CONFLICT OF LAWS ATTY JK CAMPOSANO

INTRODUCTION/GENERAL CONCEPTS
JURISDICTION VS. CHOICE OF LAW
1. Hasegawa and Nippon Eng. v. Kitamura 
G.R. No. 149177 November 23, 2007
Ponente: Justice Nachura
Facts:
1. The petitioner Nippon Engineering Consultants Co. is a Japanese consultancy firm which provides technical
and management support in the infrastructure project of foreign governments. It entered into a Independent
Contractor Agreement (ICA) with respondent Kitamura, a Japanese national permanently residing in the
Philippines. Under the ICA, the respondent will extend professional services to the petitioner for a year.
2. Subsequently Kitamura was assigned as project manager of STAR project in 1999. In 2000, he was informed
by the petitioner that it will no longer renew the ICA and that he will be retained until its expiration. Kitamura
filed a civil casefor specific performance before the RTC of Lipa and damages.
3. The lower court ruled that it has jurisdiction over the dispute and denied the petitioner's motion to dismiss
since accordingly, it is vested by law with the power to entertain and hear the civil case filed by Kitamura. The
Court of Appeals upheld the lower court's decision.
Issue: Whether or not the RTC has jurisdiction over the case
HELD: YES
1. The only issue is the jurisdiction, hence, choice-of-law rules as raised by the petitioner is inapplicable and
not yet called for (reference to lex loci, lex contractus, or state of most significant rule). The petitioner
prematurely invoked the said rules before pointing out any conflict between the laws of Japan and the
Philippines.
2. The doctrine on forum non conveniens cannot be invoked to deprive the RTC of its jurisdiction. Dismissing
the case on this ground requires a factual determination hence the principle is considered to be more a matter
of defense.
PETITION IS DENIED.

DETERMINATION OF APPLICABLE LAW

2. SAUDI ARABIAN AIRLINES, petitioner, 
vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge
of Branch 89, Regional Trial Court of Quezon City, respondents.

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Facts:
Milagros Morada was hired as a flight attendant of SAUDIA and was based in Jeddah, Saudi Arabia. During a
lay-over in Indonesia, Morada, together with other crew members - Thamer and Allah went disco dancing. The
three of them returned to their hotels when it was almost morning and agreed to have breakfast in the room
of Thamer. However, Thamer attempted to rape Morada. Hotel personnels rescued Morada while Thamer and
Allah were both arrested by the Indonesian police. 

Upon Morada's return to Jeddah, she was interrogated by SAUDIA officials regarding the incident. They even
requested for her to help arrange the release of the two in Indonesia - to which she refused to do so. Later,
she learned that after two weeks of imprisonment, Thamer and Allah were allowed to deported through the
help of the Saudi Arabian government. Eventually, the two were again in service at SAUDI while Morada was
transferred to the Philippines. When Morada was requested by her superiors, her passport was taken from
her and was pressured to drop the case or her passport will not be returned. She eventually agreed to such
request just to get her passport back.

Years later, Morada was once again summoned by SAUDIA to Jeddah for further investigation. Morada agreed
when she received assurance from SAUDIA's Manila Manager, Aslam Saleemi, that the investigation was
routinary and that it posed no danger to her. She was once again interrogated by the judge about the incident.

When she was about to board her flight back to the Philippines, she was forbidden by the authorities, was
escorted back to court, interrogated and was sentenced to 5 months imprisonment and 286 lashes due to
violation of Islamic laws on dancing and socializing with men.

She sought help from the Philippine Embassy in Jeddah. To earn her upkeep, she worked on domestic flights of
SAUDIA while Thamer and Allah continued to serve in international flights.

Since Morada was wrongfully convicted, the Prince of Makkah dismissed the case and allowed her to leave
Saudi Arabia. However, shortly before her return to Manila, her services were terminated by SAUDIA, without
being informed of the cause.

Thus, Morada filed a case for damages against SAUDIA and its country manager.

SAUDIA field a motion to dismiss contending that:

(1) that the Complaint states no cause of action against Saudia;
(2) that the claim or demand set forth in the Complaint has been waived, abandoned or otherwise
extinguished; and
(3) that the trial court has no jurisdiction to try the case.

Issues:
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(1) Whether the case involves conflict of laws - YES
(2) Whether the trial court has jurisdiction over the case - YES.

Ruling: 
Conflict of Laws
There is a foreign element in this case, hence, it involves a conflict of laws question.

Foreign elements may appear in different forms. It may simply consist of the fact that one of the parties to the
contract is an alien or has a foreign domicile or that a contract between nationals of one State involves
properties situated in another State. In other cases, the foreign element may assume a complex form.

Here, the foreign element comes from the fact that the plaintiff, Morada was a resident Philippine National
while SAUDIA is a resident foreign corporation. Moreover, through Morada's employment as a flight
stewardess of SAUDIA, the occurrences surrounding the case transpired while she was on her travels which
was across national borders. This caused a "conflicts" situation to arise.

Jurisdiction
Weighing the relative claims of the parties, the court found it best to hear the case in the Philippines. If it
refused to take cognizance of the case, it would be forcing Morada to seek remedial action elsewhere, i.e. in
the Kingdom of Saudi Arabia where she no longer maintains substantial connections. That would have caused
a fundamental unfairness to her.

Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been
shown by either of the parties. The choice of forum of the Morada should be upheld.

Similarly, the trial court has also acquired jurisdiction over the persons of the parties in this case. By filing her
Complaint and Amended Complaint with the trial court, Morada has voluntary submitted herself to the
jurisdiction of the court. Similarly, SAUDIA has filed several motions asking the court for relief. This indicates
that SAUDIA indeed has submitted to the jurisdiction of the trial court.

Discussion as to what applicable law in case of conflict of laws; Choice-of-laws

As to the choice of applicable law, we note that choice-of-law problems seek to answer two important
questions:
(1) What legal system should control a given situation where some of the significant facts occurred in two or
more states; and
(2) to what extent should the chosen legal system regulate the situation.

Several theories have been propounded in order to identify the legal system that should ultimately control.
Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and
predictability, they do not always do so. The forum is then faced with the problem of deciding which of these
two important values should be stressed.

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Before a choice can be made, it is necessary for us to determine under what category a certain set of facts or
rules fall. This process is known as "characterization", or the "doctrine of qualification". It is the "process of
deciding whether or not the facts relate to the kind of question specified in a conflicts rule."  The purpose of
"characterization" is to enable the forum to select the proper law.

Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact.  An
essential element of conflict rules is the indication of a "test" or "connecting factor" or "point of contact".
Choice-of-law rules invariably consist of a factual relationship (such as property right, contract claim) and a
connecting factor or point of contact, such as the situs of the res, the place of celebration, the place of
performance, or the place of wrongdoing.

The relevant point of contact in this case is Lex Loci Actus.

(4) the place where an act has been done, the locus actus, such as the place where a contract has been made,
a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in
contracts and torts.

Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or "point of
contact" could be the place or places where the tortious conduct or lex loci actus occurred. And applying the
torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place
where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner
allegedly deceived private respondent, a Filipina residing and working here.

According to her, she had honestly believed that petitioner would, in the exercise of its rights and in the
performance of its duties, "act with justice, give her due and observe honesty and good faith." Instead,
petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in
another country is of no moment. For in our view what is important here is the place where the over-all harm
or the totality of the alleged injury to the person, reputation, social standing and human rights of complainant,
had lodged, according to the plaintiff below (herein private respondent). All told, it is not without basis to
identify the Philippines as the situs of the alleged tort.

Other point of contacts: 

(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;

(2) the seat of a legal or juridical person, such as a corporation;

(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex
situs is decisive when real rights are involved;

(4) the place where an act has been done, the locus actus, such as the place where a contract has been made,
a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in
contracts and torts;

(5) the place where an act is intended to come into effect, e.g., the place of performance of contractual duties,
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or the place where a power of attorney is to be exercised;

(6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis;

(7) the place where judicial or administrative proceedings are instituted or done. The lex forithe law of the
forumis particularly important because, as we have seen earlier, matters of procedure not going to the
substance of the claim involved are governed by it; and because the lex fori applies whenever the content of
the otherwise applicable foreign law is excluded from application in a given case for the reason that it falls
under one of the exceptions to the applications of foreign law; and

(8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its
master or owner as such. It also covers contractual relationships particularly contracts of affreightment.

3. RAYTHEON INTERNATIONAL, INC., v. STOCKTON W. ROUZIE, JR., G.R. NO. 162894 February 26, 2008
Facts:
Brand Marine Services, Inc. (BMSI), a foreign corporation duly organized and existing under the laws of the
State of Connecticut, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract
whereby BMSI hired respondent as its representative to negotiate the sale of services in several government
projects in the Philippines for an agreed remuneration of 10% of the gross receipts. Then, respondent secured
a service contract with the Republic of the Philippines on behalf of BMSI.
After 4 years, respondent filed before the Arbitration branch of the NLRC a suit against BMSI and Rust
International, Inc. (RUST) for alleged nonpayment of commissions, illegal termination and breach of
employment contract. Labor Arbiter rendered judgment ordering BMSI and RUST to pay respondent’s money
claims. Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s
complaint on the ground of lack of jurisdiction. Respondent elevated the case to the SC but was dismissed.
After that, respondent, then a resident of La Union, instituted an action for damages before the RTC of La
Union. The Complaint named as defendants here in petitioner as well as BMSI and RUST, the two corporations
impleaded in the earlier labor case. The complaint essentially reiterated the allegations in the labor case that
respondent was not paid for his services. The complaint also averred that BMSI and RUST as well as petitioner
itself had combined and functioned as one company.
In its Answer, petitioner alleged that contrary to respondent’s claim, it was a foreign corporation duly licensed
to do business in the Philippines and denied entering into any arrangement with respondent or paying the
latter any sum of money. Petitioner also referred to the NLRC decision which disclosed that per the written
agreement between respondent and BMSI and RUST, denominated as “Special Sales Representative
Agreement,” the rights and obligations of the parties shall be governed by the laws of the State of
Connecticut. Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action
and forum non conveniens. It was denied.

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Issue:
Whether or not the Philippine court can acquire jurisdiction over the case notwithstanding the stipulation that
the same shall be governed by a foreign law.
Held:
Yes. That the subject contract included a stipulation that the same shall be governed by the laws of the State
of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter, are
precluded from hearing the civil action.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse impositions on its
jurisdiction where it is not the most “convenient” or available forum and the parties are not precluded from
seeking remedies elsewhere. Petitioner averred foreign elements present in this case which include (1) BRII
and RUST are foreign corporations and respondent Rouzie is an American citizen, and (2) The evidence to be
presented is located outside the Philippines. The Court held that these are not sufficient to oust the trial court
of its jurisdiction over the case and the parties involved.

JURISDICTION AND CHOICE OF LAW

4. Fort Bonifacio Development Corporation vs Sorongon and Fong GR No. 176709, May 8, 2009
FACTS:
Petitioner Fort Bonifacio Development Corporation entered into a trade contract with L & M Maxco Specialist
Construction’s wherein Maxco would undertake the structural and partialarchitectural package of the
Bonifacio Ridge Condominium Phase1 (BRCP Later, petitioner accused Maxco of delay in completion of its
work and sent the latter a notice of termination. Subsequently, Maxco was sued by its creditors including
respondent for debts unrelated to BRCP 1. In order to settle the collection suit, Maxco assigned its receivables
representing its retention money from the BRCP 1 in the amount of P1, 577,115.90. Respondent Valentin Fong
informed petitioner regarding Maxco’s assignment in his favor and asked to confirm the validity of Maxco’s
receivables. Petitioner informed respondent Fong that there is no more amount due to Maxco from petitioner
after the rectification of defect as well. Respondent Fong filed a complaint for a sum of money against
petitioner and Maxco in the Regional Trial Court of Mandaluyong City. Petitioner argued that since respondent
merely stepped into the shoes of Maxco as its assignee, it was the CIAC and not the regular courts that had
jurisdiction over the dispute as provided in the Trade Contract.
ISSUE: Whether or not CIAC has jurisdiction over the claims of Valentin Fong?
HELD: No, CIAC has no jurisdiction on such claims. An examination of the allegations in Fong’s complaint
revealed that his cause of action springs not from a violation of the provisions of the Trade Contract, but from
the assignment of Maxco’s retention money to him and failure of petitioner to turn over the retention money.
Although the jurisdiction of the CIAC is not limited to the instances enumerated in Section 4 of E. O. No. 1008,
Fong’s claim is not even construction-related at all. This court has held that: "Construction is defined as
referring to all on-site works on buildings or altering structures, from land clearance through completion
including excavation, erection and assembly and installation of components and equipment." Thus,
petitioner’s insistence on the application of the arbitration clause of the Trade Contract to Fong is clearly

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anchored on an erroneous premise that the latter is seeking to enforce a right under the trade contract. Fong’s
demand that the portion of retention money should have been paid to him before the other creditors of
Maxco clearly, does not require the CIAC’s expertise and technical knowledge of construction.

5. G.R. No. L-26379 December 27, 1969

WILLIAM C. REAGAN, ET. AL vs.
COMMISSIONER OF INTERNAL REVENUE

FACTS:
Petitioner Reagan, a civilian employee of an American corporation providing technical assistance to the US Air
Force in the Philippines, questioned the payment of the income tax assessed on him by respondent CIR on an
amount realized by him on a sale of his automobile to a member of the US Marine Corps, the transaction
having taken place at the Clark Field Air Base at Pampanga. It is his contention, that in legal contemplation the
sale was made outside Philippine territory and therefore beyond our jurisdictional power to tax. He seeks that
an amount of P2,979.00 as the income tax paid by him be refunded.
ISSUE: WON the Clark Field Air Base is a foreign property therefore excluded from the power of Philippine
taxation.
HELD: NO.
By the [Military Bases] Agreement, it should be noted, the Philippine Government merely consents that the
United States exercise jurisdiction in certain cases. The consent was given purely as a matter of comity,
courtesy, or expediency over the bases as part of the Philippine territory or divested itself completely of
jurisdiction over offenses committed therein. This provision is not and can not on principle or authority be
construed as a limitation upon the rights of the Philippine Government.
The State is not precluded from allowing another power to participate in the exercise of jurisdictional right
over certain portions of its territory. If it does so, it by no means follows that such areas become impressed
with an alien character. They retain their status as native soil. They are still subject to its authority. Its
jurisdiction may be diminished, but it does not disappear. So it is with the bases under lease to the American
armed forces by virtue of the military bases agreement of 1947. They are not and cannot be foreign territory.

6. Perkins v. Dizon G.R. No. 46631, November 16, 1939

Facts:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of
Manila against the Benguet Consolidated Mining Company for dividends registered in his name, payment of
which was being withheld by the company; and, for the recognition of his right to the control and disposal of
said shares, to the exclusion of all others. The company filed its answer alleging that the withholding of such
dividends and the nonrecognition of plaintiff's right to the disposal and control of the shares were due to
certain demands made with respect to said shares by the petitioner herein, Idonah Slade Perkins, and by one
George H. Engelhard. Including defendant petitioner, Idonah Slade Perkins, and George H. Engelhard in his
amended complaint, respondent Perkins prayed that they be adjudged without interest in the shares of stock
in question and excluded from any claim they assert thereon. Thereafter, summons by publication were
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served upon these two non-resident defendants pursuant to the order of the trial court. Engelhard filed his
answer to the amended complaint while petitioner Idonah Slade Perkins, through counsel, challenged the
jurisdiction of the lower court over her person
Issue: Whether or not the Court of First Instance of Manila has acquired jurisdiction over the person of the
present petitioner as a non-resident defendant, or, notwithstanding the want of such jurisdiction, whether or
not said court may validly try the case.
Held: Yes. Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in
the Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or
personal property within the Philippines in which said defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from any
interest therein, service of summons maybe made by publication. The action being in quasi in rem, The Court
of First Instance of Manila has jurisdiction over the person of the non-resident. In order to satisfy the
constitutional requirement of due process, summons has been served upon her by publication. There is no
question as to the adequacy of publication made nor as to the mailing of the order of publication to the
petitioner's last known place of residence in the United States. But, of course, the action being quasi in rem
and notice having be made by publication, the relief that may be granted by the Philippine court must be
confined to the res, it having no jurisdiction to render a personal judgment against the non-resident.

JURISDICTION OVER THE PERSON OF THE PLAINTIFF AND THE DEFENDANT

7. Spouses Genato v. Viola 2010 Del Castillo, J.

SUMMARY After the HLURB decision has been final and executory, the HLURB rendered another decision
granting Viola’s motion to quash the execution of the judgment. Viola contends that the HLURB did not
acquire jurisdiction over her person since she was not a party to the case. The SC ruled in favor of Sps. Genato
and held that it is not the caption of the pleading but the allegations therein that are controlling. Having been
set forth in the body of the complaint as a complainant, Viola was a party to the case. The SC also
differentiated between jurisdiction over subject matter and jurisdiction over the person.
FACTS October 1991 – Thirty four (34) individuals, including Rita Viola, filed a complaint titled "VILLA REBECCA
HOMEOWNERS ASSOCIATION, INC. versus MR. WILLIAM GENATO and spouse REBECCA GENATO in the HLURB.
Prior to the filing of the complaint, a cease and desist order was issued by HLURB enjoining them from paying
the amortization. When HLURB lifted the CDO, the complainants wanted resume their amortization payments
but Sps. Genato refused and instead demanded a lump sum payment. Thus, the complainants are praying that
Sps. Genato accept the complainants' monthly amortization payments corresponding to the period of
effectivity of the (subsequently lifted) CDO, without any penalty; and at 3% interest for those with delinquent
payments. They also prayed for correction of deficiencies in the construction of the units to conform with the
plans and specifications. They also prayed for the construction of commercial wells, water pump facilities and
proper drainage in the subdivision. HLRUB granted the reliefs prayed for. This decision was revised and then
reinstated; and subsequently became final and executory. The HLRUB Arbiter Torres issued a Writ of
Execution. The sheriff seized Rita Viola's two delivery trucks and 315 sacks of rice. Respondent Viola then filed
an Urgent Motion to Quash Execution. The two trucks were ordered released but the 315 sacks of rice were
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sold at public auction to the highest bidder petitioner Rebecca Genato in the amount of P189,000.00. On
December 15, 2000, Arbiter Torres issued an Order denying respondent Viola's motion to quash the writ of
execution and directed her to pay the Sps. Genato the amount of P739,133.31. Viola appealed the said Order
and on January 10, 2003, the HLURB, First Division rendered another decision granting the granting the motion
to quash and ordering the payment of 315 sacks of rice in the amount of P318,500.00 Sps. Genato appealed to
the Office of thet President which affirmed the HLURB decision. Their MR was denied. They appealed to the CA
but the CA also affirmed the decision of the Office of the President. Hence this present petition for review in
the SC. Defense: Viola contends that the HLURB did not acquire jurisdiction over her person since she was not
a party to the case; hence, the HLURB decision is a nullity as against her and therefore never acquired finality.
With a void judgment, the resultant execution was likewise void. She also argues that, since the levy and
auction were illegal, the correct valuation of the 315 sacks of rice is not the price paid at the auction but its
actual value of P318,500.00. RATIO

W/N findings of fact and conclusions of any adjudicative body should be considered binding and conclusive on
the appellate court
As a general rule, yes. Exception: when there is no substantial evidence supporting those findings. Findings of
fact and conclusions of an adjudicative body like the HLURB, which can be considered as a trier of facts on
specific matters within its field of expertise, should be considered as binding and conclusive upon the
appellate courts. It in a better position to assess and evaluate the credibility of the contending parties and the
validity of their respective evidence. However, these doctrines hold true only when such findings and
conclusions are supported by substantial evidence. In the present case, we find it difficult to find sufficient
evidential support for the HLURB's conclusion that it did not acquire jurisdiction over the person of Viola. We
are thus persuaded that there is ample justification to disturb the findings of the HLURB.
W/N the CA erred in ruling that the HLURB has not acquired jurisdiction over the person of Rita Viola
Yes. It is not the caption of the pleading but the allegations therein that are controlling. The inclusion of the
names of all the parties in the title of a complaint is a formal requirement under Section 3, Rule 7 of the Rules
of Court. However, the rules of pleadings require courts to pierce the form and go into the substance. The
non-inclusion of one or some of the names of all the complainants in the title of a complaint, is not fatal to the
case, provided there is a statement in the body of the complaint indicating that such complainant/s was/were
made party to such action. This is especially true before the HLURB where the proceedings are summary in
nature. Having been set forth in the body of the complaint as a complainant, Viola was a party to the case.
Moreover, it was only when the final and executory judgment of the HLURB was already being executed
against Viola that she, for the first time, reversed her position claimed that she was not a party to the case and
that the HLURB did not acquire jurisdiction over her. Viola is estopped from taking such inconsistent position.
Distinction between jurisdiction over the subject matter and jurisdiction over the person:

Jurisdiction over the subject matter is conferred by the Constitution or by law. In contrast, jurisdiction over the
person is acquired by the court by virtue of the party's voluntary submission to the authority of the court or
through the exercise of its coercive processes.

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Jurisdiction over the person is waivable unlike jurisdiction over the subject matter which is neither subject to
agreement nor conferred by consent of the parties.

In civil case, courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction
over the defendants is acquired either through the service of summons upon them in the manner required by
law or through their voluntary appearance in court and their submission to its authority.

The act of filing the complaint with the HLURB is unequivocally a voluntary submission by the complainants,
including Viola, to the authority of the HLURB. Clearly, the HLURB acquired jurisdiction over Viola, who was
one of the complainants, upon the filing of their complaint. W/N the HLURB can still rule on the lack of
jurisdiction over the person of Rita Viola after the decision has become final and executory No. The April 27,
1999 HLURB Resolution, has long been final and executory. Nothing is more settled in the law than that a
decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any
respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it was
made by the court that rendered it or by the highest court of the land.

The only recognized exceptions to the general rule are the correction of clerical errors, the so-called nunc pro
tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances transpire
after the finality of the decision rendering its execution unjust and inequitable. None of the exceptions is
present in this case. W/N Rita Viola can claim an amount higher than what appears on the sheriff’s Certificate
of Sale No. In determining the amount to be credited to the account of Viola, we look at the Sheriff's Partial
Report and the Sheriff's Certificate of Sale. Both documents state that in the auction sale of the 315 sacks of
rice, Mrs. Rebecca Genato submitted the highest bid in the amount of P189,000.00. Drawing from Section 19,
Rule 39 of the Rules of Court which states that "all sales of property under execution must be made at public
auction, to the highest bidder," it naturally follows that the highest bid submitted is the amount that should be
credited to the account of the judgment debtor. FALLO WHEREFORE, the petition is GRANTED. The assailed
September 9, 2005 Decision of the Court of Appeals is REVERSED and SET ASIDE and the December 15, 2000
Order of Arbiter Marino Bernardo M. Torres is REINSTATED and AFFIRMED.
8. Avon Insurance PLC., et al. v. CA (G.R. No. 97642)
Facts:
Respondent Yupangco Cotton Mills engaged to secure with Worldwide Security and Insurance Co. several of its
properties which were then covered by reinsurance treaties between Worldwide Security and several foreign
reinsurance companies, including herein petitioners. These reinsurance agreements had been made through
an international broker acting for Worldwide Security. While the policies are in effect, Yupangco’s properties
were razed in fire giving rise to their indemnification. Worldwide acknowledged a remaining balance and
assigned to Yupangco all reinsurance proceeds still collectible from all the reinsurance companies. Thus, as
assignee and original insured, Yupangco instituted a collection suit against petitioners. Petitioners averred that
they are foreign corporations not doing business in the Philippines therefore cannot be subject to the
jurisdiction of its courts. CA found for Yupangco.

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Issue:
Whether or not petitioners are foreign corporations doing business in the Philippines.
Ruling: NO.
To qualify the petitioners’ business of reinsurance within the Philippine forum, resort must be made to the
established principles in determining what is meant by “doing business in the Philippines.” The term ordinarily
implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the
performance of acts or works or the exercise of the functions normally incident to and in progressive
prosecution of the purpose and object of its organization.
As it is, private respondent has made no allegation or demonstration of the existence of petitioners’ domestic
agent, but avers simply that they are doing business not only abroad but in the Philippines as well. It does not
appear at all that the petitioners had performed any act which would give the general public the impression
that it had been engaging, or intends to engage in its ordinary and usual business undertakings in the country.
The reinsurance treaties between the petitioners and Worldwide Surety and Insurance were made through an
international insurance broker, and not through any entity or means remotely connected with the Philippines.
Moreover, there is authority to the effect that a reinsurance company is not doing business in a certain state
merely because the property or lives which are insured by the original insurer company are located in that
state. The reason for this is that a contract of reinsurance is generally a separate and distinct arrangement
from the original contract of insurance, whose contracted risk is insured in the reinsurance agreement. Hence,
the original insured has generally no interest in the contract of reinsurance.
Indeed, if a foreign corporation does not do business here, there would be no reason for it to be subject to the
State’s regulation. As we observed, in so far as the State is concerned, such foreign corporation has no legal
existence. Therefore, to subject such corporation to the courts’ jurisdiction would violate the essence of
sovereignty.

9. CEZAR VS. RICAFORT-BAUTISTA, 2006

Facts:

Private respondent Specified Material Corp filed a complaint for collection of sum of money (P1,860,000 plus
3% monthly interest) against petitioner due to the latter’s failure to pay the construction materials it
purportedly purchased under a credit line from Specified.
Cezar had expressed willingness to pay Specified as long as an inventory is made and the parties’ conflicting
records as to materials delivered and actual materials used are reconciled. After Cezar failed to show up in
meetings for verification of documents, Specified sent a final demand letter and later on filed the complaint.
Sheriff Marquez served the summons to Robles, an alleged employee of Cezar.
As Cezar failed to answer the complaint, the respondent judge declared him in default. Specified filed an
amended complaint, raising the obligation to P2,005,000,  a copy of the which was personally received by
Cezar. Cezar, by way of special appearance, filed a motion to set aside decision arguing that the trial court did
not acquire jurisdiction over his person. After RTC denied the motion, he filed a petition for annulment of

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judgment and preliminary injunction with CA, which was dismissed.  SC also denied the certiorari due to non-
compliance with procedural requirements.
After SC’s resolution became final and executory, Specified moved for execution however the scheduled
hearing on was reset after Cezar filed an Urgent Ex-Parte Motion to Re-Set Hearing.
Issue:
W/N RTC acquired jurisdiction
Held:
Yes.  A court can acquire jurisdiction over the defendant or respondent either through service of summons or
voluntary appearance. The service of summons is intended to give official notice to the defendant or
respondent that an action had been commenced against it.
Whenever practicable, summons must be served by handing a copy thereof to the defendant in person and he
refuses to receive and sign it, by tendering the summons to him.
It is only when the defendant cannot be served personally within a reasonable time that a substituted service
may be made. Impossibility of prompt service should be shown by stating the efforts made to find the
defendant personally and the fact that such efforts failed in the proof service. In the case, the sheriff’s return
is patently defective for failure to state impossibility of personal service.
However, the defect in service was cured and the RTC acquired jurisdiction by virtue of Cezar’s voluntary
through his motion for re-setting the court’s hearing on the motion for execution.  
An appearance in whatever form without expressly objecting to the jurisdiction of the court over the person, is
a submission to the jurisdiction of the court over the person of the defendant or respondent. A voluntary
appearance is a waiver of the necessity of a formal notice. The defendant may appear by presenting a motion,
for example, and unless by such appearance he specifically objects to the jurisdiction of the court, he thereby
gives his assent to the jurisdiction of the court over his person. Petition dismissed, judgment affirmed.

10. Valmonte v. CA Digest G.R. No. 108538 January 22, 1996

Service of Summons
Facts:
Petitioner Lourdes A. Valmonte is a foreign resident. Petitioners Lourdes and Alfredo are husband and wife
both residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who
is a member of the Philippine bar, however, practices his profession in the Philippines, commuting for this
purpose between his residence in the state of Washington and Manila, where he holds office at S-304 Gedisco
Centre, 1564 A. Mabini, Ermita, Manila.
Private respondent Rosita Dimalanta, who is the sister of petitioner filed an action for partition against former
and her husband. She alleged that, the plaintiff is of legal age, a widow and is at present a resident of 14823
Conway Road, Chesterfield, Missouri, U.S.A., while the defendants are spouses but, for purposes of this
complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita, Manila where

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defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte’s spouse holds office and where he
can be found.He husband was also her counsel, who has a law office in the Philippines. The summons were
served on her husband.
Petitioner in a letter, 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 then made upon petitioner Alfredo
at his office in Manila. Alfredo D. Valmonte accepted his summons, but not the one for Lourdes, on the
ground that he was not authorized to accept the process on her behalf. Accordingly the process server left
without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A. Valmonte,
however, did not file her Answer. For this reason private respondent moved to declare her in default.
Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his wife and opposed the private
respondent’s motion. RTC denied the MR of respondents. CA declared petitioner Lourdes in default. Said
decision was received by Alfredo hence this petition.

Issue: Whether or not petitioner Lourdes A. Valmonte was validly served with summons.
NO.
There was no valid service of summons on Lourdes.
1. The action herein 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; or (3) in any other manner which the court
may deem sufficient.
2. In the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means
of any of the first two modes. 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. The 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.
3. Secondly, the service in the attempted manner on petitioner was not made upon prior leave of the trial
court as required also in Rule 14, § 17. As provided in § 19, such leave must be applied for by motion in
writing, supported by affidavit of the plaintiff or some person on his behalf and setting forth the grounds for
the application.
4. Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes was
not given ample time to file her Answer which, according to the rules, shall be not less than sixty (60) days
after notice.

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12. Signetics Corp. v. CA Digest G.R. No. 105141 August 31, 1993
Service of Summons on Foreign Corporations
Facts:
1. The petitioner, Signetics was organized under the laws of the United States of America. Through Signetics
Filipinas Corporation (SigFil), a wholly-owned subsidiary, Signetics entered into lease contract over a piece of
land with Fruehauf Electronics Phils., Inc. (Freuhauf).

2. Freuhauf sued Signetics for damages, accounting or return of certain machinery, equipment and
accessories, as well as the transfer of title and surrender of possession of the buildings, installations and
improvements on the leased land, before the RTC of Pasig (Civil Case No. 59264). Claiming that Signetics
caused SigFil to insert in the lease contract the words "machineries, equipment and accessories," the
defendants were able to withdraw these assets from the cost-free transfer provision of the contract.

3. Service of summons was made on Signetics through TEAM Pacific Corp. on the basis of the allegation that
Signetics is a "subsidiary of US PHILIPS CORPORATION, and may be served summons at Philips Electrical
Lamps, Inc., Las Piñas, Metro Manila and/or c/o Technology Electronics Assembly & Management (TEAM)
Pacific Corporation, Electronics Avenue, FTI Complex, Taguig, Metro Manila," service of summons was made
on Signetics through TEAM Pacific Corporation.

4. Petitioner filed a motion to dismiss the complaint on the ground of lack of jurisdiction over its person.
Invoking Section 14, Rule 14, of the Rules of Court and the rule laid down in Pacific Micronisian Line, Inc., v.
Del Rosario and Pelington to the effect that the fact of doing business in the Philippines should first be
established in order that summons could be validly made and jurisdiction acquired by the court over a foreign
corporation.
5. The RTC denied the Motion to dismiss. While the CA affirmed RTC. Hence this petition. The petitioner argues
that what was effectively alleged in the complaint as an activity of doing business was "the mere equity
investment" of petitioner in SigFil, which the petitioner insists, had theretofore been transferred to TEAM
holdings, Ltd.

Issue: Whether or not the lower court, had correctly assumed jurisdiction over the petitioner, a foreign
corporation, on its claim in a motion to dismiss, that it had since ceased to do business in the Philippines.
YES.
1. Signetics cannot, at least in this early stage, assail, on the one hand, the veracity and correctness of the
allegations in the complaint and proceed, on the other hand, to prove its own, in order to hasten a
peremptory escape. As explained by the Court in Pacific Micronisian, summons may be served upon an agent
of the defendant who may not necessarily be its "resident agent designated in accordance with law." The term

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"agent", in the context it is used in Section 14, refers to its general meaning, i.e., one who acts on behalf of a
principal.
The allegations in the complaint have thus been able to amply convey that not only is TEAM Pacific the
business conduit of the petitioner in the Philippines but that, also, by the charge of fraud, is none other than
the petitioner itself.
2. The rule is that, a foreign corporation, although not engaged in business in the Philippines, may still look up
to our courts for relief; reciprocally, such corporation may likewise be "sued in Philippine courts for acts done
against a person or persons in the Philippines" (Facilities Management Corporation v. De la Osa), provided
that, in the latter case, it would not be impossible for court processes to reach the foreign corporation, a
matter that can later be consequential in the proper execution of judgment. Hence, a State may not exercise
jurisdiction in the absence of some good basis (and not offensive to traditional notions of fair play and
substantial justice) for effectively exercising it, whether the proceedings are in rem, quasi in rem or in
personam.

JURISDICTION OVER THE SUBJECT MATTER CASES:

12. El Banco Espanol vs. Palanca
G.R. No. L-11390; March 26, 1918
FACTS:
Engracio Palanca was indebted to El Banco and he had his parcel of land as security to his debt which
amounted to 218, 294. 10 Php while his property was worth 75, 000 Php more than what he owed. Due to his
failure to pay, El Banco executed an instrument to mortgage the former's property. However, Engracio left for
Amoy, China and eventually died there. The mortgagor then instituted foreclosure proceeding but since
defendant is a non-resident, it was necessary to give notice by publication. The Clerk of Court was also
directed to send copy of the summons to the defendant's last known address but it was not shown whether
the Clerk complied with this requirement. Nevertheless, after publication in a newspaper of the City of Manila,
the cause proceeded and judgment by default was rendered. The decision was likewise published and
afterwards sale by public auction was held with the bank as the highest bidder and the same was confirmed by
the court. However, about seven years after the confirmation of this sale, a motion was made by Vicente
Palanca, as administrator of the estate of the original defendant, wherein he requested the court to set aside
the order of default and the judgment, and to vacate all the proceedings subsequent thereto. On the ground
that the order of default and the judgment rendered thereon were void because the court had never acquired
jurisdiction over the defendant or over the subject of the action.
ISSUE:
Whether or not the court acquired jurisdiction over the defendant and the subject matter or the action.
HELD:
Where the defendant in a mortgage foreclosure lives outside of the country and refuses to appear or
otherwise submit himself to the authority of the court, the jurisdiction of the latter is limited to the mortgaged
property, with respect to which jurisdiction of the court is based upon the fact that the property is located
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within the district and that the court, under the provisions of law applicable in such cases is vested with the
power to subject property to the obligation created by the mortgage. In such case personal jurisdiction over
the non-resident defendant is non-essential and in fact cannot be acquired.

13.

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