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I. Introduction
4
1.) Henry Hilton v. Gustave Bertin Guyot, et al.
4
2.) Rabi Abdullahi v. P zer
7
3.) Nevsun Resources Limited v. Araya
10
II. Jurisdiction
12
a. Administrative Order No. 251-2020
12
1.) William Gemperie v. Helen Schenker and Paul Schenker, as her husband
b. Jurisdiction over the property
12
14
1.) Pennoyer v. Neff
14
2.) International Shoe Co. v. Washington
16
3.) Mullane v. Central Hanover Bank and Trust
18
4.) Shaffer v. Heitner
20
c. Jurisdiction Over the Subject Matter
22
1.) Idonah Perkins v. Roxas
22
III. Forum Non Conveniens
25
1.) Gil Puyat v. Ron Zabarte
25
2.) The Manila Hotel Corp and Manila Hotel Intl v. NLRC, Marcelo Santos
27
3.) Bank of America NT&SA, Bank of America International v. Court of Appeals,
Eduardo Litonjua and Aurelo Litonjua
30
4.) Pioneer Concrete Philippines, Pioneer Philippines Holdings, and Philip J Klepzig v.
Antonio Todaro
32
34
6.) Saudi Arabian Airlines (Saudi) and Brenda Betia v. Ma. Jopette Rebensencio,
Montassah Sacar-Adiong, et al
37
7.) Continental Micronesia v. Joseph Basso
41
8.) Philippine National Construction Corporation v. Asiavest Merchant Bankers
Berhad
44
9.) Bernardo Zamora v. Emmanuel Quinn, Emmanuel Quinn, Efrem Quinn, and
Emma Rose Quimbo
47
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5.) Raytheon International v. Stockton Rouzie
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10.) Western Sales Trading Company, Western Sales Trading Inc. and John Does v. 7D
Food International
50
11.) Bangladesh Bank v. Rizal Commercial Banking Corp
IV. Choice of Law
53
55
1.) Kazuhiro Hasegawa and Nippon Engineering Consultants v. Minoru Kitamura 55
2.) Continental Micronesia v. Joseph Basso
57
3.) Raytheon International, Inc. v. Stockton Rouzie
60
3.) Saudi Arabian Airlines v. Milagros Morada and Court of Appeals
63
5.) Dale Strickland v. Ernst and Young LLP
67
a.) Traditional Approach
69
1. Vested Right Theory
69
1.) Elserce Gray v. Frank Gray
69
2.) Alabama Great Southern Railroad. Co. v. Carroll
71
b.) Modern Approaches
74
1. Place of the Most Signi cant Relationship/Grouping of Contracts
74
1.) Auten v. Auten
74
2.) Haag v. Barnes
77
3.) Continental Microasia
80
4.) Saudi Arabian Airlines v. Court of Appeals
83
2. Interest Analysis
87
1.) Babcock v. Jackson
87
2.) Pitzer College v. Indian Harbor Insurance
90
3.) Bienvenido Cadalin et al v. Philippine Overseas Employee Agency, Brown & Root
International, and Asia International Builders Corporation
93
4.) Banks of America v. American Realty Corporation
96
5.) Herald Black Dacasin v. Sharon Del Mundo
99
101
1.) Kearney v. Salomon
101
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3. Comparative Impairment Analysis
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4. Functional Analysis
105
1.) Milliken v. Pratt
105
Facts
105
V. Problem of Characterization
107
1.) LWV Construction Corporation v. Marcelo Dupo,
107
2.) Saudi Arabian Airlines v. Milagros Morada and Court of Appeals
110
a.) Subject Matter Characterization
114
1.) Gibbs v. Government of Philippines
114
b.) Substance-Procedure Dichotomy
114
1.) Grant v. Mclauliffe
c.) Others
114
114
1.) Cadalin v. POEA Administrator
114
2.) Haumschild v. Continental
114
VI. Renvoi
114
I. Introduction
1.) Henry Hilton v. Gustave Bertin Guyot, et al.
Facts
Henry Hilton and William Libbey, residents of New York and trading as co-partners in
Paris, under the rm name of A.T. Stewart. & Co. were merchants in the Cities of New York and
Paris and elsewhere. They maintained a regular store and place of business at Paris. Meanwhile,
Charles Fortin & Co. carried on the manufacture and sale of gloves at Paris.
The two rms had there large dealings in that business, and controversies arose in the
adjustment of accounts between them.
A complaint brought by Fortin & Co. against Stewart & Co. for sum of money cases was
led in the Tribunal of Commerce of the Department of the Seine —— a judicial tribunal or
court organized and existing under the laws of France, sitting at Paris and having jurisdiction of
suits and controversies between merchants or traders growing out of commercial dealings
between them.
In other words, petitoner were sued in France for debts due to the French rm, Charles
Fortich & Co.
A nal judgment held that Fortin & Co. are eligible to recover from Stewart & Co. various
sums, arising out of the dealings between them, amounting to 660,847 francs.
Thereafter, appeals were taken by both parties from that judgment to the Court of
Appeal of Paris. However, the Appellate Court in Paris dismissed the appeal of the defendants,
and con rmed the judgment of the lower court in favor of the Fortin & Co, and ordered that
they shall recover an additional sum of 152,528 francs with interest on all the claims allowed.
Thereafter, Gustave Guyot, liquidator of the French rm (Charles Fortich & Co.), sued
Hilton and Libbey on the French judgment in the U.S. Circuit Court in New York. The court
held the judgment conclusive and entered a decree in favor of the French rm without
examining anew the merits of the case.
Hilton questions the ruling on the ground that in France, French courts gave no force and
effect to duly rendered judgments of U.S. courts against French citizens.
Issue
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Do laws have any effect, of their own force, beyond the limits of the sovereignty from
which its authority is derived?
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Ruling
The Court ruled in the negative.
In nding that there was no applicable treaty or domestic statute from which an answer
could be derived, the Court determined that it must ascertain the law, based on guidance from
"judicial decisions, from the works of jurists and commentators, and from the acts and usages of
civilized nations.”
In an ruling authored by Justice Horace Gray, the Court, drawing upon both domestic
and international legal sources, concluded that whether any foreign judgment was to be enforced
in the U.S. rested on whether there was comity between the U.S. and the foreign jurisdiction in
question.
In articulating this position, the Court set forth the general standard for making this
determination and for what de ned international comity.
Justice Gray ruled that:
No law has any effect, of its own force, beyond the limits of the sovereignty from
which its authority is derived.
The extent to which the law of one nation, as put in force within its territory,
whether by executive order, by legislative act, or by judicial decree, shall be allowed to
operate within the dominion of another nation, depends upon "the comity of nations.”
"Comity," in the legal sense, is neither a matter of absolute obligation, on the one
hand, nor of mere courtesy and good will, upon the other.
But it is the recognition which one nation allows within its territory to the
legislative, executive or judicial acts of another nation, having due regard both to
international duty and convenience, and to the rights of its own citizens or of other
persons who are under the protection of its laws.
When an action is brought in the court of US, by a citizen of a foreign country
against one of its own citizens, to recover a sum of money adjudged by a court of that
country to be due from the defendant to the plaintiff, and the foreign judgment appears to
have been rendered by a competent court, the judgment is prima facie evidence, at least,
of the truth of the matter adjudged.
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Justice Gray said that the judgment should be held conclusive upon the merits
tried in the foreign court. Unless some special ground is shown for impeaching the
judgment, as by showing that it was affected by fraud or prejudice, or that, by the
principles of international law, and by the comity of our own country, it should not be
given full credit and effect.
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In the case at bar, however, the US Supreme Court ruled there is a ground upon which
the US Courts are satis ed that it does not require it to give conclusive effect to the judgments of
the courts of France.
Justice Gray held that ground to be the want of reciprocity, on the part of France, as to
the effect to be given to the judgments of this and other foreign countries.
When judgments of courts of foreign countries against the citizens of France are sued
upon in the courts of France, the merits of the controversies upon which those judgments are
based are examined with a new trial — unless a treaty to the contrary effect exists between the
Republic of France and the country in which such judgment is obtained.
However, that is not the case between the Republic of France and the United States.
Thus, the tribunals of the Republic of France give no force and effect, within the jurisdiction of
their country, to the judgments duly rendered by courts of competent jurisdiction of the United
States against citizens of France.
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So the US Courts held that the reasonable conclusion appears that the judgment
rendered in France, or in any other foreign country, are not entitled to full credit and conclusive
effect when sued in the US but are considered as prima facie evidence only of the plaintiff ’s
claim.
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2.) Rabi Abdullahi v. P zer
Facts
In 1996, during an epidemic of bacterial meningitis in Nigeria, P zer sought to gain the
approval of the U.S. Food and Drug Administration (“FDA”) for the use on children of its new
antibiotic called “Trovan.”
In April 1996, P zer dispatched three of its American physicians to work with four
Nigerian doctors to experiment with Trovan on children who were patients in Nigeria’s Infectious
Disease Hospital in Nigeria.
Working along side with Nigerian government of cials, the team allegedly recruited two
hundred sick children who sought treatment at the Infectious Disease Hospital and gave half of
the children Trovan and the other half Ceftriaxone, an FDA- approved antibiotic the safety and
ef cacy of which was well-established.
Rabbi Abdullahi contend P zer knew that Trovan had never previously been tested on
children in the form being used and that animal tests showed that Trovan had life-threatening
side effects, including liver damage, and a degenerative bone condition.
Rabbi Abdullah allege that P zer purportedly gave the children — who were in the
Ceftriaxone control group — a deliberately low dose in order to misrepresent the effectiveness of
Trovan.
Thereafter, P zer allegedly concluded the experiment and left without administering
follow-up care.
Rabi Abdullahi, the tests caused the deaths of eleven children, ve of whom had taken
Trovan and six of whom had taken the lowered dose of Ceftriaxone, and left many others blind,
deaf, paralyzed, or brain-damaged.
Moreover, Rabi Abdullahi claims that P zer, working in partnership with the Nigerian
government, failed to secure the informed consent of either the children or their guardians and
speci cally failed to disclose or explain the experimental nature of the study or the serious risks
involved.
Rabi Abdullahi and others sued P zer under the Alien Torts Statute before a United
States District Court for the Southern District of New York. They alleged that P zer violated
international law for non-consensual medical experimentation.
P zer moved to dismiss for failure to state a claim under the ATS and on the basis of
forum non conveniens.
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The district court granted the motion on the ground that plaintiffs failed to identify a
source of international law that "provides a proper predicate for jurisdiction under the ATS.”
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The court justi ed its decision on the ground that "[a] cause of action for P zer's failure
to get any consent, informed or otherwise, before performing medical experiments on the subject
children would expand customary international law far beyond that contemplated by the ATS."
With respect to forum non conveniens, the court held that "plaintiffs had failed to submit
speci c evidence that the Nigerian judiciary would be biased against its own citizens in an action
against P zer" and that "Nigeria was an adequate alternate forum."
Plaintiffs appealed,
Issue
Whether Nigeria offers an adequate forum for the adjucaitioin of the plaintiffs’ claim?
Ruling
The Supreme Court ruled in the negative.
The three-step analysis set forth in the case of Iragorri v. United Techs applies. In the
case at bar, the second step of the analysis, which requires the court to consider the adequacy of
the alternative forum, is pivotal. The Court ruled that dismissal is not appropriate if an adequate
and presently available alternative forum does not exist.
A forum in which defendants are amenable to service of process and which permits
litigation of the dispute is generally adequate.
Such a forum may nevertheless be inadequate if it does not permit the reasonably prompt
adjudication of a dispute, if the forum is not presently available, or if the forum provides a
remedy so clearly unsatisfactory or inadequate that it is tantamount to no remedy at all
The defendant bears the burden of establishing that a presently available and adequate
alternative forum exists, and that the balance of private and public interest factors tilts heavily in
favor of the alternative forum.
Absent a showing of inadequacy by a plaintiff, "considerations of comity preclude a court
from adversely judging the quality of a foreign justice system.”
Accordingly, while the plaintiff bears the initial burden of producing evidence of
corruption, delay or lack of due process in the foreign forum, the defendant bears the ultimate
burden of persuasion as to the adequacy of the forum.
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When the district court granted P zer's motion, it identi ed the pivotal issue as whether
the plaintiffs produced suf cient evidence to show that Nigeria is an inadequate alternative
forum. Having found that they had not, it concluded that Nigeria was an adequate forum.
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In so doing, the district court omitted an analysis of whether P zer discharged its burden
of persuading the court as to the adequacy and present availability of the Nigerian forum and
improperly placed on plaintiffs the burden of proving that the alternative forum is inadequate.
On remand, the district court will have an opportunity to reassess this issue.
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3.) Nevsun Resources Limited v. Araya
Facts
Eritrea is a country in east Africa. It has a “National Service Program,” where all
Eritreans have to do military training and military or other public service when they turn
eighteen. But people in this program are forced to work for years and years on projects supported
by military or political party of cials.
The Bisha mine was built starting in 2008 and owned by the Bisha Mining Share
Company. Workers from the National Service Program were used to help build the mine and
were forced to work under harsh and dangerous conditions for years.
Thereafter, several former labourers at the Bisha Mine came to Canada as refugees.
In November 2014, they brought a class action against Nevsun in the Supreme Court of British
Columbia for damages for violations of customary international law in the form of forced labor,
slavery, cruel, inhuman, or degrading treatment, and crimes against humanity.
They claimed that they were forced to join Eritrea’s military services where they
experienced violent, cruel, inhuman, and degrading treatment arising while working at the mine
from 2008 to 2012.
The workers sued Nevsun, saying it was responsible for the said acts.
Nevsun Resources Ltd (Nevsun)—later acquired by Zijin Mining—was a mining rm
incorporated under British Columbia law and headquartered in Vancouver, British Columbia.
Nevsun Resources held a 60 percent stake in Bisha Mining Share Company (BMSC).
At trial, Nevsun brought a motion to strike the labourers' claim. First, it argued that
Eritrea was the more appropriate forum to hear the claim, based on the doctrine of forum non
conveniens
It further argued that the act of state doctrine—a doctrine of subject-matter
jurisdiction similar to state immunity that has been adopted in a number of common
law countries—prevented the trial court from considering the plaintiffs' claim.
Thus, Nevsun submitted, the government of Eritrea—and not Nevsun—was ultimately
responsible for the acts giving rise to the plaintiffs' claims.
The judge dismissed Nevsun’s motion to strike, and the Court of Appeal agreed.
Issue
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(1) Whether or not the Eritrean workers have the standing to claim violation of customary
international law?
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(2) Whether or not the claims of the Eritrean workers are barred by the acts of state
doctrine?
Ruling
(1) Whether or not the Eritrean workers have the standing to claim violation
of customary international law?
Yes. While states were historically the main subjects of international law, it has long since
evolved from this state‐centric template.
The past 70 years have seen a proliferation of human rights law that transformed
international law and made the individual an integral part of this legal domain, re ected in the
creation of a complex network of conventions and normative instruments intended to protect
human rights and ensure compliance with those rights.
The rapid emergence of human rights signi ed a revolutionary shift in international law
to a human‐centric conception of global order. The result of these developments is that
international law now works not only to maintain peace between states, but to protect the lives of
individuals, their liberty, their health, and their education.
The context in which international human rights norms must be interpreted and applied
today is one in which such norms are routinely applied to private actors. It is therefore not plain
and obvious that corporations today enjoy a blanket exclusion under customary international law
from direct liability for violations of obligatory, de nable, and universal norms of international
law.
(2) Whether or not the claims of the Eritrean workers are barred by the acts
of state doctrine?
No. The act of state doctrine has played no role in Canadian law and is not part of
Canadian common law.
Whereas English jurisprudence has reaf rmed and reconstructed the act of state doctrine,
Canadian law has developed its own approach to addressing the twin principles underlying the
doctrine: con ict of laws and judicial restraint.
Both principles have developed separately in Canadian jurisprudence rather than as
elements of an all‐encompassing act of state doctrine. As such, in Canada, the principles
underlying the act of state doctrine have been completely subsumed within this jurisprudence.
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Canadian courts determine questions dealing with the enforcement of foreign laws
according to ordinary private international law principles which generally call for deference, but
allow for judicial discretion to decline to enforce foreign laws where such laws are contrary to
public policy, including respect for public international law.
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II. Jurisdiction
a. Administrative Order No. 251-2020
1.) William Gemperie v. Helen Schenker and Paul Schenker, as her husband
Facts
Paul Schenker, acting through his wife and attorney-in-fact, Helen Schenker led with the
CFI of Rizal a complaint against William Gemperle for the enforcement of Schenker's allegedly
initial subscription to the shares of stock of the Philippine-Swiss Trading Co., Inc. and the
exercise of his alleged pre-emptive rights to the unissued original capital stock of said corporation
and damages.
William Gemperle alleging that, in connection with said complaint, Mrs. Schenker had
caused to be published some allegations and matters which were impertinent, irrelevant and
immaterial to said case. He also alleges that the publications were false and derogatory to his
reputation, good name and credit. That the publications were ”with the purpose of attacking" his
"honesty, integrity and reputation" and of bringing him "into public hatred, discredit, disrepute
and contempt as a man and a businessman"
Thus, Gemperle commenced the present action against the Schenkers for the recovery of
Damages and to order Mrs. Schenker "to retract in writing the said defamatory expressions".
However, the Court of First Instance of Rizal dismissed the case for lack of jurisdiction
over the person of Paul Schenker and for want of cause of action against his wife and codefendant, Helen Schenker, said Paul Schenker "being in no position to be joined with her as
party defendant, because he is beyond the reach of the Philippine courts.”
Issue
Whether or not the lower court had acquired jurisdiction over the person of Schenker?
Ruling
The Supreme Court ruled in the negative.
Paul Schenker, a Swiss citizen, residing in Switzerland, has not been actually served with
summons in the Philippines, although the summons addressed to him and Mrs. Schenker had
been served personally upon his wife in the Philippines.
The Supreme Court ruled that the lower court had acquired jurisdiction over said
defendant, through service of the summons addressed to him upon Mrs. Schenker because she is
the representative and attorney-in-fact of her husband in the said Civil Case which apparently in
her representative capacity.
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In other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of
her husband, so that she was, also, empowered to represent him in suits led against him,
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particularly in a case, like the one at bar, which is a consequence of the action brought by her on
his behalf.
Therefore, where a non-resident alien had constituted his wife as his attorney-in-fact had
authorized her to sue, and the latter in fact had sued on his behalf, and as a result thereof a suit
was brought against him and a service of summons addressed to him on the latter case was
served personally on his wife, his attorney-in-fact;
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The Supreme Court concluded that the court had acquired jurisdiction over his person,
he having empowered her to sue, so that she was also in effect empowered to represent him in
suits led against him.
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b. Jurisdiction over the property
1.) Pennoyer v. Neff
Facts
Marcus Neff had arrived in Oregon in 1848 after taking the Oregon Trail by wagon. He
became one of the rst men to invest over land in Oregon. Neff sought a land grant under
the Donation Law of Oregon, an act of the United States Congress enacted on September 27,
1850. The act provided an incentive for the development of land in the territories of the
American West by conveying parcels of land to be used for further development. Single
unmarried men, like Neff was at the time, could receive 320 acres of free land.
In an attempt to speed up the process and deal with the requisite paperwork, the illiterate
Neff hired attorney John H. Mitchell.
Neff was successful in procuring property on the ancestral homeland of the Multnomah
Indian tribe in Multnomah County, Oregon. Neff however failed to pay Mitchell the $300 he
was allegedly owed for his services. Thereafter, Mitchell sued Neff in the Circuit Court
of Multnomah County to recover the unpaid legal fees in connection with the legal services to
provided to Marcus Neff.
When Mitchell sued Neff, the latter no longer lived in Oregon and was apparently living
in California at the time of the commencement of the action. Since Neff lived out of state, the
Oregon State Court allowed Mitchell to “serve” Neff through a “substituted service by
publication by posting an advertisement in a local newspaper called “Paci c Christian Advocate”,
a niche religious publication, for six (6) weeks.
In accordance with a state law allowing for service be made by publication of summons,
Mitchell published a notice in a local newspaper regarding the lawsuit. When Neff failed to
appear in court, Mitchell won a default judgment.
Thereafter Neff ’s land in Oregon was seized to satisfy the judgment, Mitchell purchased
it at public auction. He subsequently assigned it to Sylvester Pennoyer.
Nine (9) years later, Neff led an action before the Federal District Court of Oregon to
recover the possession of the land, asserting title by a patent issued to him under the Donation
Law of Oregon.
He claims that the judgment in the case of Mitchell v. Neff was invalid for lack of personal
jurisdiction over him and the property. On the other hand, Pennoyer asserts title by virtue of the
sheriff sale, under an execution sued out upon a judgment against Neff.
The federal court ruled in favor of Neff.
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Pennoyer lost on appeal before the CA. Hence, the instant petition.
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Issue
Whether or not the Circuit Court of the State of Oregon acquired jurisdiction over the
person of Neff, a non-resident, and his land?
Ruling
The Supreme Court ruled in the negative.
The Supreme Court ruled in favor of Neff, holding that for the trial court to have
jurisdiction over the property, the property needed to be attached before the start of litigation,
whereupon the trial court has quasi in rem jurisdiction.
The Supreme Court held that Mitchell had made the mistake of not attaching the parcel
at the start of his action against Neff, instead waiting until after judgement had been rendered.
As a general rule, a court may enter a judgment against a non-resident only if the party:
1) is personally served with process while within the state; or 2) has property within the state, and
that property is attached before litigation begins.
The State court lacked jurisdiction over the person of Neff for want of personal service
of process on him. If, without personal service, judgments in personam, obtained ex parte against
non-residents and absent parties, upon mere publication of process, which would never be seen
by the parties interested, could be upheld and enforced, they would be the constant instruments
of fraud and oppression.
Thus, the personal judgment recovered in the State court of Oregon against Neff, then a
non-resident of the State, was without any validity, and did not authorize a sale of the property.
The US Supreme Court explained that constructive notice as opposed to actual notice is
insuf cient under US law to inform a person living in another state, except for cases affecting the
personal status of an American plaintiff (like divorce) or cases that are in rem, in which the
property sought is within the boundaries of the state and the law presumes that property is
always in the possession of the owner who therefore knows what happens to the property.
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Thus, attachment of the property before judicial proceedings makes constructive notice
suf cient.
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2.) International Shoe Co. v. Washington
Facts
International Shoe Co is a Delaware corporation, having its principal place of business in
St. Louis, Missouri, and is engaged in the manufacture and sale of shoes and other footwear.
International Shoe Co maintains places of business in several states, other than Washington, at
which its manufacturing is carried on and from which its merchandise is distributed interstate
through several sales units or branches located outside the State of Washington.
International Shoe Co has no of ce in Washington and makes no contracts either for sale
or purchase of merchandise there. It maintains no stock of merchandise in that state and makes
there no deliveries of goods in intrastate commerce.
During the years from 1937 to 1940, International Shoe Co employed eleven to thirteen
salesmen under direct supervision and control of sales managers located in St. Louis. These
salesmen resided in Washington, their principal activities were con ned to that state and they
were compensated by commissions based upon the amount of their sales.
International Shoe Co supplies its salesmen with a line of samples, each consisting of one
shoe of a pair, which they display to prospective purchasers. On occasion the salesmen rent
permanent sample rooms, for exhibiting samples, in business buildings, or rent rooms in hotels or
business buildings temporarily for that purpose. The cost of such rentals is reimbursed by
International Shoe Co.
Due to these business activities, the State issued a Notice of Assessment holding the
corporation liable for contributions to the State’s unemployment compensation fund by virtue of
the Washington Unemployment Compensation Act.
Notice was served via mail and personal service to the Washington salesmen. The
corporation refused to pay, arguing that they were not conducting business in Washington and
thus the State had no jurisdiction over it.
They further argued that the service of notice was insuf cient to constitute due process.
The trial court ruled in favor of the State and the Supreme Court of Washington ruled that there
was suf cient business activity to hold the corporation liable for taxes to the State.
The Supreme Court of Washington was of opinion that the regular and systematic
solicitation of orders in the state by appellant's salesmen, resulting in a continuous ow of
appellant's product into the state, was suf cient to constitute doing business in the state so as to
make appellant amenable to suit in its courts.
The corporation appealed the decision to the Supreme Court of the United States.
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International Shoe Co argues that its activities within the state were not suf cient to
manifest its "presence" there and that in its absence the state courts were without jurisdiction,
that consequently it was a denial of due process for the state to subject them to suit.
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International Shoe Co also argues that since it was not present within the state, it is a
denial of due process to subject it to taxation or other money exaction.
Issue
Whether or not a non-resident corporation's activities in a state make it subject to the
jurisdiction of that state?
Ruling
The Supreme Court ruled in the af rmative.
Historically, the jurisdiction of courts to render judgment in personam is grounded on
their de facto power over the defendant's person. Hence his presence within the territorial
jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him.
But now that the capias ad respondendum, a certain writ used under the American Law
System, has given way to personal service of summons or other form of notice.
Thus, due process requires in order to subject a defendant to a judgment in personam, if
he be not present within the territory of the forum, he should have certain minimum contacts
with it such that the maintenance of the suit does not offend “traditional notions of fair play and
substantial justice”
Since the corporate personality is a ction, it is clear that, unlike an individual, its
"presence" without as well as within the state of its origin can be manifested only by activities
carried on in its behalf by those who are authorized to act for it.
It is evident that the operations of the salesmen in Washington established suf cient
contacts or ties with the state to make it reasonable and just, according to traditional conception
of fair play and substantial justice, to permit the state to enforce the obligations which appellant
has incurred there.
Hence, the Supreme Court ruled that it cannot say that the maintenance of the present
suit in the State of Washington involves an unreasonable or undue procedure. It is enough that
International Shoe Co established such contacts with the state that the particular form of
substituted service adopted there gives reasonable assurance that the notice will be actual.
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Therefore, in order for a state to exercise personal jurisdiction over a defendant, the
defendant must have such minimum contacts with the state so that exercising jurisdiction over the
defendant would not offend “traditional notions of fair play and substantial justice.”
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3.) Mullane v. Central Hanover Bank and Trust
Facts
In January 1946, Central Hanover Bank and Trust Company (CHBT) established a
common fund pursuant to Section 100(c) of the New York Banking Law allowing the creation of
common funds for distribution of judicial settlement trusts. During the accounting period a total
of 113 trusts participated in the common trust fund.
In March 1947, Central Hanover petitioned the New York Surrogate's Court for
a settlement of its rst account as common trustee. By this time there were approximately 113
trusts participating in the fund with combined gross capital assets of nearly three million dollars.
The only notice given bene ciaries was by publication in a local newspaper in compliance
with the minimum requirements of the New York Banking Law. Some of the bene ciaries were
not residents of New York.
After ling such petition, the petitioner shall cause to be issued by the court in which the
petition is led and shall publish not less than once in each week for four successive weeks in a
newspaper to be designated by the court a notice or citation addressed generally without naming
them to all parties interested in such common trust fund and in such estates, trusts or funds
mentioned in the petition.
Thus, the only notice required, and the only one given, was by newspaper publication
setting forth merely the name and address of the trust company, the name and the date of
establishment of the common trust fund, and a list of all participating estates, trusts or funds.
At the time the rst investment in the common fund was made on behalf of each
participating estate, however, the trust company, pursuant to the requirements of Section 100(c),
had noti ed those people by mail that were entitled to share in the principal if the interest they
held became distributable.
Upon the ling of the petition for the settlement of accounts, the Mullane was, by order
of the court pursuant to Section 100(c) of the New York Banking Law, appointed as special
guardian and attorney for all persons known or unknown not otherwise appearing who had or
might thereafter have any interest in the income of the common trust fund.
The Mullane appeared specially, objecting that notice and the statutory provisions for
notice to bene ciaries were inadequate to afford due process under the Fourteenth Amendment,
and therefore that the court was without jurisdiction to render a nal and binding decree.
Issue
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Whether or not the notice by publication to all of the bene ciaries of a common trust
whose residences are known constitute reasonable notice under the due process requirement of
the Fourteenth Amendment?
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Ruling
The Supreme Court ruled in the negative.
"Distinctions between actions in rem and those in personam are ancient and originally
expressed in procedural terms that seems really to have been a distinction in the substantive law
of property under a system quite unlike our own.
Personal service of written notice within the jurisdiction is the classic form of notice
always adequate in any type of proceeding.
But the vital interest of the State in bringing any issues as to its duciaries to a nal
settlement can be served only if interests or claims of individuals who are outside of the State
can somehow be determined. A construction of the Due Process Clause which would place
impossible or impractical obstacles in the way could not be justi ed.
But when notice is a person's due process which is a mere gesture is not due process. The
means employed must be such as one desirous of actually informing the absentee might
reasonably adopt to accomplish it.
The reasonableness and hence the constitutional validity of any chosen method may be
defended on the ground that it is in itself reasonably certain to inform those affected or where
conditions do not reasonably permit such notice, that the form chosen is not substantially less
likely to bring home notice than other of the feasible and customary substitutes.
It would be idle to pretend that publication alone is a reliable means of acquainting
interested parties of the fact that their rights are before the courts.
As to known present bene ciaries of known place of residence, however, notice by
publication stands on a different footing.
Exceptions in the name of necessity do not sweep away the rule that within the limits of
practicability, notice must be such as is reasonably calculated to reach interested parties. Where
the names and post of ce addresses of those affected by a proceeding are at hand, the reasons
disappear for resort to means less likely than the mails to apprise them of its pendency.
The trustee has on its books the names and addresses of the income bene ciaries
represented by appellant, and we nd no tenable ground for dispensing with a serious effort to
inform them personally of the accounting, at least by ordinary mail to the record addresses…
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Therefore, the Supreme Court ruled that that the notice of judicial settlements of
accounts required by the New York Banking Law is incompatible with the requirements of the
Fourteenth Amendment as a basis for adjudication depriving known persons whose whereabouts
are also known of substantial property rights.
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4.) Shaffer v. Heitner
Facts
Heitner, a nonresident of Delaware, led a shareholder's derivative suit in a Delaware
Chancery Court, naming as defendants a corporation and its subsidiary, as well as 28 present or
former corporate of cers or directors.
Heitner alleging that the individual defendants had violated their duties to Greyhound by
causing it and its subsidiary to engage in activities in Oregon that resulted in corporate liability
for substantial damages in a private antitrust suit and a large ne in a criminal contempt action.
Heitner led a motion for sequestration of 82,000 shares of Greyhound stock belonging
to the individual defendants, all nonresidents of Delaware, accompanied by an af davit
identifying the property to be sequestered as stock, options, warrants, and various corporate
rights of the defendants.
A sequestration order was issued pursuant to which shares and options belonging to 21
defendants (appellants) were "seized" and "stop transfer" orders were placed on the corporate
books.
Defendants were noti ed by certi ed mail to their last known address and by publication
in a newspaper.
Thereafter, Shaffer entered a special appearance to quash service of process and to vacate
the sequestration order, contending that the ex parte sequestration procedure did not accord
them due process.
And that the property seized was not capable of attachment in Delaware and that they
did not have suf cient contacts with Delaware to sustain jurisdiction of that State's courts in
accordance the ruling of International Shoe Co. v. Washington.
Both the court of chancery and the Delaware Supreme Court held that the statutory situs
of the stock in Delaware was a suf cient basis for the exertion of quasi in rem jurisdiction.'
Issue
Whether or not a nonresident have minimum contacts with the forum state in order for
the state to exercise in rem jurisdiction?
Ruling
The Supreme Court ruled in the af rmative.
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The Court held that (1) all assertions of state jurisdiction, including in rem and quasi in
rem actions, must be evaluated according to the minimum contacts standard, and (2) neither the
presence of the nonresident defendants' stock in Delaware nor the fact that the nonresident
defendants were of cers of a Delaware chartered corporation, provided the requisite contacts to
establish the jurisdiction of Delaware courts.
21 of 114
In support of its ruling, the court held that the minimum contacts test of International
Shoe should have been applied to assertions of in rem as well as in personam jurisdiction. The
court noted that appellant's seized property did not have suf cient contacts with the state to
support Delaware's assertion of jurisdiction over appellants.
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The court further held that appellants had neither purposefully availed themselves of the
privilege of conducting activities within the state, nor had any reason to expect to be brought
before a Delaware court.
22 of 114
c. Jurisdiction Over the Subject Matter
1.) Idonah Perkins v. Roxas
Facts
Eugene Arthur Perkins, led a complaint in the CFI of Manila against the Benguet
Consolidated Mining Company for the recovery of the sum of P71,379.90, consisting of
dividends which have been declared and made payable on shares of stock registered in his name,
payment of which was being withheld by the Benguet Consolidated Mining Company, and for
the recognition of his right to the control and disposal of said shares, to the exclusion of all
others.
On the other hand, Benguet Consolidated Mining Company led its answer, alleging that
the withholding of Eugene’s right to the disposal and control of the shares was due to certain
demands made with respect to said shares by Idonah Slade Perkins, and by George H.
Engelhard.
The answer prays that the adverse claimants (Idonah Slade Perkins, and by George H.
Engelhard) be made parties to the action and served with notice thereof by publication, and that
thereafter all such parties be required to interplead and settle the rights among themselves.
On September 5, 1938, the trial court ordered Eugene Arthur Perkins, to include in his
complaint as parties defendants Idonah Slade Perkins, and George H. Engelhard.
The complaint was accordingly amended and in addition to the relief prayed for in the
original complaint, Eugene Perkins prayed that Idonah Slade Perkins and George H. Engelhard
be adjudged without interest in the shares of stock in question and excluded from any claim they
assert in the shares of stocks.
Thereafter, summons by publication were served upon the non-resident defendants,
Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial court.
Thereafter, Idonah Perkins’s objection to the court's jurisdiction over her person having
been overruled by the trial court and by the Supreme Court in another case. Thereafter, Idahoan
Perkins led her answer with a cross-complaint in which she sets up a judgment allegedly
obtained by her against Eugene Arthur Perkins, from the Supreme Court of the State of the New
York, wherein the US Court declared that she is the sole legal owner and entitled to the
possession and control of the shares of stock in question together with all the cash dividends
declared thereon by the Benguet Consolidated Mining Company.
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Eugene Arthur Perkins, led a reply and an answer in which he sets up several defenses to
the enforcement in this jurisdiction of the judgment of the Supreme Court of the State of New
York.
23 of 114
Thereafter, Idonah Slade Perkins led a demurrer on the ground that "the court has no
jurisdiction of the subject of the action," because the alleged judgment of the Supreme Court of
the State of New York is res judicata.
Issue
Whether or not the CFI of Manila has jurisdiction over the subject matter of the action
in view of the alleged judgment entered in favor of the petitioner by the SC of New York and
which is claimed by her to be res judicata on all questions raised by the respondent, Eugene
Perkins?
Ruling
The Supreme Court ruled in the af rmative.
By jurisdiction over the subject matter is meant the nature of the cause of action and of
the relief sought, and this is conferred by the sovereign authority which organizes the court, and
is to be sought for in general nature of its powers, or in authority specially conferred.
In the present case, the amended complaint led by Eugene Arthur Perkins in the CFI
alleged the ownership in himself of the shares of stock involved in this action as manager of the
conjugal partnership between him and his wife, Idonah Slade Perkins.
In the case at bar, the amended complaint led by the Eugene in the CFI alleged the
ownership in himself of the shares of stock involved in this action as manager of the conjugal
partnership between him and his wife, Idonah.
The amended complaint further states that such claims are invalid, unfounded, and made
only for the purpose of vexing, hindering and delaying Eugene Arthur Perkins.
The amended complaint prays that Benguet Consolidated Mining Company be required
and ordered to recognize the right of the Eugune to the control and disposal of said shares.
It also prayed that Idonah Slade Perkins and George H. Engelhard to be each held to
have no interest or claim in the subject matter of the controversy between Eugene and Benguet
Consolidated Mining Company, and each of them be excluded therefrom.
The respondent's action, therefore, calls for the adjudication of title to certain shares of
stock of the Benguet Consolidated Mining Company, and the granting of af rmative reliefs,
which fall within the general jurisdiction of the Court of First Instance of Manila.
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Similarly, the Court of First Instance of Manila is empowered to adjudicate the several
demands contained in petitioner's cross- complaint. The cross-complaint sets up a judgment
allegedly recovered by Idonah Slade Perkins against Eugene Arthur Perkins in the Supreme
Court of New York and by way of relief prays.
24 of 114
In other words, Idonah Slade Perkins in her cross-complaint brought suit against Eugene
Arthur Perkins and the Benguet Consolidated Mining Company upon the alleged judgment of
the Supreme Court of the State of New York and asked the CFI to render judgment enforcing
that New York judgment, and to issue execution thereon.
The Supreme Court held that this is a form of action recognized by section 47, Rule 39,
Rules of Court and which falls within the general jurisdiction of the Court of First Instance of
Manila, to adjudicate, settle and determine.
The test of jurisdiction is whether or not the tribunal has power to enter upon the inquiry,
not whether its conclusion in the course of it is right or wrong. If its decision is erroneous, its
judgment can be reversed on appeal; but its determination of the question, which the petitioner
here anticipates and seeks to prevent, is the exercise by that court — and the rightful exercise —
of its jurisdiction.
25 of 114
III. Forum Non Conveniens
1.) Gil Puyat v. Ron Zabarte
Facts
Ron Zabarte commenced an action to enforce the money judgment rendered by the
Superior Court for the State of California.
On the other hand, Gil Puyat led his Answer and argued in his defense that the Court
for the State of California, County of Contra Costa did not properly acquire jurisdiction over the
subject matter of and over the persons involved in the case. Moreover, he alleged that in the
transaction, which is the subject matter in the said case, he is not in any way liable.
Thereafter, Ron Zabarte led a Motion for Summary Judgment under Rule 34 of the
Rules of Court alleging that the Answer led by Gil Puyat failed to tender any genuine issue as to
the the material facts.
Subsequently, Gil Puyat led a Motion to Dismiss on the ground of lack of jurisdiction
over the subject matter of the case and forum-non-conveniens.
The RTC then ordered Gil Puyat to pay the Ron. Meanwhile, the Court of Appeals
Puyat’s argument that the RTC should have dismissed the action for the enforcement of a foreign
judgment, on the ground of forum non conveniens.
It reasoned out that the recognition of the foreign judgment was based on comity,
reciprocity and res judicata.
Gil Puyat argues that the RTC should have refused to entertain the Complaint for
enforcement of the foreign judgment on the principle of forum non conveniens.
He claims that the trial court had no jurisdiction, because the case involved partnership
interest, and there was dif culty in ascertaining the applicable law in California. All the aspects
of the transaction took place in a foreign country, and respondent is not even Filipino.
Issue
Whether or the trial court should have refused to entertain the complaint on the ground
of forum non conveniens?
Ruling
The Supreme Court ruled in the negative.
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Under the principle of forum non conveniens, even if the exercise of jurisdiction is
authorized by law, courts may nonetheless refuse to entertain a case for any of the following
practical reasons:
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(1) The belief that the matter can be better tried and decided elsewhere, either because
the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;
(2) The belief that the non-resident plaintiff sought the forum (a practice known as forum
shopping, familiar with forum shopping?) merely to secure procedural advantages or to convey or
harass the defendant;
(3) The unwillingness to extend local judicial facilities to non-residents or aliens when the
docket may already be over-crowded;
(4) The inadequacy of the local judicial machinery for effectuating the right sought to be
maintained; and
(5) The dif culty of ascertaining foreign law
None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In
the present action, there was no more need for material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the local machinery to enforce the foreign judgment,
and no question raised as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed on
the basis of the above-mentioned principle depends largely upon the facts of each case and 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 to ascertain the rights and the obligations of the parties based on
foreign laws or contracts. The parties needed only to perform their obligations under the
Compromise Agreement they had entered into.
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The Supreme Court held that 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 coveniens. Not only do these defenses weaken each
other, but they bolster the nding of the lower courts that he was merely maneuvering to avoid or
delay payment of his obligation.
27 of 114
2.) The Manila Hotel Corp and Manila Hotel Intl v. NLRC, Marcelo Santos
Background
When the case was led in 1990, Manila Hotel Corp was still a government-owned and
controlled corporation duly organized and existing under the laws of the Philippines.
Manila Hotel International is a corporation duly organized and existing under the laws
of Hong Kong. While Manila Hotel Corp is an "incorporator" of MHICL, owning 50% of its
capital stock.
By virtue of a "management agreement” with the Palace Hotel (Wang Fu Company
Limited), MHICL trained the personnel and staff of the Palace Hotel at Beijing, China.
Facts
Marcelo Santos was an overseas worker employed as a printer at the Mazoon Printing
Press, Sultanate of Oman. Subsequently, in June 1988, he was directly hired by the Palace Hotel,
Beijing, People's Republic of China and later terminated due to retrenchment.
During his employment with the Mazoon Printing Press in the Sultanate of Oman,
Santos received a letter from Mr. Gerhard R. Shmidt, General Manager of Palace Hotel, Beijing,
China offering Santos the same position as printer, but with a higher monthly salary and
increased bene ts.
Mr. Schmidt informed Santos that he was recommended by one Nestor Buenio, a friend
of his. Thereafter, Santos wrote to Mr. Shmidt and signi ed his acceptance of the offer.
Consequently, the Palace Hotel Manager, Mr. Henk mailed a ready to sign employment contract
to Santos.
Mr. Henk advised respondent Santos that if the contract was acceptable, to return the
same to Mr. Henk in Manila, together with his passport and pictures for his visa to China.
Thereafter, Santos resigned from the Mazoon Printing Press under the pretext that he was
needed at home to help with the family's piggery and poultry business.
Thereafter, Santos was deemed resigned from the Mazoon Printing Press. When he left
for Beijing, China, Santos then started to work at the Palace Hotel. Santos signed an amended
"employment agreement" with the Palace Hotel.
Thereafter, the Palace Hotel informed Santos by letter signed by Mr. Shmidt that his
employment at the Palace Hotel print shop will be terminated due to business reverses brought
about by the political upheaval in China.
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The Palace Hotel then terminated the employment of Santos and paid all bene ts due
him, including his plane fare back to the Philippines.
28 of 114
Thereafter, Santos led a complaint for illegal dismissal with the Arbitration Branch,
National Capital Region, National Labor Relations Commission (NLRC).
He prayed for an award of damages and the complaint named petitioners, the Palace
Hotel and Mr. Shmidt as respondents. However, the Palace Hotel and Mr. Shmidt were not
served with summons and neither participated in the proceedings before the Labor Arbiter.
The Labor Artier then decided the case against the petitioners and they appealed to the
NLRC, arguing that the POEA, not the NLRC had jurisdiction over the case.
Issue
Whether or not the NLRC was an inconvenient forum?
Ruling
The Supreme Court ruled in the af rmative.
The main aspects of the case transpired in two foreign jurisdictions and the case involves
purely foreign elements.
The Supreme Court held the the only link that the Philippines has with the case is that
Santos is a Filipino citizen. Meanwhile, the Palace Hotel and Manila Hotel International are
foreign corporations. Thus, not all cases involving our citizens can be tried here.
Santos was hired directly by the Palace Hotel, a foreign employer, through
correspondence sent to the Sultanate of Oman, where Santos was then employed and that he
was hired without the intervention of the POEA or any authorized recruitment agency of the
government.
Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (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.
The Supreme Court held that the conditions are unavailing in the case at bar. The
Supreme Court held that NLRC is an inconvenient forum because from the time of recruitment,
to employment to dismissal occurred outside the Philippines.
It further ruled that the inconvenience is compounded by the fact that the defendants, the
Palace Hotel and MHICL are not nationals of the Philippines. Neither are they "doing business
in the Philippines."
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Moreover, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the
Philippines.
29 of 114
Neither can an intelligent decision be made as to the law governing the employment
contract as such was perfected in foreign soil. This calls to fore the application of the principle of
lex loci contractus (the law of the place where the contract was made) and the employment
contract was not perfected in the Philippines.
Moreover, the Supreme Court ruled that neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, People's
Republic of China. The NLRC was not in a position to determine whether the Tiannamen
Square incident truly adversely affected operations of the Palace Hotel as to justify respondent
Santos' retrenchment.
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The Supreme Court noted that the ruling does not mean that the Philippine courts and
agencies have no power to solve controversies involving foreign employers. If Santos were an
"overseas contract worker," a Philippine forum, speci cally the POEA, not the NLRC, would
protect him. However, Santos is not an "overseas contract worker" a fact which he admits with
conviction.
30 of 114
3.) Bank of America NT&SA, Bank of America International v. Court of Appeals,
Eduardo Litonjua and Aurelo Litonjua
Facts
Eduardo Litonjua and Aurelo Litonjua were engaged in the shipping business and owned
two vessels: Don Aurelio and El Champion, through their wholly-owned corporations.
Eduardo Litonjua and Aurelo Litonjua deposited their revenues from said business with
the branches of said Bank of America NT&SA and Bank of America International in the United
Kingdom and Hongkong up to 1979.
While respondents business was doing well, the banks induced them to increase the
number of their ships in operation, offering them loans to acquire said vessels.
Thereafter, the banks acquired, through Litonjuas' corporations as the borrowers four
vessels1. The vessels were registered in the names of their corporations and the operation and the
funds derived therefrom were placed under the complete and exclusive control and disposition of
the banks. Moreover, the possession of the vessels was also placed by the banks in the hands of
persons selected and designated by them.
The Litonjuas claimed that the banks as trustees did not fully render an account of all the
income derived from the operation of the vessels as well as of the proceeds of the subsequent
foreclosure sale.
The respondents allege that because of the breach of bank's duciary duties and
negligence, the revenues derived from the operation of all the vessels declined drastically. They
allege also that the loans acquired for the purchase of the four additional vessels then matured
and remained unpaid, prompting the banks to have all the six vessels, including the two vessels
originally owned by the private respondents, foreclosed and sold at public auction to answer for
the obligations incurred for and in behalf of the operation of the vessels.
Thereafter, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua led a Complaint before the
Regional Trial Court of Pasig against the Bank of America NT&SA and Bank of America
International, Ltd.
Bank of America NT&SA and Bank of America International led a Motion to Dismiss
on grounds of forum non conveniens and lack of cause of action against them.
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(a) El Carrier ; (b) El General; (c) El Challenger; and (d) El Conqueror
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In support of their claim that the local court is not the proper forum, the banks allege that
the (1) The Bank of America Branches involved are based in Hongkong and England. As such,
the evidence and the witnesses are not readily available in the Philippines; (2) The loan
transactions were obtained, perfected, performed, consummated and partially paid outside the
Philippines; (3) Bank of America International Ltd. is not licensed nor engaged in trade or
business in the Philippines, (4) All the loans involved were granted to the Private Respondents'
foreign CORPORATIONS
Issue
Should the complaint be dismissed on the ground of forum non-conveniens?
Ruling
The Supreme Court ruled in the negative.
The doctrine of forum non-conveniens, literally meaning 'the forum is inconvenient',
emerged in private international law to deter the practice of global forum shopping, that is to
prevent non-resident litigants from choosing the forum or place wherein to bring their suit for
malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant,
to avoid overcrowded dockets, or to select a more friendly venue.
Under this doctrine, a court, in con icts of law cases, may refuse impositions on its
jurisdiction where it is not the most "convenient" or available forum and the parties are not
precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion of the trial
court.
The Supreme Court held 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.
The Supreme Court further ruled that while it is within the discretion of the trial court to
abstain from assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court's desistance,
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Moreover, 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.
32 of 114
4.) Pioneer Concrete Philippines, Pioneer Philippines Holdings, and Philip J
Klepzig v. Antonio Todaro
Fact
Todaro has been the managing director of Betonval Readyconcrete, Inc. (Betonval), a
company engaged in pre-mixed concrete and concrete aggregate production; he resigned from
Betonval in February 1996;
Sometime in May 1996, Pioneer International Limited contacted Todaro and asked him
if he was available to join them in connection with their intention to establish a ready-mix
concrete plant and other related operations in the Philippines.
Todaro then informed Pioneer International Limited of his availability and interest to
join them. Subsequently, Pioneer International Limited and Todaro came to an agreement
wherein the former consented to engage the services of the latter as a consultant for two to three
months, after which, he would be employed as the manager of Pioneer International Limited’s
ready-mix concrete operations should the company decide to invest in the Philippines.
Thereafter, Pioneer International Limited started its operations in the Philippines;
however, it refused to comply with its undertaking to employ Todaro on a permanent basis.
Thus, Todaro led with the Regional Trial Court (RTC) of Makati City, a complaint for
Sum of Money and Damages against Pioneer International Limited (PIL), Pioneer Concrete
Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald
(McDonald) and Philip J. Klepzig (Klepzig).
Instead of ling an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the
complaint on the grounds that the complaint states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction of the
NLRC, and that the complaint should be dismissed on the basis of the doctrine of forum non
conveniens.
The RTC of Makati denied the motion to dismiss. Thereafter, petitioners led a Petition
for Certiorari with the CA wherein it denied the Petition for Certiorari.
Petitioners contend that since the majority of the defendants in the present case are not
residents of the Philippines, they are not subject to compulsory processes of the Philippine court
handling the case for purposes of requiring their attendance during trial. Even assuming that
they can be summoned, their appearance would entail excessive costs.
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Petitioners further assert that there is no allegation in the complaint from which one can
conclude that the evidence to be presented during the trial can be better obtained in the
Philippines. Moreover, the events which led to the present controversy occurred outside the
Philippines. Petitioners conclude that based on the foregoing factual circumstances, the case
should be dismissed under the principle of forum non conveniens.
33 of 114
Issue
Whether or not the principle of forum non conveniens may apply in the case at bar?
Ruling
The Supreme Court ruled in the af rmative.
In the case at bar, the Supreme Court stated that the ruling in Bank of America v. CA is
instructive in that:
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.
That Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to
have power to enforce its decision."
Moreover, 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.
The Supreme Court further ruled that while it is within the discretion of the trial court to
abstain from assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court's desistance; and that
the propriety of dismissing a case based on this principle of forum non conveniens requires a
factual determination, hence it is more properly considered a matter of defense.
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In the present case, the factual circumstances cited by petitioners which would allegedly
justify the application of the doctrine of forum non conveniens are matters of defense, the merits
of which should properly be threshed out during trial.
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5.) Raytheon International v. Stockton Rouzie
Facts
Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under the
laws of the State of Connecticut, United States of America.
Meanwhile, Stockton W. Rouzie, Jr., an American citizen, entered into a contract
whereby Brand Marine Services hired Stockton as its representative to negotiate the sale of
services in several government projects in the Philippines for an agreed remuneration of 10% of
the gross receipts.
Thereafter, Stockton secured a service contract with the Republic of the Philippines on
behalf of Brand Marine for the dredging of rivers affected by the Mt. Pinatubo eruption and
mud ows.
Thereafter, Stockton led before the Arbitration Branch of the National Labor Relations
Commission a suit against Brand Marine Services and Rust International, Inc. (RUST), Rodney
C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal termination
and breach of employment contract.
The Labor Arbiter rendered judgment ordering Brand Marine Services and Rust
International to pay Stockton’s money claims.
Upon appeal by Brand Marine Services, the NLRC reversed the decision of the Labor
Arbiter and dismissed Stockton’s complaint on the ground of lack of jurisdiction. Thereafter, the
Resolution became nal and executory.
A few months later, Stockton Rouzie, a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union.
The Complaint was docked as a Civil Case and imploded Raytheon International, Inc.
as, Brand Marine Services and RUST, the two corporations impleaded in the earlier labor case as
the defendants.
The complaint essentially reiterated the allegations in the labor case that Brand Marine
Services verbally employed Stockton to negotiate the sale of services in government projects and
that he was not paid the commissions due him from the Pinatubo dredging project which he
secured on behalf of BMSI.
The complaint also averred that Brand Marine Services and RUST as well as Raytheon
itself had combined and functioned as one company.
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Raytheon International sought the dismissal of the complaint on grounds of failure to
state a cause of action and forum non conveniens and prayed for damages by way of compulsory
counterclaim.
35 of 114
Moreover, Raytheon International also referred to the NLRC decision which disclosed
that the written agreement between Stockton and BMSI and RUST, denominated as “Special
Sales Representative Agreement,” that the rights and obligations of the parties shall be governed
by the laws of the State of Connecticut.
The RTC held that the principle of forum non conveniens was inapplicable because the
trial court could enforce judgment on petitioner, it being a foreign corporation licensed to do
business in the Philippines.
Meanwhile, the Court of Appeals denied the petition for certiorari of the petitioner for
lack of merit.
Issue
Whether or not the Philippine court can acquire jurisdiction over the case
notwithstanding the stipulation that the same shall be governed by a foreign law.
Ruling
The Supreme Court ruled in the af rmative.
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law and by the material allegations in the complaint, irrespective of whether
or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.
The Civil Case led is an action for damages arising from an alleged breach of contract.
Undoubtedly, the nature of the action and the amount of damages prayed are within the
jurisdiction of the RTC.
The subject contract included a stipulation that the same shall be governed by the laws of
the State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal
for that matter, are precluded from hearing the civil action. Jurisdiction and choice of law are two
distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to travel to this state;
Meanwhile, the 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.
Under the doctrine of forum non conveniens, a court, in con icts-of- laws cases, may
refuse impositions on its jurisdiction where it is not the most "convenient" or available forum and
the parties are not precluded from seeking remedies elsewhere,
Petitioner’s averments of the foreign elements in the instant case are not suf cient to oust
the trial court of its jurisdiction over Civil Case No. 1192-BG and the parties involved.
fi
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fi
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Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a matter of
defense.
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While it is within the discretion of the trial court to abstain from assuming jurisdiction on
this ground, it should do so only after vital facts are established, to determine whether special
circumstances require the court's desistance.
fi
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign elements.
In the same manner, the Supreme Court defers to the sound discretion of the lower courts
because their ndings are binding on the Supreme Court.
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6.) Saudi Arabian Airlines (Saudi) and Brenda Betia v. Ma. Jopette Rebensencio,
Montassah Sacar-Adiong, et al
Facts
Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing under
the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine of ce located at Gil Puyat
Avenue, Makati City.
Respondents were recruited and hired by Saudia as Temporary Flight Attendants with
the accreditation and approval of the POEA. After undergoing seminars required by the POEA
for deployment overseas, as well as training modules offered by Saudia, respondents became
Permanent Flight Attendants.
They then entered into Cabin Attendant contracts with Saudia. Thereafter, Respondents
continued their employment with Saudia until they were separated from service on various dates
in 2006.
Respondents contended that the termination of their employment was illegal. They
alleged that the termination was made solely because they were pregnant.
Respondents alleged, they had informed Saudia of their respective pregnancies and had
gone through the necessary procedures to process their maternity leaves. Initially, Saudia had
given its approval but later on informed respondents that its management in Jeddah, Saudi
Arabia had disapproved their maternity leaves. In addition, it required respondents to le their
resignation letters.
Saudia anchored its disapproval of respondents' maternity leaves and demand for their
resignation on its "Uni ed Employment Contract for Female Cabin Attendants" (Uni ed
Contract).
Under the Uni ed Contract, it provides that if the Air Hostess becomes pregnant at any
time during the term of this contract, it shall render her employment contract as void and she
will be terminated due to lack of medical tness.
Thereafter, respondents executed handwritten resignation letters. Thus, respondents led
a Complaint against Saudia and its of cers for illegal dismissal and for underpayment of salary,
and damages.
Saudia assailed the jurisdiction of the Labor Arbiter. It claimed that all the determining
points of contact referred to foreign law and insisted that the Complaint ought to be dismissed on
the ground of forum non conveniens. It added that respondents had no cause of action as they
resigned voluntarily
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The Labor Arbiter dismissed the respondent’s complaint.
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The NLRC reversed the decision of the LA. On the matter of forum non conveniens, it
noted that there were no special circumstances that warranted its abstention from exercising
jurisdiction.
Saudia asserts that Philippine courts and/or tribunals are not in a position to make an
intelligent decision as to the law and the facts. This is because respondents' Cabin Attendant
contracts require the application of the laws of Saudi Arabia, rather than those of the
Philippines.
It claims that the dif culty of ascertaining foreign law calls into operation the principle of
forum non conveniens, thereby rendering improper the exercise of jurisdiction by Philippine
tribunals.
Issue
Whether the Forum Non Conveniens nds application in the case at bar?
Ruling
The Supreme Court ruled in the negative.
Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata,
is a means of addressing the problem of parallel litigation.
While the rules of forum shopping, litis pendentia, and res judicata are designed to
address the problem of parallel litigation within a single jurisdiction, forum non conveniens is a
means devised to address parallel litigation arising in multiple jurisdictions.
Consistent with the principle of comity, a tribunal’s desistance in exercising jurisdiction on
account of forum non conveniens is a deferential gesture to the tribunals of another sovereign. It
is a measure that prevents the former’s having to interfere in affairs which are better and more
competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that tribunals elsewhere are
better suited to rule on and resolve a controversy, but also, that these tribunals are better
positioned to enforce judgments and, ultimately, to dispense justice.
Forum non conveniens nds no application and does not operate to divest Philippine
tribunals of jurisdiction and to require the application of foreign law.
fi
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fi
Forum non conveniens relates to forum, not to the choice of governing law. That forum
non conveniens may ultimately result in the application of foreign law is merely an incident of its
application. In this strict sense, forum non conveniens is not applicable. It is not the primarily
pivotal consideration in this case.
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In any case, even a further consideration of the applicability of forum non conveniens on
the incidental matter of the law governing respondents' relation with Saudia leads to the
conclusion that it is improper for Philippine tribunals to divest themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a forum and its incidents
must grapple with two (2) considerations: rst, the availability and adequacy of recourse to a
foreign tribunal; and second, the question of where, as between the forum court and a foreign
court, the balance of interests inhering in a dispute weighs more heavily.
Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a
dispute: rst, the vinculum which the parties and their relation have to a given jurisdiction; and
second, the public interest that must animate a tribunal, in its capacity as an agent of the
sovereign, in choosing to assume or decline jurisdiction.
The rst is more concerned with the parties, their personal circumstances, and private
interests; the second concerns itself with the state and the greater social order.
In considering the vinculum, a court must look into the preponderance of linkages which
the parties and their transaction may have to either jurisdiction. In this respect, factors, such as
the parties' respective nationalities and places of negotiation, execution, performance,
engagement or deployment, come into play.
In considering public interest, a court proceeds with a consciousness that it is an organ of
the state. It must, thus, determine if the interests of the sovereign (which acts through it) are
outweighed by those of the alternative jurisdiction.
In this respect, the court delves into a consideration of public policy. Should it nd that
public interest weighs more heavily in favor of its assumption of jurisdiction, it should proceed in
adjudicating the dispute, any doubt or contrary view arising from the preponderance of linkages
notwithstanding.
The Supreme Court held that our law on contracts recognizes the validity of contractual
choice of law provisions. Where such provisions exist, Philippine tribunals, acting as the forum
court, generally defer to the parties' articulated choice.
This is consistent with the fundamental principle of autonomy of contracts. Article 1306
of the Civil Code expressly provides that "[t]he contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient."
However, while a Philippine tribunal (acting as the forum court) is called upon to respect
the parties' choice of governing law, such respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public order, or public policy that underlie the
contract central to the controversy.
fi
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fi
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As the present dispute relates to the illegal termination of respondents' employment, the
case at bar is immutably a matter of public interest and public policy. Consistent with clear
pronouncements in law and jurisprudence, Philippine laws properly
govern this case.
nd application in and
Moreover, it follows that Philippine tribunals may properly assume jurisdiction over the
present controversy.
All told, the considerations for assumption of jurisdiction by Philippine tribunals because
rst, all the parties are based in the Philippines and all the material incidents transpired in this
jurisdiction. Thus, the parties may conveniently seek relief from Philippine tribunals.
Second, Philippine tribunals are in a position to make an intelligent decision as to the law
and the facts. And third, Philippine tribunals are in a position to enforce their decisions.
There is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the
contrary, the immense public policy considerations attendant to this case behoove Philippine
tribunals to not shy away from their duty to rule on the case.
fi
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40 of 114
41 of 114
7.) Continental Micronesia v. Joseph Basso
Facts
Continental Micronesia, Inc. (CMI) is a foreign corporation organized and existing under
the laws of and domiciled in the United States of America (US). It is licensed to do business in
the Philippines.
Basso, a US citizen, resided in the Philippines prior to his death.
During his visit to Manila, Mr. Braden, Managing Director-Asia of Continental, offered
Basso the position of General Manager of the Philippine Branch of Continental. Thereafter,
Basso accepted the offer and signed the employment contract and returned it to Mr. Braden as
instructed.
Continental Micronesia, Inc took over the Philippine operations of Continental, with
Basso retaining his position as General Manager. Thereafter, Basso received a letter from (Mr.
Schulz), who was then Continental Micronesia, Inc.’s Vice President of Marketing and Sales,
informing Basso that he has agreed to work in Continental Micronesia, Inc. as a consultant on an
"as needed basis”.
Basso wrote a counter-proposal and a letter addressed to Ms. Woodward, the Human
Resources Department, inquiring about the status of his employment.
Ms. Woodward informed Basso that Continental Micronesia, Inc. rejected his counterproposal and, thus, terminated his employment. Thereafter, Basso led a Complaint for Illegal
Dismissal with Moral and Exemplary Damages against Continental Micronesia, Inc. on
December 19, 1996,.
Alleging the presence of foreign elements, Continental Micronesia, Inc. led a Motion to
Dismiss on the ground of lack of jurisdiction over the person of Continental Micronesia, Inc.
and the subject matter of the controversy.
The Labor Artbiter dismissed the case for lack of merit and jurisdiction.
However, the NLRC did not agree with the pronouncement of the Labor Arbiter that his
of ce has no jurisdiction over the controversy.
Meanwhile, the Court of Appeals denied the petition of Continental. The Court of
Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the subject matter of
the case and over the parties.
Issue
(1) Whether or not the labor tribunals have jurisdiction over the parties and subject matter
of the case?
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(2) Whether or not the Philippine Court is the convenient forum?
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(3) What law should apply in the case at bar?
Ruling
(1) Whether or not the labor tribunals have jurisdiction over the parties and subject matter of the
case? — The Supreme Court ruled in the af rmative.
The judicial resolution of con ict-of-laws problems, three consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Jurisdiction is de ned as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or not the plaintiff is entitled to
recover all or some of the claims or reliefs sought therein.
It cannot be acquired through a waiver or enlarged by the omission of the parties or
conferred by the acquiescence of the court.
The Supreme Court ruled that the fact that the employment contract of Basso was
replete with references to US laws, and that it originated from and was returned to the US, do
not automatically preclude our labor tribunals from exercising jurisdiction to hear and try this
case.
The Supreme Court ruled that this case stemmed from an illegal dismissal complaint.
The Labor Code, under Article 217, clearly vests original and exclusive jurisdiction to hear and
decide cases involving termination disputes to the Labor Arbiter.
Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject matter of the
case.
(2) Whether or not the Philippine Court is the convenient forum? — The Supreme Court
ruled in the af rmative.
Under the doctrine of forum non conveniens, a Philippine court in a con ict-of-laws case
may assume jurisdiction 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.
All these requisites are present here.
The Supreme Court held that Basso may conveniently resort to local labor tribunals as he
and Continental had physical presence in the Philippines during the duration of the trial.
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Continental has a Philippine branch, while Basso, before his death, was residing here.
43 of 114
Therefore, it could be reasonably expected that no extraordinary measures were needed
for the parties to make arrangements in advocating their respective cases.
(3) What law should apply in the case at bar? — The Supreme Court ruled that Philippine
Law is applicable
The choice-of-law issue in a con ict-of-laws case seeks to answer the following important
questions: (1) What legal system should control a given situation where some of the signi cant
facts occurred in two or more states; and (2) to what extent should the chosen legal system
regulate the situation.
These questions are entirely different from the question of jurisdiction that only seeks to
answer whether the courts of a state where the case is initiated have jurisdiction to enter a
judgment. As such, the power to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law.
Is the indication of a "test" or "connecting factor" or "point of contact". Choice-of-law
rules invariably consist of a factual relationship (such as property right, contract claim) and a
connecting fact or point of contact, such as the situs of the res, the place of celebration, the place
of performance, or the place of wrongdoing.
Jurisdiction provides for "test factors," "points of contact" or "connecting factors" in this
case are the following:
(1) The nationality, domicile or residence of Basso; (2) The seat of CMI; (3) The place
where the employment contract has been made, the locus actus; (4) The place where the act is
intended to come into effect, e.g., the place of performance of contractual duties; (5) The
intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis; and (6) The place where judicial or administrative proceedings are instituted or done.
Applying the foregoing in this case, the Supreme Court conclude that Philippine law is
the applicable law.
Basso, though a US citizen, was a resident here from the time he was hired by Continetal
until his death during the pendency of the case.
Continental, while a foreign corporation, has a license to do business in the Philippines
and maintains a branch here, where Basso was hired to work.
The contract of employment was negotiated in the Philippines. A purely consensual
contract, it was also perfected in the Philippines when Basso accepted the terms and conditions
of his employment as offered by Continental.
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The place of performance relative to Basso's contractual duties was in the Philippines.
The alleged prohibited acts of Basso that warranted his dismissal were committed in the
Philippines.
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8.) Philippine National Construction Corporation v. Asiavest Merchant Bankers
Berhad
Facts
PNCC and Asiavest Holdings caused the incorporation of an associate company known
as Asiavest-CDCP, through which they entered into contracts to construct rural roads and bridges
for the State of Pahang, Malaysia.
In connection with this construction contract, PNCC obtained various guarantees and
bonds from Asiavest Merchant Bankers Berhad to guarantee the due performance of its
obligations.
The four contracts of guaranty stipulate that Asiavest Merchant Bankers Berhad shall
guarantee to the State of Pahang "the performance by PNCC of its construction contracts and
the repayment of the temporary advances given to PNCC.
These contracts were understood to be governed by the laws of Malaysia. Thereafter,
there was failure to perform the obligations under the construction contract, prompting the State
of Pahang to demand payment against Asiavest Merchant Bankers (M) Berhad's performance
bonds.
It entered into a compromise agreement with the State of Pahang by paying a reduced
amount. Consequently, the Asiavest Merchant Bankers (M) Berhad demanded indemnity from
PNCC by demanding the amount it paid to the State of Pahang.
Thereafter, Asiavest Merchant Bankers (M) Berhad led a Complaint for recovery of sum
of money against PNCC before the Regional Trial Court of Pasig. It based its action on
Malaysian laws.
The Regional Trial Court rendered judgment in favor of Asiavest Merchant Bankers (M)
Berhad. Meanwhile, the Court of Appeals dismissed PNCC's appeal for raising pure questions of
law exclusively cognizable by this court.
PNCC submits that the trial court could have invoked the principle of forum non
conveniens and refused to take cognizance of the case considering the dif culty in acquiring
jurisdiction over the two Malaysian corporations and in determining PNCC's exact liability.
Issue
(1) Whether our courts have jurisdiction over the subject matter?
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(2) Whether the forum non conveniens principle are applicable in the case at bar?
45 of 114
Ruling
(1) Whether our courts have jurisdiction over the subject matter? (Which is an action for recovery
of sum of money led by a Malaysian corporation against a Philippine corporation involving a
contract executed and performed in Malaysia) — The Supreme Court ruled in the
af rmative.
Jurisdiction over the subject matter is conferred by law. Batas Pambansa Blg. 129 is one
such law that provides for the jurisdiction of our courts.
Section 19 thereof shows that civil actions for payment of sum of money are within the
exclusive original jurisdiction of trial court. These jurisdictional amounts were adjusted to
P300,000.00, and P400,000.00 in the case of Metro Manila.
Thus, the Regional Trial Court of Pasig has jurisdiction over respondent's complaint for
recovery of the sum of Malaysian Ringgit (MYR) 3,915,053.54
(2) Whether the forum non conveniens principle are applicable in the case at bar? — The
Supreme Court in the negative.
PNCC argues that in view of the compelling necessity to implead the two foreign
corporations, the Trial Court should have refused to assume jurisdiction over the case on the
ground of forum non-conveniens, even if the Court might have acquired jurisdiction over the
subject matter and over the person of the petitioner.
The Supreme Court held that Forum non conveniens doctrine applies in con icts of law
cases and gives courts the choice of not assuming jurisdiction when it appears that it is not the
most convenient forum and the parties may seek redress in another one.
It is a device "designed to frustrate illicit means for securing advantages and vexing
litigants that would otherwise be possible if the venue of litigation (or dispute resolution) were left
entirely to the whim of either party."
Jurisprudence, in the case of Puyat v. Zabarte, numerated practical reasons when courts
may refuse to entertain a case even though the exercise of jurisdiction is authorized by law:
1) The belief that the matter can be better tried and decided elsewhere, either because the
main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known as
forum shopping[,] merely to secure procedural advantages or to convey or harass the
defendant;
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3) The unwillingness to extend local judicial facilities to non- residents or aliens when the
docket may already be overcrowded;
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4) The inadequacy of the local judicial machinery for effectuating the right sought to be
maintained; and
5) The dif culty of ascertaining foreign law.
On the other hand, courts may choose to assume jurisdiction subject to the following
requisites: "(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.
The determination of whether to entertain a case is addressed to the sound discretion of
the court, which must carefully consider the facts of the particular case.
Thus, a mere invocation of the doctrine of forum non conveniens or an easy averment
that foreign elements exist cannot operate to automatically divest a court of its jurisdiction. It is
crucial for courts to determine rst if facts were established such that special circumstances exist
to warrant its desistance from assuming jurisdiction.
Moreover, jurisprudence provides that there is a need to raise forum non conveniens at
the earliest possible time, and to show that a prior suit has been brought in another jurisdiction.
In the case at bar, the Supreme Court agreed with the ruling of the Trial Court wherein it
assumed jurisdiction and ruled that it would be more convenient to try the case in the Philippines
because defendant corporation as its principal of ce is located in the Philippines, its records will
be more accessible, witnesses would be readily available and entail less expenses in terms of legal
services.
In the case at bar, PNCC is a domestic corporation with its main of ce in the Philippines.
It is safe to assume that all of its pertinent documents in relation to its business would be available
in its main of ce. Moreover, most of PNCC’s of cers and employees who were involved in the
construction contract in Malaysia could most likely also be found in the Philippines.
fi
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Thus, the Supreme Court held that our courts would be better positioned to enforce the
judgment and, ultimately, to dispense” in this case against PNCC.
9.) Bernardo Zamora v. Emmanuel Quinn, Emmanuel Quinn, Efrem Quinn, and
Emma Rose Quimbo
Facts
Bernardo Zamora led a Complaint for Reconveyance of Title of Real Properties
fraudulently obtained with the Regional Trial Court (RTC) of Cebu City claiming that he is in
possession of the original of the Transfer Certi cate of Titles, against respondents, who earlier
led a Petition for the Issuance of New Duplicate Certi cate of Title, which was granted by the
RTC of Cebu City.
Pending the resolution of Zamora’s complaint, he commenced another action before the
Court of Appeals, Cebu City for the Annulment of Judgment of the RTC of Cebu City, Branch
9, which was dismissed based on technicalities.
Then, again, Bernardo Zamora commenced another civil action before the CA for the
Annulment of Judgment of the RTC of Cebu City, Branch 9.
Thereafter, the RTC of Cebu City, Branch 19 dismissed 1st Civil Case for the complaint
for reconveyance on the ground of forum shopping.
Thereafter, the respondents led with the CA a motion to dismiss the 2nd civil action
before the CA for annulment of judgment of the RTC of Cebu City led by petitioner.
Respondents claiming that petitioner has resorted to forum shopping, which was granted
by the CA.
According to the CA, petitioner committed forum shopping because there is identity of
causes of action, parties and reliefs sought in the action led by him for reconveyance of real
properties instituted before the RTC and the petition for annulment of judgment instituted
before the CA.
Issue
Whether or not petitioner violated the rule against forum shopping
Ruling
The Supreme Court ruled in the af rmative.
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Jurisprudence provides that Forum Shopping is committed by a party who institutes two
or more suits in different courts, either simultaneously or successively, in order to ask the courts to
rule on the same or related causes or to grant the same or substantially the same reliefs, on the
supposition that one or the other court would make a favorable disposition or increase a party's
chances of obtaining a favorable decision or action.
fi
fi
47 of 114
48 of 114
Forum-shopping originated as a concept in private international law, where non-resident
litigants are given the option to choose the forum or place wherein to bring their suit for various
reasons or excuses, including to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue.
To combat these less than honorable excuses, the principle of forum non conveniens was
developed whereby a court, in con icts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded from
seeking remedies elsewhere.
Moreover, jurisprudence provides that a violation of the rule shall constitute contempt of
court and shall be a cause for the summary dismissal of both petitions, without prejudice to the
taking of appropriate action against the counsel or party concerned."
Jurisprudence has recognized that forum shopping can be committed in several ways:
(1) ling multiple cases based on the same cause of action and with the same prayer, the
previous case not having been resolved yet (where the ground for dismissal is litis pendentia);
(2) ling multiple cases based on the same cause of action and the same prayer, the
previous case having been nally resolved (where the ground for dismissal is res judicata); and
(3) ling multiple cases based on the same cause of action but with different prayers
(splitting of causes of action, where the ground for dismissal is also either litis pendentia or res
judicata)
Similarly, it has been recognized that forum shopping exists 4) “where a party attempts to
obtain a preliminary injunction in another court after failing to obtain the same from the original
court."
To determine whether a party violated the rule against forum shopping, the most
important factor to ask is whether the elements of litis pendentia are present, or whether a nal
judgment in one case will amount to res judicata in another; otherwise stated, the test for
determining forum shopping is whether in the two (or more) cases pending, there is identity of
parties, rights or causes of action, and reliefs sought.
For litis pendentia to exist, three (3) requisites must concur:
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The requisites of litis pendentia are: (a) the identity of parties, or at least such as
representing the same interests in both actions; (b) the identity of rights asserted and relief prayed
for, the relief being founded on the same facts; and (c) the identity of the two cases such that
judgment in one, regardless of which party is successful, would amount to res judicata in the
other.
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On the other hand, res judicata or prior judgment bars a subsequent case when the
following requisites are satis ed:
(1) the former judgment is nal; (2) it is rendered by a court having jurisdiction over the
subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there is —
between the rst and the second actions — identity of parties, of subject matter, and of causes of
action.
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In the case at bar, the remedies sought by petitioner in the RTC, as well as in the CA
shows that petitioner has, indeed committed forum shopping. There is identity of causes of
action, parties and reliefs sought in the action he led for the reconveyance of properties before
the RTC and the petition for annulment of judgment led before the CA.
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10.) Western Sales Trading Company, Western Sales Trading Inc. and John Does v.
7D Food International
Facts
Western Sales Trading Company, Inc. (WSTC Guam) is a foreign corporation organized
under the laws of Guam, U.S.A., with Western Sales Trading Company Philippines, Inc. (WSTC
Philippines) as its wholly-owned subsidiary, a corporation duly organized and existing under and
by virtue of the laws of the Philippines. WSTC Guam imports products from the Philippines for
sale and distribution in Guam.
7D Food International, Inc. (7D), on the other hand, is a corporation duly organized and
existing under the laws of the Philippines. It is engaged in the harvesting and processing of dried
mangoes, juices, and candies.
In 2012, 7D led a Complaint for Breach of Contract, Judicial Con rmation of
Rescission, Nullity of Instrument, and Damages (Complaint) against WSTC Guam and WSTC
Philippines (collectively, petitioners) and several John Does.
In the main, 7D alleged that petitioners violated their verbal exclusive distributorship
agreement for the sale and distribution of 7D Mango Products in Guam and Hawaii. 7D further
alleged that WSTC Guam purchased Star Sand Quality dried green mango products from ECJ
Farms, 7D's competitor, and distributed them in Hawaii and Guam
In response, petitioners contended that what WSTC Guam had with 7D was an isolated
written contract for exclusive distributorship in Hawaii for a period of one year from July 2003 to
June 2004.
They also pointed out 7D's failure to disclose the pending cases abroad in its Certi cate
of Non-Forum Shopping. Ultimately, they sought the dismissal of the Complaint under the
principle of forum non conveniens.
The RTC then dismissed the complaint on the grounds of forum shopping and litis
pendentia. According to the RTC, litis pendentia and forum shopping are present in view of the
pendency of the cases involving the distributorship agreement subject of this case before the
Guam and Hawaii courts.
Moreover, the Trial Court ruled that 7D's causes of action in the Complaint are similar to
those that it raised in its answer to the complaint led against it before the Hawaii court, the RTC
held that a judgment in the Hawaii court would constitute res judicata in the instant case or vice
versa.
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The CA reversed the RTC Orders and ordered the remand of the case to the RTC for
the conduct of further proceedings.
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The CA concluded that the unveri ed allegations found in 7D's Complaint and in
petitioners' Answer Ad Cautelam are insuf cient as evidentiary basis to prove the existence and
authenticity of the documents led by the parties in the pending civil suits abroad.
Although petitioners attached the complaints led in the Hawaii and Guam courts by
Western Sales Trading Company Guam, the CA observed that these documents were machine
copies that are inadequate to prove the veracity of the allegation with regard to the pendency of
these actions led abroad on the ground that the documents failed to meet the requirements of
authentication and proof.
The CA also held that the RTC should not abdicate its function of ascertaining factual
controversies in its determination of the existence of the elements of litis pendentia and res
judicata through mere allegations of the parties.
Issue
Whether or not pendency of the foreign cases in Guam and Hawaii constitutes litis
pendentia and forum shopping that would merit the dismissal of 7D's complaint.
Ruling
The Supreme Court ruled in the negative.
The Supreme Court held that the CA correctly ruled that a determination as to whether
a party violated the rule against forum shopping requires a determination of the presence of the
elements of litis pendentia or res judicata which necessarily demands a review of the matters and
incidents taken up in the cases led in the Guam and Hawaii courts, including the foreign
pleadings.
The Supreme Court held before the foreign pleadings could be given evidentiary weight,
petitioners must rst comply with the rules on authentication and proof of documents provided
under the Rules.
It is not enough that the pleadings pertaining to the Guam and Hawaii cases were simply
attached in petitioners' answer.
The Supreme Court is not convinced that authentication could be dispensed with and
that the mere admission of 7D of the existence of the cases in the Guam and Hawaii courts is
suf cient to rule on the presence of litis pendentia and forum shopping.
The determination of the presence of litis pendentia and res judicata which would merit
the outright dismissal of the complaint led before the RTC necessitates a reference to the
pleadings in the foreign courts.
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The issues between the parties cannot be limited to a simple determination of the mere
existence and pendency of the cases led abroad.
Therefore, without proper authentication of the copies of the subject pleadings led
abroad, the Court cannot exhaustively discuss or properly decide on the existence of the elements
of litis pendentia and res judicata in relation to forum shopping.
The due execution and authenticity of the pleadings, and more importantly, the
assertions therein must be proven as a fact, concomitant to the duty of the judge to rest his/her
ndings of facts and judgment only and strictly upon the evidence presented by the parties.
In the case at bar, the RTC failed to give the parties the opportunity to ventilate their
claims and substantiate their allegations as to the pendency of the other civil suits abroad by its
premature dismissal of the complaint.
fi
Petitioners were deprived of the opportunity to authenticate and prove the pleadings led
in the Guam and Hawaii courts in the same way that 7D was not afforded the chance to contest
the contents of these attached pleadings.
fi
fi
52 of 114
53 of 114
11.) Bangladesh Bank v. Rizal Commercial Banking Corp
Facts
Bangladesh Bank (the "Bank") is the central bank of the People's Republic of Bangladesh
and is headquartered in Dhaka, Bangladesh. Since 1973, the Bank has maintained a U.S.
currency account ("New York Fed Account") at the Federal Reserve Bank of New York ("Federal
Reserve"), with an average $1 billion balance. The Bank uses the account to conduct eighty- ve
percent of its international transactions.
By January 2015, North Korean hackers identi ed the Bank as a target. Speci cally, the
hackers began sending spear-phishing emails to Bank employees, which enticed employees to
click on links that installed malware onto Bank computers.
By March 2015, the malware allowed the hackers to access, fraudulently communicate
with and surveil the Bank's computer network, as well as hide their tracks by making their
contact appear authentic and authorized.
On January 29, 2016, six days before the theft, the hackers accessed the Bank's
SWIFTLIVE system, the platform on which the Bank communicates with other banks, including
to transfer funds between banks.
The hackers began executing the theft on Thursday, February 4, 2016, after the close of
business in Bangladesh.
The North Korean Hackers chose this date to minimize monitoring in Bangladesh and
the Philippines: in Bangladesh, the work week runs from Sunday through Thursday and
businesses are closed on Friday and Saturday.
In the Philippines, it was a long holiday weekend and businesses were closed from
Saturday through Monday. From 8:55 p.m. through 1:00 A.M. Bangladesh time, the hackers
issued 70 fraudulent payment orders from the Bank's SWIFT platform, to transfer nearly $1
billion out of the New York Fed Account. Four of the payment orders, totaling $81 million, were
fully executed.
RCBC is one of the largest banks in the Philippines and is headquartered in the Manila
metropolitan area. The hackers' payment orders directed the stolen funds be routed through
RCBC correspondent accounts in the United States and then to RCBC accounts in the
Philippines.
Because RCBC does not have a New York Fed account, to which funds could be
transferred directly, stopovers at local correspondent accounts were necessary. The funds passed
through four correspondent accounts, three of which are located at banks in New York City and
the fourth at a bank in Philadelphia.
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Eventually, $81 million dollars reached the Philippines, passing through bank accounts at
Defendant RCBC and through casinos operated by Bloomberry and Eastern Hawaii.
54 of 114
Bangladesh Bank alleges that Rizal Commercial Banking Corp have violated both state
law and the Racketeer In uenced and Corrupt Organizations Act ("RICO")
Issue
Whether the complaint should be dismissed for Forum Non Conveniens
Ruling
The Court ruled in the negative.
Plaintiff's choice of forum is accorded deference. While Defendant has identi ed the
Philippines as an adequate alternative forum, the private interest factors are neutral and the
public interest factors weigh toward Plaintiff's forum, Given that these three considerations favor
Plaintiff on balance, dismissal under the forum non conveniens doctrine is unwarranted.
Although the General Rule is that "the choice of a United States forum by a foreign
plaintiff is entitled to less deference" compared to when a plaintiff sues in its home forum, this
submits an exception in cases where "it appears that a domestic or foreign plaintiff's choice of
forum has been dictated by reasons that the law recognizes as valid" , such as when the lawsuit
has a "bona de connection to the United States and to the forum of choice.”
The obvious bona de connection to the Southern District is that the theft took place
within the jurisdiction of said court. The theft targeted a major U.S. institution located in New
York City, the Federal Reserve. Critical evidence of the fraudulent payment orders, the
movement of the stolen funds into correspondent accounts and the movement out of those
accounts abroad exists in or close to this district.
Three of the four correspondent accounts are in New York City and one is located nearby
in Philadelphia. Federal Reserve Senior Vice President Anne Baum attests in a declaration that
the Federal Reserve and the Bank have entered into a formal agreement, whereby the Federal
Reserve will "provide technical assistance to Bangladesh Bank in its litigation.”
Defendant argues that Plaintiff's choice of the Southern District should not be accorded
deference because Plaintiff is forum shopping, in order to avail itself of the "possibility of RICO
treble damages.". Defendant's forum shopping argument is rejected. It is based on speculation
and insuf cient to undermine deference to Plaintiff's forum.
Defendant has carried its burden of establishing that the Philippines is an adequate
alternative forum.
"An alternative forum is adequate if the defendants are amenable to service of process
there, and if it permits litigation of the subject matter of the dispute.”
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Defendants argue that they are amenable to service in the Philippines since almost all
Defendants are Philippine residents or corporations, thus facilitating service in the Philippines.
Thus, the Philippines is also an adequate forum based on the second factor.
55 of 114
IV. Choice of Law
1.) Kazuhiro Hasegawa and Nippon Engineering Consultants v. Minoru Kitamura
Facts
Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy rm
providing technical support in infrastructure projects of foreign governments, entered into an
Independent Contractor Agreement (ICA) with Minoru Kitamura, a Japanese national
permanently residing in the Philippines.
The agreement provides that Kitamura was to extend professional services to Nippon.
Thereafter, Nippon then assigned Kitamura to work as the project manager of the Southern
Tagalog Access Road (STAR) Project in the Philippines.
When the STAR Project was near completion, DPWH engaged the services of Nippon,,
for the supervision of the Bongabon-Baler Road Improvement Project. Kitamura was then
named as the project manager.
Nippon's general manager, Kazuhiro Hasegawa, informed Kitamura that the company
had no intention of renewing his contract and his services would be engaged by the company
only up to the substantial completion of the STAR Project.
Respondent was threatened with unemployment, he sought for a negotiation which
Nippon refused. Thus, Kitamura led an action for speci c performance and damages with the
RTC of Lipa City.
Petitioners argue that the agreement had been perfected in Japan and executed by and
between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction.
They asserted that the claim for improper pre-termination of respondent's ICA could
only be heard and ventilated in the proper courts of Japan following the principles of lex loci
celebrationis and lex contractus.
RTC denied the motion to dismiss reasoning that matters connected with the
performance of contracts are regulated by the law prevailing at the place of performance.
Issue
Whether the petitioner can invoke the principles of Lex Loci Celebrationis, Lex
Contractus, The State of The Most Signi cant Relationship Rule to assail the jurisdiction of the
Philippine Courts in Civil Cases involving contracts executed outside the Philippines by Foreign
Nationals?
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Ruling
The Supreme Court ruled in the negative.
56 of 114
The judicial resolution of con icts problems involves three consecutive phases: (1)
jurisdiction, (2) choice of law, and (3) recognition and enforcement of judgments.
Corresponding to these phases are the following questions: (1) Jurisdiction — Where can
or should litigation be initiated? (2) Choice of Law — Which law will the court apply? and (3)
Recognition and enforcement of judgments — Where can the resulting judgment be enforced?
In this case the Supreme Court distinguished Jurisdiction from Choice of Law.
Jurisdiction considers whether it is fair to cause a defendant to travel to this state.
Meanwhile, 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. Thus, 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 the case at bar, the case was only in its rst phase — which deals with jurisdiction.
The principles of Lex Loci Celebrationis, Lex Contractus, The State of The Most
Signi cant Relationship Rule make reference to the law applicable to a case/dispute, these are
rules that are proper for the second phase — the choice of law.
Such principles determine which state's law is to be applied in resolving the substantive
issues of a con icts problem. Necessarily, since the only issue in the case at bar is of jurisdiction,
choice-of-law rules are not only inapplicable but also not yet called for.
Therefore, the invocation of these grounds unsound.
In the case at bar, the petitioners' premature invocation of choice-of-law rules is exposed
or shown by the fact that they have not yet pointed out any con ict between the laws of Japan
and the Philippines.
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The Supreme Court held that before determining which law should apply, rst there
should exist a con ict of laws situation requiring the application of the con ict of laws rules.
Furthermore, when the law of a foreign country is invoked to provide the proper rules for the
solution of a case, the existence of such law must be pleaded and proved.
57 of 114
2.) Continental Micronesia v. Joseph Basso
Facts
Continental Micronesia, Inc. (CMI) is a foreign corporation organized and existing under
the laws of and domiciled in the United States of America (US). It is licensed to do business in
the Philippines.
Basso, a US citizen, resided in the Philippines prior to his death.
During his visit to Manila, Mr. Braden, Managing Director-Asia of Continental, offered
Basso the position of General Manager of the Philippine Branch of Continental. Thereafter,
Basso accepted the offer and signed the employment contract and returned it to Mr. Braden as
instructed.
Continental Micronesia, Inc took over the Philippine operations of Continental, with
Basso retaining his position as General Manager. Thereafter, Basso received a letter from (Mr.
Schulz), who was then Continental Micronesia, Inc.’s Vice President of Marketing and Sales,
informing Basso that he has agreed to work in Continental Micronesia, Inc. as a consultant on an
"as needed basis”.
Basso wrote a counter-proposal and a letter addressed to Ms. Woodward, the Human
Resources Department, inquiring about the status of his employment.
Ms. Woodward informed Basso that Continental Micronesia, Inc. rejected his counterproposal and, thus, terminated his employment. Thereafter, Basso led a Complaint for Illegal
Dismissal with Moral and Exemplary Damages against Continental Micronesia, Inc. on
December 19, 1996,.
Alleging the presence of foreign elements, Continental Micronesia, Inc. led a Motion to
Dismiss on the ground of lack of jurisdiction over the person of Continental Micronesia, Inc.
and the subject matter of the controversy.
The Labor Artbiter dismissed the case for lack of merit and jurisdiction.
However, the NLRC did not agree with the pronouncement of the Labor Arbiter that his
of ce has no jurisdiction over the controversy.
Meanwhile, the Court of Appeals denied the petition of Continental. The Court of
Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the subject matter of
the case and over the parties.
Issue
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(1) Whether or not the labor tribunals have jurisdiction over the parties and subject matter
of the case?
58 of 114
(2) Whether or not the Philippine Court is the convenient forum?
(3) What law should apply in the case at bar?
Ruling
(1) Whether or not the labor tribunals have jurisdiction over the parties and subject matter of the
case? — The Supreme Court ruled in the af rmative.
The judicial resolution of con ict-of-laws problems, three consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Jurisdiction is de ned as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or not the plaintiff is entitled to
recover all or some of the claims or reliefs sought therein.
It cannot be acquired through a waiver or enlarged by the omission of the parties or
conferred by the acquiescence of the court.
The Supreme Court ruled that the fact that the employment contract of Basso was
replete with references to US laws, and that it originated from and was returned to the US, do
not automatically preclude our labor tribunals from exercising jurisdiction to hear and try this
case.
The Supreme Court ruled that this case stemmed from an illegal dismissal complaint.
The Labor Code, under Article 217, clearly vests original and exclusive jurisdiction to hear and
decide cases involving termination disputes to the Labor Arbiter.
Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject matter of the
case.
(2) Whether or not the Philippine Court is the convenient forum? — The Supreme Court
ruled in the af rmative.
Under the doctrine of forum non conveniens, a Philippine court in a con ict-of-laws case
may assume jurisdiction 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.
All these requisites are present here.
The Supreme Court held that Basso may conveniently resort to local labor tribunals as he
and Continental had physical presence in the Philippines during the duration of the trial.
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Continental has a Philippine branch, while Basso, before his death, was residing here.
59 of 114
Therefore, it could be reasonably expected that no extraordinary measures were needed
for the parties to make arrangements in advocating their respective cases.
(3) What law should apply in the case at bar? — The Supreme Court ruled that Philippine
Law is applicable
The choice-of-law issue in a con ict-of-laws case seeks to answer the following important
questions: (1) What legal system should control a given situation where some of the signi cant
facts occurred in two or more states; and (2) to what extent should the chosen legal system
regulate the situation.
These questions are entirely different from the question of jurisdiction that only seeks to
answer whether the courts of a state where the case is initiated have jurisdiction to enter a
judgment. As such, the power to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law.
Is the indication of a "test" or "connecting factor" or "point of contact". Choice-of-law
rules invariably consist of a factual relationship (such as property right, contract claim) and a
connecting fact or point of contact, such as the situs of the res, the place of celebration, the place
of performance, or the place of wrongdoing.
Jurisdiction provides for "test factors," "points of contact" or "connecting factors" in this
case are the following:
(1) The nationality, domicile or residence of Basso; (2) The seat of CMI; (3) The place
where the employment contract has been made, the locus actus; (4) The place where the act is
intended to come into effect, e.g., the place of performance of contractual duties; (5) The
intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis; and (6) The place where judicial or administrative proceedings are instituted or done.
Applying the foregoing in this case, the Supreme Court conclude that Philippine law is
the applicable law.
Basso, though a US citizen, was a resident here from the time he was hired by Continetal
until his death during the pendency of the case. On the other hand, Continental, while a foreign
corporation, has a license to do business in the Philippines and maintains a branch here, where
Basso was hired to work.
The contract of employment was negotiated in the Philippines. A purely consensual
contract, it was also perfected in the Philippines when Basso accepted the terms and conditions
of his employment as offered by Continental.
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The place of performance relative to Basso's contractual duties was in the Philippines.
The alleged prohibited acts of Basso that warranted his dismissal were committed in the
Philippines.
60 of 114
3.) Raytheon International, Inc. v. Stockton Rouzie
Facts
Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under the
laws of the State of Connecticut, United States of America.
Meanwhile, Stockton W. Rouzie, Jr., an American citizen, entered into a contract
whereby Brand Marine Services hired Stockton as its representative to negotiate the sale of
services in several government projects in the Philippines for an agreed remuneration of 10% of
the gross receipts.
Thereafter, Stockton secured a service contract with the Republic of the Philippines on
behalf of Brand Marine for the dredging of rivers affected by the Mt. Pinatubo eruption and
mud ows.
Thereafter, Stockton led before the Arbitration Branch of the National Labor Relations
Commission a suit against Brand Marine Services and Rust International, Inc. (RUST), Rodney
C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal termination
and breach of employment contract.
The Labor Arbiter rendered judgment ordering Brand Marine Services and Rust
International to pay Stockton’s money claims.
Upon appeal by Brand Marine Services, the NLRC reversed the decision of the Labor
Arbiter and dismissed Stockton’s complaint on the ground of lack of jurisdiction. Thereafter, the
Resolution became nal and executory.
A few months later, Stockton Rouzie, a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union.
The Complaint was docked as a Civil Case and imploded Raytheon International, Inc.
as, Brand Marine Services and RUST, the two corporations impleaded in the earlier labor case as
the defendants.
The complaint essentially reiterated the allegations in the labor case that Brand Marine
Services verbally employed Stockton to negotiate the sale of services in government projects and
that he was not paid the commissions due him from the Pinatubo dredging project which he
secured on behalf of BMSI.
The complaint also averred that Brand Marine Services and RUST as well as Raytheon
itself had combined and functioned as one company.
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Raytheon International sought the dismissal of the complaint on grounds of failure to
state a cause of action and forum non conveniens and prayed for damages by way of compulsory
counterclaim.
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Moreover, Raytheon International also referred to the NLRC decision which disclosed
that the written agreement between Stockton and BMSI and RUST, denominated as “Special
Sales Representative Agreement,” that the rights and obligations of the parties shall be governed
by the laws of the State of Connecticut.
The RTC held that the principle of forum non conveniens was inapplicable because the
trial court could enforce judgment on petitioner, it being a foreign corporation licensed to do
business in the Philippines.
Meanwhile, the Court of Appeals denied the petition for certiorari of the petitioner for
lack of merit.
Issue
Whether or not the Philippine Court can acquire jurisdiction over the case despite a
stipulation that the contract shall be governed by a foreign law?
Ruling
The Supreme Court ruled in the af rmative.
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law and by the material allegations in the complaint, irrespective of whether
or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.
The Civil Case led is an action for damages arising from an alleged breach of contract.
Undoubtedly, the nature of the action and the amount of damages prayed are within the
jurisdiction of the RTC.
The subject contract included a stipulation that the same shall be governed by the laws of
the State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal
for that matter, are precluded from hearing the civil action.
Jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to travel to this state;
Meanwhile, the 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.
Under the doctrine of forum non conveniens, a court, in con icts-of- laws cases, may
refuse impositions on its jurisdiction where it is not the most "convenient" or available forum and
the parties are not precluded from seeking remedies elsewhere,
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Petitioner’s averments of the foreign elements in the case at bar are not suf cient to oust
the trial court of its jurisdiction over Civil Case and the parties involved.
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Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a matter of
defense.
While it is within the discretion of the trial court to abstain from assuming jurisdiction on
this ground, it should do so only after vital facts are established, to determine whether special
circumstances require the court's desistance.
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Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign elements.
In the same manner, the Supreme Court defers to the sound discretion of the lower courts
because their ndings are binding on the Supreme Court.
63 of 114
3.) Saudi Arabian Airlines v. Milagros Morada and Court of Appeals
Facts
SAUDIA hired Milagros Morada as a Flight Attendant for its airlines based in Jeddah,
Saudi Arabia.
While on a lay-over in Jakarta, Indonesia, Milagros Morada went to a disco with her
fellow crew members Thamer and Allah, both Saudi nationals. Because it was almost morning
when they returned to their hotels, they agreed to have breakfast at the room of Thamer. When
they were in the room, Allah left.
Shortly after, Thamer attempted to rape Milagros. Fortunately, a security personnel heard
her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and
Allah.
Thereafter, Milagros learned that Indonesian authorities agreed to deport Thamer and
Allah. Thereafter, Chief Legal Of cer of SAUDIA brought her to the police station where the
police took her passport and questioned her about the Jakarta incident and also pressured her to
drop the case against Thamer and Allah.
One year and a half later, Khaled Al-Balawi, the country manager of SAUDIA, brought
Milagros to a Saudi Court and was tricked to a sign a document to appear before the court and
she was then sentenced to imprisonment 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.
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against
her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, she was
terminated from the service by SAUDIA, without her being informed of the cause.
Thereafter, , Morada led a Complaint for damages against SAUDIA, and Khaled AlBalawi, its country manager.
Petitioner led a motion to dismiss which raised the following grounds, to wit: (1) that the
Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real
party in interest; (3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the
case.
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The Trial Court denied the motion to dismiss.
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SAUDIA claims that before us is a con ict of laws that must be settled at the outset. It
maintains that private respondent's claim for alleged abuse of rights occurred in the Kingdom of
Saudi Arabia.
It alleges that the existence of a foreign element quali es the instant case for the
application of the law of the Kingdom of Saudi Arabia, by virtue of the Lex Loci Delicti
Commissi rule.
Issue
(1) Whether or not RTC has jurisdiction to try the civil case?
(2) Whether or not the Philippine Law should govern the case at bar?
Ruling
(1) Whether or not RTC has jurisdiction to try the civil case? - The Supreme Court ruled in
the af rmative.
In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a ight
stewardess, events did transpire during her many occasions of travel across national borders,
particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a
"con icts" situation to arise.
Respondent predicated her cause of action on Articles 19 and 21 of the New Civil Code.
Although Article 19 merely declares a principle of law, Article 21 gives esh to its provisions. The
Supreme Court agreed with Milagros’ assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal forum.
In the case at bar, SAUDIA has
Morada's Amended Complaint.
led several motions praying for the dismissal of
SAUDIA prayed for other reliefs under the premises. Undeniably, SAUDIA has
effectively submitted to the trial court's jurisdiction by praying for the dismissal of the Amended
Complaint on grounds other than lack of jurisdiction.
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Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we nd that the trial court has jurisdiction over the case and that its exercise
thereof, justi ed.LibLex
65 of 114
(2) Whether or not the Philippine Law should govern the case at bar? -The Supreme Court
ruled in the af rmative.
A Choice-of-Law problems seek to answer two important questions: (1) What legal system
should control a given situation where some of the signi cant facts occurred in two or more
states; and (2) to what extent should the chosen legal system regulate the situation.
The Supreme Court explained that before a choice can be made, it is necessary for the
Court to determine under what category a certain set of facts or rules fall. This process is known
as "characterization", or the "doctrine of quali cation”.
It is the "process of deciding whether or not the facts relate to the kind of question
speci ed in a con icts rule.” The purpose of "characterization" is to enable the forum to select
the proper law.
The Supreme Court explained that that the starting point of analysis of the Court is not
a legal relation, but a factual situation, event, or operative fact. An essential element of con ict
rules is the indication of a "test" or "connecting factor" or "point of contact".
These "test factors" or "points of contact" or "connecting factors" could be any of the
following:
"(1) The nationality of a person, his
domicile, his residence, his place of sojourn,
or his origin;
(2) The seat of a legal or juridical
person, such as a corporation;
(3) The situs of a thing, that is, the
place where a thing is, or is deemed to be
situated. In particular, the lex situs is decisive
when real rights are involved;
(4) The place where an act has
been done, the locus actus The lex loci
actus is particularly important in
contracts and torts
(5) The place where an act is intended
to come into effect, e.g., the place of
performance of contractual duties, or the
place where a power of attorney is to be
exercised;
(6) The intention of the contracting
parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) The place where judicial or
administrative proceedings are instituted or
done.2
(8) The ag of a ship
2
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The lex fori — the law of the forum — is particularly important because, as we have seen earlier, matters of
'procedure' not going to the substance of the claim involved are governed by it; and because the lex fori applies
whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the
reason that it falls under one of the exceptions to the applications of foreign law,
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The Supreme Court held that considering that the complaint is one involving torts, the
"connecting factor" or "point of contact" could be the place or places where the tortious conduct
or lex loci actus occurred.
Applying the torts principle in a con icts case, the Supreme Court nds that the
Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took
place).
This is because it is in the Philippines where SAUDIA allegedly deceived Milagros, a
Filipina residing and working in the Philippines. There is reasonable basis for Milagros’ assertion
that although she was already working in Manila, SAUDIA brought her to Jeddah on the
pretense that she would merely testify in an investigation of the charges she made against the two
crew members for the attack on her person while they were in Jakarta. As it turned out, she was
the one made to face trial for very serious charges for violation of Islamic laws.
Moreover, the Supreme Court also applied the “State of the most signi cant
relationship”.
To determine the State which has the most signi cant relationship, the following contacts
are to be taken into account and evaluated according to their relative importance with respect to
the particular issue: (a) the place where the injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any, between the
parties is centered.
The Supreme Court held that here is basis for the claim that over-all injury occurred and
lodged in the Philippines.
In the case at bar, Milagros is a resident Filipina national, working with SAUDIA, a
resident foreign corporation engaged in the business of international air carriage in the
Philippines. Thus, the "relationship" between the parties was centered here in the Philippines,
although it should be stressed that this suit is not based on mere labor law violations.
From the record, the claim that the Philippines has the most signi cant contact with the
matter in this dispute, raised by Milagros as plaintiff below against SAUDIA has been properly
established.
Thus, the Supreme Court held that the Philippines is the situs of the tort complained of
and the place "having the most interest in the problem”.
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Thus, the Supreme Court held that the Philippine law on torts should have paramount
application to and control in the resolution of the legal issues arising out of the case at bar.
5.) Dale Strickland v. Ernst and Young LLP
Facts
Srtrickland led a case (collection of sum of money) against Ernst & Young LLP (EYLLP)
but RTC ordered that EYLLP be dropped as a defendance in the Civil Case No. 05-692, and
referred their dispute to arbitration. The same fate happened to the case against Punongbayan &
Araullo (PA).
National Home Mortgage Finance Corp and PA entered into a Financial Advisory
Services Agreement (FASA) for the liquidation of NHMFC Uni ed Home Lending Program
(UHLP). During this time, PA was the Philippine member of the global company, EYLLP.
Strickland was a partner of EYLLP who was listed as member of the Engagement Team.
PA wrote a letter to Strickland to formalize the working relationship between EY/APFS
and PA/EYLLP. However, EYLLP wrote PA termination of their membership to EYLLP, but
they continued their working relationship. Strickland was even sent to Manila as partner. PA sent
to NHMFC its intention to remove Strickland as a result of Strickland’s resignation from EYLLP.
EYLLP sent Mark Grinis to replace Strickland. NHMFC intended to retain Strickland with the
UHLP Project so it negotiated the working arrangement of Strickland, but no actual written and
nal agreement came about.
PA intiated mutual voluntary termination of NHMFC Agreement. In the talk, the parties
agreed that Strickland will continue its participation in the project. However, PA objected to
Strckland’s proposal on the compensation. But Strickland still demanded for equitable
compensation from EYLLP as the project reaches its closing. PA denied that there was a
contractual relationship with Strickland. EYLLP led for a motion to refer to arbitration.
RTC held that the dispute between the parties covers domestic arbitral proceedings and
cannot be categorized as a commercial dispute of an international character since the dispute
arose from their professional and service relationship and does not cover matters arising from a
relationship of a commercial nature or commercial intercourse that would qualify as commercial.
The agreement has also no reasonable relationship with one or more foreign states.
It appearing therefore that the arbitral clause in question is inoperative or incapable of
being performed in this jurisdiction referral to arbitration in the United States pursuant to the
arbitration clause is uncalled for.
This was set aside by CA. Strickland fought the decision of RTC and CA to remand the
case to arbitration because the Partnership Agreement containing the arbitration clause was
never proven by respondents.
Issue
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Whether or not the arbitration clause in the Partnership Agreement may be applied?
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67 of 114
68 of 114
Ruling
The Supreme Court ruled in the af rmative.
Despite the failure to prove application of foreign law, it still falls under international
commercial arbitration applying processual presumption.
Plainly, considering that the arbitration clause is in itself a contract, the setting forth of its
provisions in EYLLP's answer and in its motion to refer to arbitration, coupled with the actual
submission by EYLLP of the Partnership Agreement, complies with the requirements of Section
7, Rule 8 of the Rules of Court which Strickland should have speci cally denied.
The Supreme Court note that while the cases before us have a foreign element involving
foreign parties and international transactions, the parties do not question the jurisdiction of our
courts to hear and decide the case. The parties quibble only on whether the dispute between
Strickland and EYLLP should be referred to arbitration despite Strickland's alleged causes of
action based on tortious conduct of the parties in refusing to compensate him for services
rendered. Moreover, in relation to the other defendants, speci cally respondent PA, the issue
pertains to the suspension of the proceedings in Civil Case No. 05-692 pending resolution of the
arbitration between Strickland and EYLLP.
The Supreme Court have consistently af rmed that commercial relationships covered by
our arbitration laws are purely private and contractual in nature. Article 1306 of the Civil Code
provides for autonomy of contracts where the parties are free to stipulate on such terms and
conditions except for those which go against law, morals, and public policy. In our jurisdiction,
commercial arbitration is a purely private system of adjudication facilitated by private citizens
which we have consistently recognized as valid, binding, and enforceable.
Thus, the Supreme Court agreed with the CA's ruling on the nature of the contract
between Strickland and EYLLP, and its application of our commercial arbitration laws to this
case:
x x x "[T]he International Law doctrine of presumed-identity approach o r
processual presumption comes into play. Where a foreign law is not pleaded, or, even if
pleaded, is not proved, the presumption is that foreign law is the same as ours.”
In this jurisdiction, one of the laws governing arbitration is the [Alternative
Dispute Resolution (ADR)] Act. Under this statute, international commercial arbitration
shall be governed by the Model Law on International Commercial Arbitration ("Model
Law") adopted by the United Nations Commission on International Trade Law.
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Meanwhile, domestic arbitration is governed by the Arbitration Law as amended
by the ADR Act. To determine the applicable law here, the nature of the arbitration
sought to be undertaken must be looked at. The ADR Act de nes domestic arbitration
negatively by stating that it is one that is not international as de ned in the Model Law
69 of 114
a.) Traditional Approach
1. Vested Right Theory
1.) Elserce Gray v. Frank Gray
Facts
Elserce Gray led an action in New Hampshire for damages arising out of personal
injuries against Frank M. Gray, her husband.
She alleges that the injuries were caused by her husband while driving from their home in
New Hampshire to Maine where the accident happened.
In Maine, spouses are barred from maintaining an action against each other. However, no
such prohibition exists in New Hampshire.
Issue
What law should govern between Lex Loci (the law of which the tort or transaction is
committed) and Lex Fori (the law of the court in which a proceeding is brought)
Ruling
The Court ruled that Lex Loci should govern.
If there is a con ict between the lex loci and the lex fori, the former governs in torts the
same as in contracts, in respect to the legal effect and incidents of acts.
Therefore, the law in Maine should be applied.
Elserce Gray argues that the act complained of was a delict and the only reason a
recovery could not be had in Maine is because of the spousal relation of the parties. It is argued
by Elserce Gray that since the parties are residents of New Hampshire, where spousal incapacity
to sue has been abolished, she argues that the complaint for acts done in Maine may be brought
into the state of New Hampshire.
According to the Court, the argument fails to distinguish between status and the incidents
which local law attaches to the status. The parties are husband and wife and that status also
applies with them into Maine.
But the incidents of that married status are those prescribed by the law of the place
where transactions take place.
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The Court ruled that the act of Frank Gray’s is a delict which is govern by lex loci — the
law of which the tort or transaction is committed. Thus, such act would have been actionable if it
was committed in New Hampshire.
70 of 114
However, since the incident happened in Maine and because of the married relation of
the parties in the case at bar, the law in Maine states that there is no cause of action in the special
instance because Maine laws bar spouses from maintaining an action against each other.
Moreover, American Jurisprudence provides that a wife, as guest passenger in an
automobile, remains as a wife after crossing the state line and the recovery for injuries caused by
ordinary negligence depends upon which side of the state line the accident occurred.
Therefore, Elserce Gray’s action fails because not merely that there is a prohibition of suit
but there is no cause of action at the place (Maine) where the acts complained of were done.
There has been no breach of legal duty.
71 of 114
2.) Alabama Great Southern Railroad. Co. v. Carroll
Facts
The plaintiff is W. D. Carroll, a brakeman of the Alabama Great Southern Railroad
Company and was a citizen of Alabama.
Meanwhile, the defendant is Alabama Great Southern Railroad is an Alabama
corporation, operating a railroad extending from the state of Tennessee, through Alabama to
Meridian, in the state of Mississippi.
W.D Carroll, at the time of the injury complained, was in the service of the Alabama
Great Southern in the capacity of brakeman on freight trains running from Birmingham to
Mississippi, under a contract which was made in the state of Alabama.
The injury was caused by the breaking of a link between two cars in a freight train. The
the injury was suffered was in the state of Mississippi. The defect the link resulted from its being
bent while cold and cracked the link.
It was alleged that it was duty of other employees of Alabama Great Southern Railroad
stationed along its line to inspect the links attached to cars to be put in trains and also that it was
the duty of the conductor of freight trains and the other train-men to maintain such inspection
as occasion afforded throughout the runs or trips of such trains.
According to W. D. Carroll there was a negligent omission on the part of such employees
to perform this duty. Thus, W. D. Carroll argues that the Alabama Great Southern Railroad
being an Alabama corporation that an action may be maintained in Alabama to recover
damages for an injury sustained in Mississippi if the facts present a good cause of action under
the law of that State.
Under Alabama law, an employer is responsible for its misperformance or nonperformance whereby injury results to one of his employees under the doctrine of the commonlaw and wholly irrespective of statutory provisions.
However, Alabama Great Southern Railroad argues that the only negligence which nds
support by direction is that of persons whose duty it was to inspect the links of the train, and
remove such as were defective and replace them with others which were not defective.
fi
This was the negligence not of the Alabama Great Southern Railroad, but of fellowemployees of W.D Carroll and under Mississippi law, they are not liable.
72 of 114
Issue
1. Whether or not the common law in Alabama of the Master- servant relationship with regard
to liability will apply to this case?
2. Whether or not the fact the the negligence that caused the injury occurred in Alabama lead to
the conclusion that the laws of Alabama should take effect, speci cally damages under Art 2590
of the Code?
3. Whether or not the fact that the laws of Alabama are integrated into the contract of
employment of the plaintiff and respondent?
Ruling
1.) Whether or not the common law in Alabama of the Master- servant relationship with regard
to liability will apply to this case? — The Court ruled in the negative.
This being the common-law applicable to the premises as understood and declared in
Alabama, it will be presumed in our courts as thus declared to be the common-law of Mississippi,
unless the evidence shows a different rule to have been announced by the Supreme Court of the
State as being the common-law thereof. The evidence adduced here fails to show any such thing;
but to the contrary it is made to appear from the testimony of Judge Arnold and by the decisions
of the Supreme Court of Mississippi which were introduced on the trial below that that court is
in full accord with this one in this respect.
Citing N. 0. J. & G. N. R. R. Co. v. Hughes, 49 Miss. 258, a section foreman and trainman are fellow-servants in respect of the negligence of the former unknown to the company in
failing to keep the track in repair, and that an engineer on a passing train who was injured in
consequence could not recover against common employer and the doctrine of this case is said by
Mr. McKinney to be substantially the rule recognized by the English common-law decisions.
The Court declared that plaintiff has shown no cause of action under the common- law
as it is understood and applied both in Alabama and in Mississippi. It is, however, further
contended that the plaintiff, if his evidence be believed, has made out a case for the recovery
sought under the Employer's Liability Act of Alabama, it being clearly shown that there is no
such, or similar law of force in the State of Mississippi.
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Common law provides that there can be no recovery in one State for injuries to the
person sustained in another unless the in iction of the injuries is actionable under the law of the
State in which they were received. Certainly this is the well established rule of law subject in
some jurisdictions to the quali cation that the in iction of the injuries would also support an
action in the State where the suit is brought, had they been received within that State.
73 of 114
2. Whether or not the fact the the negligence that caused the injury occurred in Alabama lead to
the conclusion that the laws of Alabama should take effect, speci cally damages under Art 2590
of the Code? — The Supreme Court ruled in the negative.
It is admitted, or at least cannot be denied, that negligence of duty unproductive of
damnifying results will not authorize or support a recovery. Up to the time train passed out of
Alabama no injury had resulted. For all that occurred in Alabama, therefore, no cause of action
whatever arose. The face which created the right to sue, the injury without which confessedly no
action would lie anywhere, transpired in the State of Mississippi.
It was in that State, therefore, necessarily that the cause of action, if any, arose; and
whether a cause of action arose and existed at all or not must in all reason be determined by the
law which obtained at the time and place when and where the fact which is relied on to justify a
recovery transpired. Section 2590 of the Code of Alabama had no ef ciency beyond the lines of
Alabama.
It cannot be allowed to operate upon facts occurring in another State so as to evolve out
of them rights and liabilities which do not exist under the law of that State which is of course
paramount in the premises.
These latter facts-of citizenship and domicile respectively of plaintiff and defendant-are
of no importance in this connection, it seems to us, further than this: they may tend to show that
the contract was made here, which is not controverted, and if the plaintiff has a cause of action
at all, he, by reason of them, may prosecute it in our courts.
They have no bearing on the primary question of existence of a caust of action, and as
that is the question before us, we need not further advert to the fact of plaintiff's citizenship
3. Whether or not the fact that the laws of Alabama are integrated into the contract of
employment of the plaintiff and respondent? — The Supreme Court ruled in the
negative.
The only of ce of the contract, under section 2590 of the Code, is the establishment of a
relation between them, that of master and servant; and it is upon that relation, that incident or
consequence of the contract, and not upon the rights of the parties under the contract, that our
statute operates.
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The law is not concerned with the contractual stipulations, except in so far as to
determine from them that the relation upon which it is to operate exists. Finding this relation the
statute imposes certain duties and liabilities on the parties to it wholly regardless of the
stipulations of the contract as to the rights of the parties under it, and, it may be, in the teeth of
such stipulations.
74 of 114
b.) Modern Approaches
1. Place of the Most Signi cant Relationship/Grouping of Contracts
1.) Auten v. Auten
Facts
Margarite Auten (plaintiff) and Harold Auten (defendant) were married in England in
1917 and lived there until 1931 with their children.
Thereafter, Harold abandoned Margarite, obtained a divorce in Mexico without her
involvement, proceeded to "marry" another woman and ultimately moved to New York.
Margarite came to New York and entered into a separation agreement with Harold.
Under the agreement, Harold had to pay 50 pounds a month through a New York trustee
for the support of his wife and the children. It was also agreed upon that the parties had to live
separately. Moreover, it was also agreed that neither should sue "in any action relating to their
separation" and that the wife should not "cause any complaint to be lodged against husband, in
any jurisdiction, by reason of the said alleged divorce or remarriage.
After the separation agreement was executed, Margarite returned to England, where she
continued to live with the children. After Margarite’s return to England, Harold stopped making
payments.
Margarite led an action in England seeking legal separation on the ground of adultery.
Although Mr. Auten was served with process, the case never went to trial and Mrs. Auten
received nothing.
Thereafter, the present action was brought in New York to enforce the separation
agreement. The husband admitted to making the agreement but argued that the wife's institution
of the English separation proceeding was in violation of the said agreement and thus, his
obligation was extinguished.
The lower court ruled in favor of Harold Auten, applying New York Law.
Issue
Whether or not the English law applies in this case and not the US Law.
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Ruling
The Supreme Court ruled in the af rmative.
75 of 114
While most cases, as a general rule, rely upon the rule that "All matters upon the
execution, the interpretation and the validity of contracts are determined by the law of the place
where the contract is made", while "All matters connected with its performance are regulated by
the law of the place where the contract, by its terms, is to be performed."
However other decisions have resorted to a method — rst employed to rationalize the
results achieved by the courts in decided cases — which is called the "center of gravity" or the
"grouping of contacts" theory of the con ict of laws.
Under this theory, the courts, instead of regarding as conclusive the parties' intention or
the place of making or performance, lay emphasis upon the law of the place "which has the most
signi cant contacts with the matter in dispute".
Although this "grouping of contacts" theory may, perhaps, afford less certainty and
predictability than the rigid general rules, the merit of its approach is that it gives to the place
"having the most interest in the problem" paramount control over the legal issues arising out of a
particular factual context, thus allowing the (court) forum to apply the policy of the jurisdiction
"most intimately concerned with the outcome of a particular litigation.
Moreover, by stressing the signi cant contacts, it enables the court, not only to re ect the
relative interests of the several jurisdictions involved but also to give effect to the probable
intention of the parties and consideration to "whether one rule or the other produces the best
practical result”.
In the case at bar, the Court ruled that it is English law which must be applied to
determine the impact and effect to be given the wife's institution of the separation suit.
According to the Court New York’s sole nexus/connection with the matter in dispute is
that it is the place where the agreement was made and where the trustee, to whom the moneys
were in the rst instance to be paid.
In the case at bar, the agreement effected a separation between British subjects, who had
been married in England, had children there and lived there as a family for fourteen years.
It involved a husband who had willfully deserted and abandoned his wife and children in
England and was in the United States, when the agreement was signed, merely on a temporary
visa.
Moreover, it concerned an English wife who came to this country at that time because it
was the only way she could see her husband to discuss their differences. The sole purpose of
Margarite trip to New York was to get Harold to agree to the support of his family, and she
returned to England immediately after the agreement was executed.
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While the money were to be paid through the medium of a New York trustee, such
payments were "for account of" the wife and children, who lived in England.
The agreement also provides that payment was in English currency and provides that the
rst payment should be made to Margarite "immediately before sailing for England", but it
speci es that the husband may visit the children "if he should go to England".
Therefore, the Court concluded that the agreement determined and xed the marital
responsibilities of an English husband and father and provided for the support and maintenance
of the allegedly abandoned wife and children who were to remain in England.
There is no question that England has the greatest concern in prescribing and governing
those obligations, and in securing to the wife and children essential support and maintenance.
And the paramount interest of that country is not affected by the fact that the parties separate
and provide for such support by a voluntary agreement.
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It is still England, as the jurisdiction of marital domicile and the place where the wife and
children were to be, that has the greatest concern in de ning and regulating the rights and duties
existing under that agreement, and, speci cally, in determining the circumstances that effect a
termination or repudiation of the agreement.
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76 of 114
77 of 114
2.) Haag v. Barnes
Facts
This paternity proceeding was instituted pursuant to Sec. 64 of the New York City
Criminal Courts Act. The complaint was dismissed on motion on the ground that a contract
previously entered into between the parties in Illinois was a bar to this proceeding. Complainant
appeals from such determination.
The complainant Dorothy Haag alleges that in 1974 she moved from Minnesota and took
up residence in New York City and that since then she has been a resident of New York. The
defendant Norman Barnes, on the other hand, is a resident of Illinois.
According to the statements complain in Haag’s af davits, she met Barnes in the spring
of 1974 in New York. She was a law secretary and had been hired by Barnes to work for him
while he was in New York.
The relationship resulted to a child and upon knowledge of Barnes, the latter asked her to
move to Illinois to be near him. She refused, and instead went to live in California with her sister
to await the birth of her child.
However, she returned to Chicago, Illinois before the child was born and upon attempting
to communicate with Barnes, she was referred to his attorney. The baby was born in a hospital in
Chicago and the expenses were paid by Barnes. Shortly after the birth of the child, Haag
attempts to see Barnes in New York but failed and was advised to return to Illinois in order than
an agreement might be m,ade for the support aof her and her child.
The agreement provides for the child’s support, that Haag releases Barnes from all
manner of actions, and that their agreement “shall in respects be interpreted, construed and
governed by the laws of the State of Illinois.”
Shortly after the agreement was signed, Haag lived in California for 2 years then returned
to New York where she and her child have ever been supported by Barnes with sums in express
of their agreement. This present proceeding was instituted and Barnes was thereafter arrested
pursuant to Section 64 of the New York Criminal Courts Act.
A motion was made by Barnes to dismiss the proceeding and was granted by the Court of
Special Sessions and the resulting order was af rmed by the Appellate Division.
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Barnes urged for the dismissal on the grounds that the parties entered into an agreement
providing for the support which has been fully performed, the agreement relinquished the right
to bring any action for the support of the child, and any action is precluded by the laws of the
State of Illinois which the parties expressly agreed.
78 of 114
Haag contended that the laws of New York would apply and not Illinois, that the
agreement in question is not a suf cient basis for a motion to dismiss under wither Section 63 of
the New York City Criminal Courts Act or Section 121 of the Domestic Relations Law since
both of these provisions provide that, “an agreement to compromise made by the mother shall be
binding only when the court shall have determined that adequate provision has been made, and
that even were the Illinois law to apply, it does not bar the present proceeding.
Issue
Whether the law of New York or of Illinois applies?
Ruling
The Court ruled that the law of Illinois applies
Haag may not upset a support agreement which is itself perfectly consistent with the
public policy of New York, which was entered into in Illinois with the understanding that it
would be governed by the laws of Illinois and which constates a bar to a suit for further support
under Illinois law.
The traditional view was that the law governing a contract is to be determined by the
intention of the parties.
However, the more modern view is that, “the court, instead of regarding as conclusive the
parties’ intention or the place of making or performance, lay emphasis rather upon the law of
the place ‘which has the most signi cant contacts with the matter in dispute’”. Whichever of
these views one applies in this case, however the answer is the same, namely that Illinois law
applies.
The agreement, in so many words, recites that it "shall in all respects be interpreted,
construed and governed by the laws of the State of Illinois" and, since it was also drawn and
signed by Haag in Illinois, the traditional con icts rule would treat these factors as conclusive and
result in applying Illinois law.
But, even if the parties' intention and the place of the making of the contract are not
given decisive effect, they are nevertheless to be given heavy weight in determining which
jurisdiction "`has the most signi cant contacts with the matter in dispute'".
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When these important factors are taken together with other of the "signi cant contacts"
in the case, they likewise point to Illinois law.
79 of 114
Among these other Illinois contacts are the following:
(1) both parties are designated in the agreement as being "of Chicago, Illinois", and
Barnes’ place of business is and always has been in Illinois;
(2) the child was born in Illinois;
(3) the persons designated to act as agents for the principals (except for a third alternate)
are Illinois residents, as are the attorneys for both parties who drew the agreement; and
(4) all contributions for support always have been, and still are being, made from Chicago.
fi
Contrasted with these Illinois contacts, the New York contacts are of far less weight and
signi cance. Chief among these is the fact that child and mother presently live in New York and
that part of the "liaison" took place in New York.
80 of 114
3.) Continental Microasia
Facts
Continental Micronesia, Inc. (CMI) is a foreign corporation organized and existing under
the laws of and domiciled in the United States of America (US). It is licensed to do business in
the Philippines.
Basso, a US citizen, resided in the Philippines prior to his death.
During his visit to Manila, Mr. Braden, Managing Director-Asia of Continental, offered
Basso the position of General Manager of the Philippine Branch of Continental. Thereafter,
Basso accepted the offer and signed the employment contract and returned it to Mr. Braden as
instructed.
Continental Micronesia, Inc took over the Philippine operations of Continental, with
Basso retaining his position as General Manager. Thereafter, Basso received a letter from (Mr.
Schulz), who was then Continental Micronesia, Inc.’s Vice President of Marketing and Sales,
informing Basso that he has agreed to work in Continental Micronesia, Inc. as a consultant on an
"as needed basis”.
Basso wrote a counter-proposal and a letter addressed to Ms. Woodward, the Human
Resources Department, inquiring about the status of his employment.
Ms. Woodward informed Basso that Continental Micronesia, Inc. rejected his counterproposal and, thus, terminated his employment. Thereafter, Basso led a Complaint for Illegal
Dismissal with Moral and Exemplary Damages against Continental Micronesia, Inc. on
December 19, 1996,.
Alleging the presence of foreign elements, Continental Micronesia, Inc. led a Motion to
Dismiss on the ground of lack of jurisdiction over the person of Continental Micronesia, Inc.
and the subject matter of the controversy.
The Labor Artbiter dismissed the case for lack of merit and jurisdiction.
However, the NLRC did not agree with the pronouncement of the Labor Arbiter that his
of ce has no jurisdiction over the controversy.
Meanwhile, the Court of Appeals denied the petition of Continental. The Court of
Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the subject matter of
the case and over the parties.
Issue
(1) Whether or not the labor tribunals have jurisdiction over the parties and subject matter
of the case?
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(2) Whether or not the Philippine Court is the convenient forum?
81 of 114
(3) What law should apply in the case at bar?
Ruling
(1) Whether or not the labor tribunals have jurisdiction over the parties and subject matter of the
case? — The Supreme Court ruled in the af rmative.
The judicial resolution of con ict-of-laws problems, three consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Jurisdiction is de ned as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or not the plaintiff is entitled to
recover all or some of the claims or reliefs sought therein.
It cannot be acquired through a waiver or enlarged by the omission of the parties or
conferred by the acquiescence of the court.
The Supreme Court ruled that the fact that the employment contract of Basso was
replete with references to US laws, and that it originated from and was returned to the US, do
not automatically preclude our labor tribunals from exercising jurisdiction to hear and try this
case.
The Supreme Court ruled that this case stemmed from an illegal dismissal complaint.
The Labor Code, under Article 217, clearly vests original and exclusive jurisdiction to hear and
decide cases involving termination disputes to the Labor Arbiter.
Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject matter of the
case.
(2) Whether or not the Philippine Court is the convenient forum? — The Supreme Court
ruled in the af rmative.
Under the doctrine of forum non conveniens, a Philippine court in a con ict-of-laws case
may assume jurisdiction 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.
All these requisites are present here.
The Supreme Court held that Basso may conveniently resort to local labor tribunals as he
and Continental had physical presence in the Philippines during the duration of the trial.
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Continental has a Philippine branch, while Basso, before his death, was residing here.
82 of 114
Therefore, it could be reasonably expected that no extraordinary measures were needed
for the parties to make arrangements in advocating their respective cases.
(3) What law should apply in the case at bar? — The Supreme Court ruled that Philippine
Law is applicable
The choice-of-law issue in a con ict-of-laws case seeks to answer the following important
questions: (1) What legal system should control a given situation where some of the signi cant
facts occurred in two or more states; and (2) to what extent should the chosen legal system
regulate the situation.
These questions are entirely different from the question of jurisdiction that only seeks to
answer whether the courts of a state where the case is initiated have jurisdiction to enter a
judgment. As such, the power to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law.
Is the indication of a "test" or "connecting factor" or "point of contact". Choice-of-law
rules invariably consist of a factual relationship (such as property right, contract claim) and a
connecting fact or point of contact, such as the situs of the res, the place of celebration, the place
of performance, or the place of wrongdoing.
Jurisdiction provides for "test factors," "points of contact" or "connecting factors" in this
case are the following:
(1) The nationality, domicile or residence of Basso; (2) The seat of CMI; (3) The place
where the employment contract has been made, the locus actus; (4) The place where the act is
intended to come into effect, e.g., the place of performance of contractual duties; (5) The
intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis; and (6) The place where judicial or administrative proceedings are instituted or done.
Applying the foregoing in this case, the Supreme Court conclude that Philippine law is
the applicable law.
Basso, though a US citizen, was a resident here from the time he was hired by Continetal
until his death during the pendency of the case.
Continental, while a foreign corporation, has a license to do business in the Philippines
and maintains a branch here, where Basso was hired to work.
The contract of employment was negotiated in the Philippines. A purely consensual
contract, it was also perfected in the Philippines when Basso accepted the terms and conditions
of his employment as offered by Continental.
fi
fl
The place of performance relative to Basso's contractual duties was in the Philippines.
The alleged prohibited acts of Basso that warranted his dismissal were committed in the
Philippines.
83 of 114
4.) Saudi Arabian Airlines v. Court of Appeals
Facts
SAUDIA hired Milagros Morada as a Flight Attendant for its airlines based in Jeddah,
Saudi Arabia.
While on a lay-over in Jakarta, Indonesia, Milagros Morada went to a disco with her
fellow crew members Thamer and Allah, both Saudi nationals. Because it was almost morning
when they returned to their hotels, they agreed to have breakfast at the room of Thamer. When
they were in the room, Allah left.
Shortly after, Thamer attempted to rape Milagros. Fortunately, a security personnel heard
her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and
Allah.
Thereafter, Milagros learned that Indonesian authorities agreed to deport Thamer and
Allah. Thereafter, Chief Legal Of cer of SAUDIA brought her to the police station where the
police took her passport and questioned her about the Jakarta incident and also pressured her to
drop the case against Thamer and Allah.
One year and a half later, Khaled Al-Balawi, the country manager of SAUDIA, brought
Milagros to a Saudi Court and was tricked to a sign a document to appear before the court and
she was then sentenced to imprisonment 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.
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against
her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, she was
terminated from the service by SAUDIA, without her being informed of the cause.
Thereafter, , Morada led a Complaint for damages against SAUDIA, and Khaled AlBalawi, its country manager.
Petitioner led a motion to dismiss which raised the following grounds, to wit: (1) that the
Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real
party in interest; (3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the
case.
fi
fi
fi
The Trial Court denied the motion to dismiss.
84 of 114
SAUDIA claims that before us is a con ict of laws that must be settled at the outset. It
maintains that private respondent's claim for alleged abuse of rights occurred in the Kingdom of
Saudi Arabia.
It alleges that the existence of a foreign element quali es the instant case for the
application of the law of the Kingdom of Saudi Arabia, by virtue of the Lex Loci Delicti
Commissi rule.
Issue
(1) Whether or not RTC has jurisdiction to try the civil case?
(2) Whether or not the Philippine Law should govern the case at bar?
Ruling
(1) Whether or not RTC has jurisdiction to try the civil case? - The Supreme Court ruled in
the af rmative.
In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a ight
stewardess, events did transpire during her many occasions of travel across national borders,
particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a
"con icts" situation to arise.
Respondent predicated her cause of action on Articles 19 and 21 of the New Civil Code.
Although Article 19 merely declares a principle of law, Article 21 gives esh to its provisions. The
Supreme Court agreed with Milagros’ assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal forum.
In the case at bar, SAUDIA has
Morada's Amended Complaint.
led several motions praying for the dismissal of
SAUDIA prayed for other reliefs under the premises. Undeniably, SAUDIA has
effectively submitted to the trial court's jurisdiction by praying for the dismissal of the Amended
Complaint on grounds other than lack of jurisdiction.
fl
fl
fi
fl
fi
fi
fi
fi
fl
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we nd that the trial court has jurisdiction over the case and that its exercise
thereof, justi ed.LibLex
85 of 114
(2) Whether or not the Philippine Law should govern the case at bar? -The Supreme Court
ruled in the af rmative.
A Choice-of-Law problems seek to answer two important questions: (1) What legal system
should control a given situation where some of the signi cant facts occurred in two or more
states; and (2) to what extent should the chosen legal system regulate the situation.
The Supreme Court explained that before a choice can be made, it is necessary for the
Court to determine under what category a certain set of facts or rules fall. This process is known
as "characterization", or the "doctrine of quali cation”.
It is the "process of deciding whether or not the facts relate to the kind of question
speci ed in a con icts rule.” The purpose of "characterization" is to enable the forum to select
the proper law.
The Supreme Court explained that that the starting point of analysis of the Court is not
a legal relation, but a factual situation, event, or operative fact. An essential element of con ict
rules is the indication of a "test" or "connecting factor" or "point of contact".
These "test factors" or "points of contact" or "connecting factors" could be any of the
following:
"(1) The nationality of a person, his
domicile, his residence, his place of sojourn,
or his origin;
(2) The seat of a legal or juridical
person, such as a corporation;
(3) The situs of a thing, that is, the
place where a thing is, or is deemed to be
situated. In particular, the lex situs is decisive
when real rights are involved;
(4) The place where an act has
been done, the locus actus The lex loci
actus is particularly important in
contracts and torts
(5) The place where an act is intended
to come into effect, e.g., the place of
performance of contractual duties, or the
place where a power of attorney is to be
exercised;
(6) The intention of the contracting
parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) The place where judicial or
administrative proceedings are instituted or
done.3
(8) The ag of a ship
3
fl
fi
fi
fl
fi
fl
fi
The lex fori — the law of the forum — is particularly important because, as we have seen earlier, matters of
'procedure' not going to the substance of the claim involved are governed by it; and because the lex fori applies
whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the
reason that it falls under one of the exceptions to the applications of foreign law,
86 of 114
The Supreme Court held that considering that the complaint is one involving torts, the
"connecting factor" or "point of contact" could be the place or places where the tortious conduct
or lex loci actus occurred.
Applying the torts principle in a con icts case, the Supreme Court nds that the
Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took
place).
This is because it is in the Philippines where SAUDIA allegedly deceived Milagros, a
Filipina residing and working in the Philippines. There is reasonable basis for Milagros’ assertion
that although she was already working in Manila, SAUDIA brought her to Jeddah on the
pretense that she would merely testify in an investigation of the charges she made against the two
crew members for the attack on her person while they were in Jakarta. As it turned out, she was
the one made to face trial for very serious charges for violation of Islamic laws.
Moreover, the Supreme Court also applied the “State of the most signi cant
relationship”.
To determine the State which has the most signi cant relationship, the following contacts
are to be taken into account and evaluated according to their relative importance with respect to
the particular issue: (a) the place where the injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any, between the
parties is centered.
The Supreme Court held that here is basis for the claim that over-all injury occurred and
lodged in the Philippines.
In the case at bar, Milagros is a resident Filipina national, working with SAUDIA, a
resident foreign corporation engaged in the business of international air carriage in the
Philippines. Thus, the "relationship" between the parties was centered here in the Philippines,
although it should be stressed that this suit is not based on mere labor law violations.
From the record, the claim that the Philippines has the most signi cant contact with the
matter in this dispute, raised by Milagros as plaintiff below against SAUDIA has been properly
established.
Thus, the Supreme Court held that the Philippines is the situs of the tort complained of
and the place "having the most interest in the problem”.
fi
fi
fi
fi
fl
Thus, the Supreme Court held that the Philippine law on torts should have paramount
application to and control in the resolution of the legal issues arising out of the case at bar.
87 of 114
2. Interest Analysis
1.) Babcock v. Jackson
Facts
On Friday, September 16, 1960, Petitioner Georgia Babcock and her friends, respondents
Mr. and Mrs. William Jackson, all residents of Rochester, left that city in Mr. Jackson's
automobile, for a week-end trip to Canada. As Mr. Jackson was driving in the Province of
Ontario, he lost control of the car; went off the highway into an adjacent stone wall, and Miss
Babcock was seriously injured. Upon her return to this New York State, she brought the present
action against William Jackson, alleging negligence on his part in operating his automobile.
At the time of the accident, there was a law in force in Ontario providing that "the owner
or driver of a motor vehicle, other than a vehicle operated in the business of carrying passengers
for compensation, is not liable for any loss or damage resulting from bodily injury to, or the death
of any person being carried in the motor vehicle,”
Even though no such bar is recognized under New York’s substantive law of torts, the
Jacksons moved to dismiss the complaint on the ground that the law of the place where the
accident occurred governs and that Ontario's guest statute bars recovery.
The court at Special Term, agreeing with the Jacksons, granted the motion and the
Appellate Division, af rmed the judgment of dismissal without opinion.
Issue
Whether the law of the place of residence of the victims (New York) be applied, or,
should the law of the place of the tort (Ontario) be applied?
Ruling
The Court ruled in the New York Law should be applied.
The traditional choice of law rule has been that the substantive rights and liabilities
arising out of a tortious occurrence are determinable by the law of the place of the tort. Its
foundation is found in the vested rights doctrine, that a right to recover for a foreign tort owes its
creation to the law of the jurisdiction where the injury occurred and depends for its existence and
extent solely on such law.
The drawback of the vested rights theory as applied to torts, is that it ignores the interest
which jurisdictions other than that where the tort occurred may have in the resolution of
particular issues.
fi
fi
fi
It is for this very reason that has led to the trend towards its abandonment or modi cation
because it fails to take account of underlying policy considerations in evaluating the signi cance
to be ascribed to the circumstance that an act had a foreign situs in determining the rights and
liabilities which arise out of that act.
88 of 114
Signi cantly, it was dissatisfaction with "the mechanical formulae of the con icts of law"
which led to judicial departure from similarly in exible choice of law rules in the eld of
contracts, grounded, like the torts rule, on the vested rights doctrine.
Under the traditional rules, matters bearing upon the execution, interpretation and
validity of a contract were determinable by the internal law of the place where the contract was
made. On the other hand, matters connected with their performance were regulated by the
internal law of the place where the contract was to be performed.
However, in Auten v. Auten, the court abandoned such rules and applied what has been
termed the "center of gravity" or "grouping of contacts" theory of the con ict of laws.
Under the center of gravity theory, the courts, instead of regarding as conclusive the
parties' intention or the place of making or performance, lay emphasis rather upon the law of the
place which has the most signi cant contacts with the matter in dispute.
Realization of the unjust and anomalous results which may ensue from application of the
traditional rule in tort cases has also prompted judicial search for a more satisfactory alternative
in that area.
This is since modern conditions make it unjust and anomalous to subject the traveling
citizen of this State to the varying laws of other States through and over which they move. Courts
should if possible provide protection for our own State's people against unfair and anachronistic
treatment of the lawsuits which result from these disasters.
The same judicial disposition is also re ected workmen's compensation, tortious
occurrences arising out of a contract, issues affecting the survival of a tort right of action,
interfamilial immunity from tort, and situations involving a form of statutory liability. The
similarity is covered by two aspects: (1) by one rationale or another, they rejected the inexorable
application of the law of the place of the tort where that place has no reasonable or relevant
interest in the particular issue involved; and, (2) the courts, after examining the particular
circumstances presented, applied the law of some jurisdiction other than the place of the tort
because it had a more compelling interest in the application of its law to the legal issue involved.
Thus, the "center of gravity" or "grouping of contacts" doctrine affords the appropriate
approach for accommodating the competing interests in tort cases with multi-State contacts.
Justice, fairness and "the best practical result" may best be achieved by giving controlling
effect to the law of the jurisdiction which, because of its relationship or contact with the
occurrence or the parties, has the greatest concern with the speci c issue raised in the litigation.
fi
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fi
fl
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fi
fi
The merit of such a rule is that "it gives to the place `having the most interest in the
problem' paramount control over the legal issues arising out of a particular factual context" and
thereby allows the forum to apply "the policy of the jurisdiction `most intimately concerned with
the outcome of the particular litigation.'"
89 of 114
Such, indeed, is the approach adopted in the most recent revision of the Con ict of Laws
Restatement in the eld of torts.
According to the principles there set out, "The local law of the state which has the most
signi cant relationship with the occurrence and with the parties determines their rights and
liabilities in tort", and the relative importance of the relationships or contacts of the respective
jurisdictions is to be evaluated in the light of "the issues, the character of the tort and the relevant
purposes of the tort rules involved".
Applying the center of gravity theory in the case at bar, it is the concern of State of New
York which is unquestionably the greater and more direct and that the interest of Ontario.
In the case at bar, the action involves injuries sustained by a New York guest as the result
of the negligence of a New York host in the operation of an automobile, garaged, licensed and
undoubtedly insured in New York, in the course of a week-end journey which began and was to
end there.
It is New York, the place where the parties resided, where their guest-host relationship
arose and where the trip began and was to end, rather than Ontario, the place of the fortuitous
occurrence of the accident, which has the dominant contacts and the superior claim for
application of its law.
Although the rightness or wrongness of defendant's conduct may depend upon the law of
the particular jurisdiction through which the automobile passes, the rights and liabilities of the
parties which stem from their guest-host relationship should remain constant and not vary and
shift as the automobile proceeds from place to place.
Although the traditional rule has in the past been applied by this court in giving
controlling effect to the guest statute of the foreign jurisdiction in which the accident occurred,
reconsideration of the in exible traditional rule persuades us, as already indicated, that, in failing
to take into account essential policy considerations and objectives, its application may lead to
unjust and anomalous results. This being so, the rule, formulated as it was by the courts, should
be discarded.
In conclusion, then, there is no reason why all issues arising out of a tort claim must be
resolved by reference to the law of the same jurisdiction.
fl
fl
fi
fi
Where the issue involves standards of conduct, it is more than likely that it is the law of
the place of the tort which will be controlling but the disposition of other issues must turn, as
does the issue of the standard of conduct itself, on the law of the jurisdiction which has the
strongest interest in the resolution of the particular issue presented.
90 of 114
2.) Pitzer College v. Indian Harbor Insurance
Facts
Pitzer College is one of the Claremont Colleges in Southern California. The Claremont
University Consortium is an umbrella entity that enters into insurance contracts on behalf of the
Claremont Colleges.
Claremont University Consortium purchased an insurance policy from Indian Harbor
Insurance Company to cover Pitzer College for remediation expenses caused by pollution-related
damage. Under the policy, it provides that New York law governs any issues arising under the said
policy.
The Insurance Policy contained a provision requiring Pitzer College to provide Indian
Harbor with notice of any condition requiring remediation and also contained a consent
provision stating that Indian Harbor would not cover any expenses Pitzer College incurred for
remediation without rst obtaining Indian Harbor's consent.
The consent provision included an exception for emergencies, but required Pitzer College
to notify Indian Harbor "immediately thereafter" it incurred any emergency expenses.
Pitzer College discovered darkened soils at the construction site for a new dormitory on
campus. With pressure to complete the dormitory prior to the start of the academic year, Pitzer
College secured one of two Transportable Treatment Units located in Southern California to
remediate the soils. The remediation treatment was successful with a cost of nearly $2 million.
Pitzer College did not inform Indian Harbor of the remediation until approximately
three months after it completed remediation and six months after it discovered the darked soils.
Nor did Pitzer College obtain Indian Harbor's consent before commencing remediation or
paying remediation costs.
Because of this, Indian Harbor denied coverage on the basis of Pitzer College’s late
notice and its failure to obtain Indian Harbor's consent.
As a result, Pitzer College sued Indian Harbor in Los Angeles County Superior Court,
alleging that the insurer breached the Policy by failing to indemnify Pitzer for the remediation
costs.
On the other hand, Indian Harbor removed the case to federal court on the basis of
diversity jurisdiction and moved for summary judgment, claiming that it had no obligation to
indemnify Pitzer College for remediation costs because Pitzer College had violated the Policy's
notice and consent provisions
fi
fi
The district court applied New York law, nding that Pitzer College failed to establish that
the California notice-prejudice rule was a fundamental public policy that overrode the Policy's
choice of law provision.
91 of 114
Further, the court mentioned that New York Insurance law applies a notice-prejudice rule
to insurance policies issued or delivered in New York, policies issued and delivered outside New
York [as in this case] are subject to a strict no-prejudice rule under New York common law, which
denies coverage where timely notice is not provided
The district court also concluded that summary judgment was separately warranted
because Pitzer College failed to comply with the Policy's consent provision. The district court
further concluded that Pitzer's remediation work did not fall within the emergency exception, but
that, even if it did, Pitzer was not entitled to rely on the exception because it failed to
"immediately thereafter" notify Indian Harbor of the emergency.
Pitzer College argues that the notice-prejudice rule is a fundamental public policy while
Indian Harbor argues that the notice-prejudice rule is not a fundamental public policy of
California.
Issue
Whether or not the New York law should be applied in this case?
Ruling
The Court ruled in the af rmative.
The Supreme Court cited section 187 of the Restatement Second of Con ict of Laws
wherein the parties' choice of law generally governs unless (1) it con icts with a state's
fundamental public policy, and (2) that state has a materially greater interest in the determination
of the issue than the contractually chosen state
Under Restatement section 187, subdivision (2) is for the court rst to determine either:
(1) whether the chosen state has a substantial relationship to the parties or their transaction, or (2)
whether there is any other reasonable basis for the parties' choice of law.
If neither of these tests is met, that is the end of the inquiry, and the court need not
enforce the parties' choice of law. However, if either test is met, the court must next determine
whether the chosen state's law is contrary to a fundamental policy of California
If there is no such con ict, the court shall enforce the parties' choice of law. However, if
there is a fundamental con ict with California law, the court must then determine whether
California has a 'materially greater interest than the chosen state in the determination of the
particular issue.
If California has a materially greater interest than the chosen state, the choice of law shall
not be enforced.
fl
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fi
fi
fl
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Thus, if Pitzer can establish "both that the chosen law is contrary to a fundamental policy
of California and that California has a materially greater interest in the determination of the
particular issue," then the court will not enforce the provision.
92 of 114
Prejudice is a question of fact on which the insurer has the burden of proof and the
insured's delay does not itself satisfy the burden of proof. The Court held that the insured's delay
does not itself satisfy the burden of proof.
It must show " a substantial likelihood that, with timely notice, and notwithstanding a
denial of coverage or reservation of rights, it would have settled the claim for less or taken steps
that would have reduced or eliminated the insured's liability.
In other words, the insurer must show that timely notice would have enabled it to achieve
a better result in the underlying third party action.
The Court concluded that California's notice-prejudice rule is a fundamental public
policy of California. The rule is based on the rationale that the essential part of the contract is
insurance coverage, not the procedure for determining liability, and that " the notice requirement
serves to protect insurers from prejudice, not to shield them from their contractual obligations'
through 'a technical escape-hatch.
fi
fi
fi
Thus, as a matter of rst impression, notice-prejudice rule is fundamental rule of public
policy affecting enforceability of choice of law provision and as a matter of rst impression, the
rule applies to provisions in rst party insurance policies requiring insured to obtain insurer's
consent.
93 of 114
3.) Bienvenido Cadalin et al v. Philippine Overseas Employee Agency, Brown &
Root International, and Asia International Builders Corporation
Facts
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the Supreme Court
for Certiorari.
On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on behalf of
728 other OFWs instituted a class suit by ling a Complaint with the POEA for illegal dismissal
and money claims arising from their recruitment by ASIA INTERNATIONAL BUILDERS
CORPORATION (AIBC), a domestic corporation licensed as a service contractor to recruit,
mobilize and deploy Filipino workers for overseas employment on behalf of its foreign principals,
and employment by BROWN & ROOT INTERNATIONAL, INC (BRI) which is a foreign
corporation with headquarters in Houston, Texas, and is engaged in construction.
Cadalin et. al. were recruited by AIBC and employed by BRII to work in several
countries. Some of the petitioners were deployed to work in Bahrain. They were prematurely
terminated from their work and upon their return to the Philippines, they instituted the said class
suit.
Meanwhile, Bahrain had a law governing prescription of actions. Article 156 of the Amiri
Decree No. 23 provided that “claims arising out of a contract of employment shall not be
actionable after the lapse of 1 year from the date of the expiry of the contract.”
Thereafter, numerous motions were led, new complainants joined the case, and
numerous remedies were availed by both parties
The POEA Administrator ruled that the prescriptive period for the ling of claims was 10
years. Meanwhile, NLRC reversed the ruling of the POEA Administrator and held that the
prescriptive period for the ling of claims was 3 years as provided under the Labor Code.
Issue
Whether or not Amiri Decree No. 23 could be applied in our jurisdiction –
Ruling
The Supreme Court ruled in the negative.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's
public policy. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as
regards the claims in question would contravene the public policy on the protection to labor.
fi
fi
fi
fi
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized
that:The state shall promote social justice in all phases of national development. (Sec. 10)
94 of 114
The state af rms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare. (Sec. 18)
In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
SEC. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
As a general rule, a foreign procedural law will not be applied in the forum (local court).
Procedural matters, such as service of process, joinder of actions, period and requisites for
appeal, and so forth, are governed by the laws of the forum. This is true even if the action is
based upon a foreign substantive law.
A law on prescription of actions is sui generis in Con ict of Laws in the sense that it may
be viewed either as procedural or substantive, depending on the characterization given such a
law.
In Bournias v. Atlantic Maritime Company, where the issue was the applicability of the
Panama Labor Code in a case led in the State of New York for claims arising from said Code,
the claims would have prescribed under the Panamanian Law but not under the Statute of
Limitations of New York.
The U.S. Circuit Court of Appeals held that the Panamanian Law was procedural as it
was not "speci cally intended to be substantive," hence, the prescriptive period provided in the
law of the forum should apply. The Court observed: " ... we are dealing with a statute of
limitations of a foreign country, and it is not clear on the face of the statute that its purpose was
to limit the enforceability, outside as well as within the foreign country concerned, of the
substantive rights to which the statute pertains. We think tat as a yardstick for determining
whether that was the purpose, this test is the most satisfactory one.
The American court applied the statute of limitations of New York, instead of the
Panamanian law, after nding that there was no showing that the Panamanian law on
prescription was intended to be substantive. Being considered merely a procedural law even in
Panama, it has to give way to the law of the forum (local Court) on prescription of actions.
fl
fi
fi
fi
fi
However the characterization of a statute into a procedural or substantive law becomes
irrelevant when the country of the forum (local Court) has a "borrowing statute." Said statute has
the practical effect of treating the foreign statute of limitation as one of substance. A "borrowing
statute" directs the state of the forum (local Court) to apply the foreign statute of limitations to
the pending claims based on a foreign law. While there are several kinds of "borrowing statutes,"
one form provides that an action barred by the laws of the place where it accrued will not be
enforced in the form even though the local statute was not run against it.
95 of 114
Section 48 of the 1901 Code of Civil Procedure (Act 190) is of this kind. It prides:
"If by the laws of the state or country where the cause of action arose, the action is
barred, it is also barred in the Philippine Islands." Section 48 has not been repealed or amended
by the Civil Code of the Philippines.
In the light of the 1987 Constitution, however, Section 48 cannot be enforced insofar as it
ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum (local Court) will not enforce any foreign claim obnoxious to the
forum's public policy. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of
1976 as regards the claims in question would contravene the public policy on the protection to
labor.
96 of 114
4.) Banks of America v. American Realty Corporation
Facts
Bank of America is an international banking and nancing institution duly licensed to do
business in the Philippines, organized and existing under and by virtue of the laws of the State of
California, United States of America.
On the other hand, American Realty Corporation is a domestic corporation.
Bank of America on several occasions granted major multi-million United States (US)
Dollar loans to (1) Liberian Transport Navigation, S.A.; (2) El Challenger S.A. and (3) Eshley
Compania Naviera S.A., all of which are existing under and by virtue of the laws of the
Republic of Panama and are foreign af liates of American Realty Corporation.
Due to the default in the payment of the loan amortizations, Bank of America and the
borrowers signed and entered into restructuring agreements. As additional security for the
restructured loans, American Realty Corporation as third party mortgagor executed two real
estate mortgages over its parcel of land in Bulacan.
Thereafter, the borrowers defaulted in the payment of the restructured loans prompting
Bank of America to le civil actions before foreign courts for the collection of the principal loan,
At the same time, Bank of America led before the Of ce of the Provincial Sheriff of Bulacan,
Philippines, an application for extrajudicial foreclosure of real estate mortgage.
the mortgaged real properties were sold at public auction in an extrajudicial foreclosure
sale, with Integrated Credit and Corporation Services Co. (ICCS) as the highest bidder for the
sum of Twenty Four Million Pesos.
Thereafter, American Realty Corporation led before the Pasig Regional Trial Court an
action for damages against the Bank of America, for the latter's act of foreclosing extrajudicially
the real estate mortgages despite the pendency of civil suits before foreign courts for the
collection of the principal loan.
Bank of America argues that the rule prohibiting the mortgagee from foreclosing the
mortgage after an ordinary suit for collection has been led, is not applicable in the present case
because under English Law, which is the governing law under the principal agreements, the
mortgagee does not lose its security interest by ling civil actions for sums of money.
fi
fi
fi
fi
fi
fi
fi
fi
fi
The Trial Court ruled in favor of American Realty Corporation. Meanwhile, Court of
Appeals af rmed the assailed decision of the lower court.
Issue
(1) Whether mortgage-creditor waive its remedy to foreclose the real estate mortgage
constituted over a third party mortgagor's property situated in the Philippines by ling an action
for the collection of the principal loan before foreign courts?
(2) What law should govern the case at bar?
Ruling
(1) Whether mortgage-creditor waive its remedy to foreclose the real estate mortgage constituted
over a third party mortgagor's property situated in the Philippines by ling an action for the
collection of the principal loan before foreign courts? — The Supreme Court ruled in the
af rmative.
Jurisprudence provides that
A mortgage creditor may institute against the mortgage debtor either a personal
action for debt or a real action to foreclose the mortgage. In other words, he may pursue
either of the two remedies, but not both.
Therefore, in our jurisdiction, the remedies available to the mortgage creditor are
deemed alternative and not cumulative.
Notably, an election of one remedy operates as a waiver of the other. For this
purpose, a remedy is deemed chosen upon the ling of the suit for collection or upon the
ling of the complaint in an action for foreclosure of mortgage, pursuant to the provision
of Rules on Civil Procedure.
As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage
creditor upon ling of the petition not with any court of justice but with the Of ce of the
Sheriff of the province where the sale is to be made, in accordance with the provisions of
Act No. 3135, as amended by Act No. 4118.
(2) What law should govern the case at bar? — Philippine Law
In the case at bar, Bank of America alleges that under English Law is the
governing law with regard to the principal agreements, the mortgagee does not lose its
security interest by simply ling civil actions for sums of money.
In the case at bar, Philippine law shall apply despite the evidence presented by
Bank of America to prove the English law on the matter.
fi
fi
fi
fi
fi
fi
The Supreme Court held that it is a well-imbedded principle in our jurisdiction
that there is no judicial notice of any foreign law. A foreign law must be properly pleaded
and proved as a fact.
fi
fi
97 of 114
98 of 114
Thus, if the foreign law involved is not properly pleaded and proved, our courts
will presume that the foreign law is the same as our local or domestic or internal law. This
is what the Supreme Court referred to as the doctrine of processual presumption.
Moreover, even assuming that the English Law on the matter were properly
pleaded and proved in accordance with the Rules of Court, the said foreign law would
still not nd applicability.
The rationale behind it is that when the foreign law, judgment or contract is
contrary to a sound and established public policy of the forum, the said foreign law,
judgment or order shall not be applied.
Additionally, prohibitive laws concerning persons, their acts or property, and those
which have for their object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by determinations or
conventions agreed upon in a foreign country.
Moreover, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice is the most
important function of law; hence, a law, or judgment or contract that is obviously unjust
negates the fundamental principles of Con ict of Laws.
fl
fi
Clearly then, English Law is not applicable.
99 of 114
5.) Herald Black Dacasin v. Sharon Del Mundo
Facts
Herald Dacasin, American, and Sharon Del Mundo Dacasin, Filipino, were married in
Manila in April 1994. They have one daughter, Stephanie, born on 21 September 1995.
Thereafter, Sharon sought and obtained from Illinois court a divorce decree against
Herald. In its ruling, the Illinois court dissolved the marriage of Herald and Sharon, awarded to
Sharon the sole custody of Stephanie and retained jurisdiction over the case for enforcement
purposes.
Thereafter, Herald and Sharon executed in Manila a contract for the joint custody of
Stephanie. The parties chose Philippine courts as exclusive forum to adjudicate disputes arising
from the Agreement.
Sharon undertook to obtain from the Illinois court an order "relinquishing" jurisdiction to
Philippine courts.
In 2004, Herald sued Sharon in the Regional Trial Court of Makati City to enforce the
Agreement. Herald alleged that in violation of the Agreement, Sharon exercised sole custody
over Stephanie.
Sharon sought the dismissal of the complaint for lack of jurisdiction because of the
Illinois court's retention of jurisdiction to enforce the divorce decree.
The RTC ruled in favor of Sharon and dismissed the case for lack of jurisdiction.
Herald submits the following alternative theories for the validity of the Agreement to
justify its enforcement by the trial court: (1) the Agreement novated the valid divorce decree,
modifying the terms of child custody from sole (maternal) to joint; or (2) the Agreement is
independent of the divorce decree obtained by respondent.
Issue
Whether the 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 Supreme Court ruled in the negative.
The trial court has jurisdiction to entertain petitioner's suit but not to enforce the
Agreement which is void.
fi
Subject matter jurisdiction is conferred by law. At the time petitioner led his suit in the
trial court, statutory law vests on Regional Trial Courts exclusive original jurisdiction over civil
actions incapable of pecuniary estimation.
100 of 114
An action for speci c performance, such as petitioner's suit to enforce the Agreement on
joint child custody, belongs to this species of actions. Thus, jurisdiction-wise, petitioner went to
the right court.
Despite that, the trial court cannot enforce the Agreement which is contrary to law.
In this jurisdiction, parties to a contract are free to stipulate the terms of agreement
subject to the minimum ban on stipulations contrary to law, morals, good customs, public order,
or public policy.
Otherwise, the contract is denied legal existence, deemed inexistent and void from the
beginning.
For lack of relevant stipulation in the Agreement, these and other ancillary Philippine
substantive law serve as default parameters to test the validity of the Agreement's joint child
custody stipulations.
At the time the parties executed the Agreement on 28 January 2002, two facts are
undisputed: (1) Stephanie was under seven years old (having been born on 21 September 1995);
and (2) petitioner and respondent were no longer married under the laws of the United States
because of the divorce decree.
The relevant Philippine law on child custody for spouses separated in fact or in law
provides that "no child under seven years of age shall be separated from the mother. (This
statutory awarding of sole parental custody to the mother is mandatory, grounded on sound
policy consideration).
Therefore, the Agreement's object to establish a post-divorce joint custody regime
between respondent and petitioner over their child under seven years old contravenes Philippine
law.
fi
The Agreement is not only void ab initio for being contrary to law, it has also been
repudiated by the mother when she refused to allow joint custody by the father.
101 of 114
3. Comparative Impairment Analysis
1.) Kearney v. Salomon
Facts
Plaintiffs-Kelly Kearney and Mark Levy-are California residents who were employed in
California by MFS Communications Company (MFS) when that company was acquired in 1996
by WorldCom (a large nationwide telecommunications rm). After the acquisition, both plaintiffs
continued to work for WorldCom in California and, during the course of their employment, both
were granted stock options in WorldCom that could be exercised only through defendant
Salomon Smith Barney (SSB).
The complaint alleges that in 1998, WorldCom's Human Relations Department informed
Levy that the Atlanta branch of ce of Salomon Smith Barney handled nancial matters for
WorldCom employees, and that this department “directed” him to that branch of ce with regard
to matters involving the exercise of his stock options. Both Levy and Kearney opened accounts
with SSB's Atlanta of ce and, during the course of their relationships with SSB, each plaintiff,
while in California, made and received numerous telephone calls from individual brokers in the
Atlanta of ce.
Kearney and Levy led claims against Salomon Smith Barney with the National
Association of Securities Dealers, alleging that SSB and its individual brokers had engaged in
“malfeasance, fraud, and breach of duciary duties” in providing advice to them. Apparently in
the course of the litigation of those claims, Kearney and Levy learned that numerous telephone
calls that were made and received by SSB's Atlanta of ce to and from California clients, while the
clients were in California, were tape-recorded by SSB employees without the clients' knowledge
or consent.
Kearney and Levy then led the present action, seeking relief on their own behalf and on
behalf of all other clients of Salomon Smith Barney who resided in California and whose
accounts were serviced by the Atlanta branch of Salomon Smith Barney.
The complaint maintained that the conduct of Salomon Smith Barney alleged in the
complaint provided a basis for a civil cause of action under section 637.2 of the Penal Code-a
provision of California's invasion-of-privacy statutory scheme-as well as under section 17200 of
the Business and Professions Code, a provision of California's unfair competition law that
provides a civil remedy against (among other things) unlawful business practices.
The complaint sought (1) injunctive relief to restrain Salomon Smith Barney in the future
“from using its practice/policy of illegally recording telephone conversations with its clients,” and
(2) damages and restitution based upon SSB's past conduct.
fi
fi
fi
fi
fi
fi
fi
fi
fi
fi
fi
Salomon Smith Barney led a demurrer to the complain. The trial court sustained the
demurrer without leave to amend, concluding that “under both Georgia and federal law
recordings may lawfully be made in Georgia with one party's consent.
102 of 114
On appeal, the Court of Appeal although noting that the parties had failed to identify or
brief the correct legal issue (that is, the choice-of-law issue) in either the trial court or, initially, in
the Court of Appeal-nonetheless af rmed the judgment rendered by the trial court, concluding
“that, on the speci c facts of this case, Georgia has the greater interest in having its law applied.”
As noted above, the Court granted plaintiffs' petition for review to address the novel
choice-of-law-issue presented by this case.
Issue
Whether or not the California law, instead of the Georgia law, should be applied with
respect to petitioner’s action in obtaining an injunctive relief ?
Ruling
The Supreme Court ruled in the af rmative.
The Court ruled that California law governs. Beginning with Chief Justice Traynor's
seminal decision for this court in Reich v. Purcell, California has applied the so-called
governmental interest analysis in resolving choice- of-law issues.
In brief outline, the governmental interest approach generally involves three steps:
(1) The court determines whether the relevant law of each of the potentially
affected jurisdictions with regard to the particular issue in question is the same or
different.
(2) If there is a difference, the court examines each jurisdiction's interest in the
application of its own law under the circumstances of the particular case to determine
whether a true con ict exists.
(3) If the court nds that there is a true con ict, it carefully evaluates and
compares the nature and strength of the interest of each jurisdiction in the application of
its own law “to determine which state's interest would be more impaired if its policy were
subordinated to the policy of the other state” and then ultimately applies “the law of the
state whose interest would be the more impaired if its law were not applied.
In the rst step, (The court determines whether the relevant law of each of the potentially
affected jurisdictions with regard to the particular issue in question is the same or different.)
[Law of California] — it explicitly created a new, statutory private right of action,
authorizing any person who has been injured by any violation of the invasion-of-privacy
legislation to bring a civil action to recover damages and to obtain injunctive relief in response to
such violation.
fl
fi
fi
fi
fi
fi
fl
fi
fi
Under subdivision (a) of section 632, “[e]very person who, intentionally and without the
consent of all parties to a con dential communication, by means of any electronic amplifying or
recording device, . records the con dential communication, whether the communication is
103 of 114
carried on among the parties in the presence of one another or by means of a telegraph,
telephone, or other device”, violates the statute and is punishable as speci ed in the provision.
As made clear by the terms of section 632 as a whole, this provision does not absolutely
preclude a party to a telephone conversation from recording the conversation, but rather simply
prohibits such a party from secretly or surreptitiously recording the conversation, that is, from
recording the conversation without rst informing all parties to the conversation that the
conversation is being recorded.
Nothing in the language or purpose of the law suggests that the related provisions of
section 632 should not similarly apply to protect against the secret recording of any con dential
communication that is sent from or received at any place within California.
Accordingly, construing section 632 in light of the language and purpose of the relevant
statutory scheme as a whole, the Court conclude that section 632 applies when a con dential
communication takes place in part in California and in part in another state.
[Law of Georgia] — : “It is the public policy of this State and the purpose and intent
of this Chapter to protect the citizens of this State from invasions upon their privacy.
Georgia decisions long have interpreted the relevant Georgia privacy statutes as not
applicable to a situation in which a conversation is recorded by one of the participants in the
conversation. In this respect, of course, Georgia law differs from California law.
In light of the underlying purpose of the Georgia statute, however, the Court believe thatGeorgia statutes were intended, and reasonably should be interpreted, to apply to such a call.
It also ruled that that the law of each state differs with regard to the legality of such
conduct. Although it is unlawful under California law for a party to a telephone conversation to
record the conversation without the knowledge of all other parties to the conversation, such
conduct is not unlawful under Georgia law.
Under the 2nd Step, (If there is a difference, the court examines each jurisdiction's
interest in the application of its own law under the circumstances of the particular case to
determine whether a true con ict exists.)
The Court in this case ruled that this case presents a true con ict of laws.
fi
fi
fi
fl
fi
fl
Although plaintiffs are correct that the facts of this case do not implicate the privacy
interests protected by the Georgia statute, the Georgia statute also can reasonably be viewed as
establishing the general ground rules under which persons in Georgia may act with regard to the
recording of private conversations, including telephone calls.
104 of 114
Because Georgia law prohibits the recording of such conversations except when the
recording is made by one of the parties to the conversation or with such a party's consent,
persons in Georgia reasonably may expect, at least as a general matter, that they lawfully can
record their own conversations with others without obtaining the other person's consent, and
Georgia has a legitimate interest in not having liability imposed on persons or businesses who
have acted in Georgia in reasonable reliance on the provisions of Georgia law.
Because the conduct of SSB that is at issue in this case involves activity that its employees
engaged in within Georgia, we believe that Georgia possesses a legitimate interest in having its
law applied in this setting.
3rd Step (If the court nds that there is a true con ict, it carefully evaluates and compares
the nature and strength of the interest of each jurisdiction in the application of its own law “to
determine which state's interest would be more impaired if its policy were subordinated to the
policy of the other state” and then ultimately applies “the law of the state whose interest would
be the more impaired if its law were not applied)
Under the comparative impairment approach, true con icts are resolved “by applying the
law of the state whose interest would be the more impaired if its law were not applied.”
The Court ruled that the failure to apply California law in the present context would
result in a signi cant impairment of California's interests.
First, because California law, with regard to the particular matter here at issue, is more
protective of privacy interests than the comparable Georgia privacy statute, the application of
California law would not violate any privacy interest protected by Georgia law. In addition, there
is, of course, nothing in Georgia law that requires any person or business to record a telephone call
without providing notice to the other parties to the call, and thus persons could comply with
California law without violating any provision of Georgia law.
Second, with respect to businesses in Georgia that record telephone calls, California law
would apply only to those telephone calls that are made to or received from California, not to all
telephone calls to and from such Georgia businesses.
fl
fl
fi
fi
For the foregoing reasons, we conclude that, as a realistic matter, the application of
California law in this context would not result in a severe impairment of Georgia's interests.
105 of 114
4. Functional Analysis
1.) Milliken v. Pratt
Facts
In 1870, Daniel Pratt, a Massachusetts resident, entered into an agreement with Milliken
and his business partner (plaintiffs), who operated a company, Derring, Milliken & Co. (DM &
Co.), in Portland, Maine.
The agreement allowed Pratt to make purchases from DM & Co. on credit. As a
condition of the agreement, Milliken and his partner required a guaranty from Mrs. Pratt
(defendant), under which she would agree to guarantee payment by her husband in the amount
of $500.
The guaranty made reference to its being made in Portland, Maine. Mrs. Pratt executed it
at her home in Massachusetts; her husband then sent it by mail to Portland. At the time that the
guaranty was made, Massachusetts law did not allow a married woman to act as a surety for her
husband. Maine, on the other hand, permitted married women to enter such contracts.
Over the next year and a half, Mr. Pratt made various purchases from DM & Co.
Requests for purchases were all made to DM & Co.’s Portland address; all deliveries were made
from Portland.
Mr. Pratt timely paid for such purchases until the fall of 1871, at which point he held an
unpaid balance of $560.12. After Mrs. Pratt refused to pay her husband’s debt, plaintiffs sued her
in a Massachusetts court.
By that point, Massachusetts law had changed so that a married woman had capacity to
act as a surety for her husband. The trial court decided in favor of Mrs. Pratt. Plaintiffs appealed.
Issue
Whether the guaranty that was executed and delivered by the defendant wife in Maine
valid even if her law of domicile does not allow her to enter into a contract for the
accommodation of her husband?
Ruling
The Court ruled in the af rmative.
The court held that the contract, which the law of Maine recognized was lawfully made
by a capable person, was valid everywhere, although the wife would not have been, under the law
of her domicile, deemed capable of making it. Accordingly, the judgment in favor of the
creditors was af rmed.
fi
fi
The validity of a contract is to be determined by the law of the state in which it is made;
if it is valid there, it is deemed valid everywhere, and will sustain an action in the courts of a state
whose laws do not permit such a contract.
106 of 114
Even a contract expressly prohibited by the statutes of the state in which the suit is
brought, if not in itself immoral, is not necessarily nor usually deemed so invalid that the comity
of the state, as administered by its courts, will refuse to entertain an action on such a contract
made by one of its own citizens abroad in a state the laws of which permit it.
If the contract is completed in another state, it makes no difference in principle whether
the citizen of this state goes in person, or sends an agent, or writes a letter, across the boundary
line between the two states.
107 of 114
V. Problem of Characterization
1.) LWV Construction Corporation v. Marcelo Dupo,
Facts
LWV Construction Corporation, a domestic corporation which recruits Filipino workers,
hired Marcelo Dupo as Civil Structural Superintendent to work in Saudi Arabia for its principal,
Mohammad Al-Mojil Group/Establishment (MMG).
Marcelo Dupo signed his rst overseas employment contract, renewable after one year. It
was renewed ve times. The sixth and last contract stated that Marcelo’s employment starts upon
reporting to work and ends when he leaves the work site.
Thereafter, Marcelo left Saudi Arabia on April 30, 1999 and arrived in the Philippines on
May 1, 1999.
Marcelo informed MMG, through the LWV Construction, that he needs to extend his
vacation because his son was hospitalized. He also sought a promotion with salary adjustment.
MMG then informed Marcelo that his promotion is subject to management's review and
that his services are still needed; that he was issued a plane ticket for his return ight to Saudi
Arabia. MMG also informed Marcelo that his decision regarding his employment must be made
within seven days, otherwise, MMG "will be compelled to cancel his slot.
Thereafter, Marcelo resigned and through a letter demanded for his long service award.
According to Marcelo, when he followed up his claim for long service award, LWV
Construction informed him that MMG did not respond.
Marcelo then led a complaint for payment of service award against LWV Construction
before the NLRC Arbitration Branch.
In support of his claim, respondent averred in his position paper that:
Under the Law of Saudi Arabia, an employee who rendered at least ve (5) years in a
company within the jurisdiction of Saudi Arabia, is entitled to the so-called long service award
which is known to others as longevity pay of at least one half month pay for every year of
service.
fl
fi
fi
fi
fi
LWV Construction Corporation offered payment and prescription as defenses. LWV
Construction Corporation maintained that MMG "pays its workers their Service Award or
Severance Pay every conclusion of their Labor Contracts pursuant to Article 87 of the [Saudi
Labor Law]”.
Under Article 87, "payment of the award is at the end or termination of the Labor
Contract concluded for a speci c period". Based on the payroll, Marcelo was already paid his
service award or severance pay for his latest (sixth) employment contract.
Moreover, LWV Construction Corporation added that under Article 13 of the Saudi
Labor Law, the action to enforce payment of the service award must be led within one year
from the termination of a labor contract for a speci c period.
Petitioner concluded that the one-year prescriptive period had lapsed because respondent
led his complaint one year and seven months after his sixth contract ended.
The Labor Arbiter ordered LWV Construction to pay Marcelo longevity pay. Meanwhile,
the af rmed the Labor Arbiter's decision.
The Court of Appeals and af rmed the NLRC. The Court of Appeals ruled that service
award is the same as longevity pay, and that the severance pay received by respondent cannot be
equated with service award.
Issue
Whether or not Marcelo’s action has prescribed?
Ruling
The Supreme Court ruled in the negative.
As a general rule, a foreign procedural law will not be applied in the forum. Procedural
matters, such as service of process, joinder of actions, period and requisites for appeal, and so
forth, are governed by the laws of the forum.
What applies is Article 291 of our Labor Code and not Article 13 of Saudi Labor law.
In Cadalin v. POEA’s Administrator, we held that Article 291 covers all money claims
from employer-employee relationship and is broader in scope than claims arising from a speci c
law.
It is not limited to money claims recoverable under the Labor Code, but applies also to
claims of overseas contract workers. As a general rule, a foreign procedural law will not be
applied in the forum.
Procedural matters, such as service of process, joinder of actions, period and requisites for
appeal, and so forth, are governed by the laws of the forum.
fi
fi
fi
fl
fi
fi
This is true even if the action is based upon a foreign substantive law. A law on
prescription of actions is sui generis in Con ict of Laws in the sense that it may be viewed either
as procedural or substantive, depending on the characterization given such a law.
fi
fi
108 of 114
109 of 114
Thus, in the Supreme Court’s view, Marcelo’s complaint was led well within the threeyear prescriptive period under Article 291 of our Labor Code.
fi
fi
This point, however, has already been mooted by the Supreme Court’s nding that
respondent’s service award had been paid, albeit the payroll termed such payment as severance
pay.
110 of 114
2.) Saudi Arabian Airlines v. Milagros Morada and Court of Appeals
Facts
SAUDIA hired Milagros Morada as a Flight Attendant for its airlines based in Jeddah,
Saudi Arabia.
While on a lay-over in Jakarta, Indonesia, Milagros Morada went to a disco with her
fellow crew members Thamer and Allah, both Saudi nationals. Because it was almost morning
when they returned to their hotels, they agreed to have breakfast at the room of Thamer. When
they were in the room, Allah left.
Shortly after, Thamer attempted to rape Milagros. Fortunately, a security personnel heard
her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and
Allah.
Thereafter, Milagros learned that Indonesian authorities agreed to deport Thamer and
Allah. Thereafter, Chief Legal Of cer of SAUDIA brought her to the police station where the
police took her passport and questioned her about the Jakarta incident and also pressured her to
drop the case against Thamer and Allah.
One year and a half later, Khaled Al-Balawi, the country manager of SAUDIA, brought
Milagros to a Saudi Court and was tricked to a sign a document to appear before the court and
she was then sentenced to imprisonment 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.
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against
her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, she was
terminated from the service by SAUDIA, without her being informed of the cause.
Thereafter, , Morada led a Complaint for damages against SAUDIA, and Khaled AlBalawi, its country manager.
Petitioner led a motion to dismiss which raised the following grounds, to wit: (1) that the
Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real
party in interest; (3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the
case.
fi
fi
fi
The Trial Court denied the motion to dismiss.
111 of 114
SAUDIA claims that before us is a con ict of laws that must be settled at the outset. It
maintains that private respondent's claim for alleged abuse of rights occurred in the Kingdom of
Saudi Arabia.
It alleges that the existence of a foreign element quali es the instant case for the
application of the law of the Kingdom of Saudi Arabia, by virtue of the Lex Loci Delicti
Commissi rule.
Issue
(1) Whether or not RTC has jurisdiction to try the civil case?
(2) Whether or not the Philippine Law should govern the case at bar?
Ruling
(1) Whether or not RTC has jurisdiction to try the civil case? - The Supreme Court ruled in
the af rmative.
In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a ight
stewardess, events did transpire during her many occasions of travel across national borders,
particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a
"con icts" situation to arise.
Respondent predicated her cause of action on Articles 19 and 21 of the New Civil Code.
Although Article 19 merely declares a principle of law, Article 21 gives esh to its provisions. The
Supreme Court agreed with Milagros’ assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal forum.
In the case at bar, SAUDIA has
Morada's Amended Complaint.
led several motions praying for the dismissal of
SAUDIA prayed for other reliefs under the premises. Undeniably, SAUDIA has
effectively submitted to the trial court's jurisdiction by praying for the dismissal of the Amended
Complaint on grounds other than lack of jurisdiction.
fl
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fi
fl
fi
fi
fi
fi
fl
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we nd that the trial court has jurisdiction over the case and that its exercise
thereof, justi ed.LibLex
112 of 114
(2) Whether or not the Philippine Law should govern the case at bar? -The Supreme Court
ruled in the af rmative.
A Choice-of-Law problems seek to answer two important questions: (1) What legal system
should control a given situation where some of the signi cant facts occurred in two or more
states; and (2) to what extent should the chosen legal system regulate the situation.
The Supreme Court explained that before a choice can be made, it is necessary for the
Court to determine under what category a certain set of facts or rules fall. This process is known
as "characterization", or the "doctrine of quali cation”.
It is the "process of deciding whether or not the facts relate to the kind of question
speci ed in a con icts rule.” The purpose of "characterization" is to enable the forum to select
the proper law.
The Supreme Court explained that that the starting point of analysis of the Court is not
a legal relation, but a factual situation, event, or operative fact. An essential element of con ict
rules is the indication of a "test" or "connecting factor" or "point of contact".
These "test factors" or "points of contact" or "connecting factors" could be any of the
following:
"(1) The nationality of a person, his
domicile, his residence, his place of sojourn,
or his origin;
(2) The seat of a legal or juridical
person, such as a corporation;
(3) The situs of a thing, that is, the
place where a thing is, or is deemed to be
situated. In particular, the lex situs is decisive
when real rights are involved;
(4) The place where an act has
been done, the locus actus The lex loci
actus is particularly important in
contracts and torts
(5) The place where an act is intended
to come into effect, e.g., the place of
performance of contractual duties, or the
place where a power of attorney is to be
exercised;
(6) The intention of the contracting
parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) The place where judicial or
administrative proceedings are instituted or
done.4
(8) The ag of a ship
4
fl
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fi
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fi
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The lex fori — the law of the forum — is particularly important because, as we have seen earlier, matters of
'procedure' not going to the substance of the claim involved are governed by it; and because the lex fori applies
whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the
reason that it falls under one of the exceptions to the applications of foreign law,
113 of 114
The Supreme Court held that considering that the complaint is one involving torts, the
"connecting factor" or "point of contact" could be the place or places where the tortious conduct
or lex loci actus occurred.
Applying the torts principle in a con icts case, the Supreme Court nds that the
Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took
place).
This is because it is in the Philippines where SAUDIA allegedly deceived Milagros, a
Filipina residing and working in the Philippines. There is reasonable basis for Milagros’ assertion
that although she was already working in Manila, SAUDIA brought her to Jeddah on the
pretense that she would merely testify in an investigation of the charges she made against the two
crew members for the attack on her person while they were in Jakarta. As it turned out, she was
the one made to face trial for very serious charges for violation of Islamic laws.
Moreover, the Supreme Court also applied the “State of the most signi cant
relationship”.
To determine the State which has the most signi cant relationship, the following contacts
are to be taken into account and evaluated according to their relative importance with respect to
the particular issue: (a) the place where the injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any, between the
parties is centered.
The Supreme Court held that here is basis for the claim that over-all injury occurred and
lodged in the Philippines.
In the case at bar, Milagros is a resident Filipina national, working with SAUDIA, a
resident foreign corporation engaged in the business of international air carriage in the
Philippines. Thus, the "relationship" between the parties was centered here in the Philippines,
although it should be stressed that this suit is not based on mere labor law violations.
From the record, the claim that the Philippines has the most signi cant contact with the
matter in this dispute, raised by Milagros as plaintiff below against SAUDIA has been properly
established.
Thus, the Supreme Court held that the Philippines is the situs of the tort complained of
and the place "having the most interest in the problem”.
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Thus, the Supreme Court held that the Philippine law on torts should have paramount
application to and control in the resolution of the legal issues arising out of the case at bar.
114 of 114
a.) Subject Matter Characterization
1.) Gibbs v. Government of Philippines
b.) Substance-Procedure Dichotomy
1.) Grant v. Mclauliffe
c.) Others
1.) Cadalin v. POEA Administrator
2.) Haumschild v. Continental
VI. Renvoi