001 Hilton v. Guyot [159 U.S. 113; June 3, 1895] TOPIC: Conflict Rules PONENTE:

AUTHOR: RC NOTES: A citizen & resident of US who has a principal place of business in US but has an agent in France and is accustomed to purchase and store large quantities of goods there and in a suit brought against him by a citizen and in a court of that country, appears and defends with the sole object of preventing his property within said jurisdiction (but not in the custody of that court) from being taken in satisfaction of any judgment that may be recovered against him. ** There are still justly due and owing from the defendants to the plaintiffs upon the said judgments amounting to 1,008,783 francs equivalent to $195,122.47.

FACTS: 1. It was admitted that for several years prior to 1876, the firm of Alexander T. Stewart & Co., composed of Stewart and Libbey, conducted their business as merchants in the City of NY, with branches in other cities of America and Europe; that both partners were citizens and residents of NY. And that Stewart died, and Hilton and Libbey formed a partnership to continue the business under the same firm name, and became the owners of all the property and rights of the old firm. 2. The first of the 2 cases was an action at law in the Circuit Court of the US for the Southern District of NY by Gustave Bertin Guyot, as official liquidator of the firm of Charles Fortin & Co., and by the surviving members of that firm, all aliens and citizens of the Republic of France, against Henry Hilton and William Libbey, citizens of the US and of the State of NY and trading as copartners in the cities of NY and Paris and elsewhere under the firm name of A. T. Stewart & Co. 3. The action was upon a judgment recovered in a French court at Paris, in the Republic of France, by the firm of Charles Fortin & Co., all French citizens, against Hilton & Libbey, as copartners, and citizens of the US and of NY. 4. The complaint alleged that in 1886 and since, during the time of all the transactions included in the judgment sued on, Hilton and Libbey, as successors to Alexander T. Stewart and Libbey, under the firm name of A. T. Stewart & Co., carried on a general business as merchants in the Cities of NY and Paris and elsewhere, and maintained a regular store and place of business at Paris; that during the same time, Charles Fortin & Co. carried on the manufacture and sale of gloves at Paris, and the 2 firms had large dealings and controversies arose in the adjustment of accounts between them. 5. The complaint further alleged that 5 suits were brought by Fortin & Co. against Stewart & Co. for sums alleged to be due and 3 suits by Stewart & Co. against Fortin & Co., in the Tribunal of Commerce of the Department of the Seine, a judicial tribunal or court organized and existing under the laws of France, sitting at Paris and having jurisdiction of suits and controversies between merchants or traders growing out of commercial dealings between them; that Stewart & Co. appeared by their authorized attorneys in all those suits, and that, after full hearing before an arbitrator appointed by that court and before the court itself, and after all the suits had been consolidated by the court, final judgment was rendered. (Ordered that Fortin & Co. recover of Stewart & Co. various sums, arising out of the dealings between them, amounting to 660,847 francs with interest and dismissed part of Fortin & Co.'s claim.) 6. The complaint also alleged that appeals were taken by both parties to the CA of Paris (Dismissed appeal). 7. The defendants, in their answer, set forth in detail the original contracts and transactions in France between the parties and the subsequent dealings between them modifying those contracts, and alleged that the plaintiffs had no just claim against the defendants, but that, on the contrary, the defendants, upon a just settlement of the accounts, were entitled to recover large sums from the plaintiffs. 8. The answer admitted the proceedings and judgments in the French courts and that the defendants gave up their business in France before the judgment on appeal. They had no property within the jurisdiction of France to which the judgment could be collected. 9. The answer alleged the ff.:

x that they were then residents and citizens of the State of NY, and neither of them at that time, or within 4 years before, had been within, or resident or domiciled within, the jurisdiction of that tribunal or owed any allegiance to France, but that they were the owners of property situated in that country which would by the law of France have been liable to seizure if they did not appear in that tribunal, and that they unwillingly, and solely for the purpose of protecting their property, authorized and caused an agent to appear for them in the proceedings;

x that pending the litigation, the defendants discovered gross frauds in the accounts of Fourtin & Co.; x that the arbitrator and tribunal declined to compel Fortin & Co. to produce their books and papers for inspection; x that there was not a full and fair trial of the controversies before the arbitrator;

x that no witness was sworn or affirmed; x that the arbitrator was deceived and misled by the false and fraudulent accounts introduced by Fortin & Co. and

by the hearsay testimony given, without the solemnity of an oath and without cross-examination, and by the fraudulent suppression of the books and papers; and

x that Fortin & Co. made up their statements and accounts falsely and fraudulently, and with intent to deceive the defendants and the arbitrator and the said courts of France.

10. The laws of France provides: "That the construction given to said statutes by the judicial tribunals of France is such that no comity is displayed towards the judgments of tribunals of foreign countries against the citizens of France, when sued upon in said courts of France, and the merits of the controversies upon which the said judgments are based are examined anew, unless a treaty to the contrary effect exists between the said Republic of France and the country in which such judgment is obtained. That no treaty exists between the said Republic of France and the United States, by the terms or effect of which the judgments of either country are prevented from being examined anew upon the merits, when sued upon in the courts of the country other than that in which it is obtained. That the tribunals of the Republic of France give no force and effect, within the jurisdiction of the said country, to the duly rendered judgments of courts of competent jurisdiction of the United States against citizens of France, after proper personal service of the process of said courts is made thereon in this country." 11. The defendants filed a bill in equity against the plaintiffs setting forth the same matters as in their answer to the action and prayed for a discovery and for an injunction against the prosecution of the action. (Bill was dismissed.) 12. From the decree dismissing the bill, an appeal was taken which is the second case now before this Court. ISSUE: Whether or not a judgment for a sum of money, rendered by a court of a foreign country, having jurisdiction of the cause and of the parties, in a suit brought by one of its citizens against an American is conclusive upon US courts. HELD: No, it is prima facie evidence only, and not conclusive of the merits of the claim in an action brought here upon the judgment if by the law of the foreign country, as in France, judgments of our own courts are not recognized as conclusive. RATIO: 1. International law, in its widest and most comprehensive sense -- including not only questions of right between nations, governed by what has been appropriately called the "law of nations," but also questions arising under what is usually called "private international law," or the "conflict of laws," and concerning the rights of persons within the territory and dominion of one nation by reason of acts, private or public, done within the dominions of another nation -- is part of our law, and must be ascertained and administered by the courts of justice as often as such questions are presented in litigation between man and man, duly submitted to their determination. 2. The most certain guide for the decision of such questions is a treaty or a statute of this country. But when there is no written law upon the subject, the duty still rests upon the judicial tribunals for ascertaining and declaring what the law is, whenever it becomes necessary to do so in order to determine the rights of parties to suits regularly brought before them. 3. No law has any effect beyond the limits of the sovereignty from which its authority is derived. The extent to which the law of one nation, as put in force within its territory, whether by executive order, legislative act, or judicial decree shall be allowed to operate within the dominion of another nation depends upon what our greatest jurists have been content to call "the comity of nations." 4. "Comity," in the legal sense, is neither a matter of absolute obligation nor of mere courtesy and goodwill. It is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience and to the rights of its own citizens or of other persons was are under the protection of its laws. 5. Mr. Justice Story: XXX Every nation must be the final judge for itself not only of the nature and extent of the duty, but of the occasions on which its exercise may be justly demanded." 6. Chief Justice Taney: "XXX The comity thus extended to other nations is no impeachment of sovereignty. It is the voluntary act of the nation by which it is offered, and is inadmissible when contrary to its policy, or prejudicial to its interests. But it contributes so largely to promote justice between individuals and to produce a friendly intercourse between the sovereignties to which they belong, that courts of justice have continually acted upon it as a part of the voluntary law of nations. . . . It is not the comity of the courts, but the comity of the nation, which is administered and ascertained in the same way, and guided by the same reasoning, by which all other principles of municipal law are ascertained and guided." 7. Mr. Wheaton: "All the effect which foreign laws can have in the territory of a state depends absolutely on the express or tacit consent of that stateXXX but their application is admitted only from considerations of utility and the mutual convenience of states, ex commitate, ob reciprocam utilitatem." 8. Wheaton's International Law: "No sovereign is bound, unless by special compact, to execute within his dominions a judgment rendered by the tribunals of another state, and if execution be sought by suit upon the judgment or otherwise, the

tribunal in which the suit is brought, or from which execution is sought, is on principle at liberty to examine into the merits of such judgment, and to give effect to it or not, as may be found just and equitable. The general comity, utility, and convenience of nations have, however, established a usage among most civilized states by which the final judgments of foreign courts of competent jurisdiction are reciprocally carried into execution, under certain regulations and restrictions, which differ in different countries." 9. Chancellor Kent: "The effect to be given to foreign judgments is altogether a matter of comity in cases where it is not regulated by treaty." 10. Every foreign judgment, of whatever nature, in order to be entitled to any effect, must have been rendered by a court having jurisdiction of the cause, and upon regular proceedings, and due notice. In alluding to different kinds of judgments, therefore, such jurisdiction, proceedings, and notice will be assumed. It will also be assumed that they are untainted by fraud, the effect of which will be considered later. 11. A judgment in rem, adjudicating the title to a ship or other movable property within the custody of the court, is treated as valid everywhere. As said by Chief Justice Marshall:"The sentence of a competent court proceeding in rem is conclusive with respect to the thing itself, and operates as an absolute change of the property. By such sentence, the right of the former owner is lost and a complete title given to the person who claims under the decree. No court of coordinate jurisdiction can examine the sentence. The question, therefore, respecting its conformity to general or municipal law can never arise, for no coordinate tribunal is capable of making the inquiry." 12. A judgment affecting the status of persons, such as a decree confirming or dissolving a marriage, is recognized as valid in every country unless contrary to the policy of its own law. 13. Other judgments, not strictly in rem, under which a person has been compelled to pay money, are so far conclusive that the justice of the payment cannot be impeached in another country, so as to compel him to pay it again. For instance, a judgment in foreign attachment is conclusive, as between the parties, of the right to the property or money attached. 14. The extraterritorial effect of judgments in personam at law or in equity may differ according to the parties to the cause. A judgment of that kind between two citizens or residents of the country, and subject to the jurisdiction in which it is rendered, may be held conclusive as between them everywhere. So if a foreigner invokes the jurisdiction by bringing an action against a citizen, both may be held bound by a judgment in favor of either, and if a citizen sues a foreigner and judgment is rendered in favor of the latter, both may be held equally bound. CASE LAW/ DOCTRINE:

002 SAUDI ARABIAN AIRLINES v. CA, Milagros P. Morada and Hon. Rodolfo A. Ortiz (RTC QC) G.R. No. 122191. October 8, 1998 TOPIC: Conflicts of Rules Preliminary Question PONENTE: Quisumbing

AUTHOR: JANNA

FACTS: 1. Jan. 21, 1988: SAUDIA hired MILAGROS as a flight attendant for its airlines based in Jeddah, Saudi Arabia. 2. April 27, 1990: While on a lay-over in Jakarta, Indonesia, MILAGROS went to a disco dance with fellow crew members, Thamer Al-Gazzawi (THAMER) and Allah Al-Gazzawi (ALLAH), both Saudi nationals. It was almost morning when they returned to their hotels, so the three agreed to have breakfast in THAMERs room. After they got to THAMERs room, ALLAH left on some pretext, and shortly after, THAMER attempted to rape MILAGROS. 3. Fortunately, a roomboy and several security personal heard her cries for help and rescued her. Indonesian police arrested THAMER and ALLAH, with the latter as an accomplice. 4. MILAGROS returned to Jeddah a few days later and was interrogated by several SAUDIA officials, who then requested her to return to Jakarta and help arrange for the release of THAMER and ALLAH. MILAGROS refused to cooperate, so the negotiations for the release of THAMER and ALLAH by SAUDIA Legal Officer Sirah Akkad and base manager Baharini with the Indonesian police did not succeed. MILAGROS refusal was due to fears that she might be tricked into something she did not want because of her inability to understand the local dialect. She also declined to sign a blank paper and a document written in the local dialect. 6. Eventually, SAUDIA allowed MILAGROS to return to Jeddah but barred her from the Jakarta flights. 10. MILAGROS learned that Indonesian authorities agreed to deport THAMER and ALLAH after two weeks of detention, through the Saudi Arabian governments intercession. Eventually, the two were again put in service by SAUDIA. 7. In Sep. 1990, SAUDIA transferred MILAGROS to Manila. On Jan. 14, 1992, just when MILAGROS thought that the Jakarta incident was already behind her, her superiors requested her to see Mr. Ali Meniewy (MENIEWY), Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When MILAGROS met up with MENIEWY, he brought her to the police station where the police took her passport and questioned her about the Jakarta incident. 8. MINIEWY simply stood by as the police pressured MILAGROS to make a statement dropping the case. Only after she agreed, did the police return her passport and allowed her to catch the afternoon flight out of Jeddah. 9. June 16, 1993: Minutes before departure of a flight to Manila from Riyadh, MILAGROS was not allowed to board the plane, and was ordered to take a later flight to Jeddah to see MINIEWY. 10. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a document written in Arabic. They told her that this was necessary to close the case against Thamer and Allah. 11. As it turned out, MILAGROS signed a notice to her to appear before the court on June 27, 1993. 12. MILAGROS returned to Manila, and shortly after, she was summoned by SAUDIA to report to Jeddah once again to see MINIEWY on June 27, 1993 for further investigation.SAUDIAs Manila manager, Aslam Saleemi assured her that the investigation was routinary and that it posed no danger to her. 13. June 27, 1993: MILAGROS was brought to the same Saudi court by a SAUDIA officer. The next day, she was interrogated by a Saudi judge through an interpreter about the Jakarta incident, and was let go after an hour. 14. MILAGROS was forbidden to take her flight by a SAUDIA officer, just as her plane was about to take off. 15. MILAGROS passport was taken away by the secretary of Mr. Yahya Saddick, at the Inflight Service Office, where she was told to go, and she was told to remain in Jeddah, at the crew quarters, until further orders. 16. July 3, 1993: a SAUDIA legal officer escorted MILAGROS to Court, where was sentenced, translated to her in English, 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. 17. The court found MILAGROS 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. SAUDIA refused any assistance to MILAGROS, so she asked the Philippine Embassy to help her while her case is on appeal. She worked on the domestic flights for her upkeep. Thamer & Allah continued to serve in the international flights. 18. The Prince of Makkah dismissed the case against MILAGROS because of wrongful conviction, and allowed her to leave Saudi Arabia, but shortly before her return to Manila, she was dismissed by SAUDIA without being informed why. 19. MILAGROS filed a Complaint for damages against SAUDIA and and Khaled AL-BALAWI, its country manager. 20. SAUDIA filed to dismiss, stating lack of jurisdiction. MILAGROS opposed, then filed an Amended Complaint dropping case against AL-BALAWI. Motion to dismiss was denied. MR was denied. 21. CA denied SAUDIAs Pet. for Issuance of a Writ of Preliminary Injuction. SAUDIA filed Petition for review at SC. 22. While pending, CA ruled: (1) PH is an appropriate forum considering that the Amended Complaints basis for recovery of damages is Article 21 of the Civil Code; (2) certiorari is not the proper remedy in a denial of a Motion to Dismiss. petitioner should have proceeded to trial, and in case of an adverse ruling, find recourse in an appeal, was rendered.

ISSUE(S): (1) Whether CA erred in holding that RTC of QC has jurisdiction to try and hear Civil Case No. Q-93-18394 Milagros Morada v. Saudi Arabian Airlines; (2) Whether CA erred in Ruling that Philippine Law should govern; (Whether the case presents a conflict of rules: YES) SAUDIAs contention: There is a conflict of laws that must be settled at the outset. MILAGROS claim for alleged abuse of rights occurred in the Kingdom of Saudi Arabia, thus the the existence of a foreign element qualifies the instant case for the application of the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule.

MILAGROS MORADAs contention: Since her Amended Complaint is based on Art. 19 and 21 of the Civil Code, then the instant case is properly a matter of domestic law.

HELD: YES; NO; YES. WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394 entitled Milagros P. Morada vs. Saudi Arabia Airlines is hereby REMANDED to Regional Trial Court of Quezon City, Branch 89 for further proceedings. RATIO:

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

In the 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.

2. We thus find private respondents (MILAGROS MORADAs) assertion that the case is purely domestic, imprecise. A conflicts problem presents itself here, and the question of jurisdiction[43] confronts the court a quo.

3. 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.

Art. 19. 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.

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals,[45] this Court held that:

The aforecited provisions on human relations were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes.

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.

4. Based on the allegations[46] in the Amended Complaint, read in the light of the Rules of Court on jurisdiction[47] we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction over the subject matter of the suit.

5. Weighing the relative claims of the parties, the court a quo found it best to hear the case in the Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains substantial connections. That would have caused a fundamental unfairness to her. Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been shown by either of the parties. The choice of forum of the plaintiff (now private respondent) should be upheld. 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.

6. The records show that petitioner SAUDIA has filed several motions[50] 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. Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its exercise thereof, justified.

7. 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. 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 thesitus of the res, the place of celebration, the place of performance, or the place of wrongdoing.

8. Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable law.[59] These test factors or points of contact or connecting factors could be any of the following:

(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;

(2) the seat of a legal or juridical person, such as a corporation;

(3) 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.)

9.After a careful study of the pleadings on record, 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.

10. 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.

11. 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.

12. As already discussed, there is basis for the claim that over-all injury occurred and lodged in the Philippines. There is likewise no question that private respondent is a resident Filipina national, working with petitioner, a resident foreign corporation engaged here in the business of international air carriage. Thus, the relationship between the parties was centered here, although it should be stressed that this suit is not based on mere labor law violations. From the record, the claim that the Philippines has the most significant contact with the matter in this dispute,[63] raised by private respondent as plaintiff below against defendant (herein petitioner), in our view, has been properly established.

13. Prescinding from this premise that the Philippines is the situs of the tort complaint of and the place having the most interest in the problem, we find, by way of recapitulation, that the Philippine law on tort liability should have paramount application to and control in the resolution of the legal issues arising out of this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over the parties and the subject matter of the complaint; the appropriate venue is in Quezon City, which could properly apply Philippine law.

14. Moreover, we find untenable petitioners insistence that [s]ince private respondent instituted this suit, she has the burden of pleading and proving the applicable Saudi law on the matter.[64] As aptly said by private respondent, she has no obligation to plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21 of the Civil Code of the Philippines. In her Amended Complaint and subsequent pleadings she never alleged that Saudi law should govern this case.[65] And as correctly held by the respondent appellate court, considering that it was the petitioner who was invoking the applicability of the law of Saudi Arabia, thus the burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia is.[66]

15. Lastly, no error could be imputed to the respondent appellate court in upholding the trial courts denial of defendants (herein petitioners) motion to dismiss the case. Not only was jurisdiction in order and venue properly laid, but appeal after trial was obviously available, and the expeditious trial itself indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately concerned with the ultimate outcome of the case below not just for the benefit of all the litigants, but also for the vindication of the countrys system of law and justice in a transnational setting. With these guidelines in mind, the trial court must proceed to try and adjudge the case in the light of relevant Philippine law, with due consideration of the foreign element or elements involved. Nothing said herein, of course, should be construed as prejudging the results of the case in any manner whatsoever.

CASE LAW/ DOCTRINE:

> Where the factual antecedents satisfactorily establish the existence of a foreign element, [] the problem herein could present a conflicts case. A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more states is said to contain a foreign element. The presence of a foreign element is inevitable since social and economic affairs of individuals and associations are rarely confined to the geographic limits of their birth or conception. 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.

>test factors or points of contact or connecting factors for determining applicable law: (1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such as a corporation; (3) 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.

03 PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F. LLORENTE, respondents. G.R. No. 124371, 23 November 2000 TOPIC: Conflict of Laws Ponente: Pardo, J.

Foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like any other fact, they must be alleged and proved.

FACTS: 1. Lorenzo Llorente (deceased) and petitioner Paula Llorente got married in 1937 in Nabua, Cam Sur. 2. Lorenzo was an enlisted serviceman of the US Navy from 1927-1957. 3. In 1943, he became a US Citizen. When he returned to visit his wife, he discovered that Paula was pregnant and was living in and having an adulterous relationship with his brother, Ceferino Llorente. 4. Lorenzo refused to forgive and live with Paula so they made a written agreement to the effect that (1) all the family allowances allotted by the United States Navy as part of Lorenzos salary and all other obligations for Paulas daily maintenance and support would be suspended; (2) they would dissolve their marital union in accordance with judicial proceedings; (3) they would make a separate agreement regarding their conjugal property acquired during their marital life; and (4) Lorenzo would not prosecute Paula for her adulterous act since she voluntarily admitted her fault and agreed to separate from Lorenzo peacefully. The agreement was signed by both Lorenzo and Paula and was witnessed by Paulas father and stepmother. A notary public notarized the agreement. 5. Lorenzo then filed a divorce in California, which later on became final (1952). 6. He returned to the Phil. and in 1958, he married Alicia and they lived together for 25 years. They had 3 children. 7. In 1981, he made his last will and testament stating that all his properties will be given to Alicia and their three children. He filed a petition for the probate and allowance of his last will and testament, wherein he moved that Alicia be appointed Special Administratrix of his estate. This motion was denied by the court for the reason that Lorenzo was still alive. 8. The trial court then admitted the will to probate. But before the proceeding could be terminated, Lorenzo died. 9. Paula (1st wife) then filed a letter of administration over Llorentes estate in her favor. She contended (1) that she was Lorenzos surviving spouse, (2) that the various property were acquired during their marriage, (3) that Lorenzos will disposed of all his property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the conjugal property. 10. Alicia (2nd wife) filed in the testate proceeding a petition for the issuance of letters testamentary. But without terminating the testate proceedings, the trial court gave due course to Paulas petition. 11. The trial court ruled that the divorce was void and inapplicable in the Philippines; therefore Lorenzo and Alicias marriage is likewise void. It further ruled that Alicia is not entitled to receive any share from the estate even if the will especially said so having gained the status of paramour. The court declared that Paula is entitled as conjugal partner to one-half of their conjugal properties, and as primary compulsory heir, to one-third of the estate; and then one-third should go to the illegitimate children. 12. On appeal by Alicia, the CA ruled that Alicia is a co-owner of whatever properties she and the deceased may have acquired during the 25 years of cohabitation. ISSUES: 1. Who are entitled to inherit from the late Lorenzo N. Llorente? 2. In relation to the topic: Which law shall apply? Foreign/National law or Philippine law? HELD: 1. We do not agree with the decision of the Court of Appeals. We remand the case to the trial court for ruling on the intrinsic validity of the will of the deceased. 2. The foreign law applies. The Civil Code provides that intestate and testamentary succession, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found. In this case, Lorenzo was an American citizen. RATIO: 1. The applicable law: FOREIGN LAW

Lorenzo N. Llorente became an American citizen long before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death.

Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.

The Civil Code clearly provides:

Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding

Filipino at time of weddingAmerican at time of divorce

upon citizens of the Philippines, even though living abroad.

Art. 16. Real property as well as personal property is subject to the law of the country where it is situated.

However, intestate and testamentary succession, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found. (emphasis ours)

True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like any other fact, they must be alleged and proved.

While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign law. The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case was referred back to the law of the decedents domicile, in this case, Philippine law.

We note that while the trial court stated that the law of New York was not sufficiently proven, in the same breath it made the categorical, albeit equally unproven statement that American law follows the domiciliary theory hence, Philippine law applies when determining the validity of Lorenzos will.

First, there is no such thing as one American law. The "national law" indicated in Article 16 of the Civil Code cannot possibly apply to general American law. There is no such law governing the validity of testamentary provisions in the United States. Each State of the union has its own law applicable to its citizens and in force only within the State. It can therefore refer to no other than the law of the State of which the decedent was a resident. Second, there is no showing that the application of the renvoi doctrine is called for or required by New York State law.

2. Other matters discussed: Validity of the Foreign Divorce and Validity of the Will: Owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy and morality. In the same case, the Court ruled that aliens may obtain divorces abroad, provided they are valid according to their national law. We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects of this divorce (as to the succession to the estate of the decedent) are matters best left to the determination of the trial court.

Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed.

When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign country, the solemnities established by Philippine laws shall be observed in their execution. (underscoring ours)

The clear intent of Lorenzo to bequeath his property to his second wife and children by her is glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was a foreigner, not covered by our laws on family rights and duties, status, condition and legal capacity.

Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by foreign law which must be pleaded and proved. Whether the will was executed in accordance with the formalities required is answered by referring to Philippine law. In fact, the will was duly probated.

004 LWV Construction v. Dupo G.R. No. 172342 TOPIC: PONENTE: Quisimbing, J.

AUTHOR: NOTES:

FACTS: 1. LWV Construction (petitioner), a domestic corporation which recruits Filipino workers, hired Marcelo Dupo

(respondent) as Civil Structural Superintendent to work in Saudi Arabia for its principal, Mohammad Al-Mojil Group/Establishment (MMG).

2. On February 26, 1992, respondent signed his first overseas employment contract, renewable after one year. 2.1 The employment contract was renewed 5 times and the contracts were for a period of 1 year. 2.2 The sixth and last contract stated that respondents employment starts upon reporting to work and ends when he

leaves the work site. 2.3 He left Saudi Arabia on April 30, 1999 and arrived in the Philippines on May 1, 1999.

3. On May 28, 1999, respondent informed MMG, through the petitioner, that he needs to extend his vacation because his son was hospitalized. He also sought a promotion with salary adjustment.

4. Reply of MMG: his promotion is subject to managements review; that his services are still needed; that he was issued a plane ticket for his return flight to Saudi Arabia on May 31, 1999; and that his decision regarding his employment must be made within seven days, otherwise, MMG will be compelled to cancel [his] slot.

5. On July 6, 1999, respondent resigned. 5.1 He sent a letter to MMG claiming that he is entitled for a long service award for his more than 7 years of

service. 5.2 Basis: Saudi Labor Law: that an employee who rendered at least five (5) years in a company within the

jurisdiction of Saudi Arabia, is entitled to the so-called long service award which is known to others as longevity pay of at least one half month pay for every year of service. In excess of five years an employee is entitled to one month pay for every year of service. In both cases inclusive of all benefits and allowances.

6. However, MMG did not respond to respondents claim. 7. Hence, respondent filed a complaint for payment of service award against petitioner. 8. Petitioners defense:

8.1 MMG pays its workers their Service Award or Severance Pay every conclusion of their Labor Contracts pursuant to Article 87 of the [Saudi Labor Law]. Under Article 87, payment of the award is at the end or termination of the Labor Contract concluded for a specific period. Based on the payroll, respondent was already paid his service award or severance pay for his latest (sixth) employment contract.

8.2 The one-year prescriptive period had lapsed because respondent filed his complaint on December 11, 2000 or one year and seven months after his sixth contract ended.

9. LA: petitioner to pay respondent longevity pay of US$12,640.33 or P648,562.69 and attorneys fees of P64,856.27 or a total of P713,418.96. 9.1 respondents seven-year employment with MMG had sufficiently oriented him on the benefits given to

workers; that petitioner was unable to convincingly refute respondents claim that MMG offered him longevity pay before he went on vacation on May 1, 1999; and that respondents claim was not barred by prescription since his claim on July 6, 1999, made a month after his cause of action accrued, interrupted the prescriptive period under the Saudi Labor Law until his claim was categorically denied.

10. NLRC: affirmed. Respondent is entitled to longevity pay which is different from severance pay. 11. CA: Under Article 87 of the Saudi Labor and Workmen Law (Saudi Labor Law), respondent Marcelo Dupo is

entitled to a service award or longevity pa. ISSUE(S):

1. Whether or not respondent is entitled to a service award or longevity pay of US$12,640.33 under the provisions of the Saudi Labor Law.

2. Whether or not respondents action has prescribed HELD:

1. No. 2. No.

RATIO: RE: Service Award or Longevity Pay Article 87 clearly grants a service award. It reads:

Article 87

Where the term of a labor contract concluded for a specified period comes to an end or where the employer cancels a contract of

Entitled to the pmt even though iba yung tawag niya doon sa paymentHOWEVER, SC didnt rule in R's favor since binayaran na pala siya

unspecified period, the employer shall pay to the workman an award for the period of his service to be computed on the basis of half a months pay for each of the first five years and one months pay for each of the subsequent years. The last rate of pay shall be taken as basis for the computation of the award. For fractions of a year, the workman shall be entitled to an award which is proportionate to his service period during that year. Furthermore, the workman shall be entitled to the service award provided for at the beginning of this article in the following cases:

A. If he is called to military service. B. If a workman resigns because of marriage or childbirth. C. If the workman is leaving the work as a result of a force majeure beyond his control.

Respondent, however, has called the benefit other names such as long service award and longevity pay. On the other hand, petitioner claimed that the service award is the same as severance pay. Notably, the Labor Arbiter was unable to specify any law to support his award of longevity pay. He anchored the award on his finding that respondents allegations were more credible because his seven-year employment at MMG had sufficiently oriented him on the benefits given to workers. To the NLRC, respondent is entitled to service award or longevity pay under Article 87 and that longevity pay is different from severance pay. The Court of Appeals agreed.

Considering that Article 87 expressly grants a service award, why is it correct to agree with respondent that service award is the same as longevity pay, and wrong to agree with petitioner that service award is the same as severance pay? And why would it be correct to say that service award is severance pay, and wrong to call service award as longevity pay?

We found the answer in the pleadings and evidence presented. Respondents position paper mentioned how his long service award or longevity pay is computed: half-months pay per year of service and one-months pay per year after five years of service. Article 87 has the same formula to compute the service award.

The payroll submitted by petitioner showed that respondent received severance pay of SR2,786 for his sixth employment contract covering the period April 21, 1998 to April 29, 1999. The computation below shows that respondents severance pay of SR2,786 was his service award under Article 87.

Service Award = (SR5,438) + (9 days/365 days) x (SR5,438) Service Award = SR2,786.04

Respondents service award for the sixth contract is equivalent only to half-months pay plus the proportionate amount for the additional nine days of service he rendered after one year. Respondents employment contracts expressly stated that his employment ended upon his departure from work. Each year he departed from work and successively new contracts were executed before he reported for work anew. His service was not cumulative. Pertinently, in Brent School, Inc. v. Zamora, we said that a fixed term is an essential and natural appurtenance of overseas employment contracts, as in this case. We also said in that case that under American law, [w]here a contract specifies the period of its duration, it terminates on the expiration of such period. A contract of employment for a definite period terminates by its own terms at the end of such period. As it is, Article 72 of the Saudi Labor Law is also of similar import. It reads:

A labor contract concluded for a specified period shall terminate upon the expiry of its term. If both parties continue to enforce the contract, thereafter, it shall be considered renewed for an unspecified period.

Regarding respondents claim that he was offered US$12,640.33 as longevity pay before he returned to the Philippines on May 1, 1999, we find that he was not candid on this particular point. His categorical assertion about the offer being engrained in his mind such that he reconstructed the computation and arrived at the computation exactly the same with the amount he was previously offered is not only beyond belief. Such assertion is also a stark departure from his July 6, 1999 letter to MMG where he could only express his hope that he was entitled to a long service award and where he never mentioned the supposed previous offer. Moreover, respondents claim that his monthly compensation is SR10,248.92 is belied by the payroll which shows that he receives SR5,438 per month.

We therefore emphasize that such payroll should have prompted the lower tribunals to examine closely respondents computation of his supposed longevity pay before adopting that computation as their own.

RE: Prescription

What applies is Article 291 of our Labor Code which reads:

ART. 291. Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.

x x x x

In Cadalin v. POEAs Administrator, we held that Article 291 covers all money claims from employer-employee relationship and is broader in scope than claims arising from a specific law. It is not limited to money claims recoverable under the Labor Code, but applies also to claims of overseas contract workers. The following ruling inCadalin v. POEAs Administrator is instructive:

First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall not be actionable after the lapse of one year from the date of the expiry of the contract x x x.

As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action is based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive, depending on the characterization given such a law.

x x x x

However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum has a borrowing statute. Said statute has the practical effect of treating the foreign statute of limitation as one of substance (Goodrich, Conflict of Laws, 152-153 [1938]). A borrowing statute directs the state of the forum to apply the foreign statute of limitations to the pending claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds of borrowing statutes, one form provides that an action barred by the laws of the place where it accrued, will not be enforced in the forum even though the local statute has not run against it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind. Said Section provides:

If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippine Islands.

Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said Code repealed only those provisions of the Code of Civil Procedure as to which were inconsistent with it. There is no provision in the Civil Code of the Philippines, which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws, 104 [7th ed.]).

In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure] cannot be enforced ex proprio vigore insofar as it ordains the application in this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the forums public policy x x x. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene the public policy on the protection to labor.

x x x x

Thus, in our considered view, respondents complaint was filed well within the three-year prescriptive period under Article 291 of our Labor Code. This point, however, has already been mooted by our finding that respondents service award had been paid, albeit the payroll termed such payment as severance pay. CASE LAW/ DOCTRINE:

DISSENTING/CONCURRING OPINION(S):

005 IDONAH SLADE PERKINS, petitioner, vs. ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and BENGUET CONSOLIDATED MINING COMPANY, respondents. G.R. No. 46631; November 16, 1939 TOPIC: Resolution of Conflicts Problems: Jurisddiction PONENTE: MORAN, J.

AUTHOR: Krystelle Candor NOTES: (if applicable)

FACTS: (chronological order) 1. On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of Manila against

the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on 52,874 shares of stock registered in his name, payment of which was being withheld by the company; and, for the recognition of his right to the control and disposal of said shares, to the exclusion of all others.

2. To the complaint, the company filed its answer alleging, by way of defense, that the withholding of such dividends and the non-recognition of plaintiff's right to the disposal and control of the shares were due to certain demands made with respect to said shares by the petitioner herein, Idonah Slade Perkins, and by one George H. Engelhard.

3. The answer prays that the adverse claimants be made parties to the action and served with notice thereof by publication, and that thereafter all such parties be required to interplead and settle the rights among themselves.

4. On September 5, 1938, the trial court ordered respondent Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in addition to the relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins and George Engelhard be adjudged without interest in the shares of stock in question and excluded from any claim they assert thereon.

5. Thereafter, summons by publication were served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard filed his answer to the amended complaint, and on December 10, 1938, petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled "objection to venue, motion to quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower court over her person.

6. Petitioner's objection, motion and demurrer having been overruled as well as her motion for reconsideration of the order of denial, she now brought the present petition for certiorari, praying that the summons by publication issued against her be declared null and void, and that, with respect to her, respondent Judge be permanently prohibited from taking any action on the case.

ISSUE(S): Whether or not the CFI of Manila has acquired jurisdiction over the person of the present petitioner as a non-resident defendant. HELD: YES. The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of the non-resident. In order to satisfy the constitutional requirement of due process, summons has been served upon her by publication. RATIO: Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in the Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or personal property within the Philippines in which said defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from any interest therein, service of summons maybe made by publication. We have fully explained the meaning of this provision in El Banco Espaol Filipino vs. Palanca, 37 Phil., 921, wherein we laid down the following rules:

(1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter and over the persons of the parties. Jurisdiction over the subject-matter is acquired by concession of the sovereign authority which organizes a court and determines the nature and extent of its powers in general and thus fixes its jurisdiction with reference to actions which it may entertain and the relief it may grant. Jurisdiction over the persons of the parties is acquired by their voluntary appearance in court and their submission to its authority, or by the coercive power of legal process exerted over their persons. (2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot acquire jurisdiction over his person even if the summons be served by publication, for he is beyond the reach of judicial process. No tribunal established by one State can extend its process beyond its territory so as to subject to its decisions either persons or property located in another State. "There are many expressions in the American reports from which it might be inferred that the court acquires personal jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth, the proposition that jurisdiction over the person of a non-resident cannot be acquired by publication and notice was never clearly understood even in the American courts until after the decision had been rendered by the Supreme Court of the United States in the leading case

of Pennoyer v. Neff . In the light of that decisions which have subsequently been rendered in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by publication and notice is no longer open to question; and it is now fully established that a personal judgment upon constructive or substituted service against a non-resident who does not appear is wholly invalid. This doctrine applies to all kinds of constructive or substituted process, including service by publication and personal service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in the case where the non-resident defendant has expressly or impliedly consented to the mode of service. (3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a Philippine court. Where, however, the action is in rem or quasi in rem in connection with property located in the Philippines, the court acquires jurisdiction over the res, and its jurisdiction over the person of the non-resident is non-essential. In order that the court may exercise power over the res, it is not necessary that the court should take actual custody of the property, potential custody thereof being sufficient. There is potential custody when, from the nature of the action brought, the power of the court over the property is impliedly recognized by law. "An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property, assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world." (4) As before stated, in an action in rem or quasi in rem against a non-resident defendant, jurisdiction over his person is non-essential, and if the law requires in such case that the summons upon the defendant be served by publication, it is merely to satisfy the constitutional requirement of due process. If any be said, in this connection, that "may reported cases can be cited in which it is assumed that the question of the sufficiency of publication or notice in the case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally adopted by the court because of the analogy between service by publication and personal service of process upon the defendant; and, as has already been suggested, prior to the decision of Pennoyer v. Neff (supra), the difference between the legal effects of the two forms of service was obscure. It is accordingly not surprising that the modes of expression which had already been moulded into legal tradition before that case was decided have been brought down to the present day. But it is clear that the legal principle here involved is not affected by the peculiar languages in which the courts have expounded their ideas."

The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-resident, as laid down by the Supreme Court of the United States in Pennoyer v. Neff, supra, may be found in a recognized principle of public law to the effect that "no State can exercise direct jurisdiction and authority over persons or property without its territory. The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions. "Any exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable of binding such persons or property in any other tribunals." When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principle that a "State, through its tribunals, may subject property situated within its limits owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the owners are domiciled. Every State owes protection to its citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff, supra.) In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest in a property located in the Philippines. That property consists in certain shares of stocks of the Benguet Consolidated Mining Company, a sociedad anonima, organized in the Philippines under the provisions of the Spanish Code of Commerce, with its principal office in the City of Manila and which conducts its mining activities therein. The situs of the shares is in the jurisdiction where the corporation is created, whether the certificated evidencing the ownership of those shares are within or without that jurisdiction. Under these circumstances, we hold that the action thus brought is quasi in rem, for while the judgement that may be rendered therein is not strictly a judgment in

rem, "it fixes and settles the title to the property in controversy and to that extent partakes of the nature of the judgment in rem." As held by the Supreme Court of the United States in Pennoyer v. Neff (supra);

It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has for its object the disposition of the property, without reference to the title of individual claimants; but , in a large and more general sense, the terms are applied to actions between parties, where the direct object is to reach and dispose of property owned by them, or of some interest therein.

The action being in quasi in rem, The CFI of Manila has jurisdiction over the person of the non-resident. In order to satisfy the constitutional requirement of due process, summons has been served upon her by publication. There is no question as to the adequacy of publication made nor as to the mailing of the order of publication to the petitioner's last known place of residence in the United States. But, of course, the action being quasi in rem and notice having be made by publication, the relief that may be granted by the Philippine court must be confined to the res, it having no jurisdiction to render a personal judgment against the non-resident. In the amended complaint filed by Eugene Arthur Perkins, no money judgment or other relief in personam is prayed for against the petitioner. The only relief sought therein is that she be declared to be without any interest in the shares in controversy and that she be excluded from any claim thereto. Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an action in personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims are or may be made upon a person for or relating to personal property, or the performance of an obligation or any portion thereof, so that he may be made subject to several actions by different persons, such person may bring an action against the conflicting claimants, disclaiming personal interest in the controversy, and the court may order them to interplead with one another and litigate their several claims among themselves, there upon proceed to determine their several claims. Here, The Benguet Consolidated Mining Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred that in connection with the shares of stock in question, conflicting claims were being made upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard, and prayed that these last two be made parties to the action and served with summons by publication, so that the three claimants may litigate their conflicting claims and settle their rights among themselves. The court has not issued an order compelling the conflicting claimants to interplead with one another and litigate their several claims among themselves, but instead ordered the plaintiff to amend his complaint including the other two claimants as parties defendant. The plaintiff did so, praying that the new defendants thus joined be excluded fro any interest in the shares in question, and it is upon this amended complaint that the court ordered the service of the summons by publication. It is therefore, clear that the publication of the summons was ordered not in virtue of an interpleading, but upon the filing of the amended complaint wherein an action quasi in rem is alleged. Had not the complaint been amended, including the herein petitioner as an additional defendant, and had the court, upon the filing of the answer of the Benguet Consolidated Mining Company, issued an order under section 120 of the Code of Civil Procedure, calling the conflicting claimants into court and compelling them to interplead with one another, such order could not perhaps have validly been served by publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the proceeding would be purely one of interpleading. Such proceeding is a personal action, for it merely seeks to call conflicting claimants into court so that they may interplead and litigate their several claims among themselves, and no specific relief is prayed for against them, as the interpleader have appeared in court, one of them pleads ownership of the personal property located in the Philippines and seeks to exclude a non-resident claimant from any interest therein, is a question which we do not decide not. Suffice it to say that here the service of the summons by publication was ordered by the lower court by virtue of an action quasi in rem against the non-resident defendant. Respondents contend that, as the petitioner in the lower court has pleaded over the subject-matter, she has submitted herself to its jurisdiction. We have noticed, however, that these pleas have been made not as independent grounds for relief, but merely as additional arguments in support of her contention that the lower court had no jurisdiction over the person. In other words, she claimed that the lower court had no jurisdiction over her person not only because she is a non-resident, but also because the court had no jurisdiction over the subject-matter of the action and that the issues therein involved have already been decided by the New York court and are being relitigated in the California court. Although this argument is obviously erroneous, as neither jurisdiction over the subject-matter nor res adjudicata nor lis pendens has anything to do with the question of jurisdiction over her person, we believe and so hold that the petitioner has not, by such erroneous argument, submitted herself to the jurisdiction of the court. Voluntary appearance cannot be implied from either a mistaken or superflous reasoning but from the nature of the relief prayed for. For all the foregoing, petition is hereby denied, with costs against petitioner. CASE LAW/ DOCTRINE: DISSENTING/CONCURRING OPINION(S):

006 Asiavest Limited vs Court of Appeals G.R. No. 128803, September 25, 1998 TOPIC: Resolution of Conflicts Problems: Jurisdiction PONENTE: Davide, Jr. J;

AUTHOR: De Guzman, Bien NOTES:

FACTS: The defendant Antonio Heras was sued on the basis of his personal guarantee of the obligations of Compania Hermanos de Navegacion S.A. in Hongkong. But before said judgment was issued and even during trial, Heras already left for good Hong Kong and he returned to the Philippines. Thus, The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant praying that said defendant be ordered to pay to the plaintiff the amounts awarded by the Hong Kong Court Judgment dated December 28, 1984 and amended on April 13, 1987, to wit: US$1,810,265.40 with legal interest from December 28, 1984, interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to December 28, 1984; and HK$905.00 at fixed cost in the action; and at least $80,000.00 representing attorney's fees, litigation expenses and cost. On October 19, 1988, defendant filed his Answer. HERAS maintained that the Hong Kong court did not have jurisdiction over him because the fundamental rule is that jurisdiction in personam over non-resident defendants, so as to sustain a money judgment, must be based upon personal service of summons within the state which renders the judgment. The case was then set for pre-trial conference. At the conference, the parties could not arrive at any settlement. However, they agreed on the following stipulations of facts: 1. The defendant admits the existence of the judgment dated December 28, 1984 as well as its amendment dated April 13, 1987, but not necessarily the authenticity or validity thereof; 2. The plaintiff is not doing business and is not licensed to do business in the Philippines; 3. The residence of defendant, Antonio Heras, is New Manila, Quezon City. The plaintiff presented only documentary evidence to show rendition, existence, and authentication of such judgment by the proper officials concerned. In addition, the plaintiff presented testimonial and documentary evidence to show its entitlement to attorney's fees and other expenses of litigation. On the other hand, the defendant presented two witnesses, namely. Fortunata dela Vega and Russel Warren Lousich. The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of a statement of claim of Asiavest Limited was ever served in the office of the Navegante Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of summons was either served on the defendant at his residence in New Manila, Quezon City. Her knowledge is based on the fact that she was the personal secretary of Mr. Heras during his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping business in Hong Kong. Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of the law office of the defendant's counsel stated that There is no record that a writ of summons was served on the person of the defendant in Hong Kong, or that any such attempt at service was made. Likewise, there is no record that a copy of the judgment of the High Court was furnished or served on the defendant; anyway, it is not a legal requirement to do so under Hong Kong laws. On cross-examination by counsel for ASIAVEST, Lousich' testified that the Hong Kong court authorized service of summons on HERAS outside of its jurisdiction, particularly in the Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERAS's son-in-law Dionisio Lopez. On redirect examination, Lousich declared that such service of summons would be valid under Hong Kong laws provided that it was in accordance with Philippine laws. The trial court held that since the Hong Kong court judgment had been duly proved, it is a presumptive evidence of a right as between the parties; hence, the party impugning it had the burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden. He did not testify to state categorically and under oath that he never received summons. Even his own witness Lousich admitted that HERAS was served with summons in his Quezon City residence. As to De la Vega's testimony regarding non-service of summons, the same was hearsay and had no probative value. As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the procedural laws of the Philippines because it contained no statements of the facts and the law on which it was based, the trial court ruled that since the issue relate to procedural matters, the law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich, such legalities were not required under Hong Kong laws. The trial Court also debunked HERAS' contention that the principle of excussion under Article 2058 of the Civil Code of the Philippines was violated. It declared that matters of

substance are subject to the law of the place where the transaction occurred; in this case, Hong Kong laws must govern. The trial court concluded that the Hong Kong court judgment should be recognized and given effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the foreign judgment. The Court of Appeals rendered its decision reversing the decision of the trial court and dismissing ASIAVEST's complaint without prejudice. It underscored the fact that a foreign judgment does not of itself have any extraterritorial application. For it to be given effect, the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If such tribunal has not acquired jurisdiction, its judgment is void. It then stressed that where the action is in personam and the defendant is in the Philippines, the summons should be personally served on the defendant pursuant to Section 7, Rule 14 of the Rules of Court. 4 Substituted service may only be availed of where the defendant cannot be promptly served in person, the fact of impossibility of personal service should be explained in the proof of service. It also found as persuasive HERAS' argument that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge of the court issuing the summons, ASIAVEST should have asked for leave of the local courts to have the foreign summons served by the sheriff or other court officer of the place where service was to be made, or for special reasons by any person authorized by the judge. The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is unavailing to give jurisdiction in an action against him personally for money recovery." Summons should have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did not acquire jurisdiction over HERAS. ISSUE(S): Whether or not the foreign judgment can be enforced against Heras in the Philippines? HELD: No. Although the foreign judgment was duly authenticated (Asiavest was able to adduce evidence in support thereto) and Heras was never able to overcome the validity of it, it cannot be enforced against Heras here in the Philippines because Heras was not properly served summons. Hence, as far as Philippine law is concerned, the Hong Kong court has never acquired jurisdiction over Heras. This means then that Philippine courts cannot act to enforce the said foreign judgment. RATIO: Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, a foreign judgment against a person rendered by a court having jurisdiction to pronounce the judgment is presumptive evidence of a right as between the parties and their successors in interest by the subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to the contrary, a court, or judge acting as such, whether in the Philippines or elsewhere, is presumed to have acted in the lawful exercise of jurisdiction. At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. The judgment is thus presumed to be valid and binding in the country from which it comes, until the contrary is shown. Lousich declared that the record of the Hong Kong case failed to show that a writ of summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither did the record show that a copy of the judgment of the court was served on HERAS. He stated further that under Hong Kong laws (a) a writ of summons could be served by the solicitor of the claimant or plaintiff; and (b) where the said writ or claim was not contested, the claimant or plaintiff was not required to present proof under oath in order to obtain judgment. There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong Kong in respect of service of summons either in actions in rem or in personam, and where the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-called processual presumption shall come into play. It will thus be presumed that the Hong Kong law on the matter is similar to the Philippine law. In Valmonte vs. Court of Appeals, it will be helpful to determine first whether the action is in personam, in rem, or quasi in rem because the rules on service of summons under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action. An action in personam is an action against a person on the basis of his personal liability. An action in rem is an action against the thing itself instead of against the person. An action quasi in rem is one wherein an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. Jurisdiction over the person of a resident defendant who does not voluntarily appear in court can be acquired by personal service of summons as provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served

with summons within a reasonable time, substituted service may be made in accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following modes of service may be resorted to: (1) substituted service set forth in Section 8; (2) personal service outside the country, with leave of court; (3) service by publication, also with leave of court; or (4) any other manner the court may deem sufficient. However, in an action in personam wherein the defendant is a non-resident who does not voluntarily submit himself to the authority of the court, personal service of summons within the state is essential to the acquisition of jurisdiction over her person. This method of service is possible if such defendant is physically present in the country. If he is not found therein, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him. An exception was laid down in Gemperle v. Schenker, wherein a non-resident was served with summons through his wife, who was a resident of the Philippines and who was his representatives and attorney-in-fact in a prior civil case filed by him; moreover, the second case was a mere offshoot of the first case. In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was based on his personal guarantee of the obligation of the principal debtor. Before we can apply the foregoing rules, we must determine first whether HERAS was a resident of Hong Kong. We note that the residence of HERAS insofar as the action for the enforcement of the Hong Kong court judgment is concerned, was never in issue. He never challenged the service of summons on him through a security guard in his Quezon City residence and through a lawyer in his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the Philippine court over his person on the ground of invalid service of summons. What was in issue was his residence as far as the Hong Kong suit was concerned. We therefore conclude that the stipulated fact that HERAS "is a resident of New Manila, Quezon City, Philippines" refers to his residence at the time jurisdiction over his person was being sought by the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS was a resident of Hong Kong at the time. Accordingly, since HERAS was not a resident of Hong Kong and the action against him was, indisputably, one in personam, summons should have been personally served on him in Hong Kong. The extraterritorial service in the Philippines was therefore inval