conflicts of law cases digest

7/26/2019 Conflicts of Law Cases Digest

http://slidepdf.com/reader/full/conflicts-of-law-cases-digest 1/57

C O N F L I C T O F L A W S

1s t

e x a m c a s e s | 1

I. BASIC PRINCIPLES

Topic: In General

G.R. No. 122191 October 8, 1998SAUDI ARABIAN AIRLINES, petitioner, vs.COURT OF APPEALS, MILAGROS P.MORADA and HON. RODOLFO A.ORTIZ, in his capacity as Presiding Judge ofBranch 89, Regional Trial Court of QuezonCity, respondents.

Facts: Milagros Morada is a flight attendantof Saudi Arabian Airlines (SAUDIA). While ona lay-over in Jakarta, she went to a disco dance with a fellow crew members, Thamer and Allah Al-Gazzawi who are both Saudinationals. After the party, they returned to thehotel and decided to have breakfast at theroom of Thamer. For some reason, Allah leftthe room and shortly after he did, Thamerattempted to rape Milagros. Fortunately, aroomboy and several security personnel heardher cries for help and rescued her. Later, theIndonesian police came and arrested Thamerand Allah Al-Gazzawi, the latter as anaccomplice.

When Milagros returned to Jeddah a few dayslater, several SAUDIA officials interrogated

her about the Jakarta incident. They thenrequested her to go back to Jakarta to helparrange the release of Thamer and Allah. InJakarta, SAUDIA officials negotiated with thepolice for the immediate release of thedetained crew members but did not succeed because Milagros refused to cooperate.

Later on, she learned that, through theintercession of the Saudi Arabian government,the Indonesian authorities agreed to deportThamer and Allah after two weeks ofdetention. Eventually, they were again put in

service by SAUDIA while Milagros wastransferred to Manila.

Just when Milagros thought that the Jakartaincident was already behind her, her superiorsrequested her to see Mr. Ali Meniewy, ChiefLegal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he brought her tothe police station where the police took herpassport and questioned her about the Jakartaincident. Miniewy simply stood by as thepolice put pressure on her to make a statementdropping the case against Thamer and Allah.

Not until she agreed to do so did the police

return her passport and allowed her to catchthe afternoon flight out of Jeddah.

One year and a half later in Riyadh, Saudi Arabia, a few minutes before the departure ofher flight to Manila, Milagros was not allowedto board the plane and instead ordered to takea later flight to Jeddah to see Mr. Miniewy, theChief Legal Officer of SAUDIA. When she did,a certain Khalid of the SAUDIA office broughther to a Saudi court where she was asked tosign a document written in Arabic. They toldher that this was necessary to close the caseagainst Thamer and Allah. As it turned out,plaintiff signed a notice to her to appear beforethe court on June 27, 1993. She then returnedto Manila.

Shortly afterwards, SAUDIA summonedMilagros to report to Jeddah once again andsee Miniewy for further investigation. She didso after receiving assurance from SAUDIA'sManila manager, AslamSaleemi, that theinvestigation was routinary and that it posedno danger to her.

In Jeddah, a SAUDIA legal officer brought herto the same Saudi court where a Saudi judgeinterrogated her through an interpreter aboutthe Jakarta incident. After one hour ofinterrogation, they let her go. At the airport,

however, just as her plane was about to takeoff, a SAUDIA officer told her that the airlinehad forbidden her to take flight. At the InflightService Office where she was told to go, thesecretary of Mr. YahyaSaddick took away herpassport and told her to remain in Jeddah, atthe crew quarters, until further orders.

Subsequently, SAUDIA legal officer againescorted plaintiff to the same court where the judge, to her astonishment and shock,rendered a decision, translated to her inEnglish, sentencing her to five months

imprisonment and to 286 lashes.

Only then did she realize that the Saudi courthad tried her, together with Thamer and Allah,for what happened in Jakarta. The court foundplaintiff guilty of (1) adultery; (2) going to adisco, dancing and listening to the music in violation of Islamic laws; and (3) socializing with the male crew, in contravention of Islamictradition.

Facing conviction, Milagros sought the help ofher employer, SAUDIA. Unfortunately, she was denied any assistance. She then asked thePhilippine Embassy in Jeddah to help her




1s t


while her case is on appeal. Eventually, thePrince of Makkah dismissed the case againsther and allowed her to leave Saudi Arabia.Shortly before her return to Manila, she wasterminated from the service by SAUDIA, without her being informed of the cause.

Morada filed a Complaint for damages againstSAUDIA.

SAUDIA‘s contention: The trial court has no jurisdiction to hear and try the civil case basedon Article 21 of the New Civil Code since theproper law applicable is the law of theKingdom of Saudi Arabia inasmuch as thiscase involves what is known in privateinternational law as a "conflicts problem".Otherwise, the Republic of the Philippines will

sit in judgment of the acts done by anothersovereign state which is abhorred.

Issue: What law should apply in thecase?

Ruling: It is Philippine Law that shouldapply.

Foreign element

Where the factual antecedents satisfactorilyestablish the existence of a foreign element, weagree with petitioner that the problem hereincould present a "conflicts" case.

A factual situation that cuts across territoriallines and is affected by the diverse laws of twoor more states is said to contain a "foreignelement". The presence of a foreign element isinevitable since social and economic affairs ofindividuals and associations are rarelyconfined to the geographic limits of their birthor conception.

The forms in which this foreign element mayappear are many. The foreign element maysimply consist in the fact that one of theparties to a contract is an alien or has a foreigndomicile, or that a contract between nationalsof one State involves properties situated inanother State. In other cases, the foreignelement may assume a complex form.

In the instant case, the foreign elementconsisted in the fact that:

1.

Private respondent Morada is a

resident Philippine national, and that

2. Petitioner SAUDIA is a residentforeign corporation.

3. Also, by virtue of the employment ofMorada with the petitioner Saudia as aflight stewardess, events did transpireduring her many occasions of travel

across national borders, particularlyfrom Manila, Philippines to Jeddah,Saudi Arabia, and vice versa, thatcaused a "conflicts" situation to arise.

A conflicts problem presents itself here, andthe question of jurisdiction 43 confronts thecourt a quo.

Philippines is the situs of the tortcomplained of and the place "having themost interest in the problem", we find,

that the Philippine law on tort liabilityshould have paramount application toand control in the resolution of the legalissues arising out of this case.

As to the choice of applicable law, we note thatchoice-of-law problems seek to answer twoimportant questions:

(1) What legal system should control a givensituation where some of the significant factsoccurred in two or more states; and

(2) To what extent should the chosen legalsystem regulate the situation.

Several theories have been propounded inorder to identify the legal system that shouldultimately control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and predictability, theydo not always do so. The forum is then faced with the problem of deciding which of thesetwo important values should be stressed.

Doctrine of Qualification

Before a choice can be made, it is necessary forus to determine under what category a certainset of facts or rules fall. This process is knownas "characterization", or the "doctrine ofqualification". It is the "process ofdeciding whether or not the facts relateto the kind of question specified in aconflicts rule." The purpose of"characterization" is to enable the forum toselect the proper law.

Our starting point of analysis here is not alegal relation, but a factual situation, event, or




1s t


operative fact. An essential element of conflictrules is the indication of a "test" or "connectingfactor" or "point of contact". Choice-of-lawrules invariably consist of a factualrelationship (such as property right, contractclaim) and a connecting factor or point of

contact, such as the situs of the res, the placeof celebration, the place of performance, or theplace of wrongdoing.

Test Factors, Points of Contact, Connecting Factors

Note that one or more circumstances may bepresent to serve as the possible test for thedetermination of the applicable law. These"test factors" or "points of contact" or"connecting factors" could be any of the

following:

(1) The nationality of a person, hisdomicile, his residence, his place of sojourn, orhis origin;

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

(3) thesitus of a thing, that is, the place where a thing is, or is deemed to be situated.In particular, the lexsitus is decisive when realrights are involved;

(4) the place where an act has been done,the locus actus, such as the place where acontract has been made, a marriagecelebrated, a will signed or a tort committed.The lex loci actus is particularly important incontracts and torts;

(5) the place where an act is intended tocome into effect, e.g., the place of performanceof contractual duties, or the place where apower of attorney is to be exercised;

(6) the intention of the contracting partiesas to the law that should govern theiragreement, the lex loci intentionis;

(7) the place where judicial oradministrative proceedings are instituted ordone. The lexfori — the law of the forum — isparticularly important because, as we haveseen earlier, matters of "procedure" not goingto the substance of the claim involved aregoverned by it; and because the lexfori applies whenever the content of the otherwise

applicable foreign law is excluded fromapplication in a given case for the reason that

it falls under one of the exceptions to theapplications of foreign law; and

(8) the flag of a ship, which in many casesis decisive of practically all legal relationshipsof the ship and of its master or owner as such.It also covers contractual relationshipsparticularly contracts of affreightment.

Considering that the complaint in the court aquo is one involving torts, the "connectingfactor" or "point of contact" could be the placeor places where the tortious conduct or lex lociactus occurred. And applying the tortsprinciple in a conflicts case, we find that thePhilippines could be said as a situs of the tort(the place where the alleged tortious conducttook place). This is because it is in the

Philippines where SAUDIA allegedly deceivedMilagros, a Filipina residing and working here. According to her, she had honestly believedthat SAUDIA would, in the exercise of itsrights and in the performance of its duties, "act with justice, give her due and observe honestyand good faith." Instead, SAUDIA failed toprotect her, she claimed. That certain acts orparts of the injury allegedly occurred inanother country is of no moment. For in our view what is important here is the place wherethe over-all harm or the totality of the allegedinjury to the person, reputation, social

standing and human rights of complainant,had lodged, according to Milagros. All told, itis not without basis to identify the Philippinesas the situs of the alleged tort.

Principle of lex loci delicticommissi

Moreover, with the widespread criticism of thetraditional rule of lex loci delicticommissi,modern theories and rules on tort liabilityhave been advanced to offer fresh judicialapproaches to arrive at just results. In keepingabreast 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 appropriateto apply now, given the factual context of thiscase.

In applying said principle to determine theState which has the most significantrelationship, the following contacts are to betaken into account and evaluated according totheir relative importance with respect to theparticular issue: (a) the place where the injuryoccurred; (b) the place where the conduct

causing the injury occurred; (c) the domicile,residence, nationality, place of incorporation




1s t


and place of business of the parties, and (d)the place where the relationship, if any, between the parties is centered.

As already discussed, there is basis for theclaim that over-all injury occurred and lodgedin the Philippines. There is likewise noquestion that private respondent is a residentFilipina national, working with petitioner, aresident foreign corporation engaged here inthe business of international air carriage.Thus, the "relationship" between the parties was centered here, although it should bestressed that this suit is not based on merelabor law violations. From the record, theclaim that the Philippines has the mostsignificant contact with the matter in thisdispute, raised by private respondent asplaintiff below against defendant (hereinpetitioner), in our view, has been properlyestablished.

Prescinding from this premise that thePhilippines is the situs of the tort complainedof and the place "having the most interest inthe problem", we find, by way ofrecapitulation, that the Philippine law on tortliability should have paramount application toand control in the resolution of the legal issuesarising out of this case.

Burden of proving the applicable lawrests on SAUDIA and not Milagros

Further, we hold that the respondent RegionalTrial Court has jurisdiction over the partiesand the subject matter of the complaint; theappropriate venue is in Quezon City, whichcould properly apply Philippine law. Moreover, we find untenable SAUDIA's insistence that"[s]ince Milagros instituted this suit, she hasthe burden of pleading and proving theapplicable Saudi law on the matter." As aptlysaid by private respondent, she has "no

obligation to plead and prove the law of theKingdom of Saudi Arabia since her cause ofaction is based on Articles 19 and 21" of theCivil Code of the Philippines. And as correctlyheld by the respondent appellate court,"considering that it was the petitioner who wasinvoking the applicability of the law of Saudi Arabia, then the burden was on it [petitioner]to plead and to establish what the law of Saudi Arabia is".

Indubitably, the Philippines is the stateintimately 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 country's system of law and justice in a transnational setting. With theseguidelines in mind, the trial court mustproceed to try and adjudge the case in the lightof relevant Philippine law, with dueconsideration of the foreign element or

elements involved. Nothing said herein, ofcourse, should be construed as prejudging theresults of the case in any manner whatsoever.

II. JURISDICTION

Topic: Subject Matter

SAUDI ARABIAN AIRLINES, petitioner , vs. COURT OF APPEALS, MILAGROS P.MORADA and HON. RODOLFO A.ORTIZ, in his capacity as PresidingJudge of Branch 89, Regional TrialCourt of Quezon City, respondents.

FACTS: Petitioner SAUDIA hiredprivate respondent MORADA (a Filipina) as aflight attendant in 1988, based in Jeddah. On1990, while on a lay-over in Jakarta,Indonesia, she went to a disco party withfellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals and onthe following morning in their hotel, one of themale attendants attempted to rape her. She was rescued by hotel attendants who heard hercry for help. The Indonesian police arrestedthe two.

MORADA returned to Jeddah, but was asked by the company to go back to Jakarta and helparrange the release of the 2 male attendants.MORADA did not cooperate because wasafraid that she might be tricked into something

she did not want because of her inability tounderstand the local dialect.

On January 14, 1992, just when plaintiffthought that the Jakarta incident wasalready behind her, her superiorsrequested 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 thepolice took her passport and questionedher about the Jakarta incident. Miniewysimply stood by as the police put pressure

on her to make a statement dropping thecase against Thamer and Allah. Not untilshe agreed to do so did the police return




1s t


her passport and allowed her to catch theafternoon flight out of Jeddah.

One year and a half later or on June 16,1993, in Riyadh, Saudi Arabia, a fewminutes before the departure of her flight

to Manila, plaintiff was not allowed to board the plane and instead ordered totake a later flight to Jeddah to see Mr.Miniewy, the Chief Legal Officer ofSAUDIA. When she did, a certain Khalidof the SAUDIA office brought her to aSaudi court where she was asked to sign adocument written in Arabic. They told herthat this was necessary to close the caseagainst Thamer and Allah. As it turnedout, plaintiff signed a notice to her toappear before the court on June 27, 1993.Plaintiff then returned to Manila.

Shortly afterwards, defendant SAUDIAsummoned plaintiff to report to Jeddahonce again and see Miniewy on June 27,1993 for further investigation. Plaintiff didso after receiving assurance fromSAUDIAs Manila manager, AslamSaleemi,that the investigation was routinary andthat it posed no danger to her.

In 1993, she was surprised, upon beingordered by SAUDIA to go to the Saudi court,that she was being convicted of (1) adultery;

(2) going to a disco, dancing and listening tothe music in violation of Islamic laws; and (3)socializing with the male crew, incontravention of Islamic tradition, sentencingher to five months imprisonment and to 286lashes. Only then did she realize that the Saudicourt had tried her, together with the 2, for what happened in Jakarta.

SAUDIA denied her the assistance sherequested. But because she was wrongfullyconvicted, Prince of Makkah dismissed thecase against her and allowed her to leave Saudi

Arabia. Shortly before her return to Manila,she was terminated from the service bySAUDIA, without her being informed of thecause.

On November 23, 1993, Morada filed aComplaint for damages against SAUDIA, andKhaled Al-Balawi (―Al-Balawi‖), its countrymanager.

SAUDIA ALLEGES: Private respondent‘sclaim for alleged abuse of rights occurred inthe Kingdom of Saudi Arabia. It alleges that

the existence of a foreign element qualifies theinstant case for the application of the law of

the Kingdom of Saudi Arabia, by virtue of thelex loci delicticommissi rule.

MORADA ALLEGES: Since her AmendedComplaint is based on Articles 19 and 21 of theCivil Code, then the instant case is properly amatter of domestic law.

ISSUES: 1. WON the RTC of Quezon City has jurisdiction to hear and try civil case forrecovery of damages under Article 21 of theCivil Code

2. WON Philippine law should govern in thecase

HELD: 1 and 2.YES.On the presence of a―Foreign Element‖ in the case: A factual

situation that cuts across territorial lines and isaffected by the diverse laws of two or morestates is said to contain a ―foreign element‖.The presence of a foreign element is inevitablesince social and economic affairs of individualsand associations are rarely confined to thegeographic limits of their birth or conception.

In the instant case, the foreign elementconsisted in the fact that private respondentMorada is a resident Philippine national, andthat petitioner SAUDIA is a resident foreigncorporation. Also, by virtue of the employment

of Morada with the petitioner Saudia as aflight stewardess, events did transpire duringher many occasions of travel across national borders, particularly from Manila, Philippinesto Jeddah, Saudi Arabia, and vice versa, thatcaused a ―conflicts‖ situation to arise.

COURT disagrees with MORADA that his ispurely a domestic case. However, the courtfinds that the RTC of Quezon City possesses jurisdiction over the subject matter of the suit.Its authority to try and hear the case isprovided for under Section 1 of Republic ActNo. 7691, to wit:

BP129 Sec. 19.Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise exclusive jurisdiction:xxx xxxxxx(8) In all other cases in which demand,exclusive of interest, damages of whateverkind, attorney`y‘s fees, litigation expenses, andcots or the value of the property in controversyexceeds One hundred thousand pesos(P100,000.00) or, in such other cases in Metro

Manila, where the demand, exclusive of theabove-mentioned items exceeds Two hundredThousand pesos (P200,000.00). (Emphasis




1s t


ours)xxx xxxxxxSection 2 (b), Rule 4 of the Revised Rules ofCourt — the venue, Quezon City, isappropriate:Sec. 2 Venue in Courts of First Instance. —

[Now Regional Trial Court](a) xxx xxxxxx(b) Personal actions. — All other actions may be commenced and tried where the defendantor any of the defendants resides or may befound, or where the plaintiff or any of theplaintiff resides, at the election of the plaintiff.

Weighing the relative claims of the parties, thecourt a quo found it best to hear the case in thePhilippines. Had it refused to take cognizanceof the case, it would be forcing plaintiff(private respondent now) to seek remedialaction elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintainssubstantial connections. That would havecaused a fundamental unfairness to her.Moreover, by hearing the case in thePhilippines no unnecessary difficulties andinconvenience have been shown by either ofthe parties. The choice of forum of the plaintiff(now private respondent) should be upheld.

Considering that the complaint in the courtaquo is one involving torts, the connecting

factor or point of contact could be the place orplaces where the tortious conduct or lex lociactusoccurred. And applying the tortsprinciple in a conflicts case, we find that thePhilippines could be said as a situs of the tort(the place where the alleged tortious conducttook place). This is because it is in thePhilippines where petitioner allegedlydeceived private respondent, a Filipinaresiding and working here. According to her,she had honestly believed that petitioner would, in the exercise of its rights and in theperformance of its duties, act with justice, giveher her due and observe honesty and goodfaith. Instead, petitioner failed to protect her,she claimed. That certain acts or parts of theinjury allegedly occurred in another country isof no moment. For in our view what isimportant here is the place where the over-allharm or the fatality of the alleged injury to theperson, reputation, social standing and humanrights of complainant, had lodged, accordingto the plaintiff below (herein privaterespondent). All told, it is not without basis toidentify the Philippines as the situs of thealleged tort.

As already discussed, there is basis for theclaim that over-all injury occurred and lodged

in the Philippines. There is likewise noquestion that private respondent is a residentFilipina national, working with petitioner, aresident foreign corporation engaged here inthe business of international air carriage.Thus, the relationship between the parties was

centered here, although it should be stressedthat this suit is not based on mere labor law violations. From the record, the claim that thePhilippines has the most significant contact with the matter in this dispute, raised byprivate respondent as plaintiff below againstdefendant (herein petitioner), in our view, has been properly established.

KAZUHIRO HASEGAWA and NIPPONENGINEERING CONSULTANTS CO.,LTD. vs. MINORU KITAMURANovember 23, 2007

FACTS: Nippon Engineering Consultants Co.,Ltd. (Nippon), a Japanese consultancy firmproviding technical and management supportin the infrastructure projects of foreigngovernments, entered into an IndependentContractor Agreement (ICA) with respondentMinoru Kitamura, a Japanese nationalpermanently residing in the Philippines.

The ICA provides that Kitamura was to extendprofessional services to Nippon for a yearstarting on April 1, 1999. Nippon then assignedrespondent to work as the project manager ofthe Southern Tagalog Access Road (STAR)Project in the Philippines. When the STARProject was near completion, DPWH engagedthe consultancy services of Nippon,on January 28, 2000, this time for the detailedengineering and construction supervision ofthe Bongabon-Baler Road Improvement(BBRI) Project. Kitamura was named as theproject manager in the contract's Appendix3.1. However, on Feb 28 2000, Hasegawa,Nippon‘s general manager for its InternationalDivision informed Kitamura that the company

had no more intention of automaticallyrenewing his ICA. His services would beengaged by the company only up to thesubstantial completion of the STAR Projecton March 31, 2000, just in time for the ICA'sexpiry.

Kitamura requested for a negotiationconference but Nippon refused to do so. Thisprompted Kitamura to file a civil case forspecific performance and damages withthe Regional Trial Court of Lipa City. Nipponmoved to dismiss the case for lack of

jurisdiction since the ICA had been perfected




1s t


in Japan and executed by and betweenJapanese nationals.

RTC (Lipa) denied the MTD and ruled that thematters connected with the performance ofcontracts are regulated by the law prevailing at

the place of performance. The subsequent MR was also denied. Hence Nippon filed with theCA their first Petition for Certiorari under Rule65 but it was denied. Note that petitionersadopted an additional but different theory when they elevated the case to the appellatecourt. In the Motion to Dismiss filed with thetrial court, petitioners never contended thatthe RTC is an inconvenient forum.

A second Petition for Certiorari under Rule 65 was filed but the same was denied. The CAruled, among others, that the principle of lex

loci celebrationis was not applicable to thecase, because nowhere in the pleadings wasthe validity of the written agreement put inissue. The CA thus declared that the trial court was correct in applying instead the principleof lex loci solutionis.

Hence this petition for review before thisCourt where Nippon dropped their otherarguments, maintained the forum nonconveniens defense, and introduced their newargument that the applicable principle is the[state of the] most significant relationship rule.

ISSUE: WON RTC has jurisdiction over thesubject case.

HELD: Yes

To elucidate, in the judicial resolution ofconflicts problems, three consecutive phasesare involved: jurisdiction, choice of law, andrecognition and enforcement of judgments.Corresponding to these phases are thefollowing questions: (1) Where can or shouldlitigation be initiated? (2) Which law will the

court apply? and (3) Where can the resulting judgment be enforced?

Analytically, jurisdiction and choice of law aretwo distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travelto this state; choice of law asks the furtherquestion whether the application of asubstantive law which will determine themerits of the case is fair to both parties. Thepower to exercise jurisdiction does notautomatically give a state constitutionalauthority to apply forum law. While

jurisdiction and the choice of the lex fori willoften coincide, the minimum contacts for one

do not always provide the necessary significantcontacts for the other. The question of whetherthe law of a state can be applied to atransaction is different from the question of whether the courts of that state have jurisdiction to enter a judgment.

In this case, only the first phase is at issue --- jurisdiction. Jurisdiction, however, has variousaspects. For a court to validly exercise itspower to adjudicate a controversy, it musthave jurisdiction over the plaintiff or thepetitioner, over the defendant or therespondent, over the subject matter, over theissues of the case and, in cases involvingproperty, over the res or the thing which is thesubject of the litigation. In assailing thetrial court's jurisdiction herein,petitioners are actually referring to

subject matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by thesovereign authority which establishes andorganizes the court. It is given only by law andin the manner prescribed by law. It is furtherdetermined by the allegations of the complaintirrespective of whether the plaintiff is entitledto all or some of the claims asserted therein.To succeed in its motion for the dismissal of anaction for lack of jurisdiction over the subjectmatter of the claim, the movant must show

that the court or tribunal cannot act on thematter submitted to it because no law grants itthe power to adjudicate the claims.

In the instant case, petitioners, in their motionto dismiss, do not claim that the trial court isnot properly vested by law with jurisdiction tohear the subject controversy for, indeed, CivilCase No. 00-0264 for specific performanceand damages is one not capable of pecuniaryestimation and is properly cognizable by theRTC of Lipa City. What they rather raise asgrounds to question subject matter jurisdiction

are the principles of lex locicelebrationis and lex contractus, and the stateof the most significant relationship rule.

The Court finds the invocation of thesegrounds unsound.

Lex loci celebrationis relates to the law of theplace of the ceremony or the law of the place where a contract is made. The doctrine of lexcontractus or lex loci contractus means thelaw of the place where a contract is executed orto be performed. It controls the nature,

construction, and validity of the contract and itmay pertain to the law voluntarily agreed upon




1s t


by the parties or the law intended by themeither expressly or implicitly. Under the stateof the most significant relationship rule, toascertain what state law to apply to a dispute,the court should determine which state has themost 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 beperformed, and the domicile, place of business, or place of incorporation of theparties. This rule takes into account severalcontacts and evaluates them according to theirrelative importance with respect to theparticular issue to be resolved.Since these three principles in conflict of lawsmake reference to the law applicable to adispute, they are rules proper for the secondphase, the choice of law. They determine

which state's law is to be applied in resolvingthe substantive issues of a conflictsproblem. Necessarily, as the only issue in thiscase is that of jurisdiction, choice-of-law rulesare not only inapplicable but also not yet calledfor.

Further, petitioners' premature invocation ofchoice-of-law rules is exposed by the fact thatthey have not yet pointed out any conflict between the laws of Japan and ours. Beforedetermining which law should apply, firstthere should exist a conflict of laws situation

requiring the application of the conflict of lawsrules. Also, when the law of a foreign countryis invoked to provide the proper rules for thesolution of a case, the existence of such lawmust be pleaded and proved.

It should be noted that when a conflicts case,one involving a foreign element, is brought before a court or administrative agency, thereare three alternatives open to the latter indisposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal toassume jurisdiction over the case; (2) assume

jurisdiction over the case and apply theinternal law of the forum; or (3) assume jurisdiction over the case and take into accountor apply the law of some other State orStates. The courts power to hear cases andcontroversies is derived from the Constitutionand the laws. While it may choose to recognizelaws of foreign nations, the court is not limited by foreign sovereign law short of treaties orother formal agreements, even in mattersregarding rights provided by foreignsovereigns.

Neither can the other ground raised, forumnon conveniens, be used to deprive the trial

court of its jurisdiction herein. First, it is not aproper basis for a motion to dismiss becauseSection 1, Rule 16 of the Rules of Court doesnot include it as a ground. Second, whether asuit should be entertained or dismissed on the basis of the said doctrine depends largely upon

the facts of the particular case and is addressedto the sound discretion of the trial court. Inthis case, the RTC decided to assume jurisdiction. Third, the propriety of dismissinga case based on this principle requires a factualdetermination; hence, this conflicts principle ismore properly considered a matter of defense.

Dacasin vs Dacasin

Facts: Petitioner Herald Dacasin, American,

and respondent Sharon delMundo Dacasin,

Filipino, were married in Manila in April 1994.

They have a daughter, Stephanie. In 1999

respondent obtained from Illinois court a

divorce decree and awarded respondent sole

custody of Stephanie.

In 2002, petitioner and respondent executed

in Manila an Agreement for the joint custody

of Stephanie. They chose Phil courts as

exclusive forum to adjudicate disputes arising

from the Agreement.

In 2004, petitioner sued respondent toenforce the Agreement. He alleged that

respondent exercised sole custody in violation

of their Agreement.

Trial court dismissed complaint for lack of

jurisdiction stating that Illinois court retained

jurisdiction, divorce decree is binding on

petitioner following the nationality rule and

Agreement is void contravening Art 2035(5)

Civil Code (prohibiting compromise

agreements on jurisdiction).

Issue: Whether or not trial court has

jurisdiction to take cognizance of petitioner‘s

suit and enforce the Agreement on the joint

custody of the parties‘ child.

Ruling: The trial court has jurisdiction

to entertain to entertain petitioner‘s suit but

not to enforce the Agreement which is void.

Subject matter jurisdiction is conferred by law.

An action for specific performance, such as

petitioner‘s suit to enforce the Agreement on joint child custody, is an action incapable of




1s t


pecuniary estimation which is under RTCs

jurisdiction. Thus, jurisdiction-wise, petitioner

went to the right court.

What the Illinois court retained was

jurisdiction x xx for the purposeof enforcing all and sundry the various

provisions of [its] Judgment for

Dissolution.[11]Petitioner‘s suit seek s the

enforcement not of the various provisions of

the divorce decree but of the post-divorce

Agreement on joint child custody. Thus, the

action lies beyond the zone of the Illinois

courts so-called retained jurisdiction.

The foregoing notwithstanding, the trial court

cannot enforce the Agreement which is

contrary to law. Upon separation of thespouses, the mother takes sole custody under

the law if the child is below 7yo and any

agreement to the contrary is void. The

Agreement made by the parties seek to

establish a post-divorce joint custody regime

which contravenes Phil law.

However, instead of ordering the dismissal ofpetitioner‘s suit, the logical end is to remandthe case to settle Stephanie‘s custody. She isnow 15yo, removing the case outside the ambit

of mandatory maternal custody regime.

Topic: How Acquired Over the Person

NORTHWEST ORIENT AIRLINES,INC. vs.COURT OF APPEALS and C.F.SHARP & COMPANY INC., (G.R. No.112573 February 9, 1995)

FACTS: Petitioner Northwest Orient Airlines,

Inc. (NORTHWEST), a corporation organizedunder the laws of the State of Minnesota,U.S.A., sought to enforce in the RTC- Manila, a judgment rendered in its favor by a Japanesecourt against private respondent C.F. Sharp &Company, Inc., (SHARP), a corporationincorporated under Philippine laws.

On May 9, 1974, Northwest Airlines andSharp, through its Japan branch, entered intoan International Passenger Sales Agency Agreement, whereby the former authorized thelatter to sell its air transportation tickets.

Unable to remit the proceeds of the ticket salesmade by defendant on behalf of the plaintiff

under the said agreement, plaintiff on March25, 1980 sued defendant in Tokyo, Japan, forcollection of the unremitted proceeds of theticket sales, with claim for damages.

On April 11, 1980, a writ of summons was

issued by the 36th Civil Department, TokyoDistrict Court of Japan against defendant at itsoffice at the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma,Kanagawa Prefecture. The attempt to serve thesummons was unsuccessful because the bailiff was advised by a person in the office that Mr.Dinozo, the person believed to be authorizedto receive court processes was in Manila and would be back on April 24, 1980.

On April 24, 1980, bailiff returned to thedefendant‘s office to serve the summons. Mr.

Dinozo refused to accept the same claimingthat he was no longer an employee of thedefendant.

After the two attempts of service wereunsuccessful, the judge of the Tokyo DistrictCourt decided to have the complaint and the writs of summons served at the head office ofthe defendant in Manila. On July 11, 1980, theDirector of the Tokyo District Court requestedthe Supreme Court of Japan to serve thesummons through diplomatic channels uponthe defendant‘s head office in Manila.

On August 28, 1980, defendant received fromDeputy Sheriff Rolando Balingit the writ ofsummons (p. 276, Records). Despite receipt ofthe same, defendant failed to appear at thescheduled hearing. Thus, the Tokyo Courtproceeded to hear the plaintiff‘s complaint andon [January 29, 1981], rendered judgmentordering the defendant to pay the plaintiff thesum of 83,158,195 Yen and damages for delayat the rate of 6% per annum from August 28,1980 up to and until payment is completed(pp. 12-14, Records).

On March 24, 1981, defendant received fromDeputy Sheriff Balingit copy of the judgment.Defendant not having appealed the judgment,the same became final and executory.

Plaintiff was unable to execute the decision inJapan, hence, on May 20, 1983, a suit forenforcement of the judgment was filed byplaintiff before the Regional Trial Court ofManila Branch 54.

Defendant filed its answer averring that the

judgment of the Japanese Court: (1) theforeign judgment sought to be enforced is null

http://sc.judiciary.gov.ph/jurisprudence/2010/february2010/168785.htm#_ftn11







1s t


and void for want of jurisdiction and (2) thesaid judgment is contrary to Philippine lawand public policy and rendered without dueprocess of law.

In its decision, the Court of Appeals sustained

the trial court. It agreed with the latter in itsreliance upon Boudard vs. Tait wherein it washeld that ―the process of the court has noextraterritorial effect and no jurisdiction isacquired over the person of the defendant byserving him beyond the boundaries of thestate.‖ To support its position, the Court of Appeals further stated:In an action strictly in personam, such as theinstant case, personal service of summons within the forum is required for the court toacquire jurisdiction over the defendant(Magdalena Estate Inc. vs. Nieto, 125 SCRA

230). To confer jurisdiction on the court,personal or substituted service of summons onthe defendant not extraterritorial service isnecessary.

ISSUE: Whether a Japanese court can acquire jurisdiction over a Philippine corporationdoing business in Japan by serving summonsthrough diplomatic channels on the Philippinecorporation at its principal office in Manilaafter prior attempts to serve summons inJapan had failed.

HELD: YES A foreign judgment is presumed to be validand binding in the country from which itcomes, until the contrary is shown. It is alsoproper to presume the regularity of theproceedings and the giving of due noticetherein.

The judgment may, however, be assailed byevidence of want of jurisdiction, want of noticeto the party, collusion, fraud, or clear mistakeof law or fact.(See Sec. 50, R 39)

Being the party challenging the judgmentrendered by the Japanese court, SHARP hadthe duty to demonstrate the invalidity of such judgment.

It is settled that matters of remedy andprocedure such as those relating to the serviceof process upon a defendant are governed bythe lexfori or the internal law of the forum. 8In this case, it is the procedural law of Japan where the judgment was rendered thatdetermines the validity of the extraterritorialservice of process on SHARP. As to what this

law is is a question of fact, not of law.

It was then incumbent upon SHARP to presentevidence as to what that Japanese procedurallaw is and to show that under it, the assailedextraterritorial service is invalid. It did not. Accordingly, the presumption of validity andregularity of the service of summons and the

decision thereafter rendered by the Japanesecourt must stand.

Alternatively in the light of the absence ofproof regarding Japanese law, thepresumption of identity or similarity or the so-called processual presumption may beinvoked. Applying it, the Japanese law on thematter is presumed to be similar with thePhilippine law on service of summons on aprivate foreign corporation doing business inthe Philippines.

Section 14, Rule 14 of the Rules of Courtprovides that if the defendant is a foreigncorporation doing business in the Philippines,service may be made: (1) on its resident agentdesignated in accordance with law for thatpurpose, or, (2) if there is no such residentagent, on the government official designated by law to that effect; or (3) on any of itsofficers or agents within the Philippines.

Where the corporation has no such agent,service shall be made on the governmentofficial designated by law, to wit: (a) the

Insurance Commissioner in the case of aforeign insurance company; (b) theSuperintendent of Banks, in the case of aforeign banking corporation; and (c) theSecurities and Exchange Commission, in thecase of other foreign corporations dulylicensed to do business in the Philippines.

Nowhere in its pleadings did SHARP professto having had a resident agent authorized toreceive court processes in Japan.

While it may be true that service could have

been made upon any of the officers or agentsof SHARP at its three other branches in Japan,the availability of such a recourse would notpreclude service upon the proper governmentofficial, as stated above.

As found by the respondent court, twoattempts at service were made at SHARP‘s Yokohama branch. Both were unsuccessful.

The Tokyo District Court requested theSupreme Court of Japan to cause the deliveryof the summons and other legal documents to

the Philippines. Acting on that request, theSupreme Court of Japan sent the summons




1s t


together with the other legal documents to theMinistry of Foreign Affairs of Japan which, inturn, forwarded the same to the JapaneseEmbassy in Manila. Thereafter, the courtprocesses were delivered to the Ministry (nowDepartment) of Foreign Affairs of the

Philippines, then to the Executive Judge of theCourt of First Instance (now Regional TrialCourt) of Manila, who forthwith orderedDeputy Sheriff Rolando Balingit to serve thesame on SHARP at its principal office inManila. This service is equivalent to service onthe proper government official under Section14, Rule 14 of the Rules of Court, in relation toSection 128 of the Corporation Code. Hence,SHARP‘s contention that such manner ofservice is not valid under Philippine laws holdsno water.

In as much as SHARP was admittedlydoing business in Japan through itsfour duly registered branches at thetime the collection suit against it wasfiled, then in the light of theprocessual presumption, SHARP may be deemed a resident of Japan, and, assuch, was amenable to the jurisdictionof the courts therein and may bedeemed to have assented to the saidcourts' lawful methods of servingprocess.

Accordingly, the extraterritorial service ofsummons on it by the Japanese Court was valid not only under the processualpresumption but also because of thepresumption of regularity of performance ofofficial duty.

LOURDES A. VALMONTE and ALFREDO D. VALMONTE vs. THEHONORABLE COURT OF APPEALS,THIRD DIVISION and ROSITADIMALANTA [G.R. No.108538. January 22, 1996]

Facts: Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife.They are both residents of Carkeek DriveSouth Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of thePhilippine bar, however, practices hisprofession in the Philippines, commuting forthis purpose between his residence in the stateof Washington and Manila, where he holdsoffice at Mabini, Ermita, Manila.

On March 9, 1992, private respondent Rosita

Dimalanta, who is the sister of petitionerLourdes A. Valmonte, filed a complaint forpartition of real property and accounting of

rentals against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte. Thesubject of the action is a three-door apartmentlocated in Paco,Manila. Private respondentalleged that the complaint may be served withsummons at Mabini St., Ermita, Manila where

defendant Alfredo D. Valmonte as defendantLourdes Arreola Valmontes spouse holds officeand where he can be found.

The averment was based on a letter previouslysent by petitioner Lourdes A. Valmonte toprivate respondents counsel in which, inregard to the partition of the property inquestion, she referred private respondentscounsel to her husband as the party to whomall communications intended for her should besent.

Service of summons was then made uponpetitioner Alfredo D. Valmonte, who at thetime, was at his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons,insofar as he was concerned, but refused toaccept the summons for his wife, Lourdes A. Valmonte, on the ground that he was notauthorized to accept the process on her behalf. Accordingly the process server left withoutleaving a copy of the summons and complaintfor petitioner Lourdes A. Valmonte.

Petitioner Alfredo D. Valmonte thereafter filed

his Answer with Counterclaim. PetitionerLourdes A. Valmonte, however, did not file her Answer. For this reason private respondentmoved to declare her in default. Petitioner Alfredo D. Valmonte entered a specialappearance in behalf of his wife and opposedthe private respondents motion.

Issue: whether petitioner Lourdes A. Valmonte was validly served with summons.NO.

Held: To provide perspective, it will be helpfulto determine first the nature of the action filedagainst petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an action in personam, in rem orquasi in rem. This is because the rules onservice of summons embodied in Rule 14 applyaccording to whether an action is one or theother of these actions.

In an action in personam, personal service ofsummons or, if this is not possible and hecannot be personally served, substitutedservice, as provided in Rule 14, 7-8[2] isessential for the acquisition by the court of

jurisdiction over the person of a defendant who does not voluntarily submit himself to the

http://sc.judiciary.gov.ph/jurisprudence/1996/jan1996/108538.htm#_ftn2







1s t


authority of the court.[3] If defendant cannot beserved with summons because he istemporarily abroad, but otherwise he is aPhilippine resident, service of summons may, by leave of court, be made bypublication.[4] Otherwise stated, a resident

defendant in an action in personam, whocannot be personally served with summons,may be summoned either by means ofsubstituted service in accordance with Rule 14,8 or by publication as provided in 17 and 18 ofthe same Rule.[5]

In all of these cases, it should be noted,defendant must be a resident ofthe Philippines, otherwise an action in personam cannot be brought because jurisdiction over his person is essential tomake a binding decision.

On the other hand, if the action is inrem or quasi in rem, jurisdiction over theperson of the defendant is not essential forgiving the court jurisdiction so long as thecourt acquires jurisdiction over the res. If thedefendant is a nonresident and he is not foundin the country, summons may be servedextraterritorially in accordance with Rule 14,17, which provides:

17. Extraterritorial service. - When thedefendant does not reside and is not found in

the Philippines and the action affects thepersonal status of the plaintiff or relates to, orthe subject of which is, property within thePhilippines, in which the defendant has orclaims a lien or interest, actual or contingent,or in which the relief demanded consists, wholly or in part, in excluding the defendantfrom any interest therein, or the property ofthe defendant has been attached within thePhilippines, service may, by leave of court, beeffected out of the Philippines by personalservice as under Section 7; or by publication ina newspaper of general circulation in such

places and for such time as the court mayorder, in which case a copy of the summonsand order of the court shall be sent byregistered mail to the last known address ofthe defendant, or in any other manner thecourt may deem sufficient. Any order grantingsuch leave shall specify a reasonable time, which shall not be less than sixty (60) daysafter notice, within which the defendant mustanswer.

In such cases, what gives the court jurisdictionin an action in rem or quasi in rem is that ithas jurisdiction over the res, i.e. the personalstatus of the plaintiff who is domiciled in thePhilippines or the property litigated or

attached. Service of summons in the mannerprovided in 17 is not for the purpose of vestingit with jurisdiction but for complying with therequirements of fair play or due process, sothat he will be informed of the pendency of theaction against him and the possibility that

property in the Philippines belonging to him orin which he has an interest may be subjectedto a judgment in favor of the plaintiff and hecan thereby take steps to protect his interest ifhe is so minded.[6]

Applying the foregoing rules to the case at bar,private respondents action, which is forpartition and accounting under Rule 69, is inthe nature of an action quasi in rem. Such anaction is essentially for the purpose of affectingthe defendants interest in a specific propertyand not to render a judgment against him. As

explained in the leading case of Banco Espaol Filipino v. Palanca : [7]

[An action quasi in rem is] an action which while not strictly speaking an action inrem partakes of that nature and issubstantially such. . . . The action quasi inrem differs from the true action in rem in thecircumstance that in the former an individualis named as defendant and the purpose of theproceeding is to subject his interest therein tothe obligation or lien burdening the property. All proceedings having for their sole object the

sale or other disposition of the property of thedefendant, whether by attachment,foreclosure, or other form of remedy, are in ageneral way thus designated. The judgmententered in these proceedings is conclusive only between the parties.

As petitioner Lourdes A. Valmonte is anonresident who is not found in thePhilippines, service of summons on her must be in accordance with Rule 14, 17. Suchservice, to be effective outside the Philippines,must be made either (1) by personal service;

(2) by publication in a newspaper of generalcirculation in such places and for such time asthe court may order, in which case a copy ofthe summons and order of the court should besent by registered mail to the last knownaddress of the defendant; or (3) in any othermanner which the court may deem sufficient.

Since in the case at bar, the service ofsummons upon petitioner Lourdes A. Valmonte was not done by means of any of thefirst two modes, the question is whether theservice on her attorney, petitioner Alfredo D. Valmonte, can be justified under the thirdmode, namely, in any . . . manner the courtmay deem sufficient.
























1s t


We hold it cannot. This mode of service, likethe first two, must be made outsidethe Philippines, such as through the PhilippineEmbassy in the foreign country where thedefendant resides.[8] Moreover, there areseveral reasons why the service of summons

on Atty. Alfredo D. Valmonte cannot beconsidered a valid service of summons onpetitioner Lourdes A. Valmonte. In the firstplace, service of summons on petitioner Alfredo D. Valmonte was not made upon theorder of the court as required by Rule 14, 17and certainly was not a mode deemedsufficient by the court which in fact refused toconsider the service to be valid and on that basis declare petitioner Lourdes A. Valmontein default for her failure to file an answer.

In the second place, service in the attempted

manner on petitioner was not made upon priorleave of the trial court as required also in Rule14, 17. As provided in 19, such leave must beapplied for by motion in writing, supported byaffidavit of the plaintiff or some person on his behalf and setting forth the grounds for theapplication.

Finally, and most importantly, because there was no order granting such leave, petitionerLourdes A. Valmonte was not given ampletime to file her Answer which, according to therules, shall be not less than sixty (60) days

after notice. It must be noted that the period tofile an Answer in an action against a residentdefendant differs from the period given in anaction filed against a nonresident defendant who is not found in the Philippines. In theformer, the period is fifteen (15) days fromservice of summons, while in the latter, it is atleast sixty (60) days from notice.

Strict compliance with these requirementsalone can assure observance of due process.That is why in one case,[9] although the Courtconsidered publication in the Philippines of

the summons (against the contention that itshould be made in the foreign state wheredefendant was residing) sufficient, nonethelessthe service was considered insufficient becauseno copy of the summons was sent to the lastknown correct address in the Philippines.

Private respondent cites the ruling in De Leonv. Hontanosas, 67 SCRA 458,462-463 (1975),in which it was held that service of summonsupon the defendants husband was binding onher. But the ruling in that case is justified because summons were served upondefendants husband in their conjugal home inCebu City and the wife was only temporarilyabsent, having gone to Dumaguete City for a

vacation. The action was for collection of asum of money. In accordance with Rule 14, 8,substituted service could be made on anyperson of sufficient discretion in the dwellingplace of the defendant, and certainlydefendants husband, who was there, was

competent to receive the summons on her behalf. In any event, it appears that defendantin that case submitted to the jurisdiction of thecourt by instructing her husband to move forthe dissolution of the writ of attachment issuedin that case.

On the other hand, in the case of Gemperle v. Schenker, [10] it was held that service on the wife of a nonresident defendant was foundsufficient because the defendant hadappointed his wife as his attorney-in-fact. It was held that although defendant Paul

Schenker was a Swiss citizen and resident ofSwitzerland, service of summons upon his wifeHelen Schenker who was in the Philippines was sufficient because she was her husbandsrepresentative and attorney-in-fact in a civilcase, which he had earlier filed against WilliamGemperle. In fact Gemperles action was fordamages arising from allegedly derogatorystatements contained in the complaint filed inthe first case. As this Court said, i]n other words, Mrs. Schenker had authority to sue,and had actually sued, on behalf of herhusband, so that she was, also, empowered to

represent him in suits filed against him,particularly in a case, like the one at bar, whichis a consequence of the action brought by heron his behalf .[11] Indeed, if instead of filing anindependent action Gemperle fileda counterclaim in the action brought by Mr.Schenker against him, there would have beenno doubt that the trial court could haveacquired jurisdiction over Mr. Schenkerthrough his agent and attorney-in-fact, Mrs.Schenker.

In contrast, in the case at bar, petitioner

Lourdes A. Valmonte did not appoint herhusband as her attorney-in-fact. Although she wrote private respondent s attorney that allcommunications intended for her should beaddressed to her husband who is also herlawyer at the latters address in Manila, nopower of attorney to receive summons for hercan be inferred therefrom. In fact the letter was written seven months before the filing ofthis case below, and it appears that it was written in connection with the negotiations between her and her sister, respondent RositaDimalanta, concerning the partition of the

property in question. As is usual innegotiations of this kind, the exchange ofcorrespondence was carried on by counsel for



















1s t


the parties. But the authority given topetitioners husband in these negotiationscertainly cannot be construed as also includingan authority to represent her in any litigation.

HAHN vs. CA

Nature of the case:

This is a petition for review of thedecision of the Court of Appeals dismissing acomplaint for specific performance whichpetitioner had filed against private respondenton the ground that the Regional Trial Court ofQuezon City did not acquire jurisdiction overprivate respondent Bayerische Motoren Werke Aktiengesellschaft (BMW), a nonresidentforeign corporation, and of the appellatecourt's order denying petitioner's motion for

reconsideration.

FACTS:

Petitioner Alfred Hahn (Hahn) is aFilipino citizen doing business underthe name and style "Hahn-Manila."On the other hand, private respondentBayerische Motoren Werke Aktiengesellschaft (BMW) is anonresident foreign corporationexisting under the laws of the formerFederal Republic of Germany, withprincipal office at Munich, Germany.

Hahn executed in favor of BMW a"Deed of Assignment with SpecialPower of Attorney," where he cededhis rights over the BMW Trademarkin the Philippines in favor of BMW sothat the latter can proceed to also become a dealer of BMW cars on thecondition that Hahn remain in close business relation with BMW (i.e. Hahnremains exclusive dealer of BMWcars)

Later, Hahn was informed that BMW was arranging to grant the exclusivedealership of BMW cars and productsto another entity accordingly due toBMW‘s dissatisfaction to the variousaspects of Hahn‘s (decline in sales,deteriorating services, and inadequateshowroom and warehouse facilities,and petitioner's alleged failure tocomply with the standards for anexclusive BMW dealer).

Nonetheless, BMW expressed willingness to continue businessrelations with the petitioner on the basis of a "standard BMW importer"

contract, otherwise, it said, if this wasnot acceptable to petitioner, BMW would have no alternative but toterminate petitioner's exclusivedealership.

Hahn protested, claiming that the

termination of his exclusive dealership would be a breach of the Deed of Assignment. Hahn insisted that aslong as the assignment of itstrademark and device subsisted, heremained BMW's exclusive dealer inthe Philippines because theassignment was made in considerationof the exclusive dealership.

Because of Hahn's insistence on theformer business relation, BMW withdrew its offer of a "standardimporter contract" and terminated the

exclusive dealer relationship.

Hahn filed a complaint for specificperformance and damages againstBMW to compel it to continue theexclusive dealership. He also filedapplication for temporary restrainingorder and for writs of preliminary,mandatory and prohibitory injunctionto enjoin BMW from terminating hisexclusive dealership.

Quezon City Regional Trial Courtissued a temporary restraining order.Summons and copies of the complaint

were thereafter served on BMWthrough the Department of Trade andIndustry, pursuant to Rule 14, 14 ofthe Rules of Court which forwarded toBMW Germany via registered mail.However, without proof of service onBMW the hearing on the on theapplication for the writ of preliminaryinjunction proceeded ex parte.

Thereafter, BMW moved to dismissthe case, contending that the trialcourt did not acquire jurisdiction overit through the service of summons on

the Department of Trade andIndustry, because it (BMW) was aforeign corporation and it was notdoing business in the Philippines.

BMW also pointed out that theexecution of the Deed of Assignment was an isolated transaction; that Hahn was not its agent because the latterundertook to assemble and sell BMWcars and products without theparticipation of BMW and sold otherproducts; and that Hahn was anindentor or middleman transacting

business in his own name and for hisown account.




1s t


Hahn opposed the motion. He arguedthat BMW was doing business in thePhilippines through him as its agent,as shown by the fact that BMWinvoices and order forms were used todocument his transactions; that he

gave warranties as exclusive BMWdealer; that BMW officials periodicallyinspected standards of servicerendered by him; and that he wasdescribed in service booklets andinternational publications of BMW asa "BMW Importer" or "BMW TradingCompany" in the Philippines.

The trial court deferred resolution ofthe Motion to dismiss until after trialon the merits for the reason that thegrounds advanced by BMW in itsmotion did not seem to be indubitable.

Without seeking reconsideration of thetrial court order, BMW filed a petitionfor certiorari with the Court of Appeals primarily assailing the trialcourt‘s jurisdiction.

The Court of Appeals enjoined the trialcourt from hearing Hahn's complaint.It rendered judgment finding the trialcourt guilty of grave abuse ofdiscretion in deferring resolution ofthe motion to dismiss. The CA alsoproceeded to decide on the merits ofthe specific performance case (stating

that any ruling which the trial courtmight make on the motion to dismiss would anyway be elevated to it onappeal). It ruled that BMW was notdoing business in the country and,therefore, jurisdiction over it could not be acquired through service ofsummons on the DTI pursuant to Rule14, Section 14.

The court upheld BMW‘s contentionthat Hahn acted in his own name andfor his own account and independentlyof BMW, based on Alfred Hahn's

allegations that he had invested hisown money and resources inestablishing BMW's goodwill in thePhilippines and on BMW's claim thatHahn sold products other than thoseof BMW. It held that Hahn was a mereindentor or broker and not an agentthrough whom private respondentBMW transacted business in thePhilippines. Consequently, the Courtof Appeals dismissed petitioner'scomplaint against BMW.

ISSUE: (these two issues are tightlyintertwined)

1) WON trial court gravely abusedits discretion in deferring actionon the motion to dismiss and

Suffice it to say that trial court acted withcompetent authority in entering its assailedorder deferring resolution of BMW‘s motion todismiss pending trial on the merits. Rule 16, 3authorizes courts to defer the resolution of amotion to dismiss until after the trial if theground on which the motion is based does notappear to be indubitable. Here (as to bediscussed below) the record of the case bristles with factual issues and it is not at all clear whether some allegations correspond to theproof if only pleadings without the benefit offull blown trial are considered. In any case,there seems to be a significant issue that hadto be resolved first via full trial (presentationof evidence, etc,)-WON Hahn is truly an agentof BMW.

On the issue of jurisdiction, Rule 14,S 141 read in conjunction with the provisions ofForeign Investments Act of 1991 (R.A. No.7042)2 confers jurisdiction on the trial courtover foreign corporations like BMW.Fundamentally, the aforementioned statuteauthorities read together allow the trial courtto serve summons to foreign companies viaDTI (hence gain over jurisdiction thereover) as

long as they are considered to be doing business in the Phils.- this includes

1 14. Service upon foreign corporations. If the defendant is a

foreign corporation, or a nonresident joint stock company or

association, doing business in the Philippines, service may be

made on its resident agent designated in accordance with law

for that purpose, or, if there be no such agent, on the

government official designated by law to that effect, or on any

of its officers or agents within the Philippines. (Emphasis

added)2 d) the phrase "doing business" shall include soliciting orders,

service contracts, opening offices, whether called "liaison"

offices or branches, appointing representatives or distributors

domiciled in the Philippines or who in any calendar year stay in

the country for a period or periods totalling one hundred eighty

(180) days or more; participating in the management,

supervision or control of any domestic business, firm, entity or

corporation in the Philippines; and any other act or acts that

imply a continuity 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: Provided, however, That the phrase "doing

business" shall not be deemed to include mere investment as

a shareholder by a foreign entity in domestic corporations duly

registered to do business, and/or the exercise of rights as such

investor; nor having, a nominee director or officer to represent

its interests in such corporation; nor appointing a

representative or distributor domiciled in the Philippines

which transacts business in its own name and for its own

account. (Emphasis supplied)




1s t


"appointing representatives or distributors inthe Philippines" but not when therepresentative or distributor "transacts business in its name and for its own account."-The question then is whether petitioner AlfredHahn is the agent or distributor in the

Philippines of private respondent BMW. If heis, BMW may be considered doing business inthe Philippines and the trial court acquired jurisdiction over it (BMW) by virtue of theservice of summons on the Department ofTrade and Industry. Otherwise, if Hahn is notthe agent of BMW but an independent dealer,albeit of BMW cars and products, BMW, aforeign corporation, is not considered doing business in the Philippines within the meaningof the Foreign Investments Act of 1991 and theIRR, and the trial court did not acquire jurisdiction over it (BMW).

2)

WON Hahn is BMW’s agent

The Court of Appeals held thatpetitioner Alfred Hahn acted in hisown name and for his own accountand not as agent or distributor in thePhilippines of BMW on the groundthat "he alone had contacts withindividuals or entities interested inacquiring BMW vehicles. To supportthis conclusion, the CA relied heavily

on Hahn‘s allegation that he aloneinvested a lot of money and resourcesin order to single-handedly competeagainst other motorcycle and carcompanies and that he has built buildings and other infrastructuressuch as service centers andshowrooms to maintain and promotethe car and products of defendantBMW.- this conclusion by the CA isflawed.

There is nothing to support the

appellate court's finding that Hahnsolicited orders alone and for his ownaccount and without "interferencefrom, let alone direction of, BMW."To the contrary, Hahn‘s fullallegations in his complaint show theopposite.

Hahn, in his complete allegationspointed out that he placed ordersmade with him directly with theBMW. It is the BMW that fixed thedown payment and pricing charges,notified Hahn of the scheduled

production month for the orders, andreconfirmed the orders by signing

and returning to Hahn the acceptancesheets and the payment was madedirectly to BMW. Hahn was merelycredited with commissions from thetotal purchase price upon invoicing ofa vehicle order by BMW. All orders

were on invoices and forms of BMW. And these allegations weresubstantially admitted by BMW which in its petition for certiorari before the CA.

Contrary to CA’s conclusion thisarrangement shows an agency. An agent receives a commissionupon the successful conclusionof a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller

together, even if no sale iseventually made.

As to the service centers andshowrooms which he said he had putup at his own expense, Hahn said thathe had to follow BMW specificationsas exclusive dealer of BMW in thePhilippines. According to Hahn,BMW periodically inspected theservice centers to see to it that BMWstandards were maintained.- thisillustrates BMW‘s control overHahn‘s activities! More so, theseallegations as to BMW extensicecontrol over Hahn‘s activities werealso admitted in its letter to Hahnterminating exclusive dealership. Inany case, the fact that Hahn investedhis own money to put up these servicecenters and showrooms does notnecessarily prove that he is not agentof BMW.

Finally, BMW‘s fear that byresponding to the summons it would be waiving its objection to the trial

court's jurisdiction- it is now settledthat for purposes of havingsummons served on a foreigncorporation in accordance with Rule 14, 14, it is sufficient that itbe alleged in the complaint thatthe foreign corporation is doingbusiness in the Philippines. Thecourt need not go beyond theallegations of the complaint inorder to determine whether ithas jurisdiction. Adetermination that the foreign

corporation is doing business isonly tentative and is made only for the purpose of enabling the




1s t


local court to acquire jurisdiction over the foreigncorporation through service ofsummons pursuant to Rule 14, 14. Such determination does not foreclose a contrary finding

should evidence later show thatit is not transacting business inthe country. (in other words, theright to question the court‘s jurisdiction is not deemed foreclosed by active participation in trial)

Far from committing an abuse ofdiscretion, the trial court properly deferredresolution of the motion to dismiss and thusavoided prematurely deciding a question which requires a factual basis, with the sameresult if it had denied the motion andconditionally assumed jurisdiction. It is theCourt of Appeals which, by ruling that BMW isnot doing business on the basis merely ofuncertain allegations in the pleadings,disposed of the whole case with finality andthereby deprived petitioner of his right to beheard on his cause of action. Nor was there justification for nullifying the writ ofpreliminary injunction issued by the trialcourt. Although the injunction was issued ex parte, the fact is that BMW was subsequentlyheard on its defense by filing a motion todismiss.

Asiavest vs. CASeptember 25, 1998

Facts: Asiavest Limited filed a complaint against Antonio Heras praying that he be ordered topay the amount awarded by the Hong KongCourt sometime in December 1984, which was judgment was later amended in April 1987.

Antonio Heras admits the existence of the

judgment, but cites that Asiavest is not doing business in the Philippines. He also cites thathe resides in New Manila, Quezon City.

Heras presented two witnesses:1.

His personal secretary who claimedthat no writ of summons was servedupon Heras‘ office in Hong Kong or athis residence in New Manila.

2.

A representative from the law office of Antonio‘s counsel who verified thatthere was no record of a writ ofsummons served on the person of

Antonio. The witness said that theservice is not a legal requirement to doso under Hong Kong laws.

The trial court ruled that the Hong Kong court judgment should be given effect for Heras hadfailed to overcome the legal presumption infavor of the foreign judgment.

The Court of Appeals reversed the trial court‘sdecision, ruling that a foreign judgment doesnot itself have any extraterritorial application,and to be given effect, the foreign tribunalshould have acquired jurisdiction over theperson and the subject matter. Otherwise, the judgment is void.

The Court of Appeals agreed with Heras thatnotice sent outside the state to a non-residentis unavailing to give jurisdiction in an actionagainst him personally for moneyrecovery. Summons should have been

personally served on Heras in Hong Kong, for,as claimed by ASIAVEST, Heras was physicallypresent in Hong Kong for nearly 14 years. Since there was not even an attempt toserve summons on Heras in Hong Kong, theHong Kong Supreme Court did not acquire jurisdiction over Heras.

Issue: Whether the Hong Kong court hadacquired jurisdiction over Heras. NO

Ruling:Since there was failure to prove specifically

any piece of Hong Kong law regarding serviceof summons, the Supreme Court applied thedoctrine of processual presumption. It thenproceeded to identify whether the action filedin Hong Kong against Heras was one inpersonam, in rem, or quasi in rem. (If sir asks for the distinctions, see end of case)

In the case at bar, the action filed in HongKong against HERAS was in personam, since it was based on his personal guarantee of theobligation of the principal debtor.

The Supreme Court then relied on thestipulation of facts agreed upon by the parties, whereby Heras referred to New Manila,Quezon City as his residence at the time jurisdiction over his person was being sought by the Hong Kong court.

Thus, since Heras was not a resident of HongKong and the action against him was one inpersonam, summons should have beenpersonally served on him in Hong Kong. Theextraterritorial service in the Philippines wasinvalid and did not confer on the Hong Kong

court jurisdiction over his person. It followsthat the Hong Kong court judgment cannot be




1s t


given force and effect in the Philippines forhaving been rendered without jurisdiction.

Even assuming Heras had been a resident ofHong Kong, he was no longer such when theextraterritorial service of summons was

attempted to be made on him.

Taking from the case of Brown vs. Brown where a proceeding quasi in rem wasinstituted against a suspect who fled thePhilippines, the Supreme Court ruled thatHeras, who was also an absentee, should have been served with summons in the samemanner as a non-resident not found in HongKong. Section 17, Rule 14 of the Rules of Courtproviding for extraterritorial service will notapply because the suit against him was in personam. Neither does Section 18, which

allows extraterritorial service on a residentdefendant who is temporarily absent from thecountry, because even if Heras be consideredas a resident of Hong Kong, the undisputedfact remains that he left Hong Kong not onlytemporarily but for good.

Just in case: An action in personam is an action against aperson on the basis of his personal liability. Anaction in rem is an action against the thingitself instead of against the person.[19] Anaction quasi in rem is one wherein an

individual is named as defendant and thepurpose of the proceeding is to subject hisinterest therein to the obligation or lien burdening the property.

In an action in personam, jurisdiction over theperson of the defendant is necessary for thecourt to validly try and decide the case.Jurisdiction over the person of a residentdefendant who does not voluntarily appear incourt can be acquired by personal service ofsummons as provided under Section 7, Rule 14of the Rules of Court. If he cannot be

personally served with summons within areasonable time, substituted service may bemade in accordance with Section 8 of saidRule. If he is temporarily out of the country,any of the following modes of service may beresorted to: (1) substituted service set forth inSection 8; (2) personal service outside thecountry, with leave of court; (3) service bypublication, also with leave of court; or (4) anyother manner the court may deem sufficient.

However, in an action in personam whereinthe defendant is a non-resident who does not

voluntarily submit himself to the authority ofthe court, personal service of summons within

the state is essential to the acquisition of jurisdiction over her person. This method ofservice is possible if such defendant isphysically present in the country. If he is notfound therein, the court cannot acquire jurisdiction over his person and therefore

cannot validly try and decide the case againsthim. An exception was laid down in Gemperle v. Schenker wherein a non-resident was served with summons through his wife, who was aresident of the Philippines and who was hisrepresentative and attorney-in-fact in a priorcivil case filed by him; moreover, the secondcase was a mere offshoot of the first case.

On the other hand, in a proceeding in rem orquasi in rem, jurisdiction over the person ofthe defendant is not a prerequisite to confer jurisdiction on the court provided that the

court acquires jurisdiction over the res.Nonetheless, summons must be served uponthe defendant not for the purpose of vestingthe court with jurisdiction but merely forsatisfying the due process requirements. Thus, where the defendant is a non-resident who isnot found in the Philippines and (1) the actionaffects the personal status of the plaintiff; (2)the action relates to, or the subject matter of which is property in the Philippines in whichthe defendant has or claims a lien or interest;(3) the action seeks the exclusion of thedefendant from any interest in the property

located in the Philippines; or (4) the propertyof the defendant has been attached in thePhilippines -- service of summons may beeffected by (a) personal service out of thecountry, with leave of court; (b) publication,also with leave of court; or (c) any othermanner the court may deem sufficient.

G.R. No. 122191 October 8, 1998SAUDI ARABIAN AIRLINES, petitioner, vs.COURT OF APPEALS, MILAGROS P.MORADA and HON. RODOLFO A.

ORTIZ, in his capacity as Presiding Judge ofBranch 89, Regional Trial Court of QuezonCity, respondents.

Facts: (Note: the most important facts in this

topic is found at the last part before the issue)

Milagros Morada is a flight attendant of Saudi

Arabian Airlines (SAUDIA). While on a lay-

over in Jakarta, she went to a disco dance with

a fellow crew members, Thamer and Allah Al-

Gazzawi who are both Saudi nationals. After

the party, they returned to the hotel anddecided to have breakfast at the room of




1s t


Thamer. For some reason, Allah left the room

and shortly after he did, Thamer attempted to

rape Milagros. 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 Milagros 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 officials negotiated with the

police for the immediate release of the

detained crew members but did not succeed

because Milagros refused to cooperate.

Later on, she 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 SAUDIA while Milagros was

transferred to Manila.

Just when Milagros 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 in Riyadh, Saudi Arabia, a few minutes before the departure of

her flight to Manila, Milagros 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. She then returned

to Manila.

Shortly afterwards, SAUDIA summoned

Milagros to report to Jeddah once again and

see Miniewy for further investigation. She did

so after receiving assurance from SAUDIA's

Manila manager, AslamSaleemi, that the

investigation was routinary and that it posedno danger to her.

In Jeddah, a SAUDIA legal officer brought her

to the same Saudi court where a Saudi judge

interrogated her 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. YahyaSaddick took away her

passport and told her to remain in Jeddah, at

the crew quarters, until further orders.

Subsequently, 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.

Facing conviction, Milagros sought the help of

her employer, SAUDIA. Unfortunately, she

was denied any assistance. She then asked the

Philippine Embassy in Jeddah to help her while her case is on appeal. Eventually, the

Prince of Makkah dismissed the case against

her and allowed her to leave Saudi Arabia.

Shortly before her return to Manila, she was

terminated from the service by SAUDIA,

without her being informed of the cause.

MOST IMPORTANT FACTS RELATED

TO THE TOPIC: On November 3, 1993,

Morada filed a Complaint for damages against

SAUDIA. On January 19,1994, SAUDIA filed

for an Omnibus Motion to Dismiss, with the

following contentions:




1s t


1. That the complaint states no cause ofaction against SAUDIA

2. The defendant Al-balawi is not a realparty in interest.

3.

That the claim or demand set forth inthe complaint has been waived,

abandoned, or otherwise extinguished.4. That the trial court has no jurisdiction

to try the case

ISSUE: Did the court acquired jurisdiction

over the parties?

RULING: Yes, the court acquired jurisdiction

over the parties.

The trial court possesses jurisdiction over the

person of the parties.

The trial court acquired jurisdiction over

(respondent) Morada through her act of filing

the complaint and amended complaint. On the

other hand, the court acquired jurisdiction

over the (Petitioner) SAUDIA by praying for

the dismissal of the Amended Complaint.

(from full text)

By filing her Complaint and Amended

Complaint with the trial court, privaterespondent has voluntary submitted herself to

the jurisdiction of the court.

The records show that petitioner SAUDIA has

filed several motionspraying for the dismissal

of Moradas Amended Complaint. SAUDIA also

filed an Answer In Ex

AbundanteCautelamdated 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 tothe trial courts jurisdiction by praying for the

dismissal of the Amended Complaint on

grounds other than lack of jurisdiction.

Supreme Court quoted the following rulings.

(only if sir Juan asks)

Republic vs. Ker and Company, Ltd.:

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 validlydecide 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.

De Midgely vs. Ferandos, held that:

When the appearance is by motion for the

purpose of objecting to the jurisdiction of thecourt 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, forexample, ask for adismissal of the action upon the further

ground that the court had no jurisdiction over

the subject matter.

[G.R. Nos. 121576-78. June 16, 2000]

BANCO DO BRASIL, petitioner, vs. THECOURT OF APPEALS, HON. ARSENIOM. GONONG, and CESAR S. URBINO,SR., respondents.

Facts: In 1989, Duraproof services asrepresented by its manager Cesar Urbino,Sr.sued Poro Point Shipping Services fordamages the former incurred when one of thelatter‘s ship ran aground because of a typhooncausing losses to Urbino. Urbino impleadedBanco Do Brasil (BDB), a foreign corporationnot engaged in business in the Philippines nordoes it have any office here or any agent. BDB was impleaded simply because it has a claimover the sunken ship. BDB however failed toappear multiple times. Eventually, a judgment was rendered and BDB was adjudged to pay

$300,000.00 in damages in favor of Urbinofor BDB being a nuisance defendant.




1s t


BDB assailed the said decision as it arguedthat there was no valid service of summons because the summons was issued to theambassador of Brazil. Further, the othersummons which were made throughpublication is not applicable to BDB as it

alleged that the action against them is inpersonam.

Petitioner avers that the action filed against itis an action for damages, as such it is an actionin personam which requires personal serviceof summons be made upon it for the court toacquire jurisdiction over it. However,inasmuch as petitioner Banco do Brasil is anon-resident foreign corporation, notengaged in business in the Philippines, unlessit has property located in the Philippines which may be attached to convert the actioninto an action in rem, the court cannot acquire jurisdiction over it in respect of an action in personam.

ISSUE: Whether or not the court acquired jurisdiction over Banco Do Brasil?

HELD: No. Banco Do Brasil is correct.

First. When the defendant is a nonresidentand he is not found in the country, summonsmay be served extraterritorially in accordance

with Rule 14, Section 17of the Rules of Court. Under this provision, there are only four (4)instances when extraterritorial service ofsummons is proper, namely: "(1) when theaction affects the personal status of theplaintiffs; (2) when the action relates to, or thesubject of which is property, within thePhilippines, in which the defendant claims alien or interest, actual or contingent; (3) whenthe relief demanded in such action consists, wholly or in part, in excluding the defendantfrom any interest in property located in thePhilippines; and (4) when the defendant non-

residents property has been attached withinthe Philippines."In these instances, service ofsummons may be effected by (a) personalservice out of the country, with leave of court;(b) publication, also with leave of court; or (c)any other manner the court may deemsufficient.

Clear from the foregoing, extrajudicial serviceof summons apply only where the action is inrem, an action against the thing itself insteadof against the person, or in an action quasi inrem, where an individual is named as

defendant and the purpose of the proceeding isto subject his interest therein to the obligation

or loan burdening the property. This is soinasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of thedefendant is not a prerequisite to confer jurisdiction on the court provided that thecourt acquires jurisdiction over the res.

However, where the action is in personam,one brought against a person on the basis ofhis personal liability, jurisdiction over theperson of the defendant is necessary for thecourt to validly try and decide the case. Whenthe defendant is a non-resident , personalservice of summons within the state isessential to the acquisition of jurisdiction overthe person.This cannot be done, however, ifthe defendant is not physically present in thecountry, and thus, the court cannot acquire jurisdiction over his person and thereforecannot validly try and decide the case againsthim.

In the instant case, Urbino‘s suit againstpetitioner is premised on petitioners being oneof the claimants of the subject vessel M/V Star Ace. Thus, it can be said that privaterespondent initially sought only to excludepetitioner from claiming interest over thesubject vessel M/V Star Ace. However, privaterespondent testified during the presentation ofevidence that, for being a nuisance defendant,

petitioner caused irreparable damage toprivate respondent in the amount of$300,000.00.Therefore, while the action is inrem, by claiming damages, the reliefdemanded went beyond the res and sought arelief totally alien to the action.

It must be stressed that any relief granted inrem or quasi in rem actions must be confinedto the res, and the court cannot lawfully rendera personal judgment against thedefendant.Clearly, the publication of summonseffected by private respondent is invalid and

ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitionerfor the alleged commission of an injury to hisperson or property caused by petitioners beinga nuisance defendant, private respondentsaction became in personam. Bearing in mindthe in personam nature of the action, personalor, if not possible, substituted service ofsummons on petitioner, and notextraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for

damages. Thus, the trial court had no jurisdiction to award damages amounting to




1s t


$300,000.00 in favor of private respondentand as against herein petitioner.

WHEREFORE, the subject petition is herebyGRANTED. The Decision and the Resolutionof the Court 29317 are herebyREVERSEDandSETASIDEinsofar as theyaffect petitioner Banco do Brasil.

G.R. No. 150656 April 29, 2003

MARGARITA ROMUALDEZ-

LICAROS, petitioner,

vs.

ABELARDO B. LICAROS, respondent.

FACTS: Abelardo Licaros ( Abelardo, for

short) and Margarita Romualdez-Licaros

( Margarita, hereafter) were lawfully marriedon December 15, 1968. Ironically, marital

differences, squabbles and irreconcilable

conflicts transpired between the spouses, such

that sometime in 1979, they agreed to separate

from bed and board.

In 1982, Margarita left for the United States

and there, to settle down with her two (2)

children. In the United States, on April 26,

1989, Margarita applied for divorce before the

Superior Court of California, County of SanMateo. On August 6, 1990, Margarita was

granted the decree of divorce together with a

distribution of properties between her and

Abelardo.

For his part, on June 24, 1991, Abelardo

commenced Civil Case No. 91-1757, for the

declaration of nullity of his marriage with

Margarita, based on psychological incapacity

under the New Family Code. As Margarita was

then residing at 96 Mulberry Lane, Atherton,

California, U.S.A., Abelardo initially movedthat summons be served through the

International Express Courier Service. The

court a quo denied the motion. Instead, it

ordered that summons be served by

publication in a newspaper of general

circulation once a week for three (3)

consecutive weeks, at the same time furnishing

respondent a copy of the order, as well as the

corresponding summons and a copy of the

petition at the given address in the United

States through the Department of Foreign Affairs, all at the expense of Abelardo.

Respondent was given sixty (60) days after

publication to file a responsive pleading.

On July 15, 1991, Process Server, Maximo B.

Dela Rosa, submitted his Officer‘s Return

quoted hereunder:

"OFFICER’S RETURN

THIS IS TO CERTIFY that on July 3, 1991, I

have served a copy of summons and

complaint with annexes together with order

dated June 28, 1991 issued by the Court in the

above-entitled case upon defendant

Margarita Romualdez-Licaros c/o DFA. (sent

by Mail) thru Pat G. Martines receiving Clerk

of Department of Foreign Affairs a person

authorized to receive this kind of process whoacknowledged the receipt thereof at ADB

Bldg., Roxas Blvd., Pasay City, Metro

Manila."

On November 8, 1991, the Decision as handed

down in Civil Case No. 91-1757 declaring the

marriage between Abelardo and Margarita null

and void.

Almost nine (9) years later, on April 28, 2000,

the petition at bench was commenced when

Margarita received a letter dated November18, 1991 from a certain Atty. Angelo Q.

Valencia informing her that she no longer has

the right to use the family name " Licaros"

inasmuch as her marriage to Abelardo had

already been judicially dissolved by the

Regional Trial Court of Makati on November

8, 1991.

Margarita insists that the trial court never

acquired jurisdiction over her person in the

petition for declaration of nullity of marriage

since she was never validly served with

summons. Neither did she appear in court to

submit voluntarily to its jurisdiction.

On the other hand, Abelardo argues that

jurisdiction over the person of a non-resident

defendant in an action in rem or quasi in

rem is not necessary. The trial and appellate

courts made a clear factual finding that there

was proper summons by publication effected

through the Department of Foreign Affairs as

directed by the trial court. Thus, the trial court




1s t


acquired jurisdiction to render the decision

declaring the marriage a nullity.

ISSUE: Whether Margarita was validly served

with summons in the case for declaration of

nullity of her marriage with Abelardo?

HELD: YES. Summons is a writ by which the

defendant is notified of the action brought

against him. Service of such writ is the means

by which the court acquires jurisdiction over

his person.

As a rule, when the defendant does not reside

and is not found in the Philippines, Philippine

courts cannot try any case against him because

of the impossibility of acquiring jurisdiction

over his person unless he voluntarily appearsin court. But when the case is one of actions in

rem or quasi in rem enumerated in Section 15,

Rule 14 of the Rules of Court, Philippine courts

have jurisdiction to hear and decide the case.

In such instances, Philippine courts have

jurisdiction over the res, and jurisdiction over

the person of the non-resident defendant is

not essential.

Actions in personam and actions in

rem or quasi in rem differ in that actions in

personam are directed against specific persons

and seek personal judgments. On the other

hand, actions in rem or quasi in rem are

directed against the thing or property or status

of a person and seek judgments with respect

thereto as against the whole world.

At the time Abelardo filed the petition for

nullity of the marriage in 1991, Margarita was

residing in the United States. She left the

Philippines in 1982 together with her two

children. The trial court considered Margaritaa non-resident defendant who is not found in

the Philippines. Since the petition affects the

personal status of the plaintiff, the trial court

authorized extraterritorial service of summons

under Section 15, Rule 14 of the Rules of Court.

The term "personal status" includes family

relations, particularly the relations between

husband and wife.

Under Section 15 of Rule 14, a defendant who

is a non-resident and is not found in the

country may be served with summons byextraterritorial service in four instances:

(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, in which the defendant

has or claims a lien or interest, actual or

contingent; (3) when the relief demandedconsists, wholly or in part, in excluding the

defendant from any interest in property

located in the Philippines; or (4) when the

property of the defendant has been attached

within the Philippines.

In these instances, extraterritorial service of

summons may be effected under any of three

modes: (1) by personal service out of the

country, with leave of court; (2) by publication

and sending a copy of the summons and order

of the court by registered mail to the

defendant‘s last known address, also with

leave of court; or (3) by any other means

the judge may consider sufficient .

Applying the foregoing rule, the trial court

required extraterritorial service of summons to

be effected on Margarita in the following

manner:

x x x, service of Summons by way of

publication in a newspaper of general

circulation once a week for three (3)

consecutive weeks, at the same time,

furnishing respondent copy of this Order as

well as the corresponding Summons and copy

of the petition at her given address at No. 96

Mulberry Lane, Atherton, California,

U.S.A., thru the Department of Foreign

Affairs, all at the expense of petitioner.

The trial court‘s prescribed mode of

extraterritorial service does not fall under the

first or second mode specified in Section 15 ofRule 14, but under the third mode. This refers

to "any other means that the judge may

consider sufficient.

The Process Server‘s Return of 15 July 1991

shows that the summons addressed to

Margarita together with the complaint and its

annexes were sent by mail to the Department

of Foreign Affairs with acknowledgment of

receipt. The Process Server‘s certificate of

service of summons is prima facie evidence of

the facts as set out in the certificate. Before

proceeding to declare the marriage between




1s t


Margarita and Abelardo null and void, the trial

court stated in its Decision dated 8 November

1991 that "compliance with the

jurisdictional requirements

hav(e)(sic) been duly established ." We

hold that delivery to the Department ofForeign Affairs was sufficient compliance with

the rule. After all, this is exactly what the trial

court required and considered as sufficient to

effect service of summons under the third

mode of extraterritorial service pursuant to

Section 15 of Rule 14.

G.R. No. 127692 March 10, 2004

FORTUNATO GOMEZ and AURORAGOMEZ v.COURT OF APPEALS, ADOLFOTROCINO and MARIANO TROCINO

Facts: Spouses Jesus andCaridadTrocinomortgaged two parcels of landto Dr. Yujuico, which was subsequentlyforeclosed and sold at a public auction. Beforethe expiration of the redemption period, Sps.Trocino sold the said property to SpousesGomez who redeemed the same from Dr. Yujuico. Sps. Trocino, however, refused toconvey ownership of the properties to Sps.

Gomez. This prompted Sps. Gomez to file anaction for specific performance and/orrescission against the heirs of Jesus J. Trocino,Sr., which include herein respondents andtheir mother Caridad Trocino.

On January 10, 1992, the trial court‘s ProcessServer served summons on respondents, in themanner described in his "Return of Service," to wit:

Respectfully returned to the Branch Clerk ofCourt, Regional Trial Court of Cebu, Branch

10, the herein attached original summonsissued in the above-entitled case with theinformation that on January 8, 1992summons and copies of the complaint were served to the defendants Jacob,Jesus Jr., Adolfo, Mariano,Consolacion, Alice, Racheal thrudefendant Caridad Trocino at their givenaddress at Maria Cristina Extension (besidesSacred Heart School for Girls), Cebu City,evidence by her signature found at the lowerportion of the original summons.

After trial on the merits, the RTC rendered itsdecision in favor of Sps. Gomez, ordering the

respondent heirs to execute a Deed of Sale andto deliver the titles to Sps. Gomez. Due to therespondents‘ failure to deliver the title, theRTC declared the said titles null and void,ordering the Register of Deeds of Cebu City toissue new titles in the name of Sps. Gomez.

Thereafter, respondents Adolfo and MarianoTrocino filed with the Court of Appeals, apetition for the annulment of the judgment,alleging that the trial court‘s decision is nulland void on the ground that it did not acquire jurisdiction over their persons as they were not validly served with a copy of the summons andthe complaint. The CA granted the petition,thereby annulling the decision of the RTC.

Issue: Whether or not summons was

effectively served on respondents. YES as toCaridad Trocino; NO as to respondentsMariano and Adolfo Trocino

Ruling: The action instituted by Sps.Gomez affect the parties alone, not the whole world. Hence, it is an action in personam, i.e.,any judgment therein is binding only upon theparties properly impleaded. It is an actionagainst persons, namely, herein respondents,on the basis of their personal liability. Assuch, personal service of summonsupon the defendants is essential in

order for the court to acquire of jurisdiction over their persons. Inactions in personam, summons on thedefendant must be served by handing a copythereof to the defendant in person, or, if herefuses to receive it, by tendering it to him.This is specifically provided in Section 7, Rule14 of the Rules of Court, which states:

SEC. 7. Personal service of summons.-- Thesummons shall be served by handing a copythereof to the defendant in person or, if herefuses to receive it, by tendering it to him.

In this case, summons were not served on Adolfo and Mariano. Adolfo Trocino is alreadya resident of Ohio, U.S.A. for 25 years. Being anon-resident, the court cannot acquire jurisdiction over his person and validly try anddecide the case against him.On the other hand,Mariano Trocino has been in Talibon, Boholsince 1986. To validly acquire jurisdiction overhis person, summons must be served on himpersonally, or through substituted service,upon showing of impossibility of personalservice.




1s t


The process server served the summons andcopies of the complaint on respondents Jacob,Jesus, Jr., Adolfo, Mariano,Consolacion, Aliceand Racheal, through their mother, CaridadTrocino.The return did not contain anyparticulars as to the impossibility of

personal service on Mariano Trocino within a reasonable time. Suchimproper service renders the sameineffective. Inasmuch as the sheriff‘s returnfailed to state the facts and circumstancesshowing the impossibility of personal serviceof summons upon respondents within areasonable time, petitioners should havesought the issuance of an alias summons.Under Section 5, Rule 14 of the Rules of Court,alias summons may be issued when theoriginal summons is returned without beingserved on any or all of the

defendants.28 Petitioners, however, did not doso, and they should now bear theconsequences of their lack of diligence.

Consequently, the judgment sought to beexecuted against respondents were rendered without jurisdiction as there was neither aproper service of summons nor was there any waiver or voluntary submission to the trialcourt‘s jurisdiction. Hence, the same is void, with regard to private respondents exceptCaridad Trocino.When the process serverpersonally served the summons on CaridadTrocino, the trial court validly acquired jurisdiction over her person alone. Hence, thetrial court‘s decision is valid and binding withregard to her, but only in proportion toCaridad Trocino‘s share. Hence, the petitionfor review is DENIED.

St. Aviation Services vs. GrandInternational Airways, Inc.G.R. No. 140288 October 23, 2006

Facts:

St. Aviation Services (petitioner) is a foreign corporation based inSingapore and is engaged in themanufacture, repair, and maintenanceof airplanes and aircrafts.

Grand International Airways(respondent) is domesticcorporation engaged in airtimeoperations.

January 1996, petitioner andrespondent executed an Agreement forthe Maintenance and Modification of Airbus A 300 B4-103 (First Agreement).

They agreed that the construction, validity and performance thereof shall be governed by the lawsof Singapore. They further agreed tosubmit any suit arising from theiragreement to the non-exclusive jurisdiction of the Singapore courts.

Petitioner undertook the contracted works and thereafter promptlydelivered the aircrafts to respondent.

Petitioner billed respondent in thetotal amount of US$303,731.67 orS$452,560 for the period of March1996 to October 1997.

Despite repeated demands respondentfailed to pay.

December 12, 1997, petitioner filed before the High Court of the Republic

of Singapore an action for the sumS$452,560.

Upon petitioner‘s motion, the courtissued a Writ of Summons to be servedextraterritorially oroutside Singapore uponrespondent. The court sought theassistance of the sheriffof Pasay City to effect service of thesummons upon respondent. However,despite receipt of summons,respondent failed to answer the claim.

On February 17, 1998, on motion of

petitioner, the Singapore High Courtrendered a judgment by defaultagainst respondent.

On August 4, 1998, petitioner filed with the RTC, Branch 117, Pasay City,a Petition for Enforcement ofJudgment, docketed as Civil Case No.98-1389.

Respondent: Moved to dismiss the petition on2 grounds:

1. The Singapore High Court did notacquire jurisdiction over its person;

and2. The foreign judgment sought to beenforced is void for having beenrendered in violation of its right to dueprocess. (This was denied by the RTCsaying that these are not grounds for amotion to dismiss under the Rules onCivil Procedure)

They appealed to the CA and was grantedsaying that the complaint does not involve the personal status of plaintiff, nor any propertyin which the defendant has a claim or interest,

or which the private respondent has attachedbut purely an action for collection of debt. It isa personal action as well as an




1s t


action in personam, not an action inrem or quasi in rem. As a personal action, theservice of summons should be personal orsubstituted, not extraterritorial, in order toconfer jurisdiction on the court.

Issues:

1.

Whether the Singapore HighCourt has acquired jurisdictionover the person of therespondent by the service ofsummons upon its office in thePhilippines.

2. Whether the judgment by defaultin Suit No. 2101 by the SingaporeHigh Court is enforceable inthe Philippines.

Ruling: Generally, in the absence of aspecial contract, no sovereign is bound to giveeffect within its dominion to a judgmentrendered by a tribunal of another country;however, under the rules of comity, utility andconvenience, nations have established a usageamong civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected andrendered efficacious under certain conditionsthat may vary in different countries. Certainly,the Philippine legal system has long agoaccepted into its jurisprudence and procedural

rules the viability of an action for enforcementof foreign judgment, as well as the requisitesfor such valid enforcement, as derived frominternationally accepted doctrines. (GeneralPrinciple)

The conditions for the recognition andenforcement of a foreign judgment in our legalsystem are contained in Section 48, Rule 39 ofthe 1997 Rules of Civil Procedure, as amended,thus:

SEC. 48. Effect of foreign judgments. The

effect of a judgment or final order of a tribunalof a foreign country, having jurisdiction torender the judgment or final order is asfollows:

a)

In case of a judgment or final orderupon a specific thing, the judgment orfinal order is conclusive upon the titleto the thing; and

b)

In case of a judgment or final orderagainst a person, the judgment or finalorder is presumptive evidence of a

right as between the parties and their

successors in interest by a subsequenttitle;

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.

Under the above Rule, a foreign judgment ororder against a person is merely presumptiveevidence of a right as between the parties. Theparty attacking a foreign judgment has the burden of overcoming the presumption of its validity.

Generally, matters of remedy and proceduresuch as those relating to the service of processupon a defendant are governed by the lex forior the internal law of the forum, which in this

case is the law of Singapore.

In an Order dated December 24, 1997, theSingapore High Court granted leave to serve acopy of the Writ of Summons on theDefendant by a method of serviceauthorized by the law of the Philippinesfor service of any originating processissued by the Philippines at ground floor, APMC Building, 136 Amorsolo corner GamboaStreet, 1229 Makati City, or elsewhere inthe Philippines.

This service of summons outside Singapore isin accordance with Order 11, r. 4(2) of theRules of Court 1996 of Singapore, whichprovides.

(2) Where in accordance with these Rules, anoriginating process is to be served on adefendant in any country with respect to whichthere does not subsist a Civil ProcedureConvention providing for service in thatcountry of process of the High Court, theoriginating process may be served

a)

through the government of thatcountry, where that government is willing to effect service;

b)

through a Singapore Consularauthority in that country, except where service through such anauthority is contrary to the law of thecountry; or

c)

by a method of serviceauthorized by the law of thatcountry for service of anyoriginating process issued bythat country.




1s t


In the Philippines, jurisdiction over a party isacquired by service of summons by thesheriff, his deputy or other proper court officereither personally by handing a copy thereof tothe defendant or by substituted service.

In this case, the Writ of Summons issued bythe Singapore High Court was served uponrespondent at its office locatedat Mercure Hotel (formerly Village Hotel),MIA Road, Pasay City. The Sheriffs Returnshows that it was received on May 2, 1998 byJoyce T. Austria, Secretary of the GeneralManager of respondent company. Butrespondent completely ignored the summons,hence, it was declared in default.

Considering that the Writ of Summons wasserved upon respondent in accordance with

our Rules, jurisdiction was acquired by theSingapore High Court over its person. The judgment of default rendered by that courtagainst respondent is valid.

G.R. No. 172242 August 14, 2007PERKIN ELMER SINGAPORE PTELTD., Petitioner, vs. DAKILA TRADINGCORPORATION, Respondent.

Facts: Perkin Elmer Singapore Pte. Ltd. is acorporation duly organized and existing underthe laws of Singapore. It is not considered as aforeign corporation "doing business" in thePhilippines. Herein respondent Dakila TradingCorporation is a corporation organized andexisting under Philippine laws, and engaged inthe business of selling and leasing outlaboratory instrumentation and processcontrol instrumentation, and trading oflaboratory chemicals and supplies.

Respondent entered into a Distribution Agreement on 1 June 1990 with Perkin-Elmer Instruments Asia Pte Ltd. (PEIA), a corporation duly organized and existingunder the laws of Singapore and engaged inthe business of manufacturing, producing,selling or distributing variouslaboratory/analytical instruments. By virtue ofthe said agreement, PEIA appointed therespondent as the sole distributor of itsproducts in the Philippines. The respondent was likewise granted the right to purchase andsell the products of PEIA subject to the termsand conditions set forth in the Distribution Agreement. PEIA, on the other hand, shall giverespondent a commission for the sale of itsproducts in the Philippines.

Under the same Distribution Agreement,respondent shall order the products of PEIA, which it shall sell in the Philippines, eitherfrom PEIA itself or from Perkin-ElmerInstruments (Philippines) Corporation(PEIP), an affiliate of PEIA. PEIP is a

corporation duly organized and existing underPhilippine laws, and involved in the businessof wholesale trading of all kinds of scientific, biotechnological, and analytical instrumentsand appliances. PEIA allegedly owned 99% ofthe shares of PEIP.

On 2 August 1997, however, PEIA unilaterallyterminated the Distribution Agreement,prompting respondent to file before the RTC ofMandaluyong City, Branch 212, aComplaint for Collection of Sum of Money andDamages with Prayer for Issuance of a Writ of Attachment against PEIA and PEIP, docketedas Civil Case No. MC99-605.

Respondent then filed Ex-Parte Motions forIssuance of Summons and for Leave of Courtto Deputize Respondent‘s General Manager,Richard A. Tee, to Serve Summons Outside ofthe Philippines, which the RTC granted in itsOrder, dated 27 April 2000. Thus, an AliasSummons, dated 4 September 2000, wasissued by the RTC to PEIA. But the said AliasSummons was served on 28 September 2000

and received by Perkinelmer Asia, aSingaporean based sole proprietorship, owned by the petitioner and, allegedly, a separate anddistinct entity from PEIA.

Accordingly, respondent filed an Ex-ParteMotion to Admit Amended Complaint,together with the Amended Complaintclaiming that PEIA had become a soleproprietorship owned by the petitioner, andsubsequently changed its name to Perkinelmer Asia. Being a sole proprietorship of thepetitioner, a change in PEIA‘s name and

juridical status did not detract from the factthat all its due and outstanding obligations tothird parties were assumed by the petitioner.Hence, in its Amended Complaint respondentsought to change the name of PEIA to that ofthe petitioner. In an Order, dated 24 July2001, the RTC admitted the AmendedComplaint filed by the respondent.Respondent then filed another Motion for theIssuance of Summons and for Leave of Courtto Deputize Respondent‘s General Manager,Richard A. Tee, to Serve Summons Outside thePhilippines. In another Order, dated 4 March

2002, the RTC deputized respondent‘s GeneralManager to serve summons on petitioner inSingapore. The RTC thus issued summons to




1s t


the petitioner. Acting on the said Order,respondent‘s General Manager went toSingapore and served summons on thepetitioner.

Issue: Whether there is proper service ofsummons and acquisition of jurisdiction by theRTC over the person of the petitioner;

Ruling: NO, because the action is one inpersonam.

One of the modes of acquiring jurisdiction overthe person of the defendant or respondent in acivil case is through service of summons. It isintended to give notice to the defendant orrespondent that a civil action has beencommenced against him. The defendant or

respondent is thus put on guard as to thedemands of the plaintiff or the petitioner.

The proper service of summons differsdepending on the nature of the civil caseinstituted by the plaintiff or petitioner: whether it is in personam, in rem, or quasi inrem. Actions in personam, are thoseactions brought against a person on the basisof his personal liability ; actions in rem areactions against the thing itself instead ofagainst the person; and actions are quasi inrem, where an individual is named as

defendant and the purpose of the proceeding isto subject his or her interest in a property tothe obligation or loan burdening the property.

Under Section 15, Rule 14 of the 1997 RevisedRules of Civil Procedure, there are onlyfour instances wherein a defendant whois a non-resident and is not found in thecountry may be served with summons by extraterritorial service, to wit: (1) whenthe action affects the personal status of theplaintiff; (2) when the action relates to, or thesubject of which is property, within the

Philippines, in which the defendant claims alien or an interest, actual or contingent; (3) when the relief demanded in such actionconsists, wholly or in part, in excluding thedefendant from any interest in propertylocated in the Philippines; and (4) when thedefendant non-resident‘s property has beenattached within the Philippines. In theseinstances, service of summons may be effected by (a) personal service out of the country, withleave of court; (b) publication, also with leaveof court; or (c) any other manner the courtmay deem sufficient.

Undoubtedly, extraterritorial service ofsummons applies only where the actionis in rem or quasi in rem, but not if anaction is in personam.

When the case instituted is an action in rem orquasi in rem, Philippine courts already have jurisdiction to hear and decide the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant isnot a prerequisite to confer jurisdiction on thecourt, provided that the court acquires jurisdiction over the res. Thus, in suchinstance, extraterritorial service of summonscan be made upon the defendant. The saidextraterritorial service of summons is not forthe purpose of vesting the court with jurisdiction, but for complying with therequirements of fair play or due process, sothat the defendant will be informed of thependency of the action against him and thepossibility that property in the Philippines belonging to him or in which he has an interestmay be subjected to a judgment in favor of theplaintiff, and he can thereby take steps toprotect his interest if he is so minded. On theother hand, when the defendant orrespondent does not reside and is notfound in the Philippines, and the actioninvolved is in personam, Philippinecourts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court.

In the case at bar, this Court sustainsthe contention of the petitioner thatthere can never be a validextraterritorial service of summonsupon it, because the case before thecourt a quo involving collection of a sumof money and damages is, indeed, anaction in personam, as it deals with thepersonal liability of the petitioner to therespondent by reason of the allegedunilateral termination by the former ofthe Distribution Agreement. Even theCourt of Appeals, in its Decision dated 4 April2004, upheld the nature of the instant case asan action in personam.

Thus, being an action in personam, personalservice of summons within the Philippines isnecessary in order for the RTC to validlyacquire jurisdiction over the person of thepetitioner, and this is not possible in thepresent case because the petitioner is a non-

resident and is not found within thePhilippines.




1s t


G.R. No. 156848 October 11, 2007

PIONEER INTERNATIONAL,

LTD., petitioner, vs. HON. TEOFILO

GUADIZ, JR., in his capacity as

Presiding Judge of Regional Trial Court,

Branch 147, Makati City, and ANTONIOD. TODARO, respondents.

Facts:

Antonio D. Todaro was the managing

director of Betonval Readyconcrete, Inc.

(Betonval) from June 1975 up to his

resignation in February 1996.

According to Todaro, PIL contacted him in

May 1996 and asked if he could join it in

establishing a pre-mixed concrete plant and

in overseeing its operations in thePhilippines. Todaro confirmed his

availability and expressed interest in joining

PIL. Todaro met with several of PIL‘s

representatives and even gave PIL the names

of three of his subordinates in Betonval

whom he would like to join him in PIL.

Several letters were exchanged between

Todaro and PIL on the former‘s willingness

to serve as consultant of PIL on a permanent

basis should the company establish itself on

a permanent basis in the Philippines.

Todaro‘s request for permanent employment

with PPHI, however, was unsuccessful.

PIL‘s Executive General Manager (Folwell)

authorized Klepzig (President and Managing

Director of PPHI and PCPI) to terminate the

association of PIL and Todaro.

Todaro then filed a complaint for sum of

money and damages with preliminary

attachment against Pioneer Intl, LTD (PIL),

Pioneer Concrete Philippines, Inc. (PCPI),

Pioneer Philippines Holdings, Inc. (PPHI),

John G. McDonald (McDonald), and Philip

J. Klepzig (Klepzig).

Copies of the summons and of the complaint

were served to PIL and its co-defendants at

PPHI and PCPI‘s office in Alabang,

Muntinlupa, through Cecille L. De Leon (De

Leon), who was Klepzig‘s Executive

Assistant.

Todaro alleged that PIL is a corporation duly

organized under Australian laws, while PCPI

and PPHI are corporations duly organized

under Philippine laws. PIL is engaged in theready-mix and concrete aggregates business.

PIL established PPHI as the holding

company of the stocks of its operating

company in the Philippines, PCPI.

PIL filed, by special appearance, a motion to

dismiss Todaro‘s complaint. PIL‘s co-

defendants, PCPI, PPHI, and Klepzig, filed aseparate motion to dismiss.

PIL’s contention:

o The trial court has no jurisdiction over

PIL because PIL is a foreign corporation

not doing business in the Philippines;

and

o

It questioned the service of summons on

it. Assuming arguendo that Klepzig is

PIL‘s agent in the Philippines, it was not

Klepzig but De Leon who received the

summons for PIL;

Lower court ruled in favor of Todaro and

asserted that it had jurisdiction over PIL.

Issue: W/N the trial court has jurisdiction

over the person of PIL. NO due to improper

service of summons

Ruling:

Jurisdiction over PIL

PIL questions the trial court‘s exercise of

jurisdiction over it on two levels.

1) That PIL is a foreign corporation not doing

business in the Philippines and because of this,

the service of summons on PIL did not follow

the mandated procedure; and

2) That Todaro‘s claims are based on an

alleged breach of an employment contract so

Todaro should have filed his complaint before

the NLRC and not before the trial court.

Transacting Business in the Philippine

Section 12, Rule 14 of the 1997 Rules of

Civil Procedure Service upon foreign private juridical

entity. — When the defendant is a foreign

juridical entity which has transacted

business in the Philippines, service may be

made on its resident agent designated in

accordance with law for that purpose, or, if

there be no such agent, on the government

official designated by law to that effect, or

any of its officers or agents within the

Philippines.




1s t


PIL insists that its sole act of "transacting" or

"doing business" in the Philippines consisted

of its investment in PPHI. Under Philippine

law, PIL‘s mere investment in PPHI does not

constitute "doing business."

However, we affirm the lower courts‘ ruling

and declare that, based on the allegations in

Todaro‘s complaint, PIL was doing business in

the Philippines when it negotiated Todaro‘s

employment with PPHI.

Section 3(d) of Republic Act No. 7042, Foreign

Investments Act of 1991, states:

The phrase "doing business" shall

include soliciting orders, service

contracts, opening offices, xxx ; and anyother 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: Provided, however, That the

phrase "doing business" shall not be deemed

to include mere investment as a shareholder

by a foreign entity in domestic corporations

duly registered to do business, and/or the

exercise of rights as such investor; xxx

PIL’s alleged acts in actively negotiating

to employ Todaro to run its pre-mixed

concrete operations in the Philippines, which

acts are hypothetically admitted in PIL‘s

motion to dismiss, are not mere acts of a

passive investor in a domestic

corporation. Such are managerial andoperational acts in directing and establishing

commercial operations in the Philippines. The

annexes (referring to the letters exchanged

between the parties) that Todaro attached to

his complaint give us an idea on the extent of

PIL‘s involvement in the negotiations

regarding Todaro‘s employment.

In Annex "E," McDonald of Pioneer Concrete

Group HK confirmed his offer to engage

Todaro as a consultant of PIL. In Annex "F,"

Todaro accepted the consultancy. In Annex

"H," Klepzig of PPHI stated that PIL

authorized him to tell Todaro about the

cessation of his consultancy. Finally, in

Annex "I," Folwell of PIL wrote to Todaro to

confirm that "Pioneer" no longer wishes to

be associated with Todaro and that Klepzig

is authorized to terminate this association.

In fact, in the letters to Todaro, the word"Pioneer" was used to refer not just to PIL

alone but also to all corporations negotiating

with Todaro under the Pioneer name.

In this sense, the various Pioneer corporations

were not acting as separate corporations. The

various Pioneer corporations were all working

in concert to negotiate an employment

contract between Todaro and PPHI, a

domestic corporation.

Finally, the phrase "doing business in the

Philippines" in the former version of Section

12, Rule 14 now reads "has transacted business

in the Philippines." The scope is thus broader

in that it is enough for the application of the

Rule that the foreign private juridical entity

"has transacted business in the Philippines."

Purpose of the summons

The purpose of summons is not only to acquire

jurisdiction over the person of the defendant,

but also to give notice to the defendant that an

action has been commenced against it and to

afford it an opportunity to be heard on the

claim made against it. The requirements of the

rule on summons must be strictly followed;

otherwise, the trial court will not acquire

jurisdiction over the defendant.

When summons is served on a foreign juridical

entity, there are three prescribed ways:

(1) Service on its resident agent designated in

accordance with law for that purpose,(2) Service on the government official

designated by law to receive summons if the

corporation does not have a resident agent,

and

(3) Service on any of the corporation‘s officers

or agents within the Philippines.

In the present case, service of summons on

PIL failed to follow any of the

prescribed processes. PIL had no resident

agent in the Philippines. Summons was not

served on the Securities and Exchange

Commission (SEC), the designated




1s t


government agency, since PIL is not registered

with the SEC.

Summons for PIL was served on De

Leon, Klepzig’s Executive Assistant.

Klepzig is PIL’s "agent within thePhilippines" because PIL authorized

Klepzig to notify Todaro of the cessation

of his consultancy. The authority given by

PIL to Klepzig to notify Todaro implies that

Klepzig was likewise authorized to receive

Todaro‘s response to PIL‘s notice. Todaro

responded to PIL‘s notice by filing a complaint

before the trial court.

However, summons was not served

personally on Klepzig as agent of PIL.Instead, summons was served on De Leon,

Klepzig‘s Executive Assistant. In this instance,

De Leon was not PIL‘s agent but a mere

employee of Klepzig. In effect, the sheriff

resorted to substituted service. For symmetry,

we apply the rule on substituted service of

summons on a natural person and we find that

no reason was given to justify the service of

PIL‘s summons on De Leon.

Thus, we rule that PIL transacted business in

the Philippines and Klepzig was its agent

within the Philippines. However, there was

improper service of summons on PIL since

summons was not served personally on

Klepzig.

Case was remanded to the lower court forproper service of summons and trial.

G.R. No. 168747 October 19, 2007 VICTORIA REGNER, Petitioner, vs.CYNTHIA R. LOGARTA, TERESA R.

TORMIS and CEBU COUNTRY CLUB,Inc., Respondents

Luis Regner had 3 daughters with 1st wife:Cynthia Logarta, Teresa Tormis (and MelindaBorja). Victoria Regner is the second wife ofLuis.

After Luis died, Victoria alleged that Cynthiaand Teresa defrauded Luis (who was then veryill and was unable to write) into placing histhumbmark into a Deed of Donation. In saidDeed, Luis purportedly donated a Proprietary

Ownership Certificate for Cebu Country Clubmembership shares. Victoria alleged that it is

void because Luis‘ thumbmark was placed without the his free will and voluntarinessconsidering his physical state; that it was done without Luis‘s lawyer; that the ratificationmade before he died is likewise void because ofsimilar circumstances.

In the same year, Victoria filed a complaint toannul said deed.

The sheriff could not deliver the summonsagainst Cynthia and Teresa becauseapparently, although they are Filipinos, theyare in California and not in the PH.

It was only in the year 2000 that one of thesummons was served to one of the sisters,Teresa, when she came back to the Philippines.Teresa immediately filed a motion to dismisson the ground of –

-

Failure to prosecute her case for anunreasonable length of time.

-

Alleged that the case should bedismissed because Cynthia, who is anindispensable party, was not issuedany summons, hence, since anindispensable party is not served withsummons, without her who has suchan interest in the controversy orsubject matter there can be no properdetermination of the case.

The trial court ruled in favour of Teresa; this was affirmed by the Court of Appeals.

ISSUE: WON the court acquired jurisdiction.

HELD: NO. Dismissal of Victoria‘s complaintis correct.

Cynthia is an indispensable party

Rule 3, Section 7 of the Rules of Court, definesindispensable parties as parties-in-interest without whom there can be no finaldetermination of an action. As such, they must be joined either as plaintiffs or as defendants.

Cynthia and Teresa are indispensable parties.They allegedly derived their rights to thesubject property by way of donation from theirfather Luis. The country club membershipcertificate is undivided and it is impossible topinpoint which specific portion of the property belongs to either Teresa or Cynthia, thus,making them indispensable parties.

Action filed was a personal action

There are generally two types of actions:actions in rem and actions in personam. Anaction in personam is an action against a

person on the basis of his personal liability,




1s t


while an action in rem is an action against thething itself, instead of against the person.

The certificate, subject of the donation, is apersonal property. The action filed by Victoriais therefore a personal action. So in order for

the court to acquire jurisdiction over therespondents, summons must be served uponthem.

Proper service of summons

In personal actions, if the respondents areresidents of the Philippines, they may beserved summons in the following order:

1. Personal Service;

2.

If not possible, Substituted Service;

3.

If respondent can‘t be found becausehe is abroad but still a resident of thePhilippines, by publication with leaveof court.

In personal actions still, if the respondentsare non-residents, they may be servedsummons in the following manner:

1.

Personal service through thePhilippine embassy;

2.

By publication in a newspaper ofgeneral circulation in such placesand for such time as the court mayorder, in which case a copy of the

summons and order of the courtshould be sent by registered mail tothe last known address of thedefendant; or

3.

In any other manner which thecourt may deem sufficient.

Conclusion

Cynthia was never served any summons in anyof the manners authorized by the Rules ofCourt. The summons served to Teresa cannot bind Cynthia. It is incumbent upon Victoria tocompel the court to authorize theextraterritorial service of summons againstCynthia. Her failure to do so for a long periodof time constitutes a failure to prosecute onher part.

G.R. No. 165273, March 10, 2010LEAH PALMA vs. HON. DANILO P.

GALVEZ, in his capacity as PRESIDING

JUDGE of the REGIONAL TRIAL COURT OF

ILOILO CITY, BRANCH 24; and PSYCHE

ELENA AGUDO,

FACTS:

July 28, 2003 - petitioner Leah Palmafiled with the RTC an action for damagesagainst the Philippine Heart Center(PHC), Drs. Giron and Cruz, alleging thatthe defendants committed professionalfault, negligence and omission for havingremoved her right ovary against her will.Defendants filed their respective Answers.Petitioner subsequently filed a Motion for

Leave to Admit Amended Complaint,

praying for the inclusion of additional

defendants who were all nurses at the

PHC, namely, Karla Reyes, Myra

Mangaser and herein private respondent

Agudo. Thus, summons were subsequently

issued to them.

February 17, 2004 - RTC's process serversubmitted his return of summons statingthat the alias summons, together with acopy of the amended complaint and itsannexes, were served upon privaterespondent thru her husband Alfredo Agudo, who received and signed the sameas private respondent was out of thecountry.

March 1, 2004 - counsel of privaterespondent filed a Notice of Appearance

and a Motion for Extension of Time to File Answer stating that he was just engaged byprivate respondent's husband as she wasout of the country and the Answer wasalready due.

March 15, 2004 - private respondent'scounsel filed a Motion for AnotherExtension of Time to File Answer,[5] andstating that while the draft answer wasalready finished, the same would be sentto private respondent for her

clarification/verification before thePhilippine Consulate in Ireland; thus, thecounsel prayed for another 20 days to filethe Answer.

March 30, 2004, private respondent fileda Motion to Dismiss on the ground thatthe RTC had not acquired jurisdiction overher as she was not properly served withsummons, since she was temporarily outof the country; that service of summons onher should conform to Section 16, Rule 14

of the Rules of Court.

http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/165273.htm#_ftn5







1s t


Petitioner filed her Opposition] to the

motion to dismiss, arguing that a

substituted service of summons on private

respondent's husband was valid and

binding on her; that service of summons

under Section 16, Rule 14 was notexclusive and may be effected by other

modes of service, i.e., by personal or

substituted service.

RTC Ruling: RTC granted privaterespondent's motion to dismiss. It foundthat while the summons was served atprivate respondent's house and received by respondent's husband, such service didnot qualify as a valid service of summonson her as she was out of the country at the

time the summons was served, thus, she was not personally served a summons; andeven granting that she knew that acomplaint was filed against her,nevertheless, the court did not acquire jurisdiction over her person as she was not validly served with summons; thatsubstituted service could not be resortedto since it was established that privaterespondent was out of the country, thus,Section 16, Rule 14 provides for the serviceof summons on her by publication.

Petitioner‘s MR was denied. Petitioner isnow before us alleging that the publicrespondent committed a grave abuse ofdiscretion amounting to lack or excess of jurisdiction when he ruled that:

I.

Substituted service ofsummons upon privaterespondent, a defendantresiding inthe Philippines but

temporarily outside thecountry is invalid;II.

Section 16, Rule 14, of the1997 Rules of CivilProcedure limits the modeof service of summonsupon a defendant residingin the Philippines, buttemporarily outside thecountry, exclusively toextraterritorial service ofsummons under section15 of the same rule;

III.

In not ruling that by filingtwo (2) motions forextension of time to file

Answer, privaterespondent had voluntarily submittedherself to the jurisdictionof respondent court,pursuant to Section 20,

Rule 14 of the 1997 Rulesof Civil Procedure, hence,equivalent to having beenserved with summons;

x x x

Petitioner‘s claims: RTC committed agrave abuse of discretion in ruling thatSection 16, Rule 14, limits the service ofsummons upon the defendant-resident who is temporarily out of the countryexclusively by means of extraterritorialservice, i.e., by personal service or bypublication, pursuant to Section 15 of thesame Rule. Petitioner further argues thatin filing two motions for extension of timeto file answer, private respondent voluntarily submitted to the jurisdiction ofthe court.

private respondent‘s claims: She insiststhat since she was out of the country at thetime the service of summons was made,such service should be governed bySection 16, in relation to Section 15, Rule14 of the Rules of Court; that there was no voluntary appearance on her part whenher counsel filed two motions forextension of time to file answer, since shefiled her motion to dismiss on the groundof lack of jurisdiction within the periodprovided under Section 1, Rule 16 of theRules of Court.

ISSUE: WON there was a valid service of

summons on private respondent. YES

HELD: In civil cases, the trial court

acquires jurisdiction over the person of the

defendant either by the service of summons or

by the latter‘s voluntary appearance and

submission to the authority of the

former.[16] Private respondent was a Filipino

resident who was temporarily out of

the Philippines at the time of the service of

summons; thus, service of summons on her is








1s t


governed by Section 16, Rule 14 of the Rules of

Court, which provides:

Sec. 16. Residents temporarily

out of the Philippines. When an

action is commenced against a

defendant who ordinarily resides

within the Philippines, but who is

temporarily out of it, servicemay, by

leave of court, be also effected out of

the Philippines, as under the

preceding section. (Emphasis

supplied)

The preceding section referred to in

the above provision is Section 15, which

speaks of extraterritorial service, thus:

SEC. 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 ofthe 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.

The RTC found that since private

respondent was abroad at the time of the

service of summons, she was a resident who

was temporarily out of the country; thus,

service of summons may be made only bypublication.

We do not agree.

In Montefalcon v. Vasquez ,[17] we said

that because Section 16 of Rule 14 uses the

words may and also, it is not mandatory. Other

methods of service of summons allowed underthe Rules may also be availed of by the serving

officer on a defendant-resident who is

temporarily out of the Philippines. Thus, if a

resident defendant is temporarily out of the

country, any of the following modes of service

may be resorted to: (1) substituted service set

forth in section 7 ( formerly Section 8), Rule

14; (2) personal service outside the country,

with leave of court; (3) service by publication,

also with leave of court; or (4) in any other

manner the court may deem sufficient.[18]

In Montalban v. Maximo,[19] we held

that substituted service of summons under the

present Section 7, Rule 14 of the Rules of Court

in a suit in personam against residents of

the Philippines temporarily absent therefrom

is the normal method of service of summons

that will confer jurisdiction on the court over

such defendant. In the same case, we

expounded on the rationale in providing for

substituted service as the normal mode of

service for residents temporarily out ofthe Philippines.

x x x A man temporarily absent from

this country leaves a definite place of

residence, a dwelling where he lives, a local

base, so to speak, to which any inquiry about

him may be directed and where he is bound to

return. Where one temporarily absents

himself, he leaves his affairs in the hands of

one who may be reasonably expected to act in

his place and stead; to do all that is necessary

to protect his interests; and to communicate with him from time to time any incident of

importance that may affect him or his business

or his affairs. It is usual for such a man to leave

at his home or with his business associates

information as to where he may be contacted

in the event a question that affects him crops

up. If he does not do what is expected of him,

and a case comes up in court against him, he

cannot just raise his voice and say that he is

not subject to the processes of our courts. He

cannot stop a suit from being filed against himupon a claim that he cannot be summoned at
















1s t


his dwelling house or residence or his office or

regular place of business.

Not that he cannot be reached within a

reasonable time to enable him to contest a suit

against him. There are now advanced facilitiesof communication. Long distance telephone

calls and cablegrams make it easy for one he

left behind to communicate with him.[20]

Considering that private

respondent was temporarily out of the

country, the summons and complaint

may be validly served on her through

substituted service under Section 7,

Rule 14 of the Rules of Court which reads:

SEC. 7. Substituted

service. If, for justifiable causes, the

defendant cannot be served within a

reasonable time as provided in the

preceding section, service may be

effected (a) by leaving copies of the

summons at the defendants residence

with some person of suitable age and

discretion then residing therein, or (b)

by leaving the copies at defendants

office or regular place of business withsome competent person in charge

thereof.

We have held that a dwelling, house or

residence refers to the place where the person

named in the summons is living at the time

when the service is made, even though he may

be temporarily out of the country at the

time.[21] It is, thus, the service of the summons

intended for the defendant that must be left

with the person of suitable age and discretion

residing in the house of the

defendant. Compliance with the rules

regarding the service of summons is as

important as the issue of due process as that of

jurisdiction.[22]

Section 7 also designates the persons with

whom copies of the process may be left. The

rule presupposes that such a relation of

confidence exists between the person with

whom the copy is left and the defendant and,

therefore, assumes that such person will

deliver the process to defendant or in some

way give him notice thereof .[23]

In this case, the Sheriff's Return stated that

private respondent was out of the country;

thus, the service of summons was made at her

residence with her husband, Alfredo P. Agudo,

acknowledging receipt thereof. Alfredo was

presumably of suitable age and discretion, who was residing in that place and, therefore, was

competent to receive the summons on private

respondent's behalf.

Notably, private respondent makes no issue as

to the fact that the place where the summons

was served was her residence, though she was

temporarily out of the country at that time,

and that Alfredo is her husband. In fact, in the

notice of appearance and motion for extension

of time to file answer submitted by private

respondent's counsel, he confirmed the

Sheriff's Return by stating that private

respondent was out of the country and that his

service was engaged by respondent's

husband. In his motion for another extension

of time to file answer, private respondent's

counsel stated that a draft of the answer had

already been prepared, which would be

submitted to private respondent, who was in

Ireland for her clarification and/or verification

before the Philippine Consulate there. These

statements establish the fact that privaterespondent had knowledge of the case filed

against her, and that her husband had told her

about the case as Alfredo even engaged the

services of her counsel.

In addition, we agree with petitioner that the

RTC had indeed acquired jurisdiction over the

person of private respondent when the latter's

counsel entered his appearance on private

respondent's behalf, without qualification and

without questioning the propriety of the

service of summons, and even filed two

Motions for Extension of Time to File Answer.

In effect, private respondent, through counsel,

had already invoked the RTCs jurisdiction over

her person by praying that the motions for

extension of time to file answer be granted. We

have held that the filing of motions seeking

affirmative relief, such as, to admit answer, for

additional time to file answer, for

reconsideration of a default judgment, and to

lift order of default with motion for

reconsideration, are considered voluntarysubmission to the jurisdiction of the




















1s t


court.[24] When private respondent earlier

invoked the jurisdiction of the RTC to secure

affirmative relief in her motions for additional

time to file answer, she voluntarily submitted

to the jurisdiction of the RTC and is thereby

estopped from asserting otherwise.[25]

Considering the foregoing, we find that the

RTC committed a grave abuse of discretion

amounting to excess of jurisdiction in issuing

its assailed Orders.

Topic: Forum Non-Conveniens

COMMUNICATION MATERIALS ANDDESIGN, INC., ASPAC MULTI-TRADE,INC., (formerly ASPAC-ITECPHILIPPINES, INC.) and FRANCISCO S. AGUIRRE, petitioners, vs.THE COURT OF APPEALS, ITECINTERNATIONAL, INC., and ITEC,INC., respondents.G.R. No. 102223 August 22, 1996

Facts: COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI, for brevity) and ASPAC MULTI-TRADE INC., (ASPAC, for brevity) are both domestic corporations. ITEC,INC. and/or ITEC, INTERNATIONAL, INC.(ITEC, for brevity) are corporations dulyorganized and existing under the laws of theState of Alabama, United States of America.ITEC is a foreign corporation not licensed todo business in the Philippines.

ITEC entered into a contract with ASPACreferred to as "Representative Agreement". Pursuant to the contract, ITECengaged ASPAC as its "exclusiverepresentative" in the Philippines for the saleof ITEC's products, in consideration of which,

ASPAC was paid a stipulated commission. Thesaid agreement was initially for a term oftwenty-four months. After the lapse of theagreed period, the agreement was renewed foranother twenty-four months.

One year into the second term of the parties'Representative Agreement, ITEC decided toterminate the same, because ASPAC allegedly violated its contractual commitment asstipulated in their agreements.ITEC chargesthe ASPAC and another PhilippineCorporation, DIGITAL BASE

COMMUNICATIONS, INC. (DIGITAL, for brevity) of using knowledge and information of

ITEC's products specifications to develop theirown line of equipment and product support, which are similar, if not identical to ITEC'sown, and offering them to ITEC's formercustomer.

A complaint was filed with the RTC of Makati by ITEC, INC. ITEC sought to enjoin (1) tocease and desist from selling or attempting tosell to PLDT and to any other party, products which have been copied or manufactured "inlike manner, similar or identical to theproducts, wares and equipment of plaintiff,"and (2) ASPAC, to cease and desist from usingin its corporate name, letter heads, envelopes,sign boards and business dealings, plaintiff'strademark, internationally known as ITEC;and the recovery from defendants in solidum,damages of at least P500,000.00, attorney's

fees and litigation expenses.

Defendants filed a motion to dismiss thecomplaint on the ground that (1) That plaintiffhas no legal capacity to sue as it is a foreigncorporation doing business in the Philippines without the required BOI authority and SEClicense, and (2) that plaintiff is simply engagedin forum shopping which justifies theapplication against it of the principle of"forum non conveniens".

After conducting hearings on the prayer for

preliminary injunction, the court issued itsOrder: (1) denying the motion to dismiss for being devoid of legal merit with a rejection of both grounds relied upon by the defendants intheir motion to dismiss, and (2) directing theissuance of a writ of preliminary injunction onthe same day.The respondent appellate courtaffirmed the trial court‘s order.

It is the ASPAC's submission that ITECs areforeign corporations actually doing business inthe Philippines without the requisite authorityand license from the Board of Investments and

the Securities and Exchange Commission, andthus, disqualified from instituting the presentaction in our courts. It is their contention thatthe provisions of the Representative Agreement, ASPAC executed with ITEC, aresimilarly "highly restrictive" in nature as thosefound in the agreements which confronted theCourt in the case of Top-Weld Manufacturing, Inc. vs. ECED S . A. et al ., as toreduce petitioner ASPAC to a mere conduit orextension of private respondents in thePhilippines.

ASPAC likewise argues that since ITEC has nocapacity to bring suit here, the Philippines isnot the "most convenient forum" because the












1s t


trial court is devoid of any power to enforce itsorders issued or decisions rendered in a casethat could not have been commenced to begin with, such that in insisting to assume andexercise jurisdiction over the case below, thetrial court had gravely abused its discretion

and even actually exceeded its jurisdiction.

As against petitioner's insistence that privaterespondent is "doing business" in thePhilippines, the latter maintains that it is not.

Private respondent argues that a scrutiny of itsRepresentative Agreement with the Petitioners will show that although ASPAC was named asrepresentative of ITEC., ASPAC actually actedin its own name and for its own account.

Issues:

1) Whether ITEC is an unlicensed corporationdoing business in the Philippines; YES

2) Whether or not this fact bars it frominvoking the injunctive authority of our courts.NO

Held: Section 133 of the CorporationCode, provides that "No foreign corporation,transacting business in the Philippines withouta license, or its successors or assigns, shall bepermitted to maintain or intervene in anyaction, suit or proceeding in any court oradministrative agency of the Philippines; butsuch corporation may be sued or proceededagainst before Philippine Courts oradministrative tribunals on any valid cause ofaction recognized under Philippine laws."

Generally, a "foreign corporation" has no legalexistence within the state in which it is foreign.This proceeds from the principle that juridicalexistence of a corporation is confined withinthe territory of the state under whose laws it was incorporated and organized, and it has nolegal status beyond such territory. Such foreign

corporation may be excluded by any otherstate from doing business within its limits, orconditions may be imposed on the exercise ofsuch privileges. Before a foreign corporationcan transact business in this country, it mustfirst obtain a license to transact business in thePhilippines, and a certificate from theappropriate government agency. If it transacts business in the Philippines without such alicense, it shall not be permitted to maintain orintervene in any action, suit, or proceeding inany court or administrative agency of thePhilippines, but it may be sued on any valid

cause of action recognized under Philippinelaws.

The purpose of the law in requiring thatforeign corporations doing business in thePhilippines be licensed to do so and that theyappoint an agent for service of process is tosubject the foreign corporation doing businessin the Philippines to the jurisdiction of its

courts. The object is not to prevent the foreigncorporation from performing single acts, butto prevent it from acquiring a domicile for thepurpose of business without taking stepsnecessary to render it amenable to suit in thelocal courts. The implication of the law is thatit was never the purpose of the legislature toexclude a foreign corporation which happensto obtain an isolated order for business fromthe Philippines, and thus, in effect, to permitpersons to avoid their contracts made withsuch foreign corporations.

The true test as to what constitutes "doing" or"engaging" or "transacting" business, however,seems to be whether the foreign corporation iscontinuing the body or substance of the business or enterprise for which it wasorganized.

These foregoing instances should bedistinguished from a single or isolatedtransaction or occasional, incidental, or casualtransactions, which do not come within themeaning of the law, for in such case, theforeign corporation is deemed not engaged in

business in the Philippines.

Where a single act or transaction, however, isnot merely incidental or casual but indicatesthe foreign corporation's intention to do other business in the Philippines, said single act ortransaction constitutes "doing" or "engagingin" or "transacting" business in thePhilippines.

We are persuaded to conclude that ITEC had been "engaged in" or "doing business" in thePhilippines for some time now. This is the

inevitable result after a scrutiny of thedifferent contracts and agreements enteredinto by ITEC with its various business contactsin the country, particularly ASPAC andTelephone Equipment Sales and Services, Inc.(TESSI, for brevity). The latter is a localelectronics firm engaged by ITEC to be its localtechnical representative, and to create aservice center for ITEC products sold locally.Its arrangements, with these entities indicateconvincingly ITEC's purpose to bring about thesituation among its customers and the generalpublic that they are dealing directly with ITEC,and that ITEC is actively engaging in businessin the country.




1s t


[Note: Forum non-conveniens issue – butread above ruling to understand]

Notwithstanding such finding that ITECis doing business in the country, ASPACis nonetheless estopped from raising

this fact to bar ITEC from institutingthis injunction case against it.

A foreign corporation doing business in thePhilippines may sue in Philippine Courtsalthough not authorized to do business hereagainst a Philippine citizen or entity who hadcontracted with and benefited by saidcorporation. To put it in another way, a partyis estopped to challenge the personality of acorporation after having acknowledged thesame by entering into a contract with it. Andthe doctrine of estoppel to deny corporate

existence applies to a foreign as well as todomestic corporations. One who has dealt with a corporation of foreign origin as acorporate entity is estopped to deny itscorporate existence and capacity: Theprinciple will be applied to prevent a personcontracting with a foreign corporation fromlater taking advantage of its noncompliance with the statutes chiefly in cases where suchperson has received the benefits of thecontract.

The rule is deeply rooted in the time-honored

axiom of Commodum ex injuria sua nonhaberedebet — no person ought to derive anyadvantage of his own wrong. This is as itshould be for as mandated by law, "everyperson must in the exercise of his rights and inthe performance of his duties, act with justice,give everyone his due, and observe honestyand good faith."

The doctrine of lack of capacity to sue based onthe failure to acquire a local license is based onconsiderations of sound public policy. Thelicense requirement was imposed to subject

the foreign corporation doing business in thePhilippines to the jurisdiction of its courts. It was never intended to favor domesticcorporations who enter into solitarytransactions with unwary foreign firms andthen repudiate their obligations simply because the latter are not licensed to do business in this country.

By entering into the "Representative Agreement" with ITEC, ASPAC is charged withknowledge that ITEC was not licensed toengage in business activities in the country,and is thus estopped from raising in defensesuch incapacity of ITEC, having chosen to

ignore or even presumptively take advantageof the same.

Petitioner's insistence on the dismissal of thisaction due to the application, or nonapplication, of the private international law

rule of forum non conveniens defies well-settled rules of fair play. According topetitioner, the Philippine Court has no venueto apply its discretion whether to givecognizance or not to the present action, because it has not acquired jurisdiction overthe person of the plaintiff in the case, the latterallegedly having no personality to sue beforePhilippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the originalcomplaint. And as we have already observed,

petitioner is not at liberty to questionplaintiff's standing to sue, having alreadyacceded to the same by virtue of its entry intothe Representative Agreement referred toearlier.

Thus, having acquired jurisdiction, it is now

for the Philippine Court, based on the facts of

the case, whether to give due course to the suit

or dismiss it, on the principle of forum non

convenience. Hence, the Philippine Court may

refuse to assume jurisdiction in spite of its

having acquired jurisdiction. Conversely, thecourt 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.

Dismissed, Denial of MTD is affirmed.

PHILSEC INVESTMENTCORPORATION, 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.[G.R.

No. 103493. June 19, 1997]

FACTS: On January 15, 1983, privaterespondent Ventura O. Ducat obtainedseparate loans from petitioners AyalaInternational Finance Limited (hereafter




1s t


called AYALA )[1] and Philsec InvestmentCorporation (hereafter called PHILSEC) in thesum of US$2,500,000.00, secured by shares ofstock owned by Ducat. In order to facilitate thepayment of the loans, private respondent1488, Inc., through its president, private

respondent DragoDaic, assumed Ducatsobligation under an Agreementwhereby 1488,Inc. executed a Warranty Deed with VendorsLien by which it sold to petitioner AthonaHoldings, N.V. (hereafter called ATHONA) aparcel 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 theamount of US$2,500,000.00 as initialpayment of the purchase price. The balance ofUS$307,209.02 was to be paid by means ofa promissory note executed by ATHONA infavor of 1488, Inc. Subsequently, upon their

receipt of the US$2,500,000.00 from 1488,Inc., PHILSEC and AYALA released Ducatfrom 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 onthe balance of US$307,209.02, the entireamount covered by the note became due anddemandable. Accordingly, on October 17, 1985,private respondent 1488, Inc. sued petitionersPHILSEC, AYALA, and ATHONA in theUnited States for payment of the balance of

US$307,209.02 and for damages for breach ofcontract and for fraud allegedly perpetrated bypetitioners in misrepresenting themarketability of the shares of stock deliveredto 1488, Inc. under the Agreement. Originallyinstituted in the United States District Court ofTexas, 165th Judicial District (Case No. 85-57746), the venue of the action was latertransferred to the United States District Courtfor the Southern District of Texas, where 1488,Inc. filed an amended complaint, reiteratingits allegations in the original complaint.

For their part, PHILSEC and AYALA filed

a motion to dismiss on the ground of lack of jurisdiction over their person, but, as theirmotion was denied, they later filed a jointanswer with counterclaim against privaterespondents and Edgardo V. Guevarra,PHILSECs own former president, for therescission of the sale on the ground that theproperty had been overvalued. On March 13,1990, the United States District Court for theSouthern District of Texas dismissed thecounterclaim against Edgardo V. Guevarra onthe ground that it was frivolous and [was] brought against him simply to humiliate and

embarrass him. For this reason, the U.S. courtimposed so-called Rule 11 sanctions

on PHILSEC and AYALA and ordered them topay 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 theRegional Trial Court of Makati (Civil Case No.16563). The complaint reiterated the allegationof petitioners in their respective counterclaimsin Civil Action No. H-86-440 of the UnitedStates District Court of Southern Texas thatprivate respondents committed fraud byselling the property at a price 400 percentmore than its true value of US$800,000.00.Petitioners claimed that, as a result of privaterespondents fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were

induced to enter into the Agreement and topurchase the Houston property. On April 20,1987, the trial court issued a writ ofpreliminary attachment against the real andpersonal properties of private respondents.[2]

Private respondent Ducat moved todismiss Civil Case No. 16563 on the grounds of(1) litispendentia, 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 ofpetitioners PHILSEC and BPI-IFL to state acause of action. On the other hand, privaterespondents 1488, Inc. and its president Daicfiled a joint Special Appearance and QualifiedMotion to Dismiss, contending that the action being in personam, extraterritorial service ofsummons by publication was ineffectual anddid not vest the court with jurisdiction over1488, Inc., which is a non-resident foreigncorporation, and Daic, who is a non-residentalien.

On January 26, 1988, the trial courtgranted Ducats motion to dismiss, stating thatthe evidentiary requirements of thecontroversy may be more suitably tried before

the forum of the litispendentia in the U.S.,under the principle in private international lawof forum non conveniens, even as it noted thatDucat was not a party in the U.S. case.

The trial court also held itself without jurisdiction over 1488, Inc. and Daic becausethey were non-residents and the action wasnot an action in rem or quasi in rem, so thatextraterritorial service of summons wasineffective. The trial court subsequently liftedthe writ of attachment it had earlier issuedagainst the shares of stocks of 1488, Inc. andDaic.

http://sc.judiciary.gov.ph/jurisprudence/1997/jun1997/103493.htm#_edn1











1s t


The dismissal of Civil Case No. 16563 onthe ground of forum non conveniens waslikewise affirmed by the Court of Appeals onthe ground that the case can be better triedand decided by the U.S. court:

The U.S. case and the case at bar arosefrom only one main transaction, and involveforeign elements, to wit: 1) the propertysubject 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 inthe Philippines, is wholly owned by Philsec, adomestic corporation, Athona Holdings is alsoowned by BPI-IFL, also a foreign corporation;4) the Warranty Deed was executed in Texas,U.S.A.

ISSUE: W/N the Principle of Forum NonConveniens relied upon by the CA in affirmingthe dismissal by the trial court of the civilaction is applicable.

RULING: Nor is the trial courts refusal totake cognizance of the case justifiable underthe principle of forum non conveniens. First, amotion to dismiss is limited to the groundsunder Rule 16, 1, which does not include forumnon conveniens.[16] The propriety of dismissinga case based on this principle requires a factual

determination, hence, it is more properlyconsidered a matter of defense. Second, whileit is within the discretion of the trial court toabstain from assuming jurisdiction on thisground, it should do so only after vital facts areestablished, to determine whether specialcircumstances require the courts desistance.[17]

In this case, the trial court abstained fromtaking jurisdiction solely on the basis of thepleadings filed by private respondents inconnection with the motion to dismiss. Itfailed to consider that one of the plaintiffs

(PHILSEC) is a domestic corporation and oneof the defendants (Ventura Ducat) is aFilipino, and that it was the extinguishment ofthe latters debt which was the object of thetransaction under litigation. The trial courtarbitrarily dismissed the case even afterfinding that Ducat was not a party in the U.S.case.

ISSUE: W/N the doctrine of litispendentia isapplicable.

RULING: In the case at bar, it cannot be saidthat 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. Theproceedings in the trial court weresummary. Neither the trial court nor theappellate court was even furnished copies ofthe pleadings in the U.S. court or apprised ofthe evidence presented thereat, to assure a

proper determination of whether the issuesthen being litigated in the U.S. court wereexactly the issues raised in this case such thatthe judgment that might be rendered wouldconstitute res judicata.

It was error therefore for the Court of Appeals to summarily rule that petitionersaction is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over theirpersons, but their claim was brushed aside by both the trial court and the Court of

Appeals.[13]

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. 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.

THE MANILA HOTEL CORP. ANDMANILA HOTEL INTL. LTD., petitioners, vs.NATIONAL LABOR RELATIONSCOMMISSION, ARBITER CEFERINA J.DIOSANA AND MARCELO G.SANTOS,respondents.PARDO, J .:

Facts:

In May, 1988, private respondentMarcelo Santos (hereinafter referredto as "Santos") was an overseas workeremployed as a printer at the MazoonPrinting Press, Sultanate of Oman.Subsequently, in June 1988, he wasdirectly hired by the Palace Hotel,Beijing, People's Republic of Chinaand later terminated due toretrenchment.

During his employment with theMazoon Printing Press in the

Sultanate of Oman, respondent Santosreceived a letter dated May 2, 1988




















1s t


from Mr. Gerhard R. Shmidt, GeneralManager, Palace Hotel, Beijing, China.Mr. Schmidt informed respondentSantos that he was recommended byone Nestor Buenio, a friend of his.

Mr. Shmidt offered respondent Santosthe same position as printer, but witha higher monthly salary and increased benefits. The position was slated toopen on October 1, 1988.

On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified hisacceptance of the offer.

On May 19, 1988, the Palace HotelManager, Mr. Hans J. Henk mailed aready to sign employment contract torespondent Santos. Mr. Henk advisedrespondent Santos that if the contract was acceptable, to return the same toMr. Henk in Manila, together with hispassport and two additional picturesfor his visa to China.

On May 30, 1988, respondent Santosresigned from the Mazoon PrintingPress, effective June 30, 1988, underthe pretext that he was needed athome to help with the family's piggeryand poultry business.

On June 4, 1988, respondent Santos wrote the Palace Hotel andacknowledged Mr. Henk's letter.Respondent Santos enclosed four (4)signed copies of the employmentcontract (dated June 4, 1988) andnotified them that he was going toarrive in Manila during the first weekof July 1988.

The employment contract of June 4,1988 stated that his employment would commence September 1, 1988for a period of two years.12 It providedfor a monthly salary of nine hundreddollars (US$900.00) net of taxes,payable fourteen (14) times a year.13

On November 5, 1988, respondentSantos left for Beijing, China. Hestarted to work at the Palace Hotel.14

Subsequently, respondent Santossigned an amended "employment

agreement" with the Palace Hotel,effective November 5, 1988. In thecontract, Mr. Shmidt represented the

Palace Hotel. The Vice President(Operations and Development) ofpetitioner MHICL Miguel D. Cerguedasigned the employment agreementunder the word "noted".

On July 22, 1989, Mr. Shmidt'sExecutive Secretary, a certain Joannasuggested in a handwritten note thatrespondent Santos be given one (1)month notice of his release fromemployment.

On August 10, 1989, the Palace Hotelinformed respondent Santos by lettersigned by Mr. Shmidt that hisemployment at the Palace Hotel printshop would be terminated due to business reverses brought about by thepolitical upheaval in China.

On September 5, 1989, the PalaceHotel terminated the employment ofrespondent Santos and paid all benefits due him, including his planefare back to the Philippines.

On October 24, 1989, respondentSantos, through his lawyer, Atty.Ednave wrote Mr. Shmidt, demandingfull compensation pursuant to theemployment agreement.

On February 20, 1990, respondentSantos filed a complaint for illegaldismissal with the Arbitration Branch,National Capital Region, NationalLabor Relations Commission (NLRC).He prayed for an award of nineteenthousand nine hundred and twentythree dollars (US$19,923.00) as actualdamages, forty thousand pesos(P40,000.00) as exemplary damagesand attorney's fees equivalent to 20%of the damages prayed for. Thecomplaint named MHC, MHICL, thePalace Hotel and Mr. Shmidt asrespondents.

On June 27, 1991, Labor ArbiterCeferina J. Diosana, decided the caseagainst petitioners.

On July 23, 1991, petitioners appealedto the NLRC, arguing that the POEA,not the NLRC had jurisdiction over thecase.

http://www.lawphil.net/judjuris/juri2000/oct2000/gr_120077_2000.html#fnt12















1s t


On August 28, 1992, the NLRCpromulgated a resolution, stating:20 "WHEREFORE, let the appealedDecision be, as it is hereby, declarednull and void for want of jurisdiction.Complainant is hereby enjoined to filehis complaint with the POEA.

On September 18, 1992, respondentSantos moved for reconsideration ofthe afore-quoted resolution. Heargued that the case was notcognizable by the POEA as he was notan "overseas contract worker."21

On May 31, 1993, the NLRC grantedthe motion and reversed itself. TheNLRC directed Labor Arbiter EmersonTumanon to hear the case on thequestion of whether privaterespondent was retrenched ordismissed.22

Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of theNational Capital Region, ArbitrationBranch, and the case was transferredto Labor Arbiter Jose G. de Vera.24

On November 25, 1994, Labor Arbiterde Vera submitted his report.25 Hefound that respondent Santos wasillegally dismissed from employmentand recommended that he be paidactual damages equivalent to hissalaries for the unexpired portion ofhis contract.26

Issue: W/N the NLRC is the properforum? No

Held: I. Forum Non-Conveniens

The NLRC was a seriouslyinconvenient forum.

We note that the main aspects of thecase transpired in two foreign jurisdictions and the case involvespurely foreign elements. The only linkthat the Philippines have with the caseis that respondent Santos is a Filipinocitizen. The Palace Hotel and MHICLare foreign corporations. Not all casesinvolving our citizens can be triedhere.

The employment contract . — Respondent Santos was hired directly by the Palace Hotel, a foreign

employer, through correspondencesent to the Sultanate of Oman, whererespondent Santos was thenemployed. He was hired without theintervention of the POEA or anyauthorized recruitment agency of the

government.36

Under the rule of forum nonconveniens, a Philippine court oragency may assume jurisdiction overthe case if it chooses to doso provided : (1) that the Philippinecourt is one to which the parties mayconveniently resort to; (2) that thePhilippine court is in a position tomake an intelligent decision as to thelaw and the facts; and (3) that thePhilippine court has or is likely to have

power to enforce its decision.37 Theconditions are unavailing in the case at bar.

Not Convenient . — We fail to see howthe NLRC is a convenient forum giventhat all the incidents of the case — from the time of recruitment, toemployment to dismissal occurredoutside the Philippines. Theinconvenience is compounded by thefact that the proper defendants, thePalace Hotel and MHICL are not

nationals of the Philippines. Neitherare they "doing business in thePhilippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henkare non-residents of the Philippines.

No power to determine applicablelaw. — Neither can an intelligentdecision be made as to the lawgoverning the employment contract assuch was perfected in foreign soil. Thiscalls to fore the application of theprinciple of lex loci contractus (the law

of the place where the contract wasmade).38

The employment contract was notperfected in the Philippines.Respondent Santos signified hisacceptance by writing a letter while he was in the Republic of Oman. Thisletter was sent to the Palace Hotel inthe People's Republic of China.

No power to determine the facts. — Neither can the NLRC determine thefacts surrounding the alleged illegaldismissal as all acts complained of








































1s t


took place in Beijing, People'sRepublic of China. The NLRC was notin a position to determine whether theTiannamen Square incident trulyadversely affected operations of thePalace Hotel as to justify respondent

Santos' retrenchment.

Principle of effectiveness, no power toexecute decision. — Even assumingthat a proper decision could bereached by the NLRC, such would nothave any binding effect against theemployer, the Palace Hotel. The PalaceHotel is a corporation incorporatedunder the laws of China and was noteven served with summons.Jurisdiction over its person was notacquired.

This is not to say that Philippinecourts and agencies have no power tosolve controversies involving foreignemployers. Neither are we saying that we do not have power over anemployment contract executed in aforeign country . If Santos were an"overseas contract worker", a Philippine forum, specifically the POEA, not the NLRC, would protecthim.39 He is not an "overseas contract worker" a fact which he admits with

conviction.40

Even assuming that the NLRC was the proper

forum, even on the merits, the NLRC's

decision cannot be sustained.

G.R. No. 141536. February 26, 2001 GIL MIGUEL T. PUYAT, petitioner, vs.RON ZABARTE, respondent.

PANGANIBAN, J.:

Facts: On 24 January 1994, Ron Zabartecommenced [an action] to enforce the money judgment rendered by the Superior Court forthe State of California, County of Contra Costa,U.S.A. On 18 March 1994, [petitioner Puyat]filed his Answer with the following special andaffirmative defenses:

x x x x x x x x x

‗8) The Superior Court for the State ofCalifornia, County of Contra Costa[,]did not properly acquire jurisdictionover the subject matter of and over the

persons involved in [C]ase #C21-00265.

‗9) The Judgment on Stipulations forEntry in Judgment in Case #C21-00265 dated December 12, 1991 wasobtained without the assistance ofcounsel for [petitioner] and withoutsufficient notice to him and therefore, was rendered in clear violation of[petitioner‘s] constitutional rights tosubstantial and procedural dueprocess.

‗10) was procured by means of fraudor collusion or undue influence and/or based on a clear mistake of fact andlaw.

‗11) is contrary to the laws, publicpolicy and canons of moralityobtaining in the Philippines and theenforcement of such judgment in thePhilippines would result in the unjustenrichment of [respondent] at theexpense of [petitioner] in this case.

‗12) is null and void and unenforceablein the Philippines.

‗13) In the transaction, which is the

subject matter in Case #C21-00265,[petitioner] is not in any way liable, infact and in law, to [respondent] in thiscase.

‘14) [Respondent] is guilty ofmisrepresentation or falsification inthe f iling of his ‗Complaint‘ in this casedated December 6, 1993. Worse,[respondent] has no capacity to sue inthe Philippines.

‘15) Venue has been improperly laid inthis case.‘

―On 1 August 1994, [respondent] fileda [M]otion for [S]ummary [J]udgmentunder Rule 34 of the Rules of Courtalleging that the [A]nswer filed by[petitioner] failed to tender anygenuine issue as to the material facts.In his [O]pposition to [respondent‘s]motion, [petitioner] demurred asfollows:

‗2) [Petitioner] begs to disagree[;] insupport hereof, [he] wishes to mention












1s t


that in his ‗Answer with Special and Affirmative Defenses‘ dated March 16,1994 [petitioner] has interposed thatthe ‗Judgment on Stipulations forEntry in Judgment‘ is null and void,fraudulent, illegal and unenforceable,

the same having been obtained bymeans of fraud, collusion, undueinfluence and/or clear mistake of factand law. In addition, [he] hasmaintained that said ‗Judgment onStipulations for Entry in Judgment‘ was obtained without the assistance ofcounsel for [petitioner] and withoutsufficient notice to him and therefore, was rendered in violation of hisconstitutional rights to substantial andprocedural due process.‘

On 6 April 1995, the court a quo issued an[O]rder granting [respondent‘s] [M]otion for[S]ummary [J]udgment [and] likewisegranting [petitioner] ten (10) days to submitopposing affidavits, after which the case would be deemed submitted for resolution.[Petitioner] filed a [M]otion for[R]econsideration of the aforesaid [O]rder and[respondent] filed [C]omment.

On 30 June 1995, [petitioner] filed a[M]otion to [D]ismiss on the ground of

lack of jurisdiction over the subjectmatter of the case and forum-non-conveniens. In his [O]pposition to the[M]otion [respondent] contended that[petitioner could] no longer question the jurisdiction of the lower court on the groundthat [the latter‘s] Answer had failed to raisethe issue of jurisdiction. [Petitioner] countered by asserting in his Reply that jurisdiction[could] not be fixed by agreement of theparties. The lower court dismissed [his][M]otion for [R]econsideration and [M]otion[to] [D]ismiss.

The RTC eventually rendered its February 21,1997 Decision, which disposed as follows:

―WHEREFORE, judgment is hereby rendered,ordering [petitioner] to pay [respondent] thefollowing amounts:

―1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18,1991, or its peso equivalent, pursuant to the[J]udgment of [S]tipulation for [E]ntry in[J]udgment dated December 19, 1991; 2. The

amount of P30,000.00 as attorney‘s fees; 3. Topay the costs of suit. The claim for moral

damages, not having been substantiated, it ishereby denied.‖

Citing Ingenohl v. Olsen, the CA rejectedpetitioner‘s argument that the RTC shouldhave dismissed the action for the enforcementof a foreign judgment, on the ground of forumnon conveniens. It reasoned out that therecognition of the foreign judgment was basedon comity, reciprocity and res judicata.

Issue: Whether or not the principle of forumnon conveniens was inapplicable to the instantcase. It was inapplicable.

Petitioner argues that the RTC should haverefused to entertain the Complaint forenforcement of the foreign judgment on the

principle of forum non conveniens. He claimsthat the trial court had no jurisdiction, becausethe case involved partnership interest, andthere was difficulty in ascertaining theapplicable law in California. All the aspects ofthe transaction took place in a foreign country,and respondent is not even Filipino.

Ruling: The principle of forum nonconveniens is inapplicable.

Under the principle of forum nonconveniens, even if the exercise of jurisdiction

is authorized by law, courts may nonethelessrefuse to entertain a case for any of thefollowing practical reasons:

―1) The belief that the matter can be bettertried and decided elsewhere, either becausethe main aspects of the case transpired in aforeign jurisdiction or the material witnesseshave their residence there;

2) The belief that the non-resident plaintiffsought the forum[,] a practice known as forum

shopping[,] merely to secure proceduraladvantages or to convey or harass thedefendant;

3) The unwillingness to extend local judicialfacilities to non-residents or aliens when thedocket may already be overcrowded;

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

5) The difficulty of ascertaining foreign law.‖




1s t


None of the aforementioned reasons barredthe RTC from exercising its jurisdiction. In thepresent action, there was no more need formaterial witnesses, no forum shopping orharassment of petitioner, no inadequacy in thelocal machinery to enforce the foreign

judgment, and no question raised as to theapplication of any foreign law.

Authorities agree that the issue of whether asuit should be entertained or dismissed on the basis of the above-mentioned principledepends largely upon the facts of each caseand on the sound discretion of the trial court. Since the present action lodged in the RTC was for the enforcement of a foreign judgment, there was no need toascertain the rights and the obligationsof the parties based on foreign laws orcontracts. The parties needed only to perform their obligations under theCompromise Agreement they hadentered into. 1âwphi1.nêt

Under Section 48, Rule 39 of the 1997 Rules ofCivil Procedure, a judgment in an action inpersonam rendered by a foreign tribunalclothed with jurisdiction is presumptiveevidence of a right as between the parties andtheir successors-in-interest by a subsequenttitle.

Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere --enjoys the presumption that it is acting in thelawful exercise of its jurisdiction, and that it isregularly performing its official duty. Its judgment may, however, be assailed if there isevidence of want of jurisdiction, want of noticeto the party, collusion, fraud or clear mistakeof law or fact. But precisely, this possibilitysignals the need for a local trial court toexercise jurisdiction. Clearly, the application offorum non coveniens is not called for.

The grounds relied upon by petitioner are

contradictory. On the one hand, he insists that

the RTC take jurisdiction over the enforcement

case in order to invalidate the foreign

judgment; yet, he avers that the trial court

should not exercise jurisdiction over the same

case on the basis of forum non conveniens. Not

only do these defenses weaken each other, but

they bolster the finding of the lower courts that

he was merely maneuvering to avoid or delay

payment of his obligation.

Bank of America v CA

Facts:

Eduardo K. Litonjua, Sr. and AurelioJ. Litonjua (Litonjuas, for brevity )filed a Complaint before the RegionalTrial Court of Pasig against the Bankof America NT&SA and Bank of America International, Ltd.(defendant banks for brevity ).

The plaintiffs (Litonjuas, for brevity ) alleged that:o

They were engaged in the shipping business and owned two vessels:Don Aurelio and El Champion,through their wholly-ownedcorporations;

o

They deposited their revenuesfrom said business together withother funds with the branches ofsaid banks in the United Kingdomand Hongkong up to 1979.

(N ote: The Lintonjua’s, through

the inducement of the defendant

banks acquired additional ships

in operation. The Lintonjua’s

obtained loan from the defendant

banks to finance the acquisition of

additional ships.)

o Thereafter, the defendant banksacquired, through their(Litonjuas) corporations as the borrowers: (a) El Carrier; (b) ElGeneral; (c) El Challenger; and (d)El Conqueror;

o

The vessels were registered in thenames of their corporations; theoperation and the funds derivedtherefrom were placed under thecomplete and exclusive controland disposition of the petitioners(defendants);and the possessionthe vessels was also placed bydefendant banks in the hands ofpersons selected and designated by them (defendant banks)

(Note: The corporations are

wholly owned by the Lintonjua’s

and prior to the incorporation of

such entities, they were clients of

petitioners which induced them to

acquire loans from said

petitioners to invest on the

additional ships.)




1s t


o The loans acquired for thepurchase of the four additional vessels then matured andremained unpaid, promptingdefendant banks to have all the six vessels, including the two vessels

originally owned by the privaterespondents, foreclosed and soldat public auction to answer for theobligations incurred for and in behalf of the operation of the vessels;

o The Litonjuas prayed for theaccounting of the revenues derivedin the operation of the six vesselsand of the proceeds of the salethereof at the foreclosureproceedings instituted bypetitioners; damages for breach of

trust; exemplary damages andattorneys fees.

Defendant banks filed a Motion toDismiss on grounds of forum nonconveniens and lack of cause of actionagainst them.

The trial court denied the motion todismiss

Issue: WON the complaint should be

dismissed on the ground of forum non-conveniens.

Held: No. All the requisites in order for the

court to assume jurisdiction are present and

Sec. 1, Rule 16 of the Rules of Court does not

include said doctrine as a ground for motion to

dismiss.

Explanation of doctrine of forum non-

conveniens

The doctrine of forum non-conveniensliterally

meaning the forum is inconvenient, emerged

in private international law to deter the

practice of global forum shopping,[42] that is

to prevent non-resident litigants from

choosing the forum or place wherein to bring

their suit for malicious reasons, such as to

secure procedural advantages, to annoy and

harass the defendant, to avoid overcrowded

dockets, or to select a more friendly venue.

Under this doctrine, a court, in conflicts of law

cases, may refuse impositions on its

jurisdiction where it is not the mostconvenient or available forum and the parties

are not precluded from seeking remedies

elsewhere.[43]

Application of the doctrine of non-conveniens

depends on the discretion of the court,

provided that all the requisites are present

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.[44] In the case of

Communication Materials and Design, Inc. vs.

Court of Appeals,[45] this Court held that xxx

[a] Philippine Court may assume jurisdiction

over the case if it chooses to do so; provided,

that the following requisites are met: (1) that

the Philippine Court is one to which the partiesmay conveniently resort to; (2) that the

Philippine Court is in a position to make an

intelligent decision as to the law and the facts;

and, (3) that the Philippine Court has or is

likely to have power to enforce its

decision.[46] Evidently, all these requisites are

present in the instant case.

The doctrine of forum non-conveniens is not

one of the grounds of Motion to dismiss

Moreover, this Court enunciated in Philsec.

Investment Corporation vs. Court of

Appeals,[47] that the doctrine of forum non

conveniens should not be used as a ground for

a motion to dismiss because Sec. 1, Rule 16 of

the Rules of Court does not include said

doctrine as a ground. This Court further ruled

that while it is within the discretion of the trial

court to abstain from assuming jurisdiction on

this ground, it should do so only after vital

facts are established, to determine whether

special circumstances require the courtsdesistance; and that the propriety of

dismissing a case based on this principle of

forum non conveniens requires a factual

determination, hence it is more properly

considered a matter of defense.[48]

Additional info, just in case i-ask:

No forum shopping because not all therequirements for litispendentia arepresent. While there may be identity of

parties, notwithstanding the presenceof other respondents,[51] as well asthe reversal in positions of plaintiffs




1s t


and defendants[52], still the otherrequirements necessary forlitispendentia were not shown bypetitioner. It merely mentioned thatcivil cases were filed in Hongkong andEngland without however showing the

identity of rights asserted and thereliefs sought for as well as thepresence of the elements of res judicata should one of the cases beadjudged.

[T]hedefendant banks enumerated the civil

actions instituted abroad (Hongkong and

England) involving the parties herein. The

petitioners in their motion for reconsideration

(CA Rollo, p. 72), after enumerating the

various civil actions instituted abroad, did averthat Copies of the foreign judgments are

hereto attached and made integral parts hereof

as Annexes B, C, D and E, they failed, wittingly

or inadvertently, to include a single foreign

judgment in their pleadings submitted to this

Court as annexes to their petition. How then

could We have been expected to rule on this

issue even if We were to hold that foreign

judgments could be the basis for the

application of the aforementioned principle of

res judicata.

G.R. No. 166920, February 19, 2007PACIFIC CONSULTANTSINTERNATIONAL ASIA, INC. and JENSPETER HENRICHSEN, Petitioners, vs.KLAUS K. SCHONFELD, Respondent.

Facts: Klaus K. Schonfeld is a Canadiancitizen and was a resident of New Westminster, British Columbia, Canada. Hehad been a consultant in the field ofenvironmental engineering and water supplyand sanitation.

Pacicon Philippines, Inc. (PPI) is a corporationengaged in the business of providing specialtyand technical services both in and out of thePhilippines. It is a subsidiary of PacificConsultants International of Japan (PCIJ).The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was basedin Tokyo, Japan.

In 1997, PCIJ decided to engage in consultancyservices in the Philippines. Respondent wasemployed by PCIJ, through Henrichsen, asSector Manager of PPI in its Water and

Sanitation Department in the Philippines. Hissalary was to be paid partly by PPI and PCIJ.

Respondent arrived in the Philippines andassumed his position as PPI Sector Manager.He was accorded the status of a resident

alien.As required by the Omnibus RulesImplementing the Labor Code, PPI applied foran Alien Employment Permit (Permit) forrespondent before the Department of Laborand Employment (DOLE). It appendedrespondent‘s contract of employment to theapplication. DOLE granted the application andissued the Permit to respondent.

On May 5, 1999, respondent received a letterfrom Henrichsen informing him that hisemployment had been terminated effective August 4, 1999. However, on July 24, 1999,

Henrichsen, by electronic mail, requestedrespondent to stay put in his job after August5, 1999, until such time that he would be ableto report on certain projects and discuss all theopportunities he had developed.

Respondent filed with PPI several moneyclaims, including unpaid salary, leave pay, airfare, and cost of shipment of goods to Canada.Respondent then filed a Complaint for IllegalDismissal against petitioners PPI andHenrichsen with the Labor Arbiter.

Respondent alleged that he was illegallydismissed; PPI had not notified the DOLE ofits decision to close one of its departments, which resulted in his dismissal; and they failedto notify him that his employment wasterminated.

Petitioners filed a Motion to Dismiss thecomplaint on the following grounds: (1) theLabor Arbiter had no jurisdiction over thesubject matter; and (2) venue was improperlylaid. It averred that respondent was aCanadian citizen, a transient expatriate who

had left the Philippines. He was employed anddismissed by PCIJ, a foreign corporation withprincipal office in Tokyo, Japan.

Since respondent‘s cause of action was basedon his letter of employment executed inTokyo,under the principle of lex locicontractus, the complaint should have beenfiled in Tokyo, Japan. Petitioners claimed thatrespondent did not offer any justification forfiling his complaint against PPI before theNLRC in the Philippines. Moreover, underSection 12 of the General Conditions of

Employment appended to the letter ofemployment, Schonfeld and PCIJ had agreed




1s t


that any employment-related dispute should be brought before the London Court of Arbitration.

Respondent opposed the Motion, contendingthat he was employed by PPI to work in the

Philippines under contract separate from hiscontract of employment with PCIJ. He insistedthat PPI is a Philippine-registered corporation;it is inconsequential that PPI is a wholly-owned subsidiary of PCIJ as the two haveseparate and distinct personalities; and hereceived orders and instructions fromHenrichsen who was the president of PPI.

According to respondent, the materialallegations of the complaint, not petitioners‘defenses, determine which quasi-judicial bodyhas jurisdiction. Section 21 of the Arbitration

Clause in the General Conditions ofEmployment does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may befiled.

The Labor Arbiter granted thepetitioners‘Motion to Dismiss. NLRC affirmed the NLRC‘sdecision in toto.Respondent then filed apetition for certiorari under Rule 65 with theCA.The CA found the petition meritorious. Amotion for the reconsideration of the abovedecision was filed by PPI and Henrichsen,

which was denied. Hence the present recourse.

Issue: WON Philippines has jurisdiction overrespondent's claim despite the fact thatrespondent, a foreign national, was hiredabroad by a foreign corporation, executed hisemployment contract abroad, and agreed thatdisputes be settled in the London.

Held: As claimed by respondent that he hadan employment contract with petitioner PPI;otherwise, petitioner PPI would not have filedan application for a Permit with the DOLE.

Petitioners are thus estopped from allegingthat the PCIJ, not petitioner PPI, had been theemployer of respondent all along.

The SC agreed with the conclusion of the CAthat there was an employer-employeerelationship between petitioner PPI andrespondent using the four-fold test.Jurisprudence is firmly settled that wheneverthe existence of an employment relationship isin dispute, four elements constitute thereliable yardstick: (a) the selection andengagement of the employee; (b) the payment

of wages; (c) the power of dismissal; and (d)the employer‘s power to control the employee‘s

conduct. Stated otherwise, an employer-employee relationship exists where the personfor whom the services are performed reservesthe right to control not only the end to beachieved but also the means to be used inreaching such end.

The SC quote with approval the followingruling of the CA:

[T]here is, indeed, substantial evidence onrecord which would erase any doubt that therespondent company is the true employer ofpetitioner. In the case at bar, the power tocontrol and supervise petitioner‘s workperformance devolved upon the respondentcompany. Likewise, the power to terminate theemployment relationship was exercised by thePresident of the respondent company. It is not

the letterhead used by the company in thetermination letter which controls, but theperson who exercised the power to terminatethe employee. It is also inconsequential if thesecond letter of employment executed in thePhilippines was not signed by the petitioner. An employer-employee relationship mayindeed exist even in the absence of a writtencontract, so long as the four elementsmentioned in the Mafinco case are all present.

The settled rule on stipulations regarding venue, as held by this Court in the vintage case

of Philippine Banking Corporation v. Tensuan,is that while they are considered valid andenforceable, venue stipulations in a contractdo not, as a rule, supersede the general rule setforth in Rule 4 of the Revised Rules of Court inthe absence of qualifying or restrictive words.They should be considered merely as anagreement or additional forum, not as limiting venue to the specified place. They are notexclusive but, rather permissive. If theintention of the parties were to restrict venue,there must be accompanying language clearlyand categorically expressing their purpose and

design that actions between them be litigatedonly at the place named by them.

In the instant case, no restrictive words like"only," "solely," "exclusively in this court," "inno other court save —," "particularly,""nowhere else but/except —," or words ofequal import were stated in the contract. Itcannot be said that the court of arbitration inLondon is an exclusive venue to bring forthany complaint arising out of the employmentcontract.

Petitioners contend that respondent shouldhave filed his Complaint in his place of




1s t


permanent residence, or where the PCIJ holdsits principal office, at the place where thecontract of employment was signed, in Londonas stated in their contract. By enumeratingpossible venues where respondent could havefiled his complaint, however, petitioners

themselves admitted that the provision on venue in the employment contract is indeedmerely permissive.

Petitioners‘ insistence on the application of theprinciple of forum non conveniens must berejected. The bare fact that respondent is aCanadian citizen and was a repatriate does not warrant the application of the principle for thefollowing reasons:

First. The Labor Code of the Philippines doesnot include forum non conveniens as a ground

for the dismissal of the complaint.

Second. The propriety of dismissing a case based on this principle requires a factualdetermination; hence, it is properly consideredas defense.

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals, this Court held that:

x xx [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 whichthe parties may conveniently resort to; (2) thatthe Philippine Court is in a position to makean intelligent decision as to the law and thefacts; and, (3) that the Philippine Court has oris likely to have power to enforce its decision. xxx

G.R. No. 156848 October 11, 2007

PIONEER INTERNATIONAL,LTD., petitioner, vs.HON. TEOFILO GUADIZ, JR., in hiscapacity as Presiding Judge of RegionalTrial Court, Branch 147, Makati City,and ANTONIO D. TODARO, respondents.

FACTS Todaro filed a complaint forsum of money and damages with preliminaryattachment against PIL, PCPI, PPHI,McDonald, and Klepzig.

Todaro alleged that PIL is a corporation dulyorganized under Australian laws, while PCPI

and PPHI are corporations duly organizedunder Philippine laws. PIL is engaged in theready-mix and concrete aggregates businessand has established a presence worldwide. PILestablished PPHI as the holding company ofthe stocks of its operating company in the

Philippines, PCPI. McDonald is the ChiefExecutive Officer of PIL‘s Hong Kong office while Klepzig is the President and ManagingDirector of PPHI and PCPI. For his part,Todaro further alleged that he was themanaging director of Betonval Readyconcrete,Inc. (Betonval) from June 1975 up to hisresignation in February 1996.

Before Todaro filed his complaint, there wereseveral meetings and exchanges of letters between Todaro and the officers of PioneerConcrete (Hong Kong) Limited, PioneerConcrete Group HK, PPHI, and PIL. Accordingto Todaro, PIL contacted him and asked if hecould join it in establishing a pre-mixedconcrete plant and in overseeing its operationsin the Philippines. Todaro confirmed hisavailability and expressed interest. Todaro met with several of PIL‘s representatives and evengave PIL the names of three of hissubordinates in Betonval whom he would liketo join him in PIL.

After series of letters Klepzig withdrew its offer

and also Annex "I" shows the letter of K.M.Folwell (Folwell), PIL‘s Executive GeneralManager of Australia and Asia, to Todaro.Folwell confirmed the contents of Klepzig‘sletter. Folwell‘s message reads:

Thank you for your letter to Dr.Schubert dated 29th September 1997regarding the alleged breach ofcontract with you. Dr. Schubert hasasked me to investigate this matter.

I have discussed and examined the

material regarding your association with Pioneer over the period from mid1996 through to September 1997.

Clearly your consultancy services toPioneer Hong Kong are welldocumented and have beenappropriately rewarded. However, inregard to your request and expectationto be given permanentemployment with PioneerPhilippines Holdings, Inc. I aminformed that negotiations to reach

agreement on appropriate terms andconditions have not been successful.




1s t


The employment conditions youspecified in your letter to JohnMcDonald dated 11th September are well beyond our expectations.

Mr. Todaro, I regret that we do not wish to pursue our association with you any further. Mr. Klepzig wasauthorized to terminate thisassociation and the letter he sent to you dated 18th September has mysupport.

Thank you for your involvement withPioneer. I wish you all the best for thefuture.

PIL filed, a motion to dismiss Todaro‘s

complaint. PIL‘s co-defendants, PCPI, PPHI,and Klepzig, filed a separate motion todismiss.17 PIL asserted that the trial court hasno jurisdiction over PIL because PIL is aforeign corporation not doing business in thePhilippines. PIL also questioned the service ofsummons on it. Assuming arguendo thatKlepzig is PIL‘s agent in the Philippines, it wasnot Klepzig but De Leon who received thesummons for PIL. PIL further stated that theNational Labor Relations Commission(NLRC), and not the trial court, has jurisdiction over the subject matter of the

action. It claimed that assuming that thetrial court has jurisdiction over thesubject matter of the action, thecomplaint should be dismissed on theground of forum non-conveniens. Finally, PIL maintained that thecomplaint does not state a cause of action because there was no perfected contract, andno personal judgment could be rendered bythe trial court against PIL because PIL is aforeign corporation not doing business in thePhilippines and there was improper service ofsummons on PIL.

The Ruling of the Trial Court

On 4 January 1999, the trial court issued anorder18 which ruled in favor of Todaro. Thetrial court denied the motions to dismiss filed by PIL, PCPI, PPHI, and Klepzig.

on the issue of forum non-conveniens, the trialcourt found that it is more convenient to hearand decide the case in the Philippines becauseTodaro resides in the Philippines and thecontract allegedly breached involvesemployment in the Philippines.

The Ruling of the Appellate Court

The appellate court denied PIL‘s petition andaffirmed the trial court‘s ruling in toto.

The Issues

WON Pursuant to the principle of forum non-conveniens, [the trial court] committed graveabuse of discretion when it took cognizance ofthe case? NO

The Ruling of the Court

Forum Non-Conveniens

The doctrine of forum non-conveniens requires an examination of thetruthfulness of the allegations in thecomplaint. Section 1, Rule 16 of the 1997 Rulesof Civil Procedure does notmention forum non-conveniens as a groundfor filing a motion to dismiss. The propriety ofdismissing a case based on forum non-conveniens requires a factual determination;hence, it is more properly considered a matterof defense. While it is within the discretion ofthe trial court to abstain from assuming jurisdiction on this ground, the trial courtshould do so only after vital facts areestablished to determine whether specialcircumstances require the court‘s desistance.25

Other Issues in case i-ask:

A. [The trial court] did not and cannotacquire jurisdiction over the person of[PIL] considering that:

A.1. [PIL] is a foreigncorporation "not doing business" in the Philippines. A.2. Moreover, the complaint

does not contain appropriateallegations of ultimate factsshowing that [PIL] is doing ortransacting business in thePhilippines. A.3. Assuming arguendo that jurisdiction may be acquiredover the person of [PIL], [thetrial court] still failed toacquire jurisdiction sincesummons was improperlyserved on [PIL].

B. [Todaro] does not have a cause of

action and the complaint fails to statea cause of action. Jurisprudence issettled in that in resolving a motion to
















1s t


dismiss, a court can consider all thepleadings filed in the case, includingannexes, motions and all evidence onrecord.C. [The trial court] did not and cannotacquire jurisdiction over the subject

matter of the complaint since theallegations contained thereinindubitably show that [Todaro] baseshis claims on an alleged breach of anemployment contract. Thus, exclusive jurisdiction is vested with the [NLRC].

As to other issues: cause of action, naa

Jurisdiction over PIL: wala, because summons

were not properly served. Failed to follow

prescribed processes.

KAZUHIRO HASEGAWA and NIPPON

ENGINEERING CONSULTANTS CO.,

LTD.,Petitioners, v.MINORU

KITAMURA, Respondent. G.R. No.

149177; November 23, 2007

FACTS: 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, entered into an Independent

Contractor Agreement (ICA) with respondent

Minoru Kitamura, a Japanese national

permanently residing in the Philippines. The

agreement provides that respondent was to

extend professional services to Nippon for a

year starting on April 1, 1999. 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. Subsequently, the

DPWH engaged the services of Nippon for the

detailed engineering and construction

supervision of the Bongabon-Baler Road

Improvement (BBRI) Project. Petitioner

Kazuhiro Hasegawa (Nippon's general

manager) informed respondent that the

company had no more intention of

automatically renewing his ICA. Threatened

with impending unemployment, respondent

requested a negotiation conference but to no

avail. Hence, he consequently initiated on

June 1, 2000 Civil Case No. 00-0264 for

specific performance and damages with the

Regional Trial Court of Lipa City. Petitioners

moved to dismiss the complaint for lack of

jurisdiction contending that the ICA had been

perfected in Japan and executed by and

between Japanese nationals. 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 lexcontractus.

RTC: Held that matters connected with the

performance of contracts are regulated by the

law prevailing at the place of performance.

Hence, it denied the motion to dismiss. CA:

Held, among others, that the principle of lexloci 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. Petitioner‘s contention:

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 thelitigation 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

following the [state of the] most significant

relationship rule in Private International Law.

ISSUE: 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 principle of forum non conveniens.

HELD: NO! 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) Wherecan the resulting judgment be enforced?




1s t


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 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 lexfori 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.

In this case, only the first phase is at issue.

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. Inassailing 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. It is further

determined by the allegations of the complaint

irrespective of whether the plaintiff is entitled

to all or some of the claims asserted therein.

To succeed in its motion for the dismissal of an

action for lack of jurisdiction over the subject

matter of the claim, the movant must show

that the court or tribunal cannot act on the

matter submitted to it because no law grants it

the power to adjudicate the claims.

In the instant case, 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, CivilCase 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. What they rather raise as

grounds to question subject matter jurisdiction

are the principles of lex loci celebrationis and

lexcontractus, and the state of the most

significant relationship rule.

The Court finds the invocation of these

grounds unsound. Neither can the other

ground raised, forum non conveniens, 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. Second, whether a suit should be

entertained or dismissed on the basis of thesaid doctrine depends largely upon the facts of

the particular case and is addressed to the

sound discretion of the trial court. 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. Accordingly, 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.

RAYTHEON INTERNATIONAL,INC.,petitioner, vs.STOCKTON W.ROUZIE, JR., respondent.

FACTS: Sometime in 1990, BrandMarine Services, Inc. (BMSI), a corporationduly organized and existing under the laws of

the State of Connecticut, USA, and respondentStockton W. Rouzie, Jr., an American citizen,entered into a contract whereby BMSI hiredrespondent as its representative to negotiatethe sale of services in several governmentprojects in the Philippines for an agreedremuneration of 10% of the gross receipts. On11 March 1992, respondent secured a servicecontract with the Republic of the Philippineson behalf of BMSI for the dredging of riversaffected by the Mt. Pinatubo eruption andmudflows.

On 16 July 1994, respondent filed before the Arbitration Branch of the NLRC a suit against




1s t


BMSI and Rust International, Inc. (RUST),Rodney C. Gilbert and Walter G. Browning foralleged nonpayment of commissions, illegaltermination and breach of employmentcontract.

NLRC rendered judgment ordering BMSI andRUST to pay respondent‘s money claims.Uponappeal by BMSI, the NLRC reversed thedecision of the Labor Arbiter and dismissedrespondent‘s complaint on the ground of lackof jurisdiction.Respondent elevated the case tothis Court but was dismissed in a Resolutiondated 26 November 1997. The Resolution became final and executory on 09 November1998.

On 8 January 1999, respondent, then aresident of La Union, instituted an action for

damages before the Regional Trial Court(RTC) of Bauang, La Union. TheComplaint,docketed as Civil Case No. 1192-BG,named as defendants herein petitionerRaytheon International, Inc. as well as BMSIand RUST, the two corporations impleaded inthe earlier labor case. The complaintessentially reiterated the allegations in thelabor case that BMSI verbally employedrespondent to negotiate the sale of services ingovernment projects and that respondent wasnot paid the commissions due him from thePinatubo dredging project which he secured on

behalf of BMSI. The complaint also averredthat BMSI and RUST as well as petitioner itselfhad combined and functioned as onecompany.

In its Answer,petitioner alleged that contraryto respondent‘s claim, it was a foreigncorporation duly licensed to do business in thePhilippines and denied entering into anyarrangement with respondent or paying thelatter any sum of money. Petitioner alsodenied combining with BMSI and RUST forthe purpose of assuming the alleged obligation

of the said companies. Petitioner also referredto the NLRC decision which disclosed that perthe written agreement between respondentand BMSI and RUST, denominated as "SpecialSales Representative Agreement," the rightsand obligations of the parties shall begoverned by the laws of the State ofConnecticut.Petitioner sought the dismissal ofthe complaint on grounds of failure to state acause of action and forum non conveniens andprayed for damages by way of compulsorycounterclaim.

The trial court held that the factual allegationsin the complaint, assuming the same to be

admitted, were sufficient for the trial court torender a valid judgment thereon. It also ruledthat the principle of forum non conveniens was inapplicable because the trial court couldenforce judgment on petitioner, it being aforeign corporation licensed to do business in

the Philippines. MR denied. Rule 65Petitionwith the Court of Appeals praying forthe issuance of a writ of certiorari and a writ ofinjunction to set aside the twin orders of thetrial court was filed but likewise denied.

Petitioner mainly asserts that the writtencontract between respondent and BMSIincluded a valid choice of law clause, that is,that the contract shall be governed by the lawsof the State of Connecticut. It also mentionsthe presence of foreign elements in the dispute– namely, the parties and witnesses involved

are American corporations and citizens andthe evidence to be presented is located outsidethe Philippines – that renders our local courtsinconvenient forums. Petitioner theorizes thatthe foreign elements of the dispute necessitatethe immediate application of the doctrine of forum non conveniens.

ISSUE: WON the case should be dismissedunder the doctrine of forum non conveniens

HELD: NO.

On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in aPhilippine court and where the court has jurisdiction over the subject matter, the partiesand the res, it may or can proceed to try thecase even if the rules of conflict-of-laws or theconvenience of the parties point to a foreignforum. This is an exercise of sovereignprerogative of the country where the case isfiled.

Jurisdiction over the nature and subject

matter of an action is conferred by theConstitution and the lawand by the materialallegations in the complaint, irrespective of whether or not the plaintiff is entitled torecover all or some of the claims or reliefssought therein. Civil Case No. 1192-BG is anaction for damages arising from an alleged breach of contract. Undoubtedly, the nature ofthe action and the amount of damages prayedare within the jurisdiction of the RTC.

As regards jurisdiction over the parties, thetrial court acquired jurisdiction over herein

respondent (as party plaintiff) upon the filingof the complaint. On the other hand,




1s t


jurisdiction over the person of petitioner (asparty defendant) was acquired by its voluntaryappearance in court.

That the subject contract included astipulation that the same shall be governed bythe laws of the State of Connecticut does notsuggest that the Philippine courts, or any otherforeign tribunal for that matter, are precludedfrom hearing the civil action. Jurisdictionand choice of law are two distinctconcepts. Jurisdiction considers whether it isfair 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 isfair to both parties. The choice of lawstipulation will become relevant only when thesubstantive issues of the instant case develop,that is, after hearing on the merits proceeds before the trial court.

Under the doctrine of forum non conveniens, acourt, in conflicts-of-laws cases, may refuseimpositions on its jurisdiction where it is notthe most "convenient" or available forum andthe parties are not precluded from seekingremedies elsewhere. Petitioner‘s averments ofthe foreign elements in the instant case are notsufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG

and the parties involved.

Moreover, the propriety of dismissing a case based on the principle of forum nonconveniens requires a factual determination;hence, it is more properly considered as amatter of defense. While it is within thediscretion of the trial court to abstain fromassuming jurisdiction on this ground, it shoulddo so only after vital facts are established, todetermine whether special circumstancesrequire the court‘s desistance.

Navida v. Judge Dizon (Guys taas kayo angtitle sa case, refer na lng mo sa fulltext)May 30, 2011

FACTS: Before the Court areconsolidated Petitions for Reviewon Certiorari under Rule 45 of the Rules ofCourt, which arose out of two civil cases that were filed in different courts but whose factual background and issues are closely intertwined

Proceedings before the Texas CourtsBeginning 1993, a number of personal injury

suits were filed in different Texas state courts by citizens of twelve foreign countries,

including the Philippines. The thousands ofplaintiffs sought damages for injuries theyallegedly sustained from their exposureto dibromochloropropane (DBCP), a chemicalused to kill nematodes (worms), while workingon farms in 23 foreign countries. The cases

were eventually transferred to, andconsolidated in, the Federal District Court forthe Southern District of Texas, HoustonDivision. The cases therein that involvedplaintiffs from the Philippines were JorgeColindres Carcamo, et al. v. Shell Oil Co., etal., and Juan Ramon Valdez, et al. v. ShellOil Co., et al . The defendants in theconsolidated cases prayed for the dismissal ofall the actions under the doctrine of forum nonconveniens.

In a Memorandum and Order dated July

11, 1995, the Federal DistrictCourt conditionally granted the defendantsmotion to dismiss subject to several conditions(see Memorandum and Order in Fulltext).Pertinently, the said Memorandum and Orderstates in the event that the highest courtof any foreign country finally affirmsthe dismissal for lack of jurisdiction ofan action commenced by a plaintiff inthese actions in his home country or thecountry in which he was injured, thatplaintiff may return to this court and,upon proper motion, the court will

resume jurisdiction over the action as ifthe case had never been dismissed for[ forum non conveniens].

Civil Case No. 5617 before the RTC ofGeneral Santos City and G.R. Nos.125078 and 125598

In accordance with the above Memorandumand Order, a total of 336 plaintiffs fromGeneral Santos City (the petitioners in G.R.No. 125078, hereinafter referred to asNAVIDA,et al .) filed a Joint Complaint in

the RTC of General Santos City on August 10,1995. However, instead of answering theircomplaint, most of the defendant companiesfiled their various Motions for Bill ofParticulars.

On May 20, 1996, without resolving themotions filed by the parties, the RTC ofGeneral Santos City issuedan Order dismissing the complaint on theground that it did not have jurisdiction to hearthe case and that the filing of the case in thePhilippine courts violated the rules on forum

shopping and litis pendencia, among others.The RTC expounded that the filing of the casein the U.S. courts divested this court of its own




1s t


jurisdiction. This court takes note that the U.S.District Court did not decline jurisdiction overthe cause of action. The case was dismissed onthe ground of forum non conveniens, which isreally a matter of venue. By taking cognizanceof the case, the U.S. District Court has, in

essence, concurrent jurisdiction with this courtover the subject matter of this case. It is settledthat initial acquisition of jurisdiction divestsanother of its own jurisdiction.

On July 11, 1996, NAVIDA, et al., filed aPetition for Review on Certiorari in order toassail the RTC Order but the RTC merelyreiterated that it no longer had any jurisdictionover the case.

Civil Case No. 24,251-96 before the RTCof Davao City and G.R. Nos. 126654,

127856, and 128398

Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers inthe banana plantation and/or as residents nearthe said plantation, they were made to useand/or were exposed to nematocides, which contained the chemical DBCP.

The RTC of Davao City, however, junked CivilCase No. 24,251-96 in its Order datedOctober 1, 1996. The Court however wasconstrained to dismiss the case because it

shares the opinion of legal experts given in theinterview made by the Inquirer in its Specialreport Pesticide Cause Mass Sterility, to wit:The Philippines should be an inconvenientforum to file this kind of damage suit againstforeign companies since the causes of actionalleged in the petition do not exist underPhilippine laws. There has been no decidedcase in Philippine Jurisprudence awarding tothose adversely affected by DBCP. This meansthere is no available evidence which will proveand disprove the relation between sterility andDBCP.

The case eventually found its way to the SC ina Petition for Review, docketed as G.R. No.126654, filed on November 12, 1996 by ABELLA, et al., assails before this Court theabove-quoted order of the RTC of Davao City.

ISSUE: WON the RTCs have jurisdiction overthe subject matter in these cases.

HELD: YES

The RTC of General Santos City and theRTC of Davao City have jurisdiction over

Civil Case Nos. 5617 and 24,251-96,respectively

The rule is settled that jurisdiction over the subject matter of a case isconferred by law and is determined by the

allegations in the complaint and the characterof the relief sought, irrespective of whether theplaintiffs are entitled to all or some of theclaims asserted therein. Once vested by law, ona particular court or body, the jurisdiction overthe subject matter or nature of the actioncannot be dislodged by anybody other than bythe legislature through the enactment of a law.

At the time of the filing of thecomplaints, the jurisdiction of the RTC in civilcases under Batas Pambansa Blg. 129, asamended by Republic Act No. 7691, was:

SEC. 19. Jurisdiction in civilcases. Regional Trial Courts shallexercise exclusive original jurisdiction:

(8) In all other cases in whichthe demand, exclusive of interest,damages of whatever kind, attorneysfees, litigation expenses, and costs orthe value of the property incontroversy exceeds One hundredthousand pesos (P100,000.00) or, in

such other cases in Metro Manila, where the demand, exclusive of theabovementioned items exceeds Twohundred thousand pesos(P200,000.00).

Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:

2. The exclusion of the termdamages of whatever kind indetermining the jurisdictionalamount under Section 19 (8) and

Section 33 (1) of B.P. Blg. 129, asamended by R.A. No. 7691, appliesto cases where the damages aremerely incidental to or aconsequence of the main cause ofaction. However, in cases where theclaim for damages is the main causeof action, or one of the causes ofaction, the amount of such claimshall be considered in determiningthe jurisdiction of the court.

The claim for damages is the main cause of

action and that the total amount sought in thecomplaints is approximately P2.7 million foreach of the plaintiff claimants. The RTCs




1s t


unmistakably have jurisdiction over the casesfiled in General Santos City and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview of thedefinition of the jurisdiction of the RTC underBatas Pambansa Blg. 129.

Moreover, the allegation in both complaintnarrate that:

XXX

5. The plaintiffs wereexposed to DBCP in the 1970s upto the early 1980s WHILE (a)they used this product in the banana plantations WHERE they were employed, and/or (b) theyresided within the agricultural

area WHERE IT WAS USED. As aresult of such exposure, the plaintiffssuffered serious and permanentinjuries TO THEIR HEALTH,including, but not limited to,STERILITY and severe injuries totheir reproductive capacities.

6. THE DEFENDANTS WERE AT FAULT OR WERENEGLIGENT IN THAT THEYMANUFACTURED, produced,sold, and/or USED DBCP and/or

otherwise, PUT THE SAME intothe stream of commerce, WITHOUT INFORMING THEUSERS OF ITS HAZARDOUSEFFECTS ON HEALTH AND/OR WITHOUT INSTRUCTIONS ONITS PROPER USE AND APPLICATION. THEY allowedPlaintiffs to be exposed to, DBCP-containing materials which THEYknew, or in the exercise of ordinarycare and prudence ought to haveknown, were highly harmful and

injurious to the Plaintiffs health and well-being.

Thus, these allegations in thecomplaints constitute the cause ofaction of plaintiff claimants a quasi-delict, which under the Civil Code isdefined as an act, or omission whichcauses damage to another, there beingfault or negligence. To be precise, Article2176 of the Civil Code provides:

Article 2176. Whoever by act or

omission causes damage to another, there being fault or negligence, is obliged to pay for

the damage done. Such fault or negligence, ifthere is no pre-existing contractual relation between the parties, is called a quasi-delictand is governed by the provisions of thisChapter.

As specifically enumerated in the amendedcomplaints, NAVIDA, et al., and ABELLA, etal., point to the acts and/or omissions of thedefendant companies in manufacturing,producing, selling, using, and/or otherwiseputting into the stream of commerce,nematocides which contain DBCP, withoutinforming the users of its hazardous effects onhealth and/or without instructions on itsproper use and application.

Clearly then, the acts and/oromissions attributed to the defendant

companies constitute a quasi-delict which isthe basis for the claim for damages filed byNAVIDA, et al., and ABELLA, et al., withindividual claims of approximately P2.7million for each plaintiff claimant, whichobviously falls within the purview of the civilaction jurisdiction of the RTCs.

Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al.,allegedly suffered resulted from their exposureto DBCP while they were employed in the banana plantations located in

the Philippines or while they were residing within the agricultural areas also located inthe Philippines. The factual allegations in the Amended Joint-Complaints all point to theircause of action, which undeniably occurredin the Philippines. The RTC of GeneralSantos City and the RTC of Davao Cityobviously have reasonable basis to assume jurisdiction over the cases.

It is, therefore, error on the part of thecourts a quo when they dismissed the cases onthe ground of lack of jurisdiction on the

mistaken assumption that the cause of actionnarrated by NAVIDA, et al., and ABELLA, etal., took place abroad and had occurredoutside and beyond the territorial boundariesof the Philippines, i.e., the manufacture of thepesticides, their packaging in containers, theirdistribution through sale or other disposition,resulting in their becoming part of the streamof commerce, and, hence, outside the jurisdiction of the RTCs.

Certainly, the cases below are notcriminal cases where territoriality, or

the situs of the act complained of, would bedeterminative of jurisdiction and venue for




1s t


trial of cases. In personal civil actions, such asclaims for payment of damages, the Rules ofCourt allow the action to be commenced andtried in the appropriate court, where any of theplaintiffs or defendants resides, or in the caseof a non-resident defendant, where he may be

found, at the election of the plaintiff.

In a very real sense, most of theevidence required to prove the claims ofNAVIDA, et al., and ABELLA, et al., areavailable only in the Philippines. First, plaintiffclaimants are all residents of the Philippines,either in General Santos City orin Davao City. Second, the specific areas wherethey were allegedly exposed to the chemicalDBCP are within the territorial jurisdiction ofthe courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their claims for

damages. Third, the testimonial anddocumentary evidence from important witnesses, such as doctors, co-workers, familymembers and other members of thecommunity, would be easier to gather inthe Philippines. Considering the great numberof plaintiff claimants involved in this case, it isnot far-fetched to assume that voluminousrecords are involved in the presentation ofevidence to support the claim of plaintiffclaimants. Thus, these additional factors,coupled with the fact that the alleged cause ofaction of NAVIDA, et al., and ABELLA, et al.,

against the defendant companies fordamages occurred in the Philippines,demonstrate that, apart from the RTC ofGeneral Santos City and the RTC of Davao Cityhaving jurisdiction over the subject matter inthe instant civil cases, they are, indeed, theconvenient fora for trying these cases.

The RTC of General Santos City and theRTC of Davao City validly acquired jurisdiction over the persons of all thedefendant companies

It is well to stress again that none ofthe parties claims that the courts a quo lack jurisdiction over the cases filed beforethem. All parties are one in asserting that theRTC of General Santos City and the RTC ofDavao City have validly acquired jurisdictionover the persons of the defendant companiesin the action below. All parties voluntarily,unconditionally and knowingly appeared andsubmitted themselves to the jurisdiction of the

connection, all the defendant companiesdesignated and authorized representatives toreceive summons and to represent them in theproceedings before the courts a quo. All thedefendant companies submitted themselves tothe jurisdiction of the courts a quo by making

several voluntary appearances, by praying for various affirmative reliefs, and by activelyparticipating during the course of theproceedings below.

In line herewith, this Court, in Meat Packing Corporation of the Philippines v. Sandiganbayan. held that jurisdiction overthe person of the defendant in civil cases isacquired either by his voluntary appearance incourt and his submission to its authority or byservice of summons. Furthermore, the activeparticipation of a party in the proceedings is

tantamount to an invocation of the courts jurisdiction and a willingness to abide by theresolution of the case, and will bar said partyfrom later on impugning the court or bodys jurisdiction.

Thus, the RTC of General Santos Cityand the RTC of Davao City have validlyacquired jurisdiction over the persons of thedefendant companies, as well as over thesubject matter of the instant case. What ismore, this jurisdiction, which has beenacquired and has been vested on the courts a

quo, continues until the termination of theproceedings.

It may also be pertinently stressed that jurisdiction is different from the exercise of jurisdiction. Jurisdiction refers to theauthority to decide a case, not the orders or thedecision rendered therein. Accordingly, wherea court has jurisdiction over the persons of thedefendants and the subject matter, as in thecase of the courts a quo, the decision on allquestions arising therefrom is but an exerciseof such jurisdiction. Any error that the court

may commit in the exercise of its jurisdictionis merely an error of judgment, which does notaffect its authority to decide the case, muchless divest the court of the jurisdiction over thecase.

conflicts of law cases digest

Documents