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CONFLICT OF LAWS Comity is also the doctrine under which the contracts made,
[PRIVATE INTERNATIONAL LAW]
CHAPTER I
INTRODUCTION
REASONS WHY CONFLICT OF LAWS EVOLVED
General Rule: The law of one country has no effect of its own
force beyond the limits of its sovereignty from which authority is
derived, and that the obligation of every law is confined to the
state in which it is established and it can attached only to those
who are citizens and others who are within its territorial
jurisdiction.
CONFLICT OF LAWS DEFINED.
 Black’s Law Dictionary definition:
“Inconsistency or difference between the laws of different
states countries, arising in 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, either where it varies from the domestic law, or
where the domestic law is silent or not exclusively applicable
to the case in point.”
 American jurisprudence definition:
“Conflict of laws 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, conflict 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 rights of persons
within the territory and dominion of one state or nations, by
reason of acts, private or public, done within the dominion
of another, and which is based on the broad principle that
one country will respect and give effect to the laws of
another so far as can be done consistently with its own
interest.”
OTHER TERMS DEFINED.
 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 is
inevitable since social and economic affairs of individuals
and associations are rarely confined to the geographic limits
of their birth or conception.
 Comity – The recognition which one state allows within its
territory to the legislative, executive, or judicial acts of
another state, having due regard both to international duty
and convenience and to the rights of its own citizens or other
persons who are under the protection of its own laws.
Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law
rights acquired, and obligations incurred in one state or
country, in accordance with its laws, are recognized and
enforced by the courts of another state or country.
 Lex situs – The applicable law regarding the acquisition,
transfer and devolution of the title to property is the law
where the property is located. A conflict of law situation only
arises when:
1. There is a dispute over the title of ownership of an
immovable, such that the capacity to take or transfer
immovable, the formalities of conveyance, the essential
validity and effect of the transfer, or the interpretation
and effect of conveyance, are to be determined; and
2. A foreign law on land ownership and its conveyance is
asserted to conflict with a domestic law on the same
matters.
 Lex fori – The law of the place where the act was done.
 Lex loci actus – The law of the place where the contract was
done.
 Lex loci celebrationis – The law of the place where a contract
is entered into.
 Lex loci contractus – The proper law applicable in deciding
upon the rights and liabilities of the contracting parties. 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.
 Lex loci delictus – The law of the place where the offense or
wrong took place.
 Lex loci domicilii – The law of the place of domicile of a
person.
 Lex loci rei sitae; lex situs – The law of the place where a
thing is situtated.
 Kilberg doctrine – 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
limitations on damages for wrongful act because such rule is
procedural and hence the law of the forum governs on the
issue.
 Center of Gravity doctrine – Also known as 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.
CONFLICT OF LAWS ESSENTIALLY INVOLVES TWO REMEDIES.
 Two remedies:
1. The enforcement of rights that accrued completely or
partly in a foreign country in the form of action filed in
Philippine courts by a citizen or an aggrieved person;
2. The recognition and enforcement of foreign judgment,
in the form of a petition or complaint to enforce such
foreign judgment filed in Philippine courts by the
prevailing party.
 GENERAL RULE: The rights acquired under a foreign statute
may be enforced elsewhere in comity, if not against public
policy. The law of the country where the right was acquired
or the liability was incurred where the action is filed with
govern as to all that pertain to the remedy.

 The fact that the statute is silent, obscure or insufficient with
respect to a question before the court will not justify the
latter from declining to render judgment thereon.
 When the law does not provide a rule or norm for the court
to follow in deciding a question submitted to it, but leaves it
to the court to determine it in one way or to another to his
discretion, the judge is not absolutely free to act at his
pleasure or will or arbitrarily. He must decide the question,
not in accordance with law for there is none, but in
conformity with justice, reason and equity, in view of the
circumstances of the case.
 Philippine Courts apply Philippine laws or jurisprudence;
they do not automatically apply foreign laws and comity
prescribe their application, when they are not contrary to
prohibitive laws or public policies and when such foreign
laws are properly pleaded and proved. Foreign laws are
independent of, and are not superior than, Philippine laws,
and they cannot be forced upon Philippine courts, except by
consent, express or implied.
 Recognition or enforcement of foreign judgment is actually
an extra-territorial application in our country of the foreign
law upon which the foreign judgment is based, to which
Philippine courts may consent, except when such law
contravenes Philippine law or the public policy of the
country. Moreover, by filing the petition for enforcement of
the foreign judgment, which Section of 48 of the ROC so
authorizes, the prevailing party voluntarily submits itself to
the jurisdiction of Philippine courts and to the power or
authority of the latter to review the foreign judgment by
either ordering its enforcement or rejecting enforcement by
evidence of want of jurisdiction, want of notice to the party,
fraud, collusion, and clear mistake of law or fact.
CONFLICT OF LAWS PRESUPPOSES CONFLICT.
 Conflict of laws assumes that there is a conflict between a
local law and a foreign law involving a foreign element or
elements, which requires a determination of which law
should apply.
 Where there is no conflict or where the conflict is merely
apparent than real or where the case involves no foreign
element, then there is no conflict of laws situation, even if
there is a foreign element involved. The court will decide the
case by applying local or municipal laws.
 Where the case involves no foreign element and the local
laws applicable on the matter are conflicting, courts resolve
them:
1. By reconciling the two or more laws, if at all possible; or
2. If they cannot be reconciled, by considering one law as
having been impliedly repealed by the later statute; or
3. By excepting one law from the operation of the other,
and on the basis thereof, decide the case.
 Conflict of laws is, in reality, a municipal or national law of
the country where the case is filed, for the forum court
decides the case on the basis of it laws or, if foreign law is
applied, it is only because the local or municipal law so
requires. If the provision of a treaty or international
convention are applied, it is because the country’s
adherence thereto makes them part of the national law with
the force and effect of a law.
Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law
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FOREIGN ELEMENT IN CONFLICT OF LAWS SITUATION.
 The presence of foreign element in a case determines the
existence of a conflict of laws situation. Where there is no
foreign element, no conflict of laws exists.
Saudi Arabian Airlines v. Court of Appeals
297 SCRA 469, 1998
FACTS:
The defendant Saudi Arabian Airlines hired the Filipina flight
attendant on January 21, 1988.
On April 27, 1990, 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.
An attempted rape occurred by Thamer to the 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.
On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors requested her to
see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah,
Saudi Arabia. Mr. Meniewy brought her to the police station
where the police took her passport and questioned her about the
Jakarta incident. Miniewy simply stood by as the police put
pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police
return her passport and allowed her to catch the afternoon flight
out of Jeddah.
One year and a half later or on lune 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to
Manila, plaintiff was not allowed to board the plane and instead
ordered to take a later flight to Jeddah to see Mr. Miniewy.
When she did, a certain Khalid of the SAUDIA office brought her
to a Saudi court where she was asked to sign a document written
in Arabic. They told her that this was necessary to close the case
against Thamer and Allah. As it turned out, plaintiff signed a
notice to her to appear before the court on June 27, 1993.
Plaintiff then returned to Manila.
On July 3, 1993 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.

Facing conviction, private respondent sought the help of her
employer, petitioner SAUDIA. Unfortunately, she was denied any
assistance. She then asked the Philippine Embassy in Jeddah to
help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while
Thamer and Allah continued to serve in the international
flights.
Because she was wrongfully convicted, the Prince of Makkah
dismissed the case against her and allowed her to leave Saudi
Arabia. Shortly before her return to Manila, she was terminated
from the service by SAUDIA, without her being informed of the
cause.
Respondent's Action to File the Case in the Philippines
On November 23, 1993, Morada filed a Complaint for damages
against SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country
manager.
The trial court issued an Order dated August 29, 1994 denying
the Motion to Dismiss Amended Complaint filed by Saudia.
Respondent Judge subsequently issued another Order dated
February 2, 1995, denying SAUDIA's Motion for Reconsideration.
Consequently, on February 20, 1995, SAUDIA filed its Petition for
Certiorari and Prohibition with Prayer for Issuance of Writ of
Preliminary Injunction and/or Temporary Restraining Order with
the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with
Temporary Restraining Order dated February 23, 1995,
prohibiting the respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.
In another Resolution promulgated on September 27, 1995, now
assailed, the appellate court denied SAUDIA's Petition for the
Issuance of a Writ of Preliminary Injunction dated February 18,
1995.
However, during the pendency of the instant Petition,
respondent Court of Appeals rendered the Decision dated April
10, 1996, now also assailed. It ruled that the Philippines is an
appropriate forum considering that the Amended Complaint's
basis for recovery of damages is Article 21 of the Civil Code, and
thus, clearly within the jurisdiction of respondent Court. It further
held that certiorari is not the proper remedy in a denial of a
Motion to Dismiss, inasmuch as the petitioner should have
proceeded to trial, and in case of an adverse ruling, find recourse
in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for
Review with Prayer for Temporary Restraining Order dated April
30, 1996, given due course by this Court. After both parties
submitted their Memoranda, the instant case is now deemed
submitted for decision.
Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law
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ISSUES:
1. Whether the Respondent Appellate Court erred in holding
that the Regional Trial Court of Quezon City has jurisdiction
to hear and try the civil case?
2.
b) Whether the Respondent Appellate Court erred in ruling
that in this case Philippine law should govern?
HELD:
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.
Several theories have been propounded in order to identify the
legal system that should ultimately control. Although ideally, all
choice-of-law theories should intrinsically advance both notions
of justice and predictability, they do not always do so. The forum
is then faced with the problem of deciding which of these two
important values should be stressed.
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."
The purpose of "characterization" is to enable the forum to select
the proper law.
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. Note that one or more circumstances may be
present to serve as the possible test for the determination of the
applicable law. These "test factors" or "points of contact" or
"connecting factors" could be any of the following:
1. the nationality of a person, his domicile, his residence, his
place of sojourn, or his origin;
2. the seat of a legal or juridical person, such as a corporation;
3. the situs of a thing, that is, the place where a thing is, or is
deemed to be situated. In particular, the lex situsis decisive
when real rights are involved;
4. 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. The lex loci
actus is particularly important in contracts and torts;
5. the place where an act is intended to come into effect, e.g.,
the place of performance of contractual duties, or the place
where a power of attorney is to be exercised;
6. the intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;
7. the place where judicial or administrative proceedings are
instituted or done. The lex fori — the law of the forum — is
particularly important because, as we have seen earlier,

matters of "procedure" not going to the substance of the
claim involved are governed by it; and because the lex fori
applies whenever the content of the otherwise applicable
foreign law is excluded from application in a given case for
the reason that it falls under one of the exceptions to the
applications of foreign law; and
8. the flag of a ship, which in many cases is decisive of
practically all legal relationships of the ship and of its master
or owner as such. It also covers contractual relationships
particularly contracts of affreightment. (Emphasis ours).
Lastly, no error could be imputed to the respondent appellate
court in upholding the trial court's denial of defendant's (herein
petitioner's) motion to dismiss the case. Not only was jurisdiction
in order and venue properly laid, but appeal after trial was
obviously available, and expeditious trial itself indicated by the
nature of the case at hand. Indubitably, the Philippines is the
state intimately concerned with the ultimate outcome of the
case below, not just for the benefit of all the litigants, but also
for the vindication of the country's system of law and justice in a
transnational setting. With these guidelines in mind, the trial
court must proceed to try and adjudge the case in the light of
relevant Philippine law, with due consideration of the foreign
element or elements involved. Nothing said herein, of course,
should be construed as prejudging the results of the case in any
manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED. Civil Case No. Q-93-18394 entitled "Milagros P.
Morada vs. Saudi Arabia Airlines" is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further
proceedings.
SO ORDERED.
THREE WAYS OF DEALING WITH CONFLICT OF LAWS CASES.
 The three ways of dealing with cases involving foreign
elements assume that the court of the forum may acquire
jurisdiction over the case, over the subject matter, the
parties, and the res, for it has jurisdiction to assume or not
to assume.
 Three ways:
1. The court might refuse to hear the cases and dismiss it;
— In accordance to the principle of forum non
conveniens, the court may be more convenient to
have the case tried in another forum, where the
more essential elements thereof exist and where it
is more convenient for the parties to litigate
therein.
2. The court might decide the case by its own local law;
and
— The Philippines is competent “to take hold of any
judicial matter it sees fit by making its courts and
agencies assume jurisdiction over all kinds of cases
brought before them” in the exercise of its
sovereign operative.
3. Special rules might be devised to deal with the case in a
manner designed to promote the smooth function of
Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law
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the international and interstate systems and to do
justice to the parties.
— The court assumes jurisdiction and seizes the
occasion as the opportunity to formulate or refine
rules of conflict of laws, taking into account not
only the relevant local laws buy also general
principles and polices on the matter.
RIGHTS OF FOREIGNER AGAINST THAT OF CITIZEN.
Salvacion v. Central Bank
278 SCRA 27, 1997
FACTS:
Greg Bartelli, an American tourist, was arrested for committing
four counts of rape and serious illegal detention against Karen
Salvacion. Police recovered from him several dollar checks and a
dollar account in the China Banking Corp. He was, however, able
to escape from prison. In a civil case filed against him, the trial
court awarded Salvacion moral, exemplary and attorney’s fees
amounting to almost P1,000,000.00.
Salvacion tried to execute the judgment on the dollar deposit of
Bartelli with the China Banking Corp. but the latter refused
arguing that Section 11 of Central Bank Circular No. 960 exempts
foreign currency deposits from attachment, garnishment, or any
other order or process of any court, legislative body, government
agency or any administrative body whatsoever. Salvacion
therefore filed this action for declaratory relief in the Supreme
Court.
ISSUES:
Should Section 113 of Central Bank Circular No. 960 and Section
8 of Republic Act No. 6426, as amended by PD 1246, otherwise
known as the Foreign Currency Deposit Act be made applicable
to a foreign transient?
HELD:
NO. The provisions of Section 113 of Central Bank Circular No.
960 and PD No. 1246, insofar as it amends Section 8 of Republic
Act No. 6426, are hereby held to be INAPPLICABLE to this case
because of its peculiar circumstances. Respondents are hereby
required to comply with the writ of execution issued in the civil
case and to release to petitioners the dollar deposit of Bartelli in
such amount as would satisfy the judgment.
Supreme Court ruled that the questioned law makes futile the
favorable judgment and award of damages that Salvacion and
her parents fully deserve. It then proceeded to show that the
economic basis for the enactment of RA No. 6426 is not anymore
present; and even if it still exists, the questioned law still denies
those entitled to due process of law for being unreasonable and
oppressive. The intention of the law may be good when enacted.
The law failed to anticipate the iniquitous effects producing
outright injustice and inequality such as the case before us.
The SC adopted the comment of the Solicitor General who
argued that the Offshore Banking System and the Foreign

Currency Deposit System were designed to draw deposits from
foreign lenders and investors and, subsequently, to give the
latter protection. However, the foreign currency deposit made
by a transient or a tourist is not the kind of deposit encouraged
by PD Nos. 1034 and 1035 and given incentives and protection
by said laws because such depositor stays only for a few days in
the country and, therefore, will maintain his deposit in the bank
only for a short time. Considering that Bartelli is just a tourist or
a transient, he is not entitled to the protection of Section 113 of
Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.
Further, the SC said: “In fine, the application of the law depends
on the extent of its justice. Eventually, if we rule that the
questioned Section 113 of Central Bank Circular No. 960 which
exempts from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any
administrative body whatsoever, is applicable to a foreign
transient, injustice would result especially to a citizen aggrieved
by a foreign guest like accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides that “in case of
doubt in the interpretation or application of laws, it is presumed
that the lawmaking body intended right and justice to prevail.”
___________
NOTES: On February 4, 1989, Greg Bartelli y Northcott, an
American tourist, coaxed and lured petitioner Karen Salvacion,
then 12 years old to go with him to his apartment. Therein, Greg
Bartelli detained Karen Salvacion for four days, or up to February
7, 1989 and was able to rape the child once on February 4, and
three times each day on February 5, 6, and 7, 1989. On February
7, 1989, after policemen and people living nearby, rescued
Karen, Greg Bartelli was arrested and detained at the Makati
Municipal Jail. The policemen recovered from Bartelli the
following items: 1.) Dollar Check No. 368, Control No.
021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book
No. 104-108758-8 (Peso Acct.); 3.) Dollar Account — China
Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877; 5.)
Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.)
Stuffed Doll (Teddy Bear) used in seducing the complainant.
Chapter II
CHOICE OF LAW
GENERALLY.
 As a rule, the choice is between a substantive foreign law
and the substantive local law of the country where the case
is filed, as it is settled that the procedural steps and
requirements of the law of the latter, relative to the filing
and enforcement of the cause of action are followed.
FOREIGN LAW HAS NO EXTRATERRITORIAL EFFECT;
EXCEPTIONS.
 As an admitted international principle, a nation possesses
and exercises within its own territory an absolute and
exclusive jurisdiction, and that any exception to this right
must be traced to the consent of the nation.
Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law
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 The consent to the extraterritorial application of a foreign
law in our country may be expressly given, such as in the
form of local law adopting a foreign law.
 The consent may also be by the Philippines’ entering into a
treaty or adhering to an international convention.
 The consent may also be implied, as in the observance of the
principles of comity.
CHARACTERIZATION AND POINTS OF CONTACTS OR
CONNECTING FACTORS.
 Characterization or the Doctrine of Qualification:
 It is the process wherein, before a choice of law is made,
it is necessary to determine what category a certain set
of facts or rules fall.
 It is the process of deciding whether or not the facts
relate to the kind of question specified in a conflicts
rule.
 PURPOSE: to enable the court of the forum to select the
proper law.
 The starting point of analysis is a factual situation, event, or
operative fact. An essential element of conflict of rules is the
indication of a “test” or “connecting factor” or “point of
contact” which could be any of the following:
1. The nationality of a person, his domicile, his residence,
his place of sojourn, or his origin;
2. The seat of a legal or juridical person,
3. The situs of a thing, that is, the place where a thing is or
is deemed to be situated.
4. The place where an act was been done, the locus actus.
The lex loci actus is particularly important in contracts
and torts;
5. The place where an act is intended to come into effect;
6. The intention of the contracting parties as to the law
that should govern their agreement, the lex loci
intentionis;
7. The place where judicial or administrative proceedings
are instituted or done. 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; and
8. The flag of the ship, which in many cases is decisive of
practically all legal relationships of the ship and of the
master or owner of such.
CHOICE OF APPLICABLE LAW, GENERALLY.
 The choice of law seeks 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.
 U.S. Restatement of the Law, Second, Conflict of Laws 2d
suggests the following principles in determining the
applicable law:

§6. Choice-of-Law Principles.
(1) A court, subject to constitutional restrictions, will follow
a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to
the choice of law of the applicable rule of law include:
(a) The needs the interstate and international systems,
(b) The relevant policies of the forum,
(c) The relevant policies of the other interested states
and the relative interests of those states in the
determination of the particular issue,
(d) The protection of justified expectations,
(e) The basic policies underlying the particular field of
law,
(f) Certainty, predictability, and uniformity of result,
and
(g) Case in the determination and application of the
law to be applied.
 The parties may stipulate as to what law should govern in
case of dispute arising from their contract, in the absence of
prohibitive law or public policy providing otherwise.
 Section 187 of the U.S. Restatement of the Law, Second,
Conflict of Laws 2d which may have persuasive effect in our
country, reads:
§187. Law of the State Chosen by the Parties.
(1) The law of the State chose by the parties to govern their
contractual rights and duties will be applied if the
particular issue is one which the parties could have
resolved by an explicit provision in their agreement
directed to that issue.
(2) The law of the state chosen by the parties to govern
their contractual rights and duties will be applied, even
if the particular issue is one which the parties could not
have resolved by an explicit provision in their
agreement directed to that issue, unless either:
(a) The chosen state has no substantial relationship to
the parties or the transaction and there is no other
reasonable basis for the parties’ choice, or
(b) Application of the law of the chosen state would be
contrary to a fundamental policy of the state which
has materially greater interest that the chosen
state in the determination of a particular issue and
which, under the rule of §188, would be the state
of the applicable law in the absence of an effective
choice of law by the parties.
(3) In the absence of a contrary indication of intention, the
reference is to the local law of the state of the chosen
law.
 Two principles for determining personal law applicable to
the person:
1. Domiciliary rule — which makes the domicile of the
person as the determining factor (followed by Anglo-
American countries).
2. Nationality rule — which makes the citizenship or
nationality of the person as the basis for determining his
personal law (followed by the Philippines).
 The provision adopts nationality or citizenship as
the basis for determining the personal laws of an
individual, which are Philippine laws relating to
Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law
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family rights and duties, to the status, condition
and legal capacity of persons, and which follow him
wherever he may be, in the Philippines or abroad.
 Article 16 of the New Civil Code embodies the doctrine of lex
loci or lex loci rei sitae. It directs that where the property is
situated in the Philippines, then Philippine laws apply to the
given case, but where the property is situated in a foreign
country, then the latter’s law applies.
 The first paragraph of Article 17 of the New Civil Code
embodies the rule of lex loci contractus or the law of the
place of execution of the contract, wills and other public
documents and governs the forms and solemnities thereof.
 Where a party to a contract executed in a country
where by its law he has the capacity to enter into such
contract but does not possess such capacity in the place
of performance thereof, it has been held that he cannot
plead such lack of capacity to defeat the contract.
 Where the Philippine law is silent on any given case,
Philippine courts are not justified to extend the force and
effect of foreign law. To do so would be to incorporate into
our statutes the foreign law by judicial ruling which is
beyond the authority of the courts do. Thus, no foreign law
may or should interfere with the operation and application
of Philippine laws. There are however exceptions to the rule:
1. One is when the Philippine legislature, by law, has given
its consent to the extension of a specific law to the
Philippines.
2. When Congress enacts a law adopting or copying a
specific foreign statute.
3. Borrowing statute — a statue which directs the court of
the forum to apply the foreign statute to the pending
claims based on a foreign law.
AGREEMENT BY PARTIES; IT CANNOT COVER JURISDICTION.
 The parties to the contract may stipulate as to the applicable
foreign law to govern their dispute arising from the contract.
 As a rule, what the parties have stipulated are binding and
preclude them from applying another law or instituting the
action in a place other than as stipulated.
 The choice of law must bear some relationship to the parties
or their transaction, otherwise the agreement as to the law
chosen is invalid or it will not be respected in the forum
court.
 The parties MAY STIPULATE in their agreement as to the
APPLICABLE LAW and VENUE OF ACTION, in the event of
dispute and litigation arising therefrom, and if there are
some minimum contacts with the law of the chosen forum,
Philippine courts where the action is filed may refuse to
assume jurisdiction and dismiss the action without prejudice
to filing the same in the chosen forum.
Hongkong and Shanghai Banking Corp. v Sheman
176 SCRA 331, 338; 1989
FACTS:
It appears that sometime in 1981, Eastern Book Supply Service
PTE, Ltd. (COMPANY), a company incorporated in Singapore
applied with and was granted by HSBC Singapore branch an

overdraft facility in the maximum amount of Singapore dollars
200,000 with interest at 3% over HSBC prime rate, payable
monthly, on amounts due under said overdraft facility.
As a security for the repayment by the COMPANY of sums
advanced by HSBC to it through the aforesaid overdraft facility,
in 1982, both private respondents and a certain Lowe, all of
whom were directors of the COMPANY at such time, executed a
Joint and Several Guarantee in favor of HSBC whereby private
respondents and Lowe agreed to pay, jointly and severally, on
demand all sums owed by the COMPANY to petitioner BANK
under the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising
hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts of Singapore shall
have jurisdiction over all disputes arising under this guarantee. …
The COMPANY failed to pay its obligation. Thus, HSBC demanded
payment and inasmuch as the private respondents still failed to
pay, HSBC filed A complaint for collection of a sum of money
against private respondents Sherman and Reloj before RTC of
Quezon City.
Private respondents filed an MTD on the ground of lack of
jurisdiction over the subject matter. The trial court denied the
motion. They then filed before the respondent IAC a petition for
prohibition with preliminary injunction and/or prayer for a
restraining order. The IAC rendered a decision enjoining the RTC
Quezon City from taking further cognizance of the case and to
dismiss the same for filing with the proper court of Singapore
which is the proper forum. MR denied, hence this petition.
ISSUES:
Do Philippine courts have jurisdiction over the suit, vis-a-vis the
Guarantee stipulation regarding jurisdiction?
HELD:
YES. One basic principle underlies all rules of jurisdiction in
International Law: a State does not have jurisdiction in the
absence of some reasonable basis for exercising it, whether the
proceedings are in rem quasi in rem or in personam. To be
reasonable, the jurisdiction must be based on some minimum
contacts that will not offend traditional notions of fair play and
substantial justice. The defense of private respondents that the
complaint should have been filed in Singapore is based merely
on technicality. They did not even claim, much less prove, that
the filing of the action here will cause them any unnecessary
trouble, damage, or expense. On the other hand, there is no
showing that petitioner BANK filed the action here just to harass
private respondents.
**
In the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., where
the stipulation was “[i]n case of litigation, jurisdiction shall be
vested in the Court of Davao City.” We held:
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Anent the claim that Davao City had been stipulated as the
venue, suffice it to say that a stipulation as to venue does not
preclude the filing of suits in the residence of plaintiff or
defendant under Section 2 (b), Rule 4, ROC, in the absence of
qualifying or restrictive words in the agreement which would
indicate that the place named is the only venue agreed upon by
the parties.
Applying the foregoing to the case at bar, the parties did not
thereby stipulate that only the courts of Singapore, to the
exclusion of all the rest, has jurisdiction. Neither did the clause in
question operate to divest Philippine courts of jurisdiction. In
International Law, jurisdiction is often defined as the light of a
State to exercise authority over persons and things within its
boundaries subject to certain exceptions. Thus, a State does not
assume jurisdiction over travelling sovereigns, ambassadors and
diplomatic representatives of other States, and foreign military
units stationed in or marching through State territory with the
permission of the latter’s authorities. This authority, which finds
its source in the concept of sovereignty, is exclusive within and
throughout the domain of the State. A State is competent to take
hold of any judicial matter it sees fit by making its courts and
agencies assume jurisdiction over all kinds of cases brought
before them
NOTES: The respondent IAC likewise ruled that: In a conflict
problem, a court will simply refuse to entertain the case if it is
not authorized by law to exercise jurisdiction. And even if it is so
authorized, it may still refuse to entertain the case by applying
the principle of forum non conveniens.
However, whether a suit should be entertained or dismissed on
the basis of the principle of forum non conveniens depends
largely upon the facts of the particular case and is addressed to
the sound discretion of the trial court. Thus, the IAC should not
have relied on such principle.
WHERE THERE IS NO AGREEMENT AS TO APPLICABLE LAW.
 In the absence of effective choice of law by the parties,
Section 188 of the U.S. Restatement of Law, Second, Conflict
of Laws 2d may be of persuasive effect. It reads:
§188. Law Governing in Absence of Effective Choice by the
Parties:
(1) The rights and duties of the parties with respect to an
issue in contract are determined by the local law of the
state which, with respect to that issue, has the most
significant relationship to the transaction and the
parties under the principle stated in §6.
(2) In the absence of an effective choice of law by the
parties, the contacts to be taken into account in
applying the principles of $6 to determine the law
applicable to an issue include:
(a) The place of contracting,
(b) The place of negotiation of the contract;
(c) The place of performance;
(d) The location of the subject matter of the contract;
and

(e) The domicile, residence, nationality, place of
incorporation and place of business of the parties.
(3) If the place of negotiating the contract and the place of
performance are in the same state, the local law of this
state will usually be applied, exception as otherwise
provided in $189–203.
APPLICABLE FOREIGN LAW DETERMINED BY RULES OF
CONFLICT OF LAWS.
 The principles often applied in determining what law should
govern the resolution by the court of a conflict-of-law case
filed in the forum include:
a. Substance versus procedural principle
 General rule, all matters of procedure are governed
by the law of the forum, where the case is filed,
while matters of substance are governed by the law
of the country where the cause of action arose.
 The rule of characterization does not apply where
the country in which the case is filed has a
borrowing law, as in our country, which states that
if the cause of action in the country where the
cause arose has prescribed, it will also be
considered as having prescribed in our country
even when local law has a longer period of
prescription.
b. Center of gravity doctrine (synonymous with the
most significant relationship theory; also known
as grouping of contacts principle)
 Choice of law problems in conflict of law 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.
 The most significant rule or the grouping of
contacts principle is generally applied when
the acts or contacts or series of acts or
contracts occur in more than two countries,
not one of which is of sufficient significance to
determine the law applicable or the place
where the action is to be filed, so that there is
need to group them together and from which
determination is done.
 In applying the 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:
1. The place where the injury occurred;
2. The place where the conduct causing
the injury occurred;
3. The domicile, residence, nationality,
place of incorporation and place of
business of the parties; and
4. The place where the relationship, if
any, between the parties is centered.
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c. Renvoi
 A doctrine under which court in resorting to foreign law
adopts rules of foreign country as to conflict of law,
which may rule in turn refer to back to the law of the
forum.
d. Lex fori
 The law of the forum, or court; that is, the positive law
of the country or jurisdiction of whose judicial system
the court where the suit is brought or remedy sought in
an integral part. The lex loci, or law of jurisdiction in
which relief is sought controls to all matters pertaining
to remedial as distinguished from substantial rights.
e. German rule of elective concurrence
 Under this theory, the place of tort is whenever an
essential part of the tort has been committed. And the
injured person may choose to sue in either of the places,
which to him is most advantageous to his claim.
f. The State interest analysis
 The court takes into account the interest of the state in
issue, not only as a sovereign in a set of facts or any
entity but as a repository of justice.
g. Caver’s principle
 Where 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. The absence of conflict
of laws rule in the forum does not justify the court from
declining to render judgment.
 The court faced with conflict of laws case, has to decide
the same by applying:
 First, the written laws;
 Second, the customs of the place;
 Third, by judicial decisions;
 Fourth, general principles of law; and
 Fifth, principles of justice, reason and
equity, in view of the circumstances of the
case.
ILLUSTRATION OF BORROWING STATUTE.
Cadalin v. POEA’s Administrator
238 SCRA 721, 1994
FACTS:
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the
Supreme Court for Certiorari.
On June 6, 1984, Cadalin, Amul and Evangelista, in their own
behalf and on behalf of 728 other OCWs instituted a class suit by
filing an “Amended Complaint” with the POEA for money claims
arising from their recruitment by ASIA INTERNATIONAL
BUILDERS CORPORATION (AIBC) and employment by BROWN &
ROOT INTERNATIONAL, INC (BRI) which is a foreign corporation
with headquarters in Houston, Texas, and is engaged in
construction; while AIBC is a domestic corporation licensed as a
service contractor to recruit, mobilize and deploy Filipino

workers for overseas employment on behalf of its foreign
principals.
The amended complaint sought the payment of the unexpired
portion of the employment contracts, which was terminated
prematurely, and secondarily, the payment of the interest of the
earnings of the Travel and Reserved Fund; interest on all the
unpaid benefits; area wage and salary differential pay; fringe
benefits; reimbursement of SSS and premium not remitted to the
SSS; refund of withholding tax not remitted to the BIR; penalties
for committing prohibited practices; as well as the suspension of
the license of AIBC and the accreditation of BRII.
On October 2, 1984, the POEA Administrator denied the “Motion
to Strike Out of the Records” filed by AIBC but required the
claimants to correct the deficiencies in the complaint pointed
out.
AIB and BRII kept on filing Motion for Extension of Time to file
their answer. The POEA kept on granting such motions.
On November 14, 1984, claimants filed an opposition to the
motions for extension of time and asked that AIBC and BRII
declared in default for failure to file their answers.
On December 27, 1984, the POEA Administrator issued an order
directing AIBC and BRII to file their answers within ten days from
receipt of the order.
(at madami pang motions ang na-file, new complainants joined
the case, ang daming inavail na remedies ng both parties)
On June 19, 1987, AIBC finally submitted its answer to the
complaint. At the same hearing, the parties were given a period
of 15 days from said date within which to submit their respective
position papers. On February 24, 1988, AIBC and BRII submitted
position paper. On October 27, 1988, AIBC and BRII filed a
“Consolidated Reply,” POEA Adminitartor rendered his decision
which awarded the amount of $824, 652.44 in favor of only 324
complainants. Claimants submitted their “Appeal Memorandum
For Partial Appeal” from the decision of the POEA. AIBC also filed
its MR and/or appeal in addition to the “Notice of Appeal” filed
earlier.
NLRC promulgated its Resolution, modifying the decision of the
POEA. The resolution removed some of the benefits awarded in
favor of the claimants. NLRC denied all the MRs. Hence, these
petitions filed by the claimants and by AlBC and BRII.
The case rooted from the Labor Law enacted by Bahrain where
most of the complainants were deployed. His Majesty Ise Bin
Selman Al Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23
on June 16, 1176, otherwise known re the Labour Law for the
Private Sector. Some of the provision of Amiri Decree No. 23 that
are relevant to the claims of the complainants-appellants are as
follows:
“Art. 79: x x x A worker shall receive payment for each extra hour
equivalent to his wage entitlement increased by a minimum of
twenty-rive per centurn thereof for hours worked during the day;
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and by a minimum off fifty per centurn thereof for hours worked
during the night which shall be deemed to being from seven
o’clock in the evening until seven o’clock in the morning .”
Art. 80: Friday shall be deemed to be a weekly day of rest on full
pay.
If employee worked, 150% of his normal wage shall be paid to
him x x x.”
Art. 81; x x x When conditions of work require the worker to work
on any official holiday, he shall be paid an additional sum
equivalent to 150% of his normal wage.”
Art. 84: Every worker who has completed one year’s continuous
service with his employer shall be entitled to Laos on full pay for
a period of not less than 21 days for each year increased to a
period not less than 28 days after five continuous years of
service.”
A worker shall be entitled to such leave upon a quantum meruit
in respect of the proportion of his service in that year.”
Art. 107: A contract of employment made for a period of
indefinite duration may be terminated by either party thereto
after giving the other party prior notice before such termination,
in writing, in respect of monthly paid workers and fifteen days’
notice in respect of other workers. The party terminating a
contract without the required notice shall pay to the other party
compensation equivalent to the amount of wages payable to the
worker for the period of such notice or the unexpired portion
thereof.”
Art. Ill: x x x the employer concerned shall pay to such worker,
upon termination of employment, a leaving indemnity for the
period of his employment calculated on the basis of fifteen days’
wages for each year of the first three years of service and of one
month’s wages for each year of service thereafter. Such worker
shall be entitled to payment of leaving indemnity upon a
quantum meruit in proportion to the period of his service
completed within a year.”
ISSUES:
1. Whether or not the foreign law should govern or the
contract of the parties.( Whether or not the complainants
who have worked in Bahrain are entitled to the above-
mentioned benefits provided by Amiri Decree No. 23 of
Bahrain).
2. Whether or not the Bahrain Law should apply in the case.
3. Whether or not the instant cases qualify as; a class suit.
HELD:
1. NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules
on Evidence governing the pleading and proof of a foreign
law and admitted in evidence a simple copy of the Bahrain’s
Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector).

NLRC applied the Amiri Deere, No. 23 of 1976, which
provides for greater benefits than those stipulated in the
overseas-employment contracts of the claimants. It was of
the belief that where the laws of the host country are more
favorable and beneficial to the workers, then the laws of the
host country shall form part of the overseas employment
contract. It approved the observation of the POEA
Administrator that in labor proceedings, all doubts in the
implementation of the provisions of the Labor Code and its
implementing regulations shall be resolved in favor of labor.
The overseas-employment contracts, which were prepared
by AIBC and BRII themselves, provided that the laws of the
host country became applicable to said contracts if they
offer terms and conditions more favorable than those
stipulated therein. However there was a part of the
employment contract which provides that the
compensation of the employee may be “adjusted downward
so that the total computation plus the non-waivable benefits
shall be equivalent to the compensation” therein agree,’
another part of the same provision categorically states “that
total remuneration and benefits do not fall below that of the
host country regulation and custom.”
Any ambiguity in the overseas-employment contracts
should be interpreted against AIBC and BRII, the parties that
drafted it. Article 1377 of the Civil Code of the Philippines
provides:
‘The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the obscurity.”
Said rule of interpretation is applicable to contracts of
adhesion where there is already a prepared form containing
the stipulations of the employment contract and the
employees merely “take it or leave it.” The presumption is
that there was an imposition by one party against the other
and that the employees signed the contracts out of necessity
that reduced their bargaining power.
We read the overseas employment contracts in question as
adopting the provisions of the Amiri Decree No. 23 of 1976
as part and parcel thereof. The parties to a contract may
select the law by which it is to be governed. In such a case,
the foreign law is adopted as a “system” to regulate the
relations of the parties, including questions of their capacity
to enter into the contract, the formalities to be observed by
them, matters of performance, and so forth. Instead of
adopting the entire mass of the foreign law, the parties may
just agree that specific provisions of a foreign statute shall
be deemed incorporated into their contract “as a set of
terms.” By such reference to the provisions of the foreign
law, the contract does not become a foreign contract to be
governed by the foreign law. The said law does not operate
as a statute but as a set of contractual terms deemed written
in the contract.
A basic policy of contract is to protect the expectation of the
parties. Such party expectation is protected by giving effect
to the parties’ own choice of the applicable law. The choice
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of law must, however, bear some relationship the parties or
their transaction. There is no question that the contracts
sought to be enforced by claimants have a direct connection
with the Bahrain law because the services were rendered in
that country.
2. NLRC ruled that the prescriptive period for the filing of the
claims of the complainants was 3 years, as provided in
Article 291 of the Labor Code of the Philippines, and not ten
years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No.
23 of 1976.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
“A claim arising out of a contract of employment shall not
actionable after the lapse of one year from the date of the
expiry of the Contract”.
As a general rule, a foreign procedural law will not be applied
in the forum (local court), Procedural matters, such as
service of process, joinder of actions, period and requisites
for appeal, and so forth, are governed by the laws of the
forum. This is true even if the action is based upon a foreign
substantive law.
A law on prescription of actions is sui generis in Conflict of
Laws in the sense that it may be viewed either as procedural
or substantive, depending on the characterization given
such a law. In Bournias v. Atlantic Maritime Company (220 F.
2d. 152, 2d Cir. [1955]), where the issue was the applicability
of the Panama Labor Code in a case filed in the State of New
York for claims arising from said Code, the claims would have
prescribed under the Panamanian Law but not under the
Statute of Limitations of New York. The U.S. Circuit Court of
Appeals held that the Panamanian Law was procedural as it
was not “specifically intended to be substantive,” hence, the
prescriptive period provided in the law of the forum should
apply. The Court observed: “. . . we are dealing with a statute
of limitations of a foreign country, and it is not clear on the
face of the statute that its purpose was to limit the
enforceability, outside as well as within the foreign country
concerned, of the substantive rights to which the statute
pertains. We think that as a yardstick for determining
whether that was the purpose, this test is the most
satisfactory one.
The Court further noted: “Applying that test here it appears
to us that the libellant is entitled to succeed, for the
respondents have failed to satisfy us that the Panamanian
period of limitation in question was specifically aimed
against the particular rights which the libellant seeks to
enforce. The Panama Labor Code is a statute having broad
objectives.” The American court applied the statute of
limitations of New York, instead of the Panamanian law,
after finding that there was no showing that the Panamanian
law on prescription was intended to be substantive. Being
considered merely a procedural law even in Panama, it has
to give way to the law of the forum (local Court) on
prescription of actions.

However the characterization of a statute into a procedural
or substantive law becomes irrelevant when the country of
the forum (local Court) has a “borrowing statute.” Said
statute has the practical effect of treating the foreign statute
of limitation as one of substance. A “borrowing statute”
directs the state of the forum (local Court) to apply the
foreign statute of limitations to the pending claims based on
a foreign law. While there are several kinds of “borrowing
statutes,” one form provides that an action barred by the
laws of the place where it accrued will not be enforced in the
forum even though the local statute was not run against it.
Section 48 of Code of Civil Procedure is of this kind. It
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.”
Section 48 has not been repealed or amended by the Civil
Code of the Philippines. In the light of the 1987 Constitution,
however, Section 48 cannot be enforced ex proprio 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 (local Court) will not enforce any
foreign claim obnoxious to the forum’s public policy. To
enforce the one-year prescriptive period of the Amiri Decree
No. 23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987
Constitution emphasized that:“The state shall promote
social justice in all phases of national development” (Sec.
10).
‘The state affirms labor as a primary social economic force.
It shall protect the rights of workers and promote their
welfare” (Sec. 18).
In Article XIII on Social Justice and Human Rights, the 1987
Constitution provides:
“Sec. 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for
all.”
Thus, the applicable law on prescription is the Philippine law.
The next question is whether the prescriptive period
governing the filing of the claims is 3 years, as provided by
the Labor Code or 10 years, as provided by the Civil Code of
the Philippines.
Article 1144 of the Civil Code of the Philippines provides:
“The following actions must be brought within ten years
from the time the right of action accross: (1) Upon a written
contract; (2) Upon anobligation created by law; (3) Upon a
judgment”
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In this case, the claim for pay differentials is primarily
anchored on the written contracts between the litigants, the
ten-year prescriptive period provided by Art. 1144(l) of the
New Civil Code should govern.
3. NO. A class suit is proper where the subject matter of the
controversy is one of common or general interest to many
and the parties are so numerous that it is impracticable to
bring them all before the court. When all the claims are for
benefits granted under the Bahrain law many of the
claimants worked outside Bahrain. Some of the claimants
were deployed in Indonesia under different terms and
condition of employment.
Inasmuch as the First requirement of a class suit is not
present (common or general interest based on the Amiri
Decree of the State of Bahrain), it is only logical that only
those who worked in Bahrain shall be entitled to rile their
claims in a class suit.
While there are common defendants (AIBC and BRII) and the
nature of the claims is the same (for employee’s benefits),
there is no common question of law or fact. While some
claims are based on the Amiri Law of Bahrain, many of the
claimants never worked in that country, but were deployed
elsewhere. Thus, each claimant is interested only in his own
demand and not in the claims of the other employees of
defendants. A claimant has no concern in protecting the
interests of the other claimants as shown by the fact, that
hundreds of them have abandoned their co-claimants and
have entered into separate compromise settlements of their
respective claims. The claimants who worked in Bahrain
cannot be allowed to sue in a class suit in a judicial
proceeding.
WHEREFORE, all the three petitioners are DISMISSED.
EXCEPTIONS TO APPLICATION OF FOREIGN LAW.
 A foreign law 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;
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.
 Exceptions to the rule:
1. A foreign law will not be applied if it contravenes
prohibitive law or public policy of the forum.
2. The agreement stipulating the specific law as the
applicable law may not be enforced when the
relationship of the contracting parties affects public
interest in the country of one of the parties, or the
substantial contacts arising therefrom point to the law
of another country as applicable law, or such agreement
contravenes the prohibitive law or the public policy of

the forum. Where the local law or the international
convention to which the country adhered specifies the
applicable law, any agreement between the parties
stipulating a different law as the applicable law is invalid
or will not be respected.
3. The situs of the 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. In view of Article 16 of the Civil
Code, any foreign law sought to be applied in a conflict
of laws case in the country contrary thereto may not be
enforced.
4. Where a foreign law, foreign judgment or contract is
contrary to a sound and established public policy of the
forum, the said foreign law, judgment or contract shall
not be applied.
5. Even when a foreign law is the applicable law in a given
conflict of law 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.
 The test is whether the rule really regulates
procedure, that is, the judicial process for enforcing
really regulates and duties recognized by
substantive law and for justly administering
remedy and redress for a disregard or infraction
thereof.
 The parties cannot, by entering into an agreement,
change the procedure prescribed by the law of the
forum.
6. Foreign penal laws have no extraterritorial application
in the Philippines. As a rule, penal laws of one country
are obligatory only within its jurisdiction.
PROOF AND AUTHENTICATION OF FOREIGN LAWS; OF
DOCUMENTS.
 When a party involves a foreign law as basis for his cause of
action or defense, or when he relies on foreign document to
support his claim or defense, and such law or judgment is
not contrary to local law or public policy, he has to allege and
prove the same, as any other fact. His failure to do so may
give rise to the presumption that the foreign law is similar to
Philippine law on the matter, or in the case of foreign
document, the same will not be admissible in evidence.
 Where there is conflict between foreign law upon which the
cause of action or defense is founded, one hand, and local
law of the forum under which no valid cause of action or
defense may accrue, on the other hand, the latter prevails
and will result in the dismissal of the action or the rejection
of the defense.
 Foreign laws do not prove themselves in the country, nor
can the courts take judicial notice of them. Like any other
fact, they must be alleged and proved.
 The general rule is that foreign documents, before they can
be admitted in evidence in our courts, must be duly
authenticated.
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 Public documents are generally irremovable from where
they are official kept. For this reason, public documents to
be used as evidence may be evidenced by any of the
following:
1. By any official publication thereof; or
2. By certified true copy or one attested by the officer
having the legal custody of the record, or by his deputy,
and accompanied, if not kept in the Philippines, with a
certificate that such officer has custody.
3. If the office in which the record is kept in a foreign
country, a copy of the document should have a
certificate 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.
 To be admissible in evidence, copy of the foreign law must
comply with the following requirements:
1. An official publication containing the foreign law must
be submitted;
2. If no official publication can be submitted, the copy of
the foreign law must be attested by the officer having
legal custody of the records or by his deputy; and the
same must be accompanied by a certificate of a
secretary of embassy or legation, consul general,
consul, vice consular or consular agent or foreign
service officer of the Philippines, with the seal of the
office and duly ribboned.
EXCEPTIONS TO NON-JUDICIAL COGNIZANCE OF FOREIGN
LAWS.
 The general rule is that Philippine courts are not authorized
to take judicial notice of foreign laws, except:
1. Where there are exceptional circumstances when the
foreign laws are already within the actual knowledge of
the court;
2. Where the courts are familiar with the specific foreign
laws;
3. When a foreign law, such as that of the Nevada law, was
proved in accordance with the Section 24 and 25 of Rule
132 of the Rules of Court and introduced as evidence in
the probate of the will of a citizen of Nevada, such
circumstances justified the Court to take judicial notice
of said foreign law in another case involving the
partition of the estate or the decedent, even though the
provisions of said law were not presented in the form
and manner provided by the Rules of Court, where the
adverse party did not dispute the quoted provisions of
the said law of Nevada.
4. Specialized quasi-judicial agencies may take judicial
notice of foreign law, even if the foreign law has not
been alleged and proved because the general rule
applies only to cases filed in courts and not to cases
before administrative or quasi-judicial bodies which, by
reason of their mandated functions, have become
familiar with the applicable foreign laws.

CHAPTER III
CITIZENSHIP AND DOMICILE
A. CITIZENSHIP
IMPORTANCE OF NATIONALITY AND DOMICILE.
 Citizenship and nationality are synonymous and are
interchangeably used. A person may be a citizen of one
country, but he may be domiciled in another state or
country.
 Article 15 of the New Civil Code provides that, “Laws relating
to family rights and duties, or to the status, condition and
legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad.”
 Article 16, second paragraph, of the New Civil Code states
that, “interstate and testamentary succession, both with
respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national
law of the person whose succession is under consideration,
whatever maybe the nature of the property and regardless
of the country wherein said property may be found.”
 Nationality law refers to the private law of the state of
which the descendent was a citizen.
 If an alien is required to renounce his citizenship before he
could be allowed to take his oath as a Filipino in his petition
for naturalization, the renunciation must be in accordance
with his national law and not by that of the Philippines.
 Domiciliary principle – the status or condition of a person
and the relation in which he stands to other persons are
fixed by the law of the domicile, and the status so fixed is
recognized and upheld in every other state, so far is
consistent with its own laws and policy.
CITIZENSHIP, GENERALLY.
 Citizenship means the status of being a citizen of a state who
owes allegiance to the state and is entitled to its protection
and to the enjoyment of civil and political rights therein.
 Citizenship is synonymous with nationality.
 While a state does not determine who are the citizens of the
other countries, the court of the forum, where a case is filed
whose resolution requires determination of the citizenship
of the party in the case, may determine whether such party,
by reason of the latter’s law, is a citizen of that country.
WHO ARE CITIZENS OF THE PHILIPPINES.
 “Citizen” in two concepts, as used by the Constitution: a
natural person; and a juridical person at least 60% of whose
capital is owned by Filipino natural persons.
 Article IV of the 1987 Constitution on citizenship provides:
“Section 1. The following are citizens of the Philippines:
1. Those who are citizens of the Philippines at the
time of the adoption of this Constitution;
2. Those whose fathers or mothers are citizens of the
Philippines;
3. Those born before January 17, 1973, of Filipino
mothers, who elect Philippine citizenship upon
reaching the age of majority; and
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4. Those who are naturalized in accordance with law.
Section 2. Natural-born citizens are those who are citizens of
the Philippines from birth without having to perform any act
to acquire or perfect their Philippine citizenship. Those who
elect Philippine citizenship in accordance with paragraph (3),
Section 1 hereof shall be deemed natural-born citizens.
Section 3. Philippine citizenship may be lost or reacquired in
the manner provided by law.
Section 4. Citizens of the Philippines who marry aliens shall
retain their citizenship, unless by their act or omission, they
are deemed, under the law, to have renounced it.
Section 5. Dual allegiance of citizens is inimical to the
national interest and shall be dealt with by law.
 The Constitution recognizes two modes of acquiring
Philippine citizenship:
1. Jus sanguinis – the acquisition of citizenship on the basis
of blood relationship, pursuant to which a child follows
the nationality or citizenship of the parents regardless
of the place of his/her birth;
2. Naturalization – the acquisition of Philippine citizenship
in accordance with the nationalization law of the
country or by act of Congress adopting an alien and
clothing him the privileges of a citizen.
ELECTION OF CITIZENSHIP.
 Commonwealth Act of 625 prescribes the procedure for a
valid election of Philippine citizenship. Under Section 1
thereof, legitimate children born of Filipino mothers may
elect Philippine citizenship by expressing such intention.
 The election must be made within a reasonable time from
reaching the age of majority, which has been construed to
mean 3 years therefrom.
 One who is privileged to elect Philippine citizenship has only
an inchoate right with to such citizenship. As such, he should
avail of the right with fervor, enthusiasm and promptitude.
TWO KINDS OF CITIZENS.
 Two ways of acquiring citizenship: by birth, and by
naturalization. These two ways corresponds to two kinds of
citizenship: natural born and naturalized.
 A person who at the tie of birth is a citizen of a particular
country, is a natural citizen thereof.
 Section 2 of Article IV of the 1987 Constitution defines who
natural-born citizens are.
 Included as natural-born citizens are those before January
17, 1973, of Filipino mothers, who elect Philippine
citizenship upon reaching the age of majority.
DUAL CITIZENSHIP.
 Dual citizenship means the status of a person who is a
citizen of two or more countries at the same time. Dual
citizenship arises when, as a result of the concurrent
application of the different laws of two or more states, a

person is simultaneously considered a national by the said
states.
 Considering the citizenship clause of the Constitution, it is
possible for the following class of citizens to possess dual
citizenship:
1. Those born of Filipino fathers and/or mothers in foreign
countries which follow the principle of jus soli;
2. Those born in the Philippines of Filipino mothers and
alien fathers if by the laws of their fathers’ country such
children are citizens of that country; and
3. Those who marry aliens if by the laws of the latter’s
country the former are considered citizens, unless by
their act or omission they are deemed to have
renounced Philippine citizenship.
 Republic Act 9225 covers only natural-born Filipino citizens
and not naturalized citizens.
 Naturalized citizens cannot have dual citizenship, one as
citizen of his country of origin and another as naturalized
citizen of the Philippines, which is inimical to the national
interest.
 Under the Naturalization Law, an alien whose petition for
naturalization has been granted, is required to take oath
renouncing his allegiance and fidelity to the state of which
he was a subject or citizen. The purpose is to prevent dual
allegiance to two distinct jurisdictions.
 The dual citizenship is retained, under Republic Act 9225,
except when he files a certificate of candidacy for an elective
position which requires that he renounce under oath his
allegiance to any foreign country; or when he accepts an
appointive position which requires renunciation of
allegiance to any foreign country before he takes his oath of
office.
 Dual allegiance refers to the situation in which a person
simultaneously owes, by some positive act, loyalty to two or
more states. Dual citizenship is involuntary, while dual
allegiance is the result of an individual’s volition. Section 5
of Article V of the Constitution considers dual allegiance of
citizens as inimical to the national interest.
LOSS OF CITIZENSHIP.
 Pursuant to Commonwealth Act 63, a Filipino citizen may
lose his citizenship in any of the following acts:
1. By naturalization in a foreign country;
2. By express renunciation of citizenship;
3. By subscribing to an oath of allegation to support the
constitution or laws of a foreign country upon attaining
the age of 21 years of age or more;
4. By accepting commission in the military, naval or air
service of a foreign country;
5. By cancellation of certificate of naturalization;
6. By having been declared by competent authority, a
deserter of the Philippine armed forces in times of war,
unless subsequently a plenary pardon or amnesty has
been granted;
7. In case of a woman, upon her marriage to a foreigner if,
by virtue of the laws in force in her husband’s country,
she acquires his nationality.
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 DISCUSSION FOR #7: This provision defers to the
foreign law the determination of her citizenship.
She will automatically lose her citizenship if the law
of the country of her husband she acquires, by her
marriage, his citizenship, or she remains a Filipino
citizen if the foreign law is silent on the matter.
 Section 4 of Article IV of the Constitution changed
the rule and ordained that a citizen, whether male
or female, who marries an alien retains his/her
citizenship, entirely living up to him/her whether
he/she desires to lose his/her citizenship by his/her
act or omission he/she is deemed, under the law,
to have renounced it.
 The fact that a Philippine citizen with dual citizenship
resulting from the simultaneous application of jus soli and
jus sanguinis holds a foreign passport and having himself
listed as a foreigner in the Bureau of Immigration nor result
in the loss of his citizenship, for possessing such passport or
having himself listed as a foreigner is merely an assertion of
his other citizenship and not a renunciation of his Filipino
citizenship.
 What Commonwealth Act 63 requires to lose one’s
citizenship in favor of the other is through express
renunciation.
RE-ACQUISITION OF FILIPINO CITIZENSHIP.
 A Filipino woman or a natural born citizen who lost his/her
citizenship may require it by (as enumerated by
Commonwealth Act 63):
1. Direct act of Congress;
2. Naturalization; or
3. Administrative repatriation.
 Repatriation results in the recovery of the original
nationality. If he was originally a natural-born citizen before
he lost his Filipino citizenship, he will be restored to his
former status as a natural-born Filipino.
 To be naturalized, an applicant has to prove that he
possesses all the qualifications and none of the
disqualification provided by law to become a Filipino citizen.
The decision granting Philippine citizenship becomes
executory only after two years from its promulgation when
the court is satisfied that during the intervening period, the
applicant has:
1. Not left the Philippines;
2. Has dedicated himself to a lawful calling or profession;
3. Has not been convicted of any offense or violation of
Government promulgated rules;
4. Committed any act prejudicial to national interest or
contrary to any Government announced policies.
 Naturalization is a mode of both acquisition and
reacquisition of Philippine citizenship.
a. AS A MODE OF ACQUISITION: Governed by
Commonwealth Act 473, as amended.
b. AS A MODE OF REACQUISITION: It is governed by
Commonwealth Act 63.
 Repatriation may be had under various statutes by those
who lost their citizenship due to:
1. Desertion of the armed forces;

2. Services in the armed forces of the allied forces in WWII;
3. Services in the Armed Forces of the United States at any
other time;
4. Marriage of a Filipino woman to an alien; and
5. Political economic necessity.
 Repatriation simply consist of the taking oath of allegiance
to the Republic of the Philippines and registering said oath
in the Local Civil Registry of the place where the person
concerned resides or last resided.
 Repatriation results in the recovery of the original
nationality. This means that a naturalized Filipino who lost
his citizenship will be restored to his prior status as a
naturalized Filipino citizen. On the other hand, if he was
originally a natural-born citizen before he lost his Filipino
citizenship, he will be restored to his former status as a
natural-born Filipino.
 Republic Act 8171, which became a law on October 23, 1995,
provides for the repatriation of Filipino women who have
lost their Philippine citizenship by marriage to aliens and of
natural born citizens who have lost their citizenship on
account of political or economic necessity.
 Both Republic Acts 9225 and 8171 are applicable only to
natural-born citizens who lost their citizenship abroad.
 Republic Act 2639 provides for the acquisition of Philippine
citizenship by persons who lost such citizenship by rendering
service to, or accepting commission in, the armed forces of
the United States. All that is required is to take an oath of
allegiance to the Republic and to register that fact with the
civil registry of the place of his residence or where he last
resided in the Philippines.
CITIZENSHIP BY NATURALIZATION.
 There are three ways by which an alien may be become a
citizen by naturalization:
1. By an administrative naturalization pursuant to
Republic Act 9139;
 It is a simplified procedure of acquiring Philippine
citizenship by aliens who are born and residing in
the Philippines. Aliens who are not born in the
Philippines cannot therefore be naturalized by
administrative and simplified procedure under
Republic Act 9139.
 If the applicant is a married woman, the
naturalization will benefit the minor children but
not the husband.
2. By a judicial naturalization pursuant to Commonwealth
Act 473; and
3. By legislative naturalization.
 The marriage of an alien woman to a Filipino does not ipso
facto make her a Filipino citizen. She still has to show, by
affidavits and supporting documents, that she has none of
the disqualifications under Section 4 of the Revised
Nationalization Law, as in a petition for cancellation of her
alien certificate of registration or in any appropriate
proceeding in which the issue of her citizenship is raised.
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B. DOMICILE
DOMICILE DEFINED.
 Black defines domicile as follows:
“That place where a man has his true, fixed and
permanent home and principal establishment, and to
which whenever he is absent he has the intention of
returning. The permanent residence of a person or the
place to which he intends to return even though he may
actually reside elsewhere. A person may have more
than one residence by only one domicile. The legal
domicile of a person is important since it, rather than
the actual residence, often controls the jurisdiction of
the taxing authorities and determine where a person
may exercise privileges of voting and other legal rights
and privileges. x x x “Residence” signifies living in a
particular locality while “domicile” means living in that
locality with intent to make it a fixed and permanent
home.”
 The Restatement of the Law, Second, Conflict of Laws
2d, Section 11 thereof, defines domicile as follows:
1. Domicile is a place, usually a person’s home, to
which the rules of Conflict of Laws sometimes
accord determinative significance because of the
person’s identification with that place.
2. Every person has a domicile at all times and, at least
for the same purpose, no person has more than one
domicile at a time.
 The law of the forum governs domicile. The Philippine
court where a conflict of laws case is filed determines,
on the bases of its law, the domicile of one or both
parties, when their domicile is in issue.
 Domicile is one of the test factors in determining the
applicable law in actions involving conflict of laws.
 For the exercise of civil rights and the fulfillment of civil
obligations, Article 50 of the Civil Code defines domicile
as follows:
“For the exercise of civil rights and the fulfillment of civil
obligations, the domicile of natural persons is the place
of their habitual residence.”
 The said provision means that the individual’s
“permanent home,” “a place to which, whenever
absent for business or for pleasure, one intends to
return, and depends on facts and circumstances in
the sense that they disclose intent.”
 Domicile includes the twin elements of:
1. The fact of residing or physical presence in a
fixed place; and
2. Animus manendi, or the intention of returning
there permanently.
 In the Philippines, domicile is defined as the fixed,
permanent residence to which, when absent, one has
the intention of returning. It has also been defined as
the place where a party actually or constructively has
his permanent home, where he, no matter where he
may be found at any given time, eventually intends to
return and remain.

KINDS OF DOMICILE.
 There are three kinds of domicile:
a. Domicile of origin or by birth;
b. Domicile of choice; and
c. Domicile by operation of law.
 Domicile of origin is the domicile of a person’s parents at the
time of his birth, which is not easily lost, and it continues
until, upon reaching the age of majority age, he abandons it
and acquires a new domicile which is the domicile by choice.
Domicile by operation of law is that which the law attributes
to a person because of his disability to make a choice, such
as when he is a minor or suffers from mental or physical
disability, in which case he follows, as a rule, the domicile of
his father.
RULES REGARDING DOMICILE.
 Though each case must depend upon the particular facts or
circumstances, there are three rules which are established in
determining domicile:
1. A person has a domicile somewhere;
2. A domicile once established remains until a new one is
acquired; and
3. A man can have but only one domicile at a time.
 A person may change his domicile of origin or domicile of
choice by complying with the following requirements: (1) an
actual removal or an actual change of domicile; (2) bona fide
intention of abandoning the former place of residence and
establishing a new one; and (3) acts which correspond with
such purpose. Clear and positive proof of these criteria is
required. Only with evidence of concurrence of all these
requisites can the presumption of continuity of domicile be
rebutted.
 In order to acquire a new domicile by choice, there must
concur: (1) residence or bodily presence in the new locality,
(2) an intention to remain there, and (3) an intention to
abandon the old domicile. There must be basically be an
animus manendi coupled with animus non revertendi. The
purpose remain in or at the domicile of choice must be for an
indefinite period of time, the change of residence must be
voluntary, and the residence at the place chosen for the new
domicile must be actual.
DOMICILE OF WIFE AND MINOR CHILDREN.
 Article 69 of the Family Code provides:
“The husband and wife shall fix the family domicile. In case
of disagreement, the court shall decide.
The court may exempt one spouse from living with the other
if the latter should live abroad or there are other valid and
compelling reasons for the exemption. However, such
exemption shall not apply if the same is not compatible with
the solidarity of the family.”
 Section 69 of the Family Code may be availed of when
one spouse is a foreigner married to a Filipino.
 Where there is no agreement as to a common domicile
between husband and wife, the rule is that the wife follows
that of the husband during the existence of the marriage or
until the death of the husband.
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 The term residence should only be interpreted to mean
“actual residence.” Thus, when a woman marries and
follows the domicile of the husband, she keeps her domicile
of origin and merely gains a new home. The implication of
this ruling is that the termination of the marriage or the
death of the husband operates to revert her domicile to her
domicile of origin, except when, by her overt acts, he has
chosen the domicile of her husband as her domicile of
choice. This principle may apply to minor children who
becomes of age or have come emancipated.
 The domicile of origin of a legitimate child follows that of the
father, wherever the child may be born.
 Whenever a parental domicile is changed, that of the child
necessarily follows it. A child cannot, as a rule, acquire
domicile of his own.
 After reaching the age of majority or after having been
emancipated, the child may change his domicile of origin to
that of domicile of choice, but he must comply with its
requirement.
 The domicile of the illegitimate children follows that of her
mother; that of an adopted child follows that of the adopting
parent.
 After the termination of marriage or after the death of the
husband, the general rule is that they follow that of their
mother.
 In legal separation of declaration of nullity of marriage or
annulment of voidable marriage, the domicile of the minor
children follows that in whose favor their custody is
awarded.
DOMICILE AND RESIDENCE DISTINGUISHED.
 Residence is used to indicate a place of abode, whether
permanent or temporary;
 Domicile denotes a fixed permanent residence to which,
when absent one has the intention of returning.
 Residence is not domicile, but domicile is residence coupled
with the intention to remain for an unlimited time.
 Home is defined as the place where a person dwells and
which is the center of his domestic, social and civil life.
DOMICILE AND RESIDENCE FOR POLITICAL PURPOSES.
 For the exercise of political rights, domicile and residence
means the same thing.
 The word “residence,” for the purpose of meeting the
qualification for an elective position, means “domicile” or
the individual’s permanent home, a place to which,
whenever absent for business or for pleasure, one intends
to return, and depends on facts and circumstances in the
sense that they disclose intent. It includes the twin
elements.
 In showing compliance with the residence requirement,
both intent and actual presence in the place where the
candidate intends to run must satisfy the length of time
prescribed by the Constitution or the law.
 Exercising the right of election franchise is a deliberate
assertion of the fact of residence, and is said to have decided
preponderance in a doubtful case upon the place the elector
claims as or believes to be his residence.

DOMICILE AND VENUE.
 For the purpose of venue in estate proceedings, residence
and venue are different.
 Domicile refers to the fixed, permanent residence to which,
when absent, one has the intention of returning.
 Venue in estate proceeding is the place where the
settlement of estate is filed and corresponds to residence in
the context of venue provisions, which is nothing more than
a person’s actual residence or place of abode, where he
resides therein with continuity and consistency.
 The word “reside” in the place where settlement of estate
should be filed does not refer to legal residence or domicile
but to the personal, actual or physical habitation of a person,
actual residence or place of abode.
CHAPTER IV
NATIONALITY AND DOMICILE OF CORPORATIONS
CITIZENSHIP OF JURIDICAL ENTITY.
 Section 2 of the Corporation Code defines a Domestic
Corporation as an artificial being created by operation of
law, having the right of succession and the powers,
attributes and properties expressly authorized by law or
incident to its existence.
 Its citizenship or nationality cannot be dissociated from the
persons who compose it.
 As a general rule, the nationality of a private corporation is
determined by the character or citizenship of its controlling
stockholders.
TEST TO DETERMINE FILIPINO CORPORATION.
 There are two tests to determine whether a corporation or
juridical entity is a Filipino corporation:
a. The grandfather test
 The 1987 Constitution requires that certain
business are reserved to Filipino citizens or to
corporations whose ownership is at least 60%
owned by such citizens.
 The following business may only be undertaken by
Filipino citizens or corporations the capital of which
is owned by Filipino citizens to the extent of at least
60% thereof:
1. Exploration, development, and utilization of
natural resources;
2. Operation of public utilities; and
3. Educational institutions other than those
established by religious groups and mission
boards.
 The ownership of mass media shall be reserved to
Filipino citizens of corporations wholly owned by
such citizens.
 Only Filipino citizens or corporation or associations
at least 70% of the capital of which owned by such
citizens shall be allowed to engaged in the
advertising industry.
 The grandfather rule governs the strict application
of the ownership of a corporation, namely, at least
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60% thereof must be owned by natural persons
who are citizens of the Philippines, and it applies
only to the business enumerated in the
Constitution.
b. The control test
 For natural persons: where a Filipino wife or a
Filipino husband and her/his foreign spouse own
shares of stock in a partly nationalized business
enterprise, those shares in the name of the Filipino
spouse may be counted as part of the Filipino
ownership in said enterprise.
 For juridical entities or corporations: when the
stockholders include juridical entities or
corporations which are not 100% Filipino owned,
the following rule issued by the Securities and
Exchange Commission, in determining the Filipino
ownership of the said entities or corporations,
should be followed:
“Shares belonging to corporations or partnerships
at least 60% of the capital stock of which is owned
by Filipino citizens shall be considered as Philippine
nationality, but if the percentage of Filipino
ownership is less than 60%, only the number of
shares corresponding to such percentage shall be
counted as Philippine nationality…”
 The above rule is called the “control test” method,
as opposed to the so-called “grandfather rule”
which is a strict application or computation of the
nationality of a partly owned Filipino corporation.
 The control test may be applicable only to
corporations engaged in the business as authorized
by the foreign investment law, as amended, which
specifies the percentage of ownership of Filipino
nationals in corporations allowed to engage in such
business.
 The control test may not be applicable to
corporations authorized to engage in certain
business activities specified in the 1987
Constitution, as to which the grandfather rule
applies.
DOMICILE OF JURIDICAL PERSON.
 Article 51 of the Civil Code defines the domicile of juridical
persons or corporations. It reads:
“When the law creating or recognizing them, or any other
provision does not fix the domicile of juridical persons, the
same shall be understood to be the place where their legal
representation is established or where they exercise their
principal functions.”
 The domicile of a corporation is the place where its principal
place of business or principal office is stabled. The articles of
incorporation indicate its principal place of business or
office, and it is where its residence is.
 The principal place of business or office of a corporation is
its residence for purposes of venue of suit or action.
 There is improper venue where the suit against a
corporation is filed in the residence of its officer or in the
 18

place of its branch office, unless such residence or branch is

also the principal place of business of the corporation.
 The law governing the incorporation of a foreign corporation
is the law of the state or country of its incorporation or
registration. Such law may provide for the domicile of such
foreign corporation. If such law is silent on the matter, then
its domicile is the place where its legal representation is
established, which is the place of incorporation or where it
exercises its principal business.

DOMICILE OF FOREIGN CORPORATION.

 The domicile of a corporation is in the state where it is
incorporated.
 While a foreign corporation is domiciled in the state of its
incorporation, it may also be considered a resident in the
Philippines, where it does business. What effectively makes
such foreign corporation a resident corporation in the
Philippines is it actually being in the Philippines and licitly
doing business in the country.
 The domicile of a corporation belongs to the state where it
was incorporated. In a strict sense, such domicile as a
corporation may have is single in its essence and a
corporation can have only one domicile which is the state of
creation.
 Nonetheless, a corporation formed in one state may, for
certain purposes, be regarded as a residence in another
state in which it has offices and transacts business.
 The Tax Code declares that term “resident foreign
corporation applies to foreign corporation engaged in the
trade or business within the Philippines.”
 It has been held that a foreign corporation licitly doing
business in the Philippines, which is a defendant in a civil
suit, may not be considered as a non-resident within the
scope of the legal provision authorizing attachment against
a defendant not residing in the Philippines. In short, such
foreign corporation is a resident of the Philippines.
 For tax purposes, a foreign corporation may be either:
a. A resident foreign corporation – is a duly licensed to do
business in the country and is taxed on its net income
from the sources within the country;
b. A non-resident foreign corporation – is not a duly
licensed to do business in the country and is taxed on its
gross income from the same source.

Agpalo Notes: Conflict of Laws | Prepared by Terence L. Valdehueza | 2016 • Bukidnon State University ─ College of Law