1. Hasegawa v.

Kitamura
G.R. No. 149177, 23 Nov. 2007

2. Small v. United States

544 US 385 (2005)

3. Saudi Arabian Airlines v. Rebenscio et al

G.R. No. 198587, 14 Jan. 2015

4. SAUDI ARABIAN AIRLINES 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, 297 SCRA 469, G.R. No. 122191,
October 8, 1998

5. HONGKONG AND SHANGHAI BANKING CORPORATION vs. JACK ROBERT SHERMAN, DEODATO RELOJ and THE
INTERMEDIATE APPELLATE COURT, 176 SCRA 331, G.R. No. 72494, August 11, 1989

6. IN THE MATTER OF THE ESTATE OF CHEONG BOO, deceased, MORA ADONG vs. CHEONG SENG GEE, 43 Phil.
43, G.R. No. 18081, March 3, 1922
5. CAYETANO LIM and MARCIANO LIM vs. THE INSULAR COLLECTOR OF CUSTOMS, 36 Phil. 472, G.R. No. L-
11759, March 16, 1917

7. PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V.
vs. THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS,
and WILLIAM H. CRAIG, 274 SCRA 102, G.R. No. 103493, June 19, 1997

8. PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG vs. ANTONIO
D. TODARO, 524 SCRA 153, G.R. No. 154830, June 8, 2007

9. MENANDRO B. LAUREANO vs. COURT OF APPEALS AND SINGAPORE AIRLINES LIMITED, 324 SCRA 414, G.R.
No. 114776, February 2, 2000

10. WILDVALLEY SHIPPING CO., LTD. vs. COURT OF APPEALS and PHILIPPINE PRESIDENT LINES INC., 342 SCRA 213,
G.R. No. 119602, October 6, 2000

11. AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto Santos vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, 210 SCRA 256, G.R. No. 101538, June 23, 1992

12. INTERNATIONAL SHOE COMPANY vs. STATE OF WASHINGTON, OFFICE OF UNEMPLOYMENT COMPENSATION
& PLACEMENT, ET AL., 326 US 310, December 3, 1945

13. EL BANCO ESPA-OL-FILIPINO vs. VICENTE PALANCA, administrator of the estate of Engracio Palanca
Tanquinyeng, 37 Phil. 921, G.R. No. L-11390, March 26, 1918

14. WILLIAM F. GEMPERLE vs. HELEN SCHENKER and PAUL SCHENKER as her husband, 19 SCRA 45, G.R. No. L-
18164, January 23, 1967

15. VICTORIA REGNER vs. CYNTHIA R. LOGARTA, TERESA R. TORMIS and CEBU COUNTRY CLUB, Inc., 537 SCRA 277,
G.R. No. 168747, October 19, 2007

16. EUROPEAN RESOURCES AND TECHNOLOGIES, INC. and DELFIN J. WENCESLAO vs. INGENIEUBURO BIRKHAHN +
NOLTE, Ingeniurgesellschaft mbh and HEERS & BROCKSTEDT GMBH & CO., 435 SCRA 246, G.R. No. 159586,
July 26, 2004

17. ERIE RAILROAD COMPANY vs. HARRY J. TOMPKINS, 304 US 64, April 25, 1938
 18. K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING OIL CO., LTD. vs. THE HONORABLE COURT OF APPEALS,
ATLANTIC VENUS CO., S.A., and THE VESSEL M/V "ESTELLA", G.R. Nos. 90306-07, July 30, 1990

19. HENRY HEINE vs. NEW YORK LIFE INSURANCE COMPANY, 45 F2d 426, Dec. 1, 1930

20. In the matter Estate of Edward Randolph Hix, deceased, A.W. FLUEMER vs. ANNIE COUSHING HIX, 54 Phil. 610,
G.R. No. L-32636, March 17, 1930

21. TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO. vs. MAGDALENA C. BOHANAN,
EDWARD C. BOHANAN, and MARY LYDIA BOHANAN, 106 Phil. 997, G.R. No. L-12105, January 30, 1960

22. PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC, and
JOEL C. LAMANGAN in their behalf and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United
States District Court of Hawaii vs. HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of
Branch 137, Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its court
appointed legal representatives in Class Action MDL 840, United States District Court of Hawaii, namely:
Imelda R. Marcos and Ferdinand Marcos, Jr., G.R. No. 139325, April 12, 2005

23. SYLVESTER PENNOYER vs. MARCUS NEFF, 95 US 714, May 13, 1878

24. MULLANE, SPECIAL GUARDIAN vs. CENTRAL HANOVER BANK & TRUST CO., TRUSTEE, et al., 399 US 306, April
24, 1950

25. R. F. SHAFFER, et al. vs. ARNOLD HEITNER, 433 US 186, June 24, 1977

26. IDONAH SLADE PERKINS vs. MAMERTO ROXAS, ET AL., 72 Phil. 514, G.R. No. 47517, June 1941

THIRD DIVISION

KAZUHIRO HASEGAWA and NIPPON ENGINEERING G.R. No. 149177

CONSULTANTS CO., LTD.,
Petitioners, Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

MINORU KITAMURA, Promulgated:

Respondent.
November 23, 2007

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 18, 2001
Decision[1]of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution[2] denying the
motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy firm
providing technical and management support in the infrastructure projects of foreign governments,[3] entered into an
Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national permanently residing
in the Philippines.[4] The agreement provides that respondent was to extend professional services to Nippon for a year
starting on April 1, 1999.[5] Nippon then assigned respondent to work as the project manager of the Southern Tagalog
Access Road (STAR) Project in the Philippines, following the company's consultancy contract with the Philippine
Government.[6]

When the STAR Project was near completion, the Department of Public Works and Highways (DPWH) engaged the
consultancy services of Nippon, on January 28, 2000, this time for the detailed engineering and construction
supervision of the Bongabon-Baler Road Improvement (BBRI) Project.[7] Respondent was named as the project
manager in the contract's Appendix 3.1.[8]

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its International Division, informed
respondent that the company had no more intention of automatically renewing his ICA. His services would be engaged
by the company only up to the substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's
expiry.[9]

Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation conference and
demanded that he be assigned to the BBRI project. Nippon insisted that respondents contract was for a fixed term that
had already expired, and refused to negotiate for the renewal of the ICA.[10]

As he was not able to generate a positive response from the petitioners, respondent consequently initiated on June 1,
2000 Civil Case No. 00-0264 for specific performance and damages with the Regional Trial Court of Lipa City.[11]

For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and between
Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They asserted that the claim for improper
pre-termination of respondent's ICA could only be heard and ventilated in the proper courts of Japan following the
principles of lex loci celebrationis and lex contractus.[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of Kitamura by a
certain Y. Kotake as project manager of the BBRI Project.[13]

On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank[14] that matters connected with the
performance of contracts are regulated by the law prevailing at the place of performance,[15] denied the motion to
dismiss.[16] The trial court subsequently denied petitioners' motion for reconsideration,[17] prompting them to file
with the appellate court, on August 14, 2000, their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP
No. 60205].[18] On August 23, 2000, the CA resolved to dismiss the petition on procedural groundsfor lack of
statement of material dates and for insufficient verification and certification against forum shopping.[19] An Entry of
Judgment was later issued by the appellate court on September 20, 2000.[20]

Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the reglementary
period, a secondPetition for Certiorari under Rule 65 already stating therein the material dates and attaching thereto
the proper verification and certification. This second petition, which substantially raised the same issues as those in
the first, was docketed as CA-G.R. SP No. 60827.[21]

Ruling on the merits of the second petition, the appellate court rendered the assailed April 18,
2001 Decision[22] finding no grave abuse of discretion in the trial court's denial of the motion to dismiss. The CA ruled,
among others, that the principle of lex loci celebrationis was not applicable to the case, because nowhere in the
pleadings was the validity of the written agreement put in issue. The CA thus declared that the trial court was correct
in applying instead the principle of lex loci solutionis.[23]
Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25, 2001 Resolution.
[24]

Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant Petition for Review
on Certiorari[25] imputing the following errors to the appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL COURT VALIDLY
EXERCISED JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE
CONTRACT SUBJECT MATTER OF THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN
TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN
TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE NEED TO REVIEW
OUR ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.[26]

The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction of Philippine
courts in civil cases for specific performance and damages involving contracts executed outside the country by foreign
nationals may be assailed on the principles of lex loci celebrationis, lex contractus, the state of the most significant
relationship rule, or forum non conveniens.

However, before ruling on this issue, we must first dispose of the procedural matters raised by the respondent.

Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has already barred the
filing of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the
first one) and the instant petition for review thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's defective certification of
non-forum shopping, it was a dismissal without prejudice.[27] The same holds true in the CA's dismissal of the said
case due to defects in the formal requirement of verification[28] and in the other requirement in Rule 46 of the Rules
of Court on the statement of the material dates.[29] The dismissal being without prejudice, petitioners can re-file the
petition, or file a second petition attaching thereto the appropriate verification and certificationas they, in fact didand
stating therein the material dates, within the prescribed period[30] in Section 4, Rule 65 of the said Rules.[31]

The dismissal of a case without prejudice signifies the absence of a decision on the merits and leaves the parties free
to litigate the matter in a subsequent action as though the dismissed action had not been commenced. In other words,
the termination of a case not on the merits does not bar another action involving the same parties, on the same
subject matter and theory.[32]

Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and even if petitioners still
indicated in the verification and certification of the second certiorari petition that the first had already been dismissed
on procedural grounds,[33] petitioners are no longer required by the Rules to indicate in their certification of non-
forum shopping in the instant petition for review of the second certiorari petition, the status of the aforesaid first
petition before the CA. In any case, an omission in the certificate of non-forum shopping about any event that will not
constitute res judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant the dismissal
and nullification of the entire proceedings, considering that the evils sought to be prevented by the said certificate are
no longer present.[34]

The Court also finds no merit in respondent's contention that petitioner Hasegawa is only authorized to verify and
certify, on behalf of Nippon, the certiorari petition filed with the CA and not the instant petition. True, the
Authorization[35] dated September 4, 2000, which is attached to the second certiorari petition and which is also
attached to the instant petition for review, is limited in scopeits wordings indicate that Hasegawa is given the authority
to sign for and act on behalf of the company only in the petition filed with the appellate court, and that authority
cannot extend to the instant petition for review.[36] In a plethora of cases, however, this Court has liberally applied the
Rules or even suspended its application whenever a satisfactory explanation and a subsequent fulfillment of the
requirements have been made.[37] Given that petitioners herein sufficiently explained their misgivings on this point
and appended to their Reply[38] an updated Authorization[39] for Hasegawa to act on behalf of the company in the
instant petition, the Court finds the same as sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the verification and certification. As
respondent pointed out, and to which we agree, Hasegawa is truly not authorized to act on behalf of Nippon in this
case. The aforesaid September 4, 2000 Authorization and even the subsequent August 17, 2001 Authorization were
issued only by Nippon's president and chief executive officer, not by the company's board of directors. In not a few
cases, we have ruled that corporate powers are exercised by the board of directors; thus, no person, not even its
officers, can bind the corporation, in the absence of authority from the board.[40] Considering that Hasegawa verified
and certified the petition only on his behalf and not on behalf of the other petitioner, the petition has to be denied
pursuant to Loquias v. Office of the Ombudsman.[41] Substantial compliance will not suffice in a matter that demands
strict observance of the Rules.[42] While technical rules of procedure are designed not to frustrate the ends of justice,
nonetheless, they are intended to effect the proper and orderly disposition of cases and effectively prevent the
clogging of court dockets.[43]

Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the trial court's denial
of their motion to dismiss. It is a well-established rule that an order denying a motion to dismiss is interlocutory,
and cannot be the subject of the extraordinary petition for certiorari or mandamus. The appropriate recourse is to file
an answer and to interpose as defenses the objections raised in the motion, to proceed to trial, and, in case of an
adverse decision, to elevate the entire case by appeal in due course.[44] While there are recognized exceptions to this
rule,[45] petitioners' case does not fall among them.

This brings us to the discussion of the substantive issue of the case.

Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction to hear and resolve the
civil case for specific performance and damages filed by the respondent. The ICA subject of the litigation was entered
into and perfected in Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language. Thus,
petitioners posit that local courts have no substantial relationship to the parties[46] following the [state of the] most
significant relationship rule in Private International Law.[47]

The Court notes that petitioners adopted an additional but different theory when they elevated the case to the
appellate court. In the Motion to Dismiss[48] filed with the trial court, petitioners never contended that the RTC is an
inconvenient forum. They merely argued that the applicable law which will determine the validity or invalidity of
respondent's claim is that of Japan, following the principles of lex loci celebrationis and lex contractus.[49] While not
abandoning this stance in their petition before the appellate court, petitioners on certiorari significantly invoked the
defense of forum non conveniens.[50] On petition for review before this Court, petitioners dropped their other
arguments, maintained the forum non conveniens defense, and introduced their new argument that the applicable
principle is the [state of the] most significant relationship rule.[51]

Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change in theory, as
explained in Philippine Ports Authority v. City of Iloilo.[52] We only pointed out petitioners' inconstancy in their
arguments to emphasize their incorrect assertion of conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved: jurisdiction, choice
of law, and recognition and enforcement of judgments. Corresponding to these phases are the following questions: (1)
Where can or should litigation be initiated? (2) Which law will the court apply? and (3) Where can the resulting
judgment be enforced?[53]

Analytically, jurisdiction and choice of law are two distinct concepts.[54] Jurisdiction considers whether it is fair to
cause a defendant to travel to this state; choice of law asks the further question whether the application of a
substantive law which will determine the merits of the case is fair to both parties. The power to exercise jurisdiction
does not automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of
the lex fori will often coincide, the minimum contacts for one do not always provide the necessary significant contacts
for the other.[55] The question of whether the law of a state can be applied to a transaction is different from the
question of whether the courts of that state have jurisdiction to enter a judgment.[56]

In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has various aspects. For a court to validly
exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff or the petitioner, over the
defendant or the respondent, over the subject matter, over the issues of the case and, in cases involving property, over
the res or the thing which is the subject of the litigation.[57] In assailing the trial court's jurisdiction herein, petitioners
are actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which establishes
and organizes the court. It is given only by law and in the manner prescribed by law.[58] It is further determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein.[59] To succeed in its motion for the dismissal of an action for lack of jurisdiction over the subject matter of the
claim,[60] the movant must show that the court or tribunal cannot act on the matter submitted to it because no law
grants it the power to adjudicate the claims.[61]

In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not properly vested by law
with jurisdiction to hear the subject controversy for, indeed, Civil Case No. 00-0264 for specific performance and
damages is one not capable of pecuniary estimation and is properly cognizable by the RTC of Lipa City.[62] What they
rather raise as grounds to question subject matter jurisdiction are the principles of lex loci celebrationis and lex
contractus, and the state of the most significant relationship rule.

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the law of the place of the ceremony[63] or the law of the place where a contract is
made.[64] The doctrine of lex contractus or lex loci contractus means the law of the place where a contract is executed
or to be performed.[65] It controls the nature, construction, and validity of the contract[66] and it may pertain to the
law voluntarily agreed upon by the parties or the law intended by them either expressly or implicitly.[67] Under the
state of the most significant relationship rule, to ascertain what state law to apply to a dispute, the court should
determine which state has the most substantial connection to the occurrence and the parties. In a case involving a
contract, the court should consider where the contract was made, was negotiated, was to be performed, and the
domicile, place of business, or place of incorporation of the parties.[68] This rule takes into account several contacts
and evaluates them according to their relative importance with respect to the particular issue to be resolved.[69]

Since these three principles in conflict of laws make reference to the law applicable to a dispute, they are rules proper
for the second phase, the choice of law.[70] They determine which state's law is to be applied in resolving the
substantive issues of a conflicts problem.[71] Necessarily, as the only issue in this case is that of jurisdiction, choice-of-
law rules are not only inapplicable but also not yet called for.

Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have not yet pointed
out any conflict between the laws of Japan and ours. Before determining which law should apply, first there should
exist a conflict of laws situation requiring the application of the conflict of laws rules.[72] Also, when the law of a
foreign country is invoked to provide the proper rules for the solution of a case, the existence of such law must be
pleaded and proved.[73]

It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or
administrative agency, there are three alternatives open to the latter in disposing of it: (1) dismiss the case, either
because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case and
apply the internal law of the forum; or (3) assume jurisdiction over the case and take into account or apply the law of
some other State or States.[74] The courts power to hear cases and controversies is derived from the Constitution and
the laws. While it may choose to recognize laws of foreign nations, the court is not limited by foreign sovereign law
short of treaties or other formal agreements, even in matters regarding rights provided by foreign sovereigns.[75]

Neither can the other ground raised, forum non conveniens,[76] be used to deprive the trial court of its jurisdiction
herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court does not
include it as a ground.[77] Second, whether a suit should be entertained or dismissed on the basis of the said doctrine
depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court.[78] In
this case, the RTC decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle
requires a factual determination; hence, this conflicts principle is more properly considered a matter of defense.[79]

Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by respondent and
the grounds raised by petitioners to assail that jurisdiction are inappropriate, the trial and appellate courts correctly
denied the petitioners motion to dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.

SO ORDERED.
SMALL v. UNITED STATES

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 03—750.Argued November 3, 2004–Decided April 26, 2005

Petitioner Small was convicted in a Japanese Court of trying to smuggle firearms and
ammunition into that country. He served five years in prison and then returned to the United
States, where he bought a gun. Federal authorities subsequently charged Small under 18 U.S.C.
§ 922(g)(1), which forbids “any person … convicted in any court … of a crime punishable by
imprisonment for a term exceeding one year … to … possess … any firearm.” (Emphasis added.)
Small pleaded guilty while reserving the right to challenge his conviction on the ground that his
earlier conviction, being foreign, fell outside §922(g)(1)’s scope. The Federal District Court and
the Third Circuit rejected this argument.
Held: Section 922(g)(1)’s phrase “convicted in any court” encompasses only domestic, not
foreign, convictions. Pp. 2—9.
(a) In considering the scope of the phrase “convicted in any court” it is appropriate to assume
that Congress had domestic concerns in mind. This assumption is similar to the legal
presumption that Congress ordinarily intends its statutes to have domestic, not extraterritorial,
application, see, e.g., Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285. The phrase “convicted in any
court” describes one necessary portion of the “gun possession” activity that is prohibited as a
matter of domestic law. Moreover, because foreign convictions may include convictions for
conduct that domestic laws would permit, e.g.,for engaging in economic conduct that our
society might encourage, convictions from a legal system that are inconsistent with American
understanding of fairness, and convictions for conduct that domestic law punishes far less
severely, the key statutory phrase “convicted in any court of, a crime punishable by
imprisonment for a term exceeding one year” somewhat less reliably identifies dangerous
individuals for the purposes of U.S. law where foreign convictions, rather than domestic
convictions, are at issue. In addition, it is difficult to read the statute as asking judges or
prosecutors to refine its definitional distinctions where foreign convictions are at issue. To
somehow weed out inappropriate foreign convictions that meet the statutory definition is not
consistent with the statute’s language; it is not easy for those not versed in foreign laws to
accomplish; and it would leave those previously convicted in a foreign court (say of economic
crimes) uncertain about their legal obligations. These considerations provide a convincing basis
for applying the ordinary assumption about the reach of domestically oriented statutes here.
Thus, the Court assumes a congressional intent that the phrase “convicted in any court” applies
domestically, not extraterritorially, unless the statutory language, context, history, or purpose
shows the contrary. Pp. 2—5.
(b) There is no convincing indication to the contrary here. The statute’s language suggests no
intent to reach beyond domestic convictions. To the contrary, if read to include foreign
convictions, the statute’s language creates anomalies. For example, in creating an exception
allowing gun possession despite a conviction for an antitrust or business regulatory crime,
§921(a)(20)(A) speaks of “Federal or State” antitrust or regulatory offenses. If the phrase
“convicted in any court” generally refers only to domestic convictions, this language causes no
problem. But if the phrase includes foreign convictions, the words “Federal or State” prevent
the exception from applying where a foreign antitrust or regulatory conviction is at issue. Such
illustrative examples suggest that Congress did not consider whether the generic phrase
“convicted in any court” applies to foreign convictions. Moreover, the statute’s legislative
history indicates no intent to reach beyond domestic convictions. Although the statutory
purpose of keeping guns from those likely to become a threat to society does offer some
support for reading §922(g)(1) to include foreign convictions, the likelihood that Congress, at
best, paid no attention to the matter is reinforced by the empirical fact that, according to the
Government, since 1968, there have fewer than a dozen instances in which such a foreign
conviction has served as a predicate for a felon-in-possession prosecution. Pp. 5—8.
SECOND DIVISION
G.R. No. 198587, January 14, 2015

SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners, v. MA. JOPETTE M. REBESENCIO, MONTASSAH
B. SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ, Respondents.

DECISION

LEONEN, J.:

All Filipinos are entitled to the protection of the rights guaranteed in the Constitution.

This is a Petition for Review on Certiorari with application for the issuance of a temporary restraining order and/or writ
of preliminary injunction under Rule 45 of the 1997 Rules of Civil Procedure praying that judgment be rendered
reversing and setting aside the June 16, 2011 Decision 1 and September 13, 2011 Resolution2 of the Court of Appeals in
CA-G.R. SP. No. 113006.

Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing under the laws of Jeddah,
Kingdom of Saudi Arabia. It has a Philippine office located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue,
Makati City.3 In its Petition filed with this court, Saudia identified itself as follows:chanroblesvirtuallawlibrary

1. Petitioner SAUDIA is a foreign corporation established and existing under the Royal Decree No. M/24
of 18.07.1385H (10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its Philippine Office is located
at 4/F Metro House Building, Sen, Gil J. Puyat Avenue, Makati City (Philippine Office) . It may be served
with orders of this Honorable Court through undersigned counsel at 4 th and 6th Floors, Citibank Center
Bldg., 8741 Paseo de Roxas, Makati City.4 (Emphasis supplied)

Respondents (complainants before the Labor Arbiter) were recruited and hired by Saudia as Temporary Flight
Attendants with the accreditation and approval of the Philippine Overseas Employment Administration. 5 After
undergoing seminars required by the Philippine Overseas Employment Administration for deployment overseas, as
well as training modules offered by Saudia (e.g., initial flight attendant/training course and transition training), and
after working as Temporary Flight Attendants, respondents became Permanent Flight Attendants. They then entered
into Cabin Attendant contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May 16, 1990; 6 Montassah B.
Sacar-Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen Ruth) on May 22, 1993; 7 and Loraine Schneider-Cruz
(Loraine) on August 27, 1995.8

Respondents continued their employment with Saudia until they were separated from service on various dates in
2006.9

Respondents contended that the termination of their employment was illegal. They alleged that the termination was
made solely because they were pregnant.10

As respondents alleged, they had informed Saudia of their respective pregnancies and had gone through the necessary
procedures to process their maternity leaves. Initially, Saudia had given its approval but later on informed respondents
that its management in Jeddah, Saudi Arabia had disapproved their maternity leaves. In addition, it required
respondents to file their resignation letters. 11

Respondents were told that if they did not resign, Saudia would terminate them all the same. The threat of
termination entailed the loss of benefits, such as separation pay and ticket discount entitlements. 12

Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base Manager, Abdulmalik Saddik
(Abdulmalik).13 Montassah was informed personally by Abdulmalik and a certain Faisal Hussein on October 20, 2006
after being required to report to the office one (1) month into her maternity leave. 14Rouen Ruth was also personally
informed by Abdulmalik on October 17, 2006 after being required to report to the office by her Group
Supervisor.15 Loraine received a call on October 12, 2006 from her Group Supervisor, Dakila Salvador. 16

Saudia anchored its disapproval of respondents' maternity leaves and demand for their resignation on its "Unified
Employment Contract for Female Cabin Attendants" (Unified Contract). 17 Under the Unified Contract, the employment
of a Flight Attendant who becomes pregnant is rendered void. It provides:chanroblesvirtuallawlibrary

(H) Due to the essential nature of the Air Hostess functions to be physically fit on board to provide
various services required in normal or emergency cases on both domestic/international flights beside
her role in maintaining continuous safety and security of passengers, and since she will not be able to
maintain the required medical fitness while at work in case of pregnancy, accordingly, if the Air Hostess
becomes pregnant at any time during the term of this contract, this shall render her employment
contract as void and she will be terminated due to lack of medical fitness.18 (Emphasis supplied)

In their Comment on the present Petition, 19 respondents emphasized that the Unified Contract took effect on
September 23, 2006 (the first day of Ramadan), 20 well after they had filed and had their maternity leaves approved.
Ma. Jopette filed her maternity leave application on September 5, 2006. 21 Montassah filed her maternity leave
application on August 29, 2006, and its approval was already indicated in Saudia's computer system by August 30,
2006.22 Rouen Ruth filed her maternity leave application on September 13, 2006, 23 and Loraine filed her maternity
leave application on August 22, 2006. 24

Rather than comply and tender resignation letters, respondents filed separate appeal letters that were all rejected. 25

Despite these initial rejections, respondents each received calls on the morning of November 6, 2006 from Saudia's
office secretary informing them that their maternity leaves had been approved. Saudia, however, was quick to renege
on its approval. On the evening of November 6, 2006, respondents again received calls informing them that it had
received notification from Jeddah, Saudi Arabia that their maternity leaves had been disapproved. 26

Faced with the dilemma of resigning or totally losing their benefits, respondents executed handwritten resignation
letters. In Montassah's and Rouen Ruth's cases, their resignations were executed on Saudia's blank letterheads that
Saudia had provided. These letterheads already had the word "RESIGNATION" typed on the subject portions of their
headings when these were handed to respondents. 27

On November 8, 2007, respondents filed a Complaint against Saudia and its officers for illegal dismissal and for
underpayment of salary, overtime pay, premium pay for holiday, rest day, premium, service incentive leave pay,
13th month pay, separation pay, night shift differentials, medical expense reimbursements, retirement benefits, illegal
deduction, lay-over expense and allowances, moral and exemplary damages, and attorney's fees. 28 The case was
initially assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC NCR Case No. 00-11-12342-07.

Saudia assailed the jurisdiction of the Labor Arbiter. 29 It claimed that all the determining points of contact referred to
foreign law and insisted that the Complaint ought to be dismissed on the ground of forum non conveniens.30 It added
that respondents had no cause of action as they resigned voluntarily. 31

On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the Decision 32dismissing
respondents' Complaint. The dispositive portion of this Decision reads:chanroblesvirtuallawlibrary
 WHEREFORE, premises' considered, judgment is hereby rendered DISMISSING the instant complaint for
lack of jurisdiction/merit.33cralawlawlibrary

On respondents' appeal, the National Labor Relations Commission's Sixth Division reversed the ruling of Executive
Labor Arbiter Jambaro-Franco. It explained that "[considering that complainants-appellants are OFWs, the Labor
Arbiters and the NLRC has [sic] jurisdiction to hear and decide their complaint for illegal termination." 34 On the matter
of forum non conveniens, it noted that there were no special circumstances that warranted its abstention from
exercising jurisdiction.35 On the issue of whether respondents were validly dismissed, it held that there was nothing on
record to support Saudia's claim that respondents resigned voluntarily.

The dispositive portion of the November 19, 2009 National Labor Relations Commission
Decision36reads:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, judgment is hereby rendered finding the appeal impressed with
merit. The respondents-appellees are hereby directed to pay complainants-appellants the aggregate
amount of SR614,001.24 corresponding to their backwages and separation pay plus ten (10%) percent
thereof as attorney's fees. The decision of the Labor Arbiter dated December 12, 2008 is hereby
VACATED and SET ASIDE. Attached is the computation prepared by this Commission and made an
integral part of this Decision.37cralawlawlibrary

In the Resolution dated February 11, 2010, 38 the National Labor Relations Commission denied petitioners' Motion for
Reconsideration.

In the June 16, 2011 Decision, 39 the Court of Appeals denied petitioners' Rule 65 Petition and modified the Decision of
the National Labor Relations Commission with respect to the award of separation pay and backwages.

The dispositive portion of the Court of Appeals Decision reads:chanroblesvirtuallawlibrary

WHEREFORE, the instant petition is hereby DENIED. The Decision dated November 19, 2009 issued by
public respondent, Sixth Division of the National Labor Relations Commission - National Capital Region
is MODIFIED only insofar as the computation of the award of separation pay and backwages. For greater
clarity, petitioners are ordered to pay private respondents separation pay which shall be computed from
private respondents' first day of employment up to the finality of this decision, at the rate of one month
per year of service and backwages which shall be computed from the date the private respondents were
illegally terminated until finality of this decision. Consequently, the ten percent (10%) attorney's fees
shall be based on the total amount of the award. The assailed Decision is affirmed in all other respects.

The labor arbiter is hereby DIRECTED to make a recomputation based on the

foregoing.40cralawlawlibrary

In the Resolution dated September 13, 2011, 41 the Court of Appeals denied petitioners' Motion for Reconsideration.

Hence, this Appeal was filed.

The issues for resolution are the following:

First, whether the Labor Arbiter and the National Labor Relations Commission may exercise jurisdiction over Saudi
Arabian Airlines and apply Philippine law in adjudicating the present dispute;

Second, whether respondents' voluntarily resigned or were illegally terminated; and

Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian
Airlines.chanRoblesvirtualLawlibrary

Summons were validly served on Saudia and jurisdiction over it validly acquired.

There is no doubt that the pleadings and summons were served on Saudia through its counsel. 42 Saudia, however,
claims that the Labor Arbiter and the National Labor Relations Commission had no jurisdiction over it because
summons were never served on it but on "Saudia Manila." 43 Referring to itself as "Saudia Jeddah," it claims that
"Saudia Jeddah" and not "Saudia Manila" was the employer of respondents because:

First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by respondents;

Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and benefits; and

Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. 44

Saudia posits that respondents' Complaint was brought against the wrong party because "Saudia Manila," upon which
summons was served, was never the employer of respondents. 45

Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare allegation, there is no basis for
concluding that "Saudia Jeddah" is distinct from "Saudia Manila."

What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . . . located at 4/F Metro
House Building, Sen. Gil J. Puyat Avenue, Makati City." 46 Even in the position paper that Saudia submitted to the Labor
Arbiter,47 what Saudia now refers to as "Saudia Jeddah" was then only referred to as "Saudia Head Office at Jeddah,
KSA,"48 while what Saudia now refers to as "Saudia Manila" was then only referred to as "Saudia's office in Manila." 49

By its own admission, Saudia, while a foreign corporation, has a Philippine office.

Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of 1991, provides the
following:chanroblesvirtuallawlibrary

The phrase "doing business" shall include . . . opening offices, whether called "liaison" offices or
branches; . . . and any other act or acts that imply a continuity of 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. (Emphasis supplied)

A plain application of Section 3(d) of the Foreign Investments Act leads to no other conclusion than that Saudia is a
foreign corporation doing business in the Philippines. As such, Saudia may be sued in the Philippines and is subject to
the jurisdiction of Philippine tribunals.

Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" � the latter being nothing
more than Saudia's local office � service of summons to Saudia's office in Manila sufficed to vest jurisdiction over
Saudia's person in Philippine tribunals.chanRoblesvirtualLawlibrary

II

Saudia asserts that Philippine courts and/or tribunals are not in a position to make an intelligent decision as to the law
and the facts. This is because respondents' Cabin Attendant contracts require the application of the laws of Saudi
Arabia, rather than those of the Philippines. 50 It claims that the difficulty of ascertaining foreign law calls into
operation the principle of forum non conveniens, thereby rendering improper the exercise of jurisdiction by Philippine
tribunals.51

A choice of law governing the validity of contracts or the interpretation of its provisions dees not necessarily
imply forum non conveniens. Choice of law and forum non conveniens are entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of contracts. Article 1306 of the
Civil Code firmly ensconces this:chanroblesvirtuallawlibrary

Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy.

In contrast, forum non conveniens is a device akin to the rule against forum shopping. It is designed to frustrate illicit
means for securing advantages and vexing litigants that would otherwise be possible if the venue of litigation (or
dispute resolution) were left entirely to the whim of either party.

Contractual choice of law provisions factor into transnational litigation and dispute resolution in one of or in a
combination of four ways: (1) procedures for settling disputes, e.g., arbitration; (2) forum, i.e., venue; (3) governing
law; and (4) basis for interpretation. Forum non conveniens relates to, but is not subsumed by, the second of these.

Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a given jurisdiction as
the governing law of a contract does not preclude the exercise of jurisdiction by tribunals elsewhere. The reverse is
equally true: The assumption of jurisdiction by tribunals does not ipso factomean that it cannot apply and rule on the
basis of the parties' stipulation. In Hasegawa v. Kitamura:52ChanRoblesVirtualawlibrary

Analytically, jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is
fair to cause a defendant to travel to this state; choice of law asks the further question whether the
application of a substantive law V'hich will determine the merits of the case is fair to both parties. The
power to exercise jurisdiction does not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex fori will often, coincide, the "minimum contacts" for one
do not always provide the necessary "significant contacts" for the other. The question of whether the
law of a state can be applied to a transaction is different from the question of whether the courts of that
state have jurisdiction to enter a judgment.53cralawlawlibrary

As various dealings, commercial or otherwise, are facilitated by the progressive ease of communication and travel,
persons from various jurisdictions find themselves transacting with each other. Contracts involving foreign elements
are, however, nothing new. Conflict of laws situations precipitated by disputes and litigation anchored on these
contracts are not totally novel.

Transnational transactions entail differing laws on the requirements Q for the validity of the formalities and substantive
provisions of contracts and their interpretation. These transactions inevitably lend themselves to the possibility of
various fora for litigation and dispute resolution. As observed by an eminent expert on transnational
law:chanroblesvirtuallawlibrary

The more jurisdictions having an interest in, or merely even a point of contact with, a transaction or
relationship, the greater the number of potential fora for the resolution of disputes arising out of or
related to that transaction or relationship. In a world of increased mobility, where business and personal
transactions transcend national boundaries, the jurisdiction of a number of different fora may easily be
invoked in a single or a set of related disputes.54cralawlawlibrary
Philippine law is definite as to what governs the formal or extrinsic validity of contracts. The first paragraph of Article
17 of the Civil Code provides that "[t]he forms and solemnities of contracts . . . shall be governed by the laws of the
country in which they are executed"55 (i.e., lex loci celebrationis).

In contrast, there is no statutorily established mode of settling conflict of laws situations on matters pertaining to
substantive content of contracts. It has been noted that three (3) modes have emerged: (1) lex loci contractus or the
law of the place of the making; (2) lex loci solutionis or the law of the place of performance; and (3) lex loci
intentionis or the law intended by the parties. 56

Given Saudia's assertions, of particular relevance to resolving the present dispute is lex loci intentionis.

An author observed that Spanish jurists and commentators "favor lex loci intentionis."57 These jurists and
commentators proceed from the Civil Code of Spain, which, like our Civil Code, is silent on what governs the intrinsic
validity of contracts, and the same civil law traditions from which we draw ours.

In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P. Eusebio Construction,
Inc.,58 manifested preference for allowing the parties to select the law applicable to their
contract":chanroblesvirtuallawlibrary

No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule followed
by most legal systems, however, is that the intrinsic validity of a contract must be governed by the lex
contractus or "proper law of the contract." This is the law voluntarily agreed upon by the parties (the lex
loci voluntatis) or the law intended by them either expressly or implicitly (the lex loci intentionis). The
law selected may be implied from such factors as substantial connection with the transaction, or the
nationality or domicile of the parties. Philippine courts would do well to adopt the first and most basic
rule in most legal systems, namely, to allow the parties to select the law applicable to their contract,
subject to the limitation that it is not against the law, morals, or public policy of the forum and that the
chosen law must bear a substantive relationship to the transaction.59 (Emphasis in the original)

Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of the laws of Saudi Arabia.
It insists that the need to comply with these stipulations calls into operation the doctrine of forum non
conveniens and, in turn, makes it necessary for Philippine tribunals to refrain from exercising jurisdiction.

As mentioned, contractual choice of laws factors into transnational litigation in any or a combination of four (4) ways.
Moreover, forum non conveniens relates to one of these: choosing between multiple possible fora.

Nevertheless, the possibility of parallel litigation in multiple fora � along with the host of difficulties it poses � is not
unique to transnational litigation. It is a difficulty that similarly arises in disputes well within the bounds of a singe
jurisdiction.

When parallel litigation arises strictly within the context of a single jurisdiction, such rules as those on forum
shopping, litis pendentia, and res judicata come into operation. Thus, in the Philippines, the 1997 Rules on Civil
Procedure provide for willful and deliberate forum shopping as a ground not only for summary dismissal with prejudice
but also for citing parties and counsels in direct contempt, as well as for the imposition of administrative
sanctions.60 Likewise, the same rules expressly provide that a party may seek the dismissal of a Complaint or another
pleading asserting a claim on the ground "[t]hat there is another action pending between the same parties for the
same cause," i.e., litis pendentia, or "[t]hat the cause of action is barred by a prior judgment," 61 i.e., res judicata.

Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a means of addressing the
problem of parallel litigation. While the rules of forum shopping, litis pendentia, and res judicata are designed to
address the problem of parallel litigation within a single jurisdiction, forum non conveniens is a means devised to
address parallel litigation arising in multiple jurisdictions.

Forum non conveniens literally translates to "the forum is inconvenient." 62 It is a concept in private international law
and was devised to combat the "less than honorable" reasons and excuses that litigants use to secure procedural
advantages, annoy and harass defendants, avoid overcrowded dockets, and select a "friendlier" venue. 63 Thus, the
doctrine of forum non conveniens addresses the same rationale that the rule against forum shopping does, albeit on a
multijurisdictional scale.

Forum non conveniens, like res judicata,64 is a concept originating in common law. 65 However, unlike the rule on res
judicata, as well as those on litis pendentia and forum shopping, forum non conveniens finds no textual anchor,
whether in statute or in procedural rules, in our civil law system. Nevertheless, jurisprudence has applied forum non
conveniens as basis for a court to decline its exercise of jurisdiction. 66

Forum non conveniens is soundly applied not only to address parallel litigation and undermine a litigant's capacity to
vex and secure undue advantages by engaging in forum shopping on an international scale. It is also grounded on
principles of comity and judicial efficiency.

Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on account of forum non
conveniens is a deferential gesture to the tribunals of another sovereign. It is a measure that prevents the former's
having to interfere in affairs which are better and more competently addressed by the latter. Further, forum non
conveniens entails a recognition not only that tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better positioned to enforce judgments and, ultimately, to dispense
justice. Forum non conveniens prevents the embarrassment of an awkward situation where a tribunal is rendered
incompetent in the face of the greater capability � both analytical and practical � of a tribunal in another
jurisdiction.

The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of efficiency and economy as it is
a matter of international courtesy. A court would effectively be neutering itself if it insists on adjudicating a controversy
when it knows full well that it is in no position to enforce its judgment. Doing so is not only an exercise in futility; it is
an act of frivolity. It clogs the dockets of a.tribunal and leaves it to waste its efforts on affairs, which, given
transnational exigencies, will be reduced to mere academic, if not trivial, exercises.

Accordingly, under the doctrine of forum non conveniens, "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."67 In Puyat v. Zabarte,68 this court recognized the following situations as among those that may
warrant a court's desistance from exercising jurisdiction:chanroblesvirtuallawlibrary

1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the
case transpired in a foreign jurisdiction or the material witnesses have their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to
secure procedural advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non � residents or aliens when the docket may already be
overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and

5) The difficulty of ascertaining foreign law. 69

In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,70 this court underscored that a
Philippine court may properly assume jurisdiction over a case if it chooses to do so to the extent: "(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."71

The use of the word "may" (i.e., "may refuse impositions on its jurisdiction" 72) in the decisions shows that the matter
of jurisdiction rests on the sound discretion of a court. Neither the mere invocation of forum non conveniens nor the
averment of foreign elements operates to automatically divest a court of jurisdiction. Rather, a court should renounce
jurisdiction only "after 'vital facts are established, to determine whether special circumstances' require the court's
desistance."73 As the propriety of applying forum non conveniens is contingent on a factual determination, it is,
therefore, a matter of defense.74

The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure is exclusive in its recital of the grounds
for dismissal that are exempt from the omnibus motion rule: (1) lack of jurisdiction over the subject matter; (2) litis
pendentia; (3) res judicata; and (4) prescription. Moreover, dismissal on account offorum non conveniens is a
fundamentally discretionary matter. It is, therefore, not a matter for a defendant to foist upon the court at his or her
own convenience; rather, it must be pleaded at the earliest possible opportunity.

On the matter of pleading forum non conveniens, we state the rule, thus: Forum non conveniens must not only be
clearly pleaded as a ground for dismissal; it must be pleaded as such at the earliest possible opportunity. Otherwise, it
shall be deemed waived.

This court notes that in Hasegawa,76 this court stated that forum non conveniens is not a ground for a motion to
dismiss. The factual ambience of this case however does not squarely raise the viability of this doctrine. Until the
opportunity comes to review the use of motions to dismiss for parallel litigation, Hasegawa remains existing doctrine.

Consistent with forum non conveniens as fundamentally a factual matter, it is imperative that it proceed from
& factually established basis. It would be improper to dismiss an action pursuant to forum non conveniens based
merely on a perceived, likely, or hypothetical multiplicity of fora. Thus, a defendant must also plead and show that a
prior suit has, in fact, been brought in another jurisdiction.

The existence of a prior suit makes real the vexation engendered by duplicitous litigation, the embarrassment of
intruding into the affairs of another sovereign, and the squandering of judicial efforts in resolving a dispute already
lodged and better resolved elsewhere. As has been noted:chanroblesvirtuallawlibrary

A case will not be stayed o dismissed on [forum] non conveniens grounds unless the plaintiff is shown to
have an available alternative forum elsewhere. On this, the moving party bears the burden of proof.

A number of factors affect the assessment of an alternative forum's adequacy. The statute of limitations
abroad may have run, of the foreign court may lack either subject matter or personal jurisdiction over
the defendant. . . . Occasionally, doubts will be raised as to the integrity or impartiality of the foreign
court (based, for example, on suspicions of corruption or bias in favor of local nationals), as to the
fairness of its judicial procedures, or as to is operational efficiency (due, for example, to lack of
resources, congestion and delay, or interfering circumstances such as a civil unrest). In one noted case, [it
was found] that delays of 'up to a quarter of a century' rendered the foreign forum... inadequate for
these purposes.77cralawlawlibrary

We deem it more appropriate and in the greater interest of prudence that a defendant not only allege supposed
dangerous tendencies in litigating in this jurisdiction; the defendant must also show that such danger is real and
present in that litigation or dispute resolution has commenced in another jurisdiction and that a foreign tribunal has
chosen to exercise jurisdiction.

III

Forum non conveniens finds no application and does not operate to divest Philippine tribunals of jurisdiction and to
require the application of foreign law.

Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the Cabin Attendant contracts that
require the application of the laws of Saudi Arabia.

Forum non conveniens relates to forum, not to the choice of governing law. Thai forum non conveniensmay ultimately
result in the application of foreign law is merely an incident of its application. In this strict sense, forum non
conveniens is not applicable. It is not the primarily pivotal consideration in this case.

In any case, even a further consideration of the applicability of forum non conveniens on the incidental matter of the
law governing respondents' relation with Saudia leads to the conclusion that it is improper for Philippine tribunals to
divest themselves of jurisdiction.

Any evaluation of the propriety of contracting parties' choice of a forum and'its incidents must grapple with two (2)
considerations: first, the availability and adequacy of recourse to a foreign tribunal; and second, the question of where,
as between the forum court and a foreign court, the balance of interests inhering in a dispute weighs more heavily.

The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign tribunal and can be resolved
by juxtaposing the competencies and practical circumstances of the tribunals in alternative fora. Exigencies, like the
statute of limitations, capacity to enforce orders and judgments, access to records, requirements for the acquisition of
jurisdiction, and even questions relating to the integrity of foreign courts, may render undesirable or even totally
unfeasible recourse to a foreign court. As mentioned, we consider it in the greater interest of prudence that a
defendant show, in pleading forum non conveniens, that litigation has commenced in another jurisdiction and that a
foieign tribunal has, in fact, chosen to exercise jurisdiction.

Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a dispute: first, the vinculum which
the parties and their relation have to a given jurisdiction; and second, the public interest that must animate a tribunal,
in its capacity as an agent of the sovereign, in choosing to assume or decline jurisdiction. The first is more concerned
with the parties, their personal circumstances, and private interests; the second concerns itself with the state and the
greater social order.

In considering the vinculum, a court must look into the preponderance of linkages which the parties and their
transaction may have to either jurisdiction. In this respect, factors, such as the parties' respective nationalities and
places of negotiation, execution, performance, engagement or deployment, come into play.

In considering public interest, a court proceeds with a consciousness that it is an organ of the state. It must, thus,
determine if the interests of the sovereign (which acts through it) are outweighed by those of the alternative
jurisdiction. In this respect, the court delves into a consideration of public policy. Should it find that public interest
weighs more heavily in favor of its assumption of jurisdiction, it should proceed in adjudicating the dispute, any doubt
or .contrary view arising from the preponderance of linkages notwithstanding.

Our law on contracts recognizes the validity of contractual choice of law provisions. Where such provisions exist,
Philippine tribunals, acting as the forum court, generally defer to the parties' articulated choice.
This is consistent with the fundamental principle of autonomy of contracts. Article 1306 of the Civ:l Code expressly
provides that "[t]he contracting parties may establish 'such stipulations, clauses, terms and conditions as they may
deem convenient."78 Nevertheless, while a Philippine tribunal (acting as the forum court) is called upon to respect the
parties' choice of governing law, such respect must not be so permissive as to lose sight of considerations of law,
morals, good customs, public order, or public policy that underlie the contract central to the controversy.

Specifically with respect to public policy, in Pakistan International Airlines Corporation v. Ople,79 this court explained
that:chanroblesvirtuallawlibrary

counter-balancing the principle of autonomy of contracting parties is the equally general rule that
provisions of applicable law, especially provisions relating to matters affected with public policy, are
deemed written inta the contract. Put a little differently, the governing principle is that parties may not
contract away applicable provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest.80(Emphasis supplied)

Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall ensure the fundamental equality before
the law of women and men." Contrasted with Article II, Section 1 of the 1987 Constitution's statement that "[n]o
person shall ... be denied the equal protection of the laws," Article II, Section 14 exhorts the State to "ensure." This
does not only mean that the Philippines shall not countenance nor lend legal recognition and approbation to measures
that discriminate on the basis of one's being male or female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.

The Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), signed and ratified by the
Philippines on July 15, 1980, and on August 5, 1981, respectively, 81 is part of the law of the land. In view of the
widespread signing and ratification of, as well as adherence (in practice) to it by states, it may even be said that many
provisions of the CEDAW may have become customary international law. The CEDAW gives effect to the Constitution's
policy statement in Article II, Section 14. Article I of the CEDAW defines "discrimination against women"
as:chanroblesvirtuallawlibrary

any distinction, exclusion or restriction made on the basis of sex which has the effect or purpose of
impairing or nullifying the recognition, enjoyment or exercise by women, irrespective of their marital
status, on a basis of equality of men and women, of human rights and fundamental freedoms in the
political, economic, social, cultural, civil or any other field. 82cralawlawlibrary

The constitutional exhortation to ensure fundamental equality, as illumined by its enabling law, the CEDAW, must
inform and animate all the actions of all personalities acting on behalf of the State. It is, therefore, the bounden duty
of this court, in rendering judgment on the disputes brought before it, to ensure that no discrimination is heaped upon
women on the mere basis of their being women. This is a point so basic and central that all our discussions and
pronouncements � regardless of whatever averments there may be of foreign law � must proceed from this
premise.

So informed and animated, we emphasize the glaringly discriminatory nature of Saudia's policy. As argued by
respondents, Saudia's policy entails the termination of employment of flight attendants who become pregnant. At the
risk of stating the obvious, pregnancy is an occurrence that pertains specifically to women. Saudia's policy excludes
from and restricts employment on the basis of no other consideration but sex.

We do not lose sight of the reality that pregnancy does present physical limitations that may render difficult the
performance of functions associated with being a flight attendant. Nevertheless, it would be the height of iniquity to
view pregnancy as a disability so permanent and immutable that, it must entail the termination of one's employment.
It is clear to us that any individual, regardless of gender, may be subject to exigencies that limit the performance of
functions. However, we fail to appreciate how pregnancy could be such an impairing occurrence that it leaves no other
recourse but the complete termination of the means through which a woman earns a living.

Apart from the constitutional policy on the fundamental equality before the law of men and women, it is settled that
contracts relating to labor and employment are impressed with public interest. Article 1700 of the Civil Code provides
that "[t]he relation between capital and labor are not merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good."

Consistent with this, this court's pronouncements in Pakistan International Airlines Corporation 83 are clear and
unmistakable:chanroblesvirtuallawlibrary

Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly,
the law of Pakistan as the applicable law of the agreement, and, secondly, lays the venue for settlement
of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi, Pakistan".
The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws
and'regulations to the subject matter of this case, i.e., the employer-employee relationship between
petitioner PIA and private respondents. We have already pointed out that the relationship is much
affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to govern their relationship. . . . Under
these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust
Philippine agencies and courts of the jurisdiction vested upon them by Philippine law. 84 (Emphasis
supplied)

As the present dispute relates to (what the respondents allege to be) the illegal termination of respondents'
employment, this case is immutably a matter of public interest and public policy. Consistent with clear
pronouncements in law and jurisprudence, Philippine laws properly find application in and govern this case.
'Moreover, as this premise for Saudia's insistence on the application forum non conveniens has been shattered, it
follows that Philippine tribunals may properly assume jurisdiction over the present controversy. Philippine
jurisprudence provides ample illustrations of when a court's renunciation of jurisdiction on account of forum non
conveniens is proper or improper.'

In Philsec Investment Corporation v. Court of Appeals,85 this court noted that the trial court failed to consider that one
of the plaintiffs was a domestic corporation, that one of the defendants was a Filipino, and that it was the
extinguishment of the latter's debt that was the object of the transaction subject of the litigation. Thus, this court held,
among others, that the trial court's refusal to assume jurisdiction was not justified by forum non conveniens and
remanded the case to the trial court.

In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained the trial court's assumption of jurisdiction
considering that the trial court could properly enforce judgment on the petitioner which was a foreign corporation
licensed to do business in the Philippines.

In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no reason to disturb the trial court's assumption of
jurisdiction over a case in which, as noted by the trial court, "it is more convenient to hear and decide the case in the
Philippines because Todaro [the plaintiff] resides in the Philippines and the contract allegedly breached involve[d]
employment in the Philippines."88

In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this court held that the fact that the complainant in an
illegal dismissal case was a Canadian citizen and a repatriate did not warrant the application of forum non
conveniens considering that: (1) the Labor Code does not include forum non conveniens as a ground for the dismissal
of a complaint for illegal dismissal; (2) the propriety of dismissing a case based on forum non conveniens requires a
factual determination; and (3) the requisites for assumption of jurisdiction as laid out in Bank of America,
NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations Commission 91 that the National
Labor Relations Q Commission was a seriously inconvenient forum. In that case, private respondent Marcelo G. Santos
was working in the Sultanate of Oman when he received a letter from Palace Hotel recruiting him for employment in
Beijing, China. Santos accepted the offer. Subsequently, however, he was released from employment supposedly due
to business reverses arising from political upheavals in China (i.e., the Tiananmen Square incidents of 1989). Santos
later filed a Complaint for illegal dismissal impleading Palace Hotel's General Manager, Mr. Gerhard Schmidt, the
Manila Hotel International Company Ltd. (which was, responsible for training Palace Hotel's personnel and staff), and
the Manila Hotel Corporation (which owned 50% of Manila Hotel International Company Ltd.'s capital stock).

In ruling against the National Labor Relations Commission's exercise of jurisdiction, this court noted that the main
aspects of the case transpired in two (2) foreign jurisdictions, Oman and China, and that the case involved purely
foreign elements. Specifically, Santos was directly hired by a foreign employer through correspondence sent to Oman.
Also, the proper defendants were neither Philippine nationals nor engaged in business in the Philippines, while the
main witnesses were not residents of the Philippines. Likewise, this court noted that the National Labor Relations
Commission was in no position to conduct the following: first, determine the law governing the employment contract,
as it was entered into in foreign soil; second, determine the facts, as Santos' employment was terminated in Beijing;
and third, enforce its judgment, since Santos' employer, Palace Hotel, was incorporated under the laws of China and
was not even served with summons.

Contrary to Manila Hotel, the case now before us does not entail a preponderance of linkages that favor a foreign
jurisdiction.

Here, the circumstances of the parties and their relation do not approximate the circumstances enumerated
in Puyat,92 which this court recognized as possibly justifying the desistance of Philippine tribunals from exercising
jurisdiction.

First, there is no basis for concluding that the case can be more conveniently tried elsewhere. As established earlier,
Saudia is doing business in the Philippines. For their part, all four (4) respondents are Filipino citizens maintaining
residence in the Philippines and, apart from their previous employment with Saudia, have no other connection to the
Kingdom of Saudi Arabia. It would even be to respondents' inconvenience if this case were to be tried elsewhere.

Second, the records are bereft of any indication that respondents filed their Complaint in an effort to engage in forum
shopping or to vex and inconvenience Saudia.

Third, there is no indication of "unwillingness to extend local judicial facilities to non-residents or aliens." 93That Saudia
has managed to bring the present controversy all the way to this court proves this.

Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating the right sought to be
maintained. Summons was properly served on Saudia and jurisdiction over its person was validly acquired.

Lastly, there is not even room for considering foreign law. Philippine law properly governs the present dispute.

As the question of applicable law has been settled, the supposed difficulty of ascertaining foreign law (which requires
the application of forum non conveniens) provides no insurmountable inconvenience or special circumstance that will
justify depriving Philippine tribunals of jurisdiction.

Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia which should apply, it does not
follow that Philippine tribunals should refrain from exercising jurisdiction. To. recall our pronouncements in Puyat, 94 as
well as in Bank of America, NT&SA,95 it is not so much the mere applicability of foreign law which calls into
operation forum non conveniens. Rather, what justifies a court's desistance from exercising jurisdiction is
"[t]he difficulty of ascertaining foreign law"96 or the inability of a "Philippine Court to make an intelligent decision as to
the law[.]"97

Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e., "to make an intelligent
decision"98), Philippine tribunals may apply the foreign law selected by the parties. In fact, (albeit without meaning to
make a pronouncement on the accuracy and reliability of respondents' citation) in this case, respondents themselves
have made averments as to the laws of Saudi Arabia. In their Comment, respondents write:chanroblesvirtuallawlibrary

Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and unlawful to terminate the
employment of any woman by virtue of pregnancy. The law in Saudi Arabia is even more harsh and strict
[sic] in that no employer can terminate the employment of a female worker or give her a warning of the
same while on Maternity Leave, the specific provision of Saudi Labor Laws on the matter is hereto
quoted as follows:chanroblesvirtuallawlibrary

"An employer may not terminate the employment of a female worker or give her a
warning of the same while on maternity leave." (Article 155, Labor Law of the Kingdom of
Saudi Arabia, Royal Decree No. M/51.) 99cralawlawlibrary

All told, the considerations for assumption of jurisdiction by Philippine tribunals as outlined in Bank of America,
NT&SA100 have been satisfied. First, all the parties are based in the Philippines and all the material incidents transpired
in this jurisdiction. Thus, the parties may conveniently seek relief from Philippine tribunals. Second, Philippine tribunals
are in a position to make an intelligent decision as to the law and the facts. Third, Philippine tribunals are in a position
to enforce their decisions. There is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary,
the immense public policy considerations attendant to this case behoove Philippine tribunals to not shy away from
their duty to rule on the case.chanRoblesvirtualLawlibrary

IV

Respondents were illegally terminated.

In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary resignation as "the voluntary act of an employee
who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the act of
relinquishment."102 Thus, essential to the act of resignation is voluntariness. It must be the result of an employee's
exercise of his or her own will.

In the same case of Bilbao, this court advanced a means for determining whether an employee resigned
voluntarily:chanroblesvirtuallawlibrary

As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee
before and after the alleged resignation must be considered in determining whether he or she, in fact,
intended, to sever his or her employment.103 (Emphasis supplied)

On the other hand, constructive dismissal has been defined as "cessation of work because 'continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay' and
other benefits."104

In Penaflor v. Outdoor Clothing Manufacturing Corporation,105 constructive dismissal has been described as
tantamount to "involuntarily [sic] resignation due to the harsh, hostile, and unfavorable conditions set by the
employer."106 In the same case, it was noted that "[t]he gauge for constructive dismissal is whether a reasonable
person in the employee's position would feel compelled to give up his employment under the prevailing
circumstances."107

Applying the cited standards on resignation and constructive dismissal, it is clear that respondents were constructively
dismissed. Hence, their termination was illegal.

The termination of respondents' employment happened when they were pregnant and expecting to incur costs on
account of child delivery and infant rearing. As noted by the Court of Appeals, pregnancy is a time when they need
employment to sustain their families. 108 Indeed, it goes against normal and reasonable human behavior to abandon
one's livelihood in a time of great financial need.

It is clear that respondents intended to remain employed with Saudia. All they did was avail of their maternity leaves.
Evidently, the very nature of a maternity leave means that a pregnant employee will not report for work only
temporarily and that she will resume the performance of her duties as soon as the leave allowance expires.

It is also clear that respondents exerted all efforts to' remain employed with Saudia. Each of them repeatedly filed
appeal letters (as much as five [5] letters in the case of Rebesencio 109) asking Saudia to reconsider the ultimatum that
they resign or be terminated along with the forfeiture of their benefits. Some of them even went to Saudia's office to
personally seek reconsideration.110

Respondents also adduced a copy of the "Unified Employment Contract for Female Cabin Attendants." 111This contract
deemed void the employment of a flight attendant who becomes pregnant and threatened termination due to lack of
medical fitness.112 The threat of termination (and the forfeiture of benefits that it entailed) is enough to compel a
reasonable person in respondents' position to give up his or her employment.

Saudia draws attention to how respondents' resignation letters were supposedly made in their own handwriting. This
minutia fails to surmount all the other indications negating any voluntariness on respondents' part. If at all, these same
resignation letters are proof of how any supposed resignation did not arise from respondents' own initiative. As earlier
pointed out, respondents' resignations were executed on Saudia's blank letterheads that Saudia had provided. These
letterheads already had the word "RESIGNATION" typed on the subject portion of their respective headings when
these were handed to respondents. 113ChanRoblesVirtualawlibrary

"In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the
employer."114 In this case, Saudia makes much of how respondents supposedly completed their exit interviews,
executed quitclaims, received their separation pay, and took more than a year to file their Complaint. 115 If at all,
however, these circumstances prove only the fact of their occurrence, nothing more. The voluntariness of respondents'
departure from Saudia is non sequitur.

Mere compliance with standard procedures or processes, such as the completion of their exit interviews, neither
negates compulsion nor indicates voluntariness.

As with respondent's resignation letters, their exit interview forms even support their claim of illegal dismissal and
militates against Saudia's arguments. These exit interview forms, as reproduced by Saudia in its own Petition, confirms
the unfavorable conditions as regards respondents' maternity leaves. Ma. Jopette's and Loraine's exit interview forms
are particularly telling:chanroblesvirtuallawlibrary
 a. From Ma. Jopette's exit interview form:

�� �3. In what respects has the job met or failed to meet your expectations?

THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE. 116

b. From Loraine's exit interview form:

�� �1. What are your main reasons for leaving Saudia? What company are you joining?

�� ��� �xxx xxx xxx

�� ��� �Others

CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY) 117

As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v. Paramio,118 this court noted that "[i]f (a)
there is clear proof that the waiver was wangled from an unsuspecting or gullible person; or (b) the terms of the
settlement are unconscionable, and on their face invalid, such quitclaims must be struck down as invalid or
illegal."119 Respondents executed their quitclaims after having been unfairly given an ultimatum to resign or be
terminated (and forfeit their benefits).chanRoblesvirtualLawlibrary

Having been illegally and unjustly dismissed, respondents are entitled to full backwages and benefits from the time of
their termination until the finality of this Decision. They are likewise entitled to separation pay in the amount of one
(1) month's salary for every year of service until the fmality of this Decision, with a fraction of a year of at least six (6)
months being counted as one (1) whole year.

Moreover, "[m]oral damages are awarded in termination cases where the employee's dismissal was attended by bad
faith, malice or fraud, or where it constitutes an act oppressive to labor, or where it was done in a manner contrary to
morals, good customs or public policy." 120 In this case, Saudia terminated respondents' employment in a manner that
is patently discriminatory and running afoul of the public interest that underlies employer-employee relationships. As
such, respondents are entitled to moral damages.

To provide an "example or correction for the public good" 121 as against such discriminatory and callous schemes,
respondents are likewise entitled to exemplary damages.

In a long line of cases, this court awarded exemplary damages to illegally dismissed employees whose "dismissal[s
were] effected in a wanton, oppressive or malevolent manner." 122 This court has awarded exemplary damages to
employees who were terminated on such frivolous, arbitrary, and unjust grounds as membership in or involvement
with labor unions,123 injuries sustained in the course of employment, 124development of a medical condition due to
the employer's own violation of the employment contract, 125and lodging of a Complaint against the
employer.126 Exemplary damages were also awarded to employees who were deemed illegally dismissed by an
employer in an attempt to evade compliance with statutorily established employee benefits. 127 Likewise, employees
dismissed for supposedly just causes, but in violation of due process requirements, were awarded exemplary
damages.128

These examples pale in comparison to the present controversy. Stripped of all unnecessary complexities, respondents
were dismissed for no other reason than simply that they were pregnant. This is as wanton, oppressive, and tainted
with bad faith as any reason for termination of employment can be. This is no ordinary case of illegal dismissal. This is
a case of manifest gender discrimination. It is an affront not only to our statutes and policies on employees' security of
tenure, but more so, to the Constitution's dictum of fundamental equality between men and women. 129

The award of exemplary damages is, therefore, warranted, not only to remind employers of the need to adhere to the
requirements of procedural and substantive due process in termination of employment, but more importantly, to
demonstrate that gender discrimination should in no case be countenanced.

Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal, respondents are likewise entitled
to attorney's fees in the amount of 10% of the total monetary award. 130

VI

Petitioner Brenda J. Betia may not be held liable.

A corporation has a personality separate and distinct from those of the persons composing it. Thus, as a rule,
corporate directors and officers are not liable for the illegal termination of a corporation's employees. It is only when
they acted in bad faith or with malice that they become solidarity liable with the corporation. 131

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever Electrical,132 this court clarified that
"[b]ad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and
conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of
the nature of fraud."133

Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or with malice as regards their
termination. Thus, she may not be held solidarity liable with Saudia.cralawred

WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not solidarity liable with petitioner Saudi
Arabian Airlines, and second, that petitioner Saudi Arabian Airlines is liable for moral and exemplary damages. The
June 16, 2011 Decision and the September 13, 2011 Resolution of the Court of Appeals in CA-G.R. SP. No. 113006 are
hereby AFFIRMED in all other respects. Accordingly, petitioner Saudi Arabian Airlines is ordered to pay respondents:

(1) Full backwages and all other benefits computed from the respective dates in which each of the respondents
were illegally terminated until the finality of this Decision;

(2) Separation pay computed from the respective dates in which each of the respondents commenced employment
until the finality of this Decision at the rate of one (1) month's salary for every year of service, with a fraction of a
year of at least six (6) months being counted as one (1) whole year;

(3) Moral damages in the amount of P100,000.00 per respondent;

(4) Exemplary damages in the amount of P200,000.00 per respondent; and

(5) Attorney's fees equivalent to 10% of the total award.

Interest of 6% per annum shall likewise be imposed on the total judgment award from the finality of this Decision until
full satisfaction thereof.

This case is REMANDED to the Labor Arbiter to make a detailed computation of the amounts due to respondents which
petitioner Saudi Arabian Airlines should pay without delay.

SO ORDERED.chanroblesvirtuallawlibr
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

[G.R. No. 122191. October 8, 1998]

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.

DECISION

QUISUMBING, J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the
Resolution[1] dated September 27, 1995 and the Decision [2] dated April 10, 1996 of the Court of Appeals [3] in CA-
G.R. SP No. 36533,[4] and the Orders[5] dated August 29, 1994[6] and February 2, 1995[7] that were issued by the
trial court in Civil Case No. Q-93-18394. [8]

The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned Decision [9],
are as follows:

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.

When plaintiff returned to Jeddah a few days later, several SAUDIA officials interrogated her about the Jakarta
incident. They then requested her to go back to Jakarta to help arrange the release of Thamer and Allah. 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. She was afraid 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.Eventually, SAUDIA allowed plaintiff to return to
Jeddah but barred her from the Jakarta flights.

Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to
deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service by defendant SAUDI
(sic). In September 1990, defendant SAUDIA transferred plaintiff to Manila.

On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors
requested her to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and questioned her about the Jakarta
incident. Miniewy simply stood by as the police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her passport and allowed her to catch the
afternoon flight out of Jeddah.

One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her flight
to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. 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. As it turned out, plaintiff signed a notice to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June 27,
1993 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.

In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened then
but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane was about to take off, a SAUDIA officer
told her that the airline had forbidden her to take flight. At the Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the crew quarters, until
further orders.

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 Arabia.Shortly before her return to Manila, [12] she was terminated from the service by SAUDIA, without
her being informed of the cause.

On November 23, 1993, Morada filed a Complaint [13] for damages against SAUDIA, and Khaled Al-Balawi (Al-
Balawi), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss [14] 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.

On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) [15] Saudia filed a reply[16] thereto
on March 3, 1994.

On June 23, 1994, Morada filed an Amended Complaint [17] wherein Al-Balawi was dropped as party
defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss Amended Complaint [18].
 The trial court issued an Order [19] dated August 29, 1994 denying the Motion to Dismiss Amended Complaint
filed by Saudia.

From the Order of respondent Judge [20] denying the Motion to Dismiss, SAUDIA filed on September 20, 1994,
its Motion for Reconsideration[21] of the Order dated August 29, 1994. It 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. On October 14, 1994, Morada filed her Opposition [22] (To Defendants Motion for
Reconsideration).

In the Reply[23] filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion for
Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not apply, even if that
ground is raised for the first time on appeal.Additionally, SAUDIA alleged that the Philippines does not have any
substantial interest in the prosecution of the instant case, and hence, without jurisdiction to adjudicate the same.

Respondent Judge subsequently issued another Order [24] dated February 2, 1995, denying SAUDIAs Motion for
Reconsideration. The pertinent portion of the assailed Order reads as follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru counsel, on September 20,
1994, and the Opposition thereto of the plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply
therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October 24, 1994, considering that a perusal of
the plaintiffs Amended Complaint, which is one for the recovery of actual, moral and exemplary damages plus
attorneys fees, upon the basis of the applicable Philippine law, Article 21 of the New Civil Code of the Philippines, is,
clearly, within the jurisdiction of this Court as regards the subject matter, and there being nothing new of substance
which might cause the reversal or modification of the order sought to be reconsidered, the motion for reconsideration
of the defendant, is DENIED.

SO ORDERED.[25]

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with Prayer for
Issuance of Writ of Preliminary Injunction and/or Temporary Restraining Order [26] with the Court of Appeals.

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining Order [27] dated February
23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless otherwise directed, in the
interim.

In another Resolution[28] promulgated on September 27, 1995, now assailed, the appellate court denied
SAUDIAs Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995, to wit:

The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after considering the Answer, with
Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein
petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al., v. Court of Appeals, et. Al., 100335, April
7, 1993, Second Division).

SO ORDERED.

On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition [29] for Review with Prayer for
Temporary Restraining Order dated October 13, 1995.

However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision[30] dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum considering
that the Amended Complaints basis for recovery of damages is Article 21 of the Civil Code, and thus, clearly within the
jurisdiction of respondent Court. It further held that certiorari is not the proper remedy in a denial of a Motion to
Dismiss, inasmuch as the petitioner should have proceeded to trial, and in case of an adverse ruling, find recourse in
an appeal.

On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary Restraining
Order[31] dated April 30, 1996, given due course by this Court. After both parties submitted their Memoranda,
[32] the instant case is now deemed submitted for decision.

Petitioner SAUDIA raised the following issues:

The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article 21 of the New Civil Code
since the proper law applicable is the law of the Kingdom of Saudi Arabia inasmuch as this case involves what is known
in private international law as a conflicts problem. Otherwise, the Republic of the Philippines will sit in judgment of the
acts done by another sovereign state which is abhorred.

II.

Leave of court before filing a supplemental pleading is not a jurisdictional requirement. Besides, the matter as to
absence of leave of court is now moot and academic when this Honorable Court required the respondents to
comment on petitioners April 30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining
Order Within Ten (10) Days From Notice Thereof. Further, the Revised Rules of Court should be construed with
liberality pursuant to Section 2, Rule 1 thereof.

III.

Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO. 36533 entitled Saudi Arabian
Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed its April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-day reglementary period as provided for
under Section 1, Rule 45 of the Revised Rules of Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet
become final and executory and this Honorable Court can take cognizance of this case. [33]

From the foregoing factual and procedural antecedents, the following issues emerge for our resolution:

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.

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 the lex loci delicti commissi rule.[34]
 On the other hand, private respondent contends that since her Amended Complaint is based on Articles
19[35] and 21[36] 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.

As stated by private respondent in her Amended Complaint [38] dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing business in the Philippines. It
may be served with summons and other court processes at Travel Wide Associated Sales (Phils.), Inc., 3 rd Floor, Cougar
Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.

xxxxxxxxx

6. Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed
to deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service by defendant
SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to Manila.

7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors
requested her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and questioned her about the Jakarta
incident. Miniewy simply stood by as the police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her passport and allowed her to catch the
afternoon flight out of Jeddah.

8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her
flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight to Jeddah to see
Mr. Meniewy, the Chief Legal Officer of SAUDIA. 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. As it turned out, plaintiff signed a notice to her to appear before the court on June
27, 1993. Plaintiff then returned to Manila.

9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June
27, 1993 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.

10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened
then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the Jakarta incident. After
one hour of interrogation, they let her go. At the airport, however, just as her plane was about to take off, a SAUDIA
officer told her that the airline had forbidden her to take that flight. At the Inflight Service Office where she was told to
go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the crew quarters,
until further orders.

11. 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; (3) socializing with the male crew, in contravention of Islamic tradition.

12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the help of the Philippine Embassy in
Jeddah. The latter helped her pursue an appeal from the decision of the court. To pay for her upkeep, she worked on
the domestic flights of defendant SAUDIA while, ironically, Thamer and Allah freely served the international flights.
[39]
 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. [40]

The forms in which this foreign element may appear are many. [41] 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 jurisdiction [43] 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.

On one hand, Article 19 of the New Civil Code provides;

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.

On the other hand, Article 21 of the New Civil Code provides:

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.

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.[48] Its authority to try and hear the case is provided for under Section 1 of Republic Act No. 7691,
to wit:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, is
hereby amended to read as follows:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive jurisdiction:

xxxxxxxxx

(8) In all other cases in which demand, exclusive of interest, damages of whatever kind, attorneys fees, litigation
expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00)
or, in such other cases in Metro Manila, where the demand, exclusive of the above-mentioned items exceeds Two
hundred Thousand pesos (P200,000.00). (Emphasis ours)

xxxxxxxxx

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 x x x 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.

Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the RTC Quezon
City assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a judgment if one is
obtained is quite obvious. Relative advantages and obstacles to a fair trial are equally important. Plaintiff may not, by
choice of an inconvenient forum, vex, harass, or oppress the defendant, e.g. by inflicting upon him needless expense or
disturbance. But unless the balance is strongly in favor of the defendant, the plaintiffs choice of forum should rarely be
disturbed.[49]

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.

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.

As held by this Court in Republic vs. Ker and Company, Ltd.:[51]

We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower courts jurisdiction over
defendants person, prayed for dismissal of the complaint on the ground that plaintiffs cause of action has
prescribed. By interposing such second ground in its motion to dismiss, Ker and Co., Ltd. availed of an affirmative
defense on the basis of which it prayed the court to resolve controversy in its favor. For the court to validly decide the
said plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon the latters person, who, being the
proponent of the affirmative defense, should be deemed to have abandoned its special appearance and voluntarily
submitted itself to the jurisdiction of the court.

Similarly, the case of De Midgely vs. Ferandos, held that:

When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the person, it must
be for the sole and separate purpose of objecting to the jurisdiction of the court. If his motion is for any other purpose
than to object to the jurisdiction of the court over his person, he thereby submits himself to the jurisdiction of the
court. A special appearance by motion made for the purpose of objecting to the jurisdiction of the court over the
person will be held to be a general appearance, if the party in said motion should, for example, ask for a dismissal of
the action upon the further ground that the court had no jurisdiction over the subject matter. [52]

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.

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. [53]

Several theories have been propounded in order to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and
predictability, they do not always do so. The forum is then faced with the problem of deciding which of these two
important values should be stressed.[54]

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 the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing.
[58]

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.)

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 liability[61]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. [62]
 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.

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.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]

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.

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.

SO ORDERED.
 FIRST DIVISION

G.R. No. 72494 August 11, 1989

HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,

vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT, respondents.

Quiason, Makalintal, Barot & Torres for petitioner.

Alejandro, Aranzaso & Associates for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals)
dated August 2, 1985, which reversed the order of the Regional Trial Court dated February 28,1985 denying the
Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato Reloj.

A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner Hongkong and Shanghai Banking
Corporation (hereinafter referred to as petitioner BANK) against private respondents Jack Robert Sherman and
Deodato Reloj, docketed as Civil Case No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84.

It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as COMPANY), a
company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an
overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently increased
to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts
due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner
BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain Robin
de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p.
53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally, on
demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility.

The Joint and Several Guarantee provides, inter alia, that:

This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under
this guarantee. ... (p. 33-A, Rollo).

The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from private
respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private
respondents still failed to pay, petitioner BANK filed the above-mentioned complaint.
On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which was opposed by
petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order dated February 28, 1985 (pp,
64-65, Rollo), which read as follows:

In a Motion to Dismiss filed on December 14, 1984, the defendants seek the dismissal of the
complaint on two grounds, namely:

1. That the court has no jurisdiction over the subject matter of the complaint; and

2. That the court has no jurisdiction over the persons of the defendants.

In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the motion. "On the
first ground, defendants claim that by virtue of the provision in the Guarantee (the actionable
document) which reads —

This guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws
of the Republic of Singapore. We hereby agree that the courts in Singapore shall
have jurisdiction over all disputes arising under this guarantee,

the Court has no jurisdiction over the subject matter of the case. The Court finds and concludes
otherwise. There is nothing in the Guarantee which says that the courts of Singapore shall have
jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been
established in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be conferred
by the will, submission or consent of the parties.

On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen nor a resident
of the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is
acquired by service of summons and copy of the complaint on them. There has been a valid service
of summons on both defendants and in fact the same is admitted when said defendants filed a
'Motion for Extension of Time to File Responsive Pleading on December 5, 1984.

WHEREFORE, the Motion to Dismiss is hereby DENIED.

SO ORDERED.

A motion for reconsideration of the said order was filed by private respondents which was, however, denied (p.
66,Rollo).

Private respondents then filed before the respondent Intermediate Appellate Court (now Court of Appeals) a petition
for prohibition with preliminary injunction and/or prayer for a restraining order (pp. 39-48, Rollo). On August 2, 1985,
the respondent Court rendered a decision (p. 37, Rollo), the dispositive portion of which reads:

WHEREFORE, the petition for prohibition with preliminary injuction is hereby GRANTED. The
respondent Court is enjoined from taking further cognizance of the case and to dismiss the same for
filing with the proper court of Singapore which is the proper forum. No costs.

SO ORDERED.

The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.

The main issue is whether or not Philippine courts have jurisdiction over the suit.

The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to wit:

(14) This guarantee and all rights, obligations and liabilites arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore.
 We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under
this guarantee. ... (p. 53-A, Rollo)

In rendering the decision in favor of private respondents, the Court of Appeals made, the following observations (pp.
35-36, Rollo):

There are significant aspects of the case to which our attention is invited. The loan was obtained by
Eastern Book Service PTE, Ltd., a company incorporated in Singapore. The loan was granted by
the Singapore Branch of Hongkong and Shanghai Banking Corporation. The Joint and Several
Guarantee was also concluded in Singapore. The loan was in Singaporean dollars and the repayment
thereof also in the same currency. The transaction, to say the least, took place in Singporean setting
in which the law of that country is the measure by which that relationship of the parties will be
governed.

xxx xxx xxx

Contrary to the position taken by respondents, the guarantee agreement compliance that any
litigation will be before the courts of Singapore and that the rights and obligations of the parties shall
be construed and determined in accordance with the laws of the Republic of Singapore. A closer
examination of paragraph 14 of the Guarantee Agreement upon which the motion to dismiss is
based, employs in clear and unmistakeable (sic) terms the word 'shall' which under statutory
construction is mandatory.

Thus it was ruled that:

... the word 'shall' is imperative, operating to impose a duty which may be enforced (Dizon vs.
Encarnacion, 9 SCRA 714).lâwphî1.ñèt

There is nothing more imperative and restrictive than what the agreement categorically commands
that 'all rights, obligations, and liabilities arising hereunder shall be construed and determined under
and may be enforced in accordance with the laws of the Republic of Singapore.'

While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several Guarantee
contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that "[t]his guarantee
and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall
have jurisdiction over all disputes arising under this guarantee" be liberally construed. One basic principle underlies all
rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for
exercising it, whether the proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction must
be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice (J.
Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-out by petitioner BANK at the outset, the instant
case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a
foreign tribunal, with more reason as a defendant. However, in this case, private respondents are Philippine residents
(a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in
the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve
the case. Private respondents' stance is hardly comprehensible, unless their ultimate intent is to evade, or at least
delay, the payment of a just obligation.

The defense of private respondents that the complaint should have been filed in Singapore is based merely on
technicality. They did not even claim, much less prove, that the filing of the action here will cause them any
unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the
action here just to harass private respondents.

In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187, it was ruled:
 ... An accurate reading, however, of the stipulation, 'The parties agree to sue and be sued in the
Courts of Manila,' does not preclude the filing of suits in the residence of plaintiff or defendant. The
plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive
words which would indicate that Manila and Manila alone is the venue are totally absent therefrom.
We cannot read into that clause that plaintiff and defendant bound themselves to file suits with
respect to the last two transactions in question only or exclusively in Manila. For, that agreement did
not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur.

This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R. No. 57250, October 30,
1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation, jurisdiction shall be vested in the Court of Davao
City." We held:

Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a stipulation
as to venue does not preclude the filing of suits in the residence of plaintiff or defendant under
Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the
agreement which would indicate that the place named is the only venue agreed upon by the parties.

Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of Singapore, to the
exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest Philippine courts of
jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons
and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over
travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed
in or marching through State territory with the permission of the latter's authorities. This authority, which finds its
source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent
to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of
cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).lâwphî1.ñèt

As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue has been waived.
However, We agree with the ruling of the respondent Court that:

While in the main, the motion to dismiss fails to categorically use with exactitude the words
'improper venue' it can be perceived from the general thrust and context of the motion that what is
meant is improper venue, The use of the word 'jurisdiction' was merely an attempt to copy-cat the
same word employed in the guarantee agreement but conveys the concept of venue. Brushing aside
all technicalities, it would appear that jurisdiction was used loosely as to be synonymous with venue.
It is in this spirit that this Court must view the motion to dismiss. ... (p. 35, Rollo).

At any rate, this issue is now of no moment because We hold that venue here was properly laid for the same reasons
discussed above.

The respondent Court likewise ruled that (pp. 36-37, Rollo):

... In a conflict problem, a court will simply refuse to entertain the case if it is not authorized by law to
exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain the case by
applying the principle of forum non conveniens. ...

However, whether a suit should be entertained or dismissed on the basis of the principle of forum non
conveniensdepends largely upon the facts of the particular case and is addressed to the sound discretion of the trial
court (J. Salonga, Private International Law, 1981, p. 49).lâwphî1.ñèt Thus, the respondent Court should not have relied
on such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion and that
consequently, it cannot be permitted to take a stand contrary to the stipulations of the contract, substantial bases exist
for petitioner Bank's choice of forum, as discussed earlier.

Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine branch is involved in
the transaction sued upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch as
well-known is the rule that a defendant cannot plead any defense that has not been interposed in the court below.

ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the Regional Trial Court is
REINSTATED, with costs against private respondents. This decision is immediately executory.

SO ORDERED.

Narvasa, Cruz, Gancayco and Griñ;o-Aquino, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 18081 March 3, 1922

IN THE MATTER OF THE ESTATE OF CHEONG BOO, deceased.

MORA ADONG, petitioner-appellant,
vs.
CHEONG SENG GEE, opponent-appellant.

Kincaid, Perkins & Kincaid and P. J. Moore for petitioner-appellant.

Carlos A. Sobral for opponent-appellant.

MALCOLM, J.:

The two question presented for determination by these appeals may be framed as follows: Is a marriage contracted in
China and proven mainly by an alleged matrimonial letter, valid in the Philippines? Are the marriage performed in the
Philippines according to the rites of the Mohammedan religion valid? As the decision of the Supreme Court on the last
point will affect marriages consummated by not less than one hundred and fifty thousand Moros who profess the
Mohammedan faith, the transcendental importance of the cause can be realized. We proposed to give to the subject
the serious consideration which it deserves.

Cheong Boo, a native of China, died intestate in Zamboanga, Philippine Islands, on August 5, 1919. He left property
worth nearly P100,000. The estate of the deceased was claimed, on the one hand, by Cheong Seng Gee, who alleged
that he was a legitimate child by a marriage contracted by Cheong Boo with Tan Dit in China in 1895. The estate was
claimed, on the other hand, by the Mora Adong who alleged that she had been lawfully married to Cheong Boo in
1896 in Basilan, Philippine Islands, and her daughters, Payang, married to Cheng Bian Chay, and Rosalia Cheong Boo,
unmarried.

The conflicting claims to the estate of Cheong Boo were ventilated in the Court of First Instance of Zamboanga. The
trial judge, the Honorable Quirico Abeto, after hearing the evidence presented by both sides, reached the conclusion,
with reference to the allegations of Cheong Seng Gee, that the proof did not sufficiently establish the Chinese
marriage, but that because Cheong Seng Gee had been admitted to the Philippine Islands as the son of the deceased,
he should share in the estate as a natural child. With reference to the allegations of the Mora Adong and her daughters
Payang and Rosalia, the trial judge reached the conclusion that the marriage between the Mora Adong and the
deceased had been adequately proved but that under the laws of the Philippine Islands it could not be held to be a
lawful marriage; accordingly, the daughters Payang and Rosalia would inherit as natural children. The order of the trial
judge, following these conclusions, was that there should be a partition of the property of the deceased Cheong Boo
between the natural children, Cheong Seng Gee, Payang, and Rosalia.

From the judgment of the Judge of First Instance both parties perfected appeals. As to the facts, we can say that we
agree in substance with the findings of the trial court. As to the legal issues submitted for decision by the numerous
assignments of error, these can best be resolved under two heads, namely: (1) The validity of the Chinese marriage;
and (2) the validity of the Mohammedan marriage.

1. Validity of the Chinese Marriage

The theory advanced on behalf of the claimant Cheong Seng Gee was that Cheong Boo was married in the city of
Amoy, China, during the second moon of the twenty-first year of the Emperor Quang Su, or, according to the modern
count, on February 16, 1985, to a young lady named Tan Dit. Witnesses were presented who testified to having been
present at the marriage ceremony. There was also introduced in evidence a document in Chinese which in translation
reads as follows:

One hundred Your nephew, Tan Chao, respecfully answers the

years of life and venerable Chiong Ing, father of the bridegroom,
health for both. accepting his offer of marriage, and let this
document serve as proof of the acceptance of
said marriage which is to be celebrated during
the merry season of the flowers.

I take advantage of this occasion to wish for

your and the spouses much happiness, a long
life, and prolific issue, as noble and great as that
which you brought forth. I consider the
marriage of your son Boo with my sister Lit Chia
as a mandate of God and I hope that they treat
each other with great love and mutual courtesy
and that both they and their parents be very
happy.

Given during the second moon of the twenty-

first year of the reign of the Emperor Quang Su.

Cheong Boo is said to have remained in China for one year and four months after his marriage during which time there
was born to him and his wife a child named Cheong Seng Gee. Cheong Boo then left China for the Philippine Islands
and sometime thereafter took to himself a concubine Mora by whom he had two children. In 1910, Cheong Boo was
followed to the Philippines by Cheong Seng Gee who, as appears from documents presented in evidence, was
permitted to land in the Philippine Islands as the son of Cheong Boo. The deceased, however, never returned to his
native hearth and seems never to have corresponded with his Chinese wife or to have had any further relations with
her except once when he sent her P10.

The trial judge found, as we have said, that the proof did not sustain the allegation of the claimant Cheong Seng Gee,
that Cheong Boo had married in China. His Honor noted a strong inclination on the part of the Chinese witnesses,
especially the brother of Cheong Boo, to protect the interests of the alleged son, Cheong Seng Gee, by overstepping
the limits of truthfulness. His Honor also noted that reliable witnesses stated that in the year 1895, when Cheong Boo
was supposed to have been in China, he was in reality in Jolo, in the Philippine Islands. We are not disposed to disturb
this appreciation of fact by the trial court. The immigration documents only go to show the relation of parent and child
existing between the deceased Cheong Boo and his son Cheong Seng Gee and do not establish the marriage between
the deceased and the mother of Cheong Seng Gee.
Section IV of the Marriage Law (General Order No. 68) provides that "All marriages contracted without these Islands,
which would be valid by the laws of the country in which the same were contracted, are valid in these Islands." To
establish a valid foreign marriage pursuant to this comity provision, it is first necessary to prove before the courts of
the Islands the existence of the foreign law as a question of fact, and it is then necessary to prove the alleged foreign
marriage by convincing evidence.

As a case directly in point is the leading one of Sy Joc Lieng vs. Encarnacion ([1910]), 16 Phil., 137; [1913], 228 U.S.,
335). Here, the courts of the Philippines and the Supreme Court of the United States were called upon to decide, as to
the conflicting claims to the estate of a Chinese merchant, between the descendants of an alleged Chinese marriage
and the descendants of an alleged Philippine marriage. The Supreme Courts of the Philippine Islands and the United
States united in holding that the Chinese marriage was not adequately proved. The legal rule was stated by the United
States Supreme Court to be this: A Philippine marriage, followed by forty years of uninterrupted marital life, should not
be impugned and discredited, after the death of the husband and administration of his estate, though an alleged prior
Chinese marriage, "save upon proof so clear, strong, and unequivocal as to produce a moral conviction of the existence
of such impediment." Another case in the same category is that of Son Cui vs. Guepangco ([1912], 22 Phil., 216).

In the case at bar there is no competent testimony as to what the laws of China in the Province of Amoy concerning
marriage were in 1895. As in the Encarnacion case, there is lacking proof so clear, strong, and unequivocal as to
produce a moral conviction of the existence of the alleged prior Chinese marriage. Substitute twenty-three years for
forty years and the two cases are the same.

The lower court allowed the claimant, Cheong Seng Gee, the testamentary rights of an acknowledged natural child.
This finding finds some support in Exhibit 3, the affidavit of Cheong Boo before the American Vice-Consul at Sandakan,
British North Borneo. But we are not called upon to make a pronouncement on the question, because the oppositor-
appellant indicates silent acquiescence by assigning no error.

2. Validity of the Mohammedan Marriage

The biographical data relating to the Philippine odyssey of the Chinaman Cheong Boo is fairly complete. He appears to
have first landed on Philippine soil sometime prior to the year 1896. At least, in the year las mentioned, we find him in
Basilan, Philippine Islands. There he was married to the Mora Adong according to the ceremonies prescribed by the
book on marriage of the Koran, by the Mohammedan Iman (priest) Habubakar. That a marriage ceremony took place is
established by one of the parties to the marriage, the Mora Adong, by the Iman who solemnized the marriage, and by
other eyewitnesses, one of whom was the father of the bride, and another, the chief of the rancheria, now a municipal
councilor. The groom complied with Quranic law by giving to the bride a dowry of P250 in money and P250 in goods.

The religious rites began with the bride and groom seating themselves in the house of the father of the bride,
Marahadja Sahibil. The Iman read from the Koran. Then the Iman asked the parents if they had any objection to the
marriage. The marital act was consummated by the groom entering the woman's mosquito net.

From the marriage day until the death of Cheong Boo, twenty-three years later, the Chinaman and the Mora Adong
cohabited as husband and wife. To them were born five children, two of whom, Payang and Rosalia, are living. Both in
his relations with Mora Adong and with third persons during his lifetime, Cheong Boo treated Adong as his lawful wife.
He admitted this relationship in several private and public documents. Thus, when different legal documents were
executed, including decrees of registration, Cheong Boo stated that he was married to the Mora Adong while as late as
1918, he gave written consent to the marriage of his minor daughter, Payang.

Notwithstanding the insinuation of counsel for the Chinese appellant that the custom is prevalent among the Moros to
favor in their testimony, a relative or friend, especially when they do not swear on the Koran to tell the truth, it seems
to us that proof could not be more convincing of the fact that a marriage was contracted by the Chinaman Cheong Boo
and the Mora Adong, according to the ceremonies of the Mohammedan religion.
It is next incumbent upon us to approach the principal question which we announced in the very beginning of this
decision, namely, Are the marriages performed in the Philippines according to the rites of the Mohammedan religion
valid? Three sections of the Marriage Law (General Order No. 68) must be taken into consideration.

Section V of the Marriage Law provides that "Marriage may be solemnized by either a judge of any court inferior to the
Supreme Court, justice of the peace, or priest or minister of the Gospel of any denomination . . ." Counsel, failing to
take account of the word "priest," and only considering the phrase "minister of the Gospel of any denomination"
would limit the meaning of this clause to ministers of the Christian religion. We believe this is a strained interpretation.
"Priest," according to the lexicographers, means one especially consecrated to the service of a divinity and considered
as the medium through whom worship, prayer, sacrifice, or other service is to be offered to the being worshipped, and
pardon, blessing, deliverance, etc., obtained by the worshipper, as a priest of Baal or of Jehovah; a Buddhist priest.
"Minister of the Gospel" means all clergymen of every denomination and faith. A "denomination" is a religious sect
having a particular name. (Haggin vs. Haggin [1892], 35 Neb., 375; In re Reinhart, 9 O. Dec., 441; Hale vs. Everett
[1868], 53 N. H. 9.) A Mohammedan Iman is a "priest or minister of the Gospel," and Mohammedanism is a
"denomination," within the meaning of the Marriage Law.

The following section of the Marriage Law, No. VI, provides that "No particular form for the ceremony of marriage is
required, but the parties must declare, in the presence of the person solemnizing the marriage, that they take each
other as husband and wife." The law is quite correct in affirming that no precise ceremonial is indispensable requisite
for the creation of the marriage contract. The two essentials of a valid marriage are capacity and consent. The latter
element may be inferred from the ceremony performed, the acts of the parties, and habit or repute. In this instance,
there is no question of capacity. Nor do we think there can exist any doubt as to consent. While it is true that during
the Mohammedan ceremony, the remarks of the priest were addressed more to the elders than to the participants, it
is likewise true that the Chinaman and the Mora woman did in fact take each other to be husband and wife and did
thereafter live together as husband and wife. (Travers vs. Reinhardt [1907], 205 U.S., 423.

It would be possible to leave out of view altogether the two sections of the Marriage Law which have just been quoted
and discussed. The particular portion of the law which, in our opinion, is controlling, is section IX, reading as follows:
"No marriage heretofore solemnized before any person professing to have authority therefor shall be invalid for want
of such authority or on account of any informality, irregularity, or omission, if it was celebrated with the belief of the
parties, or either of them, that he had authority and that they have been lawfully married."

The trial judge in construing this provision of law said that he did not believe that the legislative intention in
promulgating it was to validate marriages celebrated between Mohammedans. To quote the judge:

This provisions relates to marriages contracted by virtue of the provisions of the Spanish law before
revolutionary authorized to solemnized marriages, and it is not to be presumed that the legislator intended by
this law to validate void marriages celebrated during the Spanish sovereignty contrary to the laws which then
governed.

What authority there is for this statement, we cannot conceive. To our mind, nothing could be clearer than the
language used in section IX. Note for a moment the all embracing words found in this section:

"No marriage" — Could more inclusive words be found? "Heretofore solemnized" — Could any other construction than
that of retrospective force be given to this phrase? "Before any person professing to have authority therefor shall be
invalid for want of such authority" — Could stronger language than this be invoked to announce legislative intention?
"Or on account of any informality, irregularity, or omission" — Could the legislative mind frame an idea which would
more effectively guard the marriage relation against technicality? "If it was celebrated with the belief of the parties, or
either of them, that he had authority and that they have been lawfully married" — What was the purpose of the
legislator here, if it was not to legalize the marriage, if it was celebrated by any person who thought that he had
authority to perform the same, and if either of the parties thought that they had been married? Is there any word or
hint of any word which would restrict the curative provisions of section IX of the Marriage Law to Christian marriages?
By what system of mental gymnastics would it be possible to evolve from such precise language the curious idea that it
was restricted to marriages performed under the Spanish law before the revolutionary authorities?

In view of the importance of the question, we do not desire to stop here but would ascertain from other sources the
meaning and scope of Section IX of General Order No. 68.

The purpose of the government toward the Mohammedan population of the Philippines has, time and again, been
announced by treaty, organic law, statutory law, and executive proclamation. The Treaty of Paris in its article X,
provided that "The inhabitants of the territories over which Spain relinquishes or cedes her sovereignty shall be
secured Instructions to the Philippine Commission imposed on every branch of the Government of the Philippine
Islands the inviolable rule "that no law shall be made respecting an establishment of religion or prohibiting the free
exercise thereof, and that the free exercise and enjoyment of religious profession and worship, without discrimination
or preference, shall forever be allowed ... That no form of religion and no minister of religion shall be forced upon any
community or upon any citizen of the Islands; that, upon the other hand, no minister of religion shall be interfered
with or molested in following his calling, and that the separation between state and church shall be real, entire, and
absolute." The notable state paper of President McKinley also enjoined the Commission, "to bear in mind that the
Government which they are establishing is designed . . . for the happiness, peace, and prosperity of the people of the
Philippine Islands" and that, therefore, "the measures adopted should be made to conform to their customs, their
habits, and even their prejudices. . . . The Philippine Bill and the Jones Law reproduced the main constitutional
provisions establishing religious toleration and equality.

Executive and legislative policy both under Spain and the United States followed in the same path. For instance, in the
Treaty of April 30, 1851, entered into by the Captain General of the Philippines and the Sultan of Sulu, the Spanish
Government guaranteed "with all solemnity to the Sultan and other inhabitants of Sulu the free exercise of their
religion, with which it will not interfere in the slightest way, and it will also respect their customs." ( See further Decree
of the Governor-General of January 14, 1881.) For instance, Act No. 2520 of the Philippine Commission, section 3,
provided that "Judges of the Court of First Instance and justices of the peace deciding civil cases in which the parties
are Mohammedans or pagans, when such action is deemed wise, may modify the application of the law of the
Philippine Islands, except laws of the United States applicable to the Philippine Islands, taking into account local laws
and customs. . . ." (See further Act No. 787, sec. 13 [ j]; Act No. 1283, sec. 6 [b]; Act No. 114 of the Legislative Council
amended and approved by the Philippine Commission; Cacho vs. Government of the United States [1914], 28 Phil.,
616.) Various responsible officials have so oft announced the purpose of the Government not to interfere with the
customs of the Moros, especially their religious customs, as to make quotation of the same superfluous.

The retrospective provisions of the Philippine Marriage Law undoubtedly were inspired by the governmental policy in
the United States, with regard to the marriages of the Indians, the Quakers, and the Mormons. The rule as to Indians
marriages is, that a marriage between two Indians entered into according to the customs and laws of the people at a
place where such customs and laws are in force, must be recognized as a valid marriage. The rule as to the Society of
Quakers is, that they will be left to their own customs and that their marriages will be recognized although they use no
solemnization. The rule as to Mormon marriages is that the sealing ceremony entered into before a proper official by
members of that Church competent to contract marriage constitutes a valid marriage.

The basis of human society throughout the civilized world is that of marriage. Marriage in this jurisdiction is not only a
civil contract, but, it is a new relation, an institution in the maintenance of which the public is deeply interested.
Consequently, every intendment of the law leans toward legalizing matrimony. Persons dwelling together in apparent
matrimony are presumed, in the absence of any counter-presumption or evidence special to the case, to be in fact
married. The reason is that such is the common order of society, and if the parties were not what they thus hold
themselves out as being, they would be living in the constant violation of decency and of law. A presumption
established by our Code of Civil Procedure is "that a man and woman deporting themselves as husband and wife have
entered into a lawful contract of marriage.:" (Sec. 334, No. 28.) Semper praesumitur pro matrimonio — Always
presume marriage. (U. S. vs. Villafuerte and Rabano [1905], 4 Phil., 476; Son Cui vs. Guepangco, supra;
U.S. vs.Memoracion and Uri [1916], 34 Phil., 633; Teter vs. Teter [1884], 101 Ind., 129.)
Section IX of the Marriage Law is in the nature of a curative provision intended to safeguard society by legalizing prior
marriages. We can see no substantial reason for denying to the legislative power the right to remove impediments to
an effectual marriage. If the legislative power can declare what shall be valid marriages, it can render valid, marriages
which, when they took place, were against the law. Public policy should aid acts intended to validate marriages and
should retard acts intended to invalidate marriages. (Coghsen vs. Stonington [1822], 4 Conn, 209; Baity vs. Cranfill
[1884], 91 N. C., 273.)

The courts can properly incline the scales of their decisions in favors of that solution which will mot effectively
promote the public policy. That is the true construction which will best carry legislative intention into effect. And here
the consequences, entailed in holding that the marriage of the Mora Adong and the deceased Cheong Boo, in
conformity with the Mohammedan religion and Moro customs, was void, would be far reaching in disastrous result.
The last census shows that there are at least one hundred fifty thousand Moros who have been married according to
local custom. We then have it within our power either to nullify or to validate all of these marriages; either to make all
of the children born of these unions bastards or to make them legitimate; either to proclaim immorality or to sanction
morality; either to block or to advance settled governmental policy. Our duty is a obvious as the law is plain.

In moving toward our conclusion, we have not lost sight of the decisions of this court in the cases of United
States vs. Tubban ([1915]), 29 Phil., 434) and United States vs. Verzola ([1916, 33 Phil., 285). We do not, however,
believe these decisions to be controlling. In the first place, these were criminal actions and two Justice dissented.. In
the second place, in the Tubban case, the marriage in question was a tribal marriage of the Kalingas, while in the
Verzola case, the marriage had been performed during the Spanish regime by a lieutenant of the Guardia Civil. In
neither case, in deciding as to whether or not the accused should be given the benefit of the so-called unwritten law,
was any consideration given to the provisions of section IX of General Order No. 68. We are free to admit that, if
necessary, we would unhesitatingly revoke the doctrine announced in the two cases above mentioned.

We regard the evidence as producing a moral conviction of the existence of the Mohammedan marriage. We regard
the provisions of section IX of the Marriage law as validating marriages performed according to the rites of the
Mohammedan religion.

There are other questions presented in the various assignments of error which it is unnecessary to decide. In resume,
we find the Chinese marriage not to be proved and that the Chinaman Cheong Seng Gee has only the rights of a
natural child, and we find the Mohammedan marriage to be proved and to be valid, thus giving to the widow and the
legitimate children of this union the rights accruing to them under the law.

Judgment is reversed in part, and the case shall be returned to the lower court for a partition of the property in
accordance with this decision, and for further proceedings in accordance with law. Without special findings as to costs
in this instance, it is so ordered.

Araullo, C.J., Johnson, Street, Avanceña, Villamor, Ostrand, Johns and Romualdez, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
 EN BANC

G.R. No. L-11759 March 16, 1917

CAYETANO LIM and MARCIANO LIM, petitioners-appellants,

vs.
THE INSULAR COLLECTOR OF CUSTOMS, respondent-appellee.

Williams, Ferrier and SyCip for appellants.

Attorney-General Avanceña for appellee.

CARSON, J.:

The real question raised on this appeal is whether the Insular Collector of Customs may lawfully deny entry into the
Philippine Islands to two children aged 8 and 14 years, respectively, under and by authority of the Chinese
Immigration, Laws, it appearing that the children arrived at the Port of Manila accompanied by and in the custody of
their mother, a Filipino woman; that they were born in China, out of lawful wedlock; and that their father was a
Chinese person.

It is contended, on behalf of the Insular Collector of Customs, that these children being Chinese persons are denied the
right of entrance into the Philippine Islands under the express terms of the Chinese immigration laws. On the other
hand, it is urged on behalf of the children that they are entitled to enter, regardless of the provisions of the Chinese
immigration laws, since the admitted facts, as it is said, disclose that they are citizens of the Philippine Islands; and for
the further reason, that their mother, who is entitled to their custody and charged with their maintenance and
education, is clearly entitled to take up her residence in the Philippine Islands and should not be required, to that end,
to abandon her minor children.

Without discussing or deciding any of the contentions of the parties as to the rights of citizenship of these children,
actual or inchoate, we are of opinion that by analogous reasoning to that upon which the Supreme Court of the United
States held that the wives and minor children of Chinese merchants domiciled in the United States may enter that
country without certificates, these children must be held to be entitled to enter the Philippine Islands with their
mother, for the purpose of taking up their residence here with her, it appearing that she is natural guardian, entitled to
their custody and charged with their maintenance and education. (U. S. vs. Gue Lim, 176 U. S. 459.)

In the case just cited the court said:

While the literal construction of the section would require a certificate, as therein stated, from every Chinese
person, other than a laborer, who should come into the country, yet such a construction leads to what we
think an absurd result, for it requires a certificate for a wife of a merchant, among others, in regard to whom
its would be impossible to give the particulars which the statute requires shall be stated in such certificate.

"Nothing is better settled," says the present Chief Justice, in Lau Ow Bew vs. United States (144 U. S., 59)
"than that statutes should receive a sensible construction, such as will effectuate the legislative intention, and,
if possible, so as to avoid and unjust or an absurd conclusion.

The purposes of the sixth section, requiring the certificate, was not to prevent the persons named in the
second article of the treaty from coming into the country, but to prevent Chinese laborers from entering
under the guise of being one of the classes permitted by the treaty. It is the coming of Chinese laborers that
the act is aimed against.

It was said in the opinion in the Lau Ow Bew case, in speaking of the provisions that the sole evidence
permissible should be the certificate: "This rule of evidence was evidently prescribed by the amendment as a
means of effectually preventing the violation or evasion of the prohibition against the coming of Chinese
laborers. It was designed as a safeguard to prevent the unlawful entry of such laborers, under the pretense
that they belong to the merchant class or to some other of the admitted classes."
 It was also held in that case that although the literal wording of the statute of 1884, section six, would require
a certificate in the case of a merchant already domiciled in the United States and who had left the country for
temporary purposes, animo revertendi, yet its true and proper construction did not include his case, and the
general terms used in the act were limited to those persons to whom Congress manifestly intended to apply
them, which would be those who were about to come to the United States for the first time, and not to those
Chinese merchants already domiciled in the United States who had gone to China for temporary purposes
only, with the intention of returning. The case of Wan Shing vs. United States (140 U. S., 24), was referred to,
and attention called to the fact that the appellant therein was not a merchant but a laborer, who had acquired
no commercial domicile in this county, and was clearly within the exception requiring him to procure and
produce the certificate specified in the act. The rule was approved, and the differences in the two cases
pointed out by the Chief Justice.

To hold that a certificate is required in this case is to decide that the woman cannot come into this country at
all, for it is not possible for her to comply with the act, because she cannot in any event procure the certificate
even by returning to China. She must come in as the wife of her domiciled husband or not at all. The act was
never meant to accomplish the result of permanently excluding the wife under the circumstances of this case,
and we think that, properly and reasonably construed, it does not do so. If we hold that she is entitled to
come in as the wife, because the true construction of the treaty and the act permits it, there is no provision
which makes the certificate the only proof of the fact that she is such wife.

In the case of the minor children, the same result must follow as in that of the wife. All the reasons which
favor the construction of the statute as exempting the wife from the necessity of procuring a certificate apply
with equal force to the case of minor children of a member or members of the admitted classes. They come in
by reason of their relationship to the father, and whether they accompany or follow him, a certificate is not
necessary in either case. When the fact is established to the satisfaction of the authorities that the person
claiming to enter, either as wife or minor child, is in fact the wife or minor child of one of the members of the
class mentioned in the treaty as entitled to enter, them that person in entitled to admission without the
certificate.

We are not advised of any provision of Chinese law which differentiates the status of infant children, born out of lawful
wedlock, from that of similar children under the laws in force in the Philippine Islands. We assume, therefore, that in
China as well as in the Philippine Islands such children have the right to look to their mother for their maintenance and
education, and that she is entitled to their custody and control in fulfilling the obligations towards them which are
imposed upon her, not only by the natural impulses of love and affection, but also by the express mandate of the law.
And it having been held on the highest authority that the general terms of the Act were limited to those to whom
Congress manifestly intended to apply them as set forth in the foregoing opinion, and that "nothing is better settled
than that statutes should receive a sensible construction, such as will effectuate the legislative intention, and, if
possible, so as to avoid an unjust or an absurd conclusion," we are of opinion that the Chinese Immigration Laws
should not be construed so as to exclude infant children of a Filipino mother, born out of lawful wedlock, seeking
entrance to the Philippine Islands for the purpose of taking up their residence with her in her native land.

It has been suggested that such a ruling opens the door to fraud and evasion, but we are not much impressed with the
force of this suggestion, knowing as we do that the immigration authorities have been furnished by the law with
peculiarly effective machinery for its enforcement, well calculated to defeat any attempt to make an unauthorized or
improper use of so manifestly reasonable an exception from the literal construction and application of its general
provisions.

Some confusion seems to have arisen in the court below as to the precise nature and effect of the somewhat
inartificial pleadings upon which these proceedings were submitted. The case appears to have been submitted upon an
answer to an order to show cause why a writ of habeas corpus should not issue upon the petition filed on behalf of the
infant children. In the form in which the answer is couched, there is much in the contention of the appellee that the
trial court should have treated the answer as in substance and effect a demurrer to the petition, admitting the truth of
the facts alleged therein, but praying judgment as to whether it sets forth facts sufficient to constitute a cause of
action and to justify the issuance of the writ. We are inclined to think, however, that the understanding of the parties
and of the court below was that the answer should be treated rather as in the nature of a return to a writ of habeas
corpus, accepting as true the allegations of the petition but maintaining the legality of the detention upon the facts
thus submitted. Without considering at this time whether in habeas corpus proceedings the respondent may, without
consent of court, demur to, instead of answering an order to show cause why the writ should not issue, and without
considering or deciding the course which should be pursued where a respondent attempts to file a demurrer to a
petition for a writ of habeas corpus in lieu of the return prescribed by the statute to the writ when actually issued; we
treat the answer to the order to show cause in the case at bar as we think the parties and the court below understood
it should be treated, that is to say, as in substance and effect the return which the Insular Collector desired to make to
the writ of habeas corpus issued or assumed to have been issued in response to the petition on behalf of the children
held in custody by him.

We conclude, therefore, that, it appearing that the respondent Collector of Customs is detaining the petitioners under
an erroneous construction of the immigration laws, and it appearing from the facts disclosed by the administrative
proceedings that these children are entitled to admission into the Philippine Islands, the order entered in the court
below should be reversed, and in lieu thereof an order should be entered directing the discharge of these children
from the custody of the Insular Collector of Customs, with the costs in both instances, de officio. So ordered.

Torres, Moreland, Trent and Araullo, JJ., concur

SECOND DIVISION

[G.R. No. 103493. June 19, 1997]

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.

DECISION

MENDOZA, J.:

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.

The facts are as follows:

On January 15, 1983, 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) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value
of P14,088,995.00. 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, dated January 27, 1983, 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., for US$2,807,209.02, while PHILSEC and AYALA
extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of apromissory note executed by ATHONA in favor of 1488, Inc. Subsequently,
upon their receipt of the US$2,500,000.00 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 of US$307,209.02, the entire amount covered by the note
became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc. sued petitioners
PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 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,
165th Judicial District, where it was docketed as Case No. 85-57746, 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. Private respondent Perlas, who had allegedly appraised the property, was later dropped as counterdefendant.
ATHONA sought the recovery of damages and excess payment allegedly made to 1488, Inc. and, in the alternative, the
rescission of sale of the property. 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. On March 13, 1990, 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. For this reason, the U.S. court imposed so-called Rule 11
sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra.

On April 10, 1987, while Civil Case No. H-86-440 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, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners
in their respective counterclaims in Civil Action No. H-86-440 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 of
US$800,000.00. 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. Petitioners
prayed that private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay
damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and personal
properties of private respondents.[2]

Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis
Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of
petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the
property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale
and whose only participation was to extend financial accommodation to ATHONA under a separate loan
agreement. On the other hand, private respondents 1488, Inc. and its president Daic filed a joint Special Appearance
and Qualified Motion to Dismiss, contending that the action being in personam, extraterritorial service of summons by
publication was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident alien.

On January 26, 1988, 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.

A separate hearing was held with regard to 1488, Inc. and Daics motion to dismiss. On March 9, 1988, the trial
court[3] granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that
the main factual element of the cause of action in this case which is the validity of the sale of real property in the
United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United
States District Court which, under the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate
matters needed to determine the assessment and/or fluctuations of the fair market value of real estate situated in
Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial
court)

The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents and the
action was not an action in rem or quasi in rem, so that extraterritorial service of summons was ineffective. The trial
court subsequently lifted the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic.

Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle of litis
pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants, despite the previous
attachment of shares of stocks belonging to 1488, Inc. and Daic.

On January 6, 1992, the Court of Appeals[4] affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488,
Inc., and Daic on the ground of litis pendentia, thus:

The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the Ayala
International Finance Ltd. (BPI-IFLs former name) and the Athona Holdings, NV. The case at bar involves the same
parties. The transaction sued upon by the parties, in both cases is the Warranty Deed executed by and between
Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are sued upon by 1488
Inc., which likewise alleges fraud employed by herein appellants, on the marketability of Ducats securities given in
exchange for the Texas property. The recovery of a sum of money and damages, for fraud purportedly committed by
appellees, in overpricing the Texas land, constitute the action before the Philippine court, which likewise stems from
the same Warranty Deed.

The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a sum of
money for alleged tortious acts, so that service of summons by publication did not vest the trial court with jurisdiction
over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was
likewise affirmed by the Court of Appeals on the ground that the case can be better tried and decided by the U.S.
court:

The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to wit: 1) the
property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign
corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does not claim to be doing business
in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a
foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.

In their present appeal, petitioners contend that:

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.

3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL
COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT
 AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE
RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.

We will deal with these contentions in the order in which they are made.

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 judgment [5] in the case
before it. The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of
Appeals.[6] Thus, 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.

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.

Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd.,[10] which
private respondents invoke for claiming conclusive effect for the foreign judgment in their favor, the foreign judgment
was considered res judicata because this Court found from the evidence as well as from appellants own
pleadings[11] that the foreign court did not make a clear mistake of law or fact or that its judgment was void for want
of jurisdiction or because of fraud or collusion by the defendants. Trial had been previously held in the lower court and
only afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of Washington to
have the effect of res judicata in the case before the lower court. In the same vein, in Philippine International Shipping
Corp. v. Court of Appeals,[12] this Court held that the foreign judgment was valid and enforceable in the Philippines
there being no showing that it was vitiated by want of notice to the party, collusion, fraud or clear mistake of law or
fact. The prima facie presumption under the Rule had not been rebutted.

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. [13]

Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of
judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to
Branch 134, although the proceedings were suspended because of the pendency of this case. To sustain the appellate
courts ruling that the foreign judgment constitutes res judicataand is a bar to the claim of petitioners would effectively
preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise: a foreign
judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in
this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a
separate proceeding. This is plainly untenable. It has been held therefore that:

[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.[14]

Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should be
consolidated.[15] After all, the two have been filed in the Regional Trial Court of Makati, albeit in different salas, this
case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134
of Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign
judgment and only in the event they succeed in doing so may they proceed with their action against private
respondents.

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. [17]

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.

Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc.
and Daic could not be obtained because this is an action in personam and summons were served by extraterritorial
service. Rule 14, 17 on extraterritorial service provides that service of summons on a non-resident defendant may be
effected out of the Philippines by leave of Court where, among others, the property of the defendant has been
attached within the Philippines.[18] It is not disputed that the properties, real and personal, of the private
respondents had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.
[19]

Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings
in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the
petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main
judgment under consideration in Civil Case No. 16563. The separability of Guevarras claim is not only admitted by
petitioners,[20] it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil
Case No. 16563.[21] Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed.

WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the
Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in accordance
with this decision. The temporary restraining order issued on June 29, 1994 is hereby LIFTED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 154830 June 8, 2007

PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG, petitioners,
vs.
ANTONIO D. TODARO, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision 1 of the Court of
Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution 2 of August 21, 2002 denying
petitioners’ Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial Court (RTC) of Makati
City, a complaint for Sum of Money and Damages with Preliminary Attachment against Pioneer International Limited
(PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald)
and Philip J. Klepzig (Klepzig).3

In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws of Australia and is
principally engaged in the ready-mix concrete and concrete aggregates business; PPHI is the company established by
PIL to own and hold the stocks of its operating company in the Philippines; PCPI is the company established by PIL to
undertake its business of ready-mix concrete, concrete aggregates and quarrying operations in the Philippines;
McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the President and Managing Director of
PPHI and PCPI; Todaro has been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company engaged
in pre-mixed concrete and concrete aggregate production; he resigned from Betonval in February 1996; in May 1996,
PIL contacted Todaro and asked him if he was available to join them in connection with their intention to establish a
ready-mix concrete plant and other related operations in the Philippines; Todaro informed PIL of his availability and
interest to join them; subsequently, PIL and Todaro came to an agreement wherein the former consented to engage
the services of the latter as a consultant for two to three months, after which, he would be employed as the manager
of PIL's ready-mix concrete operations should the company decide to invest in the Philippines; subsequently, PIL
started its operations in the Philippines; however, it refused to comply with its undertaking to employ Todaro on a
permanent basis.4

Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the grounds that the
complaint states no cause of action, that the RTC has no jurisdiction over the subject matter of the complaint, as the
same is within the jurisdiction of the NLRC, and that the complaint should be dismissed on the basis of the doctrine
of forum non conveniens.5

In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners' respective motions to
dismiss.6 Herein petitioners, as defendants, filed an Urgent Omnibus Motion 7 for the reconsideration of the trial
court's Order of January 4, 1999 but the trial court denied it via its Order 8 dated June 3, 1999.

On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On October 31, 2000, the CA
rendered its presently assailed Decision denying herein petitioners' Petition for Certiorari. Petitioners filed a Motion for
Reconsideration but the CA denied it in its Resolution dated August 21, 2002.

Hence, herein Petition for Review on Certiorari based on the following assignment of errors:

A.

THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION AGAINST
PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE
ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND
PETITIONERS.

B.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND
WITH APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL
COURT DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN
ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION OF
THE NATIONAL LABOR RELATIONS COMMISSION.

THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF "FORUM NON
CONVENIENS" AS A VALID GROUND FOR DISMISSING A COMPLAINT.10

In their first assigned error, petitioners contend that there was no perfected employment contract between PIL and
herein respondent. Petitioners assert that the annexes to respondent's complaint show that PIL's offer was for
respondent to be employed as the manager only of its pre-mixed concrete operations and not as the company's
managing director or CEO. Petitioners argue that when respondent reiterated his intention to become the manager of
PIL's overall business venture in the Philippines, he, in effect did not accept PIL's offer of employment and instead
made a counter-offer, which, however, was not accepted by PIL. Petitioners also contend that under Article 1318 of the
Civil Code, one of the requisites for a contract to be perfected is the consent of the contracting parties; that under
Article 1319 of the same Code, consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract; that the offer must be certain and the acceptance absolute; that a
qualified acceptance constitutes a counter-offer. Petitioners assert that since PIL did not accept respondent's counter-
offer, there never was any employment contract that was perfected between them.

Petitioners further argue that respondent's claim for damages based on the provisions of Articles 19 and 21 of the Civil
Code is baseless because it was shown that there was no perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract, petitioners
contend that PCPI and PPHI, may not also be held liable because they are juridical entities with personalities which are
separate and distinct from PIL, even if they are subsidiary corporations of the latter. Petitioners also aver that the
annexes to respondent's complaint show that the negotiations on the alleged employment contract took place
between respondent and PIL through its office in Hongkong. In other words, PCPI and PPHI were not privy to the
negotiations between PIL and respondent for the possible employment of the latter; and under Article 1311 of the Civil
Code, a contract is not binding upon and cannot be enforced against one who was not a party to it even if he be aware
of such contract and has acted with knowledge thereof.

Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting in his capacity as
president of PCPI and PPHI and settled is the rule that an officer of a corporation is not personally liable for acts done
in the performance of his duties and within the bounds of the authority conferred on him. Furthermore, petitioners
argue that even if PCPI and PPHI are held liable, respondent still has no cause of action against Klepzig because PCPI
and PPHI have personalities which are separate and distinct from those acting in their behalf, such as Klepzig.

As to their second assigned error, petitioners contend that since herein respondent's claims for actual, moral and
exemplary damages are solely premised on the alleged breach of employment contract, the present case should be
considered as falling within the exclusive jurisdiction of the NLRC.

With respect to the third assigned error, petitioners assert that the principle of forum non conveniens dictates that
even where exercise of jurisidiction is authorized by law, courts may refuse to entertain a case involving a foreign
element where the matter can be better tried and decided elsewhere, either because the main aspects of the case
transpired in a foreign jurisdiction or the material witnesses have their residence there and the plaintiff sought the
forum merely to secure procedural advantage or to annoy or harass the defendant. Petitioners also argue that one of
the factors in determining the most convenient forum for conflicts problem is the power of the court to enforce its
decision. Petitioners contend that since the majority of the defendants in the present case are not residents of the
Philippines, they are not subject to compulsory processes of the Philippine court handling the case for purposes of
requiring their attendance during trial. Even assuming that they can be summoned, their appearance would entail
excessive costs. Petitioners further assert that there is no allegation in the complaint from which one can conclude that
the evidence to be presented during the trial can be better obtained in the Philippines. Moreover, the events which led
to the present controversy occurred outside the Philippines. Petitioners conclude that based on the foregoing factual
circumstances, the case should be dismissed under the principle of forum non conveniens.

In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the factual allegations in the
complaint determine whether or not the complaint states a cause of action.

As to the question of jurisdiction, respondent contends that the complaint he filed was not based on a contract of
employment. Rather, it was based on petitioners' unwarranted breach of their contractual obligation to employ
respondent. This breach, respondent argues, gave rise to an action for damages which is cognizable by the regular
courts.

Even assuming that there was an employment contract, respondent asserts that for the NLRC to acquire jurisdiction,
the claim for damages must have a reasonable causal connection with the employer-employee relationship of
petitioners and respondent.

Respondent further argues that there is a perfected contract between him and petitioners as they both agreed that
the latter shall employ him to manage and operate their ready-mix concrete operations in the Philippines. Even
assuming that there was no perfected contract, respondent contends that his complaint alleges an alternative cause of
action which is based on the provisions of Articles 19 and 21 of the Civil Code.

As to the applicability of the doctrine of forum non conveniens, respondent avers that the question of whether a suit
should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the
facts of the particular case and is addressed to the sound discretion of the trial judge, who is in the best position to
determine whether special circumstances require that the court desist from assuming jurisdiction over the suit.
The petition lacks merit.

Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission by which a party
violates a right of another. A cause of action exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and, (3) an act or omission on the part of such defendant violative of
the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages.11

In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:

The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true
would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts
alleged therein? The inquiry is into the sufficiency, not the veracity of the material allegations. If the
allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed
regardless of the defense that may be presented by the defendants.13

Moreover, the complaint does not have to establish or allege facts proving the existence of a cause of action at the
outset; this will have to be done at the trial on the merits of the case. 14 To sustain a motion to dismiss for lack of
cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been
defectively stated, or is ambiguous, indefinite or uncertain. 15

Hence, in resolving whether or not the Complaint in the present case states a cause of action, the trial court correctly
limited itself to examining the sufficiency of the allegations in the Complaint as well as the annexes thereto. It is
proscribed from inquiring into the truth of the allegations in the Complaint or the authenticity of any of the documents
referred or attached to the Complaint, since these are deemed hypothetically admitted by the respondent.

This Court has reviewed respondent’s allegations in its Complaint. In a nutshell, respondent alleged that herein
petitioners reneged on their contractual obligation to employ him on a permanent basis. This allegation is sufficient to
constitute a cause of action for damages.

The issue as to whether or not there was a perfected contract between petitioners and respondent is a matter which is
not ripe for determination in the present case; rather, this issue must be taken up during trial, considering that its
resolution would necessarily entail an examination of the veracity of the allegations not only of herein respondent as
plaintiff but also of petitioners as defendants.

The Court does not agree with petitioners' contention that they were not privy to the negotiations for respondent's
possible employment. It is evident from paragraphs 24 to 28 of the Complaint 16 that, on various occasions, Klepzig
conducted negotiations with respondent regarding the latter's possible employment. In fact, Annex "H" 17 of the
complaint shows that it was Klepzig who informed respondent that his company was no longer interested in employing
respondent. Hence, based on the allegations in the Complaint and the annexes attached thereto, respondent has a
cause of action against herein petitioners.

As to the question of jurisdiction, this Court has consistently held that where no employer-employee relationship exists
between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor
statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. 18 In the present
case, no employer-employee relationship exists between petitioners and respondent. In fact, in his complaint, private
respondent is not seeking any relief under the Labor Code, but seeks payment of damages on account of petitioners'
alleged breach of their obligation under their agreement to employ him. It is settled that an action for breach of
contractual obligation is intrinsically a civil dispute.19 In the alternative, respondent seeks redress on the basis of the
provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is within the realm of civil
law, and jurisdiction over it belongs to the regular courts. 20
With respect to the applicability of the principle of forum non conveniens in the present case, this Court's ruling
in Bank of America NT & SA v. Court of Appeals21 is instructive, to wit:

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, 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.

Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the
facts of the particular case and is addressed to the sound discretion of the trial court. In the case
of Communication Materials and Design, Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine
Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are
met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the
Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the
Philippine Court has or is likely to have power to enforce its decision."

Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the doctrine
of forum non conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of
the Rules of Court does not include said doctrine as a ground. This Court further ruled that while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only
after vital facts are established, to determine whether special circumstances require the court’s desistance;
and that the propriety of dismissing a case based on this principle of forum non conveniens requires a
factual determination, hence it is more properly considered a matter of defense. 22 (emphasis supplied)

In the present case, the factual circumstances cited by petitioners which would allegedly justify the application of the
doctrine of forum non conveniens are matters of defense, the merits of which should properly be threshed out during
trial.

WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals
are AFFIRMED.

Costs against petitioners.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 114776. February 2, 2000]

MENANDRO B. LAUREANO, petitioner, vs. COURT OF APPEALS AND SINGAPORE AIRLINES LIMITED, respondents.

DECISION

QUISUMBING, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse the Decision of the Court of
Appeals, dated October 29, 1993, in C.A. G.R. No. CV 34476, as well as its Resolution dated February 28, 1994, which
denied the motion for reconsideration.

The facts of the case as summarized by the respondent appellate court are as follows:

"Sometime in 1978, plaintiff [Menandro B. Laureano, herein petitioner], then Director of Flight
Operations and Chief Pilot of Air Manila, applied for employment with defendant company [herein
private respondent] through its Area Manager in Manila.

On September 30, 1978, after the usual personal interview, defendant wrote to plaintiff, offering a
contract of employment as an expatriate B-707 captain for an original period of two (2) years
commencing on January 21, 1978, Plaintiff accepted the offer and commenced working on January
20, 1979. After passing the six-month probation period, plaintiff's appointment was confirmed
effective July 21, 1979. (Annex "B", p. 30, Rollo).

On July 21, 1979, defendant offered plaintiff an extension of his two-year contract to five (5) years
effective January 21, 1979 to January 20, 1984 subject to the terms and conditions set forth in the
contract of employment, which the latter accepted (Annex "C", p. 31, Rec.).

During his service as B-707 captain, plaintiff on August 24, 1980, while in command of a flight,
committed a noise violation offense at the Zurich Airport, for which plaintiff apologized. (Exh. "3", p.
307, Rec.).
Sometime in 1980, plaintiff featured in a tail scraping incident wherein the tail of the aircraft scraped
or touched the runway during landing. He was suspended for a few days until he was investigated by
a board headed by Capt. Choy. He was reprimanded. Scjuris

On September 25, 1981, plaintiff was invited to take a course of A-300 conversion training at
Aeroformacion, Toulouse, France at defendant's expense. Having successfully completed and passed
the training course, plaintiff was cleared on April 7, 1981 for solo duty as captain of the Airbus A-300
and subsequently appointed as captain of the A-300 fleet commanding an Airbus A-300 in flights
over Southeast Asia. (Annexes "D", "E" and "F", pp. 34-38, Rec.).

Sometime in 1982, defendant, hit by a recession, initiated cost-cutting measures. Seventeen (17)
expatriate captains in the Airbus fleet were found in excess of the defendant's requirement (t.s.n.,
July 6, 1988. p. 11). Consequently, defendant informed its expatriate pilots including plaintiff of the
situation and advised them to take advance leaves. (Exh. "15", p. 466, Rec.).

Realizing that the recession would not be for a short time, defendant decided to terminate its excess
personnel (t.s.n., July 6, 1988, p. 17). It did not, however, immediately terminate it's A-300 pilots. It
reviewed their qualifications for possible promotion to the B-747 fleet. Among the 17 excess Airbus
pilots reviewed, twelve were found qualified. Unfortunately, plaintiff was not one of the
twelve. Jurissc

On October 5, 1982, defendant informed plaintiff of his termination effective November 1, 1982 and
that he will be paid three (3) months salary in lieu of three months notice (Annex "I", pp. 41-42,
Rec.). Because he could not uproot his family on such short notice, plaintiff requested a three-month
notice to afford him time to exhaust all possible avenues for reconsideration and retention.
Defendant gave only two (2) months notice and one (1) month salary. (t.s.n., Nov. 12, 1987. p. 25).

Aggrieved, plaintiff on June 29, 1983, instituted a case for illegal dismissal before the Labor Arbiter.
Defendant moved to dismiss on jurisdictional grounds. Before said motion was resolved, the
complaint was withdrawn. Thereafter, plaintiff filed the instant case for damages due to illegal
termination of contract of services before the court a quo (Complaint, pp. 1-10, Rec.).

Again, defendant on February 11, 1987 filed a motion to dismiss alleging inter alia: (1) that the court
has no jurisdiction over the subject matter of the case, and (2) that Philippine courts have no
jurisdiction over the instant case. Defendant contends that the complaint is for illegal dismissal
together with a money claim arising out of and in the course of plaintiff's employment "thus it is the
Labor Arbiter and the NLRC who have the jurisdiction pursuant to Article 217 of the Labor Code" and
that, since plaintiff was employed in Singapore, all other aspects of his employment contract and/or
documents executed in Singapore. Thus, defendant postulates that Singapore laws should apply and
courts thereat shall have jurisdiction. (pp. 50-69, Rec.). Misjuris

In traversing defendant's arguments, plaintiff claimed that: (1) where the items demanded in a
complaint are the natural consequences flowing from a breach of an obligation and not labor
benefits, the case is intrinsically a civil dispute; (2) the case involves a question that is beyond the
field of specialization of labor arbiters; and (3) if the complaint is grounded not on the employee's
dismissal per se but on the manner of said dismissal and the consequence thereof, the case falls
under the jurisdiction of the civil courts. (pp. 70-73, Rec.)

On March 23, 1987, the court a quo denied defendant's motion to dismiss (pp. 82-84, Ibid). The
motion for reconsideration was likewise denied. (p. 95 ibid)

On September 16, 1987, defendant filed its answer reiterating the grounds relied upon in its motion
to dismiss and further arguing that plaintiff is barred by laches, waiver, and estoppel from instituting
the complaint and that he has no cause of action. (pp. 102-115)" [1]
On April 10, 1991, the trial court handed down its decision in favor of plaintiff. The dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff Menandro Laureano and against
defendant Singapore Airlines Limited, ordering defendant to pay plaintiff the amounts of -

SIN$396,104.00, or its equivalent in Philippine currency at the current rate of exchange at the time of
payment, as and for unearned compensation with legal interest from the filing of the complaint until
fully paid; Jjlex

SIN$154,742.00, or its equivalent in Philippine currency at the current rate of exchange at the time of
payment; and the further amounts of P67,500.00 as consequential damages with legal interest from
the filing of the complaint until fully paid;

P1,000,000.00 as and for moral damages; P1,000,000.00 as and for exemplary damages; and
P100,000.00 as and for attorney's fees.

Costs against defendant.

SO ORDERED."[2]

Singapore Airlines timely appealed before the respondent court and raised the issues of jurisdiction, validity of
termination, estoppel, and damages.

On October 29, 1993, the appellate court set aside the decision of the trial court, thus,

"...In the instant case, the action for damages due to illegal termination was filed by plaintiff-appellee
only on January 8, 1987 or more than four (4) years after the effectivity date of his dismissal on
November 1, 1982. Clearly, plaintiff-appellee's action has already prescribed.

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. The complaint is hereby
dismissed.

SO ORDERED."[3] Newmiso

Petitioner's and Singapore Airlines' respective motions for reconsideration were denied.

Now, before the Court, petitioner poses the following queries:

1. IS THE PRESENT ACTION ONE BASED ON CONTRACT WHICH PRESCRIBES IN TEN YEARS UNDER
ARTICLE 1144 OF THE NEW CIVIL CODE OR ONE FOR DAMAGES ARISING FROM AN INJURY TO THE
RIGHTS OF THE PLAINTIFF WHICH PRESCRIBES IN FOUR YEARS UNDER ARTICLE 1146 OF THE NEW
CIVIL CODE?

2. CAN AN EMPLOYEE WITH A FIXED PERIOD OF EMPLOYMENT BE RETRENCHED BY HIS EMPLOYER?

3. CAN THERE BE VALID RETRENCHMENT IF AN EMPLOYER MERELY FAILS TO REALIZE THE EXPECTED
PROFITS EVEN IF IT WERE NOT, IN FACT, INCURRING LOSSES?

At the outset, we find it necessary to state our concurrence on the assumption of jurisdiction by the Regional Trial
Court of Manila, Branch 9. The trial court rightly ruled on the application of Philippine law, thus: Acctmis

"Neither can the Court determine whether the termination of the plaintiff is legal under the
Singapore Laws because of the defendant's failure to show which specific laws of Singapore Laws
apply to this case. As substantially discussed in the preceding paragraphs, the Philippine Courts do
not take judicial notice of the laws of Singapore. The defendant that claims the applicability of the
Singapore Laws to this case has the burden of proof. The defendant has failed to do so. Therefore,
the Philippine law should be applied."[4]
Respondent Court of Appeals acquired jurisdiction when defendant filed its appeal before said court. [5] On this
matter, respondent court was correct when it barred defendant-appellant below from raising further the issue of
jurisdiction.[6]

Petitioner now raises the issue of whether his action is one based on Article 1144 or on Article 1146 of the Civil Code.
According to him, his termination of employment effective November 1, 1982, was based on an employment contract
which is under Article 1144, so his action should prescribe in 10 years as provided for in said article. Thus he claims the
ruling of the appellate court based on Article 1146 where prescription is only four (4) years, is an error. The appellate
court concluded that the action for illegal dismissal originally filed before the Labor Arbiter on June 29, 1983, but
which was withdrawn, then filed again in 1987 before the Regional Trial Court, had already prescribed.

In our view, neither Article 1144[7] nor Article 1146[8] of the Civil Code is here pertinent. What is applicable is Article
291 of the Labor Code, viz:

"Article 291. Money claims. - All money claims arising from employee-employer 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" Misact

What rules on prescription should apply in cases like this one has long been decided by this Court. In illegal dismissal, it
is settled, that the ten-year prescriptive period fixed in Article 1144 of the Civil Code may not be invoked by
petitioners, for the Civil Code is a law of general application, while the prescriptive period fixed in Article 292 of the
Labor Code [now Article 291] is a SPECIAL LAW applicable to claims arising from employee-employer relations. [9]

More recently in De Guzman. vs. Court of Appeals,[10] where the money claim was based on a written contract, the
Collective Bargaining Agreement, the Court held:

"...The language of Art. 291 of the Labor Code does not limit its application only to 'money claims
specifically recoverable under said Code' but covers all money claims arising from an employee-
employer relations" (Citing Cadalin v. POEA Administrator, 238 SCRA 721, 764 [1994]; and Uy v.
National Labor Relations Commission, 261 SCRA 505, 515 [1996]). ...

It should be noted further that Article 291 of the Labor Code is a special law applicable to money
claims arising from employer-employee relations; thus, it necessarily prevails over Article 1144 of the
Civil Code, a general law. Basic is the rule in statutory construction that 'where two statutes are of
equal theoretical application to a particular case, the one designed therefore should prevail.'
(Citing Leveriza v. Intermediate Appellate Court, 157 SCRA 282, 294.) Generalia specialibus non
derogant."[11]

In the light of Article 291, aforecited, we agree with the appellate court's conclusion that petitioner's action
for damages due to illegal termination filed again on January 8, 1987 or more than four (4) years after the effective
date of his dismissal on November 1, 1982 has already prescribed.

"In the instant case, the action for damages due to illegal termination was filed by plaintiff-appellee
only on January 8, 1987 or more than four (4) years after the effectivity date of his dismissal on
November 1, 1982. Clearly, plaintiff-appellee's action has already prescribed."

We base our conclusion not on Article 1144 of the Civil Code but on Article 291 of the Labor Code, which sets the
prescription period at three (3) years and which governs under this jurisdiction.

Petitioner claims that the running of the prescriptive period was tolled when he filed his complaint for illegal dismissal
before the Labor Arbiter of the National Labor Relations Commission. However, this claim deserves scant
consideration; it has no legal leg to stand on. In Olympia International, Inc. vs. Court of Appeals, we held that "although
the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or
voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been
commenced at all."[12]

Now, as to whether petitioner's separation from the company due to retrenchment was valid, the appellate court
found that the employment contract of petitioner allowed for pre-termination of employment. We agree with the
Court of Appeals when it said, Sdjad

"It is a settled rule that contracts have the force of law between the parties. From the moment the
same is perfected, the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all consequences which, according to their nature, may be in keeping with
good faith, usage and law. Thus, when plaintiff-appellee accepted the offer of employment, he was
bound by the terms and conditions set forth in the contract, among others, the right of mutual
termination by giving three months written notice or by payment of three months salary. Such
provision is clear and readily understandable, hence, there is no room for interpretation."

xxx

Further, plaintiff-appellee's contention that he is not bound by the provisions of the Agreement, as
he is not a signatory thereto, deserves no merit. It must be noted that when plaintiff-appellee's
employment was confirmed, he applied for membership with the Singapore Airlines Limited (Pilots)
Association, the signatory to the aforementioned Agreement. As such, plaintiff-appellee is estopped
from questioning the legality of the said agreement or any proviso contained therein." [13]

Moreover, the records of the present case clearly show that respondent court's decision is amply supported by
evidence and it did not err in its findings, including the reason for the retrenchment:

"When defendant-appellant was faced with the world-wide recession of the airline industry resulting
in a slow down in the company's growth particularly in the regional operation (Asian Area) where the
Airbus 300 operates. It had no choice but to adopt cost cutting measures, such as cutting down
services, number of frequencies of flights, and reduction of the number of flying points for the A-300
fleet (t.s.n., July 6, 1988, pp. 17-18). As a result, defendant-appellant had to layoff A-300 pilots,
including plaintiff-appellee, which it found to be in excess of what is reasonably needed." [14]

All these considered, we find sufficient factual and legal basis to conclude that petitioner's termination from
employment was for an authorized cause, for which he was given ample notice and opportunity to be heard, by
respondent company. No error nor grave abuse of discretion, therefore, could be attributed to respondent appellate
court. Sppedsc

ACCORDINGLY, the instant petition is DISMISSED. The decision of the Court of Appeals in C.A. CV No. 34476 is
AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 101538 June 23, 1992

AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto
Santos, petitioner,
vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.

CRUZ, J.:

This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention, reading as follows:

Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one
of the High Contracting Parties, either before the court of the domicile of the carrier or of his
principal place of business, or where he has a place of business through which the contract has been
made, or before the court at the place of destination.

The petitioner is a minor and a resident of the Philippines. Private respondent Northwest Orient Airlines (NOA) is a
foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office
in the Philippines.

On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San Francisco. U.S.A., for his flight from
San Francisco to Manila via Tokyo and back. The scheduled departure date from Tokyo was December 20, 1986. No
date was specified for his return to San Francisco. 1
On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco airport for his scheduled
departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation
for his flight from Tokyo to Manila. He therefore had to be wait-listed.

On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of Makati. On April 13, 1987, NOA
moved to dismiss the complaint on the ground of lack of jurisdiction. Citing the above-quoted article, it contended that
the complaint could be instituted only in the territory of one of the High Contracting Parties, before:

1. the court of the domicile of the carrier;

2. the court of its principal place of business;

3. the court where it has a place of business through which the contract had been made;

4. the court of the place of destination.

The private respondent contended that the Philippines was not its domicile nor was this its principal place of business.
Neither was the petitioner's ticket issued in this country nor was his destination Manila but San Francisco in the United
States.

On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The petitioner appealed to the
Court of Appeals, which affirmed the decision of the lower court. 3 On June 26, 1991, the petitioner filed a motion for
reconsideration, but the same was denied. 4 The petitioner then came to this Court, raising substantially the same
issues it submitted in the Court of Appeals.

The assignment of errors may be grouped into two major issues, viz:

(1) the constitutionality of Article 28(1) of the Warsaw Convention; and

(2) the jurisdiction of Philippine courts over the case.

The petitioner also invokes Article 24 of the Civil Code on the protection of minors.

THE ISSUE OF CONSTITUTIONALITY

A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw
Convention violates the constitutional guarantees of due process and equal protection.

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to
International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933.
The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine
instrument of accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited with the
Polish government on November 9, 1950. The Convention became applicable to the Philippines on February 9, 1951.
On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence
thereto. "to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by
the Republic of the Philippines and the citizens thereof." 5

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the
force and effect of law in this country.

The petitioner contends that Article 28(1) cannot be applied in the present case because it is unconstitutional. He
argues that there is no substantial distinction between a person who purchases a ticket in Manila and a person who
purchases his ticket in San Francisco. The classification of the places in which actions for damages may be brought is
arbitrary and irrational and thus violates the due process and equal protection clauses.

It is well-settled that courts will assume jurisdiction over a constitutional question only if it is shown that the essential
requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or controversy
involving a conflict of legal rights susceptible of judicial determination; the constitutional question must have been
opportunely raised by the proper party; and the resolution of the question is unavoidably necessary to the decision of
the case itself. 6

Courts generally avoid having to decide a constitutional question. This attitude is based on the doctrine of separation
of powers, which enjoins upon the departments of the government a becoming respect for each other's acts.

The treaty which is the subject matter of this petition was a joint legislative-executive act. The presumption is that it
was first carefully studied and determined to be constitutional before it was adopted and given the force of law in this
country.

The petitioner's allegations are not convincing enough to overcome this presumption. Apparently, the Convention
considered the four places designated in Article 28 the most convenient forums for the litigation of any claim that may
arise between the airline and its passenger, as distinguished from all other places. At any rate, we agree with the
respondent court that this case can be decided on other grounds without the necessity of resolving the constitutional
issue.

B. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the Warsaw
Convention is inapplicable because of a fundamental change in the circumstances that served as its
basis.

The petitioner goes at great lengths to show that the provisions in the Convention were intended to protect airline
companies under "the conditions prevailing then and which have long ceased to exist." He argues that in view of the
significant developments in the airline industry through the years, the treaty has become irrelevant. Hence, to the
extent that it has lost its basis for approval, it has become unconstitutional.

The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this doctrine constitutes an attempt
to formulate a legal principle which would justify non-performance of a treaty obligation if the conditions with relation
to which the parties contracted have changed so materially and so unexpectedly as to create a situation in which the
exaction of performance would be unreasonable." 7 The key element of this doctrine is the vital change in the
condition of the contracting parties that they could not have foreseen at the time the treaty was concluded.

The Court notes in this connection the following observation made in Day v. Trans World Airlines, Inc.: 8

The Warsaw drafters wished to create a system of liability rules that would cover all the hazards of air
travel . . . The Warsaw delegates knew that, in the years to come, civil aviation would change in ways
that they could not foresee. They wished to design a system of air law that would be both durable
and flexible enough to keep pace with these changes . . . The ever-changing needs of the system of
civil aviation can be served within the framework they created.

It is true that at the time the Warsaw Convention was drafted, the airline industry was still in its infancy. However, that
circumstance alone is not sufficient justification for the rejection of the treaty at this time. The changes recited by the
petitioner were, realistically, not entirely unforeseen although they were expected in a general sense only. In fact, the
Convention itself, anticipating such developments, contains the following significant provision:

Article 41. Any High Contracting Party shall be entitled not earlier than two years after the coming
into force of this convention to call for the assembling of a new international conference in order to
consider any improvements which may be made in this convention. To this end, it will communicate
with the Government of the French Republic which will take the necessary measures to make
preparations for such conference.

But the more important consideration is that the treaty has not been rejected by the Philippine government. The
doctrine of rebus sic stantibus does not operate automatically to render the treaty inoperative. There is a necessity for
a formal act of rejection, usually made by the head of State, with a statement of the reasons why compliance with the
treaty is no longer required.

In lieu thereof, the treaty may be denounced even without an expressed justification for this action. Such denunciation
is authorized under its Article 39, viz:

Article 39. (1) Any one of the High Contracting Parties may denounce this convention by a notification
addressed to the Government of the Republic of Poland, which shall at once inform the Government
of each of the High Contracting Parties.

(2) Denunciation shall take effect six months after the notification of denunciation, and shall operate
only as regards the party which shall have proceeded to denunciation.

Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or pursuant to Article 39, is not a
function of the courts but of the other branches of government. This is a political act. The conclusion and renunciation
of treaties is the prerogative of the political departments and may not be usurped by the judiciary. The courts are
concerned only with the interpretation and application of laws and treaties in force and not with their wisdom or
efficacy.

C. The petitioner claims that the lower court erred in ruling that the plaintiff must sue in the United
States, because this would deny him the right to access to our courts.

The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the United States would
constitute a constructive denial of his right to access to our courts for the protection of his rights. He would
consequently be deprived of this vital guaranty as embodied in the Bill of Rights.

Obviously, the constitutional guaranty of access to courts refers only to courts with appropriate jurisdiction as defined
by law. It does not mean that a person can go to any court for redress of his grievances regardless of the nature or
value of his claim. If the petitioner is barred from filing his complaint before our courts, it is because they are not
vested with the appropriate jurisdiction under the Warsaw Convention, which is part of the law of our land.

II

THE ISSUE OF JURISDICTION.

A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw
Convention is a rule merely of venue and was waived by defendant when it did not move to dismiss
on the ground of improper venue.

By its own terms, the Convention applies to all international transportation of persons performed by aircraft for hire.

International transportation is defined in paragraph (2) of Article 1 as follows:

(2) For the purposes of this convention, the expression "international transportation" shall mean any
transportation in which, according to the contract made by the parties, the place of departure and
the place of destination, whether or not there be a break in the transportation or a transshipment,
are situated [either] within the territories of two High Contracting Parties . . .

Whether the transportation is "international" is determined by the contract of the parties, which in the case of
passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between
certain designated terminals "within the territories of two High Contracting Parties," the provisions of the Convention
automatically apply and exclusively govern the rights and liabilities of the airline and its passenger.

Since the flight involved in the case at bar is international, the same being from the United States to the Philippines
and back to the United States, it is subject to the provisions of the Warsaw Convention, including Article 28(1), which
enumerates the four places where an action for damages may be brought.

Whether Article 28(1) refers to jurisdiction or only to venue is a question over which authorities are sharply divided.
While the petitioner cites several cases holding that Article 28(1) refers to venue rather than jurisdiction, 9there are
later cases cited by the private respondent supporting the conclusion that the provision is jurisdictional. 10

Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon d
court which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as
fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the
wrong county may be waived by the failure of the defendant to make a timely objection. In either case, the court may
render a valid judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether
or not a prohibition exists against their alteration. 11

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a venue provision.
First, the wording of Article 32, which indicates the places where the action for damages "must" be brought,
underscores the mandatory nature of Article 28(1). Second, this characterization is consistent with one of the
objectives of the Convention, which is to "regulate in a uniform manner the conditions of international transportation
by air." Third, the Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1),
which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last
sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as
such, cannot be left to the will of the parties regardless of the time when the damage occurred.

This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways, Ltd., 12 where it was held:

. . . Of more, but still incomplete, assistance is the wording of Article 28(2), especially when
considered in the light of Article 32. Article 28(2) provides that "questions of procedure shall be
governed by the law of the court to which the case is submitted" (Emphasis supplied). Section (2)
thus may be read to leave for domestic decision questions regarding the suitability and location of a
particular Warsaw Convention case.

In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept.
Jurisdiction in the international sense must be established in accordance with Article 28(1) of the Warsaw Convention,
following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only
after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second
question shall be governed by the law of the court to which the case is submitted.

The petitioner submits that since Article 32 states that the parties are precluded "before the damages occurred" from
amending the rules of Article 28(1) as to the place where the action may be brought, it would follow that the Warsaw
Convention was not intended to preclude them from doing so "after the damages occurred."

Article 32 provides:

Art. 32. Any clause contained in the contract and all special agreements entered into before the
damage occurred by which the parties purport to infringe the rules laid down by this convention,
whether by deciding the law to be applied, or by altering the rules as to jurisdiction, shall be null and
void. Nevertheless for the transportation of goods, arbitration clauses shall be allowed, subject to
this convention, if the arbitration is to take place within one of the jurisdictions referred to in the first
paragraph of Article 28.

His point is that since the requirements of Article 28(1) can be waived "after the damages (shall have) occurred," the
article should be regarded as possessing the character of a "venue" and not of a "jurisdiction" provision. Hence, in
moving to dismiss on the ground of lack of jurisdiction, the private respondent has waived improper venue as a ground
to dismiss.

The foregoing examination of Article 28(1) in relation to Article 32 does not support this conclusion. In any event, we
agree that even granting arguendo that Article 28(1) is a venue and not a jurisdictional provision, dismissal of the case
was still in order. The respondent court was correct in affirming the ruling of the trial court on this matter, thus:

Santos' claim that NOA waived venue as a ground of its motion to dismiss is not correct. True it is that
 NOA averred in its MOTION TO DISMISS that the ground thereof is "the Court has no subject matter
jurisdiction to entertain the Complaint" which SANTOS considers as equivalent to "lack of jurisdiction
over the subject matter . . ." However, the gist of NOA's argument in its motion is that the Philippines
is not the proper place where SANTOS could file the action — meaning that the venue of the action is
improperly laid. Even assuming then that the specified ground of the motion is erroneous, the fact is
the proper ground of the motion — improper venue — has been discussed therein.

Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of non-waiver if there are special
circumstances justifying this conclusion, as in the petition at bar. As we observed in Javier vs. Intermediate Court of
Appeals: 13

Legally, of course, the lack of proper venue was deemed waived by the petitioners when they failed
to invoke it in their original motion to dismiss. Even so, the motivation of the private respondent
should have been taken into account by both the trial judge and the respondent court in arriving at
their decisions.

The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of Appeals, where it was held
that Article 28(1) is a venue provision. However, the private respondent avers that this was in effect reversed by the
case of Aranas v. United Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision. Neither
of these cases is binding on this Court, of course, nor was either of them appealed to us. Nevertheless, we here
express our own preference for the later case of Aranas insofar as its pronouncements on jurisdiction conform to the
judgment we now make in this petition.

B. The petitioner claims that the lower court erred in not ruling that under Article 28(1) of the
Warsaw Convention, this case was properly filed in the Philippines, because Manila was the
destination of the plaintiff.

The Petitioner contends that the facts of this case are analogous to those in Aanestad v. Air Canada. 16 In that case,
Mrs. Silverberg purchased a round-trip ticket from Montreal to Los Angeles and back to Montreal. The date and time
of departure were specified but not of the return flight. The plane crashed while on route from Montreal to Los
Angeles, killing Mrs. Silverberg. Her administratrix filed an action for damages against Air Canada in the U.S. District
Court of California. The defendant moved to dismiss for lack of jurisdiction but the motion was denied thus:

. . . It is evident that the contract entered into between Air Canada and Mrs. Silverberg as evidenced
by the ticket booklets and the Flight Coupon No. 1, was a contract for Air Canada to carry Mrs.
Silverberg to Los Angeles on a certain flight, a certain time and a certain class, but that the time for
her to return remained completely in her power. Coupon No. 2 was only a continuing offer by Air
Canada to give her a ticket to return to Montreal between certain dates. . . .

The only conclusion that can be reached then, is that "the place of destination" as used in the
Warsaw Convention is considered by both the Canadian C.T.C. and the United States C.A.B. to
describe at least two "places of destination," viz., the "place of destination" of a particular flight
either an "outward destination" from the "point of origin" or from the "outward point of destination"
to any place in Canada.

Thus the place of destination under Art. 28 and Art. 1 of the Warsaw Convention of the flight on
which Mrs. Silverberg was killed, was Los Angeles according to the ticket, which was the contract
between the parties and the suit is properly filed in this Court which has jurisdiction.

The Petitioner avers that the present case falls squarely under the above ruling because the date and time of his return
flight to San Francisco were, as in the Aanestad case, also left open. Consequently, Manila and not San Francisco
should be considered the petitioner's destination.

The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where the United States District
Court (Eastern District of Pennsylvania) said:

. . . Although the authorities which addressed this precise issue are not extensive, both the cases and
the commentators are almost unanimous in concluding that the "place of destination" referred to in
the Warsaw Convention "in a trip consisting of several parts . . . is the ultimate destination that is
accorded treaty jurisdiction." . . .

But apart from that distinguishing feature, I cannot agree with the Court's analysis in Aanestad;
whether the return portion of the ticket is characterized as an option or a contract, the carrier was
legally bound to transport the passenger back to the place of origin within the prescribed time and.
the passenger for her part agreed to pay the fare and, in fact, did pay the fare. Thus there was
mutuality of obligation and a binding contract of carriage, The fact that the passenger could forego
her rights under the contract does not make it any less a binding contract. Certainly, if the parties did
not contemplate the return leg of the journey, the passenger would not have paid for it and the
carrier would not have issued a round trip ticket.

We agree with the latter case. The place of destination, within the meaning of the Warsaw Convention, is determined
by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier.
Examination of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the date of the
return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport the
petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and
not the destination.

The petitioner submits that the Butz case could not have overruled the Aanestad case because these decisions are
from different jurisdictions. But that is neither here nor there. In fact, neither of these cases is controlling on this
Court. If we have preferred the Butz case, it is because, exercising our own freedom of choice, we have decided that it
represents the better, and correct, interpretation of Article 28(1).

Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and
not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction under the Convention.

The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate
destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that
every contract of carriage has one place of departure and one place of destination. An intermediate place where the
carriage may be broken is not regarded as a "place of destination."

C. The petitioner claims that the lower court erred in not ruling that under Art. 28(1) of the Warsaw
Convention, this case was properly filed in the Philippines because the defendant has its domicile in
the Philippines.

The petitioner argues that the Warsaw Convention was originally written in French and that in interpreting its
provisions, American courts have taken the broad view that the French legal meaning must govern. 18 In French, he
says, the "domicile" of the carrier means every place where it has a branch office.

The private respondent notes, however, that in Compagnie Nationale Air France vs. Giliberto, 19 it was held:

The plaintiffs' first contention is that Air France is domiciled in the United States. They say that the
domicile of a corporation includes any country where the airline carries on its business on "a regular
and substantial basis," and that the United States qualifies under such definition. The meaning of
domicile cannot, however, be so extended. The domicile of a corporation is customarily regarded as
the place where it is incorporated, and the courts have given the meaning to the term as it is used in
article 28(1) of the Convention. (See Smith v. Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d
798, 802; Nudo v. Societe Anonyme Belge d' Exploitation de la Navigation Aerienne Sabena Belgian
World Airlines (E.D. pa. 1962). 207 F. Supp, 191; Karfunkel v. Compagnie Nationale Air France (S.D.N.Y.
1977), 427 F. Suppl. 971, 974). Moreover, the structure of article 28(1), viewed as a whole, is also
 incompatible with the plaintiffs' claim. The article, in stating that places of business are among the
bases of the jurisdiction, sets out two places where an action for damages may be brought; the
country where the carrier's principal place of business is located, and the country in which it has a
place of business through which the particular contract in question was made, that is, where the
ticket was bought, Adopting the plaintiffs' theory would at a minimum blur these carefully drawn
distinctions by creating a third intermediate category. It would obviously introduce uncertainty into
litigation under the article because of the necessity of having to determine, and without standards or
criteria, whether the amount of business done by a carrier in a particular country was "regular" and
"substantial." The plaintiff's request to adopt this basis of jurisdiction is in effect a request to create a
new jurisdictional standard for the Convention.

Furthermore, it was argued in another case 20 that:

. . . In arriving at an interpretation of a treaty whose sole official language is French, are we bound to
apply French law? . . . We think this question and the underlying choice of law issue warrant some
discussion
. . . We do not think this statement can be regarded as a conclusion that internal French law is to be
"applied" in the choice of law sense, to determine the meaning and scope of the Convention's terms.
Of course, French legal usage must be considered in arriving at an accurate English translation of the
French. But when an accurate English translation is made and agreed upon, as here, the inquiry into
meaning does not then revert to a quest for a past or present French law to be "applied" for
revelation of the proper scope of the terms. It does not follow from the fact that the treaty is written
in French that in interpreting it, we are forever chained to French law, either as it existed when the
treaty was written or in its present state of development. There is no suggestion in the treaty that
French law was intended to govern the meaning of Warsaw's terms, nor have we found any
indication to this effect in its legislative history or from our study of its application and interpretation
by other courts. Indeed, analysis of the cases indicates that the courts, in interpreting and applying
the Warsaw Convention, have, not considered themselves bound to apply French law simply because
the Convention is written in French. . . .

We agree with these rulings.

Notably, the domicile of the carrier is only one of the places where the complaint is allowed to be filed under Article
28(1). By specifying the three other places, to wit, the principal place of business of the carrier, its place of business
where the contract was made, and the place of destination, the article clearly meant that these three other places
were not comprehended in the term "domicile."

D. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the Warsaw
Convention does not apply to actions based on tort.

The petitioner alleges that the gravamen of the complaint is that private respondent acted arbitrarily and in bad faith,
discriminated against the petitioner, and committed a willful misconduct because it canceled his confirmed reservation
and gave his reserved seat to someone who had no better right to it. In short. the private respondent committed a
tort.

Such allegation, he submits, removes the present case from the coverage of the Warsaw Convention. He argues that in
at least two American cases, 21 it was held that Article 28(1) of the Warsaw Convention does not apply if the action is
based on tort.

This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article in question was interpreted
thus:

. . . Assuming for the present that plaintiff's claim is "covered" by Article 17, Article 24 clearly
excludes any relief not provided for in the Convention as modified by the Montreal Agreement. It
 does not, however, limit the kind of cause of action on which the relief may be founded; rather it
provides that any action based on the injuries specified in Article 17 "however founded," i.e.,
regardless of the type of action on which relief is founded, can only be brought subject to the
conditions and limitations established by the Warsaw System. Presumably, the reason for the use of
the phrase "however founded," in two-fold: to accommodate all of the multifarious bases on which a
claim might be founded in different countries, whether under code law or common law, whether
under contract or tort, etc.; and to include all bases on which a claim seeking relief for an injury
might be founded in any one country. In other words, if the injury occurs as described in Article 17,
any relief available is subject to the conditions and limitations established by the Warsaw System,
regardless of the particular cause of action which forms the basis on which a plaintiff could seek
relief . . .

The private respondent correctly contends that the allegation of willful misconduct resulting in a tort is insufficient to
exclude the case from the comprehension of the Warsaw Convention. The petitioner has apparently misconstrued the
import of Article 25(l) of the Convention, which reads as follows:

Art. 25 (1). The carrier shall not be entitled to avail himself of the provisions of this Convention which
exclude or limit his liability. if the damage is caused by his willful misconduct or by such default on his
part as, in accordance with the law of the court to which the case is submitted, is considered to be
equivalent to willful misconduct.

It is understood under this article that the court called upon to determine the applicability of the limitation provision
must first be vested with the appropriate jurisdiction. Article 28(1) is the provision in the Convention which defines
that jurisdiction. Article 22 23 merely fixes the monetary ceiling for the liability of the carrier in cases covered by the
Convention. If the carrier is indeed guilty of willful misconduct, it can avail itself of the limitations set forth in this
article. But this can be done only if the action has first been commenced properly under the rules on jurisdiction set
forth in Article 28(1).

III

THE ISSUE OF PROTECTION TO MINORS

The petitioner calls our attention to Article 24 of the Civil Code, which states:

Art. 24. In all contractual property or other relations, when one of the parties is at a disadvantage on
account of his moral dependence, ignorance, indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his protection.

Application of this article to the present case is misplaced. The above provision assumes that the court is vested with
jurisdiction to rule in favor of the disadvantaged minor, As already explained, such jurisdiction is absent in the case at
bar.

CONCLUSION

A number of countries have signified their concern over the problem of citizens being denied access to their own
courts because of the restrictive provision of Article 28(1) of the Warsaw Convention. Among these is the United
States, which has proposed an amendment that would enable the passenger to sue in his own domicile if the carrier
does business in that jurisdiction. The reason for this proposal is explained thus:

In the event a US citizen temporarily residing abroad purchases a Rome to New York to Rome ticket
on a foreign air carrier which is generally subject to the jurisdiction of the US, Article 28 would
prevent that person from suing the carrier in the US in a "Warsaw Case" even though such a suit
could be brought in the absence of the Convention.

The proposal was incorporated in the Guatemala Protocol amending the Warsaw Convention, which was adopted at
Guatemala City on March 8,
1971. 24 But it is still ineffective because it has not yet been ratified by the required minimum number of contracting
parties. Pending such ratification, the petitioner will still have to file his complaint only in any of the four places
designated by Article 28(1) of the Warsaw Convention.

The proposed amendment bolsters the ruling of this Court that a citizen does not necessarily have the right to sue in
his own courts simply because the defendant airline has a place of business in his country.

The Court can only sympathize with the petitioner, who must prosecute his claims in the United States rather than in
his own country at least inconvenience. But we are unable to grant him the relief he seeks because we are limited by
the provisions of the Warsaw Convention which continues to bind us. It may not be amiss to observe at this point that
the mere fact that he will have to litigate in the American courts does not necessarily mean he will litigate in vain. The
judicial system of that country in known for its sense of fairness and, generally, its strict adherence to the rule of law.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

SECOND DIVISION

[G.R. No. 119602. October 6, 2000]

WILDVALLEY SHIPPING CO., LTD. petitioner, vs. COURT OF APPEALS and PHILIPPINE PRESIDENT LINES
INC., respondents.

DECISION

BUENA, J.:

This is a petition for review on certiorari seeking to set aside the decision of the Court of Appeals which reversed
the decision of the lower court in CA-G.R. CV No. 36821, entitled "Wildvalley Shipping Co., Ltd., plaintiff-appellant,
versus Philippine President Lines, Inc., defendant-appellant."

The antecedent facts of the case are as follows:

Sometime in February 1988, the Philippine Roxas, a vessel owned by Philippine President Lines, Inc., private
respondent herein, arrived in Puerto Ordaz, Venezuela, to load iron ore. Upon the completion of the loading and when
the vessel was ready to leave port, Mr. Ezzar del Valle Solarzano Vasquez, an official pilot of Venezuela, was designated
by the harbour authorities in Puerto Ordaz to navigate the Philippine Roxas through the Orinoco River. [1] He was
asked to pilot the said vessel on February 11, 1988 [2] boarding it that night at 11:00 p.m.[3]

The master (captain) of the Philippine Roxas, Captain Nicandro Colon, was at the bridge together with the pilot
(Vasquez), the vessel's third mate (then the officer on watch), and a helmsman when the vessel left the port [4] at 1:40
a.m. on February 12, 1988.[5] Captain Colon left the bridge when the vessel was under way. [6]

The Philippine Roxas experienced some vibrations when it entered the San Roque Channel at mile 172. [7] The
vessel proceeded on its way, with the pilot assuring the watch officer that the vibration was a result of the shallowness
of the channel.[8]

Between mile 158 and 157, the vessel again experienced some vibrations. [9] These occurred at 4:12 a.m.[10] It
was then that the watch officer called the master to the bridge. [11]

The master (captain) checked the position of the vessel [12] and verified that it was in the centre of the channel.
[13] He then went to confirm, or set down, the position of the vessel on the chart. [14] He ordered Simplicio A.
Monis, Chief Officer of the President Roxas, to check all the double bottom tanks. [15]

At around 4:35 a.m., the Philippine Roxas ran aground in the Orinoco River, [16] thus obstructing the ingress and
egress of vessels.

As a result of the blockage, the Malandrinon, a vessel owned by herein petitioner Wildvalley Shipping Company,
Ltd., was unable to sail out of Puerto Ordaz on that day.

Subsequently, Wildvalley Shipping Company, Ltd. filed a suit with the Regional Trial Court of Manila, Branch III
against Philippine President Lines, Inc. and Pioneer Insurance Company (the underwriter/insurer of Philippine Roxas)
for damages in the form of unearned profits, and interest thereon amounting to US $400,000.00 plus attorney's fees,
costs, and expenses of litigation. The complaint against Pioneer Insurance Company was dismissed in an Order dated
November 7, 1988.[17]

At the pre-trial conference, the parties agreed on the following facts:

"1. The jurisdictional facts, as specified in their respective pleadings;

"2. That defendant PPL was the owner of the vessel Philippine Roxas at the time of the incident;

"3. That defendant Pioneer Insurance was the insurance underwriter for defendant PPL;

"4. That plaintiff Wildvalley Shipping Co., Inc. is the owner of the vessel Malandrinon, whose passage was obstructed
by the vessel Philippine Roxas at Puerto Ordaz, Venezuela, as specified in par. 4, page 2 of the complaint;

"5. That on February 12, 1988, while the Philippine Roxas was navigating the channel at Puerto Ordaz, the said vessel
grounded and as a result, obstructed navigation at the channel;

"6. That the Orinoco River in Puerto Ordaz is a compulsory pilotage channel;

"7. That at the time of the incident, the vessel, Philippine Roxas, was under the command of the pilot Ezzar Solarzano,
assigned by the government thereat, but plaintiff claims that it is under the command of the master;

"8. The plaintiff filed a case in Middleburg, Holland which is related to the present case;

"9. The plaintiff caused the arrest of the Philippine Collier, a vessel owned by the defendant PPL;

"10. The Orinoco River is 150 miles long and it takes approximately 12 hours to navigate out of the said river;

"11. That no security for the plaintiff's claim was given until after the Philippine Collier was arrested; and

"12. That a letter of guarantee, dated 12-May-88 was issued by the Steamship Mutual Underwriters Ltd." [18]

The trial court rendered its decision on October 16, 1991 in favor of the petitioner, Wildvalley Shipping Co.,
Ltd. The dispositive portion thereof reads as follows:

"WHEREFORE, judgment is rendered for the plaintiff, ordering defendant Philippine President Lines, Inc. to pay to the
plaintiff the sum of U.S. $259,243.43, as actual and compensatory damages, and U.S. $162,031.53, as expenses
incurred abroad for its foreign lawyers, plus additional sum of U.S. $22,000.00, as and for attorney's fees of plaintiff's
local lawyer, and to pay the cost of this suit.

"Defendant's counterclaim is dismissed for lack of merit.

"SO ORDERED."[19]

Both parties appealed: the petitioner appealing the non-award of interest with the private respondent
questioning the decision on the merits of the case.

After the requisite pleadings had been filed, the Court of Appeals came out with its questioned decision dated
June 14, 1994,[20] the dispositive portion of which reads as follows:

"WHEREFORE, finding defendant-appellant's appeal to be meritorious, judgment is hereby rendered reversing the
Decision of the lower court. Plaintiff-appellant's Complaint is dismissed and it is ordered to pay defendant-appellant
the amount of Three Hundred Twenty-three Thousand, Forty-two Pesos and Fifty-three Centavos (P323,042.53) as and
for attorney's fees plus cost of suit. Plaintiff-appellant's appeal is DISMISSED.

"SO ORDERED."[21]

Petitioner filed a motion for reconsideration [22] but the same was denied for lack of merit in the resolution
dated March 29, 1995.[23]

Hence, this petition.

 The petitioner assigns the following errors to the court a quo:

1. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT UNDER PHILIPPINE LAW NO FAULT
OR NEGLIGENCE CAN BE ATTRIBUTED TO THE MASTER NOR THE OWNER OF THE "PHILIPPINE ROXAS"
FOR THE GROUNDING OF SAID VESSEL RESULTING IN THE BLOCKAGE OF THE RIO ORINOCO;

2. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE FINDINGS OF FACTS OF THE TRIAL
COURT CONTRARY TO EVIDENCE;

3. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE "PHILIPPINE ROXAS" IS
SEAWORTHY;

4. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING VENEZUELAN LAW DESPITE THE
FACT THAT THE SAME HAS BEEN SUBSTANTIALLY PROVED IN THE TRIAL COURT WITHOUT ANY
OBJECTION FROM PRIVATE RESPONDENT, AND WHOSE OBJECTION WAS INTERPOSED BELATEDLY ON
APPEAL;

5. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN AWARDING ATTORNEY'S FEES AND COSTS TO
PRIVATE RESPONDENT WITHOUT ANY FAIR OR REASONABLE BASIS WHATSOEVER;

6. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT PETITIONER'S CAUSE IS
MERITORIOUS HENCE, PETITIONER SHOULD BE ENTITLED TO ATTORNEY'S FEES, COSTS AND INTEREST.

The petition is without merit.

The primary issue to be determined is whether or not Venezuelan law is applicable to the case at bar.

It is well-settled that foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to
take judicial notice of them. Like any other fact, they must be alleged and proved. [24]

A distinction is to be made as to the manner of proving a written and an unwritten law. The former falls under
Section 24, Rule 132 of the Rules of Court, as amended, the entire provision of which is quoted hereunder. Where the
foreign law sought to be proved is "unwritten," the oral testimony of expert witnesses is admissible, as are printed and
published books of reports of decisions of the courts of the country concerned if proved to be commonly admitted in
such courts.[25]

Section 24 of Rule 132 of the Rules of Court, as amended, provides:

"Sec. 24. Proof of official record. -- The record of public documents referred to in paragraph (a) of Section 19, when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer
having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign
country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office." (Underscoring supplied)

The court has interpreted Section 25 (now Section 24) to include competent evidence like the testimony of a
witness to prove the existence of a written foreign law. [26]

In the noted case of Willamette Iron & Steel Works vs. Muzzal,[27] it was held that:
" Mr. Arthur W. Bolton, an attorney-at-law of San Francisco, California, since the year 1918 under oath, quoted
verbatim section 322 of the California Civil Code and stated that said section was in force at the time the obligations of
defendant to the plaintiff were incurred, i.e. on November 5, 1928 and December 22, 1928. This evidence sufficiently
established the fact that the section in question was the law of the State of California on the above dates. A reading of
sections 300 and 301 of our Code of Civil Procedure will convince one that these sections do not exclude the
presentation of other competent evidence to prove the existence of a foreign law.

"`The foreign law is a matter of fact You ask the witness what the law is; he may, from his recollection, or on producing
and referring to books, say what it is.' (Lord Campbell concurring in an opinion of Lord Chief Justice Denman in a well-
known English case where a witness was called upon to prove the Roman laws of marriage and was permitted to
testify, though he referred to a book containing the decrees of the Council of Trent as controlling, Jones on Evidence,
Second Edition, Volume 4, pages 3148-3152.) x x x.

We do not dispute the competency of Capt. Oscar Leon Monzon, the Assistant Harbor Master and Chief of Pilots
at Puerto Ordaz, Venezuela,[28] to testify on the existence of the Reglamento General de la Ley de Pilotaje (pilotage
law of Venezuela)[29] and the Reglamento Para la Zona de Pilotaje N o 1 del Orinoco (rules governing the navigation of
the Orinoco River). Captain Monzon has held the aforementioned posts for eight years. [30] As such he is in charge of
designating the pilots for maneuvering and navigating the Orinoco River.He is also in charge of the documents that
come into the office of the harbour masters.[31]

Nevertheless, we take note that these written laws were not proven in the manner provided by Section 24 of
Rule 132 of the Rules of Court.

The Reglamento General de la Ley de Pilotaje was published in the Gaceta Oficial[32]of the Republic of
Venezuela. A photocopy of the Gaceta Oficial was presented in evidence as an official publication of the Republic of
Venezuela.

The Reglamento Para la Zona de Pilotaje No 1 del Orinoco is published in a book issued by the Ministerio de
Comunicaciones of Venezuela.[33] Only a photocopy of the said rules was likewise presented as evidence.

Both of these documents are considered in Philippine jurisprudence to be public documents for they are the
written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public
officers of Venezuela.[34]

For a copy of a foreign public document to be admissible, the following requisites are mandatory: (1) It must be
attested by the officer having legal custody of the records or by his deputy; and (2) It must be accompanied by a
certificate by a secretary of the embassy or legation, consul general, consul, vice consular or consular agent or foreign
service officer, and with the seal of his office. [35] The latter requirement is not a mere technicality but is intended to
justify the giving of full faith and credit to the genuineness of a document in a foreign country. [36]

It is not enough that the Gaceta Oficial, or a book published by the Ministerio de Comunicaciones of Venezuela,
was presented as evidence with Captain Monzon attesting it. It is also required by Section 24 of Rule 132 of the Rules
of Court that a certificate that Captain Monzon, who attested the documents, is the officer who had legal custody of
those records made by a secretary of the embassy or legation, consul general, consul, vice consul or consular agent or
by any officer in the foreign service of the Philippines stationed in Venezuela, and authenticated by the seal of his
office accompanying the copy of the public document. No such certificate could be found in the records of the case.
 With respect to proof of written laws, parol proof is objectionable, for the written law itself is the best
evidence. According to the weight of authority, when a foreign statute is involved, the best evidence rule requires that
it be proved by a duly authenticated copy of the statute. [37]

At this juncture, we have to point out that the Venezuelan law was not pleaded before the lower court.

A foreign law is considered to be pleaded if there is an allegation in the pleading about the existence of the
foreign law, its import and legal consequence on the event or transaction in issue. [38]

A review of the Complaint [39] revealed that it was never alleged or invoked despite the fact that the grounding
of the M/V Philippine Roxas occurred within the territorial jurisdiction of Venezuela.

We reiterate that under the rules of private international law, a foreign law must be properly pleaded and proved
as a fact. In the absence of pleading and proof, the laws of a foreign country, or state, will be presumed to be the same
as our own local or domestic law and this is known as processual presumption. [40]

Having cleared this point, we now proceed to a thorough study of the errors assigned by the petitioner.

Petitioner alleges that there was negligence on the part of the private respondent that would warrant the award
of damages.

There being no contractual obligation, the private respondent is obliged to give only the diligence required of a
good father of a family in accordance with the provisions of Article 1173 of the New Civil Code, thus:

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When
negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance, that which is expected
of a good father of a family shall be required.

The diligence of a good father of a family requires only that diligence which an ordinary prudent man would
exercise with regard to his own property. This we have found private respondent to have exercised when the vessel
sailed only after the "main engine, machineries, and other auxiliaries" were checked and found to be in good running
condition;[41] when the master left a competent officer, the officer on watch on the bridge with a pilot who is
experienced in navigating the Orinoco River; when the master ordered the inspection of the vessel's double bottom
tanks when the vibrations occurred anew.[42]

The Philippine rules on pilotage, embodied in Philippine Ports Authority Administrative Order No. 03-85,
otherwise known as the Rules and Regulations Governing Pilotage Services, the Conduct of Pilots and Pilotage Fees in
Philippine Ports enunciate the duties and responsibilities of a master of a vessel and its pilot, among other things.

The pertinent provisions of the said administrative order governing these persons are quoted hereunder:

Sec. 11. Control of Vessels and Liability for Damage. -- On compulsory pilotage grounds, the Harbor Pilot providing the
service to a vessel shall be responsible for the damage caused to a vessel or to life and property at ports due to his
negligence or fault. He can be absolved from liability if the accident is caused by force majeure or natural calamities
provided he has exercised prudence and extra diligence to prevent or minimize the damage.

The Master shall retain overall command of the vessel even on pilotage grounds whereby he can countermand or
overrule the order or command of the Harbor Pilot on board. In such event, any damage caused to a vessel or to life
and property at ports by reason of the fault or negligence of the Master shall be the responsibility and liability of the
registered owner of the vessel concerned without prejudice to recourse against said Master.

Such liability of the owner or Master of the vessel or its pilots shall be determined by competent authority in
appropriate proceedings in the light of the facts and circumstances of each particular case.

xxx

Sec. 32. Duties and Responsibilities of the Pilots or Pilots Association. -- The duties and responsibilities of the Harbor
Pilot shall be as follows:

xxx

f) A pilot shall be held responsible for the direction of a vessel from the time he assumes his work as a pilot thereof
until he leaves it anchored or berthed safely; Provided, however, that his responsibility shall cease at the moment the
Master neglects or refuses to carry out his order."

The Code of Commerce likewise provides for the obligations expected of a captain of a vessel, to wit:

Art. 612. The following obligations shall be inherent in the office of captain:

xxx

"7. To be on deck on reaching land and to take command on entering and leaving ports, canals, roadsteads, and rivers,
unless there is a pilot on board discharging his duties. x x x.

The law is very explicit. The master remains the overall commander of the vessel even when there is a pilot on
board. He remains in control of the ship as he can still perform the duties conferred upon him by law [43] despite the
presence of a pilot who is temporarily in charge of the vessel. It is not required of him to be on the bridge while the
vessel is being navigated by a pilot.

However, Section 8 of PPA Administrative Order No. 03-85, provides:

Sec. 8. Compulsory Pilotage Service - For entering a harbor and anchoring thereat, or passing through rivers or straits
within a pilotage district, as well as docking and undocking at any pier/wharf, or shifting from one berth or another,
every vessel engaged in coastwise and foreign trade shall be under compulsory pilotage.

xxx.

The Orinoco River being a compulsory pilotage channel necessitated the engaging of a pilot who was presumed
to be knowledgeable of every shoal, bank, deep and shallow ends of the river. In his deposition, pilot Ezzar Solarzano
Vasquez testified that he is an official pilot in the Harbour at Port Ordaz, Venezuela, [44] and that he had been a pilot
for twelve (12) years.[45] He also had experience in navigating the waters of the Orinoco River. [46]

The law does provide that the master can countermand or overrule the order or command of the harbor pilot on
board. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop the vessel, [47] mayhap,
because the latter had assured him that they were navigating normally before the grounding of the vessel.
[48] Moreover, the pilot had admitted that on account of his experience he was very familiar with the configuration of
the river as well as the course headings, and that he does not even refer to river charts when navigating the Orinoco
River.[49]
 Based on these declarations, it comes as no surprise to us that the master chose not to regain control of the
ship. Admitting his limited knowledge of the Orinoco River, Captain Colon relied on the knowledge and experience of
pilot Vasquez to guide the vessel safely.

Licensed pilots, enjoying the emoluments of compulsory pilotage, are in a different class from ordinary employees, for
they assume to have a skill and a knowledge of navigation in the particular waters over which their licenses extend
superior to that of the master; pilots are bound to use due diligence and reasonable care and skill. A pilot's ordinary
skill is in proportion to the pilot's responsibilities, and implies a knowledge and observance of the usual rules of
navigation, acquaintance with the waters piloted in their ordinary condition, and nautical skill in avoiding all known
obstructions. The character of the skill and knowledge required of a pilot in charge of a vessel on the rivers of a
country is very different from that which enables a navigator to carry a vessel safely in the ocean. On the ocean, a
knowledge of the rules of navigation, with charts that disclose the places of hidden rocks, dangerous shores, or other
dangers of the way, are the main elements of a pilot's knowledge and skill. But the pilot of a river vessel, like the
harbor pilot, is selected for the individual's personal knowledge of the topography through which the vessel is
steered."[50]

We find that the grounding of the vessel is attributable to the pilot. When the vibrations were first felt the watch
officer asked him what was going on, and pilot Vasquez replied that "(they) were in the middle of the channel and that
the vibration was as (sic) a result of the shallowness of the channel." [51]

Pilot Ezzar Solarzano Vasquez was assigned to pilot the vessel Philippine Roxas as well as other vessels on the
Orinoco River due to his knowledge of the same. In his experience as a pilot, he should have been aware of the
portions which are shallow and which are not.His failure to determine the depth of the said river and his decision to
plod on his set course, in all probability, caused damage to the vessel.Thus, we hold him as negligent and liable for its
grounding.

In the case of Homer Ramsdell Transportation Company vs. La Compagnie Generale Transatlantique, 182 U.S.
406, it was held that:

x x x The master of a ship, and the owner also, is liable for any injury done by the negligence of the crew employed in
the ship. The same doctrine will apply to the case of a pilot employed by the master or owner, by whose negligence
any injury happens to a third person or his property: as, for example, by a collision with another ship, occasioned by
his negligence. And it will make no difference in the case that the pilot, if any is employed, is required to be a licensed
pilot; provided the master is at liberty to take a pilot, or not, at his pleasure, for in such a case the master acts
voluntarily, although he is necessarily required to select from a particular class. On the other hand, if it is compulsive
upon the master to take a pilot, and, a fortiori, if he is bound to do so under penalty, then, and in such case, neither
he nor the owner will be liable for injuries occasioned by the negligence of the pilot; for in such a case the pilot
cannot be deemed properly the servant of the master or the owner, but is forced upon them, and the maxim Qui facit
per alium facit per se does not apply." (Underscoring supplied)

Anent the river passage plan, we find that, while there was none, [52] the voyage has been sufficiently planned
and monitored as shown by the following actions undertaken by the pilot, Ezzar Solarzano Vasquez, to wit: contacting
the radio marina via VHF for information regarding the channel, river traffic, [53]soundings of the river, depth of the
river, bulletin on the buoys.[54] The officer on watch also monitored the voyage.[55]

We, therefore, do not find the absence of a river passage plan to be the cause for the grounding of the vessel.

The doctrine of res ipsa loquitur does not apply to the case at bar because the circumstances surrounding the
injury do not clearly indicate negligence on the part of the private respondent. For the said doctrine to apply, the
following conditions must be met: (1) the accident was of such character as to warrant an inference that it would not
have happened except for defendant's negligence; (2) the accident must have been caused by an agency or
instrumentality within the exclusive management or control of the person charged with the negligence complained of;
and (3) the accident must not have been due to any voluntary action or contribution on the part of the person injured.
[56]

As has already been held above, there was a temporary shift of control over the ship from the master of the
vessel to the pilot on a compulsory pilotage channel. Thus, two of the requisites necessary for the doctrine to apply,
i.e., negligence and control, to render the respondent liable, are absent.

As to the claim that the ship was unseaworthy, we hold that it is not.

The Lloyds Register of Shipping confirmed the vessels seaworthiness in a Confirmation of Class issued on
February 16, 1988 by finding that "the above named ship (Philippine Roxas) maintained the class "+100A1
Strengthened for Ore Cargoes, Nos. 2 and 8 Holds may be empty (CC) and +LMC" from 31/12/87 up until the time of
casualty on or about 12/2/88."[57] The same would not have been issued had not the vessel been built according to
the standards set by Lloyd's.

Samuel Lim, a marine surveyor, at Lloyd's Register of Shipping testified thus:

"Q Now, in your opinion, as a surveyor, did top side tank have any bearing at all to the seaworthiness of the vessel?

"A Well, judging on this particular vessel, and also basing on the class record of the vessel, wherein
recommendations were made on the top side tank, and it was given sufficient time to be repaired, it means
that the vessel is fit to travel even with those defects on the ship.

"COURT

What do you mean by that? You explain. The vessel is fit to travel even with defects? Is that what you
mean? Explain.

"WITNESS

"A Yes, your Honor. Because the class society which register (sic) is the third party looking into the condition of the
vessel and as far as their record states, the vessel was class or maintained, and she is fit to travel during that
voyage."

xxx

"ATTY. MISA

Before we proceed to other matter, will you kindly tell us what is (sic) the 'class +100A1 Strengthened for Ore
Cargoes', mean?

"WITNESS

"A Plus 100A1 means that the vessel was built according to Lloyd's rules and she is capable of carrying ore bulk
cargoes, but she is particularly capable of carrying Ore Cargoes with No. 2 and No. 8 holds empty.

xxx
 "COURT

The vessel is classed, meaning?

"A Meaning she is fit to travel, your Honor, or seaworthy." [58]

It is not required that the vessel must be perfect. To be seaworthy, a ship must be reasonably fit to perform the
services, and to encounter the ordinary perils of the voyage, contemplated by the parties to the policy. [59]

As further evidence that the vessel was seaworthy, we quote the deposition of pilot Vasquez:

"Q Was there any instance when your orders or directions were not complied with because of the inability of the
vessel to do so?

"A No.

"Q. Was the vessel able to respond to all your commands and orders?

"A. The vessel was navigating normally.[60]

Eduardo P. Mata, Second Engineer of the Philippine Roxas submitted an accident report wherein he stated that on
February 11, 1988, he checked and prepared the main engine, machineries and all other auxiliaries and found them all
to be in good running condition and ready for maneuvering. That same day the main engine, bridge and engine
telegraph and steering gear motor were also tested. [61]Engineer Mata also prepared the fuel for consumption for
maneuvering and checked the engine generators.[62]

Finally, we find the award of attorneys fee justified.

Article 2208 of the New Civil Code provides that:

"Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be
recovered, except:

xxx

"(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation
should be recovered.

xxx

Due to the unfounded filing of this case, the private respondent was unjustifiably forced to litigate, thus the
award of attorneys fees was proper.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is DENIED and the decision of the Court of Appeals in CA
G.R. CV No. 36821 is AFFIRMED.

SO ORDERED.
International Shoe Co. v. Washington

Brief Fact Summary. Defendant was an out of state company that employed salesmen within the state of Washington.
Washington sued Defendant to recover unpaid unemployment taxes and served Defendant in two ways: (1) by mail
and (2) by serving one of its salesmen within the state. Defendant appealed from a verdict for Washington, claiming
that Washington had no personal jurisdiction over Defendant.
Synopsis of Rule of Law. In order for a state to exercise personal jurisdiction over a defendant, the defendant must
have such minimum contacts with the state so that exercising jurisdiction over the defendant would not offend
“traditional notions of fair play and substantial justice.”�

Facts. International Shoe Co., Defendant, was a company based in Delaware with an office in St. Louis, Missouri.
Defendant employed salesmen that resided in Washington to sell their product in the state of Washington. Defendant
regularly shipped orders to the salesmen who accepted them, the salesmen would display the products at places in
Washington, and the salesmen were compensated by commission for sale of the products. The salesmen were also
reimbursed for the cost of renting the places of business in Washington. Washington sued Defendant after Defendant
failed to make contributions to an unemployment compensation fund exacted by state statutes. The Washington
statute said that the commissioner could issue personal service if Defendant was found within the state, or by mailing
it to Defendant if Defendant was not in the state. The notice of assessment was served upon Defendant’s salesperson
and a copy of the notice was mailed to Defendant. Defendant appeared specially, moving to set aside the order that
service upon the salesperson was proper service. Defendant also argued that it did not “do business” � in the state,
that there was no agent upon which service could be made, and that Defendant did not furnish employment within
the meaning of the statute. Defendant also argued that the statute violated the Due Process Clause of the Fourteenth
Amendment and imposed a prohibitive burden of interstate commerce. The trial court found for Washington and the
Supreme Court of Washington affirmed, reasoning that the continuous flow of Defendant’s product into Washington
was sufficient to establish personal jurisdiction. Defendant appealed.

Issue. Is service of process upon Defendant’s agent sufficient notice when the corporation’s activities result in a large
volume of interstate business so that the corporation receives the protection of the laws of the state and the suit is
related to the activities which make the corporation present?

Held. Yes. Affirmed. The general rule is that in order to have jurisdiction with someone outside the state, the person
must have certain minimum contacts with it such that the maintenance of the suit does not offend “traditional notions
of fair play and substantial justice. For a corporation, the “minimum contacts” � required are not just continuous and
systematic activities but also those that give rise to the liabilities sued on. Defendant could have sued someone in
Washington. It was afforded the protection of the laws of that state, and therefore it should be subject to suit.

Dissent. The state’s power to tax should not be qualified by an ambiguous statement regarding fair play and substantial
justice.

Discussion. This decision articulates the rule for determining whether a state has personal jurisdiction over an absent
defendant via the “minimum contacts”� test. In general, International Shoe demonstrates that contacts with a state
should be evaluated in terms of how “fair”� it would be to exercise jurisdiction over an absent defendant.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-11390 March 26, 1918

EL BANCO ESPAÑOL-FILIPINO, plaintiff-appellant,

vs.
VICENTE PALANCA, administrator of the estate of Engracio Palanca Tanquinyeng, defendant-appellant.

Aitken and DeSelms for appellant.

Hartigan and Welch for appellee.

STREET, J.:

This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a mortgage upon various
parcels of real property situated in the city of Manila. The mortgage in question is dated June 16, 1906, and was
executed by the original defendant herein, Engracio Palanca Tanquinyeng y Limquingco, as security for a debt owing by
him to the bank. Upon March 31, 1906, the debt amounted to P218,294.10 and was drawing interest at the rate of 8
per centum per annum, payable at the end of each quarter. It appears that the parties to this mortgage at that time
estimated the value of the property in question at P292,558, which was about P75,000 in excess of the indebtedness.
After the execution of this instrument by the mortgagor, he returned to China which appears to have been his native
country; and he there died, upon January 29, 1810, without again returning to the Philippine Islands.

As the defendant was a nonresident at the time of the institution of the present action, it was necessary for the
plaintiff in the foreclosure proceeding to give notice to the defendant by publication pursuant to section 399 of the
Code of Civil Procedure. An order for publication was accordingly obtained from the court, and publication was made
in due form in a newspaper of the city of Manila. At the same time that the order of the court should deposit in the
post office in a stamped envelope a copy of the summons and complaint directed to the defendant at his last place of
residence, to wit, the city of Amoy, in the Empire of China. This order was made pursuant to the following provision
contained in section 399 of the Code of Civil Procedure:

In case of publication, where the residence of a nonresident or absent defendant is known, the judge must
direct a copy of the summons and complaint to be forthwith deposited by the clerk in the post-office, postage
prepaid, directed to the person to be served, at his place of residence

Whether the clerk complied with this order does not affirmatively appear. There is, however, among the papers
pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo Chan y Garcia, an employee of the
attorneys of the bank, showing that upon that date he had deposited in the Manila post-office a registered letter,
addressed to Engracio Palanca Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff's affidavit, the
summons, and the order of the court directing publication as aforesaid. It appears from the postmaster's receipt that
Bernardo probably used an envelope obtained from the clerk's office, as the receipt purports to show that the letter
emanated from the office.

The cause proceeded in usual course in the Court of First Instance; and the defendant not having appeared, judgment
was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a decision was rendered in favor of the
plaintiff. In this decision it was recited that publication had been properly made in a periodical, but nothing was said
about this notice having been given mail. The court, upon this occasion, found that the indebtedness of the defendant
amounted to P249,355. 32, with interest from March 31, 1908. Accordingly it was ordered that the defendant should,
on or before July 6, 1908, deliver said amount to the clerk of the court to be applied to the satisfaction of the
judgment, and it was declared that in case of the failure of the defendant to satisfy the judgment within such period,
the mortgage property located in the city of Manila should be exposed to public sale. The payment contemplated in
said order was never made; and upon July 8, 1908, the court ordered the sale of the property. The sale took place
upon July 30, 1908, and the property was bought in by the bank for the sum of P110,200. Upon August 7, 1908, this
sale was confirmed by the court.

About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a motion was made in this
cause by Vicente Palanca, as administrator of the estate of the original defendant, Engracio Palanca Tanquinyeng y
Limquingco, wherein the applicant requested the court to set aside the order of default of July 2, 1908, and the
judgment rendered upon July 3, 1908, and to vacate all the proceedings subsequent thereto. The basis of this
application, as set forth in the motion itself, was that the order of default and the judgment rendered thereon were
void because the court had never acquired jurisdiction over the defendant or over the subject of the action.

At the hearing in the court below the application to vacate the judgment was denied, and from this action of the court
Vicente Planca, as administrator of the estate of the original defendant, has appealed. No other feature of the case is
here under consideration than such as related to the action of the court upon said motion.

The case presents several questions of importance, which will be discussed in what appears to be the sequence of
most convenient development. In the first part of this opinion we shall, for the purpose of argument, assume that the
clerk of the Court of First Instance did not obey the order of the court in the matter of mailing the papers which he was
directed to send to the defendant in Amoy; and in this connection we shall consider, first, whether the court acquired
the necessary jurisdiction to enable it to proceed with the foreclosure of the mortgage and, secondly, whether those
proceedings were conducted in such manner as to constitute due process of law.
The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several different, though
related, senses since it may have reference (1) to the authority of the court to entertain a particular kind of action or to
administer a particular kind of relief, or it may refer to the power of the court over the parties, or (2) over the property
which is the subject to the litigation.

The sovereign authority which organizes a court determines the nature and extent of its powers in general and thus
fixes its competency or jurisdiction with reference to the actions which it may entertain and the relief it may grant.

Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission to its
authority, or it is acquired by the coercive power of legal process exerted over the person.

Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property
under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of
legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and
made effective. In the latter case the property, though at all times within the potential power of the court, may never
be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment
proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and
held to abide the final event of the litigation. 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.

In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in rem, by
which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is
substantially such. The expression "action in rem" is, in its narrow application, used only with reference to certain
proceedings in courts of admiralty wherein the property alone is treated as responsible for the claim or obligation
upon which the proceedings are based. The action quasi rem differs from the true action in rem in the circumstance
that in the former an individual is named as defendant, and the purpose of the proceeding is to subject his interest
therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a
general way thus designated. The judgment entered in these proceedings is conclusive only between the parties.

In speaking of the proceeding to foreclose a mortgage the author of a well known treaties, has said:

Though nominally against person, such suits are to vindicate liens; they proceed upon seizure; they treat
property as primarily indebted; and, with the qualification above-mentioned, they are substantially property
actions. In the civil law, they are styled hypothecary actions, and their sole object is the enforcement of the
lien against the res; in the common law, they would be different in chancery did not treat the conditional
conveyance as a mere hypothecation, and the creditor's right ass an equitable lien; so, in both, the suit is real
action so far as it is against property, and seeks the judicial recognition of a property debt, and an order for
the sale of the res. (Waples, Proceedings In Rem. sec. 607.)

It is true that in proceedings of this character, if the defendant for whom publication is made appears, the action
becomes as to him a personal action and is conducted as such. This, however, does not affect the proposition that
where the defendant fails to appear the action is quasi in rem; and it should therefore be considered with reference to
the principles governing actions in rem.

There is an instructive analogy between the foreclosure proceeding and an action of attachment, concerning which the
Supreme Court of the United States has used the following language:

If the defendant appears, the cause becomes mainly a suit in personam, with the added incident, that the
property attached remains liable, under the control of the court, to answer to any demand which may be
established against the defendant by the final judgment of the court. But, if there is no appearance of the
 defendant, and no service of process on him, the case becomes, in its essential nature, a proceeding in rem,
the only effect of which is to subject the property attached to the payment of the defendant which the court
may find to be due to the plaintiff. (Cooper vs. Reynolds, 10 Wall., 308.)

In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to, be
considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by
the seizure; and the purpose of the proceedings is to subject the property to that lien. If a lien already exists, whether
created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce
such lien in the manner provided by law precisely as though the property had been seized upon attachment. (Roller vs.
Holly, 176 U. S., 398, 405; 44 L. ed., 520.) It results that the mere circumstance that in an attachment the property may
be seized at the inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the
time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the
court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem.

Passing now to a consideration of the jurisdiction of the Court of First Instance in a mortgage foreclosure, it is evident
that the court derives its authority to entertain the action primarily from the statutes organizing the court. The
jurisdiction of the court, in this most general sense, over the cause of action is obvious and requires no comment.
Jurisdiction over the person of the defendant, if acquired at all in such an action, is obtained by the voluntary
submission of the defendant or by the personal service of process upon him within the territory where the process is
valid. If, however, the defendant is a nonresident and, remaining beyond the range of the personal process of the
court, refuses to come in voluntarily, the court never acquires jurisdiction over the person at all. Here the property
itself is in fact the sole thing which is impleaded and is the responsible object which is the subject of the exercise of
judicial power. It follows that the jurisdiction of the court in such case is based exclusively on the power which, under
the law, it possesses over the property; and any discussion relative to the jurisdiction of the court over the person of
the defendant is entirely apart from the case. The jurisdiction of the court over the property, considered as the
exclusive object of such action, is evidently based upon the following conditions and considerations, namely: (1) that
the property is located within the district; (2) that the purpose of the litigation is to subject the property by sale to an
obligation fixed upon it by the mortgage; and (3) that the court at a proper stage of the proceedings takes the property
into custody, if necessary, and expose it to sale for the purpose of satisfying the mortgage debt. An obvious corollary is
that no other relief can be granted in this proceeding than such as can be enforced against the property.

We may then, from what has been stated, formulated the following proposition relative to the foreclosure proceeding
against the property of a nonresident mortgagor who fails to come in and submit himself personally to the jurisdiction
of the court: (I) That the jurisdiction of the court is derived from the power which it possesses over the property; (II)
that jurisdiction over the person is not acquired and is nonessential; (III) that the relief granted by the court must be
limited to such as can be enforced against the property itself.

It is important that the bearing of these propositions be clearly apprehended, for 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 nonresident 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 vs. Neff (95 U. S. 714; 24 L. ed., 565). In the light of that decision, and of other 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 nonresident 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 nonresident defendant has expressly or impliedly consented to the mode of service. (Note to Raher vs.
Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A., 585; 35 L. R. A. [N. S.], 312
The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process from the tribunals of one
State cannot run into other States or countries and that due process of law requires that the defendant shall be
brought under the power of the court by service of process within the State, or by his voluntary appearance, in order
to authorize the court to pass upon the question of his personal liability. The doctrine established by the Supreme
Court of the United States on this point, being based upon the constitutional conception of due process of law, is
binding upon the courts of the Philippine Islands. Involved in this decision is the principle that in proceedings in rem or
quasi in rem against a nonresident who is not served personally within the state, and who does not appear, the relief
must be confined to the res, and the court cannot lawfully render a personal judgment against him. (Dewey vs. Des
Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.) Therefore in
an action to foreclose a mortgage against a nonresident, upon whom service has been effected exclusively by
publication, no personal judgment for the deficiency can be entered. (Latta vs. Tutton, 122 Cal., 279; Blumberg vs.
Birch, 99 Cal., 416.)

It is suggested in the brief of the appellant that the judgment entered in the court below offends against the principle
just stated and that this judgment is void because the court in fact entered a personal judgment against the absent
debtor for the full amount of the indebtedness secured by the mortgage. We do not so interpret the judgment.

In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all cases of foreclosure, to
ascertain the amount due, as prescribed in section 256 of the Code of Civil Procedure, and to make an order requiring
the defendant to pay the money into court. This step is a necessary precursor of the order of sale. In the present case
the judgment which was entered contains the following words:

Because it is declared that the said defendant Engracio Palanca Tanquinyeng y Limquingco, is indebted in the
amount of P249,355.32, plus the interest, to the 'Banco Espanol-Filipino' . . . therefore said appellant is
ordered to deliver the above amount etc., etc.

This is not the language of a personal judgment. Instead it is clearly intended merely as a compliance with the
requirement that the amount due shall be ascertained and that the evidence of this it may be observed that according
to the Code of Civil Procedure a personal judgment against the debtor for the deficiency is not to be rendered until
after the property has been sold and the proceeds applied to the mortgage debt. (sec. 260).

The conclusion upon this phase of the case is that whatever may be the effect in other respects of the failure of the
clerk of the Court of First Instance to mail the proper papers to the defendant in Amoy, China, such irregularity could in
no wise impair or defeat the jurisdiction of the court, for in our opinion that jurisdiction rest upon a basis much more
secure than would be supplied by any form of notice that could be given to a resident of a foreign country.

Before leaving this branch of the case, we wish to observe that we are fully aware that many reported cases can be
cited in which it is assumed that the question of the sufficiency of publication or notice in a 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 the publication and personal service of process upon the defendant; and, as has already been suggested,
prior to the decision of Pennoyer vs. 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 molded 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 effected by the peculiar language in which the courts have expounded their ideas.

We now proceed to a discussion of the question whether the supposed irregularity in the proceedings was of such
gravity as to amount to a denial of that "due process of law" which was secured by the Act of Congress in force in
these Islands at the time this mortgage was foreclosed. (Act of July 1, 1902, sec. 5.) In dealing with questions involving
the application of the constitutional provisions relating to due process of law the Supreme Court of the United States
has refrained from attempting to define with precision the meaning of that expression, the reason being that the idea
expressed therein is applicable under so many diverse conditions as to make any attempt ay precise definition
hazardous and unprofitable. As applied to a judicial proceeding, however, it may be laid down with certainty that the
requirement of due process is satisfied if the following conditions are present, namely; (1) There must be a court or
tribunal clothed with judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully
acquired over the person of the defendant or over the property which is the subject of the proceeding; (3) the
defendant must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing.

Passing at once to the requisite that the defendant shall have an opportunity to be heard, we observe that in a
foreclosure case some notification of the proceedings to the nonresident owner, prescribing the time within which
appearance must be made, is everywhere recognized as essential. To answer this necessity the statutes generally
provide for publication, and usually in addition thereto, for the mailing of notice to the defendant, if his residence is
known. Though commonly called constructive, or substituted service of process in any true sense. It is merely a means
provided by law whereby the owner may be admonished that his property is the subject of judicial proceedings and
that it is incumbent upon him to take such steps as he sees fit to protect it. In speaking of notice of this character a
distinguish master of constitutional law has used the following language:

. . . if the owners are named in the proceedings, and personal notice is provided for, it is rather from
tenderness to their interests, and in order to make sure that the opportunity for a hearing shall not be lost to
them, than from any necessity that the case shall assume that form. (Cooley on Taxation [2d. ed.], 527,
quoted in Leigh vs. Green, 193 U. S., 79, 80.)

It will be observed that this mode of notification does not involve any absolute assurance that the absent owner shall
thereby receive actual notice. The periodical containing the publication may never in fact come to his hands, and the
chances that he should discover the notice may often be very slight. Even where notice is sent by mail the probability
of his receiving it, though much increased, is dependent upon the correctness of the address to which it is forwarded
as well as upon the regularity and security of the mail service. It will be noted, furthermore, that the provision of our
law relative to the mailing of notice does not absolutely require the mailing of notice unconditionally and in every
event, but only in the case where the defendant's residence is known. In the light of all these facts, it is evident that
actual notice to the defendant in cases of this kind is not, under the law, to be considered absolutely necessary.

The idea upon which the law proceeds in recognizing the efficacy of a means of notification which may fall short of
actual notice is apparently this: Property is always assumed to be in the possession of its owner, in person or by agent;
and he may be safely held, under certain conditions, to be affected with knowledge that proceedings have been
instituted for its condemnation and sale.

It is the duty of the owner of real estate, who is a nonresident, to take measures that in some way he shall be
represented when his property is called into requisition, and if he fails to do this, and fails to get notice by the
ordinary publications which have usually been required in such cases, it is his misfortune, and he must abide
the consequences. (6 R. C. L., sec. 445 [p. 450]).

It has been well said by an American court:

If property of a nonresident cannot be reached by legal process upon the constructive notice, then our
statutes were passed in vain, and are mere empty legislative declarations, without either force, or meaning;
for if the person is not within the jurisdiction of the court, no personal judgment can be rendered, and if the
judgment cannot operate upon the property, then no effective judgment at all can be rendered, so that the
result would be that the courts would be powerless to assist a citizen against a nonresident. Such a result
would be a deplorable one. (Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662, 667.)

It is, of course universally recognized that the statutory provisions relative to publication or other form of notice
against a nonresident owner should be complied with; and in respect to the publication of notice in the newspaper it
may be stated that strict compliance with the requirements of the law has been held to be essential. In Guaranty Trust
etc. Co. vs. Green Cove etc., Railroad Co. (139 U. S., 137, 138), it was held that where newspaper publication was made
for 19 weeks, when the statute required 20, the publication was insufficient.
With respect to the provisions of our own statute, relative to the sending of notice by mail, the requirement is that the
judge shall direct that the notice be deposited in the mail by the clerk of the court, and it is not in terms declared that
the notice must be deposited in the mail. We consider this to be of some significance; and it seems to us that, having
due regard to the principles upon which the giving of such notice is required, the absent owner of the mortgaged
property must, so far as the due process of law is concerned, take the risk incident to the possible failure of the clerk
to perform his duty, somewhat as he takes the risk that the mail clerk or the mail carrier might possibly lose or destroy
the parcel or envelope containing the notice before it should reach its destination and be delivered to him. This idea
seems to be strengthened by the consideration that placing upon the clerk the duty of sending notice by mail, the
performance of that act is put effectually beyond the control of the plaintiff in the litigation. At any rate it is obvious
that so much of section 399 of the Code of Civil Procedure as relates to the sending of notice by mail was complied
with when the court made the order. The question as to what may be the consequences of the failure of the record to
show the proof of compliance with that requirement will be discussed by us further on.

The observations which have just been made lead to the conclusion that the failure of the clerk to mail the notice, if in
fact he did so fail in his duty, is not such an irregularity, as amounts to a denial of due process of law; and hence in our
opinion that irregularity, if proved, would not avoid the judgment in this case. Notice was given by publication in a
newspaper and this is the only form of notice which the law unconditionally requires. This in our opinion is all that was
absolutely necessary to sustain the proceedings.

It will be observed that in considering the effect of this irregularity, it makes a difference whether it be viewed as a
question involving jurisdiction or as a question involving due process of law. In the matter of jurisdiction there can be
no distinction between the much and the little. The court either has jurisdiction or it has not; and if the requirement as
to the mailing of notice should be considered as a step antecedent to the acquiring of jurisdiction, there could be no
escape from the conclusion that the failure to take that step was fatal to the validity of the judgment. In the
application of the idea of due process of law, on the other hand, it is clearly unnecessary to be so rigorous. The
jurisdiction being once established, all that due process of law thereafter requires is an opportunity for the defendant
to be heard; and as publication was duly made in the newspaper, it would seem highly unreasonable to hold that
failure to mail the notice was fatal. We think that in applying the requirement of due process of law, it is permissible to
reflect upon the purposes of the provision which is supposed to have been violated and the principle underlying the
exercise of judicial power in these proceedings. Judge in the light of these conceptions, we think that the provision of
Act of Congress declaring that no person shall be deprived of his property without due process of law has not been
infringed.

In the progress of this discussion we have stated the two conclusions; (1) that the failure of the clerk to send the notice
to the defendant by mail did not destroy the jurisdiction of the court and (2) that such irregularity did not infringe the
requirement of due process of law. As a consequence of these conclusions the irregularity in question is in some
measure shorn of its potency. It is still necessary, however, to consider its effect considered as a simple irregularity of
procedure; and it would be idle to pretend that even in this aspect the irregularity is not grave enough. From this point
of view, however, it is obvious that any motion to vacate the judgment on the ground of the irregularity in question
must fail unless it shows that the defendant was prejudiced by that irregularity. The least, therefore, that can be
required of the proponent of such a motion is to show that he had a good defense against the action to foreclose the
mortgage. Nothing of the kind is, however, shown either in the motion or in the affidavit which accompanies the
motion.

An application to open or vacate a judgment because of an irregularity or defect in the proceedings is usually required
to be supported by an affidavit showing the grounds on which the relief is sought, and in addition to this showing also
a meritorious defense to the action. It is held that a general statement that a party has a good defense to the action is
insufficient. The necessary facts must be averred. Of course if a judgment is void upon its face a showing of the
existence of a meritorious defense is not necessary. (10 R. C. L., 718.)

The lapse of time is also a circumstance deeply affecting this aspect of the case. In this connection we quote the
following passage from the encyclopedic treatise now in course of publication:
 Where, however, the judgment is not void on its face, and may therefore be enforced if permitted to stand on
the record, courts in many instances refuse to exercise their quasi equitable powers to vacate a judgement
after the lapse of the term ay which it was entered, except in clear cases, to promote the ends of justice, and
where it appears that the party making the application is himself without fault and has acted in good faith and
with ordinary diligence. Laches on the part of the applicant, if unexplained, is deemed sufficient ground for
refusing the relief to which he might otherwise be entitled. Something is due to the finality of judgments, and
acquiescence or unnecessary delay is fatal to motions of this character, since courts are always reluctant to
interfere with judgments, and especially where they have been executed or satisfied. The moving party has
the burden of showing diligence, and unless it is shown affirmatively the court will not ordinarily exercise its
discretion in his favor. (15 R. C. L., 694, 695.)

It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco, died January 29, 1910. The
mortgage under which the property was sold was executed far back in 1906; and the proceedings in the foreclosure
were closed by the order of court confirming the sale dated August 7, 1908. It passes the rational bounds of human
credulity to suppose that a man who had placed a mortgage upon property worth nearly P300,000 and had then gone
away from the scene of his life activities to end his days in the city of Amoy, China, should have long remained in
ignorance of the fact that the mortgage had been foreclosed and the property sold, even supposing that he had no
knowledge of those proceedings while they were being conducted. It is more in keeping with the ordinary course of
things that he should have acquired information as to what was transpiring in his affairs at Manila; and upon the basis
of this rational assumption we are authorized, in the absence of proof to the contrary, to presume that he did have, or
soon acquired, information as to the sale of his property.

The Code of Civil Procedure, indeed, expressly declares that there is a presumption that things have happened
according to the ordinary habits of life (sec. 334 [26]); and we cannot conceive of a situation more appropriate than
this for applying the presumption thus defined by the lawgiver. In support of this presumption, as applied to the
present case, it is permissible to consider the probability that the defendant may have received actual notice of these
proceedings from the unofficial notice addressed to him in Manila which was mailed by an employee of the bank's
attorneys. Adopting almost the exact words used by the Supreme Court of the United States in Grannis vs. Ordeans
(234 U. S., 385; 58 L. ed., 1363), we may say that in view of the well-known skill of postal officials and employees in
making proper delivery of letters defectively addressed, we think the presumption is clear and strong that this notice
reached the defendant, there being no proof that it was ever returned by the postal officials as undelivered. And if it
was delivered in Manila, instead of being forwarded to Amoy, China, there is a probability that the recipient was a
person sufficiently interested in his affairs to send it or communicate its contents to him.

Of course if the jurisdiction of the court or the sufficiency of the process of law depended upon the mailing of the
notice by the clerk, the reflections in which we are now indulging would be idle and frivolous; but the considerations
mentioned are introduced in order to show the propriety of applying to this situation the legal presumption to which
allusion has been made. Upon that presumption, supported by the circumstances of this case, ,we do not hesitate to
found the conclusion that the defendant voluntarily abandoned all thought of saving his property from the obligation
which he had placed upon it; that knowledge of the proceedings should be imputed to him; and that he acquiesced in
the consequences of those proceedings after they had been accomplished. Under these circumstances it is clear that
the merit of this motion is, as we have already stated, adversely affected in a high degree by the delay in asking for
relief. Nor is it an adequate reply to say that the proponent of this motion is an administrator who only qualified a few
months before this motion was made. No disability on the part of the defendant himself existed from the time when
the foreclosure was effected until his death; and we believe that the delay in the appointment of the administrator and
institution of this action is a circumstance which is imputable to the parties in interest whoever they may have been.
Of course if the minor heirs had instituted an action in their own right to recover the property, it would have been
different.

It is, however, argued that the defendant has suffered prejudice by reason of the fact that the bank became the
purchaser of the property at the foreclosure sale for a price greatly below that which had been agreed upon in the
mortgage as the upset price of the property. In this connection, it appears that in article nine of the mortgage which
was the subject of this foreclosure, as amended by the notarial document of July 19, 1906, the parties to this mortgage
made a stipulation to the effect that the value therein placed upon the mortgaged properties should serve as a basis of
sale in case the debt should remain unpaid and the bank should proceed to a foreclosure. The upset price stated in
that stipulation for all the parcels involved in this foreclosure was P286,000. It is said in behalf of the appellant that
when the bank bought in the property for the sum of P110,200 it violated that stipulation.

It has been held by this court that a clause in a mortgage providing for a tipo, or upset price, does not prevent a
foreclosure, nor affect the validity of a sale made in the foreclosure proceedings. (Yangco vs. Cruz Herrera and Wy
Piaco, 11 Phil. Rep., 402; Banco-Español Filipino vs. Donaldson, Sim and Co., 5 Phil. Rep., 418.) In both the cases here
cited the property was purchased at the foreclosure sale, not by the creditor or mortgagee, but by a third party.
Whether the same rule should be applied in a case where the mortgagee himself becomes the purchaser has
apparently not been decided by this court in any reported decision, and this question need not here be considered,
since it is evident that if any liability was incurred by the bank by purchasing for a price below that fixed in the
stipulation, its liability was a personal liability derived from the contract of mortgage; and as we have already
demonstrated such a liability could not be the subject of adjudication in an action where the court had no jurisdiction
over the person of the defendant. If the plaintiff bank became liable to account for the difference between the upset
price and the price at which in bought in the property, that liability remains unaffected by the disposition which the
court made of this case; and the fact that the bank may have violated such an obligation can in no wise affect the
validity of the judgment entered in the Court of First Instance.

In connection with the entire failure of the motion to show either a meritorious defense to the action or that the
defendant had suffered any prejudice of which the law can take notice, we may be permitted to add that in our
opinion a motion of this kind, which proposes to unsettle judicial proceedings long ago closed, can not be considered
with favor, unless based upon grounds which appeal to the conscience of the court. Public policy requires that judicial
proceedings be upheld. The maximum here applicable is non quieta movere. As was once said by Judge Brewer,
afterwards a member of the Supreme Court of the United States:

Public policy requires that judicial proceedings be upheld, and that titles obtained in those proceedings be
safe from the ruthless hand of collateral attack. If technical defects are adjudged potent to destroy such titles,
a judicial sale will never realize that value of the property, for no prudent man will risk his money in bidding
for and buying that title which he has reason to fear may years thereafter be swept away through some occult
and not readily discoverable defect. (Martin vs. Pond, 30 Fed., 15.)

In the case where that language was used an attempt was made to annul certain foreclosure proceedings on the
ground that the affidavit upon which the order of publication was based erroneously stated that the State of Kansas,
when he was in fact residing in another State. It was held that this mistake did not affect the validity of the
proceedings.

In the preceding discussion we have assumed that the clerk failed to send the notice by post as required by the order
of the court. We now proceed to consider whether this is a proper assumption; and the proposition which we propose
to establish is that there is a legal presumption that the clerk performed his duty as the ministerial officer of the court,
which presumption is not overcome by any other facts appearing in the cause.

In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a presumption "that official
duty has been regularly performed;" and in subsection 18 it is declared that there is a presumption "that the ordinary
course of business has been followed." These presumptions are of course in no sense novelties, as they express ideas
which have always been recognized. Omnia presumuntur rite et solemniter esse acta donec probetur in contrarium.
There is therefore clearly a legal presumption that the clerk performed his duty about mailing this notice; and we think
that strong considerations of policy require that this presumption should be allowed to operate with full force under
the circumstances of this case. A party to an action has no control over the clerk of the court; and has no right to
meddle unduly with the business of the clerk in the performance of his duties. Having no control over this officer, the
litigant must depend upon the court to see that the duties imposed on the clerk are performed.
Other considerations no less potent contribute to strengthen the conclusion just stated. There is no principle of law
better settled than that after jurisdiction has once been required, every act of a court of general jurisdiction shall be
presumed to have been rightly done. This rule is applied to every judgment or decree rendered in the various stages of
the proceedings from their initiation to their completion (Voorhees vs. United States Bank, 10 Pet., 314; 35 U. S., 449);
and if the record is silent with respect to any fact which must have been established before the court could have rightly
acted, it will be presumed that such fact was properly brought to its knowledge. (The Lessee of Grignon vs. Astor, 2
How., 319; 11 L. ed., 283.)

In making the order of sale [of the real state of a decedent] the court are presumed to have adjudged every
question necessary to justify such order or decree, viz: The death of the owners; that the petitioners were his
administrators; that the personal estate was insufficient to pay the debts of the deceased; that the private
acts of Assembly, as to the manner of sale, were within the constitutional power of the Legislature, and that
all the provisions of the law as to notices which are directory to the administrators have been complied with. .
. . The court is not bound to enter upon the record the evidence on which any fact was decided. (Florentine
vs. Barton, 2 Wall., 210; 17 L. ed., 785.) Especially does all this apply after long lapse of time.

Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive discussion in a case
analogous to that which is now before us. It there appeared that in order to foreclose a mortgage in the State of
Kentucky against a nonresident debtor it was necessary that publication should be made in a newspaper for a specified
period of time, also be posted at the front door of the court house and be published on some Sunday, immediately
after divine service, in such church as the court should direct. In a certain action judgment had been entered against a
nonresident, after publication in pursuance of these provisions. Many years later the validity of the proceedings was
called in question in another action. It was proved from the files of an ancient periodical that publication had been
made in its columns as required by law; but no proof was offered to show the publication of the order at the church, or
the posting of it at the front door of the court-house. It was insisted by one of the parties that the judgment of the
court was void for lack of jurisdiction. But the Supreme Court of the United States said:

The court which made the decree . . . was a court of general jurisdiction. Therefore every presumption not
inconsistent with the record is to be indulged in favor of its jurisdiction. . . . It is to be presumed that the court
before making its decree took care of to see that its order for constructive service, on which its right to make
the decree depended, had been obeyed.

It is true that in this case the former judgment was the subject of collateral , or indirect attack, while in the case at bar
the motion to vacate the judgment is direct proceeding for relief against it. The same general presumption, however, is
indulged in favor of the judgment of a court of general jurisdiction, whether it is the subject of direct or indirect attack
the only difference being that in case of indirect attack the judgment is conclusively presumed to be valid unless the
record affirmatively shows it to be void, while in case of direct attack the presumption in favor of its validity may in
certain cases be overcome by proof extrinsic to the record.

The presumption that the clerk performed his duty and that the court made its decree with the knowledge that the
requirements of law had been complied with appear to be amply sufficient to support the conclusion that the notice
was sent by the clerk as required by the order. It is true that there ought to be found among the papers on file in this
cause an affidavit, as required by section 400 of the Code of Civil Procedure, showing that the order was in fact so sent
by the clerk; and no such affidavit appears. The record is therefore silent where it ought to speak. But the very purpose
of the law in recognizing these presumptions is to enable the court to sustain a prior judgment in the face of such an
omission. If we were to hold that the judgment in this case is void because the proper affidavit is not present in the file
of papers which we call the record, the result would be that in the future every title in the Islands resting upon a
judgment like that now before us would depend, for its continued security, upon the presence of such affidavit among
the papers and would be liable at any moment to be destroyed by the disappearance of that piece of paper. We think
that no court, with a proper regard for the security of judicial proceedings and for the interests which have by law
been confided to the courts, would incline to favor such a conclusion. In our opinion the proper course in a case of this
kind is to hold that the legal presumption that the clerk performed his duty still maintains notwithstanding the
absence from the record of the proper proof of that fact.

In this connection it is important to bear in mind that under the practice prevailing in the Philippine Islands the word
"record" is used in a loose and broad sense, as indicating the collective mass of papers which contain the history of all
the successive steps taken in a case and which are finally deposited in the archives of the clerk's office as a memorial of
the litigation. It is a matter of general information that no judgment roll, or book of final record, is commonly kept in
our courts for the purpose of recording the pleadings and principal proceedings in actions which have been
terminated; and in particular, no such record is kept in the Court of First Instance of the city of Manila. There is,
indeed, a section of the Code of Civil Procedure which directs that such a book of final record shall be kept; but this
provision has, as a matter of common knowledge, been generally ignored. The result is that in the present case we do
not have the assistance of the recitals of such a record to enable us to pass upon the validity of this judgment and as
already stated the question must be determined by examining the papers contained in the entire file.

But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia showing that upon April 4,
1908, he sent a notification through the mail addressed to the defendant at Manila, Philippine Islands, should be
accepted as affirmative proof that the clerk of the court failed in his duty and that, instead of himself sending the
requisite notice through the mail, he relied upon Bernardo to send it for him. We do not think that this is by any means
a necessary inference. Of course if it had affirmatively appeared that the clerk himself had attempted to comply with
this order and had directed the notification to Manila when he should have directed it to Amoy, this would be
conclusive that he had failed to comply with the exact terms of the order; but such is not this case. That the clerk of
the attorneys for the plaintiff erroneously sent a notification to the defendant at a mistaken address affords in our
opinion very slight basis for supposing that the clerk may not have sent notice to the right address.

There is undoubtedly good authority to support the position that when the record states the evidence or makes an
averment with reference to a jurisdictional fact, it will not be presumed that there was other or different evidence
respecting the fact, or that the fact was otherwise than stated. If, to give an illustration, it appears from the return of
the officer that the summons was served at a particular place or in a particular manner, it will not be presumed that
service was also made at another place or in a different manner; or if it appears that service was made upon a person
other than the defendant, it will not be presumed, in the silence of the record, that it was made upon the defendant
also (Galpin vs. Page, 18 Wall., 350, 366; Settlemier vs. Sullivan, 97 U. S., 444, 449). While we believe that these
propositions are entirely correct as applied to the case where the person making the return is the officer who is by law
required to make the return, we do not think that it is properly applicable where, as in the present case, the affidavit
was made by a person who, so far as the provisions of law are concerned, was a mere intermeddler.

The last question of importance which we propose to consider is whether a motion in the cause is admissible as a
proceeding to obtain relief in such a case as this. If the motion prevails the judgment of July 2, 1908, and all
subsequent proceedings will be set aside, and the litigation will be renewed, proceeding again from the date
mentioned as if the progress of the action had not been interrupted. The proponent of the motion does not ask the
favor of being permitted to interpose a defense. His purpose is merely to annul the effective judgment of the court, to
the end that the litigation may again resume its regular course.

There is only one section of the Code of Civil Procedure which expressly recognizes the authority of a Court of First
Instance to set aside a final judgment and permit a renewal of the litigation in the same cause. This is as follows:

SEC. 113. Upon such terms as may be just the court may relieve a party or legal representative from the
judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or
excusable neglect; Provided, That application thereof be made within a reasonable time, but in no case
exceeding six months after such judgment, order, or proceeding was taken.

An additional remedy by petition to the Supreme Court is supplied by section 513 of the same Code. The first
paragraph of this section, in so far as pertinent to this discussion, provides as follows:
 When a judgment is rendered by a Court of First Instance upon default, and a party thereto is unjustly
deprived of a hearing by fraud, accident, mistake or excusable negligence, and the Court of First Instance
which rendered the judgment has finally adjourned so that no adequate remedy exists in that court, the party
so deprived of a hearing may present his petition to the Supreme Court within sixty days after he first learns
of the rendition of such judgment, and not thereafter, setting forth the facts and praying to have judgment set
aside. . . .

It is evident that the proceeding contemplated in this section is intended to supplement the remedy provided by
section 113; and we believe the conclusion irresistible that there is no other means recognized by law whereby a
defeated party can, by a proceeding in the same cause, procure a judgment to be set aside, with a view to the renewal
of the litigation.

The Code of Civil Procedure purports to be a complete system of practice in civil causes, and it contains provisions
describing with much fullness the various steps to be taken in the conduct of such proceedings. To this end it defines
with precision the method of beginning, conducting, and concluding the civil action of whatever species; and by
section 795 of the same Code it is declared that the procedure in all civil action shall be in accordance with the
provisions of this Code. We are therefore of the opinion that the remedies prescribed in sections 113 and 513 are
exclusive of all others, so far as relates to the opening and continuation of a litigation which has been once concluded.

The motion in the present case does not conform to the requirements of either of these provisions; and the
consequence is that in our opinion the action of the Court of First Instance in dismissing the motion was proper.

If the question were admittedly one relating merely to an irregularity of procedure, we cannot suppose that this
proceeding would have taken the form of a motion in the cause, since it is clear that, if based on such an error, the
came to late for relief in the Court of First Instance. But as we have already seen, the motion attacks the judgment of
the court as void for want of jurisdiction over the defendant. The idea underlying the motion therefore is that
inasmuch as the judgment is a nullity it can be attacked in any way and at any time. If the judgment were in fact void
upon its face, that is, if it were shown to be a nullity by virtue of its own recitals, there might possibly be something in
this. Where a judgment or judicial order is void in this sense it may be said to be a lawless thing, which can be treated
as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.

But the judgment in question is not void in any such sense. It is entirely regular in form, and the alleged defect is one
which is not apparent upon its face. It follows that even if the judgment could be shown to be void for want of
jurisdiction, or for lack of due process of law, the party aggrieved thereby is bound to resort to some appropriate
proceeding to obtain relief. Under accepted principles of law and practice, long recognized in American courts, a
proper remedy in such case, after the time for appeal or review has passed, is for the aggrieved party to bring an
action to enjoin the judgment, if not already carried into effect; or if the property has already been disposed of he may
institute suit to recover it. In every situation of this character an appropriate remedy is at hand; and if property has
been taken without due process, the law concedes due process to recover it. We accordingly old that, assuming the
judgment to have been void as alleged by the proponent of this motion, the proper remedy was by an original
proceeding and not by motion in the cause. As we have already seen our Code of Civil Procedure defines the
conditions under which relief against a judgment may be productive of conclusion for this court to recognize such a
proceeding as proper under conditions different from those defined by law. Upon the point of procedure here
involved, we refer to the case of People vs. Harrison (84 Cal., 607) wherein it was held that a motion will not lie to
vacate a judgment after the lapse of the time limited by statute if the judgment is not void on its face; and in all cases,
after the lapse of the time limited by statute if the judgment is not void on its face; and all cases, after the lapse of
such time, when an attempt is made to vacate the judgment by a proceeding in court for that purpose an action
regularly brought is preferable, and should be required. It will be noted taken verbatim from the California Code (sec.
473).

The conclusions stated in this opinion indicate that the judgment appealed from is without error, and the same is
accordingly affirmed, with costs. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-18164 January 23, 1967

WILLIAM F. GEMPERLE, plaintiff-appellant,

vs.
HELEN SCHENKER and PAUL SCHENKER as her husband, defendants-appellees.

Gamboa & Gamboa for plaintiff-appellant.

A. R. Narvasa for defendants-appellees.

CONCEPCION, C. J.:

Appeal, taken by plaintiff, William F. Gemperle, from a decision of the Court of First Instance of Rizal dismissing this
case for lack of jurisdiction over the person of defendant Paul Schenker and for want of cause of action against his wife
and co-defendant, Helen Schenker said Paul Schenker "being in no position to be joined with her as party defendant,
because he is beyond the reach of the magistracy of the Philippine courts."

The record shows that sometime in 1952, Paul Schenker-hereinafter referred to as Schenker — acting through his wife
and attorney-in-fact, Helen Schenker — herein-after referred to as Mrs. Schenker — filed with the Court of First
Instance of Rizal, a complaint — which was docketed as Civil Case No. Q-2796 thereof — against herein plaintiff
William F. Gemperle, for the enforcement of Schenker's allegedly initial subscription to the shares of stock of the
Philippines-Swiss Trading Co., Inc. and the exercise of his alleged pre-emptive rights to the then unissued original
capital stock of said corporation and the increase thereof, as well as for an accounting and damages. Alleging that, in
connection with said complaint, Mrs. Schenker had caused to be published some allegations thereof and other
matters, which were impertinent, irrelevant and immaterial to said case No. Q-2796, aside from being false and
derogatory to the reputation, good name and credit of Gemperle, "with the only purpose of attacking" his" honesty,
integrity and reputation" and of bringing him "into public hatred, discredit, disrepute and contempt as a man and a
businessman", Gemperle commenced the present action against the Schenkers for the recovery of P300,000 as
damages, P30,000 as attorney's fees, and costs, in addition to praying for a judgment ordering Mrs. Schenker "to
retract in writing the said defamatory expressions". In due course, thereafter, the lower court, rendered the decision
above referred to. A reconsiderating thereof having been denied, Gemperle interposed the present appeal.

The first question for determination therein is whether or not the lower court had acquired jurisdiction over the
person of Schenker. Admittedly, he, a Swiss citizen, residing in Zurich, Switzerland, has not been actually served with
summons in the Philippines, although the summons address to him and Mrs. Schenker had been served personally
upon her in the Philippines. It is urged by plaintiff that jurisdiction over the person of Schenker has been secured
through voluntary appearance on his part, he not having made a special appearance to assail the jurisdiction over his
person, and an answer having been filed in this case, stating that "the defendants, by counsel, answering the plaintiff's
complaint, respectfully aver", which is allegedly a general appearance amounting to a submission to the jurisdiction of
the court, confirmed, according to plaintiff, by a P225,000 counterclaim for damages set up in said answer; but this
counterclaim was set up by Mrs. Schenker alone, not including her husband. Moreover, said answer contained several
affirmative defenses, one of which was lack of jurisdiction over the person of Schenker, thus negating the alleged
waiver of this defense. Nevertheless, We hold that the lower court had acquired jurisdiction over said defendant,
through service of the summons addressed to him upon Mrs. Schenker, it appearing from said answer that she is the
representative and attorney-in-fact of her husband aforementioned civil case No. Q-2796, which apparently was filed
at her behest, in her aforementioned representative capacity. In 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 of the one at bar, which is consequence of the action brought by her on his behalf.

Inasmuch as the alleged absence of a cause of action against Mrs. Schenker is premised upon the alleged lack of
jurisdiction over the person of Schenker, which cannot be sustained, it follows that the conclusion drawn therefore
from is, likewise, untenable.

Wherefore, the decision appealed from should be, is hereby, reversed, and the case remanded to the lower court for
proceedings, with the costs of this instance defendants-appellees. It is so ordered.
THIRD DIVISION

VICTORIA REGNER, G.R. No. 168747

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, NACHURA, and
REYES, JJ.

CYNTHIA R. LOGARTA, TERESA R. TORMIS and Promulgated:

CEBU COUNTRY CLUB, Inc.,
Respondents. October 19, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:
This Petition for Review on Certiorari seeks to reverse the Decision[1] dated 6 May 2005 of the Court of Appeals in CA-
G.R. CV No. 71028 entitled, Victoria Regner v. Cynthia Logarta, Teresa R. Tormis and Cebu Country Club, Inc., which
affirmed the Order dated 9 November 2000 of the Regional Trial Court (RTC) of Cebu, granting herein respondents
motion to dismiss Civil Case No. CEB 23927. The Order dated 9 November 2000 of the RTC dismissed herein petitioners
complaint for declaration of nullity of a deed of donation, for failure to serve summons on Cynthia Logarta, an
indispensable party therein.

Civil Case No. CEB. 23927 arose from the following factual antecedents:

Luis Regner (Luis) had three daughters with his first wife, Anicita C. Regner, namely, Cynthia Logarta (Cynthia) and
Teresa Tormis (Teresa), the respondents herein, and Melinda Regner-Borja (Melinda).

Herein petitioner Victoria Regner (Victoria) is the second wife of Luis.

During the lifetime of Luis, he acquired several properties, among which is a share at Cebu Country Club Inc.,
evidenced by Proprietary Ownership Certificate No. 0272. On 15 May 1998, Luis executed a Deed[2] of Donation in
favor of respondents Cynthia and Teresa covering Proprietary Ownership Certificate No. 0272 of the Cebu Country
Club, Inc.

Luis passed away on 11 February 1999.

On 15 June 1999, Victoria filed a Complaint[3] for Declaration of Nullity of the Deed of Donation with Prayer for
Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order against Cynthia and Teresa with the RTC,
docketed as Civil Case No. CEB. 23927. Victoria alleged in her complaint that: on 17 March 1997, Luis made a written
declaration wherein he stated that due to his illness and forgetfulness, he would not sign any document without the
knowledge of his lawyer, Atty. Francis Zosa; on 15 May 1998, when Luis was already very ill and no longer of sound and
disposing mind, Cynthia and Teresa , conspiring and confederating with each other, fraudulently made or caused to be
fraudulently made a Deed of Donation whereby they made it appear that Luis donated to them Proprietary Ownership
Certificate No. 0272; since Luis no longer had the ability to write or affix his signature, Melinda, acting under the
influence of her sisters, Cynthia and Teresa, fraudulently manipulated the hand of Luis so that he could affix his
thumbmark on the assailed Deed of Donation; on 8 February 1998, or three days before the death of Luis, and when
he was already in comatose condition at the Cebu Doctors Hospital, Melinda, Teresa, and Cynthia caused the
preparation of an affidavit to the effect that Luis affirmed the Deed of Donation he allegedly executed earlier by lifting
his hand to affix his thumbmark on the said affidavit.

Sheriff Melchor A. Solon served the summonses on Cynthia and Teresa at the Borja Family Clinic
in Tagbilaran City wherein Melinda worked as a doctor, but Melinda refused to receive the summonses for her sisters
and informed the sheriff that their lawyer, Atty. Francis Zosa, would be the one to receive the same.

Upon her arrival in the Philippines, on 1 June 2000, Teresa was personally served the summons at Room 304, Regency
Crest Condominium, Banilad, Cebu City. She filed her Answer[4] with counterclaim with the RTC on 6 June 2000.

Subsequently, on 12 September 2002, Teresa filed a motion to dismiss Civil Case No. CEB 23927 because of petitioners
failure to prosecute her action for an unreasonable length of time.

Petitioner opposed[5] the motion and filed her own motion to set the case for pre-trial, to which Teresa filed her
rejoinder on the ground that their sister, Cynthia, an indispensable party, had not yet been served a summons. Thus,
Teresa prayed for the dismissal of petitioners complaint, as the case would not proceed without Cynthias presence.

On 9 November 2000, the RTC issued an Order[6] granting respondent Teresas motion to dismiss, pertinent portions
of which read:

Considering that the donees in the Deed of Donation are Cynthia R. Logarta and Teresa R. Tormis,
they are therefore an (sic) indispensable party (sic). In the case of Quisumbing vs. Court of Appeals,
189 SCRA 325, indispensable parties are those with such an interest in the controversy that a final
decree would necessarily affect their rights so that the court could not proceed without their
presence
 Wherefore, in view of the foregoing, the instant case is hereby dismissed without prejudice.

A motion for reconsideration was filed by petitioner, but the same was denied in an Order dated 14 February 2001.

Aggrieved, petitioner appealed to the Court of Appeals. On 6 May 2005, the Court of Appeals rendered a Decision
denying the appeal and affirming in toto the order of dismissal of the complaint by the RTC and the denial of the
motion for reconsideration thereof. The Court of Appeals ratiocinated that petitioners failure to move for an
extraterritorial service of summons constitutes failure to prosecute for an unreasonable length of time, thus:

[T]he plaintiff-appellant [Victoria Regner] should have moved for the extraterritorial service of
summons for both defendants-appellees Teresa R. Tormis and Cynthia R. Logarta as they were not
residing and were not found in the Philippines when plaintiff-appellant [Victoria Regner] filed this
case below. Although defendant-appellant Teresa Tormis was personally served with summons
on June 1, 2000 when she came to the Philippines but the same was only effected after a long wait
or after the lapse of almost one year from the date the complaint was filed on June 15, 1999. To
allow this practice would be to make the continuation of like proceedings before the courts
dependent on when the defendants would be personally served with summons by the time they
would come to the Philippines, which would only unnecessarily delay the proceedings and clog the
court dockets as well. The afore-cited rule was precisely crafted to meet situations similar to the
present case to avoid unnecessary delays.
It has to be emphasized that it is incumbent upon the plaintiff [Victoria Regner] to move with leave
of court for the extraterritorial service of summons. Taking into account the considerable time that
had elapsed from the filing of the complaint on June 15, 1999 until defendant-appellee Teresa R.
Tormis, through counsel, filed a motion to dismiss on September 12, 2000, or approximately fifteen
(15) months, without any act on the part of plaintiff-appellant [Victoria Regner] to move for
extraterritorial service of summons upon the person of defendant-appellee Cynthia Logarta renders
plaintiff-appellants [Victoria Regner] complaint dismissible for failure to prosecute her action for
unreasonable length of time under Section 3, Rule 17, Revised Rules of Court, x x x. [7]

Hence, this appeal via petition[8] for review on certiorari filed by petitioner raising the following assignment of errors:

THE COURT OF APPEALS ERRED IN HOLDING THAT THE DELAY IN SERVING SUMMONS ON ONE OF
THE DEFENDANTS CONSTITUTES A FAILURE TO PROSECUTE NOTWITHSTANDING THAT THE REST OF
THE CO-DEFENDANTS WERE DULY SERVED WITH SUMMONSES

THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THE ANSWER FILED BY ONE INDIVIDUAL
DEFENDANT REDOUNDS TO THE BENEFIT OF THE OTHER DEFENDANT WHO HAS NOT BEEN SERVED
WITH SUMMONS, THE NATURE OF ACTION BEING ADMITTEDLY COMMON AMONG ALL
DEFENDANTS.[9]

From the foregoing, this Court identifies the issues to be resolved in this petition as: (1) Whether a co-donee
is an indispensable party in an action to declare the nullity of the deed of donation, and (2) whether delay in the
service of summons upon one of the defendants constitutes failure to prosecute that would warrant dismissal of the
complaint.

A Court must acquire jurisdiction over the persons of indispensable parties before it can validly pronounce judgments
personal to the parties. Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint. On the other
hand, jurisdiction over the person of a party defendant is assured upon the service of summons in the manner
required by law or otherwise by his voluntary appearance. As a rule, if a defendant has not been summoned, the court
acquires no jurisdiction over his person, and a personal judgment rendered against such defendant is null and void.
[10] A decision that is null and void for want of jurisdiction on the part of the trial court is not a decision in the
contemplation of law and, hence, it can never become final and executory. [11]

Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interest without whom there can be
no final determination of an action. As such, they must be joined either as plaintiffs or as defendants. The general rule
with reference to the making of parties in a civil action requires, of course, the joinder of all necessary parties where
possible, and the joinder of all indispensable parties under any and all conditions, their presence being a sine qua
non for the exercise of judicial power.[12] It is precisely when an indispensable party is not before the court [that] the
action should be dismissed.[13] The absence of an indispensable party renders all subsequent actions of the court
null and void for want of authority to act, not only as to the absent parties but even as to those present. [14]

As we ruled in Alberto v. Mananghala[15]:

In an action for recovery of property against a person who purchased it from another who in turn
acquired it from others by the same means or by donation or otherwise, the predecessors of
defendants are indispensable parties if the transfers, if not voided, may bind plaintiff. (Garcia vs.
Reyes, 17 Phil. 127.) In the latter case, this Court held:

In order to bring this suit duly to a close, it is imperative to determine the only question raised in
connection with the pending appeal, to wit, whether all the persons who intervened in the matter of
the transfers and donation herein referred to, are or are not necessary parties to this suit, since it is
asked in the complaint that the said transfers and donation be declared null and void an
indispensable declaration for the purpose, in a proper case, of concluding the plaintiff to be the sole
owner of the house in dispute.

If such a declaration of annulment can directly affect the persons who made and who were
concerned in the said transfers, nothing could be more proper and just than to hear them in the
litigation, as parties interested in maintaining the validity of those transactions, and therefore,
whatever be the nature of the judgment rendered, Francisco Reyes, Dolores Carvajal, Alfredo
Chicote, Vicente Miranda, and Rafael Sierra, besides the said minors, must be included in the case as
defendants. (Garcia vs. Reyes, 17 Phil., 130-131.)

It takes no great degree of legal sophistication to realize that Cynthia and Teresa are indispensable parties to Civil Case
No. CEB 23927. Cynthia and Teresa allegedly derived their rights to the subject property by way of donation from their
father Luis. The central thrust of the petitioners complaint in Civil Case No. CEB 23927 was that Luis could not have
donated Proprietary Ownership Certificate No. 0272 to his daughters Cynthia and Teresa, as Luis was already very ill
and no longer of sound and disposing mind at the time of donation on 15 May 1997. Accordingly, the prayer in
petitioners complaint was for the trial court to declare null and void the Deed of Donation and to restrain the Cebu
Country Club, Inc. from transferring title and ownership of Proprietary Ownership Certificate No. 0272 to Cynthia and
Teresa.

Thus, based on the Deed of Donation, Teresa and Cynthia are co-owners of Proprietary Membership Certificate No.
0272 of Cebu Country Club, Inc. The country club membership certificate is undivided and it is impossible to pinpoint
which specific portion of the property belongs to either Teresa or Cynthia. Indeed, both Teresa and Cynthia are
indispensable parties in Civil Case No. CEB 23927.

An indispensable party has been defined as follows:

An indispensable party is a party who has such an interest in the controversy or subject matter that a
final adjudication cannot be made, in his absence, without injuring or affecting that interest, a party
who has not only an interest in the subject matter of the controversy, but also has an interest of such
nature that a final decree cannot be made without affecting his interest or leaving the controversy in
such a condition that its final determination may be wholly inconsistent with equity and good
conscience. It has also been considered that an indispensable party is a person in whose absence
there cannot be a determination between the parties already before the court which is effective,
complete, or equitable. Further, an indispensable party is one who must be included in an action
before it may properly go forward.
A person is not an indispensable party, however, if his interest in the controversy or subject matter is
separable from the interest of the other parties, so that it will not necessarily be directly or
injuriously affected by a decree which does complete justice between them.Also, a person is not an
indispensable party if his presence would merely permit complete relief between him and those
already parties to the action, or if he has no interest in the subject matter of the action. It is not a
 sufficient reason to declare a person to be an indispensable party that his presence will avoid
multiple litigation.[16]

In Servicewide Specialists, Incorporated v. Court of Appeals,[17] this Court held that no final determination of a case
could be made if an indispensable party is not legally present therein:

An indispensable party is one whose interest will be affected by the courts action in the litigation,
and without whom no final determination of the case can be had. The partys interest in the subject
matter of the suit and in the relief sought are so inextricably intertwined with the other parties that
his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot
be a resolution of the dispute of the parties before the court which is effective, complete, or
equitable.

The rationale for treating all the co-owners of a property as indispensable parties in a suit involving the co-owned
property is explained in Arcelona v. Court of Appeals[18]:

As held by the Supreme Court, were the courts to permit an action in ejectment to be maintained by
a person having merely an undivided interest in any given tract of land, a judgment in favor of the
defendants would not be conclusive as against the other co-owners not parties to the suit, and thus
the defendant in possession of the property might be harassed by as many succeeding actions of
ejectment, as there might be co-owners of the title asserted against him. The purpose of this
provision was to prevent multiplicity of suits by requiring the person asserting a right against the
defendant to include with him, either as co-plaintiffs or as co-defendants, all persons standing in the
same position, so that the whole matter in dispute may be determined once and for all in one
litigation.

Applying the foregoing definitions and principles to the present case, this Court finds that any decision in Civil Case No.
CEB 23927 cannot bind Cynthia, and the Court cannot nullify the donation of the property she now co-owns with
Teresa, even if limited only to the portion belonging to Teresa, to whom summons was properly served, since
ownership of the property is still pro indiviso. Obviously, Cynthia is an indispensable party in Civil Case No. CEB 23927
without whom the lower court is barred from making a final adjudication as to the validity of the entire
donation. Without the presence of indispensable parties to a suit or proceeding, a judgment therein cannot attain
finality.[19]

Being an indispensable party in Civil Case No. CEB 23927, the trial court must also acquire jurisdiction over Cynthias
person through the proper service of summons.

Based on the foregoing disquisitions, the issue of whether the answer filed by Teresa should benefit Cynthia who was
not served summons need not be discussed.

As to determine whether Cynthia was properly served a summons, it will be helpful to determine first the nature of
the action filed against Cynthia and Teresa by petitioner Victoria, 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 a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or
the recovery of damages.[20] In contrast, in a real action, the plaintiff seeks the recovery of real property; or, as
indicated in Section 2(a), Rule 4 of the then Rules of Court, a real action is an action affecting title to real property or
for the recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property. An
action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action
against the thing itself, instead of against the person. [21]

In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served,
substituted service, as provided in Section 7, Rule 14 of the Rules of Court, [22] 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.[23] If defendant cannot be served a summons because he is temporarily abroad, but is otherwise a
Philippine resident, service of summons may, by leave of court, be made by publication.[24] Otherwise stated, a
resident defendant in an action in personam, who cannot be personally served a summons, may be summoned either
by means of substituted service in accordance with Section 7, Rule 14 of the Rules of Court, or by publication as
provided in Sections 15 and 16 of the same Rule.
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 Section 15, Rule 14 of
the Rules of Court, which provides:

Section 15. 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 6; 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.

As stated above, there are only four instances wherein a defendant who is a non-resident and is not found in the
country may be served a summons by extraterritorial service, to wit: (1) when the action affects the personal status of
the plaintiff; (2) when the action relates to, or the subject of which is property within the Philippines, on which the
defendant claims a lien or an 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.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.[25]

In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has jurisdiction over the res,
i.e., the personal status of the plaintiff who is domiciled in the Philippines or the property litigated or attached. Service
of summons in the manner provided in Section 15, Rule 14 of the Rules of Court is not for the purpose of vesting the
court with jurisdiction, but for complying with the requirements of fair play or due process, so that the defendant will
be informed of the pendency of the action against him; and the possibility that property in the Philippines belonging to
him, or in which he has an interest, might be subjected to a judgment in favor of the plaintiff and he can thereby take
steps to protect his interest if he is so minded.[26]

In petitioners Complaint in Civil Case No. CEB No. 23427, she alleged that Cynthia is residing at 462 West Vine No. 201,
Glendale, California, 912041, U.S.A.; while Teresa is residing at 2408 South Hacienda Boulevard, Hacienda Heights,
California, but they usually visit here in the Philippines and can be served summonses and other processes at the Borja
Family Clinic, Bohol.Pertinent portions of the Complaint read:

2. Defendant Cynthia R. Logarta is a Filipino, of legal age, married to Ramon Logarta,

resident (sic) 463 West Vine No.201, Glendale, California, 912041, USA. She however usually
visits in the Philippines and can be served with summons and other processes of this
Honorable Court at Borja Family Clinic, Tagbilaran, Bohol;

3. Defendant Teresa R. Tormis is likewise a Filipino, of legal age, married to Antonio Tormis,
and a resident of 2408 South Hacienda Heights, California, 19745, U.S.A. She however
usually visits in the Philippines and can be served with summons and other processes of this
Honorable Court at Borja Family Clinic, Tagbilaran, Bohol.[27]

Petitioner prayed for a declaration of nullity of the deed of donation, to restrain Cebu Country Club, Inc. from
transferring title and ownership of Proprietary Ownership Certificate No. 0272 to Cynthia and Teresa, and for moral
and exemplary damages. Civil Case No. CEB 23927 is evidently an action against Cynthia and Teresa on the basis of
their personal liability for the alleged fraudulent transfer of the subject Country Club membership from Luis to their
name. In this sense, petitioner questions the participation and shares of Cynthia and Teresa in the transferred Country
Club membership. Moreover, the membership certificate from the Cebu Country Club, Inc. is a personal property. Thus,
the action instituted by petitioner before the RTC is in personam.

Being an action in personam, the general rule requires the personal service of summons on Cynthia within
the Philippines, but this is not possible in the present case because Cynthia is a non-resident and is not found within
the Philippines.

As Cynthia is a nonresident who is not found in the Philippines, service of summons on her must be in accordance with
Section 15, Rule 14 of the Rules of Court. Such service, to be effective outside the Philippines, must be made either (1)
by personal service; (2) by publication in a newspaper of general circulation in such places and for such time as
the court may order, in which case a copy of the summons and order of the court should be sent by registered mail to
the last known address of the defendant; or (3) in any other manner which the court may deem sufficient. The third
mode, like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign
country where Cynthia resides.

Since in the case at bar, the service of summons upon Cynthia was not done by any of the authorized modes, the trial
court was correct in dismissing petitioners complaint.

Section 3, Rule 17 of the 1997 Rules of Civil Procedure, states

SEC. 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the
date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any order of the court, the complaint
may be dismissed upon motion of the defendant or upon the court's own motion, without prejudice
to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the
court.

As can be gleaned from the rule, there are three instances when the complaint may be dismissed due to the plaintiff's
fault: (1) if he fails to appear during a scheduled trial, especially on the date for the presentation of his evidence in
chief; (2) if he fails to prosecute his action for an unreasonable length of time; and (3) if he fails to comply with the
rules or any order of the court.[28]

Considering the circumstances of the case, it can be concluded that the petitioner failed to prosecute the case for an
unreasonable length of time. There is failure to prosecute when the plaintiff, being present, is not ready or is unwilling
to proceed with the scheduled trial or when postponements in the past were due to the plaintiff's own making,
intended to be dilatory or caused substantial prejudice on the part of the defendant. [29]

While a court can dismiss a case on the ground of failure to prosecute, the true test for the exercise of such power is
whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in failing to proceed
with reasonable promptitude.[30] As to what constitutes an unreasonable length of time, within the purview of the
above-quoted provision, the Court has ruled that it depends upon the circumstances of each particular case, and that
the sound discretion of the court in the determination of said question will not be disturbed, in the absence of patent
abuse; and that the burden of showing abuse of judicial discretion is upon the appellant since every presumption is in
favor of the correctness of the court's action.[31] Likewise, the concept of promptness is a relative term and must not
unnecessarily be an inflexible one. It connotes an action without hesitation and loss of time. As to what constitutes
the term is addressed to the consideration of the trial court, bearing in mind that while actions must be disposed of
with dispatch, the essential ingredient is the administration of justice and not mere speed. [32]

It is well to quote the doctrine laid in Padua v. Ericta,[33] as accentuated in the subsequent case Marahay v.
Melicor[34]:

Courts should not brook undue delays in the ventilation and determination of causes. It should be
their constant effort to assure that litigations are prosecuted and resolved with dispatch.
 Postponements of trials and hearings should not be allowed except on meritorious grounds; and the
grant or refusal thereof rests entirely in the sound discretion of the Judge. It goes without saying,
however, that discretion must be reasonably and wisely exercised, in the light of the attendant
circumstances. Some reasonable deferment of the proceedings may be allowed or tolerated to the
end that cases may be adjudged only after full and free presentation of evidence by all the parties,
especially where the deferment would cause no substantial prejudice to any part. The desideratum
of a speedy disposition of cases should not, if at all possible, result in the precipitate loss of a partys
right to present evidence and either in plaintiff's being non-suited or the defendant's being
pronounced liable under an ex parte judgment.

[T]rial courts have x x x the duty to dispose of controversies after trial on the merits whenever
possible. It is deemed an abuse of discretion for them, on their own motion, to enter a dismissal
which is not warranted by the circumstances of the case (Municipality of Dingras v. Bonoan, 85 Phil.
458-59 [1950]). While it is true that the dismissal of an action on grounds specified under Section 3,
Rule 17 of the Revised Rules of Court is addressed to their discretion (Flores v. Phil. Alien Property
Administrator, 107 Phil. 778 [1960]; Montelibano v. Benares, 103 Phil. 110 [1958]; Adorable v.
Bonifacio, 105 Phil. 1269 [1959]; Inter-Island Gas Service, Inc. v. De la Gerna, L-17631, October 19,
1966, 18 SCRA 390), such discretion must be exercised soundly with a view to the circumstances
surrounding each particular case (Vernus-Sanciangco v. Sanciangco, L-12619, April 28, 1962, 4 SCRA
1209). If facts obtain that serve as mitigating circumstances for the delay, the same should be
considered and dismissal denied or set aside (Rudd v. Rogerson, 15 ALR 2d 672; Cervi v. Greenwood,
147 Colo. 190, 362 P.2d 1050 [1961]), especially where the suit appears to be meritorious and the
plaintiff was not culpably negligent and no injury results to defendant (27 C.J.S. 235-36; 15 ALR 3rd
680). (Abinales vs. Court of First Instance of Zamboanga City, Br. I, 70 SCRA 590, 595).

It is true that the allowance or denial of petitions for postponement and the setting aside of orders
previously issued, rest principally upon the sound discretion of the judge to whom they are
addressed, but always predicated on the consideration that more than the mere convenience of the
courts or of the parties of the case, the ends of justice and fairness would be served thereby (Camara
Vda. de Zubiri v. Zubiri, et al., L-16745, December 17, 1966). When no substantial rights are affected
and the intention to delay is not manifest, the corresponding motion to transfer the hearing having
been filed accordingly, it is sound judicial discretion to allow them (Rexwell Corp. v. Canlas, L-16746,
December 30, 1961). x x x.

This Court recalls that the complaint herein was filed on 15 June 1999. The summonses for Cynthia and Teresa were
served on their sister Melinda at the Borja Family Clinic in Tagbilaran City, but the latter refused to receive the same. It
was only on 1 June 2000 that summons was served on Teresa at Room 304, Regency Crest Condominium,
Banilad, Cebu City, when she was in the Philippines for a visit. However, the summons for Cynthia was never served
upon her.

Although Section 1, Rule 14 of the Rules, imposes upon the clerk of court the duty to serve summons, this does not
relieve the petitioner of her own duty as the plaintiff in a civil case to prosecute the case diligently. If the clerk had
been negligent, it was petitioners duty to call the courts attention to that fact. It must be noted that it was not even
petitioner who called the courts attention that summons had not been served on Cynthia, but Teresa. This despite the
fact that petitioner was aware, as early as 15 June 1999, when she filed her complaint, that the summonses could not
be served on Teresa and Cynthia, as she admitted therein that Teresa and Cynthia were residing abroad. Petitioner as
plaintiff should have asked that Cynthia and Teresa be summoned by publication at the earliest possible
time. She cannot idly sit by and wait till this is done. She cannot afterwards wash her hands and say that the delay was
not her fault. She cannot simply "fold [her] hands" and say that it is the duty of the clerk of court to have the
summonses served on Cynthia and Teresa for the prompt disposition of her case. If there were no means of
summoning any of the defendants, petitioner should have so informed the court within a reasonable period of time, so
that the case could be disposed of one way or another and the administration of justice would not suffer delay. The
non-performance of that duty by petitioner as plaintiff is an express ground for dismissing an action. For, indeed, this
duty imposed upon her was precisely to spur on the slothful.
For failure to diligently pursue the complaint, petitioner trifled with the right of the respondents to speedy trial. It also
sorely tried the patience of the court and wasted its precious time and attention. To allow petitioner to wait until such
time that summonses were served on respondents would frustrate the protection against unreasonable delay in the
prosecution of cases and violate the constitutional mandate of speedy dispensation of justice which would in time
erode the peoples confidence in the judiciary. We take a dim view of petitioners complacent attitude. Ex nihilo nihil fit.
[35]

Likewise, petitioners counsel inexplicably failed to diligently pursue the service of summonses on respondents. These
were acts of negligence, laxity and truancy which the court could have very easily avoided or timely
remedied. Petitioner and her counsel could not avail themselves of this Courts sympathy, considering their apparent
complacency, if not delinquency, in the conduct of their litigation.

Considering the foregoing, we sustain the dismissal by the trial court of the petitioners complaint for failure to
prosecute for a period of more than one year (from the time of filing thereof on 15 June 1997 until Teresas filing of a
motion to dismiss).

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit and the assailed Decision dated 6
May 2005 of the Court of Appeals in CA-G.R. CV No. 71028 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.
FIRST DIVISION

[G.R. No. 159586. July 26, 2004]

EUROPEAN RESOURCES AND TECHNOLOGIES, INC. and DELFIN J. WENCESLAO, petitioners, vs. INGENIEUBURO
BIRKHAHN + NOLTE, Ingeniurgesellschaft mbh and HEERS & BROCKSTEDT GMBH & CO., respondents.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this Petition for Review under Rule 45 of the Rules of Court is the Decision [1] of the Court of Appeals
dated May 15, 2003, which sustained the Order of the Regional Trial Court of Angeles City, Branch 61, dated June 28,
2001, and its subsequent Resolution dated August 3, 2003 denying petitioners motion for reconsideration.

European Resources and Technologies Inc. (hereinafter ERTI), a corporation organized and existing under the laws
of the Republic of the Philippines, is joined by Delfin J. Wenceslao as petitioner in this case. Ingenieuburo Birkhan +
Nolte Ingiurgesellschaft mbh and Heers & Brockstedt Gmbh & Co. are German corporations who are respondents in
this case and shall be collectively referred to as the German Consortium.

The German Consortium tendered and submitted its bid to the Clark Development Corporation (CDC) to
construct, operate and manage the Integrated Waste Management Center at the Clark Special Economic Zone
(CSEZ). CDC accepted the German Consortiums bid and awarded the contract to it. On October 6, 1999, CDC and the
German Consortium executed the Contract for Services[2] which embodies the terms and conditions of their
agreement.

The Contract for Services provides that the German Consortium shall be empowered to enter into a contract or
agreement for the use of the integrated waste management center by corporations, local government units, entities,
and persons not only within the CSEZ but also outside. For waste collected within the CSEZ, the German Consortium
may impose a tipping fee per ton of waste collected from locators and residents of the CSEZ, which fees shall be
subject to the schedule agreed upon by the parties and specified in the Contract for Services. For its operations outside
of the CSEZ, the German Consortium shall pay CDC US$1.50 per ton of non-hazardous solid waste collected.[3] The
CDC shall guarantee that nineteen thousand eighteen hundred (19,800) tons per year of solid waste volume shall be
collected from inside and outside the CSEZ.[4] The contract has a term of twenty-five (25) years,[5] during which time
the German Consortium shall operate the waste management center on a day-to-day basis.[6]

Article VIII, Section 7 of the Contract for Services provides that the German Consortium shall undertake to
organize a local corporation as its representative for this project. On April 18, 2000, the German Consortium entered
into a Joint Venture with D.M. Wenceslao and Associates, Inc. (DMWAI) and Ma. Elena B. Villarama (doing business as
LBV and Associates), embodied in a Memorandum of Understanding[7] (MOU) signed by the parties. Under the MOU,
the parties agreed to jointly form a local corporation to which the German Consortium shall assign its rights under the
Contract for Services. Pursuant to this agreement, petitioner European Resources and Technologies, Inc. was
incorporated. The parties likewise agreed to prepare and finalize a Shareholders Agreement within one (1) month from
the execution of the MOU, which shall provide that the German Consortium shall own fifteen percent (15%) of the
equity in the joint venture corporation, DMWAI shall own seventy percent (70%) and LBV&A shall own fifteen percent
(15%). In the event that the parties fail to execute the Shareholders Agreement, the MOU shall be considered null and
void.[8]

On August 1, 2000, without the Shareholders Agreement having been executed, the German Consortium and
petitioner ERTI entered into a Memorandum of Agreement (MOA)[9] whereby the German Consortium ceded its rights
and obligations under the Contract for Services in favor of ERTI and assigned unto ERTI, among others, its license from
CDC to engage in the business of providing environmental services needed in the CSEZ in connection with the waste
management within the CSEZ and other areas.[10] Likewise, the parties agreed that should there be a disagreement
between or among them relative to the interpretation or implementation of the MOA and the collateral documents
including but not limited to the Contract for Services between the German Consortium and CDC, the dispute shall be
referred to a panel of arbitrators.[11]

On December 11, 2000, ERTI received a letter from BN Consultants Philippines, Inc., signed by Mr. Holger Holst
for and on behalf of the German Consortium,[12] stating that the German Consortiums contract with DMWAI, LBV&A
and ERTI has been terminated or extinguished on the following grounds: (a) the CDC did not give its approval to the
Consortiums request for the approval of the assignment or transfer by the German Consortium in favor of ERTI of its
rights and interests under the Contract for Services; (b) the parties failed to prepare and finalize the Shareholders
Agreement pursuant to the provision of the MOU; (c) there is no more factual or legal basis for the joint venture to
continue; and (d) with the termination of the MOU, the MOA is also deemed terminated or extinguished.

Attached to the letter was a copy of the letter of the CDC,[13] stating that the German Consortiums assignment of
an eighty-five percent (85%) majority interest to another party violated its representation to undertake both the
financial and technical aspects of the project. The dilution of the Consortiums interest in ERTI is a substantial
modification of the Consortiums representations which were used as bases for the award of the project to it.

On February 20, 2001, petitioner ERTI, through counsel, sent a letter to CDC requesting for the reconsideration of
its disapproval of the agreement between ERTI and the German Consortium.

Before CDC could act upon petitioner ERTIs letter, the German Consortium filed a complaint for injunction against
herein petitioners before the Regional Trial Court of Angeles City, Branch 61, docketed as Civil Case No. 10049. The
German Consortium claimed that petitioner ERTIs continued misrepresentation as to their right to accept solid wastes
from third parties for processing at the waste management center will cause irreparable damage to the Consortium
and its exclusive right to operate the waste management center at the CSEZ. Moreover, petitioner ERTIs acts destroy
the Consortiums credibility and undermine customer confidence in it. Hence, the German Consortium prayed that a
writ of temporary restraining order be issued against petitioner ERTI and, after hearing, a writ of preliminary injunction
be likewise issued ordering petitioner ERTI to cease and desist from misrepresenting to third parties or the public that
it has any right or interest in the waste management center at CSEZ.[14]

Petitioners filed their Opposition to the application for preliminary injunction on February 7, 2001. The following
day, February 8, 2001, petitioners sent respondents, through Mr. Holger Holst, a letter demanding that the parties
proceed to arbitration in accordance with Section 17 of the MOA. At the hearings on the application for injunction,
petitioners objected to the presentation of evidence on the ground that the trial court had no jurisdiction over the
case since the German Consortium was composed of foreign corporations doing business in the country without a
license. Moreover, the MOA between the parties provides that the dispute should be referred to arbitration.

The trial court overruled the objection and proceeded with the hearing. On June 28, 2001, the trial court issued
an Order granting the writ of preliminary injunction.[15] Petitioners filed a motion for reconsideration, which was
denied in a Resolution dated November 21, 2001.

On January 17, 2002, petitioners filed a petition for certiorari and prohibition under Rule 65 of the Rules of Court
before the Court of Appeals, assailing the trial courts Orders dated June 28, 2001 and November 21, 2001.

Meanwhile, on February 11, 2002, the temporary restraining order issued was lifted in view of respondents
failure to file sufficient bond.[16] On September 6, 2002, all proceedings in Civil Case No. 10049 were suspended until
the petition for certiorari pending before the Court of Appeals shall have been resolved.[17]

On May 15, 2003, the Court of Appeals dismissed the petition for certiorari. Petitioners Motion for
Reconsideration was denied in a Resolution dated August 25, 2003.

Hence, this petition arguing that the Court of Appeals committed reversible error in:
(a) Ruling that petitioners are estopped from assailing the capacity of the respondents to institute the suit for
injunction
(b) Ruling that respondents are entitled to an injunctive writ.
(c) Not holding that the dispute is covered by the arbitration clause in the memorandum of agreement.
(d) Issuing the writ of preliminary injunction that is tantamount to a decision of the case on the merits.[18]

The petition is partly meritorious.

There is no general rule or governing principle laid down as to what constitutes doing or engaging in or
transacting business in the Philippines. Thus, it has often been held that a single act or transaction may be considered
as doing business when a corporation performs acts for which it was created or exercises some of the functions for
which it was organized.[19] We have held that the act of participating in a bidding process constitutes doing business
because it shows the foreign corporations intention to engage in business in the Philippines. In this regard, it is the
performance by a foreign corporation of the acts for which it was created, regardless of volume of business, that
determines whether a foreign corporation needs a license or not.[20]

Consequently, the German Consortium is doing business in the Philippines without the appropriate license as
required by our laws. By participating in the bidding conducted by the CDC for the operation of the waste management
center, the German Consortium exhibited its intent to transact business in the Philippines. Although the Contract for
Services provided for the establishment of a local corporation to serve as respondents representative, it is clear from
the other provisions of the Contract for Services as well as the letter by the CDC containing the disapproval that it will
be the German Consortium which shall manage and conduct the operations of the waste management center for at
least twenty-five years. Moreover, the German Consortium was allowed to transact with other entities outside the
CSEZ for solid waste collection. Thus, it is clear that the local corporation to be established will merely act as a conduit
or extension of the German Consortium.

As a general rule, unlicensed foreign non-resident corporations cannot file suits in the Philippines. Section 133 of
the Corporation Code specifically provides:
SECTION 133. 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 laws.

A corporation has legal status only within the state or territory in which it was organized. For this reason, a
corporation organized in another country has no personality to file suits in the Philippines. In order to subject a foreign
corporation doing business in the country to the jurisdiction of our courts, it must acquire a license from the Securities
and Exchange Commission (SEC) and appoint an agent for service of process. Without such license, it cannot institute a
suit in the Philippines.[21]

However, there are exceptions to this rule. In a number of cases,[22] we have declared a party estopped from
challenging or questioning the capacity of an unlicensed foreign corporation from initiating a suit in our courts. In the
case of Communication Materials and Design, Inc. v. Court of Appeals,[23] a foreign corporation instituted an action
before our courts seeking to enjoin a local corporation, with whom it had a Representative Agreement, from using its
corporate name, letter heads, envelopes, sign boards and business dealings as well as the foreign corporations
trademark. The case arose when the foreign corporation discovered that the local corporation has violated certain
contractual commitments as stipulated in their agreement. In said case, we held that a foreign corporation doing
business in the Philippineswithout license may sue in Philippine Courts a Philippine citizen or entity that had
contracted with and benefited from it.

Hence, the party is estopped from questioning the capacity of a foreign corporation to institute an action in our
courts where it had obtained benefits from its dealings with such foreign corporation and thereafter committed a
breach of or sought to renege on its obligations.The rule relating to estoppel is deeply rooted in the axiom
of commodum ex injuria sua non habere debetno person ought to derive any advantage from his own wrong.

In the case at bar, petitioners have clearly not received any benefit from its transactions with the German
Consortium. In fact, there is no question that petitioners were the ones who have expended a considerable amount of
money and effort preparatory to the implementation of the MOA. Neither do petitioners seek to back out from their
obligations under both the MOU and the MOA by challenging respondents capacity to sue. The reverse could not be
any more accurate. Petitioners are insisting on the full validity and implementation of their agreements with the
German Consortium.
 To rule that the German Consortium has the capacity to institute an action against petitioners even when the
latter have not committed any breach of its obligation would be tantamount to an unlicensed foreign corporation
gaining access to our courts for protection and redress. We cannot allow this without violating the very rationale for
the law prohibiting a foreign corporation not licensed to do business in the Philippines from suing or maintaining an
action in Philippine courts. The object of requiring a license is not to prevent the foreign corporation from performing
single acts, but to prevent it from acquiring domicile for the purpose of business without taking the steps necessary to
render it amenable to suits in the local courts.[24] In other words, the foreign corporation is merely prevented from
being in a position where it takes the good without accepting the bad.

On the issue of whether the respondents were entitled to the injunctive writ, the petitioners claim that
respondents right is not in essebut is rather a future right which is contingent upon a judicial declaration that the MOA
has been validly rescinded. The Court of Appeals, in its decision, held that the MOA should be deemed subject to a
suspensive condition, that is, that CDCs prior written consent must be obtained for the validity of the assignment.

This issue must be resolved in a separate proceeding. It must be noted that the hearing conducted in the trial
court was merely a preliminary hearing relating to the issuance of the injunctive writ. In order to fully appreciate the
facts of this case and the surrounding circumstances relating to the agreements and contract involved, further proof
should be presented for consideration of the court. Likewise, corollary matters, such as whether either of the parties is
liable for damages and to what extent, cannot be resolved with absolute certainty, thus rendering any decision we
might make incomplete as to fully dispose of this case.

More importantly, it is evident that CDC must be made a proper party in any case which seeks to resolve the
effectivity or ineffectivity of its disapproval of the assignment made between petitioners and respondent German
Consortium. Where, as in the instant case, CDC is not impleaded as a party, any decision of the court which will
inevitably affect or involve CDC cannot be deemed binding on it.

For the same reason, petitioners assertion that the instant case should be referred to arbitration pursuant to the
provision of the MOA is untenable.

We have ruled in several cases that arbitration agreements are valid, binding, enforceable and not contrary to
public policy such that when there obtains a written provision for arbitration which is not complied with, the trial court
should suspend the proceedings and order the parties to proceed to arbitration in accordance with the terms of their
agreement.[25] In the case at bar, the MOA between petitioner ERTI and respondent German Consortium provided:
17. Should there be a disagreement between or among the Parties relative to the interpretation or implementation of
this Agreement and the collateral documents including but not limited to the Contract for Services between GERMAN
CONSORTIUM and CDC and the Parties cannot resolve the same by themselves, the same shall be endorsed to a panel
of arbitrators which shall be convened in accordance with the process ordained under the Arbitration Law of the
Republic of the Philippines.[26]

Indeed, to brush aside a contractual agreement calling for arbitration in case of disagreement between parties
would be a step backward.[27] But there are exceptions to this rule. Even if there is an arbitration clause, there are
instances when referral to arbitration does not appear to be the most prudent action. The object of arbitration is to
allow the expeditious determination of a dispute. Clearly, the issue before us could not be speedily and efficiently
resolved in its entirety if we allow simultaneous arbitration proceedings and trial, or suspension of trial pending
arbitration.[28]

As discussed earlier, the dispute between respondent German Consortium and petitioners involves the
disapproval by the CDC of the assignment by the German Consortium of its rights under the Contract for Services to
petitioner ERTI. Admittedly, the arbitration clause is contained in the MOA to which only the German Consortium and
petitioner ERTI were parties. Even if the case is brought before an arbitration panel, the decision will not be binding
upon CDC who is a non-party to the arbitration agreement. What is more, the arbitration panel will not be able to
completely dispose of all the issues of this case without including CDC in its proceedings. Accordingly, the interest of
justice would only be served if the trial court hears and adjudicates the case in a single and complete proceeding.

Lastly, petitioners question the propriety of the issuance of writ of preliminary injunction claiming that such is
already tantamount to granting the main prayer of respondents complaint without the benefit of a trial. Petitioners
point out that the purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to
some of the parties before their claims can be thoroughly studied and decided. It cannot be used to railroad the main
case and seek a judgment without a full-blown trial as in the instant case.

The Court of Appeals ruled that since petitioners did not raise this issue during the hearing on the application for
preliminary injunction before the trial court, the same cannot be raised for the first time on appeal and even in special
civil actions for certiorari as in this case.

At the outset, it must be noted that with the finding that the German Consortium is without any personality to
file the petition with the trial court, the propriety of the injunction writ issued is already moot and academic. Even
assuming for the sake of argument that respondents have the capacity to file the petition, we find merit in the issue
raised by petitioners against the injunction writ issued.

Before an injunctive writ can be issued, it is essential that the following requisites are present: (1) there must be a
right in esse or the existence of a right to be protected; and (2) the act against which injunction to be directed is a
violation of such right.[29] The onus probandiis on movant to show that there exists a right to be protected, which is
directly threatened by the act sought to be enjoined. Further, there must be a showing that the invasion of the right is
material and substantial and that there is an urgent and paramount necessity for the writ to prevent a serious damage.
[30]

Thus, it is clear that for the issuance of the writ of preliminary injunction to be proper, it must be shown that the
invasion of the right sought to be protected is material and substantial, that the right of complainant is clear and
unmistakable and that there is an urgent and paramount necessity for the writ to prevent serious damage. [31] At the
time of its application for an injunctive writ, respondents right to operate and manage the waste management center,
to the exclusion of or without any participation by petitioner ERTI, cannot be said to be clear and unmistakable. The
MOA executed between respondents and petitioner ERTI has not yet been judicially declared as rescinded when the
complaint was lodged in court.[32] Hence, a cloud of doubt exists over respondent German Consortiums exclusive
right relating to the waste management center.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 68923 dated May 15, 2003 is REVERSED and
SET ASIDE. The Orders of the trial court dated June 28, 2001 and November 21, 2001 are ANNULLED and SET ASIDE
and Civil Case No. 10049 is DISMISSED for lack of legal capacity of respondents to institute the action. Costs against
respondents.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. Nos. 90306-07 July 30, 1990

K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING OIL CO., LTD., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ATLANTIC VENUS CO., S.A., and THE VESSEL M/V "ESTELLA", respondents.

Hernandez, Velicaria Vibar & Santiago for petitioners.

Cesar C. Cruz & Partners for private respondents

CORTES, J:

Ordinarily, the Court will not disturb the factual findings of the Court of Appeals, these being considered final and
conclusive. However, when its factual conclusions are manifestly mistaken, the Court will step in to correct the
misapprehension [De la Cruz v. Sosing, 94 Phil. 26 (1953); Castillo v. Court of Appeals, G.R. No. L-48290, September 29,
1983, 124 SCRA 808.] This case is one such instance calling for the Court's review of the facts.

On January 7,1987, Kumagai Kaiun Kaisha, Ltd. (hereinafter referred to as Kumagai), a corporation formed and existing
under the laws of Japan, filed a complaint for the collection of a sum of money with preliminary attachment against
Atlantic Venus Co., S.A. (hereinafter referred to as "Atlantic"), a corporation registered in Panama, the vessel MV
Estella and Crestamonte Shipping Corporation (hereinafter referred to as "Crestamonte"), a Philippine corporation.
Atlantic is the owner of the MV Estella. The complaint, docketed as Civil Case No. 8738930 of the Regional Trial Court,
Branch XIV, Manila alleged that Crestamonte, as bareboat charterer and operator of the MV Estella, appointed N.S.
Shipping Corporation (hereinafter referred to as "NSS"), a Japanese corporation, as its general agent in Japan. The
appointment was formalized in an Agency Agreement. NSS in turn appointed Kumagai as its local agent in Osaka,
Japan. Kumagai supplied the MV Estella with supplies and services but despite repeated demands Crestamonte failed
to pay the amounts due.

NSS and Keihin Narasaki Corporation (hereinafter referred to a Keihin filed complaints-in-intervention.

On May 19,1987, petitioner Fu Hing Oil Co., Ltd. (hereinafter referred to as Fu Hing"), a corporation organized in Hong
Kong and not doing business in the Philippines, filed a motion for leave to intervene with an attached complaint-in-
intervention, alleging that Fu Hing supplied marine diesel oil/fuel to the MV Estella and incurred barge expenses for
the total sum of One Hundred Fifty-two Thousand Four Hundred Twelve Dollars and Fifty-Six Cents (US$152,412.56)
but such has remained unpaid despite demand and that the claim constitutes a maritime lien. The issuance of a writ of
attachment was also prayed for.

On July 16, 1987, petitioner K.K. Shell Sekiyu Osaka Hatsubaisho (hereinafter referred to as K.K. Shell"), a corporation
organized in Japan and not doing business in the Philippines, likewise filed a motion to intervene with an attached
complaint-in-intervention, alleging that upon request of NSS, Crestamonte's general agent in Japan, K.K. Shell provided
and supplied marine diesel oil/fuel to the W Estella at the ports of Tokyo and Mutsure in Japan and that despite
previous demands Crestamonte has failed to pay the amounts of Sixteen Thousand Nine Hundred Ninety-Six Dollars
and Ninety- Six Cents (US$16,996.96) and One Million Yen (Y1,000,000.00) and that K.K. Shell's claim constitutes a
maritime lien on the MV Estella. The complaint-in-intervention sought the issuance of a writ of preliminary
attachment.

The trial court allowed the intervention of Fu Hing and K.K. Shell on June 19,1987 and August 11, 1987, respectively.
Writs of preliminary attachment were issued on August 25, 1987 upon posting of the appropriate bonds. Upon the
posting of counterbonds, the writs of attachment were discharged on September 3, 1987.
Atlantic and the MV Estella moved to dismiss the complaints-in- intervention filed by Fu Hing and K.K. Shell.

In the meantime, Atlantic and the AWU Estella filed a petition in the Court of Appeals against the trial court judge,
Kumagai, NSS and Keihin, docketed as CA-G.R. SP No. 12999, which sought the annulment of the orders of the trial
court dated April 30, 1987 and August 11, 1987. Among others, the omnibus order dated August 11, 1987 denied the
motion to reconsider the order allowing Fu Hing's intervention and granted K.K. Shell's motion to intervene. Again Fu
Hing and K.K. Shell intervened, CA-G.R. SP No. 12999 was consolidated with another case (CA-G.R. SP No. 12341). Fu
Hing and K.K. Shell intervened in CA-G.R. SP No. 12999.

In a decision dated June 14, 1989, the Court of Appeals annulled the orders of the trial court and directed it to cease
and desist from proceeding with the case.

According to the Court of Appeals, Fu Hing and K.K. Shell were not suppliers but sub-agents of NSS, hence they were
bound by the Agency Agreement between Crestamonte and NSS, particularly, the choice of forum clause, which
provides:

12.0-That this Agreement shall be governed by the Laws of Japan. Any matters, disputes, and/or
differences arising between the parties hereto concerned regarding this Agreement shall be subject
exclusively to the jurisdiction of the District Courts of Japan.

Thus, concluded the Court of Appeals, the trial court should have disallowed their motions to intervene.

A motion for reconsideration was filed by Fu Hing and K.K. Shell but this was denied by the Court of Appeals. Hence
this petition;

In this case, we shall review the decision of the Court of Appeals only insofar as it relate to the intervention of K.K.
Shell. Fu Hing Oil Co., Ltd. filed a motion to withdraw as co-petitioner on March 7, 1990, alleging that an amicable
settlement had been reached with private respondents. The Court granted the motion on March 19, 1990.

After considering the pleadings filed by the parties and the arguments raised therein, the Court finds reversible error
on the part of the Court of Appeals in so far; as it disallowed petitioners' intervention in the case before the trial court
and ordered the latter to cease and desist from proceeding with the case.

1. A reading of the Agency Agreement fails to support the conclusion that K.K. Shell is a sub-agent of NSS and is,
therefore, bound by the agreement.

The body of the Agency Agreement entered into by and between Crestamonte (referred to in the agreement as
"Owner") and NSS ("Agent") provides:

WITNESSETH

That the OWNER has appointed and by these presents hereby appoints the AGENT as its General Agents for all Japan
in connection with the Owner's vessels and/or providing suitable vessels for Japan Ports under the following terms and
conditions:

1.0 - In general, the Agent will abide by the Owner's decisions regarding the mode of operations of
the vessels in Japan and that all cargo bookings, vessel's fixtures/charters, etc. by the Agent, shall
always be subject to the prior approval and consent of the Owners.

2.0 - That the Agent shall provide for the necessary services required for the husbanding of the
Owner's vessels in all Japan Ports and issue Bill(s) of Lading to Shippers in the form prescribed by the
Owners.

3.0 - That the Agent shall be responsible for fixing south-bound cargoes with revenues sufficient to
cover ordinary liner operation expenses such as bunkers, additives, lubricating oil, water, running
repairs, drydocking expenses, usual port disbursement accounts, cargo handling charges including
stevedorage, provisions and ship's stores and cash advance to crew (excluding crew provisions).
 The Agent expressly agrees that the Owner's cash flow in Japan shall be essentially the Agent's
responsibility, and should the revenue for south-bound cargoes as above-mentioned be insufficient
to cover the aforesaid expenses, the Agent shall provide credit to the extent of the vessels'
requirements, provided however that said obligation shall be secured by the Owner committing at
least forty-eight (48) mailings of Japan/Philippines liner service per year.

The Agent shall settle, in behalf of the Owner, all outstanding payments for the operation costs on
Owner's liner service carried forward from the present Owner's agent, subject to approval of Owner's
Representative in Japan in regard to amount and nature thereof.

4.0- That the agent shall furnish office space of approximately thirty (30) square meters for the
exclusive use of the Owner and its representatives, within the premises of the Agent's office, free of
charge.

5.0 — That the responsibilities of the Agent in regard to the cargo shall begin, in the case of imports
into the territory of Japan, from the time such cargo has left the ship's tackles, and shall cease, in
case of export, upon completion of loading.

6.0 — That the remuneration of the Agent from the Owner shall be as follows:

xxx xxx xxx

7.0 — That the Agent shall exert best efforts to recommend to Owners stevedoring and other
expenses incurred in connection with work on board the Owner's vessels, as well as customs house
charges, pilotage, harbour dues, cables, etc. which are for Owner's account, on the cheapest possible
terms. Owners shall decide and may appoint through the Agent the services described herein.

8.0 — That the Agent shall be responsible for the due collection of and due payment to the Owner of
all outward freight prepaid for cargo without delay upon the sailing of each vessel from the port. The
Agent shall be also responsible for the due collection of all inward freight payable at the port against
delivery unless otherwise instructed by the Owner to the contrary.

9.0 — The account statements supported by vouchers in two copies itemized for each service and/or
supply for each vessel, shall be forwarded by the Agent to the Owner promptly after the departure of
each vessel but in no case later than 60 days thereafter.

10.0 — That the freightage to be collected by the Agent in Japan shall be paid to the Owner after
deducting the total amount of disbursements incurred in Japan.

11.0 — That this Agreement takes effect as of April 15, 1983 and shall remain in force unless
terminated by either party upon 60 days notice.

12.0 — That this Agreement shall be governed by the Laws of Japan. Any matters, disputes, and/or
differences arising between the parties hereto concerned regarding this reement shall be subject
exclusively to the jurisdiction of the District Courts of Japan. [Annex "G" of the Petition, Rollo, pp.
100-104.]

No express reference to the contracting of sub-agents or the applicability of the terms of the agreement, particularly
the choice-of-forum clause, to sub-agents is made in the text of the agreement. What the contract clearly states are
NSS' principal duties, i.e., that it shall provide for the necessary services required for the husbanding of Crestamonte's
vessels in Japanese ports (section 2.0) and shall be responsible for fixing southbound cargoes with revenues sufficient
to cover ordinary expenses (section 3.0).i•t•c-aüsl

Moreover, the complaint-in-intervention filed by K.K. Shell merely alleges that it provided and supplied the MV Estella
with marine diesel oil/fuel, upon request of NSS who was acting for and as duly appointed agent of Crestamonte
[Rollo, pp. 116117.] There is thus no basis for the Court of Appeal's finding, as regards K.K Shell in relation to its
intervention in Civil Case No. 87-38930, that "the sub-agents admitted in their pleadings that they were appointed as
local agent/sub-agent or representatives by NSS by virtue of said Agency Agreement" [Decision, p. 7; Rollo, p. 33.]
What the Court of Appeals could have been referring to was K.K. Shell's Urgent Motion for Leave to Intervene dated
February 24, 1987 in another case (Civil Case No. 86-38704) in another court and involving other vessels (NW Ofelia
and MV Christina C), where it was alleged that K.K. Shell is "one of the representatives of NS Shipping Corporation for
the supply of bunker oil, fuel oil, provisions and other necessaries to vessels of which NS Shipping Corporation was the
general agent." [Comment, p. 17; Rollo, p. 274.] However, this allegation does not conclusively establish a sub-agency
between NSS and K.K. Shell. It is therefore surprising how the Court of Appeals could have come to the conclusion, just
on the basis of the Agency Agreement and the pleadings filed in the trial court, that "Crestamonte is the principal, NSS
is the agent and ... Fu Hing and K.K Shell are the sub-agents." [Decision, p. 6; Rollo, p. 32.]

In view of the inconclusiveness of the Agency Agreement and the pleadings filed in the trial court, additional evidence,
if there be any, would still have to be presented to establish the allegation that K.K. Shell is a sub-agent of NSS.

In the same vein, as the choice-of-forum clause in the agreement (paragraph 12.0) has not been conclusively shown to
be binding upon K.K. Shell, additional evidence would also still have to be presented to establish this defense, K.K. Shell
cannot therefore, as of yet, be barred from instituting an action in the Philippines.

2. Private respondents have anticipated the possibility that the courts will not find that K.K. Shell is expressly bound by
the Agency Agreement, and thus they fall back on the argument that even if this were so, the doctrine of forum non
conveniens would be a valid ground to cause the dismissal of K.K. Shell's complaint-in-intervention.

K.K. Shell counters this argument by invoking its right as maritime lienholder. It cites Presidential Decree No. 1521, the
Ship Mortgage Decree of 1978, which provides:

SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-Any person furnishing repairs,
supplies, to wage, use of dry dock or marine railway, or other necessaries, to any vessel, whether
foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the
owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be
necessary to allege or prove that credit was given to the vessel.

Private respondents on the other hand argue that even if P.D. No. 1521 is applicable, K.K. Shell cannot rely on the
maritime lien because the fuel was provided not exclusively for the benefit of the MV Estella, but for the benefit of
Crestamonte in general. Under the law it must be established that the credit was extended to the vessel itself. Now,
this is a defense that calls precisely for a factual determination by the trial court of who benefitted from the delivery of
the fuel. Hence, again, the necessity for the reception of evidence before the trial court.

In other words, considering the dearth of evidence due to the fact that the private respondents have yet to file their
answer in the proceedings below and trial on the merits is still to be conducted, whether or not petitioners are indeed
maritime lienholders and as such may enforce the lien against the MV Estella are matters that still have to be
established.

Neither are we ready to rule on the private respondents' invocation of the doctrine of forum non conveniens, as the
exact nature of the relationship of the parties is still to be established. We leave this matter to the sound discretion of
the trial court judge who is in the best position, after some vital facts are established, to determine whether special
circumstances require that his court desist from assuming jurisdiction over the suit.

It was clearly reversible error on the. part of the Court of Appeals to annul the trial court's orders, insofar as K.K. Shell
is concerned, and order the trial court to cease and desist from proceeding with Civil Case No. 87-38930. There are still
numerous material facts to be established in order to arrive at a conclusion as to the true nature of the relationship
between Crestamonte and K.K. Shell and between NSS and K.K. Shell. The best recourse would have been to allow the
trial court to proceed with Civil Case No. 87-38930 and consider whatever defenses may be raised by private
respondents after they have filed their answer and evidence to support their conflicting claims has been presented.
The Court of Appeals, however, substituted its judgment for that of the trial court and decided the merits of the case,
even in the absence of evidence, on the pretext of reviewing an interlocutory order.

WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals is REVERSED in CA-G.R. SP No. 12999,
insofar as it annulled the order of the August 11, 1987 and directed the trial court to cease and desist from proceeding
with Civil Case No. 87-38930.

SO ORDERED.
Heine v. New York Life Insurance Company
Facts
The New York Life Insurance Company and the Guardian Insurance Company ("the insurance companies") were
corporations created in New York, USA. As conditions to be allowed to conduct business in Germany, they were made
to agree to be supervised by German authorities, to invest the proceeds of policies in German securities, and to
establish a local agency to whom summons may be served. The insurance companies were later sued before courts in
both the US and Germany for the recovery on some 240 life insurance policies issued in Germany to German nationals,
payable in German currency.

Arguments for the Plaintif

As the US courts have jurisdiction over the subject matter and the parties, they have no choice but to try the case.

Issue
Whether or not the US courts may dismiss the case on the ground of forum non conveniens.

Held
Yes. Under the circumstances, the case may be more suitably tried before German courts.

Ratio Decidendi
The courts in both jurisdictions are competent to try the case and summons may be served upon the insurance
companies in both jurisdictions. Requiring the insurance companies to defend their interests in the US would subject
them to great and unnecessary inconvenience and expenses, including the possibility of having to bring documentary
evidence all the way from their office in Germany. Moreover, trying the case in the US additionally burden the courts in
that jurisdiction, to the detriment of other litigants. The assumption of jurisdiction over a case the cause of action of
which arose from another jurisdiction and wherein both parties are non-residents is discretionary upon the court.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-32636 March 17, 1930

In the matter Estate of Edward Randolph Hix, deceased.

A.W. FLUEMER, petitioner-appellant,
vs.
ANNIE COUSHING HIX, oppositor-appellee.

C.A. Sobral for appellant.

Harvey & O' Brien and Gibbs & McDonough for appellee.

MALCOLM, J.:

The special administrator of the estate of Edward Randolph Hix appeals from a decision of Judge of First Instance
Tuason denying the probate of the document alleged to by the last will and testament of the deceased. Appellee is not
authorized to carry on this appeal. We think, however, that the appellant, who appears to have been the moving party
in these proceedings, was a "person interested in the allowance or disallowance of a will by a Court of First Instance,"
and so should be permitted to appeal to the Supreme Court from the disallowance of the will (Code of Civil Procedure,
sec. 781, as amended; Villanueva vs. De Leon [1925], 42 Phil., 780).

It is theory of the petitioner that the alleged will was executed in Elkins, West Virginia, on November 3, 1925, by Hix
who had his residence in that jurisdiction, and that the laws of West Verginia Code, Annotated, by Hogg, Charles E.,
vol. 2, 1914, p. 1690, and as certified to by the Director of the National Library. But this was far from a compliance with
the law. The laws of a foreign jurisdiction do not prove themselves in our courts. the courts of the Philippine Islands
are not authorized to take American Union. Such laws must be proved as facts. (In re Estate of Johnson [1918], 39 Phil.,
156.) Here the requirements of the law were not met. There was no was printed or published under the authority of
the State of West Virginia, as provided in section 300 of the Code of Civil Procedure. Nor was the extract from the law
attested by the certificate of the officer having charge of the original, under the sale of the State of West Virginia, as
provided in section 301 of the Code of Civil Procedure. No evidence was introduced to show that the extract from the
laws of West Virginia was in force at the time the alleged will was executed.

In addition, the due execution of the will was not established. The only evidence on this point is to be found in the
testimony of the petitioner. Aside from this, there was nothing to indicate that the will was acknowledged by the
testator in the presence of two competent witnesses, of that these witnesses subscribed the will in the presence of the
testator and of each other as the law of West Virginia seems to require. On the supposition that the witnesses to the
will reside without the Philippine Islands, it would then the duty of the petitioner to prove execution by some other
means (Code of Civil Procedure, sec. 633.)

It was also necessary for the petitioner to prove that the testator had his domicile in West Virginia and not establish
this fact consisted of the recitals in the CATHY will and the testimony of the petitioner. Also in beginning administration
proceedings orginally in the Philippine Islands, the petitioner violated his own theory by attempting to have the
principal administration in the Philippine Islands.

While the appeal pending submission in this court, the attorney for the appellant presented an unverified petition
asking the court to accept as part of the evidence the documents attached to the petition. One of these documents
discloses that a paper writing purporting to be the was presented for probate on June 8, 1929, to the clerk of Randolph
Country, State of West Virginia, in vacation, and was duly proven by the oaths of Dana Wamsley and Joseph L.
MAdden, the subscribing witnesses thereto , and ordered to be recorded and filed. It was shown by another document
that, in vacation, on June 8, 1929, the clerk of court of Randolph Country, West Virginia, appointed Claude W. Maxwell
as administrator, cum testamento annexo, of the estate of Edward Randolph Hix, deceased. In this connection, it is to
be noted that the application for the probate of the will in the Philippines was filed on February 20, 1929, while the
proceedings in West Virginia appear to have been initiated on June 8, 1929. These facts are strongly indicative of an
intention to make the Philippines the principal administration and West Virginia the ancillary administration. However
this may be, no attempt has been made to comply with Civil Procedure, for no hearing on the question of the
allowance of a will said to have been proved and allowed in West Virginia has been requested. There is no showing
that the deceased left any property at any place other than the Philippine Islands and no contention that he left any in
West Virginia.

Reference has been made by the parties to a divorce purported to have been awarded Edward Randolph Hix from
Annie Cousins Hix on October 8, 1925, in the State of West specific pronouncements on the validity or validity of this
alleged divorce.

For all of the foregoing, the judgment appealed from will be affirmed, with the costs of this instance against the
appellant.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-12105 January 30, 1960

TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor-appellee,

vs.
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA BOHANAN, oppositors-appellants.

Jose D. Cortes for appellants.

Ohnick, Velilla and Balonkita for appellee.

LABRADOR, J.:

Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose, presiding, dismissing the
objections filed by Magdalena C. Bohanan, Mary Bohanan and Edward Bohanan to the project of partition submitted
by the executor and approving the said project.

On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding, admitted to probate a last will
and testament of C. O. Bohanan, executed by him on April 23, 1944 in Manila. In the said order, the court made the
following findings:

According to the evidence of the opponents the testator was born in Nebraska and therefore a citizen of that
state, or at least a citizen of California where some of his properties are located. This contention in untenable.
Notwithstanding the long residence of the decedent in the Philippines, his stay here was merely temporary,
and he continued and remained to be a citizen of the United States and of the state of his pertinent residence
to spend the rest of his days in that state. His permanent residence or domicile in the United States depended
upon his personal intent or desire, and he selected Nevada as his homicide and therefore at the time of his
death, he was a citizen of that state. Nobody can choose his domicile or permanent residence for him. That is
his exclusive personal right.

Wherefore, the court finds that the testator C. O. Bohanan was at the time of his death a citizen of the United
States and of the State of Nevada and declares that his will and testament, Exhibit A, is fully in accordance
with the laws of the state of Nevada and admits the same to probate. Accordingly, the Philippine Trust
Company, named as the executor of the will, is hereby appointed to such executor and upon the filing of a
bond in the sum of P10,000.00, let letters testamentary be issued and after taking the prescribed oath, it may
enter upon the execution and performance of its trust. (pp. 26-27, R.O.A.).

It does not appear that the order granting probate was ever questions on appeal. The executor filed a project of
partition dated January 24, 1956, making, in accordance with the provisions of the will, the following adjudications: (1)
one-half of the residuary estate, to the Farmers and Merchants National Bank of Los Angeles, California, U.S.A. in trust
only for the benefit of testator's grandson Edward George Bohanan, which consists of several mining companies; (2)
the other half of the residuary estate to the testator's brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith, share
and share alike. This consist in the same amount of cash and of shares of mining stock similar to those given to
testator's grandson; (3) legacies of P6,000 each to his (testator) son, Edward Gilbert Bohana, and his daughter, Mary
Lydia Bohanan, to be paid in three yearly installments; (4) legacies to Clara Daen, in the amount of P10,000.00;
Katherine Woodward, P2,000; Beulah Fox, P4,000; and Elizabeth Hastings, P2,000;

It will be seen from the above that out of the total estate (after deducting administration expenses) of P211,639.33 in
cash, the testator gave his grandson P90,819.67 and one-half of all shares of stock of several mining companies and to
his brother and sister the same amount. To his children he gave a legacy of only P6,000 each, or a total of P12,000.
The wife Magadalena C. Bohanan and her two children question the validity of the testamentary provisions disposing
of the estate in the manner above indicated, claiming that they have been deprived of the legitimate that the laws of
the form concede to them.

The first question refers to the share that the wife of the testator, Magdalena C. Bohanan, should be entitled to
received. The will has not given her any share in the estate left by the testator. It is argued that it was error for the trial
court to have recognized the Reno divorce secured by the testator from his Filipino wife Magdalena C. Bohanan, and
that said divorce should be declared a nullity in this jurisdiction, citing the case of Querubin vs.Querubin, 87 Phil., 124,
47 Off. Gaz., (Sup, 12) 315, Cousins Hiz vs. Fluemer, 55 Phil., 852, Ramirez vs. Gmur, 42 Phil., 855 and
Gorayeb vs. Hashim, 50 Phil., 22. The court below refused to recognize the claim of the widow on the ground that the
laws of Nevada, of which the deceased was a citizen, allow him to dispose of all of his properties without requiring him
to leave any portion of his estate to his wife. Section 9905 of Nevada Compiled Laws of 1925 provides:

Every person over the age of eighteen years, of sound mind, may, by last will, dispose of all his or her estate,
real and personal, the same being chargeable with the payment of the testator's debts.

Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in the testator's estafa had
already been passed upon adversely against her in an order dated June 19, 1955, (pp. 155-159, Vol II Records, Court of
First Instance), which had become final, as Magdalena C. Bohanan does not appear to have appealed therefrom to
question its validity. On December 16, 1953, the said former wife filed a motion to withdraw the sum of P20,000 from
the funds of the estate, chargeable against her share in the conjugal property, (See pp. 294-297, Vol. I, Record, Court of
First Instance), and the court in its said error found that there exists no community property owned by the decedent
and his former wife at the time the decree of divorce was issued. As already and Magdalena C. Bohanan may no longer
question the fact contained therein, i.e. that there was no community property acquired by the testator and
Magdalena C. Bohanan during their converture.

Moreover, the court below had found that the testator and Magdalena C. Bohanan were married on January 30, 1909,
and that divorce was granted to him on May 20, 1922; that sometime in 1925, Magdalena C. Bohanan married Carl
Aaron and this marriage was subsisting at the time of the death of the testator. Since no right to share in the
inheritance in favor of a divorced wife exists in the State of Nevada and since the court below had already found that
there was no conjugal property between the testator and Magdalena C. Bohanan, the latter can now have no longer
claim to pay portion of the estate left by the testator.

The most important issue is the claim of the testator's children, Edward and Mary Lydia, who had received legacies in
the amount of P6,000 each only, and, therefore, have not been given their shares in the estate which, in accordance
with the laws of the forum, should be two-thirds of the estate left by the testator. Is the failure old the testator to give
his children two-thirds of the estate left by him at the time of his death, in accordance with the laws of the forum
valid?

The old Civil Code, which is applicable to this case because the testator died in 1944, expressly provides that
successional rights to personal property are to be earned by the national law of the person whose succession is in
question. Says the law on this point:

Nevertheless, legal and testamentary successions, in respect to the order of succession as well as to the
extent of the successional rights and the intrinsic validity of their provisions, shall be regulated by the national
law of the person whose succession is in question, whatever may be the nature of the property and the
country in which it is found. (par. 2, Art. 10, old Civil Code, which is the same as par. 2 Art. 16, new Civil Code.)

In the proceedings for the probate of the will, it was found out and it was decided that the testator was a citizen of the
State of Nevada because he had selected this as his domicile and his permanent residence. (See Decision dated April
24, 1950, supra). So the question at issue is whether the estementary dispositions, especially hose for the children
which are short of the legitime given them by the Civil Code of the Philippines, are valid. It is not disputed that the
laws of Nevada allow a testator to dispose of all his properties by will (Sec. 9905, Complied Nevada Laws of
1925, supra). It does not appear that at time of the hearing of the project of partition, the above-quoted provision was
introduced in evidence, as it was the executor's duly to do. The law of Nevada, being a foreign law can only be proved
in our courts in the form and manner provided for by our Rules, which are as follows:

SEC. 41. Proof of public or official record. — An official record or an entry therein, when admissible for any
purpose, may be evidenced by an official publication thereof or by a copy tested by the officer having the legal
custody of he record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a
certificate that such officer has the custody. . . . (Rule 123).

We have, however, consulted the records of the case in the court below and we have found that during the hearing on
October 4, 1954 of the motion of Magdalena C. Bohanan for withdrawal of P20,000 as her share, the foreign law,
especially Section 9905, Compiled Nevada Laws. was introduced in evidence by appellant's (herein) counsel as Exhibits
"2" (See pp. 77-79, VOL. II, and t.s.n. pp. 24-44, Records, Court of First Instance). Again said laws presented by the
counsel for the executor and admitted by the Court as Exhibit "B" during the hearing of the case on January 23, 1950
before Judge Rafael Amparo (se Records, Court of First Instance, Vol. 1).

In addition, the other appellants, children of the testator, do not dispute the above-quoted provision of the laws of the
State of Nevada. Under all the above circumstances, we are constrained to hold that the pertinent law of Nevada,
especially Section 9905 of the Compiled Nevada Laws of 1925, can be taken judicial notice of by us, without proof of
such law having been offered at the hearing of the project of partition.

As in accordance with Article 10 of the old Civil Code, the validity of testamentary dispositions are to be governed by
the national law of the testator, and as it has been decided and it is not disputed that the national law of the testator is
that of the State of Nevada, already indicated above, which allows a testator to dispose of all his property according to
his will, as in the case at bar, the order of the court approving the project of partition made in accordance with the
testamentary provisions, must be, as it is hereby affirmed, with costs against appellants.

Paras, Bengzon, C.J., Padilla, Bautista Angelo and Endencia, JJ., concur.
Barrera, J., concurs in the result.
SECOND DIVISION

[G.R. No. 139325. April 12, 2005]

PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C.
LAMANGAN in their behalf and on behalf of the Class Plaintifs in Class Action No. MDL 840, United States
District Court of Hawaii, petitioners, vs. HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge
of Branch 137, Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its
court appointed legal representatives in Class Action MDL 840, United States District Court of Hawaii,
namely: Imelda R. Marcos and Ferdinand Marcos, Jr., respondents.

DECISION

TINGA, J.:

Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding out its bitter crop.
While the restoration of freedom and the fundamental structures and processes of democracy have been much
lauded, according to a significant number, the changes, however, have not sufficiently healed the colossal damage
wrought under the oppressive conditions of the martial law period. The cries of justice for the tortured, the murdered,
and the desaparecidos arouse outrage and sympathy in the hearts of the fair-minded, yet the dispensation of the
appropriate relief due them cannot be extended through the same caprice or whim that characterized the ill-wind of
martial rule. The damage done was not merely personal but institutional, and the proper rebuke to the iniquitous past
has to involve the award of reparations due within the confines of the restored rule of law.

The petitioners in this case are prominent victims of human rights violations[1] who, deprived of the opportunity
to directly confront the man who once held absolute rule over this country, have chosen to do battle instead with the
earthly representative, his estate. The clash has been for now interrupted by a trial court ruling, seemingly comported
to legal logic, that required the petitioners to pay a whopping filing fee of over Four Hundred Seventy-Two Million
Pesos (P472,000,000.00) in order that they be able to enforce a judgment awarded them by a foreign court. There is an
understandable temptation to cast the struggle within the simplistic confines of a morality tale, and to employ short-
cuts to arrive at what might seem the desirable solution. But easy, reflexive resort to the equity principle all too often
leads to a result that may be morally correct, but legally wrong.

Nonetheless, the application of the legal principles involved in this case will comfort those who maintain that our
substantive and procedural laws, for all their perceived ambiguity and susceptibility to myriad interpretations, are
inherently fair and just. The relief sought by the petitioners is expressly mandated by our laws and conforms to
established legal principles. The granting of this petition for certiorari is warranted in order to correct the legally infirm
and unabashedly unjust ruling of the respondent judge.

The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with the United States District
Court (US District Court), District of Hawaii, against the Estate of former Philippine President Ferdinand E. Marcos
(Marcos Estate). The action was brought forth by ten Filipino citizens[2] who each alleged having suffered human rights
abuses such as arbitrary detention, torture and rape in the hands of police or military forces during the Marcos regime.
[3] The Alien Tort Act was invoked as basis for the US District Courts jurisdiction over the complaint, as it involved a suit
by aliens for tortious violations of international law.[4] These plaintiffs brought the action on their own behalf and on
behalf of a class of similarly situated individuals, particularly consisting of all current civilian citizens of the Philippines,
their heirs and beneficiaries, who between 1972 and 1987 were tortured, summarily executed or had disappeared
while in the custody of military or paramilitary groups. Plaintiffs alleged that the class consisted of approximately ten
thousand (10,000) members; hence, joinder of all these persons was impracticable.

The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of the US Federal Rules of Civil
Procedure, the provisions of which were invoked by the plaintiffs. Subsequently, the US District Court certified the case
as a class action and created three (3) sub-classes of torture, summary execution and disappearance victims.[5] Trial
ensued, and subsequently a jury rendered a verdict and an award of compensatory and exemplary damages in favor of
the plaintiff class. Then, on 3 February 1995, the US District Court, presided by Judge Manuel L. Real, rendered a Final
Judgment (Final Judgment) awarding the plaintiff class a total of One Billion Nine Hundred Sixty Four Million Five
Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final Judgment was eventually
affirmed by the US Court of Appeals for the Ninth Circuit, in a decision rendered on 17 December 1996.[6]

On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of Makati (Makati
RTC) for the enforcement of the Final Judgment. They alleged that they are members of the plaintiff class in whose
favor the US District Court awarded damages.[7]They argued that since the Marcos Estate failed to file a petition for
certiorari with the US Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the
decision of the US District Court had become final and executory, and hence should be recognized and enforced in the
Philippines, pursuant to Section 50, Rule 39 of the Rules of Court then in force.[8]

On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among others, the non-payment of the
correct filing fees. It alleged that petitioners had only paid Four Hundred Ten Pesos ( P410.00) as docket and filing fees,
notwithstanding the fact that they sought to enforce a monetary amount of damages in the amount of over Two and a
Quarter Billion US Dollars (US$2.25 Billion). The Marcos Estate cited Supreme Court Circular No. 7, pertaining to the
proper computation and payment of docket fees. In response, the petitioners claimed that an action for the
enforcement of a foreign judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred Ten
Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141.[9]

On 9 September 1998, respondent Judge Santiago Javier Ranada[10] of the Makati RTC issued the
subject Order dismissing the complaint without prejudice. Respondent judge opined that contrary to the petitioners
submission, the subject matter of the complaint was indeed capable of pecuniary estimation, as it involved a judgment
rendered by a foreign court ordering the payment of definite sums of money, allowing for easy determination of the
value of the foreign judgment. On that score, Section 7(a) of Rule 141 of the Rules of Civil Procedure would find
application, and the RTC estimated the proper amount of filing fees was approximately Four Hundred Seventy Two
Million Pesos, which obviously had not been paid.

Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada denied in an Order dated 28
July 1999. From this denial, petitioners filed a Petition for Certiorari under Rule 65 assailing the twin orders of
respondent judge.[11] They prayed for the annulment of the questioned orders, and an order directing the
reinstatement of Civil Case No. 97-1052 and the conduct of appropriate proceedings thereon.

Petitioners submit that their action is incapable of pecuniary estimation as the subject matter of the suit is the
enforcement of a foreign judgment, and not an action for the collection of a sum of money or recovery of damages.
They also point out that to require the class plaintiffs to pay Four Hundred Seventy Two Million Pesos
(P472,000,000.00) in filing fees would negate and render inutile the liberal construction ordained by the Rules of
Court, as required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the inexpensive disposition of every
action.
 Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which provides that Free access to
the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of
poverty, a mandate which is essentially defeated by the required exorbitant filing fee. The adjudicated amount of the
filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable, and unjust.

The Commission on Human Rights (CHR) was permitted to intervene in this case.[12] It urged that the petition be
granted and a judgment rendered, ordering the enforcement and execution of the District Court judgment in
accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For the CHR, the Makati RTC erred in
interpreting the action for the execution of a foreign judgment as a new case, in violation of the principle that once a
case has been decided between the same parties in one country on the same issue with finality, it can no longer be
relitigated again in another country.[13] The CHR likewise invokes the principle of comity, and of vested rights.

The Courts disposition on the issue of filing fees will prove a useful jurisprudential guidepost for courts
confronted with actions enforcing foreign judgments, particularly those lodged against an estate. There is no basis for
the issuance a limited pro hac vice ruling based on the special circumstances of the petitioners as victims of martial
law, or on the emotionally-charged allegation of human rights abuses.

An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge ignored the clear
letter of the law when he concluded that the filing fee be computed based on the total sum claimed or the stated
value of the property in litigation.

In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as basis for the computation of
the filing fee of over P472 Million. The provision states:

SEC. 7. Clerk of Regional Trial Court.-

(a) For filing an action or a permissive counterclaim or money claim against an estate not based on
judgment, or for filing with leave of court a third-party, fourth-party, etc., complaint, or a complaint in
intervention, and for all clerical services in the same time, if the total sum claimed, exclusive of interest, or
the started value of the property in litigation, is:

1. Less than P 100,00.00 P 500.00

2. P 100,000.00 or more - P 800.00

but less than P 150,000.00
3. P 150,000.00 or more but - P 1,000.00
less than P 200,000.00
4. P 200,000.00 or more but
less than P 250,000.00 - P 1,500.00
5. P 250,000.00 or more but
less than P 300,00.00 - P 1,750.00
6. P 300,000.00 or more but
not more than P 400,000.00 - P 2,000.00
7. P 350,000.00 or more but not
more than P400,000.00 - P 2,250.00
8. For each P 1,000.00 in excess of
P 400,000.00 - P 10.00

...

(Emphasis supplied)
 Obviously, the above-quoted provision covers, on one hand, ordinary actions, permissive counterclaims, third-
party, etc. complaints and complaints-in-interventions, and on the other, money claims against estates which are not
based on judgment. Thus, the relevant question for purposes of the present petition is whether the action filed with
the lower court is a money claim against an estate not based on judgment.

Petitioners complaint may have been lodged against an estate, but it is clearly based on a judgment, the Final
Judgment of the US District Court. The provision does not make any distinction between a local judgment and a foreign
judgment, and where the law does not distinguish, we shall not distinguish.

A reading of Section 7 in its entirety reveals several instances wherein the filing fee is computed on the basis of
the amount of the relief sought, or on the value of the property in litigation. The filing fee for requests for extrajudicial
foreclosure of mortgage is based on the amount of indebtedness or the mortgagees claim. [14] In special proceedings
involving properties such as for the allowance of wills, the filing fee is again based on the value of the property.
[15] The aforecited rules evidently have no application to petitioners complaint.

Petitioners rely on Section 7(b), particularly the proviso on actions where the value of the subject matter cannot
be estimated. The provision reads in full:

SEC. 7. Clerk of Regional Trial Court.-

(b) For filing

1. Actions where the value

of the subject matter

cannot be estimated --- P 600.00

2. Special civil actions except

judicial foreclosure which

shall be governed by
paragraph (a) above --- P 600.00

3. All other actions not

involving property --- P 600.00

In a real action, the assessed value of the property, or if there is none, the estimated value, thereof shall be alleged by
the claimant and shall be the basis in computing the fees.

It is worth noting that the provision also provides that in real actions, the assessed value or estimated value of
the property shall be alleged by the claimant and shall be the basis in computing the fees. Yet again, this provision
does not apply in the case at bar. A real action is one where the plaintiff seeks the recovery of real property or an
action affecting title to or recovery of possession of real property.[16]Neither the complaint nor the award of damages
adjudicated by the US District Court involves any real property of the Marcos Estate.

Thus, respondent judge was in clear and serious error when he concluded that the filing fees should be computed
on the basis of the schematic table of Section 7(a), as the action involved pertains to a claim against an estate based on
judgment. What provision, if any, then should apply in determining the filing fees for an action to enforce a foreign
judgment?

To resolve this question, a proper understanding is required on the nature and effects of a foreign judgment in
this jurisdiction.
 The rules of comity, utility and convenience of nations have established a usage among civilized states by which
final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under
certain conditions that may vary in different countries.[17] This principle was prominently affirmed in the leading
American case of Hilton v. Guyot[18] and expressly recognized in our jurisprudence beginning with Ingenholl v. Walter
E. Olsen & Co.[19] The conditions required by the Philippines for recognition and enforcement of a foreign judgment
were originally contained in Section 311 of the Code of Civil Procedure, which was taken from the California Code of
Civil Procedure which, in turn, was derived from the California Act of March 11, 1872. [20] Remarkably, the procedural
rule now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has remained unchanged down to the last word
in nearly a century. Section 48 states:

SEC. 48. Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign country, having jurisdiction to
pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title;

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.

There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an
action in rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an
action in personam, the foreign judgment is presumptive, and not conclusive, of a right as between the parties and
their successors in interest by a subsequent title.[21] However, in both cases, the foreign judgment is susceptible to
impeachment in our local courts on the grounds of want of jurisdiction or notice to the party, [22] collusion, fraud,
[23]or clear mistake of law or fact.[24] Thus, the party aggrieved by the foreign judgment is entitled to defend against
the enforcement of such decision in the local forum. It is essential that there should be an opportunity to challenge the
foreign judgment, in order for the court in this jurisdiction to properly determine its efficacy.[25]

It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign judgment [26],
even if such judgment has conclusive effect as in the case of in rem actions, if only for the purpose of allowing the
losing party an opportunity to challenge the foreign judgment, and in order for the court to properly determine its
efficacy.[27] Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of
its validity.[28]

The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign judgment in
the Philippines. But there is no question that the filing of a civil complaint is an appropriate measure for such purpose.
A civil action is one by which a party sues another for the enforcement or protection of a right, [29] and clearly an
action to enforce a foreign judgment is in essence a vindication of a right prescinding either from a conclusive
judgment upon title or the presumptive evidence of a right.[30] Absent perhaps a statutory grant of jurisdiction to a
quasi-judicial body, the claim for enforcement of judgment must be brought before the regular courts.[31]

There are distinctions, nuanced but discernible, between the cause of action arising from the enforcement of a
foreign judgment, and that arising from the facts or allegations that occasioned the foreign judgment. They may
pertain to the same set of facts, but there is an essential difference in the right-duty correlatives that are sought to be
vindicated. For example, in a complaint for damages against a tortfeasor, the cause of action emanates from the
violation of the right of the complainant through the act or omission of the respondent. On the other hand, in a
complaint for the enforcement of a foreign judgment awarding damages from the same tortfeasor, for the violation of
the same right through the same manner of action, the cause of action derives not from the tortious act but from the
foreign judgment itself.
 More importantly, the matters for proof are different. Using the above example, the complainant will have to
establish before the court the tortious act or omission committed by the tortfeasor, who in turn is allowed to rebut
these factual allegations or prove extenuating circumstances. Extensive litigation is thus conducted on the facts, and
from there the right to and amount of damages are assessed. On the other hand, in an action to enforce a foreign
judgment, the matter left for proof is the foreign judgment itself, and not the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the
foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law. The limitations on review is in
consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims and issues.
[32] Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from previous
litigation, to safeguard against the harassment of defendants, to insure that the task of courts not be increased by
never-ending litigation of the same disputes, and in a larger sense to promote what Lord Coke in the Ferrers Case of
1599 stated to be the goal of all law: rest and quietness.[33] If every judgment of a foreign court were reviewable on
the merits, the plaintiff would be forced back on his/her original cause of action, rendering immaterial the previously
concluded litigation.[34]

Petitioners appreciate this distinction, and rely upon it to support the proposition that the subject matter of the
complaintthe enforcement of a foreign judgmentis incapable of pecuniary estimation. Admittedly the proposition, as it
applies in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all practical intents and purposes, the
matter at hand is capable of pecuniary estimation, down to the last cent. In the assailed Order, the respondent judge
pounced upon this point without equivocation:

The Rules use the term where the value of the subject matter cannot be estimated. The subject matter of the present
case is the judgment rendered by the foreign court ordering defendant to pay plaintiffs definite sums of money, as and
for compensatory damages. The Court finds that the value of the foreign judgment can be estimated; indeed, it can
even be easily determined. The Court is not minded to distinguish between the enforcement of a judgment and the
amount of said judgment, and separate the two, for purposes of determining the correct filing fees. Similarly, a plaintiff
suing on promissory note for P1 million cannot be allowed to pay only P400 filing fees (sic), on the reasoning that the
subject matter of his suit is not the P1 million, but the enforcement of the promissory note, and that the value of such
enforcement cannot be estimated.[35]

The jurisprudential standard in gauging whether the subject matter of an action is capable of pecuniary
estimation is well-entrenched. The Marcos Estate cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals,
which ruled:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court
has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for
the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in
the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the
basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to,
or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of
the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance (now
Regional Trial Courts).

On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v. Scandia,[36] from which the
rule in Singsong and Raymundo actually derives, but which incorporates this additional nuance omitted in the latter
cases:

xxx However, where the basic issue is something other than the right to recover a sum of money, where the money
claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant
perform his part of the contract (specific performance) and in actions for support, or for annulment of judgment or
to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable exclusively by courts of first instance.[37]

Petitioners go on to add that among the actions the Court has recognized as being incapable of pecuniary
estimation include legality of conveyances and money deposits,[38] validity of a mortgage,[39] the right to support,
[40] validity of documents,[41] rescission of contracts,[42]specific performance,[43] and validity or annulment of
judgments.[44] It is urged that an action for enforcement of a foreign judgment belongs to the same class.

This is an intriguing argument, but ultimately it is self-evident that while the subject matter of the action is
undoubtedly the enforcement of a foreign judgment, the effect of a providential award would be the adjudication of a
sum of money. Perhaps in theory, such an action is primarily for the enforcement of the foreign judgment, but there is
a certain obtuseness to that sort of argument since there is no denying that the enforcement of the foreign judgment
will necessarily result in the award of a definite sum of money.

But before we insist upon this conclusion past beyond the point of reckoning, we must examine its possible
ramifications. Petitioners raise the point that a declaration that an action for enforcement of foreign judgment may be
capable of pecuniary estimation might lead to an instance wherein a first level court such as the Municipal Trial Court
would have jurisdiction to enforce a foreign judgment. But under the statute defining the jurisdiction of first level
courts, B.P. 129, such courts are not vested with jurisdiction over actions for the enforcement of foreign judgments.

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in civil
cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including
the grant of provisional remedies in proper cases, where the value of the personal property, estate, or
amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila
where such personal property, estate, or amount of the demand does not exceed Two hundred thousand
pesos (P200,000.00) exclusive of interest damages of whatever kind, attorney's fees, litigation expenses, and
costs, the amount of which must be specifically alleged: Provided, That where there are several claims or
causes of action between the same or different parties, embodied in the same complaint, the amount of the
demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of
action arose out of the same or different transactions;

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in
such cases, the defendant raises the question of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession.

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein does not exceed Twenty
thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed
Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses and costs: Provided, That value of such property shall be determined by the assessed value of the
adjacent lots.[45]

Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter pertains to an assertion of
rights and interests over property or a sum of money. But as earlier pointed out, the subject matter of an action to
enforce a foreign judgment is the foreign judgment itself, and the cause of action arising from the adjudication of such
judgment.
 An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement of a foreign
judgment, even if capable of pecuniary estimation, would fall under the jurisdiction of the Regional Trial Courts, thus
negating the fears of the petitioners. Indeed, an examination of the provision indicates that it can be relied upon as
jurisdictional basis with respect to actions for enforcement of foreign judgments, provided that no other court or office
is vested jurisdiction over such complaint:

Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

xxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising jurisdiction or any
court, tribunal, person or body exercising judicial or quasi-judicial functions.

Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US District Court judgment
is one capable of pecuniary estimation. But at the same time, it is also an action based on judgment against an estate,
thus placing it beyond the ambit of Section 7(a) of Rule 141. What provision then governs the proper computation of
the filing fees over the instant complaint? For this case and other similarly situated instances, we find that it is covered
by Section 7(b)(3), involving as it does, other actions not involving property.

Notably, the amount paid as docket fees by the petitioners on the premise that it was an action incapable of
pecuniary estimation corresponds to the same amount required for other actions not involving property. The
petitioners thus paid the correct amount of filing fees, and it was a grave abuse of discretion for respondent judge to
have applied instead a clearly inapplicable rule and dismissed the complaint.

There is another consideration of supreme relevance in this case, one which should disabuse the notion that the
doctrine affirmed in this decision is grounded solely on the letter of the procedural rule. We earlier adverted to the the
internationally recognized policy of preclusion,[46] as well as the principles of comity, utility and convenience of
nations[47] as the basis for the evolution of the rule calling for the recognition and enforcement of foreign judgments.
The US Supreme Court in Hilton v. Guyot[48] relied heavily on the concept of comity, as especially derived from the
landmark treatise of Justice Story in his Commentaries on the Conflict of Laws of 1834.[49] Yet the notion of comity
has since been criticized as one of dim contours[50] or suffering from a number of fallacies.[51] Other conceptual
bases for the recognition of foreign judgments have evolved such as the vested rights theory or the modern doctrine
of obligation.[52]

There have been attempts to codify through treaties or multilateral agreements the standards for the recognition
and enforcement of foreign judgments, but these have not borne fruition. The members of the European Common
Market accede to the Judgments Convention,signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and rvision au fond.[53]The most ambitious of these attempts is
the Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, prepared
in 1966 by the Hague Conference of International Law.[54] While it has not received the ratifications needed to have it
take effect,[55] it is recognized as representing current scholarly thought on the topic.[56] Neither the Philippines nor
the United States are signatories to the Convention.

Yet even if there is no unanimity as to the applicable theory behind the recognition and enforcement of foreign
judgments or a universal treaty rendering it obligatory force, there is consensus that the viability of such recognition
and enforcement is essential. Steiner and Vagts note:

. . . The notion of unconnected bodies of national law on private international law, each following a quite separate
path, is not one conducive to the growth of a transnational community encouraging travel and commerce among its
members. There is a contemporary resurgence of writing stressing the identity or similarity of the values that systems
of public and private international law seek to further a community interest in common, or at least reasonable, rules
on these matters in national legal systems. And such generic principles as reciprocity play an important role in both
fields.[57]

Salonga, whose treatise on private international law is of worldwide renown, points out:

Whatever be the theory as to the basis for recognizing foreign judgments, there can be little dispute that the end is to
protect the reasonable expectations and demands of the parties. Where the parties have submitted a matter for
adjudication in the court of one state, and proceedings there are not tainted with irregularity, they may fairly be
expected to submit, within the state or elsewhere, to the enforcement of the judgment issued by the court.[58]

There is also consensus as to the requisites for recognition of a foreign judgment and the defenses against the
enforcement thereof. As earlier discussed, the exceptions enumerated in Section 48, Rule 39 have remain unchanged
since the time they were adapted in this jurisdiction from long standing American rules. The requisites and exceptions
as delineated under Section 48 are but a restatement of generally accepted principles of international law. Section 98
of The Restatement, Second, Conflict of Laws, states that a valid judgment rendered in a foreign nation after a fair trial
in a contested proceeding will be recognized in the United States, and on its face, the term valid brings into play
requirements such notions as valid jurisdiction over the subject matter and parties.[59] Similarly, the notion that fraud
or collusion may preclude the enforcement of a foreign judgment finds affirmation with foreign jurisprudence and
commentators,[60] as well as the doctrine that the foreign judgment must not constitute a clear mistake of law or fact.
[61] And finally, it has been recognized that public policy as a defense to the recognition of judgments serves as an
umbrella for a variety of concerns in international practice which may lead to a denial of recognition.[62]

The viability of the public policy defense against the enforcement of a foreign judgment has been recognized in
this jurisdiction.[63] This defense allows for the application of local standards in reviewing the foreign judgment,
especially when such judgment creates only a presumptive right, as it does in cases wherein the judgment is against a
person.[64] The defense is also recognized within the international sphere, as many civil law nations adhere to a broad
public policy exception which may result in a denial of recognition when the foreign court, in the light of the choice-of-
law rules of the recognizing court, applied the wrong law to the case.[65] The public policy defense can safeguard
against possible abuses to the easy resort to offshore litigation if it can be demonstrated that the original claim is
noxious to our constitutional values.

There is no obligatory rule derived from treaties or conventions that requires the Philippines to recognize foreign
judgments, or allow a procedure for the enforcement thereof. However, generally accepted principles of international
law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even if they do not
derive from treaty obligations.[66] The classical formulation in international law sees those customary rules accepted
as binding result from the combination two elements: the established, widespread, and consistent practice on the part
of States; and a psychological element known as the opinion juris sive necessitates (opinion as to law or necessity).
Implicit in the latter element is a belief that the practice in question is rendered obligatory by the existence of a rule of
law requiring it.[67]

While the definite conceptual parameters of the recognition and enforcement of foreign judgments have not
been authoritatively established, the Court can assert with certainty that such an undertaking is among those generally
accepted principles of international law.[68] As earlier demonstrated, there is a widespread practice among states
accepting in principle the need for such recognition and enforcement, albeit subject to limitations of varying degrees.
The fact that there is no binding universal treaty governing the practice is not indicative of a widespread rejection of
the principle, but only a disagreement as to the imposable specific rules governing the procedure for recognition and
enforcement.

Aside from the widespread practice, it is indubitable that the procedure for recognition and enforcement is
embodied in the rules of law, whether statutory or jurisprudential, adopted in various foreign jurisdictions. In the
Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which has existed in its current form
since the early 1900s. Certainly, the Philippine legal system has long ago accepted into its jurisprudence and
procedural rules the viability of an action for enforcement of foreign judgment, as well as the requisites for such valid
enforcement, as derived from internationally accepted doctrines. Again, there may be distinctions as to the rules
adopted by each particular state,[69] but they all prescind from the premise that there is a rule of law obliging states
to allow for, however generally, the recognition and enforcement of a foreign judgment. The bare principle, to our
mind, has attained the status of opinio juris in international practice.

This is a significant proposition, as it acknowledges that the procedure and requisites outlined in Section 48, Rule
39 derive their efficacy not merely from the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme Court,[70] and could very well be abrogated or
revised by the high court itself. Yet the Supreme Court is obliged, as are all State components, to obey the laws of the
land, including generally accepted principles of international law which form part thereof, such as those ensuring the
qualified recognition and enforcement of foreign judgments.[71]

Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges that there is a general right
recognized within our body of laws, and affirmed by the Constitution, to seek recognition and enforcement of foreign
judgments, as well as a right to defend against such enforcement on the grounds of want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact.

The preclusion of an action for enforcement of a foreign judgment in this country merely due to an exhorbitant
assessment of docket fees is alien to generally accepted practices and principles in international law. Indeed, there are
grave concerns in conditioning the amount of the filing fee on the pecuniary award or the value of the property subject
of the foreign decision. Such pecuniary award will almost certainly be in foreign denomination, computed in
accordance with the applicable laws and standards of the forum.[72] The vagaries of inflation, as well as the relative
low-income capacity of the Filipino, to date may very well translate into an award virtually unenforceable in this
country, despite its integral validity, if the docket fees for the enforcement thereof were predicated on the amount of
the award sought to be enforced. The theory adopted by respondent judge and the Marcos Estate may even lead to
absurdities, such as if applied to an award involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very well require that the filing fee be
computed based on the value of the foreign property as determined by the standards of the country where it is
located.

As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it recognizes that the subject
matter of an action for enforcement of a foreign judgment is the foreign judgment itself, and not the right-duty
correlatives that resulted in the foreign judgment. In this particular circumstance, given that the complaint is lodged
against an estate and is based on the US District Courts Final Judgment, this foreign judgment may, for purposes of
classification under the governing procedural rule, be deemed as subsumed under Section 7(b)(3) of Rule 141, i.e.,
within the class of all other actions not involving property. Thus, only the blanket filing fee of minimal amount is
required.

Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that [F]ree access to the
courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty.
Since the provision is among the guarantees ensured by the Bill of Rights, it certainly gives rise to a demandable right.
However, now is not the occasion to elaborate on the parameters of this constitutional right. Given our preceding
discussion, it is not necessary to utilize this provision in order to grant the relief sought by the petitioners. It is
axiomatic that the constitutionality of an act will not be resolved by the courts if the controversy can be settled on
other grounds[73] or unless the resolution thereof is indispensable for the determination of the case.[74]
 One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final Judgment is not conclusive
yet, but presumptive evidence of a right of the petitioners against the Marcos Estate. Moreover, the Marcos Estate is
not precluded to present evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact. This ruling, decisive as it is on the question of filing fees and no other, does not render verdict
on the enforceability of the Final Judgment before the courts under the jurisdiction of the Philippines, or for that
matter any other issue which may legitimately be presented before the trial court. Such issues are to be litigated
before the trial court, but within the confines of the matters for proof as laid down in Section 48, Rule 39. On the other
hand, the speedy resolution of this claim by the trial court is encouraged, and contumacious delay of the decision on
the merits will not be brooked by this Court.

WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and SET ASIDE, and a new order
REINSTATING Civil Case No. 97-1052 is hereby issued. No costs.

SO ORDERED.
SYLVESTER PENNOYER vs. MARCUS NEFF, 95 US 714, May 13, 1878

In Pennoyer v Neff, 95 U.S. 714 (1878), the U.S. Supreme Court considered the relationship between the Due Process
Clause of the Fourteenth Amendment and personal jurisdiction. It held that a court may enter judgement against a
resident of another state only after he is personally served with process while in the state or owns property in the
state, which has been attached prior to the legal proceedings.

The Facts of Pennoyer v Nef

Attorney John H. Mitchell provided legal services to Marcus Neff in connection with a land grant in the state of Oregon.
Mitchell later sued Neff in an Oregon state court to recover unpaid legal fees. In accordance with a state law allowing
for service be made by publication of summons, Mitchell published a notice in a local newspaper regarding the lawsuit.
When Neff failed to appear in court, Mitchell won a default judgment.

After Neff’s land in Oregon was seized to satisfy the judgment, Mitchell purchased it at public auction. He subsequently
assigned it to Sylvester Pennoyer. Nine years later, Neff sued Pennoyer in federal court to recover his land.

The Court’s Decision in Pennoyer v Nef

The Supreme Court ruled in Neff’s favor, concluding that the state court lacked jurisdiction. As explained by Justice
Stephen J. Field, who authored the majority opinion:

A personal judgment is without any validity if it be rendered by a State court in an action upon a money
demand against a nonresident of the State who was served by a publication of summons, but upon
whom no personal service of process within the State was made, and who did not appear; and no title to
property passes by a sale under an execution issued upon such a judgment.
With regard to the jurisdiction of state courts, the Supreme Court concluded that a state’s exclusive jurisdiction and
sovereignty is limited to persons and property within its territory. “The State, having within her territory property of a
nonresident, may hold and appropriate it to satisfy the claims of her citizens against him, and her tribunals may inquire
into his obligations to the extent necessary to control the disposition of that property,” Justice Field wrote. “If he has
no property in the State, there is nothing upon which her tribunals can adjudicate.”

The court’s decision also highlighted the differences between suits against individuals (in personam), suits against
property (in rem), and suits against individuals owning property in the state (quasi in rem). As explained in the Court’s
decision, the requisite service of process for each type of suit differs:

Substituted service by publication, or in any other authorized form, is sufficient to inform a nonresident
of the object of proceedings taken where property is once brought under the control of the court by
seizure or some equivalent act, but where the suit is brought to determine his personal rights and
obligations, that is, where it is merely in personam, such service upon him is ineffectual for any purpose.
The Court’s conclusions that state courts can only determine the personal rights and obligations of parties over whom
they have jurisdiction were grounded in the Due Process clause of the 14th Amendment. As Justice Field explained:

The term “due process of law,” when applied to judicial proceedings, means a course of legal
proceedings according to those rules and principles which have been established by our jurisprudence
for the protection and enforcement of private rights. To give such proceedings any validity, there must be
a competent tribunal to pass upon their subject matter, and if that involves merely a determination of
the personal liability of the defendant, he must be brought within its jurisdiction by service of process
within the State, or by his voluntary appearance.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 47517 June 27, 1941

IDONAH SLADE PERKINS, petitioner,

vs.
MAMERTO ROXAS, ET AL., respondents.

Alva J. Hill for petitioner.

DeWitt, Perkins & Ponce Enrile for respondent Judge and respondent Perkins.
Ross, Lawrence, Selph & Carrascoso, Jr., for respondent Benguet Consolidated Mining Co.

LAUREL, J.:

On July 5, 1938, the respondent Eugene Arthur Perkins, filed a complaint in the Court of First Instance of Manila
against the Benguet Consolidated Mining Company for the recovery of the sum of P71,379.90, consisting of dividends
which have been declared and made payable on 52,874 shares of stock registered in his name, payment of which was
being withheld by the company, and for the recognition of his right to the control and disposal of said shares, to the
exclusion of all others. To the complaint, the company filed its answer, alleging, by way of defense, that the
withholding of plaintiff's right to the disposal and control of the shares was due to certain demands made with respect
to said shares by the petitioner herein. Idonah Slade Perkins, and by one George H. Engelhard. 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.

On September 5, 1938, the trial court ordered the respondent, Eugene Arthur Perkins, to include in his complaint as
parties defendants 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 H. Engelhard be adjudged without interest in the shares of stock in question and
excluded from any claim they assert thereon. 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 January 8, 1940, petitioner's objection to the
court's jurisdiction over her person having been overruled by the trial court and by this court in G. R. No. 46831,
petitioner filed her answer with a cross-complaint in which she sets up a judgment allegedly obtained by her against
respondent, Eugene Arthur Perkins, from the Supreme Court of the State of New York, wherein it is declared that she is
the sole legal owner and entitled to the possession and control of the shares of stock in question together with all the
cash dividends declared thereon by the Benguet Consolidated Mining Company, and prays for various affirmative
reliefs against the respondent. To the answer and cross-complaint thus filed, the respondent, Eugene Arthur Perkins,
filed a reply and an answer in which he sets up several defenses to the enforcement in this jurisdiction of the judgment
of the Supreme Court of the State of New York above alluded to. Instead of demurring to the reply on either of the two
grounds specified in section 100 of the Code of Civil Procedure, petitioner, Idonah Slade Perkins, on June 5, 1940, filed
a demurrer thereto on the ground that "the court has no jurisdiction of the subject of the action," because the alleged
judgment of the Supreme Court of the State of New York is res judicata.

Petitioner's demurrer having been overruled, she now filed in this court a petition entitled "Certiorari, Prohibition
and Mandamus," alleging that "the respondent judge is about to and will render judgment in the above-mentioned
case disregarding the constitutional rights of this petitioner; contrary to and annulling the final, subsisting, valid
judgment rendered and entered in this petitioner's favor by the courts of the State of New York, ... which decision
is res judicata on all the questions constituting the subject matter of civil case No. 53317, of the Court of First Instance
of Manila; and which New York judgment the Court of First Instance of Manila is without jurisdiction to annul, amend,
reverse, or modify in any respect whatsoever"; and praying that the order of the respondent judge overruling the
demurrer be annulled, and that he and his successors be permanently prohibited from taking any action on the case,
except to dismiss the same.

The only question here to be determined, therefore, is whether or not, in view of the alleged judgment entered in
favor of the petitioner by the Supreme Court of New York, and which is claimed by her to be res judicata on all
questions raised by the respondent, Eugene Arthur Perkins, in civil case No. 53317 of the Court of First Instace of
Manila, the local court has jurisdiction over the subject matter of the action in the said case. By jurisdiction over the
subject matter is meant the nature of the cause of action and of the relief sought, and this is conferred by the
sovereign authority which organizes the court, and is to be sought for in general nature of its powers, or in authority
specially conferred. In the present case, the amended complaint filed by the respondent, Eugene Arthur Perkins, in the
court below alleged the ownership in himself of the conjugal partnership between him and his wife, Idonah Slade
Perkins; that the petitioner, Idonah Slade Perkins, and George H. Engelhard assert claims to and interests in the said
stock adverse to Eugene Arthur Perkins; that such claims are invalid, unfounded, and made only for the purpose of
vexing, hindering and delaying Eugene Arthur Perkins in the exercise of the lawful control over and use of said shares
and dividends accorded to him and by law and by previous orders and decrees of this court; and the said amended
complaint prays, inter alia, "that defendant Benguet Consolidated Mining Company be required and ordered to
recognize the right of the plaintiff to the control and disposal of said shares so standing in his name to the exclusion of
all others; that the additional defendants, Idonah Slade Perkins and George H. Engelhard, be each held to have no
interest or claim in the subject matter of the controversy between plaintiff and defendant Benguet Consolidated
Mining Company, or in or under the judgment to be rendered herein and that by said judgment they, and each of them
be excluded therefrom; and that the plaintiff be awarded the costs of this suit and general relief." The respondent's
action, therefore, calls for the adjudication of title to certain shares of stock of the Benguet Consolidated Mining
Company, and the granting of affirmative reliefs, which fall within the general jurisdiction of the Court of First Instance
of Manila. (Vide: sec. 146, et seq., Adm. Code, as amended by Commonwealth Act No. 145; sec. 56, Act No. 136, as
amended by Act No. 400.)

Similarly, the Court of First Instance of Manila is empowered to adjudicate the several demands contained in
petitioner's cross-complaint. The cross-complaint sets up a judgment allegedly recovered by Idonah Slade Perkins
against Eugene Arthur Perkins in the Supreme Court of New York and by way of relief prays:

(1) Judgment against the plaintiff Eugene Arthur Perkins in the sum of one hundred eighty-five thousand and
four hundred dollars ($185,400), representing cash dividends paid to him by defendant Benguet Consolidated
Mining Co. from February, 1930, up to and including the dividend of March 30, 1937.

(2) That plaintiff Eugene Arthur Perkins be required to deliver to this defendant the certificates representing
the 48,000 shares of capital stock of Benguet Consolidated Mining Co. issued as a stock dividend on the
24,000 shares owned by this defendant as described in the judgment Exhibit 1-A.

(3) That this defendant recover under that judgment Exhibit 1-A interest upon the amount of each cash
dividend referred to in that judgment received by plaintiff Eugene Arthur Perkins from February, 1930, to and
including the dividend of March 30, 1937, from the date of payment of each of such dividends at the rate of 7
per cent per annum until paid.

(4) That this defendant recover of plaintiff her costs and disbursements in that New York action amounting to
the sum of one thousand five hundred eighty-four and 20/00 dollars ($1,584.20), and the further sum of two
thousand dollars ($2,000) granted her in that judgment Exhibit 1-A as an extra allowance, together with
interest.

(5) For an order directing an execution to be issued in favor of this defendant and against the plaintiff for
amounts sufficient to satisfy the New York judgment Exhibit 1-A in its entirety, and against the plaintiff and the
defendant Benguet Consolidated Mining Co. for such other amounts prayed for herein as this court may find
to be due and payable by each of them; and ordering them to comply with all other orders which this court
may issue in favor of the defendant in this case.
 (6) For the costs of this action, and

(7) For such other relief as may be appropriate and proper in the premises.

In other words, Idonah Slade Perkins in her cross-complaint brought suit against Eugene Arthur Perkins and the
Benguet Consolidated Mining Company upon the alleged judgment of the Supreme Court of the State of New York and
asked the court below to render judgment enforcing that New York judgment, and to issue execution thereon. This is a
form of action recognized by section 309 of the Code of Civil Procedure (now section 47, Rule 39, Rules of Court) and
which falls within the general jurisdiction of the Court of First Instance of Manila, to adjudicate, settled and determine.

The petitioner expresses the fear that the respondent judge may render judgment "annulling the final, subsisting, valid
judgment rendered and entered in this petitioner's favor by the courts of the State of New York, ... which decision
is res judicata on all the questions constituting the subject matter of civil case No. 53317," and argues on the
assumption that the respondent judge is without jurisdiction to take cognizance of the cause. Whether or not the
respondent judge in the course of the proceedings will give validity and efficacy to the New York judgment set up by
the petitioner in her cross-complaint is a question that goes to the merits of the controversy and relates to the rights
of the parties as between each other, and not to the jurisdiction or power of the court. The test of jurisdiction is
whether or not the tribunal has power to enter upon the inquiry, not whether its conclusion in the course of it is right
or wrong. If its decision is erroneous, its judgment case be reversed on appeal; but its determination of the question,
which the petitioner here anticipates and seeks to prevent, is the exercise by that court — and the rightful exercise —
of its jurisdiction.

The petition is, therefore, hereby denied, with costs against the petitioner. So ordered.

Avanceña, C.J., Diaz, Moran and Horrilleno, JJ., concur.