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Embraces cases or situations where a foreign element is involved

A factual situation that cuts across territorial lines and is affected

Municipal Law or private law of each state which regulates relations of individuals
among themselves or with their state
It is the law of the forum that furnishes the yardstick for the presence or absence of

Is that part of the municipal law of the state which directs its courts and
administrative agencies, when confronted with a legal problem involving a foreign
element, whether or not, they should apply a foreign law or foreign laws (Paras)

1. to adjust conflicting rights in international, mercantile and corporate transactions;
2. to solve personal, family, property and successional contractual problems,
possessed of facts or elements operating in two or more states


Is to provide rational and valid rules or guidelines in deciding cases not only by
courts but also by administrative agencies and public officers who are called upon
to act on a given situation where either or all the parties, event or transaction are
linked to more than one jurisdiction

Phil. Export and Foreign Loan Guarantee Corp vs. VP Eusebio Construction Corp

G.R. No. 140047 March 31, 2003

Facts: This case is an offshoot of a service contract entered into by a Filipino construction firm with the
Iraqi Government for the construction of the Institute of Physical Therapy-Medical Center(hereinafter the
Project). The State Organization of Buildings (SOB), , awarded the construction to Ajyal Trading and
Contracting Company (hereinafter Ajyal). Respondent spouses Eduardo and Iluminada Santos, in behalf
of respondent 3-Plex International, Inc. (hereinafter 3-Plex), entered into a joint venture agreement with
Ajyal wherein the former undertook the execution of the entire Project, while the latter would be entitled
to a commission of 4% of the contract price. Later, respondent 3-Plex, not being accredited by or
registered with the Philippine Overseas Construction Board (POCB), assigned and transferred all its
rights and interests under the joint venture agreement to VPECI, a construction and engineering firm duly
registered with the POCB. However, on 2 May 1981, 3-Plex and VPECI entered into an agreement that
the execution of the Project would be under their joint management.5To comply with the requirements
of performance bond and advance payment bond, 3-Plex and VPECI applied for the issuance of a
guarantee with Philguarantee, a government financial institution empowered to issue guarantees for
qualified Filipino contractors to secure the performance of approved service contracts abroad.

Subsequently, letters of guarantee were issued by Philguarantee to the Rafidain Bank of Baghdad. Al Ahli
Bank of Kuwait was, therefore, engaged to provide a counter-guarantee to Rafidain Bank, but it required
a similar counter-guarantee in its favor from the Philguarantee

SOB and the joint venture VPECI and Ajyal executed the service contract for the construction of the
Institute of Physical Therapy – Medical Rehabilitation Center, Phase II, in Baghdad, Iraq. It commenced
only on the last week of August 1981 instead of the June 2 1981

Prior to the deadline, upon foreseeing the impossibility to meet it, the surety bond was also and
the Advance Payment Guarantee was extended three times more until it was cancelled for reimbursement

Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full payment of its performance bond

VPECI requested Iraq Trade and Economic Development Minister Mohammad Fadhi Hussein to recall
the telex call on the performance guarantee for being a drastic action in contravention of its mutual
agreement that (1) the imposition of penalty would be held in abeyance until the completion of the
project; and (2) the time extension would be open, depending on the developments on the negotiations for
a foreign loan to finance the completion of the project.
VPECI advised the Philguarantee not to pay yet Al Ahli Bank because efforts were being exerted for the
amicable settlement of the Project

VPECI received another telex message from Al Ahli Bank stating that it had already paid to Rafidain
Bank the sum of US$876,564 under its letter of guarantee, and demanding reimbursement
by Philguarantee

VPECI requested the Central Bank to hold in abeyance the payment by the Philguarantee "to allow the
diplomatic machinery to take its course, for otherwise, the Philippine government , through the
Philguarantee and the Central Bank, would become instruments of the Iraqi Government in
consummating a clear act of injustice and inequity committed against a Filipino contractor,

Central Bank authorized the remittance to Al Ahli Bank

Philguarantee informed VPECI that it would remit US$876,564 to Al Ahli Bank, and reiterated the joint
and solidary obligation of the respondents to reimburse the Philguarantee for the advances made on its
counter-guarantee but they failed to pay so a case was filed in the RTC

RTC and CA: Against Philguarantee since no cause of action since it was expired because VPECI.
Inequity to allow the Philguarantee to pass on its losses to the Filipino contractor VPECI which had
sternly warned against paying the Al Ahli Bank and constantly apprised it of the developments in the
Project implementation.

ISSUE: Whether the Philippine laws should be applied in determining VPECI's default in the
performance of its obligations under the service contract


No conflicts rule on essential validity of contracts is expressly provided for in our laws

The rule followed by most legal systems, however, is that the intrinsic validity of a contract must be
governed by the lex contractus or "proper law of the contract." This is the law voluntarily agreed upon by
the parties (the lex loci voluntatis) or the law intended by them either expressly or implicitly (the lex loci
intentionis) - none in this case

In this case, the laws of Iraq bear substantial connection to the transaction, since one of the parties is the
Iraqi Government and the place of performance is in Iraq. Hence, the issue of whether respondent VPECI
defaulted in its obligations may be determined by the laws of Iraq. However, since that foreign law was
not properly pleaded or proved, the presumption of identity or similarity, otherwise known as the
processual presumption, comes into play. Where foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the same as ours

In the United States and Europe, the two rules that now seem to have emerged as "kings of the hill" are
(1) the parties may choose the governing law; and (2) in the absence of such a choice, the applicable law
is that of the State that "has the most significant relationship to the transaction and the parties Another
authority proposed that all matters relating to the time, place, and manner of performance and valid
excuses for non-performance are determined by the law of the place of performance or lex loci solutionis,
which is useful because it is undoubtedly always connected to the contract in a significant way

In this case, however, the petitioner has clearly waived these rights and remedies by making the payment
of an obligation that was yet to be shown to be rightfully due the creditor and demandable of the principal


FACTS: Petitioner Northwest Orient Airlines, Inc. (NORTHWEST), a corporation organized under the
laws of the State of Minnesota, U.S.A., sought to enforce in the RTC- Manila, a judgment rendered in its
favor by a Japanese court against private respondent C.F. Sharp & Company, Inc., (SHARP), a
corporation incorporated under Philippine laws.

Northwest Airlines and Sharp, through its Japan branch, entered into an International Passenger Sales
Agency Agreement, whereby the former authorized the latter to sell its air transportation tickets. Unable
to remit the proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said
agreement, plaintiff sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of the
ticket sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo District Court of
Japan against defendant at its office at the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku,
Yokohoma, Kanagawa Prefecture. The attempt to serve the summons was unsuccessful because the bailiff
was advised by a person in the office that Mr. Dinozo, the person believed to be authorized to receive
court processes was in Manila and would be back on April 24, 1980.

On April 24, 1980, bailiff returned to the defendant’s office to serve the summons. Mr. Dinozo refused to
accept the same claiming that he was no longer an employee of the defendant.

After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to
have the complaint and the writs of summons served at the head office of the defendant in Manila. On
July 11, 1980, the Director of the Tokyo District Court requested the Supreme Court of Japan to serve the
summons through diplomatic channels upon the defendant’s head office in Manila.
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of summons (p.
276, Records). Despite receipt of the same, defendant failed to appear at the scheduled hearing. Thus, the
Tokyo Court proceeded to hear the plaintiff’s complaint and on [January 29, 1981], rendered judgment
ordering the defendant to pay the plaintiff the sum of 83,158,195 Yen and damages for delay at the rate of
6% per annum from August 28, 1980 up to and until payment is completed (pp. 12-14, Records).

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

Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for enforcement of
the judgment was filed by plaintiff before the Regional Trial Court of Manila Branch 54.

defendant filed its answer averring that the judgment of the Japanese Court: (1) the foreign judgment
sought to be enforced is null and void for want of jurisdiction and (2) the said judgment is contrary to
Philippine law and public policy and rendered without due process of law.

In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance upon
Boudard vs. Tait wherein it was held that “the process of the court has no extraterritorial effect and no
jurisdiction is acquired over the person of the defendant by serving him beyond the boundaries of the
state.” To support its position, the Court of Appeals further stated:
In an action strictly in personam, such as the instant case, personal service of summons within the forum
is required for the court to acquire jurisdiction over the defendant (Magdalena Estate Inc. vs. Nieto, 125
SCRA 230). To confer jurisdiction on the court, personal or substituted service of summons on the
defendant not extraterritorial service is necessary.

ISSUE: whether a Japanese court can acquire jurisdiction over a Philippine corporation doing business in
Japan by serving summons through diplomatic channels on the Philippine corporation at its principal
office in Manila after prior attempts to serve summons in Japan had failed.


A foreign judgment is presumed to be valid and binding in the country from which it comes, until the
contrary is shown. It is also proper to presume the regularity of the proceedings and the giving of due
notice therein. 6
The judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.(See Sec. 50, R 39)

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

It is settled that matters of remedy and procedure such as those relating to the service of process upon a
defendant are governed by the lex fori or the internal law of the forum. 8 In this case, it is the procedural
law of Japan where the judgment was rendered that determines the validity of the extraterritorial service
of process on SHARP. As to what this law is is a question of fact, not of law.
It was then incumbent upon SHARP to present evidence as to what that Japanese procedural law is and to
show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly, the presumption
of validity and regularity of the service of summons and the decision thereafter rendered by the Japanese
court must stand.
Alternatively in the light of the absence of proof regarding Japanese law, the presumption of identity or
similarity or the so-called processual presumption may be invoked. Applying it, the Japanese law on the
matter is presumed to be similar with the Philippine law on service of summons on a private foreign
corporation doing business in the Philippines.

Section 14, Rule 14 of the Rules of Court provides that if the defendant is a foreign corporation doing
business in the Philippines, service may be made: (1) on its resident agent designated in accordance with
law for that purpose, or, (2) if there is no such resident agent, on the government official designated by
law to that effect; or (3) on any of its officers or agents within the Philippines.

Where the corporation has no such agent, service shall be made on the government official designated by
law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance company; (b) the
Superintendent of Banks, in the case of a foreign banking corporation; and (c) the Securities and
Exchange Commission, in the case of other foreign corporations duly licensed to do business in the

Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive court
processes in Japan.
While it may be true that service could have been made upon any of the officers or agents of SHARP at
its three other branches in Japan, the availability of such a recourse would not preclude service upon the
proper government official, as stated above.
As found by the respondent court, two attempts at service were made at SHARP’s Yokohama branch.
Both were unsuccessful.
The Tokyo District Court requested the Supreme Court of Japan to cause the delivery of the summons and
other legal documents to the Philippines. Acting on that request, the Supreme Court of Japan sent the
summons together with the other legal documents to the Ministry of Foreign Affairs of Japan which, in
turn, forwarded the same to the Japanese Embassy in Manila . Thereafter, the court processes were
delivered to the Ministry (now Department) of Foreign Affairs of the Philippines, then to the Executive
Judge of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith ordered Deputy
Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila. This service is
equivalent to service on the proper government official under Section 14, Rule 14 of the Rules of Court,
in relation to Section 128 of the Corporation Code. Hence, SHARP’s contention that such manner of
service is not valid under Philippine laws holds no water.

We find NORTHWEST’s claim for attorney’s fees, litigation expenses, and exemplary damages to be
without merit. We find no evidence that would justify an award for attorney’s fees and litigation expenses
under Article 2208 of the Civil Code of the Philippines. Nor is an award for exemplary damages

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST’s claims for attorneys fees, litigation expenses, and exemplary
damages but REVERSED insofar as in sustained the trial court’s dismissal of NORTHWEST’s complaint
in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and another in its stead is
hereby rendered ORDERING private respondent C.F. SHARP L COMPANY, INC. to pay to
NORTHWEST the amounts adjudged in the foreign judgment subject of said case, with interest thereon at
the legal rate from the filing of the complaint therein until the said foreign judgment is fully satisfied

Saudi Arabian Airlines v. CA Digest


Saudi Arabian Airlines (SAUDIA) hired Milagros Morada as a Flight Attendant for its airlines based in
Jeddah, Saudi Arabia. While on a lay-over in Jakarta, Morada went to a disco with fellow crew members
Thamer & Allah, 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. In which Allah left on some pretext.
Thamer attempted to rape Morada but she was rescued by hotel personnel when they heard her cries for
help. Indonesian police came and arrested Thamer and Allah, the latter as an accomplice.
Morada refused to cooperate when SAUDIA’s Legal Officer and its base manager tried to negotiate the
immediate release of the detained crew members with Jakarta police.Through the intercession of Saudi
Arabian government, Thamer and Allah were deported and, eventually, again put in service by SAUDIA.
But Morada was transferred to Manila. One year and a half year later, Morada was again ordered to see
SAUDIA’s Chief Legal Officer. Instead, she was brought to a Saudi court where she was asked to sign a
blank document, which turned out to be a notice to her to appear in court. Monada returned to Manila.
The next time she was escorted by SAUDIA’s legal officer to court, the judge rendered a decision against
her sentencing her to five months imprisonment and to 286 lashes. Apparently, she was tried by the court
which found her 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.After denial
by SAUDIA, Morada sought help from Philippine Embassy during the appeal. Prince of Makkah
dismissed the case against her. SAUDIA fired her without notice. Morada filed a complaint for damages
against SAUDIA, with the RTC of QC. SAUDIA filed Omnibus Motion to Dismiss which raised the
ground that the court has no jurisdiction, among others which was denied

ISSUE: Whether RTC of QC has jurisdiction to hear and try the case

HELD: YES. The RTC of QC has jurisdiction and Philippine law should govern.

Its jurisdiction has basis on Sec. 1 of RA 7691 and Rules of Court on venue. Pragmatic considerations,
including the convenience of the parties, also weigh heavily in favor of the RTC QC assuming
jurisdiction. Paramount is the private interest of the litigant. Weighing the relative claims of the parties,
the court a quo found it best to hear the case in the Philippines. Had it refused to take cognizance of the
case, it would be forcing Morada to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia
where she no longer maintains substantial connections. That would have caused a fundamental unfairness
to her.

By filing a complaint, Morada has voluntarily submitted to the jurisdiction of the court. By filing several
motions and praying for reliefs (such as dismissal), SAUDIA has effectively submitted to the trial court’s

Bienvenido Cadalin vs POEA

GENERAL RULE: A foreign procedural law will not be applied in the forum.

EXCEPTION: When the country of the forum has a "borrowing statute," the country of the forum will
apply the foreign statute of limitations.

EXCEPTION TO THE EXCEPTION: The court of the forum will not enforce any foreign claim
obnoxious to the forum's public policy.


Cadalin et al. are overseas contract workers recruited by respondent-appellant AIBC for its accredited
foreign principal, Brown & Root, on various dates from 1975 to 1983. As such, they were all deployed at
various projects in several countries in the Middle East as well as in Southeast Asia, in Indonesia and
Malaysia. The case arose when their overseas employment contracts were terminated even before their
expiration. Under Bahrain law, where some of the complainants were deployed, the prescriptive period
for claims arising out of a contract of employment is one year.


Whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a
Philippine law on prescription that shall be the governing law
As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as
service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by teh
laws of the forum. This is true even if the action is based upon a foreign substantive law.

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed
either as procedural or substantive, depending on the characterization given such a law.
However, the characterization of a statute into a procedural or substantive law becomes irrelevant when
the country of the forum has a “borrowing statute.” Said statute has the practical effect of treating the
foreign statute of limitation as one of substance. A “borrowing statute” directs the state of the forum to
apply the foreign statute of limitations to the pending claims based on a foreign law. While there are
several kinds of “borrowing statutes,” one form provides that an action barred by the laws of the place
where it accrued, will not be enforced in the forum even though the local statute has not run against it.
Section 48 of our Code of Civil Procedure is of this kind. Said Section provides:

“If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred
in the Philippine Islands.”
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex propio vigore insofar as
it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claims obnoxious to the forum’s public policy. To
enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in
question would contravene the public policy on the protection to labor.