JURISDICTION

By: Gimelo, Micah Alvin S.

CHOICE OF LAW
By: Yraola, Marison Mayumi D.

ENFORCEMENT OF
FOREIGN JUDGMENTS
By: Hipolito, Raymundo L. IV
JURISDICTION
 INTRODUCTION

REASONS FOR CONFLICT OF LAWS

Jorge Coquia said…..
“In the exercise of sovereignty, each state promulgates its own laws and develops its
own jurisprudence to govern relations of individuals and juridical entities within its
municipal sphere. Some states may have similar laws, but, due to the influence of
religion, culture, and customs, these laws may be interpreted and applied differently.
The division of the world into many territorial units, each imposing its own set of laws,
and the occurrence of events that contain elements significant to more than one legal
system give rise to problems that conflict of laws or private international law seeks to
solve”.
US Restatement of the Law, Second, Conflict of Laws provided…
“The world is composed of territorial states having separate and different systems of
law. Events and transactions occur, and issues arise, that may have a significant
relationship to more than one state, making necessary a special body of rules and
methods for their ordering and resolution.”

BASIS OF CONFLICTS OF LAW : COMITY OF NATIONS

“Comity, in the legal sense, is neither a matter of absolute obligation, on the one
hand, nor of mere courtesy and good will, upon the other. But it is the recognition
which one nation allows within its territory to the legislative, executive, or judicial
acts of another nation, having due regard both to international duty and
convenience, and to the rights of its own citizens or of other persons who are under
the protection of its laws…xxx” (Hilton v. Guyot, 159 US 113 (1895))

DEFINITION: PRIVATE INTERNATIONAL LAW / CONFLICT OF LAWS

“It is that part of municipal law which governs cases involving a foreign element”
(Droit International Prime)
“Those universal principles of right and justice which govern the courts of one state
having before them cases involving the operation and effect of laws of another
state or country” (R.C Minor, Conflict of Laws (1901)
“That part of law which comes into play when the issue before the court affects
some fact or event, or transaction that is so closely connected with a foreign
 system of law as to necessitate recourse to that system.” (G.C Chesire, Private
international law (1947)
“That part of the law of each state or nation which determines whether, in dealing
with a legal situation, the law or some other state or nation will be recognized,
given effect , or applied. ( Second Edition of American Jurisprudence)
“Inconsistency or difference between the laws of different state countries, arising
in the case of persons who have acquired rights, incurred obligations, injuries or
damages, or made contracts, within the territory of two or more jurisdictions.
Hence, that branch of jurisprudence, arising from the diversity of the laws of
different nations, states or jurisdictions, in their application to rights and remedies,
which reconciles the inconsistency; or decides which law or system is to govern in
the particular case, or settles the degree of force to be accorded to the law of
another jurisdiction, (the acts or rights in question having arisen under it ) either
where the domestic law is silent or not exclusively applicable to the case in point.”
(Black’s Law Dictionary, Fifth Ed. P. 271)
“Conflicts of Laws is in reality a part of the subject of international law, which is
commonly divided into two aspects, public and private. Public International Law,
or the law of nations, is that which regulates the political intercourse of nations with
each other or concerns questions of rights between nations, whereas private
international law, or conflicts of laws, is that which regulates the comity of states in
giving effect in one to the municipal laws of another relating to private persons, or
concerns the right of persons within the territory and dominion of one state of
nations, by reason of acts, private or public, done within the dominion of another,
and which is based on the broad general principle that one country will respect and
give effect to the the laws of another so far as can be done consistently with its
own interests. “ Sec. 1

DEFINITION: OTHER TERMS INTRODUCTORY TO THE STUDY OF CONFLICT OF

LAWS
1. Foreign Element - A factual situation that cuts across territorial lines and is thus
affected by the diverse laws of two or more states. The presence of a foreign
element or elements in human activities may require the application of conflict of
law rules in a given case. In cases filed in the Philippines, the foreign element may
consist of:

a. A Philippine citizen or resident of the country, in relation to a foreign

national or entity or to acts done or events that occurred in a foreign
country or property situated therein;
 b. Property located in the Philippines or acts done or events that took
place in the Philippines involving a foreign national or entity and a
citizen of the country.

2. Lex Situs – The applicable law regarding the acquisition, transfer and devolution
of the title to property is the law where the property is located. This rule may be
invoked where there is conflict of laws situation, involving real property, such as :

a. There is dispute over the title or ownership of an immovable, such

that the capacity to take and transfer immovable, the formalities of
conveyance, the essential validity and effect of conveyance, are to
be determined; and
b. A foreign law on land ownership and its conveyance is asserted to
conflict with a domestic law on the same matters. Hence the need
to determine which law would apply.

3. Lex fori – The law of the forum, where the case is filed. The term is used in contract
of denoting the law of the place where a transaction took place or where the wrong
causing damage or injury occurred.

4. Lex loci actus - The law of the place where the act was done.

5. Lex loci contractus - The proper law applicable in deciding upon the rights and
liabilities of the contracting parties. This law would also decide such matters as the
essential validity of the contract. The test to determine the proper law of the
contract would appear to be the system of law with which the transaction has the
closest and most real connection.

6. Lex loci delictus - The law of the place where the offense or wrong took place.

7. Lex loci celebrationis - The law of the place where a contract is entered into.

8. Lex loci domicilii – The law of the place of domicile of a person

9. Lex loci rei sitae; lex situs - The law of the place where a thing is situated. In actions
relating to recovery of land, the rule is that the action is governed by the law of the
place where the land is located.

10. Kilberg doctrine - In conflict of laws, it is a rule to the effect that the forum is not
bound by the law of the place of injury or death as to the limitation on damages for
 wrongful act because such rule is procedural and hence the law of the forum
governs on this issue.

11. Most Significant Relationship Doctrine/ Center of Gravity doctrine/ Grouping of

Contacts - Choice of law problems in conflict of laws are resolved by the application
of the law of the jurisdiction which has the most significant relationship to or contact
with event and parties to litigation and the issue therein.

12. Borrowing Statute – is a statute which directs the court of the forum to apply the
foreign statute to the pending claims based on foreign law.

13. Doctrine of Forum non conveniens – This Latin phrase literally means that
jurisdiction should be declined because “the forum is inconvenient.” It means that
“Even if the court assumes jurisdiction over the person and the subject matter, it
may decline to try the case on the ground that the controversy may be more
suitably tried elsewhere.”

14. Long Arm statutes - These statutes specify the kinds of contacts upon which
jurisdiction will be asserted

15. Renvoi doctrine/ Table tennis theory- is a doctrine under which court in resorting
to foreign law adopts rules of foreign country as to conflict of law, which rule may
in turn refer to back to law of the forum.

16. German Rule of elective concurrence – Pursuant to this rule, tort is committed in
both the place of where the actor engages in his conduct and the place where the
effects of such conduct, such as the injury against the injured person, may occur.

17. State- interest analysis – In applying which law applies, the court takes into
account the interest of the state in issue, not only as a sovereign in a set of facts
or an entity but as a repository of justice. Ultimately, the choice of law will depend
as to whether assuming jurisdiction will advance the interest of the state.

18. Caver’s principle – When there is no conflict of law rules in the forum, the court
applies general principles to arrive at just solutions by accommodating conflicting
policies and affording fair treatment of the parties caught in the conflict between
state policies.
 THREE DISTINCT BUT INTERRELATED ISSUES IN CONFLICT OF LAW
A. Issue of Adjudicatory Jurisdiction which determines the circumstances
that allow for a legal order to impose upon its judiciary the task of deciding multi-
state and multinational disputes.

B. Issue of Choice-of-Law which refers to the probable sources from which

the applicable law of the controversy may be derived.

C. Recognition and Enforcement of Foreign Judgments. This deals with

the study of situations which justify recognition by the forum court of a judgment
rendered by a foreign court or the enforcement of such within the forum.

II. JURISDICTION

In conflict of laws, jurisdiction can either be LEGISLATIVE jurisdiction or JUDICIAL

jurisdiction.
Legislative Jurisdiction - the ability of the state to promulgate laws and enforce
them on all persons and property within its territory.
Judicial Jurisdiction – is the power or authority of a court to try a case, render a
judgment and execute in accordance with law.

FOUR MAJOR QUESTIONS TO BE CONSIDERED IN ANALYZING A CONFLICT OF

LAWS SITUATION/ PROBLEM:
1) Has the court jurisdiction over the person of the defendant or over his
property?;
2) Has the court jurisdiction over the subject matter, usually referred to as
“competency?”;
3) Has the suit been brought in the proper venue in cases where a foreign element
is involved?’ and
4) Is there a statute or doctrine under which a court otherwise qualified to try the
case may or may not refuse to entertain it?

BASIS OF THE EXERCISE OF JUDICIAL JURISDICTION

a) Jurisdiction over the person which is based on forum-defendant contacts;
b) Jurisdiction over the res based on forum-property contacts; and
 c) Jurisdiction over the subject- matter

NOTES:
 In the absence of jurisdictional basis, a court should not try a case. In the
event that it does, its judgment will not be considered valid.

 The requirement that a state must show that there are minimum contacts
between the non-resident defendant/ property and the forum to justify its
exercise of jurisdiction has led many states to legislate long-arm statutes.
These statutes specify the kinds of contacts upon which jurisdiction will be
asserted, such as the commission of a tortuous act within the state, the
celebration of a contract there or presence of property owned by the
defendant. Moreover, if these or other minimum contacts exist, then the
court can exercise jurisdiction because it has justified interest in providing
the plaintiff with a forum, and no fundamental unfairness results in
subjecting the defendant to a suit there.

FOUR WAYS OF DEALING WITH A CONFLICT OF LAWS SITUATION

The Court may either:
a) Dismiss the case for lack of jurisdiction or on ground of forum non conveniens
b) Assume jurisdiction and apply domestic/ forum laws (LEX FORI)
c) Assume jurisdiction and apply foreign laws (LEX CAUSAE)
d) Renvoi Doctrine

NOTES:
 Doctrine of Forum non conveniens – This Latin phrase literally means that
jurisdiction should be declined because “the forum is inconvenient.” It
means that “Even if the court assumes jurisdiction over the person and
the subject matter, it may decline to try the case on the ground that the
controversy may be more suitably tried elsewhere.”

 The reason for forum non conveniens is to avoid global forum shopping,
which is the filing of repetitious suits in courts of different jurisdictions.

 In the case of First Philippine International Bank v. Court of Appeals, the

Supreme Court addressed the issue: “. . . forum shopping originated as a
concept in Private International Law, where non-resident litigants are
given the option to choose the forum or place wherein to bring their suit
for various reasons or excuses, including to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded
 dockets, or to select a more friendly venue. To combat these less than
honorable excuses, the principle of forum non conveniens was developed
whereby a court in conflict of laws cases, may refuse impositions on its
jurisdiction where it is not the most “convenient” or available forum and
the parties are not precluded from seeking remedies elsewhere.

 The Philippine Supreme Court in Wing On Company v. Syyap ( 64 OG

8311 (1967) held that the plaintiff’s choice of forum should not be
disturbed “unless the balance is strongly in favor of the defendant.”

 In Manila Hotel Corp and Manila Hotel Intl. LTD. V. NLRC, Arb. Ceferina
J. Diosana and Marcelo G. Santos, the Court held that: Under the rule of
forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: 1. That the
Philippine court is one to which the parties may conveniently resort to; 2.
That the Philippine court is in a position to make an intelligent decision as
to the law and the facts; and 3. That the Philippine court has or is likely to
have power to enforce its decisions.

 If the court chooses to assume jurisdiction, it can either apply lex fori (law
of the forum) or lex causae (system of foreign laws applicable to a
dispute).

 The presence of ANY one of the following factors would justify the
application of domestic/ forum law or LEX FORI:

a) A specific law of the forum decrees that internal law should apply;
b) The proper foreign law was not properly pleaded or proved; or
c) The case falls under any of the exceptions to the application of
foreign law. These exceptions are:

1. When the foreign law is contrary to an important public policy of the

forum or contravenes prohibitive law;
 Art. 17 (3), NCC provides: “Prohibitive laws concerning
persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by
determinations or conventions agreed upon in a foreign country.
 Public order represents in the law of persons, the public,
social, and legal interest, that which is permanent and essential
to the institutions, that which, even in favoring an individual in
 whom the right lies, cannot be left to his own will. Public order
is not as broad as public policy, as the latter may refer not only
to public safety but also to considerations which are moved by
the common good (Phil. Bank of Communications v. Echiveri,
99 SCRA 508 (1980)
 In the absence of express legislation or constitutional
prohibition, a court, in order to declare a contract void as against
a public policy, must find that the contract as to the
consideration or thing to be done, has a tendency to injure the
public, is against the public good, or contravenes some
established interests of society, or is inconsistent with sound
policy and good morals, or tends to clearly undermine the
security of individual rights, whether of personal liability or of
private property.
 When there is a conflict between a foreign law and Philippine
law, the former must yield to the latter (Bank of America v.
American Realty Corp, 321 SCRA 659 (1999).

2. When the foreign law is penal in nature;

 As a rule penal laws of one country are obligatory only within
its jurisdiction. Foreign penal laws have no extraterritorial
application in the Philippines.
 There are exceptions to the rule, as when the local law adopts
the penal law of other countries as part thereof, such as penal
laws of other states as basis for the prosecution of persons for
violation of money laundering law or in the extradition of
persons for prosecution of crimes to the requesting country
pursuant to a treaty of extradition.

3. When the foreign law is procedural in nature;

 Even when a foreign law is the applicable law in a given
conflict of laws case, its application is limited only to substantive
law which is the basis of the cause of action, and does not
extend to procedural law.
 It is settled that all matters respecting a remedy, such as the
bringing of suit, admissibility of evidence, and statute of
limitations, depend upon the law of the place where the suit is
brought.
 The parties cannot, by entering into an agreement, change
the procedure prescribed by the law of the forum. Matters of
procedure are important, the observance of which is of public
 interest, as they form part of the procedural due process. They
cannot be rendered ineffective by determinations or
conventions agreed upon in a foreign country.
 If the rule creates a right, or takes away a right, it is
substantive. But if it operates as a means of implementing
existing right, then it is procedural.

4. When the foreign law is purely fiscal or administrative in nature;

5. When the application of the foreign law will work undeniable injustice
to the citizens of the forum;

6. When the case involves real or personal property situated in the

forum;
 Art. 16, NCC provides that “ Real property as well as personal
property is subject of the law of the country where it is situated.”
This provision embodies the rule of lex loci or lex loci rei sitae.
 In view of this provision, any foreign law sought to be applied
in a conflict of laws case in the contry contrary thereto may not
be enforced.
 The situs of real property is fixed and irremovable, which is
the place where it is situated. On the other hand, personal
property may be transferred or removed from one country to
another by its owner, except certain personal property which the
law considers it as having a fixed situs, such as shares of stock
which have their situs in the country where the corporation
which issued them is domiciled or incorporated.

7. When the application of the foreign law might endanger the vital
interest of the state; or

8. When the foreign law is contrary to good moral.

 As opposed to lex fori, LEX CAUSAE or foreign law or one duly enacted in
another country may be given territorial effect and application in the resolution
of a case involving foreign elements, filed in the country, because:

1. Local law directs that it be applied in a given case, e.g. the Philippine
legislature enacted Com. Act 1936, making the US Carriage of Goods
by Sea Act applicable to all contracts for the carriage of goods by sea
to and from all Philippine ports in foreign trade;
 2. The parties have stipulated that a specific foreign law be applied to
govern in case of dispute arising from their contract;
3. A treaty or convention to which the country has adhered requires that a
foreign law be applied; or
4. The rules of conflict of laws point to the application of a foreign law, i.e.
application of a borrowing statute.

Note that while there are cases that require the application of foreign law, it
does not automatically authorize the courts to do so. The general rule remains,
that no foreign law may or should interfere with the operation and application
of Philippine laws.

 Renvoi Doctrine is a doctrine under which court in resorting to foreign law

adopts rules of foreign country as to conflict of law, which rule may in turn refer
to back to law of the forum.

 It is sometimes called the “table tennis” theory, as the law is being

referred back and forth from the forum law to the law of domicile of
the foreign party which includes a conflict of laws rule, pointing back
to the forum law as applicable law.

 This should be avoided by the forum court limiting the referring back
to only one instance and applying its own law.

 The problem on “renvoi” arises when there is doubt as to whether the

reference by the lex fori to the foreign law involves reference to the
internal law of the foreign law or a reference to the entirety of the
foreign law, including its conflicts rules.

 An example of a “renvoi” problem was the case of Aznar v. Garcia

where a California citizen who resided in our country for 50 yrs dies
here. The Supreme Court was faced with a problem of whether to
apply a California law which provides that the law of the domicile of
its deceased citizen should apply or our Civil Code which provides
that the national law of the deceased should be applied in succession
cases. In this particular case, the SC applied the Philippine law.
(PING-PONG)

 “Double Renvoi,” on the other hand occurs when the local court, in adopting
the foreign court theory, discovers that the foreign court accepts the “renvoi.”
But since the foreign law remits the case to Philippine law, being the law of
 deceased’s domicile, the foreign court may discover that Philippine law does
not accept the remission as it applies the national law of the deceased, so the
foreign court, sitting as Philippine court, would still apply its own internal law.
This is then what our court will apply. (PING-PONG-PING)

 Transmission, on the other hand, is the process of applying the law of a foreign
state thru the law of a second foreign state. Here, it involves three laws, unlike
in renvoi, which only involves two laws.
CHOICE OF LAW
 INTRODUCTION

When parties enter into an agreement, their relationship is usually governed by a

particular law. The default law is almost always the local law since the minds of the parties
are set on the local law upon entering into the agreement. This is especially true in cases
when there is no foreign element involved.
There are instances, however, when this is not the case, as when the parties
stipulate a foreign law to govern their relationship. Parties are free to stipulate their choice
of law that will govern their relationship. 1
In the judicial resolution of conflicts problems, three consecutive phases are
involved: jurisdiction, choice of law and recognition and enforcement of foreign
judgments. Corresponding to these phases are the following questions: (1) Where can or
should the litigation be initiated? (2) Which law will the court apply? (3) Where can the
resulting judgment be enforced? 2

What is Choice of Law?

By choice of law, the most trying of the areas of private international law, the law
deals with the problem that arises when two or more states have a connection to cases
about which their respective laws differ. Each court must then choose which laws to apply
based on choice of law rules that themselves rest on policy. 3

Distinction between Choice of Law and Jurisdiction

Jurisdiction and choice of law are two distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to travel to this state while choice of law asks the
further question whether the application of a substantive law which will determine the
merits of the case is fair to both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply forum law. 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. 4

Distinction between Internal Rules and Conflict Rules

Internal Rules are provisions of law that set forth rights or exact obligations. The
provision of the Civil Code for example on adverse possession is one such internal rule
as is the rule that one must be at least eighteen to contract marriage validly.
Conflict rules are rules that consider the involvement of a foreign element. They
are provisions of law that determine the applicable law in a conflict situation. 5
What are the parts of every conflicts rule?
Unlike a purely internal rule which governs a purely domestic problem without a
foreign element, a conflicts rule which indicates whether to apply the internal law or the
foreign law, has two parts which are readily recognizable:
a) The factual situation, or the set of facts or situations presenting a conflicts
problem because there is a foreign element involved;

b) The point of contact or connecting factor, which is the law of the country with
which the factual situation is most intimately connected.

In other words, the first part raises while the second part answers or solves a legal
question. 6

What is point of contact?

A “point of contact” or “connecting factor” is that which establishes a connection
between the case at hand and the laws of a foreign jurisdiction. It is therefore a prejudicial
consideration in relation to choice of law. One chooses the applicable law on the basis of
the connecting factor the legislator deems most significant, in cases where legislation is
clear as to the applicable law, or which the court appreciates to be the properly applicable
law. 7

These “points of contact” or “connecting factors” could be any of the following:

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

b) The seat of a legal or juridical person, such as a corporation;

c) The situs of a thing, that is, the place where a thing is, or is deemed to be situated.
In particular, the lex situs is decisive when real rights are involved;

d) The place where an act has been done, the locus actus, such as the place where
a contract has been made, a marriage celebrated, a will signed or tort committed.
The lex loci actus is particularly important in contracts and torts;

e) The place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is to be
exercised;
 f) The intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;

g) The place where judicial or administrative proceedings are instituted or done. The
lex fori – the law of the forum – is particularly important because, matters of
procedure, not going to the substance of the claim involved, are governed by it,
and because the lex fori applies whenever the content of the otherwise applicable
foreign law is excluded from application in a given case for the reason that it falls
under one of the exceptions to the applications of foreign law;

h) The flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its masters or owners. 8

Characterization
Before a choice can be made, it is necessary for us to determine under what
category a certain set of facts or rules fall. This process is known as “characterization” or
the “doctrine of qualification”.
“Characterization”, otherwise known as “classification” or “qualification”, is the
process of assigning a certain set of facts or factual situation to its proper legal category.
Every rule of law is based on situations of fact, actual or imagined, since the legislator
must try to solve factual situations that might arise in the future, based on past observation
and experience. These legal categories may be family relations, contracts, torts,
succession, property, etc. By characterizing the legal problem, the court of the parties
involved reach a proper solution whether to apply the local law or the proper foreign law.
The difficulty in characterization arises from the fact that a conflicts situation or
problem may be characterized by the lex fori differently from the characterization of the
lex causae (law of the state by which the act or transaction is most closely connected).
The lex fori might regard the problem as tort while the lex causae might regard it as crime.
9

Theories that Justify the Application of the Foreign Law

a) Theory of Comity
According to this theory, no foreign law would be allowed to operate in another
state except by the “comity of nations”, i.e., the reciprocal courtesy which the members
of the family of nations owe to one another. It is the recognition which one state allows
within its territory, to the legislative, executive or judicial acts of another nation, having
due regard both to international duty and convenience, and to the rights of its own
 citizens, or of other persons who are under the protection of its laws. (The Philippines
follow the Principle of Reciprocity)
b) Vested-rights Theory
Our courts enforce not the foreign law or foreign judgment but the right or rights
that have been vested under such law or judgment. Rights once acquired under a
foreign law or judgment should be enforced regardless of where the suit for its
enforcement was filed. The exception is, if the foreign law is against the public policy
of the forum.
c) Theory of Local Law
Foreign Law is applied not because it is foreign, but because our own law by
applying a similar rule requires us to do so; hence, it is as if the foreign law has become
part of our own internal or domestic law.
d) Theory of Harmony of Laws
Under this theory, identical or similar problems should be given identical or similar
solutions thus resulting in harmony of laws. Certainty of solutions to the same or
similar problems are of particular importance in areas where the parties are likely to
think in advance of the legal consequences of their transactions.
e) Theory of Justice
Since the purpose of all laws, including Conflict of Laws, is the dispensation of
justice, the proper foreign law should be applied in order to attain this objective. The
defect of this theory however, is that different persons may have different ideas of
what is just.
Note: “These theories do not mutually exclude one another. Truth may be found in their
combination” (late Justice Edgardo T. Paras) 10

Choice of Law Principles

Choice of Law is governed by several principles by virtue of Section 6 of the US
Restatement (Second) of Laws. These principles are the underlying reasons why a
particular law is made to apply to a certain case.

Principle 1: Local Law

This is the general rule and it provides the local law to be the default law that will
govern the relationship of the parties to a dispute. When there is a specification that local
laws must be applied before one even considers the application of a foreign law, provided
that these directives comply with the Constitution of the state, the statutory directive must
be followed.
The problem of renvoi. While a state has to follow its statutory directive as to choice
of law, there are times when the statutory directive, instead of applying local law, actually
directs the application of a foreign law on the matter. The foreign law, in turn, directs the
application of the laws of the forum court to the case under consideration. Thus, there is
reference back to the local laws of the forum court.
To solve this problem, the local court must, after looking at the conflicts of law rules
of the foreign state, apply the directive of the latter’s laws. Thus, if the directive is the
application of the forum court’s laws, the court must then follow this to put an end to the
endless throwing back of the case.

Principle 2: Needs of the Interstate and International Systems

Technological advances and free trade have brought about numerous international
commercial transactions spawning disputes that cut across national borders. Where we
apply only local laws that favor the interest of the forum state, this would unduly stifle the
growth of free trade and discourage people from trading with their counterparts in other
countries. The courts must formulate principles and reconcile multistate laws with the end
view of encouraging international trade among people.

Principle 3: Relevant Policies of the Forum

The policies of the forum take primordial consideration when considering the
applicable law to a case. Each forum considers certain values to be of highest import to
them.

Principle 4: Relevant Policies of Other Interested States

When two states have conflicting laws and interests, the courts must engage in
governmental interest analysis, wherein, the courts compare the laws and interests of the
two states, determines if there is a real conflict, and if a real conflict exists, apply the law
of the state whose interest is more impaired.
Note: The governmental interest analysis is rarely employed in the Philippines because
the standard practice of local courts is to declare the foreign law to be against public policy
where the foreign law conflicts with a Philippine law.
Principle 5: Protection of Justified Expectations
When the parties specify a particular law to govern their legal relations, courts must
enforce this choice of law, unless it is contrary to a statutory directive of a foreign court or
contravenes public policy.

Principle 6: Basic Policies Underlying the Particular Field of Law

This simply means that the reason and objectives of the laws in question should
be given consideration. Hence, courts should look to the type of law involved. By looking
at the particular laws involved, courts may be in a better position to decide which rights
to uphold and protect.

Principle 7: Certainty, Predictability, and Uniformity of Result

Most judicial systems favor stability in judicial decisions that is why they have
formulated principles like res judicata and stare decisis. In the area of torts, courts usually
choose between lex loci delicti and most significant relationship. Once they choose
between either of the two, they usually follow this approach in deciding future cases which
usually becomes the applicable doctrine in the jurisdiction concerned.
Principle 8: Ease in the Determination and Application of the Law to be Applied
If a court is bound by a particular doctrine by virtue of stare decisis, it is usually
simpler for the court to apply the same doctrine in future cases. There is no more need to
adopt new and more complicated analyses for what only needs to be done is to apply the
law which has been applied before.

Other Principles Affecting Choice of Law

Foreign laws have to be properly proved before they are admitted into evidence.
Failure to prove foreign law will result to the exclusion of the foreign law and a
presumption will arise that foreign law is the same as local law. This is called the
“Doctrine of processual presumption”. Foreign documents also need to be proved
before they can be admitted into evidence; otherwise, they will be excluded and will be
nothing but scraps of paper.
How are foreign documents proved in order to be admitted in evidence?
Rule 132 of the Revised Rules of Court
Sec 24. Proof of official record – The record of public documents referred to in paragraph
(a) of Section 19, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the legal custody of the
record, or by his deputy, and accompanied, if the record is not kept in the Philippines,
with a certificate that such officer has the custody. If the office in which the record is kept
is in foreign country, the certificate may be made by a secretary of the embassy or
legation, consul general, consul, vice consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office.
Sec 25. What attestation of copy must state – Whenever a copy of a document or record
is attested for the purpose of evidence, the attestation must state, in substance, that the
copy is a correct copy of the original, or a specific part thereof, as the case may be. The
attestation must be under the official seal of the attesting officer, if there be any, or if he
be the clerk of a court having a seal, under the seal of such court.

Exceptions to Proof of Foreign Laws

1) Presentation of a foreign-licensed attorney who will testify in open court concerning
her knowledge of the law in question.
2) In case of administrative agencies recognizing foreign laws without proof thereof.
3) Lack of objection to the improper presentation by one party of proof of foreign law.
4) Laws appearing in official websites like those of the Office of the President or the
Library of Congress. 11

Saudi Arabian Airlines vs. Court of Appeals

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

Facts:
Defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in
Jeddah, Saudi Arabia. While on a lay-over in Jakarta, Indonesia, plaintiff went to a disco
dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi
nationals. Because it was almost morning when they returned to their hotels, they agreed
to have breakfast together at the room of Thamer. When they were in the room, Allah left
on some pretext. Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a
roomboy and several security personnel heard her cries for help and rescued her. Later,
the Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the latter as an
accomplice. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah after two
weeks of detention. Eventually, they were again put in service by defendant SAUDI. Saudi
judge interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane was about
to take off, a SAUDIA officer told her that the airline had forbidden her to take flight. At
the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick
took away her passport and told her to remain in Jeddah, at the crew quarters, until further
orders. A SAUDIA legal officer again escorted plaintiff to the same court where the judge,
to her astonishment and shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286 lashes. Only then did she realize
that the Saudi court had tried her, together with Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and
listening to the music in violation of Islamic laws; and (3) socializing with the male crew,
in contravention of Islamic tradition. The Prince of Makkah dismissed the case against
her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, she was
terminated from the service by SAUDIA, without her being informed of the cause. The CA
ruled that the Philippines is an appropriate forum considering that the Amended
Complaints basis for recovery of damages is Article 21 of the Civil Code, and thus, clearly
within the jurisdiction of respondent Court.

Issue:
WON trial court has jurisdiction to hear and try case based on Article 21 of the New
Civil Code?

Ruling:
The foreign element consisted in the fact that private respondent Morada is a
resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation.
Also, by virtue of the employment of Morada with the petitioner Saudia as a flight
stewardess, events did transpire during her many occasions of travel across national
borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa,
that caused a conflicts situation to arise. The court a quo found it best to hear the case in
the Philippines. It also possesses jurisdiction over the persons of the parties herein. By
filing her Complaint and Amended Complaint with the trial court, private respondent has
voluntary submitted herself to the jurisdiction of the court. As to the choice of applicable
law, we note that choice-of-law problems seek to answer two important questions: (1)
What legal system should control a given situation where some of the significant facts
occurred in two or more states; and (2) to what extent should the chosen legal system
regulate the situation.
 Before a choice can be made, it is necessary for us to determine under what
category a certain set of facts or rules fall. This process is known as characterization, or
the doctrine of qualification. It is the process of deciding whether or not the facts relate to
the kind of question specified in a conflicts rule. Our starting point of analysis here is not
a legal relation, but a factual situation, event, or operative fact. An essential element of
conflict rules is the indication of a test or connecting factor or point of contact. Choice-of-
law rules invariably consist of a factual relationship (such as property right, contract claim)
and a connecting factor or point of contact, such as the situs of the res, the place of
celebration, the place of performance, or the place of wrongdoing. In the case, the place
where an act has been done, the locus actus, such as the place where a contract has
been made, a marriage celebrated, a will signed or a tort committed, is the connecting
factor. Applying the torts principle in a conflicts case, we find that the Philippines could be
said as a situs of the tort (the place where the alleged tortious conduct took place). In
applying said principle to determine the State which has the most significant relationship,
the following contacts are to be taken into account and evaluated according to their
relative importance with respect to the particular issue: (a) the place where the injury
occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile,
residence, nationality, place of incorporation and place of business of the parties, and (d)
the place where the relationship, if any, between the parties is centered.
Since the Philippines is the situs of the tort complaint of and the place having the
most interest in the problem, we find, by way of recapitulation, that the Philippine law on
tort liability should have paramount application to and control in the resolution of the legal
issues arising out of this case.

Hazegawa vs. Kitamura

G.R. No. 149177 November 23, 2007

Facts:
Petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese
consultancy firm providing technical and management support in the infrastructure
projects of foreign governments, entered into an Independent Contractor Agreement
(ICA) with respondent Minoru Kitamura, a Japanese national permanently residing in the
Philippines. The agreement provides that respondent was to extend professional services
to Nippon for a year starting on April 1, 1999. Nippon then assigned respondent to work
as the project manager of the Southern Tagalog Access Road (STAR) Project in the
Philippines, following the company's consultancy contract with the Philippine
Government. 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. Respondent was named as the
project manager. 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 only. 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 respondent’s
contract was for a fixed term that had already expired, and refused to negotiate for the
renewal of the ICA. 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. RTC
ruled that matters connected with the performance of contracts are regulated by the law
prevailing at the place of performance. 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.

Issue:
WON 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.

Ruling:
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? (3) Where can the resulting
judgment be enforced? Analytically, jurisdiction and choice of law are two distinct
concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this
state; choice of law asks the further question whether the application of a substantive law
which will determine the merits of the case is fair to both parties. The power to exercise
jurisdiction does not automatically give a state constitutional authority to apply forum law.
While jurisdiction and the choice of the lex fori will often coincide, the minimum contacts
for one do not always provide the necessary significant contacts for the other. The
question of whether the law of a state can be applied to a transaction is different from the
question of whether the courts of that state have jurisdiction to enter a judgment. What
they rather raise as grounds to question subject matter jurisdiction are the principles of
lex loci celebrationis and lex contractus, and the state of the most significant relationship
rule.
 The Court finds the invocation of these grounds unsound. Lex loci celebrationis
relates to the law of the place of the ceremony or the law of the place where a contract is
made. The doctrine of lex contractus or lex loci contractus means the law of the place
where a contract is executed or to be performed. It controls the nature, construction, and
validity of the contract and it may pertain to the law voluntarily agreed upon by the parties
or the law intended by them either expressly or implicitly. 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. This rule takes into account several contacts and
evaluates them according to their relative importance with respect to the particular issue
to be resolved. 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.
They determine which state's law is to be applied in resolving the substantive issues of a
conflicts problem. 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. 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. Neither can the other ground raised, forum non conveniens, be used
to deprive the trial court of its jurisdiction herein. First, it is not a proper basis for a motion
to dismiss because Section 1, Rule 16 of the Rules of Court does not include it as a
ground. Second, whether a suit should be entertained or dismissed on the basis of the
said doctrine depends largely upon the facts of the particular case and is addressed to
the sound discretion of the trial court. In this case, the RTC decided to assume jurisdiction.
Third, the propriety of dismissing a case based on this principle requires a factual
determination; hence, this conflicts principle is more properly considered a matter of
defense.
Accordingly, 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.
 RECOGNITION AND
ENFORCEMENT OF
FOREIGN JUDGMENTS
AND FOREIGN
ARBITRAL AWARDS
 INTRODUCTION

RECOGNITION is a remedy at law which gives a foreign judgment or arbitral award

the same effect that it has in the state where it was rendered or awarded, with respect to
the parties, subject matter, and issues involved. Typically raised as a defense, it is availed
of to extend the res judicata effect of a foreign judgment, i.e., to bar repeated litigation of
the same case.
ENFORCEMENT is a remedy to make effective a foreign judgment or arbitral
award; in other words, to enable the prevailing party to obtain the affirmative relief to
which he is entitled because of the pronouncement.
Recognition of a foreign judgment does not necessarily imply enforcement, but
enforcement always implies recognition. As to arbitral awards, recognition and
enforcement are always sought together.

FOREIGN JUDGMENTS
The recognition and enforcement of foreign judgments is governed by the principle
of qualified recognition, meaning that a foreign judgment will be recognized only if not
repelled through the means provided by law.

Requisites For Recognition and Enforcement

1. Judgment must have been a final adjudication on a civil or commercial matter, not a
criminal, administrative, or revenue matter
2. Judgment must not be contrary to public policy
3. Tribunal that rendered judgment must have been one of competent jurisdiction
4. There must have been no lack of notice, no collusion, no fraud, nor clear mistakes of
fact or law
5. There must be adequate proof of the foreign judgment

Defenses Against Recognition and Enforcement

1. Rules of Court Rule 39 Section 48: “The judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.”
 a. Jurisdiction over subject matter. The authority of the court to render the
decision must be affirmatively shown by competent proof. Mere recital of jurisdictional
facts is insufficient. The prevailing view is that although such judgments are presumed
valid, local courts are not precluded from inquiring into the foreign court’s jurisdiction.
b. Jurisdiction over the person. This requirement involves simply giving both
parties reasonable notice and opportunity to be heard. Since judgments are presumed
valid, and since lex fori governs procedural law, the burden of proving that jurisdiction
was not properly acquired is shouldered by the party raising this defense. In general,
however, our Supreme Court only refuses recognition and enforcement for complete lack
of due process.
c. Fraud. It is extrinsic fraud which may be raised as a defense, because it
concerns fraud (i) on facts that were not controverted or resolved in the case where
judgment was rendered, (ii) which would go to the jurisdiction of the court, or (iii) which
would deprive the defending party of arguing a meritorious defense. Intrinsic fraud goes
to the very existence of the cause of action --- but since it is a matter already adjudged, it
cannot be a defense to not recognize or enforce the judgment.
2. Rules of Court Rule 132 Section 29: “Any judicial record may be impeached by
evidence of: (a) want of jurisdiction in the court or judicial officer, (b) collusion between
the parties, or (c) fraud in the party offering the record, in respect to the proceedings.”
3. Tribunal pronouncing judgment was not a judicial or quasi-judicial agency
4. Judgment was not on the merits
5. Judgment was not on a civil or commercial matter
6. What is sought to be recognized or enforced is a mere provisional or interlocutory
decree
7. Claim subject of the judgment is one which is contrary to public policy, or which does
not fix a sum certain

Effect of Foreign Judgment

As provided in Rules of Court Rule 39 Section 48,
1. “In case of a judgment or final order upon a specific thing, the judgment or final order,
is conclusive upon the title to the thing.” This pertains to judgments in rem. Because they
are conclusive as to the question of title, a defendant can only raise defenses concerning
the judgment.
2. “In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors in interest
by a subsequent title.” This pertains to judgments in personam. The ruling is only
presumptive evidence, and is thus not conclusive. A party can even question the right
granted.]

Rule 108 of the Rules of Court sets forth the rules on cancellation or correction of entries
in the civil registry, to wit:

SEC. 1. Who may file petition. – Any person interested in any act, event, order or
decree concerning the civil status of persons which has been recorded in the civil
register, may file a verified petition for the cancellation or correction of any entry
relating thereto, with the Regional Trial Court of the province where the
corresponding civil registry is located.

SEC. 2. Entries subject to cancellation or correction. – Upon good and valid

grounds, the following entries in the civil register may be cancelled or corrected:
(a) births; (b) marriages; (c) deaths; (d) legal separations; (e) judgments of
annulments of marriage; (f) judgments declaring marriages void from the
beginning; (g) legitimations; (h) adoptions; (i) acknowledgments of natural children;
(j) naturalization; (k) election, loss or recovery of citizenship; (l) civil interdiction;
(m) judicial determination of filiation; (n) voluntary emancipation of a minor; and (o)
changes of name.

SEC. 3. Parties. – When cancellation or correction of an entry in the civil register

is sought, the civil registrar and all persons who have or claim any interest which
would be affected thereby shall be made parties to the proceeding.

SEC. 4. Notice and Publication. – Upon the filing of the petition, the court shall, by
an order, fix the time and place for the hearing of the same, and cause reasonable
notice thereof to be given to the persons named in the petition. The court shall also
cause the order to be published once a week for three (3) consecutive weeks in a
newspaper of general circulation in the province.

SEC. 5. Opposition. – The civil registrar and any person having or claiming any
interest under the entry whose cancellation or correction is sought may, within
fifteen (15) days from notice of the petition, or from the last date of publication of
such notice, file his opposition thereto.

SEC. 6. Expediting proceedings. – The court in which the proceedings is brought

may make orders expediting the proceedings, and may also grant preliminary
injunction for the preservation of the rights of the parties pending such
proceedings.

SEC. 7. Order. – After hearing, the court may either dismiss the petition or issue
an order granting the cancellation or correction prayed for. In either case, a
certified copy of the judgment shall be served upon the civil registrar concerned
who shall annotate the same in his record.
Rule 108 of the Rules of Court provides the procedure for cancellation or correction of
entries in the civil registry. The proceedings may either be summary or adversary. If the
correction is clerical, then the procedure to be adopted is summary. If the rectification
affects the civil status, citizenship or nationality of a party, it is deemed substantial, and
the procedure to be adopted is adversary. Since the promulgation of Republic v.
Valencia19 in 1986, the Court has repeatedly ruled that "even substantial errors in a civil
registry may be corrected through a petition filed under Rule 108, with the true facts
established and the parties aggrieved by the error availing themselves of the appropriate
adversarial proceeding."20 An appropriate adversary suit or proceeding is one where the
trial court has conducted proceedings where all relevant facts have been fully and
properly developed, where opposing counsel have been given opportunity to demolish
the opposite party’s case, and where the evidence has been thoroughly weighed and
considered.

Illustrative Cases:

Fujiki v Marinay

FACTS:

Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria Paz
Galela Marinay (Marinay) in the Philippines on 23 January 2004. The marriage did not sit
well with petitioner’s parents. Thus, Fujiki could not bring his wife to Japan where he
resides. Eventually, they lost contact with each other.
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first
marriage being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon
City, Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly
suffered physical abuse from Maekara. She left Maekara and started to contact Fujiki.
Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In
2010, Fujiki helped Marinay obtain a judgment from a family court in Japan which declared
the marriage between Marinay and Maekara void on the ground of bigamy. On 14
January 2011, Fujiki filed a petition in the RTC entitled: “Judicial Recognition of Foreign
Judgment (or Decree of Absolute Nullity of Marriage).”

DECISION OF LOWER COURTS:

(1) RTC: dismissed the petition for "Judicial Recognition of Foreign Judgment ·(or Decree
of Absolute Nullity of Marriage)" based on improper venue and the lack of personality of
petitioner, Minoru Fujiki, to file the petition.
ISSUES & RULING:

(1) Whether the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment
of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.

No. Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign
judgment relating to the status of a marriage where one of the parties is a citizen of a
foreign country. Moreover, in Juliano-Llave v. Republic, this Court held that the rule in
A.M. No. 02- 11-10-SC that only the husband or wife can file a declaration of nullity or
annulment of marriage “does not apply if the reason behind the petition is bigamy.” While
the Philippines has no divorce law, the Japanese Family Court judgment is fully consistent
with Philippine public policy, as bigamous marriages are declared void from the beginning
under Article 35(4) of the Family Code. Bigamy is a crime under Article 349 of the Revised
Penal Code. Thus, Fujiki can prove the existence of the Japanese Family Court judgment
in accordance with Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of
the Rules of Court.
(2) Whether a husband or wife of a prior marriage can file a petition to recognize a foreign
judgment nullifying the subsequent marriage between his or her spouse and a foreign
citizen on the ground of bigamy.
Yes. “[t]he recognition of the foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such as that in Rule 108 of the
Rules of Court) is precisely to establish the status or right of a party or a particular
fact.”
 Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. — Any person interested in any act, event, order or
decree concerning the civil status of persons which has been recorded in the civil
register, may file a verified petition for the cancellation or correction of any entry relating
thereto, with the Regional Trial Court of the province where the corresponding civil
registry is located. (Emphasis supplied)
There is no doubt that the prior spouse has a personal and material interest in maintaining
the integrity of the marriage he contracted and the property relations arising from it.

(3) Whether the Regional Trial Court can recognize the foreign judgment in a proceeding
for cancellation or correction of entries in the Civil Registry under Rule 108 of the Rules
of Court.
Yes. There is neither circumvention of the substantive and procedural safeguards of
marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A. No.
8369. A recognition of a foreign judgment is not an action to nullify a marriage. It is an
action for Philippine courts to recognize the effectivity of a foreign judgment, which
presupposes a case which was already tried and decided under foreign law.
In the recognition of foreign judgments, Philippine courts are incompetent to substitute
their judgment on how a case was decided under foreign law. They cannot decide on the
“family rights and duties, or on the status, condition and legal capacity” of the foreign
citizen who is a party to the foreign judgment. Thus, Philippine courts are limited to the
question of whether to extend the effect of a foreign judgment in the Philippines. In a
foreign judgment relating to the status of a marriage involving a citizen of a foreign
country, Philippine courts only decide whether to extend its effect to the Filipino party,
under the rule of lex nationalii expressed in Article 15 of the Civil Code.
For this purpose, Philippine courts will only determine (1) whether the foreign judgment
is inconsistent with an overriding public policy in the Philippines; and (2) whether any
alleging party is able to prove an extrinsic ground to repel the foreign judgment, i.e. want
of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
If there is neither inconsistency with public policy nor adequate proof to repel the
judgment, Philippine courts should, by default, recognize the foreign judgment as part of
the comity of nations.

Roehr v. Rodriguez

Petitioner Wolfgang O. Roehr, a German citizen, married private respondent Carmen

Rodriguez, a Filipina, on December 11, 1980 in Germany. Their marriage was
subsequently ratified on February 14, 1981 in Tayasan, Negros Oriental. Out of their
union were born Carolynne and Alexandra Kristine.

Carmen filed a petition for declaration of nullity of marriage before the Makati Regional
Trial Court (RTC). Wolfgang filed a motion to dismiss, but it was denied.

Meanwhile, Wolfgang obtained a decree of divorce from the Court of First Instance of
Hamburg-Blankenese. Said decree also provides that the parental custody of the children
should be vested to Wolfgang.

Wolfgang filed another motion to dismiss for lack of jurisdiction as a divorce decree had
already been promulgated, and said motion was granted by Public Respondent RTC
Judge Salonga.

Carmen filed a Motion for Partial Reconsideration, with a prayer that the case proceed for
the purpose of determining the issues of custody of children and the distribution of the
properties between her and Wolfgang. Judge Salonga partially set aside her previous
order for the purpose of tackling the issues of support and custody of their children.
1st Issue:
W/N Judge Salonga was correct in granting a partial motion for reconsideration.

Ruling:
Yes. A judge can order a partial reconsideration of a case that has not yet attained finality,
as in the case at bar.

The Supreme Court goes further to say that the court can modify or alter a judgment even
after the same has become executory whenever circumstances transpire rendering its
decision unjust and inequitable, as where certain facts and circumstances justifying or
requiring such modification or alteration transpired after the judgment has become final
and executory and when it becomes imperative in the higher interest of justice or when
supervening events warrant it.

2nd issue:
W/N Judge Salonga's act was valid when she assumed and retained jurisdiction as
regards child custody and support.

Ruling: Yes.

As a general rule, divorce decrees obtained by foreigners in other countries are

recognizable in our jurisdiction. But the legal effects thereof, e.g. on custody, care and
support of the children, must still be determined by our courts.

Before our courts can give the effect of res judicata to a foreign judgment, such as the
award of custody to Wolfgang by the German court, it must be shown that the parties
opposed to the judgment had been given ample opportunity to do so on grounds allowed
under Rule 39, Section 50 of the Rules of Court (now Rule 39, Section 48, 1997 Rules of
Civil Procedure).

In the present case, it cannot be said that private respondent was given the opportunity
to challenge the judgment of the German court so that there is basis for declaring that
judgment as res judicata with regard to the rights of Wolfgang to have parental custody
of their two children. The proceedings in the German court were summary. As to what
was the extent of Carmen’s participation in the proceedings in the German court, the
records remain unclear.

Absent any finding that private respondent is unfit to obtain custody of the children, the
trial court was correct in setting the issue for hearing to determine the issue of parental
custody, care, support and education mindful of the best interests of the children.
 FOREIGN ARBITRAL AWARDS

As defined in the Special Rules of Court on Alternative Dispute Resolution (“ADR Rules”),
a foreign arbitral award is one which is made in a country other than the Philippines.
Under the Alternative Dispute Resolution Act of 2004 (“ADR Law”), the recognition and
enforcement of foreign arbitral awards is mainly governed by the New York Convention.
For foreign arbitral awards not covered by the Convention, “the Court may, on grounds of
comity and reciprocity, recognize and enforce a non-convention award as a convention
award.”
The ADR Rules clarify that the ‘comity and reciprocity’ in question refers to that extended
by foreign states with respect to awards made in the Philippines. As to those states which
do not extend such comity and reciprocity, “the court may nevertheless treat such award
as a foreign judgment enforceable as such under Rule 39, Section 48, of the Rules of
Court.”
Proceedings for recognition and enforcement are also governed by relevant provisions of
the ADR Rules and ADR Law.

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New

York, 1958)

Objectives
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards
seeks to:
- Provide common legislative standards for the recognition of arbitration
agreements and;
- Court recognition and enforcement of foreign and non-domestic arbitral awards.
The Convention’s principal aim:
- To ensure that foreign and non-domestic arbitral awards will not be discriminated
against and
- To ensure such awards are recognized and generally capable of enforcement in
the Parties respective jurisdictions.
 The Convention’s ancillary aim:
- To require courts of Parties to give full effect to arbitration agreements by
requiring courts to deny the parties access to court in contravention of their agreement to
refer the matter to an arbitral tribunal.

Key provisions
The Convention applies to awards made in any State other than the State in which
recognition and enforcement is sought and to awards “not considered as domestic
awards”. When consenting to be bound by the Convention, a State may declare that it will
apply the Convention.
- In respect to awards made only in the territory of another Party and;
- Only to legal relationships that are considered “commercial” under its domestic
law.
The central obligation imposed upon Parties is to recognize all arbitral awards
within the scheme as binding and enforce them, if requested to do so, under the lex fori.
Each Party may determine the procedural mechanisms that may be followed where the
Convention does not prescribe any requirement.
The Convention defines five grounds upon which recognition and enforcement
may be refused at the request of the party against whom it is invoked. These are the
following:
- Incapacity of the parties
- Invalidity of the arbitration agreement
- Due process
- Scope of the arbitration agreement
- Jurisdiction of the arbitral tribunal
- Setting aside or suspension of an award in the country in which or under the law
of which, that award was made.
The court may, on its own motion, refuse recognition and enforcement of an award
based on the following grounds:
- Arbitrability
- Public policy
The Convention seeks to encourage recognition and enforcement of awards in
the greatest number of cases as possible. That purpose is achieved by:
 -Removing conditions for recognition and enforcement in national laws that are
more stringent than the conditions in the Convention.
-Allowing the continued application of any national provisions that give special or
more favourable rights to a party seeking to enforce an award.
- Allowing an interested party to avail itself of law or treaties of the country where
the award is sought to be relied upon, including where such law or treaties offer a regime
more favourable than the Convention.

Entry into force

The Convention entered into force on 7 June 1959 (article XII).

How to become a party

-The Convention is closed for signature.
-It is subject to ratification, and is open to accession by any Member State of the
United Nations, any other State, which is a member of any specialized agency of the
United Nations, or is a Party to the Statute of the International Court of Justice (articles
VIII and IX).

Optional and/or mandatory declarations and notifications

When signing, ratifying or acceding to the Convention, or notifying a territorial
extension under article X, any State may on the basis of reciprocity declare that:
- It will apply the Convention to the recognition and enforcement of awards made
only in the territory of another Party to the Convention.
- It will apply the Convention only to differences arising out of legal relationships,
whether contractual or not, which are considered as commercial under the national law
of the State making such declaration (article I).

Denunciation/Withdrawal
-By a written notification to the Secretary-General of the United Nations.
-Shall take effect one year after the date of the receipt of the notification by the
Secretary-General (article XIII).
PART ONE: United Nations Conference on International Commercial Arbitration,
New york, 20 May–10 June 1958
On May 3, 1956, Resolution 604 was adopted to convene a conference in
concluding a convention on recognition and enforcement of foreign arbitral awards as well
as considering measures to increase effectiveness of arbitration in settlements. The
Economic and Social Council deliberated, prepared, and opened the Convention for
signature.
In addition, suggestions and recommendations prepared by the Secretary-General
were taken into account to consider measures in increasing the effectiveness of
arbitration in settlement of private law disputes.
◦ As commercial arbitration progresses through prevailing information on
arbitration, organizations should continue to pursue activities regarding such matters.
◦ Creation of new abribitration facilities and development of current ones should be
done by appropriate governmental and other organizations to avoid duplication of efforts
and emphasize on measures which give greater benefits.
◦ Governments and other organiztions are encouraged to provide tehnical
assistance in furtherance of the said aim.
◦ National laws on arbitration should be uniform to define suitable subject matter
for model arbitration statutes and other measures.
◦ United Nations should encourage further study of measures to increase the
effectiveness of arbitration in the settlement of disputes.
CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN
ARBITRAL AWARDS
ARTICLE I

It applies:
• To the recognition and enforcement of arbitral awards made in the territory of a State
other than the State where the recognition and enforcement of such awards are sought,
and arising out of differences between persons, whether physical or legal.
• To arbitral awards not considered as domestic awards in the State where their
recognition and enforcement are sought.

ARBITRAL AWARDS
• It includes not only awards made by arbitrators appointed for each case but also those
made by permanent arbitral bodies to which the parties have submitted.
• When signing, ratifying or acceding to this Convention, or notifying extension under
article X hereof, any State may on the basis of reciprocity declare that it will apply the
Convention to the recognition and enforcement of awards made only in the territory of
another Contracting State. It may also declare that it will apply the Convention only to
differences arising out of legal relationships, whether contractual or not, which are
considered as commercial under the national law of the State making such declaration.

ARTICLE II
Each Contracting State shall recognize an agreement in writing under which the parties
undertake to submit to arbitration all or any differences which have arisen or which may
arise between them in respect of a defined legal relationship, whether contractual or not,
concerning a subject matter capable of settlement by arbitration.
The court of a Contracting State shall refer the parties to arbitration, unless it finds that
the said agreement is null and void, inoperative or incapable of being performed.

ARTICLE III
Each Contracting State shall recognize arbitral awards as binding and enforce them in
accordance with the rules of procedure of the territory where the award is relied upon,
under the conditions laid down in the following articles.
There shall not be imposed substantially more onerous conditions or higher fees or
charges on the recognition or enforcement of arbitral awards to which this Convention
applies than are imposed on the recognition or enforcement of domestic arbitral awards.

ARTICLE IV
To obtain the recognition and enforcement, the party applying for recognition and
enforcement needs to supply the following: (a) The duly authenticated original award or
a duly certified copy thereof; (b) The original agreement referred to in article II or a duly
certified copy thereof.
If the said award or agreement is not made in an official language of the country in which
the award is relied upon, translation shall be made and certified by an official or sworn
translator or by a diplomatic or consular agent.

ARTICLE V
It may be done at the request of the party against whom it is invoked, only if the party
furnishes to the competent authority where the recognition and enforcement is sought,
proves that:
• The parties to the agreement referred to in article II were, under the law applicable to
them, under some incapacity, or the said agreement is not valid under the law to which
the parties have subjected it or, failing any indication thereon, under the law of the country
where the award was made; or
• The party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to
present his case; or
• The award deals with a difference not contemplated by or not falling within the terms of
the submission to arbitration, or it contains decisions on matters beyond the scope of the
submission to arbitration; or
• The composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was not in
accordance with the law of the country where the arbitration took place; or
• The award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of which,
that award was made.
• Recognition and enforcement of an arbitral award may also be refused if the competent
authority in the country where recognition and enforcement is sought finds that: ◦ The
subject matter of the difference is not capable of settlement by arbitration under the law
of that country; or ◦ The recognition or enforcement of the award would be contrary to the
public policy of that country.

ARTICLE VI
If an application for the setting aside or suspension of the award has been made to a
competent authority, the authority before which the award is sought to be relied upon
may:
• Adjourn the decision on the enforcement of the award; and
• Order the other party to give suitable security

ARTICLE VII
The provisions of the Convention shall not affect the validity of multilateral or bilateral
agreements concerning the recognition and enforcement of arbitral awards entered into
by the Contracting States nor deprive any interested party of any right he may have to
avail himself of an arbitral award in the manner and to the extent allowed by the law or
the treaties of the country where such award is sought to be relied upon.

ARTICLE VIII
The Convention shall be open until 31 December 1958 for signature on behalf of any
Member of the United Nations and also on behalf of any other State which is or hereafter
becomes a member of any specialized agency of the United Nations, or which is or
hereafter becomes a party to the Statute of the International Court of Justice, or any other
State to which an invitation has been addressed by the General Assembly of the United
Nations.

ARTICLE IX
The Convention shall be open for accession to all States referred to in article VIII.
Accession shall be effected by the deposit of an instrument of accession with the
Secretary- General of the United Nation. Any State may, at the time of signature,
ratification or accession, declare that this Convention shall extend to all or any of the
territories for the international relations of which it is responsible. Such a declaration shall
take effect when the Convention enters into force for the State concerned. At any time
thereafter any such extension shall be made by notification addressed to the Secretary-
General of the United Nations and shall take effect as from the ninetieth day after the day
of receipt by the Secretary-General of the United Nations of this notification, or as from
the date of entry into force of the Convention for the State concerned, whichever is the
later. With respect to those territories to which this Convention is not extended at the time
of signature, ratification or accession, each State concerned shall consider the possibility
of taking the necessary steps in order to extend the application of this Convention to such
territories, subject, where necessary for constitutional reasons, to the consent of the
Governments of such territories

ARTICLE X
The accession of states to the Convention is effected by depositing with the UN Secretary-
General an instrument of accession. As stated in Article XII, the Convention actually
came in to force on the 90th day after the deposit of the third instrument of
ratification/accession, i.e., 7 June 1959 --- but as to each state who ratified or acceded
after this third deposit, the Convention is only deemed to enter into force on the 90th day
after it deposits its own instrument of ratification/accession.

ARTICLES XI and XII

Both provisions provide for the the binding effect of signing, ratifying or acceding to the
Convention.
• For territories belonging to a state: At the time of its signature, ratification, or accession,
a state may declare that the Convention shall also apply to its territories. The Convention
takes effect at the same time it enters into force for the signing state.
If the Convention has already entered into force in a state, extension to its territories is
made by notifying the UN Secretary-General. The Convention then enters into force on
the 90th day after the Secretary-General receives the notice.
• For federal/ non-unitary states: The federal authority in a state will be treated the same
as other Contracting Parties to the Convention, with respect to Convention Articles within
its legislative power. As to those Articles within the legislative power of the constituent
states/provinces, the Convention requires the federal authority to bring these to the
attention of the local legislatures.
The other Contracting Parties may request, through the UN, that a federal state inform
them about what action has been taken by the federal and constituent legislatures to give
effect to the Articles.

ARTICLE XIII
It provides for the the rules on denunciation. 1. A state may denounce the Convention by
notifying the UN Secretary-General. It takes effect one year after receipt. 2. A state that
extends the Convention to its territories can notify the Secretary-General that such
extension shall cease one year after his receipt of the notification. 3. The Convention will
still apply to those arbitral awards recognition and enforcement for
which was instituted before denunciation took effect.

ARTICLE XIV
A provision on fairness - as against other Parties, a Contracting Party can only avail of
those Articles which it itself had agreed to apply.

ARTICLES XV and XVII

Both provisions relate to the duties of the UN and the Secretary-General. 1. Signatories
and ratifiers of the Convention are to be notified by the Secretary-General about
subsequent signatures and ratifications, accessions, declarations, denunciations, and
notifications. 2. Signatories and ratifiers are to be provided certified copies of the
Convention. 3. Authentic copies of the Convention rendered in Chinese, English, French,
Russian, and Spanish shall be deposited in the UN archives.

ADR LAW PROVISIONS AND ADR RULES ON FOREIGN ARBITRAL AWARDS

One important distinction to make is whether a foreign arbitral award is confirmed
by a foreign court or by the Regional Trial Court.
If a foreign court confirms the award, it is recognized and enforced as a foreign
arbitral award --- not a foreign judgment --- in our jurisdiction. As a foreign arbitral award,
it is automatically presumed to have been made in the due course of arbitration and thus
subject to enforcement. In other words, recognition and enforcement is the general rule,
and refusal the exception. It is only when the grounds enumerated in the Law and Rules
are established can recognition and enforcement be refused. Moreover, the decision to
recognize and enforce is immediately executory, and RTC has no power to disturb the
arbitral tribunal’s determination of facts and interpretations of law.
If it is the RTC which confirms the award, it is enforced in the same manner as final
and executory decisions of Philippine courts.

PROCEDURE
In recognition of Article IV of the New York Convention, the ADR Law reiterates
that a party applying for recognition or enforcement must provide (a) the original or a duly
authenticated copy of the arbitral award and the arbitration agreement and (b) a duly
certified translation, if the foregoing are in a language which is not an official language of
the Philippines.
Any party to the arbitration may commence proceedings for recognition and enforcement
of the award, as soon as it is received, by filing the three documents together with a
petition, before the RTC:
1. Where the assets to be attached or levied are located
2. Where the act to be enjoined is being performed
3. In the principal place of business of any of the parties
4. In the residence of any of the parties, if they are individuals, or
5. In the National Capital Judicial Region.

The petition must state:

1. The addresses of the parties to arbitration
2. The country where the arbitral award was made
3. Whether such country is a signatory to the Convention, and
4. The relief sought.

If it is found to be sufficient in form and substance, the respondent is to be notified

and furnished a copy of the petition, and given 30 days from receipt to enter his
opposition. The only grounds he may raise are those enumerated in Article V of the
Convention, which are substantially reproduced in Rule 13.4 of the ADR Rules.
If the court finds that the petition and opposition raise mainly issues of law, it may
require the parties to submit briefs of their legal arguments within 30 days from receipt of
the court’s order.
If the court finds there are issues of fact, it shall motu proprio on request of any
party, require the parties to submit affidavits of their all their witnesses, within a period of
not less than 15 but not more than 30 days from receipt of the court order. In its discretion,
the court may likewise allow reply affidavits.
The court will conduct hearing only if it determines that there is a need, based on
the parties’ submissions. The affidavits take the place of direct testimony, i.e., the
witnesses will be immediately subjected to cross examination.
It may adjourn or defer rendering a decision if an application for suspension or
setting aside of the arbitral award had been filed with a competent court in the state where
said award was made. Upon petitioner’s application, the court may require the respondent
to furnish bond.

REMEDIES
A. Motion for reconsideration from rulings of the RTC may be filed within 15 days, non-
extendible, from receipt of the order. The other party also has a non-extendible 15-day
period to file his opposition or comment.
The only relevant grounds for an MFR as enumerated in Rule 19.1 of the ADR Rules are:
1. That the arbitration agreement is inexistent, invalid or unenforceable
2. An RTC ruling ---
2.a. Recognizing and enforcing a foreign arbitral award
2.b. Refusing recognition and enforcement of a foreign arbitral award
2.c. Upholding or reversing the arbitral tribunal’s jurisdiction
2.d. Granting or denying a party an interim measure of protection
2.e. Refusing to grant assistance in taking evidence 2.f. Enjoining or refusing to
enjoin a person from divulging confidential information, and 2.g. Declining a request for
assistance in taking evidence.
B. As to appeal, the ADR Rules expressly prohibit the filing of appeals that question the
merits of the arbitral award. The relevant matters which can be appealed are also those
enumerated above as grounds for MFR, except invalidity or unenforceability of the
arbitration agreement. In appeals from RTC rulings confirming an arbitral award, appellant
is required to post a counterbond in favor of the appellee, in an amount equivalent to the
award.
C. The losing party may also choose to file with the RTC an application to refuse
recognition and enforcement of the award. If RTC considers it proper, it may vacate its
own decision, and require the applicant to furnish security (on request of the party
seeking recognition and enforcement).
D. Special civil action for certiorari may be availed of “when the [RTC], in making a ruling
under the Special ADR Rules, has acted without or in excess of its jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal or any plain, speedy, and adequate remedy in the ordinary course of law...to annul
or set aside said ruling of the [RTC].”
The relevant grounds as enumerated in Rule 19.26 are rulings of the RTC:
1. Holding that the arbitration agreement is inexistent, invalid or unenforceable
2. Reversing the arbitral tribunal’s preliminary determination upholding its jurisdiction
3. Granting or refusing an interim relief
4. Allowing a party to enforce a foreign arbitral award pending appeal, and
5. Denying a petition for assistance in taking evidence.

RECOMMENDATION REGARDING THE INTERPRETATION OF ARTICLE II,

PARAGRAPH 1, OF THE CONVENTION ON THE RECOGNITION AND
EFNORCEMENT OF FOREIGN ARBITRAL AWARD
GENERAL ASSEMBLY
• Recognizing the value of arbitration as a method of settling disputes arising in the
context of international commercial relations
• Recalling its resolution 40/72 of 11 December 1985 regarding the Model Law
• Recognizing the need for provisions in the Model Law ◦ To conform to current practices
in international trade and modern means of contracting with regard to the form of the
arbitration agreement and the granting of interim measures
• Believing that revised articles of the Model Law will significantly enhance its operation
• Noting that the preparation of the revised articles of the Model Law on the form of the
arbitration agreement and interim measures was the subject of due deliberation and
extensive consultations with Governments
• Believing that, in connection with the modernization of articles of the Model Law, the
promotion of a uniform interpretation and application of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June
1958,2 is particularly timely,
• Expresses its appreciation to the United Nations Commission on International Trade
Law for formulating and adopting the revised articles of its Model Law on International
Commercial Arbitration on the form of the arbitration agreement and interim measures
• Also expresses its appreciation to the United Nations Commission on International
Trade Law for formulating and adopting the recommendation regarding the interpretation
of article II, paragraph 2, and article VII, paragraph 1, of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June
1958
• Requests the Secretary-General to make all efforts to ensure that the revised articles
of the Model Law and the recommendation become generally known and available.
POLICY RECOMMENDATIONS

ARTICLE II PARAGRAPH 2
• “Agreement in writing” includes an arbitral clause in a contract or an arbitral agreement
• Policy recommendation: Application of the New York Convention, given that the
circumstances in the said provision is non-exhaustive

ARTICLE VII PARAGRAPH 1

• Provisions of the New York Convention do not affect the validity of multilateral or bilateral
agreements concerning the recognition and enforcement of arbitral awards entered into
by Contracting States
• It does not deprive any interested party of any right to avail an arbitral award in the
manner and to the extent allowed by law or the treaties of the country where the award is
sought to be relied on
• Policy recommendation: Application of the New York Convention allow any interested
party to avail itself of rights it may have to seek recognition of the validity of such an
arbitration agreement

CONSIDERATIONS TAKEN
• The UNCITRAL Model representing different legal, social and economic systems and
levels of development
• Resolutions of the General Assembly reaffirming the mandate of the Commission as
the core legal body in international trade law
• Adoption of the New York Convention has been a significant achievement in promoting
the rule of law • Adoption of the resolution by the Conference of Plenipotentiaries that the
Conference “considers that greater uniformity of national laws on arbitration would further
the effectiveness of arbitration in the settlement of private law disputes”
• Different interpretations of the form requirements of the Convention and enactments of
domestic legislation and case law more favorable than the Convention with respect to
such • Wide use of E-Commerce
• Legal instruments
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PA/AMERICAN
INTERNATIONAL UNDERWRITER (PHIL.) INC., VS. STOLT-NIELSEN PHILIPPINES,
INC. AND COURT OF APPEALS
FACTS: On 9 January 1985, United Coconut Chemicals, Inc. (SHIPPER) shipped
404.774 metric tons of distilled C6-C18 fatty acid on board MT "Stolt Sceptre," a tanker
owned by Stolt-Nielsen Philippines Inc. (CARRIER), from Bauan, Batangas, Philippines,
consigned to "Nieuwe Matex" at Rotterdam, Netherlands, covered by Tanker Bill of
Lading BL No. BAT-1. The shipment was insured under a marine cargo policy with
Petitioner National Union Fire Insurance Company of Pittsburg (INSURER), a non-life
American insurance corporation. The Bill of Lading issued by the CARRIER contained a
general statement of incorporation of the terms of a Charter Party between the SHIPPER
and Parcel Tankers, Inc., entered into in Greenwich, Connecticut, U.S.A. Upon receipt of
the cargo by the CONSIGNEE, it was found to be discolored and totally contaminated.
The claim filed by the SHIPPER-ASSURED with the CARRIER having been denied, the
INSURER indemnified the SHIPPER. On 21 April 1986, the INSURER filed suit against
the CARRIER, before the RTC for recovery of the sum of P1,619,469.21, with interest.
The CARRIER moved to dismiss/suspend the proceedings on the ground that the RTC
had no jurisdiction over the claim the same being an arbitrable one; that as subrogee of
the SHIPPER-ASSURED, the INSURER is subject to the provisions of the Bill of Lading,
providing for arbitration. The INSURER opposed the dismissal/suspension of the
proceedings on the ground that it was not legally bound to submit the claim for arbitration
inasmuch as the arbitration clause provided in the Charter Party was not incorporated
into the Bill of Lading, and that the arbitration clause is void for being unreasonable and
unjust. On 28 July 1987, the RTC 1 denied the Motion, but subsequently reconsidered its
action on 19 November 1987, and deferred resolution on the Motion to Dismiss/Suspend
Proceedings until trial on the merits "since the ground alleged in said motion does not
appear to be indubitable." The CARRIER then resorted to a Petition for Certiorari and
Prohibition with prayer for Preliminary Injunction and/or Temporary Restraining Order
before the respondent Appellate Court seeking the annulment of the 19 November 1987
RTC Order. On 12 April 1989, the respondent Court 2 promulgated the Decision setting
aside the judgment; private respondent (the INSURER) is ordered to refer its claims for
arbitration; and respondent Judge is directed to suspend the proceedings in Civil case
No. 13498 pending the return of the corresponding arbitral award.
ISSUE: Whether or not the terms of the Charter Party, particularly the provision on
arbitration, binding on the insurer
HELD: YES. The pertinent portion of the Bill of Lading in issue provides in part:
“xxx…Copy of the Charter may be obtained from the Shipper or Charterer.” While the
provision on arbitration in the Charter Party reads: “xxx…4. Arbitration. Any dispute
arising from the making, performance or termination of this Charter Party shall be settled
in New York.”
Clearly, the Bill of Lading incorporates by reference the terms of the Charter Party. It is
settled law that the charter may be made part of the contract under which the goods are
carried by an appropriate reference in the Bill of Lading. This should include the provision
on arbitration even without a specific stipulation to that effect. The entire contract must be
read together and its clauses interpreted in relation to one another and not by parts.
Moreover, in cases where a Bill of Lading has been issued by a carrier covering goods
shipped aboard a vessel under a charter party, and the charterer is also the holder of the
bill of lading, "the bill of lading operates as the receipt for the goods, and as document of
title passing the property of the goods, but not as
varying the contract between the charterer and the shipowner" and is the law between
the parties who are bound by its terms and condition provided that these are not contrary
to law, morals, good customs, public order and public policy (Article 1306, Civil Code). It
has not been shown that the arbitral clause in question is null and void, inoperative, or
incapable of being performed. Nor has any conflict been pointed out between the Charter
Party and the Bill of Lading. In fine, referral to arbitration in New York pursuant to the
arbitration clause, and suspension of the proceedings in Civil Case No. 13498 below,
pending the return of the arbitral award, is, indeed called for.