1

PERKINS V. BENGUET CONSOLIDATED MINING CO.

342 US 437

SYNOPSIS OF RULE OF LAW:

Federal due process is not violated in either taking or declining jurisdiction of a

foreign corporation when the foreign corporation’s supervision of a business is carried
on continuously and systematically within a state.

FACTS:

The company’s mining properties were in the Philippine Islands. During the
occupation of the Islands by the Japanese operations were halted and the president
returned to his home in Ohio. He maintained an office where he conducted his affairs
and conducted business of the company and its employees (drew salary checks,
maintaining bank accounts, hosting Directors’ meetings, supervising policies to
rehabilitate the properties in the Philippines etc.).

ISSUE:

At the constitutional level, the fairness to the corporation, and whether as a matter
of federal due process, the business done in Ohio by the respondent mining company
was sufficiently substantial and of such a nature as to permit Ohio to entertain a cause
of action against a foreign corporation, where the cause of action arose from activities
entirely distinct from its activities in Ohio.

HELD:

Under these particular circumstances it would not violate federal due process for
Ohio to either take or decline jurisdiction of the corporation. Vacated and remanded.

Although no mining properties were located in Ohio, the operations and

supervision of the company and wartime activities being directed by the president in
the State of Ohio are enough not to violate federal due process.

PENNHURST STATE SCHOOL & HOSPITAL V. HALDERMANN

465 US 89, 1984

BRIEF FACT SUMMARY:

The Respondents, Halderman and others (Respondents), filed suit against the
Petitioners, the Pennhust State School and Hospital and its officials (Petitioners),
charging conditions at the hospital violate class member’s rights. The Petitioners
argued before the Supreme Court of the United States (Supreme Court) that the
Eleventh Amendment of the United States Constitution (Constitution) prohibited the
District Court from ordering state official to conform their conduct to state law.
SYNOPSIS OF RULE OF LAW:

A federal court’s grant of relief against state officials on the basis of state law,
whether, prospective or retroactive directly interferes with the principles of federalism
that underlie the Eleventh Amendment of the Constitution.

FACTS:

This case is before the Supreme Court for a second time to determine whether a
federal court can grant relief against state officials based on state law. The case
concerns the condition of care at Petitioners’ institution for the mentally retarded. The
Respondents’ amended complaint charged that the Petitioners violated class
member’s rights under (i) the Eighth and Fourteenth Amendments of the Constitution,
(ii) Section:504 of the Rehabilitation Act of 1973, (iii) the Developmentally Disabled
Assistance and Bill of Rights Act and (iv) the Pennsylvania Mental Health and Mental
Retardation Act of 1966. The Court of Appeals for the Third Circuit decided that the
Respondents had a right to rehabilitation in the least restrictive environment, based
solely on the bill of rights provision in the Developmentally Disabled Assistance and
Bill of Rights Act. The Supreme Court of the United States (Supreme Court) reversed
the judgment of the Court of Appeals finding that the Developmentally Dis
abled Assistance and Bill of Rights Act did not create any substantive rights and
remanded the case back to the Court of Appeals to determine if the remedial order
could be supported by any of the Respondents’ other arguments. The Court of
Appeals concluded that state law supported its prior judgment and also rejected the
Petitioners’ argument that the Eleventh Amendment barred the federal court from
considering the pendent state law claim. The case goes before the Supreme Court to
consider the Petitioners’ position.

ISSUE:

Whether a federal court has jurisdiction to award injunctive relief against state
officials on the basis of state law?

HELD:

Federal Courts lack jurisdiction to enjoin Petitioners’ actions on the basis of state
law. Reversed and remanded.

DISSENT:

The majority decision goes against established precedence by the Supreme Court,
stating a federal court can award injunctive relief on the basis of state law. This new
pronouncement will require federal courts to decide federal constitutional questions
despite the availability of state-law grounds for decision.
 3

SAUDI ARABIAN AIRLINES VS CA

GR NO 122191, 8 OCTOBER 1998

FACTS:

Saudi Arabian Airlines (SAUDIA) hired Milagros Morada as a Flight Attendant

for its airlines based in Jeddah, Saudi Arabia. While on a lay-over in Jakarta, Morada
went to a disco with fellow crew members Thamer & Allah, both Saudi nationals.
Because it was almost morning when they returned to their hotels, they agreed to have
breakfast together at the room of Thamer. In which Allah left on some pretext.
Thamer attempted to rape Morada but she was rescued by hotel personnel when they
heard her cries for help. Indonesian police came and arrested Thamer and Allah, the
latter as an accomplice.

Morada refused to cooperate when SAUDIA’s Legal Officer and its base
manager tried to negotiate the immediate release of the detained crew members with
Jakarta police. Through the intercession of Saudi Arabian government, Thamer and
Allah were deported and, eventually, again put in service by SAUDIA. But Morada
was transferred to Manila.

One year and a half year later, Morada was again ordered to see SAUDIA’s Chief
Legal Officer. Instead, she was brought to a Saudi court where she was asked to sign a
blank document, which turned out to be a notice to her to appear in court. Monada
returned to Manila.

The next time she was escorted by SAUDIA’s legal officer to court, the judge
rendered a decision against her sentencing her to five months imprisonment and to
286 lashes. Apparently, she was tried by the court which found her guilty of (1)
adultery; (2) going to a disco, dancing and listening to the music in violation of
Islamic laws; and (3) socializing with the male crew, in contravention of Islamic
tradition.

After denial by SAUDIA, Morada sought help from Philippine Embassy during
the appeal. Prince of Makkah dismissed the case against her. SAUDIA fired her
without notice.

Morada filed a complaint for damages against SAUDIA, with the RTC of QC.
SAUDIA filed Omnibus Motion to Dismiss which raised the ground that the court has
no jurisdiction, among others which was denied

ISSUE:

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

HELD:

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

By filing a complaint, Morada has voluntarily submitted to the jurisdiction of the

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

WILLIAM GEMPERLE V. HELEN SCHENKER

19 SCRA 45, 23 JANUARY 1967

FACTS:

This case was the result of William Gemperle’s retaliatory act when respondent
spouses Paul and Helen Schenker filed a case against him for the enforcement of
Schenker's allegedly initial subscription to the shares of stock of the Philippines-Swiss
Trading Co., Inc. and the exercise of his alleged pre-emptive rights to the then
unissued original capital stock of said corporation and the increase thereof, as well as
for an accounting and damages. Petitioner alleged that the said complaint tainted his
name as a businessman. He then filed a complaint for damages and prays for the
retraction of statements made by Helen Schenker.
Summons was personally served to Helen Schenker but not to Paul Schenker.
Helen then filed an answer with a counterclaim, but Paul Schenker filed a motion to
dismiss arguing that the court never acquired jurisdiction over his person since
admittedly, he is a Swiss citizen, residing in Zurich, Switzerland, and has not been
actually served with summons in the Philippines.

ISSUE:

Whether or not the court acquired jurisdiction over the person of Paul Schenker.

RULING:

Yes, although as a rule, when the defendant is a non-resident and in an accion in

personam, jurisdiction over the person of the defendant can be acquired only through
voluntary appearance or personal service of summons. But this case is an exception to
the said rule. The Supreme ratiocinated:

“We hold that the lower court had acquired jurisdiction over said defendant,
through service of the summons addressed to him upon Mrs. Schenker, it appearing
from said answer that she is the representative and attorney-in-fact of her husband
aforementioned civil case No. Q-2796, which apparently was filed at her behest, in
her aforementioned representative capacity. In other words, Mrs. Schenker had
authority to sue, and had actually sued on behalf of her husband, so that she was, also,
empowered to represent him in suits filed against him, particularly in a case, like the
of the one at bar, which is consequence of the action brought by her on his behalf.”

Briefly, in an accion in personam where the defendant is a non-resident,

substituted service of summons does not apply. However, by way of exception,
substituted service of summons may be effected, if the following requisites are
present:

1. The summons is served to the spouse of the defendant

2. The spouse must be residing in the Philippines

3. The spouse is appointed as attorney-in-fact of the spouse defendant in a previous

case involving the non-resident spouse.

IDONAH PERKINS vs. ROXAS ET AL.

GRN 47517, June 27, 1941

FACTS:

July 5, 1938, respondent Eugene Perkins filed a complaint in the CFI- Manila
against the Benguet Consolidated Mining Company for the recovery of a sum
consisting of dividends which have been declared and made payable on shares of
stock registered in his name, payment of which was being withheld by the company,
and for the recognition of his right to the control and disposal of said shares to the
exclusion of all others. The company alleged, by way of defense that the withholding
of plaintiff’s right to the disposal and control of the shares was due to certain demands
made with respect to said shares by the petitioner Idonah Perkins, and by one
Engelhard.

Eugene Perkins included in his modified complaint as parties defendants

petitioner, Idonah Perkins, and Engelhard. Eugene Perkins prayed that petitioner
Idonah Perkins and H. Engelhard be adjudged without interest in the shares of stock
in question and excluded from any claim they assert thereon. Summons by publication
were served upon the nonresident defendants Idonah Perkins and Engelhard.
Engelhard filed his answer. Petitioner filed her answer with a crosscomplaint in which
she sets up a judgment allegedly obtained by her against respondent Eugene Perkins,
from the SC of the State of New York, wherein it is declared that she is the sole legal
owner and entitled to the possession and control of the shares of stock in question
with all the cash dividends declared thereon by the Benguet Consolidated Mining
Company.

Idonah Perkins filed a demurrer thereto on the ground that “the court has no
jurisdiction of the subject of the action,” because the alleged judgment of the SC of
the State of New York is res judicata. Petitioner’s demurrer was overruled, thus this
petition.
ISSUE:

WON in view of the alleged judgment entered in favor of the petitioner by the SC
of New York and which is claimed by her to be res judicata on all questions raised by
the respondent, Eugene Perkins, the local court has jurisdiction over the subject matter
of the action.

RULING:

By jurisdiction over the subject matter is meant the nature of the cause of action
and of the relief sought, and this is conferred by the sovereign authority which
organizes the court, and is to be sought for in general nature of its powers, or in
authority specially conferred. In the present case, the amended complaint filed by the
respondent, Eugene Perkins alleged calls for the adjudication of title to certain shares
of stock of the Benguet Consolidated Mining Company and the granting of
affirmative reliefs, which fall within the general jurisdiction of the CFI- Manila.
Similarly CFI- Manila is empowered to adjudicate the several demands contained in
petitioner’s crosscomplaint.

Idonah Perkins in her crosscomplaint brought suit against Eugene Perkins and the
Benguet Consolidated Mining Company upon the alleged judgment of the SC of the
State of New York and asked the court below to render judgment enforcing that New
York judgment, and to issue execution thereon. This is a form of action recognized by
section 309 of the Code of Civil Procedure (now section 47, Rule 39, Rules of Court)
and which falls within the general jurisdiction of the CFI- Manila, to adjudicate, settle
and determine.

The petitioner expresses the fear that the respondent judge may render judgment
“annulling the final, subsisting, valid judgment rendered and entered in this
petitioner’s favor by the courts of the State of New York, which decision is res
judicata on all the questions constituting the subject matter of civil case” and argues
on the assumption that the respondent judge is without jurisdiction to take cognizance
of the cause. Whether or not the respondent judge in the course of the proceedings
will give validity and efficacy to the New York judgment set up by the petitioner in
her cross-complaint is a question that goes to the merits of the controversy and relates
to the rights of the parties as between each other, and not to the jurisdiction or power
of the court. The test of jurisdiction is whether or not the tribunal has power to enter
upon the inquiry, not whether its conclusion in the course of it is right or wrong. If its
decision is erroneous, its judgment can be reversed on appeal; but its determination of
the question, which the petitioner here anticipates and seeks to prevent, is the exercise
by that court and the rightful exercise of its jurisdiction.

Petition denied.
 6

ADONG VS CHEONG SENG GEE

43 Phil 43 [GR No. 18081 March 3, 1922]

FACTS:

Cheong Boo, a native of China, died intestate in Zamboanga, Philippine Islands, on

August 5, 1919. He left property worth nearly P100,000. The estate of the deceased
was claimed, on the one hand, by Cheong Seng Gee, who alleged that he was a
legitimate child by a marriage contracted by Cheong Boo with Tan Dit in China in
1895. The estate was claimed, on the other hand, by the Mora Adong who alleged that
she had been lawfully married to Cheong Boo in 1896 in Basilan, Philippine Islands,
and her daughters, Payang, married to Cheng Bian Chay, and Rosalia Cheong Boo,
unmarried. The conflicting claims to the estate of Cheong Boo were ventilated in the
Court of First Instance of Zamboanga. The trial judge, the Honorable Quirico Abeto,
after hearing the evidence presented by both sides, reached the conclusion, with
reference to the allegations of Cheong Seng Gee, that the proof did not sufficiently
establish the Chinese marriage, but that because Cheong Seng Gee had been admitted
to the Philippine Islands as the son of the deceased, he should share in the estate as a
natural child. With reference to the allegations of the Mora Adong and her daughters
Payang and Rosalia, the trial judge reached the conclusion that the marriage between
the Mora Adong and the deceased had been adequately proved but that under the laws
of the Philippine Islands it could not be held to be a lawful marriage; accordingly, the
daughters Payang and Rosalia would inherit as natural children. The order of the trial
judge, following these conclusions, was that there should be a partition of the property
of the deceased Cheong Boo between the natural children, Cheong Seng Gee, Payang,
and Rosalia.

ISSUES:

Whether or not the Chinese marriage is valid and recognizable in the Philippines.

Whether or not the Mohammedan marriage is valid.

HELD:

No. Section IV of the Marriage Law (General Order No. 68) provides that “All
marriages contracted without these Islands, which would be valid by the laws of the
country in which the same were contracted, are valid in these Islands.” To establish a
valid foreign marriage pursuant to this comity provision, it is first necessary to prove
before the courts of the Islands the existence of the foreign law as a question of fact,
and it is then necessary to prove the alleged foreign marriage by convincing evidence.

In the case at bar there is no competent testimony as to what the laws of China in the
Province of Amoy concerning marriage were in 1895. As in the Encarnacion case,
there is lacking proof so clear, strong, and unequivocal as to produce a moral
conviction of the existence of the alleged prior Chinese marriage. Substitute twenty-
three years for forty years and the two cases are the same.
Yes. The basis of human society throughout the civilized world is that of marriage.
Marriage in this jurisdiction is not only a civil contract, but, it is a new relation, an
institution in the maintenance of which the public is deeply interested. Consequently,
every intendment of the law leans toward legalizing matrimony. Persons dwelling
together in apparent matrimony are presumed, in the absence of any counter-
presumption or evidence special to the case, to be in fact married. The reason is that
such is the common order of society, and if the parties were not what they thus hold
themselves out as being, they would be living in the constant violation of decency and
of law. A presumption established by our Code of Civil Procedure is “that a man and
woman deporting themselves as husband and wife have entered into a lawful contract
of marriage.”

Section IX of the Marriage Law is in the nature of a curative provision intended to

safeguard society by legalizing prior marriages. We can see no substantial reason for
denying to the legislative power the right to remove impediments to an effectual
marriage. If the legislative power can declare what shall be valid marriages, it can
render valid, marriages which, when they took place, were against the law. Public
policy should aid acts intended to validate marriages and should retard acts intended
to invalidate marriages.

The courts can properly incline the scales of their decisions in favors of that solution
which will mot effectively promote the public policy. That is the true construction
which will best carry legislative intention into effect. And here the consequences,
entailed in holding that the marriage of the Mora Adong and the deceased Cheong
Boo, in conformity with the Mohammedan religion and Moro customs, was void,
would be far reaching in disastrous result. The last census shows that there are at least
one hundred fifty thousand Moros who have been married according to local custom.
We then have it within our power either to nullify or to validate all of these marriages;
either to make all of the children born of these unions bastards or to make them
legitimate; either to proclaim immorality or to sanction morality; either to block or to
advance settled governmental policy. Our duty is a obvious as the law is plain.

RAYTHEON INTERNATIONAL, INC., v. STOCKTON W. ROUZIE, JR.,

G.R. NO. 162894 February 26, 2008

FACTS:

Brand Marine Services, Inc. (BMSI), a foreign corporation duly organized and
existing under the laws of the State of Connecticut, and respondent Stockton W.
Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired
respondent as its representative to negotiate the sale of services in several government
projects in the Philippines for an agreed remuneration of 10% of the gross receipts.
Then, respondent secured a service contract with the Republic of the Philippines on
behalf of BMSI.

After 4 years, respondent filed before the Arbitration branch of the NLRC a suit
against BMSI and Rust International, Inc. (RUST) for alleged nonpayment of
commissions, illegal termination and breach of employment contract. Labor Arbiter
rendered judgment ordering BMSI and RUST to pay respondent’s money claims.
Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and
dismissed respondent’s complaint on the ground of lack of jurisdiction. Respondent
elevated the case to the SC but was dismissed.

After that, respondent, then a resident of La Union, instituted an action for

damages before the RTC of La Union. The Complaint named as defendants here in
petitioner as well as BMSI and RUST, the two corporations impleaded in the earlier
labor case. The complaint essentially reiterated the allegations in the labor case that
respondent was not paid for his services. The complaint also averred that BMSI and
RUST as well as petitioner itself had combined and functioned as one company.

In its Answer, petitioner alleged that contrary to respondent’s claim, it was a

foreign corporation duly licensed to do business in the Philippines and denied entering
into any arrangement with respondent or paying the latter any sum of money.
Petitioner also referred to the NLRC decision which disclosed that per the written
agreement between respondent and BMSI and RUST, denominated as “Special Sales
Representative Agreement,” the rights and obligations of the parties shall be governed
by the laws of the State of Connecticut. Petitioner sought the dismissal of the
complaint on grounds of failure to state a cause of action and forum non conveniens.
It was denied.

ISSUE:

Whether or not the Philippine court can acquire jurisdiction over the case
notwithstanding the stipulation that the same shall be governed by a foreign law.

HELD:

Yes. That the subject contract included a stipulation that the same shall be
governed by the laws of the State of Connecticut does not suggest that the Philippine
courts, or any other foreign tribunal for that matter, are precluded from hearing the
civil action.

Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases,

may refuse impositions on its jurisdiction where it is not the most “convenient” or
available forum and the parties are not precluded from seeking remedies elsewhere.
Petitioner averred foreign elements present in this case which include (1) BRII and
RUST are foreign corporations and respondent Rouzie is an American citizen, and (2)
The evidence to be presented is located outside the Philippines. The Court held that
these are not sufficient to oust the trial court of its jurisdiction over the case and the
parties involved.
 8

AUGUSTO BENEDICTO SANTOS III, represented by his father and legal

guardian, Augusto Benedicto Santos vs. NORTHWEST ORIENT AIRLINES
and CA
G.R. No. 101538 June 23, 1992

FACTS:

The petitioner is a minor and a resident of the Philippines. Private respondent

Northwest Orient Airlines (NOA) is a foreign corporation with principal office in
Minnesota, U.S.A. and licensed to do business and maintain a branch office in the
Philippines.
On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San
Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back.
The scheduled departure date from Tokyo was December 20, 1986. No date was
specified for his return to San Francisco.

On December 19, 1986, the petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila. Despite a previous
confirmation and re-confirmation, he was informed that he had no reservation for his
flight from Tokyo to Manila. He therefore had to be wait-listed.

On March 12, 1987, the petitioner sued NOA for damages in the RTC of Makati.
On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of
jurisdiction, citing Article 28(1) of the Warsaw Convention, reading as follows:

Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the
territory of one of the High Contracting Parties, either before the court of the domicile
of the carrier or of his principal place of business, or where he has a place of business
through which the contract has been made, or before the court at the place of
destination.

The private respondent contended that the Philippines was not its domicile nor was
this its principal place of business. Neither was the petitioner’s ticket issued in this
country nor was his destination Manila but San Francisco in the United States.
Lower court granted the dismissal, CA affirmed.

ISSUE:

WON the Philippines has jurisdiction over the case. (Issue raised by the party is
WON the provision of the Warsaw convention was constitutional)

HELD:

No jurisdiction (the provision is constitutional)

The Convention is a treaty commitment voluntarily assumed by the Philippine

government and, as such, has the force and effect of law in this country. The
petitioner’s allegations are not convincing enough to overcome this presumption.
Apparently, the Convention considered the four places designated in Article 28 the
most convenient forums for the litigation of any claim that may arise between the
airline and its passenger, as distinguished from all other places.

Convention applies to all international transportation of persons performed by

aircraft for hire. Whether the transportation is “international” is determined by the
contract of the parties, which in the case of passengers is the ticket. When the contract
of carriage provides for the transportation of the passenger between certain designated
terminals “within the territories of two High Contracting Parties,” the provisions of
the Convention automatically apply and exclusively govern the rights and liabilities of
the airline and its passenger.

The place of destination, within the meaning of the Warsaw Convention, is

determined by the terms of the contract of carriage or, specifically in this case, the
ticket between the passenger and the carrier. Examination of the petitioner’s ticket
shows that his ultimate destination is San Francisco. Although the date of the return
flight was left open, the contract of carriage between the parties indicates that NOA
was bound to transport the petitioner to San Francisco from Manila. Manila should
therefore be considered merely an agreed stopping place and not the destination.

Notably, the domicile of the carrier is only one of the places where the complaint
is allowed to be filed under Article 28(1). By specifying the three other places, to wit,
the principal place of business of the carrier, its place of business where the contract
was made, and the place of destination, the article clearly meant that these three other
places were not comprehended in the term “domicile.”

BANCO ESPAÑOL FILIPINO VS PALANCA

37 PHIL 921 [GR NO. L-11390 MARCH 26, 1918]

FACTS:

This action was instituted upon March 31, 1908, by “El Banco Espanol-Filipino”
to foreclose a mortgage upon various parcels of real property situated in the city of
Manila. The mortgage in question is dated June 16, 1906, and was executed by the
original defendant herein, Engracio Palanca Tanquinyeng y Limquingco, as security
for a debt owing by him to the bank. Upon March 31, 1906, the debt amounted to
P218,294.10 and was drawing interest at the rate of 8 per centum per annum, payable
at the end of each quarter. It appears that the parties to this mortgage at that time
estimated the value of the property in question at P292,558, which was about P75,000
in excess of the indebtedness. After the execution of this instrument by the mortgagor,
he returned to China which appears to have been his native country; and he there died,
upon January 29, 1810, without again returning to the Philippine Islands. As the
defendant was a nonresident at the time of the institution of the present action, it was
necessary for the plaintiff in the foreclosure proceeding to give notice to the defendant
by publication pursuant to section 399 of the Code of Civil Procedure. An order for
publication was accordingly obtained from the court, and publication was made in due
form in a newspaper of the city of Manila. At the same time that the order of the court
should deposit in the post office in a stamped envelope a copy of the summons and
complaint directed to the defendant at his last place of residence, to wit, the city of
Amoy, in the Empire of China. This order was made pursuant to the following
provision contained in section 399 of the Code of Civil Procedure. Whether the clerk
complied with this order does not affirmatively appear. There is, however, among the
papers pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo
Chan y Garcia, an employee of the attorneys of the bank, showing that upon that date
he had deposited in the Manila post-office a registered letter, addressed to Engracio
Palanca Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff’s
affidavit, the summons, and the order of the court directing publication as aforesaid. It
appears from the postmaster’s receipt that Bernardo probably used an envelope
obtained from the clerk’s office, as the receipt purports to show that the letter
emanated from the office. The cause proceeded in usual course in the Court of First
Instance; and the defendant not having appeared, judgment was, upon July 2, 1908,
taken against him by default. Upon July 3, 1908, a decision was rendered in favor of
the plaintiff. In this decision it was recited that publication had been properly made in
a periodical, but nothing was said about this notice having been given mail. The court,
upon this occasion, found that the indebtedness of the defendant amounted to
P249,355. 32, with interest from March 31, 1908. Accordingly it was ordered that the
defendant should, on or before July 6, 1908, deliver said amount to the clerk of the
court to be applied to the satisfaction of the judgment, and it was declared that in case
of the failure of the defendant to satisfy the judgment within such period, the
mortgage property located in the city of Manila should be exposed to public sale. The
payment contemplated in said order was never made; and upon July 8, 1908, the court
ordered the sale of the property. The sale took place upon July 30, 1908, and the
property was bought in by the bank for the sum of P110,200. Upon August 7, 1908,
this sale was confirmed by the court. About seven years after the confirmation of this
sale, or to the precise, upon June 25, 1915, a motion was made in this cause by
Vicente Palanca, as administrator of the estate of the original defendant, Engracio
Palanca Tanquinyeng y Limquingco, wherein the applicant requested the court to set
aside the order of default of July 2, 1908, and the judgment rendered upon July 3,
1908, and to vacate all the proceedings subsequent thereto. The basis of this
application, as set forth in the motion itself, was that the order of default and the
judgment rendered thereon were void because the court had never acquired
jurisdiction over the defendant or over the subject of the action.

ISSUE:

Whether the court acquired the necessary jurisdiction to enable it to proceed with
the foreclosure of the mortgage.

HELD:

Yes. Jurisdiction over the person is acquired by the voluntary appearance of a

party in court and his submission to its authority, or it is acquired by the coercive
power of legal process exerted over the person.

Jurisdiction over the property which is the subject of the litigation may result
either from a seizure of the property under legal process, whereby it is brought into
the actual custody of the law, or it may result from the institution of legal proceedings
wherein, under special provisions of law, the power of the court over the property is
recognized and made effective. In the latter case the property, though at all times
within the potential power of the court, may never be taken into actual custody at all.
An illustration of the jurisdiction acquired by actual seizure is found in attachment
proceedings, where the property is seized at the beginning of the action, or some
subsequent stage of its progress, and held to abide the final event of the litigation. An
illustration of what we term potential jurisdiction over the res, is found in the
proceeding to register the title of land under our system for the registration of land.
Here the court, without taking actual physical control over the property assumes, at
the instance of some person claiming to be owner, to exercise a jurisdiction in rem
over the property and to adjudicate the title in favor of the petitioner against all the
world.

In the terminology of American law the action to foreclose a mortgage is said to

be a proceeding quasi in rem, by which is expressed the idea that while it is not
strictly speaking an action in rem yet it partakes of that nature and is substantially
such. The expression “action in rem” is, in its narrow application, used only with
reference to certain proceedings in courts of admiralty wherein the property alone is
treated as responsible for the claim or obligation upon which the proceedings are
based. The action quasi rem differs from the true action in rem in the circumstance
that in the former an individual is named as defendant, and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the
property. All proceedings having for their sole object the sale or other disposition of
the property of the defendant, whether by attachment, foreclosure, or other form of
remedy, are in a general way thus designated. The judgment entered in these
proceedings is conclusive only between the parties.

Passing now to a consideration of the jurisdiction of the Court of First Instance in

a mortgage foreclosure, it is evident that the court derives its authority to entertain the
action primarily from the statutes organizing the court. The jurisdiction of the court,
in this most general sense, over the cause of action is obvious and requires no
comment. Jurisdiction over the person of the defendant, if acquired at all in such an
action, is obtained by the voluntary submission of the defendant or by the personal
service of process upon him within the territory where the process is valid. If,
however, the defendant is a nonresident and, remaining beyond the range of the
personal process of the court, refuses to come in voluntarily, the court never acquires
jurisdiction over the person at all. Here the property itself is in fact the sole thing
which is impleaded and is the responsible object which is the subject of the exercise
of judicial power. It follows that the jurisdiction of the court in such case is based
exclusively on the power which, under the law, it possesses over the property; and any
discussion relative to the jurisdiction of the court over the person of the defendant is
entirely apart from the case. The jurisdiction of the court over the property,
considered as the exclusive object of such action, is evidently based upon the
following conditions and considerations, namely: (1) that the property is located
within the district; (2) that the purpose of the litigation is to subject the property by
sale to an obligation fixed upon it by the mortgage; and (3) that the court at a proper
stage of the proceedings takes the property into custody, if necessary, and expose it to
sale for the purpose of satisfying the mortgage debt. An obvious corollary is that no
other relief can be granted in this proceeding than such as can be enforced against the
property.
 It is, of course universally recognized that the statutory provisions relative to
publication or other form of notice against a nonresident owner should be complied
with; and in respect to the publication of notice in the newspaper it may be stated that
strict compliance with the requirements of the law has been held to be essential.

With respect to the provisions of our own statute, relative to the sending of notice
by mail, the requirement is that the judge shall direct that the notice be deposited in
the mail by the clerk of the court, and it is not in terms declared that the notice must
be deposited in the mail. We consider this to be of some significance; and it seems to
us that, having due regard to the principles upon which the giving of such notice is
required, the absent owner of the mortgaged property must, so far as the due process
of law is concerned, take the risk incident to the possible failure of the clerk to
perform his duty, somewhat as he takes the risk that the mail clerk or the mail carrier
might possibly lose or destroy the parcel or envelope containing the notice before it
should reach its destination and be delivered to him. This idea seems to be
strengthened by the consideration that placing upon the clerk the duty of sending
notice by mail, the performance of that act is put effectually beyond the control of the
plaintiff in the litigation. At any rate it is obvious that so much of section 399 of the
Code of Civil Procedure as relates to the sending of notice by mail was complied with
when the court made the order. The question as to what may be the consequences of
the failure of the record to show the proof of compliance with that requirement will be
discussed by us further on.

In the progress of this discussion we have stated the two conclusions; (1) that the
failure of the clerk to send the notice to the defendant by mail did not destroy the
jurisdiction of the court and (2) that such irregularity did not infringe the requirement
of due process of law. As a consequence of these conclusions the irregularity in
question is in some measure short of its potency. It is still necessary, however, to
consider its effect considered as a simple irregularity of procedure; and it would be
idle to pretend that even in this aspect the irregularity is not grave enough. From this
point of view, however, it is obvious that any motion to vacate the judgment on the
ground of the irregularity in question must fail unless it shows that the defendant was
prejudiced by that irregularity. The least, therefore, that can be required of the
proponent of such a motion is to show that he had a good defense against the action to
foreclose the mortgage. Nothing of the kind is, however, shown either in the motion
or in the affidavit which accompanies the motion.

10

CAYETANO LIM v. INSULAR COLLECTOR OF CUSTOMS

36 PHIL 472

FACTS:

The real question raised on this appeal is whether the Insular Collector of
Customs may lawfully deny entry into the Philippine Islands to two children aged 8
and 14 years, respectively, under and by authority of the Chinese Immigration Laws,
it appearing that the children arrived at the Port of Manila accompanied by and in the
custody of their mother, a Filipino woman; that they were born in China, out of lawful
wedlock; and that their father was a Chinese person. These children, being Chinese
persons, are denied the right of entrance into the Philippine Islands under the express
terms of the Chinese immigration laws. On the other hand, it is urged on behalf of the
children that they are entitled to enter, regardless of the provisions of the Chinese
immigration laws, since the admitted facts, as it is said, disclose that they are citizens
of the Philippine Islands; and for the further reason, that their mother, who is entitled
to their custody and charged with their maintenance and education, is clearly entitled
to take up her residence in the Philippine Islands and should not be required, to that
end, to abandon her minor children.
Without discussing or deciding any of the contentions of the parties as to the
rights of citizenship of these children, actual or inchoate, we are of opinion that by
analogous reasoning to that upon which the Supreme Court of the United States held
that the wives and minor children of Chinese merchants domiciled in the United
States may enter that country without certificates, these children must be held to be
entitled to enter the Philippine Islands with their mother, for the purpose of taking up
their residence here with her, it appearing that she is natural guardian, entitled to their
custody and charged with their maintenance and education.

ISSUE:

WON the Insular Collector of Customs is allowed to deny entry the two minor
children?

HELD:

It has been suggested that such a ruling opens the door to fraud and evasion, but
we are not much impressed with the force of this suggestion, knowing as we do that
the immigration authorities have been furnished by the law with peculiarly effective
machinery for its enforcement, well calculated to defeat any attempt to make an
unauthorized or improper use of so manifestly reasonable an exception from the literal
construction and application of its general provisions.

Some confusion seems to have arisen in the court below as to the precise nature
and effect of the somewhat inartificial pleadings upon which these proceedings were
submitted. The case appears to have been submitted upon an answer to an order to
show cause why a writ of habeas corpus should not issue upon the petition filed on
behalf of the infant children. In the form in which the answer is couched, there is
much in the contention of the appellee that the trial court should have treated the
answer as in substance and effect a demurrer to the petition, admitting the truth of the
facts alleged therein, but praying judgment as to whether it sets forth facts sufficient
to constitute a cause of action and to justify the issuance of the writ. We are inclined
to think, however, that the understanding of the parties and of the court below was
that the answer should be treated rather as in the nature of a return to a writ of habeas
corpus, accepting as true the allegations of the petition but maintaining the legality of
the detention upon the facts thus submitted. Without considering at this time whether
in habeas corpus proceedings the respondent may, without consent of court, demur to,
instead of answering an order to show cause why the writ should not issue, and
without considering or deciding the course which should be pursued where a
respondent attempts to file a demurrer to a petition for a writ of habeas corpus in lieu
of the return prescribed by the statute to the writ when actually issued; we treat the
answer to the order to show cause in the case at bar as we think the parties and the
court below understood it should be treated, that is to say, as in substance and effect
the return which the Insular Collector desired to make to the writ of habeas corpus
issued or assumed to have been issued in response to the petition on behalf of the
children held in custody by him.

11
INTERNATIONAL SHOE CO. V. WASHINGTON
326 US 310 (1945)

FACTS:

International Shoe Co., Defendant, was a company based in Delaware with an office
in St. Louis, Missouri. Defendant employed salesmen that resided in Washington to
sell their product in the state of Washington. Defendant regularly shipped orders to
the salesmen who accepted them, the salesmen would display the products at places in
Washington, and the salesmen were compensated by commission for sale of the
products. The salesmen were also reimbursed for the cost of renting the places of
business in Washington. Washington sued Defendant after Defendant failed to make
contributions to an unemployment compensation fund exacted by state statutes. The
Washington statute said that the commissioner could issue personal service if
Defendant was found within the state, or by mailing it to Defendant if Defendant was
not in the state. The notice of assessment was served upon Defendant’s salesperson
and a copy of the notice was mailed to Defendant. Defendant appeared specially,
moving to set aside the order that service upon the salesperson was proper service.
Defendant also argued that it did not “do business” in the state, that there was no
agent upon which service could be made, and that Defendant did not furnish
employment within the meaning of the statute. Defendant also argued that the statute
violated the Due Process Clause of the Fourteenth Amendment and imposed a
prohibitive burden of interstate commerce. The trial court found for Washington and
the Supreme Court of Washington affirmed, reasoning that the continuous flow of
Defendant’s product into Washington was sufficient to establish personal jurisdiction.
Defendant appealed.

ISSUE:

Is service of process upon Defendant’s agent sufficient notice when the

corporation’s activities result in a large volume of interstate business so that the
corporation receives the protection of the laws of the state and the suit is related to the
activities which make the corporation present?

HELD:

Yes. Affirmed. The general rule is that in order to have jurisdiction with someone
outside the state, the person must have certain minimum contacts with it such that the
maintenance of the suit does not offend “traditional notions of fair play and
substantial justice. For a corporation, the “minimum contacts” required are not just
continuous and systematic activities but also those that give rise to the liabilities sued
on. Defendant could have sued someone in Washington. It was afforded the protection
of the laws of that state, and therefore it should be subject to suit.

The state’s power to tax should not be qualified by an ambiguous statement

regarding fair play and substantial justice.

This decision articulates the rule for determining whether a state has personal
jurisdiction over an absent defendant via the “minimum contacts” test. In general,
International Shoe demonstrates that contacts with a state should be evaluated in
terms of how “fair” it would be to exercise jurisdiction over an absent defendant.

12

SHAFFER V. HEITNER
433 US 186 (1977)

FACTS:

Plaintiff, a stockholder for Greyhound Corp., a company incorporated in

Delaware with its principal place of business in Arizona, sued Greyhound Corp.,
Greyhound Lines, Inc., (a subsidiary of Greyhound Corp.) and present and former
officers of the two companies for violating duties to Greyhound Corp. by causing it to
be liable for damages in an antitrust suit and a fine in a criminal contempt action in
Oregon. Plaintiff filed a motion for sequestration of the officers’ stock. Under a
Delaware statute, Delaware is the site of all stock in Delaware corporations. The stock
was seized. Defendants were notified by certified mail of the sequestration and notice
was published in a Delaware newspaper. Defendants entered a special appearance so
they could move to quash service of process and vacate the sequestration order.
Defendant argued that the order violated due process and therefore the property could
not be attached in Delaware.

In addition, Defendants argued that they did not have the minimum contacts with
Delaware required to establish jurisdiction under International Shoe Co. v.
Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Moreover, Defendants
argued that the sequestration procedures were inconsistent with the Sniadach cases
(see Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349
(1969). The Court of Chancery found for Plaintiff and the Supreme Court of Delaware
affirmed the Court of Chancery. The Supreme Court of Delaware reasoned that the
Sniadach cases involved default judgments and not compelling a party to appear. This
court furthered reasoned that sequestration procedures help to adjudicate claims of
mismanagement against Delaware companies, and do not cause permanent
deprivation of property to their shareholders. Defendants appealed.

ISSUE:

In order for the forum state to exercise in rem jurisdiction on a nonresident, must
the nonresident have minimum contacts with the forum state such that the defendant
has purposefully availed itself of the benefits of that state’s laws? If so, must the cause
of action be sufficiently related to the contacts the nonresident has with the forum
state?
HELD:

Yes to both. Judgment reversed. In rem is not a proceeding against the property, it
is a proceeding against a person’s interest in the property. You need to give an owner
of property reasonable and appropriate notice of an in rem proceeding so that he or
she recognizes that such a proceeding directly affects his or her interests. Having
property in a state does not give the state jurisdiction over causes of action unrelated
to the property unless the person also passes the minimum contacts test articulated in
the International Shoe decision. If it is unconstitutional to exercise jurisdiction over
the person directly then it should be unconstitutional to assert jurisdiction indirectly.
Plaintiff’s argument that Delaware has an interest in asserting jurisdiction over
corporate fiduciaries is not established by Delaware law.

Delaware law determines that it has jurisdiction over Defendants because

Defendants’ property is in Delaware; and not due to their status as corporate
fiduciaries. First, the statute authorizing jurisdiction does not specifically apply to
stockholder derivative actions. Moreover, Plaintiff’s inability to secure jurisdiction
over seven of the defendants because they didn’t have property in Delaware shows
that there is no necessary relationship between corporate fiduciaries and stockholders.
In addition, Plaintiff has not demonstrated that Delaware is a fair forum. Plaintiff
must demonstrate more than the applicability of Delaware’s laws to the controversy to
establish a basis for jurisdiction. Plaintiff’s argument that Defendants have received
benefits from Delaware laws only demonstrates that it would be appropriate for
Delaware law to govern obligations between Defendant and stockholders. This
argument does not require that Delaware be permitted to exercise jurisdiction,
especially considering its lack of a long-arm statute.

It is highly unlikely a court has personal jurisdiction over a non-resident

defendant that is absent from the forum state when the only contact is property owned
by the defendant located within the forum state. Even if the property is connected to
the suit, minimum contacts must still be established in compliance with the
International Shoe test.

13

WORLD-WIDE VOLKWAGEN V. WOODSON

444 US 286 (1980)

FACTS:

Harry and Kay Robinson purchased an Audi automobile from Seaway

Volkswagen, Inc. in New York State in 1976. The following year they left New York
to move to Arizona. While they were driving through Oklahoma, another car struck
them, causing a fire which burned Kay Robinson and two of her children. The
Robinsons brought a products liability suit in Oklahoma claiming that their injuries
resulted from defective design and placement for the Audi’s gas tank and fuel system.
The Robinsons joined as defendants the auto manufacturer, Audi, its importer,
Volkswagen of America, Inc., its regional distributor, World Wide Volkswagen
Corporation, and its retail dealer, Seaway. The court found that World Wide was
incorporated and had its business office in New York. It distributed Vehicles, under
Contract with Volkswagen, to retail dealers in New York, Connecticut, and New
Jersey. Seaway is a retail dealer whose place of business is in New York. There was
no evidence that either World-Wide or Seaway did any business in Oklahoma,
shipped or sold any products in that state, had an agent to receive process there, or
advertised in Oklahoma. Seaway and World-Wide made special apperances for the
purpose of opposing jurisdiction in Oklahoma. The Oklahoma court denied their
motion and this appeal followed, whereby the Supreme Court of the United States
granted Seaway and World-Wide a writ of certiorari.

ISSUE:

Whether an Oklahoma court may exercise in personam jurisdiction over a non-

resident automobile retailer and its wholesale distributor in a products liability suit,
when the defendants’ only connection with Oklahoma is the fact that an auto sold in
New York to New York residents became involved in an accident in Oklahoma?

HELD:

No. The Supreme Court reversed the Oklahoma court’s ruling. Forseeability of
being asked to defend a suit in a particular forum is not a sufficient benchmark for
personal jurisdiction under the Due Process Clause. Instead, it is the defendant’s
conduct and connection with the forum state that determines whether it is reasonable
for a defendant to be haled into court. Because Seaway and World-Wide had no
contacts, ties or relations with the state of Oklahoma, jurisdiction would violate the
Due Process Clause.

The court’s reasoning for not extending jurisdiction is that the two purposes of
the minimum contacts requirement, i.e. protecting defendants against the burden of
litigating in a distant forum and ensuring that State courts do not reach beyond the
limits established by the federal system, would not be served if jurisdiction were
granted. Specifically, the court relied on the fact that Seaway and World-Wide carry
on no activity whatsoever in Oklahoma, perform no services there, and avail
themselves of none of the privileges and benefits of Oklahoma law. The court will
look not to whether it was foreseeable to the defendant that he could be sued in a
given state, but whether a suit there is reasonable given the defendant’s ties and
relations with the state.

14

ASAHI METAL INDUSTRY CO. V. SUPERIOR COURT

480 US 102 (1987)

FACTS:

Gary Zurcher was severely injured and his wife was killed after he lost control of
his Honda motorcycle and collided with a tractor in Solano County, California.
Zurcher filed a products liability in California state court, alleging that the motorcycle
tire, tube and sealant were defective. Zucher’s complaint named Cheng Shin Rubber
Industrial, Co., Ltd., the Taiwanese manufacturer of the tube. Cheng Shin then filed a
cross- complaint against Asahi Metal Industry Co., Ltd., the manufacturer of the
tube’s valve assembly. Asahi is a Japanese corporation that manufactures tire valve
assemblies in Japan and sells them to Cheng Shin and others for use as components in
finished tire tubes. Approximately 20 percent of Cheng Shin’s sales in the United
States are in California. A manager of Cheng Shin submitted an affidavit alleging that
Asahi was aware that parts were sold in the U.S. The president of Asahi submitted an
affidavit alleging that Asahi never contemplated that they could be subject to suit in
California through its sales of tire valves to Cheng Shin in Taiwan. Asahi moved to
dismiss the suit against it for want of jurisdiction. California court denied the motion
and the Supreme Court of the United States granted a writ of certiorari.

ISSUE:

Whether the mere awareness of the part of a foreign Defendant that the
components it manufactured, sold, and delivered outside the United States would
reach the forum state in the stream of commerce constitutes sufficient minimum
contacts rendering jurisdiction appropriate.

HELD:

No. The Supreme Court of the United States reversed the Supreme Court of
California’s ruling upholding jurisdiction. Due Process requires more than that the
Defendant was aware of its product’s entry into the forum state through the stream of
commerce in order for the state to exercise jurisdiction over the Defendant. The
substantial connection between the Defendant and the forum state necessary for a
finding of minimum contacts must come about by an action of the Defendant
purposefully directed toward the forum state. The placement of a product in the
stream of commerce, without more, is not an act of the Defendant purposefully
directed toward the forum state. Concurrence. Justice Brennan concurred, in which he
was joined by Justices White, Marshall, and Blackmun. Justice Brennan disagreed
with the stream of commerce theory, as well as the court’s conclusion that Asahi did
not purposely avail itself of the California market. However, despite finding sufficient
minimum contacts, Justice Brennan still found jurisdiction improper because fair play
and substantial justice would not be achieved. Justice Stevens also concurred, in
which he was joined by Justices White and Blackmun. Specifically, he found that
minimum contacts are not always necessary for a state court to invoke jurisdiction.

In analyzing whether jurisdiction would offend traditional notions of fair play and
substantial justice, the court noted that the burden on the Defendant to defend the suit
would be severe. Moreover, the court noticed that California’s interest in the suit is
slight, since the Plaintiff is not a California resident.
 15

REPUBLIC OF THE PHILIPPINES V. PIMENTEL

533 US 851 (2008)

FACTS:

A class action by and for human rights victims (Pimentel class) of Ferdinand
Marcos, while he was President of the Republic of the Philippines (Republic), led to a
nearly $2 billion judgment in a United States District Court. The Pimentel class then
sought to attach the assets of Arelma, S. A. (Arelma), a company incorporated by
Marcos, held by a New York broker (Merrill Lynch). The Republic and a Philippine
commission (Commission) established to recover property wrongfully taken by
Marcos are also attempting to recover this and other Marcos property. The Philippine
National Banc (PNB) holds some of the disputed assets in escrow, awaiting the
outcome of pending litigation in the Sandiganbayan, a Philippine court determining
whether Marcos’ property should be forfeited to the Republic. Facing claims from
various Marcos creditors, including the Pimentel class, Merrill Lynch filed this
interpleader action under 28 U. S. C. §1335, naming, among the defendants, the
Republic, the Commission, Arelma, PNB (all petitioners here), and the Pimentel class
(respondents here).
The Republic and the Commission asserted sovereign immunity under the
Foreign Sovereign Immunities Act of 1976, and moved to dismiss pursuant to Federal
Rule of Civil Procedure 19(b), arguing that the action could not proceed without
them. Arelma and PNB also sought a Rule 19(b) dismissal. The District Court
refused, but the Ninth Circuit reversed, holding that the Republic and the Commission
are entitled to sovereign immunity and are required parties under Rule 19(a), and it
entered a stay pending the Sandiganbayan litigation’s outcome. Finding that that
litigation could not determine entitlement to Arelma’s assets, the District Court
vacated the stay and ultimately awarded the assets to the Pimentel class. The Ninth
Circuit affirmed, holding that dismissal was not warranted under Rule 19(b) because,
though the Republic and the Commission were required parties, their claim had so
little likelihood of success on the merits that the action could proceed without them.
The court found it unnecessary to consider whether prejudice to those entities might
be lessened by a judgment or interim decree in the interpleader action, found the
entities’ failure to obtain a judgment in the Sandiganbayan an equitable consideration
counseling against dismissing the interpleader suit, and found that allowing the
interpleader case to proceed would serve the Pimentel class’ interests.

HELD:

1. Because Arelma and PNB also seek review of the Ninth Circuit’s decision, this
Court need not rule on the question whether the Republic and the Commission, having
been dismissed from the suit, had the right to seek review of the decision that the suit
could proceed in their absence. As a general matter any party may move to dismiss an
action under Rule 19(b). Arelma and PNB have not lost standing to have the judgment
vacated in its entirety on procedural grounds simply because they did not appeal, or
petition for certiorari on, the underlying merits ruling denying them the interpleaded
assets. Pp. 7–9.
 2. Rule 19 requires dismissal of the interpleader action. Pp. 9–20.

(a) Under Rule 19(a), nonjoinder even of a required person does not always result
in dismissal. When joinder is not feasible, the question whether an action should
proceed turns on nonexclusive considerations in Rule 19(b), which asks whether “in
equity and good conscience, the action should proceed among the existing parties or
should be dismissed.” The joinder issue can be complex, and the case-specific
determinations involve multiple factors, some “substantive, some procedural, some
compelling by themselves, and some subject to balancing against opposing interests,”
Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U. S. 102, 119. Pp. 9–10.

(b) Here, Rule 19(a)’s application is not contested: The Republic and the
Commission are required entities. And this Court need not decide the proper standard
of review for Rule 19(b) decisions, because the Ninth Circuit’s errors of law require
reversal. Pp. 10–19.

(1) The first factor directs the court to consider, in determining whether the
action may proceed, the prejudice to absent entities and present parties in the event
judgment is rendered without joinder. Rule 19(b)(1). The Ninth Circuit gave
insufficient weight to the sovereign status of the Republic and the Commission in
considering whether they would be prejudiced if the case proceeded. Giving full
effect to sovereign immunity promotes the comity and dignity interests that
contributed to the development of the immunity doctrine. See, e.g., Verlinden B. V. v.
Central Bank of Nigeria, 461 U. S. 480, 486. These interests are concrete here. The
entities’ claims arise from historically and politically significant events for the
Republic and its people, and the entities have a unique interest in resolving matters
related to Arelma’s assets. A foreign state has a comity interest in using its courts for
a dispute if it has a right to do so. Its dignity is not enhanced if other nations bypass its
courts without right or good cause. A more specific affront could result if property the
Republic and the Commission claim is seized by a foreign court decree. This Court
has not considered the precise question presented, but authorities involving the
intersection of joinder and the United States’ governmental immunity, see, e.g., Mine
Safety Appliances Co. v. Forrestal, 326 U. S. 371, 373–375, instruct that where
sovereign immunity is asserted, and the sovereign’s claims are not frivolous,
dismissal must be ordered where there is a potential for injury to the absent
sovereign’s interests. The claims of the Republic and the Commission were not
frivolous, and the Ninth Circuit thus erred in ruling on their merits. The privilege of
sovereign immunity from suit is much diminished if an important and consequential
ruling affecting the sovereign’s substantial interest is determined, or at least assumed,
by a federal court in its absence and over its objection. The Pimentel class’ interest in
recovering its damages is not discounted, but important comity concerns are
implicated by assertion of foreign sovereign immunity. The error is not that the courts
below gave too much weight to the Pimentel class’ interests, but that they did not
accord proper weight to the compelling sovereign immunity claim. Pp. 11–16.

(2) The second factor is the extent to which any prejudice could be lessened or
avoided by relief or measures alternative to dismissal, Rule 19(b)(2), but no
alternative remedies or forms of relief have been proposed or appear to be available.
As to the third factor—whether a judgment rendered without the absent party would
be adequate, Rule 19(b)(3)—“adequacy” refers not to satisfaction of the Pimentel
class’ claims, but to the “public stake in settling disputes by wholes, whenever
possible,” Provident Bank, supra, at 111. Going forward with the action in the
absence of the Republic and the Commission would not further this public interest
because they could not be bound by a judgment to which they were not parties. As to
the fourth factor—whether the plaintiff would have an adequate remedy if the action
were dismissed for nonjoinder, Rule 19(b)(4)—the Ninth Circuit made much of the
tort victims’ lack of an alternative forum. But Merrill Lynch, not the Pimentel class, is
the plaintiff as the stakeholder in the interpleader action. See 28 U. S. C. §1335(a).
The Pimentel class’ interests are not irrelevant to Rule 19(b)’s equitable balance, but
the Rule’s other provisions are the relevant ones to consult. A dismissal on the ground
of nonjoinder will not provide Merrill Lynch with a judgment determining entitlement
to the assets so it could be done with the matter, but it likely would give Merrill
Lynch an effective defense against piecemeal litigation by various claimants and
inconsistent, conflicting judgments. Any prejudice to Merrill Lynch is outweighed by
prejudice to the absent entities invoking sovereign immunity. In the usual course, the
Ninth Circuit’s failure to give sufficient weight to the likely prejudice to the Republic
and the Commission would warrant reversal and remand for further determinations,
but here, that error plus this Court’s analysis under Rule 19(b)’s additional provisions
require the action’s dismissal.

16

PHILSEC INVESTMENT et al V. COURT OF APPEALS

G.R. NO 103493, (JUNE 19, 1997)

FACTS:

Private respondent Ducat obtained separate loans from petitioners Ayala

International Finance Limited (AYALA) and Philsec Investment Corp (PHILSEC),
secured by shares of stock owned by Ducat.

In order to facilitate the payment of the loans, private respondent 1488, Inc.,
through its president, private respondent Daic, assumed Ducat’s obligation under an
Agreement, whereby 1488, Inc. executed a Warranty Deed with Vendor’s Lien by
which it sold to petitioner Athona Holdings, N.V. (ATHONA) a parcel of land in
Texas, U.S.A., while PHILSEC and AYALA extended a loan to ATHONA as initial
payment of the purchase price. The balance was to be paid by means of a promissory
note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of
the money from 1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock in their possession
belonging to Ducat.

As ATHONA failed to pay the interest on the balance, the entire amount covered
by the note became due and demandable. Accordingly, private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment
of the balance and for damages for breach of contract and for fraud allegedly
perpetrated by petitioners in misrepresenting the marketability of the shares of stock
delivered to 1488, Inc. under the Agreement.
 While the Civil Case was pending in the United States, petitioners filed a
complaint “For Sum of Money with Damages and Writ of Preliminary Attachment”
against private respondents in the RTC Makati. The complaint reiterated the
allegation of petitioners in their respective counterclaims in the Civil Action in the
United States District Court of Southern Texas that private respondents committed
fraud by selling the property at a price 400 percent more than its true value.

Ducat moved to dismiss the Civil Case in the RTC-Makati on the grounds of (1)
litis pendentia, vis-a-vis the Civil Action in the U.S., (2) forum non conveniens, and
(3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action.

The trial court granted Ducat’s MTD, stating that “the evidentiary requirements
of the controversy may be more suitably tried before the forum of the litis pendentia
in the U.S., under the principle in private international law of forum non conveniens,”
even as it noted that Ducat was not a party in the U.S. case.

Petitioners appealed to the CA, arguing that the trial court erred in applying the
principle of litis pendentia and forum non conveniens.

The CA affirmed the dismissal of Civil Case against Ducat, 1488, Inc., and Daic
on the ground of litis pendentia.

ISSUE:

Is the Civil Case in the RTC-Makati barred by the judgment of the U.S. court?

HELD:
CA reversed. Case remanded to RTC-Makati

While this Court has given the effect of res judicata to foreign judgments in
several cases, it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law. This is because in this
jurisdiction, with respect to actions in personam, as distinguished from actions in rem,
a foreign judgment merely constitutes prima facie evidence of the justness of the
claim of a party and, as such, is subject to proof to the contrary. Rule 39, §50
provides:

Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a

foreign country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the
title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a
right as between the parties and their successors in interest by a subsequent title; but
the judgment may be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.

In the case at bar, it cannot be said that petitioners were given the opportunity to
challenge the judgment of the U.S. court as basis for declaring it res judicata or
conclusive of the rights of private respondents. The proceedings in the trial court were
summary. Neither the trial court nor the appellate court was even furnished copies of
the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure
a proper determination of whether the issues then being litigated in the U.S. court
were exactly the issues raised in this case such that the judgment that might be
rendered would constitute res judicata.

Second. Nor is the trial court’s refusal to take cognizance of the case justifiable
under the principle of forum non conveniens:

First, a MTD is limited to the grounds under Rule 16, sec.1, which does not
include forum non conveniens. The propriety of dismissing a case based on this
principle requires a factual determination, hence, it is more properly considered a
matter of defense.
Second, while it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after “vital facts are
established, to determine whether special circumstances” require the court’s
desistance.

17

HSBC v. JACK ROBERT SHERMAN, et al.,

GR NO 72494, 11 AUGUST 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.

ISSUE:

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:

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
 18

LAUREL V. GARCIA
GR NO 92013, 25 JULY 1990

FACTS:

Petitioners seek to stop the Philippine Government to sell the Roppongi Property,
which is located in Japan. It is one of the properties given by the Japanese
Government as reparations for damage done by the latter to the former during the war.

Petitioner argues that under Philippine Law, the subject property is property of
public dominion. As such, it is outside the commerce of men. Therefore, it cannot be
alienated.

Respondents aver that Japanese Law, and not Philippine Law, shall apply to the
case because the property is located in Japan. They posit that the principle of lex situs
applies.

ISSUES AND HELD:

1. WON the subject property cannot be alienated.

The answer is in the affirmative.

Under Philippine Law, there can be no doubt that it is of public dominion unless
it is convincingly shown that the property has become patrimonial. This, the
respondents have failed to do. As property of public dominion, the Roppongi lot is
outside the commerce of man. It cannot be alienated.

2. WON Philippine Law applies to the case at bar.

The answer is in the affirmative.

We see no reason why a conflict of law rule should apply when no conflict of law
situation exists. A conflict of law situation arises only when: (1) There is a dispute
over the title or ownership of an immovable, such that the capacity to take and
transfer immovables, the formalities of conveyance, the essential validity and effect of
the transfer, or the interpretation and effect of a 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. Hence, the need to determine which law should
apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no
question that the property belongs to the Philippines. The issue is the authority of the
respondent officials to validly dispose of property belonging to the State. And the
validity of the procedures adopted to effect its sale. This is governed by Philippine
Law. The rule of lex situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the
relevance of the lex situs rule is misplaced. The opinion does not tackle the
alienability of the real properties procured through reparations nor the existence in
what body of the authority to sell them. In discussing who are capable of acquiring the
lots, the Secretary merely explains that it is the foreign law which should determine
who can acquire the properties so that the constitutional limitation on acquisition of
lands of the public domain to Filipino citizens and entities wholly owned by Filipinos
is inapplicable.

19

MANILA HOTEL V. NLRC

343 SCRA 1 (2000)

FACTS:

In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he
was recruited by Palace Hotel in Beijing, China. Due to higher pay and benefits,
Santos agreed to the hotel’s job offer and so he started working there in November
1988. The employment contract between him and Palace Hotel was however without
the intervention of the Philippine Overseas Employment Administration (POEA). In
August 1989, Palace Hotel notified Santos that he will be laid off due to business
reverses. In September 1989, he was officially terminated.

In February 1990, Santos filed a complaint for illegal dismissal against Manila
Hotel Corporation (MHC) and Manila Hotel International, Ltd. (MHIL). The Palace
Hotel was impleaded but no summons were served upon it. MHC is a government
owned and controlled corporation. It owns 50% of MHIL, a foreign corporation
(Hong Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who
handled the case ruled in favor of Santos. The National Labor Relations Commission
(NLRC) affirmed the labor arbiter.

ISSUE:

Whether or not the NLRC has jurisdiction over the case.

HELD:

No. The NLRC is a very inconvenient forum for the following reasons:
The only link that the Philippines has in this case is the fact that Santos is a
Filipino; However, the Palace Hotel and MHIL are foreign corporations – MHC
cannot be held liable because it merely owns 50% of MHIL, it has no direct business
in the affairs of the Palace Hotel. The veil of corporate fiction can’t be pierced
because it was not shown that MHC is directly managing the affairs of MHIL. Hence,
they are separate entities. Santos’ contract with the Palace Hotel was not entered into
in the Philippines; Santos’ contract was entered into without the intervention of the
POEA (had POEA intervened, NLRC still does not have jurisdiction because it will
be the POEA which will hear the case);
MHIL and the Palace Hotel are not doing business in the Philippines; their
agents/officers are not residents of the Philippines;

Due to the foregoing, the NLRC cannot possibly determine all the relevant facts
pertaining to the case. It is not competent to determine the facts because the acts
complained of happened outside our jurisdiction. It cannot determine which law is
applicable. And in case a judgment is rendered, it cannot be enforced against the
Palace Hotel (in the first place, it was not served any summons).

The Supreme Court emphasized that under the rule of forum non conveniens, a
Philippine court or agency may assume jurisdiction over the case if it chooses to do so
provided:
(1) that the Philippine court is one to which the parties may conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent decision as to the
law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce its decision.
None of the above conditions are apparent in the case at bar.

20

SPS. DOMINGO BELEN V. HON PABLO CHAVEZ

GR NO 175335, 26 MARCH 2008

FACTS:

The instant petition originated from the action for the enforcement of a foreign
judgment against petitioners spouses Belen, filed by private respondent spouses
Pacleb. Private respondents secured a judgment by default with the Superior Court of
the State of California. The judgment ordered petitioners to pay private respondents
the amount of $56,204.69 representing loan repayment and share in the profits plus
interest and costs of suit. The summons was served on petitioners’ address in Laguna,
as was alleged in the complaint.

Atty. Alcantara, counsel for herein petitioners, filed an answer alleging that
petitioners were actually residents of California, USA. The answer also claimed that
petitioners’ liability had been extinguished by virtue of a judgment of dismissal.

For failure to present a copy of the alleged judgment of dismissal, the RTC
denied the motion to dismiss.

The RTC rendered a Decision directing respondents to pay the plaintiffs, and a
writ of execution was issued. The RTC denied petitioners’ motion seeking the quashal
of the writ of execution, as well as the MR.
 Thus, petitioners filed a Rule 65 petition before the CA.

The CA dismissed the petition for certiorari .

ISSUE:

Whether the RTC acquired jurisdiction over the persons of petitioners through
either the proper service of summons or the appearance of Atty. Alcantara on behalf
of petitioners.

RULING:

Jurisdiction over the person of a resident defendant who does not voluntarily
appear in court can be acquired by personal service of summons as provided under
Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with
summons within a reasonable time, substituted service may be made in accordance
with Section 8 of said Rule.

If he is temporarily out of the country, any of the following modes of service may
be resorted to:

(1) substituted service;

(2) personal service outside the country, with leave of court;

(3) service by publication, also with leave of court; or

(4) any other manner the court may deem sufficient.

However, in an action in personam wherein the defendant is a non-resident who

does not voluntarily submit himself to the authority of the court, personal service of
summons within the state is essential to the acquisition of jurisdiction over her person.
This method of service is possible if such defendant is physically present in the
country. If he is not found therein, the court cannot acquire jurisdiction over his
person and therefore cannot validly try and decide the case against him.

An exception was laid down in Gemperle v. Schenker wherein a non-resident was

served with summons through his wife, who was a resident of the Philippines and
who was his representative and attorney-in-fact in a prior civil case filed by him;
moreover, the second case was a mere offshoot of the first case.

The records of the case reveal that herein petitioners have been permanent
residents of California, U.S.A. since the filing of the action up to the present.

Nevertheless, the CA correctly concluded that the appearance of Atty. Alcantara

and his filing of numerous pleadings were sufficient to vest jurisdiction over the
persons of petitioners.