celebrationis was not applicable to the
case, because nowhere in the pleadings was
the validity of the written agreement put in
issue. The CA thus declared that the trial court
was correct in applying instead the principle of
lex loci solutionis. Petitioners contention:
Asserting that the RTC of Lipa City is an
inconvenient forum, petitioners question its
jurisdiction to hear and resolve the civil case
for specific performance and damages filed by
the respondent. The ICA subject of the
litigation was entered into and perfected in
Tokyo, Japan, by Japanese nationals, and
written wholly in the Japanese language. Thus,
petitioners posit that local courts have no
substantial relationship to the parties
following the [state of the] most significant
relationship rule in Private International Law.
ISSUE: Whether the subject matter
jurisdiction of Philippine courts in civil cases
for specific performance and damages
involving contracts executed outside the
country by foreign nationals may be assailed
on the principle of forum non conveniens.
HELD: NO! To elucidate, in the judicial
resolution of conflicts problems, three
consecutive phases are involved: jurisdiction,
choice of law, and recognition and
enforcement of judgments. Corresponding to
these phases are the following questions: (1)
Where can or should litigation be initiated? (2)
Which law will the court apply? and (3) Where
can the resulting judgment be enforced?

CONFLICT OF LAWS
1 s t e x a m c a s e s | 52
Analytically, jurisdiction and choice of law are
two distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to travel
to this state; choice of law asks the further
question whether the application of a
substantive law which will determine the
merits of the case is fair to both parties. The
power to exercise jurisdiction does not
automatically give a state constitutional
authority to apply forum law. While
jurisdiction and the choice of the lexfori will
often coincide, the minimum contacts for one
do not always provide the necessary significant
contacts for the other. The question of whether
the law of a state can be applied to a
transaction is different from the question of
whether the courts of that state have
jurisdiction to enter a judgment.
In this case, only the first phase is at issue.
Jurisdiction, however, has various aspects. For
a court to validly exercise its power to
adjudicate a controversy, it must have
jurisdiction over the plaintiff or the petitioner,
over the defendant or the respondent, over the
subject matter, over the issues of the case and,
in cases involving property, over the res or the
thing which is the subject of the litigation. In
assailing the trial court's jurisdiction herein,
petitioners are actually referring to subject
matter jurisdiction.
Jurisdiction over the subject matter in a
judicial proceeding is conferred by the
sovereign authority which establishes and
organizes the court. It is given only by law and
in the manner prescribed by law. It is further
determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled
to all or some of the claims asserted therein.
To succeed in its motion for the dismissal of an
action for lack of jurisdiction over the subject
matter of the claim, the movant must show
that the court or tribunal cannot act on the
matter submitted to it because no law grants it
the power to adjudicate the claims.
In the instant case, petitioners, in their motion
to dismiss, do not claim that the trial court is
not properly vested by law with jurisdiction to
hear the subject controversy for, indeed, Civil
Case No. 00-0264 for specific performance

and damages is one not capable of pecuniary


estimation and is properly cognizable by the
RTC of Lipa City. What they rather raise as
grounds to question subject matter jurisdiction
are the principles of lex loci celebrationis and
lexcontractus, and the state of the most
significant relationship rule.
The Court finds the invocation of these
grounds unsound. Neither can the other
ground raised, forum non conveniens, be used
to deprive the trial court of its jurisdiction
herein. First, it is not a proper basis for a
motion to dismiss because Section 1, Rule 16 of
the Rules of Court does not include it as a
ground. Second, whether a suit should be
entertained or dismissed on the basis of the
said doctrine depends largely upon the facts of
the particular case and is addressed to the
sound discretion of the trial court. In this case,
the RTC decided to assume jurisdiction. Third,
the propriety of dismissing a case based on this
principle requires a factual determination;
hence, this conflicts principle is more properly
considered a matter of defense.
Accordingly, the RTC is vested by law with the
power to entertain and hear the civil case filed
by respondent and the grounds raised by
petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts
correctly denied the petitioners motion to
dismiss.
RAYTHEON INTERNATIONAL,
INC.,petitioner, vs.STOCKTON W.
ROUZIE, JR., respondent.
FACTS:
Sometime in 1990, Brand
Marine Services, Inc. (BMSI), a corporation
duly organized and existing under the laws of
the State of Connecticut, USA, and respondent
Stockton W. Rouzie, Jr., an American citizen,
entered into a contract whereby BMSI hired
respondent as its representative to negotiate
the sale of services in several government
projects in the Philippines for an agreed
remuneration of 10% of the gross receipts. On
11 March 1992, respondent secured a service
contract with the Republic of the Philippines
on behalf of BMSI for the dredging of rivers
affected by the Mt. Pinatubo eruption and
mudflows.
On 16 July 1994, respondent filed before the
Arbitration Branch of the NLRC a suit against

CONFLICT OF LAWS
1 s t e x a m c a s e s | 53
BMSI and Rust International, Inc. (RUST),
Rodney C. Gilbert and Walter G. Browning for
alleged nonpayment of commissions, illegal
termination and breach of employment
contract.
NLRC rendered judgment ordering BMSI and
RUST to pay respondents money claims.Upon
appeal by BMSI, the NLRC reversed the
decision of the Labor Arbiter and dismissed
respondents complaint on the ground of lack
of jurisdiction.Respondent elevated the case to
this Court but was dismissed in a Resolution
dated 26 November 1997. The Resolution
became final and executory on 09 November
1998.
On 8 January 1999, respondent, then a
resident of La Union, instituted an action for
damages before the Regional Trial Court
(RTC)
of
Bauang,
La
Union.
The
Complaint,docketed as Civil Case No. 1192-BG,
named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI
and RUST, the two corporations impleaded in
the earlier labor case. The complaint
essentially reiterated the allegations in the
labor case that BMSI verbally employed
respondent to negotiate the sale of services in
government projects and that respondent was
not paid the commissions due him from the
Pinatubo dredging project which he secured on
behalf of BMSI. The complaint also averred
that BMSI and RUST as well as petitioner itself
had combined and functioned as one
company.
In its Answer,petitioner alleged that contrary
to respondents claim, it was a foreign
corporation duly licensed to do business in the
Philippines and denied entering into any
arrangement with respondent or paying the
latter any sum of money. Petitioner also
denied combining with BMSI and RUST for
the purpose of assuming the alleged obligation
of the said companies. Petitioner also referred
to the NLRC decision which disclosed that per
the written agreement between respondent
and BMSI and RUST, denominated as "Special
Sales Representative Agreement," the rights
and obligations of the parties shall be
governed by the laws of the State of
Connecticut.Petitioner sought the dismissal of
the complaint on grounds of failure to state a
cause of action and forum non conveniens and
prayed for damages by way of compulsory
counterclaim.
The trial court held that the factual allegations
in the complaint, assuming the same to be

admitted, were sufficient for the trial court to


render a valid judgment thereon. It also ruled
that the principle of forum non conveniens
was inapplicable because the trial court could
enforce judgment on petitioner, it being a
foreign corporation licensed to do business in
the Philippines. MR denied. Rule 65
Petitionwith the Court of Appeals praying for
the issuance of a writ of certiorari and a writ of
injunction to set aside the twin orders of the
trial court was filed but likewise denied.
Petitioner mainly asserts that the written
contract between respondent and BMSI
included a valid choice of law clause, that is,
that the contract shall be governed by the laws
of the State of Connecticut. It also mentions
the presence of foreign elements in the dispute
namely, the parties and witnesses involved
are American corporations and citizens and
the evidence to be presented is located outside
the Philippines that renders our local courts
inconvenient forums. Petitioner theorizes that
the foreign elements of the dispute necessitate
the immediate application of the doctrine of
forum non conveniens.
ISSUE:WON the case should be dismissed
under the doctrine of forum non conveniens
HELD: NO.
On the matter of jurisdiction over a conflictsof-laws problem where the case is filed in a
Philippine court and where the court has
jurisdiction over the subject matter, the parties
and the res, it may or can proceed to try the
case even if the rules of conflict-of-laws or the
convenience of the parties point to a foreign
forum. This is an exercise of sovereign
prerogative of the country where the case is
filed.
Jurisdiction over the nature and subject
matter of an action is conferred by the
Constitution and the lawand by the material
allegations in the complaint, irrespective of
whether or not the plaintiff is entitled to
recover all or some of the claims or reliefs
sought therein. Civil Case No. 1192-BG is an
action for damages arising from an alleged
breach of contract. Undoubtedly, the nature of
the action and the amount of damages prayed
are within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the
trial court acquired jurisdiction over herein
respondent (as party plaintiff) upon the filing
of the complaint. On the other hand,

CONFLICT OF LAWS
1 s t e x a m c a s e s | 54
jurisdiction over the person of petitioner (as
party defendant) was acquired by its voluntary
appearance in court.
That the subject contract included a
stipulation that the same shall be governed by
the laws of the State of Connecticut does not
suggest that the Philippine courts, or any other
foreign tribunal for that matter, are precluded
from hearing the civil action. Jurisdiction
and choice of law are two distinct
concepts. Jurisdiction considers whether it is
fair to cause a defendant to travel to this state;
choice of law asks the further question
whether the application of a substantive law
which will determine the merits of the case is
fair to both parties. The choice of law
stipulation will become relevant only when the
substantive issues of the instant case develop,
that is, after hearing on the merits proceeds
before the trial court.
Under the doctrine of forum non conveniens, a
court, in conflicts-of-laws cases, may refuse
impositions on its jurisdiction where it is not
the most "convenient" or available forum and
the parties are not precluded from seeking
remedies elsewhere. Petitioners averments of
the foreign elements in the instant case are not
sufficient to oust the trial court of its
jurisdiction over Civil Case No. No. 1192-BG
and the parties involved.
Moreover, the propriety of dismissing a case
based on the principle of forum non
conveniens requires a factual determination;
hence, it is more properly considered as a
matter of defense. While it is within the
discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should
do so only after vital facts are established, to
determine whether special circumstances
require the courts desistance.
Navida v. Judge Dizon (Guys taas kayo ang
title sa case, refer na lng mo sa fulltext )
May 30, 2011
FACTS:
Before
the
Court
are
consolidated
Petitions
for
Review
on Certiorari under Rule 45 of the Rules of
Court, which arose out of two civil cases that
were filed in different courts but whose factual
background and issues are closely intertwined
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury
suits were filed in different Texas state courts
by citizens of twelve foreign countries,

including the Philippines. The thousands of


plaintiffs sought damages for injuries they
allegedly sustained from their exposure
to dibromochloropropane (DBCP), a chemical
used to kill nematodes (worms), while working
on farms in 23 foreign countries. The cases
were
eventually
transferred
to,
and
consolidated in, the Federal District Court for
the Southern District of Texas, Houston
Division. The cases therein that involved
plaintiffs from the Philippines were Jorge
Colindres Carcamo, et al. v. Shell Oil Co., et
al., and Juan Ramon Valdez, et al. v. Shell
Oil Co., et al. The defendants in the
consolidated cases prayed for the dismissal of
all the actions under the doctrine of forum non
conveniens.
In a Memorandum and Order dated July
11,
1995,
the Federal
District
Court conditionally granted the defendants
motion to dismiss subject to several conditions
(see Memorandum and Order in Fulltext).
Pertinently, the said Memorandum and Order
states in the event that the highest court
of any foreign country finally affirms
the dismissal for lack of jurisdiction of
an action commenced by a plaintiff in
these actions in his home country or the
country in which he was injured, that
plaintiff may return to this court and,
upon proper motion, the court will
resume jurisdiction over the action as if
the case had never been dismissed for
[forum non conveniens].
Civil Case No. 5617 before the RTC of
General Santos City and G.R. Nos.
125078 and 125598
In accordance with the above Memorandum
and Order, a total of 336 plaintiffs from
General Santos City (the petitioners in G.R.
No. 125078, hereinafter referred to as
NAVIDA,et al.) filed a Joint Complaint in
the RTC of General Santos City on August 10,
1995. However, instead of answering their
complaint, most of the defendant companies
filed their various Motions for Bill of
Particulars.
On May 20, 1996, without resolving the
motions filed by the parties, the RTC of
General
Santos
City
issued
an Order dismissing the complaint on the
ground that it did not have jurisdiction to hear
the case and that the filing of the case in the
Philippine courts violated the rules on forum
shopping and litis pendencia, among others.
The RTC expounded that the filing of the case
in the U.S. courts divested this court of its own

CONFLICT OF LAWS
1 s t e x a m c a s e s | 55
jurisdiction. This court takes note that the U.S.
District Court did not decline jurisdiction over
the cause of action. The case was dismissed on
the ground of forum non conveniens, which is
really a matter of venue. By taking cognizance
of the case, the U.S. District Court has, in
essence, concurrent jurisdiction with this court
over the subject matter of this case. It is settled
that initial acquisition of jurisdiction divests
another of its own jurisdiction.
On July 11, 1996, NAVIDA, et al., filed a
Petition for Review on Certiorari in order to
assail the RTC Order but the RTC merely
reiterated that it no longer had any jurisdiction
over the case.
Civil Case No. 24,251-96 before the RTC
of Davao City and G.R. Nos. 126654,
127856, and 128398
Similar to the complaint of NAVIDA, et al.,
ABELLA, et al., alleged that, as workers in
the banana plantation and/or as residents near
the said plantation, they were made to use
and/or were exposed to nematocides,
which contained the chemical DBCP.
The RTC of Davao City, however, junked Civil
Case No. 24,251-96 in its Order dated
October 1, 1996. The Court however was
constrained to dismiss the case because it
shares the opinion of legal experts given in the
interview made by the Inquirer in its Special
report Pesticide Cause Mass Sterility, to wit:
The Philippines should be an inconvenient
forum to file this kind of damage suit against
foreign companies since the causes of action
alleged in the petition do not exist under
Philippine laws. There has been no decided
case in Philippine Jurisprudence awarding to
those adversely affected by DBCP. This means
there is no available evidence which will prove
and disprove the relation between sterility and
DBCP.
The case eventually found its way to the SC in
a Petition for Review, docketed as G.R. No.
126654, filed on November 12, 1996 by
ABELLA, et al., assails before this Court the
above-quoted order of the RTC of Davao City.
ISSUE: WON the RTCs have jurisdiction over
the subject matter in these cases.
HELD: YES
The RTC of General Santos City and the
RTC of Davao City have jurisdiction over

Civil Case Nos. 5617 and 24,251-96,


respectively
The
rule
is
settled
that
jurisdiction over the subject matter of a case is
conferred by law and is determined by the
allegations in the complaint and the character
of the relief sought, irrespective of whether the
plaintiffs are entitled to all or some of the
claims asserted therein. Once vested by law, on
a particular court or body, the jurisdiction over
the subject matter or nature of the action
cannot be dislodged by anybody other than by
the legislature through the enactment of a law.
At the time of the filing of the
complaints, the jurisdiction of the RTC in civil
cases under Batas Pambansa Blg. 129, as
amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil
cases. Regional Trial Courts shall
exercise
exclusive
original
jurisdiction:
(8) In all other cases in which
the demand, exclusive of interest,
damages of whatever kind, attorneys
fees, litigation expenses, and costs or
the value of the property in
controversy exceeds One hundred
thousand pesos (P100,000.00) or, in
such other cases in Metro Manila,
where the demand, exclusive of the
abovementioned items exceeds Two
hundred
thousand
pesos
(P200,000.00).
Corollary
thereto,
Supreme
Court
Administrative Circular No. 09-94, states:
2. The exclusion of the term
damages of whatever kind in
determining
the
jurisdictional
amount under Section 19 (8) and
Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies
to cases where the damages are
merely
incidental
to
or
a
consequence of the main cause of
action. However, in cases where the
claim for damages is the main cause
of action, or one of the causes of
action, the amount of such claim
shall be considered in determining
the jurisdiction of the court.
The claim for damages is the main cause of
action and that the total amount sought in the
complaints is approximately P2.7 million for
each of the plaintiff claimants. The RTCs

CONFLICT OF LAWS
1 s t e x a m c a s e s | 56
unmistakably have jurisdiction over the cases
filed in General Santos City and Davao City, as
both claims by NAVIDA, et al., and
ABELLA, et al., fall within the purview of the
definition of the jurisdiction of the RTC under
Batas Pambansa Blg. 129.
Moreover, the allegation in both complaint
narrate that:
XXX
5. The
plaintiffs
were
exposed to DBCP in the 1970s up
to the early 1980s WHILE (a)
they used this product in the
banana plantations WHERE they
were employed, and/or (b) they
resided within the agricultural
area WHERE IT WAS USED. As a
result of such exposure, the plaintiffs
suffered serious and permanent
injuries
TO
THEIR
HEALTH,
including, but not limited to,
STERILITY and severe injuries to
their reproductive capacities.
6. THE
DEFENDANTS
WERE AT FAULT OR WERE
NEGLIGENT IN THAT THEY
MANUFACTURED,
produced,
sold, and/or USED DBCP and/or
otherwise, PUT THE SAME into
the
stream
of
commerce,
WITHOUT INFORMING THE
USERS OF ITS HAZARDOUS
EFFECTS ON HEALTH AND/OR
WITHOUT INSTRUCTIONS ON
ITS
PROPER
USE
AND
APPLICATION. THEY
allowed
Plaintiffs to be exposed to, DBCPcontaining materials which THEY
knew, or in the exercise of ordinary
care and prudence ought to have
known, were highly harmful and
injurious to the Plaintiffs health and
well-being.
Thus, these allegations in the
complaints constitute the cause of
action of plaintiff claimants a quasidelict, which under the Civil Code is
defined as an act, or omission which
causes damage to another, there being
fault or negligence. To be precise, Article
2176 of the Civil Code provides:
Article 2176. Whoever by act or
omission causes damage to another, there
being fault or negligence, is obliged to pay for

the damage done. Such fault or negligence, if


there is no pre-existing contractual relation
between the parties, is called a quasi-delict
and is governed by the provisions of this
Chapter.
As specifically enumerated in the amended
complaints, NAVIDA, et al., and ABELLA, et
al., point to the acts and/or omissions of the
defendant companies in manufacturing,
producing, selling, using, and/or otherwise
putting into the stream of commerce,
nematocides which contain DBCP, without
informing the users of its hazardous effects on
health and/or without instructions on its
proper use and application.
Clearly then, the acts and/or
omissions attributed to the defendant
companies constitute a quasi-delict which is
the basis for the claim for damages filed by
NAVIDA, et al., and ABELLA, et al., with
individual claims of approximately P2.7
million for each plaintiff claimant, which
obviously falls within the purview of the civil
action jurisdiction of the RTCs.
Moreover, the injuries and illnesses,
which NAVIDA, et al., and ABELLA, et al.,
allegedly suffered resulted from their exposure
to DBCP while they were employed in the
banana
plantations
located
in
the Philippines or while they were residing
within the agricultural areas also located in
the Philippines. The factual allegations in the
Amended Joint-Complaints all point to their
cause of action, which undeniably occurred
in the Philippines. The RTC of General
Santos City and the RTC of Davao City
obviously have reasonable basis to assume
jurisdiction over the cases.
It is, therefore, error on the part of the
courts a quo when they dismissed the cases on
the ground of lack of jurisdiction on the
mistaken assumption that the cause of action
narrated by NAVIDA, et al., and ABELLA, et
al., took place abroad and had occurred
outside and beyond the territorial boundaries
of the Philippines, i.e., the manufacture of the
pesticides, their packaging in containers, their
distribution through sale or other disposition,
resulting in their becoming part of the stream
of commerce, and, hence, outside the
jurisdiction of the RTCs.
Certainly, the cases below are not
criminal cases where territoriality, or
the situs of the act complained of, would be
determinative of jurisdiction and venue for

CONFLICT OF LAWS
1 s t e x a m c a s e s | 57
trial of cases. In personal civil actions, such as
claims for payment of damages, the Rules of
Court allow the action to be commenced and
tried in the appropriate court, where any of the
plaintiffs or defendants resides, or in the case
of a non-resident defendant, where he may be
found, at the election of the plaintiff.
In a very real sense, most of the
evidence required to prove the claims of
NAVIDA, et al., and ABELLA, et al., are
available only in the Philippines. First, plaintiff
claimants are all residents of the Philippines,
either
in General Santos City or
in Davao City. Second, the specific areas where
they were allegedly exposed to the chemical
DBCP are within the territorial jurisdiction of
the courts a quo wherein NAVIDA, et al., and
ABELLA, et al., initially filed their claims for
damages. Third,
the
testimonial
and
documentary evidence from important
witnesses, such as doctors, co-workers, family
members and other members of the
community, would be easier to gather in
the Philippines. Considering the great number
of plaintiff claimants involved in this case, it is
not far-fetched to assume that voluminous
records are involved in the presentation of
evidence to support the claim of plaintiff
claimants. Thus, these additional factors,
coupled with the fact that the alleged cause of
action of NAVIDA, et al., and ABELLA, et al.,
against the defendant companies for
damages occurred in the Philippines,
demonstrate that, apart from the RTC of
General Santos City and the RTC of Davao City
having jurisdiction over the subject matter in
the instant civil cases, they are, indeed, the
convenient fora for trying these cases.
The RTC of General Santos City and the
RTC of Davao City validly acquired
jurisdiction over the persons of all the
defendant companies
It is well to stress again that none of
the parties claims that the courts a quo lack
jurisdiction over the cases filed before
them. All parties are one in asserting that the
RTC of General Santos City and the RTC of
Davao City have validly acquired jurisdiction
over the persons of the defendant companies
in the action below. All parties voluntarily,
unconditionally and knowingly appeared and
submitted themselves to the jurisdiction of the
courts a quo.
Rule 14, Section 20 of
Procedure provides
voluntary appearance
equivalent to service

the 1997 Rules of Civil


that the defendants
in the action shall be
of summons. In this

connection, all the defendant companies


designated and authorized representatives to
receive summons and to represent them in the
proceedings before the courts a quo. All the
defendant companies submitted themselves to
the jurisdiction of the courts a quo by making
several voluntary appearances, by praying for
various affirmative reliefs, and by actively
participating during the course of the
proceedings below.
In line herewith, this Court, in Meat
Packing Corporation of the Philippines v.
Sandiganbayan. held that jurisdiction over
the person of the defendant in civil cases is
acquired either by his voluntary appearance in
court and his submission to its authority or by
service of summons. Furthermore, the active
participation of a party in the proceedings is
tantamount to an invocation of the courts
jurisdiction and a willingness to abide by the
resolution of the case, and will bar said party
from later on impugning the court or bodys
jurisdiction.
Thus, the RTC of General Santos City
and the RTC of Davao City have validly
acquired jurisdiction over the persons of the
defendant companies, as well as over the
subject matter of the instant case. What is
more, this jurisdiction, which has been
acquired and has been vested on the courts a
quo, continues until the termination of the
proceedings.
It may also be pertinently stressed that
jurisdiction is different from the exercise of
jurisdiction. Jurisdiction refers to the
authority to decide a case, not the orders or the
decision rendered therein. Accordingly, where
a court has jurisdiction over the persons of the
defendants and the subject matter, as in the
case of the courts a quo, the decision on all
questions arising therefrom is but an exercise
of such jurisdiction. Any error that the court
may commit in the exercise of its jurisdiction
is merely an error of judgment, which does not
affect its authority to decide the case, much
less divest the court of the jurisdiction over the
case.