G.R. No.

148571

September 24, 2002

The Case

GOVERNMENT OF THE UNITED STATES OF

AMERICA,
Represented by the Philippine Department of
Justice, petitioner,
vs.
HON. GUILLERMO PURGANAN, Presiding Judge
Regional
Trial
Court
of
Manila
and
MARC
JIMENEZ
a.k.a.
MARCIO
BATACAN
CRESPO, respondent
Davide Jr., CJ, Bellosillo, Puno, Vitug, Mendoza,
Panganiban, Quisumbing, Ynares-Santiago, SandovalGutierrez, Carpio, Austria-Martinez, Corona, Morales
and Callejo, Sr.
DECISION
PANGANIBAN, J.:
In extradition proceedings, are prospective extraditees
entitled to notice and hearing before warrants for their
arrest can be issued? Equally important, are they
entitled to the right to bail and provisional liberty while
the extradition proceedings are pending? In general,
the answer to these two novel questions is "No." The
explanation of and the reasons for, as well as the
exceptions to, this rule are laid out in this Decision.

Before us is a Petition for Certiorari under Rule 65 of

the Rules of Court, seeking to void and set aside the
Orders dated May 23, 2001 1 and July 3, 2001 2 issued
by the Regional Trial Court (RTC) of Manila, Branch
42. 3 The first assailed Order set for hearing petitioners
application for the issuance of a warrant for the arrest
of Respondent Mark B. Jimenez.
The second challenged Order, on the other hand,
directed the issuance of a warrant, but at the same
time granted bail to Jimenez. The dispositive portion of
the Order reads as follows:
WHEREFORE, in the light of the foregoing, the
[Court] finds probable cause against respondent
Mark Jimenez. Accordingly let a Warrant for the
arrest
of
the
respondent
be
issued.
Consequently and taking into consideration
Section 9, Rule 114 of the Revised Rules of
Criminal Procedure, this Court fixes the
reasonable amount of bail for respondents
temporary liberty at ONE MILLION PESOS (Php
1,000,000.00), the same to be paid in cash.
Furthermore
respondent
is
directed
to
immediately surrender to this Court his passport
and the Bureau of Immigration and Deportation
is likewise directed to include the name of the
respondent in its Hold Departure List." 4

Essentially, the Petition prays for the lifting of the bail

Order, the cancellation of the bond, and the taking of
Jimenez into legal custody.
The Facts
This Petition is really a sequel to GR No. 139465
entitled Secretary of Justice v. Ralph C. Lantion. 5
Pursuant to the existing RP-US Extradition Treaty, 6 the
United States Government, through diplomatic
channels, sent to the Philippine Government Note
Verbale No. 0522 dated June 16, 1999, supplemented
by Note Nos. 0597, 0720 and 0809 and accompanied
by duly authenticated documents requesting the
extradition of Mark B. Jimenez, also known as Mario
Batacan Crespo. Upon receipt of the Notes and
documents, the secretary of foreign affairs (SFA)
transmitted them to the secretary of justice (SOJ) for
appropriate action, pursuant to Section 5 of
Presidential Decree (PD) No. 1069, also known as the
Extradition Law.
Upon learning of the request for his extradition,
Jimenez sought and was granted a Temporary
Restraining Order (TRO) by the RTC of Manila, Branch
25. 7 The TRO prohibited the Department of Justice
(DOJ) from filing with the RTC a petition for his
extradition. The validity of the TRO was, however,
assailed by the SOJ in a Petition before this Court in the
said GR No. 139465. Initially, the Court -- by a vote of
9-6 -- dismissed the Petition. The SOJ was ordered to
furnish private respondent copies of the extradition
request and its supporting papers and to grant the
latter a reasonable period within which to file a
comment and supporting evidence. 8

Acting on the Motion for Reconsideration filed by the

SOJ, this Court issued its October 17, 2000
Resolution. 9 By an identical vote of 9-6 -- after three
justices changed their votes -- it reconsidered and
reversed its earlier Decision. It held that private
respondent was bereft of the right to notice and
hearing during the evaluation stage of the extradition
process. This Resolution has become final and
executory.
Finding no more legal obstacle, the Government of the
United States of America, represented by the
Philippine DOJ, filed with the RTC on May 18, 2001, the
appropriate Petition for Extradition which was docketed
as Extradition Case No. 01192061. The Petition
alleged, inter alia, that Jimenez was the subject of an
arrest warrant issued by the United States District
Court for the Southern District of Florida on April 15,
1999. The warrant had been issued in connection with
the following charges in Indictment No. 99-00281 CRSEITZ: (1) conspiracy to defraud the United States and
to commit certain offenses in violation of Title 18 US
Code Section 371; (2) tax evasion, in violation of Title
26 US Code Section 7201; (3) wire fraud, in violation of
Title 18 US Code Sections 1343 and 2; (4) false
statements, in violation of Title 18 US Code Sections
1001 and 2; and (5) illegal campaign contributions, in
violation of Title 2 US Code Sections 441b, 441f and
437g(d) and Title 18 US Code Section 2. In order to
prevent the flight of Jimenez, the Petition prayed for
the issuance of an order for his "immediate arrest"
pursuant to Section 6 of PD No. 1069.
Before the RTC could act on the Petition, Respondent
Jimenez filed before it an "Urgent Manifestation/Ex-

Parte Motion," 10 which prayed that petitioners

application for an arrest warrant be set for hearing.
In its assailed May 23, 2001 Order, the RTC granted
the Motion of Jimenez and set the case for hearing on
June 5, 2001. In that hearing, petitioner manifested its
reservations on the procedure adopted by the trial
court allowing the accused in an extradition case to be
heard prior to the issuance of a warrant of arrest.
After the hearing, the court a quo required the parties
to submit their respective memoranda. In his
Memorandum, Jimenez sought an alternative prayer:
that in case a warrant should issue, he be allowed to
post bail in the amount of P100,000.
The alternative prayer of Jimenez was also set for
hearing on June 15, 2001. Thereafter, the court below
issued its questioned July 3, 2001 Order, directing the
issuance of a warrant for his arrest and fixing bail for
his temporary liberty at one million pesos in
cash. 11 After he had surrendered his passport and
posted the required cash bond, Jimenez was granted
provisional liberty via the challenged Order dated July
4, 2001. 12
Hence, this Petition. 13
Issues
Petitioner presents the following
consideration of this Court:
I.

issues

for

the

The public respondent acted without or in

excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of
jurisdiction in adopting a procedure of first
hearing a potential extraditee before issuing an
arrest warrant under Section 6 of PD No. 1069.
II.
The public respondent acted without or in
excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of
jurisdiction in granting the prayer for bail and in
allowing Jimenez to go on provisional liberty
because:
1. An extradition court has no power to
authorize bail, in the absence of any law
that provides for such power.
2. Section 13, Article III (right to bail
clause)
of
the
1987
Philippine
Constitution and Section 4, Rule 114 (Bail)
of the Rules of Court, as amended, which
[were] relied upon, cannot be used as
bases for allowing bail in extradition
proceedings.
3. The presumption is against bail in
extradition proceedings or proceedings
leading to extradition.
4. On the assumption that bail is
available in extradition proceedings or
proceedings leading to extradition, bail is
not a matter of right but only of discretion

upon clear showing by the applicant of

the existence of special circumstances.
5. Assuming that bail is a matter of
discretion in extradition proceedings, the
public respondent received no evidence
of special circumstances which may
justify release on bail.

petitioners failure to file a Motion for Reconsideration

in the RTC and to seek relief in the Court of Appeals
(CA), instead of in this Court. 15 We shall also
preliminarily discuss five extradition postulates that
will guide us in disposing of the substantive issues.
The Courts Ruling
The Petition is meritorious.

6. The risk that Jimenez will flee is high,

and no special circumstance exists that
will engender a well-founded belief that
he will not flee.
7. The conditions attached to the grant of
bail are ineffectual and do not ensure
compliance by the Philippines with its
obligations under the RP-US Extradition
Treaty.
8. The Court of Appeals Resolution
promulgated on May 10, 2001 in the case
entitled Eduardo T. Rodriguez et al. vs.
The Hon. Presiding Judge, RTC, Branch 17,
Manila, CA-G.R. SP No. 64589, relied
upon by the public respondent in granting
bail, had been recalled before the
issuance of the subject bail orders." 14
In sum, the substantive questions that this Court will
address are: (1) whether Jimenez is entitled to notice
and hearing before a warrant for his arrest can be
issued, and (2) whether he is entitled to bail and to
provisional liberty while the extradition proceedings
are pending. Preliminarily, we shall take up the alleged
prematurity of the Petition for Certiorari arising from

Preliminary Matters
Alleged Prematurity of Present Petition
Petitioner submits the following justifications for not
filing a Motion for Reconsideration in the Extradition
Court: "(1) the issues were fully considered by such
court after requiring the parties to submit their
respective memoranda and position papers on the
matter and thus, the filing of a reconsideration motion
would serve no useful purpose; (2) the assailed orders
are a patent nullity, absent factual and legal basis
therefor; and (3) the need for relief is extremely
urgent, as the passage of sufficient time would give
Jimenez ample opportunity to escape and avoid
extradition; and (4) the issues raised are purely of
law." 16
For resorting directly to this Court instead of the CA,
petitioner submits the following reasons: "(1) even if
the petition is lodged with the Court of Appeals and
such appellate court takes cognizance of the issues
and decides them, the parties would still bring the
matter to this Honorable Court to have the issues
resolved once and for all [and] to have a binding
precedent that all lower courts ought to follow; (2) the

Honorable Court of Appeals had in one case 17 ruled on

the issue by disallowing bail but the court below
refused to recognize the decision as a judicial guide
and all other courts might likewise adopt the same
attitude of refusal; and (3) there are pending issues on
bail both in the extradition courts and the Court of
Appeals, which, unless guided by the decision that this
Honorable Court will render in this case, would resolve
to grant bail in favor of the potential extraditees and
would give them opportunity to flee and thus, cause
adverse effect on the ability of the Philippines to
comply with its obligations under existing extradition
treaties." 18
As a general rule, a petition for certiorari before a
higher court will not prosper unless the inferior court
has been given, through a motion for reconsideration,
a chance to correct the errors imputed to it. This rule,
though, has certain exceptions: (1) when the issue
raised is purely of law, (2) when public interest is
involved, or (3) in case of urgency. 19 As a fourth
exception, the Court has also ruled that the filing of a
motion for reconsideration before availment of the
remedy of certiorari is not a sine qua non, when the
questions raised are the same as those that have
already been squarely argued and exhaustively passed
upon by the lower court. 20 Aside from being of this
nature, the issues in the present case also involve pure
questions of law that are of public interest. Hence, a
motion for reconsideration may be dispensed with.
Likewise, this Court has allowed a direct invocation of
its original jurisdiction to issue writs of certiorari when
there are special and important reasons therefor. 21 In
Fortich v. Corona 22 we stated:

[T]he Supreme Court has the full discretionary

power to take cognizance of the petition filed
directly [before] it if compelling reasons, or the
nature and importance of the issues raised,
warrant. This has been the judicial policy to be
observed and which has been reiterated in
subsequent cases, namely: Uy vs. Contreras, et.
al., Torres vs. Arranz, Bercero vs. De Guzman,
and, Advincula vs. Legaspi, et. al. As we have
further stated in Cuaresma:
x x x. A direct invocation of the Supreme
Courts original jurisdiction to issue these
writs should be allowed only when there
are special and important reasons
therefor, clearly and specifically set out in
the petition. This is established policy. x x
x.
Pursuant to said judicial policy, we resolve to
take primary jurisdiction over the present
petition in the interest of speedy justice and to
avoid future litigations so as to promptly put an
end to the present controversy which, as
correctly observed by petitioners, has sparked
national interest because of the magnitude of
the problem created by the issuance of the
assailed resolution. Moreover, x x x requiring the
petitioners to file their petition first with the
Court of Appeals would only result in a waste of
time and money.
That the Court has the power to set aside its own rules
in the higher interests of justice is well-entrenched in
our jurisprudence. We reiterate what we said in Piczon
vs. Court of Appeals: 23

Be it remembered that rules of procedure are

but mere tools designed to facilitate the
attainment of justice. Their strict and rigid
application, which would result in technicalities
that tend to frustrate rather than promote
substantial justice, must always be avoided.
Time and again, this Court has suspended its
own rules and excepted a particular case from
their operation whenever the higher interests of
justice so require. In the instant petition, we
forego a lengthy disquisition of the proper
procedure that should have been taken by the
parties involved and proceed directly to the
merits of the case.

The substantive issues raised in this case require an

interpretation or construction of the treaty and the law
on extradition. A cardinal rule in the interpretation of a
treaty or a law is to ascertain and give effect to its
intent. 25Since PD 1069 is intended as a guide for the
implementation of extradition treaties to which the
Philippines is a signatory, 26 understanding certain
postulates of extradition will aid us in properly
deciding the issues raised here.
1. Extradition Is a Major Instrument for the
Suppression of Crime.

In a number of other exceptional cases, 24 we held as

follows:

First, extradition treaties are entered into for the

purpose of suppressing crime 27 by facilitating
the arrest and the custodial transfer 28 of a
fugitive 29 from one state to the other.

This Court has original jurisdiction, concurrent

with that of Regional Trial Courts and the Court
of Appeals, over petitions for certiorari,
prohibition, mandamus, quo warranto and
habeas corpus, and we entertain direct resort to
us in cases where special and important reasons
or exceptional and compelling circumstances
justify the same."

With the advent of easier and faster means of

international travel, the flight of affluent
criminals from one country to another for the
purpose of committing crime and evading
prosecution has become more frequent.
Accordingly, governments are adjusting their
methods of dealing with criminals and crimes
that transcend international boundaries.

In the interest of justice and to settle once and for all

the important issue of bail in extradition proceedings,
we deem it best to take cognizance of the present
case. Such proceedings constitute a matter of first
impression over which there is, as yet, no local
jurisprudence to guide lower courts.

Today, "a majority of nations in the world

community have come to look upon extradition
as
the
major
effective
instrument
of
international co-operation in the suppression of
crime." 30 It is the only regular system that has
been devised to return fugitives to the
jurisdiction of a court competent to try them in
accordance with municipal and international
law. 31

Five Postulates of Extradition

An important practical effect x x x of the

recognition of the principle that criminals
should be restored to a jurisdiction
competent to try and punish them is that
the number of criminals seeking refuge
abroad will be reduced. For to the extent
that efficient means of detection and the
threat of punishment play a significant
role in the deterrence of crime within the
territorial limits of a State, so the
existence
of
effective
extradition
arrangements
and
the
consequent
certainty of return to the locus delicti
commissi play a corresponding role in the
deterrence of flight abroad in order to
escape the consequence of crime. x x x.
From
an
absence
of
extradition
arrangements flight abroad by the
ingenious
criminal
receives
direct
encouragement and thus indirectly does
the commission of crime itself." 32
In Secretary v. Lantion 33 we explained:
The Philippines also has a national interest to
help in suppressing crimes and one way to do it
is to facilitate the extradition of persons covered
by treaties duly entered [into] by our
government. More and more, crimes are
becoming the concern of one world. Laws
involving crimes and crime prevention are
undergoing universalization. One manifest
purpose of this trend towards globalization is to
deny easy refuge to a criminal whose activities
threaten the peace and progress of civilized
countries. It is to the great interest of the

Philippines to be part of this irreversible

movement in light of its vulnerability to crimes,
especially transnational crimes."
Indeed, in this era of globalization, easier and faster
international travel, and an expanding ring of
international crimes and criminals, we cannot afford to
be an isolationist state. We need to cooperate with
other states in order to improve our chances of
suppressing crime in our own country.
2. The Requesting State Will Accord Due
Process to the Accused
Second, an extradition treaty presupposes that both
parties thereto have examined, and that both accept
and trust, each others legal system and judicial
process. 34 More pointedly, our duly authorized
representatives signature on an extradition treaty
signifies our confidence in the capacity and the
willingness of the other state to protect the basic
rights of the person sought to be extradited. 35 That
signature signifies our full faith that the accused will
be given, upon extradition to the requesting state, all
relevant and basic rights in the criminal proceedings
that will take place therein; otherwise, the treaty would
not have been signed, or would have been directly
attacked for its unconstitutionality.
3. The Proceedings Are Sui Generis
Third, as pointed out in Secretary of Justice v.
Lantion, 36 extradition proceedings are not criminal in
nature. In criminal proceedings, the constitutional
rights of the accused are at fore; in extradition which is
sui generis -- in a class by itself -- they are not.

An extradition [proceeding] is sui generis. It is

not a criminal proceeding which will call into
operation all the rights of an accused as
guaranteed by the Bill of Rights. To begin with,
the process of extradition does not involve the
determination of the guilt or innocence of an
accused. His guilt or innocence will be adjudged
in the court of the state where he will be
extradited. Hence, as a rule, constitutional
rights that are only relevant to determine the
guilt or innocence of an accused cannot be
invoked by an extraditee x x x.
xxxxxxxxx
There are other differences between an
extradition
proceeding
and
a
criminal
proceeding. An extradition proceeding is
summary in nature while criminal proceedings
involve a full-blown trial. In contradistinction to
a criminal proceeding, the rules of evidence in
an extradition proceeding allow admission of
evidence under less stringent standards. In
terms of the quantum of evidence to be
satisfied, a criminal case requires proof beyond
reasonable doubt for conviction while a fugitive
may be ordered extradited upon showing of the
existence of a prima facie case. Finally, unlike
in a criminal case where judgment becomes
executory upon being rendered final, in an
extradition proceeding, our courts may adjudge
an individual extraditable but the President has
the final discretion to extradite him. The United
States adheres to a similar practice whereby the
Secretary of State exercises wide discretion in
balancing the equities of the case and the

demands of the nations foreign relations before

making the ultimate decision to extradite."
Given the foregoing, it is evident that the extradition
court is not called upon to ascertain the guilt or the
innocence
of
the
person
sought
to
be
37
extradited. Such determination during the extradition
proceedings will only result in needless duplication and
delay. Extradition is merely a measure of international
judicial assistance through which a person charged
with or convicted of a crime is restored to a jurisdiction
with the best claim to try that person. It is not part of
the function of the assisting authorities to enter into
questions that are the prerogative of that
jurisdiction. 38 The ultimate purpose of extradition
proceedings in court is only to determine whether the
extradition request complies with the Extradition
Treaty,
and
whether
the
person
sought
is
extraditable. 39
4. Compliance Shall Be in Good Faith.
Fourth, our executive branch of government voluntarily
entered into the Extradition Treaty, and our legislative
branch ratified it. Hence, the Treaty carries the
presumption that its implementation will serve the
national interest.
Fulfilling our obligations under the Extradition Treaty
promotes comity 40 with the requesting state. On the
other hand, failure to fulfill our obligations thereunder
paints a bad image of our country before the world
community. Such failure would discourage other states
from entering into treaties with us, particularly an
extradition treaty that hinges on reciprocity. 41

Verily, we are bound by pacta sunt servanda to comply

in good faith with our obligations under the
Treaty. 42 This principle requires that we deliver the
accused to the requesting country if the conditions
precedent to extradition, as set forth in the Treaty, are
satisfied.
In
other
words,
"[t]he
demanding
government, when it has done all that the treaty and
the law require it to do, is entitled to the delivery of
the accused on the issue of the proper warrant, and
the other government is under obligation to make the
surrender." 43 Accordingly, the Philippines must be
ready and in a position to deliver the accused, should
it be found proper.
5. There Is an Underlying Risk of Flight
Fifth, persons to be extradited are presumed to be
flight risks. This prima facie presumption finds
reinforcement in the experience 44 of the executive
branch: nothing short of confinement can ensure that
the accused will not flee the jurisdiction of the
requested state in order to thwart their extradition to
the requesting state.
The present extradition case further validates the
premise that persons sought to be extradited have a
propensity to flee. Indeed,
extradition hearings would not even begin, if only the
accused were willing to submit to trial in the
requesting country. 45 Prior acts of herein respondent -(1) leaving the requesting state right before the
conclusion of his indictment proceedings there; and (2)
remaining in the requested state despite learning that
the requesting state is seeking his return and that the
crimes he is charged with are bailable -- eloquently

speak of his aversion to the processes in the

requesting state, as well as his predisposition to avoid
them at all cost. These circumstances point to an everpresent, underlying high risk of flight. He has
demonstrated that he has the capacity and the will to
flee. Having fled once, what is there to stop him, given
sufficient opportunity, from fleeing a second time?
First Substantive Issue:
Is Respondent Entitled to Notice and Hearing
Before the Issuance of a Warrant of Arrest?
Petitioner contends that the procedure adopted by the
RTC --informing the accused, a fugitive from justice,
that an Extradition Petition has been filed against him,
and that petitioner is seeking his arrest -- gives him
notice to escape and to avoid extradition. Moreover,
petitioner pleads that such procedure may set a
dangerous precedent, in that those sought to be
extradited -- including terrorists, mass murderers and
war criminals -- may invoke it in future extradition
cases.
On the other hand, Respondent Jimenez argues that he
should not be hurriedly and arbitrarily deprived of his
constitutional right to liberty without due process. He
further asserts that there is as yet no specific law or
rule setting forth the procedure prior to the issuance of
a warrant of arrest, after the petition for extradition
has been filed in court; ergo, the formulation of that
procedure is within the discretion of the presiding
judge.
Both parties cite Section 6 of PD 1069 in support of
their arguments. It states:

SEC. 6. Issuance of Summons; Temporary Arrest;

Hearing, Service of Notices.- (1) Immediately
upon receipt of the petition, the presiding judge
of the court shall, as soon as practicable,
summon the accused to appear and to answer
the petition on the day and hour fixed in the
order. [H]e may issue a warrant for the
immediate arrest of the accused which may be
served any where within the Philippines if it
appears to the presiding judge that the
immediate arrest and temporary detention of
the accused will best serve the ends of justice.
Upon receipt of the answer, or should the
accused after having received the summons fail
to answer within the time fixed, the presiding
judge shall hear the case or set another date for
the hearing thereof.
(2) The order and notice as well as a copy of the
warrant of arrest, if issued, shall be promptly
served each upon the accused and the attorney
having charge of the case." (Emphasis ours)
Does this provision sanction RTC Judge Purganans act
of immediately setting for hearing the issuance of a
warrant of arrest? We rule in the negative.
1. On the Basis of the Extradition Law
It is significant to note that Section 6 of PD 1069, our
Extradition Law, uses the word "immediate" to qualify
the arrest of the accused. This qualification would be
rendered nugatory by setting for hearing the issuance
of the arrest warrant. Hearing entails sending notices
to the opposing parties, 46 receiving facts and
arguments 47 from them, 48 and giving them time to

prepare and present such facts and arguments. Arrest

subsequent to a hearing can no longer be considered
"immediate." The law could not have intended the
word as a mere superfluity but, on the whole, as a
means of imparting a sense of urgency and swiftness
in the determination of whether a warrant of arrest
should be issued.
By using the phrase "if it appears," the law further
conveys that accuracy is not as important as speed at
such early stage. The trial court is not expected to
make an exhaustive determination to ferret out the
true and actual situation, immediately upon the filing
of the petition. From the knowledge and the material
then available to it, the court is expected merely to get
a good first impression -- a prima facie finding -sufficient to make a speedy initial determination as
regards the arrest and detention of the accused.
Attached to the Petition for Extradition, with a
Certificate of Authentication among others, were the
following: (1) Annex H, the Affidavit executed on May
26, 1999 by Mr. Michael E. Savage -- trial attorney in
the Campaign Financing Task Force of the Criminal
Division of the US Department of Justice; (2) Annexes
H to G, evidentiary Appendices of various exhibits that
constituted evidence of the crimes charged in the
Indictment, with Exhibits 1 to 120 (duly authenticated
exhibits that constituted evidence of the crimes
charged in the Indictment); (3) Annex BB, the Exhibit I
"Appendix
of
Witness
[excerpts]
Statements
Referenced in the Affidavit of Angela Byers" and
enclosed Statements in two volumes; (4) Annex GG,
the Exhibit J "Table of Contents for Supplemental
Evidentiary Appendix" with enclosed Exhibits 121 to
132; and (5) Annex MM, the Exhibit L "Appendix of

Witness [excerpts] Statements Referenced in the

Affidavit of Betty Steward" and enclosed Statements in
two volumes. 49
It is evident that respondent judge could have already
gotten an impression from these records adequate for
him to make an initial determination of whether the
accused was someone who should immediately be
arrested in order to "best serve the ends of justice." He
could have determined whether such facts and
circumstances existed as would lead a reasonably
discreet and prudent person to believe that the
extradition request was prima facie meritorious. In
point of fact, he actually concluded from these
supporting documents that "probable cause" did exist.
In the second questioned Order, he stated:
In the instant petition, the documents sent by
the US Government in support of [its] request
for extradition of herein respondent are enough
to convince the Court of the existence of
probable cause to proceed with the hearing
against the extraditee." 50

We stress that the prima facie existence of probable

cause for hearing the petition and, a priori, for issuing
an arrest warrant was already evident from the Petition
itself and its supporting documents. Hence, after
having already determined therefrom that a prima
facie finding did exist, respondent judge gravely
abused his discretion when he set the matter for
hearing upon motion of Jimenez. 51

Moreover, the law specifies that the court sets a

hearing upon receipt of the answer or upon failure of
the accused to answer after receiving the summons. In
connection with the matter of immediate arrest,
however, the word "hearing" is notably absent from
the provision. Evidently, had the holding of a hearing
at that stage been intended, the law could have easily
so provided. It also bears emphasizing at this point
that extradition proceedings are summary 52 in nature.
Hence, the silence of the Law and the Treaty leans to
the more reasonable interpretation that there is no
intention to punctuate with a hearing every little step
in the entire proceedings.
It is taken for granted that the contracting
parties intend something reasonable and
something not inconsistent with generally
recognized principles of International Law, nor
with previous treaty obligations towards third
States. If, therefore, the meaning of a treaty is
ambiguous, the reasonable meaning is to be
preferred to the unreasonable, the more
reasonable to the less reasonable x x x ." 53
Verily, as argued by petitioner, sending to persons
sought to be extradited a notice of the request for
their arrest and setting it for hearing at some future
date would give them ample opportunity to prepare
and execute an escape. Neither the Treaty nor the Law
could have
intended that consequence, for the very purpose of
both would have been defeated by the escape of the
accused from the requested state.
2. On the Basis of the Constitution

Even Section 2 of Article III of our Constitution, which is

invoked by Jimenez, does not require a notice or a
hearing before the issuance of a warrant of arrest. It
provides:
Sec. 2. The right of the people to be secure in
their persons, houses, papers, and effects
against unreasonable searches and seizures of
whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of
arrest shall issue except upon probable cause to
be determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may produce,
and particularly describing the place to be
searched and the persons or things to be
seized."
To determine probable cause for the issuance of arrest
warrants, the Constitution itself requires only the
examination -- under oath or affirmation -- of
complainants and the witnesses they may produce.
There is no requirement to notify and hear the accused
before the issuance of warrants of arrest.
In Ho v. People 54 and in all the cases cited therein,
never was a judge required to go to the extent of
conducting a hearing just for the purpose of personally
determining probable cause for the issuance of a
warrant of arrest. All we required was that the "judge
must have sufficient supporting documents upon
which to make his independent judgment, or at the
very least, upon which to verify the findings of the
prosecutor as to the existence of probable cause." 55

In Webb v. De Leon, 56 the Court categorically stated

that a judge was not supposed to conduct a hearing
before issuing a warrant of arrest:
Again, we stress that before issuing warrants of
arrest, judges merely determine personally the
probability, not the certainty of guilt of an
accused. In doing so, judges do not conduct a
de novo hearing to determine the existence of
probable cause. They just personally review the
initial determination of the prosecutor finding a
probable cause to see if it is supported by
substantial evidence."
At most, in cases of clear insufficiency of evidence on
record, judges merely further examine complainants
and their witnesses. 57 In the present case, validating
the act of respondent judge and instituting the
practice of hearing the accused and his witnesses at
this early stage would be discordant with the rationale
for the entire system. If the accused were allowed to
be heard and necessarily to present evidence during
the prima facie determination for the issuance of a
warrant of arrest,
what would stop him from presenting his entire
plethora of defenses at this stage -- if he so desires -in his effort to negate a prima facie finding? Such a
procedure could convert the determination of a prima
facie case into a full-blown trial of the entire
proceedings and possibly make trial of the main case
superfluous. This scenario is also anathema to the
summary nature of extraditions.
That the case under consideration is an extradition and
not a criminal action is not sufficient to justify the

adoption of a set of procedures more protective of the

accused. If a different procedure were called for at all,
a more restrictive one -- not the opposite -- would be
justified in view of respondents demonstrated
predisposition to flee.
Since this is a matter of first impression, we deem it
wise to restate the proper procedure:
Upon receipt of a petition for extradition and its
supporting documents, the judge must study them and
make, as soon as possible, a prima facie finding
whether (a) they are sufficient in form and substance,
(b) they show compliance with the Extradition Treaty
and Law, and (c) the person sought is extraditable. At
his discretion, the judge may
require the submission of further documentation or
may personally examine the affiants and witnesses of
the petitioner. If, in spite of this study and
examination, no prima facie finding 58 is possible, the
petition may be dismissed at the discretion of the
judge.
On the other hand, if the presence of a prima facie
case is determined, then the magistrate must
immediately issue a warrant for the arrest of the
extraditee, who is at the same time summoned to
answer the petition and to appear at scheduled
summary hearings. Prior to the issuance of the
warrant, the judge must not inform or notify the
potential extraditee of the pendency of the petition,
lest the latter be given the opportunity to escape and
frustrate the proceedings. In our opinion, the foregoing
procedure will "best serve the ends of justice" in
extradition cases.

Second Substantive Issue:

Is Respondent Entitled to Bail?

Article III, Section 13 of the Constitution, is worded as
follows:
Art. III, Sec. 13. All persons, except those
charged with offenses punishable by reclusion
perpetua when evidence of guilt is strong, shall,
before conviction, be bailable by sufficient
sureties, or be released on recognizance as may
be provided by law. The right to bail shall not be
impaired even when the privilege of the writ of
habeas corpus is suspended. Excessive bail shall
not be required."
Respondent Mark B. Jimenez maintains that this
constitutional provision secures the right to bail of all
persons, including those sought to be extradited.
Supposedly, the only exceptions are the ones charged
with offenses punishable with reclusion perpetua,
when evidence of guilt is strong. He also alleges the
relevance to the present case of Section 4 59 of Rule
114 of the Rules of Court which, insofar as practicable
and consistent with the summary nature of extradition
proceedings, shall also apply according to Section 9 of
PD 1069.
On the other hand, petitioner claims that there is no
provision in the Philippine Constitution granting the
right to bail to a person who is the subject of an
extradition request and arrest warrant.

Extradition Different
Proceedings

from

Ordinary

Criminal

We agree with petitioner. As suggested by the use of

the word "conviction," the constitutional provision on
bail quoted above, as well as Section 4 of Rule 114 of
the Rules of Court, applies only when a person has
been arrested and detained for violation of Philippine
criminal laws. It does not apply to extradition
proceedings, because extradition courts do not render
judgments of conviction or acquittal.
Moreover, the constitutional right to bail "flows from
the presumption of innocence in favor of every
accused who should not be subjected to the loss of
freedom as thereafter he would be entitled to
acquittal, unless his guilt be proved beyond reasonable
doubt." 60 It follows that the constitutional provision on
bail will not apply to a case like extradition, where the
presumption of innocence is not at issue.
The provision in the Constitution stating that the "right
to bail shall not be impaired even when the privilege of
the writ of habeas corpus is suspended" does not
detract from the rule that the constitutional right to
bail is available only in criminal proceedings. It must
be noted that the suspension of the privilege of the
writ of habeas corpus finds application "only to
persons judicially charged for rebellion or offenses
inherent
in
or
directly
connected
with
invasion." 61 Hence, the second sentence in the
constitutional provision on bail merely emphasizes the
right to bail in criminal proceedings for the
aforementioned offenses. It cannot be taken to mean
that the right is available even in extradition
proceedings that are not criminal in nature.

That the offenses for which Jimenez is sought to be

extradited are bailable in the United States is not an
argument to grant him one in the present case. To
stress, extradition proceedings are separate and
distinct from the trial for the offenses for which he is
charged. He should apply for bail before the courts
trying the criminal cases against him, not before the
extradition court.
No Violation of Due Process
Respondent Jimenez cites the foreign case Paretti 62 in
arguing that, constitutionally, "[n]o one shall be
deprived of x x x liberty x x x without due process of
law."
Contrary to his contention, his detention prior to the
conclusion of the extradition proceedings does not
amount to a violation of his right to due process. We
iterate the familiar doctrine that the essence of due
process is the opportunity to be heard 63 but, at the
same time, point out that the doctrine does not always
call for a prior opportunity to be heard. 64 Where the
circumstances -- such as those present in an
extradition case -- call for it, a subsequent opportunity
to be heard is enough. 65 In the present case,
respondent will be given full opportunity to be heard
subsequently, when the extradition court hears the
Petition for Extradition. Hence, there is no violation of
his right to due process and fundamental fairness.
Contrary to the contention of Jimenez, we find no
arbitrariness, either, in the immediate deprivation of
his liberty prior to his being heard. That his arrest and
detention will not be arbitrary is sufficiently ensured by
(1) the DOJs filing in court the Petition with its

supporting documents after a determination that the

extradition request meets the requirements of the law
and the relevant treaty; (2) the extradition judges
independent prima facie determination that his arrest
will best serve the ends of justice before the issuance
of a warrant for his arrest; and (3) his opportunity,
once he is under the courts custody, to apply for bail
as an exception to the no-initial-bail rule.
It is also worth noting that before the US government
requested the extradition of respondent, proceedings
had already been conducted in that country. But
because he left the jurisdiction of the requesting state
before those proceedings could be completed, it was
hindered from continuing with the due processes
prescribed under its laws. His invocation of due
process now has thus become hollow. He already had
that opportunity in the requesting state; yet, instead of
taking it, he ran away.
In this light, would it be proper and just for the
government to increase the risk of violating its treaty
obligations in order to accord Respondent Jimenez his
personal liberty in the span of time that it takes to
resolve the Petition for Extradition? His supposed
immediate deprivation of liberty without the due
process that he had previously shunned pales against
the governments interest in fulfilling its Extradition
Treaty obligations and in cooperating with the world
community in the suppression of crime. Indeed,
"[c]onstitutional liberties do not exist in a vacuum; the
due process rights accorded to individuals must be
carefully balanced against exigent and palpable
government interests." 66

Too, we cannot allow our country to be a haven for

fugitives, cowards and weaklings who, instead of
facing the consequences of their actions, choose to
run and hide. Hence, it would not be good policy to
increase the risk of violating our treaty obligations if,
through
overprotection
or
excessively
liberal
treatment, persons sought to be extradited are able to
evade arrest or escape from our custody. In the
absence of any provision -- in the Constitution, the law
or the treaty -- expressly guaranteeing the right to bail
in extradition proceedings, adopting the practice of not
granting them bail, as a general rule, would be a step
towards deterring fugitives from coming to the
Philippines
to
hide
from
or
evade
their
prosecutors.1wphi1.nt
The denial of bail as a matter of course in extradition
cases falls into place with and gives life to Article
14 67 of the Treaty, since this practice would encourage
the accused to voluntarily surrender to the requesting
state to cut short their detention here. Likewise, their
detention pending the resolution of extradition
proceedings would fall into place with the emphasis of
the Extradition Law on the summary nature of
extradition cases and the need for their speedy
disposition.
Exceptions to the No Bail Rule
The rule, we repeat, is that bail is not a matter of right
in extradition cases. However, the judiciary has the
constitutional duty to curb grave abuse of
discretion 68 and tyranny, as well as the power to
promulgate rules to protect and enforce constitutional
rights. 69 Furthermore, we believe that the right to due
process is broad enough to include the grant of basic

fairness to extraditees. Indeed, the right to due

process extends to the "life, liberty or property" of
every person. It is "dynamic and resilient, adaptable to
every situation calling for its application." 70
Accordingly and to best serve the ends of justice, we
believe and so hold that, after a potential extraditee
has been arrested or placed under the custody of the
law, bail may be applied for and granted as an
exception, only upon a clear and convincing showing
(1) that, once granted bail, the applicant will not be a
flight risk or a danger to the community; and (2) that
there exist special, humanitarian and compelling
circumstances 71 including, as a matter of reciprocity,
those cited by the highest court in the requesting state
when it grants provisional liberty in extradition cases
therein.
Since this exception has no express or specific
statutory basis, and since it is derived essentially from
general principles of justice and fairness, the applicant
bears the burden of proving the above two-tiered
requirement with clarity, precision and emphatic
forcefulness. The Court realizes that extradition is
basically an executive, not a judicial, responsibility
arising from the presidential power to conduct foreign
relations. In its barest concept, it partakes of the
nature of police assistance amongst states, which is
not normally a judicial prerogative. Hence, any
intrusion by the courts into the exercise of this power
should be characterized by caution, so that the vital
international and bilateral interests of our country will
not be unreasonably impeded or compromised. In
short, while this Court is ever protective of "the
sporting idea of fair play," it also recognizes the limits

of its own prerogatives and the need to fulfill

international obligations.
Along this line, Jimenez contends that there are special
circumstances that are compelling enough for the
Court to grant his request for provisional release on
bail. We have carefully examined these circumstances
and shall now discuss them.
1. Alleged Disenfranchisement
While his extradition was pending, Respondent Jimenez
was elected as a member of the House of
Representatives. On that basis, he claims that his
detention will disenfranchise his Manila district of
600,000 residents. We are not persuaded. In People v.
Jalosjos, 72 the Court has already debunked the
disenfranchisement argument when it ruled thus:
When the voters of his district elected the
accused-appellant to Congress, they did so with
full awareness of the limitations on his freedom
of action. They did so with the knowledge that
he could achieve only such legislative results
which he could accomplish within the confines
of prison. To give a more drastic illustration, if
voters elect a person with full knowledge that
he is suffering from a terminal illness, they do so
knowing that at any time, he may no longer
serve his full term in office.
In the ultimate analysis, the issue before us
boils down to a question of constitutional equal
protection.

The Constitution guarantees: x x x nor shall any

person be denied the equal protection of laws.
This simply means that all persons similarly
situated shall be treated alike both in rights
enjoyed and responsibilities imposed. The
organs of government may not show any undue
favoritism or hostility to any person. Neither
partiality nor prejudice shall be displayed.
Does being an elective official result in a
substantial distinction that allows different
treatment? Is being a Congressman a
substantial differentiation which removes the
accused-appellant as a prisoner from the same
class as all persons validly confined under law?
The performance of legitimate and even
essential duties by public officers has never
been an excuse to free a person validly [from]
prison. The duties imposed by the mandate of
the people are multifarious. The accusedappellant asserts that the duty to legislate ranks
highest in the hierarchy of government. The
accused-appellant is only one of 250 members
of the House of Representatives, not to mention
the 24 members of the Senate, charged with the
duties of legislation. Congress continues to
function well in the physical absence of one or a
few of its members. Depending on the exigency
of Government that has to be addressed, the
President or the Supreme Court can also be
deemed the highest for that particular duty. The
importance of a function depends on the need
for its exercise. The duty of a mother to nurse
her infant is most compelling under the law of
nature. A doctor with unique skills has the duty

to save the lives of those with a particular

affliction. An elective governor has to serve
provincial constituents. A police officer must
maintain peace and order. Never has the call of
a particular duty lifted a prisoner into a different
classification from those others who are validly
restrained by law.
A strict scrutiny of classifications is essential
lest[,]
wittingly
or
otherwise,
insidious
discriminations are made in favor of or against
groups or types of individuals.
The Court cannot validate badges of inequality.
The necessities imposed by public welfare may
justify exercise of government authority to
regulate even if thereby certain groups may
plausibly assert that their interests are
disregarded.
We, therefore, find that election to the position
of
Congressman
is
not
a
reasonable
classification in criminal law enforcement. The
functions and duties of the office are not
substantial distinctions which lift him from the
class of prisoners interrupted in their freedom
and restricted in liberty of movement. Lawful
arrest and confinement are germane to the
purposes of the law and apply to all those
belonging to the same class." 73
It must be noted that even before private respondent
ran for and won a congressional seat in Manila, it was
already of public knowledge that the United States was
requesting his extradition. Hence, his constituents
were or should have been prepared for the

consequences of the extradition case against their

representative, including his detention pending the
final resolution of the case. Premises considered and in
line with Jalosjos, we are constrained to rule against
his claim that his election to public office is by itself a
compelling reason to grant him bail.
2. Anticipated Delay
Respondent Jimenez further contends that because the
extradition proceedings are lengthy, it would be unfair
to confine him during the pendency of the case. Again
we are not convinced. We must emphasize that
extradition cases are summary in nature. They are
resorted to merely to determine whether the
extradition petition and its annexes conform to the
Extradition Treaty, not to determine guilt or innocence.
Neither is it, as a rule, intended to address issues
relevant to the constitutional rights available to the
accused in a criminal action.
We are not overruling the possibility that petitioner
may, in bad faith, unduly delay the proceedings. This is
quite another matter that is not at issue here. Thus,
any further discussion of this point would be merely
anticipatory and academic.
However, if the delay is due to maneuverings of
respondent, with all the more reason would the grant
of bail not be justified. Giving premium to delay by
considering it as a special circumstance for the grant
of bail would be tantamount to giving him the power to
grant bail to himself. It would also encourage him to
stretch out and unreasonably delay the extradition
proceedings even more. This we cannot allow.

3. Not a Flight Risk?

Jimenez further claims that he is not a flight risk. To
support this claim, he stresses that he learned of the
extradition request in June 1999; yet, he has not fled
the country. True, he has not actually fled during the
preliminary stages of the request for his extradition.
Yet, this fact cannot be taken to mean that he will not
flee as the process moves forward to its conclusion, as
he hears the footsteps of the requesting government
inching closer and closer. That he has not yet fled from
the Philippines cannot be taken to mean that he will
stand his ground and still be within reach of our
government if and when it matters; that is, upon the
resolution of the Petition for Extradition.
In any event, it is settled that bail may be applied for
and granted by the trial court at anytime after the
applicant has been taken into custody and prior to
judgment, even after bail has been previously denied.
In the present case, the extradition court may continue
hearing evidence on the application for bail, which
may be granted in accordance with the guidelines in
this Decision.
Brief Refutation of Dissents
The proposal to remand this case to the extradition
court, we believe, is totally unnecessary; in fact, it is a
cop-out. The parties -- in particular, Respondent
Jimenez -- have been given more than sufficient
opportunity both by the trial court and this Court to
discuss fully and exhaustively private respondents
claim to bail. As already stated, the RTC set for hearing
not only petitioners application for an arrest warrant,
but also private respondents prayer for temporary

liberty. Thereafter required by the RTC were

memoranda on the arrest, then position papers on the
application for bail, both of which were separately filed
by the parties.
This Court has meticulously pored over the Petition,
the Comment, the Reply, the lengthy Memoranda and
the Position Papers of both parties. Additionally, it has
patiently heard them in Oral Arguments, a procedure
not normally observed in the great majority of cases in
this Tribunal. Moreover, after the Memos had been
submitted, the parties -- particularly the potential
extraditee -- have bombarded this Court with
additional pleadings -- entitled "Manifestations" by
both parties and "Counter-Manifestation" by private
respondent -- in which the main topic was Mr.
Jimenezs plea for bail.
A remand would mean that this long, tedious process
would be repeated in its entirety. The trial court would
again hear factual and evidentiary matters. Be it
noted, however, that, in all his voluminous pleadings
and verbal propositions, private respondent has not
asked for a remand. Evidently, even he realizes that
there is absolutely no need to rehear factual matters.
Indeed, the inadequacy lies not in the factual
presentation of Mr. Jimenez. Rather, it lies in his legal
arguments. Remanding the case will not solve this
utter lack of persuasion and strength in his legal
reasoning.
In short, this Court -- as shown by this Decision and the
spirited Concurring, Separate and Dissenting Opinions
written by the learned justices themselves -- has
exhaustively deliberated and carefully passed upon all
relevant questions in this case. Thus, a remand will not

serve any useful purpose; it will only further delay

these already very delayed proceedings, 74 which our
Extradition Law requires to be summary in character.
What we need now is prudent and deliberate speed,
not unnecessary and convoluted delay. What is needed
is a firm decision on the merits, not a circuitous copout.
Then, there is also the suggestion that this Court is
allegedly "disregarding basic freedoms when a case is
one of extradition." We believe that this charge is not
only baseless, but also unfair. Suffice it to say that, in
its length and breath, this Decision has taken special
cognizance of the rights to due process and
fundamental fairness of potential extraditees.
Summation
As we draw to a close, it is now time to summarize and
stress these ten points:
1. The ultimate purpose of extradition
proceedings is to determine whether the
request expressed in the petition, supported by
its annexes and the evidence that may be
adduced during the hearing of the petition,
complies with the Extradition Treaty and Law;
and whether the person sought is extraditable.
The proceedings are intended merely to assist
the requesting state in bringing the accused -or the fugitive who has illegally escaped -- back
to its territory, so that the criminal process may
proceed therein.
2. By entering into an extradition treaty, the
Philippines is deemed to have reposed its trust

in the reliability or soundness of the legal and

judicial system of its treaty partner, as well as in
the ability and the willingness of the latter to
grant basic rights to the accused in the pending
criminal case therein.
3. By nature then, extradition proceedings are
not equivalent to a criminal case in which guilt
or innocence is determined. Consequently, an
extradition case is not one in which the
constitutional rights of the accused are
necessarily available. It is more akin, if at all, to
a courts request to police authorities for the
arrest of the accused who is at large or has
escaped detention or jumped bail. Having once
escaped the jurisdiction of the requesting state,
the reasonable prima facie presumption is that
the person would escape again if given the
opportunity.
4. Immediately upon receipt of the petition for
extradition and its supporting documents, the
judge shall make a prima facie finding whether
the petition is sufficient in form and substance,
whether it complies with the Extradition Treaty
and Law, and whether the person sought is
extraditable. The magistrate has discretion to
require the petitioner to submit further
documentation, or to personally examine the
affiants or witnesses. If convinced that a prima
facie case exists, the judge immediately issues a
warrant for the arrest of the potential extraditee
and summons him or her to answer and to
appear at scheduled hearings on the petition.

5. After being taken into custody, potential

extraditees may apply for bail. Since the
applicants have a history of absconding, they
have the burden of showing that (a) there is no
flight risk and no danger to the community; and
(b) there exist special, humanitarian or
compelling circumstances. The grounds used by
the highest court in the requesting state for the
grant of bail therein may be considered, under
the principle of reciprocity as a special
circumstance. In extradition cases, bail is not a
matter of right; it is subject to judicial discretion
in the context of the peculiar facts of each case.
6. Potential extraditees are entitled to the rights
to due process and to fundamental fairness. Due
process does not always call for a prior
opportunity to be heard. A subsequent
opportunity is sufficient due to the flight risk
involved. Indeed, available during the hearings
on the petition and the answer is the full chance
to be heard and to enjoy fundamental fairness
that is compatible with the summary nature of
extradition.
7. This Court will always remain a protector of
human rights, a bastion of liberty, a bulwark of
democracy and the conscience of society. But it
is also well aware of the limitations of its
authority and of the need for respect for the
prerogatives of the other co-equal and coindependent organs of government.
8. We realize that extradition is essentially an
executive, not a judicial, responsibility arising
out of the presidential power to conduct foreign

relations and to implement treaties. Thus, the

Executive Department of government has broad
discretion
in
its
duty
and
power
of
implementation.
9. On the other hand, courts merely perform
oversight functions and exercise review
authority to prevent or excise grave abuse and
tyranny. They should not allow contortions,
delays and "over-due process" every little step
of the way, lest these summary extradition
proceedings become not only inutile but also
sources of international embarrassment due to
our inability to comply in good faith with a
treaty partners simple request to return a
fugitive. Worse, our country should not be
converted into a dubious haven where fugitives
and
escapees
can
unreasonably
delay,
mummify, mock, frustrate, checkmate and
defeat the quest for bilateral justice and
international cooperation.
10. At bottom, extradition proceedings should
be conducted with all deliberate speed to
determine compliance with the Extradition
Treaty and Law; and, while safeguarding basic
individual rights, to avoid the legalistic
contortions, delays and technicalities that may
negate that purpose.
WHEREFORE, the Petition is GRANTED. The assailed
RTC Order dated May 23, 2001 is hereby declared
NULL and VOID, while the challenged Order dated July
3, 2001 is SET ASIDE insofar as it granted bail to
Respondent Mark Jimenez. The bail bond posted by
private respondent is CANCELLED. The Regional Trial

Court of Manila is directed to conduct the extradition

proceedings before it, with all deliberate speed
pursuant to the spirit and the letter of our Extradition
Treaty with the United States as well as our Extradition
Law. No costs.

SO ORDERED.

ARTEMIO
Associate Justice

V.

PANGANIBAN

Quijano,
Rosete
and
Tizon
for
petitioner.
Perkins, Ponce Enrile, Contreras and Gomez for
respondent.
Claro M. Recto as amicus curiae.

TORRES, J.:
In his petition for certiorari against the Board of
Accountancy and Robert Orr Ferguson, J. A. Sison prays
that this Court render judgment "ordering the
respondent Board of Accountancy to revoke the
certificate issued to Robert Orr Ferguson, a British
subject admitted without examination because there
does not exist any reciprocity between the Philippines
and the United Kingdom regarding the practice of
accountancy."
Upon perusal of the pleadings and for a clear
understanding of the issue raised by petitioner the
following facts, which we believe are not disputed,
shall be stated:

G.R. No. L-2529

December 31, 1949

J.
A.
SISON, petitioner,
vs.
THE BOARD OF ACCOUNTANCY and ROBERT ORR
FERGUZON, respondents.

Pursuant to the provisions of Act No. 342, several

persons, British subjects, and the possessors of
certificates as chartered accountants issued by various
incorporated private accountant's societies in England
and other parts of the British Empire, were, without
examination, granted by the respondents Board of
Accountancy, certificates as public accountants to
practice their profession in this jurisdiction. The

respondent Robert Orr Ferguson was granted

certificate No. 713-W on January 14, 1939 pursuant to
resolution No. 24 of the Board of Accountancy, series
of 1938.
Subsequently, the Board of Accountancy, upon the
examination of the case of those British accountants
without examination, came to the conclusion that ,
there being no law which regulates the practice of
accountancy in England, and that the practice of
accountancy in England, and that the practice of
accountancy in said country being limited only to the
members of incorporated private accountant's
societies, the certificates issued by the Institutes of
chartered accountants and other similar societies in
England and Wales cannot be considered on a par with
the public accountant's certificates issued by the
Philippine Board of Accountancy, which is government
entity. In view thereof, the respondent Board of
Accountancy "resolved to suspend, . . . the validity of
the C.P.A. certificates of the above-mentioned
candidates pending the final revocation thereof should
they fail to prove to the satisfaction of the Board within
sixty days' notice that : (a) Filipinos are allowed to take
the professional accountant examination given by the
British government, if any, and (b) Filipino certified
public accountants can, upon application, be
registered as chartered accountants or granted similar
degrees by the British Government." (Annex
B.)lawphi1.net

Such action of the Board of Accountancy was based on

an opinion rendered by the Secretary of Justice, on
October 1, 1946 (Annex A), to the Chartered
Accountants in England and Wales does not meet the
requirement of section 41 of Rule 123 of the Rules of
Court and that the negative statement therein, as
quoted above, does not establish the existence of
reciprocity, which induced the board to hold that the
registration, without examination, of those British
subjects as certified public accountants, is in
accordance with the provision of section 122 of Act No.
3105 as amended by Commonwealth Act No. 342.
However, the Secretary of justice, answering a query
from the Secretary of Finance, in an opinion rendered
on February 10, 1947 "on the legality of the
suspension or revocation " of the certificates issued to
those British subjects as contemplated in resolution
No. 5, series of 1946 of the Board of Accountancy, was
of the opinion that "the board may not suspend or
revoke the certificates previously granted to the ten
British
accountants
herein
involved,
including
respondent Robert Orr Ferguson, because such action
is in contravention of section 13 of Act No. 3105 as
amended which explicitly provides that the suspension
or revocation of the certificate issued under the said
Act may be done by the board for unprofessional
conduct of the holder or other sufficient cause. The
Secretary of Justice further said that he believes that
"the change in administrative interpretation with
respect to the existence of reciprocity between the
Philippines and Great Britain as to the practice of

accountancy," does not constitute sufficient cause for

the suspension or revocation of the certificates in
question within the meaning of said provision. The
opinion of the Secretary of Justice further said that if
those certificates were issued to those British persons
on the assumption that there is "reciprocity between
Great Britain and the Philippines as to the practice of
certified public accountancy in the Philippines" a
change of administrative interpretation is not favored
(42 Am. Jur., 412).While in the instant case the public
policy with respect to the practice of foreign
accountants in this country remains unchanged, the
action intended by the Board of Accountancy, to
suspend or revoke the certificates already issued to
such persons must be based on some other grounds,
such ignorance, incapacity, deception or fraud on the
part of the holder of the certificates.
In the light of the above, the petitioner brought this
action mainly on the ground that there is no reciprocity
"between the Philippines and the United Kingdom" as
regards the practice of the profession of certified
public accountant, because the certificate submitted
by the respondent. Robert Orr Ferguson "is not a public
or financial record, and does not meet the
requirements of section 41, rule 21 [123] of the Rules
of the Court." And that the furthermore, the negative
statement that "there is nothing in the laws of the
United Kingdom to restrict the right of the Filipino
certified public accountant to practice as professional
accountant therein, " does not established the
existence of reciprocity.

Section 12 of Act No. 3105, as amended, reads:

Section 12. Any person who has been engaged
in the professional accountancy work in the
Philippine Islands for a period of five years or
more prior to the date of his application, and
who holds certificates as certified public
accountant, or as chartered accountant, or other
similar certificates or degrees in the country of
nationality, shall be entitled to registration as
certified public accountant and to receive a
certificate of registration as such certified public
accountant from the Board, Provided such
country or state does not restrict the right of the
Filipino certified public accountants to practice
therein or grants reciprocal rights to Filipino
certified public accountants to practice therein
or grants reciprocal rights to Filipinos, and
provided that the application for their
registration shall be filed with the Board not
later than December 31,1938.
From the text of the above-quoted section 12 of the
Accountancy Law, it is inferred that the registration as
certified public accountant and the issuance of the
corresponding certificate as such certified public
accountant, to a person who for five years has been
engaged in professional accountancy work in the
Philippines and is a holder of a certificate as certified
public accountant, or as a chartered accountant, or
other similar degrees in the country of his origin, is
predicated on the fact that the country of origin of

such foreign applicant (a) "does not restrict the right of

the Filipino certified public accountant to practice
therein," (b) "grants reciprocal rights to the Filipinos,"
and (c) the application for registration "be filed with
the Board not later than December 31, 1938."
In the case at bar, while the profession of certified
public accountant is not controlled or regulated by the
Government of Great Britain, the country of origin of
respondent Robert Orr Ferguson, according to the
record, said respondent had been admitted in this
country to the practice of his profession as certified
public accountant on the strength of his membership
of the Institute of Accountants and Actuaries in
Glasgow (England), incorporated by the Royal Charter
of 1855. The question of his entitlement to admission
to the practice of his profession in this jurisdiction,
does not , therefore, come under reciprocity, as this
principle is known in International Law, but it is
included in the meaning of comity, as expressed in the
alternative condition of the proviso of the abovequoted section 12 which says: such country or state
does not restrict the right of Filipino certified public
accountants to practice therein.
Mutuality, reciprocity, and comity as bases or
elements. International Law is founded
largely upon mutuality, reciprocity, and the
principle of comity of nations. Comity, in this
connection, is neither a matter of absolute
obligation on the one hand, nor of mere
courtesy and good will on the other; it is the

recognition which one nation allows within its

territory to the acts of foreign governments and
tribunals, having due regard both to the
international duty and convenience and the
rights of its own citizens or of other persons who
are under the protection of its laws. The fact of
reciprocity does not necessarily influence the
application of the doctrine of comity, although it
may do so and has been given consideration in
some instances. (30 Am. Jur., 178; Hilton vs.
Guyot, 159 U. S., 113, 40 Law. ed., 95; 16 S. Ct.,
139.)
In Hilton vs. Guyot (supra), the highest court of the
United States said that comity "is the recognition
which one nation allows within its territory to the
legislative, executive, or judicial acts of another nation,
having due regard both to International duty and
convenience, and to the rights of its own citizens or of
other persons who are under the protection of its laws.
" Again, in Bank of Augusta vs. Earle, 38 U.S., 13 Pet.
519, 589, Chief Justice Taney, speaking for the court
while Mr. Justice Story well-known author of the
treatise on Conflict of Laws was a member of it, and
largely adopting his words, said:
. . . It is needless to enumerate here the
instances in which by the general practice of
civilized countries, the laws of the one will, by
the comity of nations, be recognized and
executed in another, where the rights of
individuals are concerned . . . The comity thus

extended to other nations is no impeachment of

sovereignty. It is the voluntary act of the nation
by which it is offered, and is inadmissible when
contrary to its policy, or prejudicial to its
interest. But it contributes so largely to promote
justice between individuals, and to produce a
friendly intercourse between the sovereignties
to which they belong, that courts, but the
comity of the nation, which is administered and
ascertained in the same way, and guided by the
same reasoning, by which all other principles of
municipal law are ascertained and guided.
The record shows that the British Minister accredited
to the Philippine Republic in two notes concerning this
question, addressed to the President of the Philippines
in his capacity as Head of the Department of Foreign
Affairs, said:
. . . there is no governmental control of the
accounting profession in the United Kingdom
and any resident of the United Kingdom, of
whatever nationality, may engage in the
profession of accounting without formality; and .
. . that the high standards of the accounting
profession
in the United Kingdom are
maintained by a number of private societies
whose membership is restricted to persons who
have
passed
a
different
professional
examination
but
impose
no
restriction
whatsoever on membership with respect of
nationality. (Night of November 5, 1946.)

Again , the British Minister, in his note of April 15,

1947, further said:
Your Excellency will recall that doubt had been
expressed
by
the
Philippine
authorities
concerned as to whether qualified public
accountants would be allowed to practice
income tax accounting in the United Kingdom.
Accordingly, I requested a ruling on this point,
and I am happy to inform Your Excellency that I
have been authorized by His Majesty Principal
Secretary of State for Foreign Affairs to state, for
the information of the Government of the
Philippines, that qualified Philippine citizen are
allowed
to
practice
the
profession
of
accountancy including income tax accounting, in
the United Kingdom.
We are bound to take notice of the fact that fact that
the Philippine and the United Kingdom, are bound by a
treaty of friendship and commerce, and each nation is
represented in the other by corresponding diplomatic
envoy. There is no reason whatsoever to doubt the
statement and assurance made by the diplomatic
representative of the British Government in the
Philippines, regarding the practice of the accountancy
profession in the United Kingdom and the fact that
Filipino certified public accountant will be admitted to
practice their profession in the United Kingdom should
they choose to do so.

Under such circumstances, and without necessarily

construing that such attitude of the British
Government in the premises, as represented by the
British Minister, amounts to reciprocity, we may at
least state that it comes within the realm of comity, as
contemplated in our law.

WORLD-WIDE VOLKSWAGEN CORPORATION et

al., Petitioners, v. Charles S. WOODSON, District
Judge of Creek County, Oklahoma, et al.

It appearing that the record fails to show that the

suspension of this respondent is . . . based on any of
the cause provided by the Accountancy Law, we find
no reason why Robert Orr Ferguson, who had
previously been registered as certified public
accountants and issued the corresponding certificate
public accountant in the Philippine Islands, should be
suspended from the practice of his profession in these
Islands. The petition is denied, with cost.

Decided: Jan. 21, 1980.

Moran, C.J., Paras, Pablo, Bengzon, Padilla, Tuason,

Montemayor and Reyes, JJ., concur.

Syllabus

No. 78-1078.
Argued: Oct. 3, 1979.

opinion, WHITE [HTML]

dissent, BRENNAN [HTML]

dissent, MARSHALL, BLACKMUN [HTML]

dissent, BLACKMUN [HTML]

A products-liability action was instituted in an

Oklahoma state court by respondents husband and
wife to recover for personal injuries sustained in
Oklahoma in an accident involving an automobile that
had been purchased by them in New York while they
were New York residents and that was being driven
through Oklahoma at the time of the accident. The
defendants included the automobile retailer and its
wholesaler (petitioners), New York corporations that
did no business in Oklahoma. Petitioners entered
special appearances, claiming that Oklahoma's
exercise of jurisdiction over them would offend

limitations on the State's jurisdiction imposed by the

Due Process Clause of the Fourteenth Amendment.
The trial court rejected petitioners' claims and they
then sought, but were denied a writ of prohibition in
the Oklahoma Supreme Court to restrain respondent
trial judge from exercising in personam jurisdiction
over them.
Held: Consistently with the Due Process Clause, the
Oklahoma trial court may not exercise in personam
jurisdiction over petitioners. Pp. 291-209.
(a) A state court may exercise personal jurisdiction
over a nonresident defendant only so long as there
exist "minimum contacts" between the defendant and
the forum State. International Shoe Co. v.
Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.
The defendant's contacts with the forum State must be
such that maintenance of the suit does not offend
traditional notions of fair play and substantial justice,
id., at 316, 66 S.Ct., at 158, and the relationship
between the defendant and the forum must be such
that it is "reasonable . . . to require the corporation to
defend the particular suit which is brought there," id.,
at 317, 66 S.Ct., at 158. The Due Process Clause "does
not contemplate that a state may make binding a
judgment in personam against an individual or
corporate defendant with which the state has no
contacts, ties, or relations." Id., at 319, 66 S.Ct., at
159. Pp. 291-294.

(b) Here, there is a total absence in the record of those

affiliating circumstances that are a necessary
predicate to any exercise of state-court jurisdiction.
Petitioners carry on no activity whatsoever in
Oklahoma; they close no sales and perform no services
there, avail themselves of none of the benefits of
Oklahoma law, and solicit no business there either
through
salespersons
or
through
advertising
reasonably calculated to reach that State. Nor does the
record show that they regularly sell cars to Oklahoma
residents or that they indirectly, through others, serve
or seek to serve the Oklahoma market. Although it is
foreseeable that automobiles sold by petitioners would
travel to Oklahoma and that the automobile here
might cause injury in Oklahoma, "foreseeability" alone
is not a sufficient benchmark for personal jurisdiction
under the Due Process Clause. The foreseeability that
is critical to due process analysis is not the mere
likelihood that a product will find its way into the forum
State, but rather is that the defendant's conduct and
connection with the forum are such that he should
reasonably anticipate being haled into court there. Nor
can jurisdiction be supported on the theory that
petitioners earn substantial revenue from goods used
in Oklahoma. Pp. 295-299.
Okl., 585 P.2d 351, reversed.
Herbert Rubin, New York City, for petitioners.
Jefferson G. Greer, Tulsa, Okl., for respondents.

TOP

Mr. Justice WHITE delivered the opinion of the Court.

The issue before us is whether, consistently with the
Due Process Clause of the Fourteenth Amendment, an
Oklahoma court may exercise in personam jurisdiction
over a nonresident automobile retailer and its
wholesale distributor in a products-liability action,
when the defendants' only connection with Oklahoma
is the fact that an automobile sold in New York to New
York residents became involved in an accident in
Oklahoma.
* Respondents Harry and Kay Robinson purchased a
new Audi automobile from petitioner Seaway
Volkswagen, Inc. (Seaway), in Massena, N. Y., in 1976.
The following year the Robinson family, who resided in
New York, left that State for a new home in Arizona. As
they passed through the State of Oklahoma, another
car struck their Audi in the rear, causing a fire which
severely burned Kay Robinson and her two children. 1
The Robinsons 2 subsequently brought a productsliability action in the District Court for Creek County,
Okla., claiming that their injuries resulted from
defective design and placement of the Audi's gas tank
and fuel system. They joined as defendants the
automobile's manufacturer, Audi NSU Auto Union

Aktiengesellschaft (Audi); its importer Volkswagen of

America, Inc. (Volkswagen); its regional distributor,
petitioner World-Wide Volkswagen Corp. (World-Wide);
and its retail dealer, petitioner Seaway. Seaway and
World-Wide entered special appearances, 3 claiming
that Oklahoma's exercise of jurisdiction over them
would offend the limitations on the State's jurisdiction
imposed by the Due Process Clause of the Fourteenth
Amendment. 4
The facts presented to the District Court showed that
World-Wide is incorporated and has its business office
in New York. It distributes vehicles, parts, and
accessories, under contract with Volkswagen, to retail
dealers in New York, New Jersey, and Connecticut.
Seaway, one of these retail dealers, is incorporated
and has its place of business in New York. Insofar as
the record reveals, Seaway and World-Wide are fully
independent corporations whose relations with each
other and with Volkswagen and Audi are contractual
only. Respondents adduced no evidence that either
World-Wide or Seaway does any business in Oklahoma,
ships or sells any products to or in that State, has an
agent to receive process there, or purchases
advertisements in any media calculated to reach
Oklahoma. In fact, as respondents' counsel conceded
at oral argument, Tr. of Oral Arg. 32, there was no
showing that any automobile sold by World-Wide or
Seaway has ever entered Oklahoma with the single
exception of the vehicle involved in the present case.

Despite the apparent paucity of contacts between

petitioners and Oklahoma, the District Court rejected
their constitutional claim and reaffirmed that ruling in
denying
petitioners'
motion
for
5
reconsideration. Petitioners then sought a writ of
prohibition in the Supreme Court of Oklahoma to
restrain the District Judge, respondent Charles S.
Woodson, from exercising in personam jurisdiction
over them. They renewed their contention that,
because they had no "minimal contacts," App. 32, with
the State of Oklahoma, the actions of the District Judge
were in violation of their rights under the Due Process
Clause.
The Supreme Court of Oklahoma denied the writ, 585
P.2d 351 (1978), 6 holding that personal jurisdiction
over petitioners was authorized by Oklahoma's "longarm" statute Okla.Stat., Tit. 12, 1701.03(a)(4)
(1971). 7 Although the court noted that the proper
approach was to test jurisdiction against both statutory
and constitutional standards, its analysis did not
distinguish these questions, probably because
1701.03(a)(4) has been interpreted as conferring
jurisdiction to the limits permitted by the United States
Constitution. 8 The court's rationale was contained in
the following paragraph, 585 P.2d, at 354:
"In the case before us, the product being sold and
distributed by the petitioners is by its very design and
purpose so mobile that petitioners can foresee its

possible use in Oklahoma. This is especially true of the

distributor, who has the exclusive right to distribute
such automobile in New York, New Jersey and
Connecticut.
The
evidence
presented
below
demonstrated that goods sold and distributed by the
petitioners were used in the State of Oklahoma, and
under the facts we believe it reasonable to infer, given
the retail value of the automobile, that the petitioners
derive substantial income from automobiles which
from time to time are used in the State of Oklahoma.
This being the case, we hold that under the facts
presented, the trial court was justified in concluding
that the petitioners derive substantial revenue from
goods used or consumed in this State."
We granted certiorari, 440 U.S. 907, 99 S.Ct. 1212, 59
L.Ed.2d 453 (1979), to consider an important
constitutional question with respect to state-court
jurisdiction and to resolve a conflict between the
Supreme Court of Oklahoma and the highest courts of
at least four other States. 9 We reverse.
II
The Due Process Clause of the Fourteenth Amendment
limits the power of a state court to render a valid
personal judgment against a nonresident defendant.
Kulko v. California Superior Court, 436 U.S. 84, 91, 98
S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978). A judgment
rendered in violation of due process is void in the
rendering State and is not entitled to full faith and

credit elsewhere. Pennoyer v. Neff, 95 U.S. 714, 732733, 24 L.Ed. 565 (1878). Due process requires that
the defendant be given adequate notice of the suit,
Mullane v. Central Hanover Trust Co., 339 U.S. 306,
313-314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950), and
be subject to the personal jurisdiction of the court,
International Shoe Co. v. Washington, 326 U.S. 310, 66
S.Ct. 154, 90 L.Ed. 95 (1945). In the present case, it is
not contended that notice was inadequate; the only
question is whether these particular petitioners were
subject to the jurisdiction of the Oklahoma courts.
As has long been settled, and as we reaffirm today, a
state court may exercise personal jurisdiction over a
nonresident defendant only so long as there exist
"minimum contacts" between the defendant and the
forum State. International Shoe Co. v. Washington,
supra, at 316, 66 S.Ct., at 158. The concept of
minimum contacts, in turn, can be seen to perform two
related, but distinguishable, functions. It protects the
defendant against the burdens of litigating in a distant
or inconvenient forum. And it acts to ensure that the
States through their courts, do not reach out beyond
the limits imposed on them by their status as coequal
sovereigns in a federal system.
The protection against inconvenient litigation is
typically described in terms of "reasonableness" or
"fairness." We have said that the defendant's contacts
with the forum State must be such that maintenance

of the suit "does not offend 'traditional notions of fair

play and substantial justice.' " International Shoe Co. v.
Washington, supra, at 316, 66 S.Ct., at 158, quoting
Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342,
85 L.Ed. 278 (1940). The relationship between the
defendant and the forum must be such that it is
"reasonable . . . to require the corporation to defend
the particular suit which is brought there." 326 U.S., at
317, 66 S.Ct., at 158. Implicit in this emphasis on
reasonableness is the understanding that the burden
on the defendant, while always a primary concern, will
in an appropriate case be considered in light of other
relevant factors, including the forum State's interest in
adjudicating the dispute, see McGee v. International
Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2
L.Ed.2d 223 (1957); the plaintiff's interest in obtaining
convenient and effective relief, see Kulko v. California
Superior Court, supra, 436 U.S., at 92, 98 S.Ct., at
1697, at least when that interest is not adequately
protected by the plaintiff's power to choose the forum,
cf. Shaffer v. Heitner, 433 U.S. 186, 211, n. 37, 97 S.Ct.
2569, 2583, n. 37, 53 L.Ed.2d 683 (1977); the
interstate judicial system's interest in obtaining the
most efficient resolution of controversies; and the
shared interest of the several States in furthering
fundamental substantive social policies, see Kulko v.
California Superior Court, supra, 436 U.S., at 93, 98, 98
S.Ct., at 1697, 1700.

The limits imposed on state jurisdiction by the Due

Process Clause, in its role as a guarantor against
inconvenient litigation, have been substantially relaxed
over the years. As we noted in McGee v. International
Life Ins. Co., supra, 355 U.S., at 222223, 78 S.Ct., at
201, this trend is largely attributable to a fundamental
transformation in the American economy:
"Today many commercial transactions touch two or
more States and may involve parties separated by the
full continent. With this increasing nationalization of
commerce has come a great increase in the amount of
business conducted by mail across state lines. At the
same time modern transportation and communication
have made it much less burdensome for a party sued
to defend himself in a State where he engages in
economic activity."
The historical developments noted in McGee, of
course, have only accelerated in the generation since
that case was decided.
Nevertheless, we have never accepted the proposition
that state lines are irrelevant for jurisdictional
purposes, nor could we, and remain faithful to the
principles of interstate federalism embodied in the
Constitution. The economic interdependence of the
States was foreseen and desired by the Framers. In the
Commerce Clause, they provided that the Nation was
to be a common market, a "free trade unit" in which
the States are debarred from acting as separable

economic entities. H. P. Hood & Sons, Inc. v. Du

Mond, 336 U.S. 525, 538, 69 S.Ct. 657, 665, 93 L.Ed.
865 (1949). But the Framers also intended that the
States retain many essential attributes of sovereignty,
including, in particular, the sovereign power to try
causes in their courts. The sovereignty of each State,
in turn, implied a limitation on the sovereignty of all of
its sister Statesa limitation express or implicit in both
the original scheme of the Constitution and the
Fourteenth Amendment.
Hence, even while abandoning the shibboleth that "the
authority of every tribunal is necessarily restricted by
the territorial limits of the State in which it is
established," Pennoyer v. Neff, supra, 95 U.S., at
720, we emphasized that the reasonableness of
asserting jurisdiction over the defendant must be
assessed "in the context of our federal system of
government,"
International
Shoe
Co.
v.
Washington, 326 U.S., at 317, 66 S.Ct., at 158, and
stressed that the Due Process Clause ensures not only
fairness, but also the "orderly administration of the
laws," id., at 319, 66 S.Ct., at 159. As we noted in
Hanson v. Denckla, 357 U.S. 235, 250-251, 78 S.Ct.
1228, 2 L.Ed.2d 1283 (1958):
"As technological progress has increased the flow of
commerce between the States, the need for
jurisdiction over nonresidents has undergone a similar
increase.
At
the
same
time,
progress
in

communications and transportation has made the

defense of a suit in a foreign tribunal less burdensome.
In response to these changes, the requirements for
personal jurisdiction over nonresidents have evolved
from the rigid rule of Pennoyer v. Neff, 95 U.S. 714, 24
L.Ed. 565, to the flexible standard of International Shoe
Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed.
95. But it is a mistake to assume that this trend
heralds the eventual demise of all restrictions on the
personal jurisdiction of state courts. Citation omitted.
Those restrictions are more than a guarantee of
immunity from inconvenient or distant litigation. They
are a consequence of territorial limitations on the
power of the respective States."
Thus, the Due Process Clause "does not contemplate
that a state may make binding a judgment in
personam against an individual or corporate defendant
with which the state has no contacts, ties, or
relations." International Shoe Co. v. Washington, 326
U.S., at 319, 66 S.Ct., at 159. Even if the defendant
would suffer minimal or no inconvenience from being
forced to litigate before the tribunals of another State;
even if the forum State has a strong interest in
applying its law to the controversy; even if the forum
State is the most convenient location for litigation, the
Due Process Clause, acting as an instrument of
interstate federalism, may sometimes act to divest the
State of its power to render a valid judgment. Hanson

v. Denckla, supra, 357 U.S., at 251, 254, 78 S.Ct., at

1238, 1240.
Applying these principles to the case at hand, 10 we
find in the record before us a total absence of those
affiliating circumstances that are a necessary
predicate to any exercise of state-court jurisdiction.
Petitioners carry on no activity whatsoever in
Oklahoma. They close no sales and perform no
services there. They avail themselves of none of the
privileges and benefits of Oklahoma law. They solicit
no business there either through salespersons or
through advertising reasonably calculated to reach the
State. Nor does the record show that they regularly sell
cars at wholesale or retail to Oklahoma customers or
residents or that they indirectly, through others, serve
or seek to serve the Oklahoma market. In short,
respondents seek to base jurisdiction on one, isolated
occurrence and whatever inferences can be drawn
therefrom: the fortuitous circumstance that a single
Audi automobile, sold in New York to New York
residents, happened to suffer an accident while
passing through Oklahoma.
It is argued, however, that because an automobile is
mobile by its very design and purpose it was
"foreseeable" that the Robinsons' Audi would cause
injury in Oklahoma. Yet "foreseeability" alone has
never been a sufficient benchmark for personal
jurisdiction under the Due Process Clause. In Hanson v.

Denckla, supra, it was no doubt foreseeable that the

settlor of a Delaware trust would subsequently move
to Florida and seek to exercise a power of appointment
there; yet we held that Florida courts could not
constitutionally exercise jurisdiction over a Delaware
trustee that had no other contacts with the forum
State. In Kulko v. California Superior Court, 436 U.S. 84,
98 S.Ct. 1690, 56 L.Ed.2d 132 (1978), it was surely
"foreseeable" that a divorced wife would move to
California from New York, the domicile of the marriage,
and that a minor daughter would live with the mother.
Yet we held that California could not exercise
jurisdiction in a child-support action over the former
husband who had remained in New York.
If foreseeability were the criterion, a local California
tire retailer could be forced to defend in Pennsylvania
when a blowout occurs there, see Erlanger Mills, Inc. v.
Cohoes Fibre Mills, Inc., 239 F.2d 502, 507 (CA4 1956);
a Wisconsin seller of a defective automobile jack could
be haled before a distant court for damage caused in
New Jersey, Reilly v. Phil Tolkan Pontiac, Inc., 372
F.Supp. 1205 (N.J.1974); or a Florida soft-drink
concessionaire could be summoned to Alaska to
account for injuries happening there, see Uppgren v.
Executive Aviation Services, Inc., 304 F.Supp. 165, 170171 (Minn.1969). Every seller of chattels would in
effect appoint the chattel his agent for service of
process. His amenability to suit would travel with the
chattel. We recently abandoned the outworn rule of

Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed.

1023 (1905), that the interest of a creditor in a debt
could be extinguished or otherwise affected by any
State having transitory jurisdiction over the debtor.
Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53
L.Ed.2d 683 (1977). Having inferred the mechanical
rule that a creditor's amenability to a quasi in rem
action travels with his debtor, we are unwilling to
endorse an analogous principle in the present case. 11
This is not to say, of course, that foreseeability is
wholly irrelevant. But the foreseeability that is critical
to due process analysis is not the mere likelihood that
a product will find its way into the forum State. Rather,
it is that the defendant's conduct and connection with
the forum State are such that he should reasonably
anticipate being haled into court there. See Kulko v.
California Superior Court, supra, 436 U.S., at 97-98, 98
S.Ct., at 1699-1700; Shaffer v. Heitner,433 U.S., at
216, 97 S.Ct., at 2586, and see id., at 217-219, 97
S.Ct., at 2586-2587 (Stevens, J., concurring in
judgment). The Due Process Clause, by ensuring the
"orderly administration of the laws," International Shoe
Co. v. Washington, 326 U.S., at 319, 66 S.Ct., at 159,
gives a degree of predictability to the legal system
that allows potential defendants to structure their
primary conduct with some minimum assurance as to
where that conduct will and will not render them liable
to suit.

When a corporation "purposefully avails itself of the

privilege of conducting activities within the forum
State," Hanson v. Denckla, 357 U.S., at 253, 78 S.Ct.,
at 1240, it has clear notice that it is subject to suit
there, and can act to alleviate the risk of burdensome
litigation by procuring insurance, passing the expected
costs on to customers, or, if the risks are too great,
severing its connection with the State. Hence if the
sale of a product of a manufacturer or distributor such
as Audi or Volkswagen is not simply an isolated
occurrence, but arises from the efforts of the
manufacturer or distributor to serve directly or
indirectly, the market for its product in other States, it
is not unreasonable to subject it to suit in one of those
States if its allegedly defective merchandise has there
been the source of injury to its owner or to others. The
forum State does not exceed its powers under the Due
Process Clause if it asserts personal jurisdiction over a
corporation that delivers its products into the stream
of commerce with the expectation that they will be
purchased by consumers in the forum State. Cf. Gray v.
American Radiator & Standard Sanitary Corp., 22 Ill.2d
432, 176 N.E.2d 761 (1961).
But there is no such or similar basis for Oklahoma
jurisdiction over World-Wide or Seaway in this case.
Seaway's sales are made in Massena, N. Y. WorldWide's market, although substantially larger, is limited
to dealers in New York, New Jersey, and Connecticut.
There is no evidence of record that any automobiles

distributed by World-Wide are sold to retail customers

outside this tristate area. It is foreseeable that the
purchasers of automobiles sold by World-Wide and
Seaway may take them to Oklahoma. But the mere
"unilateral activity of those who claim some
relationship with a nonresident defendant cannot
satisfy the requirement of contact with the forum
State." Hanson v. Denckla, supra, at 253, 78 S.Ct., at
1239-1240.
In a variant on the previous argument, it is contended
that jurisdiction can be supported by the fact that
petitioners earn substantial revenue from goods used
in Oklahoma. The Oklahoma Supreme Court so found,
585 P.2d, at 354-355, drawing the inference that
because one automobile sold by petitioners had been
used in Oklahoma, others might have been used there
also. While this inference seems less than compelling
on the facts of the instant case, we need not question
the court's factual findings in order to reject its
reasoning.
This argument seems to make the point that the
purchase of automobiles in New York, from which the
petitioners earn substantial revenue, would not occur
but for the fact that the automobiles are capable of
use in distant States like Oklahoma. Respondents
observe that the very purpose of an automobile is to
travel, and that travel of automobiles sold by
petitioners is facilitated by an extensive chain of

Volkswagen service centers throughout the country,

including some in Oklahoma. 12 However, financial
benefits accruing to the defendant from a collateral
relation to the forum State will not support jurisdiction
if they do not stem from a constitutionally cognizable
contact with that State. See Kulko v. California Superior
Court, 436 U.S., at 94-95, 98 S.Ct., at 1698-1699. In
our view, whatever marginal revenues petitioners may
receive by virtue of the fact that their products are
capable of use in Oklahoma is far too attenuated a
contact to justify that State's exercise of in personam
jurisdiction over them.
Because we find that petitioners have no "contacts,
ties, or relations" with the State of Oklahoma,
International Shoe Co. v. Washington, supra, 326 U.S.,
at 319, 66 S.Ct., at 159, the judgment of the Supreme
Court of Oklahoma is
Reversed.

SUPREME COURT OF THE UNITED STATES

Syllabus
HARTFORD
CO. et al.

FIRE

INSURANCE

v. CALIFORNIA et al.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
NINTH CIRCUIT

No. 91-1111.
Argued February
Decided June 28, 1993

23,

[n.*]

Nineteen States and many

private
plaintiffs
filed
complaints alleging that the
defendants--four
domestic
primary
insurers,
domestic
companies
who
sell
reinsurance to insurers, two
domestic trade associations, a
domestic reinsurance broker,
and
reinsurers
based
in
London--violated the Sherman
Act by engaging in various

1993 --

conspiracies aimed at forcing

certain other primary insurers
to change the terms of their
standard domestic commercial
general
liability
insurance
policies to conform with the
policies the defendant insurers
wanted to sell. After the
actions were consolidated for
litigation, the District Court
granted
the
defendants'
motions to dismiss. The Court
of Appeals reversed, rejecting
the District Court's conclusion
that the defendants were
entitled to antitrust immunity
under 2(b) of the McCarran
Ferguson Act, which exempts
from federal regulation "the
business of insurance," except
"to the extent that such
business is not regulated by
State law." Although it held the
conduct involved to be "the
business of insurance," the
Court of Appeals ruled that the
foreign reinsurers did not fall
within
2(b)'s
protection
because their activities could

not be "regulated by State

law," and that the domestic
insurers had forfeited their
2(b) exemption when they
conspired with the nonexempt
foreign
reinsurers.
Furthermore, held the court,
most of the conduct in
question fell within 3(b),
which provides that nothing in
the McCarran Ferguson Act
"shall render the . . .Sherman
Act inapplicable to any . . . act
of boycott . . . ." Finally, the
court rejected the District
Court's conclusion that the
principle
of
international
comity
barred
it
from
exercising
Sherman
Act
jurisdiction over the three
claims brought solely against
the London reinsurers.
Held: The judgment is affirmed
in part and reversed in part,
and the case is remanded.
938 F. 2d 919, affirmed in part,
reversed
in
part,
and
remanded.

Justice Souter delivered the

opinion of the Court with
respect to Parts I, II-A, III, and
IV, concluding that:
1. The domestic defendants
did not lose their 2(b)
immunity by conspiring with
the foreign defendants. The
Court of Appeals's conclusion
to the contrary was based in
part
on
the
statement,
in Group Life & Health Ins.
Co. v. Royal Drug Co., 440 U.S.
205, 231, that, "[i]n analogous
contexts, the Court has held
that an exempt entity forfeits
antitrust exemption by acting
in concert with nonexempt
parties." Even assuming that
foreign reinsurers were "not
regulated by State law," the
Court of Appeals's reasoning
fails because the analogy
drawn by the Royal Drug Court
was a loose one. Following that
language,
the Royal
Drug Court cited two cases
dealing
with
the
Capper
Volstead Act, which immunizes

certain
"persons"
from
Sherman
Act
liability. Ibid.Because,
in
contrast,
the
McCarran
Ferguson
Act
immunizes
activities rather than entities,
an entity based analysis of
2(b)
immunity
is
inappropriate. See id., at 232233.
Moreover,
the
agreements at issue in Royal
Drug Co. were made with
"parties wholly outside the
insurance industry," id., at 231,
whereas
the
alleged
agreements here are with
foreign
reinsurers
and
admittedly
concern
"the
business of insurance." Pp. 1317.
2. Even assuming that a court
may
decline
to
exercise
Sherman Act jurisdiction over
foreign
conduct
in
an
appriopriate case, international
comity would not counsel
against exercising jurisdiction
in the circumstances alleged
here. The only substantial

question in this case is

whether "there is in fact a true
conflict between domestic and
foreign
law." Socit
Nationale
Industrielle
Arospatiale v. United States
District Court, 482 U.S. 522,
555 (Blackmun, J., concurring
in part and dissenting in part).
That
question
must
be
answered in the negative,
since the London reinsurers do
not argue that British law
requires them to act in some
fashion prohibited by United
States law or claim that their
compliance with the laws of
both countries is otherwise
impossible. Pp. 27-32.
Justice Scalia delivered the
opinion of the Court with
respect to Part I, concluding
that a "boycott" for purposes
of 3(b) of the Act occurs
where, in order to coerce a
target into certain terms on
onetransaction, parties refuse
to engage in other, unrelated
transactions with the target. It

is not a "boycott" but rather a

concerted agreement to terms
(a
"cartelization")
where
parties refuse to engage in a
particular transaction until the
terms of that transaction are
agreeable. Under the foregoing
test, the allegations of a
"boycott"
in
this
case,
construed most favorably to
the respondents, are sufficient
to sustain most of the relevant
counts of complaint against a
motion to dismiss. Pp. 2-12.
Souter, J., announced the
judgment of the Court and
delivered the opinion for a
unanimous Court with respect
to Parts I and II-A, the opinion
of the Court with respect to
Parts III and IV, in which
Rehnquist, C. J., and White,
Blackmun, and Stevens, JJ.,
joined, and an opinion with
respect to Part II-B, in which
White, Blackmun, and Stevens,
JJ., joined. Scalia, J., delivered
the opinion of the Court with
respect to Part I, in which

Rehnquist, C. J., and O'Connor,

Kennedy, and Thomas, JJ.,
joined,
and
a
dissenting
opinion with respect to Part II,
in which O'Connor, Kennedy,
and Thomas, JJ., joined.

UNITED STATES COURT OF APPEALS, SECOND

CIRCUIT DOLLY M.E. FILARTIGA and JOEL
FILARTIGA,
Plaintiffs-Appellants, v. AMERICO NORBERTO PENAIRALA, Defendant-Appellee No. 191, Docket 79-6090
630 F.2d 876; 1980 U.S. App. LEXIS 16111 October 16,
1979, Argued June 30, 1980, Decided PRIOR HISTORY:
Appeal from a judgment of the United States District
Court for the Eastern District of New York, Eugene H.

Nickerson, District Judge, dismissing appellants'

complaint for want of subject matter jurisdiction,
pursuant to Fed. R. Civ. P. 12(c). DISPOSITION:
Reversed. COUNSEL: Peter Weiss, New York City
(Rhonda Copelon, John Corwin and Jose Antonio Lugo,
Center for Constitutional Rights, New York City, and
Michael Maggio, Goren & Maggio, Washington, D. C., of
counsel), for plaintiffsappellants. Murry D. Brochin,
Newark, N. J. (Lowenstein, Sandler, Brochin, Kohl,
Fisher & Boylan, P. C., Newark, N. J., of counsel), for
defendant-appellee. Irving Gornstein, Atty., Dept. of
Justice, Washington, D. C. (Drew S. Days, III, Asst. Atty.
Gen., John E. Huerta, Deputy Asst. Atty. Gen., Roberts
B. Owen, Legal Advisor, William T. Lake, Deputy Legal
Advisor, Stefan A. Riesenfeld, Charles Runyon and
Linda A. Baumann, Attys., Dept. of State, Washington,
D. C.), for the U. S. as amicus curiae. Donald L.
Doernberg, New York City, and David S. Weissbrodt,
Minneapolis, Minn., for Amnesty International-U. S. A.,
Intern. League for Human Rights, and the Lawyers'
Committee for Intern. Human Rights as amici curiae.
Allan Abbot Tuttle, and Steven M. Schneebaum,
Washington, D. C., for The Intern. Human Rights Law
Group, The Council on Hemispheric Affairs and the
Washington Office on Latin America as amici curiae.
JUDGES: Before FEINBERG, Chief Judge, KAUFMAN and
KEARSE n*, Circuit Judges. * The late Judge Smith was
a member of the original panel in this case. After his
unfortunate death, Judge Kearse was designated to fill
his place pursuant to Local Rule 0.14(b). OPINION BY:
KAUFMAN
OPINION:
Upon
ratification
of
the

Constitution, the thirteen former colonies were fused

into a single nation, one which, in its relations with
foreign states, is bound both to observe and construe
the accepted norms of international law, formerly
known as the law of nations. Under the Articles of
Confederation, the several states had interpreted and
applied this body of doctrine as a part of their common
law, but with the founding of the "more perfect Union"
of 1789, the law of nations became preeminently a
federal concern. Implementing the constitutional
mandate for national control over foreign relations, the
First Congress established original district court
jurisdiction over "all causes where an alien sues for a
tort only (committed) in violation of the law of
nations." Judiciary Act of 1789, ch. 20, 9(b), 1 Stat.
73, 77 (1789), codified at 28 U.S.C. 1350. Construing
this rarely-invoked provision, we hold that deliberate
torture perpetrated under color of official authority
violates
universally
accepted
norms
of
the
international law of human rights, regardless of the
nationality of the parties. Thus, whenever an alleged
torturer is found and served with process by an alien
within our borders, 1350 provides federal jurisdiction.
Accordingly, we reverse the judgment of the district
court dismissing the complaint for want of federal
jurisdiction. I The appellants, plaintiffs below, are
citizens of the Republic of Paraguay. Dr. Joel Filartiga, a
physician, describes himself as a longstanding
opponent of the government of President Alfredo
Stroessner, which has held power in Paraguay since
1954. His daughter, Dolly Filartiga, arrived in the

United States in 1978 under a visitor's visa, and has

since applied for permanent political asylum. The
Filartigas brought this action in the Eastern District of
New York against Americo Norberto Pena-Irala (Pena),
also a citizen of Paraguay, for wrongfully causing the
death of Dr. Filartiga's seventeen-year old son, Joelito.
Because the district court dismissed the action for
want of subject matter jurisdiction, we must accept as
true the allegations contained in the Filartigas'
complaint and affidavits for purposes of this appeal.
The appellants contend that on March 29, 1976, Joelito
Filartiga was kidnapped and tortured to death by Pena,
who was then Inspector General of Police in Asuncion,
Paraguay. Later that day, the police brought Dolly
Filartiga to Pena's home where she was confronted
with the body of her brother, which evidenced marks
of severe torture. As she fled, horrified, from the
house, Pena followed after her shouting, "Here you
have what you have been looking for for so long and
what you deserve. Now shut up." The Filartigas claim
that Joelito was tortured and killed in retaliation for his
father's political activities and beliefs. Shortly
thereafter, Dr. Filartiga commenced a criminal action in
the Paraguayan courts against Pena and the police for
the murder of his son. As a result, Dr. Filartiga's
attorney was arrested and brought to police
headquarters where, shackled to a wall, Pena
threatened him with death. This attorney, it is alleged,
has since been disbarred without just cause. During
the course of the Paraguayan criminal proceeding,
which is apparently still pending after four years,

another man, Hugo Duarte, confessed to the murder.

Duarte, who was a member of the Pena household, (1)
claimed that he had discovered his wife and Joelito in
flagrante delicto, and that the crime was one of
passion. The Filartigas have submitted a photograph of
Joelito's corpse showing injuries they believe refute
this claim. Dolly Filartiga, moreover, has stated that
she will offer evidence of three independent autopsies
demonstrating that her brother's death "was the result
of professional methods of torture." Despite his
confession, Duarte, we are told, has never been
convicted or sentenced in connection with the crime.
In July of 1978, Pena sold his house in Paraguay and
entered the United States under a visitor's visa. He
was accompanied by Juana Bautista Fernandez
Villalba, who had lived with him in Paraguay. The
couple remained in the United States beyond the term
of their visas, and were living in Brooklyn, New York,
when Dolly Filartiga, who was then living in
Washington, D. C., learned of their presence. Acting on
information provided by Dolly the Immigration and
Naturalization Service arrested Pena and his
companion, both of whom were subsequently ordered
deported on April 5, 1979 following a hearing. They
had then resided in the United States for more than
nine months. Almost immediately, Dolly caused Pena
to be served with a summons and civil complaint at
the Brooklyn Navy Yard, where he was being held
pending deportation. The complaint alleged that Pena
had wrongfully caused Joelito's death by torture and
sought compensatory and punitive damages of $

10,000,000. The Filartigas also sought to enjoin Pena's

deportation to ensure his availability for testimony at
trial. (2) The cause of action is stated as arising under
"wrongful death statutes; the U. N. Charter; the
Universal Declaration on Human Rights; the U. N.
Declaration Against Torture; the American Declaration
of the Rights and Duties of Man; and other pertinent
declarations, documents and practices constituting the
customary international law of human rights and the
law of nations," as well as 28 U.S.C. 1350, Article II,
sec. 2 and the Supremacy Clause of the U. S.
Constitution. Jurisdiction is claimed under the general
federal question provision, 28 U.S.C. 1331 and,
principally on this appeal, under the Alien Tort Statute,
28 U.S.C. 1350. (3) Judge Nickerson stayed the order
of deportation, and Pena immediately moved to
dismiss the complaint on the grounds that subject
matter jurisdiction was absent and for forum non
conveniens. On the jurisdictional issue, there has been
no suggestion that Pena claims diplomatic immunity
from suit. The Filartigas submitted the affidavits of a
number of distinguished international legal scholars,
who stated unanimously that the law of nations
prohibits absolutely the use of torture as alleged in the
complaint. (4) Pena, in support of his motion to dismiss
on the ground of forum non conveniens, submitted the
affidavit of his Paraguayan counsel, Jose Emilio
Gorostiaga, who averred that Paraguayan law provides
a full and adequate civil remedy for the wrong alleged.
(5) Dr. Filartiga has not commenced such an action,
however, believing that further resort to the courts of

his own country would be futile. Judge Nickerson heard

argument on the motion to dismiss on May 14, 1979,
and on May 15 dismissed the complaint on
jurisdictional grounds. (6) The district judge recognized
the strength of appellants' argument that official
torture violates an emerging norm of customary
international law. Nonetheless, he felt constrained by
dicta contained in two recent opinions of this Court,
Dreyfus v. von Finck, 534 F.2d 24 (2d Cir.), cert. denied,
429 U.S. 835, 97 S. Ct. 102, 50 L. Ed. 2d 101 (1976);
IIT v. Vencap, Ltd., 519 F.2d 1001 (2d Cir. 1975), to
construe narrowly "the law of nations," as employed in
1350, as excluding that law which governs a state's
treatment of its own citizens. The district court
continued the stay of deportation for forty-eight hours
while appellants applied for further stays. These
applications were denied by a panel of this Court on
May 22, 1979, and by the Supreme Court two days
later. Shortly thereafter, Pena and his companion
returned to Paraguay. II Appellants rest their principal
argument in support of federal jurisdiction upon the
Alien Tort Statute, 28 U.S.C. 1350, which provides:
"The district courts shall have original jurisdiction of
any civil action by an alien for a tort only, committed
in violation of the law of nations or a treaty of the
United States." Since appellants do not contend that
their action arises directly under a treaty of the United
States, (7) a threshold question on the jurisdictional
issue is whether the conduct alleged violates the law
of nations. In light of the universal condemnation of
torture in numerous international agreements, and the

renunciation of torture as an instrument of official

policy by virtually all of the nations of the world (in
principle if not in practice), we find that an act of
torture committed by a state official against one held
in detention violates established norms of the
international law of human rights, and hence the law
of nations. The Supreme Court has enumerated the
appropriate sources of international law. The law of
nations "may be ascertained by consulting the works
of jurists, writing professedly on public law; or by the
general usage and practice of nations; or by judicial
decisions recognizing and enforcing that law." United
States v. Smith, 18 U.S. (5 Wheat.) 153, 160-61, 5 L.
Ed. 57 (1820); Lopes v. Reederei Richard Schroder, 225
F. Supp. 292, 295 (E.D.Pa.1963). In Smith, a statute
proscribing "the crime of piracy (on the high seas) as
defined by the law of nations," 3 Stat. 510(a) (1819),
was held sufficiently determinate in meaning to afford
the basis for a death sentence. The Smith Court
discovered among the works of Lord Bacon, Grotius,
Bochard and other commentators a genuine consensus
that
rendered
the
crime
"sufficiently
and
constitutionally defined." Smith, supra, 18 U.S. (5
Wheat.) at 162, 5 L. Ed. 57. The Paquete Habana, 175
U.S. 677, 20 S. Ct. 290, 44 L. Ed. 320 (1900),
reaffirmed that where there is no treaty, and no
controlling executive or legislative act or judicial
decision, resort must be had to the customs and
usages of civilized nations; and, as evidence of these,
to the works of jurists and commentators, who by
years of labor, research and experience, have made

themselves peculiarly well acquainted with the

subjects of which they treat. Such works are resorted
to by judicial tribunals, not for the speculations of their
authors concerning what the law ought to be, but for
trustworthy evidence of what the law really is. Id. at
700, 20 S. Ct. at 299. Modern international sources
confirm the propriety of this approach. (8) Habana is
particularly instructive for present purposes, for it held
that the traditional prohibition against seizure of an
enemy's coastal fishing vessels during wartime, a
standard that began as one of comity only, had
ripened over the preceding century into "a settled rule
of international law" by "the general assent of civilized
nations." Id. at 694, 20 S. Ct. at 297; accord, id. at 686,
20 S. Ct. at 297. Thus it is clear that courts must
interpret international law not as it was in 1789, but as
it has evolved and exists among the nations of the
world today. See Ware v. Hylton, 3 U.S. (3 Dall.) 199, 1
L. Ed. 568 (1796) (distinguishing between "ancient"
and "modern" law of nations). The requirement that a
rule command the "general assent of civilized nations"
to become binding upon them all is a stringent one.
Were this not so, the courts of one nation might feel
free to impose idiosyncratic legal rules upon others, in
the name of applying international law. Thus, in Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S. Ct.
923, 11 L. Ed. 2d 804 (1964), the Court declined to
pass on the validity of the Cuban government's
expropriation of a foreign-owned corporation's assets,
noting the sharply conflicting views on the issue
propounded
by
the
capital-exporting,
capital-

importing, socialist and capitalist nations. Id. at 42830, 84 S. Ct. at 940-41. The case at bar presents us
with a situation diametrically opposed to the conflicted
state of law that confronted the Sabbatino Court.
Indeed, to paraphrase that Court's statement, id. at
428, 84 S. Ct. at 940, there are few, if any, issues in
international law today on which opinion seems to be
so united as the limitations on a state's power to
torture persons held in its custody. The United Nations
Charter (a treaty of the United States, see 59 Stat.
1033 (1945)) makes it clear that in this modern age a
state's treatment of its own citizens is a matter of
international concern. It provides: With a view to the
creation of conditions of stability and well-being which
are necessary for peaceful and friendly relations
among nations ... the United Nations shall promote ...
universal respect for, and observance of, human rights
and fundamental freedoms for all without distinctions
as to race, sex, language or religion. Id. Art. 55. And
further: All members pledge themselves to take joint
and separate action in cooperation with the
Organization for the achievement of the purposes set
forth in Article 55. Id. Art. 56. While this broad
mandate has been held not to be wholly selfexecuting, Hitai v. Immigration and Naturalization
Service, 343 F.2d 466, 468 (2d Cir. 1965), this
observation alone does not end our inquiry. (9) For
although there is no universal agreement as to the
precise extent of the "human rights and fundamental
freedoms" guaranteed to all by the Charter, there is at
present no dissent from the view that the guaranties

include, at a bare minimum, the right to be free from

torture. This prohibition has become part of customary
international law, as evidenced and defined by the
Universal Declaration of Human Rights, General
Assembly Resolution 217 (III)(A) (Dec. 10, 1948) which
states, in the plainest of terms, "no one shall be
subjected to torture." (10) The General Assembly has
declared that the Charter precepts embodied in this
Universal Declaration "constitute basic principles of
international law." G.A.Res. 2625 (XXV) (Oct. 24,
1970). Particularly relevant is the Declaration on the
Protection of All Persons from Being Subjected to
Torture, General Assembly Resolution 3452, 30 U.N.
GAOR Supp. (No. 34) 91, U.N.Doc. A/1034 (1975),
which is set out in full in the margin. (11) The
Declaration expressly prohibits any state from
permitting the dastardly and totally inhuman act of
torture. Torture, in turn, is defined as "any act by which
severe pain and suffering, whether physical or mental,
is intentionally inflicted by or at the instigation of a
public official on a person for such purposes as ...
intimidating him or other persons." The Declaration
goes on to provide that "(w)here it is proved that an
act of torture or other cruel, inhuman or degrading
treatment or punishment has been committed by or at
the instigation of a public official, the victim shall be
afforded redress and compensation, in accordance
with national law." This Declaration, like the
Declaration of Human Rights before it, was adopted
without dissent by the General Assembly. Nayar,
"Human Rights: The United Nations and United States

Foreign Policy," 19 Harv.Int'l L.J. 813, 816 n.18 (1978).

These U.N. declarations are significant because they
specify with great precision the obligations of member
nations under the Charter. Since their adoption,
"(m)embers can no longer contend that they do not
know what human rights they promised in the Charter
to promote." Sohn, "A Short History of United Nations
Documents on Human Rights," in The United Nations
and Human Rights, 18th Report of the Commission
(Commission to Study the Organization of Peace ed.
1968). Moreover, a U.N. Declaration is, according to
one authoritative definition, "a formal and solemn
instrument, suitable for rare occasions when principles
of great and lasting importance are being enunciated."
34 U.N. ESCOR, Supp. (No. 8) 15, U.N. Doc.
E/cn.4/1/610 (1962) (memorandum of Office of Legal
Affairs, U.N. Secretariat). Accordingly, it has been
observed that the Universal Declaration of Human
Rights "no longer fits into the dichotomy of "binding
treaty' against "non-binding pronouncement,' but is
rather an authoritative statement of the international
community." E. Schwelb, Human Rights and the
International Community 70 (1964). Thus, a
Declaration creates an expectation of adherence, and
"insofar as the expectation is gradually justified by
State practice, a declaration may by custom become
recognized as laying down rules binding upon the
States." 34 U.N. ESCOR, supra. Indeed, several
commentators have concluded that the Universal
Declaration has become, in toto, a part of binding,
customary international law. Nayar, supra, at 816-17;

Waldlock,
"Human
Rights
in
Contemporary
International Law and the Significance of the European
Convention," Int'l & Comp. L.Q., Supp. Publ. No. 11 at
15 (1965). Turning to the act of torture, we have little
difficulty discerning its universal renunciation in the
modern usage and practice of nations. Smith, supra,
18 U.S. (5 Wheat.) at 160-61, 5 L. Ed. 57. The
international consensus surrounding torture has found
expression in numerous international treaties and
accords. E. g., American Convention on Human Rights,
Art. 5, OAS Treaty Series No. 36 at 1, OAS Off. Rec.
OEA/Ser 4 v/II 23, doc. 21, rev. 2 (English ed., 1975)
("No one shall be subjected to torture or to cruel,
inhuman or degrading punishment or treatment");
International Covenant on Civil and Political Rights,
U.N. General Assembly Res. 2200 (XXI)A, U.N. Doc.
A/6316 (Dec. 16, 1966) (identical language); European
Convention for the Protection of Human Rights and
Fundamental Freedoms, Art. 3, Council of Europe,
European Treaty Series No. 5 (1968), 213 U.N.T.S. 211
(semble). The substance of these international
agreements is reflected in modern municipal i. e.
national law as well. Although torture was once a
routine concomitant of criminal interrogations in many
nations, during the modern and hopefully more
enlightened era it has been universally renounced.
According to one survey, torture is prohibited,
expressly or implicitly, by the constitutions of over
fifty-five nations, (12) including both the United States
(13) and Paraguay. (14) Our State Department reports
a general recognition of this principle: There now

exists an international consensus that recognizes basic

human rights and obligations owed by all governments
to their citizens .... There is no doubt that these rights
are often violated; but virtually all governments
acknowledge their validity. Department of State,
Country Reports on Human Rights for 1979, published
as Joint Comm. Print, House Comm. on Foreign Affairs,
and Senate Comm. on Foreign Relations, 96th Cong.
2d Sess. (Feb. 4, 1980), Introduction at 1. We have
been directed to no assertion by any contemporary
state of a right to torture its own or another nation's
citizens. Indeed, United States diplomatic contacts
confirm the universal abhorrence with which torture is
viewed: In exchanges between United States
embassies and all foreign states with which the United
States maintains relations, it has been the Department
of State's general experience that no government has
asserted a right to torture its own nationals. Where
reports of torture elicit some credence, a state usually
responds by denial or, less frequently, by asserting
that the conduct was unauthorized or constituted
rough treatment short of torture. (15) Memorandum of
the United States as Amicus Curiae at 16 n.34. Having
examined the sources from which customary
international law is derived the usage of nations,
judicial opinions and the works of jurists (16) we
conclude that [HN5] official torture is now prohibited
by the law of nations. The prohibition is clear and
unambiguous, and admits of no distinction between
treatment of aliens and citizens. Accordingly, we must
conclude that the dictum in Dreyfus v. von Finck,

supra, 534 F.2d at 31, to the effect that "violations of

international law do not occur when the aggrieved
parties are nationals of the acting state," is clearly out
of tune with the current usage and practice of
international law. The treaties and accords cited above,
as well as the express foreign policy of our own
government, (17) all make it clear that international
law confers fundamental rights upon all people vis-avis their own governments. While the ultimate scope of
those rights will be a subject for continuing refinement
and elaboration, we hold that the right to be free from
torture is now among them. We therefore turn to the
question whether the other requirements for
jurisdiction are met. III Appellee submits that even if
the tort alleged is a violation of modern international
law, federal jurisdiction may not be exercised
consistent with the dictates of Article III of the
Constitution. The claim is without merit. Common law
courts of general jurisdiction regularly adjudicate
transitory tort claims between individuals over whom
they exercise personal jurisdiction, wherever the tort
occurred. Moreover, as part of an articulated scheme
of federal control over external affairs, Congress
provided, in the first Judiciary Act, 9(b), 1 Stat. 73, 77
(1789), for federal jurisdiction over suits by aliens
where principles of international law are in issue. The
constitutional basis for the Alien Tort Statute is the law
of nations, which has always been part of the federal
common law. It is not extraordinary for a court to
adjudicate a tort claim arising outside of its territorial
jurisdiction. A state or nation has a legitimate interest

in the orderly resolution of disputes among those

within its borders, and where the lex loci delicti
commissi is applied, it is an expression of comity to
give effect to the laws of the state where the wrong
occurred. Thus, Lord Mansfield in Mostyn v. Fabrigas, 1
Cowp. 161 (1774), quoted in McKenna v. Fisk, 42 U.S.
(1 How.) 241, 248, 11 L. Ed. 117 (1843) said: If A
becomes indebted to B, or commits a tort upon his
person or upon his personal property in Paris, an action
in either case may be maintained against A in England,
if he is there found .... As to transitory actions, there is
not a colour of doubt but that any action which is
transitory may be laid in any county in England,
though the matter arises beyond the seas. Mostyn
came into our law as the original basis for state court
jurisdiction over out-of-state torts, McKenna v. Fisk,
supra, 42 U.S. (1 How.) 241, 11 L. Ed. 117 (personal
injury suits held transitory); Dennick v. Railroad Co.,
103 U.S. 11, 26 L. Ed. 439 (1880) (wrongful death
action held transitory), and it has not lost its force in
suits to recover for a wrongful death occurring upon
foreign soil, Slater v. Mexican National Railroad Co.,
194 U.S. 120, 24 S. Ct. 581, 48 L. Ed. 900 (1904), as
long as the conduct complained of was unlawful where
performed. Restatement (Second) of Foreign Relations
Law of the United States 19 (1965). Here, where in
personam jurisdiction has been obtained over the
defendant, the parties agree that the acts alleged
would violate Paraguayan law, and the policies of the
forum are consistent with the foreign law, (18) state
court jurisdiction would be proper. Indeed, appellees

conceded as much at oral argument. Recalling that

Mostyn was freshly decided at the time the
Constitution was ratified, we proceed to consider
whether the First Congress acted constitutionally in
vesting jurisdiction over "foreign suits," Slater, supra,
194 U.S. at 124, 24 S. Ct. at 582, alleging torts
committed in violation of the law of nations. A case
properly "aris(es) under the ... laws of the United
States" for Article III purposes if grounded upon
statutes enacted by Congress or upon the common law
of the United States. See Illinois v. City of Milwaukee,
406 U.S. 91, 99-100, 92 S. Ct. 1385, 1390-91, 31 L. Ed.
2d 712 (1972); Ivy Broadcasting Co., Inc. v. American
Tel. & Tel. Co., 391 F.2d 486, 492 (2d Cir. 1968). The
law of nations forms an integral part of the common
law, and a review of the history surrounding the
adoption of the Constitution demonstrates that it
became a part of the common law of the United States
upon the adoption of the Constitution. Therefore, the
enactment of the Alien Tort Statute was authorized by
Article III. During the eighteenth century, it was taken
for granted on both sides of the Atlantic that the law of
nations forms a part of the common law. 1 Blackstone,
Commentaries 263-64 (1st Ed. 1765-69); 4 id. at 67.
(19) Under the Articles of Confederation, the
Pennsylvania Court of Oyer and Terminer at
Philadelphia, per McKean, Chief Justice, applied the law
of nations to the criminal prosecution of the Chevalier
de Longchamps for his assault upon the person of the
French Consul-General to the United States, noting
that "(t)his law, in its full extent, is a part of the law of

this state ...." Respublica v. DeLongchamps, 1 U.S. (1

Dall.) 113, 119, 1 L. Ed. 59 (1784). Thus, a leading
commentator has written: It is an ancient and a
salutary feature of the Anglo-American legal tradition
that the Law of Nations is a part of the law of the land
to be ascertained and administered, like any other, in
the appropriate case. This doctrine was originally
conceived and formulated in England in response to
the demands of an expanding commerce and under
the influence of theories widely accepted in the late
sixteenth, the seventeenth and the eighteenth
centuries. It was brought to America in the colonial
years as part of the legal heritage from England. It was
well understood by men of legal learning in America in
the eighteenth century when the United Colonies broke
away from England to unite effectively, a little later, in
the United States of America. Dickenson, "The Law of
Nations as Part of the National Law of the United
States," 101 U.Pa.L.Rev. 26, 27 (1952). Indeed,
Dickenson goes on to demonstrate, id. at 34-41, that
one of the principal defects of the Confederation that
our Constitution was intended to remedy was the
central government's inability to "cause infractions of
treaties or of the law of nations, to be punished." 1
Farrand, Records of the Federal Convention 19 (Rev.
ed. 1937) (Notes of James Madison). And, in Jefferson's
words, the very purpose of the proposed Union was "to
make us one nation as to foreign concerns, and keep
us distinct in domestic ones." Dickenson, supra, at 36
n. 28. As ratified, the judiciary article contained no
express reference to cases arising under the law of

nations. Indeed, the only express reference to that

body of law is contained in Article I, sec. 8, cl. 10,
which grants to the Congress the power to "define and
punish ... offenses against the law of nations."
Appellees seize upon this circumstance and advance
the proposition that the law of nations forms a part of
the laws of the United States only to the extent that
Congress has acted to define it. This extravagant claim
is amply refuted by the numerous decisions applying
rules of international law uncodified in any act of
Congress. E. g., Ware v. Hylton, 3 U.S. (3 Dall.) 199, 1
L. Ed. 568 (1796); The Paquete Habana, supra, 175
U.S. 677, 20 S. Ct. 290, 44 L. Ed. 320; Sabbatino,
supra, 376 U.S. 398, 84 S. Ct. 923, 11 L. Ed. 2d 804
(1964). A similar argument was offered to and rejected
by the Supreme Court in United States v. Smith, supra,
18 U.S. (5 Wheat.) 153, 158-60, 5 L. Ed. 57 and we
reject it today. As John Jay wrote in The Federalist No.
3, at 22 (1 Bourne ed. 1901), "Under the national
government, treaties and articles of treaties, as well as
the laws of nations, will always be expounded in one
sense and executed in the same manner, whereas
adjudications on the same points and questions in the
thirteen states will not always accord or be
consistent." Federal jurisdiction over cases involving
international law is clear. Thus, it was hardly a radical
initiative for Chief Justice Marshall to state in The
Nereide, 13 U.S. (9 Cranch) 388, 422, 3 L. Ed. 769
(1815), that in the absence of a congressional
enactment, (20) United States courts are "bound by
the law of nations, which is a part of the law of the

land." These words were echoed in The Paquete

Habana, supra, 175 U.S. at 700, 20 S. Ct. at 299:
"international law is part of our law, and must be
ascertained and administered by the courts of justice
of appropriate jurisdiction, as often as questions of
right depending upon it are duly presented for their
determination." The Filartigas urge that 28 U.S.C.
1350 be treated as an exercise of Congress's power to
define offenses against the law of nations. While such
a reading is possible, see Lincoln Mills v. Textile
Workers, 353 U.S. 448, 77 S. Ct. 912, 1 L. Ed. 2d 972
(1957) (jurisdictional statute authorizes judicial
explication of federal common law), we believe it is
sufficient here to construe the Alien Tort Statute, not
as granting new rights to aliens, but simply as opening
the federal courts for adjudication of the rights already
recognized by international law. The statute
nonetheless does inform our analysis of Article III, for
we recognize that questions of jurisdiction "must be
considered part of an organic growth part of an
evolutionary process," and that the history of the
judiciary article gives meaning to its pithy phrases.
Romero v. International Terminal Operating Co., 358
U.S. 354, 360, 79 S. Ct. 468, 473, 3 L. Ed. 2d 368
(1959). The Framers' overarching concern that control
over international affairs be vested in the new national
government to safeguard the standing of the United
States among the nations of the world therefore
reinforces the result we reach today. Although the
Alien Tort Statute has rarely been the basis for
jurisdiction during its long history, (21) in light of the

foregoing discussion, there can be little doubt that this

action is properly brought in federal court. (22) This is
undeniably an action by an alien, for a tort only,
committed in violation of the law of nations. The
paucity of suits successfully maintained under the
section is readily attributable to the statute's
requirement of alleging a "violation of the law of
nations" (emphasis supplied) at the jurisdictional
threshold. Courts have, accordingly, engaged in a
more searching preliminary review of the merits than
is required, for example, under the more flexible
"arising under" formulation. Compare O'Reilly de
Camara v. Brooke, 209 U.S. 45, 52, 28 S. Ct. 439, 441,
52 L. Ed. 676 (1907) (question of Alien Tort Statute
jurisdiction disposed of "on the merits") (Holmes, J.),
with Bell v. Hood, 327 U.S. 678, 66 S. Ct. 773, 90 L. Ed.
939 (1946) (general federal question jurisdiction not
defeated by the possibility that the averments in the
complaint may fail to state a cause of action). Thus,
the narrowing construction that the Alien Tort Statute
has previously received reflects the fact that earlier
cases did not involve such well-established, universally
recognized norms of international law that are here at
issue. For example, the statute does not confer
jurisdiction over an action by a Luxembourgeois
international investment trust's suit for fraud,
conversion and corporate waste. IIT v. Vencap, 519
F.2d 1001, 1015 (1975). In IIT, Judge Friendly astutely
noted that the mere fact that every nation's municipal
law may prohibit theft does not incorporate "the Eighth
Commandment, "Thou Shalt not steal' ... (into) the law

of nations." It is only where the nations of the world

have demonstrated that the wrong is of mutual, and
not merely several, concern, by means of express
international accords, that a wrong generally
recognized becomes an international law violation
within the meaning of the statute. Other recent 1350
cases are similarly distinguishable. (23) IIT adopted a
dictum from Lopes v. Reederei Richard Schroder, 225 F.
Supp. 292 (E.D.Pa.1963) to the effect that "a violation
of the law of nations arises only when there has been
"a violation by one or more individuals of those
standards, rules or customs (a) affecting the
relationship between states or between an individual
and a foreign state and (b) used by those states for
their common good and/or in dealings inter se.' " IIT,
supra, 519 F.2d at 1015, quoting Lopes, supra, 225 F.
Supp. at 297. We have no quarrel with this formulation
so long as it be understood that the courts are not to
prejudge the scope of the issues that the nations of
the
world
may
deem
important
to
their
interrelationships, and thus to their common good. As
one commentator has noted: the sphere of domestic
jurisdiction is not an irreducible sphere of rights which
are somehow inherent, natural, or fundamental. It
does not create an impenetrable barrier to the
development of international law. Matters of domestic
jurisdiction are not those which are unregulated by
international law, but those which are left by
international law for regulation by States. There are,
therefore, no matters which are domestic by their
"nature.' All are susceptible of international legal

regulation and may become the subjects of new rules

of customary law of treaty obligations. Preuss, "Article
2, Paragraph 7 of the Charter of the United Nations
and Matters of Domestic Jurisdiction," Hague Receuil
(Extract, 149) at 8, reprinted in H. Briggs, The Law of
Nations 24 (1952). Here, the nations have made it
their business, both through international accords and
unilateral action, (24) to be concerned with domestic
human rights violations of this magnitude. The case
before us therefore falls within the Lopes/IIT rule. Since
federal jurisdiction may properly be exercised over the
Filartigas' claim, the action must be remanded for
further
proceedings.
Appellee
Pena,
however,
advances several additional points that lie beyond the
scope of our holding on jurisdiction. Both to emphasize
the boundaries of our holding, and to clarify some of
the issues reserved for the district court on remand,
we will address these contentions briefly. IV Pena
argues that the customary law of nations, as reflected
in treaties and declarations that are not self-executing,
should not be applied as rules of decision in this case.
In doing so, he confuses the question of federal
jurisdiction under the Alien Tort Statute, which requires
consideration of the law of nations, with the issue of
the choice of law to be applied, which will be
addressed at a later stage in the proceedings. The two
issues are distinct. Our holding on subject matter
jurisdiction decides only whether Congress intended to
confer judicial power, and whether it is authorized to
do so by Article III. The choice of law inquiry is a much
broader one, primarily concerned with fairness, see

Home Insurance Co. v. Dick, 281 U.S. 397, 50 S. Ct.

338, 74 L. Ed. 926 (1930); consequently, it looks to
wholly different considerations. See Lauritzen v.
Larsen, 345 U.S. 571, 73 S. Ct. 921, 97 L. Ed. 1254
(1954). Should the district court decide that the
Lauritzen analysis requires it to apply Paraguayan law,
our courts will not have occasion to consider what law
would govern a suit under the Alien Tort Statute where
the challenged conduct is actionable under the law of
the forum and the law of nations, but not the law of
the jurisdiction in which the tort occurred. (25) Pena
also argues that "if the conduct complained of is
alleged to be the act of the Paraguayan government,
the suit is barred by the Act of State doctrine." This
argument was not advanced below, and is therefore
not before us on this appeal. We note in passing,
however, that we doubt whether action by a state
official in violation of the Constitution and laws of the
Republic of Paraguay, and wholly unratified by that
nation's government, could properly be characterized
as an act of state. See Banco Nacionale de Cuba v.
Sabbatino, supra, 376 U.S. 398, 84 S. Ct. 923, 11 L. Ed.
2d 804; Underhill v. Hernandez, 168 U.S. 250, 18 S. Ct.
83, 42 L. Ed. 456 (1897). Paraguay's renunciation of
torture as a legitimate instrument of state policy,
however, does not strip the tort of its character as an
international law violation, if it in fact occurred under
color of government authority. See Declaration on the
Protection of All Persons from Being Subjected to
Torture, supra note 11; cf. Ex parte Young, 209 U.S.
123, 28 S. Ct. 441, 52 L. Ed. 714 (1908) (state official

subject to suit for constitutional violations despite

immunity of state). Finally, we have already stated
that we do not reach the critical question of forum non
conveniens, since it was not considered below. In
closing, however, we note that the foreign relations
implications of this and other issues the district court
will be required to adjudicate on remand underscores
the wisdom of the First Congress in vesting jurisdiction
over such claims in the federal district courts through
the Alien Tort Statute. Questions of this nature are
fraught with implications for the nation as a whole, and
therefore should not be left to the potentially varying
adjudications of the courts of the fifty states. In the
twentieth century the international community has
come to recognize the common danger posed by the
flagrant disregard of basic human rights and
particularly the right to be free of torture. Spurred first
by the Great War, and then the Second, civilized
nations have banded together to prescribe acceptable
norms of international behavior. From the ashes of the
Second World War arose the United Nations
Organization, amid hopes that an era of peace and
cooperation had at last begun. Though many of these
aspirations have remained elusive goals, that
circumstance cannot diminish the true progress that
has been made. In the modern age, humanitarian and
practical considerations have combined to lead the
nations of the world to recognize that respect for
fundamental human rights is in their individual and
collective interest. Among the rights universally
proclaimed by all nations, as we have noted, is the

right to be free of physical torture. Indeed, for

purposes of civil liability, the torturer has become like
the pirate and slave trader before him hostis humani
generis, an enemy of all mankind. Our holding today,
giving effect to a jurisdictional provision enacted by
our First Congress, is a small but important step in the
fulfillment of the ageless dream to free all people from
brutal violence. Endnotes (1) Duarte is the son of
Pena's companion, Juana Bautista Fernandez Villalba,
who later accompanied Pena to the United States. (2)
Several officials of the Immigration and Naturalization
Service were named as defendants in connection with
this portion of the action. Because Pena has now been
deported, the federal defendants are no longer parties
to this suit, and the claims against them are not before
us on this appeal. (3) Jurisdiction was also invoked
pursuant to 28 U.S.C. 1651, 2201 & 2202,
presumably in connection with appellants' attempt to
delay Pena's return to Paraguay. (4) Richard Falk, the
Albert G. Milbank Professor of International Law and
Practice at Princeton University, and a former Vice
President of the American Society of International Law,
avers that, in his judgment, "it is now beyond
reasonable doubt that torture of a person held in
detention that results in severe harm or death is a
violation of the law of nations." Thomas Franck,
professor of international law at New York University
and Director of the New York University Center for
International Studies offers his opinion that torture has
now been rejected by virtually all nations, although it
was once commonly used to extract confessions.

Richard Lillich, the Howard W. Smith Professor of Law

at the University of Virginia School of Law, concludes,
after a lengthy review of the authorities, that officially
perpetrated torture is "a violation of international law
(formerly called the law of nations)." Finally, Myres
MacDougal, a former Sterling Professor of Law at the
Yale Law School, and a past President of the American
Society of International Law, states that torture is an
offense against the law of nations, and that "it has
long been recognized that such offenses vitally affect
relations between states." (5) The Gorostiaga affidavit
states that a father whose son has been wrongfully
killed may in addition to commencing a criminal
proceeding bring a civil action for damages against the
person responsible. Accordingly, Mr. Filartiga has the
right to commence a civil action against Mr. Duarte
and Mr. Pena-Irala since he accuses them both of
responsibility for his son's death. He may commence
such a civil action either simultaneously with the
commencement of the criminal proceeding, during the
time that the criminal proceeding lasts, or within a
year after the criminal proceeding has terminated. In
either event, however, the civil action may not
proceed to judgment until the criminal proceeding has
been disposed of. If the defendant is found not guilty
because he was not the author of the case under
investigation in the criminal proceeding, no civil action
for indemnity for damages based upon the same deed
investigated in the criminal proceeding, can prosper or
succeed. (6) The court below accordingly did not
consider the motion to dismiss on forum non

conveniens grounds, which is not before us on this

appeal. (7) Appellants "associate themselves with" the
argument of some of the amici curiae that their claim
arises directly under a treaty of the United States, Brief
for Appellants at 23 n.*, but nonetheless primarily rely
upon treaties and other international instruments as
evidence of an emerging norm of customary
international law, rather then independent sources of
law. (8) The Statute of the International Court of
Justice, Arts. 38 & 59, June 26, 1945, 59 Stat. 1055,
1060 (1945) provides: Art. 38 1. The Court, whose
function is to decide in accordance with international
law such disputes as are submitted to it, shall apply:
(a) international conventions, whether general or
particular, establishing rules expressly recognized by
the contesting states; (b) international custom, as
evidence of a general practice accepted as law; (c) the
general principles of law recognized by civilized
nations; (d) subject to the provisions of Article 59,
judicial decisions and the teachings of the most highly
qualified publicists of the various nations, as subsidiary
means for the determination of the rules of law. 2. This
provision shall not prejudice the power of the Court to
decide a case ex aequo et bono, if the parties agree
thereto. Art. 59 The decision of the Court has no
binding force except between the parties and in
respect of that particular case. (9) We observe that
this Court has previously utilized the U.N. Charter and
the Charter of the Organization of American States,
another non-self-executing agreement, as evidence of
binding principles of international law. United States v.

Toscanino, 500 F.2d 267 (2d Cir. 1974). In that case,

our government's duty under international law to
refrain from kidnapping a criminal defendant from
within the borders of another nation, where formal
extradition procedures existed, infringed the personal
rights of the defendant, whose international law claims
were thereupon remanded for a hearing in the district
court. (10) Eighteen nations have incorporated the
Universal Declaration into their own constitutions. 48
Revue Internationale de Droit Penal Nos. 3 & 4, at 211
(1977). (11) Article 1 1. For the purpose of this
Declaration, torture means any act by which severe
pain or suffering, whether physical or mental, is
intentionally inflicted by or at the instigation of a
public official on a person for such purposes as
obtaining from him or a third person information or
confession, punishing him for an act he has committed
or is suspected of having committed, or intimidating
him or other persons. It does not include pain or
suffering arising only from, inherent or incidental to
lawful sanctions to the extent consistent with the
Standard Minimum Rules for the Treatment of
Prisoners. 2. Torture constitutes an aggravated and
deliberate form of cruel, inhuman or degrading
treatment or punishment. Article 2 Any act of torture
or other cruel, inhuman or degrading treatment or
punishment is an offense to human dignity and shall
be condemned as a denial of the purposes of the
Charter of the United Nations and as a violation of
human rights and fundamental freedoms proclaimed in
the Universal Declaration of Human Rights. Article 3

No state may permit or tolerate torture or other cruel,

inhuman or degrading treatment or punishment.
Exceptional circumstances such as a state of war or a
threat of war, internal political instability or any other
public emergency may not be invoked as a justification
of torture or other cruel, inhuman or degrading
treatment or punishment. Article 4 Each state shall, in
accordance with the provisions of this Declaration,
take effective measures to prevent torture and other
cruel, inhuman or degrading treatment or punishment
from being practiced within its jurisdiction. Article 5
The training of law enforcement personnel and of other
public officials who may be responsible for persons
deprived of their liberty shall ensure that full account
is taken of the prohibition against torture and other
cruel, inhuman or degrading treatment or punishment.
This prohibition shall also, where appropriate, be
included in such general rules or instructions as are
issued in regard to the duties and functions of anyone
who may be involved in the custody or treatment of
such persons. Article 6 Each state shall keep under
systematic review interrogation methods and practices
as well as arrangements for the custody and treatment
of persons deprived of their liberty in its territory, with
a view to preventing any cases of torture or other
cruel, inhuman or degrading treatment or punishment.
Article 7 Each state shall ensure that all acts of torture
as defined in Article I are offenses under its criminal
law. The same shall apply in regard to acts which
constitute participation in, complicity in, incitement to
or an attempt to commit torture. Article 8 Any person

who alleges he has been subjected to torture or other

cruel, inhuman or degrading treatment or punishment
by or at the instigation of a public official shall have
the right to complain to, and to have his case
impartially examined by, the competent authorities of
the state concerned. Article 9 Wherever there is
reasonable ground to believe that an act of torture as
defined in Article I has been committed, the competent
authorities of the state concerned shall promptly
proceed to an impartial investigation even if there has
been no formal complaint. Article 10 If an investigation
under Article 8 or Article 9 establishes that an act of
torture as defined in Article I appears to have been
committed, criminal proceedings shall be instituted
against the alleged offender or offenders in
accordance with national law. If an allegation of other
forms of cruel, inhuman or degrading treatment or
punishment is considered to be well founded, the
alleged offender or offenders shall be subject to
criminal, disciplinary or other appropriate proceedings.
Article 11 Where it is proved that an act of torture or
other cruel, inhuman or degrading treatment or
punishment has been committed by or at the
instigation of a public official, the victim shall be
afforded redress and compensation, in accordance
with national law. Article 12 Any statement which is
established to have been made as a result of torture or
other cruel, inhuman or degrading treatment or
punishment may not be invoked as evidence against
the person concerned or against any other person in
any proceeding. (12)(48 R48 Revue Internationale de

Droit Penal Nos. 3 & 4 at 208 (1977). (13) U.S.Const.,

Amend. VIII ("cruel and unusual punishments"
prohibited); id. Amend. XIV. (14) Constitution of
Paraguay, Art. 45 (prohibiting torture and other cruel
treatment). (15) The fact that the prohibition of torture
is often honored in the breach does not diminish its
binding effect as a norm of international law. As one
commentator has put it, "The best evidence for the
existence of international law is that every actual State
recognizes that it does exist and that it is itself under
an obligation to observe it. States often violate
international law, just as individuals often violate
municipal law; but no more than individuals do States
defend their violations by claiming that they are above
the law." J. Brierly, The Outlook for International Law 45 (Oxford 1944). (16) See note 4, supra: see also
Ireland v. United Kingdom, Judgment of Jan. 18, 1978
(European Court of Human Rights), summarized in
(1978) Yearbook, European Convention on Human
Rights 602 (Council of Europe) (holding that Britain's
subjection of prisoners to sleep deprivation, hooding,
exposure to hissing noise, reduced diet and standing
against a wall for hours was "inhuman and degrading,"
but not "torture" within meaning of European
Convention on Human Rights). (17) E. g., 22 U.S.C.
2304(a)(2) ("Except under circumstances specified in
this section, no security assistance may be provided to
any country the government of which engages in a
consistent pattern of gross violations of internationally
recognized human rights."); 22 U.S.C. 2151(a) ("The
Congress finds that fundamental political, economic,

and technological changes have resulted in the

interdependence of nations. The Congress declares
that the individual liberties, economic prosperity, and
security of the people of the United States are best
sustained and enhanced in a community of nations
which respect individual civil and economic rights and
freedoms"). (18) Conduct of the type alleged here
would be actionable under 42 U.S.C. 1983 or,
undoubtedly, the Constitution, if performed by a
government official. (19) As Lord Stowell said in The
Maria, 165 Eng.Rep. 955, 958 (Adm.1807): "In the first
place it is to be recollected, that this is a Court of the
Law of Nations, though sitting here under the authority
of the King of Great Britain. It belongs to other nations
as well as to our own; and what foreigners have a right
to demand from it, is the administration of the law of
nations, simply, and exclusively of the introduction of
principles borrowed from our own municipal
jurisprudence, to which it is well known, they have at
all times expressed no inconsiderable repugnance."
(20) The plainest evidence that international law has
an existence in the federal courts independent of acts
of Congress is the long-standing rule of construction
first enunciated by Chief Justice Marshall: "an act of
congress ought never to be construed to violate the
law of nations, if any other possible construction
remains ...." The Charming Betsy, 6 U.S. (2 Cranch),
64, 67, 2 L. Ed. 208 (1804), quoted in Lauritzen v.
Larsen, 345 U.S. 571, 578, 73 S. Ct. 921, 926, 97 L. Ed.
1254 (1953). (21) Section 1350 afforded the basis for
jurisdiction over a child custody suit between aliens in

Adra v. Clift, 195 F. Supp. 857 (D.Md.1961), with a

falsified passport supplying the requisite international
law violation. In Bolchos v. Darrel, 1 Bee 74, 3 Fed.Cas.
810 (D.S.C.1795), the Alien Tort Statute provided an
alternative basis of jurisdiction over a suit to
determine title to slaves on board an enemy vessel
taken on the high seas. (22) We recognize that our
reasoning might also sustain jurisdiction under the
general federal question provision, 28 U.S.C. 1331.
We prefer, however, to rest our decision upon the Alien
Tort Statute, in light of that provision's close
coincidence with the jurisdictional facts presented in
this case. See Romero v. International Terminal
Operating Co., 358 U.S. 354, 79 S. Ct. 468, 3 L. Ed. 2d
368 (1959). (23) Dreyfus v. von Finck, 534 F.2d 24 (2d
Cir.), cert. denied, 429 U.S. 835, 97 S. Ct. 102, 50 L.
Ed. 2d 101 (1976), concerned a forced sale of
property, and thus sought to invoke international law
in an area in which no consensus view existed. See
Sabbatino, supra, 376 U.S. at 428, 84 S. Ct. at 940.
Similarly, Benjamins v. British European Airways, 572
F.2d 913 (2d Cir. 1978), cert. denied, 439 U.S. 1114, 99
S. Ct. 1016, 59 L. Ed. 2d 72 (1979), held only that an
air disaster, even if caused by "wilful" negligence, does
not constitute a law of nations violation. Id. at 916. In
Khedivial Line, S. A. E. v. Seafarers' International
Union, 278 F.2d 49 (2d Cir. 1960), we found that the
"right" to free access to the ports of a foreign nation
was at best a rule of comity, and not a binding rule of
international law. The cases from other circuits are
distinguishable in like manner. The court in Huynh Thi

Anh v. Levi, 586 F.2d 625 (6th Cir. 1978), was unable to
discern from the traditional sources of the law of
nations "a universal or generally accepted substantive
rule or principle" governing child custody, id. at 629,
and therefore held jurisdiction to be lacking. Cf.
Nguyen Da Yen v. Kissinger, 528 F.2d 1194, 1201 n.13
(9th Cir. 1975) ("the illegal seizure, removal and
detention of an alien against his will in a foreign
country would appear to be a tort ... and it may well be
a tort in violation of the "law of nations' ") (s 1350
question not reached due to inadequate briefing).
Finally, the district court in Lopes v. Reederei Richard
Schroder, 225 F. Supp. 292 (E.D.Pa.1963) simply found
that the doctrine of seaworthiness, upon which the
plaintiff relied, was a uniquely American concept, and
therefore not a part of the law of nations. (24) As
President Carter stated in his address to the United
Nations on March 17, 1977: All the signatories of the
United Nations Charter have pledged themselves to
observe and to respect basic human rights. Thus, no
member of the United Nations can claim that
mistreatment of the citizens is solely its own business.
Equally, no member can avoid its responsibilities to
review and to speak when torture or unwarranted
deprivation occurs in any part of the world. Reprinted
in 78 Department of State Bull. 322 (1977); see note
17, supra. (25) In taking that broad range of factors
into account, the district court may well decide that
fairness requires it to apply Paraguayan law to the
instant case. See Slater v. Mexican National Railway
Co., 194 U.S. 120, 24 S. Ct. 581, 48 L. Ed. 900 (1904).

Such a decision would not retroactively oust the

federal court of subject matter jurisdiction, even
though plaintiff's cause of action would no longer
properly be "created" by a law of the United States.
See American Well Works Co. v. Layne & Bowler Co.,
241 U.S. 257, 260, 36 S. Ct. 585, 586, 60 L. Ed. 987
(1916) (Holmes, J.). Once federal jurisdiction is
established by a colorable claim under federal law at a
preliminary stage of the proceeding, subsequent
dismissal of that claim (here, the claim under the
general international proscription of torture) does not
deprive the court of jurisdiction previously established.
See Hagans v. Lavine, 415 U.S. 528, 94 S. Ct. 1372, 39
L. Ed. 2d 577 (1974); Romero v. International Terminal
Operating Co., 358 U.S. 354, 79 S. Ct. 468, 3 L. Ed. 2d
368 (1959); Bell v. Hood, 327 U.S. 678, 66 S. Ct. 773,
90 L. Ed. 939 (1946). Cf. Huynh Thi Ahn, supra, 586
F.2d at 633 (choice of municipal law ousts 1350
jurisdiction when no international norms exist).

654 F. Supp. 276 (1986)

Alberto

M.

GUINTO,

Jr.

and

Stella

Suarez,

Plaintiffs,
v.
Ferdinand Edralin MARCOS and Does I through
C, Inclusive, Defendants.

Civ. No. 86-0737-R(CM).

United States District Court, S.D. California.

that effect was entered on September 22, 1986. This

memorandum decision sets forth the reasons for
granting the defendant's motion.

October 31, 1986.

*277 Fred H. Arm, San Diego, Cal., for plaintiffs.
BACKGROUND
Charles G. Miller, Bartko, Welsh, Tarrant & Miller, San
Francisco, Cal., for defendants.

Plaintiffs, both Philippine citizens, reside in the State of

California. Defendant, also a Philippine citizen, at
present resides in the State of Hawaii. In their first

MEMORANDUM DECISION AND ORDER

amended complaint (the "Complaint"), plaintiffs allege

that defendant and unnamed aides and associates

RHOADES, District Judge.

Defendant Marcos' motion to dismiss plaintiffs' first
amended complaint came on regularly for hearing on
August 25, 1986, before the Honorable John S.

violated

plaintiffs'

rights

arising

under

the

First

Amendment of the United States Constitution by

seizing and restraining distribution of a film that
plaintiffs produced and directed.

Rhoades. Fred H. Arm appeared on behalf of plaintiffs

Plaintiffs allege that the film, entitled "100 DAYS IN

Alberto M. Guinto, Jr. and Stella Suarez. Charles G.

SEPTEMBER," originally was endorsed by the Philippine

Miller and Bartko, Welsh, Tarrant & Miller appeared on

government. Complaint .6. Upon its completion in

behalf of defendant Ferdinand Marcos.

1975, however, the plaintiffs allege that the Philippine

After hearing argument and considering the record and

authorities cited, the court granted the defendant's
motion and ordered that plaintiffs' first amended
complaint be dismissed with prejudice. An order to

government, at defendant's direction, seized the film.

Complaint .8. Plaintiffs further allege that repeated
requests for the return of their film were refused, and
in fact, that defendant arranged that plaintiffs be
arrested on conspiracy charges. Complaint .9-12.

Plaintiffs then fled the Philippines before they could be

arrested. Complaint .13. At oral argument, counsel
informed the court that the film recently had been

*278 A. JURISDICTION

returned to plaintiffs and at present is being shown

The first issue a district court must address is whether

throughout the Philippines.

it has jurisdiction to hear the lawsuit. In general,

As a result of defendant's actions, plaintiffs allege that

they have suffered general damages for economic loss
in the amount of $100 million; and physical and
emotional damages in the amount of $5 million.
Because of the alleged deliberate, vexatious and
malicious

nature

of

defendant's

alleged

actions,

plaintiffs seek exemplary and punitive damages in the

amount of $1 billion, in addition to costs and attorney's
fees.

subject matter jurisdiction cannot be waived by the

parties

to

federal

lawsuit. See,

e.g., Sosna

v.

Iowa, 419 U.S. 393, 95 S. Ct. 553, 42 L. Ed. 2d 532

(1975). The plaintiff must affirmatively allege facts
showing the existence of jurisdiction. Fed.R.Civ.P. 8(a)
(1). If these facts are challenged, the burden is on the
party claiming jurisdiction to demonstrate that the
court has jurisdiction over the subject matter. KVOS,
Inc. v. Associated Press, 299 U.S. 269, 57 S. Ct. 197, 81
L. Ed. 183 (1936). Unless jurisdiction exists, this court
is powerless to afford any remedy to the plaintiffs.

DISCUSSION

In the instant action, the plaintiffs asserted only one

In support of his motion to dismiss, defendant has

advanced several theories. However, because the
instant matter may be resolved on either jurisdictional
grounds or by application of the Act of State doctrine,
it is not necessary to reach the issues of Head of State
Immunity,
Conveniens.

Personal

Jurisdiction

or

Forum

non

basis

for

this

court's

jurisdiction

in

their

complaint, i.e., federal question jurisdiction under 28

U.S.C.

1331.

However,

in

their

opposition

to

defendant's motion, plaintiffs also argue two other

bases for this court's jurisdiction: first, under the
diversity of citizenship statute, 28 U.S.C. 1332; and
second, under the Alien Tort Claims Act, 28 U.S.C.
1350. Although plaintiffs have not properly pleaded

these latter two theories, the court will discuss them,

In

their

complaint,

the

plaintiffs

contend

that

for I believe that this court does not have jurisdiction

jurisdiction exists in this court because their First

under any of the theories proffered by the plaintiff.

Amendment claim arises "under the Constitution, laws,

or treaties of the United States." 28 U.S.C. 1331. In
the instant action, the plaintiffs, citizens of the
Philippines, allege that defendant Marcos violated their

1. Diversity Jurisdiction

First Amendment rights under the United States

Neither defendant Marcos, nor either of the plaintiffs

Constitution by conduct that occurred entirely within

are citizens of the United States. For diversity of

the Republic of the Philippines when defendant Marcos

citizenship jurisdiction to exist under either 28 U.S.C.

was President of the Philippines.

1332(a) (1) or 1332(a) (2), at least one of the litigants

must be a "citizen" of a State. A person is a citizen of a

The United States Constitution does not apply to

State if (1) he or she is domiciled in that State, AND (2)

foreign

he or she is a citizen of the United States. Kantor v.

territory. Stonehill v. United States, 405 F.2d 738, 743

Wellesley Galleries, Ltd.,704 F.2d 1088, 1090 (9th Cir.

(9th Cir. 1968). Therefore, plaintiffs' claim does not

1983); 13B Wright & Miller, Federal Practice And

arise under the Constitution of the United States.

Procedure 2d 3611, at p. 507.

officials

acting

within

their

own

In addition, plaintiffs fail to allege any treaties of the

Since none of the parties to this lawsuit is a citizen of a

United States under which their claim can be said to

State there is no diversity of citizenship jurisdiction.

arise.
Finally, the plaintiffs are correct in asserting that the

2. Federal
1331)

Question

Jurisdiction (28

U.S.C.

"laws" of the United States as defined in 1331

include

the

Common

Law, Illinois

v.

City

of

Milwaukee, 406 U.S. 91, 100, 92 S. Ct. 1385, 1391, 31

L. Ed. 2d 712 (1972), and that the Common Law
includes within it the "law of nations."

However, in the instant case, the plaintiffs have not

(D.C.Cir.1984), cert. denied, 470 U.S. 1003, 105 S. Ct.

alleged a private cause of action arising under the law

1354, 84 L. Ed. 2d 377 (1985).

of nations (as I will discuss shortly) that would enable

them to recover against foreign nations for injury to
themselves. Moreover, even where a federal question

3. Jurisdiction Under The Alien Tort Claims Act

exists, the lack of a private cause of action, either

express

or

lawsuit. Price

implied,
v.

requires

Hawaii, 764

dismissal

F.2d

623,

of

the

628

(9th

28 U.S.C. 1350 provides:

Cir.1985), cert. denied, ___ U.S. ___, 106 S. Ct. 793, 88

The district courts shall have original jurisdiction of any

L. Ed. 2d 771.

civil action by an alien for a tort only, committed in

In sum, the inquiry as to jurisdiction under the Alien

Tort Claims Act, 28 U.S.C. 1350, necessarily decides,

violation of the law of nations or a treaty of the United

States.

in this case, the issue of federal question jurisdiction.

Section 1350 provides a right to an alien, if a tort has

If *279 Section 1350 confers a cause of action on the

been committed against him or her in violation of

plaintiffs, then plaintiffs have a claim "arising under"

a treaty of the United States, or the "law of nations."

Federal law. However, plaintiffs have not successfully

raised any other source of a private cause of action
under 1331.

In the instant action, as I have already observed,

plaintiffs have alleged no treaty of the United States
under which their claim can be said to have arisen.

As plaintiffs have not alleged a cause of action under

Therefore, if the plaintiffs are to have a claim under

1350, it follows that under the facts of this case,

1350, it must arise under the "law of nations."

jurisdiction does not exist under 1331. In reaching

this conclusion, I have relied on and applied the
analysis of Judge Edwards contained at note 4 in TelOren v. Libyan Arab Republic, 726 F.2d 774, 779-780

Section 1350 has been in existence since 1789, but it

has been described by one judge as "a kind of
Lohengrin; ... no one seems to know whence it
came." IIT v. Vencap, Ltd., 519 F.2d 1001, 1015 (2d Cir.

1975) (J. Friendly). Few courts have addressed the

nor

issue of what constitutes a "law of nations," and there

sovereignty,

is

1350]." Cohen v. Hartman, 634 F.2d 318, 319 (5th

no

universally

accepted

definition

of

this

phrase. Dreyfus v. Von Finck, 534 F.2d 24, 30-31 (2d

Cir.), cert. denied, 429 U.S. 835, 97 S. Ct. 102, 50 L.
Ed. 2d 101 (1976).
However,

in

the IIT case,

impinges

upon

jurisdiction

nation's
will

not

exercise
lie

of

its

under

Cir.1981).
However, the Second Circuit in Filartiga v. PenaIrala, 630 F.2d 876, 880 (1980), in holding that "an act

Judge

Friendly,

quoting

of torture committed by a state official against one

from Lopes v. Reederei Richard Schroder, 225 F. Supp.

held in detention violates established norms of the

292, 297 (E.D. Pa.1963), posited the following as a

international law of human rights, and hence the law

"test" to aid in determining when a violation of the law

of nations," qualified the test set out in IIT v. Vencap:

of nations has occurred:

We have no quarrel with this formulation so long as it
[A] violation of the law of nations arises only when

be understood that the courts are not to prejudge the

there has been `a violation by one or more individuals

scope of the issues that the nations of the world may

of those standards, rules or customs (a) affecting the

deem important to their interrelationships, and thus to

relationship between states or between an individual

their common good.

and a foreign state, and (b) used by those states for

their common good and/or in dealings inter se.'

630 F.2d at 888.

IIT, 519 F.2d at 1015.

Filartiga provides guidance insofar as it notes that the

Subsequently, courts held that the law of nations

1789, but as it has evolved and exists among the

"deals primarily with the relationship among nations

nations of the world today, Id. at 881, and to the

rather than among individuals,"Dreyfus, supra, 534

extent that international law today limits a state's

F.2d at 30-31, or that "[i]f a controversy existing

power to torture. Id. at 885. However, there still is no

between individuals neither involves internal relations

consensus as to what constitutes a "law of nations."

law of nations should be interpreted not as it was in

This conclusion is perhaps best reflected in the District

each of which violates definable, universal, and

of Columbia's decision in *280 Tel-Oren, supra, 726

obligatory norms [citation omitted] and in the process

F.2d 774, in which all three judges of the panel wrote

are defining the limits of section 1350's reach."Id.[1]

separately.

However dearly our country holds First Amendment

Despite this absence of consensus, I have relied on the

rights, I must conclude that a violation of the First

opinion of Judge Edwards in Tel-Oren in reaching the

Amendment right of free speech does not rise to the

conclusion that the plaintiffs have failed to assert

level of such universally recognized rights and so does

conduct that constitutes a violation of the law of

not constitute a "law of nations."

nations. Judge Edwards lists some representative

violations of international law that are state-practiced,
encouraged or condoned:

or causing the disappearance of individuals; (d) torture

or other cruel, inhuman or degrading treatment or
punishment; (e) prolonged arbitrary detention; (f)
patterns

racial
of

gross

under 1350. Since the 1350 issue determines the

issue of jurisdiction under 1331 (federal question),

(a) genocide; (b) slavery or slave trade; (c) the murder

systematic

Accordingly, the plaintiffs cannot assert jurisdiction

discrimination;
violations

of

(g)

and I have already ruled that plaintiffs cannot claim

jurisdiction under diversity of citizenship, 1332, this
court does not have subject matter jurisdiction, and
the complaint must be dismissed.

consistent

internationally

recognized human rights.

B. ACT OF STATE DOCTRINE

726 F.2d at 781. Although Judge Edwards did not

Even if jurisdiction could be asserted under one of the

attempt

previously

to

determine

whether

each

of

these

discussed

statutory

sections,

am

international law violations were indeed violations of

convinced that the Act of State doctrine would require

the "law of nations," he did note that "commentators

the dismissal of this action.

have begun to identify a handful of heinous actions

The Act of State doctrine forbids review by the United

This is not to say that I condone the acts that the

States courts of the acts of a foreign head of State

plaintiffs have alleged in their *281 complaint. As I

acting in his official capacity.DeRoburt v. Gannett

noted earlier, this country, and I myself, hold First

Corp., 733

Amendment

F.2d

701,

703

(9th

Cir.1984), cert.

rights

very

dearly.

Nevertheless,

denied, 469 U.S. 1159, 105 S. Ct. 909, 83 L. Ed. 2d 923

violation of First Amendment rights simply does not

(1985).

rise to the level of a violation of a "law of nations." In

In order for plaintiffs to assert jurisdiction under the

Alien Tort Claims Act, they must allege that the tortious
acts were official acts or acts committed under color of
law. See Filartiga, supra, 630 F.2d 876. Moreover, it
appears that plaintiffs' theory of liability is that Marcos
in his capacity as President of the Philippines engaged

the instant case, this court is thrust into the very

sensitive area of international law. Reciprocity is a
critical consideration. However much the acts of an
official in another country may offend our sense of
what is right, we are constrained to a large extent by
the customs and usages of international law.

in a systematic policy of suppressing rights of free

ACCORDINGLY, for the foregoing reasons, IT IS HEREBY

speech in the Philippines. This theory of recovery

ORDERED that the Defendant's Motion to Dismiss is

requires precisely the type of inquiry in which the

GRANTED.

federal courts have refused to engage under the Act of

State doctrine. It is beyond the capacity of the federal
courts to subject the official acts or policies of the
head of a foreign state to traditional standards of
judicial review.
In sum, even if the plaintiffs had been able to claim
jurisdiction, the Act of State doctrine would preclude
this court from hearing the instant lawsuit.

IT IS SO ORDERED.
NOTES
[1] While there is no consensus on what constitutes a
violation of the "law of nations," in one area there
appears to be a consensus. A taking or expropriation of
a foreign national's property by his government is not
cognizable under 1350. The Court in De Sanchez v.

Banco Central de Nicaragua, 770 F.2d 1385, 1397 (5th

Cir.1985) stated:
[T]he standards of human rights that have been
generally accepted and hence incorporated into the
law of nations are still limited. They encompass only
such basic rights as the right not to be murdered,
tortured, or otherwise subjected to cruel, inhuman or
degrading punishment ... At present, the taking by a
state of its national's property does not contravene the
international law of minimum human rights.

45 F.2d 426 (1930)

HEINE

right to do business in Germany, the insurance

v.

companies were required to and did submit to the

NEW YORK LIFE INS. CO.

supervision and control of the German insurance

officials, to invest the reserves arising from German

No. 10465.

policies in German securities, and to establish, and

District Court, D. Oregon.

they do now maintain, an office in that country with a

resident representative or agent upon whom service of

December 1, 1930.
C. T. Haas and E. B. Seabrook, both of Portland, Or., for
plaintiff.

process can be made.

The actions now pending are brought and prosecuted
in the name of, or as assignee of the insured by,

Huntington, Wilson & Huntington and Clark & Clark, all

certain parties in the United States and Germany,

of Portland, Or., for defendant.

under an irrevocable power of attorney, by which they

are authorized and empowered to sue for, collect,

BEAN, District Judge.

This is one of a series of cases pending in this court
against the New York Life Insurance Company and the
Guardian Insurance Company, each of which is a New
York corporation, to recover on some two hundred and

receive, and receipt for all sums due or owing under

the policies, or compromise the same in consideration
of an assignment and transfer to them of the
undivided 25 per cent. interest in the policies and all
rights accruing thereunder.

forty life insurance policies made and issued by the

None of the parties to the litigation are residents or

defendants in Germany, in favor of German citizens

inhabitants of this district. The plaintiffs reside in, and

and subjects, and payable in German marks. The

are

policies of the New York Life Insurance Company were

defendants are corporations organized and existing

issued prior to August 1, 1914, and those of the

under the laws of New York, with their principal offices

Guardian prior to May 1, 1918. As a condition to their

in that state, with statutory agents in Oregon, upon

citizens

of,

the

republic

of

Germany.

The

whom service can be made. None of the causes of

and subject-matter, urges that it should refuse, in its

action arose here, nor do any of the material witnesses

discretion, to exercise such jurisdiction.

reside in the district, nor are any of the records of the

defendant companies pertaining to the policies in suit
in the district, but such records are either at the home
office in New York or at their offices in Germany. The
courts of Germany and New York are open and
functioning and competent to take jurisdiction of the
controversies, and service can be made upon the
defendants in either of such jurisdictions. To require
the defendants to defend the actions in this district
would impose upon them great and unnecessary
inconvenience and expense, and probably compel
them to produce here (three thousand miles from their
home office) numerous records, books, and papers, all
of which are in daily use by it in taking care of current
business.
In addition, it would no doubt consume months of the
time of this court to try and dispose of these cases,
thus necessarily disarranging the calendar, resulting in
delay, inconvenience, and expense to other litigants
who are entitled to invoke its jurisdiction.
Under these circumstances, the defendants, while
conceding that the court has jurisdiction of the person

I unhesitatingly concur in this view, for, as said by Mr.

Justice Holmes in Cuba Railroad Co. v. Crosby, 222 U.S.
473, 32 S. Ct. 132, 133, 56 L. Ed. 274, 38 L. R. A. (N.
S.) 40: "It should be remembered that parties do not
enter into civil relations in foreign jurisdictions in
reliance upon our courts. They could not complain if
our courts refused to meddle with their affairs, and
remitted them to the place that established and would
enforce their rights. * * * The only just ground for
complaint would be if their rights and liabilities, when
enforced by our courts, should be measured by a
different rule from that under which the parties dealt."
*427 It is apparent that the plaintiffs are seeking by
these actions to impose on the defendants a liability
under a different rule than "that under which the
parties dealt."
The courts of Germany have ruled that any person
seeking to recover on a civil contract made in
Germany prior to August, 1924, and payable in marks,
can only recover on the basis provided in the monetary
law

of

1924.

Manifestly

the

proceeding on any such theory.

plaintiffs

are

not

It is argued by the plaintiffs that, because the court

Mich. 305; Disconto Gesellschat v. Umbreit, 127 Wis.

has jurisdiction of the subject-matter and the parties, it

651, 106 N.W. 821, 15 L. R. A. (N. S.) 1045, 115 Am. St.

has no discretion, but should proceed with the case,

Rep. 1063.

regardless of where the cause of action arose, or the

law by which it is controlled, or the residence or
convenience of the parties and witnesses, or the
difficulty the court would encounter in attempting to
interpret and enforce a foreign contract, or the
interference with the other business of the court. But
that is a matter resting in its discretion. It may retain
jurisdiction, or it may, in the exercise of a sound
discretion, decline to do so, as the circumstances
suggest. The courts have repeatedly refused, in their
discretion, to entertain jurisdiction of causes of action
arising in a foreign jurisdiction, where both parties are
nonresidents of the forum. Gregonis v. Philadelphia &
R. Coal & Iron Co., 235 N.Y. 152, 139 N.E. 223, 32 A. L.
R. 1, and note; Pietraroia v. New Jersey & Hudson River
Ry. & Ferry Co., 197 N.Y. 434, 91 N.E. 120; Gregonis v.
P. & R. Coal & Iron Co., 235 N.Y. 152, 139 N.E. 223, 32

As said by Mr. Justice Bradley in The Belgenland, 114

U.S.

355,

S.

Ct.

860,

864,

29

L.

Ed.

152:

"Circumstances often exist which render it inexpedient

for the court to take jurisdiction of controversies
between foreigners in cases not arising in the country
of the forum; as, where they are governed by the laws
of the country to which the parties belong, and there is
no difficulty in a resort to its courts; or where they
have agreed to resort to no other tribunals * * * not on
the ground that it has not jurisdiction, but that, from
motives of convenience, or international comity, it will
use its discretion whether to exercise jurisdiction or
not."
See, also, Charter Shipping Co. v. Bowring, 281 U.S.
515, 50 S. Ct. 400, 74 L. Ed. 1008.

A. L. R. 1; Stewart v. Litchenberg, 148 La. 195, 86 So.

These, in my judgment, are cases of that kind. They

734; Smith v. Mutual Life Insurance Co., 14 Allen (96

are actions brought on causes of action arising in

Mass.) 336-343; National Telephone Mfg. Co. v. Du

Germany. The contract of insurance was made and to

Bois, 165 Mass. 117, 42 N.E. 510, 30 L. R. A. 628, 52

be paid there and in German currency. It is to be

Am. St. Rep. 503; Collard v. Beach, 81 App. Div. 582,

construed and given effect according to the laws of the

81 N.Y.S. 619; Great Western Railway Co. v. Miller, 19

place where it was made. 22 Am. & Eng. Ency. of Law

(2d

Ed.)

1350.

The

courts

of

this

country

are

where, as here, the courts of Germany and of the

established and maintained primarily to determine

home state of the defendant are open and functioning.

controversies between its own citizens and those

having business there, and manifestly the court may
protect itself against a flood of litigation over contracts
made and to be performed in a foreign country, where
the parties and witnesses are nonresidents of the
forum, and no reason exists why the liability, if any,
cannot be enforced in the courts of the country where

Judge Tucker, in the state court of Multnomah county,

in an able and well-considered opinion in a case
brought on one of the German policies (Kahn v. New
York), reached the same conclusion.
634 F. Supp. 842 (1986)

the cause of action arose, or in the state where the

In re UNION CARBIDE CORPORATION GAS PLANT

defendant was organized and has its principal offices.

DISASTER

True, the courts of New York have declined to exercise

1984.

AT

BHOPAL,

INDIA

IN

DECEMBER,

jurisdiction over actions brought on insurance policies

similar to those in suit. Higgins v. N. Y. Ins. Co., 220

Misc. No. 21-38 (JFK).

App. Div. 760, 222 N.Y.S. 819, and Von Nessen-Stone v.

United States District Court, S.D. New York.

N. Y. Life Ins. Co.

[1]

But that affords no reason why this

court should do so. It is to me unthinkable that

May 12, 1986.

residents and citizens of Germany may import bodily

As Amended June 10, 1986.

into this court numerous actions against a nonresident

*843 Robins, Zelle, Larson & Kaplan, Minneapolis,

defendant,

in

Michael V. Ciresi, Bruce A. Finzen, Roberta B. Walburn,

Germany, and insist as a matter of right that, because

D.S. Sastri of counsel. Barrett, Smith, Schapiro, Simon

it has obtained jurisdiction of the defendant by service

& Armstrong, New York City, Gerald A. Novack, of

of its statutory agent, the taxpayers, citizens, and

counsel, for the Union of India.

on

contracts

made

and

payable

residents of the district having business in the court

should stand aside and wait the conclusion of the case,

Waite, Schneider, Bayless & Chesley Co., L.P.A.,

Cincinnati, Ohio, Stanley M. Chesley, Phillip B. Allen,

Jan Levien, of counsel, Bailey & Broder, New York City,

plant, situated in the northern sector of the city, had

F. Lee Bailey, Michael C. Zwal, of counsel, for individual

numerous hutments adjacent to it on its southern side

plaintiffs.

which were occupied by impoverished squatters. UCIL

Hoffinger, Friedland, Dobrish, Bernfeld & Hasen, New

York City, Jack S. Hoffinger, of counsel, Liaison Counsel.
Kelley Drye & Warren, New York City, Bud G. Holman,
William A. Krohley, Lisa E. Cleary, of counsel, for
defendant.

manufactured the pesticides Sevin and Temik at the

Bhopal plant at the request of, and with the approval
of,

the

Government

MacDonald

of

India.

(Affidavit

("MacDonald

Aff.")

at

2).

of

John

UCIL

was

incorporated under Indian law in 1934. 50.9% of its

stock is owned by the defendant, Union Carbide
Corporation, a New York corporation. (MacDonald Aff.

Christic Institute, Washington, D.C., Rob Hager, Shelley

at 1). Methyl isocyanate (MIC), a highly toxic gas, is an

D. Hayes, of counsel, for Amicus Curiae.

ingredient in the production of both Sevin and Temik.

On the night of the tragedy MIC leaked from the plant
in

substantial

*844 OPINION and ORDER

determined.

KEENAN, District Judge:

The

prevailing

quantities

for

reasons

winds

the

early

on

not

morning

yet

of

December 3, 1984 were from Northwest to Southeast.

They blew the deadly gas into the overpopulated
FACTUAL BACKGROUND

hutments adjacent to the plant and into the most

densely occupied parts of the city. The results were

On the night of December 2-3, 1984 the most tragic

horrendous. Estimates of deaths directly attributable

industrial disaster in history occurred in the city of

to the leak range as high as 2,100. No one is sure

Bhopal, state of Madhya Pradesh, Union of India.

exactly how many perished. Over 200,000 people

Located there was a chemical plant owned and

suffered injuriessome serious and permanent some

operated by Union Carbide India Limited ("UCIL"). The

mild and temporary. Livestock were killed and crops

By order of April 25, 1985 this Court established a

damaged. Businesses were interrupted.

Plaintiffs' Executive Committee, comprised of F. Lee

On December 7, 1984 the first lawsuit was filed by

American lawyers in the United States on behalf of
thousands of Indians. Dawani et al. v. Union Carbide
Corp., S.D.W.Va. (84-2479). Since then 144 additional
actions have been commenced in federal courts in the
United States. The actions have all been joined and

Bailey and Stanley M. Chesley, Esqs., who represented

individual plaintiffs and Michael V. Ciresi, Esq., whose
firm represents the Union of India. Jack S. Hoffinger,
Esq.,

who

represents

individual

plaintiffs,

was

appointed liaison counsel for the Plaintiffs' Executive

Committee.[1]

assigned by the Judicial Panel on Multidistrict Litigation

On September 24, 1985, pursuant to the Bhopal Act,

to the Southern District of New York by order of

the Central Government of India framed a "scheme"

February 6, 1985, 601 F. Supp. 1035.

for the Registration and Processing of Claims arising

The individual federal court complaints have been

superseded by a consolidated complaint filed on June
28, 1985.
The Indian Government on March 29, 1985 enacted
legislation, the Bhopal Gas Leak Disaster (Processing
of Claims) Act (21 of 1985) ("Bhopal Act"), providing
that the Government of India has the exclusive right to
represent Indian plaintiffs in India and elsewhere in

out of the disaster. According to the Union of

India's *845 counsel, over 487,000 claims have been
filed in India pursuant to the "scheme."
There presently are 145 actions filed in the United
States District Court for the Southern District of New
York

under

the

Judicial

Panel

for

Multidistrict

Litigation's order of February 6, 1985, involving

approximately 200,000 plaintiffs.

connection with the tragedy. Pursuant to the Bhopal

Before this Court is a motion by the defendant Union

Act, the Union of India, on April 8, 1985, filed a

Carbide Corporation ("Union Carbide") to dismiss the

complaint with this Court setting forth claims for relief

consolidated action on the grounds of forum non

similar to those in the consolidated complaint of June

conveniens.

28, 1985.

within its "sound discretion," Piper at 257, 102 S. Ct. at

266, the district court should consider relevant public

DISCUSSION

and private interest factors, and reasonably balance

The doctrine of forum non conveniens allows a court to

those factors, in order to determine whether dismissal

decline

is favored. This Court will approach the various

jurisdiction,

even

when

jurisdiction

is

authorized by a general venue statute. In support of its

concerns

position that the consolidated action before the Court

which Piper and Gilbert set them out.

should be transferred to a more convenient forum

within the Union of India pursuant to this doctrine,
Union Carbide relies on the United States Supreme
Court's decisions in Gulf Oil Corp. v. Gilbert, 330 U.S.
501, 67 S. Ct. 839, 91 L. Ed. 1055 (1947) and Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 102 S. Ct. 252, 70
L. Ed. 2d 419 (1981). The plaintiffs cite numerous
other lower United States federal court cases in their
briefs and seek to distinguish the Supreme Court's
decisions

from

this

case.

Of

course, Gilbert and Piper are the touchstones in sorting

out and examining the contentions of both sides to this
motion on the various factors bearing on convenience.

in

the

same

direct

manner

in

At this juncture, it would be appropriate to discuss the

presumptions
In Piper, the

on

a forum

Court

non

discussed

conveniens motion.
its

earlier

finding

in Koster v. Lumbermens Mutual Casualty Co., 330 U.S.

518, 67 S. Ct. 828, 91 L. Ed. 1067 (1947), which
suggested that a plaintiff's choice of forum was
entitled to great deference when the forum chosen
was the home of the plaintiff. This presumption was
based on the fact that the choice of the home forum
indicated a reasonable assumption that the choice was
convenient. Koster at

524,

67

S.

Ct.

at

831.

Conversely, the Piper Court found:

Piper teaches a straightforward formulation of the

When the plaintiff is foreign, however, this assumption

doctrine of forum non conveniens. A district court is

is much less reasonable. Because the central purpose

advised to determine first whether the proposed

of anyforum non conveniens inquiry is to ensure that

alternative forum is "adequate." This inquiry should

the trial is convenient, a foreign plaintiff's choice

proceed in the order followed below. Then, as a matter

deserves less deference.

Piper 454 U.S. at 256, 102 S. Ct. at 266 (footnote

265, n. 22, quoting Gilbert 330 U.S. at 506-507, 67 S.

omitted).

Ct. at 842. Gilbert states that the doctrine of forum

In the case now before the Court, in which the

plaintiffs, including the Union of India, are foreign, and

non conveniens "presupposes at least two forums in

which the defendant is amenable to process."

share a home forum which is not the instant forum, the

Extending the limited inquiry of Gilbert, the Piper Court

assumption that this forum is convenient is not

delved into the relevance of the substantive and

completely reasonable. The foreign plaintiffs' choice of

procedural differences in law which would be applied

the United States forum "deserves less deference"

in the event a case was transferred on the grounds

than would be accorded a United States citizen's

of forum non conveniens. The Piper Court determined

choice. This Court will apply the presumption in favor

that

of plaintiffs' choice of forum with "less than maximum

underlying doctrine of forum non conveniens, as well

force." Piper at 261, 102 S. Ct. at 268. See note 23 at

as grossly impractical, to consider the impact of the

864, infra.

putative transferee forum's law on the plaintiff in its

it

was

theoretically

inconsistent

with

the

decision on a forum non conveniens motion: "[I]f

conclusive or substantial weight were given to the
possibility

1. Preliminary Considerations.

of

change

conveniens doctrine
"At the outset of any forum non conveniens inquiry,

in

would

law,

the forum

become

non

virtually

useless."Piper 454 U.S. at 250, 102 S. Ct. at 263.[2]

the court must determine whether there exists an

alternative forum." Piper at 254, n. 22, 102 S. Ct. at

The Court listed numerous practical considerations

265, n. 22. The elements of that inquiry are set forth

which led to its conclusion that an unfavorable change

in Piper. First,

this

in law for plaintiff was not a relevant factor in the

requirement will be satisfied when the defendant is

forum analysis. First, the Court observed that if the

`amenable

other

chance of a change in law were given substantial

jurisdiction." Piper at 254, n. 22, *846 102 S. Ct. at

weight, choice of law questions would "become

the
to

Court

said,

process'

"[o]rdinarily,
in

the

extremely important." Piper at 251, 102 S. Ct. at 263.

unfavorable change in law were a major factor in the

U.S. courts would "have to compare the rights,

analysis:

remedies, and procedures available" within the two

proposed alternative forums, to determine whether a
disadvantageous change in law would occur upon
transfer. Id. Since

"[t]he

doctrine

of forum

non

[T]he American courts, which are already extremely

attractive to foreign plaintiffs, would become even
more attractive. The flow of litigation into the United

conveniens, however, is designed in part to help courts

States would increase and further congest already

avoid conducting complex exercises in comparative

crowded courts.

law," the change in law analysis would subvert the

doctrine itself. Id. Thus, a court engaged in the inquiry
regarding

the

existence

and

adequacy

of

Piper at 252, 102 S. Ct. at 264 (footnotes omitted).

an

At the point, however, where the possible change in

alternative forum should not hinge its decision on an

law would provide "no remedy at all" to plaintiff, a

unfavorable change in law.[3]

court may conclude that no adequate alternative

Another practical concern relating to the "change in

law" inquiry was discussed by the Piper court. Based

exists. As the Piper Court observed, it did not hold

that:

on the liberality of United States federal law as

compared to much foreign law with respect to

[T]he possibility of an unfavorable change in law

availability of strict liability for tort, malleable and

should never be a relevant consideration in a forum

diverse choice of law rules among the 50 states,

non conveniensinquiry. Of course, if the remedy

availability of jury trials, contingent fee arrangements

provided by the alternative forum is so clearly

and

inadequate or unsatisfactory that it is no remedy at all,

extensive

discovery

provisions,

the

Court

observed that a change of forum might frequently

involve an unfavorable change of law for foreign
plaintiffs suing American defendants. Piper at 252, n.
18, 102 S. Ct. at 264, n. 18. Consequently, if the

the

unfavorable

change

in

law

may

be

given

substantial weight; the district court may conclude

that dismissal would not be in the interests of justice.

Piper at 254, 102 S. Ct. at 265 (emphasis in original)

inadequate to handle the Bhopal litigation. In support

(footnote omitted). Thus, while it *847 is not a "major

of this position, plaintiffs have submitted the affidavit

factor" in the analysis, a court must at least consider

of Professor Marc S. Galanter of the University of

the effect on plaintiffs of a change in law upon

Wisconsin Law School. Professor Galanter's credentials

transfer.

are impressive; he was a Fulbright Scholar at the

To a great extent, the plaintiffs in this case argue that

Indian courts do not offer an adequate forum for this
litigation by virtue of the relative "procedural and
discovery

deficiencies

[which]

would

thwart

the

victims' quest for" justice. (Memorandum in Opposition

by Plaintiffs' Executive Committee ("Memo in Opp.") at
2). The defendant disputes this contention.

amenability to process in the alternative forum, is

more than sufficiently met in the instant case. Union
Carbide has unequivocally acknowledged that it is
subject to the jurisdiction of the courts of India
(Defendant's Memorandum in Reply filed December
20, 1985 ("Reply Memo") at 8); (oral argument January
3, 1986, transcript at 29, comment of Bud Holman,
counsel for Union Carbide). Union Carbide is definitely
amenable to process in India.
this

curiae[4] argue

initial
that

test,
the

South Asian Studies at the University of Wisconsin Law

School. He is not, however, admitted to practice in
India and the Court views his opinions concerning the
Indian legal system, its judiciary and bar as far less
persuasive than those of N.A. Palkhivala and J.B.
Dadachanji, each of whom has been admitted to
practice in India for over 40 years. Both are Senior

Plaintiffs' preliminary concern, regarding defendant's

Beyond

Faculty of Law of Delhi University and specializes in

Advocates before the Supreme Court of India. Mr.

Palkhivala served as Indian Ambassador to the United
States from 1977 to 1979, and has represented the
Indian

government

Indian

legal

and amicus
system

is

three

occasions

before

international tribunals.
Although the outcome of this analysis, given the rule
of Piper regarding change in law, seems self-evident,
the Court will review plaintiffs' argument on the
inadequacy of the Indian forum out of deference to the
plaintiffs.

plaintiffs

on

A. Innovation in the Indian Judicial System.

fossils but is a living organism which grows through

the

judicial

process

and

statutory

enactments."

Professor Galanter describes the Indian common law

(Palkhavala

legal system, inherited from the British, in terms of its

defendant's

similarity to that of other common law systems. He

independent judiciary. Plaintiffs present no evidence to

compares the system favorably to that of the United

bolster their contention that the Indian legal system

States or Great Britain in terms of the appellate

has not sufficiently emerged from its colonial heritage

structure, the rule of stare decisis, the role of the

to

judiciary as "guardian of [India's] democratic structure

litigation would demand. Their claim in this regard is

and protector of citizens' rights." (Galanter Aff., at 6-

not compelling.

display

Aff.

at

experts

the

3).

The

suggest

innovativeness

examples
a

cited

developed

which

the

by
and

Bhopal

12) before pointing to its ostensible deficiencies.

According to Professor Galanter, India's legal system
"was imposed on it" during the period of colonial rule.
(Galanter Aff. at 11). Galanter argues that "Indian legal

B. Endemic Delays in the Indian Legal System.

institutions still reflect their colonial origins," (Galanter

Galanter discusses the problems of delay and backlog

Aff. at 12), in terms of the lack of broadbased

in Indian courts. Indeed, it appears that India has

legislative activity, inaccessibility of legal information

approximately one-tenth the number of judges, per

and legal services, burdensome court filing fees and

citizen,

limited innovativeness with reference to legal practice

postponements and high caseloads are widespread.

and education. (Galanter Aff. at 12).

Galanter urges that the backlog is a result of Indian

On the question of innovativeness, Mr. Palkhivala

responds with numerous examples of novel treatment
of complex legal issues by the Indian Judiciary. [5] In the
words of the former ambassador of India to the United
States, "a legal system is not *848 a structure of

as

the

United

States, [6] and

that

procedural law, which allows for adjournments in midhearing, and for multiple interlocutory and final
appeals. Numerous appeals and "[c]onsiderable delay
[are] caused by the tendency of courts to avoid the
decision of all the matters in issue in a suit, on the
ground that the suit could be disposed of on a

preliminary point." (Galanter Aff. at 17; 18-20, 21,

and another Justice of the Supreme Court of India

quoting Indian Law Commission, 54th Report (1973)

ordered the presiding court to expedite adjudication of

pp. 12-13).

claims. MC Mehta v. Union of India. (Dadachanji Aff. at

This Court acknowledges that delays and backlog exist

in Indian courts, but United States courts are subject to
delays and backlog, too. See Remarks of Honorable
Warren E. Burger, Chief Justice, Supreme Court of the
United States, 100 F.R.D. 499, 534 (1983).
However, as Mr. Palkhivala states, while delays in the
Indian legal system are a fact of judicial life in the
proposed alternative forum, there is no reason to
assume that the Bhopal litigation will be treated in
ordinary fashion.

11 and Annexure A thereto). In another instance, the

Indian Supreme Court directed the High Court to hear
a given matter on a daily basis, and set a deadline for
delivering

judgment

(Dadachanji

Aff.

at

11

and

Annexure B thereto). Other means of coping with delay

are

appointment

of

special

tribunals

by

the

Government of India (Dadachanji Aff. at 12 and

Annexure C thereto), and assignment of daily hearing
duties to a single special judge, otherwise unburdened,
to hear a special matter. (Dadachanji Aff. at 11). This
Court is persuaded, by the example of the Bhopal Act
itself and other cases where special measures to

The Bhopal tragedy has already been approached with

expedite were taken by the Indian judiciary, that the

imagination in India. Demonstrating the creativity and

most significant, urgent and extensive litigation ever

flexibility of the Indian system, the Parliament of India

to arise from a single event could be handled through

has passed the Bhopal Act in order to deal with the

special judicial accommodation in India, if required.

cases arising from the sad events of December 3,

1984. The Bhopal Act permits the cases to be treated
"speedily,

effectively, equitably and to the best

C. Procedural and Practical Capacity of Indian

advantage of the claimants." (Palkhivala Aff. at 11).

Courts.

Mr. Dadachanji refers to another Indian case which

Plaintiffs contend that the Indian legal system lacks

arose from a gas leak in New Delhi. The Chief Justice

the wherewithal to allow it "to deal effectively and

expeditiously" with the issues raised in this lawsuit.

could not provide for the expansion of lawfirms, if such

(Memo in Opp. p. 53).

a choice is required. In any event, this Court is not

Plaintiffs urge that Indian practitioners emphasize oral

skills rather than written briefs. They allegedly lack
specialization, practical investigative techniques and
coordination into partnerships. These factors, *849 it
is argued, limit the Indian bar's ability to handle the

convinced that the size of a law firm has that much to

do with the quality of legal service provided. Many
small firms in this country perform work at least on a
par with the largest firms. Bigger is not necessarily
better.

Bhopal litigation. As Mr. Dadachanji indicates, Indian

Moreover,

lawyers

complex

represent all the claimants, it is likely that if the case

technology transfers, suggesting capability within the

were transferred to India, the Attorney General or

technological and scientific areas of legal practice, if

Solicitor General of India and the Advocate General of

not "specialization." (Dadachanji Aff. at 8). Moreover,

Madhya

Indian attorneys use experts, when necessary. As to

represent the claimants. The Indian bar appears more

investigative

than capable of shouldering the litigation if it should

have

competently

ability,

Mr.

dealt

with

Dadachanji

persuasively

points out that the Central Bureau of Investigation

("CBI") of the Union of India is well equipped to handle
factual inquiry, as is the Commission of Enquiry
constituted

by

the

state

of

Madhya

Pradesh.

(Dadachanji Aff. at 8). While Indian attorneys may not

customarily join into large law firms, and as Mr.
Palkhivala states, are limited by present Indian law to
partnerships of no more than twenty, this alone or
even in concert with other factors does not establish
the inadequacy of the Indian legal system. (Palkhivala
Aff. at 8). There is no reason the Indian legislature

since the Union

Pradesh,

with

of India purports to

attendant

staffs,

would

be transferred to India. (Palkhivala Aff. at 9).

Next, plaintiffs and Professor Galanter argue that the
substantive
developed

tort
to

law

of

India

accommodate

is

the

not

sufficiently

Bhopal

claims.

Plaintiffs trace the lack of sophistication in Indian tort

law to the presence of court fees for litigants as
inhibiting the filing of civil suits. Though the filing fees
may

have

had

historical

significance,

they

are

irrelevant here. Professor Galanter acknowledges that

court fees may be waived for "poor parties or for

specific classes of litigants." (Galanter Aff. at 28). In

tort law relating to high technology or complex

fact, filing fees have been waived for claimants in India

manufacturing processes. This is of no moment with

in the Bhopal litigation already begun there.

respect to the adequacy of the Indian courts. With the

Professor Galanter asserts that India lacks codified tort

law, has little reported case law in the tort field to
serve as precedent, and has no tort law relating to
disputes arising out of complex product or design
liability. (Galanter Aff. at 30-36). As an illustration of
the paucity of Indian tort law, Professor Galanter states
that a search through the All-India Reports for the span
from 1914 to 1965 revealed only 613 tort cases
reported.

(Galanter

Aff.

at

32).

Mr.

Dadachanji

responds that tort law is sparsely reported in India due

to frequent settlement of such cases, lack of appeal to
higher courts, and the publication of tort cases in
specialized

journals

other

than

the All-India

Reports. (Dadachanji Aff. at 16-17; Palkhivala Aff. at

10). In addition, tort law has been codified in
numerous Indian statutes. (Dadachanji Aff. at 16-17).

groundwork of tort doctrine adopted from the common

law and the precedential weight awarded British cases,
as well as Indian ones, it is obvious that a welldeveloped base of tort doctrine exists to provide a
guide to Indian courts presiding over the Bhopal
litigation. In any event, much tort law applied in
American cases involving complex technology has its
source in legal principles first enunciated in Victorian
England. See, e.g., Rylands v. Fletcher, 1868, L.R. 3
H.L. 330. As Mr. Palkhivala stated in his affidavit:

*850 The plant itself was the product of highly

complex technology, but complexity of the technology
cannot be equated with complexity of legal issues. The
principles of liability and damages involved in the
Bhopal cases are all well established in India. The
complexity is not in the nature or determination of

As Professor Galanter himself states, "the major

legal issues but in the application of the law to the

categories of tort, their elements, the [theories] of

events which took place in Bhopal. Well settled law is

liability, defenses, respondeat superior, the theories of

to be applied to an unusual occurrence.

damagesare all familiar." (Galanter Aff. at 37). What is

(Palkhivala Aff. at 7).

different, Galanter asserts, is the complete absence of

Plaintiffs next assert that India lacks certain procedural

pretrial proceedings in the Bhopal litigation. [7] Any

devices which are essential to the adjudication of

dismissal of the action now before this Court is thus

complex cases, the absence of which prevent India

conditioned on defendant's consent to submit to

from providing an adequate alternative forum. They

discovery on the American model, even after transfer

urge that Indian pre-trial discovery is inadequate and

to another jurisdiction.

that therefore India is an inadequate alternative forum.

Professor Galanter states that the only forms of
discovery available in India are written interrogatories,
inspection of documents, and requests for admissions.
Parties alone are subject to discovery. Third-party
witnesses need not submit to discovery. Discovery
may be directed to admissible evidence only, not
material likely to lead to relevant or admissible
material, as in the courts of the United States. Parties
are not compelled to provide what will be actual proof
at trial as part of discovery.
These limits on discovery are adopted from the British
system. Similar discovery tools are used in Great
Britain today. This Court finds that their application
would perhaps, however, limit the victims' access to
sources of proof. Therefore, pursuant to its equitable
powers, the Court directs that the defendant consent
to submit to the broad discovery afforded by the
United States Federal Rules of Civil Procedure if or
when an Indian court sits in judgment or presides over

The ostensible lack of devices for third-party impleader

or for organizing complex cases under the law of the
state of Madhya Pradesh are two other procedural
deficiencies which plaintiffs assert preclude a finding
that India offers an adequate alternative forum.
Assuming for the moment that, upon appropriate
transfer, the Bhopal litigation would be adjudicated by
the local district court in Bhopal, and that the law of
Madhya Pradesh would be applied, this Court is still
not moved by plaintiffs' argument regarding impleader
or complex litigation.
Although no specific provision in the Indian Code of
Civil Procedure permits the impleading of third-parties
from whom contribution is sought, other provisions in
the Code do provide for impleader. As both parties to
this motion state, Order 1, Rule 10(2) of the Indian
Code of Civil Procedure "allows the court to add
additional parties if the presence of those parties is
`necessary in order to enable the Court effectively and

completely to adjudicate upon and settle all questions

that settlement, although desirable for many reasons,

involved in the suit.'" (Galanter Aff. at 60; Dadachanji

including conservation of attorneys' fees and costs of

Aff. at 18). Professor Galanter posits that a joint

litigation, preservation of judicial resources, and speed

tortfeasor would not be considered a necessary party,

of resolution, is unlikely regardless of the level of

and

activism of the presiding judge.

would

not

be

joined.

Defendant's

expert,

conversely, asserts that a party can be added to

prevent multiplicity of suits and conflicts of decisions.
Thus, Mr. Dadachanji argues, defendants would be able
to seek contribution from third-parties if joinder would
prevent repetitive litigation or inconsistency. Moreover,
the broad provision of inherent powers to aid the ends
of justice, as codified at Section 151 of the Indian Code
of

Civil

Procedure

would

prevent

an

ultimate

miscarriage of *851 justice in the area of impleader.

(Dadachanji Aff. at 19).[8]

Plaintiffs' next contention is that since no class action

procedure exists in India expeditious litigation of the
Bhopal suits would be impossible. As with all of
plaintiffs' other arguments, this purported deficiency
does not constitute "no remedy" at all. Professor
Galanter himself acknowledges that Order 1, Rule 8 of
the

Indian

Code

of

Civil

Procedure

provides

mechanism for "representative" suits, "where there are

numerous persons having the same interest in one
suit." (Galanter Aff. at 54). Even if the current state of

The absence of procedures or mechanisms within the

Indian law regarding "representative" suits involves

Indian

is

application of the mechanism to pre-existing groups

presented as support for plaintiffs' position regarding

such as religious sects or associations, there is no

the non-existence of an adequate alternative forum.

reason to conclude that the Indian legislature, capable

Professor Galanter asserts, for example, that Indian

of enacting the Bhopal Act, would not see its way to

judges do not promote settlements. The point is wholly

enacting a specific law for class actions. In addition, it

irrelevant to the question of whether an adequate

does not appear on the face of Order 1, Rule 8 that the

alternative forum exists. In any event, this Court has

"representative" suit is expressly limited to preexisting

labored hard and long to promote settlement between

groups. The Indian district court could adopt the rule

the parties for over a year, to no avail. It would appear

for use in a newly created class of injured, whose

judiciary

to

handle

complex

litigation

members all have "the same interest" in establishing

foreign jurisdictions. Piper at 252, n. 18, 102 S. Ct. at

the liability of the defendant. An Indian court has law

264, n. 18. In any event, the lack of contingency fees

available to create a representative class, or perhaps a

is not an insurmountable barrier to filing claims in

few different representative classes. The "scheme" for

India, as demonstrated by the fact that more than

registration and processing of claims, see supra, at 4,

4,000 suits have been filed by victims of the Bhopal

could perform the task of evaluating the specific

gas leak in India, already. According to Mr. Palkhivala,

amounts of claims. Moreover, Mr. Dadachanji gives at

moreover, well-known lawyers have been known to

least

serve clients without charging any fees. (Palkhivala Aff.

three

examples

where

Indian

courts

have

consolidated suits pursuant to their inherent power

under Section 151 of the Indian Code of Civil
Procedure. In at least one case, such consolidation
allegedly occurred without consent of the parties.
(Dadachanji Aff. at 9). The absence of a rule for class
actions which is identical to the American rule does not
lead to the conclusion that India is not an adequate
alternative forum.

at 8).
Plaintiffs' final contention as to the inadequacy of the
Indian forum is that a judgment rendered by an Indian
court

cannot

be

enforced

in

the

United

States

without *852 resort to further extensive litigation.

Conversely, plaintiffs assert, Indian law provides res
judicata effect to foreign judgments, and precludes
plaintiffs from bringing a suit on the same cause of

Final points regarding the asserted inadequacies of

action in India. (Galanter Aff. at 63-65). Mr. Dadachanji

Indian procedure involve unavailability of juries or

disputes this description of the Indian law of res

contingent fee arrangements in India. Plaintiffs do not

judicata. He asserts that the pendency, or even final

press these arguments, but Mr. Palkhivala touches

disposition, of an action in a foreign court does not

upon them. They are easily disposed of. The absence

prevent plaintiffs from suing in India upon the original

of juries in civil cases is a feature of many civil law

cause of action. Plaintiffs would not be limited, Mr.

jurisdictions, and of the United Kingdom. Piper at 252,

Dadachanji argues, to an Indian action to enforce the

n. 18, 102 S. Ct. at 264, n. 18 and citations therein.

foreign judgment. (Dadachanji Aff. at 19-20). In

Furthermore, contingency fees are not found in most

addition, he states that an Indian court, before

ordering that a foreign judgment be given effect,

both parties to play ball on a distant field will be taken

would seek to establish whether the foreign court had

to its limit, with each party being ordered to be bound

failed to apply Indian law, or misapplied Indian law.

by the decision of the respective foreign referees.

(Dadachanji Aff. at 20).

The

possibility

of

non-enforcement

To sum up the discussion to this point, the Court

of

foreign

determines that the Indian legal system provides an

judgment by courts of either country leads this Court

adequate alternative forum for the Bhopal litigation.

to conclude that the issue must be addressed at this

Far from exhibiting a tendency to be so "inadequate or

time. Since it is defendant Union Carbide which,

unsatisfactory" as to provide "no remedy at all," the

perhaps ironically, argues for the sophistication of the

courts of India appear to be well up to the task of

Indian legal system in seeking a dismissal on grounds

handling this case. Any unfavorable change in law for

of forum non conveniens, and plaintiffs, including the

plaintiffs which might be suffered upon transfer to the

Indian Government, which state a strong preference

Indian courts, will, by the rule of Piper, not be given

for the American legal system, it would appear that

"substantial weight." Differences between the two

both parties have indicated a willingness to abide by a

legal

judgment of the foreign nation whose forum each

detriment, do not suggest that India is not an

seeks to visit. Thus, this Court conditions the grant of a

adequate alternative forum. As Mr. Palkhivala asserts

dismissal on forum non conveniensgrounds on Union

with some dignity, "[w]hile it is true to say that the

Carbide's agreement to be bound by the judgment of

Indian system today is different in some respects from

its preferred tribunal, located in India, and to satisfy

the American system, it is wholly untrue to say that it

any judgment rendered by the Indian court, and

is deficient or inadequate. Difference is not to be

affirmed on appeal in India. Absent such consent to

equated with deficiency." (Palkhivala Aff. at 4). Piper at

abide by and to "make good" on a foreign judgment,

254, 102 S. Ct. at 265. The inquiry now turns to a

without challenge except for concerns relating to

weighing of the public and private interest factors.

minimal due process, the motion to dismiss now under

consideration will not be granted. The preference of

systems,

even

if

they

inure

to

plaintiffs'

2. Private Interest Concerns.

forum supports a finding that the private interest

factors in this case weigh strongly in favor of dismissal.

The Gilbert Court set forth a list of considerations

which affect the interests of the specific litigants to an
action, and which should be weighed in making
a forum non conveniens determination. The so-called

A. Sources of Proof.

private interest factors, along with public interest

The first example of a private interest consideration

factors discussed below, were not intended to be

discussed in Gilbert is "relative ease of access to

rigidly applied. As the Court stated in Piper,

sources of proof." As stated, the analysis of this issue

must hinge on the facts. Limited discovery on the issue

"[E]ach case turns on its facts." If central emphasis

of forum non conveniens has taken place, pursuant to

were placed on any one factor,

the Court's order of August 14, 1985. [9] The Court can

the forum non

conveniens doctrine would lose much of the flexibility

that makes it so valuable.

therefore proceed to discuss this question.

Union Carbide argues that virtually all of the evidence

Piper at 249-50, 102 S. Ct. at 263. Recognizing that

which will be relevant at a trial in this case is located in

"[p]articularly with respect to the question of relative

India. Union Carbide's position is that almost all

ease of access to sources of proof," "the private

records relating to liability, and without exception, all

interests point in both directions," the Supreme Court

records relevant to damages, are to be found in and

nevertheless upheld a district court's decision to

around Bhopal. On the liability question Union Carbide

dismiss a case in favor of the relative convenience of a

asserts that the Bhopal plant was managed and

forum in Scotland. Piper at 257, 102 S. Ct. at 267. By

operated entirely by Indian nationals, who were

contrast,

private

employed by UCIL. (Affidavit of Warren J. Woomer,

interests *853 point strongly one way. As in Piper, it

formerly Works Manager of the Bhopal plant ("Woomer

appears that the burdensome effect of a trial in this

Aff.") at 2). Defendant asserts that the Bhopal plant is

this

Court

finds

that

the

part of UCIL's Agricultural Products Division, which has

been a separate division of UCIL for at least 15 years,

Bhopal

and that the plant had "limited contact" with UCIL's

accident;" Mr. Woomer asserts that there are 193

Bombay headquarters, and almost no contact with the

employees, all Indians, who must be interviewed.

United States. (Woomer Aff. at 4, 32). Woomer claims

(Woomer Aff. at 58).[11]

to have been the last American employed by UCIL. He

departed from Bhopal in 1982. (Woomer Aff. at 2).

facility

"immediately

prior

or

after

the

In addition to the seven operating units, the Bhopal

plant contained seven functional departments which

Woomer describes the structure and organization of

serviced operations.[12] The seven heads of the units

the Bhopal facility at the time of the accident. The

reported within the plant much as the department

plant had seven operating units, each headed by a

heads did.

manager or department head, each an Indian national.

[10]

The managers or department heads each reported

either directly to the plant's General Works Manager,

or to one of three Assistant Works Managers. (Woomer
Aff. at 6). Each of these is also an Indian national.
Three of the operating units which at this very early
stage of inquiry into liability appear to have been
potentially involved in the MIC leak are the Carbon
Monoxide, MIC/Phosgene and Carbamoylation units.
(Woomer Aff. at 7-10). The Carbon Monoxide and
MIC/Phosgene units together employed 63 employees,
all

Indian

nationals.

(Woomer

Aff.

at

9).

The

Carbamoylation unit employed 99 Indian nationals.

(Woomer Aff. at 10). Mr. Woomer states that an inquiry
into the cause of the accident would require interviews
with at least those employees who were on duty at the

The maintenance unit was apparently subdivided into

departments including Instrumentation, Mechanical
Maintenance, both part of the Agricultural Chemical
Maintenance unit, which employed 171 people in total,
and Plant Engineering and Formulation Maintenance,
which employed 46 people. (Woomer Aff. at 11-12).
In *854 addition,

the

Utilities

and

Electrical

department employed 195 people. (Woomer Aff. at

13).

According

maintenance

to

Mr.

organizations

Woomer,

the

performed

various

repairs

on

equipment, provided engineering support, fabricated

certain

equipment,

controlled

utilities,

salvaged

other

temperatures

portions,
and

throughout the plant. (Woomer Aff. at 11-14).

and

pressures

Moreover, according to Mr. Woomer, these UCIL

implementing safety drills. (Woomer Aff. at 22-23). The

departments also kept daily, weekly and monthly

31 Indian employees of this department worked with

records of plant operations, many of which were

the Central Safety Committee of the plant, whose

purportedly seized by the CBI and selected for copying

members were drawn from plant management, and

by CBI immediately after the accident.

[13]

The records

the Departmental Safety Committees. Operating units

and reports of the various maintenance units would

were required to monitor plant safety mechanisms

likely be relevant to the question of liability at trial.

weekly, and to keep monthly checklists. (Holman Aff. #

Of the additional functional units, it is possible that

Quality Control, with 54 employees, Purchasing, with
53, or Stores may have been directly involved in the
disaster by virtue of their participation in analyzing
plant output, procuring raw materials for the chemical
processes of the plant, and maintaining spare parts
and certain chemicals. (Woomer Aff. at 14-19). Thus,
the records and reports of these three departments
may be necessary to an investigation of liability. While
examination

of

members

of

the

Works

Office

department and Industrial Relations department would

2 at 9). The Central Safety Committee met monthly, as

did the Departmental Safety Committees. (Woomer
Aff.

at

39).

The

MIC

Unit held

monthly safety

committee meetings, for example, and issued monthly

reports. (Woomer Aff. at 41). Quarterly "Measures of
Performance" reviews also covered safety issues, and
were required of each operating unit. (Woomer Aff. at
40). Certainly, interviews of the plant personnel
involved in safety reports and audits would be
particularly

relevant

to

the

investigation

of

the

disaster.

likely be less directly useful, information regarding

Plaintiffs refer to three occasions upon which Union

plant budgets and employee histories might be of

Carbide, not UCIL, employees conducted safety audits

relevance. Of great importance are the records and

at the Bhopal plant. As defendant correctly argues,

reports of the Safety/Medical department, which was

these three events constitute a very small fraction of

responsible for daily auditing of safety performance in

the thousands of safety audits conducted at the

all departments, training and testing on safety rules,

Bhopal facility. The three audits, moreover, were

maintaining

conducted in 1979, the fall of 1980 and in May of

safety

statistics

and

planning

and

1982, many years prior to the accident which is the

Plaintiffs discuss the fact that Robert Oldford, president

subject of this lawsuit. (Plaintiffs' Memo in Opp. at 25).

of

[14]

("UCAPC") a wholly-owned subsidiary of Union Carbide

Two accidents which occurred previously at the Bhopal

plant might also be of relevance to the liability inquiry
in this litigation. On December 24, 1981, a phosgene
gas

leak

killed

UCIL

maintenance

worker. *855 Reports of the fatality were sent to Union

Carbide management in the United States. (Woomer
Deposition, Exs. 30 and 31). Plaintiffs assert that the
accident report called for increased training in Bhopal
by

United

States

employees

of

Union

Carbide's

Institute, West Virginia, plant. Defendant states that

the responsibility for remedying problems in the
Bhopal plant rested with the plant itself, and that

Union

Carbide

Agricultural

Products

Company

headquartered in the United States, was in Bhopal at

the time of the February 1982 leak. (Memo in Opp. at
24). Union Carbide asserts that Mr. Oldford was visiting
UCIL's Research and Development Centre, located
several miles from the Bhopal plant for an unrelated
purpose, and was only coincidentally in Bhopal when
the leak occurred. To the extent that this presence in
India in 1982 has any significance, Mr. Oldford, and
any other United States employees of Union Carbide
who conducted safety audits in Bhopal or were present
when accidents occurred there, may be flown to
Bhopal for testimony or discovery.

Union Carbide did not make any recommendations,

In addition to safety data, two other types of proof

and was involved only to the extent of receiving a copy

may be relevant to a trial of this case on the merits.

of the report which called for its involvement in further

Information regarding plant design, commissioning and

training. (Woomer Aff. at 41).

start-up

The second accident at Bhopal prior to the disaster of

December, 1984 took place on February 9, 1982, when

may

bear

upon

the

liability

question.

Information pertinent to employee training should also

have significance.

a pump seal, perhaps improperly used, failed. (Memo

Leaving aside the question of whether the Government

in Opp. at 24; Woomer Aff. at 41). Many employees

of India or UCIL chose the site and product of the

were injured, and at least 25 were hospitalized.

Bhopal plant, the Court will evaluate the facts which

bear on the issue of relevant records. The findings

Plaintiffs and defendant agree that in 1973 Union

below concern the location of proof only, and bear

Carbide entered into two agreements with UCIL which

solely upon the forum non conveniens motion. The

were

Court expressly declines to make findings as to actual

"Technical Service Agreement." According to plaintiffs,

liability at this stage of the litigation.

Union

entitled
Carbide,

"Design

Transfer

pursuant

to

the

Agreement"
Design

and

Transfer

Agreement, provided a process design to UCIL, the

"detailing [of which] was undertaken in India." (Memo
in Opp. at 17). The process design package consisted
of the basic plan of the factory, which was to be
fleshed out in the detailing phase. Plaintiffs state that
at least nine Union Carbide technicians travelled to
India to monitor the progress of the project. Union
Carbide also allegedly assigned a "key engineer," John
Couvaras, to serve as UCIL Bhopal project manager.
Mr. Couvaras allegedly "assumed responsibility for
virtually every aspect of the detailing of the process
design," and approved detail reports of "not only UCIL
but

also

independent

contractors,

including

Humphreys & Glasgow Consultants Private Ltd. and

Power Gas Limited" of Bombay, India. (Memo in Opp.
at 17-20).[15]
Plaintiffs also claim that "[n]o change of any substance
was made from Union Carbide's design during the
detailing phase." Plaintiffs note that only "one portion"
of the process design work provided to UCIL by Union

Carbide was not used. (Memo in Opp. at 20). In effect,

(2) [F]oreign collaboration and import of equipment be

plaintiffs seek to establish that Union Carbide was the

settled to the satisfaction of the Government.

creator of the design used in the Bhopal plant, and

Mr. Brown claims, on personal information, that UCIL

directed UCIL's relatively minor detailing program.

told him that Union Carbide would not be allowed to be

They urge that for the most *856 part relevant proof

involved in the Bhopal project beyond the provision of

on this point is located in the United States.

process design packages. (Brown Aff. at 5). The Design

Defendant seeks to refute this contention, with notable

success. Turning first to the affidavit of Robert C.
Brown, who describes himself as "chief negotiator for
Union Carbide Corporation in connection with the two
agreements it entered into with ... UCIL in November,
1973," the Court is struck by the assertion that the two
agreements

were

negotiated

at

"arms-length"

pursuant to Union Carbide corporate policy, and that

the Union of India mandated that the Government
retain

"specific

control

over

the

terms

of

Transfer Agreement indicates that Union Carbide's

duty under the Agreement was to provide process
design packages, and that UCIL, not Union Carbide,
would be responsible to "detail design, erect and
commission the plant." (Defendant's Ex. 4, 4.1).
Union Carbide, accordingly, issued limiting warranties
with respect to the design packages, detailing of which
it would not be involved with. (Brown Aff. at 7, Ex. 4,
4.1, 12.3).

any

The nature of UCIL's detail design work is discussed in

agreements UCIL made with foreign companies such

the affidavit of Ranjit K. Dutta, who has held various

as Union Carbide Corporation." (Brown Aff. at 3-4). [16]

positions at UCIL and UCAPC. From 1973 through 1976,

Mr. Brown alleges that the Letter of Intent issued by

the Union of India in March 1972, pursuant to which

Mr. Dutta was employed as General Manager of the

Agricultural Products Division of UCIL. (Dutta Aff. at 2).

construction and design of the plant were allowed to

Mr. Dutta asserts that the Bhopal facility was built by

ensue provided, inter alia, that:

UCIL over the eight years from 1972 to 1980. (Dutta

Aff. at 8). He asserts that Union Carbide's role in the
project was "narrow", and limited to providing "certain

process design packages for certain parts of the

working primarily out of Bombay, were involved in

plant." (Dutta Aff. at 9). He continues, stating:

design detailing. (Dutta Aff. at 16). These UCIL

engineers

Once

it

did

that,

it

had

no

further

design

or

engineering role,
and that:

oversaw

the

55

to

60

Indian

engineers *857 employed by the Bombay engineering

firm which performed the detail design work. This firm,
Humphreys and Glasgow, submitted designs and
drawings to the UCIL engineers for approval. Corrected
drawings were returned by UCIL to Humphreys and

[T]he process design packages which Union Carbide

Glasgow for changes, and sent back to UCIL for final

Corporation provided are nothing more than summary

approval. (Dutta Aff. at 19-24).[17] Mr. Dutta alleges that

design starting points.... They set forth only the

"at

general parameters.... A plant cannot be constructed

engineering personnel from the United States involved

from a process design package. The detail design

in approving the detail design or drawings prepared

comprises approximately 80 percent of the sum of the

upon which construction was based. Nor did they

man hours involved in the design of any project and

receive notices of changes made." (Dutta Aff. at 24).

no

time

were

Union

Carbide

Corporation

transposes the general process design parameters into

an actual design which can be used for purchasing

Mr. Dutta expressly states that the MIC storage tank

equipment and actual construction.

and monitoring instrumentation were fabricated or

(Dutta Aff. at 9-12). (emphasis omitted).

According to Mr. Dutta, during the five years between
the date upon which Union Carbide submitted process
designs, and the date upon which the plant started-up,
there were only four visits to Bhopal by Union Carbide
process design engineers. (Dutta Aff. at 14). In
contrast, he asserts that ten to fifteen UCIL engineers,

supplied by two named Indian sub-contractors. The

vent gas scrubber is alleged to have been fabricated in
the Bhopal plant shop. (Dutta Aff. at 25).
Of the 12,000 pages of documents purportedly seized
by the CBI regarding design and construction of the
Bhopal plant, an asserted 2,000 are design reports of
Humphreys and Glasgow, UCIL or other contractors.

Defendant claims that blueprints and calculations

to the conflicting affidavits before it. This question,

comprise another 1,700 pages of documents held by

which involves credibility concerns, is left for later in

the CBI. Five thousand pages of contractors' files,

the litigation. To the extent that this particular matter

including specifications and contracts are asserted to

bears upon the relative ease of access to sources of

be in India. In addition, Union Carbide claims that

proof, Mr. Munoz and Mr. Dutta both may be called to

blueprints and diagrams may not reflect final design

testify at trial or discovery. Mr. Dutta's home is in

changes as incorporated into the actual plant, and that

Bhopal. (Dutta Aff. at 1). The Court is not aware of the

the detail design engineers' testimony will be needed

whereabouts of Mr. Munoz at this time. Either of the

to determine the configuration of the actual plant.

two could travel to either alternative forum.

[18]

(Holman Aff. # 2 at 15-16).

In addition to design and safety records, material

One final point bearing on the information regarding

regarding training of Bhopal personnel is likely to be

liability is contained in the affidavit of Edward Munoz,

relevant to the question of liability. Plaintiffs state that

at a relevant time the General Manager of UCIL's

Warren Woomer supervised the training of UCIL

Agricultural Products Division. He later acted as

personnel at Union Carbide's Institute, West Virginia

Managing Director of UCIL. Mr. Munoz has submitted

plant. According to plaintiffs, 40 UCIL employees were

an affidavit in which he states that Union Carbide

transported to Institute's MIC facility for lengthy

decided to store MIC in large quantities at the Bhopal

training. (Memo in Opp. at 22). Mr. Woomer states in

plant, despite Mr. Munoz' warnings that MIC should be

reply that the 40 employees thus trained represented

stored only in small amounts because of safety. (Memo

a fraction of the over 1,000 employees who were

in Opp. at 15-16; Munoz Aff.). Mr. Dutta, for defendant,

trained exclusively in Bhopal. (Woomer Aff. at 43). In

asserts that there was never any issue of token

addition, Mr. Woomer asserts that the training at

storage of MIC at Bhopal, as Mr. Munoz states, and that

Institute was pursuant to an arms-length agreement,

there is no truth to Mr. Munoz' assertion that he was

that UCIL selected the parties to be trained, and that

involved in the storage issue. (Dutta Aff. at 30).

UCIL paid Union Carbide for the training. (Woomer Aff.

[19]

at 43). Moreover, Mr. Woomer's description of the

*858 The Court cannot make any determination as

training provided at Bhopal suggests that each of the

as in English. (Holman Aff. # 2 at 12). The Indian

plant's employees had lengthy cumulative training, of

language documents would have to be translated to be

which the Institute training was but a very small

of use in the United States. The reverse is not true. It is

portion. (Woomer Aff. at 46). Personnel records, in any

evident to the Court that records concerning the

event, are located in Bhopal. (Holman Aff. # 2 at 4).

design, manufacture and operation of the Bhopal plant

The

briefs

and

affidavits

contain

considerable

discussion on the matter of commissioning and startup of the Bhopal plant. The Court need not resolve the
question of who was responsible for these aspects of
plant operation. However, the Court determines that
the manual regarding start-up was prepared by Indian
nationals employed by UCIL. (Woomer Aff. at 48).
In the aggregate, it appears to the Court that most of
the documentary evidence concerning design, training,
safety and start-up, in other words, matters bearing on
liability, is to be found in India. Much of the material
may be held by the Indian CBI. Material located in this
country, such as process design packages and training
records of the 40 UCIL employees trained at Institute,
constitutes a smaller portion of the bulk of the
pertinent data than that found in India. Moreover,
while records in this country are in English, a language
understood in the courts of India, certain of the records
in India are in Hindi or other Indian languages, as well

are relatively more accessible in India than in the

United States, and that fewer translation problems
would face an Indian court than an American court.
Since Union Carbide has been directed to submit to
discovery in India pursuant to the liberal grant of the
American Federal Rules of Civil Procedure, and this
opinion is conditioned upon such submission, any
records sought by plaintiffs must be made available to
them in India. The private interest factor of relative
ease of access to sources of proof bearing on liability
favors

dismissal

of

the

consolidated

case. [20] The

Indian *859 Government is asserted to have been

involved in safety, licensing and other matters relating
to liability. Records relating thereto are located in India,
as are the records seized by the CBI. Although
plaintiffs state that all such records could and would be
made available to this Court, it would be easier to
review them in India. Transmittal and translation
problems would thereby be avoided.

In fact, the plaintiffs' cases on liability will depend in

large measure upon the knowledge and activities of

B. Access to Witnesses.
Gilbert teaches

second

such witnesses as the employees of [companies] who

important

consideration

under the heading of private interests, the "availability

of compulsory process for attendance of willing, and
the

cost

of

obtaining

attendance

of

unwilling,

witnesses." Gilbert, 330 U.S. at 508, 67 S. Ct. at 843.

As discussed in detail above, most witnesses whose
testimony would relate to questions of causation and

are not parties to this litigation, but who directly

participated in the events which gave rise to it. The
United States District Court in New York, however, has
no power to subpoena any of these witnesses. It is
unlikely that many would be willing to travel to New
York to testify; and the cost, in any event, would be
prohibitively great.

and

Fitzgerald v. Texaco, 521 F.2d 448, 451-52 (2d Cir.

Humphreys and Glasgow and other subcontractors, of

1975), cert. denied, 423 U.S. 1052, 96 S. Ct. 781, 46 L.

whom there are hundreds, are located in India. Shift

Ed. 2d 641 (1976) (footnote omitted). In contrast, the

employees from the possibly malfunctioning units,

relatively few witnesses who reside in the United

safety monitoring personnel, those responsible for

States are primarily employed by Union Carbide. As

training, safety auditing, procurement, compliance

employees of a party they would probably be subject

with

be

to the subpoena power of Indian courts. Transportation

required to testify. More than likely, many of these

costs would also be lower, since fewer people would

potential witnesses do not speak English, and would

have to make the journey to testify.

liability

are

in

regulations

India.

and

Engineers

other

from

operations

UCIL

might

require translators. Many of the witnesses are not

parties to this litigation. Therefore, as the Court of
Appeals for the Second Circuit has stated in the
context of a forum non conveniens motion:

The presence of the Indian Government in this action

is also of critical importance on this motion. Plaintiffs
assert that "all necessary officials and employees of
the Central Government will voluntarily comply with
requests to attend trial." (Memo in Opp. at 70; Answer
to No. 124 of Defendant's First Requests for Admission,

Exhibit 55). This statement does not provide for

interest concerns regarding witnesses emphasize the

attendance by officials of Madhya Pradesh or the

logic

Bhopal municipality, whom Union Carbide indicates

witnesses reside in the United States than in India.

might be impleaded as third-party defendants. As

Almost all of the witnesses located in this country are

witnesses only, these officials would not be subject to

employees of defendant, and would be subject to

this

third-party

compulsory process in India as a result. Transportation

defendants, they might be immune from suit in the

costs for the relative few would not compare to the

United States by the terms of the Foreign Sovereign

alternate costs of transporting hundreds of Indian

Immunities Act, 28 U.S.C. 1602 et seq. State and city

witnesses. Since English is widely spoken in India, less

officials might also lack sufficient contacts with this

translation would be required for foreign witnesses in

district to allow this Court to exercise personal

India than in the converse situation. Should this case

jurisdiction over them.

be tried in India, fewer obstacles to calling state and

Court's

subpoena

power.

As

While Union Carbide might be deprived of testimony of

witnesses or even potential third-parties if this action
were to proceed in this forum, no such problem would

of

defendant's

position.

Relatively

fewer

local officials as witnesses or parties would face the

defendant. The Court determines that this private
interest factor weighs in favor of dismissal.

exist if litigation went forward in India.

The unavailability of compulsory process for Indian
non-party witnesses, of whom *860 there are many,
such as would ensure their presence at a trial in this
country, the high cost of transporting the large number
of Indian nationals to the United States, as well as the
need to translate their testimony should they appear,
all support the argument favoring dismissal of this
action on forum non conveniens grounds. The private

C. Possibility of View.
The third private interest factor articulated in Gilbert is
the ease of arranging for a view of the premises
around which the litigation centers. Plaintiffs assert
that the notion that a jury view of the plant and
environs is necessary is "simply preposterous." (Memo
in Opp. at 71). Plaintiffs note that a viewing of the
premises is rarely conducted in products liability cases,

since videotapes, pictures, diagrams, schematics and

In summary, then, the private interest factors weigh

models are more instructive than an actual view.

greatly in favor of dismissal on grounds of forum non

(Memo in Opp. at 71). A viewing of the plant and

conveniens. Since the "balance is strongly in favor of

hutments would probably not be of utmost importance

the defendant" and foreign plaintiffs' choice of a

in determining liability, and this consideration is not

foreign forum is given less than maximum deference,

afforded great weight on this motion.

the Court determines that dismissal is favored at this

However, the instant case is not identical to the

product design defect case cited by plaintiffs, in which

point in the inquiry. Gilbert 330 U.S. at 508, 67 S. Ct. at

843.

a district court judge determined that "the present

appearance of the defendants' facilities may or may
not be relevant to production which occurred" in the

3. Public Interest Concerns.

period in which the allegedly violative manufacture

The Gilbert Court articulated certain factors which

occurred. Hodson v. A.H. Robins Co., Inc., 528 F. Supp.

affected the interests of non-parties to a litigation to

809, 822 (E.D.Va.1981), aff'd, 715 F.2d 142 (4th Cir.

be considered in the context of the doctrine of forum

1983). In the instant case, the site of the accident was

non conveniens. These public interest concerns were

sealed after the leak, and the present condition of the

held to be relevant to a court's determination of

plant might be relevant to a finding of liability. A

whether to dismiss on these grounds. The Supreme

viewing may not be necessary, but conceivably could

Court expressly identified a few factors:

be called for later in the litigation. An Indian court is in

a far better position than this Court to direct and
supervise such a viewing should one ever be required.
This consideration, though minor, also weighs in favor
of dismissal.

Administrative

difficulties

follow

for

courts

when

litigation is piled up in congested centers instead of

being handled at its origin. Jury duty is a burden that
ought not to be imposed upon the people of a
community which has no relation to the litigation. In

cases which touch the affairs of many persons, there is

country, and finds, as a matter within its experience,

reason for holding the trial in their view and reach

that this is a "congested center" of litigation as

rather than in remote parts of the country where they

described inGilbert at 508. The burden which would be

can learn of it by report only. There is a local interest in

imposed should litigation continue here was aptly

having localized controversies decided at home. There

described by the Court of Appeals for the Second

is an appropriateness, too, in having the trial of a

Circuit in Schertenlieb v. Traum, 589 F.2d 1156 (2d

diversity case in a forum that is at home with the state

Cir.1978). Reviewing a district judge's ruling for

law

dismissal on the grounds offorum non conveniens, the

that

must

than *861 having

govern
a

court

the
in

some

case,
other

rather
forum

untangle problems in conflict of laws, and in law

foreign to itself.

Second Circuit observed that "were it not for the

somewhat unusual fact that it is the forum resident
who seeks dismissal, we would have to say very little

Gilbert at 508-09, 67 S. Ct. at 843. The Court will

regarding the exercise of Judge Metzner's discretion in

consider these various factors in turn, as well as others

dismissing this case."Schertenlieb at 1164. In affirming

discussed by the parties andamicus curiae.

the ruling for dismissal, the Court of Appeals asked the

rhetorical question:

A. Administrative Difficulties.
As is evident from the discussion thus far, the mere
size of the Bhopal case, with its multitude of witnesses
and documents to be transported and translated,

If litigation is in a clearly inconvenient forum, why

should defendant and the court be burdened with its
continuing there, if an alternative forum now exists so
that plaintiff will not be without a remedy?

obviously creates administrative problems.

Schertenlieb at 1163.

There can be no doubt that the Bhopal litigation will

This Court has already determined that because of the

take its toll on any court which sits in judgment on it.

location of the preponderance of the evidence in India,

This Court sits in one of the busiest districts in the

and the difficulty of transporting documents and

witnesses to this forum, this district is clearly an

relation to this litigation except for the fact that the

inconvenient forum for the litigation. An alternative

defendant happens to be doing business here.

forum is seen to exist in India. This Court feels that the

Domingo at 816.

answer to the Schertenlieb question is clear.

The defendant in this case, involved as it appears to
A district judge in this district, in Domingo v. States

have been in the process design phase of the plant's

Marine

construction,

Lines, 340

F.

Supp.

811 (S.D.N.Y.1972)

may

have

slightly

less

tenuous

evaluated the administrative concerns of the Southern

connection to this forum than a corporation which is

District of New York, relevant to this Court today, a full

merely

fourteen years later. The Domingo court stated:

conducted in New York, or in corporate headquarters in

doing

business

here.

Certain

business

Danbury, Connecticut, may have been directly related

It is scarcely necessary to dwell on the fact that this

to development or operation of the UCIL facility in

Court is the most heavily burdened Federal District

Bhopal. However, almost "all the relevant events"

Court in the country. The Civil Calendar grows more

leading to and following from the accident occurred in

congested all the time. The priority now properly given

India. Indian citizens are primarily involved in the case,

to the disposition of criminal cases tends to increase

both as witnesses and claimants. The substantial

this congestion.

administrative weight of this case should be centered

******
I see no reason why this Court, with its heavy burdens
and responsibilities, should be burdened with cases
like these which, from every point of view, should be
tried in the courts of the nation where all the relevant
events occurred and whose citizens are primarily
involved. Certainly, this district and the Metropolitan
area in which it is situated have no conceivable

on a court with the most significant contacts with the

event. Thus, a court in Bhopal, rather than New York,
should bear the load.
*862 In addition to the burden on the court system,
continuation of this litigation in this forum would tax
the time and resources of citizens directly. Trial in this
case will no doubt be lengthy. An assigned jury would
be compelled to sit for many months of proof. Because

of the large number of Indian language-speaking

Islamic Republic at 483, 478 N.Y.S.2d 597, 467 N.E.2d

witnesses, the jurors would be required to endure

245 (citations omitted). Administrative concerns weigh

continual translations which would double the length

against retention of this case.

of trial. The burden on the jurors themselves, and on

their families, employers and communities would be
considerable. The need for translation would be

B. The Interests of India and the United States.

avoided if trial were to be held in Bhopal.

Plaintiffs, and especially amicus curiae emphasize this
Clearly, the administrative costs of this litigation are

point of argument in opposition to the motion to

astounding and significant. Despite its deep concern

dismiss. Concerned with the asserted possibility of

for the victims of the tragedy, this Court is persuaded

developing

by a recent relevant decision of the New York State

multinational

Court of Appeals. In the opinion in Islamic Republic of

American courts should administer justice to the

Iran v. Pahlavi, 62 N.Y.2d 474, 478 N.Y.S.2d 597, 467

victims of the Bhopal disaster as they would to

N.E.2d 245 (1984), cert. denied, ___ U.S. ___, 105 S. Ct.

potential American victims of industrial accidents. The

783, 83 L. Ed. 2d 778 (1985), with reference to a

public interest is served, plaintiffs and amicus argue,

decision discussing actions brought in New York by the

when United States corporations assume responsibility

Iranian Government against the Shah and his wife, the

for accidents occurring on foreign soil. "To abandon

Court of Appeals stated that:

that responsibility," amicus asserts, "would both injure

"double-standard"
corporations,

of

plaintiffs

liability
urge

for
that

our standing in the world community and betray the

[T]he taxpayers of this State should not be compelled

spirit of fairness inherent in the American character."

to assume the heavy financial burden attributable to

(Amicus Brief at 4). The specific American interests

the cost of administering the litigation contemplated

allegedly to be served by this Court's retention of the

when their interest in the suit and the connection of its

case include the opportunity of creating precedent

subject matter ... is so ephemeral.

which

will

"bind

all

American

multinationals

henceforward," (Amicus Brief at 20); promotion of

"international cooperation," (Amicus Brief at 22-23);

commitment of judicial time and resources that would

avoidance of an asserted "double standard" of liability,

inevitably be required if the case were to be tried here.

and

of

Piper at 260-61, 102 S. Ct. at 268. According to

hazardous industries which would extract concessions

plaintiffs, the potential for greater deterrence in this

on health and environmental standards as the price of

case is "self-evident."

the

prevention

continuing

of

operations

"economic

in

the

blackmail

United

States."

(Amicus Brief at 20). An additional American public

*863 The opposing interest of India is argued to be ill-

interest ostensibly to be served by retention of the

served by sending this litigation to India. Pointing to

litigation in this forum is advanced by plaintiffs

the fact that the Union of India chose this forum,

themselves. They assert that the deterrent effect of

plaintiffs state that there can be "no question as to the

this case can be distinguished from the situation

public interest of India." (Memo in Opp. at 91). Union

in Piper, where the Court rejected the argument that

Carbide's statements regarding the interests of India in

"American citizens have an interest in ensuring that

this

American manufacturers are deterred from producing

plaintiffs, who state that "Union Carbide, whose

defective products, and that additional deterrence

actions caused the suffering of an entire city, has no

might be obtained if Piper and [its co-defendant] were

standing to assert this belated concern for the welfare

tried in the United States, where they could be sued on

of the Indian populace." (Memo in Opp. at 91).

the

basis

of

both

negligence

and

strict

liability." Piper 454 U.S. at 260, 102 S. Ct. at 268. The

Court stated that:

litigation

are

summarily

dismissed

by

the

Union Carbide, not surprisingly, argues that the public

interest of the United States in this litigation is very
slight, and that India's interest is great. In the main,
the Court agrees with the defendant.

[T]he incremental deterrence that would be gained if

this trial were held in an American court is likely to be

As noted, Robert C. Brown states in his affidavit on

insignificant. The American interest in this accident is

behalf of Union Carbide that the Indian Government

simply

preserved the right to approve foreign collaboration

not

sufficient

to

justify

the

enormous

and import of equipment to be used in connection with

Industrial Approvals, the Director General of Technical

the plant. See supra at 856. In addition, Mr. Brown

Development and the Director of Industries of Madhya

quoted excerpts from the 1972 Letter of Intent entered

Pradesh. (Dutta Aff. at 45). Moreover, UCIL was

into by the Union of India and UCIL, one term of which

ultimately required to obtain numerous licenses during

required that "the purchase of only such design and

development,

consultancy services from abroad as are not available

facility. (Dutta Aff. at 46). The list of licenses obtained

within the country" would be allowed. (Brown Aff. at 6).

fills five pages.[21]

Ranjit K. Dutta states that the Indian Government, in a

process of "Indianization," restricted the amount of
foreign materials and foreign consultants' time which
could be contributed to the project, and mandated the
use of Indian materials and experts whenever possible.
(Dutta Aff. at 35). In an alleged ongoing attempt to
minimize foreign exchange losses through imports, the
Union of India insisted on approving equipment to be
purchased abroad, through the mechanism of a
"capital goods license." (Dutta Aff. at 48-50).
The

Indian

Petroleum

Government,
and

through

Chemicals,

its

allegedly

of

and

operation

of

the

The Indian Government regulated the Bhopal plant

indirectly under a series of environmental laws,
enforced

by

numerous

agencies,

much

as

the

Occupational Safety and Health Administration, the

Environmental Protection Agency and state and local
agencies regulate the chemical industry in the United
States. (Dutta Aff. at 53-56). Emissions from the facility
were monitored by a state water pollution board, for
example. (Dutta Aff. at 64). In addition, state officials
periodically

Ministry

construction

[22]

inspected

the

fully-constructed

plant.

(Dutta Aff. at 56). A detailed inquiry into the plant's

required

operations was conducted by the Indian Government

information from UCIL regarding all aspects of the

in the aftermath of the December, 1981 fatality at the

Bhopal facility during construction in 1972 and 1973,

MIC unit and the February, 1982 incident involving a

including "information on toxicity" of chemicals. (Dutta

pump seal. (Dutta Aff. at 58-62). Numerous federal,

Aff. at 44). The Ministry required progress reports

state and local commissions, obviously, investigated

throughout the course of the construction project.

the most tragic incident of all, the MIC leak of

These reports were required by the Secretariat for

December, 1984.

The recital above demonstrates the immense interest

of

various

Indian

governmental

agencies

in

the

creation, operation, *864 licensing and regulation, and

investigation of the plant. Thus, regardless of the
extent of Union Carbide's own involvement in the UCIL
plant in Bhopal, or even of its asserted "control" over
the plant, the facility was within the sphere of
regulation of Indian laws and agencies, at all levels.
The comments of the Court of Appeals for the Sixth
Circuit with respect to its decision to dismiss a

This action involves the safety of drugs manufactured

in the United Kingdom and sold to its citizens pursuant
to licenses issued by that government. The interest of
the United Kingdom is overwhelmingly apparent. New
York, and Ohio [the United States forums] for that
matter, have a minimal interest in the safety of
products which are manufactured, regulated and sold
abroad by foreign entities, even though development
or testing occurred in this country.

non

In re Richardson-Merrell, Inc., 545 F. Supp. at 1135

conveniens grounds seem particularly apposite. In In

(footnote omitted). The Sixth Circuit confirmed this

re

view of the public interests, stating:

products

liability

action

Richardson-Merrell,

onforum

Inc., 545

F.

Supp.

1130 (S.D.Ohio 1982),modified sub. nom. Dowling v.

Richardson-Merrell Inc., 727 F.2d 608 (6th Cir.1984),

The interest of the United Kingdom in this litigation is

the court reviewed a dismissal involving an action

great. The drug was manufactured under a British

brought by a number of plaintiffs, all of whom were

license by British companies and was marketed and

citizens of Great Britain.[23] Defendant in the action was

prescribed in the United Kingdom. The alleged injuries

a drug company which had developed and tested a

took place in England and Scotland and the plaintiffs

drug in the United States which was manufactured and

are citizens and residents of those countries. When a

marketed in England. The suit was brought against the

regulated industry, such as pharmaceuticals in this

American parent, not the British subsidiary, for injuries

case

allegedly resulting from ingestion of the offending drug

Aircraft, is involved, the country where the injury

in

occurs has a particularly strong interest in product

England

and

Scotland.

The

dismissing the case, stated that:

district

court,

in

and

passenger

aircraft

operations

in Piper

liability litigation.... Though no single factor should be

determinative

in

ruling

on

a forum

non

conveniens motion, the nature of the product and its

and duty of care.... This balancing of the overall

status as regulated or not must be considered.

benefits to be derived from a product's use with the

risk of harm associated with that use is peculiarly

Dowling, 727 F.2d at 616.

suited to a forum of the country in which the product is

The Indian government, which regulated the Bhopal

to be used.... The United States should not impose its

facility, has an extensive and deep interest in ensuring

own view of the safety, warning, and duty of care

that its standards for safety are complied with. As

required of drugs sold in the United States upon a

regulators, the Indian government and individual

foreign country when those same drugs are sold in

citizens even have an interest in knowing whether

that country.

extant regulations are adequate. This Court, sitting in

Harrison v. Wyeth Laboratories, 510 F. Supp. 1, 4

a foreign country, has considered the extent of

(E.D.Pa.1980), aff'd mem., 676 F.2d 685 (3d Cir.1982).

regulation by Indian agencies of the Bhopal plant. It

India no doubt evaluated its need for a pesticide plant

finds that this is not the appropriate tribunal to

against the risks inherent in such development. Its

determine

were

conclusions regarding "[q]uestions as to the safety of

breached, or whether the laws themselves were

[products] marketed" or manufactured in India were

sufficient to protect Indian citizens from harm. It would

"properly the concern of that country." Harrison at 4

be sadly paternalistic, if not misguided, of this Court to

(emphasis omitted). This is particularly true where, as

attempt to evaluate the regulations and standards

here, the interests of the regulators were possibly

imposed in a foreign country. As another district court

drastically

stated in the context of a drug product liability action

regulators. The Court is well aware of the moral danger

brought by foreign plaintiffs in this country,

of creating the "double-standard" feared by plaintiffs

whether

the

Indian

regulations

different

from

concerns

of

American

and amicus curiae. However, when an industry is as

*865 Each government must weigh the merits of

regulated as the chemical industry is in India, the

permitting the drug's use.... Each makes its own

failure to acknowledge inherent differences in the aims

determination as to the standards of degree of safety

and concerns of Indian, as compared to American

citizens would be naive, and unfair to defendant. The

protecting its citizens from ill-use is significantly

district court in Harrison considered the hypothetical

stronger

instance in which a products liability action arising out

multinationals from exporting allegedly dangerous

of an Indian accident would be brought in the United

technology.

States. The court speculated as follows:

dismissal by which plaintiffs are troubled is not a

than

the

The

local

supposed

interest

in

"blackmail"

deterring
effect

of

significant interest of the American population, either.

The impropriety of [applying American standards of
product safety and care] would be even more clearly
seen if the foreign country involved was, for example,
India, a country with a vastly different standard of

Surely,

there

will

be

no

relaxing

of

regulatory

standards by the responsible legislators of the United

States as a response to lower standards abroad.
[24]

Other concerns than bald fear of potential liability,

living, wealth, resources, level of health care and

such as convenience or tax benefits, bear on decisions

services, values, morals and beliefs than our own.

regarding where to locate a plant. Moreover, the

Most significantly, our two societies must deal with

purported public interest of seizing this chance to

entirely different and highly complex problems of

create new law is no real interest at all. This Court

population growth and control. Faced with different

would exceed its authority were it to rule otherwise

needs, problems and resources in our example India

when restraint was in order.

may, in balancing the pros and cons ... give different

weight to various factors than would our society....

The Court concludes that the public interest of India in

Should we impose our standards upon them in spite of

this litigation far outweighs the public interest of the

such differences? We think not.

United States. This litigation offers a developing nation

Harrison at 4-5. This Court, too, thinks that it should

avoid imposing characteristically American values on
Indian concerns.

the opportunity to vindicate the suffering of its own

people within the framework of *866 a legitimate legal
system. This interest is of paramount importance. [25]

The Indian interest in creating standards of care,

enforcing them or even extending them, and of

C. The Applicable Law.

Gilbert and Piper explicitly acknowledge that the need

case. India's interest in the outcome of the litigation

of an American court to apply foreign law is an

exceeds America's, see supra at 44-58. The lex loci

appropriate

non

delicti analysis used in other jurisdictions indicates

conveniens motion, and can in fact point toward

that the law of the state where the tort occurred

dismissal. Gilbert, 330 U.S. at 509, 67 S. Ct. at

should be applied. The place in which the tort occurred

843; Piper, 454 U.S. at 260, 102 S. Ct. at 268.

was, to a very great extent, India. Other states apply

Especially when, as here, all other factors favor

the "most significant relationship" test, or "weight of

dismissal, the need to apply foreign law is a significant

contacts" test, which evaluate in which state most of

consideration on this type of motion. Piper at 260, n.

the events constituting the tort occurred. The contacts

29, 102 S. Ct. at 268, n. 29. A federal court is bound to

with

apply the choice of law rules of the state in which an

construction, operation, malfunction and subsequent

action was originally brought; even upon transfer to a

injuries are greater in number than those with the

different district, "the transferee district court must be

United States. Thus, under any one of these three

obligated to apply the state law that would have been

doctrines, it is likely that Indian law will emerge as the

applied if there had been no change of venue." Van

operative law. An Indian court, therefore, would be

Dusen v. Barrack, 376 U.S. 612, 639, 84 S. Ct. 805,

better able to apply the controlling law than would this

821, 11 L. Ed. 2d 945 (1964). Thus, this Court, sitting

United States Court, or a jury working with it. This

over a multidistrict litigation, must apply the various

public interest factor also weighs in favor of dismissal

choice of law rules of the states in which the actions

on the grounds of forum non conveniens.

concern

on

a forum

India

with

respect

to

all

phases

of

plant

now consolidated before it were brought. [26] Rather

than undertake the task of evaluating the choice of law
rules of each state separately, the Court will treat the

CONCLUSION

choice of law doctrine in toto. The "governmental

interest" analysis, employed by many jurisdictions,

It is difficult to imagine how a greater tragedy could

requires a court to look to the question of which state

occur to a peacetime population than the deadly gas

has the most compelling interest in the outcome of the

leak in Bhopal on the night of December 2-3, 1984.

The survivors of the dead victims, the injured and

American taxpayers of supporting the litigation in the

others who suffered, or may in the future suffer due to

United States would be excessive. When another,

the disaster, are entitled to compensation. This Court

adequate and more convenient forum so clearly exists,

is firmly convinced that the Indian legal system is in a

there is no reason to press the United States judiciary

far better position than the American courts to

to the limits of its capacity. No American interest in the

determine the cause of the tragic event and thereby

outcome of this litigation outweighs the interest of

fix liability. Further, the Indian courts have greater

India in applying Indian law and Indian values to the

access to all the information needed to arrive at the

task of resolving this case.

amount of the compensation to be awarded the

victims.

The Bhopal plant was regulated by Indian agencies.

The Union of India has a very strong interest in the

The presence in India of the overwhelming majority of

aftermath of the accident which affected its citizens on

the witnesses and evidence, both documentary and

its own soil. Perhaps Indian regulations were ignored or

real, would by itself suggest that India is the most

contravened. India may wish to determine whether the

convenient forum for this consolidated case. The

regulations imposed on the chemical industry within its

additional presence in India of all but the less than

boundaries were sufficiently stringent. The Indian

handful of claimants underscores the convenience of

interests far outweigh the interests of citizens of the

holding trial in India. All of the private interest factors

United States in the litigation.

described

in Piper and Gilbert weigh

heavily

toward *867 dismissal of this case on the grounds

of forum non conveniens.
The

public

interest

Plaintiffs, including the Union of India, have argued

that the courts of India are not up to the task of
conducting the Bhopal litigation. They assert that the

forth

Indian judiciary has yet to reach full maturity due to

The

the restraints placed upon it by British colonial rulers

administrative burden of this immense litigation would

who shaped the Indian legal system to meet their own

unfairly tax this or any American tribunal. The cost to

ends. Plaintiffs allege that the Indian justice system

in Piper and Gilbert also

factors
favor

set

dismissal.

has not yet cast off the burden of colonialism to meet

to Indian courts is obvious and has been demonstrated

the emerging needs of a democratic people.

in this opinion.

The Court thus finds itself faced with a paradox. In the

Therefore, the consolidated case is dismissed on the

Court's view, to retain the litigation in this forum, as

grounds of forum non conveniens under the following

plaintiffs request, would be yet another example of

conditions:

imperialism, another situation in which an established

sovereign inflicted its rules, its standards and values
on a developing nation. This Court declines to play
such a role. The Union of India is a world power in

1. Union Carbide shall consent to submit to the

jurisdiction of the courts of India, and shall continue to
waive defenses based upon the statute of limitations;

1986, and its courts have the proven capacity to mete

out fair and equal justice. To deprive the Indian

2. Union Carbide shall agree to satisfy any judgment

judiciary of this opportunity to stand tall before the

rendered against it by an Indian court, and if

world and to pass judgment on behalf of its own

applicable, upheld by an appellate court in that

people would be to revive a history of subservience

country, where such judgment and affirmance comport

and subjugation from which India has emerged. India

with the minimal requirements of due process;

and its people can and must vindicate their claims

before

the

independent

and

legitimate

judiciary

created there since the Independence of 1947.

This Court defers to the adequacy and ability of the

3. Union Carbide shall be subject to discovery under

the model of the United States Federal Rules of Civil
Procedure after appropriate demand by plaintiffs.
SO ORDERED.

courts of India. Their interest in the sad events of

December 2-3, 1984 at the UCIL plant in the City of
Bhopal, State of Madhya Pradesh, Union of India, is not
subject to question or challenge. The availability of the
probative, relevant, material and necessary evidence

NOTES
[1] All counsel on the Plaintiffs' Executive Committee
were most professional and helpful to the Court in this
case. Mr. Hoffinger agreed to proceed pro bono in this

case, and waived any possible fee. The Court has been

be considered." Piper at 252, n. 19, 102 S. Ct. at 264,

informed that neither Mr. Hoffinger, nor anyone else on

n. 19.

the Plaintiffs' Executive Committee, nor anyone in their

law firms went to India on the days immediately
following the tragedy to "sign up" Indian plaintiffs. The
behavior of many American lawyers who went to
Bhopal, India during December 1984 and January 1985
is not before this Court on this motion. Suffice it to say
that those members of the American bar who travelled
the 8,200 miles to Bhopal in those months did little to
better the American image in the Third Worldor
anywhere else. None of them were on the Plaintiffs'
Executive Committee.

rule, as set forth by the Third Circuit. Noting that a

plaintiff would choose the forum with the most
favorable choice of law rules in the first instance, "if
the possibility of an unfavorable change in substantive
is

given

conveniens inquiry,

National Council of Churches, United Church of Christ

Commission for Racial Justice, et al.
[5] For example, Mr. Palkhivala describes four cases in
which the Indian Supreme Court crafted new and
"courageous"

remedies

in

situations

relating

to

abridgements of fundamental rights. (Palkhivala Aff. at

6-7). Mr. Dadachanji describes similar decisions in
which he participated as an advocate, in his affidavit.
(Dadachanji Aff. at 2-3). The Court recognizes the

[2] The Court found a theoretical flaw in the opposite

law

[4] Rob Hager, Esq. for Citizens Commission on Bhopal,

weight
dismissal

in

the forum
would

rarely

non
be

proper." Piper at 250, 102 S. Ct. at 263.

[3] Similarly, the Court determined that "the possibility
of a change in law favorable to defendant should not

innovativeness of the Indian Courts, while refraining

from an exhaustive survey of Indian case law.
[6]

India

allegedly

has

10.5

judges

per

million

population, as compared to 107 judges per million in

the United States (Galanter Aff. at 15).
[7] A federal court has the power to condition transfer
under the doctrine of forum non conveniens upon "the
condition that defendant corporations agree to provide
the records relevant to the plaintiff's claims." Piper at
257, n. 25, 102 S. Ct. 267, n. 25. While the Court feels

that it would be fair to bind the plaintiffs to American

only of the General Works Manager and MIC Production

discovery rules, too, it has no authority to do so.

Manager, neither of whom was present at the time of

[8] The Court observes that the alleged problem would

the leak. (Woomer Aff. at 57-58).

appear to act to the detriment of defendant, not

[12] The seven functional units were Maintenance,

plaintiffs. It is Union Carbide which urges that third-

Quality Control, Stores, Purchasing, Safety/Medical,

party defendants are necessary. (Memo in Support at

Industrial Relations and Works Office. (Woomer Aff. at

27-28).

6).

Defendant

unavailability

of

discounts

third-party

the

impleader,

supposed
while

the

plaintiffs find its lack objectionable. These postures

lead the Court to the conclusion that this argument is
not compelling in either direction. The lack of specific
third-party practice will not concern the Court if it does
not concern Union Carbide.

[13] Mr. Bud Holman, counsel for Union Carbide, states

in his second affidavit that over 36,000 of the 78,000
pages of documents seized by the CBI represent plant
operation records. (Holman Aff. # 2 at 5). He asserts
that

1,700

pages

deal

with

maintenance

work

performed in 1983 and 1984. (Holman Aff. # 2 at 8).

[9] Discovery was ably managed by Magistrate Michael

H. Dolinger, of the Southern District of New York.

[14] The 1982 "Operational Safety Survey" was

apparently fairly extensive. It was conducted by three

[10] The seven operating units included Carbon

United States employees of Union Carbide, and led to

Monoxide,

MIC/Phosgene,

Carbamoylation,

Alpha

Naphthol, Aldicarb, Utilities and Formulations.

[11] Mr. Woomer states that a post-accident technical
team sought to interview these 193 employees.
According to Mr. Woomer, the Indian CBI, which had
stepped into the plant following the tragedy, advised
the technical team that interviews could be conducted

report

which

discussed

"major"

concerns

and

possibility of "serious personnel exposure." (Memo in

Opp. at 25). Mr. Woomer asserts, and plaintiffs do not
refute, that this Survey was not intended to "serve a
policing function," but was performed at the specific
request of UCIL. In addition, follow-up responsibility
"rested exclusively with UCIL plant management."
(Woomer Aff. at 37-38).

Moreover, Union Carbide states that the Union of India,

(Plaintiffs' Exhibit 3). Thus, Mr. Brown argues that

itself, conducted similar safety audits and made

Union Carbide related with UCIL much as it would have

recommendations.

with an unaffiliated, or even competing company.

Business

Manager

(Affidavit
of

of

Union

Ranjit

Carbide

K.

Dutta,

Agricultural

Products Company ("Dutta Aff.") at 58-64).

Carbide's

"international

employee"

Humphreys

and

Glasgow

was

allegedly

responsible for the following:

[15] Plaintiffs assert that Mr. Couvaras exemplifies

Union

[17]

whose

mobility throughout the Union Carbide affiliates causes

"[a]ny notion of discrete corporate identities [to]
blur[]." (Memo in Opp. at 18-19).

Among other things, developing final equipment and

unit layouts and plot plans, including equipment layout
drawings,

detailed

piping

arrangement

drawings,

layout of electrical equipment; the steel structure,

including detail design and working drawings for the

[16] As support, Mr. Brown points to the Union Carbide

buildings

Corporate Policy Manual, Section 1.10 which states:

design including specification of all proprietary and

The "arms-length principle" is a central consideration

in transfer and pricing of all technology transactions
with affiliates.

and

foundation;

mechanical

equipment

fabricated equipment; review and certification of

vendor's drawings and documents, preparation of
orthographic piping drawings for all portions of the
plant,

preparation

of

isometric

piping

drawings,

preparation of preliminary and final bills of materials

"Arms length" is defined as:

for pipes, valves, gaskets, instrument associated

The principle whereby inter-company transactions

hardware, electrical conduit; electrical engineering

between Union Carbide and its affiliates, or between

work, instrument engineering, including drawings on

affiliates, will reflect the cost to unrelated parties of

instrument hook ups, lists of instruments, review of

the

instrument specification and data sheets; definition of

same

or

circumstances.

similar

technology

under

similar

material and make calculation to size insulation,

preparation of insulation lists, preparation of material

take

off

and

procurement

inquiry

specification

assistance

including

packages,

assisting

in

Moreover, two affidavits submitted on behalf of

defendant state that Mr. Munoz was removed from his

evaluation of bids and selection of vendors, inspection

position

of certain equipment and materials to ensure proper

President in 1978, and is "extremely bitter as a result

workmanship and compliance with specifications and

of the removal." (Dutta Aff. at 31; Holman Aff. # 2 at

codes, and coordinating where Indian law required

18).

inspection

or

certification

by

governmental

inspections; preparation of a project schedule, project

reports and costs control reports at least once per
month, construction supervision including supervision
of

mechanical

testing

of

installed

equipment,

assistance in commissioning.

the

project,

and

enjoyed

mobility

between Union Carbide and UCIL, is described by Mr.

Dutta as primarily a UCIL employee. The "international
employee" status he carried is explained as a pension
accounting mechanism. (Dutta Aff. at 27).

to

member

of

Plaintiffs'

Executive

Committee at the time the affidavit was made. No

documentary

proof

Corporation

Division

[20] Union Carbide asserts throughout its briefs and

affidavits that evidence relevant to the question of
damages is located in India, as well. Certainly the
victims themselves, and, for the most part, their
medical records, are found in or near Bhopal. However,

of

this

assertion

in Opp. at 74-79). Not all of the victims would need to

be transported to the United States to describe their
injuries. The Bhopal "scheme" provides a mechanism
for

evaluating

has

been

submitted. (Dutta Aff. at 31; Holman Aff. # 2 at 18).

each

individual's

claim.

Only

representative plaintiffs need testify as to damages.

This Court would not countenance the impractical and
time-consuming

[19] Mr. Dutta asserts that Mr. Munoz was a paid

consultant

Carbide

dispositive of a forum non conveniens motion. (Memo

[18] Mr. Couvaras, whom plaintiffs assert was a "key

for

Union

as plaintiffs argue, a "head count" of witnesses is not

(Dutta Aff. at 19-20).

engineer"

as

process

of

calling

each

of

the

approximately 200,000 victims at a trial in this country.

Evidence on damages, as well as liability, is found in
India, but not to the overwhelming extent contended
by defendant. Moreover, the Court is concerned with
the policy effect of allowing the number of foreign

victims

non

brought in a foreign forum.... [T]he presence of a

conveniens determination. If carried to the extreme,

handful of American plaintiffs does not preclude such

this "head count" doctrine would mean that the more

dismissal." Nai-Chao v. Boeing Co., 555 F. Supp. 9, 21

people hurt, the less likely a suit in this country would

(N.D.Cal. 1982), aff'd sub. nom., Cheng v. Boeing

be.

Co., 708 F.2d 1406 (9th Cir.1983).

[21]

to

Indian

affect

federal

directly

and

the forum

municipal

officials

also

[24]

In

any

event,

plaintiffs'

"deterrence"

and

allegedly conducted on-site inspections resulting in

"blackmail" arguments presuppose that Union Carbide

approvals for portions of the construction, including

would be held more accountable by an American than

approvals for the flare tower, MIC layout and storage,

by an Indian tribunal. Certainly, there is a real

unit refrigeration and MIC/Phosgene structure. (Dutta

possibility of a substantial Indian judgment against

Aff. at 46-47; Exs. 102-104).

defendant, which would serve an identical deterrent

[22] One such regular inspection appears to have

taken place approximately two weeks before the MIC
disaster. (Dutta Aff. at 56; Ex. 116).

litigation are United States citizens. Of the 200,000

plaintiffs, approximately nine are American. They have
filed the complaints numbered 85 Civ. 0447, 85 Civ.
1096 and 85 Civ. 2098. This is of relative insignificance
on this motion to dismiss. "The federal courts have not
constrained

predominantly

to

foreign

retain
cases

foreign locations.
[25] While

[23] Only a small number of plaintiffs in the Bhopal

felt

function, and prevent a rush of multinationals to

jurisdiction
involving

over

controversy,"

the

accident is more

given

the

interests

than
of

the

"local
Indian

populace, it is certainly a national controversy which

should be "decided at home." Gilbert at 508-09. No
doubt Indian citizens, many of whom barely are
acquainted with their American lawyers, will find the
case more accessible if it is tried "in their view" in
India.

American

[26] Upon a cursory review of the individual complaints

plaintiffs where an examination of the Gilbert factors

comprising this action, the Court notes that suits were

demonstrated that the action is more appropriately

brought in California, Connecticut, the District of

Columbia, Florida, Illinois, Louisiana, Maryland, New

Jersey, New York, Pennsylvania, Tennessee, Texas and
West Virginia, at a minimum.

G.R. No. 120135

March 31, 2003

BANK OF AMERICA NT & SA, BANK OF AMERICA

INTERNATIONAL,
LTD., petitioners,
vs.
COURT OF APPEALS, HON. MANUEL PADOLINA,
EDUARDO LITONJUA, SR., and AURELIO K.
LITONJUA, JR., respondents.
AUSTRIA-MARTINEZ, J.:
This is a petition for review on certiorari under Rule 45
of the Rules of Court assailing the November 29, 1994
decision of the Court of Appeals1 and the April 28,
1995 resolution denying petitioners' motion for
reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio
J.
Litonjua
(Litonjuas,
for
brevity)
filed
a
Complaint2 before the Regional Trial Court of Pasig
against the Bank of America NT&SA and Bank of
America International, Ltd. (defendant banks for
brevity) alleging that: they were engaged in the
shipping business; they owned two vessels: Don
Aurelio and El Champion, through their wholly-owned
corporations; they deposited their revenues from said
business together with other funds with the branches
of said banks in the United Kingdom and Hongkong up
to 1979; with their business doing well, the defendant
banks induced them to increase the number of their
ships in operation, offering them easy loans to acquire
said
vessels;3 thereafter,
the
defendant banks

acquired, through their (Litonjuas') corporations as the

borrowers: (a) El Carrier4; (b) El General5; (c) El
Challenger6; and (d) El Conqueror 7; 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;8 and the possession the
vessels was also placed by defendant banks in the
hands of persons selected and designated by them
(defendant banks).9
The Litonjuas claimed that defendant banks as
trustees did not fully render an account of all the
income derived from the operation of the vessels as
well as of the proceeds of the subsequent foreclosure
sale;10 because of the breach of their fiduciary duties
and/or negligence of the petitioners and/or the persons
designated by them in the operation of private
respondents' six vessels, the revenues derived from
the operation of all the vessels declined drastically; the
loans acquired for the purchase of the four additional
vessels then matured and remained unpaid, prompting
defendant banks to have all the six vessels, including
the two vessels originally owned by the private
respondents, foreclosed and sold at public auction to
answer for the obligations incurred for and in behalf of
the operation of the vessels; they (Litonjuas) lost
sizeable amounts of their own personal funds
equivalent to ten percent (10%) of the acquisition cost
of the four vessels and were left with the unpaid
balance of their loans with defendant banks. 11 The
Litonjuas prayed for the accounting of the revenues

derived in the operation of the six vessels and of the

proceeds of the sale thereof at the foreclosure
proceedings instituted by petitioners; damages for
breach of trust; exemplary damages and attorney's
fees.12
Defendant banks filed a Motion to Dismiss on grounds
of forum non conveniens and lack of cause of action
against them.13
On December 3, 1993, the trial court issued an Order
denying the Motion to Dismiss, thus:
"WHEREFORE, and in view of the foregoing
consideration, the Motion to Dismiss is hereby
DENIED. The defendant is therefore, given a
period of ten (10) days to file its Answer to the
complaint.
"SO ORDERED."14
Instead of filing an answer the defendant banks went
to the Court of Appeals on a "Petition for Review on
Certiorari"15 which was aptly treated by the appellate
court as a petition for certiorari. They assailed the
above-quoted order as well as the subsequent denial
of their Motion for Reconsideration.16 The appellate
court dismissed the petition and denied petitioners'
Motion for Reconsideration.17
Hence, herein petition anchored on the following
grounds:

"1. RESPONDENT COURT OF APPEALS FAILED TO

CONSIDER THE FACT THAT THE SEPARATE
PERSONALITIES OF THE PRIVATE RESPONDENTS
(MERE STOCKHOLDERS) AND THE FOREIGN
CORPORATIONS
(THE
REAL
BORROWERS)
CLEARLY SUPPORT, BEYOND ANY DOUBT, THE
PROPOSITION THAT THE PRIVATE RESPONDENTS
HAVE NO PERSONALITIES TO SUE.
"2. THE RESPONDENT COURT OF APPEALS
FAILED TO REALIZE THAT WHILE THE PRINCIPLE
OFFORUM
NON
CONVENIENS IS
NOT
MANDATORY, THERE ARE, HOWEVER, SOME
GUIDELINES TO FOLLOW IN DETERMINING
WHETHER THE CHOICE OF FORUM SHOULD BE
DISTURBED. UNDER THE CIRCUMSTANCES
SURROUNDING THE INSTANT CASE, DISMISSAL
OF THE COMPLAINT ON THE GROUND
OF FORUM
NON-CONVENIENS IS
MORE
APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT
LIMITED
TO
FINAL
JUDGMENT
IN
THE
PHILIPPINES. IN FACT, THE PENDENCY OF
FOREIGN ACTION MAY BE THE LEGAL BASIS FOR
THE DISMISSAL OF THE COMPLAINT FILED BY
THE PRIVATE RESPONDENT. COROLLARY TO
THIS, THE RESPONDENT COURT OF APPEALS
FAILED TO CONSIDER THE FACT THAT PRIVATE
RESPONDENTS
ARE
GUILTY
OF
FORUM
18
SHOPPING."

As to the first assigned error: Petitioners argue that the

borrowers and the registered owners of the vessels are
the foreign corporations and not private respondents
Litonjuas who are mere stockholders; and that the
revenues derived from the operations of all the vessels
are deposited in the accounts of the corporations.
Hence, petitioners maintain that these foreign
corporations are the legal entities that have the
personalities to sue and not herein private
respondents; that private respondents, being mere
shareholders, have no claim on the vessels as owners
since they merely have an inchoate right to whatever
may remain upon the dissolution of the said foreign
corporations and after all creditors have been fully
paid
and
satisfied;19 and
that
while
private
respondents may have allegedly spent amounts equal
to 10% of the acquisition costs of the vessels in
question, their 10% however represents their
investments
as
stockholders
in
the
foreign
20
corporations.
Anent the second assigned error, petitioners posit that
while the application of the principle of forum non
conveniens is discretionary on the part of the Court,
said discretion is limited by the guidelines pertaining
to the private as well as public interest factors in
determining whether plaintiffs' choice of forum should
be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert21 and Piper Aircraft Co. vs. Reyno,22 to wit:
"Private interest factors include: (a) the relative
ease of access to sources of proof; (b) the

availability of compulsory process for the

attendance of unwilling witnesses; (c) the cost
of obtaining attendance of willing witnesses; or
(d) all other practical problems that make trial of
a case easy, expeditious and inexpensive. Public
interest factors include: (a) the administrative
difficulties flowing from court congestion; (b) the
local interest in having localized controversies
decided at home; (c) the avoidance of
unnecessary problems in conflict of laws or in
the application of foreign law; or (d) the
unfairness of burdening citizens in an unrelated
forum with jury duty."23
In support of their claim that the local court is not the
proper forum, petitioners allege the following:
"i) The Bank of America Branches involved, as
clearly mentioned in the Complaint, are based in
Hongkong and England. As such, the evidence
and the witnesses are not readily available in
the Philippines;
"ii) The loan transactions were obtained,
perfected,
performed,
consummated
and
partially paid outside the Philippines;
"iii) The monies were advanced outside the
Philippines. Furthermore, the mortgaged vessels
were part ofan offshore fleet, not based in the
Philippines;

"iv) All the loans involved were granted to the

Private Respondents' foreign CORPORATIONS;
"v)
The
Restructuring
Agreements
were ALL governed by the laws of England;
"vi) The subsequent sales of the mortgaged
vessels
and
the application of
the
sales
proceeds occurred and transpired outside the
Philippines, and the deliveries of the sold
mortgaged vessels were likewise made outside
the Philippines;
"vii) The revenues of the vessels and the
proceeds of the sales of these vessels
were ALL deposited to the Accounts of the
foreign CORPORATIONS abroad; and
"viii) Bank of America International Ltd. is not
licensed nor engaged in trade or business in the
Philippines."24
Petitioners argue further that the loan agreements,
security
documentation
and
all
subsequent
restructuring agreements uniformly, unconditionally
and expressly provided that they will be governed by
the laws of England;25 that Philippine Courts would
then have to apply English law in resolving whatever
issues may be presented to it in the event it
recognizes and accepts herein case; that it would then
be imposing a significant and unnecessary expense
and burden not only upon the parties to the

transaction but also to the local court. Petitioners insist

that the inconvenience and difficulty of applying
English law with respect to a wholly foreign transaction
in a case pending in the Philippines may be avoided by
its dismissal on the ground of forum non conveniens. 26
Finally, petitioners claim that private respondents have
already waived their alleged causes of action in the
case at bar for their refusal to contest the foreign civil
cases earlier filed by the petitioners against them in
Hongkong and England, to wit:
"1.) Civil action in England in its High Court of
Justice, Queen's Bench Division Commercial
Court (1992-Folio No. 2098) against (a) LIBERIAN
TRANSPORT NAVIGATION. SA.; (b) ESHLEY
COMPANIA NAVIERA SA., (c) EL CHALLENGER SA;
(d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC
NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION
CORP. SA; (g) EDUARDO K. LITONJUA & (h)
AURELIO K. LITONJUA.
"2.) Civil action in England in its High Court of
Justice, Queen's Bench Division, Commercial
Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING
COMPANY S.A., (c) EDUARDO KATIPUNAN
LITONJUA
and
(d)
AURELIO
KATIPUNAN
LITONJUA.
"3.) Civil action in the Supreme Court of
Hongkong High Court (Action No. 4039 of 1992),

against (a) ESHLEY COMPANIA NAVIERA S.A., (b)

EL CHALLENGER S.A., (c) ESPRIONA SHIPPING
COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION
(e)
EDDIE
NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING
(EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN
LITONJUA, JR., and (h) EDUARDO KATIPUNAN
LITONJUA.
"4.) A civil action in the Supreme Court of Hong
Kong High Court (Action No. 4040 of 1992),
against (a) ESHLEY COMPANIA NAVIERA S.A., (b)
EL CHALLENGER S.A., (c) ESPRIONA SHIPPING
COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION
(e)
EDDIE
NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING
(EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN
LITONJUA, RJ., and (h) EDUARDO KATIPUNAN
LITONJUA."
and that private respondents' alleged cause of action
is already barred by the pendency of another action or
bylitis pendentia as shown above.27
On the other hand, private respondents contend that
certain material facts and pleadings are omitted and/or
misrepresented in the present petition for certiorari;
that the prefatory statement failed to state that part of
the security of the foreign loans were mortgages on a
39-hectare piece of real estate located in the
Philippines;28 that while the complaint was filed only by
the stockholders of the corporate borrowers, the latter

are wholly-owned by the private respondents who are

Filipinos and therefore under Philippine laws, aside
from the said corporate borrowers being but their alteregos, they have interests of their own in the
vessels.29 Private respondents also argue that the
dismissal by the Court of Appeals of the petition for
certiorari was justified because there was neither
allegation nor any showing whatsoever by the
petitioners that they had no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course
of law from the Order of the trial judge denying their
Motion to Dismiss; that the remedy available to the
petitioners after their Motion to Dismiss was denied
was to file an Answer to the complaint; 30 that as
upheld by the Court of Appeals, the decision of the
trial court in not applying the principle of forum non
conveniens is
in
the
lawful
exercise
of
its
31
discretion. Finally, private respondents aver that the
statement of petitioners that the doctrine of res
judicata also applies to foreign judgment is merely an
opinion advanced by them and not based on a
categorical ruling of this Court; 32 and that herein
private respondents did not actually participate in the
proceedings in the foreign courts.33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the
motion to dismiss cannot be the subject of petition for
certiorari. Petitioners should have filed an answer to
the complaint, proceed to trial and await judgment

before making an appeal. As repeatedly held by this

Court:

will resolve said questions in conjunction with the

issues raised by the parties.

"An order denying a motion to dismiss is

interlocutory and cannot be the subject of the
extraordinary
petition
for certiorari
or
mandamus. The remedy of the aggrieved party
is to file an answer and to interpose as defenses
the objections raised in his motion to dismiss,
proceed to trial, and in case of an adverse
decision, to elevate the entire case by appeal in
due course. xxx Under certain situations,
recourse tocertiorari or mandamus is considered
appropriate, i.e., (a) when the trial court issued
the order without or in excess of jurisdiction; (b)
where there is patent grave abuse of discretion
by the trial court; or (c) appeal would not prove
to be a speedy and adequate remedy as when
an appeal would not promptly relieve a
defendant from the injurious effects of the
patently mistaken order maintaining the
plaintiff's baseless action and compelling the
defendant needlessly to go through a protracted
trial and clogging the court dockets by another
futile case."34

First issue. Did the trial court commit grave abuse of

discretion in refusing to dismiss the complaint on the
ground that plaintiffs have no cause of action against
defendants since plaintiffs are merely stockholders of
the corporations which are the registered owners of
the vessels and the borrowers of petitioners?

Records show that the trial court acted within its

jurisdiction when it issued the assailed Order denying
petitioners' motion to dismiss. Does the denial of the
motion to dismiss constitute a patent grave abuse of
discretion? Would appeal, under the circumstances,
not prove to be a speedy and adequate remedy? We

No. Petitioners' argument that private respondents,

being mere stockholders of the foreign corporations,
have no personalities to sue, and therefore, the
complaint should be dismissed, is untenable. A case is
dismissible for lack of personality to sue upon proof
that the plaintiff is not the real party-in-interest. Lack
of personality to sue can be used as a ground for a
Motion to Dismiss based on the fact that the
complaint, on the face thereof, evidently states no
cause of action.35 In San Lorenzo Village Association,
Inc. vs. Court of Appeals,36 this Court clarified that a
complaint states a cause of action where it contains
three essential elements of a cause of action, namely:
(1) the legal right of the plaintiff, (2) the correlative
obligation of the defendant, and (3) the act or
omission of the defendant in violation of said legal
right. If these elements are absent, the complaint
becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action. 37 To
emphasize, it is not the lack or absence of cause of
action that is a ground for dismissal of the complaint
but rather the fact that the complaint states no cause

of action.38 "Failure to state a cause of action" refers to

the insufficiency of allegation in the pleading, unlike
"lack of cause of action" which refers to the
insufficiency of factual basis for the action. "Failure to
state a cause of action" may be raised at the earliest
stages of an action through a motion to dismiss the
complaint, while "lack of cause of action" may be
raised any time after the questions of fact have been
resolved on the basis of stipulations, admissions or
evidence presented.39
In the case at bar, the complaint contains the three
elements of a cause of action. It alleges that: (1)
plaintiffs, herein private respondents, have the right to
demand for an accounting from defendants (herein
petitioners), as trustees by reason of the fiduciary
relationship that was created between the parties
involving the vessels in question; (2) petitioners have
the obligation, as trustees, to render such an
accounting; and (3) petitioners failed to do the same.
Petitioners insist that they do not have any obligation
to the private respondents as they are mere
stockholders of the corporation; that the corporate
entities have juridical personalities separate and
distinct from those of the private respondents. Private
respondents maintain that the corporations are wholly
owned by them 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.

We agree with private respondents. As held in the San

Lorenzo case,40
"xxx assuming that the allegation of facts
constituting plaintiffs' cause of action is not as
clear and categorical as would otherwise be
desired, any uncertainty thereby arising should
be so resolved as to enable a full inquiry into the
merits of the action."
As this Court has explained in the San Lorenzo case,
such a course, would preclude multiplicity of suits
which the law abhors, and conduce to the definitive
determination and termination of the dispute. To do
otherwise, that is, to abort the action on account of the
alleged fatal flaws of the complaint would obviously be
indecisive and would not end the controversy, since
the institution of another action upon a revised
complaint would not be foreclosed.41
Second Issue. Should the complaint be dismissed on
the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally
meaning 'the forum is inconvenient', emerged in
private international law to deter the practice of global
forum shopping,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
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.
Moreover, this Court enunciated in Philsec. Investment
Corporation vs. Court of Appeals,47 that the doctrine
offorum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16
of the Rules of Court does not include said doctrine as
a ground. This Court further ruled that while it is within
the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so
only after vital facts are established, to determine
whether special circumstances require the court's
desistance; and that the propriety of dismissing a case

based
on
this
principle
of forum
non
conveniens requires a factual determination, hence it
is more properly considered a matter of defense. 48
Third issue. Are private respondents guilty of forum
shopping because of the pendency of foreign action?
No. Forum shopping exists where the elements of litis
pendentia are present and where a final judgment in
one case will amount to res judicata in the
other.49 Parenthetically, for litis pendentia to be a
ground for the dismissal of an action there must be: (a)
identity of the parties or at least such as to represent
the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded
on the same acts; and (c) the identity in the two cases
should be such that the judgment which may be
rendered in one would, regardless of which party is
successful, amount to res judicata in the other.50
In case at bar, not all the requirements for litis
pendentia 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 and defendants52, still the other requirements
necessary for litis pendentia 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.

As the Court of Appeals aptly observed:

Bellosillo, (Chairman),
Callejo, Sr., JJ., concur.

"xxx [T]he petitioners, by simply enumerating

the civil actions instituted abroad involving the
parties herein xxx, failed to provide this Court
with relevant and clear specifications that would
show the presence of the above-quoted
elements or requisites for res judicata. While it
is true that 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?"53
Consequently, both courts correctly
dismissal of herein subject complaint.

denied

the

G.R. No. 115849

Mendoza,

Quisumbing

and

January 24, 1996

FIRST
PHILIPPINE
INTERNATIONAL
BANK
(Formerly Producers Bank of the Philippines)
and
MERCURIO
RIVERA, petitioners,
vs.
COURT OF APPEALS, CARLOS EJERCITO, in
substitution of DEMETRIO DEMETRIA, and JOSE
JANOLO,respondents.
DECISION

WHEREFORE, the petition is DENIED for lack of merit.

PANGANIBAN, J.:

Costs against petitioners.

In the absence of a formal deed of sale, may

commitments given by bank officers in an exchange of
letters and/or in a meeting with the buyers constitute a
perfected and enforceable contract of sale over 101

SO ORDERED.

hectares of land in Sta. Rosa, Laguna? Does the

doctrine of "apparent authority" apply in this case? If
so, may the Central Bank-appointed conservator of
Producers Bank (now First Philippine International
Bank) repudiate such "apparent authority" after said
contract has been deemed perfected? During the
pendency of a suit for specific performance, does the
filing of a "derivative suit" by the majority
shareholders and directors of the distressed bank to
prevent the enforcement or implementation of the sale
violate the ban against forum-shopping?
Simply stated, these are the major questions brought
before this Court in the instant Petition for review
oncertiorari under Rule 45 of the Rules of Court, to set
aside the Decision promulgated January 14, 1994 of
the respondent Court of Appeals1 in CA-G.R CV No.
35756 and the Resolution promulgated June 14, 1994
denying the motion for reconsideration. The dispositive
portion of the said Decision reads:
WHEREFORE, the decision of the lower court is
MODIFIED by the elimination of the damages
awarded under paragraphs 3, 4 and 6 of its
dispositive portion and the reduction of the
award in paragraph 5 thereof to P75,000.00, to
be assessed against defendant bank. In all other
aspects, said decision is hereby AFFIRMED.
All references to the original plaintiffs in the
decision and its dispositive portion are deemed,
herein and hereafter, to legally refer to the
plaintiff-appellee Carlos C. Ejercito.
Costs against appellant bank.

The dispositive portion of the trial court's 2 decision

dated July 10, 1991, on the other hand, is as follows:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiffs and
against the defendants as follows:
1. Declaring the existence of a perfected
contract to buy and sell over the six (6) parcels
of land situated at Don Jose, Sta. Rosa, Laguna
with an area of 101 hectares, more or less,
covered by and embraced in Transfer
Certificates of Title Nos. T-106932 to T-106937,
inclusive, of the Land Records of Laguna,
between the plaintiffs as buyers and the
defendant Producers Bank for an agreed price of
Five and One Half Million (P5,500,000.00) Pesos;
2. Ordering defendant Producers Bank of the
Philippines, upon finality of this decision and
receipt from the plaintiffs the amount of P5.5
Million, to execute in favor of said plaintiffs a
deed of absolute sale over the aforementioned
six (6) parcels of land, and to immediately
deliver to the plaintiffs the owner's copies of
T.C.T. Nos. T-106932 to T- 106937, inclusive, for
purposes of registration of the same deed and
transfer of the six (6) titles in the names of the
plaintiffs;
3. Ordering the defendants, jointly and
severally, to pay plaintiffs Jose A. Janolo and
Demetrio Demetria the sums of P200,000.00
each in moral damages;

4. Ordering the defendants, jointly and

severally, to pay plaintiffs the sum of
P100,000.00 as exemplary damages ;

Respondent Carlos Ejercito (respondent Ejercito, for

brevity) is of legal age and is the assignee of original
plaintiffs-appellees Demetrio Demetria and Jose Janolo.

5. Ordering the defendants, jointly and

severally, to pay the plaintiffs the amount of
P400,000.00 for and by way of attorney's fees;

Respondent Court of Appeals is the court which issued

the Decision and Resolution sought to be set aside
through this petition.

6. Ordering the defendants to pay the plaintiffs,

jointly and severally, actual and moderate
damages in the amount of P20,000.00;

The Facts
The facts of this case are summarized
respondent Court's Decision3 as follows:

in

the

With costs against the defendants.

After the parties filed their comment, reply, rejoinder,
sur-rejoinder and reply to sur-rejoinder, the petition
was given due course in a Resolution dated January
18, 1995. Thence, the parties filed their respective
memoranda and reply memoranda. The First Division
transferred this case to the Third Division per
resolution dated October 23, 1995. After carefully
deliberating on the aforesaid submissions, the Court
assigned the case to the undersigned ponente for the
writing of this Decision.

(1) In the course of its banking operations, the

defendant Producer Bank of the Philippines
acquired six parcels of land with a total area of
101 hectares located at Don Jose, Sta. Rose,
Laguna, and covered by Transfer Certificates of
Title Nos. T-106932 to T-106937. The property
used to be owned by BYME Investment and
Development Corporation which had them
mortgaged with the bank as collateral for a loan.
The original plaintiffs, Demetrio Demetria and
Jose O. Janolo, wanted to purchase the property
and thus initiated negotiations for that purpose.

The Parties
Petitioner First Philippine International Bank (formerly
Producers Bank of the Philippines; petitioner Bank, for
brevity) is a banking institution organized and existing
under the laws of the Republic of the Philippines.
Petitioner Mercurio Rivera (petitioner Rivera, for
brevity) is of legal age and was, at all times material to
this case, Head-Manager of the Property Management
Department of the petitioner Bank.

(2) In the early part of August 1987 said

plaintiffs, upon the suggestion of BYME
investment's legal counsel, Jose Fajardo, met
with defendant Mercurio Rivera, Manager of the
Property Management Department of the
defendant bank. The meeting was held pursuant
to plaintiffs' plan to buy the property (TSN of
Jan. 16, 1990, pp. 7-10). After the meeting,
plaintiff Janolo, following the advice of
defendant Rivera, made a formal purchase offer

to the bank through a letter dated August 30,

1987 (Exh. "B"), as follows:

T-106934

52,246
m.

sq.

T-106935

96,768
m.

sq.

T-106936

187,114
m.

sq.

T-106937

481,481
m.

sq.

August 30, 1987

The Producers Bank

Makati, Metro Manila

of

the

Attn.
Mr.
Mercurio
Q.
Manager, Property Management Dept.

Philippines
Rivera

Gentleman:
I have the honor to submit my formal offer to
purchase your properties covered by titles listed
hereunder located at Sta. Rosa, Laguna, with a
total area of 101 hectares, more or less.

TCT NO.

AREA

T-106932

113,580
m.

sq.

T-106933

70,899
m.

sq.

My offer is for PESOS: THREE MILLION FIVE

HUNDRED THOUSAND (P3,500,000.00) PESOS,
in cash.
Kindly contact me at Telephone Number 9211344.
(3) On September 1, 1987, defendant Rivera
made on behalf of the bank a formal reply by
letter which is hereunder quoted (Exh. "C"):

September 1, 1987

JP
M-P
GUTIERREZ
142
Charisma
St.,
Doa
Rosario, Pasig, Metro Manila

ENTERPRISES
Andres
II

Attention: JOSE O. JANOLO

In reply to your letter regarding my proposal to

purchase your 101-hectare lot located at Sta.
Rosa, Laguna, I would like to amend my
previous offer and I now propose to buy the said
lot at P4.250 million in CASH..
Hoping
that
satisfaction.

Dear Sir:
Thank you for your letter-offer to buy our six (6)
parcels of acquired lots at Sta. Rosa, Laguna
(formerly owned by Byme Industrial Corp.).
Please be informed however that the bank's
counter-offer is at P5.5 million for more than 101
hectares on lot basis.
We shall be very glad to hear your position on
the on the matter.
Best regards.
(4) On September 17, 1987, plaintiff Janolo,
responding to Rivera's aforequoted reply, wrote
(Exh. "D"):

de

Attention: Mr. Mercurio Rivera

Gentlemen:

proposal

meets

The Producers Bank

Paseo
de
Metro Manila

of the
Roxas,

Philippines
Makati

Attention: Mr. Mercurio Rivera

Re:
101
Hectares
in Sta. Rosa, Laguna

Bank
Roxas

your

(5) There was no reply to Janolo's foregoing

letter of September 17, 1987. What took place
was a meeting on September 28, 1987 between
the plaintiffs and Luis Co, the Senior VicePresident of defendant bank. Rivera as well as
Fajardo, the BYME lawyer, attended the meeting.
Two days later, or on September 30, 1987,
plaintiff Janolo sent to the bank, through Rivera,
the following letter (Exh. "E"):

September 17, 1987

Producers
Paseo
Makati, Metro Manila

this

of

Land

Gentlemen:
Pursuant to our discussion last 28 September
1987, we are pleased to inform you that we are
accepting your offer for us to purchase the
property at Sta. Rosa, Laguna, formerly owned
by Byme Investment, for a total price of PESOS:

FIVE MILLION FIVE

(P5,500,000.00).

HUNDRED

THOUSAND

Thank you.
(6) On October 12, 1987, the conservator of the
bank
(which
has
been
placed
under
conservatorship by the Central Bank since 1984)
was replaced by an Acting Conservator in the
person of defendant Leonida T. Encarnacion. On
November 4, 1987, defendant Rivera wrote
plaintiff Demetria the following letter (Exh. "F"):

"pursuant to (our) perfected sale agreement."

Defendants refused to receive both the payment
and the letter. Instead, the parcels of land
involved in the transaction were advertised by
the bank for sale to any interested buyer (Exh,
"H" and "H-1"). Plaintiffs demanded the
execution by the bank of the documents on
what
was
considered
as
a
"perfected
agreement." Thus:

Attention: Atty. Demetrio Demetria

Mr.
Manager,
Paseo
Metro Manila

Dear Sir:

Dear Mr. Rivera:

Your proposal to buy the properties the bank

foreclosed from Byme investment Corp. located
at Sta. Rosa, Laguna is under study yet as of
this time by the newly created committee for
submission to the newly designated Acting
Conservator of the bank.

This is in connection with the offer of our client,

Mr. Jose O. Janolo, to purchase your 101-hectare
lot located in Sta. Rosa, Laguna, and which are
covered by TCT No. T-106932 to 106937.

For your information.

(7) What thereafter transpired was a series of
demands by the plaintiffs for compliance by the
bank with what plaintiff considered as a
perfected contract of sale, which demands were
in one form or another refused by the bank. As
detailed by the trial court in its decision, on
November 17, 1987, plaintiffs through a letter to
defendant Rivera (Exhibit "G") tendered
payment of the amount of P5.5 million

Mercurio
Producers
de
Roxas,

Rivera
Bank
Makati

From the documents at hand, it appears that

your counter-offer dated September 1, 1987 of
this same lot in the amount of P5.5 million was
accepted by our client thru a letter dated
September 30, 1987 and was received by you
on October 5, 1987.
In view of the above circumstances, we believe
that an agreement has been perfected. We were
also informed that despite repeated follow-up to
consummate the purchase, you now refuse to
honor your commitment. Instead, you have
advertised for sale the same lot to others.

In behalf of our client, therefore, we are making

this formal demand upon you to consummate
and
execute
the
necessary
actions/documentation within three (3) days
from your receipt hereof. We are ready to remit
the agreed amount of P5.5 million at your
advice. Otherwise, we shall be constrained to
file the necessary court action to protect the
interest of our client.

covered by TCT Nos. 106932, 106933, 106934,

106935, 106936 and 106937 and registered
under Producers Bank.

We trust that you will be guided accordingly.

Kindly acknowledge receipt of our payment.

(8) Defendant bank, through defendant Rivera,

acknowledged receipt of the foregoing letter
and stated, in its communication of December 2,
1987 (Exh. "I"), that said letter has been
"referred . . . to the office of our Conservator for
proper disposition" However, no response came
from the Acting Conservator. On December 14,
1987, the plaintiffs made a second tender of
payment (Exh. "L" and "L-1"), this time through
the Acting Conservator, defendant Encarnacion.
Plaintiffs' letter reads:

(9) The foregoing letter drew no response for

more than four months. Then, on May 3, 1988,
plaintiff, through counsel, made a final demand
for compliance by the bank with its obligations
under the considered perfected contract of sale
(Exhibit "N"). As recounted by the trial court
(Original Record, p. 656), in a reply letter dated
May 12, 1988 (Annex "4" of defendant's answer
to amended complaint), the defendants through
Acting Conservator Encarnacion repudiated the
authority of defendant Rivera and claimed that
his dealings with the plaintiffs, particularly his
counter-offer of P5.5 Million are unauthorized or
illegal. On that basis, the defendants justified
the refusal of the tenders of payment and the
non-compliance with the obligations under what
the plaintiffs considered to be a perfected
contract of sale.

PRODUCERS
THE
Paseo
Makati, Metro Manila

BANK
de

OF
PHILIPPINES
Roxas,

Attn.:
Atty.
NIDA
ENCARNACION
Central Bank Conservator
We are sending you herewith, in - behalf of our
client, Mr. JOSE O. JANOLO, MBTC Check No.
258387 in the amount of P5.5 million as our
agreed purchase price of the 101-hectare lot

This is in connection with the perfected

agreement consequent from your offer of P5.5
Million as the purchase price of the said lots.
Please inform us of the date of documentation
of the sale immediately.

(10) On May 16, 1988, plaintiffs filed a suit for

specific performance with damages against the
bank, its Manager Rivers and Acting Conservator
Encarnacion. The basis of the suit was that the
transaction had with the bank resulted in a

perfected contract of sale, The defendants took

the position that there was no such perfected
sale because the defendant Rivera is not
authorized to sell the property, and that there
was no meeting of the minds as to the price.
On March 14, 1991, Henry L. Co (the brother of
Luis Co), through counsel Sycip Salazar
Hernandez and Gatmaitan, filed a motion to
intervene in the trial court, alleging that as
owner of 80% of the Bank's outstanding shares
of stock, he had a substantial interest in
resisting the complaint. On July 8, 1991, the trial
court issued an order denying the motion to
intervene on the ground that it was filed after
trial had already been concluded. It also denied
a motion for reconsideration filed thereafter.
From the trial court's decision, the Bank,
petitioner Rivera and conservator Encarnacion
appealed to the Court of Appeals which
subsequently affirmed with modification the said
judgment. Henry Co did not appeal the denial of
his motion for intervention.
In the course of the proceedings in the respondent
Court, Carlos Ejercito was substituted in place of
Demetria and Janolo, in view of the assignment of the
latters' rights in the matter in litigation to said private
respondent.
On July 11, 1992, during the pendency of the
proceedings in the Court of Appeals, Henry Co and
several other stockholders of the Bank, through
counsel Angara Abello Concepcion Regala and Cruz,
filed an action (hereafter, the "Second Case")
purportedly a "derivative suit" with the Regional

Trial Court of Makati, Branch 134, docketed as Civil

Case No. 92-1606, against Encarnacion, Demetria and
Janolo "to declare any perfected sale of the property as
unenforceable and to stop Ejercito from enforcing or
implementing the sale"4 In his answer, Janolo argued
that the Second Case was barred by litis pendentia by
virtue of the case then pending in the Court of
Appeals. During the pre-trial conference in the Second
Case, plaintiffs filed a Motion for Leave of Court to
Dismiss the Case Without Prejudice. "Private
respondent opposed this motion on the ground, among
others, that plaintiff's act of forum shopping justifies
the dismissal of both cases, with prejudice." 5 Private
respondent, in his memorandum, averred that this
motion is still pending in the Makati RTC.
In their Petition6 and Memorandum7,
summarized their position as follows:

petitioners

I.
The Court of Appeals erred in declaring that a
contract of sale was perfected between Ejercito
(in substitution of Demetria and Janolo) and the
bank.
II.
The Court of Appeals erred in declaring the
existence of an enforceable contract of sale
between the parties.
III.

The Court of Appeals erred in declaring that the

conservator does not have the power to
overrule
or
revoke
acts
of
previous
management.

The Court of Appeals has correctly held that the

conservator, apart from being estopped from
repudiating the agency and the contract, has no
authority to revoke the contract of sale.

IV.

The Issues

The findings and conclusions of the Court of

Appeals do not conform to the evidence on
record.

From the foregoing positions of the parties, the issues

in this case may be summed up as follows:

On the other hand, petitioners prayed for dismissal of

the instant suit on the ground8 that:
I.
Petitioners have engaged in forum shopping.

1) Was there forum-shopping on the part of

petitioner Bank?
2) Was there a perfected contract of sale
between the parties?
3) Assuming there was, was the said contract
enforceable under the statute of frauds?

II.
The factual findings and conclusions of the
Court of Appeals are supported by the evidence
on record and may no longer be questioned in
this case.

4) Did the bank conservator have the unilateral

power to repudiate the authority of the bank
officers and/or to revoke the said contract?
5) Did the respondent Court commit
reversible error in its findings of facts?

any

III.
The First Issue: Was There Forum-Shopping?
The Court of Appeals correctly held that there
was a perfected contract between Demetria and
Janolo (substituted by; respondent Ejercito) and
the bank.
IV.

In order to prevent the vexations of multiple petitions

and actions, the Supreme Court promulgated Revised
Circular No. 28-91 requiring that a party "must certify
under oath . . . [that] (a) he has not (t)heretofore
commenced any other action or proceeding involving
the same issues in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; (b) to the

best of his knowledge, no such action or proceeding is

pending" in said courts or agencies. A violation of the
said circular entails sanctions that include the
summary dismissal of the multiple petitions or
complaints. To be sure, petitioners have included a
VERIFICATION/CERTIFICATION in their Petition stating
"for the record(,) the pendency of Civil Case No. 921606 before the Regional Trial Court of Makati, Branch
134, involving a derivative suit filed by stockholders of
petitioner Bank against the conservator and other
defendants but which is the subject of a pending
Motion to Dismiss Without Prejudice.9
Private respondent Ejercito vigorously argues that in
spite of this verification, petitioners are guilty of actual
forum shopping because the instant petition pending
before this Court involves "identical parties or interests
represented, rights asserted and reliefs sought (as
that) currently pending before the Regional Trial Court,
Makati Branch 134 in the Second Case. In fact, the
issues in the two cases are so interwined that a
judgement or resolution in either case will
constitute res judicata in the other." 10
On the other hand, petitioners explain
no forum-shopping because:

11

that there is

1) In the earlier or "First Case" from which this

proceeding arose, the Bank was impleaded as
a defendant, whereas in the "Second Case"
(assuming the Bank is the real party in interest
in a derivative suit), it wasplaintiff;
2) "The derivative suit is not properly a suit for
and in behalf of the corporation under the
circumstances";

3) Although the CERTIFICATION/VERIFICATION

(supra) signed by the Bank president and
attached to the Petition identifies the action as a
"derivative suit," it "does not mean that it is
one" and "(t)hat is a legal question for the
courts to decide";
4) Petitioners did not hide the Second Case at
they
mentioned
it
in
the
said
VERIFICATION/CERTIFICATION.
We rule for private respondent.
To begin with, forum-shopping originated as a concept
in private international law.12, where non-resident
litigants are given the option to choose the forum or
place wherein to bring their suit for various reasons or
excuses, including to secure procedural advantages, to
annoy and harass the defendant, to avoid overcrowded
dockets, or to select a more friendly venue. To combat
these less than honorable excuses, the principle
of forum non conveniens was developed whereby a
court, in conflicts of law cases, may refuse impositions
on its jurisdiction where it is not the most "convenient"
or available forum and the parties are not precluded
from seeking remedies elsewhere.
In this light, Black's Law Dictionary 13 says that forum
shopping "occurs when a party attempts to have his
action tried in a particular court or jurisdiction where
he feels he will receive the most favorable judgment or
verdict." Hence, according to Words and Phrases14, "a
litigant is open to the charge of "forum shopping"
whenever he chooses a forum with slight connection to
factual circumstances surrounding his suit, and
litigants should be encouraged to attempt to settle

their differences without imposing undue expenses

and vexatious situations on the courts".
In the Philippines, forum shopping has acquired a
connotation encompassing not only a choice of
venues, as it was originally understood in conflicts of
laws, but also to a choice of remedies. As to the first
(choice of venues), the Rules of Court, for example,
allow a plaintiff to commence personal actions "where
the defendant or any of the defendants resides or may
be found, or where the plaintiff or any of the plaintiffs
resides, at the election of the plaintiff" (Rule 4, Sec, 2
[b]). As to remedies, aggrieved parties, for example,
are given a choice of pursuing civil liabilities
independently of the criminal, arising from the same
set of facts. A passenger of a public utility vehicle
involved in a vehicular accident may sue on culpa
contractual, culpa aquiliana or culpa criminal each
remedy being available independently of the others
although he cannot recover more than once.
In either of these situations (choice of venue or
choice of remedy), the litigant actually shops for
a forum of his action, This was the original
concept of the term forum shopping.

Eventually, however, instead of actually making

a choice of the forum of their actions, litigants,
through the encouragement of their lawyers, file
their actions in all available courts, or invoke all
relevant remedies simultaneously. This practice
had not only resulted to (sic) conflicting
adjudications among different courts and
consequent confusion enimical (sic) to an
orderly administration of justice. It had created
extreme inconvenience to some of the parties to
the action.
Thus, "forum shopping" had acquired a different
concept which is unethical professional legal
practice. And this necessitated or had given rise
to the formulation of rules and canons
discouraging or altogether prohibiting the
practice. 15
What therefore originally started both in conflicts of
laws and in our domestic law as a legitimate device for
solving problems has been abused and mis-used to
assure scheming litigants of dubious reliefs.
To avoid or minimize this unethical practice of
subverting justice, the Supreme Court, as already
mentioned, promulgated Circular 28-91. And even
before that, the Court had prescribed it in the Interim
Rules and Guidelines issued on January 11, 1983 and
had struck down in several cases 16 the inveterate use
of this insidious malpractice. Forum shopping as "the
filing of repetitious suits in different courts" has been
condemned by Justice Andres R. Narvasa (now Chief
Justice) in Minister of Natural Resources, et al., vs.
Heirs of Orval Hughes, et al.,"as a reprehensible
manipulation
of
court
processes
and

proceedings . . ."
place?

17

when does forum shopping take

There is forum-shopping whenever, as a result

of an adverse opinion in one forum, a party
seeks a favorable opinion (other than by appeal
or certiorari) in another. The principle applies
not only with respect to suits filed in the courts
but also in connection with litigations
commenced
in
the
courts
while
an
administrative proceeding is pending, as in this
case, in order to defeat administrative processes
and
in
anticipation
of
an
unfavorable
administrative ruling and a favorable court
ruling. This is specially so, as in this case, where
the court in which the second suit was brought,
has no jurisdiction.18
The test for determining whether a party violated the
rule against forum shopping has been laid dawn in the
1986 case of Buan vs. Lopez 19, also by Chief Justice
Narvasa, and that is, forum shopping exists where the
elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in the
other, as follows:
There thus exists between the action before this
Court and RTC Case No. 86-36563 identity of
parties, or at least such parties as represent the
same interests in both actions, as well as
identity of rights asserted and relief prayed for,
the relief being founded on the same facts, and
the identity on the two preceding particulars is
such that any judgment rendered in the other
action, will, regardless of which party is
successful, amount to res adjudicata in the

action under consideration: all the requisites, in

fine, of auter action pendant.
xxx

xxx

xxx

As already observed, there is between the

action at bar and RTC Case No. 86-36563, an
identity as regards parties, or interests
represented, rights asserted and relief sought,
as well as basis thereof, to a degree sufficient to
give rise to the ground for dismissal known
as auter action pendant or lis pendens. That
same identity puts into operation the sanction of
twin dismissals just mentioned. The application
of this sanction will prevent any further delay in
the settlement of the controversy which might
ensue from attempts to seek reconsideration of
or to appeal from the Order of the Regional Trial
Court in Civil Case No. 86-36563 promulgated
on July 15, 1986, which dismissed the petition
upon grounds which appear persuasive.
Consequently, where a litigant (or one representing
the same interest or person) sues the same party
against whom another action or actions for the alleged
violation of the same right and the enforcement of the
same relief is/are still pending, the defense of litis
pendencia in one case is bar to the others; and, a final
judgment in one would constitute res judicata and thus
would cause the dismissal of the rest. In either case,
forum shopping could be cited by the other party as a
ground to ask for summary dismissal of the two 20 (or
more) complaints or petitions, and for imposition of the
other sanctions, which are direct contempt of court,
criminal prosecution, and disciplinary action against
the erring lawyer.

Applying the foregoing principles in the case before us

and comparing it with the Second Case, it is obvious
that there exist identity of parties or interests
represented, identity of rights or causes and identity of
reliefs sought.
Very simply stated, the original complaint in the
court a quo which gave rise to the instant petition was
filed by the buyer (herein private respondent and his
predecessors-in-interest) against the seller (herein
petitioners) to enforce the alleged perfected sale of
real estate. On the other hand, the complaint 21 in the
Second Case seeks to declare such purported sale
involving the same real property "as unenforceable as
against the Bank", which is the petitioner herein. In
other words, in the Second Case, the majority
stockholders, in representation of the Bank, are
seeking to accomplish what the Bank itself failed to do
in the original case in the trial court. In brief, the
objective or the relief being sought, though worded
differently, is the same, namely, to enable the
petitioner Bank to escape from the obligation to sell
the property to respondent. In Danville Maritime, Inc.
vs. Commission on Audit. 22, this Court ruled that the
filing by a party of two apparently different actions, but
with the same objective,constituted forum shopping:
In the attempt to make the two actions appear
to be different, petitioner impleaded different
respondents therein PNOC in the case before
the lower court and the COA in the case before
this Court and sought what seems to be
different reliefs. Petitioner asks this Court to set
aside the questioned letter-directive of the COA
dated October 10, 1988 and to direct said body
to approve the Memorandum of Agreement

entered into by and between the PNOC and

petitioner, while in the complaint before the
lower court petitioner seeks to enjoin the PNOC
from conducting a rebidding and from selling to
other parties the vessel "T/T Andres Bonifacio",
and for an extension of time for it to comply
with the paragraph 1 of the memorandum of
agreement and damages. One can see that
although the relief prayed for in the two (2)
actions are ostensibly different, the ultimate
objective in both actions is the same, that is,
approval of the sale of vessel in favor of
petitioner and to overturn the letter-directive of
the COA of October 10, 1988 disapproving the
sale. (emphasis supplied).
In an earlier case
we held:

23

but with the same logic and vigor,

In other words, the filing by the petitioners of

the instant special civil action for certiorari and
prohibition in this Court despite the pendency of
their action in the Makati Regional Trial Court, is
a species of forum-shopping. Both actions
unquestionably involve the same transactions,
the same essential facts and circumstances. The
petitioners' claim of absence of identity simply
because the PCGG had not been impleaded in
the RTC suit, and the suit did not involve certain
acts which transpired after its commencement,
is specious. In the RTC action, as in the action
before this Court, the validity of the contract to
purchase and sell of September 1, 1986, i.e.,
whether or not it had been efficaciously
rescinded, and the propriety of implementing
the same (by paying the pledgee banks the

amount of their loans, obtaining the release of

the pledged shares, etc.) were the basic issues.
So, too, the relief was the same: the prevention
of such implementation and/or the restoration of
the status quo ante. When the acts sought to be
restrained took place anyway despite the
issuance by the Trial Court of a temporary
restraining order, the RTC suit did not
become functus oficio. It remained an effective
vehicle for obtention of relief; and petitioners'
remedy in the premises was plain and patent:
the filing of an amended and supplemental
pleading in the RTC suit, so as to include the
PCGG as defendant and seek nullification of the
acts sought to be enjoined but nonetheless
done. The remedy was certainly not the
institution of another action in another forum
based on essentially the same facts, The
adoption of this latter recourse renders the
petitioners amenable to disciplinary action and
both their actions, in this Court as well as in the
Court a quo, dismissible.
In the instant case before us, there is also identity of
parties, or at least, of interests represented. Although
the plaintiffs in the Second Case (Henry L. Co. et al.)
are not name parties in the First Case, they represent
the same interest and entity, namely, petitioner Bank,
because:
Firstly, they are not suing in their personal capacities,
for they have no direct personal interest in the matter
in controversy. They are not principally or even
subsidiarily liable; much less are they direct parties in
the assailed contract of sale; and

Secondly, the allegations of the complaint in the

Second Case show that the stockholders are bringing a
"derivative suit". In the caption itself, petitioners claim
to have brought suit "for and in behalf of the Producers
Bank of the Philippines" 24. Indeed, this is the very
essence of a derivative suit:
An individual stockholder is permitted to
institute a derivative suit on behalf of the
corporation wherein he holdsstock in order to
protect or vindicate corporate rights, whenever
the officials of the corporation refuse to sue, or
are the ones to be sued or hold the control of
the corporation. In such actions, the suing
stockholder is regarded as a nominal party, with
the corporation as the real party in interest.
(Gamboa v. Victoriano, 90 SCRA 40, 47 [1979];
emphasis supplied).
In the face of the damaging admissions taken from the
complaint in the Second Case, petitioners, quite
strangely, sought to deny that the Second Case was a
derivative suit, reasoning that it was brought, not by
the minority shareholders, but by Henry Co et al., who
not only own, hold or control over 80% of the
outstanding capital stock, but also constitute the
majority in the Board of Directors of petitioner Bank.
That being so, then they really represent the Bank. So,
whether they sued "derivatively" or directly, there is
undeniably an identity of interests/entity represented.
Petitioner also tried to seek refuge in the corporate
fiction that the personality Of the Bank is separate and
distinct from its shareholders. But the rulings of this
Court are consistent: "When the fiction is urged as a
means of perpetrating a fraud or an illegal act or as a

vehicle for the evasion of an existing obligation, the

circumvention of statutes, the achievement or
perfection of a monopoly or generally the perpetration
of knavery or crime, the veil with which the law covers
and isolates the corporation from the members or
stockholders who compose it will be lifted to allow for
its consideration merely as an aggregation of
individuals." 25
In addition to the many cases 26 where the corporate
fiction has been disregarded, we now add the instant
case, and declare herewith that the corporate veil
cannot be used to shield an otherwise blatant violation
of
the
prohibition
against
forum-shopping.
Shareholders, whether suing as the majority in direct
actions or as the minority in a derivative suit, cannot
be allowed to trifle with court processes, particularly
where, as in this case, the corporation itself has not
been remiss in vigorously prosecuting or defending
corporate causes and in using and applying remedies
available to it. To rule otherwise would be to encourage
corporate litigants to use their shareholders as fronts
to circumvent the stringent rules against forum
shopping.
Finally, petitioner Bank argued that there cannot be
any forum shopping, even assuming arguendo that
there is identity of parties, causes of action and reliefs
sought, "because it (the Bank) was the defendant in
the (first) case while it was the plaintiff in the other
(Second
Case)",citing
as
authority Victronics
Computers, Inc., vs. Regional Trial Court, Branch 63,
Makati, etc. et al., 27 where Court held:
The rule has not been extended to a defendant
who, for reasons known only to him, commences

a new action against the plaintiff instead of

filing a responsive pleading in the other case
setting forth therein, as causes of action,
specific
denials,
special
and
affirmative
defenses
or
even
counterclaims,
Thus,
Velhagen's and King's motion to dismiss Civil
Case No. 91-2069 by no means negates the
charge of forum-shopping as such did not exist
in the first place. (emphasis supplied)
Petitioner pointed out that since it was merely the
defendant in the original case, it could not have
chosen the forum in said case.
Respondent, on the other hand, replied that there is a
difference in factual setting between Victronics and
the present suit. In the former, as underscored in the
above-quoted Court ruling, the defendants did not file
anyresponsive pleading in the first case. In other
words, they did not make any denial or raise any
defense or counter-claim therein In the case before us
however, petitioners filed a responsive pleading to the
complaint as a result of which, the issues were
joined.
Indeed, by praying for affirmative reliefs and
interposing counterclaims in their responsive
pleadings,
the
petitioners
became
plaintiffs
themselves in the original case, giving unto
themselves the very remedies they repeated in the
Second Case.
Ultimately, what is truly important to consider in
determining whether forum-shopping exists or not is
the vexation caused the courts and parties-litigant by
a party who asks different courts and/or administrative

agencies to rule on the same or related causes and/or

to grant the same or substantially the same reliefs, in
the process creating the possibility of conflicting
decisions being rendered by the different fora upon the
same issue. In this case, this is exactly the problem: a
decision recognizing the perfection and directing the
enforcement of the contract of sale will directly conflict
with a possible decision in the Second Case barring the
parties front enforcing or implementing the said sale.
Indeed, a final decision in one would constitute res
judicata in the other 28.
The foregoing conclusion finding the existence of
forum-shopping notwithstanding, the only sanction
possible now is the dismissal of both cases with
prejudice, as the other sanctions cannot be imposed
because petitioners' present counsel entered their
appearance only during the proceedings in this Court,
and
the
Petition's
VERIFICATION/CERTIFICATION
contained sufficient allegations as to the pendency of
the Second Case to show good faith in observing
Circular 28-91. The Lawyers who filed the Second Case
are not before us; thus the rudiments of due process
prevent us from motu propio imposing disciplinary
measures against them in this Decision. However,
petitioners themselves (and particularly Henry Co, et
al.) as litigants are admonished to strictly follow the
rules against forum-shopping and not to trifle with
court proceedings and processes They are warned that
a repetition of the same will be dealt with more
severely.
Having said that, let it be emphasized that this petition
should be dismissed not merely because of forumshopping but also because of the substantive issues
raised, as will be discussed shortly.

The Second Issue: Was The Contract Perfected?

The respondent Court correctly treated the question of
whether or not there was, on the basis of the facts
established, a perfected contract of sale as the
ultimate issue. Holding that a valid contract has been
established, respondent Court stated:
There is no dispute that the object of the
transaction is that property owned by the
defendant bank as acquired assets consisting of
six (6) parcels of land specifically identified
under Transfer Certificates of Title Nos. T106932 to T-106937. It is likewise beyond cavil
that the bank intended to sell the property. As
testified to by the Bank's Deputy Conservator,
Jose Entereso, the bank was looking for buyers
of the property. It is definite that the plaintiffs
wanted to purchase the property and it was
precisely for this purpose that they met with
defendant Rivera, Manager of the Property
Management Department of the defendant
bank, in early August 1987. The procedure in
the sale of acquired assets as well as the nature
and scope of the authority of Rivera on the
matter is clearly delineated in the testimony of
Rivera himself, which testimony was relied upon
by both the bank and by Rivera in their appeal
briefs. Thus (TSN of July 30, 1990. pp. 19-20):
A: The procedure runs this way: Acquired
assets was turned over to me and then I
published it in the form of an inter-office
memorandum distributed to all branches
that these are acquired assets for sale. I
was instructed to advertise acquired

assets for sale so on that basis, I have to

entertain offer; to accept offer, formal
offer and upon having been offered, I
present it to the Committee. I provide the
Committee with necessary information
about the property such as original loan
of the borrower, bid price during the
foreclosure, total claim of the bank, the
appraised value at the time the property
is being offered for sale and then the
information which are relative to the
evaluation of the bank to buy which the
Committee considers and it is the
Committee that evaluate as against the
exposure of the bank and it is also the
Committee
that
submit
to
the
Conservator for final approval and once
approved, we have to execute the deed of
sale and it is the Conservator that sign
the deed of sale, sir.
The plaintiffs, therefore, at that meeting of
August 1987 regarding their purpose of buying
the property, dealt with and talked to the right
person. Necessarily, the agenda was the price of
the property, and plaintiffs were dealing with
the bank official authorized to entertain offers,
to accept offers and to present the offer to the
Committee before which the said official is
authorized to discuss information relative to
price determination. Necessarily, too, it being
inherent in his authority, Rivera is the officer
from whom official information regarding the
price, as determined by the Committee and
approved by the Conservator, can be had. And
Rivera confirmed his authority when he talked

with the plaintiff in August 1987. The testimony

of plaintiff Demetria is clear on this point (TSN of
May 31,1990, pp. 27-28):
Q: When you went to the Producers Bank
and talked with Mr. Mercurio Rivera, did
you ask him point-blank his authority to
sell any property?
A: No, sir. Not point blank although it
came from him, (W)hen I asked him how
long it would take because he was saying
that the matter of pricing will be passed
upon by the committee. And when I asked
him how long it will take for the
committee to decide and he said the
committee meets every week. If I am not
mistaken Wednesday and in about two
week's (sic) time, in effect what he was
saying he was not the one who was to
decide. But he would refer it to the
committee and he would relay the
decision of the committee to me.
Q Please answer the question.
A He did not say that he had the
authority (.) But he said he would refer
the matter to the committee and he
would relay the decision to me and he did
just like that.
"Parenthetically, the Committee referred to was
the Past Due Committee of which Luis Co was
the Head, with Jose Entereso as one of the
members.

What transpired after the meeting of early

August 1987 are consistent with the authority
and the duties of Rivera and the bank's internal
procedure in the matter of the sale of bank's
assets. As advised by Rivera, the plaintiffs made
a formal offer by a letter dated August 20, 1987
stating that they would buy at the price of P3.5
Million in cash. The letter was for the attention
of Mercurio Rivera who was tasked to convey
and accept such offers. Considering an aspect of
the official duty of Rivera as some sort of
intermediary between the plaintiffs-buyers with
their proposed buying price on one hand, and
the bank Committee, the Conservator and
ultimately the bank itself with the set price on
the other, and considering further the discussion
of price at the meeting of August resulting in a
formal offer of P3.5 Million in cash, there can be
no other logical conclusion than that when, on
September 1, 1987, Rivera informed plaintiffs by
letter that "the bank's counter-offer is at P5.5
Million for more than 101 hectares on lot basis,"
such counter-offer price had been determined
by the Past Due Committee and approved by the
Conservator after Rivera had duly presented
plaintiffs' offer for discussion by the Committee
of such matters as original loan of borrower, bid
price during foreclosure, total claim of the bank,
and market value. Tersely put, under the
established facts, the price of P5.5 Million was,
as clearly worded in Rivera's letter (Exh. "E"),
the official and definitive price at which the
bank was selling the property.
There were averments by defendants below, as
well as before this Court, that the P5.5 Million

price was not discussed by the Committee and

that price. As correctly characterized by the trial
court, this is not credible. The testimonies of
Luis Co and Jose Entereso on this point are at
best equivocal and considering the gratuitous
and self-serving character of these declarations,
the bank's submission on this point does not
inspire belief. Both Co ad Entereso, as members
of the Past Due Committee of the bank, claim
that the offer of the plaintiff was never
discussed by the Committee. In the same vein,
both Co and Entereso openly admit that they
seldom attend the meetings of the Committee.
It is important to note that negotiations on the
price had started in early August and the
plaintiffs had already offered an amount as
purchase price, having been made to
understand by Rivera, the official in charge of
the negotiation, that the price will be submitted
for approval by the bank and that the bank's
decision will be relayed to plaintiffs. From the
facts, the official bank price. At any rate, the
bank placed its official, Rivera, in a position of
authority to accept offers to buy and negotiate
the sale by having the offer officially acted upon
by the bank. The bank cannot turn around and
later say, as it now does, that what Rivera states
as the bank's action on the matter is not in fact
so. It is a familiar doctrine, the doctrine of
ostensible authority, that if a corporation
knowingly permits one of its officers, or any
other agent, to do acts within the scope of an
apparent authority, and thus holds him out to
the public as possessing power to do those acts,
the corporation will, as against any one who has
in good faith dealt with the corporation through

such agent, he estopped from denying his

authority (Francisco v. GSIS, 7 SCRA 577, 583584; PNB v. Court of Appeals, 94 SCRA 357, 369370; Prudential Bank v. Court of Appeals, G.R.
No. 103957, June 14, 1993). 29
Article 1318 of the Civil Code enumerates the
requisites of a valid and perfected contract as follows:
"(1) Consent of the contracting parties; (2) Object
certain which is the subject matter of the contract; (3)
Cause of the obligation which is established."
There is no dispute on requisite no. 2. The object of the
questioned contract consists of the six (6) parcels of
land in Sta. Rosa, Laguna with an aggregate area of
about 101 hectares, more or less, and covered by
Transfer Certificates of Title Nos. T-106932 to T106937. There is, however, a dispute on the first and
third requisites.
Petitioners allege that "there is no counter-offer made
by the Bank, and any supposed counter-offer which
Rivera (or Co) may have made is unauthorized. Since
there was no counter-offer by the Bank, there was
nothing for Ejercito (in substitution of Demetria and
Janolo) to accept." 30 They disputed the factual basis of
the respondent Court's findings that there was an offer
made by Janolo for P3.5 million, to which the Bank
counter-offered P5.5 million. We have perused the
evidence but cannot find fault with the said Court's
findings of fact. Verily, in a petition under Rule 45 such
as this, errors of fact if there be any - are, as a rule,
not reviewable. The mere fact that respondent Court
(and the trial court as well) chose to believe the
evidence presented by respondent more than that
presented by petitioners is not by itself a reversible

error. In fact, such findings merit serious consideration

by this Court, particularly where, as in this case, said
courts carefully and meticulously discussed their
findings. This is basic.
Be that as it may, and in addition to the foregoing
disquisitions by the Court of Appeals, let us review the
question of Rivera's authority to act and petitioner's
allegations that the P5.5 million counter-offer was
extinguished by the P4.25 million revised offer of
Janolo. Here, there are questions of law which could be
drawn from the factual findings of the respondent
Court. They also delve into the contractual elements of
consent and cause.
The authority of a corporate officer in dealing with
third persons may be actual or apparent. The doctrine
of "apparent authority", with special reference to
banks, was laid out in Prudential Bank vs. Court of
Appeals31, where it was held that:
Conformably, we have declared in countless
decisions that the principal is liable for
obligations contracted by the agent. The agent's
apparent representation yields to the principal's
true representation and the contract is
considered as entered into between the
principal and the third person (citing National
Food Authority vs. Intermediate Appellate Court,
184 SCRA 166).
A bank is liable for wrongful acts of its
officers done in the interests of the bank
or in the course of dealings of the officers
in their representative capacity but not
for acts outside the scape of their

authority (9 C.J.S., p. 417). A bank holding

out its officers and agents as worthy of
confidence will not be permitted to profit
by the frauds they may thus be enabled
to perpetrate in the apparent scope of
their employment; nor will it be permitted
to shirk its responsibility for such frauds
even though no benefit may accrue to the
bank therefrom (10 Am Jur 2d, p. 114).
Accordingly, a banking corporation is
liable to innocent third persons where the
representation is made in the course of its
business by an agent acting within the
general scope of his authority even
though, in the particular case, the agent
is secretly abusing his authority and
attempting to perpetrate a fraud upon his
principal or some other person, for his
own ultimate benefit (McIntosh v. Dakota
Trust Co., 52 ND 752, 204 NW 818, 40
ALR 1021).
Application of these principles is especially
necessary because banks have a fiduciary
relationship with the public and their stability
depends on the confidence of the people in their
honesty and efficiency. Such faith will be eroded
where banks do not exercise strict care in the
selection and supervision of its employees,
resulting in prejudice to their depositors.
From the evidence found by respondent Court, it is
obvious that petitioner Rivera has apparent or implied
authority to act for the Bank in the matter of selling its
acquired assets. This evidence includes the following:

(a) The petition itself in par. II-i (p. 3) states that

Rivera was "at all times material to this case,
Manager
of
the
Property
Management
Department of the Bank". By his own admission,
Rivera was already the person in charge of the
Bank's acquired assets (TSN, August 6, 1990,
pp. 8-9);
(b) As observed by respondent Court, the land
was definitely being sold by the Bank. And
during the initial meeting between the buyers
and Rivera, the latter suggested that the buyers'
offer should be no less than P3.3 million (TSN,
April 26, 1990, pp. 16-17);
(c) Rivera received the buyers' letter dated
August 30, 1987 offering P3.5 million (TSN, 30
July 1990, p.11);
(d) Rivera signed the letter dated September 1,
1987 offering to sell the property for P5.5 million
(TSN, July 30, p. 11);
(e) Rivera received the letter dated September
17, 1987 containing the buyers' proposal to buy
the property for P4.25 million (TSN, July 30,
1990, p. 12);
(f) Rivera, in a telephone conversation,
confirmed that the P5.5 million was the final
price of the Bank (TSN, January 16, 1990, p. 18);
(g) Rivera arranged the meeting between the
buyers and Luis Co on September 28, 1994,
during which the Bank's offer of P5.5 million was
confirmed by Rivera (TSN, April 26, 1990, pp.

34-35). At said meeting, Co, a major shareholder

and officer of the Bank, confirmed Rivera's
statement as to the finality of the Bank's
counter-offer of P5.5 million (TSN, January 16,
1990, p. 21; TSN, April 26, 1990, p. 35);
(h) In its newspaper advertisements and
announcements, the Bank referred to Rivera as
the officer acting for the Bank in relation to
parties
interested
in
buying
assets
owned/acquired by the Bank. In fact, Rivera was
the
officer
mentioned
in
the
Bank's
advertisements offering for sale the property in
question (cf. Exhs. "S" and "S-1").
In the very recent case of Limketkai Sons Milling,
Inc. vs. Court of Appeals, et. al.32, the Court, through
Justice Jose A. R. Melo, affirmed the doctrine of
apparent authority as it held that the apparent
authority of the officer of the Bank of P.I. in charge of
acquired assets is borne out by similar circumstances
surrounding his dealings with buyers.
To be sure, petitioners attempted to repudiate Rivera's
apparent authority through documents and testimony
which seek to establish Rivera's actual authority. These
pieces of evidence, however, are inherently weak as
they consist of Rivera's self-serving testimony and
various inter-office memoranda that purport to show
his limited actual authority, of which private
respondent cannot be charged with knowledge. In any
event, since the issue is apparent authority, the
existence of which is borne out by the respondent
Court's findings, the evidence of actual authority is
immaterial insofar as the liability of a corporation is
concerned 33.

Petitioners also argued that since Demetria and Janolo

were experienced lawyers and their "law firm" had
once acted for the Bank in three criminal cases, they
should be charged with actual knowledge of Rivera's
limited authority. But the Court of Appeals in its
Decision (p. 12) had already made a factual finding
that the buyers had no notice of Rivera's actual
authority prior to the sale. In fact, the Bank has not
shown that they acted as its counsel in respect to any
acquired assets; on the other hand, respondent has
proven that Demetria and Janolo merely associated
with a loose aggrupation of lawyers (not a professional
partnership), one of whose members (Atty. Susana
Parker) acted in said criminal cases.
Petitioners also alleged that Demetria's and Janolo's
P4.25 million counter-offer in the letter dated
September 17, 1987 extinguished the Bank's offer of
P5.5 million 34 .They disputed the respondent Court's
finding that "there was a meeting of minds when on 30
September 1987 Demetria and Janolo through Annex
"L" (letter dated September 30, 1987) "accepted"
Rivera's counter offer of P5.5 million under Annex "J"
(letter dated September 17, 1987)", citing the late
Justice Paras35, Art. 1319 of the Civil Code 36 and
related Supreme Court rulings starting with Beaumont
vs. Prieto 37.
However, the above-cited authorities and precedents
cannot apply in the instant case because, as found by
the respondent Court which reviewed the testimonies
on this point, what was "accepted" by Janolo in his
letter dated September 30, 1987 was the Bank's offer
of P5.5 million as confirmed and reiterated to Demetria
and Atty. Jose Fajardo by Rivera and Co during their
meeting on September 28, 1987. Note that the said

letter of September 30, 1987 begins with"(p)ursuant to

our discussion last 28 September 1987 . . .
Petitioners insist that the respondent Court should
have believed the testimonies of Rivera and Co that
the September 28, 1987 meeting "was meant to have
the offerors improve on their position of P5.5.
million."38However, both the trial court and the Court
of Appeals found petitioners' testimonial evidence "not
credible", and we find no basis for changing this
finding of fact.
Indeed, we see no reason to disturb the lower courts'
(both the RTC and the CA) common finding that private
respondents' evidence is more in keeping with truth
and logic that during the meeting on September 28,
1987, Luis Co and Rivera "confirmed that the P5.5
million price has been passed upon by the Committee
and could no longer be lowered (TSN of April 27, 1990,
pp. 34-35)"39. Hence, assuming arguendo that the
counter-offer of P4.25 million extinguished the offer of
P5.5 million, Luis Co's reiteration of the said P5.5
million price during the September 28, 1987
meeting revived the said offer. And by virtue of the
September 30, 1987 letter accepting thisrevived offer,
there was a meeting of the minds, as the acceptance
in said letter was absolute and unqualified.
We note that the Bank's repudiation, through
Conservator Encarnacion, of Rivera's authority and
action, particularly the latter's counter-offer of P5.5
million, as being "unauthorized and illegal" came only
on May 12, 1988 or more than seven (7) months after
Janolo' acceptance. Such delay, and the absence of
any circumstance which might have justifiably
prevented the Bank from acting earlier, clearly

characterizes the repudiation as nothing more than a

last-minute attempt on the Bank's part to get out of a
binding contractual obligation.
Taken together, the factual findings of the respondent
Court point to an implied admission on the part of the
petitioners that the written offer made on September
1, 1987 was carried through during the meeting of
September 28, 1987. This is the conclusion consistent
with human experience, truth and good faith.
It also bears noting that this issue of extinguishment of
the Bank's offer of P5.5 million was raised for the first
time on appeal and should thus be disregarded.
This Court in several decisions has repeatedly
adhered to the principle that points of law,
theories, issues of fact and arguments not
adequately brought to the attention of the trial
court need not be, and ordinarily will not be,
considered by a reviewing court, as they cannot
be raised for the first time on appeal (Santos vs.
IAC, No. 74243, November 14, 1986, 145 SCRA
592).40
. . . It is settled jurisprudence that an issue
which was neither averred in the complaint nor
raised during the trial in the court below cannot
be raised for the first time on appeal as it would
be offensive to the basic rules of fair play,
justice and due process (Dihiansan vs. CA, 153
SCRA 713 [1987]; Anchuelo vs. IAC, 147 SCRA
434 [1987]; Dulos Realty & Development Corp.
vs. CA, 157 SCRA 425 [1988]; Ramos vs. IAC,
175 SCRA 70 [1989]; Gevero vs. IAC, G.R.
77029, August 30, 1990).41

Since the issue was not raised in the pleadings as an

affirmative defense, private respondent was not given
an opportunity in the trial court to controvert the same
through opposing evidence. Indeed, this is a matter of
due process. But we passed upon the issue anyway, if
only to avoid deciding the case on purely procedural
grounds, and we repeat that, on the basis of the
evidence already in the record and as appreciated by
the lower courts, the inevitable conclusion is simply
that there was a perfected contract of sale.
The Third Issue: Is the Contract Enforceable?
The petition alleged42:
Even assuming that Luis Co or Rivera did relay a
verbal offer to sell at P5.5 million during the
meeting of 28 September 1987, and it was this
verbal offer that Demetria and Janolo accepted
with their letter of 30 September 1987, the
contract
produced
thereby
would
be
unenforceable by action there being no note,
memorandum or writing subscribed by the Bank
to evidence such contract. (Please see article
1403[2], Civil Code.)
Upon the other hand, the respondent Court in its
Decision (p, 14) stated:
. . . Of course, the bank's letter of September 1,
1987 on the official price and the plaintiffs'
acceptance of the price on September 30, 1987,
are not, in themselves, formal contracts of sale.
They are however clear embodiments of the fact
that a contract of sale was perfected between
the parties, such contract being binding in

whatever form it may have been entered into

(case citations omitted). Stated simply, the
banks' letter of September 1, 1987, taken
together with plaintiffs' letter dated September
30, 1987, constitute in law a sufficient
memorandum of a perfected contract of sale.
The respondent Court could have added that the
written communications commenced not only from
September 1, 1987 but from Janolo's August 20, 1987
letter. We agree that, taken together, these letters
constitute sufficient memoranda since they include
the names of the parties, the terms and conditions of
the contract, the price and a description of the
property as the object of the contract.
But let it be assumed arguendo that the counter-offer
during the meeting on September 28, 1987 did
constitute a "new" offer which was accepted by Janolo
on September 30, 1987. Still, the statute of frauds will
not apply by reason of the failure of petitioners to
object to oral testimony proving petitioner Bank's
counter-offer of P5.5 million. Hence, petitioners by
such utter failure to object are deemed to have
waived any defects of the contract under the statute of
frauds, pursuant to Article 1405 of the Civil Code:
Art. 1405. Contracts infringing the Statute of
Frauds, referred to in No. 2 of article 1403, are
ratified by the failure to object to the
presentation of oral evidence to prove the same,
or by the acceptance of benefits under them.
As private respondent pointed out in his Memorandum,
oral testimony on the reaffirmation of the counter-offer
of P5.5 million is a plenty and the silence of

petitioners all throughout the presentation makes the

evidence binding on them thus;
A Yes, sir, I think it was September 28, 1987 and
I was again present because Atty. Demetria told
me to accompany him we were able to meet
Luis Co at the Bank.
xxx

xxx

xxx

Q Now, what transpired during this meeting with

Luis Co of the Producers Bank?
A Atty. Demetria asked Mr. Luis Co whether the
price could be reduced, sir.
Q What price?
A The 5.5 million pesos and Mr. Luis Co said that
the amount cited by Mr. Mercurio Rivera is the
final price and that is the price they intends (sic)
to have, sir.
Q What do you mean?.
A That is the amount they want, sir.
Q What is the reaction of the plaintiff Demetria
to Luis Co's statement (sic) that the defendant
Rivera's counter-offer of 5.5 million was the
defendant's bank (sic) final offer?
A He said in a day or two, he will make final
acceptance, sir.

Q What is the response of Mr. Luis Co?.

A He said he will wait for the position of Atty.
Demetria, sir.
[Direct testimony of Atty. Jose Fajardo, TSN, January 16,
1990, at pp. 18-21.]
Q What transpired during that meeting between
you and Mr. Luis Co of the defendant Bank?
A We went straight to the point because he
being a busy person, I told him if the amount of
P5.5 million could still be reduced and he said
that was already passed upon by the
committee. What the bank expects which was
contrary to what Mr. Rivera stated. And he told
me that is the final offer of the bank P5.5 million
and we should indicate our position as soon as
possible.
Q What was your response to the answer of Mr.
Luis Co?
A I said that we are going to give him our
answer in a few days and he said that was it.
Atty. Fajardo and I and Mr. Mercurio [Rivera] was
with us at the time at his office.
Q For the record, your Honor please, will you tell
this Court who was with Mr. Co in his Office in
Producers Bank Building during this meeting?
A Mr. Co himself, Mr. Rivera, Atty. Fajardo and I.

Q By Mr. Co you are referring to?

A Mr. Luis Co.
Q After this meeting with Mr. Luis Co, did you
and your partner accede on (sic) the counter
offer by the bank?
A Yes, sir, we did.? Two days thereafter we sent
our acceptance to the bank which offer we
accepted, the offer of the bank which is P5.5
million.
[Direct testimony of Atty. Demetria, TSN, 26 April
1990, at pp. 34-36.]
Q According to Atty. Demetrio Demetria, the
amount of P5.5 million was reached by the
Committee and it is not within his power to
reduce this amount. What can you say to that
statement that the amount of P5.5 million was
reached by the Committee?
A It was not discussed by the Committee but it
was discussed initially by Luis Co and the group
of Atty. Demetrio Demetria and Atty. Pajardo
(sic) in that September 28, 1987 meeting, sir.
[Direct testimony of Mercurio Rivera, TSN, 30 July
1990, pp. 14-15.]
The Fourth Issue: May the Conservator Revoke
the Perfected and Enforceable Contract.

It is not disputed that the petitioner Bank was under a

conservator placed by the Central Bank of the
Philippines during the time that the negotiation and
perfection of the contract of sale took place.
Petitioners
energetically
contended
that
the
conservator has the power to revoke or overrule
actions of the management or the board of directors of
a bank, under Section 28-A of Republic Act No. 265
(otherwise known as the Central Bank Act) as follows:
Whenever, on the basis of a report submitted by
the appropriate supervising or examining
department, the Monetary Board finds that a
bank or a non-bank financial intermediary
performing quasi-banking functions is in a state
of continuing inability or unwillingness to
maintain a state of liquidity deemed adequate
to protect the interest of depositors and
creditors, the Monetary Board may appoint a
conservator to take charge of the assets,
liabilities, and the management of that
institution, collect all monies and debts due said
institution and exercise all powers necessary to
preserve the assets of the institution, reorganize
the management thereof, and restore its
viability. He shall have the power to overrule or
revoke the actions of the previous management
and board of directors of the bank or non-bank
financial intermediary performing quasi-banking
functions, any provision of law to the contrary
notwithstanding, and such other powers as the
Monetary Board shall deem necessary.
In the first place, this issue of the Conservator's
alleged authority to revoke or repudiate the perfected
contract of sale was raised for the first time in this

Petition as this was not litigated in the trial court or

Court of Appeals. As already stated earlier, issues not
raised and/or ventilated in the trial court, let alone in
the Court of Appeals, "cannot be raised for the first
time on appeal as it would be offensive to the basic
rules of fair play, justice and due process." 43
In the second place, there is absolutely no evidence
that the Conservator, at the time the contract was
perfected, actually repudiated or overruled said
contract of sale. The Bank's acting conservator at the
time, Rodolfo Romey, never objected to the sale of the
property to Demetria and Janolo. What petitioners are
really referring to is the letter of Conservator
Encarnacion, who took over from Romey after the sale
was perfected on September 30, 1987 (Annex V,
petition) which unilaterally repudiated not the
contract but the authority of Rivera to make a
binding offer and which unarguably came months
after the perfection of the contract. Said letter dated
May 12, 1988 is reproduced hereunder:

May 12, 1988

Atty.
Noe
C.
Zarate
Carandang
Perlas
Suite
323
Rufino
Ayala Avenue, Makati, Metro-Manila

&

Zarate
Ass.
Building

Dear Atty. Zarate:

This pertains to your letter dated May 5, 1988
on behalf of Attys. Janolo and Demetria

regarding the six (6) parcels of land located at

Sta. Rosa, Laguna.
We deny that Producers Bank has ever made a
legal counter-offer to any of your clients nor
perfected a "contract to sell and buy" with any
of them for the following reasons.
In the "Inter-Office Memorandum" dated April
25, 1986 addressed to and approved by former
Acting Conservator Mr. Andres I. Rustia,
Producers Bank Senior Manager Perfecto M.
Pascua detailed the functions of Property
Management Department (PMD) staff and
officers (Annex A.), you will immediately read
that Manager Mr. Mercurio Rivera or any of his
subordinates has no authority, power or right to
make any alleged counter-offer. In short, your
lawyer-clients did not deal with the authorized
officers of the bank.
Moreover, under Sec. 23 and 36 of the
Corporation Code of the Philippines (Bates
Pambansa Blg. 68.) and Sec. 28-A of the Central
Bank Act (Rep. Act No. 265, as amended), only
the Board of Directors/Conservator may
authorize the sale of any property of the
corportion/bank..
Our records do not show that Mr. Rivera was
authorized by the old board or by any of the
bank conservators (starting January, 1984) to
sell the aforesaid property to any of your clients.
Apparently, what took place were just
preliminary discussions/consultations between
him and your clients, which everyone

knows cannot bind

Conservator.

the

Bank's

Board

or

existent powers to the conservator under Section 28-A

of said law?

We are, therefore, constrained to refuse any

tender of payment by your clients, as the same
is patently violative of corporate and banking
laws. We believe that this is more than sufficient
legal justification for refusing said alleged
tender.

Obviously, therefore, Section 28-A merely gives the

conservator power to revoke contracts that are, under
existing law, deemed to be defective i.e., void,
voidable, unenforceable or rescissible. Hence, the
conservator merely takes the place of a bank's board
of directors. What the said board cannot do such as
repudiating a contract validly entered into under the
doctrine of implied authority the conservator cannot
do either. Ineluctably, his power is not unilateral and
he cannot simply repudiate valid obligations of the
Bank. His authority would be only to bring court
actions to assail such contracts as he has already
done so in the instant case. A contrary understanding
of the law would simply not be permitted by the
Constitution. Neither by common sense. To rule
otherwise would be to enable a failing bank to become
solvent, at the expense of third parties, by simply
getting the conservator to unilaterally revoke all
previous dealings which had one way or another or
come to be considered unfavorable to the Bank,
yielding nothing to perfected contractual rights nor
vested interests of the third parties who had dealt with
the Bank.

Rest assured that we have nothing personal

against your clients. All our acts are official,
legal and in accordance with law. We also have
no personal interest in any of the properties of
the Bank.
Please be advised accordingly.
Very truly yours,
(Sgd.)
Leonida
LEONIDA
T.
Acting Conservator

T.

Encarnacion
EDCARNACION

In the third place, while admittedly, the Central Bank

law gives vast and far-reaching powers to the
conservator of a bank, it must be pointed out that such
powers must be related to the "(preservation of) the
assets of the bank, (the reorganization of) the
management thereof and (the restoration of) its
viability." Such powers, enormous and extensive as
they are, cannot extend to the post-facto repudiation
of perfected transactions, otherwise they would
infringe against the non-impairment clause of the
Constitution 44. If the legislature itself cannot revoke an
existing valid contract, how can it delegate such non-

The Fifth Issue: Were There Reversible Errors of

Facts?
Basic is the doctrine that in petitions for review under
Rule 45 of the Rules of Court, findings of fact by the
Court of Appeals are not reviewable by the Supreme
Court. In Andres vs. Manufacturers Hanover & Trust
Corporation, 45, we held:

. . . The rule regarding questions of fact being

raised
with
this
Court
in
a
petition
for certiorari under Rule 45 of the Revised Rules
of Court has been stated in Remalante vs. Tibe,
G.R. No. 59514, February 25, 1988, 158 SCRA
138, thus:

The rule in this jurisdiction is that only questions

of law may be raised in a petition
for certiorari under Rule 45 of the Revised Rules
of Court. "The jurisdiction of the Supreme Court
in cases brought to it from the Court of Appeals
is limited to reviewing and revising the errors of
law imputed to it, its findings of the fact being
conclusive " [Chan vs. Court of Appeals, G.R. No.
L-27488, June 30, 1970, 33 SCRA 737,
reiterating a long line of decisions]. This Court
has emphatically declared that "it is not the
function of the Supreme Court to analyze or
weigh such evidence all over again, its
jurisdiction being limited to reviewing errors of
law that might have been committed by the
lower court" (Tiongco v. De la Merced, G. R. No.
L-24426, July 25, 1974, 58 SCRA 89; Corona vs.
Court of Appeals, G.R. No. L-62482, April 28,
1983, 121 SCRA 865; Baniqued vs. Court of
Appeals, G. R. No. L-47531, February 20, 1984,
127 SCRA 596). "Barring, therefore, a showing
that the findings complained of are totally
devoid of support in the record, or that they are
so glaringly erroneous as to constitute serious
abuse of discretion, such findings must stand,
for this Court is not expected or required to
examine or contrast the oral and documentary
evidence submitted by the parties" [Santa Ana,
Jr. vs. Hernandez, G. R. No. L-16394, December
17, 1966, 18 SCRA 973] [at pp. 144-145.]
Likewise, in Bernardo vs. Court of Appeals

46

, we held:

The resolution of this petition invites us to

closely scrutinize the facts of the case, relating
to the sufficiency of evidence and the credibility

of witnesses presented. This Court so held that

it is not the function of the Supreme Court to
analyze or weigh such evidence all over again.
The Supreme Court's jurisdiction is limited to
reviewing errors of law that may have been
committed by the lower court. The Supreme
Court is not a trier of facts. . . .
As held in the recent case of Chua Tiong Tay vs. Court
of
Appeals
and
Goldrock
Construction
and
Development Corp. 47:
The Court has consistently held that the factual
findings of the trial court, as well as the Court of
Appeals, are final and conclusive and may not
be reviewed on appeal. Among the exceptional
circumstances where a reassessment of facts
found by the lower courts is allowed are when
the conclusion is a finding grounded entirely on
speculation, surmises or conjectures; when the
inference made is manifestly absurd, mistaken
or impossible; when there is grave abuse of
discretion in the appreciation of facts; when the
judgment is premised on a misapprehension of
facts; when the findings went beyond the issues
of the case and the same are contrary to the
admissions of both appellant and appellee. After
a careful study of the case at bench, we find
none of the above grounds present to justify the
re-evaluation of the findings of fact made by the
courts below.
In the same vein, the ruling of this Court in the recent
case of South Sea Surety and Insurance Company
Inc. vs.Hon. Court of Appeals, et al. 48 is equally
applicable to the present case:

We see no valid reason to discard the factual

conclusions of the appellate court, . . . (I)t is not
the function of this Court to assess and evaluate
all over again the evidence, testimonial and
documentary,
adduced
by
the
parties,
particularly where, such as here, the findings of
both the trial court and the appellate court on
the matter coincide. (emphasis supplied)
Petitioners, however, assailed the respondent Court's
Decision as "fraught with findings and conclusions
which were not only contrary to the evidence on record
but have no bases at all," specifically the findings that
(1) the "Bank's counter-offer price of P5.5 million had
been determined by the past due committee and
approved by conservator Romey, after Rivera
presented the same for discussion" and (2) "the
meeting with Co was not to scale down the price and
start negotiations anew, but a meeting on the already
determined
price
of
P5.5
million"
Hence, citing Philippine National Bank vs. Court of
Appeals 49, petitioners are asking us to review and
reverse such factual findings.
The first point was clearly passed upon by the Court of
Appeals 50, thus:
There can be no other logical conclusion than
that when, on September 1, 1987, Rivera
informed plaintiffs by letter that "the bank's
counter-offer is at P5.5 Million for more than 101
hectares on lot basis, "such counter-offer price
had been determined by the Past Due
Committee and approved by the Conservator
after Rivera had duly presented plaintiffs' offer
for discussion by the Committee . . . Tersely put,

under the established fact, the price of P5.5

Million was, as clearly worded in Rivera's letter
(Exh. "E"), the official and definitive price at
which the bank was selling the property. (p. 11,
CA Decision)
xxx

xxx

xxx

. . . The argument deserves scant consideration.

As pointed out by plaintiff, during the meeting of
September 28, 1987 between the plaintiffs,
Rivera and Luis Co, the senior vice-president of
the bank, where the topic was the possible
lowering of the price, the bank official refused it
and confirmed that the P5.5 Million price had
been passed upon by the Committee and could
no longer be lowered (TSN of April 27, 1990, pp.
34-35) (p. 15, CA Decision).
The respondent Court did not believe the evidence of
the petitioners on this point, characterizing it as "not
credible" and "at best equivocal and considering the
gratuitous and self-serving character of these
declarations, the bank's submissions on this point do
not inspire belief."
To become credible and unequivocal, petitioners
should have presented then Conservator Rodolfo
Romey to testify on their behalf, as he would have
been in the best position to establish their thesis.
Under the rules on evidence 51, such suppression gives
rise to the presumption that his testimony would have
been adverse, if produced.
The second point was squarely raised in the Court of
Appeals, but petitioners' evidence was deemed

insufficient by both the trial court and the respondent

Court, and instead, it was respondent's submissions
that were believed and became bases of the
conclusions arrived at.
In fine, it is quite evident that the legal conclusions
arrived at from the findings of fact by the lower courts
are valid and correct. But the petitioners are now
asking this Court to disturb these findings to fit the
conclusion they are espousing, This we cannot do.
To be sure, there are settled exceptions where the
Supreme Court may disregard findings of fact by the
Court of Appeals 52. We have studied both the records
and the CA Decision and we find no such exceptions in
this case. On the contrary, the findings of the said
Court are supported by a preponderance of competent
and credible evidence. The inferences and conclusions
are seasonably based on evidence duly identified in
the Decision. Indeed, the appellate court patiently
traversed and dissected the issues presented before it,
lending credibility and dependability to its findings.
The best that can be said in favor of petitioners on this
point is that the factual findings of respondent Court
did not correspond to petitioners' claims, but were
closer to the evidence as presented in the trial court
by private respondent. But this alone is no reason to
reverse or ignore such factual findings, particularly
where, as in this case, the trial court and the appellate
court were in common agreement thereon. Indeed,
conclusions of fact of a trial judge as affirmed by the
Court of Appeals are conclusive upon this Court,
absent any serious abuse or evident lack of basis or
capriciousness of any kind, because the trial court is in
a better position to observe the demeanor of the

witnesses and their courtroom manner as well as to

examine the real evidence presented.
Epilogue.
In summary, there are two procedural issues involved
forum-shopping and the raising of issues for the first
time on appeal [viz., the extinguishment of the Bank's
offer of P5.5 million and the conservator's powers to
repudiate contracts entered into by the Bank's officers]
which per se could justify the dismissal of the
present case. We did not limit ourselves thereto, but
delved as well into the substantive issues the
perfection of the contract of sale and its enforceability,
which required the determination of questions of fact.
While the Supreme Court is not a trier of facts and as a
rule we are not required to look into the factual bases
of respondent Court's decisions and resolutions, we did
so just the same, if only to find out whether there is
reason to disturb any of its factual findings, for we are
only too aware of the depth, magnitude and vigor by
which the parties through their respective eloquent
counsel, argued their positions before this Court.
We are not unmindful of the tenacious plea that the
petitioner Bank is operating abnormally under a
government-appointed conservator and "there is need
to rehabilitate the Bank in order to get it back on its
feet . . . as many people depend on (it) for
investments, deposits and well as employment. As of
June 1987, the Bank's overdraft with the Central Bank
had already reached P1.023 billion . . . and there were
(other) offers to buy the subject properties for a
substantial amount of money." 53

While we do not deny our sympathy for this distressed

bank, at the same time, the Court cannot emotionally
close its eyes to overriding considerations of
substantive and procedural law, like respect for
perfected contracts, non-impairment of obligations and
sanctions against forum-shopping, which must be
upheld under the rule of law and blind justice.
This Court cannot just gloss over private respondent's
submission that, while the subject properties may
currently command a much higher price, it is equally
true that at the time of the transaction in 1987, the
price agreed upon of P5.5 million was reasonable,
considering that the Bank acquired these properties at
a foreclosure sale for no more than P3.5 million 54. That
the Bank procrastinated and refused to honor its
commitment to sell cannot now be used by it to
promote its own advantage, to enable it to escape its
binding obligation and to reap the benefits of the
increase in land values. To rule in favor of the Bank
simply because the property in question has
algebraically accelerated in price during the long
period of litigation is to reward lawlessness and delays
in the fulfillment of binding contracts. Certainly, the
Court cannot stamp its imprimatur on such outrageous
proposition.
WHEREFORE, finding no reversible error in the
questioned Decision and Resolution, the Court hereby
DENIES the petition. The assailed Decision is
AFFIRMED. Moreover, petitioner Bank is REPRIMANDED
for engaging in forum-shopping and WARNED that a
repetition of the same or similar acts will be dealt with
more severely. Costs against petitioners.
SO ORDERED.

Narvasa, C.J.,
JJ., concur.

Davide

Jr.,

Melo

and

Francisco,

G.R. No. 162894

February 26, 2008

RAYTHEON
INTERNATIONAL,
INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.

DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari
under Rule 45 of the 1997 Rules of Civil Procedure
which seeks the reversal of the Decision 1 and
Resolution2 of the Court of Appeals in CA-G.R. SP No.
67001 and the dismissal of the civil case filed by
respondent against petitioner with the trial court.
As culled from the records of the case, the following
antecedents appear:

G. Browning for alleged nonpayment of commissions,

illegal termination and breach of employment
contract.4 On 28 September 1995, Labor Arbiter Pablo
C. Espiritu, Jr. rendered judgment ordering BMSI and
RUST to pay respondents money claims. 5 Upon appeal
by BMSI, the NLRC reversed the decision of the Labor
Arbiter and dismissed respondents complaint on the
ground of lack of jurisdiction.6 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.

Sometime in 1990, Brand Marine Services, Inc. (BMSI),

a corporation duly organized and existing under the
laws of the State of Connecticut, United States of
America, and respondent Stockton W. Rouzie, Jr., an
American citizen, entered into a contract whereby
BMSI hired respondent as its representative to
negotiate the sale of services in several government
projects in the Philippines for an agreed remuneration
of 10% of the gross receipts. On 11 March 1992,
respondent secured a service contract with the
Republic of the Philippines on behalf of BMSI for the
dredging of rivers affected by the Mt. Pinatubo
eruption and mudflows.3

On 8 January 1999, respondent, then a resident of La

Union, instituted an action for damages before the
Regional Trial Court (RTC) of Bauang, La Union. The
Complaint,7 docketed as Civil Case No. 1192-BG,
named as defendants herein petitioner Raytheon
International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. 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.

On 16 July 1994, respondent filed before the

Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust
International, Inc. (RUST), Rodney C. Gilbert and Walter

In its Answer,8 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.9 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.10Petitioner 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.11
On 18 May 1999, petitioner filed an Omnibus Motion
for Preliminary Hearing Based on Affirmative Defenses
and for Summary Judgment12 seeking the dismissal of
the
complaint
on
grounds
of forum
non
conveniens and failure to state a cause of action.
Respondent opposed the same. Pending the resolution
of the omnibus motion, the deposition of Walter
Browning was taken before the Philippine Consulate
General in Chicago.13
In an Order14 dated 13 September 2000, the RTC
denied petitioners omnibus motion. 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.15
Petitioner filed a Motion for Reconsideration 16 of the
order, which motion was opposed by respondent. 17 In
an Order dated 31 July 2001,18 the trial court denied
petitioners motion. Thus, it filed a Rule 65
Petition19 with 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 dated 13
September 2000 and 31 July 2001 and to enjoin the
trial court from conducting further proceedings. 20
On 28 August 2003, the Court of Appeals rendered the
assailed Decision21 denying the petition for certiorari
for lack of merit. It also denied petitioners motion for
reconsideration in the assailed Resolution issued on 10
March 2004.22
The appellate court held that although the trial court
should not have confined itself to the allegations in the
complaint
and
should
have
also
considered
evidence aliunde in resolving petitioners omnibus
motion, it found the evidence presented by petitioner,
that is, the deposition of Walter Browning, insufficient
for purposes of determining whether the complaint
failed to state a cause of action. The appellate court
also stated that it could not rule one way or the other
on the issue of whether the corporations, including
petitioner, named as defendants in the case had
indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue

should be threshed out during trial. 23 Moreover, the

appellate court deferred to the discretion of the trial
court when the latter decided not to desist from
assuming jurisdiction on the ground of the
inapplicability
of
the
principle
of forum
non
conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN REFUSING TO
DISMISS
THE
COMPLAINT FOR FAILURE TO STATE A CAUSE OF
ACTION AGAINST RAYTHEON INTERNATIONAL,
INC.
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN REFUSING TO
DISMISS
THE
COMPLAINT ON THE GROUND OF FORUM NON
CONVENIENS.24
Incidentally, respondent failed to file a comment
despite repeated notices. The Ceferino Padua Law
Office, counsel on record for respondent, manifested
that the lawyer handling the case, Atty. Rogelio
Karagdag, had severed relations with the law firm even
before the filing of the instant petition and that it could
no longer find the whereabouts of Atty. Karagdag or of
respondent
despite
diligent
efforts.
In
a
Resolution25 dated 20 November 2006, the Court
resolved to dispense with the filing of a comment.
The instant petition lacks merit.

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.
Recently in Hasegawa v. Kitamura,26 the Court outlined
three consecutive phases involved in judicial resolution
of conflicts-of-laws problems, namely: jurisdiction,
choice of law, and recognition and enforcement of
judgments. Thus, in the instances27 where the Court
held that the local judicial machinery was adequate to
resolve controversies with a foreign element, the
following requisites had to be proved: (1) that the
Philippine Court is one to which the parties may
conveniently resort; (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 the power to enforce its decision. 28
On the matter of jurisdiction over a conflicts-of-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.29
Jurisdiction over the nature and subject matter of an
action is conferred by the Constitution and the
law30 and 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.31 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, jurisdiction over the person of petitioner (as
party defendant) was acquired by its voluntary
appearance in court.32
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.33The 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.34 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.35
Finding no grave abuse of discretion on the trial court,
the Court of Appeals respected its conclusion that it
can
assume
jurisdiction
over
the
dispute
notwithstanding its foreign elements. In the same
manner, the Court defers to the sound discretion of the
lower courts because their findings are binding on this
Court.

Petitioner also contends that the complaint in Civil

Case No. 1192-BG failed to state a cause of action
against petitioner. Failure to state a cause of action
refers to the insufficiency of allegation in the
pleading.36 As a general rule, the elementary test for
failure to state a cause of action is whether the
complaint alleges facts which if true would justify the
relief demanded.37

International, Inc., Rust International[,] Inc. and

Brand Marine Service, Inc. have combined into
one company, so much so that Raytheon
International, Inc., the surviving company (if at
all) may be held liable for the obligation of BMSI
to respondent Rouzie for unpaid commissions.
Neither
these
documents
clearly
speak
38
otherwise.

The complaint alleged that petitioner had combined

with BMSI and RUST to function as one company.
Petitioner contends that the deposition of Walter
Browning rebutted this allegation. On this score, the
resolution of the Court of Appeals is instructive, thus:

As correctly pointed out by the Court of Appeals, the

question of whether petitioner, BMSI and RUST merged
together requires the presentation of further evidence,
which only a full-blown trial on the merits can afford.

x x x Our examination of the deposition of Mr.

Walter Browning as well as other documents
produced in the hearing shows that these
evidence aliunde are not quite sufficient for us
to mete a ruling that the complaint fails to state
a cause of action.
Annexes "A" to "E" by themselves are not
substantial, convincing and conclusive proofs
that Raytheon Engineers and Constructors, Inc.
(REC) assumed the warranty obligations of
defendant Rust International in the Makar Port
Project in General Santos City, after Rust
International ceased to exist after being
absorbed by REC. Other documents already
submitted in evidence are likewise meager to
preponderantly
conclude
that
Raytheon

WHEREFORE, the instant petition for review on

certiorari is DENIED. The Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION

COCA-COLA BOTTLERS (PHILS.), G.R. No. 159323

INC. and ERIC MONTINOLA,
Petitioners,
Present:
PUNO, C.J.,*
YNARES-SANTIAGO, J.,

We review on certiorari the Decision[1] of the

Court of Appeals (CA) upholding the order of the Social
Security

petitioners

compulsory coverage with the Social Security System

(SSS).
The Facts

- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
REYES, JJ.

(SSC),[2] denying

motion to dismiss respondent Climacos petition for

C

hai
rp
er
so
n,

Commission

Petitioner Coca-Cola Bottlers (Phils.), Inc. is a

corporation engaged in the manufacture and sale of
softdrink beverages.[3] Co-petitioner Eric Montinola was

SOCIAL SECURITY COMMISSION Promulgated:

and DR. DEAN CLIMACO,
Respondents. July 31, 2008
x-------------------------------------------------x
DECISION

the general manager of its plant in Bacolod City.

[4]

Respondent Dr. Dean Climaco was a former retainer

physician at the companys plant in Bacolod City.[5]

In 1988, petitioner company and Dr. Climaco
entered into a Retainer Agreement [6] for one year, with
a monthly compensation of P3,800.00,[7] where he may

REYES, R.T., J.:

charge professional fees for hospital services rendered

in line with his specialization.[8] The agreement further

WE are confronted with triple remedial issues on

prejudicial

question,

and litis pendentia.

forum

shopping,

provided that either party may terminate the contract

upon giving thirty (30)-day written notice to the other.
[9]

In consideration of the retainers fee, Dr. Climaco

agrees

to

perform

obligations[10] enumerated

the
in

the

duties

and

Comprehensive

Medical Plan,[11] which was attached and made an

living allowance, holiday pay, service incentive leave

integral part of the agreement.

pay, Christmas bonus and all other benefits. [17]

Explicit in the contract, however, is the provision

During the pendency of the complaint, the

that no employee-employer relationship shall exist

company terminated its Retainer Agreement with Dr.

between the company and Dr. Climaco while the

Climaco. Thus,

contract is in effect.

[12]

In case of its termination, Dr.

Climaco shall be entitled only to such retainer fee as

may be due him at the time of termination.

[13]

complaint

[18]

Dr.

Climaco

filed

another

for illegal dismissal against the company

before the NLRC Bacolod City. He asked that he be

reinstated to his former position as company physician
of its Bacolod Plant, without loss of seniority rights,
with full payment of backwages, other unpaid benefits,

Dr. Climaco continuously served as the company

and for payment of damages.[19]

physician, performing all the duties stipulated in the

Retainer Agreement and the Comprehensive Medical

The Labor Arbiter, in each of the complaints,

Plan. By 1992, his salary was increased to P7,500.00

ruled in favor of petitioner company. [20] The first

per month.[14]

complaint was dismissed after Labor Arbiter Jesus N.

Rodriguez, Jr. found that the company did not have the

Meantime,
Department

of

the SSS whether

Dr.

Climaco

Labor
he

was

and
an

inquired

with

the

power of control over Dr. Climacos performance of his

Employment

and

duties and responsibilities. The validity of the Retainer

employee

the

Agreement

of

was

also

recognized.Labor

Arbiter

dismissed

second

company. Both agencies replied in the affirmative.

Benjamin Pelaez likewise

[15]

complaint in view of the dismissal of the first

As a result, Dr. Climaco filed a complaint [16] before

the

National

Labor

(NLRC), Bacolod City. In

Relations
his

complaint,

Commission
he

the

complaint.

sought

recognition as a regular employee of the company and

On appeal, the NLRC, Fourth Division, Cebu City,

demanded payment of his 13th month pay, cost of

affirmed the Arbiter disposition.[21] On petition for

review before the CA, the NLRC ruling was reversed.

National Labor Relations Commission (NLRC), Bacolod

[22]

City, against the respondent [i.e., petitioner company].

The appellate court ruled that using the four-fold

test,

an

employer-employee

relationship

existed

[27]

between the company and Dr. Climaco. Petitioners

elevated the case through a petition for review
on certiorari[23] before this Court.
Meantime, on November 9, 1994, while the

On July 24, 1995, the SSC issued an order

NLRC cases were pending, Dr. Climaco filed with the

stating among others, that the resolution of petitioner

SSC

in Bacolod City,

petition[24] praying,

among

others, that petitioner Coca-Cola Bottlers (Phils.), Inc.

companys motion to dismiss is held in abeyance

pending reception of evidence of the parties. [28]

be ordered to report him for compulsory social security

coverage.

In view of the statements of Dr. Climaco in his

opposition

to

the

companys

motion

to

dismiss,

On April 12, 1995, petitioners moved for the dismissal

petitioners again, on March 1, 1996, moved for the

of

dismissal of Dr. Climacos complaint, this time on the

the

petition

on

the

ground

of

lack

of

jurisdiction. They argued that there is no employer-

grounds of forum shopping and litis pendentia.[29]

employee relationship between the company and

Dr. Climaco; and that his services were engaged by

SSC and CA Dispositions

virtue of a Retainer Agreement.[25]

On January 17, 1997, the SSC denied petitioners
Dr. Climaco opposed the motion.[26] According to
Dr. Climaco,

[t]he

fact

that

the

petitioner

motion to dismiss, disposing as follows:

[i.e.,

respondent Dr. Climaco] does not enjoy the other

benefits of the company is a question that is being
raised by the petitioner in his cases filed with the

WHEREFORE,
PREMISES
CONSIDERED, the respondents Motion to
Dismiss is hereby denied for lack of merit.

Accordingly, let this case be

remanded to SSS Bacolod Branch Office
for reception of evidence of the parties
pursuant to the Order dated July 24,
1995.
SO ORDERED.[30]
Petitioners
reconsideration

[31]

motion
received the same fate.

for
[32]

On April 29, 1997, the company filed a petition

for certiorari before the CA. On March 15, 2002, the CA
dismissed the petition, with a fallo reading:
WHEREFORE, under the premises,
the Court holds that public respondent
Social Security Commission did not act
with grave abuse of discretion in issuing
the disputed orders, and the herein
petition is therefore DISMISSED for want
of merit.
SO ORDERED.[33]
Hence, the present recourse.
Issues
Petitioners raise the following issues for Our
consideration:

WITH ALL DUE

RESPECT,
THE
HONORABLE COURT OF APPEALS ERRED
IN
RENDERING
THE
ASSAILED
RESOLUTIONS,
HAVING
DECIDED
A
QUESTION OFSUBSTANCE IN A WAY NOT
IN
ACCORD
WITH
LAW AND THE
APPLICABLE
DECISIONS
OF
THIS
HONORABLE COURT, CONSIDERING THAT:
I.
THE
PREVIOUS
COMPLAINT
FOR
REGULARIZATION AND/OR
ILLEGAL
DISMISSAL,
WHICH
IS NOW PENDING
RESOLUTION BEFORE THE SUPREME
COURT, POSES A PREJUDICIAL QUESTION
TO THE SUBJECT OF THE PRESENT CASE.
II.
GIVEN
THE
ATTENDANT
CIRCUMSTANCES, RESPONDENT CLIMACO
IS GUILTY OF FORUM SHOPPING, WHICH
THEREBY CALLED FOR THE OUTRIGHT
DISMISSAL OF HIS PETITION BEFORE THE
SOCIAL SECURITY COMMISSION.
III.
THE PETITION SHOULD HAVE ALSO BEEN
DISMISSED OUTRIGHT ON THE GROUND
OF LITIS
PENDENTIA,
AS
THERE ARE OTHER ACTIONS PENDING
BETWEEN THE SAME PARTIES FOR THE
SAME CAUSE OF ACTION.[34] (Underscoring
supplied)

Our Ruling

recognition as a regular employee. Necessarily then, a

just resolution of these cases hinge on a determination

The petition fails.

of whether or not Dr. Climaco is an employee of the

company.[35] The issue of whether Dr. Climaco is

The

Court

notes

their

entitled to employee benefits, as prayed for in the

petition, averred that the appeal from the NLRC and CA

NLRC cases, is closely intertwined with the issue of

dispositions

whether Dr. Climaco is an employee of the company

on

respondent Climaco is

that

the
still

petitioners,

illegal

in

dismissal

pending

with

of
this

who

is

subject

to

compulsory
they

coverage
argue,

under

Court. Upon verification, however, it was unveiled that

the SSSLaw. Hence,

said

the said case had already been decided by this Courts

regularization/illegal dismissal case is a prejudicial

First Division on February 5, 2007.

question.
The argument is untenable.

While we deplore the failure of petitioners and counsel

in updating the Court on the resolution of the said

Our concept of prejudicial question was lifted

related case, We hasten to state that it did not operate

from Spain, where civil cases are tried exclusively by

to moot the issues pending before Us. We take this

civil courts, while criminal cases are tried exclusively in

opportunity to address the questions on prejudicial

criminal courts. Each kind of court is jurisdictionally

question, forum shopping, and litis pendentia.

distinct

from

the Philippines,
No prejudicial
question
exists.

and

independent

however,

courts

of

the
are

other. In
invariably

tribunals of general jurisdiction. This means that courts

here exercise jurisdiction over both civil and criminal
cases. Thus, it is not impossible that the criminal case,

Petitioners allege that Dr. Climaco previously

as well as the civil case in which a prejudicial question

filed separate complaints before the NLRC seeking

may rise, may be both pending in the same court. For

this reason, the elements of prejudicial question have

been modified in such a way that the phrase pendency

the criminal action, that which requires a decision

of the civil case in a different tribunal has been

with which said question is closely related.

eliminated.

[36]

Neither can the doctrine of prejudicial

The rule is that there is prejudicial question

question be applied by analogy. The issue in the

when (a) the previously instituted civil action

case filed by Dr. Climaco with the SSC involves the

involves an issue similar or intimately related to

question of whether or not he is an employee of Coca-

the issue raised in the subsequent criminal

Cola

action, and (b) the resolution of such issue

compulsory

determines whether or not the criminal action

System. On the contrary, the cases filed by Dr. Climaco

may proceed.

[37]

Bottlers

(Phils.),
coverage

Inc.

and

subject

to

the

of

the

Social

Security

It comes into play generally in a

before the NLRC involved different issues. In his first

situation where a civil action and a criminal action

complaint,[41] Dr. Climaco sought recognition as a

both pend and there exists in the former an issue

regular employee of the company and demanded

which must be preemptively resolved before the

payment of his 13th month pay, cost of living

criminal action may proceed. This is so because

allowance, holiday pay, service incentive leave pay,

howsoever the issue raised in the civil action is

Christmas bonus and all other benefits. [42] The second

resolved would be determinative juris et de jure of the

complaint[43] was for illegal dismissal, with prayer for

guilt or innocence of the accused in the criminal case.

reinstatement to his former position as company

[38]

physician of the companys Bacolod Plant, without loss

of seniority rights, with full payment of backwages,
Here, no

prejudicial

question

exists

other unpaid benefits, and for payment of damages.

because there is no pending criminal case.[39] The

[44]

consolidated NLRC cases cannot be considered as

determinative of whether or not the SSC should

previously

action. In Berbari v.

proceed. It is settled that the question claimed to be

it was held that a prejudicial question is

prejudicial in nature must be determinative of the case

Concepcion,

instituted
[40]

civil

understood in law to be that which must precede

Thus, the issues in the NLRC cases are not

before the court.[45]

The grave evil sought to be avoided by the rule

There is
forum
shopping.

no

against forum shopping is the rendition by two (2)

competent

tribunals

of

two

(2)

separate

and

contradictory decisions.Unscrupulous litigants, taking

Anent the second issue, petitioners posit that

advantage of a variety of competent tribunals, may

since the issues before the NLRC and the SSC are the

repeatedly try their luck in several different fora until a

same, the SSC cannot make a ruling on the issue

favorable result is reached.[49]

presented before it without necessarily having a direct

effect on the issue before the NLRC. It was patently

It is well to note that forum shopping traces its

erroneous, if not malicious, for Dr. Climaco to invoke

origin in private international law on choice of venues,

the jurisdiction of the SSC through a separate petition.

which later developed to a choice of remedies. In First

[46]

Philippine International Bank v. Court of Appeals,[50] the

Thus, petitioners contend, Dr. Climaco was guilty of

forum shopping.

Court had occasion to outline the origin of the rule on

forum shopping. Said the Court:

Again, We turn down the contention.

Forum shopping is a prohibited malpractice and
condemned as trifling with the courts and their
processes.[47] It is proscribed because it unnecessarily
burdens the courts with heavy caseloads. It also
unduly taxes the manpower and financial resources of
the judiciary. It mocks the judicial processes, thus,
affecting the efficient administration of justice. [48]

x x x forum shopping originated as

a concept in private international law,
where non-resident litigants are given the
option to choose the forum or place
wherein to bring their suit for various
reasons or excuses, including to secure
procedural advantages, to annoy and
harass
the
defendant,
to
avoid
overcrowded dockets, or to select a more
friendly venue. To combat these less than
honorable excuses, the principle of forum
non conveniens was developed whereby 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.
xxxx
In the Philippines, forum shopping
has acquired a connotation encompassing
not only a choice of venues, as it was
originally understood in conflicts of laws,
but also to a choice of remedies. As to the
first (choice of venues), the Rules of
Court, for example, allow a plaintiff to
commence personal actions where the
defendant or any of the defendants
resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at
the election of the plaintiff (Rule 4, Sec.
2[b]). As to remedies, aggrieved parties,
for example, are given a choice of
pursuing civil liabilities independently of
the criminal, arising from the same set of
facts. A passenger of a public utility
vehicle involved in a vehicular accident
may sue on culpa contractual, culpa
aquilianaor culpa criminal each remedy
being available independently of the
others although he cannot recover more
than once.
In either of these
situations (choice of venue
or choice of remedy), the
litigant actually shops for a
forum of his action. This was

the original concept of the

term forum shopping.
Eventually, however,
instead of actually making a
choice of the forum of their
actions, litigants, through
the encouragement of their
lawyers, file their actions in
all available courts, or invoke
all
relevant
remedies
simultaneously. This practice
had not only resulted to (sic)
conflicting
adjudications
among different courts and
consequent
confusion
enimical (sic) to an orderly
administration of justice. It
had
created
extreme
inconvenience to some of
the parties to the action.
Thus, forum-shopping had
acquired a different concept
which
is
unethical
professional
legal
practice. And
this
necessitated or had given
rise to the formulation of
rules
and
canons
discouraging or altogether
prohibiting the practice.
What therefore started both in
conflicts of laws and in our domestic law
as a legitimate device for solving

problems has been abused and misused

to assure scheming litigants of dubious
reliefs.[51]

curable by mere amendment of the initiatory pleading

but shall be cause for the dismissal of the case without
prejudice. The submission of a false certification or

Thus, in order to prevent forum shopping, the

1997 Rules of Civil Procedure now provide:

non-compliance with any of the undertakings therein

shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and

SEC. 5. Certification against forum

shopping. The plaintiff or principal party
shall certify under oath in the complaint
or other initiatory pleading asserting a
claim for relief, or in a sworn certification
annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore
commenced any action or filed any claim
involving the same issues in any court,
tribunal or quasi-judicial agency and, to
the best of his knowledge, no such other
action or claim is pending therein; (b) if
there is such other pending action or
claim, a complete statement of the
present status thereof; and (c) if he
should thereafter learn that the same or
similar action or claim has been filed or is
pending, he shall report that fact within
five (5) days therefrom to the court
wherein his aforesaid complaint or
initiatory pleading has been filed.[52]

criminal actions. If the acts of the party or his counsel

clearly

constitute

willful

and

deliberate

forum

shopping, the same shall be ground for summary

dismissal with prejudice and shall constitute direct
contempt as well as a cause for administrative
sanctions.[53]

There

is

forum

shopping

when

one

party

repetitively avails of several judicial remedies in

different courts, simultaneously or successively, all
substantially founded on the same transactions and
the same essential facts and circumstances, and all
raising substantially the same issues either pending in,
or already resolved adversely, by some other court.
[54]

In short, forum shopping exists where the

Forum shopping is not only strictly prohibited

elements of litis pendentia are present or where

but also condemned. So much so that [f]ailure to

a final judgment in one case will amount to res

comply with the foregoing requirements shall not be

judicata in the other.[55]

There is res judicata when (1) there is a

final judgment or order; (2) the court rendering
it has jurisdiction over the subject matter and
the parties; (3) the judgment or order is on the
merits; and (4) there is between the two cases
identity of parties, subject matter and causes of
action.[56]
Measured

by

the

foregoing

yardstick,

Dr. Climaco is not guilty of forum shopping. While it is

true that the parties are identical in the NLRC and in
the SSC, the reliefssought and the causes of action are
different.
Admittedly, Dr. Climacos basis in filing the cases
before

the

NLRC

and

the

SSC

is

his

Retainer

Agreement with the company. This does not mean,

however, that his causes of action are the same:
x x x Some authorities declare the
distinction between demands or rights of
action which are single and entire and
those which are several and distinct to be
that the former arise out of one and the
same act or contract and the latter out of
different acts or contracts. This rule has
been declared to be unsound, however,
and as evidence of its unsoundness,

reference has been made to the fact that

several promissory notes may, and often
do, grow out of one and the same
transaction, and yet they do not
constitute an entire demand. The better
rule is that the bare fact that different
demands spring out of the same or
contract does not ipso facto render a
judgment on one a bar to a suit on
another, however distinct. It is clear that
the right of a plaintiff to maintain
separate actions cannot be determined
by the fact that the claims might have
been prosecuted in a single action. A
plaintiff having separate demands against
a defendant may, at his election, join
them in the same action, or he may
prosecute them separately, subject of the
power of the court to order their
consolidation. There may be only one
cause of action although the plaintiff is
entitled to several forms and kinds of
relief, provided there is not more than
one primary right sought to be enforced
or one subject of controversy presented
for
adjudication.[57](Underscoring
supplied)
As the SSC and the CA correctly observed,
different laws are applicable to the cases before the
two tribunals. The Labor Code and pertinent social
legislations would govern the cases before the NLRC,
while the Social Security Law would govern the case

before the SSC. Clearly, as the issues pending before

In the case under review, there is no litis

the NLRC and the SSC are diverse, a ruling on the

pendentia to

speak

of. As

previously

explained,

NLRC cases would not amount to res judicata in the

although the parties in the cases before the NLRC and

case before the SSC.

the SSC are similar, the nature of the cases filed, the
rights asserted, and reliefs prayed for in each tribunal,

The
element
s of litis
pendent
ia
are
absent.

are different.
As a last attempt, however, petitioners invoke
Rule 16, Section 1(e) of the 1997 Rules of Civil

Lastly, petitioners contend that the petition of

Procedure. Petitioners

contend

that

the

petition

Dr. Climaco before the SSC is defective because there

Dr. Climaco lodged with the SSC is another action

were pending actions between the same parties and

prohibited by the Rule.[60]

involving the same issues in different fora.[58]

In Solancio v. Ramos,[61] the issue centered on
For litis pendentia to exist, there must be

whether the pending administrative case before the

(1) identity of the parties or at least such as

Bureau of Lands is another action, which would justify

representing

both

the dismissal of the complaint of plaintiff against

actions; (2) identity of the rights asserted and

defendants before the then Court of First Instance

relief prayed for, the relief founded on the same

(now RTC) of Cagayan. Ruling in the negative, the

facts; and (3) identity of the two cases such that

Court noted that both parties as well as the trial court

judgment in one, regardless of which party is

have missed the extent or meaning of the ground of

successful, would amount to res judicata in the

the motion to dismiss as contemplated under the Rules

other.[59]

of Court.[62] Mr. Justice Regala, who wrote the opinion of

the

same

interests

in

the Court, explained the phrase another action in this

wise:

This is not what is contemplated

under the law because under Section
1(d), Rule 16 (formerly Rule 8) of the
Rules of Court, [now Rule 1, Section 16(e)
of the Rules of Court, supra] one of the
grounds for the dismissal of an action is
that there is another action pending
between the same parties for the same
cause. Note that the Rule uses the phrase
another action. This phrase should be
construed in line with Section 1 of Rule 2,
which defines the word action, thus
Action
means
an
ordinary suit in a court of
justice, by which one party
prosecutes another for the
enforcement or protection of
a right, or the prevention or
redress of a wrong. Every
other remedy is a special
proceeding.[63]

Evidently, there is no another action pending

between petitioners and Dr. Climaco at the time when
the latter filed a petition before the SSC.
WHEREFORE, the petition is DENIED and the
appealed decision AFFIRMED.
Costs against petitioners.

SO ORDERED.
G.R. No. L-32636
March 17,
1930
In the matter Estate of Edward Randolph Hix,
deceased.
A.W.
FLUEMER, petitioner-appellant,
vs.
ANNIE COUSHING HIX, oppositor-appellee.
C.A.
Sobral
for
appellant.
Harvey & O' Brien and Gibbs & McDonough for
appellee.
MALCOLM, J.:
The special administrator of the estate of Edward
Randolph Hix appeals from a decision of Judge of First
Instance Tuason denying the probate of the document
alleged to by the last will and testament of the
deceased. Appellee is not authorized to carry on this
appeal. We think, however, that the appellant, who
appears to have been the moving party in these
proceedings, was a "person interested in the allowance
or disallowance of a will by a Court of First Instance,"
and so should be permitted to appeal to the Supreme
Court from the disallowance of the will (Code of Civil
Procedure, sec. 781, as amended; Villanueva vs. De
Leon [1925], 42 Phil., 780).

It is theory of the petitioner that the alleged will was

executed in Elkins, West Virginia, on November 3,
1925, by Hix who had his residence in that jurisdiction,
and that the laws of West Verginia Code, Annotated, by
Hogg, Charles E., vol. 2, 1914, p. 1690, and as certified
to by the Director of the National Library. But this was
far from a compliance with the law. The laws of a
foreign jurisdiction do not prove themselves in our
courts. the courts of the Philippine Islands are not
authorized to take American Union. Such laws must be
proved as facts. (In re Estate of Johnson [1918], 39
Phil., 156.) Here the requirements of the law were not
met. There was no was printed or published under the
authority of the State of West Virginia, as provided in
section 300 of the Code of Civil Procedure. Nor was the
extract from the law attested by the certificate of the
officer having charge of the original, under the sale of
the State of West Virginia, as provided in section 301
of the Code of Civil Procedure. No evidence was
introduced to show that the extract from the laws of
West Virginia was in force at the time the alleged will
was executed.
In addition, the due execution of the will was not
established. The only evidence on this point is to be
found in the testimony of the petitioner. Aside from
this, there was nothing to indicate that the will was
acknowledged by the testator in the presence of two
competent witnesses, of that these witnesses
subscribed the will in the presence of the testator and
of each other as the law of West Virginia seems to
require. On the supposition that the witnesses to the

will reside without the Philippine Islands, it would then

the duty of the petitioner to prove execution by some
other means (Code of Civil Procedure, sec. 633.)
It was also necessary for the petitioner to prove that
the testator had his domicile in West Virginia and not
establish this fact consisted of the recitals in
the CATHY will and the testimony of the petitioner.
Also in beginning administration proceedings orginally
in the Philippine Islands, the petitioner violated his own
theory by attempting to have the principal
administration in the Philippine Islands.
While the appeal pending submission in this court, the
attorney for the appellant presented an unverified
petition asking the court to accept as part of the
evidence the documents attached to the petition. One
of these documents discloses that a paper writing
purporting to be the was presented for probate on June
8, 1929, to the clerk of Randolph Country, State of
West Virginia, in vacation, and was duly proven by the
oaths of Dana Wamsley and Joseph L. MAdden, the
subscribing witnesses thereto , and ordered to be
recorded and filed. It was shown by another document
that, in vacation, on June 8, 1929, the clerk of court of
Randolph Country, West Virginia, appointed Claude W.
Maxwell as administrator, cum testamento annexo, of
the estate of Edward Randolph Hix, deceased. In this
connection, it is to be noted that the application for
the probate of the will in the Philippines was filed on
February 20, 1929, while the proceedings in West
Virginia appear to have been initiated on June 8, 1929.

These facts are strongly indicative of an intention to

make the Philippines the principal administration and
West Virginia the ancillary administration. However
this may be, no attempt has been made to comply
with Civil Procedure, for no hearing on the question of
the allowance of a will said to have been proved and
allowed in West Virginia has been requested. There is
no showing that the deceased left any property at any
place other than the Philippine Islands and no
contention that he left any in West Virginia.
Reference has been made by the parties to a divorce
purported to have been awarded Edward Randolph Hix
from Annie Cousins Hix on October 8, 1925, in the
State of West specific pronouncements on the validity
or validity of this alleged divorce.
For all of the foregoing, the judgment appealed from
will be affirmed, with the costs of this instance against
the appellant.
Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ.,
concur.

G.R. No. L-12105

January 30, 1960

TESTATE ESTATE OF C. O. BOHANAN, deceased.

PHILIPPINE
TRUST
CO., executor-appellee,
vs.
MAGDALENA
C.
BOHANAN,
EDWARD
C.
BOHANAN,
and
MARY
LYDIA
BOHANAN, oppositors-appellants.
Jose
D.
Cortes
for
Ohnick, Velilla and Balonkita for appellee.

appellants.

LABRADOR, J.:
Appeal against an order of the Court of First Instance
of Manila, Hon. Ramon San Jose, presiding, dismissing
the objections filed by Magdalena C. Bohanan, Mary
Bohanan and Edward Bohanan to the project of
partition submitted by the executor and approving the
said project.
On April 24, 195 0, the Court of First Instance of
Manila, Hon. Rafael Amparo, presiding, admitted to
probate a last will and testament of C. O. Bohanan,
executed by him on April 23, 1944 in Manila. In the
said order, the court made the following findings:
According to the evidence of the opponents the
testator was born in Nebraska and therefore a
citizen of that state, or at least a citizen of
California where some of his properties are
located.
This
contention
in
untenable.
Notwithstanding the long residence of the
decedent in the Philippines, his stay here was

merely temporary, and he continued and

remained to be a citizen of the United States
and of the state of his pertinent residence to
spend the rest of his days in that state. His
permanent residence or domicile in the United
States depended upon his personal intent or
desire, and he selected Nevada as his homicide
and therefore at the time of his death, he was a
citizen of that state. Nobody can choose his
domicile or permanent residence for him. That is
his exclusive personal right.
Wherefore, the court finds that the testator C. O.
Bohanan was at the time of his death a citizen
of the United States and of the State of Nevada
and declares that his will and testament, Exhibit
A, is fully in accordance with the laws of the
state of Nevada and admits the same to
probate. Accordingly, the Philippine Trust
Company, named as the executor of the will, is
hereby appointed to such executor and upon the
filing of a bond in the sum of P10,000.00, let
letters testamentary be issued and after taking
the prescribed oath, it may enter upon the
execution and performance of its trust. (pp. 2627, R.O.A.).
It does not appear that the order granting probate was
ever questions on appeal. The executor filed a project
of partition dated January 24, 1956, making, in
accordance with the provisions of the will, the
following adjudications: (1) one-half of the residuary

estate, to the Farmers and Merchants National Bank of

Los Angeles, California, U.S.A. in trust only for the
benefit of testator's grandson Edward George
Bohanan, which consists of several mining companies;
(2) the other half of the residuary estate to the
testator's brother, F.L. Bohanan, and his sister, Mrs. M.
B. Galbraith, share and share alike. This consist in the
same amount of cash and of shares of mining stock
similar to those given to testator's grandson; (3)
legacies of P6,000 each to his (testator) son, Edward
Gilbert Bohana, and his daughter, Mary Lydia Bohanan,
to be paid in three yearly installments; (4) legacies to
Clara Daen, in the amount of P10,000.00; Katherine
Woodward, P2,000; Beulah Fox, P4,000; and Elizabeth
Hastings, P2,000;
It will be seen from the above that out of the total
estate (after deducting administration expenses) of
P211,639.33 in cash, the testator gave his grandson
P90,819.67 and one-half of all shares of stock of
several mining companies and to his brother and sister
the same amount. To his children he gave a legacy of
only P6,000 each, or a total of P12,000.
The wife Magadalena C. Bohanan and her two children
question the validity of the testamentary provisions
disposing of the estate in the manner above indicated,
claiming that they have been deprived of the
legitimate that the laws of the form concede to them.
The first question refers to the share that the wife of
the testator, Magdalena C. Bohanan, should be entitled

to received. The will has not given her any share in the
estate left by the testator. It is argued that it was error
for the trial court to have recognized the Reno divorce
secured by the testator from his Filipino wife
Magdalena C. Bohanan, and that said divorce should
be declared a nullity in this jurisdiction, citing the case
of Querubin vs.Querubin, 87 Phil., 124, 47 Off. Gaz.,
(Sup, 12) 315, Cousins Hiz vs. Fluemer, 55 Phil., 852,
Ramirez vs. Gmur,
42
Phil.,
855
and
Gorayeb vs. Hashim, 50 Phil., 22. The court below
refused to recognize the claim of the widow on the
ground that the laws of Nevada, of which the deceased
was a citizen, allow him to dispose of all of his
properties without requiring him to leave any portion
of his estate to his wife. Section 9905 of Nevada
Compiled Laws of 1925 provides:
Every person over the age of eighteen years, of
sound mind, may, by last will, dispose of all his
or her estate, real and personal, the same being
chargeable with the payment of the testator's
debts.
Besides, the right of the former wife of the testator,
Magdalena C. Bohanan, to a share in the testator's
estafa had already been passed upon adversely
against her in an order dated June 19, 1955, (pp. 155159, Vol II Records, Court of First Instance), which had
become final, as Magdalena C. Bohanan does not
appear to have appealed therefrom to question its
validity. On December 16, 1953, the said former wife
filed a motion to withdraw the sum of P20,000 from

the funds of the estate, chargeable against her share

in the conjugal property, (See pp. 294-297, Vol. I,
Record, Court of First Instance), and the court in its
said error found that there exists no community
property owned by the decedent and his former wife at
the time the decree of divorce was issued. As already
and Magdalena C. Bohanan may no longer question
the fact contained therein, i.e. that there was no
community property acquired by the testator and
Magdalena C. Bohanan during their converture.
Moreover, the court below had found that the testator
and Magdalena C. Bohanan were married on January
30, 1909, and that divorce was granted to him on May
20, 1922; that sometime in 1925, Magdalena C.
Bohanan married Carl Aaron and this marriage was
subsisting at the time of the death of the testator.
Since no right to share in the inheritance in favor of a
divorced wife exists in the State of Nevada and since
the court below had already found that there was no
conjugal property between the testator and Magdalena
C. Bohanan, the latter can now have no longer claim to
pay portion of the estate left by the testator.
The most important issue is the claim of the testator's
children, Edward and Mary Lydia, who had received
legacies in the amount of P6,000 each only, and,
therefore, have not been given their shares in the
estate which, in accordance with the laws of the
forum, should be two-thirds of the estate left by the
testator. Is the failure old the testator to give his
children two-thirds of the estate left by him at the time

of his death, in accordance with the laws of the forum

valid?
The old Civil Code, which is applicable to this case
because the testator died in 1944, expressly provides
that successional rights to personal property are to be
earned by the national law of the person whose
succession is in question. Says the law on this point:
Nevertheless,
legal
and
testamentary
successions, in respect to the order of
succession as well as to the extent of the
successional rights and the intrinsic validity of
their provisions, shall be regulated by the
national law of the person whose succession is
in question, whatever may be the nature of the
property and the country in which it is found.
(par. 2, Art. 10, old Civil Code, which is the same
as par. 2 Art. 16, new Civil Code.)
In the proceedings for the probate of the will, it was
found out and it was decided that the testator was a
citizen of the State of Nevada because he had selected
this as his domicile and his permanent residence. (See
Decision dated April 24, 1950, supra). So the question
at issue is whether the estementary dispositions,
especially hose for the children which are short of the
legitime given them by the Civil Code of the
Philippines, are valid. It is not disputed that the laws of
Nevada allow a testator to dispose of all his properties
by will (Sec. 9905, Complied Nevada Laws of
1925, supra). It does not appear that at time of the

hearing of the project of partition, the above-quoted

provision was introduced in evidence, as it was the
executor's duly to do. The law of Nevada, being a
foreign law can only be proved in our courts in the
form and manner provided for by our Rules, which are
as follows:
SEC. 41. Proof of public or official record. An
official record or an entry therein, when
admissible for any purpose, may be evidenced
by an official publication thereof or by a copy
tested by the officer having the legal custody of
he record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a
certificate that such officer has the custody. . . .
(Rule 123).
We have, however, consulted the records of the case
in the court below and we have found that during the
hearing on October 4, 1954 of the motion of
Magdalena C. Bohanan for withdrawal of P20,000 as
her share, the foreign law, especially Section 9905,
Compiled Nevada Laws. was introduced in evidence by
appellant's (herein) counsel as Exhibits "2" (See pp.
77-79, VOL. II, and t.s.n. pp. 24-44, Records, Court of
First Instance). Again said laws presented by the
counsel for the executor and admitted by the Court as

Exhibit "B" during the hearing of the case on January

23, 1950 before Judge Rafael Amparo (se Records,
Court of First Instance, Vol. 1).
In addition, the other appellants, children of the
testator, do not dispute the above-quoted provision of
the laws of the State of Nevada. Under all the above
circumstances, we are constrained to hold that the
pertinent law of Nevada, especially Section 9905 of the
Compiled Nevada Laws of 1925, can be taken judicial
notice of by us, without proof of such law having been
offered at the hearing of the project of partition.
As in accordance with Article 10 of the old Civil Code,
the validity of testamentary dispositions are to be
governed by the national law of the testator, and as it
has been decided and it is not disputed that the
national law of the testator is that of the State of
Nevada, already indicated above, which allows a
testator to dispose of all his property according to his
will, as in the case at bar, the order of the court
approving the project of partition made in accordance
with the testamentary provisions, must be, as it is
hereby affirmed, with costs against appellants.
Paras, Bengzon, C.J., Padilla, Bautista Angelo and
Endencia, JJ., concur.