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NORTHWEST ORIENT AIRLINES, INC. petitioner, vs. COURT OF APPEALS and C.F. SHARP & COMPANY INC.,Respondents FACTS: Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a Japanese court against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a corporation incorporated under Philippine laws.chanroblesvirtualawlibrary chanrobles virtual law library On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through its Japan branch, entered into an International Passenger Sales Agency Agreement, whereby the former authorized the latter to sell its air transportation tickets. Unable to remit the proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said agreement, plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of the ticket sales, with claim for damages. After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to have the complaint and the writs of summons served at the head office of the defendant in Manila. On July 11, 1980, the Director of the Tokyo District Court requested the Supreme Court of Japan to serve the summons through diplomatic channels upon the defendant's head office in Manila. Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for enforcement of the judgment was filed by plaintiff before the Regional Trial Court of Manila Branch 54. 2 The foreign judgment in the Japanese Court sought in this action is null and void for want of jurisdiction over the person of the defendant considering that this is an action in personam; the Japanese Court did not acquire jurisdiction over the person of the defendant because jurisprudence requires that the defendant be served with summons in Japan in order for the Japanese Court to acquire jurisdiction over it, the process of the Court in Japan sent to the Philippines which is outside Japanese jurisdiction cannot confer jurisdiction over the defendant in the case before the Japanese Court of the case at bar. Boudard versus Tait 67 Phil. 170. The plaintiff contends that the Japanese Court acquired jurisdiction because the defendant is a resident of Japan, having four (4) branches doing business therein and in fact had a permit from the Japanese government to conduct business in Japan (citing the exhibits presented by the plaintiff); if this is so then service of summons should have been made upon the defendant in Japan in any of these alleged four branches; as admitted by the plaintiff the service of the summons issued by the Japanese Court was made in the Philippines thru a Philippine Sheriff. This Court agrees that if the defendant in a foreign court is a resident in the court of that foreign court such court could acquire jurisdiction over the person of the defendant but it must be served upon the defendant in the territorial jurisdiction of the foreign court. Such is not the case here because the defendant was served with summons in the Philippines and not in Japan. ISSUE: The principal issue here is whether a Japanese court can acquire jurisdiction over a Philippine corporation doing business in Japan by serving summons through diplomatic channels on the Philippine corporation at its principal office in Manila after prior attempts to serve summons in Japan had failed. HELD: JAPAN acquired jurisdiction Such an argument does not persuade.chanroblesvirtualawlibrary chanrobles virtual law library It is a general rule that processes of the court cannot lawfully be served outside the territorial limits of the jurisdiction of the court from which it issues (Carter vs. Carter; 41 S.E. 2d 532, 201) and this is regardless of the residence or citizenship of the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual service within the proper territorial limits on defendant or someone authorized to accept service for him. Thus, a defendant, whether a resident or not in the forum where the action is filed, must be served with summons within that forum. But even assuming a distinction between a resident defendant and non-resident defendant were to be adopted, such distinction applies only to natural persons and not in the corporations. This finds support in the concept that "a corporation has no home or residence in the sense in which those terms are applied to natural persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in its brief: Defendant-appellee is a Philippine Corporation duly organized under the Philippine laws. Clearly, its residence is the Philippines, the place of its incorporation, and not Japan. While defendant-appellee maintains branches in Japan, this will not make it a resident of Japan. A corporation does not become a resident of another by engaging in business there even though licensed by that state and in terms given all the rights and privileges of a domestic corporation (Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401). On this premise, defendant appellee is a non-resident corporation. As such, court processes must be served upon it at a place within the state in which the action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct. 354). 5 A foreign judgment is presumed to be valid and binding in the country from which it comes, until the contrary is shown. It is 6 also proper to presume the regularity of the proceedings and the giving of due notice therein.

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It is settled that matters of remedy and procedure such as those relating to the service of process upon a defendant are 8 governed by the lex fori or the internal law of the forum. In this case, it is the procedural law of Japan where the judgment was rendered that determines the validity of the extraterritorial service of process on SHARP. As to what this law is is a question of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any other fact. 9Sections 24 and 25, Rule 132 of the 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 SHARP to present evidence as to what that Japanese procedural law is and to show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly, the presumption of validity and regularity of the service of summons and the decision thereafter rendered by the Japanese court must stand.chanroblesvirtualawlibrary chanrobles virtual law library Alternatively in the light of the absence of proof regarding Japanese 10 law, the presumption of identity or similarity or the so-called processual presumption may be invoked. Applying it, the Japanese law on the matter is presumed to be similar with the Philippine law on service of summons on a private foreign corporation doing business in the Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a foreign corporation doing business in the Philippines, service may be made: (1) on its resident agent designated in accordance with law for that purpose, or, (2) if there is no such resident agent, on the government official designated by law to that effect; or (3) on any of its officers or agents within the Philippines. The National Internal Revenue Code declares that the term "'resident foreign corporation' applies to a foreign corporation engaged in trade or business within the Philippines," as distinguished from a "'non-resident foreign corporation' . . . (which is one) not engaged in trade or bussiness within the Philippines." [Sec. 20, pars. (h) and (i)].c In as much as SHARP was admittedly doing business in Japan through its four duly registered branches at the time the collection suit against it was filed, then in the light of the processual presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the jurisdiction of the courts therein and may be deemed to have assented to the said 27 courts' lawful methods of serving process. Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only under the processual presumption but also because of the presumption of regularity of performance of official duty.chanroblesvirtualawlibrary chanrobles virtual law library

3|P ag e CON F LIC T OF LA WS case dige s t- Ma r celia n o M on a to III

LOURDES A. VALMONTE and ALFREDO D. VALMONTE, Petitioners, vs. THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA DIMALANTA, Respondent. FACTS: Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the Philippine bar, however, practices his profession in the Philippines, commuting for this purpose between his residence in the state of Washington and Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita, Manila. On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A. Valmonte, filed a complaint for partition of real property and accounting of rentals against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the Regional Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment located in Paco, Manila. [I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned counsel of Dimalanta to address all communications (evidently referring to her controversy with her sister Mrs. Dimalanta over the Paco property, now the subject of the instant case) to her lawyer who happens also to be her husband. Such directive was made without any qualification just as was her choice/designation of her husband Atty. Valmonte as her lawyer likewise made without any qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being his wifes attorney (at least with regard to the dispute vis-a-vis [sic] the Paco property) would appear to be feeble or trifling, if not incredible. Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on her behalf. Accordingly the process server left without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte. ISSUE: The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was validly served with summons. In holding that she had been, the Court of Appeals stated: 1 HELD: We hold that there was no valid service of process on Lourdes A. Valmonte. To provide perspective, it will be helpful to determine first the nature of the action filed against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an action in personam, in rem or quasi in rem.This is because the rules on service of summons embodied in Rule 14 apply according to whether an action is one or the other of these actions. In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served, 2 substituted service, as provided in Rule 14, 7-8 is essential for the acquisition by the court of jurisdiction over the person of a defendant who does not voluntarily submit himself to the authority of the court. 3 If defendant cannot be served with summons because he is temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by leave of court, be made by publication. 4 Otherwise stated, a resident defendant in an action in personam, who cannot be personally served with summons, may be summoned either by means of substituted service in accordance with Rule 14, 8 or by publication as provided in 17 and 18 of the same Rule. 5 In all of these cases, it should be noted, defendant must be a resident of the Philippines, otherwise an action in personam cannot be brought because jurisdiction over his person is essential to make a binding decision. On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in accordance with Rule 14, 17, which provides: 17. Extraterritorial service. - When the defendant does not reside and is not found in the Philippines and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under Section 7; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. Applying the foregoing rules to the case at bar, private respondents action, which is for partition and accounting under Rule 69, is in the nature of an action quasi in rem. Such an action is essentially for the purpose of affecting the defendants interest in a specific property and not to render a judgment against him. As explained in the leading case ofBanco Espaol Filipino v. Palanca : 7] As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her must be in accordance with Rule 14, 17. Such service, to be effective outside the Philippines, must be made either (1) by personal service; (2) by publication in a newspaper of general circulation in such places and for such time as the court may order, in

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which case a copy of the summons and order of the court should be sent by registered mail to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient. Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of the first two modes, the question is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in any . . . manner the court may deem sufficient." We hold it cannot. This mode of service, like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign country where the defendant resides. 8 Moreover, there are several reasons why the service of summons on Atty. Alfredo D. Valmonte cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte. In the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the court as required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court which in fact refused to consider the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an answer. Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in which it was held that service of summons upon the defendants husband was binding on her. But the ruling in that case is justified because summons were served upon defendants husband in their conjugal home in Cebu City and the wife was only temporarily absent, having gone to Dumaguete City for a vacation. The action was for collection of a sum of money. In accordance with Rule 14, 8, substituted service could be made on any person of sufficient discretion in the dwelling place of the defendant, and certainly defendants husband, who was there, was competent to receive the summons on her behalf. In any event, it appears that defendant in that case submitted to the jurisdiction of the court by instructing her husband to move for the dissolution of the writ of attachment issued in that case. On the other hand, in the case of Gemperle v. Schenker, 10] it was held that service on the wife of a nonresident defendant was found sufficient because the defendant had appointed his wife as his attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss citizen and resident of Switzerland, service of summons upon his wife Helen Schenker who was in the Philippines was sufficient because she was her husbands representative and attorney-in-fact in a civil case, which he had earlier filed against William Gemperle. In fact Gemperles action was for damages arising from allegedly derogatory statements contained in the complaint filed in the first case. As this Court said, "i]n other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her husband, so that she was, also, empowered to represent him in suits filed against him, particularly in a case, like the one at bar, which is a consequence of the action brought by her on his behalf." 11 Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the action brought by Mr. Schenker against him, there would have been no doubt that the trial court could have acquired jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker. In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact. Although she wrote private respondent s attorney that "all communications" intended for her should be addressed to her husband who is also her lawyer at the latters address in Manila, no power of attorney to receive summons for her can be inferred therefrom. In fact the letter was written seven months before the filing of this case below, and it appears that it was written in connection with the negotiations between her and her sister, respondent Rosita Dimalanta, concerning the partition of the property in question. As is usual in negotiations of this kind, the exchange of correspondence was carried on by counsel for the parties. But the authority given to petitioners husband in these negotiations certainly cannot be construed as also including an authority to represent her in any litigation.

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MARGARITA ROMUALDEZ-LICAROS, Petitioner, v. ABELARDO B. LICAROS, respondent. x x x Abelardo Licaros (Abelardo, for short) and Margarita Romualdez-Licaros (Margarita, hereafter) were lawfully married on December 15, 1968. Out of this marital union were born Maria Concepcion and Abelardo, Jr. Ironically, marital differences, squabbles and irreconcilable conflicts transpired between the spouses, such that sometime in 1979, they agreed to separate from bed and board. In 1982, Margarita left for the United States and there, to settle down with her two (2) children. In the United States, on April 26, 1989, Margarita applied for divorce before the Superior Court of California, County of San Mateo where she manifested that she does not desire counseling at that time . On August 6, 1990, Margarita was granted the decree of divorce together

with a distribution of properties between her and Abelardo .

Not long after, on August 17, 1990, Abelardo and Margarita executed an Agreement of Separation of Properties (pp. 60-64, Rollo). This was followed-up by a petition filed on August 21, 1990 before the Regional Trial Court of Makati for the dissolution of the conjugal partnership of gains of the spouses and for the approval of the agreement of separation of their properties. On December 27, 1990, a decision was issued granting the petition and approving the separation of property agreement. Abelardo commenced Civil Case for the declaration of nullity of his marriage with Margarita, based on psychological incapacity under the New Family Code. As Margarita was then residing at 96 Mulberry Lane, Atherton, California, U.S.A., Abelardo initially moved that summons be served through the International Express Courier Service. The court a quo denied the motion. Instead, it ordered that summons be served by publication in a newspaper of general circulation once a week for three (3) consecutive weeks, at the same time furnishing respondent a copy of the order, as well as the corresponding summons and a copy of the petition at the given address in the United States through the Department of Foreign Affairs, all at the expense of Abelardo. Almost nine (9) years later, on April 28, 2000, the petition at bench was commenced when Margarita received a letter dated November 18, 1991 from a certain Atty. Angelo Q. Valencia informing her that she no longer has the right to use the family name Licaros inasmuch as her marriage to Abelardo had already been judicially dissolved by the Regional Trial Court of Makati on November 8, 1991. Asseverating to have immediately made some verifications and finding the information given to be true, petitioner commenced the instant petition. ISSUE: I. Whether Margarita was validly served with summons in the case for declaration of nullity of her marriage with Abelardo; HELD: She was validly served with summon. Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court acquires jurisdiction over his person.9 As a rule, when the defendant does not reside and is not found in the Philippines, Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. But when the case is one of actions in rem or quasi in rem enumerated in Section 15,10 Rule 14 of the Rules of Court, Philippine courts have jurisdiction to hear and decide the case. In such instances, Philippine courts have jurisdiction over the res, and 11 jurisdiction over the person of the non-resident defendant is not essential. Actions in personam12 and actions in rem or quasi in rem differ in that actions in personam are directed against specific persons and seek personal judgments. On the other hand, actions in rem or quasi in rem are directed against the thing or property or status of a person and seek judgments with respect thereto as against the whole world.[13 At the time Abelardo filed the petition for nullity of the marriage in 1991, Margarita was residing in the United States. She left the Philippines in 1982 together with her two children. The trial court considered Margarita a non-resident defendant who is not found in the Philippines. Since the petition affects the personal status of the plaintiff, the trial court authorized extraterritorial service of summons under Section 15, Rule 14 of the Rules of Court. The term personal status includes family 14 relations, particularly the relations between husband and wife. Under Section 15 of Rule 14, a defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service in four instances: (1) when the action affects the personal status of theplaintiff; (2) when the action relates to, or the subject of which is property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; or (4) when the property of the defendant has been attached within the Philippines. In these instances, extraterritorial service of summons may be effected under any of three modes: (1) by personal service out of the country, with leave of court; (2) by publication and sending a copy of the summons and order of the court by registered mail to the defendants last known address, also with leave of court; or (3) by any other means the judge may consider sufficient.

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The trial courts prescribed mode of extraterritorial service does not fall under the first or second mode specified in Section 15 of Rule 14, but under the third mode. This refers to any other means that the judge may consider sufficient. The Process Servers Return of 15 July 1991 shows that the summons addressed to Margarita together with the complaint and its annexes were sent by mail to the Department of Foreign Affairs with acknowledgment of receipt. The Process 16 Servers certificate of service of summons is prima facie evidence of the facts as set out in the certificate. Before proceeding to declare the marriage between Margarita and Abelardo null and void, the trial court stated in its Decision dated 8 November 1991 that compliance with the jurisdictional requirements hav(e) (sic) been duly established. We hold that delivery to the Department of Foreign Affairs was sufficient compliance with the rule. After all, this is exactly what the trial court required and considered as sufficient to effect service of summons under the third mode of extraterritorial service pursuant to Section 15 of Rule 14.

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BANCO DO BRASIL,, Petitioner, v. THE COURT OF APPEALS, HON. ARSENIO M. GONONG, and CESAR S. URBINO, SR., Respondents. FACTS: At the outset, let us state that this case should have been consolidated with the recently decided case of Vlason Enterprises Corporation v. Court of Appeals and Duraproof Services, represented by its General Manager, Cesar Urbino Sr.[6] , for these two (2) cases involved the same material antecedents, though the main issue proffered in the present petition vary with the Vlason case. The material antecedents, as quoted from the Vlason[7] case: La Union was hit by three typhoons, and the vessel ran aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered into salvage agreement with private respondent (URBINO representative of Duraproof) to secure and repair the vessel at the agreed consideration of $1 million and "fifty percent (50%) [of] the cargo after all expenses, cost and taxes." To enforce its preferred salvors lien, herein Private Respondent Duraproof Services filed with the Regional Trial Court of Manila a Petition. Private respondent amended its Petition15 to include Banco Du Brasil; Upon motion of the private respondent, the trial court allowed summons by publication to be served upon defendants who 18 were not residents and had no direct representative in the country. Private respondent again moved to declare the following in default: [Vlason], Quiray, Sy andn on March 26, 1990; Banco [do] Bra[s]il,
23

and

The trial court declared the other respondents in default and allowed private respondent to present evidence against them.32 Cesar Urbino, general manager of private respondent, testified and adduced evidence against the other respondents. On February 18, 1991, the trial court disposed as follows: 4. Banco [Du] Brasil to pay [private respondent] in the amount of $300,000.00 in damages;
35

and finally,

On April 10, 1991, petitioner Banco do Brasil filed, by special appearance, an Urgent Motion to Vacate Judgement and to Dismiss Case38 on the ground that the February 18, 1991 Decision of the trial court is void with respect to it for having been rendered without validly acquiring jurisdiction over the person of Banco do Brasil. Petitioner subsequently amended its 39 petition to specifically aver that its special appearance is solely for the purpose of questioning the Courts exercise of personal jurisdiction. On May 20, 1991, the trial court issued an Order40 acting favorably on petitioners motion and set aside as against petitioner the decision dated February 18, 1991 for having been rendered without jurisdiction over Banco do Brasils person. Private 41 42 respondent sought reconsideration of the Order dated May 20, 1991. However, the trial court in an Order dated June 21, 1991 denied said motion. For its part, petitioner Banco do Brasil sought reconsideration, insofar as its liability for damages, on the ground that there was no valid service of summons as service was on the wrong party the ambassador of Brazil. Hence, it argued, the trial court did not acquire jurisdiction over petitioner Banco do Brasil.49 Petitioner Banco do Brasil takes exception to the appellate courts declaration that the suit below is in rem, not in personam,[51] thus, service of summons by publication was sufficient for the court to acquire jurisdiction over the person of petitioner Banco do Brasil, and thereby liable to private respondent Cesar Urbino for damages claimed, amounting to $300,000.00. Petitioner further challenges the finding that the February 18, 1991 decision of the trial court was already final 52 and thus, cannot be modified or assailed. Petitioner avers that the action filed against it is an action for damages, as such it is an action in personam which requires personal service of summons be made upon it for the court to acquire jurisdiction over it. However, inasmuch as petitioner Banco do Brasil is a non-resident foreign corporation, not engaged in business in the Philippines, unless it has property located in the Philippines which may be attached to convert the action into an action in rem, the court cannot acquire jurisdiction over it in respect of an action in personam. ISSUE: WON BDB was validly served with summon. HELD: Banco do Brasil was not validly served with summon. The action was in personam, personal or substituted service is the proper mode of service of summon and not publication.

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First. When the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in accordance with Rule 14, Section 17[53] of the Rules of Court. Under this provision, there are only four (4) instances when extraterritorial service of summons is proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-residents property has been attached within the Philippines."54 In these instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner the court may deem sufficient.55 Clear from the foregoing, extrajudicial service of summons apply only where the action is in rem, an action against the thing itself instead of against the person, or in an action quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or loan burdening the property. This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res.56 However, where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non57 resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire 58 jurisdiction over his person and therefore cannot validly try and decide the case against him. In the instant case, private respondents suit against petitioner is premised on petitioners being one of the claimants of the subject vessel M/V Star Ace.59 Thus, it can be said that private respondent initially sought only to exclude petitioner from claiming interest over the subject vessel M/V Star Ace. However, private respondent testified during the presentation of evidence that, for being a nuisance defendant, petitioner caused irreparable damage to private respondent in the amount of $300,000.00.60 Therefore, while the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a relief totally alien to the action. It must be stressed that any relief granted in rem or quasi in rem actions must be confined to the res, and the court cannot 61 lawfully render a personal judgment against the defendant. Clearly, the publication of summons effected by private respondent is invalid and ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to 62 recover damages from petitioner for the alleged commission of an injury to his person or property caused by petitioners being a nuisance defendant, private respondents action became in personam. Bearing in mind thein personam nature of the action, personal or, if not possible, substituted service of summons on petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against herein petitioner.

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PHILIPPINE INTERNATIONAL SHIPPING CORPORATION (PISC), GEORGE LIM, MARCOS BAUTISTA, CARLOS LAUDE, TAN SING LIM, ANTONIO LIU LAO, ONG TEH, PHILIPPINE CONSORTIUM CONSTRUCTION CORPORATION, PACIFIC MILLS, INC., and UNIVERSAL STEEL SMELTING CO., INC., Petitioners, vs. THE HON. COURT OF APPEALS, HON. JOSE C. DE GUZMAN, as Judge presiding Branch 93 of the Regional Trial Court of Quezon City, INTERPOOL, LTD. and SHERIFF NORBERTO V. DOBLADA JR., Respondents.

FACTS:Plaintiff [respondent Interpool, Ltd.] is a foreign corporation, duly organized and existing under the laws of Bahamas Islands with office and business address at 630, 3rd Avenue, New York, New York, and not licensed to do, and not doing business, in the Philippines.chanroblesvirtualawlibrary chanrobles virtual law library Defendants Philippine International Shipping Corporation, Philippine Construction Consortium Corporation, Pacific Mills Inc., and Universal Steel Smelting Company, Inc., are corporations duly organized and existing under and by virtue of the laws of the Philippines. The other defendants, namely: 1) George Lim; 2) Marcos Bautista; 3) Carlos Laude 4) Tan Sing Lim; 5) Antonio Liu Lao and 6) Ong Teh, unconditionally and irrevocably guaranteed to pay (sic) plaintiff all payments due to it under the Master Equipment Leasing Agreement (Exhibit C) and Membership Agreement and Hiring Conditions (Exhibit B) dated June 8, 1979, in the amounts at the time and in the manner set out in the said agreements and to indemnify plaintiff against all claims, liabilities, costs, damages and expenses (including legal fees) suffered or incurred by plaintiff, arising out of or in connection with any failure by defendant Philippine International Shipping Corporation to perform any of its obligations under the aforesaid Agreements. Defendant Philippine International Shipping Corporation incurred outstanding and unpaid obligations with the plaintiff, , representing unpaid per diems, drop-off charges, interest and other agreed charges. library The plaintiff sent letters to the defendants demanding payment of their outstanding and unpaid obligations, but to no avail, so plaintiff was constrained to file a case against the principal defendant, (PISC) before the United States District Court, Southern District of New York, Plaintiff obtained a Default Judgment on July 3, 1983 against (PISC) ordering it to pay the plaintiff Because of the unjustifiable failure and refusal of PISC and its guarantors to jointly and severally pay their obligations to the plaintiff, the latter filed a complaint Trial Court of Quezon City] to enforce the default judgment of the U.S. District Court against the defendant PISC and also to enforce the individually executed Continuing Guaranties of the other defendants The defendants (herein petitioners) were duly summoned, but they failed to answer the complaint. On motion of the plaintiff, they were declared in default 8 and the plaintiff (herein private respondent) was allowed to present its evidence ex parte. On April 11, 1985 the court rendered judgment for the plaintiff. In the instant Petition for Review, filed with the Supreme Court, petitioners allege that both the Default Judgment rendered by the U.S. District Court, and the Decision of the Regional Trial Court of Quezon City are null and void essentially on jurisdictional grounds. In the first instance, petitioners contend that the U.S. District Court never acquired jurisdiction over their persons as they had not been served with summons and a copy of the Complaint. In the second instance, petitioners contend that such jurisdictional ty effectively prevented the Regional Trial Court of Quezon City from taking cognizance of the Complaint and from enforcing the U.S. District Court's Default Judgment against them. Petitioners contend, finally, that assuming the validity of the disputed Default Judgment, the same may be enforced only against petitioner Philippine International Shipping Corporation (PISC) the other nine (9) petitioners not having been impleaded originally in the case filed in New York, U.S.A. ISSUE: Jurisdiction acruired? HELD: Yes 1. To begin with, the evidence of record clearly shows that the U.S. District Court had validly acquired jurisdiction over petitioner (PISC) under the procedural law applicable in that forum i.e., the U.S. Federal Rules on Civil Procedure. Copies of the Summons and Complaint 16 in 83 Civil 290 (EW) which were in fact attached to the Petition for Review filed with this Court, were stamped "Received, 18 Jan 1983, PISC Manila." indicating that service thereof had been made upon and acknowledged by the (PISC) office in Manila on, 18 January 1983, and that (PISC) had actual notice of such Complaint and Summons. Moreover, copies of said Summons and Complaint had likewise been served upon Prentice-Hall Corporation System, Inc. (New York), petitioner PISCs agent, expressly designated by it in the Master Equipment Leasing Agreement with respondent Interpool. "for the purpose of accepting service of any process within the State of New York, USA with respect to any claim or controversy arising out of or relating to directly or indirectly, this Lease." 17 The record also shows that petitioner PISC, without, however, assailing the jurisdiction of the U.S. District Court over the person of petitioner, had filed a Motion to Dismiss 18 the Complaint in 83 Civil 290 (EW) which Motion was denied. All of the foregoing matters, which were stated specifically in the U.S. District Court's disputed Default Judgement, 19 have not been disproven or otherwise overcome by petitioners, whose bare and unsubstantiated allegations cannot prevail over clear and convincing evidence of record to the contrary.

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That foreign judgment-which had become final and executory, no appeal having been taken therefrom and perfected by petitioner PISC-is thus "presumptive evidence of a right as between the parties [i.e., PISC and Interpool] and their successors in interest by a subsequent title." 20 We note, further that there has been in this case no showing by petitioners that the Default Judgment rendered by the U.S. District Court in 83 Civil 290 (EW) was vitiated by "want of notice to the party, collusion, fraud, or clear mistake of law or fact. " 21 In other words, the Default Judgment imposing upon petitioner PISC a liability of U.S.$94,456.28 in favor of respondent Interpool, is valid and may be enforced in this jurisdiction. 2. The existence of liability (i.e., in the amount of U.S.$94,456.28) on the part of petitioner PISC having been duly established in the U.S. case, it was not improper for respondent Interpool, in seeking enforcement in this jurisdiction of the foreign judgment imposing such liability, to have included the other nine (9) petitioners herein (i.e., George Lim, Marcos Bautista, Carlos Laude,Tan Sing Lim, Antonio Liu Lao, Ong Teh Philippine Consortium Construction Corporation, Pacific Mills, Inc. and Universal Steel Smelting Co., Inc.) as defendants in Civil Case No. Q- 39927, filed with Branch 93 of the Regional Trial Court of Quezon City. With respect to the latter, Section 6, Rule 3 of the Revised Rules of Court expressly provides: chanrobles virtual law library Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action;but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest. (Emphasis supplied) The record shows that said nine (9) petitioners had executed continuing guarantees" to secure performance by petitioner PISC of its contractual obligations, under the Membership Agreement and Hiring Conditions and Master Equipment Leasing Agreement with respondent Interpool. As guarantors, they had held themselves out as liable. "whether jointly, severally, or in the alternative," to respondent Interpool under their separate "continuing guarantees" executed in the Philippines, for any breach of those Agreements on the part of (PISC) The liability of the nine (9) other petitioners was, in other words, not based upon the Membership Agreement and the Master Equipment Leasing Agreement to which they were not parties.

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SAUDI ARABIAN AIRLINES, Petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon City, Respondents. FACTS: On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in Jeddah, Saudi Arabia. x x x On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and several security personnel heard her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the latter as an accomplice. In Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated with the police for the immediate release of the detained crew members but did not succeed because plaintiff refused to cooperate. Plaintiff then returned to Manila. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again for further investigation. Plaintiff did so after receiving assurance from SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no danger to her. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening to the music in violation of Islamic laws; and (3) socializing with the male crew, in contravention of Islamic tradition.10 Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah continued to serve in the international flights.11 Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed her to leave Saudi 12 Arabia. Shortly before her return to Manila, she was terminated from the service by SAUDIA, without her being informed of the cause. On November 23, 1993, Morada filed a Complaint13 for damages against SAUDIA, and Khaled Al-Balawi (Al- Balawi), its country manager.
14 On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss which raised the following grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim or demand set forth in the Complaint has been waived, abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case.

The trial court issued an Order19 dated August 29, 1994 denying the Motion to Dismiss Amended Complaint filed by Saudia. SAUDIA alleged that the trial court has no jurisdiction to hear and try the case on the basis of Article 21 of the Civil Code, since the proper law applicable is the law of the Kingdom of Saudi Arabia. ISSUES: I WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES. II. WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THE CASE PHILIPPINE LAW SHOULD GOVERN. HELD: RTC has jurisdiction. Philippine law shall apply. Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It maintains that private respondents claim for alleged abuse of rights occurred in the Kingdom of Saudi Arabia. It alleges that the existence of a foreign element qualifies the instant case for the application of the law of the Kingdom of Saudi Arabia, by virtue of thelex loci delicti commissi rule.34

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On the other hand, private respondent contends that since her Amended Complaint is based on Articles 19 and 21 of the Civil Code, then the instant case is properly a matter of domestic law.37 Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events occurred in two states, the Philippines and Saudi Arabia. Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree with petitioner that the problem herein could present a conflicts case. The forms in which this foreign element may appear are many. The foreign element may simply consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a contract between nationals of one State involves properties situated in another State. In other cases, the foreign element may assume a complex form.42 In the instant case, the foreign element consisted in the fact that private respondent Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a flight stewardess, events did transpire during her many occasions of travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a conflicts situation to arise. We thus find private respondents assertion that the case is purely domestic, imprecise. A conflicts problem presents itself here, and the question of jurisdiction43 confronts the court a quo. After a careful study of the private respondents Amended Complaint,44 and the Comment thereon, we note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code. Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we agree with private respondents assertion that violations of Articles 19 and 21 are actionable, with judicially enforceable remedies in the municipal forum. xxx And following Section 2 (b), Rule 4 of the Revised Rules of Courtthe venue, Quezon City, is appropriate: SEC. 2 Venue in Courts of First Instance. [Now Regional Trial Court] (a) x x x (b) Personal actions. All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiff resides, at the election of the plaintiff. Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her Complaint and Amended Complaint with the trial court, private respondent has voluntary submitted herself to the jurisdiction of the court.
50 The records show that petitioner SAUDIA has filed several motions praying for the dismissal of Moradas Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial courts jurisdiction by praying for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction. 41 35 36

As to the choice of applicable law, we note that choice-of-law problems seek to answer two important questions: (1) What legal system should control a given situation where some of the significant facts occurred in two or more states; and (2) to what extent should the chosen legal system regulate the situation. Before a choice can be made, it is necessary for us to determine under what category a certain set of facts or rules fall. This process is known as characterization, or the doctrine of qualification. It is the process of deciding whether or not the facts relate to the kind of question specified in a conflicts rule.55 The purpose of characterization is to enable the forum to select the proper law.56 Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact.57 An essential element of conflict rules is the indication of a test or connecting factor or point of contact. Choice-of-law rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting factor or point of contact, such as 58 the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing. Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable 59 law. These test factors or points of contact or connecting factors could be any of the following: (1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such as a corporation;

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(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex situs is decisive when real rights are involved; (4) the place where an act has been done, the locus actus, such as the place where a contract has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in contracts and torts; (5) the place where an act is intended to come into effect, e.g., the place of performance of contractual duties, or the place where a power of attorney is to be exercised; (6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis; (7) the place where judicial or administrative proceedings are instituted or done. The lex forithe law of the forumis particularly important because, as we have seen earlier, matters of procedure not going to the substance of the claim involved are governed by it; and because the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the reason that it falls under one of the exceptions to the applications of foreign law; and (8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers contractual relationships particularly contracts of affreightment.60(Underscoring ours.) After a careful study of the pleadings on record, including allegations in the Amended Complaint deemed submitted for purposes of the motion to dismiss, we are convinced that there is reasonable basis for private respondents assertion that although she was already working in Manila, petitioner brought her to Jeddah on the pretense that she would merely testify in an investigation of the charges she made against the two SAUDIA crew members for the attack on her person while they were in Jakarta. As it turned out, she was the one made to face trial for very serious charges, including adultery and violation of Islamic laws and tradition. There is likewise logical basis on record for the claim that the handing over or turning over of the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as employer. Petitioners purported act contributed to and amplified or even proximately caused additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly facilitated the arrest, detention and prosecution of private respondent under the guise of petitioners authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But these capped the injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as claimed, to provide compensation or redress for the wrongs done, once duly proven. Considering that the complaint in the court a quo is one involving torts, the connecting factor or point of contact could be the place or places where the tortious conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her, she had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, act with justice, give her her due and observe honesty and good faith. Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no moment. For in our view what is important here is the place where the over-all harm or the fatality of the alleged injury to the person, reputation, social standing and human rights of complainant, had lodged, according to the plaintiff below (herein private respondent). All told, it is not without basis to identify the Philippines as the situs of the alleged tort. Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern theories and rules on tort liability61 have been advanced to offer fresh judicial approaches to arrive at just results. In keeping abreast with the modern theories on tort liability, we find here an occasion to apply the State of the most significant relationship rule, which in our view should be appropriate to apply now, given the factual context of this case. In applying said principle to determine the State which has the most significant relationship, the following contacts are to be taken into account and evaluated according to their relative importance with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.

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COMMUNICATION MATERIALS AND DESIGN, INC., ASPAC MULTI-TRADE, INC., (formerly ASPAC-ITEC PHILIPPINES, INC.) and FRANCISCO S. AGUIRRE, Petitioners, v. THE COURT OF APPEALS, ITEC INTERNATIONAL, INC., and ITEC, INC., Respondent. FORUM NON-CONVENIENCE: Requisite when the court may take cognizance of a case. FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI, for brevity) and ASPAC MULTI-TRADE INC., (ASPAC, for brevity) are both domestic corporations, while petitioner Francisco S. Aguirre is their President and majority stockholder. Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC, for brevity) are corporations duly organized and existing under the laws of the State of Alabama, United States of America. There is no dispute that ITEC is a foreign corporation not licensed to do business in the Philippines. On August 14, 1987, ITEC entered into a contract with petitioner ASPAC referred to as "Representative Agreement". 1 Pursuant to the contract, ITEC engaged ASPAC as its "exclusive representative" in the Philippines for the sale of ITECs products, in consideration of which, ASPAC was paid a stipulated commission. The said agreement was initially for a term of twenty-four months. After the lapse of the agreed period, the agreement was renewed for another twenty-four months. One year into the second term of the parties Representative Agreement, ITEC decided to terminate the same, because petitioner ASPAC allegedly violated its contractual commitment as stipulated in their agreements. 5 ITEC charges the petitioners and another Philippine Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL, for brevity), the President of which is likewise petitioner Aguirre, of using knowledge and information of ITECs products specifications to develop their own line of equipment and product support, which are similar, if not identical to ITECs own, and offering them to ITECs former customer. In due time, defendants filed a motion to dismiss the complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is a foreign corporation doing business in the Philippines without the required BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum shopping which justifies the application against it of the principle of "forum non conveniens". It is the petitioners submission that private respondents are foreign corporations actually doing business in the Philippines without the requisite authority and license from the Board of Investments and the Securities and Exchange Commission, and thus, disqualified from instituting the present action in our courts. It is their contention that the provisions of the Representative Agreement, petitioner ASPAC executed with private respondent ITEC, are similarly "highly restrictive" in nature as those found in the agreements which confronted the Court in the case of Top-Weld Manufacturing, Inc. v. ECED S.A. et al., 16as to reduce petitioner ASPAC to a mere conduit or extension of private respondents in the Philippines. In that case, we ruled that respondent foreign corporations are doing business in the Philippines because when the respondents entered into the disputed contracts with the petitioner, they were carrying out the purposes for which they were created, i.e., to manufacture and market welding products and equipment. The terms and conditions of the contracts as well as the respondents conduct indicate that they established within our country a continuous business, and not merely one of a temporary character. The respondents could be exempted from the requirements of Republic Act 5455 if the petitioner is an independent entity which buys and distributes products not only of the petitioner, but also of other manufacturers or transacts business in its name and for its account and not in the name or for the account of the foreign principal. A reading of the agreements between the petitioner and the respondents shows that they are highly restrictive in nature, thus making the petitioner a mere conduit or extension of the respondents. Petitioners likewise argue that since private respondents have no capacity to bring suit here, the Philippines is not the "most convenient forum" because the trial court is devoid of any power to enforce its orders issued or decisions rendered in a case that could not have been commenced to begin with, such that in insisting to assume and exercise jurisdiction over the case below, the trial court had gravely abused its discretion and even actually exceeded its jurisdiction. As against petitioners insistence that private respondent is "doing business" in the Philippines, the latter maintains that it is not. ISSUES: WON respondent foreign corporation can sue here in the Philippines despite the fact that it has no license to do business here? Is Philippins the most convenient forum? HELD: Answers are in affirmative. We can discern from a reading of Section 1 (f) (1) and 1 (f) (2) of the Rules and Regulations Implementing the Omnibus Investments Code of 1987, the following:
7

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"(1) A foreign firm is deemed not engaged in business in the Philippines if it transacts business through middlemen, acting in their own names, such as indebtors, commercial bookers or commercial merchants. (2) A foreign corporation is deemed not "doing business" if its representative domiciled in the Philippines has an 20 independent status in that it transacts business in its name and for its account." Private respondent argues that a scrutiny of its Representative Agreement with the Petitioners will show that although ASPAC was named as representative of ITEC., ASPAC actually acted in its own name and for its own account. The issues before us now are whether or not private respondent ITEC is an unlicensed corporation doing business in the Philippines, and if it is, whether or not this fact bars it from invoking the injunctive authority of our courts. Considering the above, it is necessary to state what is meant by "doing business" in the Philippines. Section 133 of the Corporation Code, provides that "No foreign corporation, transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine Courts or administrative tribunals on any valid cause of action recognized under Philippine 24 laws." Generally, a "foreign corporation" has no legal existence within the state in which it is foreign. This proceeds from the principle that juridical existence of a corporation is confined within the territory of the state under whose laws it was incorporated and organized, and it has no legal status beyond such territory. Such foreign corporation may be excluded by any other state from doing business within its limits, or conditions may be imposed on the exercise of such privileges. 25 Before a foreign corporation can transact business in this country, it must first obtain a license to transact business in the Philippines, and a certificate from the appropriate government agency. If it transacts business in the Philippines without such a license, it shall not be permitted to maintain or intervene in any action, suit, or proceeding in any court or administrative agency of the Philippines, but it may be sued on any valid cause 26 of action recognized under Philippine laws. In a long line of decisions, this Court has not altogether prohibited a foreign corporation not licensed to do business in the Philippines from suing or maintaining an action in Philippine Courts. What it seeks to prevent is a foreign corporation doing business in the Philippines without a license from gaining access to Philippine Courts. 27 There is no exact rule or governing principle as to what constitutes "doing" or "engaging" or "transacting" business. Indeed, such case must be judged in the light of its peculiar circumstances, upon its peculiar facts and upon the language of the statute applicable. The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized. 30 Article 44 of the Omnibus Investments Code of 1987 defines the phrase to include: "soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totaling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines, and any other act or acts that imply a continuity or commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization." In determining whether a corporation does business in the Philippines or not, aside from their activities within the forum, reference may be made to the contractual agreements entered into by it with other entities in the country. Thus, in the Top-Weld case (supra), the foreign corporations LICENSE AND TECHNICAL AGREEMENT and DISTRIBUTOR AGREEMENT with their local contacts were made the basis of their being regarded by this Tribunal as corporations doing business in the country. Likewise, in Merill Lynch Futures, Inc. v. Court of Appeals, etc. 38 the FUTURES CONTRACT entered into by the petitioner foreign corporation weighed heavily in the courts ruling. With the abovestated precedents in mind, we are persuaded to conclude that private respondent had been "engaged in" or "doing business" in the Philippines for some time now. When ITEC entered into the disputed contracts with ASPAC and TESSI, they were carrying out the purposes for which it was created, i.e., to market electronics and communications products. The terms and conditions of the contracts as well as ITECs conduct indicate that they established within our country a continuous business, and not merely one of a temporary character. 40 A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. 41 To put it in another way, a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a foreign as well as to domestic corporations. 42 One who has dealt with a corporation of foreign origin as a corporate

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entity is estopped to deny its corporate existence and capacity. The principle will be applied to prevent a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract. 43 The rule is deeply rooted in the time-honored axiom of Commodum ex injuria sua non habere debet - no person ought to derive any advantage of his own wrong. This is as it should be for as mandated by law, "every person must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." As observed by this Court in TOP-WELD (supra), viz:The doctrine of lack of capacity to sue based on the failure to acquire a local license is based on considerations of sound public policy. The license requirement was imposed to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. It was never intended to favor domestic corporations who enter into solitary transactions with unwary foreign firms and then repudiate their obligations 45 simply because the latter are not licensed to do business in this country. In Antam Consolidated Inc. v. Court of Appeals, et al. we expressed our chagrin over this commonly used scheme of defaulting local companies which are being sued by unlicensed foreign companies not engaged in business in the Philippines to invoke the lack of capacity to sue of such foreign companies. Obviously, the same ploy is resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge possibly acquired in violation of fiduciary arrangements between the parties. By entering into the "Representative Agreement" with ITEC, Petitioner is charged with knowledge that ITEC was not licensed to engage in business activities in the country, and is thus estopped from raising in defense such incapacity of ITEC, having chosen to ignore or even presumptively take advantage of the same. In Top-Weld, we ruled that a foreign corporation may be exempted from the license requirement in order to institute an action in our courts if its representative in the country maintained an independent status during the existence of the disputed contract. Petitioner is deemed to have acceded to such independent character when it entered into the Representative Agreement with ITEC, particularly, provision 6.2 (supra). Petitioners insistence on the dismissal of this action due to the application, or non application, of the private international law rule of forum non conveniens defies well-settled rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion whether to give cognizance or not to the present action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already observed, petitioner are not at liberty to question plaintiffs standing to sue, having already acceded to the same by virtue of its entry into the Representative Agreement referred to earlier. Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of the case, whether to give due course to the suit or dismiss it, on the principle of forum non conveniens. 47 Hence, the Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: 1) That the Philippine Court is one to which the parties may conveniently resort to; 2) That the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, 3) That the Philippine Court has or is likely to have power to enforce its decision.
46

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PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., Petitioners, vs. THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, Respondents. This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under the same cause of action asserted in a case in our local court. Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari. FACTS: Private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala International Finance Limited (hereafter called AYALA)1 and Philsec Investment Corporation (hereafter called PHILSEC), secured by shares of stock owned by Ducat. In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducats obligation under an Agreement, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., while PHILSEC and AYALA extended a loan to ATHONA as initial payment of the purchase price. The balance was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat. As ATHONA failed to pay the interest on the balance the entire amount covered by the note became due and demandable. Accordingly, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United States District Court of Texas, the venue of the action was later transferred to the United States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the property at a price over its market value. For their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their person, but, as their motion was denied, they later filed a joint answer with counterclaim against private respondents and Edgardo V. Guevarra, PHILSECs own former president, for the rescission of the sale on the ground that the property had been overvalued. The United States District Court for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the ground that it was frivolous and [was] brought against him simply to humiliate and embarrass him. The U.S. court imposed sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra. While Civil Case was pending in the United States, petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary Attachment against private respondents in the Regional Trial Court of Makati. The complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action of the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value Petitioners claimed that, as a result of private respondents fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the Houston property. The trial court issued a writ of preliminary attachment against the real and personal properties of private respondents. Private respondent Ducat moved to dismiss on the grounds of (1) litis pendentia, (2) forum non conveniens, and The trial court granted Ducats motion to dismiss, stating that the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens, even as it noted that Ducat was not a party in the U.S. case. ISSUES: 1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE. 2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE. HELD: Meritorious. Litis pendencia NOT applicable. Forum non convenience NOT applicable. Philippine courts has jurisdiction. First. It is important to note in connection with the first point that while the present case was pending in the Court of Appeals, the United States District Court for the Southern District of Texas rendered judgment5 in the case before it. The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of Appeals.6Thus, the principal issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of the U.S. court.

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Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment admitting the foreign decision is not necessary. On the other hand, petitioners argue that the foreign judgment cannot be given the effect of res judicata without giving them 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. Petitioners contention is meritorious. While this Court has given the effect of res judicata to foreign judgments in several cases,7 it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law.8 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.9 Rule 39, 50 provides: SEC. 50. 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; but the judgment 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. In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive 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. As the trial court stated in its disputed order dated March 9, 1988: On the plaintiffs claim in its Opposition that the causes of action of this case and the pending case in the United States are not identical, precisely the Order of January 26, 1988 never found that the causes of action of this case and the case pending before the USA Court, were identical. (emphasis added) It was error therefore for the Court of Appeals to summarily rule that petitioners action is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the Court of Appeals. Hang Lung Bank v. Saulog, 201 SCRA 137. [A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative relief is being sought. Hence, in the interest of justice, the complaint should be considered as a petition for the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in order that the defendant, private respondent herein, may present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if applicable. Second. Nor is the trial courts refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does not include forum non conveniens.16 The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts desistance. In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latters debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.

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BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, LTD., Petitioners, v. COURT OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR., respondents. FACTS: On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a Complaint[2 before the Regional Trial Court of Pasig against the Bank of America NT&SA and Bank of America International, Ltd. alleging that: they were engaged in the shipping business; they owned two vessels: Don Aurelio and El Champion, through their wholly-owned corporations; they deposited their revenues from said business together with other funds with the branches of said banks in the United Kingdom and Hongkong up to 1979; with their business doing well, the defendant banks induced them to increase the number of their ships in operation, offering them easy loans to acquire said vessels;3 thereafter, the defendant banks acquired, through their (Litonjuas) corporations as the borrowers: (a) El Carrier[4; (b) El General5; (c) El Challenger6; and (d) El Conqueror[7; the vessels were registered in the names of their corporations; the operation and the funds derived therefrom were placed under the complete and exclusive control and disposition of the petitioners;[8 and the possession the vessels was also placed by defendant banks in the hands of persons selected and designated by them (defendant banks).[9 The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the income derived from the operation of the vessels as well as of the proceeds of the subsequent foreclosure sale;10 because of the breach of their fiduciary duties and/or negligence of the petitioners and/or the persons designated by them in the operation of private respondents six vessels, the revenues derived from the operation of all the vessels declined drastically; the loans acquired for the purchase of the four additional vessels then matured and remained unpaid, prompting defendant banks to have all the six vessels, including the two vessels originally owned by the private respondents, foreclosed and sold at public auction to answer for the obligations incurred for and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten percent (10%) of the acquisition cost of the four vessels and were left with the unpaid balance of their loans with defendant banks.11 The Litonjuas prayed for the accounting of the revenues derived in the operation of the six vessels and of the proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners; damages for breach of trust; exemplary damages and attorneys fees.[12 Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause of action against them.13 The trial court denying the Motion to Dismiss: Petitioners posit that while the application of the principle of forum non conveniens is discretionary on the part of the Court, said discretion is limited by the guidelines pertaining to the private as well as public interest factors in determining whether plaintiffs choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs. Gilbert[21 and Piper Aircraft Co. vs. Reyno,[22 to wit: Private interest factors include: (a) the relative ease of access to sources of proof; (b) the availability of compulsory process for the attendance of unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses; or (d) all other practical problems that make trial of a case easy, expeditious and inexpensive. Public interest factors include: (a) the administrative difficulties flowing from court congestion; (b) the local interest in having localized controversies decided at home; (c) the avoidance of unnecessary problems in conflict of laws or in the application of foreign law; or (d) the unfairness of burdening 23 citizens in an unrelated forum with jury duty. In support of their claim that the local court is not the proper forum, petitioners allege the following: i) The Bank of America Branches involved, as clearly mentioned in the Complaint, are based in Hongkong and England. As such, the evidence and the witnesses are not readily available in the Philippines; ii) The loan transactions were obtained, perfected, performed, consummated and partially paid outside the Philippines; iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged vessels were part of an offshore fleet, not based in the Philippines; iv) All the loans involved were granted to the Private Respondents foreign CORPORATIONS; v) The Restructuring Agreements were ALL governed by the laws of England; vi) The subsequent sales of the mortgaged vessels and the application of the sales proceeds occurred and transpired outside the Philippines, and the deliveries of the sold mortgaged vessels were likewise made outside the Philippines; vii) The revenues of the vessels and the proceeds of the sales of these vessels were ALL deposited to the Accounts of the foreign CORPORATIONS abroad; and viii) Bank of America International Ltd. is not licensed nor engaged in trade or business in the Philippines.24

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Petitioners argue further that the loan agreements, security documentation and all subsequent restructuring agreements uniformly, unconditionally and expressly provided that they will be governed by the laws of England;25 that Philippine Courts would then have to apply English law in resolving whatever issues may be presented to it in the event it recognizes and accepts herein case; that it would then be imposing a significant and unnecessary expense and burden not only upon the parties to the transaction but also to the local court. Petitioners insist that the inconvenience and difficulty of applying English law with respect to a wholly foreign transaction in a case pending in the Philippines may be avoided by its dismissal on the ground of forum non conveniens. 26 On the other hand, private respondents contend that certain material facts and pleadings are omitted and/or misrepresented in the present petition for certiorari; that the prefatory statement failed to state that part of the security of the foreign loans were mortgages on a 39-hectare piece of real estate located in the Philippines;[28 that while the complaint was filed only by the stockholders of the corporate borrowers, the latter are wholly-owned by the private respondents who are Filipinos and therefore under Philippine laws, aside from the said corporate borrowers being but their alter-egos, they have interests of their own in the vessels.29 Private respondents also argue that the dismissal by the Court of Appeals of the petition for certiorari was justified because there was neither allegation nor any showing whatsoever by the petitioners that they had no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law from the Order of the trial judge denying their Motion to Dismiss; that the remedy available to the petitioners after their Motion to Dismiss was denied was to file an Answer to the complaint;[30 that as upheld by the Court of Appeals, the decision of the trial court in not applying the principle of forum non conveniens is in the lawful exercise of its discretion. ISSUE: Should the complaint be dismissed on the ground of forum non-conveniens? HELD No. The doctrine of forum non-conveniens, literally meaning the forum is inconvenient, emerged in private international law to deter the practice of global forum shopping,[42 that is to prevent non-resident litigants from choosing the forum or place wherein to bring their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most convenient or available forum and the parties are not precluded from seeking remedies elsewhere.[43 Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the 44 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,[45 this Court held that xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision.46Evidently, all these requisites are present in the instant case. Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals,[47 that the doctrine of forum non conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual determination, hence it is more properly considered a matter of defense.48