[G.R. No. 133876. December 29, 1999.
] "c) Under English Law, which is the governing law under the
BANK OF AMERICA, NT and SA, petitioner, vs. AMERICAN
REALTY CORPORATION and COURT OF APPEALS, respondents.
Foreign elements: BANTSA: international banking and financing
institution duly licensed to do business in the Philippines,
organized and existing under and by virtue of the laws of the
State of California, United States of America
Bank of America International Limited (BAIL), on the other
hand,
is a limited liability company organized and existing under the
laws of England.
Liberian Transport Navigation, S.A.; El Challenger S.A. and
Eshley Compania Naviera S.A. ), all of which are existing under
and by virtue of the laws of the Republic of Panama and are
foreign affiliates of private respondent
American Realty Corporation (ARC) is a domestic corporation.
Facts: Bantsa and Bail granted multi-million dollar loans in favor
of 1) Liberian Transport Navigation, S.A.; (2) El Challenger S.A.
and (3) Eshley Compania Naviera S.A. ), all of which are existing
under and by virtue of the laws of the Republic of Panama and
are foreign affiliates of private respondent. The loan was
subsequently restructured after a default of payment. ARC
executed a REM over its parcels of land situated in the Phils.
After another default of payment by the borrowers, Bantsa
filed a civil action before the High Court of Justice in England
and SC of HK against them, without impleading ARC as a 3 rd
party defendant.
Pending civil action, Bantsa filed before the Office of the
Provincial Sheriff of Bulacan an application for extrajudicial
foreclosure of REM. After due publication and notice, the real
properties were sold in a public auction in favor of ICCS. Due to
this foreclosure despite pendency of civil suits before foreign
courts for the collection of loan, ARC file an action for damages
against Banta.
Petitioner alleged that the rule prohibiting the mortgagee from
foreclosing the mortgage after an ordinary suit for collection
has been filed, is not applicable in the present case, claiming
that:
"a) The plaintiff, being a mere third party mortgagor and not a
party to the principal restructuring agreements, was never
made a party defendant in the civil cases filed in Hongkong and
England;
"b) There is actually no civil suit for sum of money filed in the
Philippines since the civil actions were filed in Hongkong and
England. As such, any decisions (sic) which may be rendered in
the abovementioned courts are not (sic) enforceable in the
Philippines unless a separate action to enforce the foreign
judgments is first filed in the Philippines, pursuant to Rule 39,
Section 50 of the Revised Rules of Court.
principal agreements, the mortgagee does not lose its security
interest by filing civil actions for sums of money."
Banta and Bail defense: the mere filing of a personal action to
collect the principal loan does not suffice; a final judgment
must be secured and obtained in the personal action so that
waiver of the remedy of foreclosure may be appreciated. To
put it differently, absent any of the two requisites, the
mortgagee-creditor is deemed not to have waived the remedy
of foreclosure.
RTC: the lower court rendered a decision in favor of private
respondent ARC declaring that the filing in foreign courts by the
defendant of collection suits against the principal debtors
operated as a waiver of the security of the mortgages.
CA: the Court of Appeals affirmed the assailed decision of the
lower court prompting petitioner to file a motion for
reconsideration which the appellate court denied.
Issue: Whether or not the petitioner's act of filing a collection
suit against the principal debtors for the recovery of the loan
before foreign courts constituted a waiver of the remedy of
foreclosure.
Ruling: yes. In Bachrach case and similar cases adjudicated
thereafter, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real
action to foreclose the mortgage. In other words, he may
pursue either of the two remedies, but not both. By such
election, his cause of action can by no means be impaired, for
each of the two remedies is complete in itself. A rule that
would authorize the plaintiff to bring a personal action against
the debtor and simultaneously or successively another action
against the mortgaged property, would result not only in
multiplicity of suits but also in subjecting the defendant to the
vexation of being sued in the place of his residence or of the
residence of the plaintiff, and then again in the place where the
property lies.
In our jurisdiction, the remedies available to the mortgage
creditor are deemed alternative and not cumulative. Notably,
an election of one remedy operates as a waiver of the other.
For this purpose, a remedy is deemed chosen upon the filing of
the suit for collection or upon the filing of the complaint in an
action for foreclosure of mortgage, pursuant to the provision of
Rule 68 of the 1997 Rules of Civil Procedure.
In this case, private respondent ARC constituted real estate
mortgages over its properties as security for the debt of the
principal debtors. By doing so, private respondent subjected
itself to the liabilities of a third party mortgagor. Under the law,
third persons who are not parties to a loan may ecure the latter
by pledging or mortgaging their own property. It is only upon
default of the borrowers that the creditor may have recourse
on the mortgagors by foreclosing the mortgaged properties in
lieu of an action for the recovery of the amount of the loan.

As to the argument wherein petitioner claimed that the
requisites of filing the action for collection and rendition of final
judgment therein should concur, the SC ruled in several
jurisprudence that the mere act of filing of an ordinary action
for collection operates as a waiver of the mortgage-creditor's
remedy to foreclose the mortgage. By the mere filing of the
ordinary action for collection against the principal debtors, the
petitioner in the present case is deemed to have elected a
remedy, as a result of which a waiver of the other necessarily
must arise. Corollarily, no final judgment in the collection suit is
required for the rule on waiver to apply.
Petitioner, by the expediency of filing four civil suits before
foreign courts, necessarily abandoned the remedy to foreclose
the real estate mortgages constituted over the properties of
third-party mortgagor and herein private respondent ARC. It is
not the nature of the redress which is crucial but the efficacy of
the remedy chosen in addressing the creditor's cause. Hence, a
suit brought before a foreign court having competence and
jurisdiction to entertain the action is deemed, for this purpose,
to be within the contemplation of the remedy available to the
mortgagee-creditor. This pronouncement would best serve the
interest of justice and fair play and further discourage the
noxious practice of splitting up a lone cause of action.
As to processural presumption wherein Banta claimed that the
English law shall govern wherein it was stated that the
mortgagee does not lose its security interest by simply filing
civil actions for sums of money.:
There is no judicial notice of any foreign law. A foreign law
must be properly pleaded and proved as a fact. Thus, if the
foreign law involved is not properly pleaded and proved, our
courts will presume that the foreign law is the same as our local
or domestic or internal law.
In the instant case, assuming arguendo that the English Law on
the matter were properly pleaded and proved in accordance
with Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales, said
foreign law would still not find applicability.
When the foreign law, judgment or contract is contrary to a
sound and established public policy of the forum, the said
foreign law, judgment or order shall not be applied. To give
justice is the most important
function of law; hence, a law, or judgment or contract that is
obviously unjust negates the fundamental principles of Conflict
of Laws.
Since the forum in this case is the Philippine court, Rules of Civil
Procedure must govern.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is
pertinent — "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."
Clearly then, English Law is not applicable.
[G.R. No. 112573. February 9, 1995.]
NORTHWEST ORIENT AIRLINES, INC., petitioner, vs. COURT OF
APPEALS and C.F. SHARP & COMPANY, INC., respondents.
Foreign elements: Northwest: a corporation organized under
the laws of the State of Minnesota, U.S.A.
A judgment rendered in its favor by a Japanese court.
Facts: Northwest and Sharp, through its Japan branch, entered
into an International Passenger Sales Agency Agreement,
whereby the former authorized the latter to sell its air
transportation tickets. Unable to remit the proceeds,
Northwest sued Sharp in Tokyo, Japan for collection of the
unremitted proceeds. A writ of summons was issued by Tokyo
District Court of Japan against defendant at its office at
Kanagawa. However, since Mr. Dinozo was in the Philippines at
that time, the summons was unsuccessful. Upon his return,
Dinozo refused to accept the summon because according to
him, he is no longer an employee of Sharp. The judge of the
Tokyo District Court requested SC of Japan to summon the
service through diplomatic channels at the head office of the
defendant in Manila.
Defendant received the writ of summons through a sheriff.
However, it failed to appear at the scheduled hearing nor
appealed the judgment rendered therein. The judgment
ordered Sharp to pay Northwest. The latter was unable to
execute the decision in Japan, hence, a suit for enforcement of
the judgment was filed by it before the RTC of Manila.
Defendant filed its answer averring that the judgment of the
Japanese Court sought to be enforced is null and void and
unenforceable in this jurisdiction having been rendered without
due and proper notice to the defendant and/or with collusion
or fraud and/or upon a clear mistake of law and fact.
RTC: "The foreign judgment in the Japanese Court sought in this
action is null and void for want of jurisdiction over the person
of the defendant considering that this is an action in personam.
Jurisprudence requires that the defendant be served with
summons in Japan in order for the Japanese Court to acquire
jurisdiction over it, the process of the Court in Japan sent to the
Philippines which is outside Japanese jurisdiction cannot confer
jurisdiction over the defendant in the case before the Japanese
court of the case at bar. The court considered defendant as a
resident of Japan, having four (4) branches doing business
therein and in fact had a permit from the Japanese government
to conduct business in Japan. If the defendant in a foreign court
is a resident in the court of that foreign court such court could
acquire jurisdiction over the person of the defendant but it
must be served upon the defendant in the territorial
jurisdiction of the foreign court.
CA: sustained RTC’s decision. The process of the court has no
extraterritorial effect and no jurisdiction is acquired over the
person of the defendant by serving him beyond the boundaries
of the state." In an action strictly in personam, such as the
instant case, personal service of summons within the forum is
required for the court to acquire jurisdiction over the
defendant. There must be actual service within the proper
territorial limits on defendant or someone authorized to accept
service for him. Thus, a defendant, whether a resident or not in
the forum where the action is filed, must be served with
summons within that forum. The service of summons effected
in Manila or beyond the territorial boundaries of Japan was null
and did not confer jurisdiction upon the Tokyo District Court
over the person of SHARP; hence, its decision was void.
Issue: whether a Japanese court can acquire jurisdiction over a
Philippine corporation doing business in Japan by serving
summons through diplomatic channels on the Philippine
corporation at its principal office in Manila after prior attempts
to serve summons in Japan had failed.
Ruling: yes.
As to validity of a foreign judgment:
A foreign judgment is presumed to be valid and binding in the
country from which it comes, until the contrary is shown. It is
also proper to presume the regularity of the proceedings and
the giving of due notice therein.
Under Section 50, Rule 39 of the rules of court, a judgment in
an action in personam of a tribunal of a foreign country having
jurisdiction to pronounce the same is presumptive evidence of
a right as between the parties and their successors-in-interest
by a subsequent title. The judgment may, however, be assailed
by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact. The party
attacking a foreign judgment has the burden of overcoming the
presumption of its validity.
It was then incumbent upon SHARP to present evidence as to
what that Japanese procedural law is and to show that under it,
the assailed extraterritorial service is invalid. It did not.
Accordingly, the presumption of validity and regularity of the
service of summons and the decision thereafter rendered by
the Japanese court must stand.
As to processual presumption:
Since there is absence of proof regarding the Japanese law, the
Japanese law on the matter is presumed to be similar with the
Philippine law on service of summons on a private foreign
corporation doing business in the Philippines.
Section 14, Rule 14 of the rules of Court provides that if the
defendant is a foreign corporation doing business in the
Philippines, service may be made:
1. on its resident agent designated in accordance with law for
that purpose;
2. on its resident agent designated in accordance with law for
that purpose; or
3. on any of its officers or agents within the Philippines.
Nowhere in its pleadings did SHARP profess to having had a
resident agent authorized to receive court processes in Japan.
Hence, service on the designated government official or on any
of SHARP's officers or agents in Japan could be availed of. While
it may be true that service could have been made upon any of
the officers or agents of SHARP at its three other branches in
Japan, the availability of such a recourse would not preclude
service upon the proper government official. It was the Tokyo
District Court which ordered that summons for SHARP be
served at its head office in the Philippines after the two
attempts of service had failed.
The service coming from the SC of Japan to Ministry of Foreign
Affairs of Japan which, in turn forwarded the same to the
Japanese Embassy in Manila to Ministry of Foreign Affairs of
the Philippines, then to the executive Judge of the RTC of
Manila is equivalent to service on the proper government
official under Section 14, Rule 14 of the Rules of Court, in
relation to Section 128 of the Corporation Code. Hence,
SHARP's contention that such manner of service is not valid
under Philippine laws holds no water.
As to the issue of residency of sharp:
United States Supreme Court ruled in the 1940 case of Milliken
vs. Meyer 22 that domicile in the state is alone sufficient to
bring an absent defendant within the reach of the state's
jurisdiction for purposes of a personal judgment by means of
appropriate substituted service or personal service without the
state. [T]he authority of a state over one of its citizens is not
terminated by the mere fact of his absence from the state. The
domicile of a corporation belongs to the state where it was
incorporated. Nonetheless, a corporation formed in one state
may, for certain purposes, be regarded a resident in another
state in which it has offices and transacts business. The
assimilation of foreign corporations authorized to do business
in the Philippines "to the status of domestic corporations,"
subsumes their being found and operating as corporations,
hence, residing, in the country.
Inasmuch as SHARP was admittedly doing business in Japan
through its four duly registered branches at the time the
collection suit against it was filed, then in the light of the
processual presumption, SHARP may be deemed a resident of
Japan, and, as such, was amenable to the jurisdiction of the
courts therein and may be deemed to have assented to the said
courts' lawful methods of serving process.
Accordingly, the extraterritorial service of summons on it by
the Japanese Court was valid not only under the processual
presumption but also because of the presumption of regularity
of performance of official duty.
[G.R. No. 108538. January 22, 1996.]
LOURDES A. VALMONTE and ALFREDO D. VALMONTE,
petitioners, vs. THE HONORABLE COURT OF APPEALS, THIRD
DIVISION and ROSITA DIMALANTA, respondents.
Foreign element: Petitioner Lourdes A. Valmonte is a foreign
resident.

Facts: Petitioners Lourdes A. Valmonte and Alfredo D.
Valmonte are husband and wife. They are both residents of
USA. However, Alfredo practices his profession as a lawyer in
the Philippines. private respondent Rosita Dimalanta, who is
the sister of petitioner Lourdes A. Valmonte, filed a complaint
for partition of real property and accounting of rentals against
petitioners Lourdes and Alfredo before the Regional Trial Court
of Manila over a three-door apartment located in Paco,
Manila.
Pursuant to a letter previously sent by Lourdes to private
respondent's counsel in which, in regard to the partition of the
property in question, she referred private respondent's counsel
to her husband as the party to whom all communications
intended for her should be sent, service of summons was made
upon Alfredo. Alfredo accepted the summons, insofar as he
was concerned, but refused to accept the summons for his
wife, Lourdes A. Valmonte, on the ground that he was not
authorized to accept the process on her behalf. He thereafter
filed his Answer with Counterclaim. Petitioner Lourdes A.
Valmonte, however, did not file her Answer. Private
respondent moved to declare her in default which was
opposed by Alfredo through special appearance.
RTC: denied private respondent's motion to declare petitioner
Lourdes A. Valmonte in default.
CA: rendered a decision granting the petition and declaring
Lourdes A. Valmonte in default. Mrs. Valmonte clearly and
unequivocally directed the aforementioned counsel of
Dimalanta to address all communications to her lawyer who
happens also to be her husband. Such directive was made
without any qualification just as was her choice/designation of
her husband Atty. Valmonte as her lawyer likewise made
without any qualification or reservation.
the disputed summons was served not upon just an ordinary
lawyer of private respondent Lourdes A. Valmonte, but upon
her lawyer husband. The same lawyer/husband happens to be
also her co-defendant in the instant case which involves real
property which, according to her lawyer/husband/co
defendant, belongs to the conjugal partnership of the
defendants.
Petitioner’s defense: alleging that the Court of Appeals erred
(1) in refusing to apply the provisions of Rule 14, § 17 of the
Revised Rules of Court and applying instead Rule 14, § 8 when
the fact is that petitioner Lourdes A. Valmonte is a nonresident
defendant; even if Rule 14, § 8 is the applicable provision, there
was no valid substituted service as there was no strict
compliance with the requirement by leaving a copy of the
summons and complaint with petitioner Alfredo D. Valmonte
Issue: whether in an action for partition filed against her and
her husband, who is also her attorney, summons intended for
her may be served on her husband, who has a law office in the
Philippines.
Ruling: no.
In an action in personam, personal service of summons or, if
this is not possible and he cannot be personally served,
substituted service, as provided in Rule 14, § 7-8 2 is essential
for the acquisition by the court of jurisdiction over the person
of a defendant who does not voluntarily submit himself to the
authority of the court. If defendant cannot be served with
summons because he is temporarily abroad, but otherwise he
is a Philippine resident, service of summons may, by leave of
court, be made by publication. 4 Otherwise stated, a resident
defendant in an action in personam, who cannot be personally
served with summons, may be summoned either by means of
substituted service in accordance with Rule 14, § 8 or by
publication as provided in § 17 and 18 of the same Rule.
defendant must be a resident of the Philippines, otherwise an
action in personam cannot be brought because jurisdiction over
his person is essential to make a binding decision.
if the action is in rem or quasi in rem, jurisdiction over the
person of the defendant is not essential for giving the court
jurisdiction so long as the court acquires jurisdiction over the
res. If the defendant is a nonresident and he is not found in the
country, summons may be served extraterritorially in
accordance with Rule 14, § 17 which provides that :
When the defendant does not reside and is not found in the
Philippines and the action affects the personal status of the
plaintiff or relates to, or the subject of which is, property within
the Philippines, in which the defendant has or claims a lien or
interest, actual or contingent, or in which the relief demanded
consists, wholly or in part, in excluding the defendant from any
interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court,
be effected out of the Philippines by personal service as under
Section 7; or by publication in a newspaper of general
circulation in such places and for such time as the court may
order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known address
of the defendant, or in any other manner the court may deem
sufficient.
What gives the court jurisdiction in an action in rem or quasi in
rem is that it has jurisdiction over the res.
In the present case, private respondent's action, which is for
partition and accounting under Rule 69, is in the nature of an
action quasi in rem. Such an action is essentially for the
purpose of affecting the defendant's interest in a specific
property and not to render a judgment against him. As
petitioner Lourdes A. Valmonte is a nonresident who is not
found in the Philippines, service of summons on her must be in
accordance with Rule 14, §17. Such service, to be effective
outside the Philippines, must be made either:
1. by personal service;
2. by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case
a copy of the summons and order of the court should be sent
by registered mail to the last known address of the defendant;
3. in any other manner which the court may deem sufficient.
The service of summons before the petitioner’s husband is not
considered as any other manner which the court may deem
sufficient. This mode of service, like the first two, must be
made outside the Philippines, such as through the Philippine
Embassy in the foreign country where the defendant resides.
Furthermore, service of summons on petitioner Alfredo D.
Valmonte was not made upon the order of the court as
required by Rule 14, § 17 and certainly was not a mode
deemed sufficient by the court which in fact refused to
consider the service to be valid and on that basis declare
petitioner Lourdes A. Valmonte in default for her failure to file
an answer. It was not made with required prior leave of court.
It should be noted that, in the case at bar, petitioner Lourdes A.
Valmonte did not appoint her husband as her attorney-in-fact.
Although she wrote private respondent's attorney that "all
communications" intended for her should be addressed to her
husband who is also her lawyer at the latter's address in
Manila, no power of attorney to receive summons for her can
be inferred therefrom. It was written in connection with the
negotiations between her and her sister, respondent Rosita
Dimalanta, concerning the partition of the property in question.
The authority given to petitioner's husband in these
negotiations certainly cannot be construed as also including an
authority to represent her in any litigation.
[G.R. Nos. 121576-78. June 16, 2000.]
BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS,
HON. ARSENIO M. GONONG, and CESAR S. URBINO, SR.,
respondents.
Foreign element: Poro Point Shipping Services, then acting as
the local agent of Omega Sea Transport, a Panamanian
Company
Facts: Poro point requested permission for its vessel M/V Star
Ace, which had engine trouble, to unload its cargo and to store
it at the Philippine Ports Authority compound. This was
approved. Despite the approval, the customs personnel
boarded the vessel when it docked on January 7, 1989, on
suspicion that it was the hijacked M/V Silver Med owned by
Med Line Philippines Co., and that its cargo would be smuggled
into the country. The district court seized the vessel and its
cargo and was held until it was abandoned. The vessel was
subjected to a salvage agreement with private respondent.
Despite the lift of the warrant of seizure, Custom Commissioner
Mison declined to issue clearance. District collector of customs
Sy forfeited the vessel in favor of the government.
Duraproof Services filed with the Regional Trial Court of Manila
a Petition for Certiorari, Prohibition and Mandamus 14 assailing
the actions of Commissioner Mison and District Collector Sy,
District Collector Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.;
. . . Vlason Enterprises as represented by its president, Vicente
Angliongto; Singkong Trading Company as represented by Atty.
Eddie Tamondong; Banco Do Brasil; Dusit International Co.;
Thai-Nan Enterprises Ltd., and Thai-United Trading Co.
Summonses was served to all of the parties.
Upon motion by Duraproof the following parties were declare
in default by the RTC, Singkong Trading Co., Commissioner
Mison, M/V Star Ace and Omega. Only private respondent,
Atty. Tamondong, Commissioner Mison, Omega and M/V Star
Ace appeared in the next pretrial hearing; thus, the trial court
declared the other respondents in default and allowed private
respondent to present evidence against them.
RTC: defendants/respondents are liable to [private respondent]
in the amount as prayed for in the petition.
petitioner Banco do Brasil filed, by special appearance, an
Urgent Motion to Vacate Judgment and to Dismiss Case 38 on
the ground that the February 18, 1991 Decision of the trial
court is void with respect to it for having been rendered
without validly acquiring jurisdiction over the person of Banco
do Brasil.
RTC: the trial court issued an Order 40 acting favorably on
petitioner’s motion and set aside as against petitioner the
decision dated February 18, 1991 for having been rendered
without jurisdiction over Banco do Brasil’s person.
CA: the appellate court rendered its Decision 47 granting
private respondent’s petitions, thereby nullifying and setting
aside the disputed orders and effectively "giving way to the
entire decision dated February 18, 1991 of the . . . Regional
Trial Court of Manila, Branch 8, in Civil Case No. 89-51451
which remains valid, final and executory, if not yet wholly
executed."
Petitioner’s defense: Banco do Brasil sought reconsideration
insofar as its liability for damages, on the ground that there was
no valid service of summons as service was on the wrong party
– the ambassador of Brazil. it argued, the trial court did not
acquire jurisdiction over petitioner Banco do Brasil. Petitioner
avers that the action filed against it is an action for damages, as
such it is an action in personam which requires personal service
of summons be made upon it for the court to acquire
jurisdiction over it. However, inasmuch as petitioner Banco do
Brasil is a non-resident foreign corporation, not engaged in
business in the Philippines, unless it has property located in the
Philippines which may be attached to convert the action into an
action in rem, the court cannot acquire jurisdiction over it in
respect of an action in personam.
Issue: W/N the Philippine courts acquired jurisdiction over
Brasil
Ruling: no.
When the defendant is a nonresident and he is not found in the
country, summons may be served extraterritorially in
accordance with Rule 14, Section 17 53 of the Rules of Court.
When the defendant is a nonresident and he is not found in the
country, summons may be served extraterritorially in
accordance with Rule 14, Section 17 53 of the Rules of Court:

1. when the action affects the personal status of the plaintiffs;
2. when the action relates to, or the subject of which is
property, within the Philippines, in which the defendant claims
a lien or interest, actual or contingent;
3. when the relief demanded in such action consists, wholly or
in part, in excluding the defendant from any interest in
property located in the Philippines;
4. when the defendant non-resident’s property has been
attached within the Philippines.
Service of summons may be effected by:
1. Personal service out of the country, with leave of court;
2. publication, also with leave of court;
3. any other manner the court may deem sufficient.
Extrajudicial service of summons apply only where the action is
in rem, an action against the thing itself instead of against the
person, or in an action quasi in rem, where an individual is
named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or loan burdening
the property. In rem and quasi in rem actions, jurisdiction over
the person of the defendant is not a prerequisite to confer
jurisdiction on the court provided that the court acquires
jurisdiction over the res.
Where the action is in personam, one brought against a person
on the basis of his personal liability, jurisdiction over the person
of the defendant is necessary for the court to validly try and
decide the case. When the defendant is a non-resident,
personal service of summons within the state is essential to the
acquisition of jurisdiction over the person. 57 This cannot be
done, however, if the defendant is not physically present in the
country, and thus, the court cannot acquire jurisdiction over his
person and therefore cannot validly try and decide the case
against him.
Private respondent’s suit against petitioner is premised on
petitioner’s being one of the claimants of the subject vessel
M/V Star Ace. respondent initially sought only to exclude
petitioner from claiming interest over the subject vessel M/V
Star Ace. However, private respondent testified during the
presentation of evidence that, for being a nuisance defendant,
petitioner caused irreparable damage to private respondent in
the amount of $300,000.00. 60 Therefore, while the action is in
rem, by claiming damages, the relief demanded went beyond
the res and sought a relief totally alien to the action.
Any relief granted in rem or quasi in rem actions must be
confined to the res, and the court cannot lawfully render a
personal judgment against the defendant. The publication of
summons effected by private respondent is invalid and
ineffective for the trial court to acquire jurisdiction over the
person of petitioner, since by seeking to recover damages from
petitioner for the alleged commission of an injury to his person
or property 62 caused by petitioner’s being a nuisance
defendant, private respondent’s action became in personam. In
personam nature of the action, personal or, if not possible,
substituted service of summons on petitioner, and not
extraterritorial service, is necessary to confer jurisdiction over
the person of petitioner and validly hold it liable to private
respondent for Damages. Trial court had no jurisdiction to
award damages amounting to $300,000.00 in favor of private
respondent and as against herein petitioner
Pp v Marcos
Facts: the Philippines' complaint of June 16, 1986, charges the
Marcoses with federal RICO violations and brings state law
claims for conversion, fraud, and deceit based on a "net worth"
theory wherein it alleges that almost all of the Marcoses'
wealth was acquired illegally by noting the large discrepancy
between the Marcoses' legitimate income and their enormous
net worth. The Philippine Government argues that this financial
gain must have been stolen and properly belongs to the
Philippine people. The Philippines sought an injunction, based
solely on this "net worth" theory, preventing the Marcoses
from disposing of their as sets until after the trial.
On June 25, 1986, the district court granted the injunction. On
appeal, the Ninth Circuit reversed. The court held that
adjudication of much of Marcos' assets is 17 barred by the act
of state doctrine, thus depriving the Philippines 18 of a
likelihood of success on the merits.
In the Ninth Circuit opinion, Judge Kozinski contends that
resolution of Marcos would interfere with our country's foreign
relations in a number of ways. A ruling against Marcos would
embarrass the United States by finding that the Philippine
government under him, which the United States considered a
close ally for many years, "was actually a criminal enterprise
under our law."' 24 law."' interference with our foreign policy
would result if the unstable Philippine political environment
creates another new government or our government's attitude
toward the current Philippine government changes. a decision
in favor of the defendants may hinder our relationship with the
current Philippine government.
Issue: w/n the US Court may not take cognizance of the case
pursuant to act of state doctrine.
Ruling: court may take cognizance. The Ninth Circuit opinion
extends the act of state doctrine beyond established law in a
manner inconsistent with the policies and rationales behind the
doctrine.
The danger of interference with the Executive's foreign policy is
certainly much less than if this court were evaluating the
conduct of the current Philippine government. As the Second
Circuit declared, "[t]he United States has made it clear that it
does not fear embarrassment if the courts of this country were
to take jurisdiction of this and other disputes between The
Republic and ex-President Marcos." it seems less troublesome
for the United States to admit its mistake in supporting a
corrupt dictator than to allow a former government official to
evade both international and United States laws.
After weighing the substantial countervailing foreign and
domestic policy interests favoring resolution of this dispute, it is
unreasonable to base this judicial decision on pure speculation
that the Philippine Government, or our country's attitude
toward it, may change in the future. It is reasonable to assume
that, by initiating this suit, the Philippines is aware of the risk
that the court may find Marcos' conduct completely legal. The
United States continues to maintain strong economic, military,
and political ties to the Philippines. 33 These ties would be
severely weakened if our courts refused to test the legality of
Marcos' conduct. 34 Rather than protecting the Executive and
Congressional branches' ability to conduct diplomatic relations
with the current Philippine government, judicial abstention
here may obstruct the maintenance of friendly relations.
Accordingly, the act of state doctrine should not bar
adjudication of this case.

Although the doctrine prevents inquiry into public

governmental acts, the government’s private and commercial
conducts is not within its scope. In order to invoke the doctrine,
the defendant must show that adjudicating the disputed
government acts would interfere with our government's
foreign policy to such an extent that judicial resolution would
be inappropriate. defendant bears the burden of showing that
the disputed acts constitute "official" rather than "private" acts
of state. In this case, the defendant have made no attempt to
meet their burden by showing how individual acts of Marcos
fall within the scope of the doctrine. In fact, many of these
activities bear little resemblance to governmental acts requiring
"complex political and policy choices." resembling the crime of
common theft.

Officials are shielded only when they act in their sovereign

capacity for the "public interest. Both the "official acts" and
"foreign policy interference" requirements are likely to be
formidable restraints preventing use of the act of state defense
by governments (and government officials) that are no longer
recognized as sovereign.