CONFLICT OF LAWS DIGESTS: JURISDICTION
ANTHONY ABAD
IN THE MATTER OF THE ESTATE OF CHEONG BOO, deceased.
MORA ADONG v. CHEONG SENG GEE
G.R. No. 18081 March 3, 1922
FACTS
Cheong Boo, a native of China, died intestate in Zamboanga, Philippine Islands and
left property worth nearly P100,000. The estate of the deceased was claimed by
Cheong Seng Gee, an alleged legitimate child by a marriage contracted by Cheong
Boo with Tan Dit in China in 1895. On the other hand, Mora Adong, the alleged
lawful wife of the deceased who married him in 1896 in Basilan, Philippine Islands,
and her daughters are also claiming as heirs of the decedent.
The conflicting claims to the estate were ventilated in the Court of First Instance of
Zamboanga. The trial judge reached the conclusion that the proof of the marriage of
Tan Dit to the decedent was not sufficient. Cheong Seng Gee should share in the
estate as a natural child. On the other hand, the trial judge reached the conclusion
that the marriage between the Mora Adong and the deceased had been adequately
proved, but, under the laws of the Philippine Islands, it could not be held to be a
lawful marriage; thus, the daughters Payang and Rosalia would inherit as natural
children. The order of the trial judge, following these conclusions, was that there
should be a partition of the property of the deceased Cheong Boo between the
natural children, Cheong Seng Gee, Payang, and Rosalia.
Thus, both parties appealed.
ISSUES
1. W/N the marriage between Tan Dit and the decedent is valid.
2. W/N the marriage between Mora and the decedent is valid considering that
it is a Mohammedan marriage.
RULING
As to the first issue:
The Court ruled that to establish a valid foreign marriage pursuant to this comity
provision, it is first necessary to prove before the courts of the Islands the existence
of the foreign law as a question of fact, and it is then necessary to prove the alleged
foreign marriage by convincing evidence.
In this case, the proof presented in Court did not sustain the validity of the
marriage of Tan Bit and the decedent. The Court noted a strong inclination on the
part of the Chinese witnesses, especially the brother of Cheong Boo, to protect the
interests of the alleged son, Cheong Seng Gee, by overstepping the limits of
truthfulness. The Court also noted that reliable witnesses stated that in the year
1895, when Cheong Boo was supposed to have been in China, he was in reality in
Jolo, in the Philippine Islands. We are not disposed to disturb this appreciation of
fact by the trial court. The immigration documents only go to show the relation of
parent and child existing between the deceased Cheong Boo and his son Cheong
Seng Gee and do not establish the marriage between the deceased and the mother
of Cheong Seng Gee.
1 3B 2009-2010
ATTY.
Also, in the case at bar, there is no competent testimony as to what the laws of
China in the Province of Amoy concerning marriage were in 1895. As in the
Encarnacion case, there is lacking proof so clear, strong, and unequivocal as to
produce a moral conviction of the existence of the alleged prior Chinese marriage.
Substitute twenty-three years for forty years and the two cases are the same.
Lastly, as to the testamentary rights of Cheong Seng Gee as an acknowledged
natural child, such was not pronounced as an error since the oppositors failed to
assigned it as an error and merely kept silence.
As to the second issue:
Yes. Marriage may be solemnized by either a judge of any court inferior to the
Supreme Court, justice of the peace, or priest or minister of the Gospel of any
denomination . . ." "Priest," according to the lexicographers, means one especially
consecrated to the service of a divinity and considered as the medium through
whom worship, prayer, sacrifice, or other service is to be offered to the being
worshipped, and pardon, blessing, deliverance, etc., obtained by the worshipper, as
a priest of Baal or of Jehovah; a Buddhist priest. "Minister of the Gospel" means all
clergymen of every denomination and faith. A "denomination" is a religious sect
having a particular name. A Mohammedan Iman is a "priest or minister of the
Gospel," and Mohammedanism is a "denomination," within the meaning of the
Marriage Law.
Next, "No particular form for the ceremony of marriage is required, but the parties
must declare, in the presence of the person solemnizing the marriage, that they
take each other as husband and wife." The law is quite correct in affirming that no
precise ceremonial is indispensable requisite for the creation of the marriage
contract. The two essentials of a valid marriage are capacity and consent. The latter
element may be inferred from the ceremony performed, the acts of the parties, and
habit or repute. In this instance, there is no question of capacity. Nor do we think
there can exist any doubt as to consent. While it is true that during the
Mohammedan ceremony, the remarks of the priest were addressed more to the
elders than to the participants, it is likewise true that the Chinaman and the Mora
woman did in fact take each other to be husband and wife and did thereafter live
together as husband and wife.
In the case, it was shown by evidence that the decedent was married to the Mora
Adong according to the ceremonies prescribed by the book on marriage of the
Koran, by the Mohammedan Iman (priest) Habubakar. That a marriage ceremony
took place is established by one of the parties to the marriage, the Mora Adong, by
the Iman who solemnized the marriage, and by other eyewitnesses, one of whom
was the father of the bride, and another, the chief of the rancheria, now a municipal
councilor. The groom complied with Quranic law by giving to the bride a dowry of
P250 in money and P250 in goods. From the marriage day until the death of Cheong
Boo, twenty-three years later, the Chinaman and the Mora Adong cohabited as
husband and wife. To them were born five children, two of whom, Payang and
Rosalia, are living. Both in his relations with Mora Adong and with third persons
during his lifetime, Cheong Boo treated Adong as his lawful wife. He admitted this
relationship in several private and public documents. Thus, when different legal
CONFLICT OF LAWS DIGESTS: JURISDICTION
documents were executed, including decrees of registration, Cheong Boo stated that
he was married to the Mora Adong while as late as 1918, he gave written consent to
the marriage of his minor daughter, Payang.
Thus, the Court ruled that the marriage was valid. The law of the Philippine Islands
has long recognized the right of the people to the free exercise of religion. Various
responsible officials have so oft announced the purpose of the Government not to
interfere with the customs of the Moros, especially their religious customs.
CAYETANO LIM AND MARCIANO LIM, v. THE INSULAR COLLECTOR OF
CUSTOMS
G.R. No. L-11759 March 16, 1917
FACTS & ISSUE
The real question raised on this appeal is whether the Insular Collector of Customs
may lawfully deny entry into the Philippine Islands to two children aged 8 and 14
years, respectively, under and by authority of the Chinese Immigration, Laws, it
appearing that the children arrived at the Port of Manila accompanied by and in the
custody of their mother, a Filipino woman; that they were born in China, out of
lawful wedlock; and that their father was a Chinese person.
RULING
The Court by analogous reasoning to that upon which the Supreme Court of the
United States held that the wives and minor children of Chinese merchants
domiciled in the United States may enter that country without certificates, these
children must be held to be entitled to enter the Philippine Islands with their
mother, for the purpose of taking up their residence here with her, it appearing that
she is natural guardian, entitled to their custody and charged with their
maintenance and education. (U. S. vs. Gue Lim, 176 U. S. 459.)
The court is not aware of any Chinese law which differentiates the status of infant
children, born out of lawful wedlock, from that of similar children under the laws in
force in the Philippine Islands. Thus the court assumes that in China as well as in
the Philippine Islands such children have the right to look to their mother for their
maintenance and education, and that she is entitled to their custody and control in
fulfilling the obligations towards them which are imposed upon her, not only by the
natural impulses of love and affection, but also by the express mandate of the law.
The court is of the opinion that the Chinese Immigration Laws should not be
construed so as to exclude infant children of a Filipino mother, born out of lawful
wedlock, seeking entrance to the Philippine Islands for the purpose of taking up
their residence with her in her native land.
We conclude, therefore, that, it appearing that the respondent Collector of Customs
is detaining the petitioners under an erroneous construction of the immigration
laws, and it appearing from the facts disclosed by the administrative proceedings
that these children are entitled to admission into the Philippine Islands, the order
entered in the court below should be reversed, and in lieu thereof an order should
be entered directing the discharge of these children from the custody of the Insular
Collector of Customs, with the costs in both instances, de officio.
2 3B 2009-2010
ATTY. ANTHONY ABAD
HASEGAWA v. KITAMURA
538 SCRA 26 (2007)
FACTS
Nippon Engineering Consultants (Nippon), a Japanese consultancy firm providing
technical and management support in the infrastructure projects national
permanently residing in the Philippines. The agreement provides that Kitamaru was
to extend professional services to Nippon for a year. Nippon assigned Kitamaru to
work as the project manager of the Southern Tagalog Access Road (STAR) project.
When the STAR project was near completion, DPWH engaged the consultancy
services of Nippon, this time for the detailed engineering & construction supervision
of the Bongabon-Baler Road Improvement (BBRI) Project. Kitamaru was named as
the project manger in the contract.
Hasegawa, Nippons general manager for its International Division, informed
Kitamaru that the company had no more intention of automatically renewing his
ICA. His services would be engaged by the company only up to the substantial
completion of the STAR Project.
Kitamaru demanded that he be assigned to the BBRI project. Nippon insisted that
Kitamarus contract was for a fixed term that had expired. Kitamaru then filed for
specific performance & damages w/ the RTC of Lipa City. Nippon filed a MTD.
Nippons contention: The ICA had been perfected in Japan & executed by & between
Japanese nationals. Thus, the RTC of Lipa City has no jurisdiction. The claim for
improper pre-termination of Kitamarus ICA could only be heard & ventilated in the
proper courts of Japan following the principles of lex loci celebrationis & lex
contractus.
The RTC denied the motion to dismiss. The CA ruled hat the principle of lex loci
celebrationis was not applicable to the case, because nowhere in the pleadings was
the validity of the written agreement put in issue. It held that the RTC was correct
in applying the principle of lex loci solutionis.
ISSUE
W/N the subject matter jurisdiction of Philippine courts in civil cases for specific
performance & damages involving contracts executed outside the country by foreign
nationals may be assailed on the principles of lex loci celebrationis, lex contractus,
the state of the most significant relationship rule, or forum non conveniens.
RULING
NO. In the judicial resolution of conflicts problems, 3 consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Jurisdiction & choice of law are 2 distinct concepts. Jurisdiction considers whether it
is fair to cause a defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law w/c will determine the merits
of the case is fair to both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply forum law. While
jurisdiction and the choice of the lex fori will often coincide, the minimum contacts
CONFLICT OF LAWS DIGESTS: JURISDICTION
for one do not always provide the necessary significant contacts for the other. The
question of whether the law of a state can be applied to a transaction is different
from the question of whether the courts of that state have jurisdiction to enter a
judgment.
In this case, only the 1st phase is at issuejurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a
controversy, it must have jurisdiction over the plaintiff/petitioner, over the
defendant/respondent, over the subject matter, over the issues of the case and, in
cases involving property, over the res or the thing w/c is the subject of the
litigation. In assailing the trial court's jurisdiction herein, Nippon is actually referring
to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the
sovereign authority w/c establishes and organizes the court. It is given only by law
and in the manner prescribed by law. It is further determined by the allegations of
the complaint irrespective of whether the plaintiff is entitled to all or some of the
claims asserted therein. To succeed in its motion for the dismissal of an action for
lack of jurisdiction over the subject matter of the claim, the movant must show that
the court or tribunal cannot act on the matter submitted to it because no law grants
it the power to adjudicate the claims.
In the instant case, Nippon, in its MTD, does not claim that the RTC is not properly
vested by law w/ jurisdiction to hear the subject controversy for a civil case for
specific performance & damages is one not capable of pecuniary estimation & is
properly cognizable by the RTC of Lipa City. What they rather raise as grounds to
question subject matter jurisdiction are the principles of lex loci celebrationis and
lex contractus, and the state of the most significant relationship rule. The Court
finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the law of the place of the ceremony or the law of
the place where a contract is made. The doctrine of lex contractus or lex loci
contractus means the law of the place where a contract is executed or to be
performed. It controls the nature, construction, and validity of the contract and it
may pertain to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly. Under the state of the most significant
relationship rule, to ascertain what state law to apply to a dispute, the court should
determine which state has the most substantial connection to the occurrence and
the parties. In a case involving a contract, the court should consider where the
contract was made, was negotiated, was to be performed, and the domicile, place of
business, or place of incorporation of the parties. This rule takes into account
several contacts and evaluates them according to their relative importance with
respect to the particular issue to be resolved.
Since these 3 principles in conflict of laws make reference to the law applicable to a
dispute, they are rules proper for the 2 nd phase, the choice of law. They determine
which state's law is to be applied in resolving the substantive issues of a conflicts
problem. Necessarily, as the only issue in this case is that of jurisdiction, choice-of-
law rules are not only inapplicable but also not yet called for.
3 3B 2009-2010
ATTY. ANTHONY ABAD
Further, Nippons premature invocation of choice-of-law rules is exposed by the fact
that they have not yet pointed out any conflict between the laws of Japan and ours.
Before determining which law should apply, 1 st there should exist a conflict of laws
situation requiring the application of the conflict of laws rules. Also, when the law of
a foreign country is invoked to provide the proper rules for the solution of a case,
the existence of such law must be pleaded and proved.
It should be noted that when a conflicts case, one involving a foreign element, is
brought before a court or administrative agency, there are 3 alternatives open to
the latter in disposing of it: (1) dismiss the case, either because of lack of
jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction
over the case and apply the internal law of the forum; or (3) assume jurisdiction
over the case and take into account or apply the law of some other State or States.
The courts power to hear cases and controversies is derived from the Constitution
and the laws. While it may choose to recognize laws of foreign nations, the court is
not limited by foreign sovereign law short of treaties or other formal agreements,
even in matters regarding rights provided by foreign sovereigns.
Neither can the other ground raised, forum non conveniens, be used to deprive the
RTC of its jurisdiction. 1st, it is not a proper basis for a motion to dismiss because
Sec. 1, Rule 16 of the Rules of Court does not include it as a ground. 2nd, whether
a suit should be entertained or dismissed on the basis of the said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion
of the RTC. In this case, the RTC decided to assume jurisdiction. 3rd, the propriety
of dismissing a case based on this principle requires a factual determination; hence,
this conflicts principle is more properly considered a matter of defense.
RAYTHEON INTERNATIONAL, INC., v. STOCKTON ROUZIE
546 SCRA 555 February 26, 2008
FACTS
Brand Marine Services, Inc. (BMSI), a corporation duly organized & existing under
the laws of the State of Connecticut, & Stockton Rouzie, Jr., an American citizen,
entered into a contract whereby BMSI hired Rouzie 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. Rouzie secured a service
contract w/ the Rep. of Phil. On behalf of BMSI for the dredging of rivers affected by
the Mt. Pinatubo eruption & mudflows.
Subsequently, Rouzie filed before the NLRC a suit against BMSI and Rust
International (Rust) for alleged nonpayment of commissions, illegal termination, &
breach of employment contract. The Labor Arbiter ordered BMSI & Rust to pay
Rouzies money claims. Upon appeal, the NLRC reversed & dismissed Rouzies
complaint on the ground of lack of jurisdiction.
Later on, Rouzie filed an action for damages before the RTC of La Union (where he
was a resident) against Raytheon International. There he reiterated that he was not
paid the commissions due him from the Pinatubo dredging project w/c he secured
CONFLICT OF LAWS DIGESTS: JURISDICTION
on behalf of BMSI. The complaint also averred that BMSI, RUST and Raytheon had
combined & functioned as 1 company. Raytheon sought the dismissal of the
complaint on the grounds of failure to state a cause of action & forum non
conveniens & prayed for damages by way of compulsory counterclaim. The RTC
denied Raytheons motion. The CA affirmed.
Raytheons contention: The written contract between Rouzie & 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 that the parties & witnesses involved are American corporations &
citizens & the evidence to be presented is located outside the Philippines, that
renders our local courts inconvenient forums. The foreign elements of the dispute
necessitate the immediate application of the doctrine of forum non conveniens.
ISSUES
(a) W/N the RTC had jurisdiction.
(b) W/N the complaint should be dismissed on the ground of forum non conveniens.
RULING
(a) YES. 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.
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law & by the material allegations in the complaint, irrespective
of w/nthe plaintiff is entitled to recover all or some of the claims or reliefs sought
therein. The case file was an action for damages arising from an alleged breach of
contract. Undoubtedly, the nature of the action and the amount of damages prayed
are w/in the jurisdiction of the RTC.
As regards jurisdiction over the parties, the RTC acquired jurisdiction over Rouzi
upon the filing of the complaint. On the other hand, jurisdiction over the person of
Raytheon was acquired by its voluntary appearance in court.
That the subject contract included a stipulation that the same shall be governed by
the laws of the State of Connecticut does not suggest that the Philippine courts, or
any other foreign tribunal for that matter, are precluded from hearing the civil
action. Jurisdiction & choice of law are 2 distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to travel to this state; choice of law asks the
further question whether the application of a substantive law which will determine
the merits of the case is fair to both parties. The choice of law stipulation will
become relevant only when the substantive issues of the instant case develop, that
is, after hearing on the merits proceeds before the trial court.
(b) NO. 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
4 3B 2009-2010
ATTY. ANTHONY ABAD
convenient or available forum and the parties are not precluded from seeking
remedies elsewhere. Raytheons averments of the foreign elements are not
sufficient to oust the RTC of its jurisdiction over the case 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 w/c 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.
MANILA HOTEL v. NLRC
343 SCRA 1 (2000)
FACTS
Marcelo Santos was employed as a printer in a printing press in Oman when he
received a job offer from Palace Hotel in China for the same position and a higher
pay. Santos remained in correspondence with Palace Hotel while he was still in
employed in Oman. After negotiations, Santos accepted the offer and signed the
contract with Palace Hotel (while still in Oman). His contract provided that he will
receive a monthly salary of $900 and the employment contract should last for two
years. After he resigned from his Oman job, he went back to the Philippines.
Thereafter, he left for China.
When Santos arrived in China, he signed an amended employment agreement
(terms were not stated in the case), and the agreement was also signed by Mr.
Schmidt of Palace Hotel and noted by the VP of Manila Hotel International Company
Limited (MHICL). Santos commenced employment immediately.
After a short vacation leave, Santos returned to Palace Hotel and he was informed
that he was going to be terminated due to business reverses suffered by the
company. After a month, he was indeed terminated and all his benefits were paid to
him. When Santos came back to the Philippines, he filed a suit in the NLRC, naming
Manila Hotel Corporation (MHC) and MHICL as defendants.
To clarify the relationship of Palace Hotel and MHICL and MHC:
MHC Incorporato MHICL Trains personnel of Palace
r of Hotel
The NLRC awarded damages to Santos, but MHC and MHICL assailed NLRCs
jurisdiction over the case.
ISSUE
Did the NLRC have jurisdiction over the case at bar?
RULING
No. The main aspects of the case transpired in two foreign jurisdictions and the case
involves purely foreign elements. The only link that the Philippines has with the case
CONFLICT OF LAWS DIGESTS: JURISDICTION
is that Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the Palace
Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman,
where respondent Santos was then employed. He was hired without the
intervention of the POEA or any authorized recruitment agency of the government.
Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine
court is one to which the parties may conveniently resort to; (2) that the Philippine
court is in a position to make an intelligent decision as to the law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce its decision.
The conditions are unavailing in the case at bar.
NLRCs jurisdiction fails because of the following reasons:
1. Not Convenient. NLRC is not a convenient forum given that all the incidents
of the case from the time of recruitment, to employment to dismissal
occurred outside the Philippines. The inconvenience is compounded by the
fact that the proper defendants, the Palace Hotel and MHICL are not
nationals of the Philippines. Neither are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are
non-residents of the Philippines.
2. No power to determine applicable law or determine the proper facts.
Neither can an intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign soil. This calls to
fore the application of the principle of lex loci contractus (the law of the
place where the contract was made).
Neither can the NLRC determine the facts surrounding the alleged illegal
dismissal as all acts complained of took place in Beijing, People's Republic
of China. The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of the
Palace Hotel as to justify respondent Santos' retrenchment.
3. Principle of effectiveness, no power to execute decision. Even assuming
that a proper decision could be reached by the NLRC, such would not have
any binding effect against the employer, the Palace Hotel. The Palace Hotel
is a corporation incorporated under the laws of China and was not even
served with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers. Neither Philippine courts do not have
power over an employment contract executed in a foreign country. If Santos were
an "overseas contract worker", a Philippine forum, specifically the POEA, not the
NLRC, would protect him. He is not an "overseas contract worker" a fact which he
admits with conviction.
5 3B 2009-2010
ATTY. ANTHONY ABAD
PHILSEC. INVESTMENT v. CA
274 SCRA 102 (1997)
FACTS
Ducat obtained two separate loans from Ayala and Philsec in the sum of $2.5M
secured by shares of stock owned by Ducat. In order to facilitate the payment of the
loans, 1488 Inc. undertook the obligation to pay by virtue of a Warranty Deed with
a Vendors Lien. Through the latter, 1488 Inc. sold to Athona Holdings (Athona) a
parcel of land in Texas while Philsec and Ayala extended a $2.5M loan to Athona to
partially cover the value of the $2.8M lot. Athona executed a promissory note in
favour of 1488 Inc. worth $.3M to complete the payment for the lot. After all these
transactions, Ducat was released by Philsec and Ayala of his loan.
Athona thereafter failed to pay the $.3M promissory note. 1488 Inc. sued Athona,
Philsec and Ayala for the payment of the $.3M. The case was filed in Texas. While
the Texas case was pending, Philsec filed a complaint to recover a sum of money
with damages in a Makati RTC against Ducat. Ducat, on the other hand, filed and
was granted a motion to dismiss on the basis of litis pendentia and forum non
conveniens. The trial court also held that it had no jurisdiction over 1488 Inc.
because the action was neither in rem nor quasi in rem, accompanied by the fact
that the said defendant was a non-resident. The Court of Appeals affirmed the
decision.
ISSUES
1. Does a judgment in a US court bar actions to be instituted in Philippine
courts? (i.e. Can the foreign judgment constitute res judicata?)
2. Did CA err in dismissing the case based on the principle of forum non
conveniens?
RULING
1. It depends. The foreign judgment cannot be given the effect of res judicata
without giving the adverse party an opportunity to impeach it on grounds
stated in Rule 39, 50 of the Rules of Court, to wit: want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
While this Court has given the effect of res judicata to foreign judgments in
several cases, it was after the parties opposed to the judgment had been
given ample opportunity to repel them on grounds allowed under the law.
It is not necessary for this purpose to initiate a separate action or
proceeding for enforcement of the foreign judgment. What is essential is
that there is opportunity to challenge the foreign judgment, in order for the
court to properly determine its efficacy. This is because in this jurisdiction,
with respect to actions in personam, as distinguished from actions in rem,
a foreign judgment merely constitutes prima facie evidence of the justness
of the claim of a party and, as such, is subject to proof to the contrary.
In the case at bar, it cannot be said that petitioners were given the
opportunity to challenge the judgment of the U.S. court as basis for
CONFLICT OF LAWS DIGESTS: JURISDICTION
declaring it res judicata or conclusive of the rights of private respondents.
The proceedings in the trial court were summary. Neither the trial court
nor the appellate court was even furnished copies of the pleadings in the
U.S. court or apprised of the evidence presented thereat, to assure a
proper determination of whether the issues then being litigated in the U.S.
court were exactly the issues raised in this case such that the judgment
that might be rendered would constitute res judicata.
2. Yes. First, a motion to dismiss is limited to the grounds under Rule 16, 1,
which does not include forum non conveniens. The propriety of dismissing
a case based on this principle requires a factual determination, hence, it is
more properly considered a matter of defense. Second, while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this
ground, it should do so only after vital facts are established, to determine
whether special circumstances require the courts desistance.
In this case, the trial court abstained from taking jurisdiction solely on the
basis of the pleadings filed by private respondents in connection with the
motion to dismiss. It failed to consider that Philsec is a domestic
corporation and Ducat is a Filipino, and that it was the extinguishment of
the latters debt which was the object of the transaction under litigation.
The trial court arbitrarily dismissed the case even after finding that Ducat
was not a party in the U.S. case.
PIONEER CONCRETE PHILIPPINES v. TODARO
254 SCRA 153 June 8, 2007
FACTS
Antonio D. Todaro (Todaro) filed with the RTC of Makati City, a complaint for Sum of
Money and Damages with Preliminary Attachment against Pioneer International
Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines
Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig).
Todaro alleged that PIL is a corporation duly organized and existing under the laws
of Australia and is principally engaged in the ready-mix concrete and concrete
aggregates business; PPHI is the company established by PIL to own and hold the
stocks of its operating company in the Philippines; PCPI is the company established
by PIL to undertake its business of ready-mix concrete, concrete aggregates and
quarrying operations in the Philippines; McDonald is the Chief Executive of the
Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI
and PCPI; Todaro has been the managing director of Betonval Readyconcrete, Inc.
(Betonval), a company engaged in pre-mixed concrete and concrete aggregate
production; he resigned from Betonval in February 1996; in May 1996, PIL
contacted Todaro and asked him if he was available to join them in connection with
their intention to establish a ready-mix concrete plant and other related operations
in the Philippines; Todaro informed PIL of his availability and interest to join them;
subsequently, PIL and Todaro came to an agreement wherein the former consented
to engage the services of the latter as a consultant for two to three months, after
which, he would be employed as the manager of PIL's ready-mix concrete
6 3B 2009-2010
ATTY. ANTHONY ABAD
operations should the company decide to invest in the Philippines; subsequently,
PIL started its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis. Instead of filing an Answer,
PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the grounds
that the complaint states no cause of action, that the RTC has no jurisdiction over
the subject matter of the complaint, as the same is within the jurisdiction of the
NLRC, and that the complaint should be dismissed on the basis of the doctrine of
forum non conveniens. RTC dismissed the MTD which was affirmed by the CA.
ISSUE
W/N the RTC should have dismissed the case on the basis of forum non conveniens
due to a presence of a foreign element
RULING
NO. Whether a suit should be entertained or dismissed on the basis of said doctrine
depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial court. In the case of Communication Materials and Design,
Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine Court may assume
jurisdiction over the case if it chooses to do so; provided, that the following
requisites are met: (1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court
has or is likely to have power to enforce its decision."
The doctrine of forum non conveniens should not be used as a ground for a motion
to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said
doctrine as a ground. This Court further ruled that while it is within the discretion of
the trial court to abstain from assuming jurisdiction on this ground, it should do so
only after vital facts are established, to determine whether special circumstances
require the courts desistance; and that the propriety of dismissing a case based on
this principle of forum non conveniens requires a factual determination, hence it is
more properly considered a matter of defense.
Note: the case was also being dismissed on the ground that there was no cause of
action but SC held that there was cause of action, to sustain a motion to dismiss for
lack of cause of action, the complaint must show that the claim for relief does not
exist, rather than that a claim has been defectively stated, or is ambiguous,
indefinite or uncertain. And it was also argued in this case that jurisdiction is with
the NLRC and not with the RTC. SC held it was with RTC, SC has consistently held
that where no employer-employee relationship exists between the parties and no
issue is involved which may be resolved by reference to the Labor Code, other labor
statutes or any collective bargaining agreement, it is the RTC that has jurisdiction.
LAUREANO V. CA
324 SCRA 414 (2000)
FACTS
Laureano, Director of Flight Operations and Chief Pilot of Air Manila, applied for
employment with Singapore Airlines [herein private respondent] through its Area
CONFLICT OF LAWS DIGESTS: JURISDICTION
Manager in Manila. He was then accepted. Sometime in 1982, Singapore Airline, hit
by a recession, initiated cost-cutting measures. Seventeen (17) expatriate captains
in the Airbus fleet were found in excess of the defendant's requirement.
Consequently, defendant informed its expatriate pilots including plaintiff of the
situation and advised them to take advance leaves. Realizing that the recession
would not be for a short time, defendant decided to terminate its excess. It did not,
however, immediately terminate it's A-300 pilots. It reviewed their qualifications for
possible promotion to the B-747 fleet. Among the 17 excess Airbus pilots reviewed,
twelve were found qualified. Unfortunately, Laureano was not one of the twelve.
Laureano instituted a case for illegal dismissal before the Labor Arbiter. Singapore
Airline moved to dismiss on jurisdictional grounds. Before said motion was resolved,
the complaint was withdrawn. Thereafter, Laureano filed the instant case for
damages due to illegal termination of contract of services before the RTC.
CA reversed the decision of the RTC, it held that the action has already prescribe,
the prescriptive period was 4 years and action was filed beyond the prescriptive
period.
ISSUES
(a) W/N Philippine law must be applied and not Singaporean law.
(b) W/N action has already prescribe.
RULING
(a) Philippine law must be applied. SC quoted the findings of the RTC, it says:
"Neither can the Court determine whether the termination of the plaintiff is legal
under the Singapore Laws because of the defendant's failure to show which specific
laws of Singapore Laws apply to this case. As substantially discussed in the
preceding paragraphs, the Philippine Courts do not take judicial notice of the laws of
Singapore. The defendant that claims the applicability of the Singapore Laws to this
case has the burden of proof. The defendant has failed to do so. Therefore, the
Philippine law should be applied." Also Respondent Court of Appeals acquired
jurisdiction when defendant filed its appeal before said court. On this matter,
respondent court was correct when it barred defendant-appellant below from raising
further the issue of jurisdiction.
(b) YES. Neither Article 1144 nor Article 1146 of the Civil Code is here pertinent.
What is applicable is Article 291 of the Labor Code. n the light of Article 291,
aforecited, we agree with the appellate court's conclusion that petitioner's action for
damages due to illegal termination filed again on January 8, 1987 or more than four
(4) years after the effective date of his dismissal on November 1, 1982 has already
prescribed. Where the money claim was based on a written contract, the Collective
Bargaining Agreement, the Court held that the language of Art. 291 of the Labor
Code does not limit its application only to 'money claims specifically recoverable
under said Code' but covers all money claims arising from an employee-employer
relations"
7 3B 2009-2010
ATTY. ANTHONY ABAD
WILD VALLEY SHIPPING CO., LTD. v. COURT OF APPEALS and PHILIPPINE
PRESIDENT LINES INC.
342 SCRA 213 October 6, 2000
FACTS
Sometime in February 1988, the Philippine Roxas, a vessel owned by Philippine
President Lines, Inc., private respondent herein, arrived in Puerto Ordaz, Venezuela,
to load iron ore. Upon the completion of the loading and when the vessel was ready
to leave port, Mr. Ezzar del Valle Solarzano Vasquez, an official pilot of Venezuela,
was designated by the harbour authorities in Puerto Ordaz to navigate the Philippine
Roxas through the Orinoco River. He was asked to pilot the said vessel on February
11, 1988 boarding it that night at 11:00 p.m.
Captain of the Philippine Roxas, Captain Nicandro Colon, was at the bridge together
with the pilot Vasquez, the vessel's third mate, and a helmsman when the vessel
left the port at 1:40 a.m. on February 12, 1988. Captain Colon left the bridge when
the vessel was under way.
The Philippine Roxas experienced some vibrations. It was then that the watch
officer called the master to the bridge. At around 4:35 a.m., the Philippine Roxas
ran aground in the Orinoco River, thus obstructing the ingress and egress of
vessels.
As a result of the blockage, the Malandrinon, a vessel owned by herein petitioner
Wildvalley Shipping Company, Ltd., was unable to sail out of Puerto Ordaz on that
day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a suit with the Regional Trial
Court of Manila against Philippine President Lines, Inc. and Pioneer Insurance
Company (the underwriter/insurer of Philippine Roxas) for damages in the form of
unearned profits, and interest.
The trial court rendered its decision on October 16, 1991 in favor of the petitioner,
Wildvalley Shipping Co., Ltd. The dispositive portion thereof reads as follows:
Both parties appealed: the petitioner appealing the non-award of interest with the
private respondent questioning the decision on the merits of the case.
After the requisite pleadings had been filed, the Court of Appeals judgment is
reversed
ISSUE
Whether or not Venezuelan law is applicable to the case at bar
RULING
It is well-settled that foreign laws do not prove themselves in our jurisdiction and
our courts are not authorized to take judicial notice of them. Like any other fact,
they must be alleged and proved.
CONFLICT OF LAWS DIGESTS: JURISDICTION
A distinction is to be made as to the manner of proving a written and an unwritten
law. The former falls under Section 24, Rule 132 of the Rules of Court, as amended,
the entire provision of which is quoted hereunder. Where the foreign law sought to
be proved is "unwritten," the oral testimony of expert witnesses is admissible, as
are printed and published books of reports of decisions of the courts of the country
concerned if proved to be commonly admitted in such courts.
Section 24 of Rule 132 of the Rules of Court, as amended, provides:
"Sec. 24. Proof of official record. -- The record of public documents referred to in
paragraph (a) of Section 19, when admissible for any purpose, may be evidenced
by an official publication thereof or by a copy attested by the officer having the legal
custody of the record, or by his deputy, and accompanied, if the record is not kept
in the Philippines, with a certificate that such officer has the custody. If the
office in which the record is kept is in a foreign country, the certificate may be made
by a secretary of the embassy or legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his
office." (Underscoring supplied)
The court has interpreted Section 25 (now Section 24) to include competent
evidence like the testimony of a witness to prove the existence of a written foreign
law.
For a copy of a foreign public document to be admissible, the following requisites
are mandatory: (1) It must be attested by the officer having legal custody of the
records or by his deputy; and (2) It must be accompanied by a certificate by a
secretary of the embassy or legation, consul general, consul, vice consular or
consular agent or foreign service officer, and with the seal of his office. The latter
requirement is not a mere technicality but is intended to justify the giving of full
faith and credit to the genuineness of a document in a foreign country.
It is not enough that the Gaceta Oficial, or a book published by the Ministerio de
Comunicaciones of Venezuela, was presented as evidence with Captain Monzon
attesting it. It is also required by Section 24 of Rule 132 of the Rules of Court that a
certificate that Captain Monzon, who attested the documents, is the officer who had
legal custody of those records made by a secretary of the embassy or legation,
consul general, consul, vice consul or consular agent or by any officer in the foreign
service of the Philippines stationed in Venezuela, and authenticated by the seal of
his office accompanying the copy of the public document. No such certificate could
be found in the records of the case.
With respect to proof of written laws, parol proof is objectionable, for the written
law itself is the best evidence. According to the weight of authority, when a foreign
statute is involved, the best evidence rule requires that it be proved by a duly
authenticated copy of the statute.
8 3B 2009-2010
ATTY. ANTHONY ABAD
There being no contractual obligation, the private respondent is obliged to give only
the diligence required of a good father of a family in accordance with the provisions
of Article 1173 of the New Civil Code, thus:
The law does provide that the master can countermand or overrule the order or
command of the harbor pilot on board. The master of the Philippine Roxas deemed
it best not to order him (the pilot) to stop the vessel, mayhap, because the latter
had assured him that they were navigating normally before the grounding of the
vessel. Moreover, the pilot had admitted that on account of his experience he was
very familiar with the configuration of the river as well as the course headings, and
that he does not even refer to river charts when navigating the Orinoco River.
AUGUSTO BENEDICTO SANTOS III v. NORTHWEST ORIENT AIRLINES and
COURT OF APPEALS
210 SCRA 256 JUNE 23 1992
FACTS
This case involves the Proper interpretation of Article 28(1) of the Warsaw
Convention, reading as follows:
Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in
the territory of one of the High Contracting Parties, either before the court of the
domicile of the carrier or of his principal place of business, or where he has a place
of business through which the contract has been made, or before the court at the
place of destination.
The petitioner is a minor and a resident of the Philippines purchased from NOA a
round-trip ticket in San Francisco. U.S.A., for his flight from San Francisco to Manila
via Tokyo and back. The scheduled departure date from Tokyo was December 20,
1986. No date was specified for his return to San Francisco.
On December 19, 1986, the petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila. Despite a previous
confirmation and re-confirmation, he was informed that he had no reservation for
his flight from Tokyo to Manila. He therefore had to be wait-listed.
Petitioner sued NOA for damages in the RTC. NOA moved to dismiss the complaint
on the ground of lack of jurisdiction. it contended that the complaint could be
instituted only in the territory of one of the High Contracting Parties, before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through which the contract had
been made;
4. the court of the place of destination.
The private respondent contended that the Philippines was not its domicile nor was
this its principal place of business. Neither was the petitioner's ticket issued in this
country nor was his destination Manila but San Francisco in the United States.
CONFLICT OF LAWS DIGESTS: JURISDICTION
ISSUE
(1) The constitutionality of Article 28(1) of the Warsaw Convention; and
(2) The jurisdiction of Philippine courts over the case.
RULING
On the issue of Constitutionality:
The Republic of the Philippines is a party to the Convention for the Unification of
Certain Rules Relating to International Transportation by Air, otherwise known as
the Warsaw Convention. It took effect on February 13, 1933. The Convention was
concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The
Philippine instrument of accession was signed by President Elpidio Quirino on
October 13, 1950, and was deposited with the Polish government on November 9,
1950. The Convention became applicable to the Philippines on February 9, 1951. On
September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201,
declaring our formal adherence thereto. "to the end that the same and every article
and clause thereof may be observed and fulfilled in good faith by the Republic of the
Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country.
On the issue of Jurisdiction:
By its own terms, the Convention applies to all international transportation of
persons performed by aircraft for hire.
International transportation is defined in paragraph (2) of Article 1 as follows:
(2) For the purposes of this convention, the expression "international
transportation" shall mean any transportation in which, according to the contract
made by the parties, the place of departure and the place of destination, whether or
not there be a break in the transportation or a transshipment, are situated [either]
within the territories of two High Contracting Parties . . .
Since the flight involved in the case at bar is international, the same being from the
United States to the Philippines and back to the United States, it is subject to the
provisions of the Warsaw Convention, including Article 28(1), which enumerates the
four places where an action for damages may be brought.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that
Article 28(1) refers to venue rather than jurisdiction, there are later cases cited by
the private respondent supporting the conclusion that the provision is jurisdictional.
In other words, where the matter is governed by the Warsaw Convention,
jurisdiction takes on a dual concept. Jurisdiction in the international sense must be
established in accordance with Article 28(1) of the Warsaw Convention, following
which the jurisdiction of a particular court must be established pursuant to the
applicable domestic law. Only after the question of which court has jurisdiction is
9 3B 2009-2010
ATTY. ANTHONY ABAD
determined will the issue of venue be taken up. This second question shall be
governed by the law of the court to which the case is submitted.
Notably, the domicile of the carrier is only one of the places where the complaint is
allowed to be filed under Article 28(1). By specifying the three other places, to wit,
the principal place of business of the carrier, its place of business where the
contract was made, and the place of destination, the article clearly meant that these
three other places were not comprehended in the term "domicile."
NATIONAL RENTAL v. SZUKHENT
375 U.S. 311 (1964)
FACTS
Petitioner, a corporation with its principal place of business in New York, sued
respondents, residents of Michigan, in New York, claiming that respondents had
defaulted in payments due under a farm equipment lease. The last paragraph of the
contract provided that "the Lessee hereby designates Florence Weinberg as agent
for the purpose of accepting service of any process within the State of New York."
The respondents were not acquainted with Florence Weinberg, and she had not
expressly undertaken to transmit notice to them. The Marshal delivered two copies
of the summons and complaint to Florence Weinberg. That same day she mailed the
summons and complaint to the respondents, together with a letter stating that the
documents had been served upon her as the respondents' agent. The petitioner
itself also notified the respondents by certified mail of the service of process upon
Florence Weinberg. The District Court quashed service of the summons and
complaint, holding that, although Florence Weinberg had promptly notified the
respondents of the service of process and mailed copies of the summons and
complaint to them, the lease agreement itself had not explicitly required her to do
so, and there was therefore a "failure of the agency arrangement to achieve
intrinsic and continuing reality." The Court of Appeals affirmed.
ISSUE
Whether the person upon whom the summons and complaint were served was "an
agent authorized by appointment" to receive the same, so as to subject the
respondents to the jurisdiction of the federal court in New York
RULING
Yes. We need not and do not in this case reach the situation where no personal
notice has been given to the defendant. Since the respondents did in fact receive
complete and timely notice of the lawsuit pending against them, no due process
claim has been made. The question presented here is whether a party to a private
contract may appoint an agent to receive service of process within the meaning of
Federal Rule of Civil Procedure 4 (d) (1), where the agent is not personally known
to the party, and where the agent has not expressly undertaken to transmit notice
to the party.
The purpose underlying the contractual provision here at issue seems clear. The
clause was inserted by the petitioner and agreed to by the respondents in order to
CONFLICT OF LAWS DIGESTS: JURISDICTION
assure that any litigation under the lease should be conducted in the State of New
York.
Florence Weinberg's prompt acceptance and transmittal to the respondents of the
summons and complaint pursuant to the authorization was itself sufficient to
validate the agency, even though there was no explicit previous promise on her part
to do so.
We deal here with a Federal Rule, applicable to federal courts in all 50 States. But
even if we were to assume that this uniform federal standard should give way to
contrary local policies, there is no relevant concept of state law which would
invalidate the agency here at issue. In Michigan, where the respondents reside, the
statute which validates service of process under the circumstances present in this
case contains no provision requiring that the appointed agent expressly undertake
to notify the principal of the service of process. Similarly, New York law, which it
was agreed should be applicable to the lease provisions, does not require any such
express promise by the agent in order to create a valid agency for receipt of
process.
It is argued, finally, that the agency sought to be created in this case was invalid
because Florence Weinberg may have had a conflict of interest. This argument is
based upon the fact that she was not personally known to the respondents at the
time of her appointment and upon a suggestion in the record that she may be
related to an officer of the petitioner corporation. But such a contention ignores the
narrowly limited nature of the agency here involved. Florence Weinberg was
appointed the respondents' agent for the single purpose of receiving service of
process. An agent with authority so limited can in no meaningful sense be deemed
to have had an interest antagonistic to the respondents, since both the petitioner
and the respondents had an equal interest in assuring that, in the event of
litigation, the latter be given that adequate and timely notice which is a prerequisite
to a valid judgment.
Dissent:
The record on the motion to quash shows that the Szukhents had never had any
dealings with Mrs. Weinberg, their supposed agent. They had never met, seen, or
heard of her. She did not sign the lease, was not a party to it, received no
compensation from the Szukhents, and undertook no obligation to them. In fact,
she was handpicked by the New York company to accept service of process in any
suits that might thereafter be filed by the company. Only after this suit was brought
was it reluctantly revealed that Mrs. Weinberg was in truth the wife of one of the
company's officers. I disagree with that holding, believing that:
(1) Whether Mrs. Weinberg was a valid agent upon whom service could validly be
effected under Rule 4 (d) (1) should be determined under New York law and that we
should accept the holdings of the federal district judge and the Court of Appeals
sitting in New York that under that State's law the purported appointment of Mrs.
Weinberg was invalid and ineffective. No federal statute has undertaken to regulate
the sort of agency transaction here involved. It is to the law of New York - the State
where this action was brought in federal court, the place where the contract was
10 3B 2009-2010
ATTY. ANTHONY ABAD
deemed by the parties to have been made, and the State the law of which was
specified as determining rights and liabilities under the contract - that we should
turn to test the validity of the appointment.
I agree with the district judge that this agency is invalid under the laws of
New York. The highest state court that has passed on the question has held that,
because of New York statutes, the designation by a nonresident of New York of an
agent to receive service of process is ineffective; the court, in denying an order for
interpleader, held that only residents of New York can make such an appointment,
and even then only in compliance with the terms of the controlling statute.;
(2) if, however, Rule 4 (d) (1) is to be read as calling upon us to formulate a new
federal definition of agency for purposes of service of process, I think our
formulation should exclude Mrs. Weinberg from the category of an "agent
authorized by appointment . . . to receive service of process." If Rule 4 (d) (1) is to
be read as requiring this Court to formulate new federal standards of agency to be
resolved in each case as a federal question, rather than as leaving the question to
state law, I think the standards we formulate should clearly and unequivocally
denounce as invalid any alleged service of process on nonresidents based on
purported agency contracts having no more substance than that naming Mrs.
Weinberg. State courts in general quite properly refuse to uphold service of process
on an agent who, though otherwise competent, has interests antagonistic to those
of the person he is meant to represent.
INTERNATIONAL SHOE CO. v. WASHINGTON
326 U.S. 310 (1945)
FACTS
Appellant is a Delaware corporation, having its principal place of business in St.
Louis, Missouri, and is engaged in the manufacture and sale of shoes and other
footwear. It maintains places of business in several states, other than Washington,
at which its manufacturing is carried on and from which its merchandise is
distributed interstate through several sales units or branches located outside the
State of Washington.
Appellant has no office in Washington and makes no contracts either for sale or
purchase of merchandise there. It maintains no stock of merchandise in that state
and makes there no deliveries of goods in intrastate commerce. During the years
from 1937 to 1940, now in question, appellant employed 11 to 13 salesmen under
direct supervision and control of sales managers located in St. Louis. These
salesmen resided in Washington; their principal activities were confined to that
state; and they were compensated by commissions based upon the amount of their
sales.
The authority of the salesmen is limited to exhibiting their samples and soliciting
orders from prospective buyers, at prices and on terms fixed by appellant. The
salesmen transmit the orders to appellants office in St. Louis for acceptance or
rejection, and when accepted, the merchandise for filling the orders is shipped f.o.b.
from points outside Washington to the purchasers within the state. All the
CONFLICT OF LAWS DIGESTS: JURISDICTION
merchandise shipped into Washington is invoiced at the place of shipment from
which collections are made. No salesman has authority to enter into contracts or to
make collections.
The Supreme Court of Washington was of opinion that the regular and systematic
solicitation of orders in the state by appellants salesmen, resulting in a continuous
flow of appellants product into the state, was sufficient to constitute doing business
in the state so as to make appellant amenable to suit in its courts. But it was also of
opinion that there were sufficient additional activities shown to bring the case within
the rule frequently stated, that solicitation within a state by the agents of a foreign
corporation plus some additional activities are sufficient to render the corporation
amenable to suit brought in the courts of the state to enforce an obligation arising
out of its activities there. The court found such additional activities in the
salesmens display of samples sometimes in permanent display rooms, and the
salesmens residence within the state, continued over a period of years, all resulting
in substantial volume of merchandise regularly shipped by appellant to purchasers
within the state.
Appellant also insists that its activities within the state were not sufficient to
manifest its presence there and that in its absence the state courts were without
jurisdiction, that consequently it was a denial of due process for the state to subject
appellant to suit.... And appellant further argues that since it was not present within
the state, it is a denial of due process to subject it to taxation or other money
exaction.
ISSUES
1. Does the Washington court have jurisdiction over International Shoe?
2. Does International Shoe have presence in Washington?
RULING
Historically, the jurisdiction of courts to render judgment in personam is grounded
on their de facto power over the defendants person. Hence his presence within the
territorial jurisdiction of a court was prerequisite to its rendition of a judgment
personally binding him. But now that the capias ad respondendum has given way to
personal service of summons or other form of notice, due process requires only that
in order to subject a defendant to a judgment in personam, if he be not present
within the territory of the forum, he should have certain minimum contacts with it
such that the maintenance of the suit does not offend traditional notions of fair
play and substantial justice.
Since the corporate personality is a fiction although a fiction intended to be acted
upon as though it were a fact, it is clear that unlike an individual, its presence
without, as well as within, the state of its origin can be manifested only by activities
carried on its behalf by those who are authorized to act for it. To say that the
corporation is so far present there as to satisfy due process requirements, for
purposes of taxation or the maintenance of suits against it in the courts of the state,
is to beg the question to be decided. For the terms present or presence are used
merely to symbolize those activities of the corporations agent within the state
which courts will deem to be sufficient to satisfy the demands of due process. Those
11 3B 2009-2010
ATTY. ANTHONY ABAD
demands may be met by such contacts of the corporation with the state of the
forum as to make it reasonable, in the context of the federal system of government,
to require the corporation to defend the particular suit which is brought there. An
estimate of the inconveniences which would result to the corporation from a trial
away from its home or principal place of business is relevant in this connection.
Presence in the state in this sense has never been doubted when the activities of
the corporation there have not only been continuous and systematic, but also give
rise to the liabilities sued on, even though no consent to be sued or authorization to
an agent to accept service of process has been given. Conversely, it has been
generally recognized that the casual presence of the corporate agent or even his
conduct of single or isolated items of activities in a state in the corporations behalf
are not enough to subject it to suit on cause of action unconnected with the
activities. To require the corporation in such circumstances to defend the suit away
from its home or other jurisdiction where it carries on more substantial activities
has been thought to lay too great and unreasonable a burden on the corporation to
comport with due process.
There have been instances in which the continuous corporate operations within a
state were thought so substantial and of such a nature as to justify suit against it on
causes of action arising from dealings entirely distinct from those activities.
We are likewise unable to conclude that the service of the process within the state
upon an agent whose activities establish appellants presence there was not
sufficient notice of the suit, or that the suit was so unrelated to those activities as to
make the agent an inappropriate vehicle for communicating the notice. It is enough
that appellant has established such contacts with the state that the particular form
of substituted service adopted there gives reasonable assurance that the notice will
be actual. Nor can we say that the mailing of the notice of suit to appellant by
registered mail at its home office was not reasonably calculated to apprise appellant
of the suit.
Appellant having rendered itself amendable to suit upon obligations arising out of
the activities of its salesmen in Washington, the state may maintain the present suit
in personam to collect the tax laid upon the exercise of the privilege of employing
appellants salesmen within the state. For Washington has made one of those
activities, which taken together establish appellants presence there for purposes
of suit, the taxable event by which the sate brings appellant within the reach of its
taxing power. The stat thus has constitutional power to lay the tax and to subject
appellant to a suit to recover it. The activities which establish its presence subject
it alike to taxation by the state and to suit to recover the tax.
CONFLICT OF LAWS DIGESTS: JURISDICTION
PERKINS v. BENGUET CONSOLIDATED MINING
342 US 437, 72 S. Ct. 413 96 (1952)
FACTS
Perkins, a non-resident of Ohio, filed two in personam cases in an Ohio court.
Among those he sued is Benguest Consolidated (Benguet), a sociedad anima
organized in the Philippines where it owns and operates gold and silver mines.
Perkins sued to collect an amount in dividends and damages she claimed to be due
her as a stockholder of Benguet.
Benguet has been carrying on in Ohio a continuous and systematic, but limited, part
of its general business. Its president, while engaged in doing such business in Ohio,
has been served with summons in this proceeding. Benguet, for its part, sought to
quash the summons served upon their president. The courts have sustained the
motions to quash.
ISSUE
Whether the Due Process Clause of the Fourteenth Amendment to the Constitution
of the United States precludes Ohio from subjecting a foreign corporation to the
jurisdiction of its courts in this action in personam
RULING
No. Ohio is free to decline or take jurisdiction over the corporation. To begin with,
Benguet is a foreign corporation according to Ohio law. The Federal Constitution
does not compel Ohio to open its courts to such a case, even though Ohio permits a
complainant to maintain a proceeding in personam in its courts against a properly
served nonresident natural person to enforce a cause of action which does not arise
out of anything done within the State.
As a matter of federal due process, the business done by the corporation in Ohio
was sufficiently substantial and of such a nature as to permit Ohio to entertain the
cause of action against it, though the cause of action arose from activities entirely
distinct from its activities in Ohio.
MCGEE v. INTERNATIONAL LIFE INSURANCE
355 US 220 (1957)
FACTS
Lulu McGee, was the mother of Lowell Franklin who purchased a life insurance policy
from Arizona-based Empire Mutual Insurance Company that named McGee as the
beneficiary. In 1948, International Life Insurance Co. ("International"), a Texas
corporation, agreed to assume Empire's insurance obligations.
International mailed a reinsurance certificate to the Franklin in California, offering to
insure him according to the terms of the Empire policy. Franklin accepted the offer
and paid premiums from California until his death in 1950. When Franklin's mother
tried to collect on the policy, the insurance company refused to pay, claiming
Franklin had committed suicide. McGee brought suit in California, and sought to
12 3B 2009-2010
ATTY. ANTHONY ABAD
enforce it in Texas. The Texas Court, however, refused to enforce the judgment by
the California Court for the collection of the proceeds of the life insurance policy.
Note that International had conducted no other business in California except for this
one policy.
ISSUE
Can California exercise jurisdiction over a International, whose contacts with that
state are limited to a single act or contract?
RULING
Yes. A state may exercise jurisdiction over a party whose contacts with that state
consist of only a single act, provided that that act is what gave rise to the claim for
which jurisdiction is being sought, and was deliberately directed toward the state.
The court relied on the fact that the suit was based on "substantial connection" with
California, particularly the facts that the contract was delivered to McGee's son while
he was a resident of California, International continued to maintain a financial
relationship with McGee's son by collecting his premium payments, and that the
policy holder was a resident of the state when he died.
The court also gave weight to California's interest in protecting its residents as
consumers of insurance policies, and validated the long arm statute which gave the
California courts their power of jurisdiction over out of state companies by declaring
that California had a "manifest interest in providing effective means of redress for
its residents.
WORLDWIDE VOLKSWAGEN CORPORATION v. CHARLES WOODSON
444 U.S. 286 (1980)
FACTS
Spouses Harry and Kay Robinson, residents of New York, who had purchased a car
from Seaway Volkswagen, a retailer in New York, brought a suit against the retailer
and its wholesale distributor, in the District Court for Creek county, Oklahoma. The
Robinsons claimed that the injuries which they suffered in a car accident in
Oklahoma were caused by the defective design and placement of their automobiles
gas tank and fuel system. Seaway Volkswagen and Worldwide Volkswagen both
incorporated and doing business in New York, asserted that Oklahomas exercise of
jurisdiction over them would violate the limitations on state jurisdiction imposed by
the due process clause. Seaway and Worldwide Volkswagen sought a writ of
prohibition in the Supreme Court of Oklahoma to prevent the trial judge from
exercising in personam jurisdiction over them. The writ was denied on the ground
that personal jurisdiction was authorized by Oklahomas long-arm statute allowing
an Oklahoma courts exercise of in personam jurisdiction over a tortfeasor who
causes injury in Oklahoma by an act or omission outside Oklahoma if he regularly
does or solicits business or engages in any other persistent course of conduct, or
derives substantial revenue from goods used or consumed or services rendered in
Oklahoma.
CONFLICT OF LAWS DIGESTS: JURISDICTION
ISSUE
W/N Oklahoma has jurisdiction over the controversy? NONE
RULING
As has long been settled, and as we reaffirm today, a state court may exercise
personal jurisdiction over a non-resident defendant only as long as there exist
minimum contacts between the defendant and the forum state. 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 defendants contacts with the Keeton (NY) brought a libel suit against Hustler Magazine (Ohio) in New Hampshire,
forum State must be such that maintenance of the suit does not offend traditional
notions of fair play and substantial justice.
Thus, the Due Process Clause does not contemplate that a state may make binding
a judgement in personam against an individual or corporate defendant with which
the state has no contacts, ties, or relations. 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 judgement.
Apply these principles to the case at hand, 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 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.
Because we find that petitioners have no contacts, ties or relations with the State
of Oklahoma the judgement of the Supreme Court of Oklahoma is reversed.
13 3B 2009-2010
ATTY. ANTHONY ABAD
CALDER v. JONES
465 U.S. 783
FACTS
ISSUE
RULING
KEETON v. HUSTLER MAGAZINE, INC.
465 U.S. 770 (1984)
FACTS
alleging jurisdiction by reason of diversity of citizenship. Keetons only connection
with New Hampshire is the circulation there of a magazine that she assists in
producing. Hustler Magazines contacts with New Hampshire consist of monthly
sales of some 10,000 to 15,000 copies of its nationally published magazine.
ISSUE
Whether or not New Hampshire has jurisdiction
RULING
YES. Hustler Magazines regular circulation of magazines in the forum State is
sufficient to support an assertion of jurisdiction in a libel action based on the
contents of the magazine. The fact that Keeton has very limited contacts in New
Hampshire does not defeat jurisdiction, since a plaintiff is not required to have
minimum contacts with the forum State before that State is permitted to assert
personal jurisdiction over a non-resident defendant.
Here, where Hustler Magazine has continuously and deliberately exploited the New
Hampshire market, it must reasonably anticipate being haled into court there in a
libel action based on the contents of its magazine, and since Hustler Magazine can
be charged with knowledge of the single publication rule, it must anticipate that
such a suit will seek nationwide damages. There is no unfairness in calling Hustler
Magazine to answer for the contents of its national publication wherever a
substantial number of copies are regularly sold and distributed.
ASAHI METAL INDUSTRY CO. v. SUPERIOR COURT
480 U.S. 102 (1987)
FACTS
Asahi Metal Industry Co. was an international corporation based in Japan, which
manufactured a valve used in the manufacture of motorcycle wheels. These valves
were bought by Cheng Shin Rubber Industrial Co., a Taiwanese distributor. One of
these valves was alleged to have failed, causing an accident in the State of
California. As a result of the accident the driver of the motorcycle sustained serious
injuries and his wife, who was riding on the motorcycle as a passenger, was killed.
The accident victim sued Cheng Shin in a California state court, and Cheng Shin in
CONFLICT OF LAWS DIGESTS: JURISDICTION
turn filed a third-party complaint (impleader) seeking indemnification from Asahi.
Asahi contested California's personal jurisdiction over Asahi, but the California
courts found jurisdiction based on Asahi's alleged awareness of the international
distribution of its products. Specifically, Asahi moved to quash Cheng Shin's
summons. The California Superior Court and the California Supreme Court both
denied the motion, leading Asahi to appeal to the United States Supreme Court.
ISSUE
Does Asahi have minimum contacts with California such that the exercise of
personal jurisdiction would not offend traditional notions of fair play and
substantive justice? NO
RULING
The Supreme Court applied a five-factor test in determining whether "traditional
notions of fair play" would permit the assertion of in personam jurisdiction over a
foreign (meaning out-of-state) defendant:
1. What is the burden on the defendant?
2. What are the interests of the forum state in the litigation?
3. What is the interest of the plaintiff in litigating the matter in that state?
4. Does the allowance of jurisdiction serve interstate efficiency?
5. Does the allowance of jurisdiction serve interstate policy interests?
The Court finds that fair play would be violated because:
The burden on the defendant is severe because the corporation
would have to travel from Japan to California and defend itself under
the laws of a foreign country.
The plaintiff is not a California resident, and thus Californias interests
in the case are diminished. California can enforce its interest in
having safe products in its state indirectly by applying pressure to
direct suppliers of goods to California, who in turn will apply
commercial pressure to their suppliers.
Cheng Shin has not shown that California is a more convenient forum
than Japan or Taiwan in which to pursue its claim.
Jurisdiction is not necessarily in the best interests of the other
countries involved.
Jurisdiction is not warranted by any international policy considerations,
if they even exist.
Because an assertion of jurisdiction would disturb the "traditional notions of fair play
and substantial justice," the decision of the California Supreme Court was reversed
and the judgment of California Court of Appeal (California's intermediate appellate
court) was effectively reinstated.
14 3B 2009-2010
ATTY. ANTHONY ABAD
BENSUAN RESTUARANT CORPORATION v. RICHARD B. KING
FACTS
ISSUE
RULING
COMPUSERVE, INCORPORATED v. PATTERSON
No. 95-3452, July 22, 1996
FACTS
CompuServe is a computer information service headquartered in Columbus, Ohio. It
contracts with individual subscribers, such as the defendant, to provide, inter alia,
access to computing and information services via the Internet. Defendant, Richard
Patterson, is a resident of Houston, Texas who claims never to have visited Ohio. He
subscribed to CompuServe, and he also placed items of "shareware" on the
CompuServe system for others to use and purchase. When he became a shareware
"provider," Patterson entered into a "Shareware Registration Agreement" ("SRA")
with CompuServe.
The SRA incorporates by reference two other documents: the CompuServe Service
Agreement ("Service Agreement") and the Rules of Operation, both of which are
published on the CompuServe Information Service. Both the SRA and the Service
Agreement expressly provide that they are entered into in Ohio, and the Service
Agreement further provides that it is to "be governed by and construed in
accordance with" Ohio law. The SRA asks a new shareware "provider" like Patterson
to type "AGREE" at various points in the document, "[i]n recognition of your online
agreement to all the above terms and conditions." Thus, Patterson's assent to the
SRA was first manifested at his own computer in Texas, then transmitted to the
CompuServe computer system in Ohio.
From 1991 through 1994, Patterson electronically transmitted 32 master software
files to CompuServe. These files were stored in CompuServe's system in Ohio, and
they were displayed in different services for CompuServe subscribers, who could
"download" them into their own computers and, if they chose to do so, pay for
them. Patterson's software product was, apparently, a program designed to help
people navigate their way around the larger Internet network. CompuServe began
to market a similar product, however, with markings and names that Patterson took
to be too similar to his own. Thus, in December of 1993, Patterson notified
CompuServe (appropriately via "E-mail" message) that the terms "WinNAV,"
"Windows Navigator," and "FlashPoint Windows Navigator" were common law
trademarks which he and his company owned. Patterson stated that CompuServe's
marketing of its product infringed these trademarks, and otherwise constituted
deceptive trade practices. CompuServe changed the name of its program, but
Patterson continued to complain.
After Patterson demanded at least $100,000 to settle his potential claims,
CompuServe filed this declaratory judgment action in the federal district court for
CONFLICT OF LAWS DIGESTS: JURISDICTION
the Southern District of Ohio, relying on the court's diversity subject matter
jurisdiction. Patterson responded pro se with a consolidated motion to dismiss on
several grounds, including lack of personal jurisdiction. Patterson also submitted a
supporting affidavit, in which he denied jurisdictional facts, including his having ever
visited Ohio.
ISSUE
Did CompuServe make a prima facie showing that Patterson's contacts with Ohio,
which have been almost entirely electronic in nature, are sufficient, under the Due
Process Clause, to support the district court's exercise of personal jurisdiction over
him?
RULING
Yes. Personal jurisdiction may be either general or specific in nature, depending on
the nature of the contacts in a given case. In the instant case, because CompuServe
bases its action on Patterson's act of sending his computer software to Ohio for sale
on its service, CompuServe seeks to establish such specific personal jurisdiction
over Patterson.
The crucial federal constitutional inquiry is whether, given the facts of the case, the
nonresident defendant has sufficient contacts with the forum state that the district
court's exercise of jurisdiction would comport with "traditional notions of fair play
and substantial justice." This court has employed three criteria to make this
determination: First, the defendant must purposefully avail himself of the privilege
of acting in the forum state or causing a consequence in the forum state. Second,
the cause of action must arise from the defendant's activities there. Finally, the acts
of the defendant or consequences caused by the defendant must have a substantial
enough connection with the forum to make the exercise of jurisdiction over the
defendant reasonable.
"Purposeful availment" requirement: The question of whether a defendant has
purposefully availed itself of the privilege of doing business in the forum state is
"the sine qua non for in personam jurisdiction." The "purposeful availment"
requirement is satisfied when the defendant's contacts with the forum state
"proximately result from actions by the defendant himself that create a substantial
connection' with the forum State," and when the defendant's conduct and
connection with the forum are such that he "should reasonably anticipate being
haled into court there." This requirement does not, however, mean that a defendant
must be physically present in the forum state.
There is no question that Patterson himself took actions that created a connection
with Ohio in the instant case. He subscribed to CompuServe, and then he entered
into the Shareware Registration Agreement when he loaded his software onto the
CompuServe system for others to use and, perhaps, purchase. Once Patterson had
done those two things, he was on notice that he had made contracts, to be
governed by Ohio law, with an Ohio-based company. Then, he repeatedly sent his
computer software, via electronic links, to the CompuServe system in Ohio, and he
advertised that software on the CompuServe system. Moreover, he initiated the
events that led to the filing of this suit by making demands of CompuServe via
electronic and regular mail messages.
15 3B 2009-2010
ATTY. ANTHONY ABAD
The real question is whether these connections with Ohio are "substantial" enough
that Patterson should reasonably have anticipated being haled into an Ohio court.
Patterson entered into a written contract with CompuServe which provided for the
application of Ohio law, and he then purposefully perpetuated the relationship with
CompuServe via repeated communications with its system in Ohio. Patterson was a
third-party provider of software who used CompuServe, which is located in
Columbus, to market his wares in Ohio and elsewhere. This was a relationship
intended to be ongoing in nature; it was not a "one-shot affair." Patterson sent
software to CompuServe repeatedly for some three years, and the record indicates
that he intended to continue marketing his software on CompuServe.
Cause of action arising from Patterson's activities in Ohio Requirement: The
cause of action in the instant case concerns allegations of trademark or trade name
infringement and unfair competition. Patterson's contacts with Ohio are certainly
related to the operative facts of that controversy. He used that system to advertise
his software and sell it. The proceeds of those sales flowed to him through Ohio. It
is uncontroverted that Patterson placed, marketed, and sold his software only on
Ohio-based CompuServe. Thus, any common law trademark or trade name which
Patterson might have in his product would arguably have been created in Ohio, and
any violation of those alleged trademarks or trade names by CompuServe would
have occurred, at least in part, in Ohio.
The reasonableness requirement: A court must consider several factors in this
context, including "the burden on the defendant, the interest of the forum state, the
plaintiff's interest in obtaining relief, and the interest of other states in securing the
most efficient resolution of controversies." It may be burdensome for Patterson to
defend a suit in Ohio, but he knew when he entered into the Shareware Registration
Agreement with CompuServe that he was making a connection with Ohio, and
presumably he hoped that connection would work to his benefit. Further, Ohio has a
strong interest in resolving a dispute involving an Ohio company, which will involve
the Ohio law on common law trademarks and trade names. CompuServe alleges
that more than $10 million could be at stake in this case, and it also contends that
this case will have a profound impact on its relationships with other "shareware"
providers like Patterson, who also directed their activities toward Ohio-based
CompuServe.
RUSH vs. SAVCHUK
444 US 320 (1980)
FACTS
While a resident of Indiana, Savchuk was injured in an accident in Indiana while
riding as a passenger in a car driven by Rush, also an Indiana resident. After
moving to Minnesota, Savchuk commenced this action against Rush in a Minnesota
state court, alleging negligence and seeking damages. As Rush had no contacts with
Minnesota that would support in personam jurisdiction, Savchuk attempted to
obtain quasi in rem jurisdiction by garnishing the contractual obligation of State
Farm Mutual Automobile Insurance Co. (State Farm) to defend and indemnify
Rush in connection with such a suit.
CONFLICT OF LAWS DIGESTS: JURISDICTION
State Farm, which does business in Minnesota, had insured the car, owned by
Rush's father, under a liability insurance policy issued in Indiana. Rush was
personally served in Indiana, and after State Farm's response to the garnishment
summons asserted that it owed the Rush nothing, Savchuk moved the trial court for
permission to file a supplemental complaint making the garnishee, State Farm, a
party to the action. Rush and State Farm moved to dismiss the complaint for lack of
jurisdiction over the defendant.
ISSUE
May Minnesota courts obtain jurisdiction over both Rush and State Farm by virtue of
a quasi in rem jurisdiction?
RULING
No. A State may not constitutionally exercise quasi in rem jurisdiction over a
defendant who has no forum contacts by attaching the contractual obligation of an
insurer licensed to do business in the State to defend and indemnify him in
connection with the suit.
A State may exercise jurisdiction over an absent defendant only if the defendant
has certain minimum contacts with the forum such that the maintenance of the suit
does not offend traditional notions of fair play and substantial justice. In
determining whether a particular exercise of state court jurisdiction is consistent
with due process, the inquiry must focus on "the relationship among the defendant,
the forum, and the litigation."
Here, the only affiliating circumstance offered to show a relationship among Rush,
Minnesota, and this lawsuit is that Rush's insurance company does business in the
State. However, the fictional presence in Minnesota of State Farm's policy obligation
to defend and indemnify Rush -- derived from combining the legal fiction that
assigns a situs to a debt, for garnishment purposes, wherever the debtor is found
with the legal fiction that a corporation is "present," for jurisdictional purposes,
wherever it does business -- cannot be deemed to give the State the power to
determine Rush's liability for the out-of-state accident. The mere presence of
property in a State does not establish a sufficient relationship between the owner of
the property and the State to support the exercise of jurisdiction over an unrelated
cause of action, and it cannot be said that the defendant engaged in any purposeful
activity related to the forum that would make the exercise of jurisdiction fair, just,
or reasonable merely because his insurer does business there. Nor does the policy
provide significant contacts between the litigation and the forum, for the policy
obligations pertain only to the conduct, not the substance, of the litigation.
BANCO ESPANOL FILIPINO v. PALANCA
37 Phil 921 (1918)
FACTS
Engracio Palance Tanquinyeng y Limquingco mortgaged various parcels of real
property in Manila to El Banco Espanol-Filipino. Afterwards, Engracio returned to
China and there he died without returning again to the Philippines.
16 3B 2009-2010
ATTY. ANTHONY ABAD
The mortgagor then instituted foreclosure proceeding but since defendant is a non-
resident, it was necessary to give notice by publication. The Clerk of Court was also
directed to send copy of the summons to the defendants last known address, which
is in Amoy, China. It is not shown whether the Clerk complied with this
requirement. Nevertheless, after publication in a newspaper of the City of Manila,
the cause proceeded and judgment by default was rendered. The decision was
likewise published and afterwards sale by public auction was held with the bank as
the highest bidder. This sale was confirmed by the court.
About seven years after the confirmation of this sale, a motion was made by Vicente
Palanca, as administrator of the estate of the original defendant, wherein the
applicant requested the court to set aside the order of default and the judgment,
and to vacate all the proceedings subsequent thereto. The basis of this application
was that the order of default and the judgment rendered thereon were void because
the court had never acquired jurisdiction over the defendant or over the subject of
the action.
ISSUE
Did the lower court acquire jurisdiction over the defendant and the subject matter of
the action?
RULING
Yes. Jurisdiction may refer to (1) to the authority of the court to entertain a
particular kind of action or to administer a particular kind of relief, or it may refer to
the power of the court over the parties, or (2) over the property which is the
subject to the litigation.
Jurisdiction over the person is acquired by the voluntary appearance of a party in
court and his submission to its authority, or it is acquired by the coercive power of
legal process exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result either
from a seizure of the property under legal process, whereby it is brought into the
actual custody of the law, or it may result from the institution of legal proceedings
wherein, under special provisions of law, the power of the court over the property is
recognized and made effective. For properties the court may not physically take into
custody, the court may exercise an in rem jurisdiction over such, at the instance of
the person claiming to be the owner, in order to adjudicate the title of the owner
against the world.
The action to foreclose a mortgage is said to be a proceeding quasi in rem, by which
is expressed the idea that while it is not strictly speaking an action in rem yet it
partakes of that nature and is substantially such. The action quasi in rem differs
from the true action in rem in the circumstance that in the former an individual is
named as defendant, and the purpose of the proceeding is to subject his interest
therein to the obligation or lien burdening the property. The judgment entered in
these proceedings is conclusive only between the parties.
CONFLICT OF LAWS DIGESTS: JURISDICTION
The action being quasi in rem, the court has acquired jurisdiction over the
defendant and the subject matter. The failure of the clerk to mail the notice, if in
fact he did so fail in his duty, is not an irregularity that amounts to a denial of due
process of law and even if proved, would not avoid the judgment in this case. Notice
was given by publication in a newspaper and this is the only form of notice which
the law unconditionally requires. This is all that was absolutely necessary to sustain
the proceedings.
CARBALLO v. ENCARNACION
92 Phil. 974 (1952)
FACTS
In the Municipal Court of Manila, Mariano Ang filed a complaint against Antonio
Carballo for the collection of P1,860.84. The corresponding summons was served
upon defendant Carballo for appearance and trial on October 10, 1949. As counsel
for him Atty. J. Gonzales entered his written appearance on October 12, 1949. On
the same day said counsel filed a motion for postponement of the hearing for
one month on the ground that he was sick, attaching a medical certificate to
prove his illness. Hearing was postponed to October 14, 1949 at which time
defendant asked for another postponement on the ground that his counsel was still
sick. The hearing was again postponed to October 24, 1949. In said last two
postponement of the hearing, the municipal court warned the defendant that the
hearing could not wait until his counsel recovered from his illness, and that if said
counsel could not attend the trial he should obtain the services of another lawyer.
On the day set for hearing, namely, October 24, 1949, neither defendant
nor his counsel appeared although there was a written manifestation of defendant's
counsel requesting further postponement because he was still sick. At the request
of plaintiff's counsel, defendant was declared in default.
ISSUE
W/N defendant Carballo defaulted in the municipal court of Manila? NO
RULING
True, he filed no answer, but his counsel filed a written appearance. In addition,
said counsel filed a motion or manifestation asking for postponement of the hearing
on the ground that he was ill. In the case of Flores vs. Zurbito, (37 Phil., 746), the
Court held that an appearance in whatever form without expressly
objecting to the jurisdiction of the court over the person, is a submission to
the jurisdiction of the court over the person. It is, therefore, clear that
petitioner Carballo made an appearance in the municipal court. Could he
then be declared in default just because he filed no answer? The answer must be in
the negative. In the case of Quinzan vs. Arellano,2 G.R. No. 4461, December
28, 1951, the Supreme Court said that in the justice of the peace court
failure to appear, not failure to answer is the sole ground for default. What
really happened in the municipal court was that the defendant though he
filed no answer to the complaint, nevertheless, he made his appearance
and in writing at that, but because of his failure and that of his counsel to
17 3B 2009-2010
ATTY. ANTHONY ABAD
appear on the date of the trial, a hearing ex-parte was held and judgment
was rendered thereafter. The judgment, therefore, was not by default. So
defendant Antonio Carballo had a right to appeal as in fact he appealed, and the
Court of First Instance should not have declared the decision appealed from final
and executory under the theory that it was not appealable.
SANTOS vs. MONTESA, JR.
221 SCRA 15 (1993)
FACTS
ISSUE
RULING
WILLIAM F. GEMPERLE v. HELEN SCHENKER and PAUL
G.R. No. L-18164 January 23, 1967
FACTS
Paul Schenker, acting through his wife and attorney-in-fact (Helen Schenker) filed
with the Court of First Instance of Rizal a complaint for the enforcement of Paul's
allegedly initial subscription to the shares of stock of the Philippines-Swiss Trading
Co., Inc. and the exercise of his alleged pre-emptive rights to the then unissued
original capital stock of said corporation and the increase thereof, as well as for an
accounting and damages. Mrs. Schenker published some allegations thereof and
other matters, which were impertinent, irrelevant and immaterial. Those allegations
were aside from being false and derogatory to the reputation, good name and credit
of Gemperle, "with the only purpose of attacking" his" honesty, integrity and
reputation" and of bringing him "into public hatred, discredit, disrepute and
contempt as a man and a businessman".
Gemperle commenced the present action against the Schenkers for the recovery of
damages and attorneys fees and praying for a judgment ordering Mrs. Schenker "to
retract in writing the said defamatory expressions". The lower court decided against
Gemperle. Gemperle interposed an appeal alleging that the lower court has not
acquired jurisdiction over the person of Paul Schenker.
ISSUE
W/n the lower court has acquired jurisdiction over the person of Paul Schenker
considering the fact that he is a Swiss citizen residing in Zurich, Switzerland and has
not been actually served with summons in the Philippines, although the summons
address to him and Mrs. Schenker had been served personally upon her in the
Philippines.
RULING
According to the Court, the lower court has acquired jurisdiction over the person of
Paul Schenker. Jurisdiction over the person of Paul has been secured through
voluntary appearance on his part, he not having made a special appearance to
CONFLICT OF LAWS DIGESTS: JURISDICTION
assail the jurisdiction over his person, and an answer having been filed in this case,
stating that "the defendants, by counsel, answering the plaintiff's complaint,
respectfully aver", which is allegedly a general appearance amounting to a
submission to the jurisdiction of the court. Paul even set up a counterclaim for
damages his answer. Although the counterclaim was set up by Mrs. Schenker alone,
it is shown that she had authority to sue, and had actually sued on behalf of her
husband, so that she was, also, empowered to represent him in suits filed against
him, particularly in a case, like the of the one at bar, which is consequence of the
action brought by her on his behalf.
ASIAVEST MERCHANT BANKERS (M) BERHAD v. COURT OF APPEALS and
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION
G.R. No. 110263 July 20, 2001
FACTS
Asiavest, a corporation organized under the laws of Malaysia, initiated a suit for
collection against Philippine National Construction Corporation (PNCC before the
High Court of Malaya in Kuala Lumpur for the recovery of the indemnity of the
performance bond it had put up in favor of PNCC to guarantee the completion of the
Felda Project and the nonpayment of the loan it extended to Asiavest-CDCP Sdn.
Bhd. for the completion of Paloh Hanai and Kuantan By Pass; Project.
The High Court of Malaya (Commercial Division) rendered judgment in favor of the
Asiavest ordering PNCC to pay Asiavest the amount alleged plus interest. However,
the judgment of the Malaysian Court was not acted upon by PNCC. Thus, a
complaint was initiated by Asiavest before RTC Pasig for the enforcement of the
Malaysian Courts judgment. PNCC sought for the dismissal of the complaint stating
that the alleged judgment of the High Court of Malaya should be denied recognition
or enforcement since on in face, it is tainted with want of jurisdiction, want of notice
to private respondent, collusion and/or fraud, and there is a clear mistake of law or
fact.
RTC Pasig rendered against Asiavest.CA affirmed RTCs decision.
ISSUE
W/N PNCCs allegation is correct; Malaysian court has not acquired jurisdiction over
PNCC.
RULING
Generally, in the absence of a special compact, no sovereign is bound to
give effect within its dominion to a judgment rendered by a tribunal of another
country;13 however, the rules of comity, utility and convenience of nations have
established a usage among civilized states by which final judgments of foreign
courts of competent jurisdiction are reciprocally respected and rendered efficacious
under certain conditions that may vary in different countries.
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be
recognized insofar as the immediate parties and the underlying cause of action are
concerned so long as it is convincingly shown that there has been an opportunity for
18 3B 2009-2010
ATTY. ANTHONY ABAD
a full and fair hearing before a court of competent jurisdiction; that the trial upon
regular proceedings has been conducted, following due citation or voluntary
appearance of the defendant and under a system of jurisprudence likely to secure
an impartial administration of justice; and that there is nothing to indicate either a
prejudice in court and in the system of laws under which it is sitting or fraud in
procuring the judgment.
Under Section 50(b),16 Rule 39 of the Revised Rules of Court, which was the
governing law at the time the instant case was decided by the trial court and
respondent appellate court, a judgment, against a person, of a tribunal of a foreign
country having jurisdiction to pronounce the same is presumptive evidence of a
right as between the parties and their successors in interest by a subsequent title.
The judgment may, however, be assailed by evidence of want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact. In addition,
under Section 3(n), Rule 131 of the Revised Rules of Court, a court, whether in the
Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of its jurisdiction. Hence, once the authenticity of the foreign judgment is
proved, the party attacking a foreign judgment, is tasked with the burden of
overcoming its presumptive validity.
In the instant case, Asiavest sufficiently established the existence of the
money judgment of the High Court of Malaya by the evidence it offered. Vinayak,
presented as Asiavest's sole witness, testified to the effect that he is in active
practice of the law profession in Malaysia and workedas legal assistant. He also
testified that PNCC was sued by his client, Asiavest in Kuala Lumpur; that the writ of
summons were served at the registered office of PNCC and was received by a
financial planning officer of PNCC for Southeast Asia operations; that upon the filing
of the case, certain persons of PNCC entered their conditional appearance
questioning the regularity of the service of the writ of summons but subsequently
withdrew the same when it realized that the writ was properly served; that because
PNCC failed to file a statement of defense within two (2) weeks, Asiavest filed an
application for summary judgment and submitted affidavits and documentary
evidence in support of its claim; that the matter was then heard before the High
Court of Kuala Lumpur in a series of dates where PNCC was represented by counsel;
and that the end result of all these proceedings is the judgment sought to be
enforced.
Having proven these facts, the presumption of the Malaysian Courts
decision is upheld. The burden to prove its invalidity now falls upon PNCC. PNCC
failed to rebut such presumption. It relied solely on the testimony of its two (2)
witnesses, an accountant and Executive Secretary and a member of the staff of the
Corporate Secretariat Section of the Corporate Legal Division of PNCC, both of
whom failed to shed light and amplify its defense or claim for non-enforcement of
the foreign judgment against it.
The recognition to be accorded a foreign judgment is not necessarily affected by the
fact that the procedure in the courts of the country in which such judgment was
rendered differs from that of the courts of the country in which the judgment is
relied on. Ultimately, matters of remedy and procedure such as those relating to the
service of summons or court process upon the defendant, the authority of counsel
CONFLICT OF LAWS DIGESTS: JURISDICTION
to appear and represent a defendant and the formal requirements in a decision are
governed by the lex fori or the internal law of the forum, 43 i.e., the law of Malaysia
in this case.
In this case, it is the procedural law of Malaysia where the judgment was
rendered that determines the validity of the service of court process on private
respondent as well as other matters raised by it. As to what the Malaysian
procedural law is, remains a question of fact, not of law. It may not be taken
judicial notice of and must be pleaded and proved like any other fact.
Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that
it may be evidenced by an official publication or by a duly attested or authenticated
copy thereof. It was then incumbent upon PNCC to present evidence as to what that
Malaysian procedural law is and to show that under it, the assailed service of
summons upon a financial officer of a corporation, as alleged by it, is invalid. It did
not. Accordingly, the presumption of validity and regularity of service of summons
and the decision thereafter rendered by the High Court of Malaya must stand.
On the matter of alleged lack of authority of the law firm of Allen and
Gledhill to represent PNCC, not only did the witnesses admit that the said law firm
of Allen and Gledhill were its counsels in its transactions in Malaysia, but the fact
that Asiavest offered in evidence relevant Malaysian jurisprudence to the effect that
(a) it is not necessary under Malaysian law for counsel appearing before the
Malaysian High Court to submit a special power of attorney authorizing him to
represent a client before said court, (b) that counsel appearing before the Malaysian
High Court has full authority to compromise the suit, and (c) that counsel appearing
before the Malaysian High Court need not comply with certain pre-requisites as
required under Philippine law to appear and compromise judgments on behalf of
their clients before said court. Furthermore, the conditional appearance by PNCC
was in fact subsequently withdrawn when counsel realized that the writ was
properly served.
On the ground that collusion, fraud and, clear mistake of fact and law tainted the
judgment of the High Court of Malaya, no clear evidence of the same was adduced
or shown. Evidence is wanting on the alleged extrinsic fraud. Hence, such
unsubstantiated allegation cannot give rise to liability therein.
Lastly, there is no merit to the argument that the foreign judgment is not
enforceable in view of the absence of any statement of facts and law upon which
the award in favor of the petitioner was based. As aforestated, the lex fori or the
internal law of the forum governs matters of remedy and procedure. Considering
that under the procedural rules of the High Court of Malaya, a valid judgment may
be rendered even without stating in the judgment every fact and law upon which
the judgment is based, then the same must be accorded respect and the courts in
the jurisdiction cannot invalidate the judgment of the foreign court simply because
our rules provide otherwise.
REGNER v. LOGARTA
19 3B 2009-2010
ATTY. ANTHONY ABAD
537 SCRA 277
FACTS
Luis Regner had three daughters with his first wife, namely Cynthia, Teresa and
Melinda (all of whom were based in California). The petitioner is Luis' second wife,
Victoria Regner.
During his lifetime, Luis acquired several properties, including the Cebu Country
Club. Sometime in 1998, Luis executed a Deed of Donation in favor of respondents
Cynthia and Teresa covering the country club. On 15 June 1999, Victoria filed a
Complaint of Order for Declaration of Nullity of the Deed Donation with Prayer for
Issuance of a Writ of Preliminary Injunction and Temporary Restraining against
Cynthia and Teresa with the RTC. Victoria alleged in her complaint that: on 17
March 1997, Luis made a written declaration wherein he stated that due to his
illness and forgetfulness, he would not sign any document without the knowledge of
his lawyer, Atty. Francis Zosa. She averred that on 15 May 1998, when Luis was
already very ill and no longer of sound and disposing mind, Cynthia and Teresa ,
conspired to make it appear that Luis donated to them said property.
Since Luis no longer had the ability to write or affix his signature, Melinda, acting
under the influence of her sisters, Cynthia and Teresa, fraudulently manipulated
the hand of Luis so that he could affix his thumbmark on the assailed Deed of
Donation
Sheriff Melchor A. Solon served the summonses on Cynthia and Teresa at the Borja
Family Clinic in Tagbilaran City wherein Melinda worked as a doctor, but Melinda
refused to receive the summonses for her sisters and informed the sheriff that their
lawyer, Atty. Francis Zosa, would be the one to receive the same.
Upon her arrival in the Philippines, on 1 June 2000, Teresa was personally served
the summons at Room 304, Regency Crest Condominium, Banilad, Cebu City.
Subsequently, on 12 September 2002, Teresa filed a motion to dismiss the case
because of petitioners failure to prosecute her action for an unreasonable length of
time.
Petitioner opposed the motion and filed her own motion to set the case for pre-trial,
to which Teresa filed her rejoinder on the ground that their sister, Cynthia, an
indispensable party, had not yet been served a summons. Thus, Teresa prayed for
the dismissal of petitioners complaint, as the case would not proceed without
Cynthias presence.
ISSUE
(1) Whether a co-donee is an indispensable party in an action to declare the nullity
of the deed of donation, and
(2)Whether delay in the service of summons upon one of the defendants constitutes
failure to prosecute that would warrant dismissal of the complaint.
RULING
CONFLICT OF LAWS DIGESTS: JURISDICTION
1) YES. It takes no great degree of legal sophistication to realize that Cynthia and
Teresa are indispensable parties to the civil case. Cynthia and Teresa allegedly
derived their rights to the subject property by way of donation from their father
Luis. The central thrust of the petitioners complaint in the civil case was that Luis
could not have donated Proprietary Ownership Certificate No. 0272 to his daughters
Cynthia and Teresa, as Luis was already very ill and no longer of sound and
disposing mind at the time of donation on 15 May 1997.
An indispensable party has been defined as follows:
An indispensable party is a party who has such an
interest in the controversy or subject matter that a final
adjudication cannot be made, in his absence, without injuring or
affecting that interest, a party who has not only an interest in the
subject matter of the controversy, but also has an interest of such
nature that a final decree cannot be made without affecting his
interest or leaving the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good
conscience.
Without the presence of indispensable parties, a judgment cannot attain finality.
2) YES.
Being an action in personam, the general rule requires the personal service of
summons on Cynthia within the Philippines, but this is not possible in the present
case because Cynthia is a non-resident and is not found within the Philippines.
As Cynthia is a nonresident who is not found in the Philippines, service of summons
on her must be in accordance with Section 15, Rule 14 of the Rules of Court. Such
service, to be effective outside the Philippines, must be made either (1) by personal
service; (2) by publication in a newspaper of general circulation in such places and
for such time as the court may order, in which case a copy of the summons and
order of the court should be sent by registered mail to the last known address of the
defendant; or (3) in any other manner which the court may deem sufficient. The
third mode, like the first two, must be made outside the Philippines, such as
through the Philippine Embassy in the foreign country where Cynthia resides.
Since in the case at bar, the service of summons upon Cynthia was not done by any
of the authorized modes, the trial court was correct in dismissing petitioners
complaint.
As can be gleaned from the Sec 3 Rule 17 of the Rules of Civil Procedure,
there are three instances when the complaint may be dismissed due to the plaintiff's
fault: (1) if he fails to appear during a scheduled trial, especially on the date for the
presentation of his evidence in chief; (2) if he fails to prosecute his action for
an unreasonable length of time; and (3) if he fails to comply with the rules or
any order of the court.
Considering the circumstances of the case, it can be concluded that the petitioner
failed to prosecute the case for an unreasonable length of time. There is failure to
20 3B 2009-2010
ATTY. ANTHONY ABAD
prosecute when the plaintiff, being present, is not ready or is unwilling to proceed
with the scheduled trial or when postponements in the past were due to the
plaintiff's own making, intended to be dilatory or caused substantial prejudice on
the part of the defendant.
EUROPEAN RESOURCES AND TECHNOLOGIES INC. v. INGENIEUBURO
BIRKHAHN + NOLTE, INGENIURGESELLSCHAFT MBH
435 SCRA 246
FACTS
ISSUE
RULING
PIPER AIRCRAFT COMPANY vs. REYNO
454 US 235 (1981)
FACTS
A small commercial plane crashed in Scotland carrying five passengers and a pilot.
All of whom were all killed. The decedents and heirs are all Scottish. The aircraft
was manufactured in Pennsylvania by Piper Aircraft (Piper). The propellers were
manufactured by Hartzell Propeller Inc. (Hartzell) in Ohio. The aircraft was owned
and operated by UK companies. The British Department of Trade report found no
evidence of defective equipment and indicated that pilot error may have
contributed.
A California probate court appointed Reyno administratrix of the estates of the five
passengers. She did not know nor was she related to any of the decedents, she was
merely the legal secretary to the attorney who filed this lawsuit. After her
appointment, Reyno filed several wrongful-death suits against Piper and Hartzell in
California for negligence. Reyno admitted the choice of the United States as a venue
was more favorable to her case.
After the filing of the case in California, the defendants Piper and Hartzell sought to
transfer the case to Pennsylvania. When the case was transferred to Pennsylvania,
both defendants filed and were granted motions to dismiss on the ground of forum
non conveniens. On appeal, the dismissal was reversed with the appellate court
opining that dismissal for forum non conveniens is never appropriate where the law
of the alternative forum is less favorable to the plaintiff.
ISSUES
1. Can the court dismiss the action on the ground of forum non conveniens by
merely showing that the substantive law that would be applied in the
alternative court is less favorable to the plaintiffs than that of the present
court?
2. Does the Gulf Oil vs. Gilbert case doctrine apply in the case at bar (i.e.
Should the case be tried in Scotland instead of the United States when all
the evidence and witnesses are in Scotland)?
CONFLICT OF LAWS DIGESTS: JURISDICTION
RULING
1. No. The possibility of a change in substantive law should ordinarily not be
given conclusive or even substantial weight in the forum non conveniens
inquiry. If conclusive or substantial weight were given to the possibility of a
change in law, the forum non conveniens doctrine would become virtually
useless. Jurisdiction and venue requirements are often easily satisfied. As a
result, many plaintiffs are able to choose from among several forums.
Ordinarily, these plaintiffs will select that forum whose choice-of-law rules
are most advantageous. Thus, if the possibility of an unfavorable change in
substantive law is given substantial weight in the forum non conveniens
inquiry, dismissal would rarely be proper. Additionally, this would lead to
other practical problems. At least where the foreign plaintiff named an
American manufacturer as defendant, a court could not dismiss the case on
grounds of forum non conveniens where dismissal might lead to an
unfavorable change in law. The American courts, already very attractive to
plaintiffs, would become even more attractive. The flow of litigation into
the United States would increase and further congest already crowded
courts.
2. Yes. Under the Gilbert ruling, dismissal will ordinarily be appropriate where
trial in the plaintiff's chosen forum imposes a heavy burden on the
defendant or the court, and where the plaintiff is unable to offer any
specific reasons of convenience supporting his choice.
Hence, the court's holding that the case would be better suited in Scotland
was not unreasonable. First, because the majority of evidence was there
and second, because the decedents were not able to properly implead the
defendants. Also, Pennsylvania would not be a good venue because there
would need to be two law standards - the Pennsylvania law would apply to
Piper and Scottish law would apply to Hartzell. A trial involving two sets of
laws would be confusing to the jury. A lack of familiarity with Scottish law
would also be confusing. Another powerful reason why Pennsylvania is a
bad venue is that Scotland has a very strong interest in this litigation.
There is "a local interest in having localized controversies decided at
home."
The incremental deterrence that would be gained if this trial were held in
American court is likely to be insignificant. The American interest in this
accident is simply not sufficient to justify the enormous commitment of
judicial time and resources that would inevitably be required if the case
were to be tried there.
GULF OIL v. GILBERT
330 US 501 (1947)
21 3B 2009-2010
ATTY. ANTHONY ABAD
FACTS
Gilbert is a resident of Virginia, where he operated a public warehouse. One day,
there was an explosion in the warehouse. Gilbert alleged that the explosion was
caused by Gulf Oils negligent handling of gasoline. In view of said accusation,
Gilbert brought an action in a court in New York City against Gulf Oil to recover
damages for destruction of the Gilberts public warehouse and its contents in
Virginia by fire resulting from Gulf Oil's negligence.
Note that Gulf Oil was a Pennsylvania corporation qualified to do business in both
Virginia and New York and it has designated agents in both states to receive
summons.
When sued in New York, the defendant, invoking the doctrine of forum non
conveniens, claimed that the appropriate place for trial is Virginia, where the
plaintiff lives and defendant does business, where all events in litigation took place,
where most of the witnesses reside, and where both state and federal courts are
available to plaintiff, and are able to obtain jurisdiction of the defendant.
The New York Court dismissed the action on the ground of forum non conveniens.
The appellate court, however, disagreed.
ISSUE
Whether or not the United States District Court has inherent power to dismiss a suit
pursuant to the doctrine of forum non conveniens
RULING
Yes. The principle of forum non conveniens is simply that a court may resist
imposition upon its jurisdiction even when jurisdiction is authorized by the letter of
a general venue statute. The federal law contains no such express criteria to guide
the district court in exercising its power. There are, however, important
considerations in the application of the doctrine--from the standpoint of litigants,
are relative ease of access to sources of proof, availability of compulsory process for
attendance of unwilling witnesses, cost of obtaining attendance of willing witnesses,
possibility of view of the premises if that be appropriate, and all other practical
problems that make trial of a case easy, expeditious, and inexpensive.
Considerations of public interest in applying the doctrine include the undesirability of
piling up litigation in congested centers, the burden of jury duty on people of a
community having no relation to the litigation, the local interest in having localized
controversies decided at home, and the unnecessary injection of problems in conflict
of laws.
In this case, the doctrine was properly applied. The Gilbert himself is not a resident
of New York, nor did any event connected with the case take place there, nor does
any witness with the possible exception of experts live there. The only reasons
given by Gilbert in filing the case in New York are that the jury in Virginia may not
be accustomed to cases where the damages sought for are as big as $400,000, and
that the same jury may be influenced by the defendant in Virginia. Needless to say,
CONFLICT OF LAWS DIGESTS: JURISDICTION
these reasons did not persuade the New York Court to exercise its jurisdiction over
Gilberts case.
LUECK v. SUNSTRANDT
No. 99-15961 January 8, 2001
FACTS
Plaintiffs appeal the district court's dismissal of their suit on the basis of forum non
conveniens. Plaintiffs, citizens of New Zealand, are victims of an airplane crash in
New Zealand, on a New Zealand carrier. Plaintiffs allege that the radio altimeter of
the Ground Proximity Warning System ("GPWS") malfunctioned during flight and
was a causal factor of the accident. Defendants, the Canadian manufacturer of the
aircraft and the American manufacturers of the GPWS and the radio altimeter,
argued that New Zealand was an adequate alternative forum and that the public
and private factors weighed in favor of dismissal. The district court agreed with
Defendants.
ISSUE
W/N the district of Arizona has jurisdiction? YES BUT THE MORE CONVENIENT
FORUM IS NEW ZEALAND HENCE DISMISSAL WAS PROPER
RULING
A district court has discretion to decline to exercise jurisdiction in a case where
litigation in a foreign forum would be more convenient for the parties. In dismissing
an action on forum non conveniens grounds the court must examine: (1) whether
an adequate alternative forum exists, and (2) whether the balance of private and
public interest factors favors dismissal.
The defendant bears the burden of proving the existence of an adequate alternative
forum. The Supreme Court has held that, where the plaintiff is a United States
citizen, the defendant must satisfy a heavy burden of proof:
A plaintiff's choice of forum is entitled to greater deference when the
plaintiff has chosen the home forum. When the home forum has been
chosen, it is reasonable to assume that this choice is convenient. When the
plaintiff is foreign, however, the assumption is much less reasonable.
ADEQUATE ALTERNATIVE FORUM
The first requirement for a forum non conveniens dismissal is that an adequate
alternative forum is available to the plaintiff. The Supreme Court has held that an
alternative forum ordinarily exists when the defendant is amenable to service of
process in the foreign forum. This threshold test is met here because Defendants
have indicated that they are amenable to service of process in New Zealand.
The foreign forum must provide the plaintiff with some remedy for his wrong in
order for the alternative forum to be adequate. As with the other requirements of a
forum non conveniens dismissal, the burden of showing the existence of an
adequate alternative forum is the defendant's. However, it is only in "rare
22 3B 2009-2010
ATTY. ANTHONY ABAD
circumstances where the remedy provided by the alternative forum is so clearly
inadequate or unsatisfactory, that it is no remedy at all," that this requirement is
not met.
In Piper Aircraft, the Supreme Court held that a foreign country was not an
inadequate forum merely because its laws offered the plaintiff a lesser remedy than
he could expect to receive in the United States court system.
In this case, Plaintiffs' attorney has candidly admitted that the impetus for the
lawsuit is money: United States law offers Plaintiffs a greater potential remedy for
their losses than New Zealand law. A jury trial in the United States on these facts
could yield significantly higher awards to Plaintiffs than the compensation they will
receive from the ACC. Under Piper Aircraft, however, it is clear that this argument
fails.
The effect of Piper Aircraft is that a foreign forum will be deemed adequate unless it
offers no practical remedy for the plaintiff's complained of wrong. A New Zealand
remedy is unquestionably available here. According to the complaint, the losses for
which Plaintiffs seek compensation are their physical injuries sustained in the
accident and the resulting loss of earnings. Plaintiffs do not dispute that they can
file and have filed claims with the ACC for these losses; nor do they dispute that
they have received compensation from the ACC for these losses. Although New
Zealand law does not permit Plaintiffs to maintain this exact suit, New Zealand,
through its no-fault accident compensation scheme, has provided and continues to
provide a remedy for Plaintiffs' losses. Plaintiffs have not shown that this type of
administrative remedy is so inadequate that it is tantamount to no remedy at all.
The forum non conveniens analysis does not look to the precise source of the
plaintiff's remedy, so we will not require the alternative forum to offer a judicial
remedy.
BALANCE OF PUBLIC AND PRIVATE FACTORS
Ordinarily, a plaintiff's choice of forum will not be disturbed unless the "private
interest" and the "public interest" factors strongly favor trial in a foreign country.
We have further held that a foreign plaintiff's choice of forum merits less deference
than that of a plaintiff who resides in the selected forum, and the showing required
for dismissal is reduced. "If the balance of conveniences suggests that trial in the
chosen forum would be unnecessarily burdensome for the defendant or the court,
dismissal is proper."
1. The Private Interest Factors
Courts consider the following private interest factors:
(1) the residence of the parties and the witnesses;
(2) the forum's convenience to the litigants;
(3) access to physical evidence and other sources of proof;
(4) whether unwilling witnesses can be compelled to testify;
(5) the cost of bringing witnesses to trial; (6) the enforce ability of the judgment;
and
CONFLICT OF LAWS DIGESTS: JURISDICTION
(7) "all other practical problems that make trial of a case easy, expeditious and
inexpensive."
The district court should look to any or all of the above factors which are relevant to
the case before it, giving appropriate weight to each. It should consider them
together in arriving at a balanced conclusion.
Plaintiffs and Defendants each find a different forum to be more convenient because
each party focuses on different evidence and witnesses. Plaintiffs focus on the
evidence relating to the testing of the radio altimeter and GPWS, which occurred in
the United States, so they argue Arizona is a more convenient forum. Defendants,
on the other hand, focus on the evidence relating to the crash itself and Plaintiffs'
ongoing medical care, so they contend that New Zealand is a more convenient
forum.
2. The Public Interest Factors
Courts consider the following public interest factors:
(1) local interest of lawsuit;
(2) the court's familiarity with governing law;
(3) burden on local courts and juries;
(4) congestion in the court; and
(5) the costs of resolving a dispute unrelated to this forum.
The public interest factors weigh against maintenance of this action in Arizona. None
of the remaining plaintiffs are citizens or residents of the United States. One of the
defendants is a citizen of the chosen forum: Honeywell, which manufactured the
radio altimeter in issue. The citizens of Arizona certainly have an interest in the
manufacturing of defective products by corporations located in their forum.
However, this interest is slight compared to the time and resources the district court
in Arizona would expend if it were to retain jurisdiction over this dispute.
Furthermore, the interest in New Zealand regarding this suit is extremely high. The
crash involved a New Zealand airline carrying New Zealand passengers. The
accident and its aftermath, including the accident investigation, the post-
investigation activity, and the various legal proceedings including an ongoing
criminal probe, have all received significant attention by the local media. Because
the local interest in this lawsuit is comparatively low, the citizens of Arizona should
not be forced to bear the burden of this dispute.
MONEGRO VS. ROSA
9816846 May 3, 2000
23 3B 2009-2010
ATTY. ANTHONY ABAD
FACTS
ISSUE
RULING
ERIE RAILROAD Co. v. TOMPKINS
304 U.S. 64 (1938)
FACTS
Tompkins, a citizen of Pennsylvania, was injured on a dark night by a
passing freight train of the Erie Railroad Company while walking along its right of
way at Hughestown in that State. He claimed that the accident occurred through
negligence in the operation, or maintenance, of the train. He was rightfully on the
premises as licensee because on a commonly used beaten footpath which ran for a
short distance alongside the tracks, and that he was struck by something which
looked like a door projecting from one of the moving cars. To enforce that claim, he
brought an action in the federal court for southern New York, which had jurisdiction
because the company is a corporation of that State. It denied liability, and the case
was tried by a jury.
The Erie insisted that its duty to Tompkins was no greater than that owed
to a trespasser. It contended, among other things, that its duty to Tompkins, and
hence its liability, should be determined in accordance with the Pennsylvania law;
that, under the law of Pennsylvania, as declared by its highest court, persons who
use pathways along the railroad right of way -- that is, a longitudinal pathway, as
distinguished from a crossing -- are to be deemed trespassers, and that the railroad
is not liable for injuries to undiscovered trespassers resulting from its negligence
unless it be wanton or willful. Tompkins denied the applicability of such rule since
there was no statute of the State on the subject. The railroad's duty and liability is
to be determined in federal courts as a matter of general law.
The trial judge refused to rule that the applicable law precluded recovery and
awarded a sum of money. The Circuit Trial Court affirmed the decision of the trial
court.
Eries had contended that application of the Pennsylvania rule was required by 34
of the Federal Judiciary Act which provides:
"The laws of the several States, except where the Constitution, treaties, or statutes
of the United States otherwise require or provide, shall be regarded as rules of
decision in trials at common law, in the courts of the United States, in cases where
they apply."
ISSUE
W/n such rule of Pennsylvania is required and should be considered by the Court in
deciding the present case.
RULING
The subject doctrine in this case is that of Swift v. Tyson. The case stated that a
federal court exercising jurisdiction over such a case on the ground of diversity of
CONFLICT OF LAWS DIGESTS: JURISDICTION
citizenship, is not free to treat this question as one of so-called "general law," but
must apply the state law as declared by the highest state court.
In deciding the present case, first, the Court held that federal courts
exercising jurisdiction on the ground of diversity of citizenship need not, in matters
of general jurisprudence, apply the unwritten law of the State as declared by its
highest court; that they are free to exercise an independent judgment as to what
the common law of the State is -- or should be. The statute is merely declarative of
the rule which would exist in the absence of the statute." The federal courts
assumed, in the broad field of "general law," the power to declare rules of decision
which Congress was confessedly without power to enact as statutes.
Second, the Court ruled that the application of Swift v. Tyson doctrine
prevented uniformity. Diversity of citizenship jurisdiction was conferred in order to
prevent apprehended discrimination in state courts against those not citizens of the
State. Swift v. Tyson introduced grave discrimination by noncitizens against
citizens. It made rights enjoyed under the unwritten "general law" vary according to
whether enforcement was sought in the state or in the federal court, and the
privilege of selecting the court in which the right should be determined was
conferred upon the noncitizen. Thus, the doctrine rendered impossible equal
protection of the law. In attempting to promote uniformity of law throughout the
United States, the doctrine had prevented uniformity in the administration of the
law of the State.
Third, except in matters governed by the Federal Constitution or by Acts of
Congress, the law to be applied in any case is the law of the State. And whether the
law of the State shall be declared by its Legislature in a statute or by its highest
court in a decision is not a matter of federal concern. There is no federal general
common law. Congress has no power to declare substantive rules of common law
applicable in a State, whether they be local in their nature or "general," be they
commercial law or a part of the law of torts. And no clause in the Constitution
purports to confer such a power upon the federal courts.
Thus, in the present case, the Circuit Court of Appeals ruled that the
question of liability is one of general law, and on that ground declined to decide the
issue of state law. The Court holds this was error, the judgment is reversed and the
case remanded to it for further proceedings in conformity with Courts opinion an
examination of the applicability of the said Pennsylvania law should be considered.
K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING OIL CO., LTD. vs.
THE HONORABLE COURT OF APPEALS, ATLANTIC VENUS CO., S.A., and THE
VESSEL M/V "ESTELLA
G.R. Nos. 90306-07 July 30, 1990
FACTS
Kumagai Kaiun Kaisha, Ltd. (Kumagai), a corporation formed and existing under the
laws of Japan, filed a complaint for the collection of a sum of money with
preliminary attachment before RTC Manila against Atlantic Venus Co., S.A.
("Atlantic"), a corporation registered in Panama, the vessel MV Estella and
Crestamonte Shipping Corporation ("Crestamonte"), a Philippine corporation.
Atlantic is the owner of the MV Estella.
24 3B 2009-2010
ATTY. ANTHONY ABAD
Manila alleged that Crestamonte, as bareboat charterer and operator of the MV
Estella, appointed N.S. Shipping Corporation ("NSS"), a Japanese corporation, as its
general agent in Japan. The appointment was formalized in an Agency Agreement.
NSS in turn appointed Kumagai as its local agent in Osaka, Japan. Kumagai supplied
the MV Estella with supplies and services but despite repeated demands
Crestamonte failed to pay the amounts due. NSS and Keihin Narasaki Corporation
(Keihin) filed complaints-in-intervention.
Fu Hing Oil Co., Ltd. (Fu Hing"), a corporation organized in Hong Kong and not
doing business in the Philippines, filed a motion for leave to intervene with an
attached complaint-in-intervention, alleging that Fu Hing supplied marine diesel
oil/fuel to the MV Estella and incurred barge expenses for the total sum of One
Hundred Fifty-two Thousand Four Hundred Twelve Dollars and Fifty-Six Cents
(US$152,412.56) but such has remained unpaid despite demand and that the claim
constitutes a maritime lien. The issuance of a writ of attachment was also prayed
for.
K.K. Shell Sekiyu Osaka Hatsubaisho (K.K. Shell"), a corporation organized in Japan
and not doing business in the Philippines, likewise filed a motion to intervene with
an attached complaint-in-intervention, alleging that upon request of NSS,
Crestamonte's general agent in Japan, K.K. Shell provided and supplied marine
diesel oil/fuel to the W Estella at the ports of Tokyo and Mutsure in Japan and that
despite previous demands Crestamonte has failed to pay the amounts of Sixteen
Thousand Nine Hundred Ninety-Six Dollars and Ninety- Six Cents (US$16,996.96)
and One Million Yen (Y1,000,000.00) and that K.K. Shell's claim constitutes a
maritime lien on the MV Estella. The complaint-in-intervention sought the issuance
of a writ of preliminary attachment. The trial court allowed the intervention of Fu
Hing and K.K. Shell. Writs of preliminary attachment were issued and upon the
posting of the counter-bonds, writs of attachment were discharged.
Atlantic and MV Estella moved to dismiss the complaints-in-intervention and Atlantic
filed a petition in the Court of Appeals against the trial court judge, Kumagai, NSS
and Keihin seeking the annulment of the orders of the trial court. the Court of
Appeals annulled the orders of the trial court and directed it to cease and desist
from proceeding with the case. According to the Court of Appeals, Fu Hing and K.K.
Shell were not suppliers but sub-agents of NSS, hence they were bound by the
Agency Agreement between Crestamonte and NSS. The trial court should have
disallowed their motions to intervene.
ISSUE
1. W/n Fu Hing and K.K. Shell should be allowed to intervene.
2. W/n the doctrine of forum non conveniens may be invoked.
RULING
As to the first issue:
No express reference to the contracting of sub-agents or the applicability of the
terms of the agreement, particularly the choice-of-forum clause, to sub-agents is
made in the text of the agreement. What the contract clearly states are NSS'
principal duties, i.e., that it shall provide for the necessary services required for the
CONFLICT OF LAWS DIGESTS: JURISDICTION
husbanding of Crestamonte's vessels in Japanese ports (section 2.0) and shall be
responsible for fixing southbound cargoes with revenues sufficient to cover ordinary
expenses (section 3.0)
Moreover, the complaint-in-intervention filed by K.K. Shell merely alleges that it
provided and supplied the MV Estella with marine diesel oil/fuel, upon request of
NSS who was acting for and as duly appointed agent of Crestamonte. There is no
basis for the CA to state that K.K. Shell admitted in its intervention that it was
appointed as local agent/sub-agent or representatives by NSS by virtue of said
Agency Agreement. The CA was erroneously referring to another case involving
another ship in another court. Thus, additional evidence must be given to establish
such allegation.
As to the second issue:
Atlantic and MV Estella are invoking the doctrine of forum non conveniens to be a
valid ground for the dismissal of K.K. Shellss complaint-in-intervention. K.K. Shell,
in turn, argued by invoking its right as maritime lienholder under Presidential
Decree No. 1521, the Ship Mortgage Decree of 1978.
SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-
Any person furnishing repairs, supplies, to wage, use of dry dock or
marine railway, or other necessaries, to any vessel, whether foreign
or domestic, upon the order of the owner of such vessel, or of a
person authorized by the owner, shall have a maritime lien on the
vessel, which may be enforced by suit in rem, and it shall be
necessary to allege or prove that credit was given to the vessel.
However, in order to invoke this, it must be established that the credit was
extended to the vessel itself. In other words, considering the dearth of evidence due
to the fact that the private respondents have yet to file their answer in the
proceedings below and trial on the merits is still to be conducted, whether or not
petitioners are indeed maritime lienholders and as such may enforce the lien against
the MV Estella are matters that still have to be established.
Neither are we ready to rule on the private respondents' invocation of the doctrine
of forum non conveniens, as the exact nature of the relationship of the parties is
still to be established. We leave this matter to the sound discretion of the trial court
judge who is in the best position to decide such.
It was clearly reversible error on the. part of the Court of Appeals to annul the trial
court's orders, insofar as K.K. Shell is concerned, and order the trial court to cease
and desist from proceeding with Civil Case No. 87-38930. There are still numerous
material facts to be established in order to arrive at a conclusion as to the true
nature of the relationship between Crestamonte and K.K. Shell and between NSS
and K.K. Shell. The best recourse would have been to allow the trial court to
proceed with Civil Case No. 87-38930 and consider whatever defenses may be
raised by private respondents after they have filed their answer and evidence to
support their conflicting claims has been presented. The Court of Appeals, however,
substituted its judgment for that of the trial court and decided the merits of the
25 3B 2009-2010
ATTY. ANTHONY ABAD
case, even in the absence of evidence, on the pretext of reviewing an interlocutory
order.
COMMUNICATIONS MATERIALS DESIGN v. CA
GR No. 102223 August 22, 1996
FACTS
ISSUE
RULING
ISLAMIC REPUBLIC OF IRAN v. PAHLAVI
62 NY 2d. 474 (1984)
FACTS
Plaintiff, the Islamic Republic of Iran, brings this action against Iran's former ruler,
Shah Mohammed Reza Pahlavi, and his wife, Empress Farah Diba Pahlavi. It alleges
in its complaint that defendants accepted bribes and misappropriated, embezzled or
converted 35 billion dollars in Iranian funds in breach of their fiduciary duty to the
Iranian people and it seeks to recover those funds and 20 billion dollars in
exemplary damages. It asks the court to impress a constructive trust on
defendants' assets located throughout the world, for an accounting of all moneys
and property received by the defendants from the government of Iran, and for other
incidental relief. The action was commenced in November, 1979 by substituted
service on the Shah made at New York Hospital where he was undergoing cancer
therapy. The Empress was personally served at the same time at the New York
residence of the Shah's sister. Thereafter, defendants moved to dismiss the
complaint alleging that it raised nonjusticiable political questions, that the court
lacked personal jurisdiction due to defective service of process on them and that the
complaint should be dismissed on grounds of forum non conveniens.
ISSUE
W/N the dismissal of the case by the New York court was proper? YES
RULING
Special Term granted defendants' motion based on forum non conveniens,
concluding that the parties had no connection with New York other than a claim that
the Shah had deposited funds in New York banks, a claim which it found insufficient
under the circumstances to justify the court in retaining jurisdiction.The common-
law doctrine of forum non conveniens, also articulated in CPLR 327(a), which
permits a court to stay or dismiss [an action] where it is determined that the action,
although jurisdictionally sound, would be better adjudicated elsewhere. In a motion
to dismiss on the ground of forum non conveniens, the burden is on a defendant
challenging the forum to demonstrate relevant private or public interest factors
which militate against accepting the litigation here. A divided Appellate Division
affirmed.
CONFLICT OF LAWS DIGESTS: JURISDICTION
The Court of Appeals dismissed the appeal as against defendant Mohammed Reza
Pahlavi, and affirmed the order of the Appellate Division as against defendant Farah
Diba Pahlavi, holding, in an opinion by Judge Simons, that the courts below did not
abuse their discretion as a matter of law in dismissing the action on the ground of
forum non conveniens since the record does not demonstrate a substantial nexus
between New York State and plaintiff's cause of action, even though there may be
no other forum in which plaintiff can obtain the relief it seeks; and that the
provisions of the January, 1981 agreements between the United States and Iran,
commonly known as the Algerian Accords, did not require reversal.
MACSHANNON v. ROCKWARE GLASS LTD.
1987 A.C. 795 at 819
FACTS
McShannon is a Scottish man. He was injured in an industrial accident at a factory
in Scotland owned by the defendants who were a company with head office in
England. London based solicitors acting on behalf of the plaintiff and his trade union
advised the bringing of proceedings in London on the grounds that the procedure
might be quicker and the damages larger. The evidence indicated that medical
testimony was equally available in Scotland and that the differences in costs
between the two systems were minimal. An application was made to stay the
proceedings in London
DOCTRINE
It was in this case that the English courts really came to adopt and formulate the
doctrine of forum non conveniens. It was decided in this case that to obtain a stay
in proceedings a defendant would have to show that there was another jurisdictional
forum to which it was amendable and in which justice could be done between the
parties at substantially less convenience and expense. Additionally, the decision
stated that any stay should not deprive the plaintiff of a legitimate personal or
juridical advantage. This case moved away from the previous test that litigation
should be classified as vexatious or oppressive before a stay could be granted.
SUMITOMO BANK LTD v. KARTIKA RATNA THAHIR & ORS
SUMMONS NO. 308 OF 1976 SINGAPORE
*I couldnt find this case! Sorry -Erman
KARTIKA RATNA THAHIR v. PT PERTAMBANGAN MINYAK DAN GAS BUM
NEGARA
CIVIL APPEAL NO. 204 OF 1992 AUGUST 25, 1994 SINGAPORE
FACTS
The husband of Petitioner worked as the assistant to the president of the
respondent corporation, an Indonesian state enterprise, which was engaged in
construction projects and developments of a steel factory. The husband was paid a
lot in US dollar. The husband went to Singapore with the petitioner, who is the
second wife of the husband. The husband then opened a joint account in Singapore
26 3B 2009-2010
ATTY. ANTHONY ABAD
in his name and petitioner. All the money he earned from Respondent were then
transferred to the Singaporean bank.
The husband died. This led to a messy series of events. The sons of the deceased
husband from his first wife were claiming the money from the Singaporean bank
and asked the bank to freeze the account since it was part of the estate of the
deceased husband. The petitioner joins in the mess by saying that since the bank
account was a joint account she was entitled to withdraw the money from the
account. The Respondent enters the mess by claiming that part of the money which
the deceased husband deposited in the Singaporean bank account is actually owned
by the Respondent corporation since some of the money were bribes received by
the deceased which is owned by the respondent.
ISSUE
Which law would apply to the respondent? Singaporean or Indonesian law?
RULING
This is a conflict of laws issue and the question is which of the two systems of law,
Singapore law or Indonesian law, governs the determination of the claim of
Pertamina.
It is important to set out the following passage in Dicey & Morris which states the
scope of r 201(2)(a):
Although the obligation to restore an unjust benefit does not arise
from a contract, it may, and very frequently does, arise in
connection with a contract. This is the case where a party seeks to
recover money paid pursuant to an ineffective contract, eg by
reason of a total failure of consideration or as a repayment of money
paid under an illegal contract or where he claims a quantum meruit
for work done or services rendered under a contract which turned
out to be void. In all these and similar cases, it is submitted that the
existence and the scope of the obligation to restore the benefit are
governed by the law which governs the contract, or by what would
have been the governing law of the contract, if it had been validly
concluded.
It is clearly not possible to say that recovery of bribes falls within the category of
recovery of money paid pursuant to an ineffective contract or that it constitutes a
similar case.
It is clear from the judgment that the basis or origin of the claim lay in the fact that
equity regarded the giving of a bribe as a constructive fraud on the part of the
giver, and as the bribed agent was necessarily a party to the bribery, it follows that
the receiving of the bribe was equally a constructive fraud on the part of the bribed
agent. In our opinion, the principals remedies against the briber and the bribed
agent have no contractual origin or connection. In our opinion, the basis of this
claim is equity. In so far as the bribed agent is concerned, in equity it is
unconscionable for him to retain the bribe and he is obliged to hand it over to the
CONFLICT OF LAWS DIGESTS: JURISDICTION
principal. We agree with the trial judge that, in this case, the obligation to restore
the bribes does not arise in connection with the contract and that it falls within
r 201(2)(c). Accordingly, in our judgment, it is governed by Singapore law.
THE RAINBOW JOY
[2005] 3 SLR 719; [2005] SGCA 36
FACTS
The appellant is a Philippine national, who signed on board the vessel as a second
engineer. The respondent is a one-vessel Panamanian company, and the vessel was
flying the Hong Kong flag.
The appellants contract of employment was set out in two documents. These
documents are the POEA contract and a document entitled Agreement and Lists of
Crew, the latter document was required under Hong Kong law.
While holding the ladder for the chief engineer who was fixing something, glass
shattered from what the chief engineer was fixing and a shard of glass hit the right
eye of the appellant.
After receiving medical treatment, the appellant filed a case for damages before the
NLRC and an admiralty court in Singapore. The Singapore trial court dismissed the
case on the ground of forum non conveniens.
Appellant contends that such ground is inadmissible since the NLRC was not a
regular court but a special tribunal and that even if forum non conveniens would be
applied, the judge should not have stayed the case in favour of the Philippines since
the defendant did not have a real defence to claim.
ISSUE
W/N the dismissal of the case was proper on the ground of forum non conveniens?
YES
RULING
First Contention: NLRC is not a court of law
The argument of the appellant before us was that the doctrine could only come into
play if the alternative forum in another country is a court of law and not when it is a
special tribunal. In the present case, the stay was made not in favour of an ordinary
Philippine court but the NLRC, or the labour arbitrators of the Philippines.
The appellant quite rightly pointed out that the doctrine of forum non conveniens is
based on the principle of comity between nations. We would emphasise that, in this
context, the comity is between nations, not between courts of law of nations. Each
country has the sole prerogative of determining how all disputes, or particular
disputes, should be resolved and it is within its sovereign rights to lay down the
process by which disputes should be resolved. An ordinary court of law would
normally be the forum. But each country is free to create special forums for all
27 3B 2009-2010
ATTY. ANTHONY ABAD
disputes, or a particular type of dispute, and it is not for any other country to
question why the former country should prescribe such unusual dispute resolution
mechanisms or procedures. Indeed, the notion of comity will be subverted if the
forum of one country does not give credence to an alternative forum which has
been created and accorded adjudication powers by another country.
In our opinion, the critical question is not so much the label attached to the forum
but its competence. The question to ask is: is the forum competent to try the
dispute in that country? It is pertinent to note that Lord Goff in Spiliada said that
the court, when confronted with an application for a stay on the ground of forum
non conveniens must determine whether there is some other available forum,
having competent jurisdiction, which is more appropriate for the trial of the action.
We would observe that no authority has been cited by the appellant in support of
his assertion that the doctrine only applies where the alternative forum is a court of
law. On the other hand, the respondent brought to our attention authorities from
Canada and the United States, which held that an action could be stayed in favour
of a foreign forum which was not an ordinary court of law.
The first argument of appellant must fail
Second contention: No defence
It is settled law that where a party seeks to bring an action in our courts in breach
of an exclusive jurisdiction clause, he must show strong cause why the court
should exercise its discretion in his favour and assist him in breaching his promise
to bring the action in the contractual forum. What is strong cause and what are
the circumstances the courts would take into account were set out in The El Amria
case as follows:
The court in exercising its discretion should grant the stay and give effect
to the agreement between the parties unless strong cause is shown by
the plaintiff for not doing so. To put it in other words the plaintiff must
show exceptional circumstances amounting to strong cause for him to
succeed in resisting an application for a stay by the defendant. In
exercising its discretion the court should take into account all the
circumstances of the particular case. In particular, the court may have
regard to the following matters, where they arise:
(a) In what country the evidence on the issues of fact is situated
or more readily available, and the effect of that on the relative
convenience and expense of trial as between the Singapore and
foreign courts.
(b) Whether the law of the foreign court applies and, if so,
whether it differs from Singapore law in any material respects.
(c) With what country either party is connected and, if so, how
closely.
(d) Whether the defendants genuinely desire trial in the foreign
country, or are only seeking procedural advantages.
(e) Whether the plaintiffs would be prejudiced by having to sue in
the foreign court because they would:
CONFLICT OF LAWS DIGESTS: JURISDICTION
(i) be deprived of security for their claim;
(ii) be unable to enforce any judgment obtained;
(iii) be faced with a time-bar not applicable here; or
(iv) for political, racial, religious or other reasons be unlikely
to get a fair trial.
Admittedly, while the circumstances which the court should take into account in
determining whether an action commenced in Singapore should not be stayed in
spite of an exclusive jurisdiction clause are, to some extent, similar to those which
the court would take into consideration in determining whether the action should be
stayed on the ground of forum non conveniens, they are not the same. In weighing
the balance of convenience under the doctrine of forum non conveniens, the issue of
whether there is a defence to the claim is not a relevant consideration as the court
should not be required to go into the merits. This is because the juridical basis of a
stay based on forum non conveniens is different from that of a stay based on an
exclusive jurisdiction clause. Under the doctrine of forum non conveniens, the object
is in determining which forum is the more appropriate forum. On the other hand, for
a party to be excused from his commitment to the exclusive jurisdiction clause he
must show exceptional circumstances, and the averment that the defendant has no
defence to the claim could constitute exceptional circumstances to enable the court
to excuse the plaintiff from complying with the jurisdictional clause.
In any event, we could not see how the appellant could seriously contend that its
common law claim in tort could be determined without a trial. Obviously, evidence
would be required to show the scope and responsibility of the appellants work on
board the vessel, the training he received, the nature of the repair job, whether the
appellant had been briefed on the repair to be undertaken and what were the
standard safety measures which the appellant ought to have taken. Indeed, there
was evidence to suggest that it was the appellants duty to brief the workers under
him on safety requirements. Moreover, there is a further claim in negligence based
on the allegation that the respondent had failed to provide the appellant with urgent
medical treatment. In addition, there is also the question as to whether the current
state of his right eye was caused by his own default in refusing to go for a corneal
transplant as recommended by the Philippine ophthalmologist. It is clear that if this
case were to proceed in Singapore, the trial judge would have to address both the
issues of liability and the appropriate quantum of damages. It would not be an
open and shut case.
Conclusion
In the circumstances of this case, it was quite clear to us that the judge was correct
in holding that the Philippines would be the more appropriate forum to determine
the claim. Nothing material in the case linked it to Singapore. The only link the
appellant had with Singapore was the fact that he joined the vessel in Singapore
and that he returned to the Philippines via Singapore. However, these
circumstances were wholly irrelevant to the claim. Neither was the fact that the writ
was served on the vessel in Singapore of any real relevance. Moreover, no security
was obtained in Singapore. What is more material are these. First, the entire crew
of the vessel, including the appellant, are Filipino and presumably reside in that
country. Second, the medical witnesses will also be from the Philippines, other than
28 3B 2009-2010
ATTY. ANTHONY ABAD
the ophthalmologist from Yangon, whose evidence may or may not even be
necessary. Third, the employment contract is governed by Philippine law. The
Philippines has specifically enacted laws to protect its citizens who are serving on
foreign vessels. Hong Kong law will only come into the picture if it is shown to be
more advantageous to the appellant and this has not been shown as yet. Fourth,
the hearing of the claim in the Philippines will also avoid the need for having
interpretation, especially for those lower rank staff, if any, who may be able to
speak only in Tagalog. Fifth, a performance bond has been furnished by Cleene
Maritime to the Filipino authorities. Sixth, the respondent has also agreed to submit
to the jurisdiction of the Philippines. To our mind, the case has overwhelming
connection with the Philippines. Thus the appeal had to be dismissed.
In re UNION CARBIDE CORPORATION GAS PLANT DISASTER AT BHOPAL,
INDIA IN DECEMBER, 1984. v. UNION CARBIDE CORPORATION,
Decided Jan. 14, 1987
FACTS
The accident occurred on the night of December 2-3, 1984, when winds blew the
deadly gas from the plant operated by UCIL into densely occupied parts of the city
of Bhopal. UCIL is incorporated under the laws of India. The company is engaged in
the manufacture of a variety of products, including chemicals, plastics, fertilizers
and insecticides, at 14 plants in India and employs over 9,000 Indian citizens. It is
managed and operated entirely by Indians in India.
Four days after the Bhopal accident, the first of some 145 purported class actions in
federal district courts in the United States was commenced on behalf of victims of
the disaster. On January 2, 1985, the Judicial Panel on Multidistrict Litigation
assigned the actions to the Southern District of New York where they became the
subject of a consolidated complaint.
In the meantime, on March 29, 1985, India enacted the Bhopal Gas Leak Disaster
(Processing of Claims) Act, granting to its government, the UOI, the exclusive right
to represent the victims in India or elsewhere. Thereupon the UOI, purporting to act
in the capacity of parens patriae, and with retainers executed by many of the
victims filed a complaint in the Southern District of New York . The cause of action is
similar to the purported class action complaints already filed by individuals in the
United States. The UOIs decision to bring suit in the United States was attributed to
the fact that, although numerous lawsuits had been instituted by victims in India
against UCIL, the Indian courts did not have jurisdiction over UCC, the parent
company, which is a defendant in the United States actions. The actions in India
asserted claims not only against UCIL but also against the UOI, the State of Madhya
Pradesh, and the Municipality of Bhopal, and were consolidated in the District Court
of Bhopal.
Judge Keenan appointed a three-person Executive Committee to represent all
plaintiffs in the pre-trial proceedings. It consisted of two lawyers representing the
individual plaintiffs and one representing the UOI. UCC moved to dismiss the
complaints on grounds of forum non conveniens, lack of standing to bring the
CONFLICT OF LAWS DIGESTS: JURISDICTION
actions in the United States, and their purported attorneys lack of authority to
represent them.
After several months of discovery related to forum non conveniens, [FN1] the
individual plaintiffs and the UOI opposed UCC’s motion. After hearing
argument, the district court, in a thoroughly reasoned 63-page opinion granted the
motion, dismissing the lawsuits before it on condition that UCC:
(1) consent to the jurisdiction of the courts of India and continue to waive
defenses based on the statute of limitations,
(2) agree to satisfy any judgment rendered by an Indian court against it
and upheld on appeal, provided the judgment and affirmance comport
with the minimal requirements of due process; and
(3) be subject to discovery under the Federal Rules of Civil Procedure of
the United States.
Judge Keenan, however, dismissed the case on the ground of forum non
conveniens. He stated that although the Indian system might limit the victims;
access to sources of proof, the Court has no authority to bind the plaintiffs (victims)
to American discovery rules. Also, proof to be offered at trial would be derived from
interviews of these witnesses in India and study of the records located there to
determine whether the accident was caused by negligence on the part of the
management or employees in the operation of the plant, by fault in its design, or by
sabotage. In short, India has greater ease of access to the proof than does the
United States.
The records are almost entirely in Hindi or other Indian languages, understandable
to an Indian court without translation. The witnesses for the most part do not speak
English but Indian languages understood by an Indian court but not by an American
court. These witnesses could be required to appear in an Indian court but not in a
court of the United States. Although witnesses in the United States could not be
subpoenaed to appear in India, they are comparatively few in number and most are
employed by UCC which, as a party, would produce them in India, with lower overall
transportation costs than if the parties were to attempt to bring hundreds of Indian
witnesses to the United States. Lastly, Judge Keenan properly concluded that an
Indian court would be in a better position to direct and supervise a viewing of the
Bhopal plant, which was sealed after the accident. Such a viewing could be of help
to a court in determining liability issues.
The district court concluded that the public interest concerns, like the private ones,
also weigh heavily in favor of India as the situs for trial and disposition of the cases.
The accident and all relevant events occurred in India. The victims, over 200,000 in
number, are citizens of India and located there. The witnesses are almost entirely
Indian citizens. The Union of India has a greater interest than does the United
States in facilitating the trial and adjudication of the victims claims. Despite the
contentions of plaintiffs and amici that it would be in the public interest to avoid a
double standard; by requiring an American parent corporation (UCC) to submit to
the jurisdiction of American courts, India has a stronger countervailing interest in
adjudicating the claims in its courts according to its standards rather than having
29 3B 2009-2010
ATTY. ANTHONY ABAD
American values and standards of care imposed upon it. Lastly, India has
considered the plant to be an Indian one and the disaster to be an Indian problem.
It therefore has a deep interest in ensuring compliance with its safety standards.
The victims continue to oppose the dismissal.Upon argument on appeal, plaintiffs
principal contentions in favor of retention of the cases by the district court are that
deference to the plaintiffs; choice of forum has been inadequate, that the Indian
courts are insufficiently equipped for the task, that UCC has its principal place of
business here, that the most probative evidence regarding negligence and causation
is to be found here, that federal courts are much better equipped through
experience and procedures to handle such complex actions efficiently than are
Indian courts, and that a transfer of the cases to India will jeopardize a $350 million
settlement being negotiated by plaintiffs counsel.
ISSUE
W/N the it is the district court of the United States and not the Indian Court that
has jurisdiction over the victims claims.
RULING
The forum non conveniens determination is committed to the sound discretion of
the trial court. It may be reversed only when there has been a clear abuse of
discretion; where the court has considered all relevant public and private interest
factors, and where its balancing of these factors is reasonable, its decision deserves
substantial deference.
Having reviewed Judge Keenans detailed decision, in which he thoroughly
considered the comparative adequacy of the forums and the public and private
interests involved, we are satisfied that there was no abuse of discretion in his
granting dismissal of the action.
Little or no deference can be paid to the plaintiffs; choice of a United States forum
when all but a few of the 200,000 plaintiffs are Indian citizens located in India who,
according to the UOI, have revoked the authorizations of American counsel to
represent them here and have substituted the UOI, which now prefers Indian
courts. The finding of our district court, after exhaustive analysis of the evidence,
that the Indian courts provide a reasonably adequate alternative forum cannot be
labelled clearly erroneous or an abuse of discretion.
Although basic design programs were prepared in the United States and some
assistance furnished to UCIL at the outset of the 10-year period during which the
Bhopal plant was constructed, the proof bearing on the issues to be tried is almost
entirely located in India. This includes the principal witnesses and documents
bearing on the development and construction of the plant, the detailed designs, the
implementation of plans, the operation and regulation of the plant, its safety
precautions, the facts with respect to the accident itself, and the deaths and injuries
attributable to the accident.
UCC contends that Indian courts, while providing an adequate alternative forum, do
not observe due process standards that would be required as a matter of course in
this country. As evidence of this apprehension it points to the haste with which the
CONFLICT OF LAWS DIGESTS: JURISDICTION
Indian court in Bhopal issued a temporary order freezing its assets throughout the
world and the possibility of serious prejudice to it if the UOI is permitted to have the
double and conflicting status of both plaintiff and co-defendant in the Indian court
proceedings. It argues that we should protect it against such denial of due process
by authorizing Judge Keenan to retain the authority, after forum non conveniens
dismissal of the cases here, to monitor the Indian court proceedings and be
available on call to rectify in some undefined way any abuses of UCC’s right
to due process as they might occur in India.
The US district courts jurisdiction is limited to proceedings before it in this country.
Once it dismisses those proceedings on grounds of forum non conveniens it ceases
to have any further jurisdiction over the matter unless and until a proceeding may
someday be brought to enforce here a final and conclusive Indian money judgment.
Nor could we, even if we attempted to retain some sort of supervisory jurisdiction,
impose our due process requirements upon Indian courts, which are governed by
their laws, not ours. The concept of shared jurisdictions is both illusory and
unrealistic. The parties cannot simultaneously submit to both jurisdictions the
resolution of the pre-trial and trial issues when there is only one consolidated case
pending in one court. Any denial by the Indian courts of due process can be raised
by UCC as a defense to the plaintiffs; later attempt to enforce a resulting judgment
against UCC in this country.
The Court also stated that once the plaintiffs they should succeed in obtaining an
Indian judgment against UCC, they may enforce it against UCC in the United States.
Lastly, it is important to note that basic justice dictates that both sides be treated
equally, with each having equal access to the evidence in the possession or under
the control of the other. Application of this fundamental principle in the present case
is especially appropriate since the UOI, as the sovereign government of India, is
expected to be a party to the Indian litigation, possibly on both sides.
FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the
Philippines) and MERCURIO RIVERA vs. COURT OF APPEALS, CARLOS
EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE JANOLO,
G.R. No. 115849 January 24, 1996
FACTS
In the course of its banking operations, Producer Bank of the Philippines acquired
six parcels of land with a total area of 101 hectares located at Don Jose, Sta. Rose,
Laguna. 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.
In the early part of August 1987, Demetrio and Jose, upon the suggestion of BYME
investment's legal counsel, met with Mercurio Rivera, Manager of the Property
Management Department of the defendant bank. The meeting was held pursuant to
Demetrios and Joses plan to buy the property. After the meeting, plaintiff Janolo,
following the advice of Mercurio, made a formal purchase offer to the bank through
a letter. The offer to buy was accepted by the bank.
30 3B 2009-2010
ATTY. ANTHONY ABAD
Then, 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. Mercurio wrote Demetrio the a letter stating
that the land to be purchased is under study yet as of this time by the newly
created committee for submission to the newly designated Acting Conservator of
the bank.
What thereafter transpired was a series of demands by the Demetrio and Jose for
compliance by the bank with what was considered as a perfected contract of sale,
which demands were in one form or another refused by the bank. Demetrio and
Jose, through a letter to defendant Mercurio, already tendered payment of the
amount of P5.5 million "pursuant to (our) perfected sale agreement." The Bank
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. Demetrio and Jose demanded the execution by the bank of the documents
on what was considered as a "perfected agreement" through another letter. The
Bank acknowledged the receipt of the letter but remained adamant in its position.
Demetrio and Jose, through counsel, made a final demand for compliance by the
bank with its obligations under the considered perfected contract of sale. The Bank
filed a reply repudiating the authority of Mercurio and claimed that his dealings with
the Demetrio and Jose, particularly his counter-offer of P5.5 Million are
unauthorized or illegal; thus, there is no perfected contract of sale. On that basis,
the Bank justified the refusal of the tenders of payment and the non-compliance
with the obligations under what the Demetrio and Jose considered to be a perfected
contract of sale.
Other major stockholders of the Bank filed a motion to intervene as a derivative suit
with the Regional Trial Court of Makati against the plaintiffs "to declare any
perfected sale of the property as unenforceable and to stop Ejercito from enforcing
or implementing the sale 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. "The Bank opposed this
motion on the ground, among others, that plaintiff's act of forum shopping justifies
the dismissal of both cases, with prejudice. The Bank, in its memorandum, averred
that this motion is still pending in the Makati RTC.
Allegations of parties:
The Bank vigorously argues that in spite of this verification, petitioners
(Demetrio, Jose, etc.) 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."
On the other hand, petitioners explain that there is no forum-shopping because:
CONFLICT OF LAWS DIGESTS: JURISDICTION
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 was plaintiff;
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.
ISSUE
W/n there is forum shopping committed in the case.
RULING
To begin with, 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.
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.
The test to determine whether there is forum shopping or not is 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.
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 (or more) complaints or petitions,
31 3B 2009-2010
ATTY. ANTHONY ABAD
and for imposition of the other sanctions, which are direct contempt of court,
criminal prosecution, and disciplinary action against the erring lawyer.
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 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 the instant case, 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".
Indeed, this is the very essence of a derivative suit. The suit was filed 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. 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)",
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
CONFLICT OF LAWS DIGESTS: JURISDICTION
parties front enforcing or implementing the said sale. Indeed, a final decision in one
would constitute res judicata in the other.
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.
WING ON COMPANY vs. SYYAP
64 O.G. 8311 (1967)
FACTS
In 1948, Wing On Company, a foreign partnership based in New York contracted
with Syyap Co., Inc. thru its agent, Murray Kein in New York. They negotiated for
the purchase of clothing material under a verbal agreement that Syyap would pay
Wing On the value thereof after the sale of goods by Syyap and that the profits
would be divided between them.
Wing On shipped to Syyap clothing materials worth $22,246.04. Syyap was able to
pay Wing On only $3,530.04 leaving a balance of $18,716. Syyap failed to settle the
debt or account for and divide the profits. The court rendered judgment in favour of
Wing On and ordered defendant to pay the balance and attorneys fee and make an
accounting of profits realized.
Syyap contends that: 1) the court a quo had no jurisdiction to try the case because
Wing On is not licensed to do business in the Philippines and therefore, had no legal
capacity to sue; and 2) the trial court should have declined jurisdiction pursuant to
the principle of forum non conveniens.
ISSUE
W/N the trial court had jurisdiction?
RULING
We believe that the facts surrounding the present case do not warrant the
application of any recognized rules of Private International Law. It is a well-
established practice in the application of the principle of forum non conveniens that
unless the balance is strongly in favour of the defendant, the plaintiffs choice of
forum should rarely be disturbed, and that, furthermore, the consideration of
inadequacy to enforce the judgment, which is one of the important factors to be
considered in the application of said principle, would precisely constitute a problem
to the plaintiff if the local courts decline to assume jurisdiction on the basis of said
principle, considering that the defendant is a resident of the Philippines.
32 3B 2009-2010
ATTY. ANTHONY ABAD
It is true that the agreement in question involving the purchase of clothing
materials was entered into in New York, USA. The goods, however, were delivered
to, and received and sold by the defendant in this jurisdiction. Considering that, as
above-stated, the Wing On Company of New York may sue in Philippine courts in
connection with the transaction in question and, considering, further that the
present suit arising from said transaction is in the nature of a personal action, the
case may be commenced and tried where the defendant resides or may be found, or
where the plaintiff resides, at the election of the plaintiff. Consequently, a venue in
the instant case was not improperly laid and the court a quo did not err in taking
cognizance of the case.
HEINE vs. NEW YORK INSURANCE COMPANY
45 F2d 426 (1940)
FACTS
This is one of several cases brought against New York Life Insurance Company and
the Guardian Insurance Company to recover on some two hundred and forty life
insurance policies made and issued by the defendants in Germany, in favour of
German citizens and payable in German marks. Defendants were incorporated in
New York with statutory agents in Oregon, upon whom service of summons can be
made.
As a condition to the insurance companies right to do business in Germany, they
were compelled to accede to the supervision and control of German insurance
officials, to invest the proceeds arising from German policies in German securities,
and to establish an office there with an agent upon whom service can be made.
The actions are brought in the name of the insured parties in the United States and
Germany for amounts due or owing under the policies.
ISSUE
May the court exercise discretion in deciding whether to retain or not to retain
jurisdiction of a case where a court in another state has jurisdiction over the case by
taking into consideration external factors? YES
RULING
The courts of Germany and New York are open and functioning and competent to
take jurisdiction of the controversies, and service can be made upon the defendants
in either of such jurisdictions. To require the defendants to defend the actions in
this district would impose upon them great and unnecessary inconvenience and
expense, and probably compel them to produce here (three thousand miles from
their home office) numerous records, books, and papers , all of which are in daily
use by it in taking care of current business. In addition, it would no doubt consume
months of the time of this court to try and dispose of these cases, thus necessarily
disarranging the calendar, resulting in delay, inconvenience, and expense to other
litigants who are entitled to invoke its jurisdictions.
It is argued by the plaintiffs that, because the court has jurisdiction of the subject
matter and the parties, it has no discretion, but should proceed with the case,
regardless of where the cause of action arose, or the law by which it is controlled, or
CONFLICT OF LAWS DIGESTS: JURISDICTION
the residence or convenience of the parties and witnesses, or the difficulty the court
would encounter in attempting to interpret and enforce a foreign contract, or the
interference with the other business of the court. But that is a matter resting in its
discretion. It may retain jurisdiction or it may, in the exercise of a sound discretion,
decline to do so, as the circumstances suggest. The courts have repeatedly refused,
in their discretion, to entertain jurisdiction of causes of action arising in a foreign
jurisdiction, where both parties are non-residents of the forum.
The courts of this country (USA) are established and maintained primarily to
determine controversies between its own citizens and those having business there,
and manifestly the court may protect itself against a flood of litigation over
contracts made and to be performed in a foreign country, forum, and no reason
exists why the liability, if any, cannot be enforced in the courts of the country where
the cause of action arose, or in the state where the defendant was organized and
has its principal offices. True, the courts of New York have declined to exercise
jurisdiction over actions brought on insurance policies similar to those in suit.
MARJORIE E. GOODWINE v. THE SUPERIOR COURT OF LOS ANGELES
COUNTY and DON F. GOODWINE
(L.A. No. 28464. Supreme Court of California. Nov. 4, 1965.)
FACTS
This is a mandamus proceeding to compel the Superior Court of Los Angeles County
to vacate an order dismissing a separate maintenance action and to compel such
court to take jurisdiction of the action. The peremptory writ granted.
Plaintiff, Marjorie E. Goodwine, began an action for separate maintenance against
her husband, Don F. Goodwine. A writ of attachment was levied upon defendant's
real property in the County of Los Angeles, giving the trial court quasi-in-rem
jurisdiction. Plaintiff secured an order for service by publication based on an
affidavit that defendant resided out of the state and defendant was personally
served in Mexico. Defendant moved to quash and to dismiss the action, on the
ground that the trial court was without jurisdiction. The trial court granted
defendant's motion and dismissed the action. Plaintiff then filed this petition for a
writ of mandate to compel the trial court to vacate its order dismissing the action.
Plaintiff and defendant were married in Nevada and they lived in California until
they moved to Mexico to live in retirement. Defendant obtained a resident's visa
and became a domiciliary of Mexico. Plaintiff obtained a tourist visa because of local
regulations, but she also intended to become a permanent resident of Mexico.
Plaintiff then left defendant and went to Los Angeles to reside with her sister,
allegedly because he treated plaintiff with extreme cruelty. Plaintiff then brought the
action for separate maintenance.
ISSUE
W/N the court has jurisdiction? YES
33 3B 2009-2010
ATTY. ANTHONY ABAD
RULING
Defendant contends that the trial court has no jurisdiction in an action for separate
maintenance when neither party is domiciled in the state. There is no merit in this
contention. In an action for divorce, the domicile of one spouse within a State gives
power to that State. The state in which one spouse is domiciled is deemed to have
sufficient interest to terminate the marriage.
In an action for separate maintenance, however, domicile is neither sufficient nor
necessary for jurisdiction. An action for separate maintenance is essentially an
action for support. Jurisdiction does not depend on domicile but on acquiring
personal jurisdiction over the husband or quasi-in- rem jurisdiction over his
property. Once quasi-in-rem jurisdiction is established, the court can award a
money judgment to the extent of the defendant's interest in the property attached.
Exercising jurisdiction in these cases does not encourage forum-shopping, since the
court will not necessarily apply the substantive law of the forum under the
applicable conflict of laws rules.
Defendant contends that even if the trial court has quasi-in-rem jurisdiction, it
properly refused to exercise it under the doctrine of forum non conveniens. The trial
court, however, has not yet considered whether the doctrine of forum non
conveniens applies to this case, since it treated defendant's motion as being for the
sole purpose of objecting to the court's jurisdiction. Since the court has jurisdiction
of the subject matter, it can now consider the applicability of that doctrine, which is
accepted in this jurisdiction and applies to actions for support In determining the
applicability of the doctrine, the court must consider the public interest as well as
the private interests of the litigants. The court must consider such factors as the
ease of access of proof, the availability and cost of obtaining witnesses, the
possibility of harassment of the defendant in litigating in an inconvenient forum, the
enforceability of the judgment, the burden on the community in litigating matters
not of local concern, and the desirability of litigating local matters in local courts.
Unless the balance is strongly in favor of the defendant, the plaintiff's choice of
forum should rarely be disturbed.. The trial court must in the first instance consider
these factors in determining whether to apply the doctrine. Thus plaintiff alleges
mistreatment throughout the marriage, both in California and in Mexico, and the
trial court must ascertain the location of witnesses and other sources of proof.
Moreover, the trial court must consider plaintiff's contention that she is domiciled in
California. The trial court originally relied on defendant's affidavit that plaintiff was
domiciled in Mexico, on the failure of plaintiff to file a counter affidavit, on the
ambiguity of plaintiff's allegation of residence in her complaint, and on points and
authorities submitted by the parties in deciding plaintiff was not a California
domiciliary. On remand, plaintiff can submit further evidence of her domicile in this
state. A determination that a plaintiff is domiciled here would ordinarily preclude
granting the defendant's motion for dismissal on the ground of forum non
conveniens. Let the peremptory writ issue as prayed.
CONFLICT OF LAWS DIGESTS: JURISDICTION
FLEUMER vs. HIX
54 Phil. 610 (1930)
FACTS
Fleumer, the special administrator of the Estate of Edward R. Hix, appealed from
the decision of the lower court denying probate of a document alleged to be the will
of Hix. Fleumer, alleged that the will was executed in West Virginia on November 3,
1925 by Hix who was residing there and therefore, the laws of West Virginia should
govern. He submitted a copy of section 3868 of Act 1882 as found in the West
Virginia Code and certified by the Director of the National Library.
ISSUE
W/N the court should apply the West Virginia Code? NO
RULING
The laws of a foreign jurisdiction do not prove themselves in courts. The courts of
the Philippine Islands are not authorized to take judicial notice of laws of the various
States of the American Union. Such laws must be proved as facts. Here the
requirements of the law were not met. There was no showing that the book from
which an extract was taken was printed or published under the authority of the
State of West Virginia, as provided in section 300 of the Code of Civil Procedure.
Nor was the extract from the law attested by the certificate of the officer having
charge of the original, under the seal of the State of West Virginia, as provided in
Section 301 of the Code of Civil Procedure. No evidence was introduced to show
that the extract from the laws of West Virginia was in force at the time the alleged
was executed.
In addition, the due execution of the will was not established. The only evidence on
this point is to be found in the testimony of the petitioner. Aside from this, there
was nothing to indicate that the will was acknowledged by the testator in the
presence of two competent witnesses, or that these witnesses subscribed to the will
in the presence of the testator and of each other as the law of West Virginia seems
to require. On the supposition that the witnesses to the will reside outside the
Philippine Islands, it would then be the duty of the petitioner to prove execution by
some other means.
PHILIPPINE TRUST CO. vs. BOHANAN
106 Phil. 997 (1960)
FACTS
In the order admitting to probate the will made by C.O. Bohanan, the CFI of Manila
declared him to be a citizen of Nevada, U.S.A. The Philippine Trust Co., named as
executor of the will, was ordered by the CFI of Manila in its order granting probate
to enter upon the execution and performance of its trust.
In a subsequent hearing of the proposed project of partition of the estate, Nevada
law was not introduced. Magdalena Bohanan, widow and her two children
questioned the validity of the will which gave to a grandson P90,819.67 of the
P211,639 and one half of all shares of stock of several mining companies. He gave
34 3B 2009-2010
ATTY. ANTHONY ABAD
the same number of shares and the same amount in cash to his brother and sister.
Only P6,000 was left to each of his children.
ISSUE
Which law will apply?
RULING
The old Civil Code, which is applicable to this case because the testator died in
1944, expressly provides that successional rights to personal property are to be
governed by the national law of the person whose succession is in question. Says
the law on this point:
Nevertheless legal and testamentary successions, in
respect to the order of succession as well as to the extent of the
successional rights and the intrinsic validity of their provisions,
shall be regulated by the national law of the person whose
succession is in question, whatever may be the nature of the
property and the country in which it is found.
In the proceedings for the probate of the will, it was found out and it was decided
that the testator was a citizen of the State of Nevada because he had selected this
as his domicile and his permanent residence. So the question at issue is whether
testamentary dispositions, especially those for the children which are short of the
legitime given them by the Civil Code of the Philippines, are valid. It is not disputed
that the laws of Nevada allow a testator to dispose of all his properties by will. It
does not appear that at the time of the hearing of the project partition, the above-
quoted provision was introduced in evidence, as it was the executors duty to do.
The law of Nevada, being a foreign law, can only be proved in our courts in the form
and manner provided for by our Rules, which are as follows:
Sec. 41 Proof of public or official record. An official
record or an entry therein, when admissible for any purpose, may
be evidenced by an official publication thereof, or by a copy
attested by the officer having the legal custody of the record, or
by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody.
We have, however, consulted the records of the case in the court below and we
have found that during the hearing on October 4, 1954 of the motion of Magdalena
C. Bohanan for withdrawal of P20,000 as her share, the foreign law, especially
Section 9905, Compiled Nevada Laws, was introduced in evidence by appellants
counsel. Again said law was presented by the counsel for the executor and admitted
by the Court during the hearing of the case on January 23, 1950.
In addition, the other appellants, children of the testator, do not dispute the above-
quoted provision of the laws of the State of Nevada. Under all the above
circumstances, we are constrained to hold the pertinent law of Nevada can be taken
judicial notice of by us, without proof of such law having been offered at the hearing
of the project of partition.
CONFLICT OF LAWS DIGESTS: JURISDICTION
As in accordance with Article 10 of the Old Civil Code, the validity of testamentary
dispositions are to be governed by the national law of the testator, and as it has
been decided and it is not disputed that the national law of the testator is that of
the State of Nevada which allows a testator to dispose of all his property according
to his will, as in the case at bar, the order of the court approving the project of
partition made in accordance with the testamentary provisions, must be affirmed.
PRISCILLA C. MIJARES, ET AL. vs. HON. SANTIAGO JAVIER RANADA, and
the ESTATE OF FERDINAND E. MARCOS
G.R. No. 139325 April 12, 2005
FACTS
In 1991, a complaint was filed with the District Court of Hawaii, against the Estate
of former Philippine President Ferdinand E. Marcos. The action was brought forth by
ten Filipino citizens who each alleged having suffered human rights abuses such as
arbitrary detention, torture and rape in the hands of police or military forces during
the Marcos regime. The Alien Tort Act was invoked as basis for the US District
Court's jurisdiction over the complaint, as it involved a suit by aliens for tortious
violations of international law. These plaintiffs brought the action on their own
behalf and on behalf of a class of similarly situated individuals (numbering around
10,000), particularly consisting of all current civilian citizens of the Philippines, their
heirs and beneficiaries, who between 1972 and 1987 were tortured, summarily
executed or had disappeared while in the custody of military or paramilitary groups.
In 1995, the US District Court awarded a total of $1,964,005,859.90 to the
plaintiffs. The judgement was affirmed by the US Court of Appeals. The Marcos
Estate did not appeal the decision to the US Supreme Court.
In 1997, the present petitioners filed a Complaint with the Makati RTC for the
enforcement of the foreign judgment. The Marcos Estate filed a motion to dismiss,
raising, among others, the non-payment of the correct filing fees. It alleged that
petitioners had only paid Four Hundred Ten Pesos (P410.00) as docket and filing
fees, notwithstanding the fact that they sought to enforce a monetary amount of
damages in the amount of over Two and a Quarter Billion US Dollars (US$2.25
Billion). In response, the petitioners claimed that an action for the enforcement of
a foreign judgment is not capable of pecuniary estimation; hence, a filing fee of only
P410.00 (now P600.00).
Judge Ranada dismissed the complaint without prejudice, saying that the action was
capable of pecuniary estimation and that the proper docket fees to be paid
amounted to 472 million. He also denied the motion for reconsideration.
Thus, petitioners filed a Petition for Certiorari under Rule 65 assailing the orders of
Judge Ranada. Petitioners argue that their action is incapable of pecuniary
estimation as the subject matter of the suit is the enforcement of a foreign
judgment, and not an action for the collection of a sum of money or recovery of
damages. They also invoke Section 11, Article III of the Bill of Rights of the
Constitution, which provides that "Free access to the courts and quasi-judicial
35 3B 2009-2010
ATTY. ANTHONY ABAD
bodies and adequate legal assistance shall not be denied to any person by reason of
poverty," a mandate which is essentially defeated by the required exorbitant filing
fee. The filing fee of 472 million, as arrived at by the RTC, was characterized as
indisputably unfair, inequitable, and unjust.
ISSUE
W/N the action is capable of pecuniary estimation. How much should the plaintiffs
pay as docket fees?
RULING
The action is CAPABLE OF PECUNIARY ESTIMATION, but the plaintiffs
ended up paying the correct amount as docket fees.
Rule 141 of the Rules of Court
SEC. 7. Clerk of Regional Trial Court.-
(a) For filing an action or a permissive counterclaim or money claim
against an estate not based on judgment, or for filing with leave of
court a third-party, fourth-party, etc., complaint, or a complaint in
intervention, and for all clerical services in the same time, if the total sum
claimed, exclusive of interest, or the started value of the property in
litigation, is:
(a corresponding docket fee is given for a certain range in the amount of
the sum claimed)
(b) For filing:
1. Actions where the value of the subject matter cannot be estimated ---
P 600.00
2. Special civil actions except judicial foreclosure which shall be governed
by paragraph (a) above --- P 600.00
3. All other actions not involving property --- P 600.00
SEC. 48. Effect of foreign judgments. The effect of a judgment of a
tribunal of a foreign country, having jurisdiction to pronounce the judgment
is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive
upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive
evidence of a right as between the parties and their successors in interest
by a subsequent title;
In either case, the judgment or final order may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
Judge Ranada opined that the subject matter of the complaint was indeed capable
of pecuniary estimation, as it involved a judgment rendered by a foreign court
ordering the payment of definite sums of money, allowing for easy determination of
the value of the foreign judgment. Section 7(a) of Rule 141 of the Rules of Civil
Procedure relied upon by Judge Ranada prescribes a corresponding filing fee based
on total sum claimed for ordinary actions, permissive counterclaims, third-party,
etc. complaints and complaints-in-interventions, and money claims against estates
which are not based on judgment. The SC said Section 7(a) was not applicable
because although the action was a claim against the estate of Marcos, it is one that
is based on judgment, which in this case, was a foreign judgment. But the SC
said that where the rule does not distinguish, ...
CONFLICT OF LAWS DIGESTS: JURISDICTION
The plaintiffs argue that the action falls under Section 7(b) (1) of Tule 141 -
actions where the value of the subject matter cannot be estimated. The SC
disagreed saying,
This is an intriguing argument, but ultimately it is self-evident
that while the subject matter of the action is undoubtedly the
enforcement of a foreign judgment, the effect of a providential
award would be the adjudication of a sum of money. Perhaps in
theory, such an action is primarily for "the enforcement of the
foreign judgment," but there is a certain obtuseness to that sort of
argument since there is no denying that the enforcement of the
foreign judgment will necessarily result in the award of a definite
sum of money.
So the SC was saying that even if the action filed by the plaintiffs is capable of
pecuniary estimation, it cannot fall under Section 7(a) because it is based on a
judgment. According to the SC, the case falls under Section 7(b)(3) --- other
actions not involving property. As it turns out, the docket fees under this rule is the
same as the one for cases not capable of pecuniary estimation so the plaintiffs
ended up paying the correct amount as docket fees and the case SHOULD NOT
have been dismissed.
The SC also said (and I think this is the part that is related to Conflicts):
There is another consideration of supreme relevance in this case, one
which should disabuse the notion that the doctrine affirmed in this decision
is grounded solely on the letter of the procedural rule. We earlier adverted to
the the internationally recognized policy of preclusion, as well as the principles of
comity, utility and convenience of nations as the basis for the evolution of the rule
calling for the recognition and enforcement of foreign judgments. The US Supreme
Court in Hilton v. Guyot relied heavily on the concept of comity, as especially
derived from the landmark treatise of Justice Story in his Commentaries on the
Conflict of Laws of 1834. Yet the notion of "comity" has since been criticized as one
"of dim contours" or suffering from a number of fallacies. Other conceptual bases
for the recognition of foreign judgments have evolved such as the vested rights
theory or the modern doctrine of obligation. xxx
There is no obligatory rule derived from treaties or conventions that requires the
Philippines to recognize foreign judgments, or allow a procedure for the
enforcement thereof. However, generally accepted principles of international law,
by virtue of the incorporation clause of the Constitution, form part of the laws of the
land even if they do not derive from treaty obligations. The classical formulation in
international law sees those customary rules accepted as binding result from the
combination two elements: the established, widespread, and consistent practice on
the part of States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a belief
that the practice in question is rendered obligatory by the existence of a rule of
law requiring it.
36 3B 2009-2010
ATTY. ANTHONY ABAD
Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether statutory or
jurisprudential, adopted in various foreign jurisdictions. In the Philippines, this is
evidenced primarily by Section 48, Rule 39 of the Rules of Court which has
existed in its current form since the early 1900s. Certainly, the Philippine legal
system has long ago accepted into its jurisprudence and procedural rules the
viability of an action for enforcement of foreign judgment, as well as the requisites
for such valid enforcement, as derived from internationally accepted doctrines.
Again, there may be distinctions as to the rules adopted by each particular
state, but they all prescind from the premise that there is a rule of law
obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has
attained the status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and
requisites outlined in Section 48, Rule 39 derive their efficacy not merely
from the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme Court, and
could very well be abrogated or revised by the high court itself. Yet the Supreme
Court is obliged, as are all State components, to obey the laws of the land, including
generally accepted principles of international law which form part thereof, such as
those ensuring the qualified recognition and enforcement of foreign judgments.
Thus, relative to the enforcement of foreign judgments in the Philippines, it
emerges that there is a general right recognized within our body of laws,
and affirmed by the Constitution, to seek recognition and enforcement of
foreign judgments, as well as a right to defend against such enforcement
on the grounds of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this
country merely due to an exhorbitant assessment of docket fees is alien to
generally accepted practices and principles in international law. Indeed,
there are grave concerns in conditioning the amount of the filing fee on the
pecuniary award or the value of the property subject of the foreign decision. Such
pecuniary award will almost certainly be in foreign denomination, computed in
accordance with the applicable laws and standards of the forum. The vagaries of
inflation, as well as the relative low-income capacity of the Filipino, to date may
very well translate into an award virtually unenforceable in this country, despite its
integral validity, if the docket fees for the enforcement thereof were predicated on
the amount of the award sought to be enforced. The theory adopted by respondent
judge and the Marcos Estate may even lead to absurdities, such as if applied to an
award involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very well
require that the filing fee be computed based on the value of the foreign property as
determined by the standards of the country where it is located.
CONFLICT OF LAWS DIGESTS: JURISDICTION
BANK OF AMERICA NT & SA, BANK OF AMERICA INTERNATIONAL, LTD. v.
COURT OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR.,
and AURELIO K. LITONJUA, JR.
G.R. No. 120135 March 31, 2003
FACTS
Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a
Complaint before the Regional Trial Court of Pasig against the Bank of America
NT&SA and Bank of America International, Ltd. (defendant banks for brevity)
alleging that: they were engaged in the shipping business; they owned two vessels:
Don Aurelio and El Champion, through their wholly-owned corporations.
They deposited their revenues from said business together with other funds with the
branches of said banks in the United Kingdom and Hongkong up to 1979; with their
business doing well, the defendant banks induced them to increase the number of
their ships in operation, offering them easy loans to acquire said vessels; thereafter,
the defendant banks acquired, through their (Litonjuas') corporations as the
borrowers: (a) El Carrier; (b) El General; (c) El Challenger; and (d) El Conqueror;
the vessels were registered in the names of their corporations; the operation and
the funds derived therefrom were placed under the complete and exclusive control
and disposition of the petitioners; and the possession the vessels was also placed by
defendant banks in the hands of persons selected and designated by them
(defendant banks).
The Litonjuas claimed that defendant banks as trustees did not fully render an
account of all the income derived from the operation of the vessels as well as of the
proceeds of the subsequent foreclosure sale. Because of the breach of their fiduciary
duties and/or negligence of the petitioners and/or the persons designated by them
in the operation of private respondents' six vessels, the revenues derived from the
operation of all the vessels declined drastically.
The loans acquired for the purchase of the four additional vessels then matured and
remained unpaid, prompting defendant banks to have all the six vessels, including
the two vessels originally owned by the private respondents, foreclosed and sold at
public auction to answer for the obligations incurred for and in behalf of the
operation of the vessels. They (Litonjuas) lost sizeable amounts of their own
personal funds equivalent to ten percent (10%) of the acquisition cost of the four
vessels and were left with the unpaid balance of their loans with defendant banks.
The Litonjuas prayed for the accounting of the revenues derived in the operation of
the six vessels and of the proceeds of the sale thereof at the foreclosure
proceedings instituted by petitioners; damages for breach of trust; exemplary
damages and attorney's fees.
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and
lack of cause of action against them. The trial court issued an Order denying the
Motion to Dismiss.
ISSUE
37 3B 2009-2010
ATTY. ANTHONY ABAD
W/N the private respondents guilty of forum shopping because of the pendency of
foreign action
RULING
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. 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." Evidently, all these requisites are present in the instant case.
That the doctrine of forum non conveniens should not be used as a ground for a
motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include
said doctrine as a ground. This Court further ruled that while it is within the
discretion of the trial court to abstain from assuming jurisdiction on this ground, it
should do so only after vital facts are established, to determine whether special
circumstances require the court's desistance; and that the propriety of dismissing a
case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense.
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.
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 defendants 52, 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.
The petitioners, by simply enumerating the civil actions instituted abroad involving
the parties herein, 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,
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.
CONFLICT OF LAWS DIGESTS: JURISDICTION
TRAVELERS HEALTH ASSN. v. VIRGINIA,
339 U.S. 643 (1950)
FACTS
The appellant Travellers Health Association was incorporated in Nebraska and its
only office has been located in Omaha, from which it has conducted a mailorder
health insurance business. New members pay an initiation fee and obligate
themselves to pay periodic assessments at the Omaha office. The funds so collected
are used for operating expenses and sick benefits to members. The appellant Pratt
in Omaha mails solicitations to these prospects. He encloses blank applications
which, if signed and returned to the home office with the required fee, usually result
in election of applicants as members. Certificates are then mailed, subject to return
within 10 days "if not satisfactory." Travelers has solicited Virginia members in this
manner since 1904, and has caused many sick benefit claims to be investigated.
Cease and desist proceedings were instituted by the State Corporation Commission
against Travelers Health Association and against R. E. Pratt, as treasurer of the
Association. Having received notice by registered mail only, they appeared
"specially" for "the sole purpose of objecting to the alleged jurisdiction of the
Commonwealth of Virginia and of its State Corporation Commission, and of moving
to set aside and quash service of summons.
The Commission, holding that the foregoing facts supported the state's power to act
in 6 proceedings, overruled appellants' objection to jurisdiction and their motion to
quash service. The Association and its treasurer were ordered to cease and desist
from further solicitations or sales of certificates to Virginia residents "through
medium of any advertisement from within or from without the State, and/or
through the mails or otherwise, by intra- or inter-state communicationunless and
until" it obtained authority in accordance with the "Blue Sky Law." This order was
affirmed by the Virginia CA.
Appellants Contention: All the activities of Travellers Health Assn take place in
Nebraska, and that consequently Virginia has no power to reach them in cease and
desist proceedings to enforce any part of its regulatory law.
ISSUE
W/N Virginia has the power to reach Travellers Health Assn. in cease and desist
proceedings to enforce any part of its regulatory law - YES
RULING
The state has power to issue a "cease and desist order" enforcing at least that
regulatory provision requiring the Association to accept service of process by
Virginia claimants on the Secretary of the Commonwealth.
It is well settled that when contracts are "executed and to be performed" in one
state and the Association was not "doing business" in such state, it could not be
sued in courts of such state unless "consent" to suits could be implied. However,
where business activities reach out beyond one state and create continuing
relationships and obligations with citizens of another state, courts need not resort to
38 3B 2009-2010
ATTY. ANTHONY ABAD
a fictional "consent" in order to sustain the jurisdiction of regulatory agencies in the
latter state.
In Osborn v. Ozlin, we recognized that a state has a legitimate interest in all
insurance policies protecting its residents against risks, an interest which the state
can protect even though the "state action may have repercussions beyond state
lines. In International Shoe Co. v. Washington, this Court, after reviewing past
cases, concluded: "due process requires only that in order to subject a defendant to
a judgment in personam, if he be not present within the territory of the forum, he
have certain minimum contacts with it such that the maintenance of the suit does
not offend `traditional notions of fair play and substantial justice.'"
Measured by the principles of these cases, the contacts and ties of appellants with
Virginia residents, together with that state's interest in faithful observance of the
certificate obligations, justify subjecting appellants to cease and desist proceedings.
The Association did not engage in mere isolated or short-lived transactions. Its
insurance certificates, systematically and widely delivered in Virginia following
solicitation based on recommendations of Virginians, create continuing obligations
between the Association and each of the many certificate holders in the state.
Appellants have caused claims for losses to be investigated and the Virginia courts
were available to them in seeking to enforce obligations created by the group of
certificates.
Moreover, if Virginia is without power to require this Association to accept service of
process on the Secretary of the Commonwealth, the only forum for injured
certificate holders might be Nebraska. Health benefit claims are seldom so large
that Virginia policyholders could afford the expense and trouble of a Nebraska law
suit. In addition, suits on alleged losses can be more conveniently tried in Virginia
where witnesses would most likely live and where claims for losses would
presumably be investigated. Such factors have been given great weight in applying
the doctrine of forum non conveniens. And prior decisions of this Court have
referred to the unwisdom, unfairness and injustice of permitting policyholders to
seek redress only in some distant state where the insurer is incorporated. The Due
Process Clause does not forbid a state to protect its citizens from such injustice.
There is, of course, one method by which claimants could recover from appellants in
Virginia courts without the aid of substituted service of process: certificate holders
in Virginia could all be garnished to the extent of their obligations to the Association.
See Huron Corp. v. Lincoln Co. While such an indirect procedure would undeniably
be more troublesome to claimants than the plan adopted by the state in its "Blue
Sky Law," it would clearly be even more harassing to the Association and its Virginia
members. Metaphysical concepts of "implied consent" and "presence" in a state
should not be solidified into a constitutional barrier against Virginia's simple, direct
and fair plan for service of process on the Secretary of the Commonwealth.
Virginia's subjection of this Association to the jurisdiction of that State's Corporation
Commission in a proceeding is consistent with "fair play and substantial justice,"
and is not offensive to the Due Process Clause.
CONFLICT OF LAWS DIGESTS: JURISDICTION
SCHMIDT vs. DRISCOLL HOTEL
249 Minn. 376, N.W. 2d 365 (1957)
FACTS
Minor, plaintiff Herbert Schmidt, through his mother and natural guardian, Matie
Shmidt, sued Driscoll Hotel, Inc. doing business as the Hook-Em-Cow Bar and Cafe
in South St. Paul, Minnesota, for damages alleged to have resulted from the
defendants illegal sale of liquor to Johnson Sorrensen. As a result, Sorrensen
became intoxicated in defendants bar so that shortly thereafter, plaintiff sustained
injuries when an automobile driven by Sorrensen, in which the plaintiff was a
passenger, turned over near Prescott, Wisconsin.
Defendant moved to dismiss the action on the ground that the pleadings failed to
state a claim against the defendant and that the court lacked jurisdiction.
The trial court granted defendants motion, having determined that no penalty by
way of collecting damages arose under the Minnesota Civil Damage Act, unless the
illegal sale in the state was followed by an injury in the state- because the law does
not provide extraterritorial effect.
ISSUE
W/N the dismissal of the case was proper? NO
RULING
It is defendants position that the action is governed by the law of torts and that,
since the last act in the series of events for which plaintiff instituted his action
occurred in Wisconsin, which has no Civil Damage Act similar to 340.95, the latter
can have no application in determining plaintiffs rights or defendants liability. In
support thereof defendant cites Restatement, Conflict of Laws, 377 and 378,
which states:
The place of wrong is in the state where the last event
necessary to make an actor liable for an alleged tort takes place.
The law of the place of wrong determines whether a
person has sustained a legal injury.
The allegations of the complaint by which we are bound for the purposes of this
appeal make clear that the plaintiffs damages are the result of two distinct wrongs
one committed by defendant in Minnesota when it sold Sorrenson intoxicating
liquors and one committed by Sorrenson in Wisconsin when his negligence caused
the car in which plaintiff was riding to turn over. It cannot be disputed that, had
plaintiffs action been against Sorrenson for his negligence, his rights would be
governed by the law of Wisconsin applicable in tort actions of this kind. But, even if
at the time of the accident there had been in effect in Wisconsin a statute similar to
340.95, it is doubtful if it could be applied to ascertain plaintiffs rights against
defendant since there is nothing here to support a claim that defendant ever
consented to be bound by Wisconsin Law.
39 3B 2009-2010
ATTY. ANTHONY ABAD
It would follow that, if the principles expressed in 377 and 378, are held
applicable to multistate fact situations like the present, then neither the laws of the
state where the last event necessary to create tort liability took place nor the laws
of the state where the liquor dealers violations of the liquor statutes occurred would
afford an injured party any remedy against the offending liquor dealer for the
injuries which resulted from his statutory violations. The result would be that here
both the interest of Wisconsin in affording whatever remedies it deems proper for
those injured there as the result of foreign violations of liquor laws and the interest
of Minnesota in admonishing a liquor dealer whose violation of its statues was the
cause of such injuries; and in providing for the injured party a remedy therefor
under the Civil Damage Act would become ineffective.
We feel that the principles in Restatement, Conflict of Laws 377 and 378, should
not be held applicable to fact situations such as the present to bring about the result
described and that a determination to the opposite effect would be more in
conformity with principles of equity and justice. Here all parties involved were
residents of Minnesota. Defendant was licensed under its laws and required to
operate its establishment in compliance therewith. Its violation of the Minnesota
statutes occurred here, and its wrongful conduct was within Minnesota when, as a
result thereof, Sorrenson became intoxicated before leaving the establishment. The
consequential harm to plaintiff, a Minnestoa citizen, accordingly should be
compensated for under M.S.A. 340.95 which furnishes him a remedy against
defendant for its wrongful acts.
PENNOYER vs. NEFF
95 US 714 (1878)
FACTS
Mitchell, an Oregon lawyer, had won an Oregon default judgment against Neff for
$300 in attorneys fees. Neff, who lived in California, had been served by publication
in an Oregon newspaper. Neff owned land in Oregon, which Pennoyer acquired
under a sheriffs deed in satisfaction of the judgment. Neff then sued Pennoyer in a
federal court in Oregon to recover the land, contending that the sale was invalid
because the state court had not acquired jurisdiction
ISSUE
W/N the sale of Neffs property by the Oregon court is valid? NO
RULING
If, without personal service judgments in personam obtained ex parte against non-
residents and absent parties, upon mere publication of process which in the great
majority of cases would never be seen by the parties interested, could be upheld
and enforced, they would be the constant instruments of fraud and oppression.
Judgments for all sorts of claims upon contracts and for torts, real or pretended,
would be thus obtained, under which property would be seized, when the evidence
of the transactions upon which they were founded, if they ever had any existence,
had perished.
CONFLICT OF LAWS DIGESTS: JURISDICTION
Substituted services by publication, or in any other authorized form, may be
sufficient to inform parties of the object of proceedings taken where property is
once brought under the control of the court by seizure or some equivalent act to
any proceedings authorized by law upon such seizure for its condemnation and sale.
Such service may also be sufficient in cases where the object of the action is to
reach and dispose of property in the State or of some interest therein, by enforcing
a contract or a lien respecting the same, or to partition it among different owners;
or, when the public is a party, to condemn and appropriate it for a public purpose.
In other words, such service may answer in all actions which are substantially
proceedings in rem. But where the entire object of the action is to determine the
personal rights and obligations of the defendants, that is, where the suit is merely
in personam, constructive service in this form upon a non-resident is ineffectual for
any purpose. Process from the tribunals of one State cannot run into another State,
and summon parties there domiciled to leave its territory and respond to
proceedings against them. Publication of process or notice within the State where
the tribunal sits cannot create any greater obligation upon the non-resident to
appear. Process sent to him out of the State, and process published within it, are
equally unavailing in proceedings to establish his personal liability.
The want of authority of the tribunals of a State to adjudicate upon the obligations
of non-residents, where they have no property within its limits, is not denied by the
court below; but the position is assumed that, where they have property within the
State, it is immaterial whether the property is in the first instance brought under
the control of the court by attachment or some other equivalent act, and afterwards
applied by its judgment to the satisfaction of demands against its owner; or such
demands be first established in a personal action, and the property of the non-
resident be afterwards seized and sold on execution. The jurisdiction of the court to
inquire into and determine his obligations at all is only incidental to its jurisdiction
over the property. Its jurisdiction in that respect cannot be made to depend upon
facts to be ascertained after it has tried the cause and rendered the judgment. If
the judgment be previously void, it will not become valid by the subsequent
discovery of property of the defendant, or by his subsequent acquisition of it. The
judgment, if void when rendered, will always remain void; it cannot occupy the
doubtful position of being valid if property be found, and void if there be none. Even
if the position assumed were confined to cases where the non-resident defendant
possessed property in the State at the commencement of the action, it would still
make the validity of the proceedings and judgment depend upon the question
whether, before the levy of the execution, the defendant had or had not disposed of
the property. If, before the levy, the property should be sold, then, according to this
position, the judgment would not be binding. This doctrine would introduce a new
element of uncertainty in judicial proceedings.
MULLANE v. CENTRAL HANOVER BANK & TRUST CO
399 U.S. 306 (1950)
Facts:
Section 100c of the New York State Banking Law provided for the pooling of small
trusts into a large common fund administered by a corporate fiduciary, with the
income, expenses, and capital gains and losses shared by the constituent trusts in
40 3B 2009-2010
ATTY. ANTHONY ABAD
proportion to their contribution to the common fund. The purpose of this legislation
(and similar laws in other states) was to provide corporate fiduciary services to
modestly-sized trusts which would be too costly to manage individually, promoting
economies of scale in the trust management industry and better risk management
for smaller trusts. Central Hanover Bank & Trust Co. in New York City was the
manager & trustee of one such common trust fund.
The common trust fund at issue in this case was established on January 17, 1946,
and 100c provided for an accounting of each fund to be undertaken twelve to
fifteen months after the establishment of a fund, and then for every three years
thereafter.
In March of 1947, Central Hanover petitioned the New York Surrogate's Court for a
settlement of its first account as common trustee. By this time there were
approximately 113 trusts participating in the fund, about half inter vivos trusts and
half testamentary trusts, with combined gross capital assets of nearly three million
dollars.
The only notice of the settlement proceedings required by 100c to be given the
trusts beneficiaries was stated as follows:
After filing such petition [for judicial settlement of its account] the
petitioner shall cause to be issued by the court in which the petition is filed
and shall publish not less than once in each week for four successive
weeks in a newspaper to be designated by the court a notice or citation
addressed generally without naming them to all parties interested in such
common trust fund and in such estates, trusts or funds mentioned in the
petition, all of which may be described in the notice or citation only in the
manner set forth in said petition and without setting forth the residence of
any such decedent or donor of any such estate, trust or fund.
When the fund had just been started, however, Central Hanover had sent notice by
mail of the future proceedings. Subsequent notice in the paper included only the
name of the trust, the date of establishment and the estates in the trust. The
names of beneficiaries were not included. Appellant Kenneth Mullane was appointed
special guardian and attorney for those parties known or unknown who had any
interest in the income of the fund, and James N. Vaughan was appointed to
represent those parties with interest in the principal.
Mullane appeared specially to object to the statutory provision for notice, claiming
that it was inadequate to afford the due process required by the Fourteenth
Amendment. The Surrogate overruled Mullanes objections, and entered a decree
accepting the accounting and terminating any rights the beneficiaries may have had
against Central Hanover for mismanagement of the trust. The New York Supreme
Court Appellate Division subsequently affirmed, as did the New York Court of
Appeals. The U.S. Supreme Court then granted certiorari.
ISSUE
CONFLICT OF LAWS DIGESTS: JURISDICTION
What are the constitutional requirements for notice of judicial proceedings to a
potential party under the Fourteenth Amendment to the United States Constitution?
HELD
Justice Jackson began his examination of the issues of the case by discussing the
nature of the jurisdiction which the Surrogates Court was exercising. He explained
some of the differences in the service of process required in in rem, quasi in rem,
and in personam actions. Mullane had argued that this was essentially an in
personam action, and that under the doctrine announced in Pennoyer v. Neff, the
Surrogate could not exercise jurisdiction on out-of-state residents upon whom
personal service had not been made.
Jackson did not explicitly determine what type of jurisdiction was being exercised
here, but held that the Fourteenth Amendment applied to all of them regardless of
how the state classified the action. The beneficiaries property rights were at stake
here, and without proper notice, the right to be heard provided by the Fourteenth
Amendment was of no practical consequence. Constructive service via newspaper
publication, wrote Jackson, was an unreliable method of giving notice, because
newspapers have limited circulation and even then, many people do not examine
the legal notices, which are usually in small typeface on the back pages. In this
case, the legal notice at issue did not even mention the names of the beneficiaries.
Furthermore, under normal circumstances, property holders are directly aware of
legal proceedings regarding their property, either directly or through a caretaker.
But in this case, the caretaker was the beneficiaries adversary - the trustee itself -
which could not be expected to give them reasonable notice, and the special
guardian was also not required to give notice.
Jackson held that notice must be reasonably calculated to inform known parties
affected by the proceedings. Thus, 100c(12), the section of the statute which dealt
with notice to beneficiaries, was unconstitutional. He further held that notice by
publication was acceptable for missing or unknown parties, for those whose
whereabouts could not be ascertained by due diligence, and for those whose future
interests were too conjectural to be known with any certainty. However, Jackson
noted that in many cases, notice to the known parties would help the information of
the proceedings to reach those who were unknown by the trustee.
Shaffer v. Heitner
433 U.S. 186 (1977)
FACTS
Appellee, a nonresident of Delaware, filed a shareholder's derivative suit in a
Delaware Chancery Court, naming as defendants a corporation and its subsidiary,
as well as 28 present or former corporate officers or directors, alleging that the
individual defendants had violated their duties to the corporation by causing it and
its subsidiary to engage in actions (which occurred in Oregon) that resulted in
corporate liability for substantial damages in a private antitrust suit and a large fine
in a criminal contempt action.
41 3B 2009-2010
ATTY. ANTHONY ABAD
Simultaneously, appellee filed a motion for sequestration of the Delaware property
of the individual defendants, all nonresidents of Delaware, accompanied by an
affidavit identifying the property to be sequestered as stock, options, warrants, and
various corporate rights of the defendants. A sequestration order was issued
pursuant to which shares and options belonging to 21 defendants (appellants) were
"seized" and "stop transfer" orders were placed on the corporate books.
Appellants entered a special appearance to quash service of process and to vacate
the sequestration order, contending that the ex parte sequestration procedure did
not accord them due process; that the property seized was not capable of
attachment in Delaware; and that they did not have sufficient contacts with
Delaware to sustain jurisdiction of that State's courts.
In that case, the Court (after noting that the historical basis of in personam
jurisdiction was a court's power over the defendant's person, making his presence
within the court's territorial jurisdiction a prerequisite to its rendition of a personally
binding judgment against him, "due process requires only that, in order to subject a
defendant to a judgment in personam, if he be not present within the territory of
the forum, he have certain minimum contacts with it such that the maintenance of
the suit does not offend 'traditional notions of fair play and substantial justice'". The
Court rejected appellants arguments.
The court held that the limitation on the purpose and length of time for which
sequestered property is held comported with due process, and that the statutory
situs of the stock (under a provision making Delaware the situs of ownership of the
capital stock of all corporations existing under the laws of that State) provided a
sufficient basis for the exercise of quasi in rem jurisdiction by a Delaware court. The
Delaware Supreme Court affirmed, concluding that International Shoe raised no
constitutional barrier to the sequestration procedure because "jurisdiction under
366 remains . . . quasi in rem founded on the presence of capital stock [in
Delaware], not on prior contact by defendants with this forum."
ISSUE
W/N a State can assert jurisdiction over a nonresident must be evaluated according
to the minimum contacts standard of International Shoe Co. v. Washington stating
that the Due Process Clause affords protection against "judgments without notice."
RULING
The Court stated in order to justify an exercise of jurisdiction in rem, the basis for
jurisdiction must be sufficient to justify exercising "jurisdiction over the interests of
persons in the thing." The presence of property in a State may bear upon the
existence of jurisdiction by providing contacts among the forum State, the
defendant, and the litigation, as for example, when claims to the property itself are
the source of the underlying controversy between the plaintiff and defendant, where
it would be unusual for the State where the property is located not to have
jurisdiction.
But where, as in the instant quasi in rem action, the property now serving as the
basis for state court jurisdiction is completely unrelated to the plaintiff's cause of
CONFLICT OF LAWS DIGESTS: JURISDICTION
action, the presence of the property alone, i.e., absent other ties among the
defendant, the State, and the litigation, would not support the State's jurisdiction.
Though the primary rationale for treating the presence of property alone as a basis
for jurisdiction is to prevent a wrongdoer from avoiding payment of his obligations
by removal of his assets to a place where he is not subject to an in personam suit,
that is an insufficient justification for recognizing jurisdiction without regard to
whether the property is in the State for that purpose. Moreover, the availability of
attachment procedures and the protection of the Full Faith and Credit Clause also
militate against that rationale.
Delaware's assertion of jurisdiction over appellants, based solely as it is on the
statutory presence of appellants' property in Delaware, violates the Due Process
Clause, which"does not contemplate that a state may make binding a judgment . . .
against an individual or corporate defendant with which the state has no contacts,
ties, or relations."
In relation to the case of International Shoe Co. v. Washington:
(a) Appellants' holdings in the corporation, which are not the subject matter of this
litigation and are unrelated to the underlying cause of action, do not provide
contacts with Delaware sufficient to support jurisdiction of that State's courts over
appellants.
(b) Nor is Delaware state court jurisdiction supported by that State's interest in
supervising the management of a Delaware corporation and defining the obligations
of its officers and directors, since Delaware bases jurisdiction not on appellants'
status as corporate fiduciaries, but on the presence of their property in the State.
Moreover, sequestration has been available in any suit against a nonresident,
whether against corporate fiduciaries or not.
(c) Though it may be appropriate for Delaware law to govern the obligations of
appellants to the corporation and stockholders, this does not mean that appellants
have "purposefully avail[ed themselves] of the privilege of conducting activities
within the forum State," Hanson v. Denckla. Appellants, who were not required to
acquire interests in the corporation in order to hold their positions, did not, by
acquiring those interests, surrender their right to be brought to judgment in the
States in which they had "minimum contacts."
LAZARO B. RAYRAY v. CHAE KYUNG LEE
GR No. L-18176 October 26, 1966
FACTS
ISSUE
RULING
FRENCH v. BANCO NACIONAL DE CUBA
295 NY 2d 422-423 1968
FACTS
42 3B 2009-2010
ATTY. ANTHONY ABAD
In 1957, Ritter, the assignor of respondent French, invested about $350,000 in a
Cuban farm. At that time, the Cuban Government permitted foreign investors to
turn the proceeds from their enterprises into American dollars, or other foreign
currency, and exempted such proceeds from Cuba's tax on the exportation of
money.
In June, 1959, six months after the inception of the Castro regime, Ritter acquired
eight such certificates, aggregating $150,000.
On July 15, 1959, the Currency Stabilization Fund issued "Decision No. 346." Aimed
at stopping the flow of foreign currency from Cuba and thereby preventing a
situation "very dangerous" to that country. Decision also suspended "for the time
being processing of" tax exemption certificates "until reorganization of the system
of exemptions". The redemption of such outstanding certificates, according to the
president of defendant bank, would have wiped out Cuba's dollar reserves.
When, in December of 1959, Ritter tendered his certificates for redemption,
together with the appropriate number of pesos, payment in American dollars was
refused under the mandate of the Decision.
The plaintiff, Ritter's assignee, brought the present action, late in 1960, in Supreme
Court, New York County, and obtained a judgment against defendant bank in the
amount of $150,000, with interest. A closely divided Appellate Division affirmed,
rejecting the defendant's claims (1) that it was entitled to sovereign immunity from
suit as an agency of the Cuban Government and (2) that the Decision in question
"had the force of law" and was an act of the sovereign Government of Cuba to
which our courts will not deny legal effect.
ISSUES
1. Whether the defendant is entitled to sovereign immunity? NO
2. Whether the defendant may invoke the "act of state" doctrine? YES
3. Whether the Hickenlooper Amendment covers this case and bars application of
the act of state doctrine? NO
4. Whether there was a violation of international law? NO
RULING
1. In view of the State Department's conclusion that the activities out of which the
present action arose "were of a jure gestionis [commercial] * * * nature" and its
position that immunity should not be granted in such cases, we must decline to
accord the defendant sovereign immunity from suit.
2. It has long been settled, and recently reaffirmed that the courts in the United
States will not inquire into the validity of the acts of a foreign government done
within its own territory. As the Supreme Court stated "[e]very sovereign State is
bound to respect the independence of every other sovereign State, and the courts
of one country will not sit in judgment on the acts of the government of another
done within its own territory. Redress of grievances by reason of such acts must be
obtained through the means open to be availed of by sovereign powers as between
themselves."
CONFLICT OF LAWS DIGESTS: JURISDICTION
Our courts will not examine a foreign law to determine whether it was adopted in
conformity with the internal procedures and requirements of the enacting state. The
act of state doctrine, it has been well said, is not limited to situations in which "the
foreign act is committed in a manner `colorably valid' under foreign law. It should
make no difference whether the foreign act is, under local law, partially or wholly,
technically or fundamentally, illegal. * * * So long as the act is the act of the
foreign sovereign, it matters not how grossly the sovereign has transgressed its
own laws.
There is no basis whatever for the plaintiff's contention that the action dishonoring
and repudiating the certificates held by Ritter was not an "act of state." Regardless
of whether or not Decision No. 346 was published in the Official Gazette or
otherwise complied with internal Cuban standards of regularity, it was issued by the
Currency Stabilization Fund, an official instrumentality of the Cuban Government.
Moreover, in compliance with that Decision or even if only in purported
compliance Banco Nacional, also an agency of the Cuban Government, refused
and continues to refuse to exchange pesos for dollars as the certificates had
required. These undisputed facts establish, as matter of law, that the breach of
contract, of which the plaintiff complains, resulted from, and, indeed, itself
constitutes, an act of state. Since it is thus apparent that there was an act of state,
it follows unless the Hickenlooper Amendment requires the court not to apply the
act of state doctrine that we are barred from all further inquiry in this case
concerning Cuba's action and, in particular, from any inquiry that would test such
action by the standards of international law or the public policy of this forum.
The Government of Cuba, by its Decision No. 346, has actually done
nothing more than enact an exchange control regulation similar to regulations
enacted or promulgated by many other countries, including our own. In an area of
international law where, for instance, there is a wide divergence "between the
national interests of capital importing and capital exporting nations and between the
social ideologies of those countries that favor state control of a considerable portion
of the means of production and those that adhere to a free enterprise system",
judicial restraint is surely indicated "It is difficult to imagine the courts of this
country embarking on adjudication in an area which touches more sensitively the
practical and ideological goals of the various members of the community of
nations." Even if, therefore, we were to assume that the decision of the Cuban
instrumentality here involved was contrary to our public policy, such considerations
would not affect our determination. As the Supreme Court observed in the far
harsher context of Sabbatino (pp. 436-437), "However offensive to the public
policy of this country and its constituent States an expropriation of this
kind may be, we conclude that both the national interest and progress
toward the goal of establishing the rule of law among nations are best
served by maintaining intact the act of state doctrine in this realm of its
application."
3. In our view, the Hickenlooper Amendment is inapplicable. So far as relevant, the
amendment declares that "no court in the United States shall decline on the ground
of the federal act of state doctrine to make a determination on the merits giving
effect to the principles of international law in a case in which a claim of title or other
43 3B 2009-2010
ATTY. ANTHONY ABAD
right to property is asserted by any party including a foreign state * * * based upon
(or traced through) a confiscation or other taking * * * by an act of that state in
violation of the principles of international law".The amendment applies only if there
is a "claim of title or other right to property" and that claim is "based upon (or
traced through) a confiscation or other taking" of such property. Ritter's loss is due
not to a taking of property but, rather, to the breach of a promise upon which he
had relied. What had happened and undoubtedly to Ritter's financial loss was
that the Cuban law which governed the contract had been changed by the adoption
of a government regulation which "suspended," perhaps permanently, the
conversion of pesos into dollars. In the strictest sense, and within the terms of the
statute we are construing, just as no one has "taken" the pesos from Ritter, so no
one has "taken" the contract from him; it is still his or his assignee's to enforce, or
attempt to enforce, as the present action bears witness. No other party claims to be
possessed of the contract rights that Ritter had acquired. In short, the control of
national currency and of foreign exchange is an essential governmental
function; the state which coins money has "power to prevent its outflow
4. The Restatement finds no violation of international law in such a currency
measure "if it is reasonably necessary in order to control the value of the currency
or to protect the foreign exchange resources of the state" The present refusal of the
Cuban Government to surrender American dollars in order to protect its dollar
reserves, though harsh in its effect, would also seem to be within the limits of
international legality.
Conclusion: Actions complained of constituted an act of state; that, under the rule
announced in Sabbatino, we are required to give effect to that act of state; and
that, since the record before us establishes that there was no taking of property to
which a claim of title or other right is asserted, the Hickenlooper Amendment does
not apply to require us to disregard the act of state doctrine. Consequently, the
plaintiff or her assignor may seek a remedy in this country only through diplomatic
efforts by the United States and arrangements established by Congress for the
protection of the interests of all American claimants againstCuba.
HASSAN EL-FADL v. CENTRAL BANK OF JORDAN, et al.
No. 94-7212 I February 6, 1996
FACTS
Hassan El-Fadl, a Lebanese national, living in Jordan, alleges that he was employed
by Petra International Banking Corporation (PIBC), a subsidiary in the District of
Columbia of Petra Bank, a privately owned bank in Jordan. From 1982 to 1989 he
was employed by PIBC in Jordan as manager of a regional office for Middle Eastern
clients. He had signed a contract under which he "would be permanently employed
for life as a senior manager of Petra International Banking Corporation." The
defendants maintain that El-Fadl was employed by Petra Bank (not PIBC) as a
senior manager with responsibility for currency and precious metals trading. In
August 1989, the Central Bank of Jordan announced that it had uncovered
widespread financial improprieties at Petra Bank and placed Petra Bank in
receivership. Since then, Petra Bank has been run by a Liquidation Committee
appointed by the Jordanian government. The Deputy Governor of the Central Bank,
CONFLICT OF LAWS DIGESTS: JURISDICTION
Michel Marto, was appointed to administer the liquidation of PIBC, and Marto came
to the District of Columbia for that purpose.
On September 14, 1989, El-Fadl was terminated by Marto and was subsequently
arrested as part of the Jordanian authorities investigation of the Petra Bank
scandal. El-Fadl alleges that the military police detained him for five days and
tortured him, until he was released on bail. El-Fadl was prosecuted first in the
Military Courts under Martial Law and then in the State Security Court, where he
was "declared innocent" on April 9, 1992, which finding was affirmed by the Prime
Minister on August 2, 1992. While the charges were pending, El-Fadl alleges that he
was forbidden to leave Jordan.
On July 30, 1993, El-Fadl filed suit in the District of Columbia, United States seeking
to recover damages against PIBC for wrongful termination of employment as well as
for various tort claims against several Jordanian institutions and officials: the
Central Bank of Jordan, its Governor and Deputy Governor, and Petra Bank. The
Central Bank of Jordan removed the case to federal district court pursuant to the
Federal Sovereign Immunities Act (FSIA). The district court dismissed the complaint
on the ground of immunity from suit under FISA and forum non conveniens because
the petitioner had an available forum in the Jordanian courts. On appeal, El-Fadl
abandoned his claim against the Central Bank but seeks to maintain his claim
against Marto on the ground that he was acting in an individual capacity.
ISSUE
1) W/N the Petitioner is entitled to initial discovery before dismissal of the
case?
2) W/N the dismissal on the ground of forum non conveniens was improper?
RULING
Yes to both. The Court of Appeals reverse the dismissal of the claims against Petra
Bank for lack of personal jurisdiction and remand to allow El-Fadl to conduct
discovery of jurisdictional facts and reverse the dismissal of the claims against Petra
Bank and PIBC on grounds of forum non conveniens, remanding for a finding
whether Petra Bank and PIBC can show that Jordan is an adequate alternative
forum. First, it is imperative to point out that the appellate court declared that El-
Fadl's brief does not distinguish between "transacting business" under the long-arm
statute and "doing business" for purposes of general jurisdiction. His reliance on the
long-arm statute is misplaced because he has failed to show any connection
between the alleged jurisdictional acts and the District of Columbia. Because El-
Fadl's claims are not related to any of Petra Bank's general business contacts with
the District of Columbia, they cannot confer specific jurisdiction under the long-arm
statute. In spite of this the Court of Appeals stated that El-Fadl's brief presents both
possible bases, general and specific, for personal jurisdiction over Petra Bank.
Indeed, El-Fadl asserts, in his statement of issues presented, that "[t]he District
Court erred ... in dismissing claims against a foreign defendant for lack of personal
jurisdiction, prior to discovery or a hearing." At the very least, El-Fadl is entitled to
discovery on this matter before it is decided. In other words, even though El-Fadl's
present jurisdictional allegations are insufficient, he has sufficiently demonstrated
44 3B 2009-2010
ATTY. ANTHONY ABAD
that it is possible that he could supplement them through discovery. El-Fadl's
request is for initial discovery, limited to jurisdictional facts.
With regard to the issue of forum non conveniens, the appellate court maintained
that in deciding a forum non conveniens motion, the district court must first
establish that there is an adequate alternative forum: At the outset of any forum
non conveniens inquiry, the court must determine whether there exists an
alternative forum. Ordinarily, this requirement will be satisfied when the defendant
is "amenable to process" in the other jurisdiction. In rare circumstances, however,
where the remedy offered by the other forum is clearly unsatisfactory, the other
forum may not be an adequate alternative, and the initial requirement may not be
satisfied. Thus, for example, dismissal would not be appropriate where the
alternative forum does not permit litigation of the subject matter of the dispute. To
show the existence of an adequate alternative forum, the defendant "must provide
enough information to enable the District Court" to evaluate the alternative forum.
Because the defendant has the burden of establishing that an adequate alternative
forum exists, this court will reverse when "the affidavit through which [the
defendant] attempted to meet its burden contains substantial gaps."The amount of
information that the defendant must provide, in supporting affidavits or other
evidence, depends on the facts of the individual case. Accordingly, the defendant
must provide more detailed information if the plaintiff provides evidence that
controverts the defendant's evidence.
PIBC and Petra Bank could not prove on the present record that Jordan was an
adequate alternative forum. PIBC submitted an affidavit from a Jordanian attorney,
Rami M. Al-Hadidi, who states that "Jordanian courts are open to El- Fadl to
adjudicate these claims against the defendants." Al-Hadidi also explains that the
Jordanian Civil Code recognizes various causes of action that El-Fadl has brought.
Yet PIBC's expert fails to address various potentially dispositive provisions of
Jordanian law that El- Fadl brought to the district court's attention. Given the gap in
PIBC's expert's affidavit and the undeveloped state of the record on this issue, the
district court erred in finding that PIBC or Petra Bank met its burden of showing that
Jordan is an adequate alternative forum.
REPUBLIC OF THE PHILIPPINES, et al v. PIMENTEL et al.
UNITED STATES SUPREME COURT NO. 06-1204
FACTS
ISSUE
RULING
CONFLICT OF LAWS DIGESTS: JURISDICTION
CREDIT SUISSE v. U.S.D.C
130 F3d 1342
FACTS
In a previous case (Multi-District Litigation [MDL] case), the plaintiffs, who
are human rights violation victims of Marcos, sought enforcement of
judgment, which awarded them almost 2 Billion Dollars, against Credit
Suisses (the Bank) branches in California. The district court denied the
Banks motion to quash the execution.
However, the resolution of the district court was reversed. California law
requires "personal service" of a notice of levy on a deposit account to be
made at the branch or office of the financial institution at which the
account is actually carried. Because none of the Estate's assets were held
in deposit accounts located in California, the service of the notice of levy at
the Banks' California offices was ineffective. The district court should have
therefore granted the Banks' motions to vacate and quash the levies.
Now, Rosales (one of the plaintiffs in the MDL case) filed the action directly
against the banks seeking the following relief: (1) an injunction restraining
the Banks from transferring or otherwise conveying any funds or assets
held by the Banks on behalf of the Marcos Estate, except as ordered by the
district court; and (2) a declaration that the Chinn assignment 1 is valid and
binding on the Banks.
The Bank now interposes the defense, via motion to dismiss, that the
granting of the Relief sought by Rosales will contravene the Act of State
Doctrine. The motion was denied.
ISSUE
Did the district court act correctly in denying the Banks motion to dismiss, saying
that the act of state doctrine will not be violated in granting the relief sought by
Rosales?
RULING
The district court was wrong.
Every sovereign State is bound to respect the independence of every other
sovereign State, and the courts of one country will not sit in judgment on the acts
of the government of another done within its own territory. Redress of grievances
1 The "Chinn assignment" is a document that purportedly assigns all right, title and interest of
the Marcos Estate in any bank accounts maintained in Switzerland to Robert A. Swift, "for the
benefit of" the MDL plaintiffs. This assignment was signed by Walter Chinn, Clerk of the
United States District Court for the District of Hawaii, at the direction of the district court as a
contempt sanction against Marcos
45 3B 2009-2010
ATTY. ANTHONY ABAD
by reason of such acts must be obtained through the means open to be availed of
by sovereign powers as between themselves.
Under this current view, an action will be barred only if: (1) there is an "official act
of a foreign sovereign performed within its own territory"; and (2) "the relief sought
or the defense interposed [in the action would require] a court in the United States
to declare invalid the [foreign sovereign's] official act." Id. at 405, 110 S.Ct. at 704.
In 1986, when Ferdinand E. Marcos left power, the Swiss Federal Council, the
highest governing body in the Swiss Executive Branch, issued an Executive Order
freezing all assets of the Marcos family that were held in Switzerland. The Federal
Council, expecting the Philippine government to seek recovery of funds deposited by
Marcos and his family in Switzerland, issued the freeze order to ensure that the
funds did not disappear before the Philippine government had an opportunity to act.
Shortly thereafter, the Philippine government formally requested, pursuant to the
Swiss Federal Act on Mutual Assistance in Criminal Matters ("IMAC"), that the
Government of Switzerland freeze all assets held in Switzerland that belonged to
Marcos and his family pending the outcome of a criminal investigation and
prosecution in the Philippines. The Philippine government also requested assistance
in obtaining evidence about the amount and nature of the Marcos assets held in
Switzerland and the circumstances under which such assets were deposited.
After ensuring that the Philippine government's request complied with IMAC, the
Swiss Federal Office of Police forwarded the request for assistance to the
enforcement authorities of the cantons in which the Marcos bank accounts were
maintained-Geneva, Fribourg and Zurich-with instructions to take provisional
measures immediately. Pursuant to IMAC procedures which require the cantonal
authorities to execute the instructions of the Swiss federal government, cantonal
orders were immediately issued freezing all assets belonging directly or indirectly to
Marcos and/or his family. These cantonal orders, which superseded the previously
issued Executive Order, were appealed and affirmed by judgments of the Swiss
Federal Supreme Court, the highest court in Switzerland. The cantonal freeze orders
remain in effect today.
Switzerland's act of issuing first the Executive Order and then the cantonal freeze
orders pursuant to IMAC was "paradigmatically sovereign in nature; it is not [the
type of act] that a private person can exercise." Callejo v. Bancomer, S.A., 764 F.2d
1101, 1116 (5th Cir.1985). The Executive and subsequent cantonal orders were,
therefore, clearly an "official act of a foreign sovereign performed within its own
territory." W.S. Kirkpatrick, 493 U.S. at 405, 110 S.Ct. at 704.
In the Rosales action, the MDL plaintiffs seek relief including: (1) an injunction
restraining the Banks from transferring or otherwise conveying any funds or assets
held by the Banks on behalf of the Marcos Estate except as ordered by the district
court; and (2) a declaration that the Chinn assignment is valid and binding on the
Banks. Both of these forms of relief would not only require a United States court to
question the validity of the freeze orders, but would also "render nugatory"
Switzerland's attempts to render legal assistance to The Republic of the Philippines
by protecting the Estate assets. See Callejo, 764 F.2d at 1116. The relief sought
CONFLICT OF LAWS DIGESTS: JURISDICTION
therefore violates the act of state doctrine, and the district court's refusal to dismiss
the action was clearly erroneous as a matter of law.
The injunction sought by the plaintiffs would compel the Banks to hold any assets of
the Marcos Estate subject to the district court's further orders. It is clear that the
district court plans on taking control of any Estate assets held by the Banks, even
though those assets are currently frozen pursuant to official orders of Swiss
authorities. Any order from the district court compelling the Banks to transfer or
otherwise convey Estate assets would be in direct contravention of the Swiss freeze
orders. Subjecting Estate assets held by the Banks to the district court's further
orders would thus allow a United States court to question and, in fact, "declare
invalid the official act of a foreign sovereign." W.S. Kirkpatrick, 493 U.S. at 405,
110 S.Ct. at 704. Issuance of the injunctive relief sought would therefore violate the
act of state doctrine.
A declaration by a United States court that the Chinn assignment is valid and
binding on the Banks would also violate the act of state doctrine. The assignment
purports to assign to Robert Swift, counsel for the MDL plaintiffs, all of the Estate's
"right, title and interest in and to bank accounts maintained in Switzerland." The
assignment directs entities having authority over such bank accounts "to perform all
necessary acts to effect the transfer of the above bank accounts forthwith."
A declaration that this assignment is valid and binding on the Banks would be a
declaration that the Banks must transfer all Estate assets held by the Banks to Swift
"forthwith." Such a declaration would not only contradict, and therefore declare
invalid, the Swiss freeze orders, but would also require the Banks to disregard the
Swiss orders.
United States courts are "bound to respect the independence of every other
sovereign State," including Switzerland. See Underhill, 168 U.S. at 252, 18 S.Ct. at
84. If the MDL plaintiffs want to contest the legality of the Swiss freeze orders, seek
a declaration of the validity of the Chinn assignment as against the Banks, or seek
an injunction compelling the Banks to turn over the assets, they should do so via
the Swiss judicial system. See Miller v. United States, 955 F.Supp. 795, 798
(N.D.Ohio 1996).
KIRKPATRICK INC. v. ENVIRONMENTAL TECTONICS CORP., INTL.
493 U.S. 400
FACTS
ISSUE
RULING
46 3B 2009-2010
ATTY. ANTHONY ABAD
IN RE: PHILIPPINE NATIONAL BANK v. UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
NO. 04-71843
FACTS
This concerns the long-running dispute over the right to the assets of the estate of
former Pres. Marcos. On the one side is a class of plaintiffs who obtained a large
judgment in the federal district court in Hawaii against the Marcos estate for human
rights violations of the Marcos regime. On the other side is the Republic of the
Philippines, which independently sought forfeiture of the Marcos estates assets.
In an earlier case, the court dealt with the attempt of class plaintiffs to reach assets
of the Marcos estate located in Swiss banks. The Swiss assets had been frozen by
the Swiss govt at the request of the Republic. Class plaintiffs obtained an
injunction from the district court requiring Swiss banks to hold the assets for their
benefit. In this case, the Court held that the injunction violated the act of state
doctrine and granted a writ of mandamus directing dismissal of the district courts
order, and ordered the latter to refrain from taking any further action in any case
involving the class plaintiffs and any Marcos assets.
Thereafter, the Swiss govt released the Swiss funds for transfer to PNB pending
determination of proper disposal of the Phil. Supreme Court wherein later it was
subsequently held that the assets were forfeited to the Republic of the Philippines.
The District Court then issued an order ruling that the Phil. SC had violated due
process and that its judgment was entitled to deference. It then issued an Order
to Show Cause against PNB requiring the bank to show why it should not be held in
contempt for violating the courts injunction against transfer of assets by the estate.
PNB filed the present petition for mandamus in this court, seeking to restrain the
district court from enforcing its order.
ISSUE
Whether or not there was a violation of the act of state doctrine? YES
RULING
Every sovereign state is bound to respect the independence of every other
sovereign state, and the courts of one country will not sit in judgment on the acts of
the government of another, done within its own territory. Redress of grievances by
reason of such acts must be obtained through the means open to be availed by the
sovereign powers as between themselves. The District Courts orders violated this
principle. In order to obtain assets from PNB or to hold PNB in contempt for the
transfer of assets to the Republic, the District Court necessarily held invalid the
forfeiture judgment of the Philippine Supreme Court.
Class plaintiffs argue that the doctrine is directed at the executive and legislative
branches of foreign governments and does not apply to judicial decisions. However,
Court held that although the act of state doctrine is normally inapplicable to court
judgments arising from private litigation, there is no inflexible rule preventing a
CONFLICT OF LAWS DIGESTS: JURISDICTION
judgment sought by a foreign government from qualifying as an act of state. The
judgment of the Phil. SC gave effect to the public interest of the Phil. Govt. The
forfeiture action was not a mere dispute between the private parties, it was an
action initiated by the Phil. Govt pursuant to its statutory mandate to recover
property allegedly stolen from its treasury. The subject matter of the forfeiture thus
qualifies for treatment as an act of state.
Class plaintiffs also argue that the doctrine is inapplicable because the judgment of
the Phil. SC did not concern matters within its own territory. Court held that the act
of state doctrine is to be applied flexibly, with reference to underlying
considerations. The fact that the escrow funds were deposited in Singapore does
not preclude the application of the act of state doctrine. The underlying
governmental interest of the Republic supports treatment of the judgment as an act
of state.
Court also held that mandamus is the proper remedy in this case. Four out of five
Bauman factors (all except factor 4) favor issuance of the writ: (1) the party
seeking the writ has no other adequate means to attain the relief she desires; (2)
the petitioner will be damaged or prejudiced in a way not correctable on appeal; (3)
the district courts order is clearly erroneous as a matter of law; (4) the district
courts order is an oft-repeated error, or manifests a persistent disregard of the
federal rules; (5) the district courts raises new and important problems, or issues
of law of first impression.
PENNHURST STATE SCHOOL & HOSPITAL vs. Terri Lee HALDERMAN
465 US 89
FACTS
Respondent Halderman, a resident of petitioner Pennhurst State School and
Hospital, a Pennsylvania institution for the care of the mentally retarded, brought a
class action in Federal District Court against Pennhurst and various state and county
officials (also petitioners). It was alleged that conditions at Pennhurst violated
various federal constitutional and statutory rights of the class members as well as
their rights under the Pennsylvania Mental Health and Mental Retardation Act of
1966 (MH/MR Act). Ultimately, the District Court awarded injunctive relief based in
part on the MH/MR Act, which was held to provide a right to adequate habilitation.
The Court of Appeals affirmed, holding that the MH/MR Act required the State to
adopt the "least restrictive environment" approach for the care of the mentally
retarded, and rejecting petitioners' argument that the Eleventh Amendment barred
a federal court from considering this pendent state-law claim. The court reasoned
that since that Amendment did not bar a federal court from granting prospective
injunctive relief against state officials on the basis of federal claims, citing Ex parte
Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 the same result obtained with
respect to a pendent state-law claim.
RULING
The Eleventh Amendment prohibited the District Court from ordering state officials
to conform their conduct to state law.
47 3B 2009-2010
ATTY. ANTHONY ABAD
(a) The principle of sovereign immunity is a constitutional limitation on the federal
judicial power established in Art. III of the Constitution. The Eleventh Amendment
bars a suit against state officials when the State is the real, substantial party in
interest, regardless of whether the suit seeks damages or injunctive relief. The
Court in Ex parte Young, supra, recognized an important exception to this general
rule: a suit challenging the federal constitutionality of a state official's action is not
one against the State.
(b) "That a State may not be sued without its consent is a fundamental rule of
jurisprudence having so important a bearing upon the construction of the
Constitution of the United States that it has become established by repeated
decisions of this court that the entire judicial power granted by the Constitution
does not embrace authority to entertain a suit brought by private parties against a
State without consent given: not one brought by citizens of another State, or by
citizens or subjects of a foreign State, because of the Eleventh Amendment; and not
even one brought by its own citizens, because of the fundamental rule of which the
Amendment is but an exemplification."
(c) The Court has recognized an important exception to this general rule: a suit
challenging the constitutionality of a state official's action is not one against the
State. In Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662, this
Court recognized that the need to promote the supremacy of federal law that is the
basis of Young must be accommodated to the constitutional immunity of the States.
Thus, the Court declined to extend the Young doctrine to encompass retroactive
relief, for to do so would effectively eliminate the States' constitutional immunity.
Edelman's distinction between prospective and retroactive relief fulfilled Young'
underlying purpose of vindicating the supreme authority of federal law while at the
same time preserving to an important degree the States' constitutional immunity.
But this need to reconcile competing interests is wholly absent when a plaintiff
alleges that a state official has violated state law. In such a case the entire basis for
the doctrine of Young and Edelman disappears. A federal court's grant of relief
against state officials on the basis of state law, whether prospective or retroactive,
does not vindicate the supreme authority of federal law. When a federal court
instructs state officials on how to conform their conduct to state law, this conflicts
directly with the principles of federalism that underlie the Eleventh Amendment.
(d) The principle that a claim that state officials violated state law in carrying out
their official responsibilities is a claim against the State that is protected by the
Eleventh Amendment applies as well to state-law claims brought into federal court
under pendent jurisdiction.
LORD DAY & LORD, BARRET SMITH v. THE SOCIALIST REPUBLIC OF
VIETNAM, SWISS REINSURANCE COMPANY, ASSURANCE GENERALES DE
FRANCE and GROUPE DES MUTUELLES ALSACIENNES
134 F. Supp.2d 549 (S.D.N.Y. 2001)
Plaintiff Lord Day & Lord (Lord Day"), a law firm in liquidation, brought this
interpleader action to determine the entitlement of funds currently held in the
possession of this Court. The Socialist Republic of Vietnam (Vietnam"), Swiss
CONFLICT OF LAWS DIGESTS: JURISDICTION
Reinsurance Company, Assurance Generales de France, and Groupe des Mutuelles
Alsaciennes (collectively "Reinsurers") have all claimed such entitlement. Defendant
Vietnam moves to dismiss the Reinsurers' Cross-Complaint for lack of jurisdiction.
FACTS
On December 6, 1970, a cargo of rice owned by the former Republic of Vietnam was
lost during overseas transport when the ship carrying the cargo sustained a collision
in the Panama Canal. The cargo was insured under Societe Vietnamenne
D'Assurances et de Reassurances ("SOVAR"). SOVAR reimbursed the Vietnam and
Tong Cuoc Tiep Te, the then "General Supply Agency" of the former Vietnam, its
insured, for the full value of the loss. SOVAR obtained an assignment dated
December 14, 1971 from its insured for all rights against third parties responsible
for the loss. In turn, SOVAR was indemnified by the Reinsurers for a portion of the
total cargo loss.
Under Plaintiff Lord Days legal representation, SOVAR and Vietnam commenced a
subrogation action in 1973 seeking recovery for the lost rice cargo against parties
responsible for the loss. This action resulted in a settlement in 1975, where the
Vietnam and Tong Cuoc Tiep Te were to obtain $548,364.56 from the Panama Canal
Company.
After the check was issued, Saigon fell to the armies of the Socialist Republic of
Vietnam, and the United States subsequently banned all transfer of funds to the
Vietnamese government and Vietnamese nationals. The settlement check was
issued "Pay to the Order of: Lord Day & Lord, attorneys for Republic of Vietnam &
Tong Cuoc Tiep Te / General Supply Agency.
Prevented from transferring the settlement check to its Vietnamese clients, Plaintiff
sought and was issued a License by the Federal Foreign Assets Control agency
permitting placement of the funds into a blocked account, pursuant to the Trading
With the Enemy Act.
Plaintiff applied for a License in its role as "attorneys for Vietnam Assurance and
Reassurance Co.," Plaintiff stated that it sought the license in order collect the
unpaid judgment and for the purpose of making disbursements to attorneys related
to the settlement and "to such other persons having an interest in the balance as
may lawfully be paid." Upon issuance of the License, Plaintiff deposited the funds in
the name of the Republic of Vietnam and Tong Cuoc Tiep Te in an interest-bearing
account with First National City Bank in New York.
Effective March 6, 1995, the United States lifted the ban, thus allowing the
settlement funds deposited by Plaintiff to be finally transferred. However, following
the fall of Saigon, SOVAR had been effectively dissolved and nationalized in April
1975 by Vietnam, who discontinued its operations. Uncertain how to proceed,
Plaintiff filed the instant Interpleader action.
Plaintiff sought (1) that each of the Defendants interplead and settle among
themselves their respective rights to the funds at issue; (2) enjoinment and
restraint from Defendants making any claim against Plaintiff to turn over the funds
48 3B 2009-2010
ATTY. ANTHONY ABAD
and prosecuting any action for the recovery of the funds; (3) discharge from all
liability in transfer and maintenance of the funds; and (4) fees and attorneys' costs.
This Court granted Plaintiff relief on each of its requests. The Court also ordered
Plaintiff to deposit the funds with the Clerk of this Court.
The Reinsurers answered the Complaint and appeared as parties of interest with
respect to the fund. Vietnams Answer asserts its right to the funds pursuant to an
Executive Agreement and also asserts several affirmative defenses, including its
right to immunity as a foreign sovereign under the Foreign Sovereign Immunities
Act.
The Reinsurers also filed a Cross-Complaint asserting entitlement to the funds.
According to the Reinsurers, prior to SOVAR's dissolution and nationalization, the
Reinsurers had an agreement with SOVAR to provide indemnity reinsurance
covering a portion of the rice cargo loss, and also held approximately 30 percent of
common stock in the corporation. The Reinsurers claim ownership of the funds by
their status as reinsurers and shareholders before and during SOVAR's dissolution
and nationalization.
Vietnam filed the instant motion to dismiss the Reinsurers' Cross-Complaint
pursuant to Federal Rules of Civil Procedure 12(b) and (c) on various grounds,
including Vietnams asserted right to the funds as a matter of law pursuant to an
Executive Agreement, lack of jurisdiction under the Federal Sovereign Immunities
Act and the statute of limitations.
ISSUE
Whether or not the Reinsurers' Cross-Complaint should be dismissed for lack of
jurisdiction.
RULING
Yes. EVEN IF: The Foreign Sovereign Immunities Act ("FSIA") provide the exclusive
basis for federal subject matter and personal jurisdiction in suits involving foreign
states. Sovereign entities are entitled to immunity from suit and federal courts lack
jurisdiction unless a statutory exception applies.
In its answer to the Interpleader Complaint, Vietnam waived its immunity agreeing
to appear in response to Plaintiff's interpleader action for the sole purpose of
asserting its claim to the disputed funds. However, Vietnam explicitly reserved its
rights as a foreign sovereign immune from jurisdiction in connection with any other
claims. Vietnam claims immunity from all other claims to the funds because, it
argues, any such claims require the court to consider alleged contractual relations
between Vietnam and the Reinsurers. Effectively, Vietnam seeks to grant this Court
jurisdiction solely for the purpose of awarding it the funds. This, Vietnam cannot do.
The FSIA provides a counterclaim exception, which states that in any action brought
by a foreign state, or in which a foreign state intervenes, in a court of the United
States or of a State, the foreign state shall not be accorded immunity with respect
to any counterclaim arising out of the transaction or occurrence that is the subject
matter of the claim of the foreign state. Even if the counterclaim exception was
inapplicable here, Vietnam has also waived its immunity to the extent necessary for
the Court to determine title to the funds in its possession. Under the FSIA, the
CONFLICT OF LAWS DIGESTS: JURISDICTION
waiver exception permits federal courts to assert jurisdiction over a foreign
sovereign that waives its immunity "either explicitly or by implication."
DISMISSED BECAUSE OF PRESCRIPTION: The FSIA does not provide for a federal
substantive law rule of decision but operates merely as a "pass-through" to state
law principles. Thus, the Court will apply New York choice of law rules. New York's
choice of law rules require application of the law of the forum with the greatest
interest. New York requires that a foreign statute of limitations, if shorter than the
New York statute, must be applied where a cause of action accrues outside of New
York. Here, however, the parties agree that New York statutes of limitations apply
and neither has raised alternate foreign limitations periods. Accordingly, in light of
the parties' agreement, New York's interest in property held within this state, and
the absence of conflicting law, the Court will apply the New York statute of
limitations.
The instant action raises challenging and novel statute of limitations questions. The
parties agree that New York's six-year statute of limitations applies to each of the
Reinsurers' three claims. The parties' dispute centers upon when each cause of
action accrued and whether the limitations period was tolled during the war and/or
while the assets were frozen.
"While the question of when a cause of action accrues often proves to be difficult in
particular applications, it is governed, in theory, by a simple principle: `A cause of
action does not accrue until its enforcement becomes possible.'" A cause of action
for reimbursement does not accrue until a payment constituting a "double recovery"
is made. Lord Day, acting as an agent for Vietnam and SOVAR, received the
settlement funds shortly after April 17, 1975 when the check was issued. Thus,
SOVAR was in constructive receipt of the settlement funds as of April 1975. Lord
Days receipt of the settlement payment thus created a "double recovery" for
SOVAR (having received payment from both the Reinsurers and the Panama Canal
Company). The Reinsurers suffered harm and had a right to reimbursement from
that date forward as all of the elements to state a claim for reimbursement had
accrued by April 1975.
The Reinsurers argue that as each of their claims is against a country with which the
United States was at war, the statute of limitations was tolled.
Assuming arguendo that either of the tolling provision applies, the statute of
limitations was tolled from April 1975 until hostilities with Vietnam ended. The
Reinsurers assert that "hostilities," within the meaning of the statute, did not
terminate until 1995 when the United States normalized relations with Vietnam and
unblocked Vietnamese assets frozen in this country.
While the United States reached a settlement of property claims and normalized
diplomatic relations with Vietnam in 1995, military conflict between the two
countries had long since ended. Absent a clear indication that the Legislature
intended the term "hostilities" to encompass both diplomatic hostilities as well as
military, the Court will not so interpret the statute.
SARATOGA COUNTRY CHAMBER OF COMMERCE, IN. v. PATAKI
49 3B 2009-2010
ATTY. ANTHONY ABAD
798 N.E. 2d 1047 (N.Y. 2003)
FACTS
ISSUE
RULING
HELEN LIU vs. REPUBLIC OF CHINA
No. 87-2976.
FACTS
Admiral Wong His-Ling (Wong), Director of the Defense Intelligence Bureau (DIB) of
the Republic of China (ROC), complained about the Chinese people overseas who
criticized the ROC after they had received favorable treatment in Taiwan. Wong
used Henry Liu as an example of this type of "ungrateful" Chinese person. Chen Chi-
li, a member of the Bamboo Union Gang, stated that such people should be "taught
a lesson," and that he could be trusted with such an assignment. Wong agreed that
Henry Liu should be "given a lesson" once the opportunity presented itself. Chen
Chi-li recruited Wu and Tong to murder Liu. They shot and killed Henry Liu in Daly
City, California. Wong, Chen Hu-men, and another DIB employee were convicted by
ROC military courts of conspiracy for their part in the Henry Liu murder.
In her complaint filed in the district court, Helen Liu (Liu) asserts that the ROC was
involved in the conspiracy to kill Henry Liu. The ROC filed a motion based on the act
of state doctrine to dismiss it as a party defendant. The district court denied it
initially to give Liu a chance to establish that, based on the findings of the ROC
courts, the ROC was liable under the doctrine of respondeat superior.
The district court denied Liu's motion for partial summary judgment and granted the
ROC's motion to dismiss it as a party defendant on act of state grounds. The district
court held that Wong's act was not incidental to his duties as Director of the DIB, or
reasonably foreseeable to the ROC. The district court also held that the act of state
doctrine precluded an American court from piercing the findings of the ROC
tribunals. The court found that the ROC decisions were "acts of state" because the
judgments represented "an exercise of the ROC's jurisdiction to give effect to its
public interests in assessing responsibility for the murder."
ISSUE
Whether or not there was subject matter jurisdiction over the ROC under the
Foreign Sovereign Immunities Act of 1976 (FSIA), codified in part at 28 U.S.C.
1602-1611 (1982)?
RULING
Yes. The FSIA is "the sole basis for obtaining [subject matter] jurisdiction over a
foreign state in our courts." Jurisprudence generally provides that foreign states are
immune from suit in the United States except as provided in sections 1605 to 1607.
CONFLICT OF LAWS DIGESTS: JURISDICTION
Liu's allegations were sufficient to bring this suit within the tortuous activity
exception of 28 U.S.C.A. 1605(a)(5) 2. Liu sued for damages for the wrongful
death of her husband which occurred within the United States. Section 1605(a)(5)
removes immunity for torts committed either by a foreign state or its agents acting
within the scope of their employment. Liu alleged both grounds: 1) that the ROC
was involved in the conspiracy to kill Henry Liu; and 2) that Wong acted within the
scope of his employment in ordering the assassination.
Whether the ROC is liable under respondeat superior is crucial to the issue of the
court's jurisdiction. Section 1606 of the FSIA provides: As to any claim for relief
with respect to which a foreign state is not entitled to immunity under section 1605
or 1607 of this chapter, the foreign state shall be liable in the same manner and to
the same extent as a private individual under like circumstances; but a foreign state
except for an agency or instrumentality thereof shall not be liable for punitive
damages....
There are two choice of law questions that must be resolved prior to determining
whether the ROC is liable under respondeat superior. First, we must decide the
choice of law rule applicable to the respondeat superior issue determinative of
jurisdiction under the FSIA. Second, assuming that we have jurisdiction under that
Act, we must ascertain the law to be applied in determining whether the ROC is
liable on the merits.
California is the place where the injury occurred, and under the federal choice of law
rule, its law will apply to the merits of the action unless the ROC has a more
significant relationship to the tort and the parties. Although the ROC has some
connection with the tort and the parties, we cannot say that it has the more
significant relationship. California and the ROC have offsetting interests in the
parties to this suit: Henry Liu was domiciled in California when he was killed, and
the ROC and other ROC nationals are parties to the suit. California, however, has a
significant interest in ensuring that its residents are compensated for torts
committed against them, and in discouraging the commission of such torts within its
borders. Consequently, based on the federal choice of law rule, California's law of
respondeat superior will determine whether Wong's act was within the scope of his
employment for purposes of jurisdiction under the FSIA and on the merits.
Respondeat Superior Element: California has established a two-prong test to
determine whether an employee is acting within the scope of employment.
Generally, an employer will be liable for an employee's wrongful act if 1) the act
was required or incident to the employee's duties or 2) the act was reasonably
foreseeable to the employer. In this case, we find that Liu has established facts
2 [a] foreign state shall not be immune from the jurisdiction of courts of the United States or of
the States in any case--- (5) not otherwise encompassed in paragraph (2) above [commercial
activities], in which money damages are sought against a foreign state for personal injury or
death, ..., occurring in the United States and caused by the tortious act or omission of that
foreign state or of any official or employee of that foreign state while acting within the scope of
his office or employment.... This exception does not apply, however, to claims based upon the
exercise of or failure to exercise a discretionary function.
50 3B 2009-2010
ATTY. ANTHONY ABAD
sufficient to meet the first prong of the test. The dispute between Liu and Wong
arose out of Liu's dissatisfaction with Wong's performance as Director of the DIB.
There is no evidence of any personal altercation unrelated to Wong's official duties.
Even if we assume, despite the absence of evidence, that Wong acted partly out of
a personal grudge "not engendered" by his employment as a high official in the ROC
government, California courts have made clear that a "mixed motive" is sufficient to
impose vicarious liability on the employer. Another factor present in this case is that
Wong used the ROC facilities entrusted to him to help Chen Chi-li and Shuai prepare
for the assassination. Wong sent both men to the DIB training school for four days,
and provided them with a dossier on Liu prepared by the DIB. As the ROC correctly
states, the mere use of facilities entrusted to the employee is insufficient to impose
liability on the employer. When an employee, such as Wong, uses governmental
authority in a mistaken attempt to benefit his employer by silencing an outspoken
critic of the government, there is nothing inequitable about spreading the loss
among all the beneficiaries of the government.
Discretionary Function Element: The court hold that the discretionary function
exception is inapplicable when an employee of a foreign government violates its
own internal law.
Act of State Doctrine: One factor we must consider is whether the foreign state
was acting in the public interest. "When the state qua state acts in the public
interest, its sovereignty is asserted. The courts must proceed cautiously to avoid an
affront to that sovereignty." Another factor to be considered is the degree of
international consensus regarding an activity. This is not the sort of case that is
likely to hinder the Executive Branch in its formulation of foreign policy, or result in
differing pronouncements on the same subject. Rather, this court would more likely
embarrass the Executive Branch if we summarily invoked the act of state doctrine to
bar an American citizen from litigating a wrongful death suit for a murder that
occurred in the United States.
To the credit of the ROC, rather than attempting to hide the sordid circumstances
involved in Liu's assassination, it made an investigation and publicly brought to trial
individuals involved, even including one in such a high position as Wong. Our
decision merely applies California law to the facts as ascertained by the ROC courts.
While the result may involve the financial responsibility of the ROC, it does not
affront its sovereignty and can cause no more embarrassment than the exposures
already made by the ROC courts. Because of our respondeat superior decision we
need not decide whether or to what extent further inquiries might be made of ROC
officials. Under these circumstances the act of state doctrine is not a bar to Liu's
suit.
PERKINS v. ROXAS
CONFLICT OF LAWS DIGESTS: JURISDICTION
G.R. No. 47517, June 27, 1941
FACTS
The private respondent Eugene Arthur Perkins, filed a complaint in the
Court of First Instance of Manila against the Benguet Consolidated Mining
Company for the recovery of the sum of P71,379.90, consisting of
dividends which have been declared and made payable on 52,874 shares of
stock registered in his name, payment of which was being withheld by the
company, and for the recognition of his right to the control and disposal of
said shares, to the exclusion of all others. To the complaint, the company
filed its answer, alleging, by way of defense, that the withholding of
plaintiff's right to the disposal and control of the shares was due to certain
demands made with respect to said shares by the petitioner herein. Idonah
Slade Perkins (ISP), and by one George H. Engelhard (GHE). Respondent
amended his complaint to implede ISP and GHE as additional defendants.
ISP filed an answer saying that there was a previous judgment in New York
saying that she is the owner of the shares, and such is res judicata.
Now, ISP files this petition for certiorari saying the respondent judge is
about to and will render judgment in the above-mentioned case
disregarding the constitutional rights of this petitioner; contrary to and
annulling the final, subsisting, valid judgment rendered and entered in this
petitioner's favor by the courts of the State of New York, ... which decision
is res judicata on all the questions constituting the subject matter of civil
case No. 53317, of the Court of First Instance of Manila; and which New
York judgment the Court of First Instance of Manila is without jurisdiction
to annul, amend, reverse, or modify in any respect whatsoever.
ISSUE
Whether or not the petition for certiorari will prosper? NO
RULING
By jurisdiction over the subject matter is meant the nature of the cause of action
and of the relief sought, and this is conferred by the sovereign authority which
organizes the court, and is to be sought for in general nature of its powers, or in
authority specially conferred.
Idonah Slade Perkins in her cross-complaint brought suit against Eugene Arthur
Perkins and the Benguet Consolidated Mining Company upon the alleged judgment
of the Supreme Court of the State of New York and asked the court below to render
judgment enforcing that New York judgment, and to issue execution thereon. This is
a form of action recognized by section 309 of the Code of Civil Procedure (now
section 47, Rule 39, Rules of Court) and which falls within the general jurisdiction of
the Court of First Instance of Manila, to adjudicate, settled and determine.
The petitioner expresses the fear that the respondent judge may render judgment
"annulling the final, subsisting, valid judgment rendered and entered in this
petitioner's favor by the courts of the State of New York, ... which decision is res
51 3B 2009-2010
ATTY. ANTHONY ABAD
judicata on all the questions constituting the subject matter of civil case No.
53317," and argues on the assumption that the respondent judge is without
jurisdiction to take cognizance of the cause. Whether or not the respondent judge in
the course of the proceedings will give validity and efficacy to the New York
judgment set up by the petitioner in her cross-complaint is a question that goes to
the merits of the controversy and relates to the rights of the parties as between
each other, and not to the jurisdiction or power of the court. The test of jurisdiction
is whether or not the tribunal has power to enter upon the inquiry, not whether its
conclusion in the course of it is right or wrong. If its decision is erroneous, its
judgment case be reversed on appeal; but its determination of the question, which
the petitioner here anticipates and seeks to prevent, is the exercise by that court
and the rightful exercise of its jurisdiction.
CALUAG v. PECSON
82 Phil. 8 (1948)
FACTS
ISSUE
RULING
FAR EAST INTERNATIONAL IMPORT and EXPORT CORPORATION v. NANKAI
KOGYO CO. LTD. G.R. No. L-13525 November 30, 1962
FACTS
On December 26, 1956, the Far East International Import & Export Corporation, Far
East for short, organized under Philippine Laws, entered into a Contract of Sale of
Steel Scrap with the Nankai Kogyo Co., Ltd., Nankai organized under Japanese Laws
with address at Osaka, Japan. The buyer sign in Japan and the seller in Manila,
Philippines. The pertinent provisions of the agreement are represented below
1. Quantity: Approximately 5,000 (five thousand) metric tons 10% more or
less.
10. Payments: BUYER shall establish an irrevocable without recourse Letter
of Credit in the amount of U.S. $312,500.00 with China Banking Corp. in
Manila, not later than 30 days upon receipt of SELLERS' confirmation about
the availability of export permit, and shall be subject to the following terms
and conditions:
a. This Letter of Credit shall be drawable 90% of quantity been
shipped uponpresentation of:
xxx xxx xxx
b. the remaining balance of 10% of the shipment shall be
adjusted between BUYER and SELLER immediately after the
CONFLICT OF LAWS DIGESTS: JURISDICTION
discharge is completed at the port of destination, and shall be
drawable by the
SELLER upon presentation of:
xxx xxx xxx
13. Force Majeure: the execution of this agrrement is subject to any and
allGovernment restrictions prohibiting or penalizing in whole or in part
theexport of Iron & Steel Scrap from the Philippines, and the Seller shall
not be responsible for delay in or failure of shipment or delivery or delays
in transportation due to force majeure, strikes, dfferences with workmen,
accidents, fires, flood, mobilizations, wars, foreign wars, riots, revolutions,
regulations and restrictions or to any conditions beyond thecontrol of the
SELLER whether the nature herein stated or not.
14. Dispute: In case of disputes, Board of Arbitration may be formed in
Japan. Decision by the board of Arbitration shall be final and binding on
both BUYER AND SELLER.
Upon perfection of the contract Nankai opened a letter for credit (No. 38/80049)
with the China Banking Corporation. On March 15, 1957, only four (4) days before
the expiration of the Far East licence, three (3) boats sent by Nankai arrived in the
PhilippinesOn March 19, 1957, the expiration of the export license, only 1,058.6
metric tons of scrap steel was loaded on the SS Mina. The loading was accordingly
stopped.
On April 27, 1957, Nankai confirmed and acknowleged delivery of the 1,058.6
metric tons of steel scrap, but asked for damages amounting to $148,135.00
consisting of dead freight charges, damages, bank charges, phone and cable
expenses.
As repeated requests, both against the shipping agent and the buyers (Nankai), for
the issuance of the of Bill Lading were ignored, Far East filed on May 16, 1957, the
present complaint for Specific Performance, damages, a writ of preliminiry
mandatory injunction directed against Nankai and the shipping company, to issue
and deliver to the plaintiff, a complete set of negotiable of Lading for the 1,058.6
metric tons of scrap and a writ of preliminary injunction against the China Banking
Corporation and the Nankai to maintain the Letter Credit. The lower court issued on
May 17, 1957 an ex parte writ of preliminary injunction, after Far East had posted a
bond in the amount of P50,000.00.
The lower court rendered judgment absolving, defendants Everett Steamship
Company and China Banking Corporation from liability and denied the claim for
damages, both actual and moral, of the parties; found that the question of
jurisdiction over the person of defendant and the subject matter has become moot
ISSUE
Whether or not the trial court acquired jurisdiction over the subject matter and over
the person of the defendant-appellant?
52 3B 2009-2010
ATTY. ANTHONY ABAD
RULING
Defendant contends that Philippine Courts have no jurisdiction to take cognizance of
the case because the Nankai is not doing business in the islands; and that while it
has entered into the transaction in question, same, however, does not constitute
"doing business", so as to make it amenable to summons and subject it to the
Court's jurisdiction. It bolstered this claim by a provision in the contract which
provides that "In case of disputes, Board of Arbitration may be formed in Japan.
Decision of the Board of Arbitration shall be final and binding on both BUYER and
SELLER".
SEC. 14. Service upon private foreign corporations. If the defendant is a
foreign corporation, or a non-resident joint stock company or association,
doing business in the Philippines, service may be made on its resident
agent designated in accordance with law for that purpose, or, if there be no
such agent, on the government official designated by law to that effect, or
on any officer or agent within the Philipines. (Rule 7).
The above rule indicates three modes of effecting service of summons upon a
private, foreign corporation, viz: (1) by serving upon the agent designated in
accordance with law to accept service of summons; (2) if there is no resident agent,
by service on the government cial designated by law to that effect; and (3) by
serving on any officer or agent of said corporation with Philippines.
The plaintiff complied with the third stated above, for it has been shown that Mr.
Ishida, who personally signed the contract for the purchase of the scrap in question
in behalf of the Nankai Kogyo, the Trade Manager of said Company, Mr. Tominaga
the Chief of the Petroleum Section of the same company and Mr. Yoshida was the
man-in-charge of the Import Section of the company's Tokyo Branch. All these
three, including the first two who were served with Summons, were officers of the
defendant company.
It is true that the defendant entered a Special Appearance, wherein it contested the
jurisdiction of the Philippines Courts to take cognizance of the case on grounds
contained in the various pleadings presented by it.
The motion to dismiss on the ground of lack of jurisdiction had been overruled
because it did not appear indubitable. Subsequently, however, the defendant filed
its Answer and invoked defenses and grounds for dismissal of complaint other than
lack of jurisdiction.
Even though the defendant objects to the jurisdiction of the court, if at thesame
time he alleges any non-jurisdictional ground for dismissing the action, the Court
acquires jurisdiction over him. Even though he does not intend to confer jurisdiction
upon the court, his appearance for some other purpose than to object to the
jurisdiction subjects him to jurisdiction of the court.Even though he does not wish to
submit to the jurisdiction of the court, he cannot ask the court to act upon any
question except the question of jurisdiction, without conferring jurisdiction upon the
court.
CONFLICT OF LAWS DIGESTS: JURISDICTION ATTY. ANTHONY ABAD

In the instant case, the testimony of Atty. Pablo Ocampo that appellant was doing
business in the Philippines corroborated by no less than Nabuo Yoshida, one of
appellant's officers, that he was sent to the Philippines by his company to look into
the operation of mines, thereby revealing the defendant's desire to continue
engaging in business here, after receiving the shipment of the iron under
consideration, making the Philippines a base thereof.

It is finally noted that when defendant's motion to dismiss in the Micronesian case
was denied, it immediately brought the matter to this Court on Prohibition seeking
to restrain the Workmen's Compensation mission from exercising jurisdiction over
the controversy. In the present case, the defendant, while entering a Special
Appearance to contest the jurisdiction of the Court, pursued its defense further by
filing its Answer and going into trial.

53 3B 2009-2010