Conflict of Laws

CASE
BY: PARAS, DIVINE MAE V.
CADALIN ET. AL. VS. POEA ADMINISTRATOR
G.R. NO. 104776
DECEMBER 5,1994

FACTS:

On 6 June 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 2 October 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 14 November 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. The POEA Administrator issued an order directing AIBC and BRII to file their
answers within ten days from receipt of the order. 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

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the day; 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 complaints are entitled to Amiri Decree No. 23 of Bahrain.
2) Whether or not the Bahrain Law should apply in the case.

RULING:

As to the first issue, 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 Decree, 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

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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 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.

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 As to the second issue, as a general rule, a foreign procedural law will not be applied in
the forum. Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by 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. However, the characterization of a statute into a
procedural or substantive law becomes irrelevant when the country of the forum has a
“borrowing statute.” Said statute has the practical effect of treating the foreign statute of
limitation as one of substance. A “borrowing statute” directs the state of the forum to apply the
foreign statute of limitations to the pending claims based on a foreign law. While there are
several kinds of “borrowing statutes,” one form provides that an action barred by the laws of the
place where it accrued, will not be enforced in the forum even though the local statute has not
run against it. Section 48 of our Code of Civil Procedure is of this kind. Said Section provides: “If
by the laws of the state or country where the cause of action arose, the action is barred, it is also
barred in the Philippine Islands.

Important Points

1) Amari Decree No. 23 is contrary to our public policy on the protection of labor;

2) The courts of the forum will not enforce any foreign claim obnoxious to the forum’s public
policy. To enforce the one-year prescriptive period of the Amari Decree No.23 would
contravene the public policy on the protection to labor;

3) 1987 Philippine Constitution emphasized that:

i. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment opportunities for all. (Sec. 3)

ii. The State shall promote social justice in all phases of national development. (Sec. 10)

iii. The State affirms labor as a primary social economic force. It shall protect the rights
of workers and promote their welfare. (Sec. 18)

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LWV CONSTRUCTION CORPORATION VS. MARCELO DUPO
G.R. NO. 172342
JULY 13, 2009

FACTS:

Petitioner LWV, a domestic corporation recruiting Filipino workers, hired respondent as

Civil Structural Superintendent to work in Saudi Arabia for its principal, Mohammad Al-Mojil
group/ establishment (MMG) Sometime in February 1992, respondent signed his first overseas
employment contract. It was renewed five times and all were fixed-period, renewable contracts
for one year. The 6th and last contract stated that respondent’s employment starts upon
reporting to work and ends when he leaves the work site. When respondent left Saudi Arabia for
the Philippines on April 30, 1999 and thereby termination his sixth contract, he informed MMG
through LWV that he needs to end his vacation because his son was hospitalized. He also sought
a promotion with salary adjustment. In reply, informed him that his promotion is subject to
management’s review; that his services are still needed; that he was issued a plane ticket for his
return flight to Saudi Arabia6 and that his decision regarding his employment must be made
within 7 days, otherwise, MMG will be compelled to cancel his slot. On 16 July 1999, respondent
resigned.

Under the Law of Saudi Arabia, an employee who rendered at least 5 years in a company
within the jurisdiction of Saudi Arabia, is entitled to the so-called long service award which is
known to others as longevity pay of at least one half month pay for every year of service. In excess
of five years an employee is entitled to one month pay for every year of service. When he
followed up his claim for long service award and the MMG failed to respond, he filed a complaint
for payment of service award against LWV before the NLRC. Aside from the allegation that it was
already paid by MMG after his 6th contract ended, LWV argued that the action has prescribed
when respondent filed the complaint one year and seven months after his 6 th contract ended,
using Article 13 of the Saudi Labor Law as basis which provides that action to enforce payment
of service award must be filed one year from the termination of the labor contract for a specific
period.

ISSUE:

Whether or not the action against petitioner has prescribed with Article 13 of the Saudi
Labor Law as basis.

RULING:

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 The Supreme Court held that what will apply on this particular case is not Art. 13 of the
Saudi Labor Law but Art. 291 of the Philippine Labor Code which provides for a 2-year prescription
period for all money claims from employee-employer relationship. A foreign procedural law shall
not be applied even if the action is based upon a foreign substantive law. The Court did not apply
the Art. 48 of the Code of Civil Procedure which provides that” if the laws of the state or country
where the cause of action arose, the action is barred, it shall also be barred in the Philippine
island because the Court, in light of the provisions of the 1987Constitution, Art.48 cannot be
applied ex proprio vigore insofar as it ordains the application of the provision of the Saudi Law.
The courts of the forum 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. The Court
therefore leaned on the constitutional provision of on protection to labor rather that adopting
the provision of the foreign law.

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AZNAR VS. GARCIA
117 PHIL 106
JANUARY 31, 1963

FACTS:

Edward S. Christensen, though born in New York, migrated to California where he

resided and consequently was considered a California Citizen for a period of nine years to 1913.
He came to the Philippines where he became a domiciliary until the time of his death. However,
during the entire period of his residence in this country, he had always considered himself as a
citizen of California.
In his will, executed on March 5, 1951, he instituted an acknowledged natural daughter,
Maria Lucy Christensen as his only heir but left a legacy of some money in favor of Helen
Christensen Garcia who, in a decision rendered by the Supreme Court had been declared as an
acknowledged natural daughter of his. Counsel of Helen claims that under Art. 16 (2) of the civil
code, California law should be applied, the matter is returned back to the law of domicile, that
Philippine law is ultimately applicable, that the share of Helen must be increased in view of
successional rights of illegitimate children under Philippine laws. On the other hand, counsel for
daughter Maria , in as much that it is clear under Art, 16 (2) of the Mew Civil Code, the national
of the deceased must apply, our courts must apply internal law of California on the matter. Under
California law, there are no compulsory heirs and consequently a testator should dispose any
property possessed by him in absolute dominion.
ISSUE:
Whether or not the Philippine Law should apply.
RULING:
The law that governs the validity of his testamentary dispositions is defined in Article 16
of the Civil Code of the Philippines, which is as follows:

ART. 16. Real property as well as personal property is subject to the law of the country where it
is situated.

However, intestate and testamentary successions, both with respect to the order of
succession and to the number 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 may be the nature of the property and regardless of the country where
said property may be found. The application of this article in the case at bar requires the
determination of the meaning of the term “national law” is used therein. It is argued on
executor’s behalf that as the deceased Christensen was a citizen of the State of California, the

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internal law thereof, which is that given in the Kaufman case, should govern the determination
of the validity of the testamentary provisions of Christensen’s will, such law being in force in the
State of California of which Christensen was a citizen. Appellant, on the other hand, insists that
Article 946 should be applicable, and in accordance therewith and following the doctrine of the
renvoi, the question of the validity of the testamentary provision in question should be referred
back to the law of the decedent’s domicile, which is the Philippines.

Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied in
In re Kaufman, its internal law. If the law on succession and the conflict of laws rules of California
are to be enforced jointly, each in its own intended and appropriate sphere, the principle cited
In re Kaufman should apply to citizens living in the State, but Article 946 should apply to such of
its citizens as are not domiciled in California but in other jurisdictions. The rule laid down of
resorting to the law of the domicile in the determination of matters with foreign element
involved is in accord with the general principle of American law that the domiciliary law should
govern in most matters or rights which follow the person of the owner.

As explained in the various authorities cited above, the national law mentioned in Article
16 of our Civil Code is the law on conflict of laws in the California Civil Code, i.e., Article 946,
which authorizes the reference or return of the question to the law of the testator’s domicile.
The conflict of laws rule in California, Article 946, Civil Code, precisely refers back the case, when
a decedent is not domiciled in California, to the law of his domicile, the Philippines in the case at
bar. The court of the domicile cannot and should not refer the case back to California; such action
would leave the issue incapable of determination because the case will then be like a football,
tossed back and forth between the two states, between the country of which the decedent was
a citizen and the country of his domicile. The Philippine court must apply its own law as directed
in the conflict of laws rule of the state of the decedent, if the question has to be decided,
especially as the application of the internal law of California provides no legitime for children
while the Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural
children legally acknowledged forced heirs of the parent recognizing them.

We therefore find that as the domicile of the deceased Edward, a citizen of California, is
the Philippines, the validity of the provisions of his will depriving his acknowledged natural child,
the appellant HELEN, should be governed by the Philippine Law, the domicile, pursuant to Art.
946 of the Civil Code of California, not by the internal law of California.

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TESTATE OF AMOS BELLIS ET. AL VS. EDWARD BELLIS
G.R. NO. L-23678
JUNE 6, 1967

FACTS:

Amos Bellis, born in Texas, was a citizen of the State of Texas and of the United States. He
had 5 legitimate children with his wife, Mary Mallen, whom he had divorced, 3 legitimate children
with his 2nd wife, Violet Kennedy and finally, 3 illegitimate children. Prior to his death, Amos
Bellis executed a will in the Philippines in which his distributable estate should be divided in trust
in the following order and manner:

a. $240,000 to his 1st wife Mary Mallen;

b. P120,000 to his 3 illegitimate children at P40,000 each;

c. The remainder shall go to his surviving children by his 1st and 2nd wives, in equal shares.

Subsequently, Amos Bellis died a resident of San Antonio, Texas, USA. His will was
admitted to probate in the Philippines. The People’s Bank and Trust Company, an executor of the
will, paid the entire bequest therein.

Preparatory to closing its administration, the executor submitted and filed its “Executor’s
Final Account, Report of Administration and Project of Partition” where it reported, inter alia, the
satisfaction of the legacy of Mary Mallen by the shares of stock amounting to $240,000 delivered
to her, and the legacies of the 3 illegitimate children in the amount of P40,000 each or a total of
P120,000. In the project partition, the executor divided the residuary estate into 7 equal portions
for the benefit of the testator’s 7 legitimate children by his 1st and 2nd marriages. Among the 3
illegitimate children, Mari Cristina and Miriam Palma Bellis filed their respective opposition to
the project partition on the ground that they were deprived of their legitimates as illegitimate
children. The lower court denied their respective motions for reconsideration.

ISSUE:

Whether Texan Law of Philippine Law must apply.

RULING:

It is not disputed that the decedent was both a national of Texas and a domicile thereof
at the time of his death. So that even assuming Texan has a conflict of law rule providing that the
same would not result in a reference back (renvoi) to Philippine Law, but would still refer to Texas
Law.

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 Nonetheless, if Texas has conflict rule adopting the situs theory (lex rei sitae) calling for
the application of the law of the place where the properties are situated, renvoi would arise,
since the properties here involved are found in the Philippines. In the absence, however of proofs
as to the conflict of law rule of Texas, it should not be presumed different from our appellants,
position is therefore not rested on the doctrine of renvoi. The parties admit that the decedent,
Amos Bellis, was a citizen of the State of Texas, USA and that under the Laws of Texas, there are
no forced heirs or legitimates. Accordingly, since the intrinsic validity of the provision of the will
and the number of successional rights has to be determined under Texas Law, the Philippine Law
on legitimates cannot be applied to the testate of Amos Bellis.

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HERBERT BROWNELL, JR.VS. SUN LIFE ASSURANCE COMPANY OF CANADA
G.R. NO. L-5731
JUNE 22, 1954

FACTS:
Subject of this petition is the endowment policy which insured Aihara and Gayapan and
upon its maturity the proceeds were payable to said insured. Brownell instituted this case to
compel Sun Life to comply with the demand to pay representing the half of the proceeds of
endowment policy and payable to one Naogiro Aihara, a Japanese national. Such claim is based
on Section 5(b) (2) of the Trading with the Enemy Act of the United States. Which claim was
approved and granted by the lower court ordering SLACOC to pay herein petitioner.

ISSUE:

Whether or not such Act is still binding despite the complete independence of the
Philippines from American government.

RULING:

The extension of the Philippine Property Act of 1946 is clearly implied from the acts of the
President of the Philippines and the Secretary of Foreign Affairs, as well as by the enactment of
R.A. Nos. 7, 8 and 477. International Law does not require that agreements between nations must
be concluded in any particular form or style. The law of nations is much more interested in the
faithful performance of international obligations than in prescribing procedural requirements.

In the case at bar, our ratification of or concurrence to the agreement for the extension
of the Philippine Property Act of 1946 is clearly implied from the acts of the President of the
Philippines and of the Secretary of Foreign Affairs, as well as by the enactment of Republic Acts
Nos. 7, 8, and 477. We must emphasize the fact that the operation of the Philippine Property Act
of 1946 in the Philippines is not derived from the unilateral act of the United States Congress,
which made it expressly applicable, or from the saving provision contained in the proclamation
of independence. It is well-settled in the United States that its laws have no extraterritorial effect.
The application of said law in the Philippines is based concurrently on said act (Philippine Property
Act of 1946) and on the tacit consent thereto and the conduct of the Philippine Government itself
in receiving the benefits of its provisions. It is also claimed by the respondent-appellant that the
trial court erred in ordering it to pay the petitioner the amount demanded, without the execution
by the petitioner of a deed of discharge and indemnity for its protection. The Trading With the
Enemy Act of the United States, the application of which was extended to the Philippines by
mutual agreement of the two Governments, contains an express provision to the effect that
delivery of property or interest therein made to or for the account of the United States in

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pursuance of the provision of the law, shall be considered as a full acquittance and discharge for
purposes of the obligation of the person making the delivery or payment. This express provision
of the United States law saves the respondent-appellant from any further liability for the amount
ordered to be paid to the petitioner, and fully protects it from any further claim with respect
thereto. The request of the respondent-appellant that a security be granted it for the payment
to be made under the law is, therefore, unnecessary, because the judgment rendered in this case
is sufficient to prove such acquittance and discharge.

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BANK OF AMERICA VS. AMERICAN REALTY CORP.
321 SCRA 659
DECEMBER 29, 1999

FACTS:

The Bank of America granted a loan to a corporation secured by a real estate mortgage
by the respondent. Upon the loan maturity, the corporation debtor failed to pay and the
petitioner bank filed 4 collection cases in the foreign courts (England and Hong Kong) against the
corporation debtors. At the same time it also filed an extrajudicial foreclosure in the office of the
Provincial Sheriff of Bulacan, Philippines on the real estate mortgage and said was sold in a public
auction. The respondent files action for damages against petitioner due to the act of foreclosing
the real estate mortgage extrajudicially despite the pending civil suits before the foreign courts
to collect the principal loan. Petitioner contends that the respondent is not made a party on the
collection case before the foreign courts for being a third party mortgagor and such actions were
filed in foreign courts and thus decisions rendered on such courts are not enforceable in the
Philippines unless a separate action is filed in the Phils to enforce such judgment and that under
the English law which is the law governing in the principal agreement, the mortgagee does not
lose its security interest by filing a civil action for sum of money. The court rendered judgment in
favor of defendants declaring that the filing of civil suit on collection of a sum of money in foreign
courts constitutes a waiver on the security of the mortgages.

ISSUE:

Whether or not the petitioner’s act of filing a collection suit against the principal debtors
before foreign courts constitutes a waiver of the remedy of foreclosure.

RULING:

The court held that Section 4 Rule 2 of the 1997 Rules on Civil Procedure provides that “if
two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the others.” A
mortgagor creditor may pursue two remedies either to institute against the mortgage debtor a
personal action for collection of money or foreclosure of a mortgage but cannot avail of both
remedies. In Phil. jurisdiction these remedies are alternative and not cumulative. Thus, choosing
one remedy is a bar to avail of the other remedy. Plaintiff cannot split up a single cause of action
by filing both remedies as expressly prohibited by the rules on civil procedure. On the contention
of the petitioner that the English law should apply to the principal agreements that states that
the mortgagee does not lose its security interest by simply filing civil actions for sums of money,
the court held that a foreign law must be properly pleaded and proved as fact. If not pleaded,

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the court will presume that the foreign law is the same as our local or domestic or internal law.
This is the Doctrine of Processual Presumption.

Granting however that the English law is applicable in the Phil. court, such law is contrary
to sound and established public policy of the forum which proscribes the splitting of a single
cause of action, thus still cannot be applied by the court in the case. It is proper that Philippine
law should be upheld since it is the country upon which the case is filed. Therefore, the filing of
a collection case by the petitioner in foreign courts is a waiver for the remedy of foreclosure of
real estate mortgage.

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J.A. SISON VS. BOARD OF ACCOUNTANCY
G.R. NO. L-2529
DECEMBER 31, 1949

FACTS:

The Board of Accountancy issued a CPA certificate to a British national named Robert Orr
Ferguson to practice his profession in the Philippines without examination. The issuance of the
said certificate was questioned by herein petitioner on the ground that there is no reciprocity
between the Philippines and the United Kingdom as regards the practice of accountancy.

To resolve this matter, the Board of Accountancy suspended the validity of the CPA
certificates until it can be proven that (a) Filipinos are allowed to take the professional accountant
examination given by the British government, if any, and (b) Filipino certified public accountants
can, upon application, be registered as chartered accountants or granted similar degrees by the
British Government." This resolution is based on the findings that there is no law which regulates
the practice of accountancy in England. However, the Philippine Accountancy Law explicitly
provides that the suspension or revocation of the certificate issued under the said Act may be
done by the board for unprofessional conduct of the holder or other sufficient cause. The
Secretary of Justice further said that he believes that "the change in administrative interpretation
with respect to the existence of reciprocity between the Philippines and Great Britain as to the
practice of accountancy," does not constitute sufficient cause for the suspension or revocation
of the certificates in question within the meaning of said provision.

ISSUE:

Whether or not the issuance of the CPA certificates was valid in the absence of reciprocity
between the Philippines and the British Government.

RULING:

It is valid as it comes within the realm of comity as contemplated in our law. Comity is
defined as the recognition which one nation allows within its territory the acts of foreign
governments and tribunals, having due regard both to the international duty and convenience
and the rights of its own citizens or of other persons who are under the protection of its laws.
The British minister in a note sent to the President of the Philippines wrote that that qualified
Philippine citizen are allowed to practice the profession of accountancy including income tax
accounting, in the United Kingdom since there is no governmental control of the accounting
profession in the said country and any resident of the United Kingdom, of whatever nationality,
may engage in the profession of accounting without formality.

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 Therefore, the SC finds no reason why Robert Orr Ferguson who had previously been
registered as certified public accountants and issued the corresponding certificate public
accountant in the Philippine Islands, should be suspended from the practice of his profession in
these Islands.

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PAULA T. LLORENTE VS. COURT OF APPEALS and ALICIA F. LLORENTE
G.R. No. 124371
November 23, 2000

FACTS:

In 1927, Lorenzo Llorente, then a Filipino, was enlisted in the U.S. Navy. In 1937, he and
Paula Llorente got married in Camarines Sur. In 1943, Lorenzo became an American citizen. In
1945, Lorenzo returned to the Philippines for a vacation. He discovered that Paula was already
living illicitly with Ceferino Llorente, a brother of Lorenzo and the two even have a son. Lorenzo
then refused to live with Paula. He also refused to give her monetary support. Eventually, Lorenzo
and Paula agreed in writing that Lorenzo shall not criminally charge Paula if the she will agree to
waive all monetary support from Lorenzo. Later, Lorenzo returned to the US.

Sometime in 1951, Lorenzo filed a divorce proceeding against Paula in California. Paula
was represented by an American counsel. The divorce was granted and in 1952, the divorce
became final. Lorenzo returned to the Philippines. In 1958, Lorenzo married Alicia Fortuno. They
had three children. In 1981, Lorenzo executed his last will and testament where he left all his
estate to Alicia and their children and left nothing for Paula. In 1983, Lorenzo went to the court
for the will’s probate and to have Alicia as the administratrix of his property. In 1985, before the
probate proceeding can be terminated, Lorenzo died. Later, Paula filed a petition for letters of
administration over Lorenzo’s estate.

The Regional Trial Court ruled that Lorenzo’s marriage with Alicia is void because the
divorce decree granted to the late Lorenzo Llorente is void and inapplicable in the Philippines,
therefore the marriage he contracted with Alicia Fortunato on January 16, 1958 at Manila is
likewise void. The Court of Appeals affirmed the trial court decision.

ISSUE:

Whether or not Lorenzo’s divorce abroad should be recognized in the Philippines.

RULING:

It is undisputed by Paula Llorente that Lorenzo became an American citizen in 1943.

Hence, when he obtained the divorce decree in 1952, he is already an American citizen. Article
15 of the Civil Code provides, 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. Since Lorenzo was no longer a Filipino, Philippine laws relating to family rights, duties, or
status are no longer applicable to him. Therefore, the divorce decree he obtained abroad must

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be respected. The rule is: aliens may obtain divorces abroad, provided they are valid according
to their national law.

However, this case was still remanded to the lower court so as for the latter to determine
the effects of the divorce as to the successional rights of Lorenzo and his heirs. Regarding on the
issue of Lorenzo’s last will and testament, it must be respected because he is an alien and is not
covered by our laws on succession. However, since the will was submitted to our courts for
probate, then the case was remanded to the lower court where the foreign law must be alleged
in order to prove the validity of the will.

18 | P a g e
FIRST PHILIPPINE INTERNATIONAL BANK VS. CA
G.R. No. 115849
January 24, 1996

FACTS:

Producer Bank of the Philippines acquired 6 parcels of land at Laguna. The property used
to be owned by BYME Investment and Development Corporation which had them mortgaged
with the bank as collateral for a loan. Demetrio Demetria and Jose O. Janolo wanted to purchase
the property and thus initiated negotiations for that purpose.

In August 1987, Demetria and Janolo met with Mercurio Rivera, Manager of the Property
Management Department of the Bank to discuss their plan to buy the property. Thereafter, they
had a series of letters where parties accepted the offer of Demetria and Janolo. Later in October,
the conservator of the bank (which has been placed under conservatorship by the Central Bank
since 1984) was replaced; and subsequently the proposal of Demetria and Janolo to buy the
properties was under study pursuant to the new conservator’s mandate. After which, a series of
demands ensued.

ISSUE:

Whether or not the conservator may revoke a perfected and enforceable contract.

RULING:

Section 28-A of Republic Act No. 265 (otherwise known as the Central Bank Act) as
follows:

Section 28-A - Whenever, on the basis of a report submitted by the appropriate

supervising or examining department, the Monetary Board finds that a bank or a non-bank
financial intermediary performing quasi-banking functions is in a state of continuing inability or
unwillingness to maintain a state of liquidity deemed adequate to protect the interest of
depositors and creditors, the Monetary Board may appoint a conservator to take charge of the
assets, liabilities, and the management of that institution, collect all monies and debts due said
institution and exercise all powers necessary to preserve the assets of the institution, reorganize
the management thereof, and restore its viability. He shall have the power to overrule or revoke
the actions of the previous management and board of directors of the bank or non-bank financial
intermediary performing quasi-banking functions, any provision of law to the contrary
notwithstanding, and such other powers as the Monetary Board shall deem necessary.

19 | P a g e
 While admittedly, the Central Bank law gives vast and far-reaching powers to the
conservator of a bank, it must be pointed out that such powers must be related to the
"(preservation of) the assets of the bank, (the reorganization of) the management thereof and
(the restoration of) its viability." Such powers, enormous and extensive as they are, cannot
extend to the post-facto repudiation of perfected transactions, otherwise they would infringe
against the non-impairment clause of the Constitution.

Section 28-A merely gives the conservator power to revoke contracts that are, under
existing law, deemed to be defective. Hence, the conservator merely takes the place of a bank's
board of directors, so what the board cannot do; the conservator cannot do either. His power is
however, not unilateral as he cannot simply repudiate valid obligations of the Bank. His authority
would be only to bring court actions to assail such contracts.

In the case, it is not disputed that the bank was under a conservator placed by the Central
Bank of the Philippines during the time that the negotiation and perfection of the contract of sale
took place. Moreover, there was absolutely no evidence that the Conservator, at the time the
contract was perfected, actually repudiated or overruled said contract of sale. The bank never
objected to the sale, what it unilaterally repudiated was—not the contract —but the authority of
Rivera to make a binding offer —and which unarguably came months after the perfection of the
contract.

The conservator’s authority would be only to bring court actions to assail such contracts
—as he has already done so in the instant case. A contrary understanding of the law would simply
not be permitted by the Constitution. Neither by common sense. To rule otherwise would be to
enable a failing bank to become solvent, at the expense of third parties, by simply getting the
conservator to unilaterally revoke all previous dealings which had one way or another or come
to be considered unfavorable to the Bank, yielding nothing to perfected contractual rights nor
vested interests of the third parties who had dealt with the Bank.

20 | P a g e
GIL MIGUEL T. PUYAT VS. RON ZABARTE
G.R. No. 141536
February 26, 2001

Facts:

On January 24, 1994, Ron Zabarte commenced to enforce the money judgment rendered
by the Superior Court for the State of California on petitioner. On 18 March 1994, petitioner said
that the said court had no jurisdiction over the people involved. Respondent on the other hand
said that petitioner’s appeal is not material. Petitioner maintained that that said Judgment on
Stipulations for Entry in Judgment was obtained without the assistance of counsel and without
sufficient notice to him and therefore, was rendered in violation of his constitutional rights to
substantial and procedural due process.

Respondent said that petitioner can no longer question the judgment of the said court
because he failed to raise the issue of jurisdiction in his answer. The RTC rendered judgment in
favor of Zabarte. The claim for moral damages, not having been substantiated, is denied.
Petitioner said that the RTC should have dismissed the action for the enforcement of a foreign
judgment, on the ground of forum non conveniens. It reasoned out that the recognition of the
foreign judgment was based on comity, reciprocity and res judicata. The CA denied this appeal,
hence this case.

Issue:

Whether or not the CA acted in a manner contrary to law when it affirmed the Order of
the trial court granting respondent’s Motion for Summary Judgment and rendering judgment
against the petitioner.

Ruling:

Summary judgment is a procedural device for the prompt disposition of actions in which
the pleadings raise only a legal issue, and not a genuine issue as to any material fact. It is resorted
to in order to avoid long drawn out litigations and useless delays. Petitioner contends that by
allowing summary judgment, the two courts a quo prevented him from presenting evidence to
substantiate his claims. The court does not agree. Summary judgment is based on facts directly
proven by affidavits, depositions or admissions. In this case, the CA and the RTC both merely
ruled that trial was not necessary to resolve the case. Petitioner’s affidavit of facts had raised no
genuine issue, thus no necessity for a resolution of issues.

21 | P a g e
 In the absence of proof of California law on the jurisdiction of courts, we presume that
such law, if any, is similar to Philippine law. The court based this conclusion on the presumption
of identity or similarity, also known as processual presumption. Petitioner failed to establish
substantial proof that the foreign court had no jurisdiction over the case. In any event, contrary
to petitioner’s contention, unjust enrichment or solutio indebiti does not apply to this case. This
doctrine contemplates payment when there is no duty to pay, and the person who receives the
payment has no right to receive it. In this case, petitioner merely argues that the other
two defendants whom he represented were liable together with him. This is not a case of unjust
enrichment. The court does not also see this case to be contrary to law, morals, public policy or
the canons of morality obtaining in the country. Petitioner owed money, and the judgment
required him to pay it. That is the long and the short of this case. The petition is denied.

22 | P a g e
PIONEER CONCRETE PHILIPPINES VS. TODARO
254 SCRA 153
JUNE 8, 2007

FACTS:
Antonio D. Todaro (Todaro) filed with the RTC of Makati City, a complaint for Sum of
Money and Damages with Preliminary Attachment against Pioneer International Limited (PIL),
Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G.
McDonald (McDonald) and Philip J. Klepzig (Klepzig).

Todaro alleged that PIL is a corporation duly organized and existing under the laws of
Australia and is principally engaged in the ready-mix concrete and concrete aggregates business.
PPHI is the company established by PIL to own and hold the stocks of its operating company in
the Philippines. PCPI is the company established by PIL to undertake its business of ready-mix
concrete, concrete aggregates and quarrying operations in the Philippines. McDonald is the Chief
Executive of the Hongkong office of PIL; and, Klepzig is the President and Managing Director of
PPHI and PCPI. Todaro has been the managing director of Betonval Readyconcrete, Inc.
(Betonval), a company engaged in pre-mixed concrete and concrete aggregate production; he
resigned from Betonval in February 1996. In May 1996, PIL contacted Todaro and asked him if he
was available to join them in connection with their intention to establish a ready-mix concrete
plant and other related operations in the Philippines, Todaro informed PIL of his availability and
interest to join them. Subsequently, PIL and Todaro came to an agreement wherein the former
consented to engage the services of the latter as a consultant for two to three months, after
which, he would be employed as the manager of PIL's ready-mix concrete operations should the
company decide to invest in the Philippines.
PIL started its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis. Instead of filing an Answer, PPHI, PCPI and
Klepzig separately moved to dismiss the complaint on the grounds that the complaint states no
cause of action, that the RTC has no jurisdiction over the subject matter of the complaint, as the
same is within the jurisdiction of the NLRC, and that the complaint should be dismissed on the
basis of the doctrine of forum non conveniens. RTC dismissed the MTD which was affirmed by the
CA.

ISSUE:
Whether or not the RTC should have dismissed the case on the basis of forum non
conveniens due to a presence of a foreign element

23 | P a g e
RULING:

Whether a suit should be entertained or dismissed on the basis of said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion of the trial
court. In the case of Communication Materials and Design, Inc. vs. Court of Appeals, this Court
held that "xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (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."

The doctrine of forum non conveniens should not be used as a ground for a motion to
dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a ground.
This Court further ruled that 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; and that the propriety
of dismissing a case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense.

24 | P a g e
WING ON COMPANY VS. SYYAP
64 O.G. 8311
1967

FACTS:

Plaintiff Wing On Company is a foreign partnership, with business address in New York
County, New York, USA which did not have a license to transact business in the Philippines.
Sometime in 1948, the defendant SYYAP and Co., a domestic corporation, thru its agent Murray
Kern, in New York, negotiated within the plaintiff for the purchase of clothing materials under
the agreement that the defendant would pay the plaintiff the value thereof after the sale of the
goods by the defendant and that the profits derived from such sale would be divided between
them.

Accordingly, in 1948, the plaintiff shipped to the defendant the clothing materials in
question, worth $22,246.04, which were received by the latter and eventually sold by it. The
defendant, however, was able to pay the plaintiff only the sum of $3,530.oo on account of the
value of the merchandise in leaving a balance of $18,716.04. Despite plaintiff’s demands on the
defendant and its agents, Murray Kern, and the promises of the defendant to pay the account in
full, the defendant failed to settle the said account. Neither was there any accounting or division
of the profits made by the defendant as agreed upon by the parties, hence, the present action
was instituted.

The appellant contended that 1. The court a quo had no jurisdiction to try the case
because Wing On is not licensed to do business in the Philippines, therefore, has no legal capacity
to sue; 2. That the trial court should have declined jurisdiction over the present suit, pursuant to
the principle of forum non conveniens in Private International Law where the ends of justice
strongly indicate that the controversy may be more suitably tried elsewhere, then jurisdiction
should be declined and the parties relegated to relief to be sought in another forum.

ISSUE:

Whether or not Wing on has a legal capacity to sue

RULING:

In the case of Marshall-Wells Co. vs Henry W. Elser, Co., supra, the Supreme Court stated
that the object of the statute was to subject the foreign corporation doing business in the
Philippines to the jurisdiction of its courts. The object of the statute was not to prevent the
foreign corporation from performing single acts, but to prevent it from acquiring domicile for the
purpose of business without taking the steps necessary to render it amenable to stir in the local

25 | P a g e
courts. The implication of the law is that it was never the purpose of the Legislature to exclude a
foreign corporation which happens to obtain an isolated order, for business from the Philippines,
from securing redress in the Philippine courts, and thus, in effect, to permit persons to avoid the
contracts made with such foreign corporations.

In the case at bar, the facts show that the transaction in question was an isolated act or
transaction. As such, it does not constitute “doing or transacting business” within the meaning
of the law. Consequently, the plaintiff, although a foreign judicial person or entity, not duly
licensed to transact business in the Philippines, has the legal personality to bring and maintain
the present suit arising from the transaction in question. In short, in this particular case, the
obtaining of a license to transact business is not a condition precedent to the institution of the
action. It is only when the foreign corporation is doing or transacting business within the purview
of the law that it has to have a license before it can sue in our courts.

26 | P a g e
PIPER AIRCRAFT CO. VS. REYNO
454 US 235
DECEMBER 8, 1981

FACTS:

In 1976 a small commercial aircraft crashed in the Scottish highlands. The pilot and five
passengers, all Scottish subjects and residents, were killed. The heirs and next of kin of all 6
victims were all also Scottish. The aircraft was manufactured in Pennsylvania by petitioner Piper
Aircraft Co. The aircraft was owned and operated by a Scottish air taxi service.
In July, 1977 a California probate court appointed Defendant Gaynell Reyno administratrix
of the estates of the five passengers Defendant was not related to any of the passengers; she
was merely the legal secretary to the attorney who filed this lawsuit. Several days after her
appointment, Defendant commenced separate wrongful death actions against Plaintiffs Piper
and Hartzell in California superior court claiming negligence and strict liability. Defendant
admitted that suit was filed in the U.S., as opposed to Scotland, because of its more favorable
laws regarding liability and damages. Plaintiffs first removed to federal court in California, and
then successfully sought transfer to the Middle District of Pennsylvania, where Plaintiff does
business. They then sought to dismiss the case on grounds of forum non conveniens.

ISSUE:

Whether a change in substantive law between venues is a sufficient reason for denying a
motion to dismiss on grounds of forum non conveniens.

RULING:

The Court of Appeals erred in holding that plaintiffs may defeat a motion to dismiss on
the ground of forum non conveniens merely by showing that the substantive law that would be
applied in the alternate forum is less favorable to the plaintiffs than that of the present forum.
The possibility of change in substantive law should not be given conclusive or even substantial
weight in the forum non conveniens inquiry. A plaintiff’s choice of forum is given greater weight
when the plaintiff has chosen the home forum. The forum non conveniens determination is
committed to the sound discretion of the trial court, and may be overturned only when there has
been a clear abuse of discretion.

Although the Supreme Court of the United States rejected the argument that the motion
to dismiss should be denied because the law in other forums would be less favorable to the
plaintiff, it did however acknowledge that if the alternative forum was so clearly inadequate that

27 | P a g e
it would offer no remedy at all, then the change in substantive law might be grounds for denying
the motion. In ruling that the district court did not abuse its discretion in granting the motion,
the Supreme Court noted Scotland’s strong interest in the litigation, since all the victims were
Scottish residents, coupled with the fact that holding the trial in Pennsylvania would make it
impossible for Plaintiff to interplead third party defendants residing in Scotland. Thus, the district
court correctly held that public policy favored holding the trial in Scotland.

28 | P a g e
KLAUS LUECK VS. SUNDSTRAND CORPORATION
NO. 99-15961
JANUARY 8, 2001

FACTS:

Plaintiffs appeal the district court's dismissal of their suit on the basis of forum non
conveniens. Plaintiffs, citizens of New Zealand, are victims of an airplane crash in New Zealand,
on a New Zealand carrier. Plaintiffs allege that the radio altimeter of the Ground Proximity
Warning System (“GPWS”) malfunctioned during flight and was a causal factor of the accident.
Defendants, the Canadian manufacturer of the aircraft and the American manufacturers of the
GPWS and the radio altimeter, argued that New Zealand was an adequate alternative forum and
that the public and private factors weighed in favor of dismissal. The district court agreed with
Defendants.

ISSUE:

Whether or not the US Courts have jurisdiction over the case.

RULING:

US Courts have no jurisdiction. A district court has discretion to decline to exercise

jurisdiction in a case where litigation in a foreign forum would be more convenient for the parties.

In dismissing an action on forum non conveniens grounds the court must examine: (1)
whether an adequate alternative forum exists, and (2) whether the balance of private and public
interest factors favors dismissal. It was also held that a district court must make a choice of law
determination in considering whether to dismiss the action. The district court's decision “may be
reversed only when there has been a clear abuse of discretion; where the court has considered
all relevant public and private interest factors, and where its balancing of these factors is
reasonable, its decision deserves substantial deference.”
A forum non conveniens determination is committed to the sound discretion of the
district court. Adequate Alternative Forum A.A jury trial in the United States on these facts could
yield significantly higher awards to Plaintiffs than the compensation they will receive from the
ACC. In this case, Plaintiffs' attorney has candidly admitted that the impetus for the lawsuit is
money:  United States law offers Plaintiffs a greater potential remedy for their losses than New
Zealand law. The forum non conveniens analysis does not look to the precise source of the
plaintiff's remedy, so we will not require the alternative forum to offer a judicial remedy. Several
other courts have found New Zealand's accident compensation system to provide an adequate
alternative remedy. Plaintiffs have not shown that this type of administrative remedy is so
inadequate that it is tantamount to no remedy at all. Although New Zealand law does not permit

29 | P a g e
Plaintiffs to maintain this exact suit, New Zealand, through its no-fault accident compensation
scheme, has provided and continues to provide a remedy for Plaintiffs' losses. A New Zealand
remedy is unquestionably available.

30 | P a g e
31 | P a g e
YAN CARLOS MONEGRO VS. LUIS ROSA
NO. 98-16846
MAY 3, 2000

FACTS:

The thirteen plaintiffs are aspiring professional baseball players who live in the Dominican
Republic. When they were between sixteen and twenty years old, they were recruited by Luis
Rosa, the Giants' former Latin America scout. At Rosa's instigation, each player signed a seven-
year minor league contract with the Giants. Although the contracts initially provided that all
the plaintiffs would play baseball for the San Pedro Giants in the Dominican Republic, the
contracts could be assigned, and the players transferred, to minor or major league teams in the
United States. Underscoring this potential for transfer, many of the contracts contained
addenda stating salaries in Bellingham, Washington, Scottsdale, Arizona, and Shreveport,
Louisiana.

Playing for the San Francisco Giants or some other United States team was the plaintiffs'
common goal. All thirteen plaintiffs claim that Rosa expressly conditioned their continued
employment and/or reassignment to United States teams upon their submitting to his sexual
advances, and that Rosa appropriated part of their earnings or signing bonuses for his own use.
They also allege that the Giants' management knew or had reason to know of Rosa's misconduct.
In April 1998, plaintiffs initiated this suit against the Giants, Rosa and Hiatt.

In June 1997, plaintiffs had brought substantially similar allegations to the attention of
authorities in the Dominican Republic. As a result of their complaints, a combined criminal and
civil suit against the Giants and Rosa is now pending in the Dominican Republic. Noting the
pendency of this “parallel” proceeding, the defendants moved in June 1998 to dismiss plaintiffs'
complaint on the alternative grounds of forum non conveniens and abstention. The district
court granted the defendants' motion on the ground of forum non conveniens. Plaintiffs timely
appeal.

ISSUE:

Whether or not the district court may dismiss plaintiffs' action on the ground of forum
non conveniens.

RULING:

32 | P a g e
 The Court reversed the decision, the present case the court ruled that they have
jurisdiction. A forum non conveniens determination “is committed to [the] sound discretion of
the trial court,” and “may be reversed only when there has been a clear abuse of discretion.” A
district court may abuse its discretion by relying on an erroneous view of the law, by relying on a
clearly erroneous assessment of the evidence, or by striking an unreasonable balance of relevant
factors.

Rather than requiring dismissal and refiling of a suit where the alternative forum is
another federal court, § 1404(a) now allows transfer of a case from one federal district court to
another “for the convenience of parties and witnesses in the interest of justice.” 28 U.S.C. §
1404(a). Section 1404(a) thus serves as a statutory substitute for forum non conveniens in
federal court when the alternative forum is within the territory of the United States. The
doctrine of forum non conveniens survives in federal court only when the alternative forum is in
a foreign country. As a consequence, a forum non conveniens motion in a Gilbert-type case is
now rare, for foreign plaintiffs seeking to avoid their home forums by filing in the United States
do not typically sue in a forum with little or no relation to either the defendant or the action.
Indeed, foreign plaintiffs typically bring such suits in the quintessentially convenient forum for
the defendant-the defendant's home forum.

33 | P a g e
EIRE RAILROAD CO. VS. TOMPKINS
304 US 64
58 S. CT. 917,82 L.E.D 1188

FACTS:

In July of 1934 Defendant visited his mother-in-law’s house in Pennsylvania. He walked

part of the distance along the railroad tracks of the Plaintiff. A train passed, and an open door on
a refrigerator car struck him and knocked him partially under the train. His right arm was severed.
Defendant then brought suit against the railroad in the Federal District Court for the Southern
District of New York. Under Pennsylvania law the railroad would have been liable only for
“wanton” negligence. However, rather than apply Pennsylvania law, the District Judge, at
Defendant’s urging, applied the “general law” that the railroad was liable even if it was guilty only
of “ordinary negligence. The jury returned a verdict for Defendant. Plaintiff appealed, but the
Second Circuit upheld Defendant’s verdict. The railroad then sought certiorari from the Supreme
Court of the United States.

ISSUE:

Whether or not a Federal court sitting in diversity jurisdiction, should apply the
substantive law of the state the activities leading to the suit arose in.

RULING:

The Supreme Court reversed the decision of the court of appeals, holding that except in
matters governed by the United States Constitution or Act of Congress, the law that is to be
applied in any case is the law of the state. There is no Federal common law.

The primary rationale for the Supreme Court’s decision here was the prevention of forum
shopping, whereby, under the old policy of allowing a federal court to ignore the state’s
substantive law and instead apply “general law” made it so that the substantive law that was
applied in each case varied according to enforcement was sought in the state or federal court.
Moreover, in asserting that there is no such thing as federal common law, the court is probably
referring to judicial common law. Common law, Congress implicitly retained the right to pass
rules governing the federal courts, e.g. the Federal Rules of Civil Procedure, etc.

34 | P a g e
K.K. SHELL SEKIYU OSAKA HATSUBAISHO AND FU HING OIL CO., LTD., VS. COURT OF APPEALS
G.R. NOS. 90306-07
JULY 30, 1990

FACTS:

On 7 January 1987, Kumagai Kaiun Kaisha, Ltd. (hereinafter referred to as Kumagai), a

corporation formed and existing under the laws of Japan, filed a complaint for the collection of a
sum of money with preliminary attachment against Atlantic Venus Co., S.A. (hereinafter referred
to as "Atlantic"), a corporation registered in Panama, the vessel MV Estella and Crestamonte
Shipping Corporation (hereinafter referred to as "Crestamonte"), a Philippine corporation.

Atlantic is the owner of the MV Estella. The complaint, docketed as Civil Case No. 8738930
of the Regional Trial Court, Branch XIV, Manila alleged that Crestamonte, as bareboat charterer
and operator of the MV Estella, appointed N.S. Shipping Corporation (hereinafter referred to as
"NSS"), a Japanese corporation, as its general agent in Japan. The appointment was formalized in
an Agency Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan.

Kumagai supplied the MV Estella with supplies and services but despite repeated
demands Crestamonte failed to pay the amounts due. NSS and Keihin Narasaki Corporation
(hereinafter referred to a Keihin filed complaints-in-intervention.

On 19 May 1987, petitioner Fu Hing Oil Co., Ltd. (hereinafter referred to as Fu Hing"), a
corporation organized in Hong Kong and not doing business in the Philippines, filed a motion for
leave to intervene with an attached complaint-in-intervention, alleging that Fu Hing supplied
marine diesel oil/fuel to the MV Estella and incurred barge expenses for the total sum of One
Hundred Fifty-two Thousand Four Hundred Twelve Dollars and Fifty-Six Cents
(US$152,412.56) but such has remained unpaid despite demand and that the claim constitutes a
maritime lien. The issuance of a writ of attachment was also prayed for.

On 16 July 1987, petitioner K.K. Shell Sekiyu Osaka Hatsubaisho (hereinafter referred to
as K.K. Shell"), a corporation organized in Japan and not doing business in the Philippines, likewise
filed a motion to intervene with an attached complaint-in-intervention, alleging that upon
request of NSS, Crestamonte's general agent in Japan, K.K. Shell provided and supplied marine
diesel oil/fuel to the W Estella at the ports of Tokyo and Mutsure in Japan and that despite
previous demands Crestamonte has failed to pay the amounts of Sixteen Thousand Nine Hundred
Ninety-Six Dollars and Ninety- Six Cents (US$16,996.96) and One Million Yen (Y1,000,000.00)
and that K.K. Shell's claim constitutes a maritime lien on the MV Estella. The complaint-in-
intervention sought the issuance of a writ of preliminary attachment.

ISSUE:

35 | P a g e
 Whether or not the court has acquired jurisdiction.

RULING:

Private respondents have anticipated the possibility that the courts will not find that K.K.
Shell is expressly bound by the Agency Agreement, and thus they fall back on the argument that
even if this were so, the doctrine of forum non conveniens would be a valid ground to cause the
dismissal of K.K. Shell's complaint-in-intervention.

The Court is not ready to rule on the private respondents' invocation of the doctrine of
forum non conveniens, as the exact nature of the relationship of the parties is still to be
established. The matter was left to the sound discretion of the trial court judge who is in the best
position, after some vital facts are established, to determine whether special circumstances
require that his court desist from assuming jurisdiction over the suit

36 | P a g e
COMMUNICATION MATERIALS AND DESIGN, INC ET AL VS. CA ET AL.
G.R. No. 102223
August 22, 1996

FACTS:
Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI) and ASPAC MULTI-
TRADE INC., (ASPAC) are both domestic corporations. Private Respondents ITEC, INC. and/or ITEC,
INTERNATIONAL, INC. (ITEC) are corporations duly organized and existing under the laws of the
State of Alabama, USA. There is no dispute that ITEC is a foreign corporation not licensed to do
business in the Philippines.
ITEC entered into a contract with ASPAC referred to as “Representative Agreement”. Pursuant to
the contract, ITEC engaged ASPAC as its “exclusive representative” in the Philippines for the sale
of ITEC’s products, in consideration of which, ASPAC was paid a stipulated commission. Through
a “License Agreement” entered into by the same parties later on, ASPAC was able to incorporate
and use the name “ITEC” in its own name. Thus, ASPAC Multi-Trade, Inc. became legally and
publicly known as ASPAC-ITEC (Philippines).
One year into the second term of the parties’ Representative Agreement, ITEC decided to
terminate the same, because petitioner ASPAC allegedly violated its contractual commitment as
stipulated in their agreements. ITEC charges the petitioners and another Philippine Corporation,
DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL), the President of which is likewise petitioner
Aguirre, of using knowledge and information of ITEC’s products specifications to develop their
own line of equipment and product support, which are similar, if not identical to ITEC’s own, and
offering them to ITEC’s former customer.

The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a MTD the
complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is a foreign
corporation doing business in the Philippines without the required BOI authority and SEC license,
and (2) that plaintiff is simply engaged in forum shopping which justifies the application against
it of the principle of “forum non conveniens”. The MTD was denied.

Petitioners elevated the case to the respondent CA on a Petition for Certiorari and
Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied, hence this
Petition for Review on Certiorari under Rule 45.

ISSUE:
Whether or not the Philippine court can give due course to the suit on the principle of
forum non convenience.

37 | P a g e
RULING:

Petitioner’s insistence on the dismissal of this action due to the application, or non-
application, of the private international law rule of forum non conveniens defies well-settled
rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion
whether to give cognizance or not to the present action, because it has not acquired jurisdiction
over the person of the plaintiff in the case, the latter allegedly having no personality to sue before
Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction
over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already
observed, petitioner is not at liberty to question plaintiff’s standing to sue, having already
acceded to the same by virtue of its entry into the Representative Agreement referred to earlier.

Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of
the case, whether to give due course to the suit or dismiss it, on the principle of forum non
convenience. Hence, the Philippine Court may refuse to assume jurisdiction in spite of its having
acquired jurisdiction. Conversely, the court may assume jurisdiction over the case if it chooses to
do so; provided, that the following requisites are met: 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.
The aforesaid requirements having been met, and in view of the court’s disposition to give due
course to the questioned action, the matter of the present forum not being the “most
convenient” as a ground for the suit’s dismissal, deserves scant consideration.

38 | P a g e
BANK OF AMERICA NT & SA VS. COURT OF APPEALS
MARCH 31 2003
G.R. NO. 120135

FACTS:

The Litonjuas (Eduardo and Aurelio), private respondents, were engaged in the shipping
business. They owned 2 vessels through their company and deposited their revenues with the
petitioner banks in both Hongkong and UK. The respondents alleged that the petitioner offered
easy loans to help them acquire additional three (3) vessels through their company. The
operation and the funds were then placed under the control of the petitioner while the
possession of the vessels were left in the hands of persons designated.

The said vessels were subsequently foreclosed when the business of respondents
declined. However, the bank as trustee failed to render an accounting of the incomes of the said
vessels. This prompted the Litonjuas to file a complaint. The petitioner bank filed a motion to
dismiss on the ground of forum non conveniens and lack of cause of action. The MD was denied
by the lower court. The petitioner filed a petition for review on certiorari with the CA. The Court
of Appeals dismissed. It was treated by the CA as a petition for certiorari.

ISSUE:

Whether or not the case should have been dismissed on the ground of Forum Non
Conveniens.

RULING:

Whether a suit is to be dismissed on the ground of Forum Non Conveniens depends

largely upon the facts of the case and is addressed to the sound discretion of the courts. The
following requisites must be met: The Philippine court must be one to which the parties may
conveniently resort to the Philippine courts is in the position to make intelligent decisions as to
law and facts and It has or likely have the power to enforce its decision.

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BOARD OF COMMISSIONERS, ET.AL. VS. HON. JOSELITO DE LA ROSA
G.R. NOS. 95122-23
197 SCRA 858
MAY 31, 1991

FACTS:
In July 1960, Santiago Gatchalian was recognized as a natural born Filipino by the Bureau
of Immigration. Santiago married in China a Chinese woman with whom he had a son named
Francisco. Francisco also married a Chinese woman in China with whom he had a son named
William.
In June 1961, Francisco and his minor son William Gatchalian arrived in the Philippines
from Hong Kong. William was seeking to be admitted as a Filipino citizen. In July 1961, the Board
of Special Inquiry recognized William as a Filipino.
In January 1962, the Secretary of Justice issued a resolution setting aside the recognition
of William and others who were similarly situated. The Secretary likewise ordered the Bureau of
Commissioners to review decisions made by the Bureau of Special Inquiry.
In July 1962, the Bureau of Commissioners reversed the recognition made by the Bureau
of Special Inquiry anent the citizenship of William. Subsequently, a warrant of exclusion was
issued against William for him to be deported. William filed a motion for reconsideration.
In 1973, his motion was granted and the original recognition made in William’s favor was
reinstated. Since his arrival in 1961, William has continuously lived in the Philippines. He built his
family and business here and was even a registered voter here.
However, in 1990, the National Bureau of Investigation recommended the filing of a
criminal case against William for violation of the Immigration Act. It was alleged that the
recognition issued in favor of William was invalid. Eventually, the Commission of Immigration and
Deportation ordered the arrest of William. William posted bail then he filed an injunction case
against the Board of Commissioners in the Regional Trial Court presided by Judge Joselito Dela
Rosa. The Board of Commissioners filed a motion to dismiss alleging that the court has no
jurisdiction over the Board of Commissioners nor the Board of Special Inquiry. The Judge denied
the Motion to Dismiss. The Board of Commissioners then filed a certiorari case against Judge Dela
Rosa. Other than the issue on jurisdiction, it was also alleged that there was no proof that
Santiago’s and Francisco’s marriages with their respective Chinese wives in China were valid. It
was argued that William must prove that under Chinese law, his father’s marriage with William’s
mother in China is valid. Without such proof, William is an illegitimate child who should follow
the citizenship of her Chinese mother.

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ISSUE:
Whether or not the marriage of Francisco Gatchalian in China is valid in accordance with
Philippine Law.

RULING:

The marriage of Francisco Gatchalian in China is valid in accordance with Philippine Law.
The Court held that in the absence of the evidence to the contrary foreign laws on a particular
subject are presumed to be the same as those of the Philippines. This is known as Processual
Presumption. In this case, there being no proof of Chinese law relating to marriage, there arises
a presumption that it is the same of that of Philippine law the said marriage then is declared valid.
Therefore, William Gatchalian following the citizenship of his father is a Filipino citizen. William
does not need to prove the Chinese Law as said law is considered the same as Philippine Law.
And under Philippine Law, all marriages performed outside of the Philippines in accordance with
the laws in force in the country where they were performed, and valid there as such, shall also
be valid in this country. And any doubt as to the validity of the matrimonial unity and the extent
as to how far the validity of such marriage may be extended to the consequences of the coverture
is answered by Art. 220 of the Civil Code in this manner: “In case of doubt, all presumptions favor
the solidarity of the family. Thus, every intendment of law or facts leans toward the validity of
marriage, the indissolubility of the marriage bonds, the legitimacy of children, the community of
property during marriage, the authority of parents over their children, and the validity of defense
for any member of the family in case of unlawful aggression. Lastly, he who asserts that the
marriage is not valid under our law bears the burden of proof to present the foreign law.

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IN RE: UNION CARBIDE CORPORATION GAS PLANT DISASTER IN BHOPAL, INDIA IN DECEMBER
1984

FACTS:
An industrial accident at a gas plant in India caused the deaths of over 2,000 people and
injuries of more than 200,000. The plant in India was operated entirely by citizens of India. There
were no American workers at the plant and no American deaths. Union Carbide Corporation
(UCC) (defendant) was named in more than 6,500 lawsuits arising from the disaster, all brought
in the United States by citizens of India (plaintiffs). The suits were consolidated in multidistrict
litigation in the United States District Court for the Southern District of New York. UCC moved to
dismiss the case from the United States courts on the ground of forum non conveniens. The
district court granted the motion on the condition that UCC consent to both the enforcement of
the Indian court award in the United States and to discovery under the Federal Rules of Civil
Procedure in the Indian proceeding. UCC appealed the consent requirements, and the plaintiffs
appealed the dismissal under forum non conveniens.

ISSUE:
Whether or not a United States court should apply the forum non conveniens test that
would apply if the plaintiff were a US resident

RULING:
When deciding the issue of forum non conveniens in a case in which the plaintiff is not a
United States resident, a U.S. court should not apply the same test that would apply if the plaintiff
was a U.S. resident.
In Piper Aircraft Co. v. Reyno, 454 U.S. 235 S. Ct. 252 (1981), the United States Supreme
Court provided factors a court should weigh when deciding to dismiss a case for forum non
conveniens. The court in Piper Aircraft held that certain factors are not to be considered if the
plaintiff is not a resident of the United States. Normally, a court will give deference to a plaintiff’s
decision to file suit in the United States. However, deference is only given if the plaintiff resides
in the United States. Normally, a court must also consider the benefit or burden imposed on each
party by applying United States law as opposed to the law applied by a foreign court. Again,
however, a comparison of the law is not required for nonresident plaintiffs. A court must only
examine whether the alternative foreign court provides the opportunity to bring a case. Here,
the district court correctly applied Piper Aircraft in finding that the case should be dismissed
under forum non conveniens. India provides a proper forum, where plaintiffs can litigate their
claims, even if Indian law is less favorable. The plant was located in India, managed by citizens of
India, and had no American employees. Thus, all of the evidence is located in India, and witnesses
are not subject to a United States court’s jurisdiction for discovery purposes. However, the part

42 | P a g e
of the district court’s order that required UCC to consent to enforcement of the Indian judgment
is overturned, because the New York Foreign Country Money Judgment Law already provides a
means for enforcement of a foreign judgment. Finally, the part of the district court’s order
requiring UCC to consent to discovery under the Federal Rules of Civil Procedure is also
overturned, because Indian procedural law will apply equally to both UCC and plaintiffs. The
district court’s order is affirmed as modified.

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TIRSO DACANAY VS. PEDRO V. FLORENDO, ET.AL.
G.R. NO. L-2071
SEPTEMBER 19, 1950

FACTS:
Spouses Isabel V. Florendo and Tirso Dacanay executed a reciprocal will on October 20,
1940. Isabel V. Florendo having died, her surviving spouse Tirso Dacanay is seeking to probate
said joint and reciprocal will, which provides in substance that whoever of the spouses, joint
testators, shall survive the other shall inherit all the properties of the latter, with an agreement
as to how the surviving spouse shall dispose of the properties in case of his or her demise.
Relatives of the deceased Isabel V. Florendo opposed the probate for the said will on the
various grounds. After receiving from counsel for both parties written arguments, the trial court
ordered dismissing the petition for probate on the ground that said will is null and void ab initio
as having been executed in violation of Article 669 of the Civil Code.

ISSUE:
Whether or not the joint and reciprocal executed by the spouses may be probated in view
of the prohibition on Article 669 of the Civil Code

RULING:
The joint and reciprocal executed by the spouses may not be probated in view of the
prohibition in Article 669 of the Civil Code.
The court agrees with Tirso Dacanay’s view that the prohibition of Article 669 of the Civil
Code is directed against the execution of a joint will, or the expression by two or more testators
of their wills in a single document and by one act, rather than against mutual or reciprocal wills,
which may be separately executed.
The provision of Article 669 of the Civil Code prohibiting the execution of a will by two or
more persons conjointly or in the same instrument either for their reciprocal benefit or for the
benefit of a third person, is not unwise and is not against public policy. This is to prevent the more
aggressive spouse to dictate the terms of the will for his or her own benefit or for that of third
persons whom he or she desires to favor. Where the will is not only joint but reciprocal, either
one of the spouses who may happen to be unscrupulous, wicked, faithless or desperate, knowing
as he or she does the terms of the will whereby the whole property of the spouses both conjugal
and paraphernal goes to the survivor, may be tempted to kill or dispose of the other.

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YAO KEE, ET.AL. VS. AIDA SY-GONZALES, ET.AL.
G.R. NO. L-55960
NOVEMBER 24, 1988

FACTS:
Sy Kiat, a Chinese national, died on January 17, 1977 leaving behind properties here in the
Philippines.
Thereafter, Aida Sy-Gonzales et al filed a petition for the grant of letters of administration
alleging that they are the children of the deceased with Asuncion Gillego. The petition was
opposed by Yao Kee et al alleging that Yao Kee is the lawful wife of the deceased whom he
married in China. The trial court rendered decision in favor of Yao Kee. On appeal, the Court of
Appeals rendered a decision, modifying the decision declaring the marriage of Sy Kiat to Yao Kee
as not proven valid in accordance with the laws of China. Both parties moved for reconsideration.

ISSUE:
Whether or not the marriage of Yao Kee and Sy Kiat is valid in accordance with the
Philippine laws

RULING:
The marriage of Yao Kee and Sy Kiat is not valid in accordance with the Philippine laws.
Well-established in this jurisdiction is the principle that Philippine courts cannot take judicial
notice of foreign laws. They must be alleged and proven as any other fact. To establish the validity
of marriage, the existence of foreign law as a question of fact and the alleged marriage must be
proven by clear and convincing evidence.
In this case, for failure to prove the foreign law or custom and consequently of the
marriage, the marriage between Yao Kee and Sy Kiat in China cannot be recognized in the
jurisdiction of Philippine courts.

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RENATO D. TAYAG VS. BENGUET CONSOLIDATED, INC.
G.R. NO. 23145
NOVEMBER 29, 1968

FACTS:
Idonah Slade Perkins, an American citizen who died in New York City, left among others,
two stock certificates issued by Benguet Consolidated, a corporation domiciled in the Philippines.
As ancillary administrator of Perkins’ estate in the Philippines, Tayag now wants to take
possession of these stock certificates but County Trust Company of New York, the domiciliary
administrator, refused to part with them. Thus, the probate court of the Philippines was forced
to issue an order declaring the stock certificates as lost and ordering Benguet Consolidated to
issue new stock certificates representing Perkins’ shares. Benguet Consolidated appealed the
order, arguing that the stock certificates are not lost as they are in existence and currently in the
possession of County Trust Company of New York.

ISSUE:
Whether or not the company should issue the new certificates

RULING:
The company should issue the new certificates. The company must issue the new
certificates because of the following reasons:
a) While factually the old certificates still exist, the same may by judicial fiction be
considered as LOST — in view of the refusal of the New York administrator to surrender
them, despite a lawful order of our courts. To deny the remedy would be derogatory to
the dignity of the Philippine judiciary. The ancillary Philippine administrator is entitled to
the possession of said certificates so that he can perform his duty as such administrator.
A contrary finding by any foreign court or entity would be inimical to the honor of our
country. After all, an administrator appointed in one state has no power over property
matters in another state. (Leon and Ghessi v. Manufacturer’s Life Ins. Co., 99 Phil. 459
[1951]).
b) The Company has nothing to fear about contingent liability should the new certificates be
issued. Its obedience to a lawful court order certainly constitutes a valid defense.

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UNITED AIRLINES INC. VS. COURT OF APPEALS, ANICE FONTANILLA
G.R. NO. 124110
APRIL 20, 2001

FACTS:
Aniceto Fontanilla bought from United Airlines, through the Philippine Travel Bureau in
Manila, three “Visit the U.S.A.” tickets from himself, his wife and his minors on, Mychal, to visit
the cities of Washington DC, Chicago and Los Angeles. All flights had been confirmed previously
by United Airlines. Having used the first coupon to DC and while at the Washington Dulles Airport,
Anice to changed their itinerary, paid the penalty for rewriting their tickets and was issued tickets
with corresponding boarding passes with the words: “Check-in-required.” They were then set to
leave but were denied boarding because the flight was overbooked. The CA ruled that private
respondents’ failure to comply with the check-in requirement will not defeat his claim as the
denied boarding rules were not complied with applying the laws of the USA, relying on the Code
of Federal Regulation Part on Oversales of the USA.

ISSUE:
Whether or not the Court of Appeals is correct in applying the laws of the USA

RULING:
The Court of Appeals is not correct in applying the laws of the USA. According to the
doctrine of “lex loci contractus”, the law of the place where a contract is made or entered into
governs with respect to its nature and validity, obligation and interpretation shall govern. This
has been said to be the rule even though the place where the contract was made is different
from the place where it is to be performed. Hence, the court should apply the law of the place
where the airline ticket was issued, where the passengers are residents and nationals of the
forum and the ticket is issued in such State by the defendant airline. Therefore, although, the
contract of carriage was to be performed in the United States, the tickets were purchased
through petitioner’s agent in Manila. It is true that the tickets were "rewritten" in D.C., however,
such fact did not change the nature of the original contract of carriage entered into by the parties
in Manila.

47 | P a g e
PAKISTAN INTERNATIONAL AIRLINES VS. HON. BLAS F. OPLE, FARRALES, MAMASIG
G.R. NO. 61594
SEPTEMBER 28, 1990

FACTS:
Pakistan International Airlines Corporation (PIA), a foreign corporation licensed to do
business in the Philippines, executed in Manila two separate contracts of employment, one with
private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.c.
Mamasig.
The contracts provided that the Duration of Employment is for a period of 3 years, PIA
reserves the right to terminate this agreement at anytime by giving the employee notice in
writing in advance one month before the intended termination or in lieu thereof, by paying the
employee wages equivalent to one month’s salary, and the agreement shall be construed and
governed under and by the laws of Pakistan, and only Courts of Karachi, Pakistan shall have the
jurisdiction to consider any matter arising out of or under this agreement.
Farrales and Mamasig then commenced training in Pakistan and after such, they began
discharging their job functions as flight attendants with base station in Manila and flying
assignments to different parts of the Middle East and Europe.
Roughly on year and four months prior to the expiration of the contracts of employment,
PIA sent separate letter to private respondents advising both that their services as flight
stewardess from abroad sizeable quantities of personal effects.

ISSUE:
Whether or not the Philippine laws should be applies and Philippine courts has jurisdiction
over this case.

RULING:

The Philippines courts have jurisdiction over this case and the Philippine laws shall be
applied.

Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly, lays
the venue for settlement of any dispute arising out of or in connection with the agreement “only
[in] courts of Karachi Pakistan”.

We have already pointed out that the relationship is much affected with public interest
and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by
the parties agreeing upon some other law to govern their relationship.

48 | P a g e
 The contract was not only executed in the Philippines, it was also performed here, at least
partially; private respondents are Philippine citizens and respondents, while petitioner, although
a foreign corporation, is licensed to do business (and actually doing business) and hence resident
in the Philippines; lastly, private respondents were based in the Philippines in between their
assigned flights to the Middle East and Europe. All the above contacts point to the Philippine
courts and administrative agencies as a proper forum for the resolution of contractual disputes
between the parties.

Under these circumstances, paragraph 10 of the employment agreement cannot be given

effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them by
Philippine law. Finally, and in any event, the petitioner PIA did not undertake to plead and prove
the contents of Pakistan law on the matter; it must therefore be presumed that the applicable
provisions of the law of Pakistan are the same as the applicable provisions of Philippine law.

49 | P a g e
HUNTINGTON VS. ATTRILL
146 US 657
DECEMBER 12, 1892

FACTS:
A bill in equity in one state to set aside a conveyance of property made in fraud of
creditors, and to charge it with the payment of a judgment since recovered by the plaintiff against
the debtor in another state upon his liability as an officer in a corporation under a statute of that
state, set forth the judgment and the cause of action on which it was recovered and also asserted,
independently of the judgment, an original liability of the defendant as a stockholder and officer
in that corporation before the conveyance. The highest court of the state declined to entertain
the bill by virtue of the judgment, because it had been recovered in another state in an action for
a penalty, or to maintain the bill on the original liability

ISSUE:
Whether a statute of one state is a penal law which cannot be enforced in another state
is to be determined by the court which is called upon to enforce it.

RULING:
If the highest court of a state declines to give full faith and credit to a judgment of another
state because in its opinion that judgment was for a penalty, this Court, in determining whether
full faith and credit have been given to that judgment, must decide for itself whether the original
cause of action was penal in the international sense.
If a judgment for a fixed sum of money, recovered in one state by a creditor of a
corporation against one of its officers upon a liability for all its debts imposed by a statute of that
state for making and recording a false certificate of the amount of its capital stock, is sued on in
a court of another state, and that court declines to enforce the judgment because of its opinion
that the original liability was a penalty, the judgment is thereby denied the full faith, credit and
effect to which it is entitled under the Constitution and laws of the United States.
In equity. The bill was dismissed by the Court of Appeals of Maryland, to which judgment
this writ of error was sued out.

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SPS. CESAR AND SUTHIRA ZALAMEA VS. COURT OF APPEALS
G.R. NO. 104235
NOVEMBER 18, 1993

FACTS:
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana
Zalamea, purchased three (3) airline tickets from the Manila agent of respondent TransWorld
Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984. The tickets of petitioners-
spouses were purchased at a discount of 75% while that of their daughter was a full fare ticket.
All three tickets represented confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of
their reservations for said flight. On the appointed date, however, petitioners checked in at 10:00
a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list
because the number of passengers who had checked in before them had already taken all the
seats available on the flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two
other Zalameas were listed as "No. 34, showing a party of two." Out of the 42 names on the wait
list, the first 22 names were eventually allowed to board the flight to Los Angeles, including
petitioner Cesar Zalamea. The two others, on the other hand, at No. 34, being ranked lower than
22, were not able to fly. As it were, those holding full-fare tickets were given first priority among
the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was
allowed to board the plane; while his wife and daughter, who presented the discounted tickets
were denied boarding. According to Mr. Zalamea, it was only later when he discovered the he
was holding his daughter's full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be
accommodated because it was also fully booked. Thus, they were constrained to book in another
flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen
($918.00) Dollars.

ISSUE:
Whether or not TWA is liable for breach of contract.

RULING:
Overbooking of flight amounts to fraud or bad faith, entitling plaintiff to an award of
moral damages because of bad faith attending the contract. The holding that overbooking was
allowed under US Federal regulations was found erroneous because: (a) this regulation was not
proved and our courts cannot take judicial notice of it; and (b) even if such regulation was proven,
the rule of lex loci contractus negated its application. According to this rule, the law of the place
where the airline ticket was issued should be applied by the country where the passengers are

51 | P a g e
residents and nationals of the forum and the ticket is issued in such State by the defendant airline.
Since tickets were sold and issued in the Philippines, the applicable law in this case would be
Philippine law. Under our jurisprudence, overbooking of flight is bad faith. Moreover, the
hierarchy of tickets practiced by TWA was evidence of its self-interest over that of its passengers
which SC held to be improper considering the public interest involved in a contract of carriage.

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GRACE J. GARCIA-RECIO VS. REDERICK A. RECIO
GR. NO. 138322
OCTOBER 2, 2001

FACTS:
Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen. They
lived together as husband and wife in Australia. On May 18, 1989, a decree of divorce,
purportedly dissolving the marriage, was issued by an Australian family court. respondent
became an Australian citizen. Petitioner filed a Complaint for Declaration of Nullity of Marriage
on the ground of bigamy.
In his Answer, respondent averred that he had revealed to petitioner his prior marriage
and its subsequent dissolution. He contended that his first marriage to an Australian citizen had
been validly dissolved by a divorce decree obtained in Australian in 1989. Thus, he was legally
capacitated to marry petitioner in 1994.

ISSUE:
Whether or not the divorce between respondent and Editha Samson was proven.

RULING:
The Supreme Court ruled that the mere presentation of the divorce decree of
respondent’s marriage to Samson is insufficient. Before a foreign divorce decree can be
recognized by our courts, the party pleading it must prove the divorce as a fact and demonstrate
its conformity to the foreign law allowing it. Furthermore, the divorce decree between
respondent and Editha Samson appears to be an authentic one issued by an Australian family
court. However, appearance is not sufficient; compliance with the aforementioned rules on
evidence must be demonstrated.

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ASIAVEST MERCHANT BANKERS BERHAD VS. CA
G.R. NO. 110263
JULY 20, 2001

FACTS:
The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under
the laws of Malaysia while private respondent Philippine National Construction Corporation is a
corporation duly incorporated and existing under Philippine laws. It appears that sometime in
1983, petitioner initiated a suit for collection against private respondent, then known as
Construction and Development Corporation of the Philippines, before the High Court of Malaya
in Kuala Lumpur.
Following unsuccessful attempts6 to secure payment from private respondent under the
judgment, petitioner initiated on September 5, 1988 the complaint before Regional Trial Court
of Pasig, Metro Manila, to enforce the judgment of the High Court of Malaya.
Private respondent sought the dismissal of the case via a Motion to Dismiss contending
that the alleged judgment of the High Court of Malaya should be denied recognition or
enforcement since on in face, it is tainted with want of jurisdiction, want of notice to private
respondent, collusion and/or fraud, and there is a clear mistake of law or fact.

ISSUE:
Whether or not the denying of recognition and enforcement to the Malaysian court
judgment is proper.

RULING:
Generally, in the absence of a special compact, no sovereign is bound to give effect within
its dominion to a judgment rendered by a tribunal of another country, however, the rules of
comity, utility and convenience of nations have established a usage among civilized states by
which final judgments of foreign courts of competent jurisdiction are reciprocally respected and
rendered efficacious under certain conditions that may vary in different countries.
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized
insofar as the immediate parties and the underlying cause of action are concerned so long as it
is convincingly shown that there has been an opportunity for a full and fair hearing before a court
of competent jurisdiction, that the trial upon regular proceedings has been conducted, following
due citation or voluntary administration of justice, and that there is nothing to indicate either a
prejudice in court and in the system of laws under which it is sitting or fraud in procuring the
judgment.

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INTERCONTINENTAL HOTELS CORPORATION VS. JACK GOLDEN
15 NY 2D 9
NOVEMBER 19, 1964

FACTS:
Defendant was a guest at plaintiff's Intercontinental Hotel in Puerto Rico. During his stay
there, in an attempt to turn chance into fortune, he played — on credit generously furnished by
plaintiff — at the dice tables in the casino conducted by the hotel, lost and, when he ascertained
the extent of his indebtedness, reneged. Following the loss of $6,000 in cash which defendant
allegedly brought with him, plaintiff advanced chips to the defendant in the sum of $12,000 which
he eventually also lost.
Strangely enough, no appellate court in this State has ruled on the question of whether
there can be recovery in New York on a professional gambling debt incurred in a jurisdiction
where gambling is legalized. The courts of New York will generally enforce contracts made in
other jurisdictions. The validity of such contracts is determined by the law of the place where the
contracts are made.
In section 612 of the Restatement, Conflict of Laws the rule is stated as follows: "No action
can be maintained upon a cause of action created in another state the enforcement of which is
contrary to the strong public policy of the forum."

ISSUE:
Whether or not the checks issued may be recovered in New York.

RULING:
There is a conflict of authority on the general question among the courts of the various
States. We hold that the clear public policy of this State will not permit suit in our courts to
recover on a gambling debt which arose in a professional gambling house even though the
gambling was legal where the debt allegedly arose. In view of our conclusion that plaintiff may
not recover in our courts upon the gambling debt herein, it becomes unnecessary to discuss the
collateral question of whether in any event, there could be recovery on that portion of the action
based on the $3,000 check. Since the check was payable in New York, the cause of action arose
in this State. nd, under New York law, there could be no recovery on the check

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