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Conflict of Laws: Processual Presumption; Property

Case: Citibank v. Sabeniano (504 SCRA 378)


Facts: Petitioner Citibank is a banking corporation duly authorized under the laws of the USA to
do commercial banking activities in the Philippines and FNCB Finance was an affiliate company
of petitioner specifically handling money market placement for its clients. Sabeniano was a
client of both petitioners Citibank and FNCB Finance. Respondent filed a complaint against
petitioners claiming to have substantial deposits, the proceeds of which were supposedly
deposited automatically and directly to respondent’s account with the petitioner Citibank and
that allegedly petitioner refused to do so despite repeated demands. Petitioner alleged that
respondent obtained several loans from the former and in default, Citibank exercised its right to
set-off respondent’s outstanding loans with her deposits and money. One of the respondent’s
money which Citibank applied against her loans are from her dollar accounts with Citibank –
Geneva in Switzerland pursuant to an alleged Declaration of Pledge executed by respondent to
its favor.
The RTC declared the act illegal, null and void and ordered the petitioner to refund the
amount plus interest, ordering Sabeniano, on the other hand to pay Citibank her indebtedness.
On appeal, the Court of Appeals affirmed the decision modifying it to entirely be in favor of the
respondent.
Issue: Whether or not the action of the petitioner in applying respondent’s dollar accounts in
Citibank – Geneva, Switzerland was valid.
Ruling: No, it was not valid. Certain principles of private international law should be considered
herein because the property pledged was in the possession of an entity in a foreign country,
namely, Citibank-Geneva. In the absence of any allegation and evidence presented by
petitioners of the specific rules and laws governing the constitution of a pledge in Geneva,
Switzerland, they will be presumed to be the same as Philippine local or domestic laws; this is
known as processual presumption. Upon closer scrutiny of the Declaration of Pledge, this Court
finds the same exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of
Assignment of the PNs notarized, yet left the Declaration of Pledge unnotarized. Second,
petitioner Citibank was unable to establish the date when the Declaration of Pledge was
executed. Third, the Declaration of Pledge was irregularly filled-out. It was constituted in favor
of Citibank, N.A. The pledge, therefore, made no sense, the pledgor and pledgee being the
same entity. Lastly, respondent denied that it was her signature on the Declaration of Pledge.
She claimed that the signature was a forgery.
Therefore, this Court declares that the remittance of respondent's dollar accounts from
Citibank-Geneva and the application thereof to her outstanding loans with petitioner Citibank
was illegal, and null and void. Petitioner Citibank is obligated to return to respondent the
amount taken from her Citibank-Geneva accounts, and, at the same time, respondent continues
to be obligated to petitioner Citibank for the balance of her outstanding loans.
Conflict of Laws: Jurisdiction; Contracts (lex loci contractus)
Case: PCL Shipping Philippines v. NLRC (511 SCRA 44)
Facts: Rusel was employed by PCL Shipping Philippines, Inc. for and in behalf of its foreign
principal, U-Ming Marine Transport Corporation. He joined the vessel MV Cemtex General for a
contract period of 12 months but shortly thereafter, Rusel injured his ankle when he slipped
while cleaning the vessel’s kitchen. A request for medical examination was denied by the
captain. After feeling unbearable pain in his ankle, Rusel jumped off the vessel using a life jacket
and swam to the shore to get his ankle treated where he was confined at a hospital for 8 days.
He was then fetched by an agent of the vessel and was required to board a plane bound for the
Philippines.
Rusel filed a complaint for illegal dismissal against petitioners before the arbitration
branch of the NLRC. In their answer, the latter alleged that Rusel deserted his employment by
jumping off the vessel. The Labor Arbiter decided in favor of Rusel finding him to have been
unjustly repatriated. Subsequent appeals to the NLRC and CA affirmed the said decision. Hence,
the present petition.
PCL Shipping contended that Rusel is guilty of abandonment when he jumped off the
ship but at the same time, they also contend that they had the right to pre-terminate
respondent's employment under POEA Memorandum Circular No. 41. Petitioners however
admit that they did not inform private respondent in writing for the termination and no formal
investigation was conducted, and claims that such requirements of notice and hearing applies
strictly only when the employment is within the Philippines and that these need not be strictly
observed in cases of international maritime or overseas employment.
ISSUE: Whether or not the twin requirements of notice and hearing need not be strictly
followed if employment is not within the Philippines as contended by petitioner.
RULING: No, the Court does not agree. The provisions of the Constitution as well as the Labor
Code which afford protection to labor apply to Filipino employees whether working within the
Philippines or abroad. Moreover, the principle of lex loci contractus (the law of the place where
the contract is made) governs in this jurisdiction. In the present case, it is not disputed that the
Contract of Employment entered into by and between petitioners and private respondent was
executed here in the Philippines with the approval of the Philippine Overseas Employment
Administration (POEA). Hence, the Labor Code together with its implementing rules and
regulations and other laws affecting labor apply in this case.
Conflict of Laws: Jurisdiction; Foreign Judgments
Case: St. Aviation Services Co., v. Grand International Airways, Inc. (505 SCRA 30)
Facts: Petitioner St. Aviation Services Co. is a foreign corporation based in Singapore engaged in
the manufacture, repair, and maintenance of airplanes and aircrafts while respondent Grand
International Airways, Inc. is a domestic corporation engaged in airline operations. Both parties
executed an agreement in Singapore for the maintenance and modification of respondent's
aircrafts. This agreement also contained that the "construction, validity and performance
thereof" shall be governed by the laws of Singapore. Both parties further agreed to submit any
suit arising from their agreement to the non-exclusive jurisdiction of Singapore courts.
Respondent subsequently defaulted in paying petitioner for its services after repeated
demands which caused the latter to file with the High court of Singapore an action for collection
of sum of money. Upon motion, the court issued a Writ of Summons which was served
extraterritorially upon respondent with the assistance of the sheriff of Pasay City but
respondent failed to answer despite receipt thereof. The Singapore High Court then rendered a
judgment by default against respondent.
Petitioner later filed with the RTC of Pasay City a Petition for Enforcement of Judgment
for which respondent filed a motion to dismiss on the ground that the Singapore High Court did
not acquire jurisdiction over him and thus decision was void for having been made in violation
of his right to due process. The motion was denied but was granted by the CA. Hence, the
instant Petition for Review on Certiorari.
ISSUE: Whether or not the Singapore High Court acquired jurisdiction over respondent by the
service of summons upon its office in the Philippines and thus making the judgment by default
in said foreign court enforceable in the Philippines.
RULING: Yes. Generally, matters of remedy and procedure such as those relating to the service
of process upon a defendant are governed by the lex fori or the internal law of the forum, which
in this case is the law of Singapore. Here, petitioner moved for leave of court to serve a copy of
the Writ of Summons outside Singapore. In an Order dated December 24, 1997, the Singapore
High Court granted "leave to serve a copy of the Writ of Summons on the Defendant by a
method of service authorized by the law of the Philippines xxx” This service of summons
outside Singapore is in accordance to the Rules of Court of Singapore.
In the Philippines, jurisdiction over a party is acquired by service of summons by the
sheriff, his deputy or other proper court officer either personally by handing a copy thereof to
the defendant or by substituted service. In this case, the Writ of Summons issued by the
Singapore High Court was served upon respondent at its office in Pasay City. Considering that
the Writ of Summons was served upon respondent in accordance with our Rules, jurisdiction
was acquired by the Singapore High Court over its person. Clearly, the judgment of default
rendered by that court against respondent is valid.

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