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G.R. No. 149177

November 23, 2007

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD., Petitioners,


vs.
MINORU KITAMURA, Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 18, 2001
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution2 denying the motion
for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy firm providing
technical and management support in the infrastructure projects of foreign governments,3 entered into an Independent
Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national permanently residing in the
Philippines.4 The agreement provides that respondent was to extend professional services to Nippon for a year starting
on April 1, 1999.5 Nippon then assigned respondent to work as the project manager of the Southern Tagalog Access Road
(STAR) Project in the Philippines, following the company's consultancy contract with the Philippine Government.6
When the STAR Project was near completion, the Department of Public Works and Highways (DPWH) engaged the
consultancy services of Nippon, on January 28, 2000, this time for the detailed engineering and construction supervision
of the Bongabon-Baler Road Improvement (BBRI) Project.7 Respondent was named as the project manager in the
contract's Appendix 3.1.8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its International Division, informed
respondent that the company had no more intention of automatically renewing his ICA. His services would be engaged by
the company only up to the substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's
expiry.9
Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation conference and
demanded that he be assigned to the BBRI project. Nippon insisted that respondents contract was for a fixed term that
had already expired, and refused to negotiate for the renewal of the ICA.10
As he was not able to generate a positive response from the petitioners, respondent consequently initiated on June 1,
2000 Civil Case No. 00-0264 for specific performance and damages with the Regional Trial Court of Lipa City.11
For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and between Japanese
nationals, moved to dismiss the complaint for lack of jurisdiction. They asserted that the claim for improper pre-termination
of respondent's ICA could only be heard and ventilated in the proper courts of Japan following the principles of lex loci
celebrationis and lex contractus.12
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of Kitamura by a certain Y.
Kotake as project manager of the BBRI Project.13
On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank14 that matters connected with the
performance of contracts are regulated by the law prevailing at the place of performance,15 denied the motion to
dismiss.16 The trial court subsequently denied petitioners' motion for reconsideration,17 prompting them to file with the
appellate court, on August 14, 2000, their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No.
60205].18 On August 23, 2000, the CA resolved to dismiss the petition on procedural groundsfor lack of statement of
material dates and for insufficient verification and certification against forum shopping.19 An Entry of Judgment was later
issued by the appellate court on September 20, 2000.20
Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the reglementary period,
a second Petition for Certiorari under Rule 65 already stating therein the material dates and attaching thereto the proper
verification and certification. This second petition, which substantially raised the same issues as those in the first, was

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docketed as CA-G.R. SP No. 60827.21
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001 Decision 22finding no
grave abuse of discretion in the trial court's denial of the motion to dismiss. The CA ruled, among others, that the principle
of lex loci celebrationis was not applicable to the case, because nowhere in the pleadings was the validity of the written
agreement put in issue. The CA thus declared that the trial court was correct in applying instead the principle of lex loci
solutionis.23
Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25, 2001 Resolution.24
Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant Petition for Review
on Certiorari25 imputing the following errors to the appellate court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL COURT VALIDLY
EXERCISED JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT
SUBJECT MATTER OF THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO JAPANESE
NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE NEED TO REVIEW OUR
ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT DEVELOPMENT[S] IN
PRIVATE INTERNATIONAL LAWS.26
The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction of Philippine courts
in civil cases for specific performance and damages involving contracts executed outside the country by foreign nationals
may be assailed on the principles of lex loci celebrationis, lex contractus, the "state of the most significant relationship
rule," or forum non conveniens.
However, before ruling on this issue, we must first dispose of the procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has already barred the filing
of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the first
one) and the instant petition for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's defective certification of
non-forum shopping, it was a dismissal without prejudice.27 The same holds true in the CA's dismissal of the said case
due to defects in the formal requirement of verification28 and in the other requirement in Rule 46 of the Rules of Court on
the statement of the material dates.29 The dismissal being without prejudice, petitioners can re-file the petition, or file a
second petition attaching thereto the appropriate verification and certificationas they, in fact didand stating therein the
material dates, within the prescribed period30 in Section 4, Rule 65 of the said Rules.31
The dismissal of a case without prejudice signifies the absence of a decision on the merits and leaves the parties free to
litigate the matter in a subsequent action as though the dismissed action had not been commenced. In other words, the
termination of a case not on the merits does not bar another action involving the same parties, on the same subject matter
and theory.32
Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and even if petitioners still
indicated in the verification and certification of the second certiorari petition that the first had already been dismissed on
procedural grounds,33 petitioners are no longer required by the Rules to indicate in their certification of non-forum
shopping in the instant petition for review of the second certiorari petition, the status of the aforesaid first petition before
the CA. In any case, an omission in the certificate of non-forum shopping about any event that will not constitute res
judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant the dismissal and nullification of
the entire proceedings, considering that the evils sought to be prevented by the said certificate are no longer present.34
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only authorized to verify and certify,
on behalf of Nippon, the certiorari petition filed with the CA and not the instant petition. True, the Authorization35 dated
September 4, 2000, which is attached to the second certiorari petition and which is also attached to the instant petition for
review, is limited in scopeits wordings indicate that Hasegawa is given the authority to sign for and act on behalf of the

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company only in the petition filed with the appellate court, and that authority cannot extend to the instant petition for
review.36 In a plethora of cases, however, this Court has liberally applied the Rules or even suspended its application
whenever a satisfactory explanation and a subsequent fulfillment of the requirements have been made.37 Given that
petitioners herein sufficiently explained their misgivings on this point and appended to their Reply38 an updated
Authorization39 for Hasegawa to act on behalf of the company in the instant petition, the Court finds the same as
sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the verification and certification. As
respondent pointed out, and to which we agree, Hasegawa is truly not authorized to act on behalf of Nippon in this case.
The aforesaid September 4, 2000 Authorization and even the subsequent August 17, 2001 Authorization were issued only
by Nippon's president and chief executive officer, not by the company's board of directors. In not a few cases, we have
ruled that corporate powers are exercised by the board of directors; thus, no person, not even its officers, can bind the
corporation, in the absence of authority from the board.40 Considering that Hasegawa verified and certified the petition
only on his behalf and not on behalf of the other petitioner, the petition has to be denied pursuant to Loquias v. Office of
the Ombudsman.41 Substantial compliance will not suffice in a matter that demands strict observance of the
Rules.42 While technical rules of procedure are designed not to frustrate the ends of justice, nonetheless, they are
intended to effect the proper and orderly disposition of cases and effectively prevent the clogging of court dockets.43
Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the trial court's denial of
their motion to dismiss. It is a well-established rule that an order denying a motion to dismiss is interlocutory, and cannot
be the subject of the extraordinary petition for certiorari or mandamus. The appropriate recourse is to file an answer and to
interpose as defenses the objections raised in the motion, to proceed to trial, and, in case of an adverse decision, to
elevate the entire case by appeal in due course.44 While there are recognized exceptions to this rule,45 petitioners' case
does not fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction to hear and resolve the
civil case for specific performance and damages filed by the respondent. The ICA subject of the litigation was entered into
and perfected in Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language. Thus, petitioners
posit that local courts have no substantial relationship to the parties46following the [state of the] most significant
relationship rule in Private International Law.47
The Court notes that petitioners adopted an additional but different theory when they elevated the case to the appellate
court. In the Motion to Dismiss48 filed with the trial court, petitioners never contended that the RTC is an inconvenient
forum. They merely argued that the applicable law which will determine the validity or invalidity of respondent's claim is
that of Japan, following the principles of lex loci celebrationis and lex contractus.49 While not abandoning this stance in
their petition before the appellate court, petitioners on certiorari significantly invoked the defense of forum non
conveniens.50 On petition for review before this Court, petitioners dropped their other arguments, maintained the forum
non conveniens defense, and introduced their new argument that the applicable principle is the [state of the] most
significant relationship rule.51
Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change in theory, as explained
in Philippine Ports Authority v. City of Iloilo.52 We only pointed out petitioners' inconstancy in their arguments to
emphasize their incorrect assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved: jurisdiction, choice of
law, and recognition and enforcement of judgments. Corresponding to these phases are the following questions: (1)
Where can or should litigation be initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment
be enforced?53
Analytically, jurisdiction and choice of law are two distinct concepts.54 Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further question whether the application of a substantive law which
will determine the merits of the case is fair to both parties. The power to exercise jurisdiction does not automatically give a

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state constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori will often coincide, the
"minimum contacts" for one do not always provide the necessary "significant contacts" for the other.55 The question of
whether the law of a state can be applied to a transaction is different from the question of whether the courts of that state
have jurisdiction to enter a judgment.56
In this case, only the first phase is at issuejurisdiction.1wphi1 Jurisdiction, however, has various aspects. For a court to
validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff or the petitioner, over the
defendant or the respondent, over the subject matter, over the issues of the case and, in cases involving property, over
the res or the thing which is the subject of the litigation.57 In assailing the trial court's jurisdiction herein, petitioners are
actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which establishes and
organizes the court. It is given only by law and in the manner prescribed by law.58 It is further determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein.59 To succeed in its motion for the dismissal of an action for lack of jurisdiction over the subject matter of the
claim,60 the movant must show that the court or tribunal cannot act on the matter submitted to it because no law grants it
the power to adjudicate the claims.61
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not properly vested by law with
jurisdiction to hear the subject controversy for, indeed, Civil Case No. 00-0264 for specific performance and damages is
one not capable of pecuniary estimation and is properly cognizable by the RTC of Lipa City.62What they rather raise as
grounds to question subject matter jurisdiction are the principles of lex loci celebrationisand lex contractus, and the "state
of the most significant relationship rule."
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the "law of the place of the ceremony"63 or the law of the place where a contract is
made.64 The doctrine of lex contractus or lex loci contractus means the "law of the place where a contract is executed or
to be performed."65 It controls the nature, construction, and validity of the contract66 and it may pertain to the law
voluntarily agreed upon by the parties or the law intended by them either expressly or implicitly.67 Under the "state of the
most significant relationship rule," to ascertain what state law to apply to a dispute, the court should determine which state
has the most substantial connection to the occurrence and the parties. In a case involving a contract, the court should
consider where the contract was made, was negotiated, was to be performed, and the domicile, place of business, or
place of incorporation of the parties.68 This rule takes into account several contacts and evaluates them according to their
relative importance with respect to the particular issue to be resolved.69
Since these three principles in conflict of laws make reference to the law applicable to a dispute, they are rules proper for
the second phase, the choice of law.70 They determine which state's law is to be applied in resolving the substantive
issues of a conflicts problem.71 Necessarily, as the only issue in this case is that of jurisdiction, choice-of-law rules are not
only inapplicable but also not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have not yet pointed out
any conflict between the laws of Japan and ours. Before determining which law should apply, first there should exist a
conflict of laws situation requiring the application of the conflict of laws rules.72 Also, when the law of a foreign country is
invoked to provide the proper rules for the solution of a case, the existence of such law must be pleaded and proved.73
It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or administrative
agency, there are three alternatives open to the latter in disposing of it: (1) dismiss the case, either because of lack of
jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case and apply the internal law
of the forum; or (3) assume jurisdiction over the case and take into account or apply the law of some other State or
States.74 The courts power to hear cases and controversies is derived from the Constitution and the laws. While it may
choose to recognize laws of foreign nations, the court is not limited by foreign sovereign law short of treaties or other
formal agreements, even in matters regarding rights provided by foreign sovereigns.75
Neither can the other ground raised, forum non conveniens,76 be used to deprive the trial court of its jurisdiction herein.

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First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court does not include it
as a ground.77 Second, whether a suit should be entertained or dismissed on the basis of the said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion of the trial court. 78 In this case, the
RTC decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle requires a factual
determination; hence, this conflicts principle is more properly considered a matter of defense.79
Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by respondent and the
grounds raised by petitioners to assail that jurisdiction are inappropriate, the trial and appellate courts correctly denied the
petitioners motion to dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
SO ORDERED.

G.R. No. L-19596

October 30, 1964

LAVERN R. DILWEG, plaintiff-appellant,


vs.
ROBERT O. PHILLIPS, INOCENTES DINEROS and ISAAC S. ECETA, defendants-appellees.
Antonio C. Amor, Enrique D. Tayag and Alonzo Q. Ancheta for plaintiff-appellant.
Lopez-De Joya, Dimaguila, Hermoso & Divino and Melotindos and Dictado for defendants-appellees.
REYES, J.B.L., J.:
Direct appeal on pure question of law from an order rendered by the Court of First Instance of Rizal, Branch II, in its Civil
Case No. 4850, dismissing plaintiff's complaint as well as from the order denying a motion to reconsider said order of
dismissal.
The record disclosed that on 7 February 1958 plaintiff Lavern R. Dilweg a nonresident American, through counsel,
instituted the complaint at bar consisting of six causes of action against defendants. Robert O. Phillips, Inocentes G.
Dineros, and Isaac S. Esceta, claiming civil damages arising out of alleged libelous and defamatory statements uttered
and published in the Philippines by the latter. On 24 February 1958 the first two named defendants presented a motion to
dismiss the complaint. Plaintiff interposed an opposition thereto on 7 March 1958.
On 13 May 1958 the trial court, acting on this motion, denied the same; consequently, on 17 May 1958 the two defendants
filed their joint answer with six causes of action as counterclaims for damages against the plaintiff. On 24 May 1958,
plaintiff answered the defendant's counterclaims.
On 11 June 1958, defendant Isaac S. Eceta, who was represented by a different counsel, filed his answer adopting in
toto as his own the answer as well as the counterclaims of his co-defendants. On 26 June 1958, plaintiff answered
defendant Eceta's counterclaims.
The trial court, in its order dated 17 September 1958, scheduled the hearing of the case for 10 and 11 December, 1958.
On 8 March 1961, in the course of the trial on the merits, defendants Robert O. Phillips and Inocentes G. Dineros
presented a written motion for reconsideration of the order dated 13 May 1958 denying their motion to dismiss the
plaintiff's complaint. An opposition thereto was interposed by plaintiff on 7 April 1961.
On 11 May 1961 the trial court issued an order, which is the subject of the present appeal, the pertinent portion of which is
as follows:
This action is one for damages by reason of alleged libelous statements uttered in the Philippines by the defendants
against the plaintiff. In otherwords, it is an action based on a tort or act, which under the law of the Philippines, is defined
as a criminal offense. At the time the said libelous statements were uttered, the plaintiff was in Washington D.C. where he
was and has always been a resident. There is no allegation in the complaint that plaintiff has ever been in the Philippines
or has resided at anytime therein.

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The general rule in this jurisdiction is that a court acquires jurisdiction over the person of the plaintiff by the filing of his
complaint. (Manila Railroad Co. vs. Attorney General, 20 Phil. 523). In King Mau Wu vs. Sycip, 50 O.G. page 5366, April
23, 1954 it was contended that as the plaintiff therein has never been a resident of the Philippines, the courts of this
country have not acquired jurisdiction to take cognizance of his action based on a contract which was executed in the
State of New York, U.S.A. The Supreme Court held that a non-resident may sue a resident in the courts of his country for
the collection of money arising from a contract notwithstanding the fact that said contract was executed outside the
country. In Western Equipment and Supply Co. vs. Reyes, 51 Phil. 116, it was held that a foreign corporation which has
never done any business in the Philippines and which is unlicensed and unregistered to do business here, may sue in the
courts of the Philippines for the purpose of restraining certain residents and inhabitants of the Philippines from organizing
a corporation in this country bearing the same name as that of the plaintiff because the action involves the use of a
tradename and hence, it is one in rem.
The instant case is however different because it is a personal action based on an act defined as a crime under Philippine
Law. It is therefore of first impression. Defendants contend that if a counterclaim is filed against the plaintiff for damages, it
cannot be enforced because the Court has not acquired jurisdiction over his person as he has never been and is not now
present in this country. It may be stated in addition, that in such a case, if a judgment is rendered against him by this Court
since he has no property in the Philippines, the decision cannot be enforced because the decision of a court of this
country is not enforceable outside of Philippine jurisdiction.
In some European countries, it is a requirement that before a non-resident alien may file an action, he must file a bond,
the so-called "Judicatum Solvi", in order to protect the interest of residents from unwarranted actions. There is no law of
this kind in this jurisdiction.
As there are no doctrines in this jurisdiction covering the issue raised by the defendants, this Court is bound to rely on
American doctrines for the reason that our rules on jurisdiction have been copied and patterned upon American laws and
statutes. The following are some of the doctrines which have some bearing on the case, aside from those cited by the
movants:
A difficulty may sometimes arise, in determining whether a particular law applies to the citizen of a foreign country, and (is)
intended to subject him to its provision. But if the law applies to him, and embraces his case, it is unquestionably
binding upon him when he is within the jurisdiction of the United States. (Brown vs. Duchesne, Mass. 19. How., U.S. 183,
194, 51 L. Ed. 595. (Ibid).
While the presence of the res or property within the territorial limits of the sovereignty under which the court acts may
confer jurisdiction in rem on the court, in personal actions jurisdiction both of the subject matter and of the person or party
whose right are to be affected are essential, and a state court can acquire no jurisdiction where neither the person nor any
property of can be found within the state. (Emmanuel vs. Ferris 41 S.E. 20, 63 S.C. 104). If a court having jurisdiction of
the subject matter acquires jurisdiction of the person it has the right and power to hear and determine the particular case;
and unless jurisdiction of the subject matter and of the person exists it is the duty of the court to decline to do more than
ascertain and declare that it has no power to examine or to decide the merits of the case ... . While a court may have
general jurisdiction of the subject matter of a class of actions, it does not necessarily follow that it may hear and determine
a particular case submitted for its consideration (21 C.J.S. 43-44)
In El Banco Espaol Filipino v. Palanca, 37 Phil. 921, and Perkins v. Dizon 69 Phil. 189, it has been also held that in order
that the court may validly try a case, it must have jurisdiction over the subject matter and over the persons of the parties.
Jurisdiction over the persons of the parties is acquired by their voluntary appearance in court and their submission to its
authority, or by the coercive power of legal process exerted over their persons.
Applying the principles laid down in the above-quoted doctrines and those cited in the motion for reconsideration of the
defendants, the Court has come to the conclusion that in order that the court may validly try a case, it must have
jurisdiction not only over the persons of the parties and over the subject matter and that plaintiff must be a resident within
the territorial jurisdiction of this Court in order that jurisdiction over his person can be acquired, otherwise the Court will not
be able to render a valid judgment against him.

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IN VIEW OF THE FOREGOING CONSIDERATIONS and of the fact that the question of jurisdiction, may be raised at any
time, the Court hereby grants the motion for reconsideration; sets aside the former order deriving defendants' motion to
dismiss and hereby dismisses this case, without costs.
SO ORDERED. (Rec. on Appeal, pp. 99-103)
On 28 June 1961, a motion to have the above-quoted order reconsidered was presented by the plaintiff and an opposition
thereto was filed by the defendants on 10 July 1961. Plaintiff, in return, submitted a reply to said opposition on 22 July
1961. On 7 November 1961, the trial court, acting on said motion, denied it; hence, the present appeal.
The sole issue posed in the present appeal is whether or not our Philippine courts can rightfully refuse to assume
jurisdiction over a personal action instituted by a nonresident alien who is not within the territorial jurisdiction of our courts.
In refusing to assume jurisdiction over this case, the court below upheld defendants' contention that in a personal action it
can only acquire jurisdiction over the person of the plaintiff if he resides within our territorial jurisdiction. We believe and
hold that the trial court is in error in this point. In fact, this Court only recently has upheld the right of non-residents to
maintain personal actions against our residents in Philippine courts Sharruf v. Bubla, G.R. No. L-17029, September 30,
1964).
In an American case with facts similar to those obtaining in the case at bar, and in which the same identical issue was
raised, the Court of Appeals of New York held:
There is no objection to the maintenance of the action in our courts in the fact that the plaintiff was an English subject, or
that he was a non-resident. As a personal action, sounding in tort, it was transitory in its nature, following the person of the
defendant. Our courts were open to the plaintiff for redress of any personal injury suffered by reason of defendant' acts
Story's Conflict of Laws, Sec. 625; Wharton's Conflict of Laws, Secs. 478, 707, 743; Gardner vs. Thomas, 14 Johns, 134,
7 Am. Dec. 445; De Witt v. Buchanan 54 Barb. 31. (Crashley v. Press Pub. Co., 71 N. E. 258, 259).
This position is supported by practically unanimous American authority (3 Am. Jur. 2d, Aliens, Sec. 43, p. 895; 21 C.J.S.
(Courts), sec. 75 pp. 112-113).
It is thus evident that, contrary to the conclusion reached by the court below, it is not indispensable for a foreigner to
establish residence, nor need he be physically present in a state of which he is not a resident or citizen in order that he
may initiate or maintain a personal action against a resident or citizen of that other state for rights of action arising in, or
for violations of laws committed within, the territorial jurisdiction of that other state. In this jurisdiction, no general law has
come to our knowledge or notice which restricts the right of non-resident aliens to sue in our courts. It is not disputed that
plaintiff's causes of action arose in, and that the defendants are within, our territorial jurisdiction. It is conceded by both
parties that the law under which the instant case falls is silent on the matter of the right of an alien to sue in our courts. On
the other hand, the particular law evidently availed of by the plaintiff in filing his complaint is article 33 of the Civil Code of
the Philippines, which provides:
In cases of defamation, fraud, and physical injuries, a civil action for damages entirely separate and distinct from the
criminal action may be brought by the injured party. Such civil action shall proceed independently of the criminal
prosecution and shall require only preponderance of evidence.
The above-quoted provision of law does not make any distinction as to whether the "injured party", who may maintain an
action for damages based on defamation, is a Filipino citizen or a resident or an alien.
The American decisions cited in the order of 11 May 1961 are not applicable to the case at bar because there the
defendants invoked the issue of lack of jurisdiction over their own persons and not against the person of the plaintiff.
The fact that there are counterclaims against the non-resident plaintiff does not alter the case. The Rules of Court provide
for remedies against nonresident defendants.
WHEREFORE, the order appealed from is set aside, and the case is ordered remanded to the court below for further
proceedings consonant with this opinion. Costs against respondents Phillips, Dineros and Eceta.

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

PADILLA, JR., J.:


This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming the dismissal of the
petitioner's complaint to enforce the judgment of a Japanese court. The principal issue here is whether a Japanese court
can acquire jurisdiction over a Philippine corporation doing business in Japan by serving summons through diplomatic
channels on the Philippine corporation at its principal office in Manila after prior attempts to serve summons in Japan had
failed.
Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under the laws of the State
of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the Regional Trial Court (RTC), Branch 54, Manila,
a judgment rendered in its favor by a Japanese court against private respondent C.F. Sharp & Company, Inc., (hereinafter
SHARP), a corporation incorporated under Philippine laws.
As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the following are the factual and
procedural antecedents of this controversy:
On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through its Japan branch, entered into
an International Passenger Sales Agency Agreement, whereby the former authorized the latter to sell its air transportation
tickets. Unable to remit the proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said
agreement, plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of the
ticket sales, with claim for damages.
On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo District Court of Japan against
defendant at its office at the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma, Kanagawa Prefecture.
The attempt to serve the summons was unsuccessful because the bailiff was advised by a person in the office that Mr.
Dinozo, the person believed to be authorized to receive court processes was in Manila and would be back on April 24,
1980.
On April 24, 1980, bailiff returned to the defendant's office to serve the summons. Mr. Dinozo refused to accept the same
claiming that he was no longer an employee of the defendant.
After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to have the complaint
and the writs of summons served at the head office of the defendant in Manila. On July 11, 1980, the Director of the Tokyo
District Court requested the Supreme Court of Japan to serve the summons through diplomatic channels upon the
defendant's head office in Manila.
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of summons (p. 276, Records).
Despite receipt of the same, defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court proceeded to
hear the plaintiff's complaint and on [January 29, 1981], rendered judgment ordering the defendant to pay the plaintiff the
sum of 83,158,195 Yen and damages for delay at the rate of 6% per annum from August 28, 1980 up to and until payment
is completed (pp. 12-14, Records).
On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the judgment. Defendant not having
appealed the judgment, the same became final and executory.
Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for enforcement of the judgment was
filed by plaintiff before the Regional Trial Court of Manila Branch 54. 2
On July 16, 1983, defendant filed its answer averring that the judgment of the Japanese Court sought to be enforced is

9
null and void and unenforceable in this jurisdiction having been rendered without due and proper notice to the defendant
and/or with collusion or fraud and/or upon a clear mistake of law and fact (pp. 41-45, Rec.).
Unable to settle the case amicably, the case was tried on the merits. After the plaintiff rested its case, defendant on April
21, 1989, filed a Motion for Judgment on a Demurrer to Evidence based on two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of jurisdiction and (2) the said judgment is contrary
to Philippine law and public policy and rendered without due process of law. Plaintiff filed its opposition after which the
court a quo rendered the now assailed decision dated June 21, 1989 granting the demurrer motion and dismissing the
complaint (Decision, pp. 376-378, Records). In granting the demurrer motion, the trial court held that:
The foreign judgment in the Japanese Court sought in this action is null and void for want of jurisdiction over the person of
the defendant considering that this is an action in personam; the Japanese Court did not acquire jurisdiction over the
person of the defendant because jurisprudence requires that the defendant be served with summons in Japan in order for
the Japanese Court to acquire jurisdiction over it, the process of the Court in Japan sent to the Philippines which is
outside Japanese jurisdiction cannot confer jurisdiction over the defendant in the case before the Japanese Court of the
case at bar. Boudard versus Tait 67 Phil. 170. The plaintiff contends that the Japanese Court acquired jurisdiction
because the defendant is a resident of Japan, having four (4) branches doing business therein and in fact had a permit
from the Japanese government to conduct business in Japan (citing the exhibits presented by the plaintiff); if this is so
then service of summons should have been made upon the defendant in Japan in any of these alleged four branches; as
admitted by the plaintiff the service of the summons issued by the Japanese Court was made in the Philippines thru a
Philippine Sheriff. This Court agrees that if the defendant in a foreign court is a resident in the court of that foreign court
such court could acquire jurisdiction over the person of the defendant but it must be served upon the defendant in the
territorial jurisdiction of the foreign court. Such is not the case here because the defendant was served with summons in
the Philippines and not in Japan.
Unable to accept the said decision, plaintiff on July 11, 1989 moved for reconsideration of the decision, filing at the same
time a conditional Notice of Appeal, asking the court to treat the said notice of appeal "as in effect after and upon issuance
of the court's denial of the motion for reconsideration."
Defendant opposed the motion for reconsideration to which a Reply dated August 28, 1989 was filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for Reconsideration and gave due course to the plaintiff's
Notice of Appeal. 3
In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance upon Boudard
vs. Tait 4 wherein it was held that "the process of the court has no extraterritorial effect and no jurisdiction is acquired over
the person of the defendant by serving him beyond the boundaries of the state." To support its position, the Court of
Appeals further stated:
In an action strictly in personam, such as the instant case, personal service of summons within the forum is required for
the court to acquire jurisdiction over the defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To confer
jurisdiction on the court, personal or substituted service of summons on the defendant not extraterritorial service is
necessary (Dial Corp vs. Soriano, 161 SCRA 739).
But while plaintiff-appellant concedes that the collection suit filed is an action in personam, it is its theory that a distinction
must be made between an action in personam against a resident defendant and an action in personam against a nonresident defendant. Jurisdiction is acquired over a non-resident defendant only if he is served personally within the
jurisdiction of the court and over a resident defendant if by personal, substituted or constructive service conformably to
statutory authorization. Plaintiff-appellant argues that since the defendant-appellee maintains branches in Japan it is
considered a resident defendant. Corollarily, personal, substituted or constructive service of summons when made in
compliance with the procedural rules is sufficient to give the court jurisdiction to render judgment in personam.
Such an argument does not persuade.
It is a general rule that processes of the court cannot lawfully be served outside the territorial limits of the jurisdiction of the

10
court from which it issues (Carter vs. Carter; 41 S.E. 2d 532, 201) and this is regardless of the residence or citizenship of
the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There
must be actual service within the proper territorial limits on defendant or someone authorized to accept service for him.
Thus, a defendant, whether a resident or not in the forum where the action is filed, must be served with summons within
that forum.
But even assuming a distinction between a resident defendant and non-resident defendant were to be adopted, such
distinction applies only to natural persons and not in the corporations. This finds support in the concept that "a corporation
has no home or residence in the sense in which those terms are applied to natural persons" (Claude Neon Lights vs. Phil.
Advertising Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in its brief:
Residence is said to be an attribute of a natural person, and can be predicated on an artificial being only by more or less
imperfect analogy. Strictly speaking, therefore, a corporation can have no local residence or habitation. It has been said
that a corporation is a mere ideal existence, subsisting only in contemplation of law an invisible being which can have,
in fact, no locality and can occupy no space, and therefore cannot have a dwelling place. (18 Am. Jur. 2d, p. 693 citing
Kimmerle v. Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)
Jurisprudence so holds that the foreign or domestic character of a corporation is to be determined by the place of its origin
where its charter was granted and not by the location of its business activities (Jennings v. Idaho Rail Light & P. Co., 26
Idaho 703, 146 p. 101), A corporation is a "resident" and an inhabitant of the state in which it is incorporated and no other
(36 Am. Jur. 2d, p. 49).
Defendant-appellee is a Philippine Corporation duly organized under the Philippine laws. Clearly, its residence is the
Philippines, the place of its incorporation, and not Japan. While defendant-appellee maintains branches in Japan, this will
not make it a resident of Japan. A corporation does not become a resident of another by engaging in business there even
though licensed by that state and in terms given all the rights and privileges of a domestic corporation (Galveston H. &
S.A.R. Co. vs. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).
On this premise, defendant appellee is a non-resident corporation. As such, court processes must be served upon it at a
place within the state in which the action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S.
Ct. 354). 5
It then concluded that the service of summons effected in Manila or beyond the territorial boundaries of Japan was null
and did not confer jurisdiction upon the Tokyo District Court over the person of SHARP; hence, its decision was void.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court contending that the
respondent court erred in holding that SHARP was not a resident of Japan and that summons on SHARP could only be
validly served within that country.
A foreign judgment is presumed to be valid and binding in the country from which it comes, until the contrary is shown. It is
also proper to presume the regularity of the proceedings and the giving of due notice therein. 6
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of a foreign country
having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successorsin-interest by a subsequent title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of
the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of jurisdiction and has
regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its validity.7 Being
the party challenging the judgment rendered by the Japanese court, SHARP had the duty to demonstrate the invalidity of
such judgment. In an attempt to discharge that burden, it contends that the extraterritorial service of summons effected at
its home office in the Philippines was not only ineffectual but also void, and the Japanese Court did not, therefore acquire
jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to the service of process upon a defendant are

11
governed by the lex fori or the internal law of the forum. 8 In this case, it is the procedural law of Japan where the
judgment was rendered that determines the validity of the extraterritorial service of process on SHARP. As to what this law
is is a question of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any other
fact. 9 Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced by an official publication or by
a duly attested or authenticated copy thereof. It was then incumbent upon SHARP to present evidence as to what that
Japanese procedural law is and to show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly,
the presumption of validity and regularity of the service of summons and the decision thereafter rendered by the Japanese
court must stand.
Alternatively
in
the
light
of
the
absence
of
proof
regarding
Japanese
law, the presumption of identity or similarity or the so-called processual presumption 10 may be invoked. Applying it, the
Japanese law on the matter is presumed to be similar with the Philippine law on service of summons on a private foreign
corporation doing business in the Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a
foreign corporation doing business in the Philippines, service may be made: (1) on its resident agent designated in
accordance with law for that purpose, or, (2) if there is no such resident agent, on the government official designated by
law to that effect; or (3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the designation is exclusive, and service of
summons is without force and gives the court no jurisdiction unless made upon him. 11
Where the corporation has no such agent, service shall be made on the government official designated by law, to wit: (a)
the Insurance Commissioner in the case of a foreign insurance company; (b) the Superintendent of Banks, in the case of
a foreign banking corporation; and (c) the Securities and Exchange Commission, in the case of other foreign corporations
duly licensed to do business in the Philippines. Whenever service of process is so made, the government office or official
served shall transmit by mail a copy of the summons or other legal proccess to the corporation at its home or principal
office. The sending of such copy is a necessary part of the service. 12
SHARP contends that the laws authorizing service of process upon the Securities and Exchange Commission, the
Superintendent of Banks, and the Insurance Commissioner, as the case may be, presuppose a situation wherein the
foreign corporation doing business in the country no longer has any branches or offices within the Philippines. Such
contention is belied by the pertinent provisions of the said laws. Thus, Section 128 of the Corporation Code13 and Section
190 of the Insurance Code 14 clearly contemplate two situations: (1) if the corporation had left the Philippines or had
ceased to transact business therein, and (2) if the corporation has no designated agent. Section 17 of the General
Banking Act 15 does not even speak a corporation which had ceased to transact business in the Philippines.
Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive court processes in
Japan. This silence could only mean, or least create an impression, that it had none. Hence, service on the designated
government official or on any of SHARP's officers or agents in Japan could be availed of. The respondent, however,
insists that only service of any of its officers or employees in its branches in Japan could be resorted to. We do not agree.
As found by the respondent court, two attempts at service were made at SHARP's Yokohama branch. Both were
unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the person authorized to accept court process,
was in Manila. On the second, Mr. Dinozo was present, but to accept the summons because, according to him, he was no
longer an employee of SHARP. While it may be true that service could have been made upon any of the officers or agents
of SHARP at its three other branches in Japan, the availability of such a recourse would not preclude service upon the
proper government official, as stated above.
As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons for SHARP be served at its
head office in the Philippine's after the two attempts of service had failed. 16 The Tokyo District Court requested the
Supreme Court of Japan to cause the delivery of the summons and other legal documents to the Philippines. Acting on
that request, the Supreme Court of Japan sent the summons together with the other legal documents to the Ministry of
Foreign Affairs of Japan which, in turn, forwarded the same to the Japanese Embassy in Manila . Thereafter, the court
processes were delivered to the Ministry (now Department) of Foreign Affairs of the Philippines, then to the Executive
Judge of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith ordered Deputy Sheriff Rolando

12
Balingit to serve the same on SHARP at its principal office in Manila. This service is equivalent to service on the proper
government official under Section 14, Rule 14 of the Rules of Court, in relation to Section 128 of the Corporation Code.
Hence, SHARP's contention that such manner of service is not valid under Philippine laws holds no water. 17
In deciding against the petitioner, the respondent court sustained the trial court's reliance on Boudard vs. Tait 18where this
Court held:
The fundamental rule is that jurisdiction in personam over nonresidents, so as to sustain a money judgment, must be
based upon personal service within the state which renders the judgment.
xxx xxx xxx
The process of a court, has no extraterritorial effect, and no jurisdiction is acquired over the person of the defendant by
serving him beyond the boundaries of the state. Nor has a judgment of a court of a foreign country against a resident of
this country having no property in such foreign country based on process served here, any effect here against either the
defendant personally or his property situated here.
Process issuing from the courts of one state or country cannot run into another, and although a nonresident defendant
may have been personally served with such process in the state or country of his domicile, it will not give such jurisdiction
as to authorize a personal judgment against him.
It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial Corp. vs. Soriano, 20 as well as the principle
laid down by the Iowa Supreme Court in the 1911 case of Raher vs. Raher. 21
The first three cases are, however, inapplicable. Boudard involved the enforcement of a judgment of the civil division of
the Court of First Instance of Hanoi, French Indo-China. The trial court dismissed the case because the Hanoi court never
acquired jurisdiction over the person of the defendant considering that "[t]he, evidence adduced at the trial conclusively
proves that neither the appellee [the defendant] nor his agent or employees were ever in Hanoi, French Indo-China; and
that the deceased Marie Theodore Jerome Boudard had never, at any time, been his employee." In Magdalena Estate,
what was declared invalid resulting in the failure of the court to acquire jurisdiction over the person of the defendants in an
action in personam was the service of summons through publication against non-appearing resident defendants. It was
claimed that the latter concealed themselves to avoid personal service of summons upon them. In Dial, the defendants
were foreign corporations which were not, domiciled and licensed to engage in business in the Philippines and which did
not have officers or agents, places of business, or properties here. On the other hand, in the instant case, SHARP was
doing business in Japan and was maintaining four branches therein.
Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided Supreme Court of Iowa
declared that the principle that there can be no jurisdiction in a court of a territory to render a personal judgment against
anyone upon service made outside its limits was applicable alike to cases of residents and non-residents. The principle
was put at rest by the United States Supreme Court when it ruled in the 1940 case ofMilliken vs. Meyer 22 that domicile in
the state is alone sufficient to bring an absent defendant within the reach of the state's jurisdiction for purposes of a
personal judgment by means of appropriate substituted service or personal service without the state. This principle is
embodied in section 18, Rule 14 of the Rules of Court which allows service of summons on residents temporarily out of
the Philippines to be made out of the country. The rationale for this rule was explained in Millikenas follows:
[T]he authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state. The state
which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact
reciprocal duties. "Enjoyment of the privileges of residence within the state, and the attendant right to invoke the
protection of its laws, are inseparable" from the various incidences of state citizenship. The responsibilities of that
citizenship arise out of the relationship to the state which domicile creates. That relationship is not dissolved by mere
absence from the state. The attendant duties, like the rights and privileges incident to domicile, are not dependent on
continuous presence in the state. One such incident of domicile is amenability to suit within the state even during sojourns
without the state, where the state has provided and employed a reasonable method for apprising such an absent party of
the proceedings against him. 23

13
The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict technical sense, such domicile
as a corporation may have is single in its essence and a corporation can have only one domicile which is the state of its
creation. 25
Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a resident in another state in which
it has offices and transacts business. This is the rule in our jurisdiction and apropos thereto, it may be necessery to quote
what we stated in State Investment House, Inc, vs. Citibank, N.A., 26 to wit:
The issue is whether these Philippine branches or units may be considered "residents of the Philippine Islands" as that
term is used in Section 20 of the Insolvency Law . . . or residents of the state under the laws of which they were
respectively incorporated. The answer cannot be found in the Insolvency Law itself, which contains no definition of the
term, resident, or any clear indication of its meaning. There are however other statutes, albeit of subsequent enactment
and effectivity, from which enlightening notions of the term may be derived.
The National Internal Revenue Code declares that the term "'resident foreign corporation' applies to a foreign corporation
engaged in trade or business within the Philippines," as distinguished from a "'non-resident foreign corporation' . . . (which
is one) not engaged in trade or bussiness within the Philippines." [Sec. 20, pars. (h) and (i)].
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, subsidiaries, affiliation, extension offices
or any other units of corporation or juridical person organized under the laws of any foreign country operating in the
Philippines shall be considered residents of the Philippines. [Sec. 1(e)].
The General Banking Act, Republic Act No. 337, places "branches and agencies in the Philippines of foreign banks . . .
(which are) called Philippine branches," in the same category as "commercial banks, savings associations, mortgage
banks, development banks, rural banks, stock savings and loan associations" (which have been formed and organized
under Philippine laws), making no distinction between the former and the latter in so far as the terms "banking institutions"
and "bank" are used in the Act [Sec. 2], declaring on the contrary that in "all matters not specifically covered by special
provisions applicable only to foreign banks, or their branches and agencies in the Philippines, said foreign banks or their
branches and agencies lawfully doing business in the Philippines "shall be bound by all laws, rules, and regulations
applicable to domestic banking corporations of the same class, except such laws, rules and regulations as provided for
the creation, formation, organization, or dissolution of corporations or as fix the relation, liabilities, responsibilities, or
duties of members, stockholders or officers of corporation. [Sec. 18].
This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs. Philippine Advertising Corp., 57 Phil.
607] that a foreign corporation licitly doing business in the Philippines, which is a defendant in a civil suit, may not be
considered a non-resident within the scope of the legal provision authorizing attachment against a defendant not residing
in the Philippine Islands; [Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59
of the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary attachment may not be applied for
and granted solely on the asserted fact that the defendant is a foreign corporation authorized to do business in the
Philippines and is consequently and necessarily, "a party who resides out of the Philippines." Parenthetically, if it may
not be considered as a party not residing in the Philippines, or as a party who resides out of the country, then, logically, it
must be considered a party who does reside in the Philippines, who is a resident of the country. Be this as it may, this
Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed to do business here, to
the status of domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs. Henry W. Elser & Co., 46
Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it would be entirely out of line with this policy should we
make a discrimination against a foreign corporation, like the petitioner, and subject its property to the harsh writ of seizure
by attachment when it has complied not only with every requirement of law made specially of foreign corporations, but in
addition with every requirement of law made of domestic corporations. . . .
Obviously, the assimilation of foreign corporations authorized to do business in the Philippines "to the status
of domestic corporations, subsumes their being found and operating as corporations, hence,residing, in the country.
The same principle is recognized in American law: that the residence of a corporation, if it can be said to have a

14
residence, is necessarily where it exercises corporate functions . . .;" that it is considered as dwelling "in the place where
its business is done . . .," as being "located where its franchises are exercised . . .," and as being "present where it is
engaged in the prosecution of the corporate enterprise;" that a "foreign corporation licensed to do business in a state is a
resident of any country where it maintains an office or agent for transaction of its usual and customary business for venue
purposes;" and that the "necessary element in its signification is locality of existence." [Words and Phrases, Permanent
Ed., vol. 37, pp. 394, 412, 493].
In as much as SHARP was admittedly doing business in Japan through its four duly registered branches at the time the
collection suit against it was filed, then in the light of the processual presumption, SHARP may be deemed a resident of
Japan, and, as such, was amenable to the jurisdiction of the courts therein and may be deemed to have assented to the
said courts' lawful methods of serving process. 27
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only under the processual
presumption but also because of the presumption of regularity of performance of official duty.
We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to be without merit. We
find no evidence that would justify an award for attorney's fees and litigation expenses under Article 2208 of the Civil Code
of the Philippines. Nor is an award for exemplary damages warranted. Under Article 2234 of the Civil Code, before the
court may consider the question of whether or not exemplary damages should be awarded, the plaintiff must show that he
is entitled to moral, temperate, or compensatory damaged. There being no such proof presented by NORTHWEST, no
exemplary damages may be adjudged in its favor.
WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED insofar as it denied
NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary damages but REVERSED insofar as in
sustained the trial court's dismissal of NORTHWEST's complaint in Civil Case No. 83-17637 of Branch 54 of the Regional
Trial Court of Manila, and another in its stead is hereby rendered ORDERING private respondent C.F. SHARP L
COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign judgment subject of said case, with interest
thereon at the legal rate from the filing of the complaint therein until the said foreign judgment is fully satisfied.
Costs against the private respondent.
SO ORDERED.

Pennoyer v. Neff
95 U.S. 714
Pennoyer v. Neff ()
Argued:
Decided:
___
Syllabus
Opinion, Field
Dissent, Hunt
Syllabus
1. A statute of Oregon, after providing for service of summons upon parties or their representatives, personally or at their
residence, declares that, when service cannot be thus made, and the defendant, after due diligence, cannot be found
within the State, and
that fact appears, by affidavit, to the satisfaction of the court or judge thereof, and it, in like manner, appears that a cause
of action exists against the defendant, or that he is a proper party to an action relating to real property in the State, such
court or judge may grant an order that the service be made by publication of summons . . . when the defendant is not a

15
resident of the State, but has property therein, and the court has jurisdiction of the subject of the action,
-- the order to designate a newspaper of the county where the action is commenced in which the publication shall be
made -- and that proof of such publication shall be "the affidavit of the printer, or his foreman, or his principal clerk."
Held, that defects in the affidavit for the order can only be taken advantage of on appeal, or by some other direct
proceeding, and cannot be urged to impeach the judgment collaterally, and that the provision as to proof of the publication
is satisfied when the affidavit is made by the editor of the paper.
2. A personal judgment is without any validity if it be rendered by a State court in an action upon a money demand against
a nonresident of the State who was served by a publication of summons, but upon whom no personal service of process
within the State was made, and who did not appear; and no title to property passes by a sale under an execution issued
upon such a judgment.
3. The State, having within her territory property of a nonresident, may hold and appropriate it to satisfy the claims of her
citizens against him, and her tribunals may inquire into his obligations to the extent necessary to control the disposition of
that property. If he has no property in the State, there is nothing upon which her tribunals can adjudicate.
4. Substituted service by publication, or in any other authorized form, is sufficient to inform a nonresident of the object of
proceedings taken where [p715] property is once brought under the control of the court by seizure or some equivalent act,
but where the suit is brought to determine his personal rights and obligations, that is, where it is merely in personam, such
service upon him is ineffectual for any purpose.
5. Process from the tribunals of one State cannot run into another State and summon a party there domiciled to respond
to proceedings against him, and publication of process or of notice within the State in which the tribunal sits cannot create
any greater obligation upon him to appear. Process sent to him out of the State, and process published within it, are
equally unavailing in proceedings to establish his personal liability.
6. Except in cases affecting the personal status of the plaintiff, and in those wherein that mode of service may be
considered to have been assented to in advance, the substituted service of process by publication allowed by the law of
Oregon and by similar laws in other States where actions are brought against nonresidents is effectual only where, in
connection with process against the person for commencing the action, property in the State is brought under the control
of the court and subjected to its disposition by process adapted to that purpose, or where the judgment is sought as a
means of reaching such property or affecting some interest therein; in other words, where the action is in the nature of a
proceeding in rem.
7. Whilst the courts of the United States are not foreign tribunals in their relations to the State courts, they are tribunals of
a different sovereignty, and are bound to give a judgment of a State court only the same faith and credit to which it is
entitled in the courts of another State.
8. The term "due process of law," when applied to judicial proceedings, means a course of legal proceedings according to
those rules and principles which have been established by our jurisprudence for the protection and enforcement of private
rights. To give such proceedings any validity, there must be a competent tribunal to pass upon their subject matter, and if
that involves merely a determination of the personal liability of the defendant, he must be brought within its jurisdiction by
service of process within the State, or by his voluntary appearance.
This action was brought by Neff against Pennoyer for the recovery of a tract of land situated in Multnomah County,
Oregon. Pennoyer, in his answer, denied Neff's title and right to possession, and set up a title in himself.
By consent of parties, and in pursuance of their written stipulation filed in the case, the cause was tried by the court, and a
special verdict given, upon which judgment was rendered in favor of Neff; whereupon Pennoyer sued out this writ of error.
The parties respectively claimed title as follows: Neff under a patent issued to him by the United States, March 19, [p716]
1866; and Pennoyer by virtue of a sale made by the sheriff of said county, under an execution sued out upon a judgment
against Neff, rendered Feb. 19, 1866, by the Circuit Court for said county, in an action wherein he was defendant and J.
H. Mitchell was plaintiff. Neff was then a nonresident of Oregon.
In Mitchell v. Neff, jurisdiction of Neff was obtained by service of summons by publication. Pennoyer offered in evidence
duly certified copies of the complaint, summons, order for publication of summons, affidavit of service by publication, and
the judgment in that case, to the introduction of which papers the plaintiff objected because, 1, said judgment is in

16
personam, and appears to have been given without the appearance of the defendant in the action or personal service of
the summons upon him, and while he was a nonresident of the State, and is, therefore, void; 2, said judgment is not in
rem, and therefore constitutes no basis of title in the defendant; 3, said copies of complaint, &c., do not show jurisdiction
to give the judgment alleged, either in rem or personam; and, 4, it appears from said papers that no proof of service by
publication was ever made, the affidavit thereof being made by the "editor" of the "Pacific Christian Advocate," and not by
"the printer, or his foreman or principal clerk." The court admitted the evidence subject to the objections.
The finding of the court in regard to the facts bearing upon the asserted jurisdiction of the State court is as follows: -That, on Nov. 13, 1865, Mitchell applied to said Circuit Court, upon his own affidavit of that date, for an order allowing the
service of the summons in said action to be made upon Neff by publication thereof, whereupon said court made said
order, in the words following:
Now, at this day, comes the plaintiff in his proper person, and by his attorneys, Mitchell and Dolph, and files affidavit of
plaintiff, and motion for an order of publication of summons, as follows, to wit:
Now comes the plaintiff, by his attorneys, and upon the affidavit of plaintiff, herewith filed, moves the court for an order of
publication of summons against defendant, as required by law, he being a nonresident;
and it appearing to the satisfaction of the court that the defendant cannot, after due diligence, be [p717] found in this
State, and that he is a nonresident thereof, that his place of residence is unknown to plaintiff, and cannot, with reasonable
diligence, be ascertained by him, and that the plaintiff has a cause of action of action against defendant, and that
defendant has property in this county and State, it is ordered and adjudged by the court that service of the summons in
this action be made by publication for six weeks successively in the "Pacific Christian Advocate," a weekly newspaper
published in Multnomah County, Oregon, and this action is continued for such service.
That the affidavit of plaintiff, referred to in said order, is in the words following:
I, J. H. Mitchell, being first duly sworn, say that the defendant, Marcus Neff, is a nonresident of this State; that he resides
somewhere in the State of California, at what place affiant knows not, and he cannot be found in this State; that plaintiff
has a just cause of action against defendant for a money demand on account; that this court has jurisdiction of such
action; that the defendant has property in this county and State.
That the complaint in said action was verified and filed on Nov. 3, 1865, and contained facts tending to prove that, at that
date, said Mitchell had a cause of action against said Neff for services as an attorney, performed "between Jan. 1, 1862,
and May 15, 1863." That the entry of judgment in said action contained the following averments:
And it appearing to the court that the defendant was, at the time of the commencement of this action, and ever since has
been, a nonresident of this State; and it further appearing that he has property in this State, and that defendant had notice
of the pendency of this action by publication of the summons for six successive weeks in the "Pacific Christian Advocate,"
a weekly newspaper of general circulation published in Multnomah County, State of Oregon, the last issue of which was
more than twenty days before the first day of this term.
That the affidavit showing the publication of the summons in the "Advocate" aforesaid was made as stated therein by the
"editor" of that paper. That said complaint, summons, affidavit of Mitchell and of the "editor" of the "Advocate" aforesaid,
and entry of judgment, were in the judgment roll, made up by the clerk in the case, but the order for publication of the
summons aforesaid was not placed in said roll [p718] by said clerk, but remains on the files of said court; and that, when
said court made said order for publication, and gave said judgment against Neff, the only evidence it had before it to prove
the facts necessary to give it jurisdiction therefor, and particularly to authorize it to find and state that Neff's residence was
unknown to Mitchell, and could not, with reasonable diligence, be ascertained by him, and that Neff had notice of the
pendency of said action by the publication of the summons as aforesaid, was, so far as appears by the said roll and the
records and files of the said court, the said complaint and affidavits of Mitchell and the editor of the "Advocate."
The statute of Oregon at the time of the commencement of the suit against Neff was as follows: -SECT. 55. When service of the summons cannot be made as prescribed in the last preceding section, and the defendant,
after due diligence, cannot be found within the State, and when that fact appears, by affidavit, to the satisfaction of the
court or judge thereof, or justice in an action in a justice's court, and it also appears that a cause of action exists against
the defendant, or that he is a proper party to an action relating to real property in this State, such court or judge or justice
may grant an order that the service be made by publication of summons in either of the following cases: . . .

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3. When the defendant is not a resident of the State, but has property therein, and the court has jurisdiction of the subject
of the action.
SECT. 56. The order shall direct the publication to be made in a newspaper published in the county where the action is
commenced, and, if no newspaper be published in the county, then in a newspaper to be designated as most likely to give
notice to the person to be served, and for such length of time as may be deemed reasonable, not less than once a week
for six weeks. In case of publication, the court or judge shall also direct a copy of the summons and complaint to be
forthwith deposited in the post office, directed to the defendant, at his place of residence, unless it shall appear that such
residence is neither known to the party making the application, nor can, with reasonable diligence, be ascertained by him.
When publication is ordered, personal service of a copy of the summons and complaint out of the State shall be
equivalent to publication and deposit in the post office. In either case, the defendant shall appear and answer by the first
day of the term following the [p719] expiration of the time prescribed in the order for publication; and, if he does not,
judgment may be taken against him for want thereof. In case of personal service out of the State, the summons shall
specify the time prescribed in the order for publication.
SECT. 57. The defendant against whom publication is ordered, or his personal representatives, on application and
sufficient cause shown, at any time before judgment, shall be allowed to defend the action; and the defendant against
whom publication is ordered, or his representatives, may in like manner, upon good cause shown, and upon such terms
as may be proper, be allowed to defend after judgment, and within one year after the entry of such judgment, on such
terms as may be just; and, if the defence be successful, and the judgment or any part thereof have been collected or
otherwise enforced, such restitution may thereupon be compelled as the court shall direct. But the title to property sold
upon execution issued on such judgment to a purchaser in good faith shall not be thereby affected.
SECT. 60. Proof of the service of summons shall be, in case of publication, the affidavit of the printer, or his foreman, or
his principal clerk, showing the same.
TOP
Opinion
FIELD, J., Opinion of the Court
MR. JUSTICE FIELD delivered the opinion of the court.
This is an action to recover the possession of a tract of land, of the alleged value of $15,000, situated in the State of
Oregon. The plaintiff asserts title to the premises by a patent of the United States issued to him in 1866, under the act of
Congress of Sept. 27, 1850, usually known as the Donation Law of Oregon. The defendant claims to have acquired the
premises under a sheriff's deed, made upon a sale of the property on execution issued upon a judgment recovered
against the plaintiff in one of the circuit courts of the State. The case turns upon the validity of this judgment.
It appears from the record that the judgment was rendered in February, 1866, in favor of J. H. Mitchell, for less than $300,
including costs, in an action brought by him upon a demand for services as an attorney; that, at the time the action was
commenced and the judgment rendered, the defendant therein, the plaintiff here, was a nonresident of the State; [p720]
that he was not personally served with process, and did not appear therein; and that the judgment was entered upon his
default in not answering the complaint, upon a constructive service of summons by publication.
The Code of Oregon provides for such service when an action is brought against a nonresident and absent defendant
who has property within the State. It also provides, where the action is for the recovery of money or damages, for the
attachment of the property of the nonresident. And it also declares that no natural person is subject to the jurisdiction of a
court of the State
unless he appear in the court, or be found within the State, or be a resident thereof, or have property therein; and, in the
last case, only to the extent of such property at the time the jurisdiction attached.
Construing this latter provision to mean that, in an action for money or damages where a defendant does not appear in
the court, and is not found within the State, and is not a resident thereof, but has property therein, the jurisdiction of the
court extends only over such property, the declaration expresses a principle of general, if not universal, law. The authority
of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to
exercise authority beyond those limits would be deemed in every other forum, as has been said by this Court, an
illegitimate assumption of power, and be resisted as mere abuse. D'Arcy v. Ketchum et al., 11 How. 165. In the case

18
against the plaintiff, the property here in controversy sold under the judgment rendered was not attached, nor in any way
brought under the jurisdiction of the court. Its first connection with the case was caused by a levy of the execution. It was
not, therefore, disposed of pursuant to any adjudication, but only in enforcement of a personal judgment, having no
relation to the property, rendered against a nonresident without service of process upon him in the action or his
appearance therein. The court below did not consider that an attachment of the property was essential to its jurisdiction or
to the validity of the sale, but held that the judgment was invalid from defects in the affidavit upon which the order of
publication was obtained and in the affidavit by which the publication was proved. [p721]
There is some difference of opinion among the members of this Court as to the rulings upon these alleged defects. The
majority are of opinion that, inasmuch as the statute requires, for an order of publication, that certain facts shall appear by
affidavit to the satisfaction of the court or judge, defects in such affidavit can only be taken advantage of on appeal, or by
some other direct proceeding, and cannot be urged to impeach the judgment collaterally. The majority of the court are also
of opinion that the provision of the statute requiring proof of the publication in a newspaper to be made by the "affidavit of
the printer, or his foreman, or his principal clerk" is satisfied when the affidavit is made by the editor of the paper. The term
"printer," in their judgment, is there used not to indicate the person who sets up the type -- he does not usually have a
foreman or clerks -- it is rather used as synonymous with publisher. The Supreme Court of New York so held in one case;
observing that, for the purpose of making the required proof, publishers were "within the spirit of the statute." Bunce v.
Reed, 16 Barb. (N. Y.) 350. And, following this ruling, the Supreme Court of California held that an affidavit made by a
"publisher and proprietor" was sufficient. Sharp v. Daugney, 33 Cal. 512. The term "editor," as used when the statute of
New York was passed, from which the Oregon law is borrowed, usually included not only the person who wrote or
selected the articles for publication, but the person who published the paper and put it into circulation. Webster, in an early
edition of his Dictionary, gives as one of the definitions of an editor, a person "who superintends the publication of a
newspaper." It is principally since that time that the business of an editor has been separated from that of a publisher and
printer, and has become an independent profession.
If, therefore, we were confined to the rulings of the court below upon the defects in the affidavits mentioned, we should be
unable to uphold its decision. But it was also contended in that court, and is insisted upon here, that the judgment in the
State court against the plaintiff was void for want of personal service of process on him, or of his appearance in the action
in which it was rendered and that the premises in controversy could not be subjected to the payment of the demand
[p722] of a resident creditor except by a proceeding in rem, that is, by a direct proceeding against the property for that
purpose. If these positions are sound, the ruling of the Circuit Court as to the invalidity of that judgment must be sustained
notwithstanding our dissent from the reasons upon which it was made. And that they are sound would seem to follow from
two well established principles of public law respecting the jurisdiction of an independent State over persons and property.
The several States of the Union are not, it is true, in every respect independent, many of the right and powers which
originally belonged to them being now vested in the government created by the Constitution. But, except as restrained
and limited by that instrument, they possess and exercise the authority of independent States, and the principles of public
law to which we have referred are applicable to them. One of these principles is that every State possesses exclusive
jurisdiction and sovereignty over persons and property within its territory. As a consequence, every State has the power to
determine for itself the civil status and capacities of its inhabitants; to prescribe the subjects upon which they may
contract, the forms and solemnities with which their contracts shall be executed, the rights and obligations arising from
them, and the mode in which their validity shall be determined and their obligations enforced; and also the regulate the
manner and conditions upon which property situated within such territory, both personal and real, may be acquired,
enjoyed, and transferred. The other principle of public law referred to follows from the one mentioned; that is, that no State
can exercise direct jurisdiction and authority over persons or property without its territory. Story, Confl. Laws, c. 2; Wheat.
Int. Law, pt. 2, c. 2. The several States are of equal dignity and authority, and the independence of one implies the
exclusion of power from all others. And so it is laid down by jurists as an elementary principle that the laws of one State
have no operation outside of its territory except so far as is allowed by comity, and that no tribunal established by it can
extend its process beyond that territory so as to subject either persons or property to its decisions. "Any exertion of
authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable of binding [p723] such persons or
property in any other tribunals." Story, Confl.Laws, sect. 539.
But as contracts made in one State may be enforceable only in another State, and property may be held by nonresidents,
the exercise of the jurisdiction which every State is admitted to possess over persons and property within its own territory
will often affect persons and property without it. To any influence exerted in this way by a State affecting persons resident
or property situated elsewhere, no objection can be justly taken; whilst any direct exertion of authority upon them, in an
attempt to give ex-territorial operation to its laws, or to enforce an ex-territorial jurisdiction by its tribunals, would be
deemed an encroachment upon the independence of the State in which the persons are domiciled or the property is
situated, and be resisted as usurpation.
Thus the State, through its tribunals, may compel persons domiciled within its limits to execute, in pursuance of their

19
contracts respecting property elsewhere situated, instruments in such form and with such solemnities as to transfer the
title, so far as such formalities can be complied with; and the exercise of this jurisdiction in no manner interferes with the
supreme control over the property by the State within which it is situated. Penn v. Lord Baltimore, 1 Ves. 444; Massie v.
Watts, 6 Cranch 148; Watkins v. Holman, 16 Pet. 25; Corbett v. Nutt, 10 Wall. 464.
So the State, through its tribunals, may subject property situated within its limits owned by nonresidents to the payment of
the demand of its own citizens against them, and the exercise of this jurisdiction in no respect infringes upon the
sovereignty of the State where the owners are domiciled. Every State owes protection to its own citizens, and, when
nonresidents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by
such nonresidents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the
nonresident situated within its limits that its tribunals can inquire into that nonresident's obligations to its own citizens, and
the inquiry can then be carried only to the extent necessary to control the disposition of the property. If the nonresident
[p724] have no property in the State, there is nothing upon which the tribunals can adjudicate.
These views are not new. They have been frequently expressed, with more or less distinctness, in opinions of eminent
judges, and have been carried into adjudications in numerous cases. Thus, in Picquet v. Swan, 5 Mas. 35, Mr. Justice
Story said:-Where a party is within a territory, he may justly be subjected to its process, and bound personally by the judgment
pronounced on such process against him. Where he is not within such territory, and is not personally subject to its laws, if,
on account of his supposed or actual property being within the territory, process by the local laws may, by attachment, go
to compel his appearance, and, for his default to appear, judgment may be pronounced against him, such a judgment
must, upon general principles, be deemed only to bind him to the extent of such property, and cannot have the effect of a
conclusive judgment in personam, for the plain reason, that, except so far as the property is concerned, it is a judgment
coram non judice.
And in Boswell's Lessee v. Otis, 9 How. 336, where the title of the plaintiff in ejectment was acquired on a sheriff's sale
under a money decree rendered upon publication of notice against nonresidents, in a suit brought to enforce a contract
relating to land, Mr. Justice McLean said:-Jurisdiction is acquired in one of two modes: first, as against the person of the defendant by the service of process; or,
secondly, by a procedure against the property of the defendant within the jurisdiction of the court. In the latter case, the
defendant is not personally bound by the judgment beyond the property in question. And it is immaterial whether the
proceeding against the property be by an attachment or bill in chancery. It must be substantially a proceeding in rem.
These citations are not made as authoritative expositions of the law, for the language was perhaps not essential to the
decision of the cases in which it was used, but as expressions of the opinion of eminent jurists. But in Cooper v. Reynolds,
reported in the 10th of Wallace, it was essential to the disposition of the case to declare the effect of a personal action
against an absent party, without the jurisdiction of the court, not served [p725] with process or voluntarily submitting to the
tribunal, when it was sought to subject his property to the payment of a demand of a resident complainant; and, in the
opinion there delivered, we have a clear statement of the law as to the efficacy of such actions, and the jurisdiction of the
court over them. In that case, the action was for damages for alleged false imprisonment of the plaintiff; and, upon his
affidavit that the defendants had fled from the State, or had absconded or concealed themselves so that the ordinary
process of law could not reach them, a writ of attachment was sued out against their property. Publication was ordered by
the court, giving notice to them to appear and plead, answer or demur, or that the action would be taken as confessed and
proceeded in ex parte as to them. Publication was had, but they made default, and judgment was entered against them,
and the attached property was sold under it. The purchaser having been put into possession of the property, the original
owner brought ejectment for its recovery. In considering the character of the proceeding, the Court, speaking through Mr.
Justice Miller, said:-Its essential purpose or nature is to establish, by the judgment of the court, a demand or claim against the defendant, and
subject his property lying within the territorial jurisdiction of the court to the payment of that demand. But the plaintiff is met
at the commencement of his proceedings by the fact that the defendant is not within the territorial jurisdiction, and cannot
be served with any process by which he can be brought personally within the power of the court. For this difficulty, the
statute has provided a remedy. It says that, upon affidavit's being made of that fact, a writ of attachment may be issued
and levied on any of the defendant's property, and a publication may be made warning him to appear; and that thereafter
the court may proceed in the case, whether he appears or not. If the defendant appears, the cause becomes mainly a suit
in personam, with the added incident that the property attached remains liable, under the control of the court, to answer to
any demand which may be established against the defendant by the final judgment of the court. But if there is no
appearance of the defendant, and no service of process on him, the case becomes in its essential nature a proceeding in

20
rem, the only effect of which is to subject the property attached to the payment of the demand which the court may find to
be due to the plaintiff. That such is [p726] the nature of this proceeding in this latter class of cases is clearly evinced by
two well established propositions: first, the judgment of the court, though in form a personal judgment against the
defendant, has no effect beyond the property attached in that suit. No general execution can be issued for any balance
unpaid after the attached property is exhausted. No suit can be maintained on such a judgment in the same court, or in
any other; nor can it be used as evidence in any other proceeding not affecting the attached property; nor could the costs
in that proceeding be collected of defendant out of any other property than that attached in the suit. Second, the court in
such a suit cannot proceed unless the officer finds some property of defendant on which to levy the writ of attachment. A
return that none can be found is the end of the case, and deprives the court of further jurisdiction, though the publication
may have been duly made and proven in court.
The fact that the defendants in that case had fled from the State, or had concealed themselves, so as not to be reached
by the ordinary process of the court, and were not nonresidents, was not made a point in the decision. The opinion treated
them as being without the territorial jurisdiction of the court, and the grounds and extent of its authority over persons and
property thus situated were considered when they were not brought within its jurisdiction by personal service or voluntary
appearance.
The writer of the present opinion considered that some of the objections to the preliminary proceedings in the attachment
suit were well taken, and therefore dissented from the judgment of the Court, but, to the doctrine declared in the above
citation, he agreed, and he may add that it received the approval of all the judges. It is the only doctrine consistent with
proper protection to citizens of other States. If, without personal service, judgments in personam, obtained ex parte
against nonresidents and absent parties, upon mere publication of process, which, in the great majority of cases, would
never be seen by the parties interested, could be upheld and enforced, they would be the constant instruments of fraud
and oppression. Judgments for all sorts of claims upon contracts and for torts, real or pretended, would be thus obtained,
under which property would be seized, when the evidence of the transactions upon [p727] which they were founded, if
they ever had any existence, had perished.
Substituted service by publication, or in any other authorized form, may be sufficient to inform parties of the object of
proceedings taken where property is once brought under the control of the court by seizure or some equivalent act. The
law assumes that property is always in the possession of its owner, in person or by agent, and it proceeds upon the theory
that its seizure will inform him not only that it is taken into the custody of the court, but that he must look to any
proceedings authorized by law upon such seizure for its condemnation and sale. Such service may also be sufficient in
cases where the object of the action is to reach and dispose of property in the State, or of some interest therein, by
enforcing a contract or a lien respecting the same, or to partition it among different owners, or, when the public is a party,
to condemn and appropriate it for a public purpose. In other words, such service may answer in all actions which are
substantially proceedings in rem. But where the entire object of the action is to determine the personal rights and
obligations of the defendants, that is, where the suit is merely in personam, constructive service in this form upon a
nonresident is ineffectual for any purpose. Process from the tribunals of one State cannot run into another State, and
summon parties there domiciled to leave its territory and respond to proceedings against them. Publication of process or
notice within the State where the tribunal sits cannot create any greater obligation upon the nonresident to appear.
Process sent to him out of the State, and process published within it, are equally unavailing in proceedings to establish his
personal liability.
The want of authority of the tribunals of a State to adjudicate upon the obligations of nonresidents, where they have no
property within its limits, is not denied by the court below: but the position is assumed, that, where they have property
within the State, it is immaterial whether the property is in the first instance brought under the control of the court by
attachment or some other equivalent act, and afterwards applied by its judgment to the satisfaction of demands against its
owner; or such demands be first established in a personal action, and [p728] the property of the nonresident be
afterwards seized and sold on execution. But the answer to this position has already been given in the statement that the
jurisdiction of the court to inquire into and determine his obligations at all is only incidental to its jurisdiction over the
property. Its jurisdiction in that respect cannot be made to depend upon facts to be ascertained after it has tried the cause
and rendered the judgment. If the judgment be previously void, it will not become valid by the subsequent discovery of
property of the defendant, or by his subsequent acquisition of it. The judgment, if void when rendered, will always remain
void; it cannot occupy the doubtful position of being valid if property be found, and void if there be none. Even if the
position assumed were confined to cases where the nonresident defendant possessed property in the State at the
commencement of the action, it would still make the validity of the proceedings and judgment depend upon the question
whether, before the levy of the execution, the defendant had or had not disposed of the property. If, before the levy, the
property should be sold, then, according to this position, the judgment would not be binding. This doctrine would introduce
a new element of uncertainty in judicial proceedings. The contrary is the law: the validity of every judgment depends upon
the jurisdiction of the court before it is rendered, not upon what may occur subsequently. In Webster v. Reid, reported in

21
11th of Howard, the plaintiff claimed title to land sold under judgments recovered in suits brought in a territorial court of
Iowa, upon publication of notice under a law of the territory, without service of process; and the court said:
These suits were not a proceeding in rem against the land, but were in personam against the owners of it. Whether they
all resided within the territory or not does not appear, nor is it a matter of any importance. No person is required to answer
in a suit on whom process has not been served, or whose property has not been attached. In this case, there was no
personal notice, nor an attachment or other proceeding against the land, until after the judgments. The judgments,
therefore, are nullities, and did not authorize the executions on which the land was sold. [p729]
The force and effect of judgments rendered against nonresidents without personal service of process upon them, or their
voluntary appearance, have been the subject of frequent consideration in the courts of the United States and of the
several States, as attempts have been made to enforce such judgments in States other than those in which they were
rendered, under the provision of the Constitution requiring that "full faith and credit shall be given in each State to the
public acts, records, and judicial proceedings of every other State;" and the act of Congress providing for the mode of
authenticating such acts, records, and proceedings, and declaring that, when thus authenticated,
they shall have such faith and credit given to them in every court within the United States as they have by law or usage in
the courts of the State from which they are or shall or taken.
In the earlier cases, it was supposed that the act gave to all judgments the same effect in other States which they had by
law in the State where rendered. But this view was afterwards qualified so as to make the act applicable only when the
court rendering the judgment had jurisdiction of the parties and of the subject matter, and not to preclude an inquiry into
the jurisdiction of the court in which the judgment was rendered, or the right of the State itself to exercise authority over
the person or the subject matter. M'Elmoyle v. Cohen, 13 Pet. 312. In the case of D'Arcy v. Ketchum, reported in the 11th
of Howard, this view is stated with great clearness. That was an action in the Circuit Court of the United States for
Louisiana, brought upon a judgment rendered in New York under a State statute, against two joint debtors, only one of
whom had been served with process, the other being a nonresident of the State. The Circuit Court held the judgment
conclusive and binding upon the nonresident not served with process, but this Court reversed its decision, observing, that
it was a familiar rule that countries foreign to our own disregarded a judgment merely against the person, where the
defendant had not been served with process nor had a day in court; that national comity was never thus extended; that
the proceeding was deemed an illegitimate assumption of power, and resisted as mere abuse; that no faith and credit or
force and effect had been given to such judgments by any State of the Union, so far [p730] as known; and that the State
courts had uniformly, and in many instances, held them to be void. "The international law," said the court,
as it existed among the States in 1790, was that a judgment rendered in one State, assuming to bind the person of a
citizen of another, was void within the foreign State, when the defendant had not been served with process or voluntarily
made defence, because neither the legislative jurisdiction nor that of courts of justice had binding force.
And the Court held that the act of Congress did not intend to declare a new rule, or to embrace judicial records of this
description. As was stated in a subsequent case, the doctrine of this Court is that the act
was not designed to displace that principle of natural justice which requires a person to have notice of a suit before he can
be conclusively bound by its result, nor those rules of public law which protect persons and property within one State from
the exercise of jurisdiction over them by another.
The Lafayette Insurance Co. v. French et al., 18 How. 404.
This whole subject has been very fully and learnedly considered in the recent case of Thompson v. Whitman, 18 Wall.
457, where all the authorities are carefully reviewed and distinguished, and the conclusion above stated is not only
reaffirmed, but the doctrine is asserted that the record of a judgment rendered in another State may be contradicted as to
the facts necessary to give the court jurisdiction against its recital of their existence. In all the cases brought in the State
and Federal courts, where attempts have been made under the act of Congress to give effect in one State to personal
judgments rendered in another State against nonresidents, without service upon them, or upon substituted service by
publication, or in some other form, it has been held, without an exception, so far as we are aware, that such judgments
were without any binding force except as to property, or interests in property, within the State, to reach and affect which
was the object of the action in which the judgment was rendered, and which property was brought under control of the
court in connection with the process against the person. The proceeding in such cases, though in the form of a personal
action, has been uniformly treated, where service was not obtained, and the party did not voluntarily [p731] appear, as
effectual and binding merely as a proceeding in rem, and as having no operation beyond the disposition of the property, or
some interest therein. And the reason assigned for this conclusion has been that which we have already stated -- that the

22
tribunals of one State have no jurisdiction over persons beyond its limits, and can inquire only into their obligations to its
citizens when exercising its conceded jurisdiction over their property within its limits. In Bissell v. Briggs, decided by the
Supreme Court of Massachusetts as early as 1813, the law is stated substantially in conformity with these views. In that
case, the court considered at length the effect of the constitutional provision, and the act of Congress mentioned, and after
stating that, in order to entitle the judgment rendered in any court of the United States to the full faith and credit mentioned
in the Constitution, the court must have had jurisdiction not only of the cause, but of the parties, it proceeded to illustrate
its position by observing, that, where a debtor living in one State has goods, effects, and credits in another, his creditor
living in the other State may have the property attached pursuant to its laws, and, on recovering judgment, have the
property applied to its satisfaction, and that the party in whose hands the property was would be protected by the
judgment in the State of the debtor against a suit for it, because the court rendering the judgment had jurisdiction to that
extent; but that, if the property attached were insufficient to satisfy the judgment, and the creditor should sue on that
judgment in the State of the debtor, he would fail because the defendant was not amenable to the court rendering the
judgment. In other words, it was held that over the property within the State the court had jurisdiction by the attachment,
but had none over his person, and that any determination of his liability, except so far as was necessary for the disposition
of the property, was invalid.
In Kilbourn v. Woodworth, 5 Johns. (N.Y.) 37, an action of debt was brought in New York upon a personal judgment
recovered in Massachusetts. The defendant in that judgment was not served with process, and the suit was commenced
by the attachment of a bedstead belonging to the defendant, accompanied with a summons to appear, served on his wife
after she had left her place in Massachusetts. The court held that [p732] the attachment bound only the property attached
as a proceeding in rem, and that it could not bind the defendant, observing, that to bind a defendant personally when he
was never personally summoned or had notice of the proceeding would be contrary to the first principles of justice,
repeating the language in that respect of Chief Justice DeGrey, used in the case of Fisher v. Lane, 3 Wils. 297, in 1772.
See also Borden v. Fitch, 15 Johns. (N. Y.) 121, and the cases there cited, and Harris v. Hardeman et al., 14 How. 334. To
the same purport, decisions are found in all the State courts. In several of the cases, the decision has been accompanied
with the observation that a personal judgment thus recovered has no binding force without the State in which it is
rendered, implying that, in such State, it may be valid and binding. But if the court has no jurisdiction over the person of
the defendant by reason of his nonresidence, and consequently no authority to pass upon his personal rights and
obligations; if the whole proceeding, without service upon him or his appearance, is coram non judice and void; if to hold a
defendant bound by such a judgment is contrary to the first principles of justice -- it is difficult to see how the judgment can
legitimately have any force within the State. The language used can be justified only on the ground that there was no
mode of directly reviewing such judgment or impeaching its validity within the State where rendered, and that therefore it
could be called in question only when its enforcement was elsewhere attempted. In later cases, this language is repeated
with less frequency than formerly, it beginning to be considered, as it always ought to have been, that a judgment which
can be treated in any State of this Union as contrary to the first principles of justice, and as an absolute nullity, because
rendered without any jurisdiction of the tribunal over the party, is not entitled to any respect in the State where rendered.
Smith v. McCutchen, 38 Mo. 415; Darrance v. Preston, 18 Iowa, 396; Hakes v. Shupe, 27 id. 465; Mitchell's Administrator
v. Gray, 18 Ind. 123.
Be that as it may, the courts of the United States are not required to give effect to judgments of this character when any
right is claimed under them. Whilst they are not foreign tribunals in their relations to the State courts, they are tribunals
[p733] of a different sovereignty, exercising a distinct and independent jurisdiction, and are bound to give to the judgments
of the State courts only the same faith and credit which the courts of another State are bound to give to them.
Since the adoption of the Fourteenth Amendment to the Federal Constitution, the validity of such judgments may be
directly questioned, and their enforcement in the State resisted, on the ground that proceedings in a court of justice to
determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due
process of law. Whatever difficulty may be experienced in giving to those terms a definition which will embrace every
permissible exertion of power affecting private rights, and exclude such as is forbidden, there can be no doubt of their
meaning when applied to judicial proceedings. They then mean a course of legal proceedings according to those rules
and principles which have been established in our systems of jurisprudence for the protection and enforcement of private
rights. To give such proceedings any validity, there must be a tribunal competent by its constitution -- that is, by the law of
its creation -- to pass upon the subject matter of the suit; and if that involves merely a determination of the personal
liability of the defendant, he must be brought within its jurisdiction by service of process within the State, or his voluntary
appearance.
Except in cases affecting the personal status of the plaintiff and cases in which that mode of service may be considered to
have been assented to in advance, as hereinafter mentioned, the substituted service of process by publication, allowed by
the law of Oregon and by similar laws in other States, where actions are brought against nonresidents, is effectual only
where, in connection with process against the person for commencing the action, property in the State is brought under

23
the control of the court, and subjected to its disposition by process adapted to that purpose, or where the judgment is
sought as a means of reaching such property or affecting some interest therein; in other words, where the action is in the
nature of a proceeding in rem. As stated by Cooley in his Treatise on Constitutional Limitations 405, for any other purpose
than to subject the property of a nonresident to valid claims against [p734] him in the State, "due process of law would
require appearance or personal service before the defendant could be personally bound by any judgment rendered."
It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has for its object the
disposition of the property, without reference to the title of individual claimants; but, in a larger and more general sense,
the terms are applied to actions between parties where the direct object is to reach and dispose of property owned by
them, or of some interest therein. Such are cases commenced by attachment against the property of debtors, or instituted
to partition real estate, foreclose a mortgage, or enforce a lien. So far as they affect property in the State, they are
substantially proceedings in rem in the broader sense which we have mentioned.
It is hardly necessary to observe that, in all we have said, we have had reference to proceedings in courts of first instance,
and to their jurisdiction, and not to proceedings in an appellate tribunal to review the action of such courts. The latter may
be taken upon such notice, personal or constructive, as the State creating the tribunal may provide. They are considered
as rather a continuation of the original litigation than the commencement of a new action. Nations et al. v. Johnson et al.,
24 How. 195.
It follows from the views expressed that the personal judgment recovered in the State court of Oregon against the plaintiff
herein, then a nonresident of the State, was without any validity, and did not authorize a sale of the property in
controversy.
To prevent any misapplication of the views expressed in this opinion, it is proper to observe that we do not mean to assert
by anything we have said that a State may not authorize proceedings to determine the status of one of its citizens towards
a nonresident which would be binding within the State, though made without service of process or personal notice to the
nonresident. The jurisdiction which every State possesses to determine the civil status and capacities of all its inhabitants
involves authority to prescribe the conditions on which proceedings affecting them may be commenced and carried on
within its territory. The State, for example, has absolute [p735] right to prescribe the conditions upon which the marriage
relation between its own citizens shall be created, and the causes for which it may be dissolved. One of the parties guilty
of acts for which, by the law of the State, a dissolution may be granted may have removed to a State where no dissolution
is permitted. The complaining party would, therefore, fail if a divorce were sought in the State of the defendant; and if
application could not be made to the tribunals of the complainant's domicile in such case, and proceedings be there
instituted without personal service of process or personal notice to the offending party, the injured citizen would be without
redress. Bish. Marr. and Div., sect. 156.
Neither do we mean to assert that a State may not require a nonresident entering into a partnership or association within
its limits, or making contracts enforceable there, to appoint an agent or representative in the State to receive service of
process and notice in legal proceedings instituted with respect to such partnership, association, or contracts, or to
designate a place where such service may be made and notice given, and provide, upon their failure, to make such
appointment or to designate such place that service may be made upon a public officer designated for that purpose, or in
some other prescribed way, and that judgments rendered upon such service may not be binding upon the nonresidents
both within and without the State. As was said by the Court of Exchequer in Vallee v. Dumergue, 4 Exch. 290,
It is not contrary to natural justice that a man who has agreed to receive a particular mode of notification of legal
proceedings should be bound by a judgment in which that particular mode of notification has been followed, even though
he may not have actual notice of them.
See also The Lafayette Insurance Co. v. French et al., 18 How. 404, and Gillespie v. Commercial Mutual Marine Insurance
Co., 12 Gray (Mass.), 201. Nor do we doubt that a State, on creating corporations or other institutions for pecuniary or
charitable purposes, may provide a mode in which their conduct may be investigated, their obligations enforced, or their
charters revoked, which shall require other than personal service upon their officers or members. Parties becoming
members of such corporations or institutions would hold their [p736] interest subject to the conditions prescribed by law.
Copin v. Adamson, Law Rep. 9 Ex. 345.
In the present case, there is no feature of this kind, and consequently no consideration of what would be the effect of such
legislation in enforcing the contract of a nonresident can arise. The question here respects only the validity of a money
judgment rendered in one State in an action upon a simple contract against the resident of another without service of
process upon him or his appearance therein.

24
Judgment affirmed.
G.R. No. 46631

November 16, 1939

IDONAH SLADE PERKINS, petitioner,


vs.
ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and BENGUET
CONSOLIDATED MINING COMPANY, respondents.
Alva J. Hill for petitioner.
Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated Mining Company.
DeWitt, Perkins & Ponce Enrile for respondent Perkins.

MORAN, J.:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of Manila against
the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on 52,874 shares of stock registered
in his name, payment of which was being withheld by the company; and, for the recognition of his right to the control and
disposal of said shares, to the exclusion of all others. To the complaint, the company filed its answer alleging, by way of
defense, that the withholding of such dividends and the non-recognition of plaintiff's right to the disposal and control of the
shares were due to certain demands made with respect to said shares by the petitioner herein, Idonah Slade Perkins, and
by one George H. Engelhard. The answer prays that the adverse claimants be made parties to the action and served with
notice thereof by publication, and that thereafter all such parties be required to interplead and settle the rights among
themselves. On September 5, 1938, the trial court ordered respondent Eugene Arthur Perkins to include in his complaint
as parties defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The complaint was accordingly
amended and in addition to the relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah
Slade Perkins and George Engelhard be adjudged without interest in the shares of stock in question and excluded from
any claim they assert thereon. Thereafter, summons by publication were served upon the non-resident defendants, Idonah
Slade Perkins and George H. Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard filed
his answer to the amended complaint, and on December 10, 1938, petitioner Idonah Slade Perkins, through counsel, filed
her pleading entitled "objection to venue, motion to quash, and demurrer to jurisdiction" wherein she challenged the
jurisdiction of the lower court over her person. Petitioner's objection, motion and demurrer having been overruled as well
as her motion for reconsideration of the order of denial, she now brought the present petition for certiorari, praying that the
summons by publication issued against her be declared null and void, and that, with respect to her, respondent Judge be
permanently prohibited from taking any action on the case.
The controlling issue here involved is whether or not the Court of First Instance of Manila has acquired jurisdiction over
the person of the present petitioner as a non-resident defendant, or, notwithstanding the want of such jurisdiction, whether
or not said court may validly try the case. The parties have filed lengthy memorandums relying on numerous authorities,
but the principles governing the question are well settled in this jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in the Philippine courts
and it appears, by the complaint or by affidavits, that the action relates to real or personal property within the Philippines in
which said defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly
or in part, in excluding such person from any interest therein, service of summons maybe made by publication.
We have fully explained the meaning of this provision in El Banco Espaol Filipino vs. Palanca, 37 Phil., 921, wherein we
laid down the following rules:
(1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter and over the persons of
the parties. Jurisdiction over the subject-matter is acquired by concession of the sovereign authority which organizes a
court and determines the nature and extent of its powers in general and thus fixes its jurisdiction with reference to actions

25
which it may entertain and the relief it may grant. Jurisdiction over the persons of the parties is acquired by their voluntary
appearance in court and their submission to its authority, or by the coercive power of legal process exerted over their
persons.
(2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot acquire jurisdiction over his
person even if the summons be served by publication, for he is beyond the reach of judicial process. No tribunal
established by one State can extend its process beyond its territory so as to subject to its decisions either persons or
property located in another State. "There are many expressions in the American reports from which it might be inferred
that the court acquires personal jurisdiction over the person of the defendant by publication and notice; but such is not the
case. In truth, the proposition that jurisdiction over the person of a non-resident cannot be acquired by publication and
notice was never clearly understood even in the American courts until after the decision had been rendered by the
Supreme Court of the United States in the leading case of Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the light of
that decisions which have subsequently been rendered in that and other courts, the proposition that jurisdiction over the
person cannot be thus acquired by publication and notice is no longer open to question; and it is now fully established that
a personal judgment upon constructive or substituted service against a non-resident who does not appear is wholly
invalid. This doctrine applies to all kinds of constructive or substituted process, including service by publication and
personal service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in
the case where the non-resident defendant has expressly or impliedly consented to the mode of service. (Note to Raher
vs. Raher, 35 L. R. A. [N. S.], 292; see also L.R.A. 585; 35 L.R.A. [N.S.], 312.)
(3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a Philippine court. Where,
however, the action is in rem or quasi in rem in connection with property located in the Philippines, the court acquires
jurisdiction over the res, and its jurisdiction over the person of the non-resident is non-essential. In order that the court
may exercise power over the res, it is not necessary that the court should take actual custody of the property, potential
custody thereof being sufficient. There is potential custody when, from the nature of the action brought, the power of the
court over the property is impliedly recognized by law. "An illustration of what we term potential jurisdiction over the res, is
found in the proceeding to register the title of land under our system for the registration of land. Here the court, without
taking actual physical control over the property , assumes, at the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world."
(4) As before stated, in an action in rem or quasi in rem against a non-resident defendant, jurisdiction over his person is
non-essential, and if the law requires in such case that the summons upon the defendant be served by publication, it is
merely to satisfy the constitutional requirement of due process. If any be said, in this connection, that "may reported cases
can be cited in which it is assumed that the question of the sufficiency of publication or notice in the case of this kind is a
question affecting the jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by virtue of the
publication. This phraseology was undoubtedly originally adopted by the court because of the analogy between service by
publication and personal service of process upon the defendant; and, as has already been suggested, prior to the
decision of Pennoyer v. Neff (supra), the difference between the legal effects of the two forms of service was obscure. It is
accordingly not surprising that the modes of expression which had already been moulded into legal tradition before that
case was decided have been brought down to the present day. But it is clear that the legal principle here involved is not
affected by the peculiar languages in which the courts have expounded their ideas."lawphi1.net
The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-resident, as laid down by
the Supreme Court of the United States in Pennoyer v. Neff, supra, may be found in a recognized principle of public law to
the effect that "no State can exercise direct jurisdiction and authority over persons or property without its territory. Story,
Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The several States are of equal dignity and authority, and the independence of
one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the
laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal
established by it can extend its process beyond that territory so as to subject either persons or property to its decisions.
"Any exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable of binding such
persons or property in any other tribunals." Story, Confl. L., sec. 539." (Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565,
568-569.).

26
When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case,
upon the principle that a "State, through its tribunals, may subject property situated within its limits owned by nonresidents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect
infringes upon the sovereignty of the State where the owners are domiciled. Every State owes protection to its citizens;
and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any
property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the
property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its
own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property. If
the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate." (Pennoyer v.
Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his amended complaint
against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest in a property located in the
Philippines. That property consists in certain shares of stocks of the Benguet Consolidated Mining Company, a sociedad
anonima, organized in the Philippines under the provisions of the Spanish Code of Commerce, with its principal office in
the City of Manila and which conducts its mining activities therein. The situs of the shares is in the jurisdiction where the
corporation is created, whether the certificated evidencing the ownership of those shares are within or without that
jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold that
the action thus brought is quasi in rem, for while the judgement that may be rendered therein is not strictly a judgment in
rem, "it fixes and settles the title to the property in controversy and to that extent partakes of the nature of the judgment in
rem." (50 C.J., p 503). As held by the Supreme Court of the United States in Pennoyer v. Neff (supra);
It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has for its object the
disposition of the property, without reference to the title of individual claimants; but , in a large and more general sense,
the terms are applied to actions between parties, where the direct object is to reach and dispose of property owned by
them, or of some interest therein.
The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of the non-resident.
In order to satisfy the constitutional requirement of due process, summons has been served upon her by publication.
There is no question as to the adequacy of publication made nor as to the mailing of the order of publication to the
petitioner's last known place of residence in the United States. But, of course, the action being quasi in rem and notice
having be made by publication, the relief that may be granted by the Philippine court must be confined to the res, it having
no jurisdiction to render a personal judgment against the non-resident. In the amended complaint filed by Eugene Arthur
Perkins, no money judgment or other relief in personam is prayed for against the petitioner. The only relief sought therein
is that she be declared to be without any interest in the shares in controversy and that she be excluded from any claim
thereto.
Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an action in
personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims are or may be made
upon a person for or relating to personal property, or the performance of an obligation or any portion thereof, so that he
may be made subject to several actions by different persons, such person may bring an action against the conflicting
claimants, disclaiming personal interest in the controversy, and the court may order them to interplead with one another
and litigate their several claims among themselves, there upon proceed to determine their several claims. Here, The
Benguet Consolidated Mining Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred that in
connection with the shares of stock in question, conflicting claims were being made upon it by said plaintiff, Eugene Arthur
Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard, and prayed that these last two be made
parties to the action and served with summons by publication, so that the three claimants may litigate their conflicting
claims and settle their rights among themselves. The court has not issued an order compelling the conflicting claimants to
interplead with one another and litigate their several claims among themselves, but instead ordered the plaintiff to amend
his complaint including the other two claimants as parties defendant. The plaintiff did so, praying that the new defendants
thus joined be excluded fro any interest in the shares in question, and it is upon this amended complaint that the court
ordered the service of the summons by publication. It is therefore, clear that the publication of the summons was ordered

27
not in virtue of an interpleading, but upon the filing of the amended complaint wherein an action quasi in rem is alleged.
Had not the complaint been amended, including the herein petitioner as an additional defendant, and had the court, upon
the filing of the answer of the Benguet Consolidated Mining Company, issued an order under section 120 of the Code of
Civil Procedure, calling the conflicting claimants into court and compelling them to interplead with one another, such order
could not perhaps have validly been served by publication or otherwise, upon the non-resident Idonah Slade Perkins, for
then the proceeding would be purely one of interpleading. Such proceeding is a personal action, for it merely seeks to call
conflicting claimants into court so that they may interplead and litigate their several claims among themselves, and no
specific relief is prayed for against them, as the interpleader have appeared in court, one of them pleads ownership of the
personal property located in the Philippines and seeks to exclude a non-resident claimant from any interest therein, is a
question which we do not decide not. Suffice it to say that here the service of the summons by publication was ordered by
the lower court by virtue of an action quasi in rem against the non-resident defendant.
Respondents contend that, as the petitioner in the lower court has pleaded over the subject-matter, she has submitted
herself to its jurisdiction. We have noticed, however, that these pleas have been made not as independent grounds for
relief, but merely as additional arguments in support of her contention that the lower court had no jurisdiction over the
person. In other words, she claimed that the lower court had no jurisdiction over her person not only because she is a
non-resident, but also because the court had no jurisdiction over the subject-matter of the action and that the issues
therein involved have already been decided by the New York court and are being relitigated in the California court.
Although this argument is obviously erroneous, as neither jurisdiction over the subject-matter nor res adjudicata nor lis
pendens has anything to do with the question of jurisdiction over her person, we believe and so hold that the petitioner
has not, by such erroneous argument, submitted herself to the jurisdiction of the court. Voluntary appearance cannot be
implied from either a mistaken or superflous reasoning but from the nature of the relief prayed for.
For all the foregoing, petition is hereby denied, with costs against petitioner.

G.R. No. L-18176

October 26, 1966

LAZARO B. RAYRAY, plaintiff-appellant,


vs.
CHAE KYUNG LEE, defendant-appellee.
Jaime R. Nuevas for plaintiff and appellee.
Rafael Jose for defendant and appellant.
CONCEPCION, C.J.:
Appeal from a decision of the Court of Juvenile and Domestic Relations.
Plaintiff Lazaro Rayray seeks the annulment of his marriage to defendant Chae Kyung Lee. Inasmuch as, the latter's
whereabouts is unknown, and she was formerly a resident of Pusan, Korea, summons was served by publication, as
provided in the Rules of Court. Thereafter, plaintiff moved that defendant be declared in default, she not having filed an
answer, and that a date be set for the reception of his evidence. Before acting on this motion, the lower court referred the
case to the City Fiscal of Manila pursuant to Articles 88 and 101 of the Civil Code of the Philippines, for the purpose of
determining whether or not a collusion between the parties exists. Said officer having found no such collusion, the case
was heard on the merits. In due course, thereafter, decision was rendered dismissing plaintiff's complaint, without costs,
upon the ground: (1) that the court could not nullify a marriage contracted abroad; and (2) that the facts proven do not
warrant the relief prayed for. A reconsideration of this decision having been denied, plaintiff appealed to the Court of
Appeals, which certified the case to the Supreme Court, the jurisdiction of the lower court being in issue in the appeal.
In relation thereto, the court a quo found that it had no jurisdiction to pass upon the validity of plaintiff's marriage to the
defendant, it having been solemnized in Seoul, Korea. Said conclusion is erroneous. In order that a given case could be
validly decided by a court of justice, it must have jurisdiction over (1) the subject-matter of the litigation; (2) the person of
the parties therein; and (3) in actions in rem or quasi-in-rem, the res.1

28
The subject-matter of the present case is the annulment of plaintiff's marriage to the defendant, which is within the
jurisdiction of our courts of first instance,2 and, in Manila, of its Court of Juvenile and Domestic Relations.3
The same acquired jurisdiction over plaintiff herein by his submission thereto in consequence of the filing of the complaint
herein.4 Defendant was placed under the jurisdiction of said court, upon the service of summons by publication.5
This is an action in rem, for it concerns the status of the parties herein, and status affects or binds the whole word.
The res in the present case is the relation between said parties, or their marriage tie.6 Jurisdiction over the same depends
upon the nationality or domicile of the parties, not the place of celebration of marriage, or the locus celebrationis.7 Plaintiff
here is a citizen of the Philippines, domiciled therein. His status is, therefore, subject to our jurisdiction, on both counts.
True that defendant was and under plaintiff's theory still is a non-resident alien. But, this fact does not deprive the
lower court of its jurisdiction to pass upon the validity of her marriage to plaintiff herein.
Indeed, marriage is one of the cases of double status, in that the status therein involves and affects two persons. One is
married, never in abstract or a vacuum, but, always to somebody else. Hence, a judicial decree on the marriage status of
a person necessarily reflects upon the status of another and the relation between them. The prevailing rule is, accordingly,
that a court has jurisdiction over the res, in an action for annulment of marriage, provided, at least, one of the parties is
domiciled in, or a national of, the forum.8 Since plaintiff is a Filipino, domiciled in the Philippines, it follows that the lower
court had jurisdiction over the res, in addition to its jurisdiction over the subject-matter and the parties. In other words, it
could validly inquire into the legality of the marriage between the parties herein.
As regards the substantial validity of said marriage, plaintiff testified that he met the defendant in Pusan Korea, sometime
in 1952, where she was operating a nightclub; that they lived together from November 1952 to April 1955; that they were
married in Pusan Korea, on March 15, 1953, as attested to by their marriage certificate Exhibit D; that before the wedding
she obtained the "police clearance" Exhibit A, written in Korean language, and dated February 16, 1953, which was
necessary in order that she could contract marriage; that on June 30, 1953, he proceeded to India and left the defendant,
then in advanced stage of pregnancy, in Korea; that in October, 1953, she joined him in India, bringing with her said
Exhibit A, and its translation into English, Exhibit B; that he then noticed that, on February 16, 1958, defendant was
already married, according to said Exhibit B; that as he confronted the defendant with the contents of this document, her
reply was that it is not unusual for a Korean girl to marry twice in Korea; that when he inquired about her status on March
15, 1953, defendant confided to him that she had lived with about two (2) Americans and a Korean, adding, however, that
there was no impediment to her contracting marriage with him; and that, later on, they were separated and her
whereabouts are now unknown to him.
The lower court considered plaintiffs evidence insufficient to establish that defendant was married to another person prior
to March 15, 1953, and we agree with this conclusion. To begin with, Exhibit A is not signed. It merely purports to bear the
seal of the Chief of Pusan National Police. Secondly, the record does not show who prepared it, much less that he had
personal knowledge of the truth of the entry therein concerning defendant's status on February 15, 1953. It should be
noted, that defendant was a native, not of Pusan but of Seoul, Korea. Hence, Exhibit A could, at best, be no more than
hearsay evidence. Again, when plaintiff allegedly confronted the defendant with the contents of Exhibit B, defendant
did not say that she had been married before. Plaintiff declared that she admitted having previously lived with several
other men, adding, however, that she had no impediment, thus, in effect, negating the alleged previous marriage.
Thirdly, if Exhibit A was obtained on February 16, 1953, in order to establish defendant's qualification to contract marriage,
why is it that the wedding took place, despite the entry in said document to the effect that defendant was married already?
There is no competent evidence to the effect that Korean laws permit bigamy or polygamy. Moreover, the presumption is
that the foreign law is identical to the lex fori, or, in the case at bar, the Philippine Law.9 In fact, the statement, imputed by
plaintiff to the defendant, to the effect that, although she had cohabited before with other men, there was no impediment to
her marrying him, clearly suggests that a previous marriage on her part would have been, in her opinion, a legal obstacle
to her marriage with the plaintiffs. Then too, the marriage certificate Exhibit D contains spaces for the entry of data on
whether any of the contracting parties had been previously married; whether the prior marriage had been dissolved by a
decree of divorce; and, if there had been such decree, the date thereof. Surely, these data would be absolutely irrelevant if
polygamy were sanctioned in Korea. And, again, why is it that Exhibit D states that defendant had had no previous

29
marriage?
Last, but not least, plaintiff cannot possibly secure the relief prayed for unless full faith and credence are given to his
testimony, but we cannot believe him for the records show that he would not hesitate to lie when it suits his purpose. Thus,
for instance, when plaintiff contracted marriage with the defendant, he said that he was single, although, he admitted, this
was a lie, because, sometime in 1940, he married in Baguio, one Adelaida Melecio or Valdez.10 But, then he would, also,
have us believe that his marriage with the latter was illegal or fictitious, because Adelaida and he did no more than sign,
on a small window in the City Hall of Baguio, certain documents the contents of which he did not read.
WHEREFORE, the decision appealed from should be, as it is hereby, affirmed, with the costs of this instance against
plaintiff-appellant. It is so ordered.
Reyes, J.B.L., Dizon,
Barrera, J, is on leave.

G.R. No. 150656

Regala,

Makalintal,

Bengzon,

J.P.,

Zaldivar,

Sanchez

and

Castro,

JJ., concur.

April 29, 2003

MARGARITA ROMUALDEZ-LICAROS, petitioner,


vs.
ABELARDO B. LICAROS, respondent.
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to annul the Decision2 dated 9 August 2001 of the Court of Appeals in CA-G.R.
SP No. 58487, as well as the Resolution dated 23 October 2001 denying the motion for reconsideration. The Court of
Appeals dismissed the petition to annul the following decisions3 rendered by Branch 143 of the Regional Trial Court of
Makati:
(1) The Decision dated 27 December 19904 granting the dissolution of the conjugal partnership of gains of the spouses
Abelardo B. Licaros and Margarita Romualdez-Licaros;
(2) The Decision dated 8 November 19915 declaring the marriage between the same spouses null and void.
The Facts
The antecedent facts as found by the Court of Appeals are as follows:
x x x Abelardo Licaros (Abelardo, for short) and Margarita Romualdez-Licaros (Margarita, hereafter) were lawfully
married on December 15, 1968. Out of this marital union were born Maria Concepcion and Abelardo, Jr. Ironically, marital
differences, squabbles and irreconcilable conflicts transpired between the spouses, such that sometime in 1979, they
agreed to separate from bed and board.
In 1982, Margarita left for the United States and there, to settle down with her two (2) children. In the United States, on
April 26, 1989, Margarita applied for divorce before the Superior Court of California, County of San Mateo ( Annex "1",
Rejoinder, pp. 164-165) where she manifested that she does not desire counseling at that time (Quotation, p. 166,
Rollo). On August 6, 1990, Margarita was granted the decree of divorce (Annex 2, Answer, p. 108, Rollo) together with a
distribution of properties between her and Abelardo (pp. 167-168, Rollo).
Not long after, on August 17, 1990, Abelardo and Margarita executed an "Agreement of Separation of Properties" ( pp. 6064, Rollo). This was followed-up by a petition filed on August 21, 1990 before the Regional Trial Court of Makati for the
dissolution of the conjugal partnership of gains of the spouses and for the approval of the agreement of separation of their
properties. This was docketed as Special Proceeding No. 2551. On December 27, 1990, a decision was issued granting
the petition and approving the separation of property agreement.
For his part, on June 24, 1991, Abelardo commenced Civil Case No. 91-1757, for the declaration of nullity of his marriage

30
with Margarita, based on psychological incapacity under the New Family Code. As Margarita was then residing at 96
Mulberry Lane, Atherton, California, U.S.A., Abelardo initially moved that summons be served through the International
Express Courier Service. The court a quo denied the motion. Instead, it ordered that summons be served by publication in
a newspaper of general circulation once a week for three (3) consecutive weeks, at the same time furnishing respondent a
copy of the order, as well as the corresponding summons and a copy of the petition at the given address in the United
States through the Department of Foreign Affairs, all at the expense of Abelardo. Respondent was given sixty (60) days
after publication to file a responsive pleading.
On July 15, 1991, Process Server, Maximo B. Dela Rosa, submitted his Officers Return quoted hereunder:
"OFFICERS RETURN
THIS IS TO CERTIFY that on July 3, 1991, I have served a copy of summons and complaint with annexes together with
order dated June 28, 1991 issued by the Court in the above-entitled case upon defendant Margarita Romualdez-Licaros
c/o DFA. (sent by Mail) thru Pat G. Martines receiving Clerk of Department of Foreign Affairs a person authorized to
receive this kind of process who acknowledged the receipt thereof at ADB Bldg., Roxas Blvd., Pasay City, Metro Manila."
(p. 40, Rollo)
As required by law, the case was referred to Trial Prosecutor Bruselas, Jr. to find out any possible collusion between the
parties in the case. Thereafter, with the negative report of collusion, Abelardo was allowed to present his evidence exparte. On November 8, 1991, the Decision (Annex "A", Petition) was handed down in Civil Case No. 91-1757 declaring
the marriage between Abelardo and Margarita null and void.
Almost nine (9) years later, on April 28, 2000, the petition at bench was commenced when Margarita received a letter
dated November 18, 1991 from a certain Atty. Angelo Q. Valencia informing her that she no longer has the right to use the
family name "Licaros" inasmuch as her marriage to Abelardo had already been judicially dissolved by the Regional Trial
Court of Makati on November 8, 1991. Asseverating to have immediately made some verifications and finding the
information given to be true, petitioner commenced the instant petition on the following grounds:
(A) THERE WAS EXTRINSIC FRAUD IN THE PREPARATION AND FILING BY ABELARDO OF THE PETITION FOR
DISSOLUTION OF THE CONJUGAL PARTNERSHIP OF GAINS AND ITS ANNEX, THE AGREEMENT OF SEPARATION
OF PROPERTIES.
(B) THE TRIAL COURT LACKED JURISDICTION TO HEAR AND DECIDE THE PETITION FOR DECLARATION OF
NULLITY OF MARRIAGE.6
The Ruling of the Court of Appeals
The Court of Appeals debunked the claim of Margarita that there was extrinsic fraud in the preparation and filing by
Abelardo of the Petition for Dissolution of Conjugal Partnership of Gains and its annex, the Agreement of Separation of
Properties. The Court of Appeals stated:
x x x, the extrinsic fraud alluded to consists of Abelardo coercing Margarita into signing the petition to dissolve their
conjugal partnership of gains together with the agreement of separation of properties, by threatening to cut-off all financial
and material support of their children then still studying in the United States; that petitioner had no hand directly or
indirectly in the preparation of the petition and agreement of separation of properties; that petitioner never met the counsel
for the petitioner, nor the notary public who notarized the deed; and, petitioner never received any notice of the pendency
of the petition nor a copy of the decision.
Antithetically, a meticulous perusal of the controversial petition (Annex "B-1") and the agreement of separation of
properties (pp. 60-64, Rollo) readily shows that the same were signed by the petitioner on the proper space after the
prayer and on the portion for the verification of the petition. The same is true with the agreement of separation of
properties. What is striking to note is that on August 6, 1990, Margarita appeared before Amado P. Cortez, Consul of the
Republic of the Philippines at the San Francisco, California, United States Consulate Office, to affirm and acknowledge
before said official that she executed the agreement of separation of properties of her own free will and deed, after being
informed of the contents thereof. And yet, there is no showing that Abelardo was with her at the Philippine Consulate

31
Office in confirming the separation of property agreement. Moreover, on page 2 of the same agreement, it is specifically
stated that such property separation document shall be "subject to approval later on by the proper court of competent
jurisdiction." The clear import of this is that the agreement must have to be submitted before the proper court for approval,
which explains and confirms petitioners signature on the petition filed in court.
In main, We see no indication nor showing of coercion or fraud from these facts, which could very well be considered as
extrinsic or collateral fraud to justify a petition under Rule 47. From all indications, the pretended coerced documents were
rather freely and voluntarily executed by the parties therein knowing fully well the imports thereof. This conclusion finds
more weight if We consider the fact that the separation of property was fully implemented and enforced, when apparently
both parties correspondingly received the properties respectively assigned to each of them under the said document.7
The Court of Appeals also rejected Margaritas claim that the trial court lacked jurisdiction to hear and decide the Petition
for Declaration of Nullity of Marriage for improper service of summons on her. The case involves the marital status of the
parties, which is an action in rem or quasi in rem. The Court of Appeals ruled that in such an action the purpose of service
of summons is not to vest the trial court with jurisdiction over the person of the defendant, but "only" to comply with due
process. The Court of Appeals concluded that any irregularity in the service of summons involves due process which does
not destroy the trial courts jurisdiction over the res which is the parties marital status. Neither does such irregularity
invalidate the judgment rendered in the case. Thus, the Court of Appeals dismissed the petition for annulment of
judgment, stating that:
At bar, the case involves the personal (marital) status of the plaintiff and the defendant. This status is the res over which
the Philippine court has acquired jurisdiction. This is also the kind of action which the Supreme Court had ruled that
service of summons may be served extraterritorially under Section 15 (formerly Section 17) of Rule 14 and where such
service of summons is not for the purpose of vesting the trial court with jurisdiction over the person of the defendant but
only for the purpose of complying with the requirements of fair play and due process. A fortiori, the court a quo had
properly acquired jurisdiction over the person of herein petitioner-defendant when summons was served by publication
and a copy of the summons, the complaint with annexes, together with the Order of June 28, 1991, was served to the
defendant through the Department of Foreign Affairs by registered mail and duly received by said office to top it all. Such
mode was upon instruction and lawful order of the court and could even be treated as any other manner the court may
deem sufficient.8
Hence, the instant petition.
The Issues
The issues raised by Margarita are restated as follows:
I. Whether Margarita was validly served with summons in the case for declaration of nullity of her marriage with Abelardo;
II. Whether there was extrinsic fraud in the preparation and filing by Abelardo of the Petition for Dissolution of the Conjugal
Partnership of Gains and its annex, the Agreement of Separation of Properties.
The Courts Ruling
The petition is bereft of merit.
First Issue: Validity of the Service of Summons on Margarita
Margarita insists that the trial court never acquired jurisdiction over her person in the petition for declaration of nullity of
marriage since she was never validly served with summons. Neither did she appear in court to submit voluntarily to its
jurisdiction.
On the other hand, Abelardo argues that jurisdiction over the person of a non-resident defendant in an action in
rem or quasi in rem is not necessary. The trial and appellate courts made a clear factual finding that there was proper
summons by publication effected through the Department of Foreign Affairs as directed by the trial court. Thus, the trial
court acquired jurisdiction to render the decision declaring the marriage a nullity.
Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means

32
by which the court acquires jurisdiction over his person.9
As a rule, when the defendant does not reside and is not found in the Philippines, Philippine courts cannot try any case
against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court.
But when the case is one of actions in rem or quasi in rem enumerated in Section 15,10 Rule 14 of the Rules of Court,
Philippine courts have jurisdiction to hear and decide the case. In such instances, Philippine courts have jurisdiction over
the res, and jurisdiction over the person of the non-resident defendant is not essential.11
Actions in personam12 and actions in rem or quasi in rem differ in that actions in personam are directed against specific
persons and seek personal judgments. On the other hand, actions in rem or quasi in rem are directed against the thing or
property or status of a person and seek judgments with respect thereto as against the whole world.13
At the time Abelardo filed the petition for nullity of the marriage in 1991, Margarita was residing in the United States. She
left the Philippines in 1982 together with her two children. The trial court considered Margarita a non-resident defendant
who is not found in the Philippines. Since the petition affects the personal status of the plaintiff, the trial court authorized
extraterritorial service of summons under Section 15, Rule 14 of the Rules of Court. The term "personal status" includes
family relations, particularly the relations between husband and wife.14
Under Section 15 of Rule 14, a defendant who is a non-resident and is not found in the country may be served with
summons by extraterritorial service in four instances: (1) when the action affects the personal status of the plaintiff;
(2) when the action relates to, or the subject of which is property within the Philippines, in which the defendant has or
claims a lien or interest, actual or contingent; (3) when the relief demanded consists, wholly or in part, in excluding the
defendant from any interest in property located in the Philippines; or (4) when the property of the defendant has been
attached within the Philippines.
In these instances, extraterritorial service of summons may be effected under any of three modes: (1) by personal service
out of the country, with leave of court; (2) by publication and sending a copy of the summons and order of the court by
registered mail to the defendants last known address, also with leave of court; or (3) by any other means the judge
may consider sufficient.
Applying the foregoing rule, the trial court required extraterritorial service of summons to be effected on Margarita in the
following manner:
x x x, service of Summons by way of publication in a newspaper of general circulation once a week for three (3)
consecutive weeks, at the same time, furnishing respondent copy of this Order as well as the corresponding Summons
and copy of the petition at her given address at No. 96 Mulberry Lane, Atherton, California, U.S.A., thru the Department
of Foreign Affairs, all at the expense of petitioner.15 (Emphasis ours)
The trial courts prescribed mode of extraterritorial service does not fall under the first or second mode specified in Section
15 of Rule 14, but under the third mode. This refers to "any other means that the judge may consider sufficient."
The Process Servers Return of 15 July 1991 shows that the summons addressed to Margarita together with the
complaint and its annexes were sent by mail to the Department of Foreign Affairs with acknowledgment of receipt. The
Process Servers certificate of service of summons is prima facie evidence of the facts as set out in the
certificate.16 Before proceeding to declare the marriage between Margarita and Abelardo null and void, the trial court
stated in its Decision dated 8 November 1991 that "compliance with the jurisdictional requirements hav(e) (sic) been
duly established." We hold that delivery to the Department of Foreign Affairs was sufficient compliance with the rule.
After all, this is exactly what the trial court required and considered as sufficient to effect service of summons under the
third mode of extraterritorial service pursuant to Section 15 of Rule 14.
Second Issue: Validity of the Judgment Dissolving the Conjugal Partnership of Gains
Margarita claims that Abelardo coerced her into signing the Petition for Dissolution of the Conjugal Partnership of
Gains ("Petition") and its annex, the Agreement of Separation of Properties ("Agreement"). Abelardo allegedly threatened
to cut off all financial and material support to their children if Margarita did not sign the documents.
The trial court did not find anything amiss in the Petition and Agreement that Abelardo filed, and thus the trial court

33
approved the same. The Court of Appeals noted that a meticulous perusal of the Petition and Agreement readily shows
that Margarita signed the same on the proper space after the prayer and on the portion for the verification of the petition.
The Court of Appeals observed further that on 6 August 1990, Margarita appeared before Consul Amado Cortez in the
Philippine Consulate Office in San Francisco, California, to affirm that she executed the Agreement of her own free will.
There was no showing that Abelardo was at that time with her at the Philippine Consulate Office. Abelardo secured judicial
approval of the Agreement as specifically required in the Agreement.
The Court is bound by the factual findings of the trial and appellate courts that the parties freely and voluntarily executed
the documents and that there is no showing of coercion or fraud. As a rule, in an appeal by certiorariunder Rule 45, the
Court does not pass upon questions of fact as the factual findings of the trial and appellate courts are binding on the
Court. The Court is not a trier of facts. The Court will not examine the evidence introduced by the parties below to
determine if the trial and appellate courts correctly assessed and evaluated the evidence on record.17
The due and regular execution of an instrument acknowledged before an officer authorized to administer oaths cannot be
overthrown by bare allegations of coercion but only by clear and convincing proof.18 A person acknowledging an
instrument before an officer authorized to administer oaths acknowledges that he freely and voluntarily executed the
instrument, giving rise to a prima facie presumption of such fact.
In the instant case, Margarita acknowledged the Agreement before Consul Cortez. The certificate of acknowledgment
signed by Consul Cortez states that Margarita personally appeared before him and "acknowledged before me that SHE
executed the same of her own free will and deed."19 Thus, there is a prima facie presumption that Margarita freely and
voluntarily executed the Agreement. Margarita has failed to rebut thisprima facie presumption with clear and convincing
proof of coercion on the part of Abelardo.
A document acknowledged before a notary public is prima facie evidence of the due and regular execution of the
document.20 A notarized document has in its favor the presumption of regularity in its execution, and to contradict the
same, there must be evidence that is clear, convincing and more than merely preponderant.21
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 58487 dismissing the petition to annul judgment
is AFFIRMED.
SO ORDERED.

G.R. No. 108538

January 22, 1996

LOURDES
A.
VALMONTE
and
ALFREDO
D.
VALMONTE, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for partition filed against her and
her husband, who is also her attorney, summons intended for her may be served on her husband, who has a law office in
the Philippines. The Regional Trial Court of Manila, Branch 48, said no and refused to declare Lourdes A. Valmonte in
default, but the Court of Appeals said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both residents of 90222
Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the Philippine bar,
however, practices his profession in the Philippines, commuting for this purpose between his residence in the state of
Washington and Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A. Valmonte, filed a

34
complaint for partition of real property and accounting of rentals against petitioners Lourdes A. Valmonte and Alfredo D.
Valmonte before the Regional Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment located
in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road, Chesterfield, Missouri, U.S.A.,
while the defendants are spouses, of legal age and at present residents of 90222 Carkeek Drive, South Seattle,
Washington, U.S.A., but, for purposes of this complaint may be served with summons at Gedisco Center, Unit 304, 1564
A. Mabini St., Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte's spouse
holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter previously sent by petitioner Lourdes A. Valmonte
to private respondent's counsel in which, in regard to the partition of the property in question, she referred private
respondent's counsel to her husband as the party to whom all communications intended for her should be sent. The letter
reads:
July 4, 1991
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I received on 3 July 1991. Please address all
communications to my lawyer, Atty. Alfredo D. Valmonte, whose address, telephone and fax numbers appear below.
c/o
Gedisco
1564
Metro
Telephone:
Fax: 521-2095

Prime
Center,
A.

Unit
Mabini,

Marine
304
Ermita
Manila
521-1736

Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at his office in Manila.
Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the summons
for his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on her behalf.
Accordingly the process server left without leaving a copy of the summons and complaint for petitioner Lourdes A.
Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A. Valmonte, however, did
not file her Answer. For this reason private respondent moved to declare her in default. Petitioner Alfredo D. Valmonte
entered a special appearance in behalf of his wife and opposed the private respondent's motion.
In its Order dated July 3, 1992, the trial court, denied private respondent's motion to declare petitioner Lourdes A.
Valmonte in default. A motion for reconsideration was similarly denied on September 23, 1992. Whereupon, private
respondent filed a petition for certiorari, prohibition and mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the petition and declaring Lourdes A. Valmonte
in default. A copy of the appellate court's decision was received by petitioner Alfredo D. Valmonte on January 15, 1993 at
his Manila office and on January 21, 1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was validly served with
summons. In holding that she had been, the Court of Appeals stated:1
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned counsel of Dimalanta to
address all communications (evidently referring to her controversy with her sister Mrs. Dimalanta over the Paco property,
now the subject of the instant case) to her lawyer who happens also to be her husband. Such directive was made without
any qualification just as was her choice/designation of her husband Atty. Valmonte as her lawyer likewise made without
any qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being his wife's attorney (at

35
least with regard to the dispute vis-a-vis (sic) the Paco property) would appear to be feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged special appearance made on behalf of his wife. Whereas
Mrs. Valmonte had manifestly authorized her husband to serve as her lawyer relative to her dispute with her sister over
the Paco property and to receive all communications regarding the same and subsequently to appear on her behalf by
way of a so-called special appearance, she would nonetheless now insist that the same husband would nonetheless had
absolutely no authority to receive summons on her behalf. In effect, she is asserting that representation by her lawyer
(who is also her husband) as far as the Paco property controversy is concerned, should only be made by him when such
representation would be favorable to her but not otherwise. It would obviously be inequitable for this Court to allow private
respondent Lourdes A. Valmonte to hold that her husband has the authority to represent her when an advantage is to be
obtained by her and to deny such authority when it would turn out to be her disadvantage. If this be allowed, Our Rules of
Court, instead of being an instrument to promote justice would be made use of to thwart or frustrate the same.
xxx

xxx

xxx

Turning to another point, it would not do for Us to overlook the fact that the disputed summons was served not upon just
an ordinary lawyer of private respondent Lourdes A. Valmonte, but upon her lawyer husband. But that is not all, the same
lawyer/husband happens to be also her co-defendant in the instant case which involves real property which, according to
her lawyer/husband/co-defendant, belongs to the conjugal partnership of the defendants (the spouses Valmonte). It is
highly inconceivable and certainly it would be contrary to human nature for the lawyer/husband/co-defendant to keep to
himself the fact that they (the spouses Valmonte) had been sued with regard to a property which, he claims to be conjugal.
Parenthetically, there is nothing in the records of the case before Us regarding any manifestation by private respondent
Lourdes A. Valmonte about her lack of knowledge about the case instituted against her and her lawyer/husband/codefendant by her sister Rosita. . . .
PREMISES CONSIDERED, the instant petition for certiorari, prohibition and mandamus is given due course. This Court
hereby Resolves to nullify the orders of the court a quo dated July 3, 1992 and September 23, 1992 and further declares
private respondent Lourdes Arreola Valmonte as having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in refusing to apply the provisions
of Rule 14, 17 of the Revised Rules of Court and applying instead Rule 14, 8 when the fact is that petitioner Lourdes A.
Valmonte is a nonresident defendant; and (2) because even if Rule 14, 8 is the applicable provision, there was no valid
substituted service as there was no strict compliance with the requirement by leaving a copy of the summons and
complaint with petitioner Alfredo D. Valmonte. Private respondent, upon the other hand, asserts that petitioners are
invoking a technicality and that strict adherence to the rules would only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed against petitioners Lourdes A.
Valmonte and Alfredo D. Valmonte by private respondent, whether it is an action in personam, in rem or quasi in rem. This
is because the rules on service of summons embodied in Rule 14 apply according to whether an action is one or the other
of these actions.
In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served,
substituted service, as provided in Rule 14, 7-82 is essential for the acquisition by the court of jurisdiction over the
person of a defendant who does not voluntarily submit himself to the authority of the court.3 If defendant cannot be served
with summons because he is temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by
leave of court, be made by publication.4 Otherwise stated, a resident defendant in an action in personam, who cannot be
personally served with summons, may be summoned either by means of substituted service in accordance with Rule 14,
8 or by publication as provided in 17 and 18 of the same Rule.5
In all of these cases, it should be noted, defendant must be a resident of the Philippines, otherwise an action in personam
cannot be brought because jurisdiction over his person is essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for

36
giving the court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he
is not found in the country, summons may be served exterritorially in accordance with Rule 14, 17, which provides:
17. Extraterritorial service. - When the defendant does not reside and is not found in the Philippines and the action
affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which
the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by
publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or
in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which
shall not be less than sixty (60) days after notice, within which the defendant must answer..
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has jurisdiction over
theres, i.e. the personal status of the plaintiff who is domiciled in the Philippines or the property litigated or attached.
Service of summons in the manner provided in 17 is not for the purpose of vesting it with jurisdiction but for complying
with the requirements of fair play or due process, so that he will be informed of the pendency of the action against him and
the possibility that property in the Philippines belonging to him or in which he has an interest may be subjected to a
judgment in favor of the plaintiff and he can thereby take steps to protect his interest if he is so minded.6
Applying the foregoing rules to the case at bar, private respondent's action, which is for partition and accounting under
Rule 69, is in the nature of an action quasi in rem. Such an action is essentially for the purpose of affecting the
defendant's interest in a specific property and not to render a judgment against him. As explained in the leading case
of Banco Espaol Filipino v. Palanca :7
[An action quasi in rem is] an action which while not strictly speaking an action in rem partakes of that nature and is
substantially such. . . . The action quasi in rem differs from the true action in rem in the circumstance that in the former an
individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or
lien burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The
judgment entered in these proceedings is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her must
be in accordance with Rule 14, 17. Such service, to be effective outside the Philippines, must be made either (1) by
personal service; (2) by publication in a newspaper of general circulation in such places and for such time as the court
may order, in which case a copy of the summons and order of the court should be sent by registered mail to the last
known address of the defendant; or (3) in any other manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of
the first two modes, the question is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be justified
under the third mode, namely, "in any . . . manner the court may deem sufficient."
We hold it cannot. This mode of service, like the first two, must be made outside the Philippines, such as through the
Philippine Embassy in the foreign country where the defendant resides.8 Moreover, there are several reasons why the
service of summons on Atty. Alfredo D. Valmonte cannot be considered a valid service of summons on petitioner Lourdes
A. Valmonte. In the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the
court as required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court which in fact refused to
consider the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an
answer.
In the second place, service in the attempted manner on petitioner was not made upon prior leave of the trial court as
required also in Rule 14, 17. As provided in 19, such leave must be applied for by motion in writing, supported by
affidavit of the plaintiff or some person on his behalf and setting forth the grounds for the application.

37
Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes A. Valmonte was not
given ample time to file her Answer which, according to the rules, shall be not less than sixty (60) days after notice. It must
be noted that the period to file an Answer in an action against a resident defendant differs from the period given in an
action filed against a nonresident defendant who is not found in the Philippines. In the former, the period is fifteen (15)
days from service of summons, while in the latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance of due process. That is why in one
case,9although the Court considered publication in the Philippines of the summons (against the contention that it should
be made in the foreign state where defendant was residing) sufficient, nonetheless the service was considered insufficient
because no copy of the summons was sent to the last known correct address in the Philippines..
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in which it was held that
service of summons upon the defendant's husband was binding on her. But the ruling in that case is justified because
summons were served upon defendant's husband in their conjugal home in Cebu City and the wife was only temporarily
absent, having gone to Dumaguete City for a vacation. The action was for collection of a sum of money. In accordance
with Rule 14, 8, substituted service could be made on any person of sufficient discretion in the dwelling place of the
defendant, and certainly defendant's husband, who was there, was competent to receive the summons on her behalf. In
any event, it appears that defendant in that case submitted to the jurisdiction of the court by instructing her husband to
move for the dissolution of the writ of attachment issued in that case.
On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife of a nonresident
defendant was found sufficient because the defendant had appointed his wife as his attorney-in-fact. It was held that
although defendant Paul Schenker was a Swiss citizen and resident of Switzerland, service of summons upon his wife
Helen Schenker who was in the Philippines was sufficient because she was her husband's representative and attorney-infact in a civil case, which he had earlier filed against William Gemperle. In fact Gemperle's action was for damages arising
from allegedly derogatory statements contained in the complaint filed in the first case. As this Court said, "[i]n other words,
Mrs. Schenker had authority to sue, and had actually sued, on behalf of her husband, so that she was, also, empowered
to represent him in suits filed against him, particularly in a case, like the one at bar, which is a consequence of the action
brought by her on his behalf" 11 Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the
action brought by Mr. Schenker against him, there would have been no doubt that the trial court could have acquired
jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact.
Although she wrote private res- pondent's attorney that "all communications" intended for her should be addressed to her
husband who is also her lawyer at the latter's address in Manila, no power of attorney to receive summons for her can be
inferred therefrom. In fact the letter was written seven months before the filing of this case below, and it appears that it
was written in connection with the negotiations between her and her sister, respondent Rosita Dimalanta, concerning the
partition of the property in question. As is usual in negotiations of this kind, the exchange of correspondence was carried
on by counsel for the parties. But the authority given to petitioner's husband in these negotiations certainly cannot be
construed as also including an authority to represent her in any litigation.
For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A. Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and September 23, 1992 of
the Regional Trial Court of Manila, Branch 48 are REINSTATED.
SO ORDERED.

MULLANE v. CENTRAL HANOVER BANK & TRUST CO. et al.


339 U.S. 306 (70 S.Ct. 652, 94 L.Ed. 865)
MULLANE v. CENTRAL HANOVER BANK & TRUST CO. et al.
No. 378.

38
Argued: and Submitted Feb. 8, 1950.
Decided: April 24, 1950.
opinion, JACKSON [HTML]
dissent, BURTON [HTML]
Mr. Kenneth J. Mullane, New York City, for appellants.
Mr. Albert B. Maginnes, New York City, for appellee, Central Hanover Bank and Trust Co.
Mr. James N. Vaughan, New York City, for appellee, James N. Vaughan, Guardian et al.
TOP
Mr. Justice JACKSON delivered the opinion of the Court.
This controversy questions the constitutional sufficiency of notice to beneficiaries on judicial settlement of accounts by the
trustee of a common trust fund established under the New York Banking Law, Consol.Laws, c. 2. The New York Court of
Appeals considered and overruled objections that the statutory notice contravenes requirements of the Fourteenth
Amendment and that by allowance of the account beneficiaries were deprived of property without due process of law. 299
N.Y. 697, 87 N.E.2d 73. The case is here on appeal under 28 U.S.C. 1257, 28 U.S.C.A. 1257.
Common trust fund legislation is addressed to a problem appropriate for state action. Mounting overheads have made
administration of small trusts undesirable to corporate trustees. In order that donors and testators of moderately sized
trusts may not be denied the service of corporate fiduciaries, the District of Columbia and some thirty states other than
New York have permitted pooling small trust estates into one fund for investment administration. * The income, capital
gains, losses and expenses of the collective trust are shared by the constituent trusts in proportion to their contribution. By
this plan, diversification of risk and economy of management can be extended to those whose capital standing alone
would not obtain such advantage.
Statutory authorization for the establishment of such common trust funds is provided in the New York Banking Law, 100c, c. 687, L.1937, as amended by c. 602, L.1943 and c. 158, L.1944. Under this Act a trust company may, with approval of
the State Banking Board, establish a common fund and, within prescribed limits, invest therein the assets of an unlimited
number of estates, trusts or other funds of which it is trustee. Each participating trust shares ratably in the common fund,
but exclusive management and control is in the trust company as trustee, and neither a fiduciary nor any beneficiary of a
participating trust is deemed to have ownership in any particular asset or investment of this common fund. The trust
company must keep fund assets separate from its own, and in its fiduciary capacity may not deal with itself or any affiliate.
Provisions are made for accountings twelve to fifteen months after the establishment of a fund and triennially thereafter.
The decree in each such judicial settlement of accounts is made binding and conclusive as to any matter set forth in the
account upon everyone having any interest in the common fund or in any participating estate, trust or fund.
In January, 1946, Central Hanover Bank and Trust Company established a common trust fund in accordance with these
provisions, and in March, 1947, it petitioned the Surrogate's Court for settlement of its first account as common trustee.
During the accounting period a total of 113 trusts, approximately half inter vivos and half testamentary, participated in the
common trust fund, the gross capital of which was nearly three million dollars. The record does not show the number or
residence of the beneficiaries, but they were many and it is clear that some of them were not residents of the State of New
York.
The only notice given beneficiaries of this specific application was by publication in a local newspaper in strict compliance
with the minimum requirements of N.Y. Banking Law 100-c(12): 'After filing such petition (for judicial settlement of its
account) the petitioner shall cause to be issued by the court in which the petition is filed 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, all of which may be described in the notice or citation only in the manner set forth in said petition
and without setting forth the residence of any such decedent or donor of any such estate, trust or fund.' 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.

39
At the time the first investment in the common fund was made on behalf of each participating estate, however, the trust
company, pursuant to the requirements of 100-c(9), had notified by mail each person of full age and sound mind whose
name and address was then known to it and who was 'entitled to share in the income therefrom * * * (or) * * * who would
be entitled to share in the principal if the event upon which such estate, trust or fund will become distributable should have
occurred at the time of sending such notice.' Included in the notice was a copy of those provisions of the Act relating to the
sending of the notice itself and to the judicial settlement of common trust fund accounts.
Upon the filing of the petition for the settlement of accounts, appellant was, by order of the court pursuant to 100-c(12),
appointed 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; and appellee Vaughan was appointed to represent
those similarly interested in the principal. There were no other appearances on behalf of any one interested in either
interest or principal.
Appellant appeared specially, objecting that notice and the statutory provisions for notice to beneficiaries were inadequate
to afford due process under the Fourteenth Amendment, and therefore that the court was without jurisdiction to render a
final and binding decree. Appellant's objections were entertained and overruled, the Surrogate holding that the notice
required and given was sufficient. 75 N.Y.S.2d 397. A final decree accepting the accounts has been entered, affirmed by
the Appellate Division of the Supreme Court, In re Central Hanover Bank & Trust Co., 275 App.Div. 769, 88 N.Y.S.2d 907,
and by the Court of Appeals of the State of New York, 299 N.Y. 697, 87 N.E.2d 73.
The effect of this decree, as held below, is to settle 'all questions respecting the management of the common fund.' We
understand that every right which beneficiaries would otherwise have against the trust company, either as trustee of the
common fund or as trustee of any individual trust, for improper management of the common trust fund during the period
covered by the accounting is sealed and wholly terminated by the decree. See Matter of Hoaglund's Estate, 194 Misc.
803, 811812, 74 N.Y.S.2d 156, 164, affirmed 272 App.Div. 1040, 74 N.Y.S.2d 911, affirmed 297 N.Y. 920, 79 N.E.2d
746; Matter of Bank of New York, 189 Misc. 459, 470, 67 N.Y.S.2d 444, 453; Matter of Security Trust Co. of Rochester,
189 Misc. 748, 760, 70 N.Y.S.2d 260, 271; Matter of Continental Bank & Trust Co., 189 Misc. 795, 797, 67 N.Y.S.2d 806,
807808.
We are met at the outset with a challenge to the power of the Statethe right of its courts to adjudicate at all as against
those beneficiaries who reside without the State of New York. It is contended that the proceeding is one in personam in
that the decree affects neither title to nor possession of any res, but adjudges only personal rights of the beneficiaries to
surcharge their trustee for negligence or breach of trust. Accordingly, it is said, under the strict doctrine of Pennoyer v.
Neff, 95 U.S. 714, 24 L.Ed. 565, the Surrogate is without jurisdiction as to nonresidents upon whom personal service of
process was not made.
Distinctions between actions in rem and those in personam are ancient and originally expressed in procedural terms what
seems really to have been a distinction in the substantive law of property under a system quite unlike our own. Buckland
and McNair, Roman Law and Common Law, 66; Burdick, Principles of Roman Law and Their Relation to Modern Law,
298. The legal recognition and rise in economic importance of incorporeal or intangible forms of property have upset the
ancient simplicity of property law and the clarity of its distinctions, while new forms of proceedings have confused the old
procedural classification. American courts have sometimes classed certain actions as in rem because personal service of
process was not required, and at other times have held personal service of process not required because the action was
in rem. See cases collected in Freeman on Judgments, 1517 et seq. (5th ed.).
Judicial proceedings to settle fiduciary accounts have been sometimes termed in rem, or more indefinitely quasi in rem, or
more vaguely still, 'in the nature of a proceeding in rem.' It is not readily apparent how the courts of New York did or would
classify the present proceeding, which has some characteristics and is wanting in some features of proceedings both in
rem and in personam. But in any event we think that the requirements of the Fourteenth Amendment to the Federal
Constitution do not depend upon a classification for which the standards are so elusive and confused generally and which,
being primarily for state courts to define, may and do vary from state to state. Without disparaging the usefulness of
distinctions between actions in rem and those in personam in many branches of law, or on other issues, or the reasoning
which underlies them, we do not rest the power of the State to resort to constructive service in this proceeding upon how
its courts or this Court may regard this historic antithesis. It is sufficient to observe that, whatever the technical definition of
its chosen procedure, the interest of each state in providing means to close trusts that exist by the grace of its laws and
are administered under the supervision of its courts is so insistent and rooted in custom as to establish beyond doubt the
right of its courts to determine the interests of all claimants, resident or nonresident, provided its procedure accords full
opportunity to appear and be heard.
Quite different from the question of a state's power to discharge trustees is that of the opportunity it must give

40
beneficiaries to contest. Many controversies have raged about the cryptic and abstract words of the Due Process Clause
but there can be no doubt that at a minimum they require that deprivation of life, liberty or property by adjudication be
preceded by notice and opportunity for hearing appropriate to the nature of the case.
In two ways this proceeding does or may deprive beneficiaries of property. It may cut off their rights to have the trustee
answer for negligent or illegal impairments of their interests. Also, their interests are presumably subject to diminution in
the proceeding by allowance of fees and expenses to one who, in their names but without their knowledge, may conduct a
fruitless or uncompensatory contest. Certainly the proceeding is one in which they may be deprived of property rights and
hence notice and hearing must measure up to the standards of due process.
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 fiduciaries to a final 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 justified.
Against this interest of the State we must balance the individual interest sought to be protected by the Fourteenth
Amendment. This is defined by our holding that 'The fundamental requisite of due process of law is the opportunity to be
heard.' Grannis v. Ordean, 234 U.S. 385, 394, 34 S.Ct. 779, 783, 58 L.Ed. 1363. This right to be heard has little reality or
worth unless one is informed that the matter is pending and can choose for himself whether to appear or default,
acquiesce or contest.
The Court has not committed itself to any formula achieving a balance between these interests in a particular proceeding
or determining when constructive notice may be utilized or what test it must meet. Personal service has not in all
circumstances been regarded as indispensable to the process due to residents, and it has more often been held
unnecessary as to nonresidents. We disturb none of the established rules on these subjects. No decision constitutes a
controlling or even a very illuminating precedent for the case before us. But a few general principles stand out in the
books.
An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice
reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford
them an opportunity to present their objections. Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278, 132 A.L.R.
1357; Grannis v. Ordean, 234 U.S. 385, 34 S.Ct. 779, 58 L.Ed. 1363; Priest v. Board of Trustees of Town of Las Vegas,
232 U.S. 604, 34 S.Ct. 443, 58 L.Ed. 751; Roller v. Holly, 176 U.S. 398, 20 S.Ct. 410, 44 L.Ed. 520. The notice must be of
such nature as reasonably to convey the required information, Grannis v. Ordean, supra, and it must afford a reasonable
time for those interested to make their appearance, Roller v. Holly, supra, and cf. Goodrich v. Ferris, 214 U.S. 71, 29 S.Ct.
580, 53 L.Ed. 914. But if with due regard for the practicalities and peculiarities of the case these conditions are reasonably
met the constitutional requirements are satisfied. 'The criterion is not the possibility of conceivable injury, but the just and
reasonable character of the requirements, having reference to the subject with which the statute deals.' American Land
Co. v. Zeiss, 219 U.S. 47, 67, 31 S.Ct. 200, 207, 55 L.Ed. 82, and see Blinn v. Nelson, 222 U.S. 1, 7, 32 S.Ct. 1, 2, 56
L.Ed. 65, Ann.Cas.1913B, 555.
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, compare Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091, with Wuchter v.
Pizzutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed. 446, 57 A.L.R. 1230, 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 as prescribed here, is a reliable means of acquainting interested parties
of the fact that their rights are before the courts. It is not an accident that the greater number of cases reaching this Court
on the question of adequacy of notice have been concerned with actions founded on process constructively served
through local newspapers. Chance alone brings to the attention of even a local resident an advertisement in small type
inserted in the back pages of a newspaper, and if he makes his home outside the area of the newspaper's normal
circulation the odds that the information will never reach him are large indeed. The chance of actual notice is further
reduced when as here the notice required does not even name those whose attention it is supposed to attract, and does
not inform acquaintances who might call it to attention. In weighing its sufficiency on the basis of equivalence with actual
notice we are unable to regard this as more than a feint.
Nor is publication here reinforced by steps likely to attract the parties' attention to the proceeding. It is true that publication

41
traditionally has been acceptable as notification supplemental to other action which in itself may reasonably be expected
to convey a warning. The ways or an owner with tangible property are such that he usually arranges means to learn of any
direct attack upon his possessory or proprietary rights. Hence, libel of a ship, attachment of a chattel or entry upon real
estate in the name of law may reasonably be expected to come promptly to the owner's attention. When the state within
which the owner has located such property seizes it for some reason, publication or posting affords an additional measure
of notification. A state may indulge the assumption that one who has left tangible property in the state either has
abandoned it, in which case proceedings against it deprive him of nothing, cf. Anderson National Bank v. luckett, 321 U.S.
233, 64 S.Ct. 599, 88 L.Ed. 692, 151 A.L.R. 824; Security Savings Bank v. California, 263 U.S. 282, 44 S.Ct. 108, 68 L.Ed.
301, 31 A.L.R. 391, or that he has left some caretaker under a duty to let him know that it is being jeopardized. Ballard v.
Hunter, 204 U.S. 241, 27 S.Ct. 261, 51 L.Ed. 461; Huling v. Kaw Valley Ry. & Imp. Co., 130 U.S. 559, 9 S.Ct. 603, 32
L.Ed. 1045. As phrased long ago by Chief Justice Marshall in The Mary, 9 Cranch 126, 144, 3 L.Ed. 678, 'It is the part of
common prudence for all those who have any interest in (a thing), to guard that interest by persons who are in a situation
to protect it.'
In the case before us there is, of course, no abandonment. On the other hand these beneficiaries do have a resident
fiduciary as caretaker of their interest in this property. But it is their caretaker who in the accounting becomes their
adversary. Their trustee is released from giving notice of jeopardy, and no one else is expected to do so. Not even the
special guardian is required or apparently expected to communicate with his ward and client, and, of course, if such a duty
were merely transferred from the trustee to the guardian, economy would not be served and more likely the cost would be
increased.
This Court has not hesitated to approve of resort to publication as a customary substitute in another class of cases where
it is not reasonably possible or practicable to give more adequate warning. Thus it has been recognized that, in the case
of persons missing or unknown, employment of an indirect and even a probably futile means of notification is all that the
situation permits and creates no constitutional bar to a final decree foreclosing their rights. Cunnius v. Reading School
District, 198 U.S. 458, 25 S.Ct. 721, 49 L.Ed. 1125, 3 Ann.Cas. 1121; Blinn v. Nelson, 222 U.S. 1, 32 S.Ct. 1, 56 L.Ed. 65,
Ann.Cas.1913B, 555; and see Jacob v. Roberts, 223 U.S. 261, 32 S.Ct. 303, 56 L.Ed. 429.
Those beneficiaries represented by appellant whose interests or whereabouts could not with due diligence be ascertained
come clearly within this category. As to them the statutory notice is sufficient. However great the odds that publication will
never reach the eyes of such unknown parties, it is not in the typical case much more likely to fail than any of the choices
open to legislators endeavoring to prescribe the best notice practicable.
Nor do we consider it unreasonable for the State to dispense with more certain notice to those beneficiaries whose
interests are either conjectural or future or, although they could be discovered upon investigation, do not in due course of
business come to knowledge of the common trustee. Whatever searches might be required in another situation under
ordinary standards of diligence, in view of the character of the proceedings and the nature of the interests here involved
we think them unnecessary. We recognize the practical difficulties and costs that would be attendant on frequent
investigations into the status of great numbers of beneficiaries, many of whose interests in the common fund are so
remote as to be ephemeral; and we have no doubt that such impracticable and extended searches are not required in the
name of due process. The expense of keeping informed from day to day of substitutions among even current income
beneficiaries and presumptive remaindermen, to say nothing of the far greater number of contingent beneficiaries, would
impose a severe burden on the plan, and would likely dissipate its advantages. These are practical matters in which we
should be reluctant to disturb the judgment of the state authorities.
Accordingly we overrule appellant's constitutional objections to published notice insofar as they are urged on behalf of any
beneficiaries whose interests or addresses are unknown to the trustee.
As to known present beneficiaries 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 office 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 beneficiaries represented by appellant, and we find
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. Cf. Wuchter v. Pizzutti, supra. Certainly sending them a copy of the statute months and perhaps
years in advance does not answer this purpose. The trustee periodically remits their income to them, and we think that
they mgith reasonably expect that with or apart from their remittances word might come to them personally that steps
were being taken affecting their interests.

42
We need not weigh contentions that a requirement of personal service of citation on even the large number of known
resident or nonresident beneficiaries would, by reasons of delay if not of expense, seriously interfere with the proper
administration of the fund. Of course personal service even without the jurisdiction of the issuing authority serves the end
of actual and personal notice, whatever power of compulsion it might lack. However, no such service is required under the
circumstances. This type of trust presupposes a large number of small interests. The individual interest does not stand
alone but is identical with that of a class. The rights of each in the integrity of the fund and the fidelity of the trustee are
shared by many other beneficiaries. Therefore notice reasonably certain to reach most of those interested in objecting is
likely to safeguard the interests of all, since any objections sustained would inure to the benefit of all. We think that under
such circumstances reasonable risks that notice might not actually reach every beneficiary are justifiable. 'Now and then
an extraordinary case may turn up, but constitutional law, like other mortal contrivances, has to take some chances, and in
the great majority of instances, no doubt, justice will be done.' Blinn v. Nelson, supra, 222 U.S. at page 7, 32 S.Ct. at page
2, 56 L.Ed. 65, Ann.Cas.1913B, 555.
The statutory notice to known beneficiaries is inadequate, not because in fact it fails to reach everyone, but because
under the circumstances it is not reasonably calculated to reach those who could easily be informed by other means at
hand. However it may have been in former times, the mails today are recognized as an efficient and inexpensive means of
communication. Moreover, the fact that the trust company has been able to give mailed notice to known beneficiaries at
the time the common trust fund was established is persuasive that postal notification at the time of accounting would not
seriously burden the plan.
In some situations the law requires greater precautions in its proceedings than the business world accepts for its own
purposes. In few, if any, will it be satisfied with less. Certainly it is instructive, in determining the reasonableness of the
impersonal broadcast notification here used, to ask whether it would satisfy a prudent man of business, counting his
pennies but finding it in his interest to convey information to many persons whose names and addresses are in his files.
We are not satisfied that it would. Publication may theoretically be available for all the world to see, but it is too much in
our day to suppose that each or any individual beneficiary does or could examine all that is published to see if something
may be tucked away in it that affects his property interests. We have before indicated in reference to notice by publication
that, 'Great caution should be used not to let fiction deny the fair play that can be secured only by a pretty close adhesion
to fact.' McDonald v. Mabee, 243 U.S. 90, 91, 37 S.Ct. 343, 61 L.Ed. 608, L.R.A.1917F, 458.
We hold the notice of judicial settlement of accounts required by the New York Banking Law 100-c(12) 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. Accordingly the judgment is reversed and the cause remanded
for further proceedings not inconsistent with this opinion.
Reversed.
Mr. Justice DOUGLAS took no part in the consideration or decision of this case.

International Shoe v. State of Washington (No. 107)


Argued: November 14, 1945
Decided: December 3, 1945
22 Wash.2d 146, 154 P.2d 801, affirmed.
Syllabus
Opinion, Stone
Separate, Black
Syllabus
Activities within a State of salesmen in the employ of a foreign corporation, exhibiting samples of merchandise and
soliciting orders from prospective buyers to be accepted or rejected by the corporation at a point outside the State, were
systematic and continuous, and resulted in a large volume of interstate business. A statute of the State requires
employers to pay into the state unemployment compensation fund a specified percentage of the wages paid for the
services of employees within the State.

43
Held:
1. In view of 26 U.S.C. 1606(a) , providing that no person shall be relieved from compliance with a state law requiring
payments to an unemployment fund on the ground that he is engaged in interstate commerce, the fact that the corporation
is engaged in interstate commerce does not relieve it from liability for payments to the state unemployment compensation
fund. P. 315.
2. The activities in behalf of the corporation render it amenable to suit in courts of the State to recover payments due to
the state unemployment compensation fund. P. 320.
(a) The activities in question established between the State and the corporation sufficient contacts or ties to make it
reasonable and just, and in conformity to the due process requirements of the Fourteenth Amendment, for the State to
enforce against the corporation an obligation arising out of such activities. P. 320.
(b) In such a suit to recover payments due to the unemployment compensation fund, service of process upon one of the
corporation's salesmen within the State, and notice sent by registered mail to the corporation at its home office, satisfies
the requirements of due process. P. 320. [p311]
3. The tax imposed by the state unemployment compensation statute -- construed by the state court, in its application to
the corporation, as a tax on the privilege of employing salesmen within the State -- does not violate the due process
clause of the Fourteenth Amendment. P. 321.
APPEAL from a judgment upholding the constitutionality of a state unemployment compensation statute as applied to the
appellant corporation.
TOP
Opinion
STONE, C.J., Opinion of the Court
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
The questions for decision are (1) whether, within the limitations of the due process clause of the Fourteenth Amendment,
appellant, a Delaware corporation, has, by its activities in the State of Washington, rendered itself amenable to
proceedings in the courts of that state to recover unpaid contributions to the state unemployment compensation fund
exacted by state statutes, Washington Unemployment Compensation Act, Washington Revised Statutes, 9998-103a
through 9998-123a, 1941 Supp., and (2) whether the state can exact those contributions consistently with the due
process clause of the Fourteenth Amendment.
The statutes in question set up a comprehensive scheme of unemployment compensation, the costs of which are
defrayed by contributions required to be made by employers to a state unemployment compensation fund. [p312] The
contributions are a specified percentage of the wages payable annually by each employer for his employees' services in
the state. The assessment and collection of the contributions and the fund are administered by appellees. Section 14(c) of
the Act (Wash.Rev.Stat., 1941 Supp., 9998-114c) authorizes appellee Commissioner to issue an order and notice of
assessment of delinquent contributions upon prescribed personal service of the notice upon the employer if found within
the state, or, if not so found, by mailing the notice to the employer by registered mail at his last known address. That
section also authorizes the Commissioner to collect the assessment by distraint if it is not paid within ten days after
service of the notice. By 14e and 6b, the order of assessment may be administratively reviewed by an appeal tribunal
within the office of unemployment upon petition of the employer, and this determination is, by 6i, made subject to judicial
review on questions of law by the state Superior Court, with further right of appeal in the state Supreme Court, as in other
civil cases.
In this case, notice of assessment for the years in question was personally served upon a sales solicitor employed by
appellant in the State of Washington, and a copy of the notice was mailed by registered mail to appellant at its address in
St. Louis, Missouri. Appellant appeared specially before the office of unemployment, and moved to set aside the order and
notice of assessment on the ground that the service upon appellant's salesman was not proper service upon appellant;
that appellant was not a corporation of the State of Washington, and was not doing business within the state; that it had
no agent within the state upon whom service could be made; and that appellant is not an employer, and does not furnish
employment within the meaning of the statute.

44
The motion was heard on evidence and a stipulation of facts by the appeal tribunal, which denied the motion [p313] and
ruled that appellee Commissioner was entitled to recover the unpaid contributions. That action was affirmed by the
Commissioner; both the Superior Court and the Supreme Court affirmed. 22 Wash.2d 146, 154 P.2d 801. Appellant in
each of these courts assailed the statute as applied, as a violation of the due process clause of the Fourteenth
Amendment, and as imposing a constitutionally prohibited burden on interstate commerce. The cause comes here on
appeal under 237(a) of the Judicial Code, 28 U.S.C. 344(a), appellant assigning as error that the challenged statutes,
as applied, infringe the due process clause of the Fourteenth Amendment and the commerce clause.
The facts, as found by the appeal tribunal and accepted by the state Superior Court and Supreme Court, are not in
dispute. Appellant 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. It 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.
Appellant has no office 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, now in question, appellant 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
confined to that state, and they were compensated by commissions based upon the amount of their sales. The
commissions for each year totaled more than $31,000. Appellant supplies its salesmen with a line of samples, each
consisting of one shoe of a pair, which [p314] they display to prospective purchasers. On occasion, they 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 appellant.
The authority of the salesmen is limited to exhibiting their samples and soliciting orders from prospective buyers, at prices
and on terms fixed by appellant. The salesmen transmit the orders to appellant's office in St. Louis for acceptance or
rejection, and, when accepted, the merchandise for filling the orders is shipped f.o.b. from points outside Washington to
the purchasers within the state. All the merchandise shipped into Washington is invoiced at the place of shipment, from
which collections are made. No salesman has authority to enter into contracts or to make collections.
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 flow of appellant's product into the state, was sufficient to constitute doing
business in the state so as to make appellant amenable to suit in its courts. But it was also of opinion that there were
sufficient additional activities shown to bring the case within the rule, frequently stated, that solicitation within a state by
the agents of a foreign corporation plus some additional activities there are sufficient to render the corporation amenable
to suit brought in the courts of the state to enforce an obligation arising out of its activities there. International Harvester
Co. v. Kentucky, 234 U.S. 579, 587; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 87; Frene v. Louisville
Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516. The court found such additional activities in the salesmen's display
of samples sometimes in permanent display rooms, and the salesmen's residence within the state, continued over a
period of years, all resulting in a [p315] substantial volume of merchandise regularly shipped by appellant to purchasers
within the state. The court also held that the statute, as applied, did not invade the constitutional power of Congress to
regulate interstate commerce, and did not impose a prohibited burden on such commerce.
Appellant's argument, renewed here, that the statute imposes an unconstitutional burden on interstate commerce need
not detain us. For 53 Stat. 1391, 26 U.S.C. 1606(a) provides that
No person required under a State law to make payments to an unemployment fund shall be relieved from compliance
therewith on the ground that he is engaged in interstate or foreign commerce, or that the State law does not distinguish
between employees engaged in interstate or foreign commerce and those engaged in intrastate commerce.
It is no longer debatable that Congress, in the exercise of the commerce power, may authorize the states, in specified
ways, to regulate interstate commerce or impose burdens upon it. Kentucky Whip & Collar Co. v. Illinois Central R. Co.,
299 U.S. 334; Perkins v. Pennsylvania, 314 U.S. 586; Standard Dredging Corp. v. Murphy, 319 U.S. 306, 308; Hooven &
Allison Co. v. Evatt, 324 U.S. 652, 679; Southern Pacific Co. v. Arizona, 325 U.S. 761, 769.
Appellant also insists that its activities within the state were not sufficient 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 appellant to suit. It refers to those cases in which it was said that the mere solicitation of orders for the purchase of
goods within a state, to be accepted without the state and filled by shipment of the purchased goods interstate, does not

45
render the corporation seller amenable to suit within the state. See Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 533;
International Harvester Co. v. Kentucky, supra, 586-587; Philadelphia [p316] & Reading R. Co. v. McKibbin, 243 U.S. 264,
268; People's Tobacco Co. v. American Tobacco Co., supra, 87. And appellant further 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. It thus denies the power of
the state to lay the tax or to subject appellant to a suit for its collection.
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. Pennoyer v. Neff, 95 U.S. 714, 733. But now that the capias ad respondendum has
given way to personal service of summons or other form of notice, due process requires only that, in order to subject a
defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum
contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial
justice." Milliken v. Meyer, 311 U.S. 457, 463. See Holmes, J., in McDonald v. Mabee, 243 U.S. 90, 91. Compare
Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316, 319. See Blackmer v. United States, 284 U.S. 421; Hess v.
Pawloski, 274 U.S. 352; Young v. Masci, 289 U.S. 253. ,
Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, Klein v.
Board of Supervisors, 282 U.S. 19, 24, 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. To
say that the corporation is so far "present" there as to satisfy due process requirements, for purposes of taxation or the
maintenance of suits against it in the courts of the state, is to beg the question to be decided. For the terms "present" or
"presence" are [p317] used merely to symbolize those activities of the corporation's agent within the state which courts will
deem to be sufficient to satisfy the demands of due process. L. Hand, J., in Hutchinson v. Chase & Gilbert, 45 F.2d 139,
141. Those demands may be met by such contacts of the corporation with the state of the forum as make it reasonable, in
the context of our federal system of government, to require the corporation to defend the particular suit which is brought
there. An "estimate of the inconveniences" which would result to the corporation from a trial away from its "home" or
principal place of business is relevant in this connection. Hutchinson v. Chase & Gilbert, supra, 141.
"Presence" in the state in this sense has never been doubted when the activities of the corporation there have not only
been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or
authorization to an agent to accept service of process has been given. St. Clair v. Cox, 106 U.S. 350, 355; Connecticut
Mutual Co. v. Spratley, 172 U.S. 602, 610-611; Pennsylvania Lumbermen's Ins. Co. v. Meyer, 197 U.S. 407, 414-415;
Commercial Mutual Co. v. Davis, 213 U.S. 245, 255-256; International Harvester Co. v. Kentucky, supra; cf. St. Louis S.W.
R. Co. v. Alexander, 227 U.S. 218. Conversely, it has been generally recognized that the casual presence of the corporate
agent, or even his conduct of single or isolated items of activities in a state in the corporation's behalf, are not enough to
subject it to suit on causes of action unconnected with the activities there. St. Clair v. Cox, supra, 359, 360; Old Wayne
Life Assn. v. McDonough, 204 U.S. 8, 21; Frene v. Louisville Cement Co., supra, 515, and cases cited. To require the
corporation in such circumstances to defend the suit away from its home or other jurisdiction where it carries on more
substantial activities has been thought to lay too great and unreasonable a burden on the corporation to comport with due
process. [p318]
While it has been held, in cases on which appellant relies, that continuous activity of some sorts within a state is not
enough to support the demand that the corporation be amenable to suits unrelated to that activity, Old Wayne Life Assn. v.
McDonough, supra; Green v. Chicago, B. & Q. R. Co., supra; Simon v. Southern R. Co., 236 U.S. 115; People's Tobacco
Co. v. American Tobacco Co., supra; cf. Davis v. Farmers Co-operative Co., 262 U.S. 312, 317, there have been instances
in which the continuous corporate operations within a state were thought so substantial and of such a nature as to justify
suit against it on causes of action arising from dealings entirely distinct from those activities. See Missouri, K. & T. R. Co.
v. Reynolds, 255 U.S. 565; Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St. Louis S.W. R. Co. v.
Alexander, supra.
Finally, although the commission of some single or occasional acts of the corporate agent in a state sufficient to impose
an obligation or liability on the corporation has not been thought to confer upon the state authority to enforce it, Rosenberg
Bros. & Co. v. Curtis Brown Co., 260 U.S. 516, other such acts, because of their nature and quality and the circumstances
of their commission, may be deemed sufficient to render the corporation liable to suit. Cf. Kane v. New Jersey, 242 U.S.
160; Hess v. Pawloski, supra; Young v. Masci, supra. True, some of the decisions holding the corporation amenable to suit
have been supported by resort to the legal fiction that it has given its consent to service and suit, consent being implied
from its presence in the state through the acts of its authorized agents. Lafayette Insurance Co. v. French, 18 How. 404,
407; St. Clair v. Cox, supra, 356; Commercial Mutual Co. v. Davis, supra, 254; Washington v. Superior Court, 289 U.S.
361, 364-365. But, more realistically, it may be said that those authorized acts were of such a nature as to justify the
fiction. Smolik v. Philadelphia & [p319] Reading Co., 222 F. 148, 151. Henderson, The Position of Foreign Corporations in

46
American Constitutional Law, 94-95.
It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a
corporation to suit and those which do not cannot be simply mechanical or quantitative. The test is not merely, as has
sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in
another state, is a little more or a little less. St. Louis S.W. R. Co. v. Alexander, supra, 228; International Harvester Co. v.
Kentucky, supra, 587. Whether due process is satisfied must depend, rather, upon the quality and nature of the activity in
relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.
That clause does not contemplate that a state may make binding a judgment in personam against an individual or
corporate defendant with which the state has no contacts, ties, or relations. Cf. Pennoyer v. Neff, supra; Minnesota
Commercial Assn. v. Benn, 261 U.S. 140.
But, to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and
protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those
obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to
respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. Compare International
Harvester Co. v. Kentucky, supra, with Green v. Chicago, B. & Q. R. Co., supra, and People's Tobacco Co. v. American
Tobacco Co., supra. Compare Connecticut Mutual Co. v. Spratley, supra, 619, 620, and Commercial Mutual Co. v. Davis,
supra, with Old Wayne Life Assn. v. McDonough, supra. See 29 Columbia Law Review, 187-195. [p320]
Applying these standards, the activities carried on in behalf of appellant in the State of Washington were neither irregular
nor casual. They were systematic and continuous throughout the years in question. They resulted in a large volume of
interstate business, in the course of which appellant received the benefits and protection of the laws of the state, including
the right to resort to the courts for the enforcement of its rights. The obligation which is here sued upon arose out of those
very activities. It is evident that these operations establish sufficient contacts or ties with the state of the forum to make it
reasonable and just, according to our traditional conception of fair play and substantial justice, to permit the state to
enforce the obligations which appellant has incurred there. Hence, we cannot say that the maintenance of the present suit
in the State of Washington involves an unreasonable or undue procedure.
We are likewise unable to conclude that the service of the process within the state upon an agent whose activities
establish appellant's "presence" there was not sufficient notice of the suit, or that the suit was so unrelated to those
activities as to make the agent an inappropriate vehicle for communicating the notice. It is enough that appellant has
established such contacts with the state that the particular form of substituted service adopted there gives reasonable
assurance that the notice will be actual. Connecticut Mutual Co. v. Spratley, supra, 618, 619; Board of Trade v. Hammond
Elevator Co., 198 U.S. 424, 437-438; Commercial Mutual Co. v. Davis, supra, 254-255. Cf. Riverside Mills v. Menefee,
237 U.S. 189, 194, 195; see Knowles v. Gaslight & Coke Co., 19 Wall. 58, 61; McDonald v. Mabee, supra; Milliken v.
Meyer, supra. Nor can we say that the mailing of the notice of suit to appellant by registered mail at its home office was
not reasonably calculated to apprise appellant of the suit. Compare Hess v. Pawloski, supra, with McDonald v. Mabee,
supra, [p321] 92, and Wuchter v. Pizzutti, 276 U.S. 13, 19, 24; cf. Becquet v. MacCarthy, 2 B. & Ad. 951; Maubourquet v.
Wyse, 1 Ir.Rep.C.L. 471. See Washington v. Superior Court, supra, 365.
Only a word need be said of appellant's liability for the demanded contributions to the state unemployment fund. The
Supreme Court of Washington, construing and applying the statute, has held that it imposes a tax on the privilege of
employing appellant's salesmen within the state measured by a percentage of the wages, here, the commissions payable
to the salesmen. This construction we accept for purposes of determining the constitutional validity of the statute. The
right to employ labor has been deemed an appropriate subject of taxation in this country and England, both before and
since the adoption of the Constitution. Steward Machine Co. v. Davis, 301 U.S. 548, 579, et seq. And such a tax imposed
upon the employer for unemployment benefits is within the constitutional power of the states. Carmichael v. Southern Coal
Co., 301 U.S. 495, 508, et seq.
Appellant having rendered itself amenable to suit upon obligations arising out of the activities of its salesmen in
Washington, the state may maintain the present suit in personam to collect the tax laid upon the exercise of the privilege
of employing appellant's salesmen within the state. For Washington has made one of those activities which, taken
together, establish appellant's "presence" there for purposes of suit the taxable event by which the state brings appellant
within the reach of its taxing power. The state thus has constitutional power to lay the tax and to subject appellant to a suit
to recover it. The activities which establish its "presence" subject it alike to taxation by the state and to suit to recover the
tax. Equitable Life Society v. Pennsylvania, 238 U.S. 143, 146; cf. International Harvester Co. v. Department of Taxation,
322 U.S. 435, 442, et seq.; Hoopeston Canning Co. v. Cullen, [p322] supra, 316-319; see General Trading Co. v. Tax
Comm'n, 322 U.S. 335.

47
Affirmed.
MR. JUSTICE JACKSON took no part in the consideration or decision of this case.
TOP
Separate
BLACK, J., Separate Opinion
MR. JUSTICE BLACK delivered the following opinion.
Congress, pursuant to its constitutional power to regulate commerce, has expressly provided that a State shall not be
prohibited from levying the kind of unemployment compensation tax here challenged. 26 U.S.C. 1600. We have twice
decided that this Congressional consent is an adequate answer to a claim that imposition of the tax violates the
Commerce Clause. Perkins v. Pennsylvania, 314 U.S. 586, affirming 342 Pa. 529; Standard Dredging Corp. v. Murphy,
319 U.S. 306, 308. Two determinations by this Court of an issue so palpably without merit are sufficient. Consequently,
that part of this appeal which again seeks to raise the question seems so patently frivolous as to make the case a fit
candidate for dismissal. Fay v. Crozer, 217 U.S. 455. Nor is the further ground advanced on this appeal, that the State of
Washington has denied appellant due process of law, any less devoid of substance. It is my view, therefore, that we
should dismiss the appeal as unsubstantial, [n1] Seaboard Air Line R. Co. v. Watson, 287 U.S. 86, 90, 92, and decline the
invitation to formulate broad rules as to the meaning of due process, which here would amount to deciding a constitutional
question "in advance of the necessity for its decision." Federation of Labor v. McAdory, 325 U.S. 450, 461. [p323]
Certainly appellant cannot, in the light of our past decisions, meritoriously claim that notice by registered mail and by
personal service on its sales solicitors in Washington did not meet the requirements of procedural due process. And the
due process clause is not brought in issue any more by appellant's further conceptualistic contention that Washington
could not levy a tax or bring suit against the corporation because it did not honor that State with its mystical "presence."
For it is unthinkable that the vague due process clause was ever intended to prohibit a State from regulating or taxing a
business carried on within its boundaries simply because this is done by agents of a corporation organized and having its
headquarters elsewhere. To read this into the due process clause would, in fact, result in depriving a State's citizens of
due process by taking from the State the power to protect them in their business dealings within its boundaries with
representatives of a foreign corporation. Nothing could be more irrational, or more designed to defeat the function of our
federative system of government. Certainly a State, at the very least, has power to tax and sue those dealing with its
citizens within its boundaries, as we have held before. Hoopeston Canning Co. v. Cullen, 318 U.S. 313. Were the Court to
follow this principle, it would provide a workable standard for cases where, as here, no other questions are involved. The
Court has not chosen to do so, but instead has engaged in an unnecessary discussion, in the course of which it has
announced vague Constitutional criteria applied for the first time to the issue before us. It has thus introduced uncertain
elements confusing the simple pattern and tending to curtail the exercise of State powers to an extent not justified by the
Constitution.
The criteria adopted, insofar as they can be identified, read as follows: Due Process does permit State courts to "enforce
the obligations which appellant has incurred" if [p324] it be found "reasonable and just according to our traditional
conception of fair play and substantial justice." And this, in turn, means that we will "permit" the State to act if, upon
an "estimate of the inconveniences" which would result to the corporation from a trial away from its "home" or principal
place of business,
we conclude that it is "reasonable" to subject it to suit in a State where it is doing business.
It is true that this Court did use the terms "fair play" and "substantial justice" in explaining the philosophy underlying the
holding that it could not be "due process of law" to render a personal judgment against a defendant without notice and an
opportunity to be heard. Milliken v. Meyer, 311 U.S. 457. In McDonald v. Mabee, 243 U.S. 90, 91, cited in the Milliken,
case, Mr. Justice Holmes, speaking for the Court, warned against judicial curtailment of this opportunity to be heard, and
referred to such a curtailment as a denial of "fair play," which even the common law would have deemed "contrary to
natural justice." And previous cases had indicated that the ancient rule against judgments without notice had stemmed
from "natural justice" concepts. These cases, while giving additional reasons why notice under particular circumstances is
inadequate, did not mean thereby that all legislative enactments which this Court might deem to be contrary to natural
justice ought to be held invalid under the due process clause. None of the cases purport to support or could support a
holding that a State can tax and sue corporations only if its action comports with this Court's notions of "natural justice." I
should have thought the Tenth Amendment settled that.

48
I believe that the Federal Constitution leaves to each State, without any "ifs" or "buts," a power to tax and to open the
doors of its courts for its citizens to sue corporations whose agents do business in those States. Believing that the
Constitution gave the States that power, I think it a judicial deprivation to condition its exercise upon this [p325] Court's
notion of "fair play," however appealing that term may be. Nor can I stretch the meaning of due process so far as to
authorize this Court to deprive a State of the right to afford judicial protection to its citizens on the ground that it would be
more "convenient" for the corporation to be sued somewhere else.
There is a strong emotional appeal in the words "fair play," "justice," and "reasonableness." But they were not chosen by
those who wrote the original Constitution or the Fourteenth Amendment as a measuring rod for this Court to use in
invalidating State or Federal laws passed by elected legislative representatives. No one, not even those who most feared
a democratic government, ever formally proposed that courts should be given power to invalidate legislation under any
such elastic standards. Express prohibitions against certain types of legislation are found in the Constitution, and, under
the long-settled practice, courts invalidate laws found to conflict with them. This requires interpretation, and interpretation,
it is true, may result in extension of the Constitution's purpose. But that is no reason for reading the due process clause so
as to restrict a State's power to tax and sue those whose activities affect persons and businesses within the State,
provided proper service can be had. Superimposing the natural justice concept on the Constitution's specific prohibitions
could operate as a drastic abridgment of democratic safeguards they embody, such as freedom of speech, press and
religion, [n2] and the right to counsel. This [p326] has already happened. Betts v. Brady, 316 U.S. 455. Compare Feldman
v. United States, 322 U.S. 487, 494-503. For application of this natural law concept, whether under the terms
"reasonableness," "justice," or "fair play," makes judges the supreme arbiters of the country's laws and practices. Polk Co.
v. Glover, 305 U.S. 5, 17-18; Federal Power Commission v. Natural Gas Pipeline Co., 315 U.S. 575, 600, n. 4. This result,
I believe, alters the form of government our Constitution provides. I cannot agree.
True, the State's power is here upheld. But the rule announced means that tomorrow's judgment may strike down a State
or Federal enactment on the ground that it does not conform to this Court's idea of natural justice. I therefore find myself
moved by the same fears that caused Mr. Justice Holmes to say in 1930:
I have not yet adequately expressed the more than anxiety that I feel at the ever-increasing scope given to the Fourteenth
Amendment in cutting down what I believe to be the constitutional rights of the States. As the decisions now stand, I see
hardly any limit but the sky to the invalidating of those rights if they happen to strike a majority of this Court as for any
reason undesirable.
Baldwin v. Missouri, 281 U.S. 586, 595.
1. This Court has, on several occasions, pointed out the undesirable consequences of a failure to dismiss frivolous
appeals. Salinger v. United States, 272 U.S. 542, 544; United Surety Co. v. American Fruit Product Co., 238 U.S. 140; De
Bearn v. Safe Deposit & Trust Co., 233 U.S. 24, 33-34.
2. These First Amendment liberties -- freedom of speech, press and religion -- provide a graphic illustration of the
potential restrictive capacity of a rule under which they are protected at a particular time only because the Court,
as then constituted, believes them to be a requirement of fundamental justice. Consequently, under the same rule,
another Court, with a different belief as to fundamental justice, could, at least as against State action, completely
or partially withdraw Constitutional protection from these basic freedoms, just as though the First Amendment had
never been written.

SHAFFER v. HEITNER, (1977)


No. 75-1812
Argued: February 22, 1977

Decided: June 24, 1977

Appellee, a nonresident of Delaware, filed 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 officers or directors, alleging that
the individual defendants had violated their duties to the corporation by causing it and its subsidiary to engage in actions
(which occurred in Oregon) that resulted in corporate liability for substantial damages in a private antitrust suit and a large
fine in a criminal contempt action. Simultaneously, appellee, pursuant to Del. Code Ann., Tit. 10, 366 (1975), filed a motion

49
for sequestration of the Delaware property of the individual defendants, all nonresidents of Delaware, accompanied by an
affidavit 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. Appellants 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; that the property seized was not capable of attachment in Delaware; and that
they did not have sufficient contacts with Delaware to sustain jurisdiction of that State's courts under the rule of
International Shoe Co. v. Washington, 326 U.S. 310 . In that case the Court (after noting that the historical basis of in
personam jurisdiction was a court's power over the defendant's person, making his presence within the court's territorial
jurisdiction a prerequisite to its rendition of a personally binding judgment against him, Pennoyer v. Neff, 95 U.S. 714 )
held that that power was no longer the central concern and that "due process requires only that in order to subject a
defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum
contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial
justice'" (and thus the focus shifted to the relationship among the defendant, the forum, and the litigation, rather than the
mutually exclusive sovereignty of the States on which the rules of Pennoyer had rested). The Court of Chancery, rejecting
appellants' arguments, upheld the 366 procedure [433 U.S. 186, 187] of compelling the personal appearance of a
nonresident defendant to answer and defend a suit brought against him in a court of equity, which is accomplished by the
appointment of a sequestrator to seize and hold the property of the nonresident located in Delaware subject to court order,
with release of the property being made upon the defendant's entry of a general appearance. The court held that the
limitation on the purpose and length of time for which sequestered property is held comported with due process and that
the statutory situs of the stock (under a provision making Delaware the situs of ownership of the capital stock of all
corporations existing under the laws of that State) provided a sufficient basis for the exercise of quasi in rem jurisdiction by
a Delaware court. The Delaware Supreme Court affirmed, concluding that International Shoe raised no constitutional
barrier to the sequestration procedure because "jurisdiction under 366 remains . . . quasi in rem founded on the presence
of capital stock [in Delaware], not on prior contact by defendants with this forum." Held:
1. Whether or not a State can assert jurisdiction over a nonresident must be evaluated according to the minimum-contacts
standard of International Shoe Co. v. Washington, supra. Pp. 207-212.
(a) In order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising
"jurisdiction over the interests of persons in the thing." The presence of property in a State may bear upon the existence of
jurisdiction by providing contacts among the forum State, the defendant, and the litigation, as for example, when claims to
the property itself are the source of the underlying controversy between the plaintiff and defendant, where it would be
unusual for the State where the property is located not to have jurisdiction. Pp. 207-208.
(b) But where, as in the instant quasi in rem action, the property now serving as the basis for state-court jurisdiction is
completely unrelated to the plaintiff's cause of action, the presence of the property alone, i. e., absent other ties among
the defendant, the State, and the litigation, would not support the State's jurisdiction. Pp. 208-209.
(c) Though the primary rationale for treating the presence of property alone as a basis for jurisdiction is to prevent a
wrongdoer from avoiding payment of his obligations by removal of his assets to a place where he is not subject to an in
personam suit, that is an insufficient justification for recognizing jurisdiction without regard to whether the property is in the
State for that purpose. Moreover, the availability of attachment procedures and the protection of the Full Faith and Credit
Clause, also militate against that rationale. Pp. 209-210. [433 U.S. 186, 188]
(d) The fairness standard of International Shoe can be easily applied in the vast majority of cases. P. 211.
(e) Though jurisdiction based solely on the presence of property in a State has had a long history, "traditional notions of
fair play and substantial justice" can be as readily offended by the perpetuation of ancient forms that are no longer justified
as by the adoption of new procedures that do not comport with the basic values of our constitutional heritage. Cf.
Sniadach v. Family Finance Corp, 395 U.S. 337, 340 ; Wolf v. Colorado, 338 U.S. 25, 27 . Pp. 211-212.

50
2. Delaware's assertion of jurisdiction over appellants, based solely as it is on the statutory presence of appellants'
property in Delaware, violates the Due Process Clause, which "does not contemplate that a state may make binding a
judgment . . . against an individual or corporate defendant with which the state has no contacts, ties, or relations."
International Shoe, supra, at 319. Pp. 213-217.
(a) Appellants' holdings in the corporation, which are not the subject matter of this litigation and are unrelated to the
underlying cause of action, do not provide contacts with Delaware sufficient to support jurisdiction of that State's courts
over appellants. P. 213.
(b) Nor is Delaware state-court jurisdiction supported by that State's interest in supervising the management of a
Delaware corporation and defining the obligations of its officers and directors, since Delaware bases jurisdiction, not on
appellants' status as corporate fiduciaries, but on the presence of their property in the State. Moreover, sequestration has
been available in any suit against a nonresident whether against corporate fiduciaries or not. Pp. 213-215.
(c) Though it may be appropriate for Delaware law to govern the obligations of appellants to the corporation and
stockholders, this does not mean that appellants have "purposefully avail[ed themselves] of the privilege of conducting
activities within the forum State," Hanson v. Denckla, 357 U.S. 235, 253 . Appellants, who were not required to acquire
interests in the corporation in order to hold their positions, did not by acquiring those interests surrender their right to be
brought to judgment in the States in which they had "minimum contacts." Pp. 215-216.
361 A. 2d 225, reversed.
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, WHITE, BLACKMUN, and
POWELL, JJ., joined, and in Parts I-III of which BRENNAN, J., joined. POWELL, J., filed a concurring opinion, post, p.
217. STEVENS, J., filed an opinion concurring in the [433 U.S. 186, 189] judgment, post, p. 217. BRENNAN, J., filed an
opinion concurring in part and dissenting in part, post, p. 219. REHNQUIST, J., took no part in the consideration or
decision of the case.
John R. Reese argued the cause for appellants. With him on the briefs were Edmund N. Carpenter II, R. Franklin Balotti,
and Lynn H. Pasahow.
Michael F. Maschio argued the cause for appellee. With him on the brief was Joshua M. Twilley.
MR. JUSTICE MARSHALL delivered the opinion of the Court.
The controversy in this case concerns the constitutionality of a Delaware statute that allows a court of that State to take
jurisdiction of a lawsuit by sequestering any property of the defendant that happens to be located in Delaware. Appellants
contend that the sequestration statute as applied in this case violates the Due Process Clause of the Fourteenth
Amendment both because it permits the state courts to exercise jurisdiction despite the absence of sufficient contacts
among the defendants, the litigation, and the State of Delaware and because it authorizes the deprivation of defendants'
property without providing adequate procedural safeguards. We find it necessary to consider only the first of these
contentions.
I
Appellee Heitner, a nonresident of Delaware, is the owner of one share of stock in the Greyhound Corp., a business
incorporated under the laws of Delaware with its principal place of business in Phoenix, Ariz. On May 22, 1974, he filed a
shareholder's derivative suit in the Court of Chancery for New Castle Country, Del., in which he named as defendants
Greyhound, its wholly owned subsidiary Greyhound Lines, Inc., 1 and 28 present or former officers or directors of one
or [433 U.S. 186, 190] both of the corporations. In essence, Heitner alleged that the individual defendants had violated
their duties to Greyhound by causing it and its subsidiary to engage in actions that resulted in the corporations being held
liable for substantial damages in a private antitrust suit 2 and a large fine in a criminal contempt action. 3 The activities

51
which led to these penalties took place in Oregon.
Simultaneously with his complaint, Heitner filed a motion for an order of sequestration of the Delaware property of the
individual defendants pursuant to Del. Code Ann., Tit. 10, 366 (1975). 4 This motion was accompanied by a
supporting [433 U.S. 186, 191] affidavit of counsel which stated that the individual defendants were nonresidents of
Delaware. The affidavit identified the property to be sequestered as
"common stock, 3% Second Cumulative Preferenced Stock and stock unit credits of the Defendant Greyhound
Corporation, a Delaware corporation, as well as all options and all warrants to purchase said stock issued to said
individual Defendants and all contractural [sic] obligations, all rights, debts or credits due or accrued to or for the benefit of
any of the said Defendants under any type of written agreement, contract or other legal instrument of any kind whatever
between any of the individual Defendants and said corporation."
The requested sequestration order was signed the day the motion was filed. 5 Pursuant to that order, the
sequestrator 6 [433 U.S. 186, 192] "seized" approximately 82,000 shares of Greyhound common stock belonging to 19
of the defendants, 7 and options belonging to another 2 defendants. 8 These seizures were accomplished by placing
"stop transfer" orders or their equivalents on the books of the Greyhound Corp. So far as the record shows, none of the
certificates representing the seized property was physically present in Delaware. The stock was considered to be in
Delaware, and so subject to seizure, by virtue of Del. Code Ann., Tit. 8, 169 (1975), which makes Delaware the situs of
ownership of all stock in Delaware corporations. 9
All 28 defendants were notified of the initiation of the suit by certified mail directed to their last known addresses and by
publication in a New Castle County newspaper. The 21 defendants whose property was seized (hereafter referred to as
appellants) responded by entering a special appearance for [433 U.S. 186, 193] the purpose of moving to quash service
of process and to vacate the sequestration order. They contended that the ex parte sequestration procedure did not
accord them due process of law and that the property seized was not capable of attachment in Delaware. In addition,
appellants asserted that under the rule of International Shoe Co. v. Washington, 326 U.S. 310 (1945), they did not have
sufficient contacts with Delaware to sustain the jurisdiction of that State's courts.
The Court of Chancery rejected these arguments in a letter opinion which emphasized the purpose of the Delaware
sequestration procedure:
"The primary purpose of `sequestration' as authorized by 10 Del. C. 366 is not to secure possession of property pending a
trial between resident debtors and creditors on the issue of who has the right to retain it. On the contrary, as here
employed, `sequestration' is a process used to compel the personal appearance of a nonresident defendant to answer
and defend a suit brought against him in a court of equity. Sands v. Lefcourt Realty Corp., Del. Supr., 117 A. 2d 365
(1955). It is accomplished by the appointment of a sequestrator by this Court to seize and hold property of the nonresident
located in this State subject to further Court order. If the defendant enters a general appearance, the sequestered property
is routinely released, unless the plaintiff makes special application to continue its seizure, in which event the plaintiff has
the burden of proof and persuasion." App. 75-76.
This limitation on the purpose and length of time for which sequestered property is held, the court concluded, rendered
inapplicable the due process requirements enunciated in Sniadach v. Family Finance Corp., 395 U.S. 337 (1969); Fuentes
v. Shevin, 407 U.S. 67 (1972); and Mitchell v. W. T. Grant Co., 416 U.S. 600 (1974). App. 75-76, 80, 83-85. The court also
found no state-law or federal constitutional barrier to the sequestrator's reliance on Del. Code Ann., Tit. 8, 169 [433 U.S.
186, 194] (1975). App. 76-79. Finally, the court held that the statutory Delaware situs of the stock provided a sufficient
basis for the exercise of quasi in rem jurisdiction by a Delaware court. Id., at 85-87.
On appeal, the Delaware Supreme Court affirmed the judgment of the Court of Chancery. Greyhound Corp. v. Heitner,
361 A. 2d 225 (1976). Most of the Supreme Court's opinion was devoted to rejecting appellants' contention that the

52
sequestration procedure is inconsistent with the due process analysis developed in the Sniadach line of cases. The court
based its rejection of that argument in part on its agreement with the Court of Chancery that the purpose of the
sequestration procedure is to compel the appearance of the defendant, a purpose not involved in the Sniadach cases.
The court also relied on what it considered the ancient origins of the sequestration procedure and approval of that
procedure in the opinions of this Court, 10 Delaware's interest in asserting jurisdiction to adjudicate claims of
mismanagement of a Delaware corporation, and the safeguards for defendants that it found in the Delaware statute. 361
A. 2d, at 230-236. [433 U.S. 186, 195]
Appellants' claim that the Delaware courts did not have jurisdiction to adjudicate this action received much more cursory
treatment. The court's analysis of the jurisdictional issue is contained in two paragraphs:
"There are significant constitutional questions at issue here but we say at once that we do not deem the rule of
International Shoe to be one of them. . . . The reason, of course, is that jurisdiction under 366 remains . . . quasi in rem
founded on the presence of capital stock here, not on prior contact by defendants with this forum. Under 8 Del. C. 169 the
`situs of the ownership of the capital stock of all corporations existing under the laws of this State . . . [is] in this State,' and
that provides the initial basis for jurisdiction. Delaware may constitutionally establish situs of such shares here, . . . it has
done so and the presence thereof provides the foundation for 366 in this case. . . . On this issue we agree with the
analysis made and the conclusion reached by Judge Stapleton in U.S. Industries, Inc. v. Gregg, D. Del., 348 F. Supp.
1004 (1972). 11
"We hold that seizure of the Greyhound shares is not invalid because plaintiff has failed to meet the prior contacts tests of
International Shoe." Id., at 229.
We noted probable jurisdiction. 429 U.S. 813 . 12 We reverse. [433 U.S. 186, 196]
II
The Delaware courts rejected appellants' jurisdictional challenge by noting that this suit was brought as a quasi in rem
proceeding. Since quasi in rem jurisdiction is traditionally based on attachment or seizure of property present in the
jurisdiction, not on contacts between the defendant and the State, the courts considered appellants' claimed lack of
contacts with Delaware to be unimportant. This categorical analysis assumes the continued soundness of the conceptual
structure founded on the century-old case of Pennoyer v. Neff, 95 U.S. 714 (1878).
Pennoyer was an ejectment action brought in federal court under the diversity jurisdiction. Pennoyer, the defendant in that
action, held the land under a deed purchased in a sheriff's sale conducted to realize on a judgment for attorney's fees
obtained against Neff in a previous action by one Mitchell. At the time of Mitchell's suit in an Oregon State court, Neff was
a nonresident of Oregon. An Oregon statute allowed service by publication on nonresidents who had property in the
State, 13 and Mitchell had used that procedure to bring Neff [433 U.S. 186, 197] before the court. The United States
Circuit Court for the District of Oregon, in which Neff brought his ejectment action, refused to recognize the validity of the
judgment against Neff in Mitchell's suit, and accordingly awarded the land to Neff. 14 This Court affirmed.
Mr. Justice Field's opinion for the Court focused on the territorial limits of the States' judicial powers. Although recognizing
that the States are not truly independent sovereigns, Mr. Justice Field found that their jurisdiction was defined by the
"principles of public law" that regulate the relationships among independent nations. The first of those principles was "that
every State possesses exclusive jurisdiction and sovereignty over persons and property within its territory." The second
was "that no State can exercise direct jurisdiction and authority over persons or property without its territory." Id., at 722.
Thus, "in virtue of the State's jurisdiction over the property of the non-resident situated within its limits," the state courts
"can inquire into that non-resident's obligations to its own citizens . . . to the extent necessary to control the disposition of
the property." Id., at 723. The Court recognized that if the conclusions of that inquiry were adverse to the nonresident
property owner, his interest in the property would be affected. Ibid. Similarly, if the defendant consented to the jurisdiction

53
of the state courts or was personally served within the State, a judgment could affect his interest in property outside the
State. But any attempt "directly" to assert extraterritorial jurisdiction over persons or property would offend sister States
and exceed the inherent limits of the State's power. A judgment resulting from such an attempt, Mr. Justice Field
concluded, was not only unenforceable [433 U.S. 186, 198] in other States, 15 but was also void in the rendering State
because it had been obtained in violation of the Due Process Clause of the Fourteenth Amendment. Id., at 732-733. See
also, e. g., Freeman v. Alderson, 119 U.S. 185, 187 -188 (1886).
This analysis led to the conclusion that Mitchell's judgment against Neff could not be validly based on the State's power
over persons within its borders, because Neff had not been personally served in Oregon, nor had he consensually
appeared before the Oregon court. The Court reasoned that even if Neff had received personal notice of the action,
service of process outside the State would have been ineffectual since the State's power was limited by its territorial
boundaries. Moreover, the Court held, the action could not be sustained on the basis of the State's power over property
within its borders because that property had not been brought before the court by attachment or any other procedure prior
to judgment. 16 Since the judgment which authorized the sheriff's sale was therefore invalid, the sale transferred no title.
Neff regained his land.
From our perspective, the importance of Pennoyer is not its result, but the fact that its principles and corollaries derived
from them became the basic elements of the constitutional [433 U.S. 186, 199] doctrine governing state-court jurisdiction.
See, e. g., Hazard, A General Theory of State-Court Jurisdiction, 1965 Sup. Ct. Rev. 241 (hereafter Hazard). As we have
noted, under Pennoyer state authority to adjudicate was based on the jurisdiction's power over either persons or property.
This fundamental concept is embodied in the very vocabulary which we use to describe judgments. If a court's jurisdiction
is based on its authority over the defendant's person, the action and judgment are denominated "in personam" and can
impose a personal obligation on the defendant in favor of the plaintiff. If jurisdiction is based on the court's power over
property within its territory, the action is called "in rem" or "quasi in rem." The effect of a judgment in such a case is limited
to the property that supports jurisdiction and does not impose a personal liability on the property owner, since he is not
before the court. 17 In Pennoyer's terms, the owner is affected only "indirectly" by an in rem judgment adverse to his
interest in the property subject to the court's disposition.
By concluding that "[t]he authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is
established," 95 U.S., at 720 , Pennoyer sharply limited the availability of in personam jurisdiction over defendants not
resident in the forum State. If a nonresident defendant could not be found in a State, he could not be sued there. On the
other hand, since the State in which property [433 U.S. 186, 200] was located was considered to have exclusive
sovereignty over that property, in rem actions could proceed regardless of the owner's location. Indeed, since a State's
process could not reach beyond its borders, this Court held after Pennoyer that due process did not require any effort to
give a property owner personal notice that his property was involved in an in rem proceeding. See, e. g., Ballard v.
Hunter, 204 U.S. 241 (1907); Arndt v. Griggs, 134 U.S. 316 (1890); Huling v. Kaw Valley R. Co., 130 U.S. 559 (1889).
The Pennoyer rules generally favored nonresident defendants by making them harder to sue. This advantage was
reduced, however, by the ability of a resident plaintiff to satisfy a claim against a nonresident defendant by bringing into
court any property of the defendant located in the plaintiff's State. See, e. g., Zammit, Quasi-In-Rem Jurisdiction:
Outmoded and Unconstitutional?, 49 St. John's L. Rev. 668, 670 (1975). For example, in the well-known case of Harris v.
Balk, 198 U.S. 215 (1905), Epstein, a resident of Maryland, had a claim against Balk, a resident of North Carolina. Harris,
another North Carolina resident, owed money to Balk. When Harris happened to visit Maryland, Epstein garnished his
debt to Balk. Harris did not contest the debt to Balk and paid it to Epstein's North Carolina attorney. When Balk later sued
Harris in North Carolina, this Court held that the Full Faith and Credit Clause, U.S. Const., Art. IV, 1, required that Harris'
payment to Epstein be treated as a discharge of his debt to Balk. This Court reasoned that the debt Harris owed Balk was
an intangible form of property belonging to Balk, and that the location of that property traveled with the debtor. By

54
obtaining personal jurisdiction over Harris, Epstein had "arrested" his debt to Balk, 198 U.S., at 223 , and brought it into
the Maryland court. Under the structure established by Pennoyer, Epstein was then entitled to proceed against that debt
to vindicate his claim against Balk, even though Balk himself was not subject to the jurisdiction [433 U.S. 186, 201] of a
Maryland tribunal. 18 See also, e. g., Louisville & N. R. Co. v. Deer, 200 U.S. 176 (1906); Steele v. G. D. Searle & Co.,
483 F.2d 339 (CA5 1973), cert. denied, 415 U.S. 958 (1974).
Pennoyer itself recognized that its rigid categories, even as blurred by the kind of action typified by Harris, could not
accommodate some necessary litigation. Accordingly, Mr. Justice Field's opinion carefully noted that cases involving the
personal status of the plaintiff, such as divorce actions, could be adjudicated in the plaintiff's home State even though the
defendant could not be served within that State. 95 U.S., at 733 -735. Similarly, the opinion approved the practice of
considering a foreign corporation doing business in a State to have consented to being sued in that State. Id., at 735-736;
see Lafayette Ins. Co. v. French, 18 How. 404 (1856). This [433 U.S. 186, 202] basis for in personam jurisdiction over
foreign corporations was later supplemented by the doctrine that a corporation doing business in a State could be deemed
"present" in the State, and so subject to service of process under the rule of Pennoyer, See, e. g., International Harvester
Co. v. Kentucky, 234 U.S. 579 (1914); Philadelphia & Reading R. Co. v. McKibbin, 243 U.S. 264 (1917). See generally
Note, Developments in the Law, State-Court Jurisdiction, 73 Harv. L. Rev. 909, 919-923 (1960) (hereafter Developments).
The advent of automobiles, with the concomitant increase in the incidence of individuals causing injury in States where
they were not subject to in personam actions under Pennoyer, required further moderation of the territorial limits on
jurisdictional power. This modification, like the accommodation to the realities of interstate corporate activities, was
accomplished by use of a legal fiction that left the conceptual structure established in Pennoyer theoretically unaltered. Cf.
Olberding v. Illinois Central R. Co., 346 U.S. 338, 340 -341 (1953). The fiction used was that the out-of-state motorist, who
it was assumed could be excluded altogether from the State's highways, had by using those highways appointed a
designated state official as his agent to accept process. See Hess v. Pawloski, 274 U.S. 352(1927). Since the motorist's
"agent" could be personally served within the State, the state courts could obtain in personam jurisdiction over the
nonresident driver.
The motorists' consent theory was easy to administer since it required only a finding that the out-of-state driver had used
the State's roads. By contrast, both the fictions of implied consent to service on the part of a foreign corporation and of
corporate presence required a finding that the corporation was "doing business" in the forum State. Defining the criteria for
making that finding and deciding whether they were met absorbed much judicial energy. See, e. g., International
Shoe [433 U.S. 186, 203] Co. v. Washington, 326 U.S., at 317 -319. While the essentially quantitative tests which
emerged from these cases purported simply to identify circumstances under which presence or consent could be
attributed to the corporation, it became clear that they were in fact attempting to ascertain "what dealings make it just to
subject a foreign corporation to local suit." Hutchinson v. Chase & Gilbert, 45 F.2d 139, 141 (CA2 1930) (L. Hand, J.). In
International Shoe, we acknowledged that fact.
The question in International Shoe was whether the corporation was subject to the judicial and taxing jurisdiction of
Washington. Mr. Chief Justice Stone's opinion for the Court began its analysis of that question by noting that the historical
basis of in personam jurisdiction was a court's power over the defendant's person. That power, however, was no longer
the central concern:
"But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due
process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the
territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend
`traditional notions of fair play and substantial justice.' Milliken v. Meyer, 311 U.S. 457, 463 ." 326 U.S., at 316 .
Thus, the inquiry into the State's jurisdiction over a foreign corporation appropriately focused not on whether the

55
corporation was "present" but on whether there have been
"such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of
government, to require the corporation to defend the particular suit which is brought there." Id., at 317. [433 U.S. 186,
204]
Mechanical or quantitative evaluations of the defendant's activities in the forum could not resolve the question of
reasonableness:
"Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and
orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not
contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with
which the state has no contacts, ties, or relations." Id., at 319. 19
Thus, the relationship among the defendant, the forum, and the litigation, rather than the mutually exclusive sovereignty of
the States on which the rules of Pennoyer rest, became the central concern of the inquiry into personal
jurisdiction. 20 The immediate effect of this departure from Pennoyer's conceptual apparatus was to increase the ability of
the state courts to obtain personal jurisdiction over nonresident defendants. See, e. g., Green, Jurisdictional Reform in
California, [433 U.S. 186, 205] 21 Hastings L. J. 1219, 1231-1233 (1970); Currie, The Growth of the Long Arm: Eight
Years of Extended Jurisdiction in Illinois, 1963 U. Ill. L. F. 533; Developments 1000-1008.
No equally dramatic change has occurred in the law governing jurisdiction in rem. There have, however, been intimations
that the collapse of the in personam wing of Pennoyer has not left that decision unweakened as a foundation for in rem
jurisdiction. Well-reasoned lower court opinions have questioned the proposition that the presence of property in a State
gives that State jurisdiction to adjudicate rights to the property regardless of the relationship of the underlying dispute and
the property owner to the forum. See, e. g., U.S. Industries, Inc. v. Gregg, 540 F.2d 142 (CA3 1976), cert. pending, No. 76359; Jonnet v. Dollar Savings Bank, 530 F.2d 1123, 1130-1143 (CA3 1976) (Gibbons, J., concurring); Camire v. Scieszka,
116 N. H. 281, 358 A. 2d 397 (1976); Bekins v. Huish, 1 Ariz. App. 258, 401 P.2d 743 (1965); Atkinson v. Superior Court,
49 Cal. 2d 338, 316 P.2d 960 (1957), appeal dismissed and cert. denied sub nom. Columbia Broadcasting System v.
Atkinson, 357 U.S. 569 (1958). The overwhelming majority of commentators have also rejected Pennoyer's premise that a
proceeding "against" property is not a proceeding against the owners of that property. Accordingly, they urge that the
"traditional notions of fair play and substantial justice" that govern a State's power to adjudicate in personam should also
govern its power to adjudicate personal rights to property located in the State. See, e. g., Von Mehren & Trautman,
Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121 (1966) (hereafter Von Mehren & Trautman);
Traynor, Is This Conflict Really Necessary?, 37 Texas L. Rev. 657 (1959) (hereafter Traynor); Ehrenzweig, The Transient
Rule of Personal Jurisdiction: The "Power" Myth and Forum Conveniens, 65 Yale L. J. 289 (1956); Developments;
Hazard. [433 U.S. 186, 206]
Although this Court has not addressed this argument directly, we have held that property cannot be subjected to a court's
judgment unless reasonable and appropriate efforts have been made to give the property owners actual notice of the
action. Schroeder v. City of New York, 371 U.S. 208 (1962); Walker v. City of Hutchinson, 352 U.S. 112 (1956); Mullane v.
Central Hanover Bank & Trust Co., 339 U.S. 306 (1950). This conclusion recognizes, contrary to Pennoyer, that an
adverse judgment in rem directly affects the property owner by divesting him of his rights in the property before the court.
Schroeder v. City of New York, supra, at 213; cf. Continental Grain Co. v. Barge FBL-585, 364 U.S. 19(1960) (separate
actions against barge and barge owner are one "civil action" for purpose of transfer under 28 U.S.C. 1404 (a)). Moreover,
in Mullane we held that Fourteenth Amendment rights cannot depend on the classification of an action as in rem or in
personam, since that is
"a classification for which the standards are so elusive and confused generally and which, being primarily for state courts
to define, may and do vary from state to state." 339 U.S., at 312 .

56
It is clear, therefore, that the law of state-court jurisdiction no longer stands securely on the foundation established in
Pennoyer. 21 We think that the time is ripe to consider whether the standard of fairness and substantial justice set forth in
International Shoe should be held to govern actions in rem as well as in personam. [433 U.S. 186, 207]
III
The case for applying to jurisdiction in rem the same test of "fair play and substantial justice" as governs assertions of
jurisdiction in personam is simple and straightforward. It is premised on recognition that "[t]he phrase, `judicial jurisdiction
over a thing,' is a customary elliptical way of referring to jurisdiction over the interests of persons in a thing." Restatement
(Second) of Conflict of Laws 56, Introductory Note (1971) (hereafter Restatement). 22 This recognition leads to the
conclusion that in order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify
exercising "jurisdiction over the interests of persons in a thing." 23 The standard for determining whether an exercise of
jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard
elucidated in International Shoe.
This argument, of course, does not ignore the fact that the presence of property in a State may bear on the existence of
jurisdiction by providing contacts among the forum State, the defendant, and the litigation. For example, when claims to
the property itself are the source of the underlying controversy between the plaintiff and the defendant, 24 it would be
unusual for the State where the property is located not to have jurisdiction. In such cases, the defendant's claim to
property [433 U.S. 186, 208] located in the State would normally 25 indicate that he expected to benefit from the State's
protection of his interest. 26 The State's strong interests in assuring the marketability of property within its borders 27 and
in providing a procedure for peaceful resolution of disputes about the possession of that property would also support
jurisdiction, as would the likelihood that important records and witnesses will be found in the State. 28 The presence of
property may also favor jurisdiction in cases, such as suits for injury suffered on the land of an absentee owner, where the
defendant's ownership of the property is conceded but the cause of action is otherwise related to rights and duties
growing out of that ownership. 29
It appears, therefore, that jurisdiction over many types of actions which now are or might be brought in rem would not be
affected by a holding that any assertion of state-court jurisdiction must satisfy the International Shoe standard. 30 For the
type of quasi in rem action typified by Harris v. Balk and the present case, however, accepting the proposed analysis
would result in significant change. These are cases where [433 U.S. 186, 209] the property which now serves as the
basis for state-court jurisdiction is completely unrelated to the plaintiff's cause of action. Thus, although the presence of
the defendant's property in a State might suggest the existence of other ties among the defendant, the State, and the
litigation, the presence of the property alone would not support the State's jurisdiction. If those other ties did not exist,
cases over which the State is now thought to have jurisdiction could not be brought in that forum.
Since acceptance of the International Shoe test would most affect this class of cases, we examine the arguments against
adopting that standard as they relate to this category of litigation. 31 Before doing so, however, we note that this type of
case also presents the clearest illustration of the argument in favor of assessing assertions of jurisdiction by a single
standard. For in cases such as Harris and this one, the only role played by the property is to provide the basis for bringing
the defendant into court.32 Indeed, the express purpose of the Delaware sequestration procedure is to compel the
defendant to enter a personal appearance. 33 In such cases, if a direct assertion of personal jurisdiction over the
defendant would violate the Constitution, it would seem that an indirect assertion of that jurisdiction should be equally
impermissible. [433 U.S. 186, 210]
The primary rationale for treating the presence of property as a sufficient basis for jurisdiction to adjudicate claims over
which the State would not have jurisdiction if International Shoe applied is that a wrongdoer

57
"should not be able to avoid payment of his obligations by the expedient of removing his assets to a place where he is not
subject to an in personam suit." Restatement 66, Comment a.
Accord, Developments 955. This justification, however, does not explain why jurisdiction should be recognized without
regard to whether the property is present in the State because of an effort to avoid the owner's obligations. Nor does it
support jurisdiction to adjudicate the underlying claim. At most, it suggests that a State in which property is located should
have jurisdiction to attach that property, by use of proper procedures, 34 as security for a judgment being sought in a
forum where the litigation can be maintained consistently with International Shoe. See, e. g., Von Mehren & Trautman
1178; Hazard 284-285; Beale, supra, n. 18, at 123-124. Moreover, we know of nothing to justify the assumption that a
debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal
jurisdiction over him. 35 The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State
enforceable in all other States. 36 [433 U.S. 186, 211]
It might also be suggested that allowing in rem jurisdiction avoids the uncertainty inherent in the International Shoe
standard and assures a plaintiff of a forum. 37 See Folk & Moyer, supra, n. 10, at 749, 767. We believe, however, that the
fairness standard of International Shoe can be easily applied in the vast majority of cases. Moreover, when the existence
of jurisdiction in a particular forum under International Shoe is unclear, the cost of simplifying the litigation by avoiding the
jurisdictional question may be the sacrifice of "fair play and substantial justice." That cost is too high.
We are left, then, to consider the significance of the long history of jurisdiction based solely on the presence of property in
a State. Although the theory that territorial power is both essential to and sufficient for jurisdiction has been undermined,
we have never held that the presence of property in a State does not automatically confer jurisdiction over the owner's
interest in that property. 38 This history must be [433 U.S. 186, 212] considered as supporting the proposition that
jurisdiction based solely on the presence of property satisfies the demands of due process, cf. Ownbey v. Morgan, 256
U.S. 94, 111 (1921), but it is not decisive. "[T]raditional notions of fair play and substantial justice" can be as readily
offended by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures that are
inconsistent with the basic values of our constitutional heritage. Cf. Sniadach v. Family Finance Corp., 395 U.S., at 340 ;
Wolf v. Colorado, 338 U.S. 25, 27 (1949). The fiction that an assertion of jurisdiction over property is anything but an
assertion of jurisdiction over the owner of the property supports an ancient form without substantial modern justification.
Its continued acceptance would serve only to allow state-court jurisdiction that is fundamentally unfair to the defendant.
We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth
in International Shoe and its progeny. 39 [433 U.S. 186, 213]
IV
The Delaware courts based their assertion of jurisdiction in this case solely on the statutory presence of appellants'
property in Delaware. Yet that property is not the subject matter of this litigation, nor is the underlying cause of action
related to the property. Appellants' holdings in Greyhound do not, therefore, provide contacts with Delaware sufficient to
support the jurisdiction of that State's courts over appellants. If it exists, that jurisdiction must have some other
foundation. 40
Appellee Heitner did not allege and does not now claim that appellants have ever set foot in Delaware. Nor does he
identify any act related to his cause of action as having taken place in Delaware. Nevertheless, he contends that
appellants' positions as directors and officers of a corporation chartered in Delaware 41 provide sufficient "contacts, ties,
or relations," International Shoe Co. v. Washington, 326 U.S., at [433 U.S. 186, 214] 319, with that State to give its courts
jurisdiction over appellants in this stockholder's derivative action. This argument is based primarily on what Heitner
asserts to be the strong interest of Delaware in supervising the management of a Delaware corporation. That interest is
said to derive from the role of Delaware law in establishing the corporation and defining the obligations owed to it by its

58
officers and directors. In order to protect this interest, appellee concludes, Delaware's courts must have jurisdiction over
corporate fiduciaries such as appellants.
This argument is undercut by the failure of the Delaware Legislature to assert the state interest appellee finds so
compelling. Delaware law bases jurisdiction, not on appellants' status as corporate fiduciaries, but rather on the presence
of their property in the State. Although the sequestration procedure used here may be most frequently used in derivative
suits against officers and directors, Hughes Tool Co. v. Fawcett Publications, Inc., 290 A. 2d 693, 695 (Del. Ch. 1972), the
authorizing statute evinces no specific concern with such actions. Sequestration can be used in any suit against a
nonresident, 42 see, e. g., U.S. Industries, Inc. v. Gregg, 540 F.2d 142 (CA3 1976), cert. pending, No. 76-359 (breach of
contract); Hughes Tool Co. v. Fawcett Publications, Inc., supra (same), and reaches corporate fiduciaries only if they
happen to own interests in a Delaware corporation, or other property in the State. But as Heitner's failure to secure
jurisdiction over seven of the defendants named in his complaint demonstrates, there is no necessary relationship
between holding a position as a corporate fiduciary and owning stock or other interests in the corporation. 43 If Delaware
perceived its interest in securing jurisdiction over corporate fiduciaries [433 U.S. 186, 215] to be as great as Heitner
suggests, we would expect it to have enacted a statute more clearly designed to protect that interest.
Moreover, even if Heitner's assessment of the importance of Delaware's interest is accepted, his argument fails to
demonstrate that Delaware is a fair forum for this litigation. The interest appellee has identified may support the
application of Delaware law to resolve any controversy over appellants' actions in their capacities as officers and
directors. 44 But we have rejected the argument that if a State's law can properly be applied to a dispute, its courts
necessarily have jurisdiction over the parties to that dispute.
"[The State] does not acquire . . . jurisdiction by being the `center of gravity' of the controversy, or the most convenient
location for litigation. The issue is personal jurisdiction, not choice of law. It is resolved in this case by considering the acts
of the [appellants]." Hanson v. Denckla, 357 U.S. 235, 254(1958). 45
Appellee suggests that by accepting positions as officers or directors of a Delaware corporation, appellants performed the
acts required by Hanson v. Denckla. He notes that Delaware law provides substantial benefits to corporate officers and
directors, 46 and that these benefits were at least in part[433 U.S. 186, 216] the incentive for appellants to assume their
positions. It is, he says, "only fair and just" to require appellants, in return for these benefits, to respond in the State of
Delaware when they are accused of misusing their power. Brief for Appellee 15.
But like Heitner's first argument, this line of reasoning establishes only that it is appropriate for Delaware law to govern the
obligations of appellants to Greyhound and its stockholders. It does not demonstrate that appellants have "purposefully
avail[ed themselves] of the privilege of conducting activities within the forum State," Hanson v. Denckla, supra, at 253, in a
way that would justify bringing them before a Delaware tribunal. Appellants have simply had nothing to do with the State of
Delaware. Moreover, appellants had no reason to expect to be haled before a Delaware court. Delaware, unlike some
States, 47 has not enacted a statute that treats acceptance of a directorship as consent to jurisdiction in the State. And
"[i]t strains reason . . . to suggest that anyone buying securities in a corporation formed in Delaware `impliedly consents' to
subject himself to Delaware's . . . jurisdiction on any cause of action." Folk & Moyer, supra, n. 10, at 785. Appellants, who
were not required to acquire interests in Greyhound in order to hold their positions, did not by acquiring those interests
surrender their right to be brought to judgment only in States with which they had had "minimum contacts."
The Due Process Clause
"does not contemplate that a state may make binding a judgment . . . against an individual or corporate defendant with
which the state has no contacts, ties, or relations." International Shoe Co. v. Washington, 326 U.S., at 319 .
Delaware's assertion of jurisdiction over appellants in this case is inconsistent with that constitutional limitation on [433
U.S. 186, 217] state power. The judgment of the Delaware Supreme Court must, therefore, be reversed.

59
It is so ordered.
MR. JUSTICE REHNQUIST took no part in the consideration or decision of this case.
Footnotes
[ Footnote 1 ] Greyhound Lines, Inc., is incorporated in California and has its principal place of business in Phoenix, Ariz.
[ Footnote 2 ] A judgment of $13,146,090 plus attorneys' fees was entered against Greyhound in Mt. Hood Stages, Inc. v.
Greyhound Corp., 1972-3 Trade Cas. 74,824, aff'd, ___ F.2d ___ (CA9 1977); App. 10.
[ Footnote 3 ] See United States v. Greyhound Corp., 363 F. Supp. 525 (ND Ill. 1973) and 370 F. Supp. 881 (ND Ill.), aff'd
508 F.2d 529 (CA7 1974). Greyhound was fined $100,000 and Greyhound Lines $500,000.
[ Footnote 4 ] Section 366 provides:
"(a) If it appears in any complaint filed in the Court of Chancery that the defendant or any one or more of the defendants is
a nonresident of the State, the Court may make an order directing such nonresident defendant or defendants to appear by
a day certain to be designated. Such order shall be served on such nonresident defendant or defendants by mail or
otherwise, if practicable, and shall be published in such manner as the Court directs, not less than once a week for 3
consecutive weeks. The Court may compel the appearance of the defendant by the seizure of all or any part of his
property, which property may be sold under the order of the Court to pay the demand of the plaintiff, if the defendant does
not appear, or otherwise defaults. Any defendant whose property shall have been so seized and who shall have entered a
general appearance in the cause may, upon notice to the plaintiff, petition the Court for an order releasing such property
or any part thereof from the seizure. The Court shall release such property unless the plaintiff shall satisfy the Court that
because of other circumstances there is a reasonable possibility that such release may render it substantially less likely
that plaintiff will obtain satisfaction of any judgment secured. If such petition shall not be granted, or if no such petition
shall be filed, such property shall remain subject to seizure and may be sold to satisfy any judgment entered in [433 U.S.
186, 191] the cause. The Court may at any time release such property or any part thereof upon the giving of sufficient
security.
"(b) The Court may make all necessary rules respecting the form of process, the manner of issuance and return thereof,
the release of such property from seizure and for the sale of the property so seized, and may require the plaintiff to give
approved security to abide any order of the Court respecting the property.
"(c) Any transfer or assignment of the property so seized after the seizure thereof shall be void and after the sale of the
property is made and confirmed, the purchaser shall be entitled to and have all the right, title and interest of the defendant
in and to the property so seized and sold and such sale and confirmation shall transfer to the purchaser all the right, title
and interest of the defendant in and to the property as fully as if the defendant had transferred the same to the purchaser
in accordance with law."
[ Footnote 5 ] As a condition of the sequestration order, both the plaintiff and the sequestrator were required to file bonds
of $1,000 to assure their compliance with the orders of the court. App. 24.
Following a technical amendment of the complaint, the original sequestration order was vacated and replaced by an alias
sequestration order identical in its terms to the original.
[ Footnote 6 ] The sequestrator is appointed by the court to effect the sequestration. His duties appear to consist of
serving the sequestration order on the [433 U.S. 186, 192] named corporation, receiving from that corporation a list of
the property which the order affects, and filing that list with the court. For performing those services in this case, the
sequestrator received a fee of $100 under the original sequestration order and $100 under the alias order.
[ Footnote 7 ] The closing price of Greyhound stock on the day the sequestration order was issued was $14 3/8. New York

60
Times, May 23, 1974, p. 62. Thus, the value of the sequestered stock was approximately $1.2 million.
[ Footnote 8 ] Debentures, warrants, and stock unit credits belonging to some of the defendants who owned either stock
or options were also sequestered. In addition, Greyhound reported that it had an employment contract with one of the
defendants calling for payment of $250,000 over a 12-month period. Greyhound refused to furnish any further information
on that debt on the ground that since the sums due constituted wages, their seizure would be unconstitutional. See
Sniadach v. Family Finance Corp., 395 U.S. 337 (1969). Heitner did not challenge this refusal.
The remaining defendants apparently owned no property subject to the sequestration order.
[ Footnote 9 ] Section 169 provides:
"For all purposes of title, action, attachment, garnishment and jurisdiction of all courts held in this State, but not for the
purpose of taxation, the situs of the ownership of the capital stock of all corporations existing under the laws of this State,
whether organized under this chapter or otherwise, shall be regarded as in this State."
[ Footnote 10 ] The court relied, 361 A. 2d, at 228, 230-231, on our decision in Ownbey v. Morgan, 256 U.S. 94 (1921),
and references to that decision in North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 610 (1975) (POWELL, J.,
concurring in judgment); Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 679 n. 14 (1974); Mitchell v. W. T.
Grant Co., 416 U.S. 600, 613 (1974); Fuentes v. Shevin, 407 U.S. 67, 91 n. 23 (1972); Sniadach v. Family Finance Corp.,
supra, at 339. The only question before the Court in Ownbey was the constitutionality of a requirement that a defendant
whose property has been attached file a bond before entering an appearance. We do not read the recent references to
Ownbey as necessarily suggesting that Ownbey is consistent with more recent decisions interpreting the Due Process
Clause.
Sequestration is the equity counterpart of the process of foreign attachment in suits at law considered in Ownbey.
Delaware's sequestration statute was modeled after its attachment statute. See Sands v. Lefcourt Realty Corp., 35 Del.
Ch. 340, 344-345, 117 A. 2d 365, 367 (Sup. Ct. 1955); Folk & Moyer, Sequestration in Delaware: A Constitutional Analysis,
73 Colum. L. Rev. 749, 751-754 (1973).
[ Footnote 11 ] The District Court judgment in U.S. Industries was reversed by the Court of Appeals for the Third Circuit.
540 F.2d 142 (1976), cert. pending, No. 76-359. The Court of Appeals characterized the passage from the Delaware
Supreme Court's opinion quoted in text as "cryptic conclusions." Id., at 149.
[ Footnote 12 ] Under Delaware law, defendants whose property has been sequestered must enter a general appearance,
thus subjecting themselves to in personam liability, before they can defend on the merits. See Greyhound Corp. v. Heitner,
361 A. 2d 225, 235-236 (1976). Thus, if the judgment below were considered not to be an appealable final judgment, 28
U.S.C. 1257 (2), appellants would have the choice of suffering a default judgment or entering [433 U.S. 186, 196] a
general appearance and defending on the merits. This case is in the same posture as was Cox Broadcasting Corp. v.
Cohn, 420 U.S. 469, 485 (1975):
"The [Delaware] Supreme Court's judgment is plainly final on the federal issue and is not subject to further review in the
state courts. Appellants will be liable for damages if the elements of the state cause of action are proved. They may
prevail at trial on nonfederal grounds, it is true, but if the [Delaware] court erroneously upheld the statute, there should be
no trial at all."
Accordingly, "consistent with the pragmatic approach that we have followed in the past in determining finality," id., at 486,
we conclude that the judgment below is final within the meaning of 1257.
[ Footnote 13 ] The statute also required that a copy of the summons and complaint be mailed to the defendant if his place

61
of residence was known to the plaintiff or could be determined with reasonable diligence. 95 U.S., at 718 . Mitchell had
averred that he did not know and could not determine Neff's address, so that the publication was the only "notice" given.
Id., at 717.
[ Footnote 14 ] The Federal Circuit Court based its ruling on defects in Mitchell's affidavit in support of the order for service
by publication and in the affidavit by which publication was proved. Id., at 720. Mr. Justice Field indicated that if this Court
had confined itself to considering those rulings, the judgment would have been reversed. Id., at 721.
[ Footnote 15 ] The doctrine that one State does not have to recognize the judgment of another State's courts if the latter
did not have jurisdiction was firmly established at the time of Pennoyer. See, e. g., D'Arcy v. Ketchum, 11 How. 165
(1851); Boswell's Lessee v. Otis, 9 How. 336 (1850); Kibbe v. Kibbe, 1 Kirby 119 (Conn. Super. Ct. 1786).
[ Footnote 16 ] Attachment was considered essential to the state court's jurisdiction for two reasons. First, attachment
combined with substituted service would provide greater assurance that the defendant would actually receive notice of the
action than would publication alone. Second, since the court's jurisdiction depended on the defendant's ownership of
property in the State and could be defeated if the defendant disposed of that property, attachment was necessary to
assure that the court had jurisdiction when the proceedings began and continued to have jurisdiction when it entered
judgment. 95 U.S., at 727 -728.
[ Footnote 17 ] "A judgment in rem affects the interests of all persons in designated property. A judgment quasi in rem
affects the interests of particular persons in designated property. The latter is of two types. In one the plaintiff is seeking to
secure a pre-existing claim in the subject property and to extinguish or establish the nonexistence of similar interests of
particular persons. In the other the plaintiff seeks to apply what he concedes to be the property of the defendant to the
satisfaction of a claim against him. Restatement, Judgments, 5-9." Hanson v. Denckla, 357 U.S. 235, 246 n. 12 (1958).
As did the Court in Hanson, we will for convenience generally use the term "in rem" in place of "in rem and quasi in rem."
[ Footnote 18 ] The Court in Harris limited its holding to States in which the principal defendant (Balk) could have sued the
garnishee (Harris) if he had obtained personal jurisdiction over the garnishee in that State. 198 U.S., at 222 -223, 226.
The Court explained:
"The importance of the fact of the right of the original creditor to sue his debtor in the foreign State, as affecting the right of
the creditor of that creditor to sue the debtor or garnishee, lies in the nature of the attachment proceeding. The plaintiff, in
such proceeding in the foreign State is able to sue out the attachment and attach the debt due from the garnishee to his
(the garnishee's) creditor, because of the fact that the plaintiff is really in such proceeding a representative of the creditor
of the garnishee, and therefore if such creditor himself had the right to commence suit to recover the debt in the foreign
State his representative has the same right, as representing him, and may garnish or attach the debt, provided the
municipal law of the State where the attachment was sued out permits it." Id., at 226.
The problem with this reasoning is that unless the plaintiff has obtained a judgment establishing his claim against the
principal defendant, see, e. g., Baltimore & O. R. Co. v. Hostetter, 240 U.S. 620 (1916), his right to "represent" the
principal defendant in an action against the garnishee is at issue. See Beale, The Exercise of Jurisdiction in Rem to
Compel Payment of a Debt, 27 Harv. L. Rev. 107, 118-120 (1913).
[ Footnote 19 ] As the language quoted indicates, the International Shoe Court believed that the standard it was setting
forth governed actions against natural persons as well as corporations, and we see no reason to disagree. See also
McGee v. International Life Ins. Co., 355 U.S. 220, 222 (1957) (International Shoe culmination of trend toward expanding
state jurisdiction over "foreign corporations and other nonresidents"). The differences between individuals and
corporations may, of course, lead to the conclusion that a given set of circumstances establishes state jurisdiction over

62
one type of defendant but not over the other.
[ Footnote 20 ] Nothing in Hanson v. Denckla, 357 U.S. 235 (1958), is to the contrary. The Hanson Court's statement that
restrictions on state jurisdiction "are a consequence of territorial limitations on the power of the respective States," id., at
251, simply makes the point that the States are defined by their geographical territory. After making this point, the Court in
Hanson determined that the defendant over which personal jurisdiction was claimed had not committed any acts
sufficiently connected to the State to justify jurisdiction under the International Shoe standard.
[ Footnote 21 ] Cf. Restatement (Second) of Conflict of Laws 59, Comment a (possible inconsistency between principle of
reasonableness which underlies field of judicial jurisdiction and traditional rule of in rem jurisdiction based solely on land in
State); 60, Comment a (same as to jurisdiction based solely on chattel in State); 68, Comment c (rule of Harris v. Balk
"might be thought inconsistent with the basic principle of reasonableness") (1971).
[ Footnote 22 ] "All proceedings, like all rights, are really against persons. Whether they are proceedings or rights in rem
depends on the number of persons affected." Tyler v. Court of Registration, 175 Mass. 71, 76, 55 N. E. 812, 814 (Holmes,
C. J.), appeal dismissed, 179 U.S. 405(1900).
[ Footnote 23 ] It is true that the potential liability of a defendant in an in rem action is limited by the value of the property,
but that limitation does not affect the argument. The fairness of subjecting a defendant to state-court jurisdiction does not
depend on the size of the claim being litigated. Cf. Fuentes v. Shevin, 407 U.S., at 88 -90; n. 32, infra.
[ Footnote 24 ] This category includes true in rem actions and the first type of quasi in rem proceedings. See n. 17, supra.
[ Footnote 25 ] In some circumstances the presence of property in the forum State will not support the inference
suggested in text. Cf., e. g., Restatement 60, Comments c, d; Traynor 672-673; Note, The Power of a State to Affect Title
in a Chattel Atypically Removed to It, 47 Colum. L. Rev. 767 (1947).
[ Footnote 26 ] Cf. Hanson v. Denckla, 357 U.S., at 253 .
[ Footnote 27 ] See, e. g., Tyler v. Court of Registration, supra.
[ Footnote 28 ] We do not suggest that these illustrations include all the factors that may affect the decision, nor that the
factors we have mentioned are necessarily decisive.
[ Footnote 29 ] Cf. Dubin v. Philadelphia, 34 Pa. D. & C. 61 (1938). If such an action were brought under the in rem
jurisdiction rather than under a long-arm statute, it would be a quasi in rem action of the second type. See n. 17, supra.
[ Footnote 30 ] Cf. Smit, The Enduring Utility of In Rem Rules: A Lasting Legacy of Pennoyer v. Neff, 43 Brooklyn L. Rev.
600 (1977). We do not suggest that jurisdictional doctrines other than those discussed in text, such as the particularized
rules governing adjudications of status, are inconsistent with the standard of fairness. See, e. g., Traynor 660-661.
[ Footnote 31 ] Concentrating on this category of cases is also appropriate because in the other categories, to the extent
that presence of property in the State indicates the existence of sufficient contacts under International Shoe, there is no
need to rely on the property as justifying jurisdiction regardless of the existence of those contacts.
[ Footnote 32 ] The value of the property seized does serve to limit the extent of possible liability, but that limitation does
not provide support for the assertion of jurisdiction. See n. 23, supra. In this case, appellants' potential liability under the in
rem jurisdiction exceeds $1 million. See nn. 7, 8, supra.

63
[ Footnote 33 ] See supra, at 193, 194. This purpose is emphasized by Delaware's refusal to allow any defense on the
merits unless the defendant enters a general appearance, thus submitting to full in personam liability. See n. 12, supra.
[ Footnote 34 ] See North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601 (1975); Mitchell v. W. T. Grant Co., 416
U.S. 600 (1974); Fuentes v. Shevin, 407 U.S. 67 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337 (1969).
[ Footnote 35 ] The role of in rem jurisdiction as a means of preventing the evasion of obligations, like the usefulness of
that jurisdiction to mitigate the limitations Pennoyer placed on in personam jurisdiction, may once have been more
significant. Von Mehren & Trautman 1178.
[ Footnote 36 ] Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the
plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where [433 U.S. 186,
211] the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt
as an original matter. Cf. n. 18, supra.
[ Footnote 37 ] This case does not raise, and we therefore do not consider, the question whether the presence of a
defendant's property in a State is a sufficient basis for jurisdiction when no other forum is available to the plaintiff.
[ Footnote 38 ] To the contrary, in Pennington v. Fourth Nat. Bank, 243 U.S. 269, 271 (1917), we said:
"The Fourteenth Amendment did not, in guaranteeing due process of law, abridge the jurisdiction which a State possessed
over property within its borders, regardless of the residence or presence of the owner. That jurisdiction extends alike to
tangible and to intangible property. Indebtedness due from a resident to a non-resident - of which bank deposits are an
example - is property within the State. Chicago, Rock Island & Pacific Ry. Co. v. Sturm, 174 U.S. 710 . It is, indeed, the
species of property which courts of the several States have most frequently applied in satisfaction of the obligations of
absent debtors. Harris v. Balk, 198 U.S. 215 . Substituted service on a non-resident by publication furnishes no legal basis
for a judgment in personam. Pennoyer v. Neff, 95 U.S. 714 . But garnishment or foreign attachment is a proceeding quasi
in rem. Freeman v. Alderson, 119 U.S. 185, 187 . The thing belonging to the absent defendant is seized and applied to the
satisfaction of his obligation. The [433 U.S. 186, 212] Federal Constitution presents no obstacle to the full exercise of this
power."
See also Huron Holding Corp. v. Lincoln Mine Operating Co., 312 U.S. 183, 193 (1941).
More recent decisions, however, contain no similar sweeping endorsements of jurisdiction based on property. In Hanson v.
Denckla, 357 U.S., at 246 , we noted that a state court's in rem jurisdiction is "[f]ounded on physical power" and that "[t]he
basis of the jurisdiction is the presence of the subject property within the territorial jurisdiction of the forum State." We
found in that case, however, that the property which was the basis for the assertion of in rem jurisdiction was not present
in the State. We therefore did not have to consider whether the presence of property in the State was sufficient to justify
jurisdiction. We also held that the defendant did not have sufficient contact with the State to justify in personam
jurisdiction.
[ Footnote 39 ] It would not be fruitful for us to re-examine the facts of cases decided on the rationales of Pennoyer and
Harris to determine whether jurisdiction might have been sustained under the standard we adopt today. To the extent that
prior decisions are inconsistent with this standard, they are overruled.
[ Footnote 40 ] Appellants argue that our determination that the minimum-contacts standard of International Shoe governs
jurisdiction here makes unnecessary any consideration of the existence of such contacts. Brief for Appellants 27; Reply
Brief for Appellants 9. They point out that they were never personally served with a summons, that Delaware has no longarm statute which would authorize such service, and that the Delaware Supreme Court has authoritatively held that the

64
existence of contacts is irrelevant to jurisdiction under Del. Code Ann., Tit. 10, 366 (1975). As part of its sequestration
order, however, the Court of Chancery directed its clerk to send each appellant a copy of the summons and complaint by
certified mail. The record indicates that those mailings were made and contains return receipts from at least 19 of the
appellants. None of the appellants has suggested that he did not actually receive the summons which was directed to him
in compliance with a Delaware statute designed to provide jurisdiction over nonresidents. In these circumstances, we will
assume that the procedures followed would be sufficient to bring appellants before the Delaware courts, if minimum
contacts existed.
[ Footnote 41 ] On the view we take of the case, we need not consider the significance, if any, of the fact that some
appellants hold positions only with a subsidiary of Greyhound which is incorporated in California.
[ Footnote 42 ] Sequestration is an equitable procedure available only in equity actions, but a similar procedure may be
utilized in actions at law. See n. 10. supra.
[ Footnote 43 ] Delaware does not require directors to own stock. Del. Code Ann., Tit. 8, 141 (b) (Supp. 1976).
[ Footnote 44 ] In general, the law of the State of incorporation is held to govern the liabilities of officers or directors to the
corporation and its stockholders. See Restatement 309. But see Cal. Corp. Code 2115 (West Supp. 1977). The rationale
for the general rule appears to be based more on the need for a uniform and certain standard to govern the internal affairs
of a corporation than on the perceived interest of the State of incorporation. Cf. Koster v. Lumbermens Mutual Casualty
Co., 330 U.S. 518, 527-528 (1947).
[ Footnote 45 ] Mr. Justice Black, although dissenting in Hanson, agreed with the majority that "the question whether the
law of a State can be applied to a transaction is different from the question whether the courts of that State have
jurisdiction to enter a judgment . . . ." 357 U.S., at 258 .
[ Footnote 46 ] See, e. g., Del. Code Ann., Tit. 8, 143, 145 (1975 ed. and Supp. 1976).
[ Footnote 47 ] See, e. g., Conn. Gen. State. Rev. 33-322 (1976); N.C. Gen. Stat. 55-33 (1975); S. C. Code Ann. 33-5-70
(1977).
MR. JUSTICE POWELL, concurring.
I agree that the principles of International Shoe Co. v. Washington, 326 U.S. 310 (1945), should be extended to govern
assertions of in rem as well as in personam jurisdiction in a state court. I also agree that neither the statutory presence of
appellants' stock in Delaware nor their positions as directors and officers of a Delaware corporation can provide sufficient
contacts to support the Delaware courts' assertion of jurisdiction in this case.
I would explicitly reserve judgment, however, on whether the ownership of some forms of property whose situs is
indisputably and permanently located within a State may, without more, provide the contacts necessary to subject a
defendant to jurisdiction within the State to the extent of the value of the property. In the case of real property, in particular,
preservation of the common-law concept of quasi in rem jurisdiction arguably would avoid the uncertainty of the general
International Shoe standard without significant cost to "`traditional notions of fair play and substantial justice.'" Id., at 316,
quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940).
Subject to the foregoing reservation, I join the opinion of the Court.
MR. JUSTICE STEVENS, concurring in the judgment.

65
The Due Process Clause affords protection against "judgments without notice." International Shoe Co. v. Washington, 326
U.S. 310, 324 (opinion of Black, J.). Throughout our history the acceptable exercise of in rem and quasi in rem [433 U.S.
186, 218] jurisdiction has included a procedure giving reasonable assurance that actual notice of the particular claim will
be conveyed to the defendant. * Thus, publication, notice by registered mail, or extraterritorial personal service has been
an essential ingredient of any procedure that serves as a substitute for personal service within the jurisdiction.
The requirement of fair notice also, I believe, includes fair warning that a particular activity may subject a person to the
jurisdiction of a foreign sovereign. If I visit another State, or acquire real estate or open a bank account in it, I knowingly
assume some risk that the State will exercise its power over my property or my person while there. My contact with the
State, though minimal, gives rise to predictable risks.
Perhaps the same consequences should flow from the purchase of stock of a corporation organized under the laws of a
foreign nation, because to some limited extent one's property and affairs then become subject to the laws of the nation of
domicile of the corporation. As a matter of international law, that suggestion might be acceptable because a foreign
investment is sufficiently unusual to make it appropriate to require the investor to study the ramifications of his decision.
But a purchase of securities in the domestic market is an entirely different matter.
One who purchases shares of stock on the open market can hardly be expected to know that he has thereby become
subject to suit in a forum remote from his residence and unrelated to the transaction. As a practical matter, the Delaware
sequestration statute creates an unacceptable risk of judgment without notice. Unlike the 49 other States, Delaware treats
the place of incorporation as the situs of the stock, even though both the owner and the custodian of the shares are
elsewhere. Moreover, Delaware denies the defendant [433 U.S. 186, 219] the opportunity to defend the merits of the suit
unless he subjects himself to the unlimited jurisdiction of the court. Thus, it coerces a defendant either to submit to
personal jurisdiction in a forum which could not otherwise obtain such jurisdiction or to lose the securities which have
been attached. If its procedure were upheld, Delaware would, in effect, impose a duty of inquiry on every purchaser of
securities in the national market. For unless the purchaser ascertains both the State of incorporation of the company
whose shares he is buying, and also the idiosyncrasies of its law, he may be assuming an unknown risk of litigation. I
therefore agree with the Court that on the record before us no adequate basis for jurisdiction exists and that the Delaware
statute is unconstitutional on its face.
How the Court's opinion may be applied in other contexts is not entirely clear to me. I agree with MR. JUSTICE POWELL
that it should not be read to invalidate quasi in rem jurisdiction where real estate is involved. I would also not read it as
invalidating other long-accepted methods of acquiring jurisdiction over persons with adequate notice of both the particular
controversy and the fact that their local activities might subject them to suit. My uncertainty as to the reach of the opinion,
and my fear that it purports to decide a great deal more than is necessary to dispose of this case, persuade me merely to
concur in the judgment.
[ Footnote * ] "To dispense with personal service the substitute that is most likely to reach the defendant is the least that
ought to be required if substantial justice is to be done." McDonald v. Mabee,243 U.S. 90, 92 .
MR. JUSTICE BRENNAN, concurring in part and dissenting in part.
I join Parts I-III of the Court's opinion. I fully agree that the minimum-contacts analysis developed in International Shoe Co.
v. Washington, 326 U.S. 310 (1945), represents a far more sensible construct for the exercise of state-court jurisdiction
than the patchwork of legal and factual fictions that has been generated from the decision in Pennoyer v. Neff, 95 U.S.
714 (1878). It is precisely because [433 U.S. 186, 220] the inquiry into minimum contacts is now of such overriding
importance, however, that I must respectfully dissent from Part IV of the Court's opinion.

66
I
The primary teaching of Parts I-III of today's decision is that a State, in seeking to assert jurisdiction over a person located
outside its borders, may only do so on the basis of minimum contacts among the parties, the contested transaction, and
the forum State. The Delaware Supreme Court could not have made plainer, however, that its sequestration statute, Del.
Code Ann., Tit. 10, 366 (1975), does not operate on this basis, but instead is strictly an embodiment of quasi in rem
jurisdiction, a jurisdictional predicate no longer constitutionally viable:
"[J]urisdiction under 366 remains . . . quasi in rem founded on the presence of capital stock here, not on prior contact by
defendants with this forum." Greyhound Corp. v. Heitner, 361 A. 2d 225, 229 (1976).
This state-court ruling obviously comports with the understanding of the parties, for the issue of the existence of minimum
contacts was never pleaded by appellee, made the subject of discovery, or ruled upon by the Delaware courts. These
facts notwithstanding, the Court in Part IV reaches the minimum-contacts question and finds such contacts lacking as
applied to appellants. Succinctly stated, once having properly and persuasively decided that the quasi in rem statute that
Delaware admits to having enacted is invalid, the Court then proceeds to find that a minimum-contacts law that Delaware
expressly denies having enacted also could not be constitutionally applied in this case.
In my view, a purer example of an advisory opinion is not to be found. True, appellants do not deny having received actual
notice of the action in question. Ante, at 213 n. 40. [433 U.S. 186, 221] However, notice is but one ingredient of a proper
assertion of state-court jurisdiction. The other is a statute authorizing the exercise of the State's judicial power along
constitutionally permissible grounds - which henceforth means minimum contacts. As of today, 366 is not such a
law. 1 Recognizing that today's decision fundamentally alters the relevant jurisdictional ground rules, I certainly would not
want to rule out the possibility that Delaware's courts might decide that the legislature's overriding purpose of securing the
personal appearance in state courts of defendants would best be served by reinterpreting its statute to permit state
jurisdiction on the basis of constitutionally permissible contacts rather than stock ownership. Were the state courts to take
this step, it would then become necessary to address the question of whether minimum contacts exist here. But in the
present posture of this case, the Court's decision of this important issue is purely an abstract ruling.
My concern with the inappropriateness of the Court's action is highlighted by two other considerations. First, an inquiry
into minimum contacts inevitably is highly dependent on creating a proper factual foundation detailing the contacts
between the forum State and the controversy in question. Because neither the plaintiff-appellee nor the state courts
viewed such an inquiry as germane in this instance, the Court today is unable to draw upon a proper factual record in
reaching its conclusion; moreover, its disposition denies appellee the normal opportunity to seek discovery on the contacts
issue. Second, it must be remembered that the Court's ruling is a constitutional one and necessarily [433 U.S. 186,
222] will affect the reach of the jurisdictional laws of all 50 States. Ordinarily this would counsel restraint in constitutional
pronouncements. Ashwander v. TVA, 297 U.S. 288, 345 -348 (1936) (Brandies, J., concurring). Certainly it should have
cautioned the Court against reaching out to decide a question that, as here, has yet to emerge from the state courts
ripened for review on the federal issue.
II
Nonetheless, because the Court rules on the minimum-contacts question, I feel impelled to express my view. While
evidence derived through discovery might satisfy me that minimum contacts are lacking in a given case, I am convinced
that as a general rule a state forum has jurisdiction to adjudicate a shareholder derivative action centering on the conduct
and policies of the directors and officers of a corporation chartered by that State. Unlike the Court, I therefore would not
foreclose Delaware from asserting jurisdiction over appellants were it persuaded to do so on the basis of minimum
contacts.
It is well settled that a derivative lawsuit as presented here does not inure primarily to the benefit of the named plaintiff.

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Rather, the primary beneficiaries are the corporation and its owners, the shareholders. "The cause of action which such a
plaintiff brings before the court is not his own but the corporation's. . . . Such a plaintiff often may represent an important
public and stockholder interest in bringing faithless managers to book." Koster v. Lumbermens Mutual Casualty Co., 330
U.S. 518, 522 , 524 (1947).
Viewed in this light, the chartering State has an unusually powerful interest in insuring the availability of a convenient
forum for litigating claims involving a possible multiplicity of defendant fiduciaries and for vindicating the State's
substantive policies regarding the management of its domestic corporations. I believe that our cases fairly establish
that [433 U.S. 186, 223] the State's valid substantive interests are important considerations in assessing whether it
constitutionally may claim jurisdiction over a given cause of action.
In this instance, Delaware can point to at least three interrelated public policies that are furthered by its assertion of
jurisdiction. First, the State has a substantial interest in providing restitution for its local corporations that allegedly have
been victimized by fiduciary misconduct, even if the managerial decisions occurred outside the State. The importance of
this general state interest in assuring restitution for its own residents previously found expression in cases that went
outside the then-prevailing due process framework to authorize state-court jurisdiction over nonresident motorists who
injure others within the State. Hess v. Pawloski, 274 U.S. 352 (1927); see Olberding v. Illinois Central R. Co., 346 U.S.
338, 341 (1953). More recently, it has led States to seek and to acquire jurisdiction over nonresident tortfeasors whose
purely out-of-state activities produce domestic consequences. E. g., Gray v. American Radiator & Standard Sanitary
Corp., 22 Ill. 2d 432, 176 N. E. 2d 761 (1961). Second, state courts have legitimately read their jurisdiction expansively
when a cause of action centers in an area in which the forum State possesses a manifest regulatory interest. E. g.,
McGee v. International Life Ins. Co., 355 U.S. 220 (1957) (insurance regulation); Travelers Health Assn. v. Virginia, 339
U.S. 643 (1950) (blue sky laws). Only this Term we reiterated that the conduct of corporate fiduciaries is just such a matter
in which the policies and interests of the domestic forum are ordinarily presumed to be paramount. Santa Fe Industries,
Inc. v. Green, 430 U.S. 462, 478 -480 (1977); see Cort v. Ash, 422 U.S. 66, 84 -85 (1975). Finally, a State like Delaware
has a recognized interest in affording a convenient forum for supervising and overseeing the affairs of an entity that is
purely the creation of that State's law. For example, even following our decision in [433 U.S. 186, 224] International Shoe,
New York courts were permitted to exercise complete judicial authority over nonresident beneficiaries of a trust created
under state law, even though, unlike appellants here, the beneficiaries personally entered into no association whatsoever
with New York. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950); 2 cf. Hartford Life Ins. Co. v.
Ibs, 237 U.S. 662, 671 (1915) (litigation concerning management of mortuary fund operated by locally chartered
corporation rests in court of that State); Bernheimer v. Converse, 206 U.S. 516, 533 (1907) (state courts can oversee
liquidation of state-chartered corporation). I, of course, am not suggesting that Delaware's varied interests would justify its
acceptance of jurisdiction over any transaction touching upon the affairs of its domestic corporations. But a derivative
action which raises allegations of abuses of the basic management of an institution whose existence is created by the
State and whose powers and duties are defined by state law fundamentally implicates the public policies of that forum.
To be sure, the Court is not blind to these considerations. It notes that the State's interests "may support the application of
Delaware law to resolve any controversy over appellants' actions in their capacities as officers and directors." Ante, at
215. But this, the Court argues, pertains to choice of law, not jurisdiction. I recognize that the jurisdictional and choice-oflaw inquiries are not identical. Hanson v. Denckla, 357 U.S. 235, 254 (1958). But I would not compartmentalize thinking in
this area quite so rigidly as it seems to me the Court does today, for both inquiries "are [433 U.S. 186, 225] often closely
related and to a substantial degree depend upon similar considerations." Id., at 258 (Black, J., dissenting). In either case
an important linchpin is the extent of contacts between the controversy, the parties, and the forum State. While
constitutional limitations on the choice of law are by no means settled, see, e. g., Home Ins. Co. v. Dick, 281 U.S.
397 (1930), important considerations certainly include the expectancies of the parties and the fairness of governing the

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defendants' acts and behavior by rules of conduct created by a given jurisdiction. See, e. g., Restatement (Second) of
Conflict of Laws 6 (1971) (hereafter Restatement). These same factors bear upon the propriety of a State's exercising
jurisdiction over a legal dispute. At the minimum, the decision that it is fair to bind a defendant by a State's laws and rules
should prove to be highly relevant to the fairness of permitting that same State to accept jurisdiction for adjudicating the
controversy.
Furthermore, I believe that practical considerations argue in favor of seeking to bridge the distance between the choice-oflaw and jurisdictional inquiries. Even when a court would apply the law of a different forum, 3 as a general rule it will feel
less knowledgeable and comfortable in interpretation, and less interested in fostering the policies of that foreign
jurisdiction, than would the courts established by the State that provides the applicable law. See, e. g., Gulf Oil Co. v.
Gilbert, 330 U.S. 501, 509 (1947); Restatement 313, p. 347; Traynor, Is This Conflict Really Necessary?, 37 Texas L. Rev.
657, 664 (1959). Obviously, such choice-of-law problems cannot entirely be avoided in a diverse legal system such as our
own. Nonetheless, when a suitor [433 U.S. 186, 226] seeks to lodge a suit in a State with a substantial interest in seeing
its own law applied to the transaction in question, we could wisely act to minimize conflicts, confusion, and uncertainty by
adopting a liberal view of jurisdiction, unless considerations of fairness or efficiency strongly point in the opposite direction.
This case is not one where, in my judgment, this preference for jurisdiction is adequately answered. Certainly nothing said
by the Court persuades me that it would be unfair to subject appellants to suit in Delaware. The fact that the record does
not reveal whether they "set foot" or committed "act[s] related to [the] cause of action" in Delaware, ante, at 213, is not
decisive, for jurisdiction can be based strictly on out-of-state acts having foreseeable effects in the forum State. E. g.,
McGee v. International Life Ins. Co., supra; Gray v. American Radiator & Standard Sanitary Corp., supra; Restatement 37.
I have little difficulty in applying this principle to nonresident fiduciaries whose alleged breaches of trust are said to have
substantial damaging effect on the financial posture of a resident corporation. 4 Further, I cannot understand how the
existence of minimum contacts in a constitutional sense is at all affected by Delaware's failure statutorily to express an
interest in controlling corporate fiduciaries. Ante, at 214. To me this simply demonstrates that Delaware [433 U.S. 186,
227] did not elect to assert jurisdiction to the extent the Constitution would allow. 5 Nor would I view as controlling or
even especially meaningful Delaware's failure to exact from appellants their consent to be sued. Ante, at 216. Once we
have rejected the jurisdictional framework created in Pennoyer v. Neff, I see no reason to rest jurisdiction on a fictional
outgrowth of that system such as the existence of a consent statute, expressed or implied. 6
I, therefore, would approach the minimum-contacts analysis differently than does the Court. Crucial to me is the fact that
appellants 7 voluntarily associated themselves with the [433 U.S. 186, 228] State of Delaware, "invoking the benefits and
protections of its laws," Hanson v. Denckla, 357 U.S., at 253 ; International Shoe Co. v. Washington, 326 U.S., at 319 , by
entering into a long-term and fragile relationship with one of its domestic corporations. They thereby elected to assume
powers and to undertake responsibilities wholly derived from that State's rules and regulations, and to become eligible for
those benefits that Delaware law makes available to its corporations' officials. E. g., Del. Code Ann., Tit. 8, 143 (1975)
(interest-free loans); 145 (1975 ed. and Supp. 1976) (indemnification). While it is possible that countervailing issues of
judicial efficiency and the like might clearly favor a different forum, they do not appear on the meager record before
us; 8 and, of course, we are concerned solely with "minimum" contacts, not the "best" contacts. I thus do not believe that it
is unfair to insist that appellants make themselves available to suit in a competent forum that Delaware might create for
vindication of its important public policies directly pertaining to appellants' fiduciary associations with the State.
[ Footnote 1 ] Indeed the Court's decision to proceed to the minimum-contacts issue treats Delaware's sequestration
statute as if it were the equivalent of Rhode Island's long-arm law, which specifically authorizes its courts to assume
jurisdiction to the limit permitted by the Constitution, R. I. Gen. Laws Ann. 9-5-33 (1970), thereby necessitating judicial
consideration of the frontiers of minimum contacts in every case arising under that statute.

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[ Footnote 2 ] The Mullane Court held: "[T]he interest of each state in providing means to close trusts that exist by the
grace of its laws and are administered under the supervision of its courts is so insistent and rooted in custom as to
establish beyond doubt the right of its courts to determine the interests of all claimants, resident or nonresident, provided
its procedure accords full opportunity to appear and be heard." 339 U.S., at 313 .
[ Footnote 3 ] In this case the record does not inform us whether an actual conflict is likely to arise between Delaware law
and that of the likely alternative forum. Pursuant to the general rule, I assume that Delaware law probably would obtain in
the foreign court. Restatement 309.
[ Footnote 4 ] I recognize, of course, that identifying a corporation as a resident of the chartering State is to build upon a
legal fiction. In many respects, however, the law acts as if state chartering of a corporation has meaning. E. g., 28 U.S.C.
1332 (c) (for diversity purposes, a corporation is a citizen of the State of incorporation). And, if anything, the propriety of
treating a corporation as a resident of the incorporating State seems to me particularly appropriate in the context of a
shareholder derivative suit, for the State realistically may perceive itself as having a direct interest in guaranteeing the
enforcement of its corporate laws, in assuring the solvency and fair management of its domestic corporations, and in
protecting from fraud those shareholders who placed their faith in that state-created institution.
[ Footnote 5 ] In fact, it is quite plausible that the Delaware Legislature never felt the need to assert direct jurisdiction over
corporate managers precisely because the sequestration statute heretofore has served as a somewhat awkward but
effective basis for achieving such personal jurisdiction. See, e. g., Hughes Tool Co. v. Fawcett Publications, Inc., 290 A. 2d
693, 695 (Del. Ch. 1972): "Sequestration is most frequently resorted to in suits by stockholders against corporate directors
in which recoveries are sought for the benefit of the corporation on the ground of claimed breaches of fiduciary duty on the
part of directors."
[ Footnote 6 ] Admittedly, when one consents to suit in a forum, his expectation is enhanced that he may be haled into that
State's courts. To this extent, I agree that consent may have bearing on the fairness of accepting jurisdiction. But whatever
is the degree of personal expectation that is necessary to warrant jurisdiction should not depend on the formality of
establishing a consent law. Indeed, if one's expectations are to carry such weight, then appellants here might be fairly
charged with the understanding that Delaware would decide to protect its substantial interests through its own courts, for
they certainly realized that in the past the sequestration law has been employed primarily as a means of securing the
appearance of corporate officials in the State's courts. N. 5, supra Even in the absence of such a statute, however, the
close and special association between a state corporation and its managers should apprise the latter that the State may
seek to offer a convenient forum for addressing claims of fiduciary breach of trust.
[ Footnote 7 ] Whether the directors of the out-of-state subsidiary should be amenable to suit in Delaware may raise
additional questions. It may well require further investigation into such factors as the degree of [433 U.S. 186,
228] independence in the operations of the two corporations, the interrelationship of the managers of parent and
subsidiary in the actual conduct under challenge, and the reasonable expectations of the subsidiary directors that the
parent State would take an interest in their behavior. Cf. United States v. First Nat. City Bank, 379 U.S. 378, 384 (1965).
While the present record is not illuminating on these matters, it appears that all appellants acted largely in concert with
respect to the alleged fiduciary misconduct, suggesting that overall jurisdiction might fairly rest in Delaware.
[ Footnote 8 ] And, of course, if a preferable forum exists elsewhere, a State that is constitutionally entitled to accept
jurisdiction nonetheless remains free to arrange for the transfer of the litigation under the doctrine of forum non
conveniens. See, e. g., Broderick v. Rosner, 294 U.S. 629, 643 (1935); Gulf Oil Co. v. Gilbert, 330 U.S. 501,
504 (1947). [433 U.S. 186, 229]

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