1. Boudard vs.

Tait
DIAZ, J p:
Plaintiffs appeal from a judgment of the Court of First Instance of
Manila dismissing the case instituted by them, thereby overruling their
complaint, and sentencing them to pay the costs. They now contend in
their brief that:
"I. The lower court erred in not admitting Exhibits D, E, F
and H to M-1 of plaintiffs.
"II. The lower court erred in declaring that it was
indispensable for the defendant to be served with summons in
Hanoi.
"III. The lower court erred in declaring that service by
publication, with personal notice by the French Consul in Manila,
was not sufficient.
"IV. The lower court erred in declaring that the Court of
Hanoi had no jurisdiction over the person of the defendant.
"V. The lower court erred in dismissing this case, instead of
sentencing the defendant to pay to the plaintiffs the amounts
claimed in the complaint as adjudged by the Court of Hanoi; and
"VI. The lower court erred in denying the motion for new
trial on the ground that the decision is contrary to the law and the
evidence."
Briefly stated, the pertinent facts of the case, that we glean from
1the records, are as follows: The appellant Emilie Elmira Renee Boudard, in
her capacity as widow of Marie Theodore Jerome Boudard and as guardian
of her coappellants, her children born during her marriage with the
deceased, obtained a judgment in their favor from the civil division of the
Court of First Instance of Hanoi, French Indo-China, on June 27, 1934, for
the sum of 40,000 piastras, equivalent, according to the rate of exchange
at the time of the rendition of the judgment, to P56,905.77, Philippine
currency, plus interest the amount or rate of which is not given. The
judgment was rendered against Stewart Eddie Tait who had been declared
in default for his failure to appear at the trial before said court.
Appellants' action, by virtue of which they obtained the foregoing
judgment, was based on the fact that Marie Theodore Jerome Boudard, who
was an employee of Stewart Eddie Tait, was killed in Hanoi by other
employees of said Tait, although "outside of the fulfillment of a duty",
according to the English translation of a certified copy of the decision in
French, presented by the appellants. The dismissal of appellants' complaint
by the lower court was based principally on the lack of jurisdiction of the
Court of Hanoi to render the judgment in question, for the execution of
which this action was instituted in this jurisdiction. The lack of jurisdiction
was discovered in the decision itself of the Court of Hanoi which states that

the appellee was not a resident of, nor had a known domicile in, that
country.
The evidence adduced at the trial conclusively proves that neither
the appellee nor his agent or employees were ever in Hanoi, French IndoChina; and that the deceased Marie Theodore Jerome Boudard had never,
at any time, been his employee. The appellee's first intimation of his having
been sued and sentenced to pay a huge sum by the civil division of the
Court of First Instance of Hanoi was when he was served with summons in
the present case.
Passing now to the consideration on the errors assigned by the
appellants, we must say that it was really unnecessary for the lower court
to admit Exhibits D, E, F and H to M-1, nor can these exhibits be admitted
as evidence, for, as to the first point, the appellants failed to show that the
proceedings against the appellee in the Court of Hanoi were in accordance
with the laws of France then in force;-and as to the second point, it appears
that said documents are not of the nature mentioned in sections 304 and
305 of Act No. 190. They are not copies of the judicial record of the
proceedings against the appellee in the Court of Hanoi, duly certified by the
Proper authorities there, whose signatures should be authenticated by the
Consul or some consular agent of the United States in said country. The
appellants argue that the papers are the original documents and that the
Honorable French Consul in the Philippines has confirmed this fact. Such
argument is not sufficient to authorize a deviation from a rule established
and sanctioned by law. To comply with the rule, the best evidence of foreign
judicial proceedings is a certified copy of the same with all the formalities
required in said sections 304 and 305 for only thus can one be absolutely
sure of the authenticity of the record. On the other hand, said exhibits or
documents, if admitted, would only corroborate and strengthen the
evidence of the appellee which in itself is convincing, and the conclusion of
the lower court that the appellee is not liable for the amount to which he
was sentenced, as alleged for he was not du]v tried or even summoned in
conformity with the law. It is said that the French law regarding summons,
according to its English translation presented by the appellants, is of the
following tenor:
"SEC. 69 (par. 8). Those who have no known residence in
France, in the place of their present residence: if the place is
unknown, the writ shall be posted at the main door of the hall of
the court where the complaint has been filed; a second copy shall
be given to the Attorney-General of the Republic who shall visae
the original." But then, Exhibits E, E-1, F and F-1 show that the
summons alleged to have been addressed to the appellee, was
delivered in Manila on September 18, 1933, to J. M. Shotwell, a
representative or agent of Churchill & Tait Inc., which is an entity
entirely different from the appellee.
Moreover, the evidence of record shows that the appellee was not
in Hanoi during the time mentioned in the complaint of the appellants, nor
were his employees or representatives. The rule in matters of this nature is
that judicial proceedings in a foreign country, regarding payment of money,
are only effective against a party if summons is duly served on him within
such foreign country before the proceedings.

"The fundamental rule is that jurisdiction in personam over

nonresidents, so as to sustain a money judgment, must be based
upon personal service within the state which renders the judgment.
(Pennoyer vs. Neff, 95 U. S., 714; 24 Law. ed., 565; Twining vs. New
Jersey, 211 U. S., 78; 29 S. Ct., 14; 53 Law. ed., 97; Continental
National Bank of Boston vs. Thurber, 143 N. Y., 648; 37 N. E., 828.)
"The process of a court of one state cannot run into another
and summon a party there domiciled to respond to proceedings
against him. (Hess vs. Pawloski, 274 U. S., 352, 355; 47 S. Ct., 632,
633 [71 Law. ed., 109].) Notice sent outside the state to a
nonresident is unavailing to give jurisdiction in an action against
him personally for money recovery. (Pennoyer vs. Neff, 95 U. S.,
714 [24 Law. ed., 565].) There must be actual service within the
State of notice upon him or upon some one authorized to accept
service for him. (Goldey vs. Morning News, 156 U. S., 518 [15 S. Ct.,
559; 39 Law. ed., 517].) A personal judgment rendered against a
nonresident, who has neither been served with process nor
appeared in the suit, is without validity. (McDonald vs. Mabee, 243
U. S., 90 [37 S. Ct.. 343; 61 Law. ed., 608; L. R. A. 1917F, 458].) The
mere transaction of business in a state by nonresident natural
persons does not imply consent to be bound by the process of its
courts. (Flexner vs. Farson, 2'18 U. S., 289 [39 S. Ct., 97; 63 Law.
ed., 250] .)" (Cited in Skandinaviska Granit Aktiebolaget vs. Weiss,
234 N. Y. S., 202, 206, 207.)
"The process of a 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. Nor has a judgment of a
court of a foreign country against a resident of this country having
no property in such foreign country based on process served here,
any effect here against either the defendant personally or his
property situated here." (5 R. C. L., 912.)
"Process issuing from the courts of one state or country
cannot run into another, and although a nonresident defendant
may have been personally served with such process in the state or
country of his domicile, it will not give such jurisdiction as to
authorize a personal judgment against him." (23 Cyc., 688.)
It can not be said that the decision rendered by the Court of
Hanoi should be conclusive to such an extent that it cannot be
contested, for it merely constitutes, from the viewpoint of our
laws, prima facie evidence of the justness of appellants' claim, and,
as such, naturally admits proof to the contrary. This is precisely the
provision of section 311 of Act No. 190, as interpreted in the case of
Ingenohl vs. Walter E. Olsen & Co. (47 Phil., 189):
"The effect of a judgment of any other tribunal of a foreign
country, having jurisdiction to pronounce the judgment, is as
follows:

"1. In case of a judgment against a specific thing, the

judgment is conclusive upon the title to the thing;
"2. In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title; but the judgment may
be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact." (Sec.
311 of Act No. 190.)
In view of the foregoing considerations, our conclusion is that we
find no merit in the errors assigned to the lower court and the appealed
judgment is in accordance with the law. Wherefore, the judgment is
affirmed, with costs against the appellants. So ordered.

2. Northwest Orient Airlines vs. CA

DAVIDE, J p:
This
petition
on certiorari seeks
to
set
aside
the
decision of the court of Appeals affirming the dismissal of the petitioner's
complaint to enforce the judgment of a Japanese court. The principal issue
here is 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. Cdpr
Petitioner Northwest Orient Airlines,
Inc.
(hereinafter NORTHWEST ),
a
corporation organized under the laws of the State of Minnesota, U.S.A.,
sought to enforce in Civil Case No. 83-17637 of the Regional Trial Court (RTC),
Branch 54, Manila, a judgment rendered in its favor by a
Japanese court against private respondent C.F. Sharp & Company, Inc.,
(hereinafter SHARP), a corporation incorporated under Philippine laws. LLpr
As found by the Court of Appeals in the challenged decision of 10 November
1993,1 the following are the factual and procedural antecedents of this
controversy:
On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp &
Company, 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 of the ticket sales
made by defendant on behalf of the plaintiff under the said agreement,
plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for
collection of the unremitted proceeds of the ticket sales, with claim for
damages.
On April 11, 1980, a writ of summons was issued by the 36th Civil
Department, Tokyo District Court of Japan against defendant at its office at
the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma,
Kanagawa Prefecture. The attempt to serve the summons was unsuccessful
because the bailiff was advised by a person in the office that Mr. Dinozo, the

person believed to be authorized to receive court processes was in Manila

and would be back on April 24, 1980.
On April 24, 1980, bailiff returned to the defendant's office to serve the
summons. Dr. Dinozo refused to accept the same claiming that he was no
longer an employee of the defendant.
After the two attempts of service were unsuccessful, the judge of the Tokyo
District Court decided to have the complaint and the writs of summons
served at the head office of the defendant in Manila. On July 11, 1980, the
Director of the Tokyo District Court requested the Supreme Court of Japan to
serve the summons through diplomatic channels upon the defendant's head
office in Manila.
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit
the writ of summons (p. 276, Records). Despite receipt of the same,
defendant failed to appear at the scheduled hearing. Thus, the
Tokyo Court proceeded to hear the plaintiff's complaint and on [January 29,
1981], rendered judgment ordering the defendant to pay the plaintiff the
sum of 83,158,195 Yen and damages for delay at the rate of 6% per annum
from August 28, 1980 up to and until payment is completed (pp. 12-14,
Records).
On March 24, 1981, defendant received from Deputy Sheriff Balingit
copy of the judgment. Defendant not having appealed the judgment, the
same became final and executory.
Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983,
a suit for enforcement of the judgment was filed by plaintiff before the
Regional Trial Court of Manila, Branch 54. 2
On July 16, 1983, 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 (pp. 41-45, Rec.). LibLex
Unable to settle the case amicably, the case was tried on the merits. After
the plaintiff rested its case, defendant on April 21, 1989, filed a Motion for
Judgment on a Demurrer to Evidence based on two grounds: (1) the foreign
judgment sought to be enforced is null and void for want of jurisdiction and
(2) the said judgment is contrary to Philippine law and public policy and
rendered without due process of law. Plaintiff filed its opposition after which
the courta quo rendered the now assailed decision dated June 21, 1989
granting the demurrer motion and dismissing the complaint (Decision, pp.
376-378, Records). In granting the demurrer motion, the trial court held that:
"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; the Japanese Court did not acquire jurisdiction
over the person of the defendant because 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. Boudard versus Tait 67 Phil. 170. The
plaintiff contends that the Japanese Court acquired jurisdiction because the
defendant is 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 (citing the exhibits presented by the plaintiff); if this is so
then service of summons should have been made upon the defendant in
Japan in any of these alleged four branches; as admitted by the plaintiff the
service of the summons issued by the Japanese Court was made in the
Philippines thru a Philippine sheriff. This Court agrees that if the defendant in
a foreign court is a resident in the court of that foreigncourt such court could
acquire jurisdiction over the person of the defendant but it must be served
upon the defendant in the territorial jurisdiction ofthe foreign court. Such is
not the case here because the defendant was served with summons in the
Philippines and not in Japan."
Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional
Notice ofAppeal, asking the court to treat the said notice of appeal "as in
effect after and upon issuance of the court's denial of the motion for
reconsideration."cdasia
Defendant opposed the motion for reconsideration to which a Reply dated
August 28, 1989 was filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for
Reconsideration and gave due course to the plaintiff's Notice of Appeal. 3
In its decision, the Court of Appeals sustained the trial court. It agreed with
the latter in its reliance upon Boudard vs. Tait 4 wherein it was held that "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." To support its position, the Court of Appeals further
stated:
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 (Magdalena Estate Inc. vs. Nieto, 125 SCRA
230). To confer jurisdiction on the court, personal or substituted
service of summons on the defendant not extraterritorial service is necessary
(Dial Corp. vs. Soriano, 161 SCRA 739). LLjur
But while plaintiff-appellant concedes that the collection suit filed is an
action in personam, it is its theory that a distinction must be made between
an action in personam against a resident defendant and an action in
personam against a non-resident defendant. Jurisdiction is acquired over a
non-resident defendant only if he is served personally within the
jurisdiction of the court, and over a resident defendant if by personal,
substituted or constructive service conformably to statutory authorization.
Plaintiff-appellant argues that since the defendant-appellee maintains
branches in Japan, it is considered a resident defendant. Corollarily, personal
substituted or constructive service of summons when made in compliance
with the procedural rules is sufficient to give the court jurisdiction to render
judgment in personam.

Such an argument does not persuade.

It is general rule that processes of the court cannot lawfully be served outside
the territorial limits of the jurisdiction of the court from which it issues
(Carter vs. Carter, 41 S.E. 2d 532, 201) and this is regardless of the residence
or citizenship of the party thus served (Iowa-Rahr, 129 NW 494, 150 Iowa
511, 35 LRC, NS 292, Am. Case 1912 D680). 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. cdasia
But even assuming a distinction between a resident defendant and nonresident defendant were to be adopted, such distinction applies only to
natural persons and not to corporations. This finds support in the concept
that "a corporation has no home or residence in the sense in which those
terms are applied to natural persons" (Claude Neon Lights vs. Phil.
Advertising Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in
its brief:
"Residence is said to be an attribute of a natural person, and can be
predicated on an artificial being only by more or less imperfect analogy.
Strictly speaking, therefore, a corporation can have no local residence or
habitation. It has been said that a corporation is a mere ideal existence,
subsisting only in contemplation of law an invisible being which can have,
in fact, no locality and can occupy no space, and therefore cannot have a
dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle vs. Topeka, 88 370,
128 p. 367; wood v. Hartfold F. Ins. Co., 13 Conn 202)"

Jurisprudence so holds that the foreign or domestic character of a corporation

is to be determined by the place of its origin, where its charter was granted
and not by the location of its business activities (Jennings v. Idaho Rail Light
& P. Co., 26 Idaho 703, 146 p. 101). A corporation is a "resident" and an
inhabitant of the state in which it is incorporated and no other (36 Am. Jur.
2d, p. 49).
Defendant-appellee is a Philippine Corporation duly organized under the
Philippine laws. Clearly, its residence is the Philippines, the place of its
incorporation, and not Japan. While defendant-appellee maintains branches in
Japan, this will not make it a resident of Japan. A corporation does not
become a resident of another by engaging in business there even though
licensed by that state and in terms given all the rights and privileges of a
domestic corporation (Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496, 38
L ed. 248, 4 S Ct. 401).cdasia
On this premise, defendant appellee is a non-resident corporation. As
such, court processes must be served upon it at a place within the state in
which the action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350,
27 L ed. 222, 1 S. Ct. 354). 5
It then concluded that 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.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the
case to this Court contending that the respondent court erred in holding that
SHARP was not a resident of Japan and that summons on SHARP could only
be validly served within the country.
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. 6
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. Also, under Section 3of Rule
131, a court, whether of the Philippines or elsewhere, enjoys the presumption
that it was acting in the lawful exercise of jurisdiction and has regularly
performed its official duty. cdasia
Consequently, the party attacking a foreign judgment has the
burden of overcoming the presumption of its validity. 7 Being the party
challenging the judgment rendered by the Japanese court, SHARP had the
duty to demonstrate the invalidity of such judgment. In an attempt to
discharge
that
burden,
it
contends
that
the
extraterritorial
service of summons effected but also was void, and the Japanese Court did
not, therefore, acquire jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to
the service of process upon a defendant are governed by the lexfori or the
internal law of the forum. 8 In this case, it is the procedural law of Japan
where the judgment was rendered that determines the validity of the
extraterritorial service of process on SHARP. As to what this law is a
question of fact, not of law. It may not be taken judicial notice of and must be
pleaded and proved like any other fact. 9 Sections 24 and 25, rule 132 of the
Rules of Court provide that it may be evidenced by an official publication or
by a duly attested or authenticated copy thereof. 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 ofsummons and the decision thereafter rendered by the
Japanese court must stand.
Alternatively, in the light of the absence of proof regarding Japanese law, the
presumption of identity
or
similarity
or
the
so-called
processual
presumption 10 may be invoked. applying it, 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, or, (2) if there is
no such resident agent, on the government official designated by law to that
effect, or (3) on any of its officers or agents within the Philippines. cdasia

If the foreign corporation has designated an agent to receive summons, the

designation is exclusive, and service of summons is without force and gives
the court no jurisdiction unless made upon him. 11
Where the corporation has no such agent, service shall be made on the
government official designated by law, to wit: (a) the Insurance
Commissioner, in the case of a foreign insurance company; (b) the
Superintendent of Banks, in the case of a foreign banking corporation; and (c)
the Securities and Exchange Commission, in the case of other foreign
corporations duly licensed to do business in the Philippines. whenever
service ofprocess is so made, the government office or official served shall
transmit by mail a copy of the summons or other legal process to the
corporation at its home or principal office. The sending of such copy is a
necessary part of the service. 12
SHARP contends that the laws authorizing service of process upon the
Securities and Exchange commission, the Superintendent of Banks, and the
Insurance Commissioner, as the case may be, presuppose a situation wherein
the foreign corporation doing business in the country no longer has any
branches or offices within the Philippines. Such contention is belied by the
pertinent provisions of the said laws. Thus, Section 128 of the Corporation
Code 13 and Section 190 of the Insurance Code 14 clearly contemplate two
situations: (1) if the corporation had left the Philippines or had ceased to
transact business therein, and (2) if the corporation has no designated
agent. Section 17 of the General Banking Act 15 does not speak of a
corporation which had ceased to transact business in the Philippines.
Nowhere in its pleadings did SHARP profess to having had a resident agent
authorized to receive court processes in Japan. This silence could only mean,
or at least create an impression, that it had none. Hence, service on the
designated government official or on any of SHARP's officers or agents in
Japan could be availed of. The respondent, however, insists that only service
on any of its officers or employees in its branches in Japan could be resorted
to. We do not agree. As found by the respondent court, two attempts at
service were made at SHARP's Yokohoma branch. Both were unsuccessful. On
the first attempt, Mr. Dinozo, who was believed to be the person authorized
to accept court process, was in Manila. On the second, Mr. Dinozo was
present, but he refused to accept the summons because, according to him,
he was no longer an employee of SHARP. 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, as stated above. cdasia
As found by the Court of Appeals, 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. 16 The Tokyo
District Court requested
the
Supreme Court of Japan
to
cause
the
delivery of the summons and other legal documents to the Philippines. Acting
on that request, the Supreme Court of Japan sent the summons together with
the other legal documents to the Ministry of Foreign Affairs of Japan which, in
turn forwarded the same to the Japanese Embassy in Manila. Thereafter,
the courtprocesses
were
delivered
to
the
Ministry
(now
Department) of Foreign Affairs of the Philippines, then to the executive
Judge of the Court of First Instance (now Regional Trial Court) of Manila, who

forthwith ordered Deputy Sheriff Rolando Balingit to serve the same on

SHARP at its principal office in Manila. This service 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. 17
In deciding against the petitioner, the respondent court sustained the
trial court's reliance on Boudard vs. Tait18 where this Court held:
"The fundamental rule is that jurisdiction in personam over non-residents, so
as to sustain a money judgment, must be based upon personal service within
the state which renders the judgment."
xxxxxxxxx
"The process of a court has no extraterritorial effect, and no jurisdiction is
acquired over the person of the defendant by serving him beyond the
boundariesof the state. Nor has a judgment of a court of a foreign country
against a resident of this country having no property in such foreign country
based on process served here, any effect here against either the defendant
personally or his property situated here."
"Process issuing from the courts of one state or country cannot run into
another, and although a non-resident defendant may have been personally
served with such process in the state or country of his domicile, it will not
give such jurisdiction as to authorize a personal judgment against
him."cdasia
It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial
Corp. vs. Soriano, 20 as well as the principle laid down by the Iowa
SupremeCourt in the 1911 case of Raher vs. Raher.21
The first three cases are, however, inapplicable. Boudard involved the
enforcement of a
judgment of the
civil
division of the Court of First
Instanceof Hanoi, French Indo-China. The trial court dismissed the case
because the Hanoi court never acquired jurisdiction over the person of the
defendant considering that "[t]he evidence adduced at the trial conclusively
proves that neither the appellee [the defendant] nor his agent or employees
were ever in Hanoi, French Indo-China; and that the deceased Marie
Theodore Jerome Boudard had never, at any time, been his employee."
In Magdalena Estate,what was declared invalid resulting in the
failure of the court to acquire jurisdiction over the person of the defendants in
an action in personam was the service of summons through publication
against non-appearing resident defendants. It was claimed that the latter
concealed themselves to avoid personal service of summons upon them.
In Dial, the defendants were foreign corporations which were not domiciled
and licensed to engage in business in the Philippines and which did not have
officers or agents, places of business, or properties here. On the other hand,
in the instant case, SHARP was doing business in Japan and was maintaining
four branches therein.
Insofar as the Philippines is concerned, Raher is a thing of the past. In that
case, a divided Supreme Court of Iowa declared that the principle that there

can be no jurisdiction in a court of a territory to render a personal judgment

against anyone upon service made outside its limits was applicable alike to
cases of residents and non-residents. The principle was put at rest by the
United States Supreme Court when it ruled in the 1940 case of Millikenvs.
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. This principle is embodied in Section 18, Rule
14 ofthe Rules of Court which allows service of summons on residents
temporarily out of the Philippines to be made out of the country. The
rationale for this rule was explained in Milliken as follows:cdasia
[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 state which accords him
privileges and affords protection to him and his property by virtue of his
domicile
may
also
exact
reciprocal
duties.
"Enjoyment of the
privileges of residence within the state, and the attendant right to invoke the
protection of its laws, are inseparable" from the various incidences of state
citizenship. The responsibilitiesof that citizenship arise out of the relationship
to the state which domicile creates. That relationship is not dissolved by
mere absence from the state. The attendant duties, like the rights and
privileges incident to domicile, are not dependent on continuous presence in
the state. One such incident of domicile is amenability to suit within the state
even during sojourns without the state, where the state has provided and
employed a reasonable method for apprising such an absent party of the
proceedings against him. 23
The domicile of a corporation belongs to the state where it was
incorporated. 24 In a strict technical sense, such domicile as a corporation
may have is single in its essence and a corporation can have only one
domicile which is the state of its creation.25
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. This is the rule in our jurisdiction and apropos thereto, it may be
necessary to quote what we stated in State Investment House, Inc.vs.
Citibank, N.A., 26 to wit:
The issue whether these Philippine branches or units may be considered
"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they
were respectively incorporated. The answer cannot be found in the
Insolvency Law itself, which contains no definition of the term, resident, or
any clear indication of its meaning. There are however other statutes,
albeit of subsequent enactment and effectivity, from which enlightening
notions of the term may be derived. cdasia
The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business
within the Philippines," as distinguished from a "'non-resident foreign
corporation' . . . (which is one) not engaged in trade or business within the
Philippines." [Sec. 20, pars. (h) and (i)].

The Offshore Banking Law, Presidential Decree No. 1034, states "that
branches, subsidiaries, affiliation, extension offices or any other
units of corporation or juridical person organized under the laws of any
foreign country operating in the Philippines shall be considered
residents of the Philippines." [Sec. 1 (e)].
The General Banking Act, Republic Act No. 337, places "branches and
agencies in the Philippines of foreign banks . . . (which are) called Philippine
branches, in the same category as "commercial banks, savings associations,
mortgage banks, development banks, rural banks, stock savings and loan
associations" (which have been formed and organized under Philippine laws),
making no distinction between the former and the latter in so far as the
terms "banking institutions" and "bank" are used in the Act [Sec. 2], declaring
on the contrary that in "all matters not specifically covered by special
provisions applicable only to foreign banks, or their branches and agencies in
the Philippines, said foreign banks or their branches and agencies in the
Philippines, said foreign banks or their branches and agencies lawfully doing
business in the Philippines "shall be bound by all laws, rules, and regulations
applicable to domestic banking corporations of the same class, except such
laws, rules and regulations as provided for the creation, formation,
organization, or dissolution ofcorporations or as fix the relation, liabilities,
responsibilities, or duties of members, stockholders or offices of corporation."
[Sec. 18].cdasia
This Court itself has already had occasion to hold [Claude Neon Lights, Fed.
Inc. vs. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation
licitly doing business in the Philippines, which is a defendant in a civil suit,
may not be considered a non-resident within the scope of the legal provision
authorizing attachment against a defendant not residing in the Philippine
Islands; [Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil
Procedure; Sec. 1 (f), Rule 59 of the Rules of 1940; Sec. 1(f), Rule 57,
rules of 1964] in other words, a preliminary attachment may not be applied
for and granted solely on the asserted fact that the defendant is a foreign
corporation authorized to do business in the Philippines and is
consequently and necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may no be considered as a party who resides out of the
country, then, logically, it must be considered a party who does reside in the
Philippines, who is a resident of the country. Be this as it may,
this Court pointed out that:
". . . Our laws and jurisprudence indicate a purpose to assimilate foreign
corporations, duly licensed to do business here, to the status of domestic
corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs. henry
W. Elser& Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 411) We
think it would be entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner, and subject
its property to the harsh writ of seizure by attachment when it has complied
not only with every requirement of law made specially of foreign
corporations, but in addition with every requirement of law made of domestic
corporations. . . ."
Obviously, the assimilation of foreign corporations authorized to do business
in the Philippines "to the status of domestic corporations," subsumes their

being found and

country. cdasia

operating

as

corporations,

hence, residing,

in

the

The same principle is recognized in American law: that the "residence of a

corporation, if it can be said to have a residence, is necessarily where it
exercises corporate functions . . .;" that it is considered as dwelling "in the
place where its business is done . . ." as being "located where its franchises
are exercised . . .," and as being "present where it is engaged in the
prosecution of the corporate enterprise;" that a "foreign corporation licensed
to do business in a state is a resident of any country where it maintains an
office or agent for transaction of its usual and customary business for venue
purposes;" and that the "necessary element in its signification is
locality of existence." [Words and Phrases, Permanent Ed., vol. 37, pp. 394,
412, 403].
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. 27
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.
We find NORTHWEST's claim for attorney's fees, litigation expenses, and
exemplary damages to be without merit. We find no evidence that would
justify an award for attorney's fees and litigation expenses under Article
2208 of the Civil Code of the Philippines. Nor is an award for exemplary
damages warranted. Under Article 2234 of the Civil Code, before
the court may consider the question of whether or not exemplary damages
should be awarded, the plaintiff must show that he is entitled to moral,
temperate, or compensatory damages. There being no such proof presented
by NORTHWEST, no exemplary damages may be adjudged in its favor. cdasia
WHEREFORE, the instant petition is partly GRANTED, and the challenged
decision is AFFIRMED insofar as it denied NORTHWEST's claims for attorney's
fees, litigation expenses, and exemplary damages but REVERSED insofar as it
sustained the trial court's dismissal of NORTHWEST's complaint in Civil Case
No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and another
in its stead is hereby rendered ORDERING private respondent C.F. SHARP &
COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign
judgment subject of said case, with interest thereon at the legal rate from the
filing of the complaint therein until the said foreign judgment is fully satisfied.
Costs against the private respondent.
SO ORDERED.

3. Nagarmull vs. Binalbagan-Isabela

DIZON, J p:
Appeal taken by Binalbagan-Isabela Sugar Company, Inc. from the decision of
the Court of First, Instance of Manila in Civil Case No. 41103 entitled
"SoorajmullNagarmull vs. Binalbagan-Isabela Sugar Company, Inc." of the
following tenor:
"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in
favor of the plaintiff, Soorajmull Nagarmull, ordering the
defendant, Binalbagan-Isabela Sugar Co., Inc. to pay said plaintiff the
sum of 18,562 rupees and 8 annas, with reservation for the plaintiff
to prove its equivalent in Philippine pesos on the date of the filing of
the complaint, plus the costs of suit."
The parties submitted to the trial court the following stipulation of facts:
"1. Under Contract G/4370 dated May 6, 1949, plaintiff, a foreign
corporation with offices at No. 8 Dalhousie Square (East) Calcutta,
India, agreed to sell to defendant, a domestic corporation with offices
at the Chronicle Building, Aduana Street, Manila, 1,700,000 pieces of
Hessian bags at $26.20 per 100 bags, C.I.F. Iloilo. Shipment of these
bags was to be made in equal installments of 425,000 pcs. or 425
bales (1,000 pcs. to a bale) during each of the months of July, August,
September and October, 1949. A copy of this contract marked Annex
'A' and the Calcutta Jute Fabrics Shippers Association Form 1935
which was made a part of the contract and marked as Annex 'A-1' are
hereto attached.
"2. This agreement was confirmed in a letter by the plaintiff to the
defendant on May 7, 1949, copy of which is attached hereto and
made a part hereof as Annex 'B';
"3. On September 8, 1949, plaintiff advised defendant that of the 850
bales scheduled for shipment in July and August, the former was able
to ship only 310 bales owing to the alleged failure of the Adamjee
Jute Mills to supply the goods in due time. Copy of plaintiff's letter is
attached hereto as Annex 'C' and made an integral part hereof;
"4. In a letter dated September 29, 1949, defendant requested
plaintiff to ship 100 bales of the 540 bales defaulted from the July and
August shipments. A copy of this letter marked Annex 'D' is hereto
attached. In this connection, it may also be mentioned that of the
425 bales scheduled for shipment in September, 54 bales were
likewise defaulted resulting in a total of 154 bales which is now the
object of the controversy.
"5. Defendant requested plaintiff to pay 5% of the value of the 154
bales defaulted as penalty which plaintiff did.
"6. Meanwhile, on October 1, 1949, the Government of India
increased the export duty of jute bags from 80 to 350 rupees per ton,
and on October 5, 1949, plaintiff requested defendant to increase its
letter of credit to cover the enhanced rate of export duty imposed
upon the goods that were to be shipped in October, reminding the

latter that under their agreement, any alteration in export duty was
to be for the buyer's account. Copy of plaintiff's letter is attached
hereto as Annex 'E';
"7. On October 25, 1949, defendant, in compliance with plaintiff's
request, increased the amount of its letter of credit by $10,986.25 to
cover the increase in export duty on 425 bales scheduled under the
contract for the shipment in October, 1949. A copy of defendant's
letter marked Annex 'F' is hereto attached;
"8. On October 27, 1949, plaintiff wrote to defendant for a further
increase of $4,000.00 in its letter of credit to cover the shipment of
154 bales which under the contract should have been included in the
July, August and September shipments. A copy of said letter is
attached hereto as Annex 'G';
"9. On November 17, 1943, plaintiff wrote defendant a letter
reiterating its claim for $4,000.00 corresponding to the increased
export taxes on the 154 bales delivered to defendant from the
defaulted shipments for the months of July, August and September,
1949. A copy of said letter is attached hereto as Annex 'H';

"13. The Bengal Chamber of Commerce, Tribunal of Arbitration,

refused to sustain defendant's contention and decided in favor of the
plaintiff, ordering the defendant to pay to the plaintiff the sum of
18,562 rupees and 8 annas. This award was thereafter referred to the
Calcutta High Court which issued a decree affirming the award;
"14. For about two years, the plaintiff attempted to enforce the said
award through the Philippine Charge de Affaires in Calcutta, the
Indian Legation here in the Philippines, and the Department of
Foreign Affairs. On September 22, 1952, plaintiff, thru the
Department of Foreign Affairs, sought to enforce its claim to which
letter defendant replied on August 11, 1952, saying that they are not
bound by the decision of the Bengal Chamber of Commerce and
consequently are not obligated to pay the claim in question. Copies
of said letters are attached hereto as Annexes 'K' and 'L',
respectively;
"15. For more than three years thereafter, no communication was
received by defendant from the plaintiff regarding their claim until
January 26, 1956, when Atty. S. EmilianoCalma wrote the defendant a
letter of demand, copy of which is attached hereto as Annex 'M';

"10. On February 6, 1951, defendant received notification from the

Bengal Chamber of Commerce, Tribunal of Arbitration in Calcutta,
India, advising it that on December 28, 1950, plaintiff applied to said
Tribunal for arbitration regarding their claim. The Tribunal requested
the defendant to send them its version of the case. This, defendant
did on March 1, 1951, thru the then Government Corporate Counsel,
former Justice Pompeyo Diaz. A copy of the letter of authority is
attached as Annex 'I';

"16. On February 3, 1956, defendant's counsel replied informing Atty.

S. EmilianoCalma that it refuses to pay plaintiff's claim because the
same has no foundation in law and in fact. A copy of this letter is
attached hereto as Annex 'N';

"11. The case was heard by the Tribunal of Arbitration on July 5, 1951.
Having previously requested the Secretary of Foreign Affairs for
Assistance, defendant was represented at the hearing by the
Philippine Consulate General in Calcutta, India, by Consul Jose
Moreno. A copy of the authority, consisting of the letter of
Government Corporate Counsel Pompeyo Diaz, dated March 1, 1951,
and 1st Indorsement thereon, dated March 2, 1951, are attached
hereto as Annexes 'J' and 'J-1';

"FINALLY, parties thru their respective counsel, state that much as

they have endeavored to agree on all matters of fact, they have
failed to do so on certain points. It is, therefore respectfully prayed of
this Honorable Court that parties be allowed to present evidence on
the disputed facts."

"12. As presented to the Tribunal of Arbitration, the whole case

revolved on the question of whether or not defendant is liable to the
plaintiff for the payment of increased export taxes imposed by the
Indian Government on the shipments of jute sacks. Defendant
contended that if the jute sacks in question were delivered by plaintiff
in the months of July, August, and September, 1949, pursuant to the
terms of the contract, then there would have been no increased
export taxes to pay because said increased taxes became effective
only on October 1, 1949, while on the other hand, plaintiff argued
that the contract between the parties and all papers and documents
made parts thereto should prevail, including defendant's letter of
September 29, 1949;

The appeal was elevated to the Court of Appeals but the latter, by its
resolution of January 27, 1964, elevated it to this Court because the
additional documents and oral evidence presented by the parties did not
raise any factual issue, and said court further found that "the three assigned
errors quoted above all pose questions of law."

"17. Thereafter, no communication was received by defendant from

plaintiff or its lawyers regarding their claim until June, 1959, when the
present complaint was filed.

Thereafter the parties submitted additional evidence pursuant to the

reservation they made in the above stipulation.

As may be gathered from the pleadings and the facts stipulated, the action
below was for the enforcement of a foreign judgment: the decision rendered
by the Tribunal of Arbitration of the Bengal Chamber of Commerce in
Calcutta, India, as affirmed by the High Court of Judicature of Calcutta. The
appealed decision provides for its enforcement subject to the right reserved
to appellee to present evidence on the equivalent in Philippine currency of
the amount adjudged in Indian currency. The record does not disclose any

evidence presented for that purpose subsequent to the rendition of

judgment.

To secure a reversal of the appealed decision appellant claims that the lower
court committed the following errors:
"I
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF-APPELLEE, A
FOREIGN CORPORATION NOT LICENSED TO TRANSACT BUSINESS IN
THE PHILIPPINES, HAS THE RIGHT TO SUE IN PHILIPPINE COURTS.
II
THE LOWER COURT ERRED WHEN IT FAILED TO CONSIDER PLAINTIFFAPPELLEE'S DEFAULT, AND INSTEAD RELIED SOLELY ON THE AWARD
OF THE BENGAL CHAMBER OF COMMERCE TRIBUNAL OF
ARBITRATION.
III
THE LOWER COURT ERRED WHEN IT HELD THAT PLAINTIFF-APPELLEE
WAS NOT GUILTY OF LACHES."
The main issue to be resolved is whether or not the decision of the Tribunal of
Arbitration of the Bengal Chamber of Commerce, as affirmed by the High
Court of Judicature of Calcutta, is enforceable in the Philippines.
For the purpose of this decision We shall assume that appellee contrary to
appellant's contention has the right to sue in Philippine courts and that, as
far as the instant case is concerned, it is not guilty of laches. This
notwithstanding, We are constrained to reverse the appealed decision upon
the ground that it is based upon a clear mistake of law and its enforcement
will give rise to a patent injustice.
It is true that under the provisions of Section 50 of Rule 39, Rules of Court, a
judgment for a sum of money rendered by a foreign court "is presumptive
evidence of a right as between the parties and their successors in interest by
a subsequent title", but when suit for its enforcement is brought in a
Philippine court, said judgment "may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact" (Emphasis supplied.).
Upon the facts of record, We are constrained to hold that the decision sought
to be enforced was rendered upon a "clear mistake of law" and because of
that it makes appellant an innocent party suffer the consequences of
the default or breach of contract committed by appellee.
There is no question at all that appellee was guilty .of a breach of contract
when it failed to deliver one-hundred fifty-four Hessian bales which, according
to the contract entered into with appellant, should have been delivered to the
latter in the months of July, August and September, all of the year 1949. It is
equally clear beyond doubt that had these one-hundred fifty-four bales been

delivered in accordance with the contract aforesaid, the increase in the

export tax due upon them would not have been imposed because said
increased export tax became effective only on October 1, 1949.
To avoid its liability for the aforesaid increase in the export tax, appellee
claims that appellant should be held liable therefor on the strength of its
letter of September 29, 1949 asking appellee to ship the shortage. This
argument is unavailing because it is not only illogical but contrary to known
principles of fairness and justice. When appellant demanded that appellee
deliver the shortage of 154 bales, it did nothing more than to demand that to
which it was entitled as a matter of right. The breach of contract committed
by appellee gave appellant, under the law and even under general principles
of fairness, the right to rescind the contract or to ask for its specific
performance, in either case with right to demand damages. Part of the
damages appellant was clearly entitled to recover from appellee growing out
of the latter's breach of the contract consists precisely of the amount of the
increase decreed in the export tax due on the shortage which, because of
appellee's fault, had to be delivered after the effectivity of the increased
export tax.
To the extent, therefore, that the decisions of the Tribunal of Arbitration of the
Bengal Chamber of Commerce and of the High Court of Judicature of Calcutta
fail to apply to the facts of this case fundamental principles of contract, the
same may be impeached, as they have been sufficiently impeached by
appellant, on the ground of "clear mistake of law". We agree in this regard
with the majority opinion in Ingenohl vs. Walter E. Olsen & Co. (47 Phil. 189),
although its view was reversed by the Supreme Court of the United States
(273 U.S. 541, 71 L. ed. 762) which at that time had jurisdiction to review by
certiorari decisions of this Court. We can not sanction a clear mistake of law
that, would work an obvious injustice upon appellant.
WHEREFORE, the appealed judgment is reversed and set aside, with costs.

"E. some of the wheels did not fit any model automobile in use in the
United States;
"F. most of the boxes in which the wheels were packed indicated that
the wheels were approved by the Specialty Equipment
Manufacturer's Association (hereafter, SEMA'); in fact no SEMA
approval has been obtained and this indication was therefore false
and could result in fraud upon retail customers purchasing the
wheels." 1

4. Phil Aluminum Wheels, Inc. vs. PASGI Enterprises

DECISION

VITUG, J p:
On 01 June 1978, FASGI Enterprises Incorporated ("FASGI"), a corporation
organized and existing under and by virtue of the laws of the State of
California, United States of America, entered into a distributorship
arrangement with Philippine Aluminum Wheels, Incorporated ("PAWI"), a
Philippine corporation, and FratelliPedriniSarezzo S.P.A. ("FPS"), an Italian
corporation. The agreement provided for the purchase, importation and
distributorship in the United States of aluminum wheels manufactured by
PAWI. Pursuant to the contract, PAWI shipped to FASGI a total of eight
thousand five hundred ninety four (8,594) wheels, with an FOB value of
US$216,444.30 at the time of shipment, the first batch arriving in two
containers and the second in three containers. Thereabouts, FASGI paid PAWI
the FOB value of the wheels. Unfortunately, FASGI later found the shipment
to be defective and in non-compliance with stated requirements, viz;
"A. contrary to the terms of the Distributorship Agreement and in
violation of U.S. law, the country of origin (the Philippines) was not
stamped on the wheels;

On 21 September 1979, FASGI instituted an action against PAWI and FPS for
breach of contract and recovery of damages in the amount of
US$2,316,591.00 before the United States District Court for the Central
District of California. In January 1980, during the pendency of the case, the
parties entered into a settlement, entitled "Transaction" with the
corresponding Italian translation "ConvenzioneTranssativa," where it was
stipulated that FPS and PAWI would accept the return of not less than 8,100
wheels after restoring to FASGI the purchase price of US$268,750.00 via four
(4) irrevocable letters of credit ("LC"). The rescission of the contract of
distributorship was to be effected within the period starting January up until
April 1980. 2
In a telex message, dated 02 March 1980, PAWI president Romeo Rojas
expressed the company's inability to comply with the foregoing agreement
and proposed a revised schedule of payment. The message, in part read:
"We are most anxious in fulfilling all our obligations under
compromise agreement executed by our Mr. Giancarlo Dallera and
your Van Curen. We have tried our best to comply with our
commitments, however, because of the situation as mentioned in the
foregoing and currency regulations and restrictions imposed by our
government on the outflow of foreign currency from our country, we
are constrained to request for a revised schedule of shipment and
opening of LCS.
"After consulting with our bank and government monetary agencies
and on the assumption that we submit the required pro-forma
invoices we can open the letters of credit in your favor under the
following schedule:
"A) First L/C it will be issued in April 1980 payable 90 days
thereafter

"B. the wheels did not have weight load limits stamped on them as
required to avoid mounting on excessively heavy vehicles, resulting
in risk of damage or bodily injury to consumers arising from possible
shattering of the wheels;

"B) Second L/C it will be issued in June 1980 payable 90 days

thereafter

"C many of the wheels did not have an indication as to which models
of automobile they would fit;

"D) Fourth L/C it will be issued in November 1980 payable 90 days

thereafter

"D. many of the wheels did not fit the model automobiles for which
they were purportedly designed;

"We understand your situation regarding the lease of your

warehouse. For this reason, we are willing to defray the extra storage
charges resulting from this new schedule. If you cannot renew the

10

"C) Third L/C it will be issued in August 1980 payable 90 days

thereafter

lease [of] your present warehouse, perhaps you can arrange to

transfer to another warehouse and storage charges transfer thereon
will be for our account. We hope you understand our position. The
delay and the revised schedules were caused by circumstances
totally beyond our control." 3
On 21 April 1980, again through a telex message, PAWI informed FASGI that it
was impossible to open a letter of credit on or before April 1980 but assured
that it would do its best to comply with the suggested schedule of
payments. 4 In its telex reply of 29 April 1980, FASGI insisted that PAWI
should meet the terms of the proposed schedule of payments, specifically its
undertaking to open the first LC within April of 1980, and that "If the letter of
credit is not opened by April 30, 1980, then . . . [it would] immediately take
all necessary legal action to protect [its] position." 5
Despite its assurances, and FASGI's insistence, PAWI failed to open the first
LC in April 1980 allegedly due to Central Bank "inquiries and restrictions,"
prompting FASGI to pursue its complaint for damages against PAWI before the
California district court. Pre-trial conference was held on 24 November 1980.
In the interim, the parties, realizing the protracted process of litigation,
resolved to enter into another arrangement, this time entitled "Supplemental
Settlement Agreement," on 26 November 1980. In substance, the covenant
provided that FASGI would deliver to PAWI a container of wheels for every LC
opened and paid by PAWI:
"3. Agreement
"3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight Thousand,
Seven Hundred Fifty and 00/100 Dollars ($268,750.00), plus interest
and storage costs as described below. Sellers shall pay such amount
by delivering to FASGI the following four (4) irrevocable letters of
credit, confirmed by Crocker Bank, Main Branch, Fresno, California, as
set forth below:

"(i) on or before June 30, 1980, a documentary letter of credit in the

amount of (a) Sixty-Five Thousand, Three Hundred Sixty-nine and
00/100 Dollars ($65,369.00), (b) plus interest on that amount at the
annual rate of 16.25% from January 1, 1980 until July 31, 1980, (c)
plus Two Thousand Nine Hundred Forty Dollars and 00/100
($2,940.00) and (d) with interest on that sum at the annual rate of
16.25% from May 1, 1980 to July 31, 1980, payable on or after
August 31, 1980;
"(ii) on or before September 1, 1980, a documentary letter of credit in
the amount of (a) Sixty-Seven Thousand, Seven Hundred NinetyThree Dollars and Sixty-Seven Cents ($67,793.67) plus (b) Two
Thousand, Nine Hundred Forty and 00/100 Dollars ($2,940.00), plus
(c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the
amount in (a) from January 1, 1980 until December 21, 1980, and on
the amount set forth in (b) from May 1, 1980 until December 21,

11

1980, payable ninety days after the date of the bill of lading under
the letter of credit;
"(iii) on or before November 1, 1980, a documentary letter of credit in
the amount of (a) Sixty-Seven Thousand, Seven Hundred NinetyThree Dollars and Sixty-Seven Cents ($67,793.67) plus (b) Two
Thousand, Nine Hundred Forty and 00/100 Dollars ($2,490.00), plus
(c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the
amount in (a) from January 1, 1980 until February 21, 1981, and on
the amount set forth in (b) from May 1, 1980 until February 21, 1981,
payable ninety days after the date of the bill of lading under the
letter of credit;
"(iv) on or before January 1, 1981, a documentary letter of credit in
the amount of (a) Sixty-Seven Thousand, Seven Hundred NinetyThree Dollars and Sixty-Seven Cents ($67,793.67) plus (b) Five
Thousand, Eight Hundred Eighty and 00/100 Dollars ($5,880.00), plus
(c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the
amount in (a) from January 1, 1980 until April 21, 1981, and on the
amount set forth in (b) from May 1, 1980 until April 21, 1981, payable
ninety days after the date of the bill of lading under the letter of
credit." 6
Anent the wheels still in the custody of FASGI, the supplemental settlement
agreement provided that cATDIH
"3.4 (a) Upon execution of this Supplemental Settlement Agreement,
the obligations of FASGI to store or maintain the Containers and
Wheels shall be limited to (i) storing the Wheels and Containers in
their present warehouse location and (ii) maintaining in effect FASGI's
current insurance in favor of FASGI, insuring against usual
commercial risks for such storage in the principal amount of the
Letters of Credit described in Paragraph 3.1. FASGI shall bear no
liability, responsibility or risk for uninsurable risks or casualties to the
Containers or Wheels.
"xxxxxxxxx
"(e) From and after February 28, 1981, unless delivery of the Letters
of Credit are delayed past such date pursuant to the penultimate
Paragraph 3.1, in which case from and after such later date, FASGI
shall have no obligation to maintain, store or deliver any of the
Containers or Wheels." 7
The deal allowed FASGI to enter before the California court the foregoing
stipulations in the event of the failure of PAWI to make good the scheduled
payments; thus
"3.5 Concurrently with execution and delivery hereof, the parties
have executed and delivered a Mutual Release (the 'Mutual Release'),
and a Stipulation for Judgment (the 'Stipulation for Judgment') with
respect to the Action. In the event of breach of this Supplemental

Settlement Agreement by Sellers, FASGI shall have the right to apply

immediately to the Court for entry of Judgment pursuant to the
Stipulation for Judgment in the full amount thereof, less credit for any
payments made by Sellers pursuant to this Supplemental Settlement
Agreement. FASGI shall have the right thereafter to enforce the
Judgment against PAWI and FPS in the United States and in any other
country where assets of FPS or PAWI may be located, and FPS and
PAWI hereby waive all defenses in any such country to execution or
enforcement of the Judgment by FASGI. Specifically, FPS and PAWI
each consent to the jurisdiction of the Italian and Philippine courts in
any action brought by FASGI to seek a judgment in those countries
based upon a Judgment against FPS or PAWI in the Action." 8

request to open LCs had already been approved by the Central Bank. Irked by
PAWI's persistent default, FASGI filed with the US District Court of the Central
District of California the following stipulation for judgment against PAWI.

In accordance with the aforementioned paragraph 3.5 of the agreement, the

parties made the following stipulation before the California court:

"Judgment will be sought in the total amount of P252,850.60,

including principal and interest accrued through May 17, 1982, plus
the sum of $17,500.00 as reasonable attorneys' fees for plaintiff in
prosecuting this action.

"The undersigned parties hereto, having entered into a Supplemental

Settlement Agreement in this action,
"IT IS HEREBY STIPULATED by and between plaintiff FASGI
Enterprises, Inc. ('FASGI') and defendants Philippine Aluminum
Wheels, Inc., ('PAWI'), and each of them, that judgment may be
entered in favor of plaintiff FASGI and against PAWI, in the amount of
Two Hundred Eighty Three Thousand Four Hundred Eighty And
01/100ths Dollars ($283,480.01).
"Plaintiff FASGI shall also be entitled to its costs of suit, and to
reasonable attorneys' fees as determined by the Court added to the
above judgment amount." 9
The foregoing supplemental settlement agreement, as well as the motion
for the entry of judgment, was executed by FASGI president Elena Buholzer
and PAWI counsel Mr. Thomas Ready.
PAWI, again, proved to be remiss in its obligation under the supplemental
settlement agreement. While it opened the first LC on 19 June 1980, it,
however, only paid on it nine (9) months after, or on 20 March 1981, when
the letters of credit by then were supposed to have all been already posted.
This lapse, notwithstanding, FASGI promptly shipped to PAWI the first
container of wheels. Again, despite the delay incurred by PAWI on the second
LC, FASGI readily delivered the second container. Later, PAWI totally defaulted
in opening and paying the third and the fourth LCs, scheduled to be opened
on or before, respectively, 01 September 1980 and 01 November 1980, and
each to be paid ninety (90) days after the date of the bill of lading under the
LC. As so expressed in their affidavits, FASGI counsel Frank Ker and FASGI
president Elena Buholzer were more inclined to believe that PAWl's failure to
pay was due not to any restriction by the Central Bank or any other cause
than its inability to pay. These doubts were based on the telex message of
PAWI president Romeo Rojas who attached a copy of a communication from
the Central Bank notifying PAWI of the bank's approval of PAWI's request to
open LCs to cover payment for the re-importation of the wheels. The
communication having been sent to FASGI before the supplemental
settlement agreement was executed, FASGI speculated that at the time PAWI
subsequently entered into the supplemental settlement agreement, its

12

"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the
Courtroom of the Honorable Laughlin E. Waters of the above court,
plaintiff FASGI ENTERPRISES, INC. (hereinafter 'FASGI') will move the
Court for entry of Judgment against defendant PHILIPPINE ALUMINUM
WHEELS, INC. (hereinafter 'PAWI'), pursuant to the Stipulation for
Judgment filed concurrently herewith, executed on behalf of FASGI
and PAWI by their respective attorneys, acting as their authorized
agents.

"The Motion will be made under Rule 54 of the Federal Rules of Civil
Procedure, pursuant to and based upon the Stipulation for Judgment,
the Supplemental Settlement Agreement filed herein on or about
November 21, 1980, the Memorandum of Points and Authorities and
Affidavits of Elena Buholzer, Franck G. Ker and Stan Cornwell all filed
herewith, and upon all the records, files and pleadings in this action.
"The Motion is made on the grounds that defendant PAWI has
breached its obligations as set forth in the Supplemental Settlement
Agreement, and that the Supplemental Settlement Agreement
expressly permits FASGI to enter the Stipulation for Judgment in the
event that PAWI has not performed under the Supplemental
Settlement Agreement." 10
On 24 August 1982, FASGI filed a notice of entry of judgment. A certificate of
finality of judgment was issued, on 07 September 1982, by the US District
Judge of the District Court for the Central District of California. PAWI, by this
time, was approximately twenty (20) months in arrears in its obligation under
the supplemental settlement agreement.
Unable to obtain satisfaction of the final judgment within the United States,
FASGI filed a complaint for "enforcement of foreign judgment" in February
1983, before the Regional Trial Court, Branch 61, of Makati, Philippines. The
Makati court, however, in an order of 11 September 1990, dismissed the
case, thereby denying the enforcement of the foreign judgment within
Philippine jurisdiction, on the ground that the decree was tainted with
collusion, fraud, and clear mistake of law and fact. 11The lower court ruled
that the foreign judgment ignored the reciprocal obligations of the parties.
While the assailed foreign judgment ordered the return by PAWI of the
purchase amount, no similar order was made requiring FASGI to return to
PAWI the third and fourth containers of wheels. 12 This situation, the trial
court maintained, amounted to an unjust enrichment on the part of FASGI.
Furthermore, the trial court said, the supplemental settlement agreement and
the subsequent motion for entry of judgment upon which the California court

had based its judgment were a nullity for having been entered into by Mr.
Thomas Ready, counsel for PAWI, without the latter's authorization.

FASGI appealed the decision of the trial court to the Court of Appeals. In a
decision, 13 dated 30 July 1997, the appellate court reversed the decision of
the trial court and ordered the full enforcement of the California judgment.
Hence this appeal.
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; 14however, 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. 15
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 trial upon regular proceedings has been conducted,
following due citation or voluntary appearance of the defendant and under a
system of jurisprudence likely to secure an impartial 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. 16 A foreign judgment is presumed to be valid and binding in the
country from which it comes, until a contrary showing, on the basis of a
presumption of regularity of proceedings and the giving of due notice in the
foreign forum. Rule 39, Section 48 of the Rules of Court of the Philippines
provides:
Sec. 48. Effect of foreign judgments or final orders The effect of a
judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
xxxxxxxxx
(b) In case of a judgment or final order against a person, the
judgment or final order is presumptive evidence of a right as between
the parties and their successors-in-interest by a subsequent title.
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
In SoorajmullNagarmull vs. Binalbagan-Isabela Sugar Co. Inc., 17 one of the
early Philippine cases on the enforcement of foreign judgments, this Court
has ruled that a judgment for a sum of money rendered in a foreign court is
presumptive evidence of a right between the parties and their successors ininterest by subsequent title, but when suit for its enforcement is brought in a
Philippine court, such judgment may be repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of

13

law or fact. In Northwest Orient Airlines, Inc., vs. Court of Appeals, 18 the
Court has said that a party attacking a foreign judgment is tasked with the
burden of overcoming its presumptive validity.
PAWI claims that its counsel, Mr. Ready, has acted without its authority. Verily,
in this jurisdiction, it is clear that an attorney cannot, without a client's
authorization, settle the action or subject matter of the litigation even when
he honestly believes that such a settlement will best serve his client's
interest. 19
In the instant case, the supplemental settlement agreement was signed by
the parties, including Mr. Thomas Ready, on 06 October 1980. The agreement
was lodged in the California case on 26 November 1980 or two (2) days after
the pre-trial conference held on 24 November 1980. If Mr. Ready was indeed
not authorized by PAWI to enter into the supplemental settlement agreement,
PAWI could have forthwith signified to FASGI a disclaimer of the settlement.
Instead, more than a year after the execution of the supplemental settlement
agreement, particularly on 09 October 1981, PAWI President Romeo S. Rojas
sent a communication to Elena Buholzer of FASGI that failed to mention Mr.
Ready's supposed lack of authority. On the contrary, the letter confirmed the
terms of the agreement when Mr. Rojas sought forbearance for the impending
delay in the opening of the first letter of credit under the schedule stipulated
in the agreement.
It is an accepted rule that when a client, upon becoming aware of the
compromise and the judgment thereon, fails to promptly repudiate the action
of his attorney, he will not afterwards be heard to complain about it. 20
Nor could PAWI claim any prejudice by the settlement. PAWI was spared from
possibly paying FASGI substantial amounts of damages and incurring heavy
litigation expenses normally generated in a full-blown trial. PAWI, under the
agreement was afforded time to reimburse FASGI the price it had paid for the
defective wheels. PAWI, should not, after its opportunity to enjoy the benefits
of the agreement, be allowed to later disown the arrangement when the
terms thereof ultimately would prove to operate against its hopeful
expectations.
PAWI assailed not only Mr. Ready's authority to sign on its behalf the
Supplemental Settlement Agreement but denounced likewise his authority to
enter into a stipulation for judgment before the California court on 06 August
1982 on the ground that it had by then already terminated the former's
services. For his part, Mr. Ready admitted that while he did receive a request
from Manuel Singson of PAWI to withdraw from the motion of judgment, the
request unfortunately came too late. In an explanatory telex, Mr. Ready told
Mr. Singson that under American Judicial Procedures when a motion for
judgment had already been filed a counsel would not be permitted to
withdraw unilaterally without a court order. From the time the stipulation for
judgment was entered into on 26 April 1982 until the certificate of finality of
judgment was issued by the California court on 07 September 1982, no
notification was issued by PAWI to FASGI regarding its termination of Mr.
Ready's services. If PAWI were indeed hoodwinked by Mr. Ready who
purportedly acted in collusion with FASGI, it should have aptly raised the
issue before the forum which issued the judgment in line with the principle of

international comity that a court of another jurisdiction should refrain, as a

matter of propriety and fairness, from so assuming the power of passing
judgment on the correctness of the application of law and the evaluation of
the facts of the judgment issued by another tribunal. 21
Fraud, to hinder the enforcement within this jurisdiction of a foreign
judgment, must be extrinsic, i.e., fraud based on facts not controverted or
resolved in the case where judgment is rendered, 22 or that which would go
to the jurisdiction of the court or would deprive the party against whom
judgment is rendered a chance to defend the action to which he has a
meritorious case or defense. In fine, intrinsic fraud, that is, fraud which goes
to the very existence of the cause of action such as fraud in obtaining the
consent to a contract is deemed already adjudged, and it, therefore,
cannot militate against the recognition or enforcement of the foreign
judgment. 23
Even while the US judgment was against both FPS and PAWI, FASGI had every
right to seek enforcement of the judgment solely against PAWI or, for that
matter, only against FPS. FASGI, in its complaint, explained:

the effects of an unwise or unfavorable contract freely entered into. As has so

aptly been explained by the appellate court, the over-all picture might,
indeed, appear to be onerous to PAWI but it should bear emphasis that the
settlement which has become the basis for the foreign judgment has not
been the start of a business venture but the end of a failed one, and each
party, naturally, has had to negotiate from either position of strength or
weakness depending on its own perception of who might have to bear the
blame for the failure and the consequence of loss. 28

Altogether, the Court finds no reversible error on the part of the appellate
court in its appealed judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
No costs.
SO ORDERED.

"17. There exists, and at all times relevant herein there existed, a
unity of interest and ownership between defendant PAWI and
defendant FPS, in that they are owned and controlled by the same
shareholders and managers, such that any individuality and
separateness between these defendants has ceased, if it ever
existed, and defendant FPS is the alter ego of defendant PAWI. The
two entities are used interchangeably by their shareholders and
managers, and plaintiff has found it impossible to ascertain with
which entity it is dealing at any one time. Adherence to the fiction of
separate existence of these defendant corporations would permit an
abuse of the corporate privilege and would promote injustice against
this plaintiff because assets can easily be shifted between the two
companies thereby frustrating plaintiff's attempts to collect on any
judgment rendered by this Court." 24
Paragraph 14 of the Supplemental Settlement Agreement fixed the liability
of PAWI and FPS to be "joint and several" or solidary. The enforcement of
the judgment against PAWI alone would not, of course, preclude it from
pursuing and recovering whatever contributory liability FPS might have
pursuant to their own agreement.
PAWI would argue that it was incumbent upon FASGI to first return the second
and the third containers of defective wheels before it could be required to
return to FASGI the purchase price therefor, 25 relying on their original
agreement (the "Transaction"). 26 Unfortunately, PAWI defaulted on its
covenants thereunder that thereby occasioned the subsequent execution of
the supplemental settlement agreement. This time the parties agreed, under
paragraph 3.4(e) 27 thereof, that any further default by PAWI would release
FASGI from any obligation to maintain, store or deliver the rejected wheels.
The supplemental settlement agreement evidently superseded, at the very
least on this point, the previous arrangements made by the parties.
PAWI cannot, by this petition for review, seek refuge over a business dealing
and decision gone awry. Neither do the courts function to relieve a party from

14

5. Tayag vs. Benguet Consolidated

FERNANDO, J p:

Confronted by an obstinate and adamant refusal of the domiciliary

administrator, the County Trust Company of New York, United States of
America, of the estate of the deceased Idonah Slade Perkins, who died in New
York City on March 27, 1960, to surrender to the ancillary administrator in the
Philippines the stock certificates owned by her in a Philippine
corporation, Benguet Consolidated, Inc., to satisfy the legitimate claims of
local creditors, the lower court, then presided by the Honorable Arsenio
Santos, now retired, issued on May 18, 1964, an order of this tenor: "After
considering the motion of the ancillary administrator, dated February 11,
1964, as well as the opposition filed by the Benguet Consolidated, Inc., the
Court hereby (1) considers as lost for all purposes in connection with the
administration and liquidation of the Philippine estate of Idonah Slade Perkins
the stock certificates covering the 33,002 shares of stock standing in her
name in the books of the Benguet Consolidated, Inc., (2) orders said
certificates cancelled, and (3) directs said corporation to issue new
certificates in lieu thereof, the same to be delivered by said corporation to
either the incumbent ancillary administrator or to the Probate Division of this
Court." 1
From such an order, an appeal was taken to this Court not by the domiciliary
administrator, the County Trust Company of New York, but by the Philippine
corporation, the Benguet Consolidated, Inc. The appeal cannot possibly
prosper. The order challenged represents a response and expresses a policy,
to paraphrase Frankfurter, arising out of a specific problem, addressed to the
attainment of specific ends by the use of specific remedies, with full and
ample support from legal doctrines of weight and significance.
The facts
will explain
why.
As
set forth in the
brief of
appellant Benguet Consolidated, Inc., Idonah Slade Perkins, who died on
March 27, 1960 in New York City, left among others, two stock certificates
covering 33,002 shares of appellant, the certificates being in the possession
of the County Trust Company of New York, which as noted, is the domiciliary
administrator of the estate of the deceased 2 Then came this portion of the
appellant's brief: "On August 12, 1960, Prospero Sanidad instituted ancillary
administration proceedings in the Court of First Instance of Manila; Lazaro A.
Marquez was appointed ancillary administrator; and on January 22, 1963, he
was substituted by the appellee Renato D. Tayag. A dispute arose between
the domiciliary administrator in New York and the ancillary administrator in
the Philippines as to which of them was entitled to the possession of the
stock certificates in question. On January 27, 1964, the Court of First Instance
of Manila ordered the domiciliary administrator, County Trust Company, to
`produce and deposit' them with the ancillary administrator or with the Clerk
of Court. The domiciliary administrator did not comply with the order, and on
February 11, 1964, the ancillary administrator petitioned the court to "issue
an order declaring the certificate or certificates of stocks covering the 33,002
shares issued in the name of Idonah Slade Perkins by Benguet Consolidated,
Inc. be declared [or] considered as lost." 3
It is to be noted further that appellant Benguet Consolidated, Inc. admits that
"it is immaterial" as far as it is concerned as to "who is entitled to the
possession of the stock certificates in question; appellant opposed the
petition of the ancillary administrator because the said stock certificates are

15

in existence, they are today in the possession of the domiciliary

administrator, the County Trust Company, in New York, U.S.A.. . . ." 4
It is its view, therefore, that under the circumstances, the stock certificates
cannot be declared or considered as lost. Moreover, it would allege that there
was a failure to observe certain requirements of its by-laws before new stock
certificates could be issued. Hence, its appeal.
As was made clear at the outset of this opinion, the appeal lacks merit. The
challenged order constitutes an emphatic affirmation of judicial authority
sought to be emasculated by the willful conduct of the domiciliary
administrator in refusing to accord obedience to a court decree. How, then,
can this order be stigmatized as illegal?
As is true of many problems confronting the judiciary, such a response was
called for by the realities of the situation. What cannot be ignored is that
conduct bordering on willful defiance, if it had not actually reached it, cannot
without undue loss of judicial prestige, be condoned or tolerated. For the law
is not so lacking in flexibility and resourcefulness as to preclude such a
solution, the more so as deeper reflection would make clear its being
buttressed by indisputable principles and supported by the strongest policy
considerations.
It can truly be said then that the result arrived at upheld and vindicated the
honor of the judiciary no less than that of the country. Through this
challenged order, there is thus dispelled the atmosphere of contingent
frustration brought about by the persistence of the domiciliary administrator
to hold on to the stock certificates after it had, as admitted, voluntarily
submitted itself to the jurisdiction of the lower court by entering its
appearance through counsel on June 27, 1963, and filing a petition for relief
from a previous order of March 15, 1963. Thus did the lower court, in the
order now on appeal, impart vitality and effectiveness to what was decreed.
For without it, what it had been decided would be set at naught and nullified.
Unless such a blatant disregard by the domiciliary administrator, with
residence abroad, of what was previously ordained by a court order could be
thus remedied, it would have entailed, insofar as this matter was concerned,
not a partial but a well-nigh complete paralysis of judicial authority.
1.Appellant Benguet Consolidated, Inc. did not dispute the power of the
appellee ancillary administrator to gain control and possession of all assets of
the decedent within the jurisdiction of the Philippines. Nor could it. Such a
power is inherent in his duty to settle her estate and satisfy the claims of
local creditors. 5 As Justice Tuason speaking for this Court made clear,
it is a "general rule universally recognized" that administration,
whether principal or ancillary, certainly "extends to the assets of a
decedent found within the state or country where it was granted,"
the corollary being "that an administrator appointed in one state or
country has no power over property in another state or country." 6

It is to be noted that the scope of the power of the ancillary administrator

was, in an earlier case, set forth by Justice Malcolm. Thus: "It is often
necessary to have more than one administration of an estate. When a person

dies intestate owning property in the country of his domicile as well as in a

foreign country, administration is had in both countries. That which is granted
in the jurisdiction of decedent's last domicile is termed the principal
administration, while any other administration is termed the ancillary
administration. The reason for the latter is because a grant of administration
does not ex propriovigore have any effect beyond the limits of the country in
which it is granted. Hence, an administrator appointed in a foreign state has
no authority in the [Philippines]. The ancillary administration is proper,
whenever a person dies, leaving in a country other than that of his last
domicile, property to be administered in the nature of assets of the deceased
liable for his individual debts or to be distributed among his heirs." 7
It would follow then that the authority of the probate court to require that
ancillary administrator's right to "the stock certificates covering the 33,002
shares
..standing
in
her
name
in
the
books
of
[appellant] Benguet Consolidated, Inc.." be respected is equally beyond
question. For appellant is a Philippine corporation owing full allegiance and
subject to the unrestricted jurisdiction of local courts. Its shares of stock
cannot therefore be considered in any wise as immune from lawful court
orders.
Our holding in Wells Fargo Bank and Union v. Collector of Internal
Revenue 8 finds application. "In the instant case, the actual situs of the
shares of stock is in the Philippines, the corporation being domiciled [here]."
To the force of the above undeniable proposition, not even appellant is
insensible. It does not dispute it. Nor could it successfully do so even if it
were so minded.
2.In the face of such incontrovertible doctrines that argue in a rather
conclusive fashion for the legality of the challenged order, how does
appellant BenguetConsolidated, Inc. propose to carry the extremely heavy
burden of persuasion of precisely demonstrating the contrary? It would assign
as the basic error allegedly committed by the lower court its "considering as
lost the stock certificates covering 33,002 shares of Benguet belonging to the
deceased Idonah Slade Perkins, . . ." 9More specifically, appellant would
stress that the "lower court could not `consider as lost' the stock certificates
in question when, as a matter of fact, his Honor the trial Judge knew, and
does know, and it is admitted by the appellee, that the said stock certificates
are in existence and are today in the possession of the domiciliary
administrator in New York." 10
There may be an element of fiction in the above view of the lower court. That
certainly does not suffice to call for the reversal of the appealed order. Since
there is a refusal, persistently adhered to by the domiciliary administrator in
New York, to deliver the shares of stocks of appellant corporation owned by
the decedent to the ancillary administrator in the Philippines, there was
nothing unreasonable or arbitrary in considering them as lost and requiring
the appellant to issue new certificates in lieu thereof. Thereby, the task
incumbent under the law on the ancillary administrator could be discharged
and his responsibility fulfilled.
Any other view would result in the compliance to a valid judicial order being
made to depend on the uncontrolled discretion of the party or entity, in this

16

case domiciled abroad, which thus far has shown the utmost persistence in
refusing to yield obedience. Certainly, appellant would not be heard to
contend in all seriousness that a judicial decree could be treated as a mere
scrap of paper, the court issuing it being powerless to remedy its flagrant
disregard.
It may be admitted of course that such alleged loss as found by the lower
court did not correspond exactly with the facts. To be more blunt, the quality
of truth may be lacking in such a conclusion arrived at. It is to be
remembered however, again to borrow from Frankfurter, "that fictions which
the law may rely upon in the pursuit of legitimate ends have played an
important part in its development." 11
Speaking of the common law in its earlier period, Cardozo could state that
fictions "were devices to advance the ends of justice, [even if] clumsy and at
times offensive."12 Some of them have persisted even to the present, that
eminent jurist, noting "the quasi contract, the adopted child, the constructive
trust, all of flourishing vitality, to attest the empire of `as if' today." 13 He
likewise noted "a class of fictions of another order, the fiction which is a
working tool of thought, but which at times hides itself from view till
reflection and analysis have brought it to the light." 14
What cannot be disputed, therefore, is the at times indispensable role that
fictions as such played in the law. There should be then on the part of the
appellant a further refinement in the catholicity of its condemnation of such
judicial technique. If ever an occasion did call for the employment of a legal
fiction to put an end to the anomalous situation of a valid judicial order being
disregarded with apparent impunity, this is it. What is thus most obvious is
that this particular alleged error does not carry persuasion.
3.Appellant Benguet Consolidated, Inc. would seek to bolster the above
contention by its invoking one of the provisions of its by-laws which would set
forth the procedure to be followed in case of a lost, stolen or destroyed stock
certificate; it would stress that in the event of a contest or the pendency of
an action regarding ownership of such certificate or certificates of stock
allegedly lost, stolen or destroyed, the issuance of a new certificate or
certificates would await the "final decision by [a] court regarding the
ownership [thereof]." 15
Such reliance is misplaced. In the first place, there is no such occasion to
apply such a by-law. It is admitted that the foreign domiciliary administrator
did not appeal from the order now in question. Moreover, there is likewise the
express admission of appellant that as far as it is concerned, "it is
immaterial . . . who is entitled to the possession of the stock certificates . . ."
Even if such were not the case, it would be a legal absurdity to impart to such
a provision conclusiveness and finality. Assuming that a contrariety exists
between the above by-law and the command of a court decree, the latter is
to be followed.
It is understandable, as Cardozo pointed out, that the Constitution overrides a
statute, to which, however, the judiciary must yield deference, when
appropriately invoked and deemed applicable. It would be most highly
unorthodox, however, if a corporate by-law would be accorded such a high

estate in the jural order that a court must not only take note of it but yield to
its alleged controlling force.
The fear of appellant of a contingent liability with which it could be saddled
unless the appealed order be set aside for its inconsistency with one of its bylaws does not impress us. Its obedience to a lawful court order certainly
constitutes a valid defense, assuming that such apprehension of a possible
court action against it could possibly materialize. Thus far, nothing in the
circumstances as they have developed gives substance to such a fear.
Gossamer possibilities of a future prejudice to appellant do not suffice to
nullify the lawful exercise of judicial authority.
4.What is more the view adopted by appellant Benguet Consolidated, Inc. is
fraught with implications at war with the basic postulates of corporate theory.
We start with the undeniable premise that, "a corporation is an artificial being
created by operation of law . . ." 16 It owes its life to the state, its birth being
purely dependent on its will. As Berle so aptly stated: "Classically, a
corporation was conceived as an artificial person, owing its existence through
creation by a sovereign power. 17 As a matter of fact, the statutory language
employed owes much to Chief Justice Marshall, who in the Dartmouth College
decision, defined a corporation precisely as "an artificial being invisible,
intangible, and existing only in contemplation of law." 18
The well-known authority Fletcher could summarize the matter thus: "A
corporation is not in fact and in reality a person, but the law treats it as
though it were a person by process of fiction, or by regarding it as an artificial
person distinct and separate from its individual stockholders.. It owes its
existence to law. It is an artificial person created by law for certain specific
purposes, the extent of whose existence, powers and liberties is fixed by its
charter." 19 Dean Pound's terse summary, a juristic person, resulting from an
association of human beings granted legal personality by the state, puts the
matter neatly. 20
There is thus a rejection of Gierke's genossenchaft theory, the basic theme of
which to quote from Friedmann, "is the reality of the group as a social and
legal entity, independent of state recognition and concession." 21 A
corporation as known to Philippine jurisprudence is a creature without any
existence until it has received the imprimatur of the state acting according to
law. It is logically inconceivable therefore that it will have rights and
privileges of a higher priority than that of its creator. More than that, it cannot
legitimately refuse to yield obedience to acts of its state organs, certainly not
excluding the judiciary, whenever called upon to do so.
As a matter of fact, a corporation once it comes into being, following
American law still of persuasive authority in our jurisdiction, comes more
often within the ken of the judiciary than the other two coordinate branches.
It institutes the appropriate Court Action to enforce its rights. Correlatively, it
is not immune from judicial control in those instances, where a duty under
the law as ascertained in an appropriate legal proceeding is cast upon it.

17

To assert that it can choose which court order to follow and which to
disregard is to confer upon it not autonomy which may be conceded but
license which cannot be tolerated. It is to argue that it may, when so minded,
overrule the state, the source of its very existence; it is to contend that what
any of its governmental organs may lawfully require could be ignored at will.
So extravagant a claim cannot possibly merit approval.
5.One last point. In Viloria v. Administrator of Veterans Affairs, 22 it was
shown that in a guardianship proceeding then pending in a lower court, the
United States Veterans Administration filed a motion for the refund of a
certain sum of money paid to the minor under guardianship, alleging that the
lower court had previously granted its petition to consider the deceased
father as not entitled to guerilla benefits according to a determination arrived
at by its main office in the United States. The motion was denied. In seeking
a reconsideration of such order, the Administrator relied on an American
federal statute making his decisions "final and conclusive on all questions of
law or fact" precluding any other American official to examine the matter
anew,
"except
a
judge
or
judges
of
the
United
States
court." 23 Reconsideration was denied, and the Administrator appealed.
In an opinion by Justice J.B.L. Reyes, we sustained the lower court. Thus: "We
are of the opinion that the appeal should be rejected. The provisions of the
U.S. Code, invoked by the appellant, make the decisions of U.S. Veteran
Administrator final and conclusive when made on claims properly submitted
to him for resolution; but they are not applicable to the present case, where
the Administrator is not acting as a judge but as a litigant. There is a great
difference between actions against the Administrator (which must be filed
strictly in accordance with the conditions that are imposed by the Veterans'
Act, including the exclusive review by United States courts), and those
actions where the Veterans' Administrator seeks a remedy from our courts
and submits to their jurisdiction by filing actions therein. Our attention has
not been called to any law or treaty that would make the findings of the
Veterans' Administrator, in actions where he is a party, conclusive on our
courts. That, in effect, would deprive our tribunals of judicial discretion and
render them mere subordinate instrumentalities of the Veterans'
Administrator."
It is bad enough as the Viloria decision made patent for our judiciary to
accept as final and conclusive, determinations made by foreign governmental
agencies. It is infinitely worse if through the absence of any coercive power
by our courts over juridical persons within our jurisdiction, the force and
effectivity of their orders could be made to depend on the whim or caprice of
alien entities. It is difficult to imagine of a situation more offensive to the
dignity of the bench or the honor of the country.
Yet that would be the effect, even if unintended, of the proposition to which
appellant Benguet Consolidated seems to be firmly committed as shown by
its failure to accept the validity of the order complained of; it seeks its
reversal. Certainly we must at all pains see to it that it does not succeed. The
deplorable consequences attendant on appellant prevailing attest to the
necessity of a negative response from us. That is what appellant will get.

That is all then that this case presents. It is obvious why the appeal cannot
succeed. It is always easy to conjure extreme and even oppressive
possibilities. That is not decisive. It does not settle the issue. What carries
weight and conviction is the result arrived at, the just solution obtained,
grounded in the soundest of legal doctrines and distinguished by its
correspondence with what a sense of realism requires. For through the
appealed order, the imperative requirement of justice according to law is
satisfied and national dignity and honor maintained.
WHEREFORE, the appealed order of the Honorable Arsenio Santos, the Judge
of the Court of First Instance, dated May 18, 1964, is affirmed. With costs
against oppositor-appellant Benguet Consolidated, Inc.

6. Oil Natural Gas Commission vs. CA

MARTINEZ, J p:
This proceeding involves the enforcement of a foreign judgment rendered by
the
Civil
Judge of Dehra
Dun,
India
in
favor of the
petitioner, OIL AND NATURAL GASCOMMISSION and
against
the
private
respondent, PACIFIC CEMENT COMPANY, INCORPORATED. LLphil
The petitioner is a foreign corporation owned and controlled by the
Government of India while the private respondent is a private corporation
duly organized and existing under the laws of the Philippines. The present
conflict between the petitioner and the private respondent has its roots in a
contract entered into by and between both parties on February 26, 1983
whereby the private respondent undertook to supply the petitioner FOUR
THOUSAND THREE HUNDRED (4,300) metric tonsof oil well cement. In
consideration therefor, the petitioner bound itself to pay the private
respondent the amount of FOUR HUNDRED SEVENTY-SEVEN THOUSAND
THREE HUNDRED U.S. DOLLARS ($477,300.00) by opening an irrevocable,
divisible, and confirmed letter of credit in favor of the latter. The oil well
cement was loaded on board the ship MV SURUTANA NAVA at the
port of Surigao City, Philippines for delivery at Bombay and Calcutta, India.
However, due to a dispute between the shipowner and the private
respondent, the cargo was held up in Bangkok and did not reach its
point of destination. Notwithstanding the fact that the private respondent had
already received payment and despite several demands made by the
petitioner, the private respondent failed to deliver the oil well cement.
Thereafter, negotiations ensued between the parties and they agreed that
the private respondent will replace the entire 4,300 metric tons of oil well
cement with Class "G" cement cost free at the petitioner's designated port.
However, upon inspection, the Class "G" cement did not conform to the

18

petitioner's specifications. The petitioner then informed the private

respondent that it was referring its claim to an arbitrator pursuant to Clause
16 of their contract which stipulates:
"Except where otherwise provided in the supply order/contract all
questions and disputes, relating to the meaning of the specification
designs, drawings and instructions herein before mentioned and as to
quality of workmanship of the items ordered or as to any other
question, claim, right or thing whatsoever, in any way arising
out of or relating to the supply order/contract design, drawing,
specification, instruction or these conditions or otherwise concerning
the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment
thereof shall be referred to the sole arbitration ofthe persons
appointed by Member of the Commission at the time of dispute. It will
be no objection to any such appointment that the arbitrator so
appointed is aCommission employer (sic) that he had to deal with the
matter to which the supply or contract relates and that in the
course of his duties as Commission's employee he had expressed
views on all or any of the matter in dispute or difference.
"The arbitrator to whom the matter is originally referred being
transferred or vacating his office or being unable to act for any
reason the Member of the Commissionshallappoint another person
to act as
arbitrator
in
accordance
with
the
terms of the
contract/supply order. Such person shall be entitled to proceed with
reference from the stage at which it was left by his predecessor.
Subject as aforesaid the provisions of the Arbitration Act, 1940, or
any Statutory modification or re-enactment there of and the rules
made there under and for the time being in force shall apply to the
arbitration proceedings under this clause.
"The arbitrator may with the consent of parties enlarge the time,
from time to time, to make and publish the award.
"The venue for arbitration shall be at Dehra Dun." 1*
On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the
dispute in petitioner's favor setting forth the arbitral award as follows:
"NOW THEREFORE after considering all facts of the case, the
evidence, oral and documentarys (sic) adduced by the claimant and
carefully examining the various written statements, submissions,
letters, telexes, etc. sent by the respondent, and the oral arguments
addressed by the counsel for the claimants, I, N.N. Malhotra, Sole
Arbitrator, appointed under clause 16 of the supply order dated
26.2.1983,
according
to
which
the
parties,
i.e.
M/S Oil and Natural Gas Commission and the Pacific Cement Co., Inc.
can refer the dispute to the sole arbitration under the provision of the
Arbitration Act. 1940, do hereby award and direct as follows:
"The Respondent will pay the following to the claimant:

1. Amount received by the Respondent

M/S Pacific Cement Co.,

against the letter of credit No. 11/19

Inc. vs. ONGC Case

dated 28.2.1983 US$ 477,300.00

Sir:

2. Re-imbursement of expenditure incurred

1. We received your letter dated 28 April 1989 only last 18 May 1989.

by the claimant on the inspection team's

2. Please inform us how much is the court fee to be paid. Your letter
did not mention the amount to be paid.

visit to Philippines in August 1985 US$ 3,881.00

3. L. C. Establishment charges incurred
by the claimant US$ 1,252.82
4. Loss of interest suffered by claimant
from 21.6.83 to 23.7.88 US$ 417,169.95

Total amount of award US$ 899,603.77

"In addition to the above, the respondent would also be liable to pay
to the claimant the interest at the rate of 6% on the above among,
with effect from 24.7.1988 up to the actual date of payment by the
Respondent in full settlement of the claim as awarded or the
date of the decree, whichever is earlier.
"I determine the cost at Rs, 70,000/-equivalent to US$5,000 towards
the expenses on Arbitration, legal expenses, stamps duly incurred by
the claimant. The cost will be shared by the parties in equal
proportion.
"Pronounced at Dehra Dun to-day, the 23rd of July 1988." 2
To enable the petitioner to execute the above award in its favor, it filed a
Petition before the Court of the Civil Judge in Dehra Dun, India (hereinafter
referred to as the foreign court for brevity), praying that the decision of the
arbitrator be made "the Rule of Court" in India. The foreign court issued
notices to the private respondent for filing objections to the petition. The
private respondent complied and sent its objections dated January 16,
1989. Subsequently, the said courtdirected the private respondent to pay
the filing fees in order that the latter's objections could be given
consideration. Instead of paying the required filing fees, the private
respondent sent the following communication addressed to the Civil
Judge of Dehra Dun:
"The Civil Judge
Dehra Dun (U.P.) India
Re: Misc. Case No. 5 of 1989

19

3. Kindly give us 15 days from receipt of your letter advising us how

much to pay to comply with the same.
Thank you for your kind consideration.
Pacific Cement Co., Inc.
By:
Jose Cortes, Jr.
President" 3
Without responding to the above communication, the foreign court refused to
admit the private respondent's objections for failure to pay the required filing
fees, and thereafter issued an Order on February 7, 1990, to wit:
"ORDER
Since objections filed by defendant have been rejected through Misc.
Suit No. 5 on 7.2.90, therefore, award should be made
"Rule of the Court.
"ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On
the basis of conditions of award decree is passed. Award Paper No.
3/B-1 shall be a part of the decree. The plaintiff shall also be entitled
to get from defendant (US$899,603.77 (US$ Eight Lakhs ninety nine
thousand six hundred and three point seventy seven only) along with
9% interest per annum till the last date of realization." 4
Despite notice sent to the private respondent of the foregoing order and
several demands by the petitioner for compliance therewith, the private
respondent refused to pay the amount adjudged by the foreign court as
owing to the petitioner. Accordingly, the petitioner filed a complaint with
Branch 30 of the Regional Trial Court (RTC) ofSurigao City for the
enforcement of the aforementioned judgment of the foreign court. The
private respondent moved to dismiss the complaint on the following grounds:
(1) plaintiff's lack of legal capacity to sue; (2) lack of cause of action; and (3)
plaintiffs claim or demand has been waived, abandoned, or otherwise
extinguished. The petitioner filed its opposition to the said motion to dismiss,
and the private respondent, its rejoinder thereto. On January 3, 1992, the RTC
issued an order upholding the petitioners legal capacity to sue, albeit
dismissing the complaint for lack of a valid cause of action. The RTC held that

the rule prohibiting foreign corporations transacting business in the

Philippines without a license from maintaining a suit in Philippine courts
admits of an exception, that is, when the foreign corporation is suing on an
isolated transaction as in this case. 5 Anent the issue of the sufficiency of the
petitioner's cause of action, however, the RTC found the referral of the
dispute between the parties to the arbitrator under Clause 16 of their
contract erroneous. According to the RTC,
"[a] perusal of the above-quoted clause (Clause 16) readily shows
that the matter covered by its terms is limited to "ALL QUESTIONS
AND DISPUTES, RELATING TO THE MEANING OF THE SPECIFICATION,
DESIGNS, DRAWINGS AND INSTRUCTIONS HEREIN BEFORE
MENTIONED and as to the QUALITY OF WORKMANSHIP OF THE ITEMS
ORDERED or as to any other questions, claim, right or thing
whatsoever, but qualified to 'IN ANY WAY ARISING OR RELATING TO
THE SUPPLY ORDER/CONTRACT, DESIGN, DRAWING, SPECIFICATION,
etc.,' repeating the enumeration in the opening sentence of the
clause.
"The court is inclined to go along with the observation of the
defendant that the breach, consisting of the non-delivery of the
purchased materials, should have been properly litigated before
a court of law, pursuant to Clause No. 15 of the Contract/Supply
Order, herein quoted, to wit:
'JURISDICTION
All questions, disputes and differences, arising under out of or in
connection with this supply order, shall be subject to the EXCLUSIVE
JURISDICTION OF THECOURT,
within
the
local
limits of whose
jurisdiction and the place from which this supply order is situated.'" 6
The RTC characterized the erroneous submission of the dispute to the
arbitrator as a "mistake of law or fact amounting to want of jurisdiction".
Consequently, the proceedings had before the arbitrator were null and void
and the foreign court had therefore, adopted no legal award which could be
the source of an enforceable right. 7
The petitioner then appealed to the respondent Court of Appeals which
affirmed
the
dismissal of the
complaint.
In
its
decision,
the
appellate court concurred with the RTC's ruling that the arbitrator did not
have jurisdiction over the dispute between the parties, thus, the
foreign court could not validly adopt the arbitrators award. In addition, the
appellate court observed
that
the
full
text of the
judgment of the
foreign court contains the dispositive portion only and indicates no
findings of fact and law as basis for the award. Hence, the said judgment
cannot be enforced by any Philippine court as it would violate the
constitutional provision that no decision shall be rendered by
any court without expressing therein clearly and distinctly the facts and the
law on which it is based. 8 The appellate court ruled further that the
dismissalof the private respondent's objections for non-payment of the
required legal fees, without the foreign court first replying to the private
respondent's query as to the amount of legal fees to be paid, constituted
want of notice or violation of due process. Lastly, it pointed out that the

20

arbitration proceeding was defective because the arbitrator was appointed

solely by the petitioner, and the fact that the arbitrator was a former
employee of the latter gives rise to a presumed bias on his part in favorof the
petitioner. 9
A subsequent motion for reconsideration by the petitioner of the
appellate court's decision was denied, thus, this petition for review on
certiorari citing the following as grounds in support thereof:
"RESPONDENT COURT OF APPEALS GRAVELY ERRED
THE LOWER COURT'S ORDER OF DISMISSAL SINCE:

IN

AFFIRMING

A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY

COGNIZABLE BY THE PROVISIONS OF CLAUSE 16 OF THE CONTRACT;
B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS AN
AFFIRMATION OF THE FACTUAL AND LEGAL FINDINGS OF THE
ARBITRATOR AND THEREFORE ENFORCEABLE IN THIS JURISDICTION;
C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A
PRESUMPTIVE RIGHT UNDER A FOREIGN JUDGMENT." 10
The threshold issue is whether or not the arbitrator had jurisdiction over the
dispute between the petitioner and the private respondent under Clause
16 of the contract. To reiterate, Clause 16 provides as follows:
"Except where otherwise provided in the supply order/contract all
questions and disputes, relating to the meaning of the specification
designs, drawings and instructions herein before mentioned and as to
quality of workmanship of the items ordered or as to any other
question, claim, right or thing whatsoever, in any way arising
out of or relating to the supply order/contract design, drawing,
specification, instruction or these conditions or otherwise concerning
the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment
thereof shall be referred to the sole arbitration ofthe persons
appointed by Member of the Commission at the time of dispute. It will
be no objection to any such appointment that the arbitrator so
appointed is aCommission employer (sic) that he had to deal with the
matter to which the supply or contract relates and that in the
course of his duties as Commission's employee he had expressed
views on all or any of the matter in dispute or difference." 11
The dispute between the parties had its origin in the non-delivery of the
4,300 metric tons of oil well cement to the petitioner. The primary question
that may be posed, therefore, is whether or not the non-delivery of the said
cargo is a proper subject for arbitration under the above-quoted Clause 16.
The petitioner contends that the same was a matter within the
purview of Clause 16, particularly the phrase, ". . . or as to any other
questions, claim, right or thing whatsoever, in any way or relating to the
supply order/contract, design, drawing, specification, instruction . . .". 12 It is
argued that the foregoing phrase allows considerable latitude so as to include
non-delivery of the cargo which was a "claim, right or thing relating to the
supply order/contract". The contention is bereft of merit. First of all, the

petitioner has misquoted the said phrase, shrewdly inserting a comma

between the words "supply order/contract" and "design" where none actually
exists. An accurate reproduction of the phrase reads, ". . . or as to any other
question, claim, right or thing whatsoever, in any way arising out of or
relating to the supply order/contract design, drawing, specification,
instruction or these conditions . . ." The absence of a comma between the
words "supply order/contract" and "design" indicates that the former cannot
be taken separately but should be viewed in conjunction with the words
"design, drawing, specification, instruction or these conditions". It is thus
clear that to fall within the purview of this phrase, the "claim, right or thing
whatsoever" must arise out of or relate to the design, drawing, specification,
or instruction of the supply order/contract. The petitioner also insists that the
non-delivery of the cargo is not only covered by the foregoing phrase but also
by the phrase, ". . . or otherwise concerning the materials or the execution or
failure to execute the same during the stipulated/extended period or after
completion/abandonment thereof . . .". prLL

The
doctrine of noscitur a sociis, although
a
rule
in
the
construction of statutes, is equally applicable in the ascertainment of the
meaning and scope of vague contractual stipulations, such as the
aforementioned phrase. According to the maxim noscitur a sociis, where a
particular word or phrase is ambiguous in itself or is equally
susceptible of various meanings, its correct construction may be made clear
and specific by considering the company of the words in which it is found or
with which it is associated, or stated differently, its obscurity or doubt may be
reviewed by reference to associated words. 13 A close examination of Clause
16 reveals that it covers three matters which may be submitted to arbitration
namely,
(1) all questions and disputes, relating to the meaning of the specification
designs, drawings and instructions herein before mentioned and as to
quality ofworkmanship of the items ordered; or
(2) any other question, claim, right or thing whatsoever, in any way arising
out of or relating to the supply order/contract design, drawing, specification,
instruction or these conditions; or
(3) otherwise concerning the materials or the execution or failure to execute
the
same
during
stipulated/extended
period
or
after
the
completion/abandonment thereof.
The first and second categories unmistakably refer to questions and disputes
relating to the design, drawing, instructions, specifications or quality of the
materials ofthe supply/order contract. In the, third category, the clause,
"execution or failure to execute the same", may be read as "execution or
failure to execute the supply order/contract". But in accordance with the
doctrine of noscitur a sociis, this reference to the supply order/contract must
be construed in the light of the preceding words with which it is associated,
meaning to say, as being limited only to the design, drawing, instructions,
specifications or quality of the materials of the supply order/contract. The
non-delivery of the oil well cement is definitely not in the nature of a dispute

21

arising from the failure to execute the supply order/contract design, drawing,
instructions, specifications or quality of the materials. That Clause 16 should
pertain only to matters involving the technical aspects of the contract is but a
logical inference considering that the underlying purpose of a referral to
arbitration is for such technical matters to be deliberated upon by a person
possessed with the required skill and expertise which may be otherwise
absent in the regular courts.
This Court agrees with the appellate court in its ruling that the nondelivery of the oil well cement is a matter properly cognizable by the regular
courts as stipulated by the parties in Clause 15 of their contract:
"All questions, disputes and differences, arising under out of or in
connection with this supply order, shall be subject to the exclusive
jurisdiction of the court, within the local limits of whose jurisdiction
and the place from which this supply order is situated." 14
The following fundamental principles in the interpretation of contracts and
other instruments served as our guide in arriving at the foregoing
conclusion:
"ART.
1373. If
some
stipulation of any
contract
should
admit of several meanings, it shall be understood as bearing that
import which is most adequate to render it effectual." 15
"ART. 1374. The various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which may result
from all of them taken jointly". 16
"Sec. 11. Instrument construed so as to give effect to all provisions.
In the construction of an instrument, where there are several
provisions or particulars, such a construction is, if possible, to be
adopted as will give effect to all." 17
Thus, this Court has held that as in statutes, the provisions of a contract
should not be read in isolation from the rest of the instrument but, on the
contrary, interpreted in the light of the other related provisions. 18 The whole
and every part of a contract must be, considered in fixing the
meaning of any of its parts and in order to produce a harmonious whole.
Equally applicable is the canon of construction that in interpreting a statute
(or a contract as in this case), care should be taken that every part thereof be
given effect, on the theory that it was enacted as an integrated measure and
not as a hodge-podge of conflicting provisions. The rule is that a construction
that would render a provision inoperative should be avoided; instead,
apparently inconsistent provisions should be reconciled whenever possible as
partsof a coordinated and harmonious whole. 19
The petitioners interpretation that Clause 16 is of such latitude as to
contemplate even the non-delivery of the oil well cement would in effect
render Clause 15 a mere superfluity. A perusal of Clause 16 shows that the
parties did not intend arbitration to be the sole means of settling disputes.
This is manifest from Clause 16 itself which is prefixed with the proviso,
"Except where otherwise provided in the supply order/contract . . .", thus
indicating that the jurisdiction of the arbitrator is not all encompassing, and

admits of exceptions as maybe provided elsewhere in the supply

order/contract. We believe that the correct interpretation to give effect to
both stipulations in the contract is for Clause 16 to be confined to all claims
or disputes arising from or relating to the design, drawing, instructions,
specifications or qualityof the materials of the supply order/contract, and for
Clause 15 to cover all other claims or disputes.
The petitioner then asseverates that granting, for the sake of argument, that
the non-delivery of the oil well cement is not a proper subject for arbitration,
the failure ofthe replacement cement to conform to the specifications of the
contract is a matter clearly falling within the ambit of Clause 16. In this
contention, we find merit. When the 4,300 metric tons of oil well cement
were not delivered to the petitioner, an agreement was forged between the
latter and the private respondent that Class "G" cement would be delivered
to the petitioner as replacement. Upon inspection, however, the replacement
cement was rejected as it did not conform to the specificationsof the
contract. Only after this latter circumstance was the matter brought before
the arbitrator. Undoubtedly, what was referred to arbitration was no longer
the mere non-delivery of the cargo at the first instance but also the
failure of the replacement cargo to conform to the specifications of the
contract, a matter clearly within the coverage of Clause 16.
The private respondent posits that it was under no legal obligation to make
replacement and that it undertook the latter only "in the spirit of liberality
and to foster good business relationship". 20 Hence, the undertaking to
deliver the replacement cement and its subsequent failure to conform to
specifications are not anymore subject of the supply order/contract or
any of the provisions thereof. We disagree.
As per Clause 7 of the supply order/contract, the private respondent
undertook to deliver the 4,300 metric tons of oil well cement at "BOMBAY
(INDIA) 2181 MT and CALCUTTA 2119 MT". 21 The failure of the private
respondent to deliver the cargo to the designated places remains undisputed.
Likewise, the fact that the petitioner had already paid for the cost of the
cement is not contested by the private respondent. The private respondent
claims, however, that it never benefited from the transaction as it was not
able
to
recover
the
cargo
that
was
unloaded
at
the
port of Bangkok. 22 First of all, whether or not the private respondent was
able to recover the cargo is immaterial to its subsisting duty to make good its
promise to deliver the cargo at the stipulated place of delivery. Secondly, we
find it difficult to believe this representation. In its Memorandum filed before
this Court, the private respondent asserted that the Civil Court of Bangkok
had already ruled that the non-delivery ofthe cargo was due solely to the
fault of the carrier. 23 It is, therefore, but logical to assume that the
necessary consequence of this finding is the eventual recovery by the private
respondent of the cargo or the value thereof. What inspires credulity is not
that the replacement was done in the spirit of liberality but that it was
undertaken precisely because of the private respondent's recognition of its
duty to do so under the supply order/contract, Clause 16 of which remains in
force and effect until the full execution thereof.
We now go to the issue of whether or not the judgment of the foreign court is
enforceable in this jurisdiction in view of the private respondent's allegation

22

that it is bereft of any statement of facts and law upon which the award in
favor of the
petitioner
was
based.
The
pertinent
portion of the
judgment of the foreign court reads:
"ORDER
Award dated 23.7.88. Paper No. 3/B-1 is made Rule of the Court. On
the basis of conditions of award decree is passed. Award Paper
No. 3/B-1 shall be a part of the decree. The plaintiff shall also be
entitled to get from defendant US$899,603.77 (US$ Eight Lakhs
ninety nine thousand six hundred and three point seventy seven
only) along with 9% interest per annum till the last
date of realization." 24
As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No.
3/B-1 shall be a part of the decree". This is a categorical decoration that the
foreign courtadopted the findings of facts and law of the arbitrator as
contained in the latters Award Paper. Award Paper No. 3/B-1, contains an
exhaustive discussion of the respective claims and defenses of the parties,
and the arbitrator's evaluation of the same. Inasmuch as the foregoing is
deemed to have been incorporated into the foreign court's judgment the
appellate court was in error when it described the latter to be a "simplistic
decision containing literally, only the dispositive portion". 25

The constitutional mandate that no decision shall be rendered by

any court without expressing therein clearly and distinctly the facts and the
law on which it is based does not preclude the validity of "memorandum
decisions"
which
adopt
by
reference
the
findings of fact
and
conclusions of law
contained
in
the
decisions of inferior
tribunals.
In Francisco v. Permskul, 26 this Court held that the following memorandum
decision of the Regional Trial Court of Makati did not transgress the
requirementsof Section 14 Article VIII of the Constitution:
"MEMORANDUM DECISION
After a careful perusal, evaluation and study of the records of this
case, this Court hereby
adopts
reference
the
findings
conclusions of law contained in the decision ofthe Metropolitan
Trial Court of Makati, Metro Manila, Branch 63 and finds that there is
no cogent reason to disturb the same.
"WHEREFORE, judgment appealed from is hereby affirmed in
toto." 27 (Emphasis supplied.)
This Court had occasion to make a similar pronouncement in the earlier
case of Romero v. Court of Appeals, 28 where
the
assailed
decision of the Court of Appealsadopted
the
findings
and
disposition of the Court of Agrarian Relations in this wise:
"We have, therefore, carefully reviewed the evidence and made a reassessment of the same, and We are persuaded, nay compelled, to
affirm the correctness of the trial court's factual findings and the
soundness of its conclusion. For judicial convenience and expediency,

therefore, We hereby adopt by way of reference, the findingsof facts

and conclusions of the court a spread in its decision, as integral
part of this Our decision." 29 (Emphasis supplied)
Hence, even in this jurisdiction, incorporation by reference is allowed if only
to avoid the cumbersome reproduction of the decision of the lower courts,
or portions thereof, in the decision of the higher court. 30 This is
particularly true when the decision sought to be incorporated is a lengthy
and thorough discussion of the facts and conclusions arrived at, as in this
case, where Award Paper No. 3/B-1 consists of eighteen (18) single spaced
pages.
Furthermore, the recognition to be accorded a foreign judgment is not
necessarily affected by the fact that the procedure in the courts of the
country in which such judgment was rendered differs from that of the
courts of the country in which the judgment is relied on. 31 This Court has
held that matters of remedy and procedure are governed by the lexfori or the
internal law of the forum. 32 Thus, if under the procedural rules of the
Civil Court of Dehra Dun, India, a valid judgment may be rendered by
adopting the arbitrators findings, then the same must be accorded respect. In
the same vein, if the procedure in the foreign court mandates that an
Orderof the Court becomes final and executory upon failure to pay the
necessary docket fees, then the courts in this jurisdiction cannot invalidate
the order of the foreigncourt simply because our rules provide otherwise.
The private respondent claims that its right to due process had been
blatantly violated, first by reason of the fact that the foreign court never
answered its queries as to the amount of docket fees to be paid then refused
to admit its objections for failure to pay the same, and second,
because of the presumed bias on the part of the arbitrator who was a former
employee of the petitioner.
Time and again this Court has held that the essence of due process is to be
found in the reasonable opportunity to be heard and submit any evidence
one may have in support of one's defense 33 or stated otherwise, what is
repugnant to due process is the denial of opportunity to be heard. 34 Thus,
there is no violation of due process even if no hearing was conducted, where
the party was given a chance to explain his side of the controversy and he
waived his right to do so. 35
In the instant case, the private respondent does not deny the fact that it was
notified by the foreign court to file its objections to the petition, and
subsequently, to pay legal fees in order for its objections to be given
consideration. Instead of paying the legal fees, however, the private
respondent sent a communication to the foreigncourt inquiring about the
correct amount of fees to be paid. On the pretext that it was yet awaiting the
foreign court's reply, almost a year passed without the private respondent
paying the legal fees. Thus, on February 2, 1990, the foreign court rejected
the objections of the private respondent and proceeded to adjudicate upon
the petitioner's claims. We cannot subscribe to the private respondent's claim
that the foreign court violated its right to due process when it failed to reply
to its queries nor when the latter rejected its objections for a clearly
meritorious ground. The private respondent was afforded sufficient

23

opportunity to be heard. It was not incumbent upon the foreign court to reply
to the private respondent's written communication. On the contrary, a
genuine concern for its cause should have prompted the private respondent
to ascertain with all due diligence the correct amount of legal fees to be paid.
The private respondent did not act with prudence and diligence thus its plea
that they were not accorded the right to procedural due process cannot elicit
either approval or sympathy from this Court. 36
The private respondent bewails the presumed bias on the part of the
arbitrator who was a former employee of the petitioner. This point deserves
scant consideration in view of the following stipulation in the contract:
". . . It will be no objection to any such appointment that the
arbitrator so appointed is a commission employer (sic) that he had to
deal with the matter to which the supply or contract relates and that
in the course of his duties as Commission's employee he had
expressed views on all or any of the matter in dispute or
difference." 37(Emphasis supplied.)
Finally, we reiterate hereunder our pronouncement in the case of Northwest
Orient Airlines, Inc. v. Court of Appeals 38 that:
"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 ofthe 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 ofwant of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact. Also, under Section 3 of Rule
131, a court, whether of the Philippines or elsewhere, enjoys the
presumption that it was acting in the lawful exercise of jurisdiction
and has regularly performed its official duty." 39
Consequently, the party attacking a foreign judgment, the private
respondent herein, had the burden of overcoming the presumption of its
validity which it failed to do in the instant case.
The foreign judgment being valid, there is nothing else left to be done than to
order its enforcement, despite the fact that the petitioner merely prays for,
the remand ofthe case to the RTC for further proceedings. As this Court has
ruled on the validity and enforceability of the said foreign judgment in this
jurisdiction, further proceedings in the RTC for the reception of evidence to
prove otherwise are no longer necessary.
WHEREFORE, the instant petition is GRANTED, and the assailed
decision of the Court of Appeals sustaining
the
trial court's
dismissal of the OIL AND NATURAL GASCOMMISSION's complaint in Civil Case
No. 4006 before Branch 30 of the RTC of Surigao City is REVERSED, and
another in its stead is hereby rendered ORDERING private respondent PACIFIC

CEMENT COMPANY, INC. to pay to petitioner the amounts adjudged in the

foreign judgment subject of said case.

2. Construction & Development Corporation of the

Philippines

SO ORDERED. LLjur
JUDGMENT

7. Asiawest Merchant Bankers vs. CA, 361 SCRA 489 (2001)

DELEON, JR., J.:
Before us is a petition for review on certiorari of the Decision of the Court of
Appeals dated May 19,1993 in CA-G.R. CY No. 35871 affirming the
Decision2 dated October 14,1991 of the Regional Trial Court of Pasig, Metro
Manila, Branch 168 in Civil Case No. 56368 which dismissed the complaint of
petitioner Asiavest Merchant Bankers (M) Berhad for the enforcement of the
money of the judgment of the High Court of Malaysia in Kuala Lumpur against
private respondent Philippine National Construction Corporation.1wphi1.nt
1

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 entitled "Asiavest Merchant Bankers (M) Berhad v. Asiavest CDCP
Sdn. Bhd. and Construction and Development Corporation of the
Philippines."3
Petitioner sought to recover the indemnity of the performance bond it had
put up in favor of private respondent to guarantee the completion of the
Felda Project and the nonpayment of the loan it extended to Asiavest-CDCP
Sdn. Bhd. for the completion of Paloh Hanai and Kuantan By Pass; Project.
On September 13, 1985, the High Court of Malaya (Commercial Division)
rendered judgment in favor of the petitioner and against the private
respondent which is also designated therein as the "2nd Defendant. "
The judgment reads in full:

Plaintiffs

And

24

(i) the sum of $2,586,866.91 from the 2nd day of March 1983
to the date of payment; and
(ii) the sum of $2,521,423.32 from the 11 th day of March 1983
to the date of payment; and $350.00 (Ringgit Three Hundred
and Fifty) costs.
Dated the 13th day of September, 1985.
Senior Assistant Registrar, High Court, Kuala Lumpur
This Judgment is filed by Messrs. Skrine & Co., 3 rd Floor, Straits Trading
Building, No.4, Leboh Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs
abovenamed. (VP/Ong/81194.7/83) 4
On the same day, September 13, 1985, the High Court of Malaya issued an
Order directing the private respondent (also designated therein as the "2nd
Defendant") to pay petitioner interest on the sums covered by the said
Judgment, thus:
SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M) Berhad

Plaintiffs

1. Asiavest -CDCP Sdn. Bhd.

Between

1. Asiavest -CDCP Sdn. Bhd.

IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the
sum of $5, 108,290.23 (Ringgit Five million one hundred and eight thousand
two hundred and ninety and Sen twenty-three) together with interest at the
rate of 12% per annum on

And

SUIT NO. C638 of 1983

Asiavest Merchant Bankers (M) Berhad

The 2nd Defendant having entered appearance herein and the Court having
under Order 14, rule 3 ordered that judgment as hereinafter provided be
entered for the Plaintiffs against the 2nd Defendant.

2. Construction
Philippines

&

Development

Defendants
Corporation

of

the

BEFORE THE SENIOR ASSISTANT REGISTRAR

Defendant

CIK SUSILA S. PARAM THIS 13th DAY OF SEPTEMBER 1985

IN
CHAMBERS

ORDER
Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs
in this action AND UPON READINGthe Summons in Chambers dated the 16th
day of August, 1984 and the Affidavit of Lee Foong Mee affirmed on the 14th
day of August 1984 both filed herein AND UPON HEARING Mr. T. Thomas of
Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd
Defendant abovenamed on the 26th day of December 1984 IT WAS
ORDERED that the Plaintiffs be at liberty to sign final judgment against the
2nd Defendant for the sum of $5,108,290.23 AND IT WAS ORDERED that the
2nd Defendant do pay the Plaintiffs the costs of suit at $350.00AND IT WAS
FURTHER ORDERED that the plaintiffs be at liberty to apply for payment of
interest AND upon the application of the Plaintiffs for payment of interest
coming on for hearing on the 1st day of August in the presence of Mr.
Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of
Counsel for the 2nd Defendant above-named AND UPON HEARING Counsel as
aforesaid BY CONSENT IT WAS ORDERED that the 2nd Defendant do pay the
Plaintiffs interest at a rate to be assessed AND the same coming on for
assessment this day in the presence of Mr. Palpanaban Devarajoo of Counsel
for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant
AND UPON HEARING Counsel as aforesaid BY CONSENT IT IS ORDERED that
the 2nd Defendant do pay the Plaintiffs interest at the rate of 12% per annum
on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the
date of payment; and
(ii) the sum Of $2,521,423.32 from the 11th day of March 1983 to the
date of Payment.
Dated the 13th day of September,1985.
Senior Assistant Registrar, High Court, Kuala Lumpur. 5
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.7
Private respondent sought the dismissal of the case via a Motion to
Dismiss filed on October 5, 1988, 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.8 Dismissal was, however, denied by the trial court considering that the
grounds relied upon are not the proper grounds in a motion to dismiss under
Rule 16 of the Revised Rules of Court. 9
On
May
22,
1989,
private
respondent
filed its
Answer
with
Compulsory Counter claim's10 and therein raised the grounds it brought up in
its motion to dismiss. In its Reply filed11 on June 8, 1989, the petitioner
contended that the High Court of Malaya acquired jurisdiction over the Person
of private respondent by its voluntary submission the court's jurisdiction
through its appointed counsel, Mr. Khay Chay Tee. Furthermore, private
respondent's counsel waived any and all objections to the High Court's
jurisdiction in a pleading filed before the court.

25

In due time, the trial court rendered its Decision dated October 14, 1991
dismissing petitioner's complaint.Petitioner interposed an appeal with the
Court of Appeals, but the appellate court dismissed the same and affirmed
the decision of the trial court in a Decision dated May 19, 1993.
Hence, the instant Petition which is anchored on two (2) assigned errors, 12 to
wit:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN
COURT DID NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC,
NOTWITHSTANDING THAT (a) THE FOREIGN COURT HAD SERVED
SUMMONS ON PNCC AT ITS MALAYSlA OFFICE, AND (b) PNCC ITSELF
APPEARED BY COUNSEL IN THE CASE BEFORE THAT COURT.
II
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND
ENFORCEMENT TO (SIC) THE MALAYSIAN COURT JUDGMENT.
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;13 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.14
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 appearance of the defendant and under a
system of jurisprudence likely to secure an impartial 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. 15
A foreign judgment is presumed to be valid and binding in the country from
which it comes, until a contrary showing, on the basis of a presumption of
regularity of proceedings and the giving of due notice in the foreign forum
Under Section 50(b),16 Rule 39 of the Revised Rules of Court, which was the
governing law at the time the instant case was decided by the trial court and
respondent appellate court, a judgment, against a person, 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. In addition, under Section 3(n), Rule 131 of the
Revised Rules of Court, a court, whether in the Philippines or elsewhere,
enjoys the presumption that it was acting in the lawful exercise of its
jurisdiction. Hence, once the authenticity of the foreign judgment is proved,
the party attacking a foreign judgment, is tasked with the burden of
overcoming its presumptive validity.

In the instant case, petitioner sufficiently established the existence of the

money judgment of the High Court of Malaya by the evidence it offered.
Vinayak Prabhakar Pradhan, presented as petitioner's sole witness, testified
to the effect that he is in active practice of the law profession in
Malaysia;17 that he was connected with Skrine and Company as Legal
Assistant up to 1981; 18 that private respondent, then known as Construction
and Development Corporation of the Philippines, was sued by his client,
Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur; 19 that the writ of
summons were served on March 17, 1983 at the registered office of private
respondent and on March 21, 1983 on Cora S. Deala, a financial planning
officer of private respondent for Southeast Asia operations; 20 that upon the
filing of the case, Messrs. Allen and Gledhill, Advocates and Solicitors, with
address at 24th Floor, UMBC Building, Jalan Sulaiman, Kuala Lumpur, entered
their conditional appearance for private respondent questioning the
regularity of the service of the writ of summons but subsequently withdrew
the same when it realized that the writ was properly served; 21 that because
private respondent failed to file a statement of defense within two (2) weeks,
petitioner filed an application for summary judgment and submitted affidavits
and documentary evidence in support of its claim; 22 that the matter was then
heard before the High Court of Kuala Lumpur in a series of dates where
private respondent was represented by counsel; 23 and that the end result of
all these proceedings is the judgment sought to be enforced.
In addition to the said testimonial evidence, petitioner offered the following
documentary evidence:
(a) A certified and authenticated copy of the Judgment promulgated
by the Malaysian High Court dated September 13, 1985 directing
private respondent to pay petitioner the sum of $5,108,290.23
Malaysian Ringgit plus interests from March 1983 until fully paid; 24
(b) A certified and authenticated copy of the Order dated September
13,1985 issued by the Malaysian High Court in Civil Suit No. C638 of
1983;25
(c) Computation of principal and interest due as of January 31, 1990
on the amount adjudged payable to petitioner by private
respondent;26
(d) Letter and Statement of Account of petitioner's counsel in
Malaysia indicating the costs for prosecuting and implementing the
Malaysian High Court's Judgment;27
(e) Letters between petitioner's Malaysian counsel, Skrine and Co.,
and its local counsel, Sycip Salazar Law Offices, relative to institution
of the action in the Philippines; 28
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2,
1990 showing attorney's fees paid by and due from petitioner; 29
(g) Statement of Claim, Writ of Summons and Affidavit of Service of
such writ in petitioner's suit against private respondent before the
Malaysian High Court;30

26

(h) Memorandum of Conditional Appearance dated March 28, 1983

filed by counsel for private respondent with the Malaysian High
Court;31
(i) Summons in Chambers and Affidavit of Khaw Chay Tee, cotmsel for
private respondent, submitted during the proceedings before the
Malaysian High Court;32
(j) Record of the Court's Proceedings in Civil Case No. C638 of 1983. 33
(k) Petitioner 's verified Application for Summary Judgment dated
August 14, 1984;34 and
(l) Letter dated November 6, 1985 from petitioner's Malaysian
Counsel to private respondent's counsel in Malaysia.35
Having thus proven, through the foregoing evidence, the existence and
authenticity of the foreign judgment, said foreign judgment enjoys
presumptive validity and the burden then fell upon the party who disputes its
validity, herein private respondent, to prove otherwise.
Private respondent failed to sufficiently discharge the burden that fell upon it
- to prove by clear and convincing evidence the grounds which it relied upon
to prevent enforcement of the Malaysian High Court judgment, namely, (a)
that jurisdiction was not acquired by the Malaysian Court over the person of
private respondent due to alleged improper service of summons upon private
respondent and the alleged lack of authority of its counsel to appear and
represent private respondent in the suit; (b) the foreign judgment is allegedly
tainted by evident collusion, fraud and clear mistake of fact or law; and (c)
not only were the requisites for enforcement or recognition allegedly not
complied with but also that the Malaysian judgment is allegedly contrary to
the Constitutional prescription that the "every decision must state the facts
and law on which it is based."36
Private respondent relied solely on the testimony of its two (2) witnesses,
namely, Mr. Alfredo. Calupitan, an accountant of private respondent, and
Virginia Abelardo, Executive Secretary and a member of the staff of the
Corporate Secretariat Section of the Corporate Legal Division, of private
respondent, both of whom failed to shed light and amplify its defense or
claim for non-enforcement of the foreign judgment against it.
Mr. Calupitan's testimony centered on the following: that from January to
December 1982 he was assigned in Malaysia as Project Comptroller of the
Pahang Project Package A and B for road construction under the joint venture
of private respondent and Asiavest Holdings;37 that under the joint venture,
Asiavest Holdings would handle the financial aspect of the project, which is
fifty-one percent (51 %) while private respondent would handle the technical
aspect of the project, or forty-nine percent (49%); 38 and, that Cora Deala was
not authorized to receive summons for and in behalf of the private
respondent.39 Ms. Abelardo's testimony, on the other hand, focused on the
following: that there was no board resolution authorizing Allen and Gledhill to
admit all the claims of petitioner in the suit brought before the High Court of
Malaya,40 though on cross-examination she admitted that Allen and Gledhill
were the retained lawyers of private respondent in Malaysia. 41

The foregoing reasons or grounds relied upon by private respondent in

preventing enforcement and recognition of the Malaysian judgment primarily
refer to matters of remedy and procedure taken by the Malaysian High Court
relative to the suit for collection initiated by petitioner. Needless to stress, the
recognition to be accorded a foreign judgment is not necessarily affected by
the fact that the procedure in the courts of the country in which such
judgment was rendered differs from that of the courts of the country in which
the judgment is relied on.42Ultimately, matters of remedy and procedure such
as those relating to the service of summons or court process upon the
defendant, the authority of counsel to appear and represent a defendant and
the formal requirements in a decision are governed by the lex fori or the
internal law of the forum,43 i.e., the law of Malaysia in this case.
In this case, it is the procedural law of Malaysia where the judgment was
rendered that determines the validity of the service of court process on
private respondent as well as other matters raised by it. As to what the
Malaysian procedural law is, remains a question of fact, not of law. It may not
be taken judicial notice of and must be pleaded and proved like any other
fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide
that it may be evidenced by an official publication or by a duly attested or
authenticated copy thereof. It was then incumbent upon private respondent
to present evidence as to what that Malaysian procedural law is and to show
that under it, the assailed service of summons upon a financial officer of a
corporation, as alleged by it, is invalid. It did not. Accordingly, the
presumption of validity and regularity of service of summons and the decision
thereafter rendered by the High Court of Malaya must stand.44
On the matter of alleged lack of authority of the law firm of Allen and Gledhill
to represent private respondent, not only did the private respondent's
witnesses admit that the said law firm of Allen and Gledhill were its counsels
in its transactions in Malaysia, 45 but of greater significance is the fact that
petitioner offered in evidence relevant Malaysian jurisprudence 46 to the effect
that (a) it is not necessary under Malaysian law for counsel appearing before
the Malaysian High Court to submit a special power of attorney authorizing
him to represent a client before said court, (b) that counsel appearing before
the Malaysian High Court has full authority to compromise the suit, and (c)
that counsel appearing before the Malaysian High Court need not comply
with certain pre-requisites as required under Philippine law to appear and
compromise judgments on behalf of their clients before said court. 47
Furthermore, there is no basis for or truth to the appellate court's conclusion
that the conditional appearance of private respondent's counsel who was
allegedly not authorized to appear and represent, cannot be considered as
voluntary submission to the jurisdiction of the High Court of Malaya,
inasmuch as said conditional appearance was not premised on the alleged
lack of authority of said counsel but the conditional appearance was entered
to question the regularity of the service of the writ of summons. Such
conditional appearance was in fact subsequently withdrawn when counsel
realized that the writ was properly served. 48
On the ground that collusion, fraud and, clear mistake of fact and law tainted
the judgment of the High Court of Malaya, no clear evidence of the same was
adduced or shown. The facts which the trial court found "intriguing"
amounted to mere conjectures and specious observations. The trial court's

27

finding on the absence of judgment against Asiavest-CDCP Sdn. Bhd. is

contradicted by evidence on record that recovery was also sought against
Asiavest-CDCP Sdn. Bhd. but the same was found insolvent. 49 Furthermore,
even when the foreign judgment is based on the drafts prepared by counsel
for the successful party, such is not per se indicative of collusion or fraud.
Fraud to hinder the enforcement within the jurisdiction of a foreign judgment
must be extrinsic, i.e., fraud based on facts not controverted or resolved in
the case where judgment is rendered, 50 or that which would go to the
jurisdiction of the court or would deprive the party against whom judgment is
rendered a chance to defend the action to which he has a meritorious
defense.51 Intrinsic fraud is one which goes to the very existence of the cause
of action is deemed already adjudged, and it, therefore, cannot militate
against the recognition or enforcement of the foreign judgment. 52 Evidence is
wanting on the alleged extrinsic fraud. Hence, such unsubstantiated
allegation cannot give rise to liability therein.
Lastly, there is no merit to the argument that the foreign judgment is not
enforceable in view of the absence of any statement of facts and law upon
which the award in favor of the petitioner was based. As aforestated, the lex
fori or the internal law of the forum governs matters of remedy and
procedure.53 Considering that under the procedural rules of the High Court of
Malaya, a valid judgment may be rendered even without stating in the
judgment every fact and law upon which the judgment is based, then the
same must be accorded respect and the courts in the jurisdiction cannot
invalidate the judgment of the foreign court simply because our rules provide
otherwise.
All in all, private respondent had the ultimate duty to demonstrate the
alleged invalidity of such foreign judgment, being the party challenging the
judgment rendered by the High Court of Malaya. But instead of doing so,
private respondent merely argued, to which the trial court agreed, that the
burden lay upon petitioner to prove the validity of the money judgment. Such
is clearly erroneous and would render meaningless the presumption of
validity accorded a foreign judgment were the party seeking to enforce it be
required to first establish its validity.54
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of
Appeals dated May 19,1993 in CA-G.R CY No. 35871 sustaining the Decision
dated October 14, 1991 in Civil Case No. 56368 of the Regional Trial Court of
Pasig, Branch 168 denying the enforcement of the Judgment dated
September 13, 1985 of the High Court of Malaya in Kuala Lumpur
is REVERSED and SET ASIDE, and another in its stead is hereby
renderedORDERING private respondent Philippine National Construction
Corporation to pay petitioner Asiavest Merchant Bankers (M) Berhad the
amounts adjudged in the said foreign Judgment, subject of the said case.
Costs against the private respondent.
SO ORDERED.

U.S.A., engaged in the business of manufacturing and selling computers

worldwide. In the Philippines, petitioner sells its products to EXXBYTE
TECHNOLOGIES CORPORATION, hereinafter referred to as EXXBYTE, its
exclusive distributor. EXXBYTE is a domestic corporation engaged in the
business of selling computer products to the public in its own name for its
own account (Petitioner's Brief, p. 2; Rollo, pp. 268-319).
Angara, Concepcion, Regala & Cruz Law Offices (hereinafter referred to as
ACCRALAW for brevity) is a duly registered professional partnership (Rollo, p.
4).
On September 10, 1980, respondent ACCRALAW entered into a contract with
EXXBYTE for acquisition and installation of a Wang 2200 US Integrated
Information System at the former's office. As stipulated in the above-said
contract, a letter of credit for US$ 86,142.55 was thereafter opened by
ACCRALAW in favor of petitioner herein to pay for the Wang 2200 US System.
Sometime in May 1981, the hardware was delivered and installed by
EXXBYTE in ACCRALAW's office (Rollo, p. 151).
On June 10, 1981, ACCRALAW and EXXBYTE entered into another contract for
the development of a data processing software program needed to
computerize the ACCRALAW office (Petitioner's Brief, p. 2).
Subsequent thereto and for one reason or the other, the contract for the
development of a data processing software program or ISLA was not
implemented.
On May 7, 1984, ACCRALAW filed a complaint for breach of contract with
damages, replevin and attachment against herein petitioner (Rollo, p. 152), in
Civil Case No. 7183 of the Regional Trial Court, Makati (Petitioner's Brief, p. 3).
On May 23, 1984, petitioner filed a Motion to Dismiss the complaint on the
ground that there was improper service of summons, hence, the court below
had not obtained jurisdiction over the person of the petitioner (Petitioner's
Brief, p. 3).

8. Wang Laboratories vs. Mendoza, 156 SCRA 44 (1987)

PARAS, J.:
This is a petition for Certiorari, Prohibition and mandamus with Preliminary
Injunction, seeking: (1) to annul and set aside the order issued by the
Regional Trial Court of Makati, Branch CXXXIV, * ruling that (a) petitioner had
voluntarily submitted itself to the jurisdiction of the respondent court, and (b)
granting respondents' Ex Abundante Cautela Motion for Leave to Effect
Extraterritorial Jurisdiction; (2) to prohibit respondent Court from proceeding
further in Civil Case No. 7183; and (3) to order the same Court to pass upon
the legal and factual issues raised in petitioner's Motion to Dismiss.
The factual background of this case is as follows:
Petitioner is a corporation duly organized under the laws of the United States
with principal address at One Industrial Avenue, Lowell, Massachusetts,

28

On July 13, 1984, petitioner filed a Motion for Deposition by Oral Examination
for the purpose of presenting testimonial evidence in support of its motion to
dismiss. The respondent court thereafter ordered the taking of the deposition
by way of oral examination.
On February 21, 1985, petitioner filed its reply to the opposition to motion to
dismiss (Petitioner's Brief, P. 3).
On March 29, 1985, ACCRALAW filed an Ex-Abundante Cautela Motion for
leave to Effect Extraterritorial Service of Summons on petitioner.
In an order dated April 24, 1985, respondent Judge Mendoza, among others,
granted the Ex-Abundante Cautela Motion to Effect Extraterritorial Service of
Summons, denied the petitioner's motion to dismiss on the ground that it had
voluntarily submitted itself to the jurisdiction of the court, and thus declined
to consider the legal and factual issues raised in the Motion to Dismiss.
Hence, this petition.
In the resolution of October 7, 1985, the Second Division of this Court without
giving due course to the petition resolved to require respondents to comment

and to issue a temporary restraining order enjoining respondent Judge from

further proceeding with Civil Case No. 7183 (Rollo, pp. 138-139).
On October 31, 1985, private respondents submitted their comment (Rollo,
pp. 147-178). In the resolution of January 13, 1986, the Court resolved to give
due course to the petition (Rollo, p. 187-A). In the resolution of February 5,
1986, the Court granted petitioner's motion to admit reply to comment and
noted aforesaid reply. Petitioner submitted its brief on September 15, 1986
(Rollo, p. 268); the respondents, on November 15, 1986 (Rollo, p. 272).
Petitioner assigns the following errors:
I.
RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN RULING THAT PETITIONER HAD VOLUNTARILY SUBMITTED
TO THE JURISDICTION OF THE COURT BELOW.
II
RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN RULING THAT ACCRALAW CAN SERVE SUMMONS ON
PETITIONER EXTRA-TERRITORIALLY.
III
RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN NOT HOLDING THAT THERE WAS IMPROPER SERVICE OF
SUMMONS ON PETITIONER.
The petition is devoid of merit.
The only issue in this case is whether or not respondent Court has acquired
jurisdiction over the person of the petitioner, a foreign corporation.
In its Motion to Dismiss, petitioner interposed that the court has no
jurisdiction over its person primarily because it is a United States corporation
with principal address at One Industrial Avenue, Lowell, Massachusetts,
U.S.A., is not domiciled in the Philippines, does not have any office or place of
business in the Philippines, is not licensed to engage and is not engaging in
business here. EXXBYTE upon whom summons was served on behalf of this
defendant is a local company entirely separate and distinct from and is not
the representative of the defendant (Rollo, pp. 57-60).
Petitioner's contention is untenable. The issue is not novel in our jurisdiction.
There are three (3) modes of effecting service of summons upon private
foreign corporations as provided for in Section 14, Rule 7 of the Rules of
Court, to wit: (1) by serving upon the agent designated in accordance with
law to accept service of summons; (2) if there is no resident agent, by service
on the government official designated by law to that office; and (3) by
serving on any officer or agent of said corporation within the Philippines (Far
East Int'l. Import and Export Corp. v. Nankai Kogyo Co., Ltd., 6 SCRA 725
[1962]).

29

Summons intended for the petitioner was served on EXXBYTE at the 3rd.
Floor, Zeta Building, 191 Salcedo Street, Legaspi Village, Makati, Metro Manila
(Rollo, p. 57) as its duly authorized and exclusive representative and
distributor in the Philippines (Rollo, p. 24 and p. 149). Petitioner opposed such
service and filed a Motion to Dismiss on the ground of lack of jurisdiction on
its person, being a foreign corporation not engaged in business in the
Philippines. Evidence presented by private respondent however, shows that
contrary to petitioner's allegations, the various public advertisements of
WANG and EXXBYTE clearly show that Wang has appointed EXXBYTE, which is
domiciled in the Philippines, as its authorized exclusive representative in this
country. In fact, WANG represents that its office in the Philippines is EXXBYTE,
while the letterhead of EXXBYTE and its invoices show that it is WANG's
representative. (Rollo, p. 65). Moreover, in its Reply to Opposition to Motion to
Dismiss, WANG itself admitted that it deals exclusively with EXXBYTE in the
sale of its products in the Philippines (Rollo, pp. 79 and 154).
In any event, as previously stated, private respondent moved further, ex
abundante cautela, for leave to effect extraterritorial service of summons on
petitioner WANG. Private respondent presented to the Court documentary
evidence proving that the defendant Wang has properties in the Philippines
consisting of trademarks registered with the Philippine Patent Office and that
WANG designated Rafael E. Evangelists of 638 Philippine Banking Building,
Ayala Avenue, Makati, Metro Manila as its Resident Agent upon whom notice
or process affecting the mark may be served. The same counsel represented
petitioner in the oral deposition of Mr. Yeoh Asia Controller for Wang
Laboratories (Annex "S," Petition). Private respondent further showed that
said trademarks have been judicially attached (Rollo, p. 110). Petitioner in its
Rejoinder to ACCRALAW's Reply, prays for the issuance of an order holding in
abeyance any and all proceedings relative to ACCRALAW's motion for leave of
court to effect extraterritorial service of summons (Rollo, p. 155).
Petitioner insists on its argument that extra-judicial summons or any kind
thereof cannot bind the petitioner inasmuch as it is not doing business in the
Philippines nor is it licensed to do business in the country.
In the cases of Mentholatum Co., Inc. v. Mangaliman (72 Phil. 524 119411
and Topweld Manufacturing, Inc. v. Eced S.A. et al., 138 SCRA 118 [1985]), it
was held that no general rule or governing principle can be laid down as to
what constitutes doing or "engaging" or "trading" in business. Indeed each
case must be judged in the light of its peculiar environmental circumstances;
upon peculiar facts and upon the language of the Statute applicable (Far East
Int'l. Import Export Corp. v. Nankai Kogyo, Co., Ltd. (6 SCRA 725 [1962]).
Under the circumstances; petitioner cannot unilaterally declare that it is not
doing business in the Philippines. In fact, it has installed, at least 26 different
products in several corporations in the Philippines since 1976 (Respondent's
Brief, Rollo, p. 272). It has registered its trade name with the Philippine
Patents Office (ibid) and Mr. Yeoh who is petitioner's controller in Asia has
visited the office of its distributor for at least four times where he conducted
training programs in the Philippines (Oral Deposition, pp. 16; 22-23, Rollo, pp.
335; 341-342, Annex "S" to Petitioner's Brief). Wang has allowed its
registered logo and trademark to be used by EXXBYTE (Pran Deposition, p.
23, Rollo, p. 342) and made it known that there exists a designated
distributor in the Philippines as published in its advertisements.

Indeed it has been held that "where a single act or transaction of a foreign
corporation is not merely incidental or casual but is of such character as
distinctly to indicate a purpose to do other business in the State, such act
constitutes doing business within the meaning of statutes prescribing the
conditions under which a foreign corporation may be served with summons
(Far East Int'l. Import and Export Corp. v. Nankai Kogyo Co. Ltd., 6 SCRA 725
[1962]).

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, with

costs against the petitioner. The temporary restraining order is hereby lifted
immediately.
SO ORDERED.

Be that as it may, the issue on the suability of foreign corporation whether or

not doing business in the Philippines has already been laid to rest. The Court
has categorically stated that although a foreign corporation is not doing
business in the Philippines, it may be sued for acts done against persons in
the Philippines. The Court has ruled as follows:
Indeed if a foreign corporation, not engaged in business in
the Philippines, is not barred from seeking redress from
courts in the Philippines, a fortiori, that same corporation
cannot claim exemption from being sued in Philippine courts
for acts done against a person or persons in the Philippines
(Facilities Management Corporation v. De la Osa, 89 SCRA
131 [1979]).
Furthermore, even though petitioner objects to the jurisdiction of the Court
over its person, the fact that it alleged non-jurisdictional grounds in its
pleadings indicates that it has waived lack of jurisdiction of the court.
As noted by the trial court, defendant Wang (petitioner herein) in its Motion
to Dismiss sought affirmative reliefs requiring the exercise of jurisdiction, by
praying: (1) for authority to take testimony by way of deposition upon oral
examination; (2) for extension of time to file opposition to plaintiffs' motion to
effect Extraterritorial Service of Summons; (3) to hold in abeyance any and
all proceedings relative to plaintiffs' foregoing motion and (4) to consider as a
mere scrap of paper plaintiff's motion to strike out Deposition (Rollo, p. 111).
In addition, the records show that petitioner also prayed for: (1) authority to
reset date of taking of deposition; (2) admission of the formal stenographic
notes and (3) suspension of time to file responsive pleadings, not to mention
its various participation in the proceedings in the court other than for the
purpose of objecting to lack of jurisdiction (Rollo, p. 169).
In fact, it is well settled that "A voluntary appearance is a waiver of the
necessity of formal notice." Thus, it has been held that when the appearance
is by motion for the purpose of objecting to the jurisdiction of the court over
the person it must be for the sole and separate purpose of objecting to the
jurisdiction of the Court. If the appearance is for any other purpose, the
defendant is deemed to have submitted himself to the jurisdiction of the
court. Such an appearance gives the court jurisdiction over the person (Flores
v. Zurbito, 37 Phil. 746 [1918]). Clarifying further, the Court has likewise ruled
that even though the defendant objects to the jurisdiction of the Court, if at
the same time he alleges any non-jurisdictional ground for dismissing the
action, the Court acquires jurisdiction over him (Far East International Import
& Export Corporation v. Nankai Kogyo, Co., Ltd., 6 SCRA 725 11962]).

9. Royal Crown International vs. NLRC

CORTES, J.:

30

Petitioner Royal Crown Internationale seeks the nullification of a resolution of

the National Labor Relations Commission (NLRC) which affirmed a decision of
the Philippine Overseas Employment Administration (POEA) holding it liable
to pay, jointly and severally with Zamel-Turbag Engineering and Architectural
Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary and
vacation pay corresponding to the unexpired portion of his employment
contract with ZAMEL.
In 1983, petitioner, a duly licensed private employment agency, recruited
and deployed private respondent for employment with ZAMEL as an
architectural draftsman in Saudi Arabia. On May 25, 1983, a service
agreement was executed by private respondent and ZAMEL whereby the
former was to receive per month a salary of US$500.00 plus US$100.00 as
allowance for a period of one (1) year commencing from the date of his
arrival in Saudi Arabia. Private respondent departed for Saudi Arabia on June
28,1983.
On February 13, 1984, ZAMEL terminated the employment of private
respondent on the ground that his performance was below par. For three (3)
successive days thereafter, he was detained at his quarters and was not
allowed to report to work until his exit papers were ready. On February 16,
1984, he was made to board a plane bound for the Philippines.
Private respondent then filed on April 23, 1984 a complaint for illegal
termination against petitioner and ZAMEL with the POEA, docketed as POEA
Case No. (L) 84-04-401.
Based on a finding that petitioner and ZAMEL failed to establish that private
respondent was terminated for just and valid cause, the Workers' Assistance
and Adjudication Office of the POEA issued a decision dated June 23, 1986
signed by Deputy Administrator and Officer-in-Charge Crescencio M.
Siddayao, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the
complainant and against respondents, ordering the latter to
pay, jointly and severally, to complainant the following
amounts:

Complainant's claim for legal and transportation expenses

are hereby DISMISSED for lack of merit.
SO ORDERED.
[POEA Decision, p. 5; Rollo, p. 34.]
On July 18, 1986, petitioner filed thru its new counsel a motion for
reconsideration which was treated as an appeal to the NLRC by the POEA.
Petitioner alleged that the POEA erred in holding it solidarity liable for
ZAMEL's violation of private respondent's service agreement even if it was
not a party to the agreement.
In a resolution promulgated on December 11, 1986, the NLRC affirmed the
POEA decision, holding that, as a duly licensed private employment agency,
petitioner is jointly and severally liable with its foreign principal ZAMEL for all
claims and liabilities which may arise in connection with the implementation
of the employment contract or service agreement [NLRC Decision, pp. 3-4;
Rollo, pp. 26-27].
On March 30, 1987, the NLRC denied for lack of merit petitioner's motion for
reconsideration.
Hence, petitioner filed the present petition captioned as "Petition for Review".
At this point, it is not amiss to note that the filing of a "Petition for Review"
under Rule 45 of the Rules of Court is not the proper means by which NLRC
decisions are appealed to the Supreme Court. It is only through a petition
for certiorari under Rule 65 that NLRC decisions may be reviewed and
nullified on the grounds of lack of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction. Nevertheless, in the interest of
justice, this Court opted to treat the instant petition as if it were a petition
for certiorari. Thus, after the filing of respondents' comments, petitioner's
joint reply thereto, and respondents' rejoinders, the Court resolved to
consider the issues joined and the case submitted for decision.
The case at bar involves two principal issues, to wit:
I. Whether or not petitioner as a private employment agency
may be held jointly and severally liable with the foreignbased employer for any claim which may arise in connection
with the implementation of the employment contracts of the
employees recruited and deployed abroad;

1. TWO THOUSAND SIX HUNDRED FORTY US DOLLARS

(US$2,640.00) or its equivalent in Philippine currency at the
time of payment, representing the salaries corresponding to
the unexpired portion of complainant's contract;
2. SIX HUNDRED US DOLLARS (US$ 600.00) less partial
payment of FIVE HUNDRED FIFTY-EIGHT SAUDI RIYALS
(SR558), or its equivalent in Philippine currency at the time of
actual payment, representing the unpaid balance of
complainant's vacation pay;
3. THREE HUNDRED FIFTY US DOLLARS (US$350.00) or its
equivalent in Philippine currency at the time of actual
payment representing reimbursement of salary deductions
for return travel fund;
4. Ten percent (10%) of the above-stated amounts, as and for
attorney's fees.

31

II. Whether or not sufficient evidence was presented by

petitioner to establish the termination of private respondent's
employment for just and valid cause.
I.
Petitioner contends that there is no provision in the Labor Code, or the
omnibus rules implementing the same, which either provides for the "thirdparty liability" of an employment agency or recruiting entity for violations of
an employment agreement performed abroad, or designates it as the agent
of the foreign-based employer for purposes of enforcing against the latter
claims arising out of an employment agreement. Therefore, petitioner
concludes, it cannot be held jointly and severally liable with ZAMEL for
violations, if any, of private respondent's service agreement.

Petitioner's conclusion is erroneous. Petitioner conveniently overlooks the fact

that it had voluntarily assumed solidary liability under the various contractual
undertakings it submitted to the Bureau of Employment Services. In applying
for its license to operate a private employment agency for overseas
recruitment and placement, petitioner was required to submit, among others,
a document or verified undertaking whereby it assumed all responsibilities for
the proper use of its license and the implementation of the contracts of
employment with the workers it recruited and deployed for overseas
employment [Section 2(e), Rule V, Book 1, Rules to Implement the Labor
Code (1976)]. It was also required to file with the Bureau a formal
appointment or agency contract executed by the foreign-based employer in
its favor to recruit and hire personnel for the former, which contained a
provision empowering it to sue and be sued jointly and solidarily with the
foreign principal for any of the violations of the recruitment agreement and
the contracts of employment [Section 10 (a) (2), Rule V, Book I of the Rules to
Implement the Labor Code (1976)]. Petitioner was required as well to post
such cash and surety bonds as determined by the Secretary of Labor to
guarantee compliance with prescribed recruitment procedures, rules and
regulations, and terms and conditions of employment as appropriate [Section
1 of Pres. Dec. 1412 (1978) amending Article 31 of the Labor Code].
These contractual undertakings constitute the legal basis for holding
petitioner, and other private employment or recruitment agencies, liable
jointly and severally with its principal, the foreign-based employer, for all
claims filed by recruited workers which may arise in connection with the
implementation of the service agreements or employment contracts
[See Ambraque International Placement and Services v. NLRC, G.R. No.
77970, January 28, 1988, 157 SCRA 431; Catan v. NLRC, G.R. No. 77279, April
15, 1988, 160 SCRA 691; Alga Moher International Placement Services v.
Atienza, G.R. No. 74610, September 30, 1988].
In a belated attempt to bolster its position, petitioner contends in its joint
reply that the omnibus rules implementing the Labor Code are invalid for not
having been published in the Official Gazette pursuant to the Court's
pronouncements in the cases of Tanada v. Tuvera [G.R. No. 63915, April 25,
1985, 136 SCRA 27; December 29, 1986, 146 SCRA 446]. Petitioner further
contends that the 1985 POEA Rules and Regulations, in particular Section 1,
Rule I of Book VII** quoted in the NLRC decision, should not have been
retroactively applied to the case at bar.
But these contentions are irrelevant to the issues at bar. They proceed from a
misapprehension of the legal basis of petitioner's liabilities as a duly licensed
private employment agency. It bears repeating that the basis for holding
petitioner jointly and severally liable with the foreign-based employer ZAMEL
is the contractual undertakings described above which it had submitted to
the Bureau of Employment Services. The sections of the omnibus rules
implementing the Labor Code cited by this Court merely enumerate the
various documents or undertakings which were submitted by petitioner as
applicant for the license to operate a private employment agency for
overseas recruitment and placement. These sections do not create the
obligations and liabilities of a private employment agency to an employee it
had recruited and deployed for work overseas. It must be emphasized again
that petitioner assumed the obligations and liabilities of a private

32

employment agency by contract. Thus, whether or not the omnibus rules are
effective in accordance with Tanada v. Tuvera is an issue the resolution of
which does not at all render nugatory the binding effect upon petitioner of its
own contractual undertakings.
The Court, consequently, finds it unnecessary to pass upon both the
implications of Tanada v. Tuvera on the omnibus rules implementing the
Labor Code as well as the applicability of the 1985 POEA Rules and
Regulations.
Petitioner further argues that it cannot be held solidarily liable with ZAMEL
since public respondent had not acquired jurisdiction over ZAMEL through
extra-territorial service of summons as mandated by Section 17, Rule 14 of
the Rules of Court.
This argument is untenable. It is well-settled that service upon any agent of a
foreign corporation, whether or not engaged in business in the Philippines,
constitutes personal service upon that corporation, and accordingly,
judgment may be rendered against said foreign corporation [Facilities
Management Corporation v. De la Osa, G.R. No. L-38649, March 26, 1979, 89
SCRA 131]. In the case at bar, it cannot be denied that petitioner is an agent
of ZAMEL. The service agreement was executed in the Philippines between
private respondent and Milagros G. Fausto, the General Manager of
petitioner, for and in behalf of ZAMEL [Annex "D" of Petition, p. 3; Rollo, p.
37]. Moreover, one of the documents presented by petitioner as evidence,
i.e., the counter-affidavit of its General Manager Ms. Fausto, contains an
admission that it is the representative and agent of ZAMEL [SeeParagraph No.
1 of Annex "H" of Petition; Rollo. p. 43].
Considering the foregoing, the Court holds that the NLRC committed no grave
abuse of discretion amounting to lack or excess of jurisdiction in declaring
petitioner jointly and severally liable with its foreign principal ZAMEL for all
claims which have arisen in connection with the implementation of private
respondent's employment contract.
II.
Petitioner asserts that the NLRC failed to consider the overwhelming evidence
it had presented before the POEA which establishes the fact that private
respondent was terminated for just and valid cause in accordance with his
service agreement with ZAMEL.
This assertion is without merit. The NLRC upheld the POEA finding that
petitioner's evidence was insufficient to prove termination from employment
for just and valid cause. And a careful study of the evidence thus far
presented by petitioner reveals to this Court that there is legal basis for
public respondent's conclusion.
It must be borne in mind that the basic principle in termination cases is that
the burden of proof rests upon the employer to show that the dismissal is for
just and valid cause, and failure to do so would necessarily mean that the
dismissal was not justified and, therefore, was illegal [Polymedic General
Hospital v. NLRC, G.R. No. 64190, January 31, 1985,134 SCRA 420; and also
Article 277 of the Labor Code]. And where the termination cases involve a
Filipino worker recruited and deployed for overseas employment, the burden
naturally devolves upon both the foreign-based employer and the

employment agency or recruitment entity which recruited the worker, for the
latter is not only the agent of the former, but is also solidarily liable with its
foreign principal for any claims or liabilities arising from the dismissal of the
worker.
In the case at bar, petitioner had indeed failed to discharge the burden of
proving that private respondent was terminated from employment for just
and valid cause. Petitioner's evidence consisted only of the following
documents:
(1) A letter dated May l5, 1984 allegedly written by an official
of ZAMEL, stating that a periodic evaluation of the entire staff
was conducted; that the personnel concerned were given a
chance to improve; that complainant's performance was
found below par; and that on February 13,1984, at about 8:30
AM, complainant was caught on the way out of the office to
look for another job during office hours without the
permission of his supervisor;
(2) A telex message allegedly sent by employees of ZAMEL,
stating that they have not experienced maltreatment, and
that the working conditions (in ZAMEL) are good;
(3) The signatures of fifteen (15) persons who allegedly sent
the telex message;
(4) A receipt dated February 16, 1984 signed by complainant,
stating that he was paid SR915 representing his salary and
SR558, representing vacation pay for the month of February
1984;
(5) The counter-affidavit of Milagros G. Fausto, the General
Manager of Royal Crown, stating that complainant was
dismissed because of poor performance, acts of dishonesty
and misconduct, and denying complainant's claim that his
salary and leave pay were not paid, and that he was
maltreated [See POEA Decision, p. 3; Rollo, p. 32, See also
Annexes "E", "F", "F-1 ", "G" and "H" of Petition; Rollo, pp. 3843].
Certainly, the telex message supposedly sent by the employees of ZAMEL is
not relevant in the determination of the legality of private respondent's
dismissal. On the other hand, the receipt signed by private respondent does
not prove payment to him of the salary and vacation pay corresponding to
the unexpired portion of his contract.
More importantly, except for its allegation that private respondent was
caught on February 13,1984 on his way out of the office compound without
permission, petitioner had failed to allege and to prove with particularity its
charges against private respondent. The letter dated May 15, 1984 allegedly
written by the Actg. Project Architect and the counter-affidavit of petitoner's
General Manager merely stated that the grounds for the employee's
dismissal were his unsatisfactory performance and various acts of
dishonesty, insubordination and misconduct. But the particular acts which
would indicate private respondent's incompetence or constitute the above
infractions were neither specified nor described therein. In the absence of

33

any other evidence to substantiate the general charges hurled against

private respondent, these documents, which comprise petitioner's evidence
in chief, contain empty and self-serving statements insufficient to establish
just and valid cause for the dismissal of private respondent [See Euro-Lines,
Phils., Inc. v. NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78;
Ambraque International Placement and Services v. NLRC, supra].
The Court is aware of the document attached in petitioner's manifestation
and joint reply which is purportedly a xerox copy of a statement executed on
December 13, 1987 in Saudi Arabia by private respondent claiming that the
latter had settled the case with ZAMEL and had "received all [his] benefits
that is salary, vacation pay, severance pay and all other bonuses before [he]
left the kingdom of Saudi Arabia on 13 Feb. 1984 and hereby indemnify
[ZAMEL] from any claims or liabilities, [he] raised in the Philippine Courts"
[Annex "A" of petitioner's Manifestation with Motion to hold in Abeyance;
Rollo, p. 82. And also Annex "A" of petitioner's Joint Reply; Rollo, p. 111].
But the veracity of the contents of the document is precisely disputed by
private respondent. He claims that he was made to sign the above statement
against his will and under threat of deportation [See Telex of private
respondent received by the Supreme Court of the Philippines on January
14,1988; Rollo, p. 83. And also private respondent's Rejoinder, pp. 1-3; Rollo,
pp. 139-141].
Petitioner finally contends that inasmuch as clause no. 13 of the service
agreement provided that the law under which the agreement shall be
regulated was the laws of Saudi Arabia [Annex "D" of Petition, p. 2; Rollo, p.
36], public respondent should have taken into account the laws of Saudi
Arabia and the stricter concept of morality availing in that jurisdiction for the
determination of the legality of private respondent's dismissal.
This contention is patently erroneous. The provisions of the Labor Code of the
Philippines, its implementing rules and regulations, and doctrines laid down
in jurisprudence dealing with the principle of due process and the basic right
of all Filipino workers to security of tenure, provide the standard by which the
legality of the exercise by management of its prerogative to dismiss
incompetent, dishonest or recalcitrant employees, is to be determined.
Whether employed locally or overseas, all Filipino workers enjoy the
protective mantle of Philippine labor and social legislation, contract
stipulations to the contrary notwithstanding. This pronouncement is in
keeping with the basic public policy of the State to afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between workers and employers. For
the State assures the basic rights of all workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work
[Article 3 of the Labor Code of the Philippines; See also Section 18, Article II
and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered
imperative by Article 17 of the Civil Code which states that laws "which have
for their object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by determination
or conventions agreed upon in a foreign country."

Needless to say, the laws of Saudi Arabia which were, incidentally, neither
pleaded nor proved by petitioner, have absolutely no bearing whatsoever to
the case at bar.
The Court holds, therefore, that the NLRC committed no grave abuse of
discretion amounting to lack or excess of jurisdiction in upholding the POEA's
finding of insufficiency of evidence to prove termination for just and valid
cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.
SO ORDERED.

(d) "All legal settlements within the compass of this AGREEMENT shall fall
under the jurisdiction of Philippine courts."
It appears that, subsequently, the DMW interests were acquired by LINGNER
& FISHER GMBH LINGNER for brevity). On other hand, LINGNER was a
subsidiary of
BEECHAM GROUP LTD. which, through BEECHAM PRODUCTS INTERNATIONAL
(BEECHAM, for brevity), had opened an office in this country at Unit A, Padilla
Building, Emerald Avenue, Pasig, Metro Manila, under the supervision or
managership of one named TANNER. LINGNER and BEECHAM can be deemed
to constitute a single personality. Subsequent reference to LINGNER will
include reference to DMW and BEECHAM.
The AGREEMENT was automatically renewed once, or up to February 28,
1973, and finally terminated on August 31, 1977. The events relative to the
termination were as follows:
Before February 28, 1973, the parties agreed to extend the AGREEMENT up
to February 28, 1975. If it is not terminated by prior notice six months before
February 28, 1975, as it was not, it would be extended for a further two years
up to February 28, 1977.

10. Longer& Fisher GMBH vs. CA

MELENCIO-HERRERA, J.:
The factual background of this case may be stated as follows: DEUTCHE
MILCHWERKE DR. A. SAUER (DMW for brevity) was a firm in West Germany
manufacturing PRODUCTS (probably chemicals) under the trademarks
FISSAN, etc. Private respondent Philippine Chemical Laboratories, Inc.
(PHILCHEM, for brevity) is a local company which apparently also
manufactures and sells chemicals.
On February 28, 1963, DMW and PHILCHEM executed a so-called Agency
AGREEMENT the basic provision of which was that PHILCHEM would be the
exclusive importer of the PRODUCTS into the Philippines. The benefit to
PHILCHEM would be the profits realized from re-sale in this country of
imported PRODUCTS. Other relevant provisions, generally stated, were that:
(a) The term of the AGREEMENT was five years renewable automatically for
five years each time unless one party gives due notice of termination to the
other.
(b) PHILCHEM could manufacture the PRODUCTS locally with raw materials
from sources other than LINGNER, but in such case DMW will have to be paid
5% of 80% of PHILCHEM's wholesale prices.
(c) After termination of the AGREEMENT, PHILCHEM will be entitled, for five
years, to 10% royalty on sales of PRODUCTS in the Philippines (hereinafter to
be referred to as the ROYALTY CLAUSE).

34

By letter dated February 25, 1977, through the law firm of Ozaeta Romulo, De
Leon, Mabanta, Buenaventura, Sayoc and De los Angeles (the Law Firm, for
brevity) PHILCHEM was advised that LINGNER was interested in continuing
business relationship with PHILCHEM and will be interested in negotiating a
new contract and that, prior to the signing of a new contract, LINGNER was
proposing that the old contract be extended by mutual agreement for a
period of six (6) calendar months beginning March 1, 1977 to expire
automatically on August 31, 1977 if no contract is entered into. The proposal
was accepted by PHILCHEM, and no new contract having been signed by
August 31, 1977, the AGREEMENT terminated on that date,
On July 20, 1979, PHILCHEM presented a claim to LINGNER for P1,055,000.00
under the ROYALTY CLAUSE. The claim was discussed between PHILCHEM and
TANNER of BEECHAM with the intervention of the Law Firm. No settlement
having been arrived at, PHILCHEM, on August 6, 1980, filed a complaint
against BEECHAM alone in Civil Case No. 38086 of the then Court of First
Instance of Rizal. The summons issued could not be served on BEECHAM, the
Sheriff having reported that BEECHAM was neither a company registered in
the Philippines, nor resident at the given address of Unit A, Padilla Building,
Emerald Avenue, Pasig, Metro Manila.
PHILCHEM then filed an amended complaint, this time making LINGNER and
BEECHAM as the defendants, and pleading that summons could be served on
the Law Firm as an agent of the defendants. The Law Firm submitted a
special appearance in the case on behalf of LINGNER, and, also on behalf of
LINGNER, moved for dismissal on the grounds (a) that LINGNER was not a
foreign corporation doing business in the Philippines and hence could not be
sued locally, and, (b) that LINGNER could not be served with summons
through the Law Firm. It will thus be noted that two issues were being raised.
The first was whether or not LINGNER was doing business in the Philippines;
and the second was whether or not LINGNER could be validly summoned
through the Law Firm as its agent. The Trial Court denied the Motion to

Dismiss, assuming that LINGNER could be sued in this jurisdiction, and

holding that LINGNER can be served with summons through the Law Firm.

principle of liberal construction of the rules to promote just determination of

actions.

LINGNER went on certiorari to the Intermediate Appellate Court where it

reiterated the plea that summons could not be validly served on it through
the Law Firm; and it also requested that a hearing be held, conformably to
the provisions of Section 9(3) of Batas Pambansa Blg. 129, on the question of
whether or not LINGNER was doing business in this country.

ACCORDINGLY, the judgment under review of the Intermediate Appellate

Court (Third Special Cases Division) is hereby upheld insofar as it sustained
the Orders, dated August 24, 1981 and December 18, 1981, of the then Court
of First Instance of Rizal, Branch XI, Pasig, denying petitioner's Motion to
Dismiss and the subsequent Motion for Reconsideration, albeit on grounds
different from those relied upon by the Intermediate Appellate Court. The
now Regional Trial Court, to which the case below has been assigned, is
hereby directed to allow private respondent Philippine Chemical Laboratories,
Inc., to apply for the issuance of alias summons on petitioner Lingner and
Fischer GMBH by publication under the provisions of Section 17, Rule 14 in
relation to Rule 4 of the Rules of Court, and after issues have been joined, to
proceed to trial and judgment accordingly.

The Appellate Court held that summons served through the Law Firm was
valid on the strength of Johnlo Trading Co. vs. Flores (88 Phil. 741 [1951]);
and it further ruled that receiving evidence on whether or not LINGNER was
doing business in the Philippines could not be justified under the cited Batas
Pambansa Blg. 129.
Considering the Comment, Reply, Rejoinder and Surrejoinder submitted by
the parties, we resolved to give due course, without requiring the submittal of
memoranda.
The Appellate Court acted correctly in denying the request for an evidentiary
hearing. Evidence necessary in regards to factual issues raised in cases
falling within the Appellate Court's original and appellate jurisdiction
contemplates "incidental" facts which were not touched upon, or fully heard
by the trial or respondent Court. The law could not have intended that the
Appellate Court would hold an original and full trial of a main factual issue in
a case, which properly pertains to Trial Courts.

No pronouncement as to costs.
SO ORDERED.

It is our view that evidence as to whether LINGNER was doing business in the
Philippines, even before the Trial Court, is no longer necessary in view of the
fact that PHILCHEM and LINGNER were contractees in the AGREEMENT and
the claim of PHILCHEM is based on the ROYALTY CLAUSE of that AGREEMENT.
Whether LINGNER is or is not doing business in the Philippines will not matter
because the parties had expressly stipulated in the AGREEMENT that all
controversies based on the AGREEMENT "shall fall under the jurisdiction of
Philippine courts". In other words, there was a covenant on venue to the
effect that LINGNER can be sued by PHILCHEM before Philippine Courts in
regards to a controversy related to the AGREEMENT.
A case should not be dismissed simply because an original summons was
wrongfully served. It should be difficult to conceive, for example, that when a
defendant personally appears before a Court complaining that he had not
been validly summoned, that the case filed against him should be dismissed.
An alias summons can be actually served on said defendant.
For the expeditious determination of this controversy, therefore, in view of
the insufficiency of evidence that LINGNER is doing business in the
Philippines, which is a sine qua non requirement under the provision of
Section 14, Rule 14 1 of the Rules before service of process can be effected
upon a foreign corporation and jurisdiction over the same may be acquired, it
is best that alias summons on LINGNER be issued, in this case under the
provisions of Section 17, Rule 14, 2 in relation to Rule 4 of the Rules of Court,
which recognizes the principle that venue can be agreed upon by the parties.
If a local plaintiff and a foreign corporation have agreed on Philippine venue,
summons by publication can be made on the foreign corporation under the

35

11. Saudi Arabian Airlines vs. CA

QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to
annul and set aside the Resolution 1dated September 27, 1995 and the
Decision 2 dated April 10, 1996 of the Court of Appeals 3 in CA-G.R. SP No.
36533, 4and the Orders 5 dated August 29, 1994 6 and February 2, 1995 7 that
were issued by the trial court in Civil Case No. Q-93-18394. 8
The pertinent antecedent facts which gave rise to the instant petition, as
stated in the questioned Decision 9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a
Flight Attendant for its airlines based in Jeddah, Saudi
Arabia. . . .

On April 27, 1990, while on a lay-over in Jakarta, Indonesia,

plaintiff went to a disco dance with fellow crew members
Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi
nationals. Because it was almost morning when they returned
to their hotels, they agreed to have breakfast together at the
room of Thamer. When they were in te (sic) room, Allah left
on some pretext. Shortly after he did, Thamer attempted to
rape plaintiff. Fortunately, a roomboy and several security
personnel heard her cries for help and rescued her. Later, the
Indonesian police came and arrested Thamer and Allah AlGazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several
SAUDIA officials interrogated her about the Jakarta incident.
They then requested her to go back to Jakarta to help arrange
the release of Thamer and Allah. In Jakarta, SAUDIA Legal
Officer Sirah Akkad and base manager Baharini negotiated
with the police for the immediate release of the detained
crew members but did not succeed because plaintiff refused
to cooperate. She was afraid that she might be tricked into
something she did not want because of her inability to
understand the local dialect. She also declined to sign a blank
paper and a document written in the local dialect. Eventually,
SAUDIA allowed plaintiff to return to Jeddah but barred her
from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to
deport Thamer and Allah after two weeks of detention.
Eventually, they were again put in service by defendant
SAUDI (sic). In September 1990, defendant SAUDIA
transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the
Jakarta incident was already behind her, her superiors
requested her to see Mr. Ali Meniewy, Chief Legal Officer of
SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her
passport and questioned her about the Jakarta incident.
Miniewy simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of
Jeddah.
One year and a half later or on lune 16, 1993, in Riyadh,
Saudi Arabia, a few minutes before the departure of her flight
to Manila, plaintiff was not allowed to board the plane and
instead ordered to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a Saudi
court where she was asked to sign a document written in
Arabic. They told her that this was necessary to close the
case against Thamer and Allah. As it turned out, plaintiff

36

signed a notice to her to appear before the court on June 27,

1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27,
1993 for further investigation. Plaintiff did so after receiving
assurance from SAUDIA's Manila manager, Aslam Saleemi,
that the investigation was routinary and that it posed no
danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on
June 28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as
her plane was about to take off, a SAUDIA officer told her that
the airline had forbidden her to take flight. At the Inflight
Service Office where she was told to go, the secretary of Mr.
Yahya Saddick took away her passport and told her to remain
in Jeddah, at the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff
to the same court where the judge, to her astonishment and
shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286
lashes. Only then did she realize that the Saudi court had
tried her, together with Thamer and Allah, for what happened
in Jakarta. The court found plaintiff guilty of (1) adultery; (2)
going to a disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing with the male
crew, in contravention of Islamic tradition. 10
Facing conviction, private respondent sought the help of her employer,
petitioner SAUDIA. Unfortunately, she was denied any assistance. She then
asked the Philippine Embassy in Jeddah to help her while her case is on
appeal. Meanwhile, to pay for her upkeep, she worked on the domestic flight
of SAUDIA, while Thamer and Allah continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the
case against her and allowed her to leave Saudi Arabia. Shortly before her
return to Manila, 12 she was terminated from the service by SAUDIA, without
her being informed of the cause.
On November 23, 1993, Morada filed a Complaint 13 for damages against
SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which
raised the following grounds, to wit: (1) that the Complaint states no cause of
action against Saudia; (2) that defendant Al-Balawi is not a real party in
interest; (3) that the claim or demand set forth in the Complaint has been
waived, abandoned or otherwise extinguished; and (4) that the trial court has
no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss)
Saudia filed a reply 16 thereto on March 3, 1994.

15

On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi

was dropped as party defendant. On August 11, 1994, Saudia filed its
Manifestation and Motion to Dismiss Amended Complaint 18.
The trial court issued an Order 19 dated August 29, 1994 denying the Motion
to Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA
filed on September 20, 1994, its Motion for Reconsideration 21 of the Order
dated August 29, 1994. It alleged that the trial court has no jurisdiction to
hear and try the case on the basis of Article 21 of the Civil Code, since the
proper law applicable is the law of the Kingdom of Saudi Arabia. On October
14, 1994, Morada filed her Opposition 22 (To Defendant's Motion for
Reconsideration).
In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged
that since its Motion for Reconsideration raised lack of jurisdiction as its
cause of action, the Omnibus Motion Rule does not apply, even if that ground
is raised for the first time on appeal. Additionally, SAUDIA alleged that the
Philippines does not have any substantial interest in the prosecution of the
instant case, and hence, without jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order 24 dated February 2,
1995, denying SAUDIA's Motion for Reconsideration. The pertinent portion of
the assailed Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi
Arabian Airlines filed, thru counsel, on September 20, 1994,
and the Opposition thereto of the plaintiff filed, thru counsel,
on October 14, 1994, as well as the Reply therewith of
defendant Saudi Arabian Airlines filed, thru counsel, on
October 24, 1994, considering that a perusal of the plaintiffs
Amended Complaint, which is one for the recovery of actual,
moral and exemplary damages plus attorney's fees, upon the
basis of the applicable Philippine law, Article 21 of the New
Civil Code of the Philippines, is, clearly, within the jurisdiction
of this Court as regards the subject matter, and there being
nothing new of substance which might cause the reversal or
modification of the order sought to be reconsidered, the
motion for reconsideration of the defendant, is DENIED.
SO ORDERED.

25

Consequently, on February 20, 1995, SAUDIA filed its Petition

for Certiorari and Prohibition with Prayer for Issuance of Writ of Preliminary
Injunction and/or Temporary Restraining Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary
Restraining Order 27 dated February 23, 1995, prohibiting the respondent
Judge from further conducting any proceeding, unless otherwise directed, in
the interim.
In another Resolution 28 promulgated on September 27, 1995, now assailed,
the appellate court denied SAUDIA's Petition for the Issuance of a Writ of
Preliminary Injunction dated February 18, 1995, to wit:

37

The Petition for the Issuance of a Writ of Preliminary

Injunction is hereby DENIED, after considering the Answer,
with Prayer to Deny Writ of Preliminary Injunction (Rollo, p.
135) the Reply and Rejoinder, it appearing that herein
petitioner is not clearly entitled thereto (Unciano Paramedical
College, et. Al., v. Court of Appeals, et. Al., 100335, April 7,
1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the instant
Petition 29 for Review with Prayer for Temporary Restraining Order dated
October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of
Appeals rendered the Decision 30 dated April 10, 1996, now also assailed. It
ruled that the Philippines is an appropriate forum considering that the
Amended Complaint's basis for recovery of damages is Article 21 of the Civil
Code, and thus, clearly within the jurisdiction of respondent Court. It further
held that certiorari is not the proper remedy in a denial of a Motion to
Dismiss, inasmuch as the petitioner should have proceeded to trial, and in
case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with
Prayer for Temporary Restraining Order31 dated April 30, 1996, given due
course by this Court. After both parties submitted their Memoranda, 32 the
instant case is now deemed submitted for decision.
Petitioner SAUDIA raised the following issues:
I
The trial court has no jurisdiction to hear and try Civil Case
No. Q-93-18394 based on Article 21 of the New Civil Code
since the proper law applicable is the law of the Kingdom of
Saudi Arabia inasmuch as this case involves what is known in
private international law as a "conflicts problem". Otherwise,
the Republic of the Philippines will sit in judgment of the acts
done by another sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a
jurisdictional requirement. Besides, the matter as to absence
of leave of court is now moot and academic when this
Honorable Court required the respondents to comment on
petitioner's April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order Within Ten
(10) Days From Notice Thereof. Further, the Revised Rules of
Court should be construed with liberality pursuant to Section
2, Rule 1 thereof.
III
Petitioner received on April 22, 1996 the April 10, 1996
decision in CA-G.R. SP NO. 36533 entitled "Saudi Arabian
Airlines v. Hon. Rodolfo A. Ortiz, et al." and filed its April 30,

1996 Supplemental Petition For Review With Prayer For A

Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or
within the 15-day reglementary period as provided for under
Section 1, Rule 45 of the Revised Rules of Court. Therefore,
the decision in CA-G.R. SP NO. 36533 has not yet become
final and executory and this Honorable Court can take
cognizance of this case. 33
From the foregoing factual and procedural antecedents, the following issues
emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN
HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON
CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q93-18394 ENTITLED "MILAGROS P. MORADA V. SAUDI
ARABIAN AIRLINES".
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING
THAT IN THIS CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be
settled at the outset. It maintains that private respondent's claim for alleged
abuse of rights occurred in the Kingdom of Saudi Arabia. It alleges that the
existence of a foreign element qualifies the instant case for the application of
the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti
commissi rule. 34
On the other hand, private respondent contends that since her Amended
Complaint is based on Articles 19 35 and 21 36 of the Civil Code, then the
instant case is properly a matter of domestic law. 37
Under the factual antecedents obtaining in this case, there is no dispute that
the interplay of events occurred in two states, the Philippines and Saudi
Arabia.
As stated by private respondent in her Amended Complaint
1994:

38

dated June 23,

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign

airlines corporation doing business in the Philippines. It may
be served with summons and other court processes at Travel
Wide Associated Sales (Phils.). Inc., 3rd Floor, Cougar
Building, 114 Valero St., Salcedo Village, Makati, Metro
Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to
deport Thamer and Allah after two weeks of detention.
Eventually, they were again put in service by defendant
SAUDIA. In September 1990, defendant SAUDIA transferred
plaintiff to Manila.

38

7. On January 14, 1992, just when plaintiff thought that the

Jakarta incident was already behind her, her superiors
reauested her to see MR. Ali Meniewy, Chief Legal Officer of
SAUDIA in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her
passport and questioned her about the Jakarta incident.
Miniewy simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of
Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh,
Saudi Arabia, a few minutes before the departure of her flight
to Manila, plaintiff was not allowed to board the plane and
instead ordered to take a later flight to Jeddah to see Mr.
Meniewy, the Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a Saudi
court where she was asked to sigh a document written in
Arabic. They told her that this was necessary to close the
case against Thamer and Allah. As it turned out, plaintiff
signed a notice to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff
to report to Jeddah once again and see Miniewy on June 27,
1993 for further investigation. Plaintiff did so after receiving
assurance from SAUDIA's Manila manger, Aslam Saleemi, that
the investigation was routinary and that it posed no danger
to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the
same Saudi court on June 27, 1993. Nothing happened then
but on June 28, 1993, a Saudi judge interrogated plaintiff
through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however,
just as her plane was about to take off, a SAUDIA officer told
her that the airline had forbidden her to take that flight. At
the Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport and
told her to remain in Jeddah, at the crew quarters, until
further orders.
11. On July 3, 1993 a SAUDIA legal officer again escorted
plaintiff to the same court where the judge, to her
astonishment and shock, rendered a decision, translated to
her in English, sentencing her to five months imprisonment
and to 286 lashes. Only then did she realize that the Saudi
court had tried her, together with Thamer and Allah, for what
happened in Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing, and listening to the
music in violation of Islamic laws; (3) socializing with the
male crew, in contravention of Islamic tradition.

12. Because SAUDIA refused to lend her a hand in the case,

plaintiff sought the help of the Philippines Embassy in Jeddah.
The latter helped her pursue an appeal from the decision of
the court. To pay for her upkeep, she worked on the domestic
flights of defendant SAUDIA while, ironically, Thamer and
Allah freely served the international flights. 39
Where the factual antecedents satisfactorily establish the existence of a
foreign element, we agree with petitioner that the problem herein could
present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected by the
diverse laws of two or more states is said to contain a "foreign element". The
presence of a foreign element is inevitable since social and economic affairs
of individuals and associations are rarely confined to the geographic limits of
their birth or conception. 40
The forms in which this foreign element may appear are many. 41 The foreign
element may simply consist in the fact that one of the parties to a 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. 42

wrongs which is impossible for human foresight to specifically

provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh
to its provisions. Thus, we agree with private respondent's assertion that
violations of Articles 19 and 21 are actionable, with judicially enforceable
remedies in the municipal forum.
Based on the allegations 46 in the Amended Complaint, read in the light of the
Rules of Court on jurisdiction 47 we find that the Regional Trial Court (RTC) of
Quezon City possesses jurisdiction over the subject matter of the suit. 48 Its
authority to try and hear the case is provided for under Section 1 of Republic
Act No. 7691, to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise
known as the "Judiciary Reorganization Act of 1980", is
hereby amended to read as follows:
Sec. 19. Jurisdiction in Civil Cases. Regional Trial Courts
shall exercise exclusive jurisdiction:
xxx xxx xxx
(8)
In
all
other
cases
in
which
demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation
expenses, and cots or the value of the
property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such
other cases in Metro Manila, where the
demand, exclusive of the above-mentioned
items exceeds Two hundred Thousand pesos
(P200,000.00). (Emphasis ours)

In the instant case, the foreign element consisted in the fact that private
respondent Morada is a resident Philippine national, and that petitioner
SAUDIA is a resident foreign corporation. Also, by virtue of the employment of
Morada with the petitioner Saudia as a flight stewardess, events did transpire
during her many occasions of travel across national borders, particularly from
Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a
"conflicts" situation to arise.
We thus find private respondent's assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of
jurisdiction 43 confronts the court a quo.
After a careful study of the private respondent's Amended Complaint, and
the Comment thereon, we note that she aptly predicated her cause of action
on Articles 19 and 21 of the New Civil Code.
44

On one hand, Article 19 of the New Civil Code provides:

Art. 19. Every person must, in the exercise of his rights and in
the performance of his duties, act with justice give everyone
his due and observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of Appeals,
that:

45

this Court held

The aforecited provisions on human relations were intended

to expand the concept of torts in this jurisdiction by granting
adequate legal remedy for the untold number of moral

39

xxx xxx xxx

And following Section 2 (b), Rule 4 of the Revised Rules of Court the venue,
Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now Regional Trial
Court]
(a) xxx xxx xxx
(b) Personal actions. All other actions may be commenced
and tried where the defendant or any of the defendants
resides or may be found, or where the plaintiff or any of the
plaintiff resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also
weigh heavily in favor of the RTC Quezon City assuming jurisdiction.
Paramount is the private interest of the litigant. Enforceability of a judgment
if one is obtained is quite obvious. Relative advantages and obstacles to a fair
trial are equally important. Plaintiff may not, by choice of an inconvenient
forum, "vex", "harass", or "oppress" the defendant, e.g. by inflicting upon him
needless expense or disturbance. But unless the balance is strongly in favor
of the defendant, the plaintiffs choice of forum should rarely be disturbed. 49

Weighing the relative claims of the parties, the court a quo found it best to
hear the case in the Philippines. Had it refused to take cognizance of the
case, it would be forcing plaintiff (private respondent now) 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 plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the
parties herein. By filing her Complaint and Amended Complaint with the trial
court, private respondent has voluntary submitted herself to the jurisdiction
of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying
for the dismissal of Morada's Amended Complaint. SAUDIA also filed an
Answer In Ex Abundante Cautelam dated February 20, 1995. What is very
patent and explicit from the motions filed, is that SAUDIA prayed for other
reliefs under the premises. Undeniably, petitioner SAUDIA has effectively
submitted to the trial court's jurisdiction by praying for the dismissal of the
Amended Complaint on grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.:

51

We observe that the motion to dismiss filed on April 14, 1962,

aside from disputing the lower court's jurisdiction over
defendant's person, prayed for dismissal of the complaint on
the ground that plaintiff's cause of action has prescribed. By
interposing such second ground in its motion to dismiss, Ker
and Co., Ltd. availed of an affirmative defense on the basis of
which it prayed the court to resolve controversy in its favor.
For the court to validly decide the said plea of defendant Ker
& Co., Ltd., it necessarily had to acquire jurisdiction upon the
latter's person, who, being the proponent of the affirmative
defense, should be deemed to have abandoned its special
appearance and voluntarily submitted itself to the jurisdiction
of the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of
objecting to the jurisdiction of the court over the person, it
must be for the sole and separate purpose of objecting to the
jurisdiction of the court. If his motion is for any other purpose
than to object to the jurisdiction of the court over his person,
he thereby submits himself to the jurisdiction of the court. A
special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the person will
be held to be a general appearance, if the party in said
motion should, for example, ask for a dismissal of the action
upon the further ground that the court had no jurisdiction
over the subject matter. 52

40

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court
of Quezon City. Thus, we find that the trial court has jurisdiction over the case
and that its exercise thereof, justified.
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. 53
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. 54
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." 55 The purpose of "characterization" is to enable the forum to
select the proper law. 56
Our starting point of analysis here is not a legal relation, but a factual
situation, event, or operative fact. 57 An essential element of conflict rules is
the indication of a "test" or "connecting factor" or "point of contact". Choiceof-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. 58
Note that one or more circumstances may be present to serve as the possible
test for the determination of the applicable law. 59 These "test factors" or
"points of contact" or "connecting factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence, his
place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a
corporation;
(3) the situs of a thing, that is, the place where a thing is, or
is deemed to be situated. In particular, the lex 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, or the
place where a power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;

(7) the place where judicial or administrative proceedings are

instituted or done. The lex fori the law of the forum is
particularly important because, as we have seen earlier,
matters of "procedure" not going to the substance of the
claim involved are governed by it; and because the lex
fori applies whenever the content of the otherwise applicable
foreign law is excluded from application in a given case for
the reason that it falls under one of the exceptions to the
applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of
practically all legal relationships of the ship and of its master
or owner as such. It also covers contractual relationships
particularly contracts of affreightment. 60 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the
Amended Complaint deemed admitted for purposes of the motion to dismiss,
we are convinced that there is reasonable basis for private respondent's
assertion that although she was already working in Manila, petitioner brought
her to Jeddah on the pretense that she would merely testify in an
investigation of the charges she made against the two SAUDIA crew
members for the attack on her person while they were in Jakarta. As it turned
out, she was the one made to face trial for very serious charges, including
adultery and violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that the "handing over"
or "turning over" of the person of private respondent to Jeddah officials,
petitioner may have acted beyond its duties as employer. Petitioner's
purported act contributed to and amplified or even proximately caused
additional humiliation, misery and suffering of private respondent. Petitioner
thereby allegedly facilitated the arrest, detention and prosecution of private
respondent under the guise of petitioner's authority as employer, taking
advantage of the trust, confidence and faith she reposed upon it. As
purportedly found by the Prince of Makkah, the alleged conviction and
imprisonment of private respondent was wrongful. But these capped the
injury or harm allegedly inflicted upon her person and reputation, for which
petitioner could be liable as claimed, to provide compensation or redress for
the wrongs done, once duly proven.
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,

41

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.
Moreover, with the widespread criticism of the traditional rule of lex loci
delicti commissi, modern theories and rules on tort liability 61 have been
advanced to offer fresh judicial approaches to arrive at just results. In keeping
abreast with the modern theories on tort liability, we find here an occasion to
apply the "State of the most significant relationship" rule, which in our view
should be appropriate to apply now, given the factual context of this case.
In applying said principle to determine the State which has the most
significant relationship, the following contacts are to be taken into account
and evaluated according to their relative importance with respect to the
particular issue: (a) the place where the injury occurred; (b) the place where
the conduct causing the injury occurred; (c) the domicile, residence,
nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is
centered. 62
As already discussed, there is basis for the claim that over-all injury occurred
and lodged in the Philippines. There is likewise no question that private
respondent is a resident Filipina national, working with petitioner, a resident
foreign corporation engaged here in the business of international air carriage.
Thus, the "relationship" between the parties was centered here, although it
should be stressed that this suit is not based on mere labor law violations.
From the record, the claim that the Philippines has the most significant
contact with the matter in this dispute, 63 raised by private respondent as
plaintiff below against defendant (herein petitioner), in our view, has been
properly established.
Prescinding from this premise that the Philippines is the situs of the tort
complained of and the place "having the most interest in the problem", we
find, by way of recapitulation, that the Philippine law on tort liability should
have paramount application to and control in the resolution of the legal
issues arising out of this case. Further, we hold that the respondent Regional
Trial Court has jurisdiction over the parties and the subject matter of the
complaint; the appropriate venue is in Quezon City, which could properly
apply Philippine law. Moreover, we find untenable petitioner's insistence that
"[s]ince private respondent instituted this suit, she has the burden of
pleading and proving the applicable Saudi law on the matter." 64 As aptly said
by private respondent, she has "no obligation to plead and prove the law of
the Kingdom of Saudi Arabia since her cause of action is based on Articles 19
and 21" of the Civil Code of the Philippines. In her Amended Complaint and
subsequent pleadings, she never alleged that Saudi law should govern this
case. 65 And as correctly held by the respondent appellate court, "considering
that it was the petitioner who was invoking the applicability of the law of
Saudi Arabia, then the burden was on it [petitioner] to plead and to establish
what the law of Saudi Arabia is". 66
Lastly, no error could be imputed to the respondent appellate court in
upholding the trial court's denial of defendant's (herein petitioner's) motion
to dismiss the case. Not only was jurisdiction in order and venue properly
laid, but appeal after trial was obviously available, and expeditious trial itself
indicated by the nature of the case at hand. Indubitably, the Philippines is the

state intimately concerned with the ultimate outcome of the case below, not
just for the benefit of all the litigants, but also for the vindication of the
country's system of law and justice in a transnational setting. With these
guidelines in mind, the trial court must proceed to try and adjudge the case
in the light of relevant Philippine law, with due consideration of the foreign
element or elements involved. Nothing said herein, of course, should be
construed as prejudging the results of the case in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil
Case No. Q-93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is
hereby REMANDED to Regional Trial Court of Quezon City, Branch 89 for
further proceedings.
SO ORDERED.

The point at issue is whether the courts of the Philippines have jurisdiction
over crime, like the one herein involved, committed aboard merchant vessels
anchored in our jurisdiction waters. 1awph!l.net
There are two fundamental rules on this particular matter in connection with
International Law; to wit, the French rule, according to which crimes
committed aboard a foreign merchant vessels should not be prosecuted in
the courts of the country within whose territorial jurisdiction they were
committed, unless their commission affects the peace and security of the
territory; and the English rule, based on the territorial principle and followed
in the United States, according to which, crimes perpetrated under such
circumstances are in general triable in the courts of the country within
territory they were committed. Of this two rules, it is the last one that obtains
in this jurisdiction, because at present the theories and jurisprudence
prevailing in the United States on this matter are authority in the Philippines
which is now a territory of the United States.
In the cases of The Schooner Exchange vs. M'Faddon and Others (7 Cranch
[U. S.], 116), Chief Justice Marshall said:
. . . When merchant vessels enter for the purposes of trade, it would
be obviously inconvenient and dangerous to society, and would
subject the laws to continual infraction, and the government to
degradation, if such individuals or merchants did not owe temporary
and local allegiance, and were not amenable to the jurisdiction of the
country. . . .
In United States vs. Bull (15 Phil., 7), this court held:

12. Pp vs. Wong Cheng

ROMUALDEZ, J.:
In this appeal the Attorney-General urges the revocation of the order of the
Court of First Instance of Manila, sustaining the demurrer presented by the
defendant to the information that initiated this case and in which the
appellee is accused of having illegally smoked opium, aboard the merchant
vessel Changsa of English nationality while said vessel was anchored in
Manila Bay two and a half miles from the shores of the city.
The demurrer alleged lack of jurisdiction on the part of the lower court, which
so held and dismissed the case.
The question that presents itself for our consideration is whether such ruling
is erroneous or not; and it will or will not be erroneous according as said court
has or has no jurisdiction over said offense.

42

. . . No court of the Philippine Islands had jurisdiction over an offense

or crime committed on the high seas or within the territorial waters of
any other country, but when she came within three miles of a line
drawn from the headlands, which embrace the entrance to Manila
Bay, she was within territorial waters, and a new set of principles
became applicable. (Wheaton, International Law [Dana ed.], p. 255,
note 105; Bonfils, Le Droit Int., secs. 490 et seq.; Latour, La Mer Ter.,
ch. 1.) The ship and her crew were then subject to the jurisdiction of
the territorial sovereign subject to such limitations as have been
conceded by that sovereignty through the proper political agency. . . .
It is true that in certain cases the comity of nations is observed, as in Mali
and Wildenhus vs. Keeper of the Common Jail (120 U.., 1), wherein it was said
that:
. . . The principle which governs the whole matter is this: Disorder
which disturb only the peace of the ship or those on board are to be
dealt with exclusively by the sovereignty of the home of the ship, but
those which disturb the public peace may be suppressed, and, if need
be, the offenders punished by the proper authorities of the local
jurisdiction. It may not be easy at all times to determine which of the
two jurisdictions a particular act of disorder belongs. Much will
undoubtedly depend on the attending circumstances of the particular
case, but all must concede that felonious homicide is a subject for the
local jurisdiction, and that if the proper authorities are proceeding

with the case in the regular way the consul has no right to interfere to
prevent it.
Hence in United States vs. Look Chaw (18 Phil., 573), this court held that:
Although the mere possession of an article of prohibited use in the
Philippine Islands, aboard a foreign vessel in transit in any local port,
does not, as a general rule, constitute a crime triable by the courts of
the Islands, such vessels being considered as an extension of its own
nationality, the same rule does not apply when the article, the use of
which is prohibited in the Islands, is landed from the vessels upon
Philippine soil; in such a case an open violation of the laws of the land
is committed with respect to which, as it is a violation of the penal
law in force at the place of the commission of the crime, no court
other than that established in the said place has jurisdiction of the
offense, in the absence of an agreement under an international
treaty.

. . . The idea of a person smoking opium securely on board a foreign

vessel at anchor in the port of Manila in open defiance of the local
authorities, who are impotent to lay hands on him, is simply
subversive of public order. It requires no unusual stretch of the
imagination to conceive that a foreign ship may come into the port of
Manila and allow or solicit Chinese residents to smoke opium on
board.
The order appealed from is revoked and the cause ordered remanded to the
court of origin for further proceedings in accordance with law, without special
findings as to costs. So ordered.

As to whether the United States has ever consented by treaty or otherwise to

renouncing such jurisdiction or a part thereof, we find nothing to this effect so
far as England is concerned, to which nation the ship where the crime in
question was committed belongs. Besides, in his work "Treaties, Conventions,
etc.," volume 1, page 625, Malloy says the following:
There shall be between the territories of the United States of
America, and all the territories of His Britanic Majesty in Europe, a
reciprocal liberty of commerce. The inhabitants of the two countries,
respectively, shall have liberty freely and securely to come with their
ships and cargoes to all such places, ports and rivers, in the
territories aforesaid, to which other foreigners are permitted to come,
to enter into the same, and to remain and reside in any parts of the
said territories, respectively; also to hire and occupy houses and
warehouses for the purposes of their commerce; and, generally, the
merchants and traders of each nation respectively shall enjoy the
most complete protection and security for their commerce, but
subject always to the laws and statutes of the two countries,
respectively. (Art. 1, Commerce and Navigation Convention.)
We have seen that the mere possession of opium aboard a foreign vessel in
transit was held by this court not triable by or courts, because it being the
primary object of our Opium Law to protect the inhabitants of the Philippines
against the disastrous effects entailed by the use of this drug, its mere
possession in such a ship, without being used in our territory, does not being
about in the said territory those effects that our statute contemplates
avoiding. Hence such a mere possession is not considered a disturbance of
the public order.
But to smoke opium within our territorial limits, even though aboard a foreign
merchant ship, is certainly a breach of the public order here established,
because it causes such drug to produce its pernicious effects within our
territory. It seriously contravenes the purpose that our Legislature has in
mind in enacting the aforesaid repressive statute. Moreover, as the AttorneyGeneral aptly observes:

43

13. U.S. vs. Bull

ELLIOTT, J.:

The appellant was convicted in the Court of First Instance of a violation of

section 1 of Act No. 55, as amended by section 1 of Act No. 275, and from the
judgment entered thereon appealed to this court, where under proper
assignments of error he contends: (1) that the complaint does not state facts
sufficient to confer jurisdiction upon the court; (2) that under the evidence
the trial court was without jurisdiction to hear and determine the case; (3)
that Act No. 55 as amended is in violation of certain provisions of the
Constitution of the United States, and void as applied to the facts of this
case; and (4) that the evidence is insufficient to support the conviction.
The information alleges:
That on and for many months prior to the 2d day of December, 1908,
the said H. N. Bull was then and there master of a steam sailing
vessel known as the steamship Standard, which vessel was then and
there engaged in carrying and transporting cattle, carabaos, and
other animals from a foreign port and city of Manila, Philippine
Islands; that the said accused H. N. Bull, while master of said vessel,
as aforesaid, on or about the 2d day of December, 1908, did then and
there willfully, unlawfully, and wrongly carry, transport, and bring into
the port and city of Manila, aboard said vessel, from the port of
Ampieng, Formosa, six hundred and seventy-seven (677) head of
cattle and carabaos, without providing suitable means for securing
said animals while in transit, so as to avoid cruelty and unnecessary
suffering to the said animals, in this, to wit, that the said H. N. Bull,
master, as aforesaid, did then and there fail to provide stalls for said
animals so in transit and suitable means for trying and securing said
animals in a proper manner, and did then and there cause some of
said animals to be tied by means of rings passed through their noses,
and allow and permit others to be transported loose in the hold and
on the deck of said vessel without being tied or secured in stalls, and
all without bedding; that by reason of the aforesaid neglect and
failure of the accused to provide suitable means for securing said
animals while so in transit, the noses of some of said animals were
cruelly torn, and many of said animals were tossed about upon the
decks and hold of said vessel, and cruelly wounded, bruised, and
killed.
All contrary to the provisions of Acts No. 55 and No. 275 of the
Philippine Commission.
Section 1 of Act No. 55, which went into effect January 1, 1901, provides that

The owners or masters of steam, sailing, or other vessels, carrying or

transporting cattle, sheep, swine, or other animals, from one port in
the Philippine Islands to another, or from any foreign port to any port
within the Philippine Islands, shall carry with them, upon the vessels
carrying such animals, sufficient forage and fresh water to provide for
the suitable sustenance of such animals during the ordinary period
occupied by the vessel in passage from the port of shipment to the
port of debarkation, and shall cause such animals to be provided with
adequate forage and fresh water at least once in every twenty-four

44

hours from the time that the animals are embarked to the time of
their final debarkation.
By Act No. 275, enacted October 23, 1901, Act No. 55 was amended by
adding to section 1 thereof the following:
The owners or masters of steam, sailing, or other vessels, carrying or
transporting cattle, sheep, swine, or other animals from one port in
the Philippine Islands to another, or from any foreign port to any port
within the Philippine Islands, shall provide suitable means for
securing such animals while in transit so as to avoid all cruelty and
unnecessary suffering to the animals, and suitable and proper
facilities for loading and unloading cattle or other animals upon or
from vessels upon which they are transported, without cruelty or
unnecessary suffering. It is hereby made unlawful to load or unload
cattle upon or from vessels by swinging them over the side by means
of ropes or chains attached to the thorns.
Section 3 of Act No. 55 provides that
Any owner or master of a vessel, or custodian of such animals, who
knowingly and willfully fails to comply with the provisions of section
one, shall, for every such failure, be liable to pay a penalty of not less
that one hundred dollars nor more that five hundred dollars, United
States money, for each offense. Prosecution under this Act may be
instituted in any Court of First Instance or any provost court
organized in the province or port in which such animals are
disembarked.
1. It is contended that the information is insufficient because it does not state
that the court was sitting at a port where the cattle were disembarked, or
that the offense was committed on board a vessel registered and licensed
under the laws of the Philippine Islands.
Act No. 55 confers jurisdiction over the offense created thereby on Courts of
First Instance or any provost court organized in the province or port in which
such animals are disembarked, and there is nothing inconsistent therewith in
Act No. 136, which provides generally for the organization of the courts of the
Philippine Islands. Act No. 400 merely extends the general jurisdiction of the
courts over certain offenses committed on the high seas, or beyond the
jurisdiction of any country, or within any of the waters of the Philippine
Islands on board a ship or water craft of any kind registered or licensed in the
Philippine Islands, in accordance with the laws thereof. (U.S.vs. Fowler, 1 Phil.
Rep., 614.) This jurisdiction may be exercised by the Court of First Instance in
any province into which such ship or water upon which the offense or crime
was committed shall come after the commission thereof. Had this offense
been committed upon a ship carrying a Philippine registry, there could have
been no doubt of the Jurisdiction of the court, because it is expressly
conferred, and the Act is in accordance with well recognized and established
public law. But the Standard was a Norwegian vessel, and it is conceded that
it was not registered or licensed in the Philippine Islands under the laws
thereof. We have then the question whether the court had jurisdiction over an
offense of this character, committed on board a foreign ship by the master
thereof, when the neglect and omission which constitutes the offense
continued during the time the ship was within the territorial waters of the

United States. No court of the Philippine Islands had jurisdiction over an

offenses or crime committed on the high seas or within the territorial waters
of any other country, but when she came within 3 miles of a line drawn from
the headlines which embrace the entrance to Manila Bay, she was within
territorial waters, and a new set of principles became applicable. (Wheaton,
Int. Law (Dana ed.), p. 255, note 105; Bonfils, Le Droit Int., sec 490 et seq.;
Latour, La Mer Ter., ch. 1.) The ship and her crew were then subject to the
jurisdiction of the territorial sovereign subject through the proper political
agency. This offense was committed within territorial waters. From the line
which determines these waters the Standard must have traveled at least 25
miles before she came to anchor. During that part of her voyage the violation
of the statue continued, and as far as the jurisdiction of the court is
concerned, it is immaterial that the same conditions may have existed while
the vessel was on the high seas. The offense, assuming that it originated at
the port of departure in Formosa, was a continuing one, and every element
necessary to constitute it existed during the voyage across the territorial
waters. The completed forbidden act was done within American waters, and
the court therefore had jurisdiction over the subject-matter of the offense and
the person of the offender.
The offense then was thus committed within the territorial jurisdiction of the
court, but the objection to the jurisdiction raises the further question whether
that jurisdiction is restricted by the fact of the nationality of the ship. Every.
Every state has complete control and jurisdiction over its territorial waters.
According to strict legal right, even public vessels may not enter the ports of
a friendly power without permission, but it is now conceded that in the
absence of a prohibition such ports are considered as open to the public ship
of all friendly powers. The exemption of such vessels from local jurisdiction
while within such waters was not established until within comparatively
recent times. In 1794, Attorney-General Bradford, and in 1796 AttorneyGeneral Lee, rendered opinions to the effect that "the laws of nations invest
the commander of a foreign ship of war with no exemption from the
jurisdiction of the country into which he comes." (1, Op. U.S. Attys. Gen., 46,
87.) This theory was also supported by Lord Stowell in an opinion given by
him to the British Government as late as 1820. In the leading case of the
Schooner Exchange vs. McFadden (7 Cranch (U.S.), 116, 144), Chief Justice
Marshall said that the implied license under which such vessels enter a
friendly port may reasonably be construed as "containing exemption from the
jurisdiction of the sovereign within whose territory she claims the rights of
hospitality." The principle was accepted by the Geneva Arbitration Tribunal,
which announced that "the priviledge of exterritoriality accorded to vessels of
war has been admitted in the law of nations; not as an absolute right, but
solely as a proceeding founded on the principle of courtesy and mutual
deference
between
nations."
(2 Moore, Int. Law Dig., secs. 252 and 254; Hall, Int. Law, sec. 55; Taylor, Int.
Law, sec. 256; Ortolan, Dip de la Mer, 2. C.X.)
Such vessels are therefore permitted during times of peace to come and go
freely. Local official exercise but little control over their actions, and offenses
committed by their crew are justiciable by their own officers acting under the
laws to which they primarily owe allegiance. This limitation upon the general
principle of territorial sovereignty is based entirely upon comity and
convenience, and finds its justification in the fact that experience shows that

45

such vessels are generally careful to respect local laws and regulation which
are essential to the health, order, and well-being of the port. But comity and
convenience does not require the extension of the same degree of exemption
to merchant vessels. There are two well-defined theories as to extent of the
immunities ordinarily granted to them, According to the French theory and
practice, matters happening on board a merchant ship which do not concern
the tranquillity of the port or persons foreign to the crew, are justiciable only
by the court of the country to which the vessel belongs. The French courts
therefore claim exclusive jurisdiction over crimes committed on board French
merchant vessels in foreign ports by one member of the crew against
another. (See Bonfils, Le Droit Int. (quat. ed.), secs. 624-628; Martens, Le
Droit Int., tome 2, pp. 338, 339; Ortolan, Dip. de la Mer, tit. 1, p. 292; Masse,
Droit Int., tome 2, p. 63.) Such jurisdiction has never been admitted or claim
by Great Britain as a right, although she has frequently conceded it by
treaties. (Halleck, Int. Law (Baker's ed.), vol. 1, 231; British Territorial Waters
Act, 1878.) Writers who consider exterritoriality as a fact instead of a theory
have sought to restrict local jurisdiction, but Hall, who is doubtless the
leading English authority, says that
It is admitted by the most thoroughgoing asserters of the territoriality
of merchant vessels that so soon as the latter enter the ports of a
foreign state they become subject to the local jurisdiction on all
points in which the interests of the country are touched. (Hall, Int.
Law, p. 263.)
The United States has adhered consistently to the view that when a merchant
vessel enters a foreign port it is subject to the jurisdiction of the local
authorities, unless the local sovereignty has by act of acquiescence or
through treaty arrangements consented to waive a portion of such
jurisdiction. (15 Op. Attys. Gen., U. S., 178; 2 Moore, Int. Law Dig., sec. 204;
article by Dean Gregory, Mich. Law Review, Vol. II, No. 5.) Chief Justice
Marshall, in the case of the Exchange, said that
When merchant vessels enter for the purpose of trade, in would be
obviously in convinient and dangerous to society and would subject
the laws to continual infraction and the government to degradation if
such individual merchants did not owe temporary and local
allegiance, and were not amendable to the jurisdiction of the country.
The Supreme Court of the United States has recently said that the merchant
vessels of one country visiting the ports of another for the purpose of trade,
subject themselves to the laws which govern the ports they visit, so long as
they remain; and this as well in war as in peace, unless otherwise provided
by treaty. (U. S. vs. Diekelman, 92 U. S., 520-525.)
Certain limitations upon the jurisdiction of the local courts are imposed by
article 13 of the treaty of commerce and navigation between Sweden and
Norway and the United States, of July 4, 1827, which concedes to the consul,
vice-consuls, or consular agents of each country "The right to sit as judges
and arbitrators in such differences as may arise between the captains and
crews of the vessels belonging to the nation whose interests are committed
to their charge, without the interference of the local authorities, unless the
conduct of the crews or of the captains should disturb the order or tranquillity
of the country." (Comp. of Treaties in Force, 1904, p. 754.) This exception

applies to controversies between the members of the ship's company, and

particularly to disputes regarding wages. (2 Moore, Int. Law Dig., sec. 206, p.
318; Tellefsen vs. Fee, 168 Mass., 188.) The order and tranquillity of the
country are affected by many events which do not amount to a riot or general
public disturbance. Thus an assault by one member of the crew upon
another, committed upon the ship, of which the public may have no
knowledge whatever, is not by this treaty withdrawn from the cognizance of
the local authorities.
In 1876 the mates of the Swedish bark Frederike and Carolina engaged in a
"quarrel" on board the vessel in the port of Galveston, Texas. They were
prosecuted before a justice of the peace, but the United States district
attorney was instructed by the Government to take the necessary steps to
have the proceedings dismissed, and the aid of the governor of Texas was
invoked with the view to "guard against a repetition of similar proceedings."
(Mr. Fish, Secretary of State, to Mr. Grip, Swedish and Norwegian charged,
May 16, 1876; Moore, Int. Law Dig.) It does not appear that this "quarrel" was
of such a nature as to amount to a breach of the criminal laws of Texas, but
when in 1879 the mate for the Norwegian bark Livingston was prosecuted in
the courts of Philadelphia County for an assault and battery committed on
board the ship while lying in the port of Philadelphia, it was held that there
was nothing in the treaty which deprived the local courts of jurisdiction.
(Commonwealth vs. Luckness, 14 Phila. (Pa.), 363.) Representations were
made through diplomatic channels to the State Department, and on July 30,
1880, Mr. Evarts, Secretary of State, wrote to Count Lewenhaupt, the Swedish
and Norwegian minister, as follows:
I have the honor to state that I have given the matter careful
consideration in connection with the views and suggestion of your
note and the provisions of the thirteenth article of the treaty of 1827
between the United States and Sweden and Norway. The stipulations
contained in the last clause of that article . . . are those under which
it is contended by you that jurisdiction is conferred on the consular
officers, not only in regard to such differences of a civil nature
growing out of the contract of engagement of the seamen, but also
as to disposing of controversies resulting from personal violence
involving offense for which the party may be held amenable under
the local criminal law.
This Government does not view the article in question as susceptible
of such broad interpretation. The jurisdiction conferred upon the
consuls is conceived to be limited to their right to sit as judges or
abitratorsin such differences as may arise between captains and
crews of the vessels, where such differences do not involve on the
part of the captain or crew a disturbance of the order or tranquillity
of the country. When, however, a complaint is made to a local
magistrate, either by the captain or one or more of the crew of the
vessel, involving the disturbance of the order or tranquillity of the
country, it is competent for such magistrate to take cognizance of the
matter in furtherance of the local laws, and under such
circumstances in the United States it becomes a public duty which
the judge or magistrate is not at liberty voluntarily to forego. In all
such cases it must necessarily be left to the local judicial authorities

46

whether the procedure shall take place in the United States or in

Sweden to determine if in fact there had been such disturbance of
the local order and tranquillity, and if the complaint is supported by
such proof as results in the conviction of the party accused, to visit
upon the offenders such punishment as may be defined against the
offense by the municipal law of the place." (Moore, Int. Law Dig., vol.
2, p. 315.)
The treaty does not therefore deprive the local courts of jurisdiction over
offenses committed on board a merchant vessel by one member of the crew
against another which amount to a disturbance of the order or tranquillity of
the country, and a fair and reasonable construction of the language requires
un to hold that any violation of criminal laws disturbs the order or traquillity
of the country. The offense with which the appellant is charged had nothing
to so with any difference between the captain and the crew. It was a violation
by the master of the criminal law of the country into whose port he came. We
thus find that neither by reason of the nationality of the vessel, the place of
the commission of the offense, or the prohibitions of any treaty or general
principle of public law, are the court of the Philippine Islands deprived of
jurisdiction over the offense charged in the information in this case.
It is further contended that the complaint is defective because it does not
allege that the animals were disembarked at the port of Manila, an allegation
which it is claimed is essential to the jurisdiction of the court sitting at that
port. To hold with the appellant upon this issue would be to construe the
language of the complaint very strictly against the Government. The
disembarkation of the animals is not necessary in order to constitute the
completed offense, and a reasonable construction of the language of the
statute confers jurisdiction upon the court sitting at the port into which the
animals are bought. They are then within the territorial jurisdiction of the
court, and the mere fact of their disembarkation is immaterial so far as
jurisdiction is concerned. This might be different if the disembarkation of the
animals constituted a constitutional element in the offense, but it does not.
It is also contended that the information is insufficient because it fails to
allege that the defendant knowingly andwillfully failed to provide suitable
means for securing said animals while in transit, so as to avoid cruelty and
unnecessary suffering. The allegation of the complaint that the act was
committed willfully includes the allegation that it was committed knowingly.
As said in Woodhouse vs. Rio Grande R.R. Company (67 Texas, 416), "the
word 'willfully' carries the idea, when used in connection with an act
forbidden by law, that the act must be done knowingly or intentionally; that,
with knowledge, the will consented to, designed, and directed the act." So in
Wongvs. City of Astoria (13 Oregon, 538), it was said: "The first one is that
the complaint did not show, in the words of the ordinance, that the appellant
'knowingly' did the act complained of. This point, I think, was fully answered
by the respondent's counsel that the words 'willfully' and 'knowingly'
conveyed the same meaning. To 'willfully' do an act implies that it was done
by design done for a certain purpose; and I think that it would necessarily
follow that it was 'knowingly' done." To the same effect is Johnson vs. The
People (94 Ill., 505), which seems to be on all fours with the present case.
The evidence shows not only that the defendant's acts were knowingly done,
but his defense rests upon the assertion that "according to his experience,

the system of carrying cattle loose upon the decks and in the hold is
preferable and more secure to the life and comfort of the animals." It was
conclusively proven that what was done was done knowingly and
intentionally.
In charging an offense under section 6 of General Orders, No. 58, paragraph
3, it is only necessary to state the act or omission complained of as
constituting a crime or public offense in ordinary and concise language,
without repitition. It need not necessarily be in the words of the statute, but it
must be in such form as to enable a person of common understanding to
know what is intended and the court to pronounce judgment according to
right. A complaint which complies with this requirement is good.
(U.S. vs. Sarabia, 4 Phil. Rep., 556.)
The Act, which is in the English language, impose upon the master of a vessel
the duty to "provide suitable means for securing such animals while in
transit, so as to avoid all cruelty and unnecessary suffering to the animals."
The allegation of the complaint as it reads in English is that the defendant
willfully, unlawfully, and wrongfully carried the cattle "without providing
suitable means for securing said animals while in transit, so as to avoid
cruelty and unnecessary suffering to the said animals in this . . . that by
reason of the aforesaid neglect and failure of the accused to provide suitable
means for securing said animals were cruelty torn, and many of said animals
were tossed about upon the decks and hold of said vessels, and cruelty
wounded, bruised, and killed."
The appellant contends that the language of the Spanish text of the
information does not charge him with failure to provide "sufficient" and
"adequate" means. The words used are "medios suficientes" and "medios
adecuados." In view of the fact that the original complaint was prepared in
English, and that the word "suitable" is translatable by the words "adecuado,"
"suficiente," and "conveniente," according to the context and circumstances,
we determine this point against the appellant, particularly in view of the fact
that the objection was not made in the court below, and that the evidence
clearly shows a failure to provide "suitable means for the protection of the
animals."
2. The appellant's arguments against the constitutionality of Act No. 55 and
the amendment thereto seems to rest upon a fundamentally erroneous
conception of the constitutional law of these Islands. The statute penalizes
acts and ommissions incidental to the transportation of live stock between
foreign ports and ports of the Philippine Islands, and had a similar statute
regulating commerce with its ports been enacted by the legislature of one of
the States of the Union, it would doubtless have been in violation of Article I,
section 3, of the Constitution of the United States. (Stubbs vs. People (Colo.),
11 L. R. A., N. S., 1071.)
But the Philippine Islands is not a State, and its relation to the United States
is controlled by constitutional principles different from those which apply to
States of the Union. The importance of the question thus presented requires
a statement of the principles which govern those relations, and consideration
of the nature and extent of the legislative power of the Philippine Commission
and the Legislature of the Philippines. After much discussion and considerable

47

diversity of
established.

opinion

certain

applicable

constitutional

doctrines

are

The Constitution confers upon the United States the express power to make
war and treaties, and it has the power possessed by all nations to acquire
territory by conquest or treaty. Territory thus acquired belongs to the United
States, and to guard against the possibility of the power of Congress to
provide for its government being questioned, the framers of the Constitution
provided in express terms that Congress should have the power "to dispose
of and make all needful rules and regulations respecting territory and other
property belonging to the United States." (Art. IV, sec. 3, par. 3.) Upon the
acquisition of the territory by the United States, and until it is formally
incorporated into the Union, the duty of providing a government therefor
devolves upon Congress. It may govern the territory by its direct acts, or it
may create a local government, and delegate thereto the ordinary powers
required for local government. (Binns vs. U. S., 194 U. S., 486.) This has been
the usual procedure. Congress has provided such governments for territories
which were within the Union, and for newly acquired territory not yet
incorporated therein. It has been customary to organize a government with
the ordinary separation of powers into executive, legislative, and judicial, and
to prescribe in an organic act certain general conditions in accordance with
which the local government should act. The organic act thus became the
constitution of the government of the territory which had not been formally
incorporated into the Union, and the validity of legislation enacted by the
local legislature was determined by its conformity with the requirements of
such organic act. (National Bank vs. Yankton, 11 Otto (U. S.), 129.) To the
legislative body of the local government Congress has delegated that portion
of legislative power which in its wisdom it deemed necessary for the
government of the territory, reserving, however, the right to annul the action
of the local legislature and itself legislate directly for the territory. This power
has been exercised during the entire period of the history of the United
States. The right of Congress to delegate such legislative power can no
longer be seriously questioned. (Dorr vs. U. S., 195 U. S., 138; U.
S. vs. Heinszen, 206 U. S., 370, 385.)
The Constitution of the United States does not by its own force operate within
such territory, although the liberality of Congress in legislating the
Constitution into contiguous territory tended to create an impression upon
the minds of many people that it went there by its own force.
(Downes vs. Bidwell, 182 U. S., 289.) In legislating with reference to this
territory, the power of Congress is limited only by those prohibitions of the
Constitution which go to the very root of its power to act at all, irrespective of
time or place. In all other respects it is plenary. (De Limavs. Bidwell, 182 U.
S., 1; Downes vs. Bidwell, 182 U. S., 244; Hawaii vs. Mankichi, 190 U. S., 197;
Dorr vs. U. S., 195 U. S., 138; Rassmussen vs. U. S., 197 U. S., 516.)
This power has been exercised by Congress throughout the whole history of
the United States, and legislation founded on the theory was enacted long
prior to the acquisition of the present Insular possessions. Section 1891 of the
Revised Statutes of 1878 provides that "The Constitution and all laws of the
United States which are not locally inapplicable shall have the same force
and effect within all the organized territories, and in every Territory hereafter
organized, as elsewhere within the United States." When Congress organized

a civil government for the Philippines, it expressly provided that this section
of the Revised Statutes should not apply to the Philippine Islands. (Sec. 1, Act
of 1902.)
In providing for the government of the territory which was acquired by the
United States as a result of the war with Spain, the executive and legislative
authorities have consistently proceeded in conformity with the principles
above state. The city of Manila was surrendered to the United States on
August 13, 1898, and the military commander was directed to hold the city,
bay, and harbor, pending the conclusion of a peace which should determine
the control, disposition, and government of the Islands. The duty then
devolved upon the American authorities to preserve peace and protect
person and property within the occupied territory. Provision therefor was
made by proper orders, and on August 26 General Merritt assumed the duties
of military governor. The treaty of peace was signed December 10, 1898. On
the 22d of December, 1898, the President announced that the destruction of
the Spanish fleet and the surrender of the city had practically effected the
conquest of the Philippine Islands and the suspension of the Spanish
sovereignty therein, and that by the treaty of peace the future control,
disposition, and government of the Islands had been ceded to the United
States. During the periods of strict military occupation, before the treaty of
peace was ratified, and the interim thereafter, until Congress acted
(Santiago vs. Noueral, 214 U.S., 260), the territory was governed under the
military authority of the President as commander in chief. Long before
Congress took any action, the President organized a civil government which,
however, had its legal justification, like the purely military government which
it gradually superseded, in the war power. The military power of the President
embraced legislative, executive personally, or through such military or civil
agents as he chose to select. As stated by Secretary Root in his report for
1901
The military power in exercise in a territory under military occupation
includes executive, legislative, and judicial authority. It not
infrequently happens that in a single order of a military commander
can be found the exercise of all three of these different powers the
exercise of the legislative powers by provisions prescribing a rule of
action; of judicial power by determination of right; and the executive
power by the enforcement of the rules prescribed and the rights
determined.
President McKinley desired to transform military into civil government as
rapidly as conditions would permit. After full investigation, the organization of
civil government was initiated by the appointment of a commission to which
civil authority was to be gradually transferred. On September 1, 1900, the
authority to exercise, subject to the approval of the President. "that part of
the military power of the President in the Philippine Islands which is
legislative in its character" was transferred from the military government to
the Commission, to be exercised under such rules and regulations as should
be prescribed by the Secretary of War, until such time as complete civil
government should be established, or congress otherwise provided. The
legislative power thus conferred upon the Commission was declared to
include "the making of rules and orders having the effect of law for the
raising of revenue by taxes, customs duties, and imposts; the appropriation

48

and expenditure of public funds of the Islands; the establishment of an

educational system to secure an efficient civil service; the organization and
establishment of courts; the organization and establishment of municipal and
departmental government, and all other matters of a civil nature which the
military governor is now competent to provide by rules or orders of a
legislative character." This grant of legislative power to the Commission was
to be exercised in conformity with certain declared general principles, and
subject to certain specific restrictions for the protection of individual rights.
The Commission were to bear in mind that the government to be instituted
was "not for our satisfaction or for the expression of our theoretical views, but
for the happiness, peace, and prosperity of the people of the Philippine
Island, and the measures adopted should be made to conforms to their
customs, their habits, and even their prejudices, to the fullest extent
consistent with the accomplishment of the indispensable requisites of just
and effective government." The specific restrictions upon legislative power
were found in the declarations that "no person shall be deprived of life,
liberty, or property without due process of law; that private property shall not
be taken for public use without just compensation; that in all criminal
prosecutions the accused shall enjoy the right to a speedy and public trial, to
be informed of the nature and cause of the accusation, to be confronted with
the witnesses against him, to have compulsory process for obtaining
witnesses in his favor, and to have the assistance of counsel for his defense;
that excessive bail shall not be required, nor excessive fines imposed, nor
cruel and unusual punishment inflicted; that no person shall be put twice in
jeopardy for the same offense or be compelled in any criminal case to be a
witness against himself; that the right to be secure against unreasonable
searches and seizures shall not be violated; that neither slavery nor
involuntary servitude shall exist except as a punishment for crime; that no
bill of attainder or ex post facto law shall be passed; that no law shall be
passed abridging the freedom of speech or of the press or of the rights of the
people to peaceably assemble and petition the Government for a redress of
grievances; that no law shall be made respecting an establishment of religion
or prohibiting the free exercise thereof, and that the free exercise and
enjoyment of religious profession and worship without discrimination or
preference shall forever be allowed."
To prevent any question as to the legality of these proceedings being raised,
the Spooner amendment to the Army Appropriation Bill passed March 2,
1901, provided that "all military, civil, and judicial powers necessary to
govern the Philippine Islands . . . shall until otherwise provided by Congress
be vested in such person and persons, and shall be exercised in such
manner, as the President of the United States shall direct, for the
establishment of civil government, and for maintaining and protecting the
inhabitants of said Islands in the free enjoyment of their liberty, property, and
religion." Thereafter, on July 4, 1901, the authority, which had been exercised
previously by the military governor, was transferred to that official. The
government thus created by virtue of the authority of the President as
Commander in Chief of the Army and Navy continued to administer the
affairs of the Islands under the direction of the President until by the Act of
July 1, 1902, Congress assumed control of the situation by the enactment of a
law which, in connection with the instructions of April 7, 1900, constitutes the
organic law of the Philippine Islands.

The Act of July 1, 1902, made no substancial changes in the form of

government which the President had erected. Congress adopted the system
which was in operation, and approved the action of the President in
organizing the government. Substantially all the limitations which had been
imposed on the legislative power by the President's instructions were
included in the law, Congress thus extending to the Islands by legislative act
nor the Constitution, but all its provisions for the protection of the rights and
privileges of individuals which were appropriate under the conditions. The
action of the President in creating the Commission with designated powers of
government, in creating the office of the Governor-General and ViceGovernor-General, and through the Commission establishing certain
executive departments, was expressly approved and ratified. Subsequently
the action of the President in imposing a tariff before and after the ratification
of the treaty of peace was also ratified and approved by Congress. (Act of
March 8, 1902; Act of July 1, 1902; U.S. vs. Heinszen, 206 U.S., 370;
Lincolnvs. U.S., 197 U.S., 419.) Until otherwise provided by law the Islands
were to continue to be governed "as thereby and herein provided." In the
future the enacting clause of all statutes should read "By authority of the
United States" instead of "By the authority of the President." In the course of
time the legislative authority of the Commission in all parts of the Islands not
inhabited by Moros or non-Christian tribes was to be transferred to a
legislature consisting of two houses the Philippine Commission and the
Philippine Assembly. The government of the Islands was thus assumed by
Congress under its power to govern newly acquired territory not incorporated
into the United States.
This Government of the Philippine Islands is not a State or a Territory,
although its form and organization somewhat resembles that of both. It
stands outside of the constitutional relation which unites the States and
Territories into the Union. The authority for its creation and maintenance is
derived from the Constitution of the United States, which, however, operates
on the President and Congress, and not directly on the Philippine
Government. It is the creation of the United States, acting through the
President and Congress, both deriving power from the same source, but from
different parts thereof. For its powers and the limitations thereon the
Government of the Philippines looked to the orders of the President before
Congress acted and the Acts of Congress after it assumed control. Its organic
laws are derived from the formally and legally expressed will of the President
and Congress, instead of the popular sovereign constituency which lies upon
any subject relating to the Philippines is primarily in Congress, and when it
exercise such power its act is from the viewpoint of the Philippines the legal
equivalent of an amendment of a constitution in the United States.
Within the limits of its authority the Government of the Philippines is a
complete governmental organism with executive, legislative, and judicial
departments exercising the functions commonly assigned to such
departments. The separation of powers is as complete as in most
governments. In neither Federal nor State governments is this separation
such as is implied in the abstract statement of the doctrine. For instance, in
the Federal Government the Senate exercises executive powers, and the
President to some extent controls legislation through the veto power. In a
State the veto power enables him to exercise much control over legislation.
The Governor-General, the head of the executive department in the Philippine

49

Government, is a member of the Philippine Commission, but as executive he

has no veto power. The President and Congress framed the government on
the model with which Americans are familiar, and which has proven best
adapted for the advancement of the public interests and the protection of
individual rights and priviliges.
In instituting this form of government of intention must have been to adopt
the general constitutional doctrined which are inherent in the system. Hence,
under it the Legislature must enact laws subject to the limitations of the
organic laws, as Congress must act under the national Constitution, and the
States under the national and state constitutions. The executive must
execute such laws as are constitutionally enacted. The judiciary, as in all
governments operating under written constitutions, must determine the
validity of legislative enactments, as well as the legality of all private and
official acts. In performing these functions it acts with the same
independence as the Federal and State judiciaries in the United States. Under
no other constitutional theory could there be that government of laws and
not of men which is essential for the protection of rights under a free and
orderly government.
Such being the constitutional theory of the Government of the Philippine
Islands, it is apparent that the courts must consider the question of the
validity of an act of the Philippine Commission or the Philippine Legislature,
as a State court considers an act of the State legislature. The Federal
Government exercises such powers only as are expressly or impliedly granted
to it by the Constitution of the United States, while the States exercise all
powers which have not been granted to the central government. The former
operates under grants, the latter subject to restrictions. The validity of an Act
of Congress depends upon whether the Constitution of the United States
contains a grant of express or implied authority to enact it. An act of a State
legislature is valid unless the Federal or State constitution expressly or
impliedly prohibits its enaction. An Act of the legislative authority of the
Philippines Government which has not been expressly disapproved by
Congress is valid unless its subject-matter has been covered by congressional
legislation, or its enactment forbidden by some provision of the organic laws.
The legislative power of the Government of the Philippines is granted in
general terms subject to specific limitations. The general grant is not alone of
power to legislate on certain subjects, but to exercise the legislative power
subject to the restrictions stated. It is true that specific authority is conferred
upon the Philippine Government relative to certain subjects of legislation, and
that Congress has itself legislated upon certain other subjects. These,
however, should be viewed simply as enactments on matters wherein
Congress was fully informed and ready to act, and not as implying any
restriction upon the local legislative authority in other matters. (See Opinion
of Atty. Gen. of U. S., April 16, 1908.)
The fact that Congress reserved the power to annul specific acts of legislation
by the Government of the Philippine tends strongly to confirm the view that
for purposes of construction the Government of the Philippines should be
regarded as one of general instead of enumerated legislative powers. The
situation was unusual. The new government was to operate far from the
source of its authority. To relieve Congress from the necessity of legislating
with reference to details, it was thought better to grant general legislative

power to the new government, subject to broad and easily understood

prohibitions, and reserve to Congress the power to annul its acts if they met
with disapproval. It was therefore provided "that all laws passed by the
Government of the Philippine Islands shall be reported to Congress, which
hereby reserves the power and authority to annul the same." (Act of
Congress, July 1, 1902, sec. 86.) This provision does not suspend the acts of
the Legislature of the Philippines until approved by Congress, or when
approved, expressly or by acquiescence, make them the laws of Congress.
They are valid acts of the Government of the Philippine Islands until annulled.
(Miners Bank vs. Iowa, 12 How. (U. S.), 1.)
In order to determine the validity of Act No. 55 we must then ascertain
whether the Legislature has been expressly or implication forbidden to enact
it. Section 3, Article IV, of the Constitution of the United States operated only
upon the States of the Union. It has no application to the Government of the
Philippine Islands. The power to regulate foreign commerce is vested in
Congress, and by virtue of its power to govern the territory belonging to the
United States, it may regulate foreign commerce with such territory. It may
do this directly, or indirectly through a legislative body created by it, to which
its power in this respect if delegate. Congress has by direct legislation
determined the duties which shall be paid upon goods imported into the
Philippines, and it has expressly authorized the Government of the Philippines
to provide for the needs of commerce by improving harbors and navigable
waters. A few other specific provisions relating to foreign commerce may be
found in the Acts of Congress, but its general regulation is left to the
Government of the Philippines, subject to the reserved power of Congress to
annul such legislation as does not meet with its approval. The express
limitations upon the power of the Commission and Legislature to legislate do
not affect the authority with respect to the regulation of commerce with
foreign countries. Act No. 55 was enacted before Congress took over the
control of the Islands, and this act was amended by Act No. 275 after the
Spooner amendment of March 2, 1901, was passed. The military government,
and the civil government instituted by the President, had the power, whether
it be called legislative or administrative, to regulate commerce between
foreign nations and the ports of the territory. (Crossvs. Harrison, 16 How.
(U.S.), 164, 190; Hamilton vs. Dillin, 21 Wall. (U.S.), 73, 87.) This Act has
remained in force since its enactment without annulment or other action by
Congress, and must be presumed to have met with its approval. We are
therefore satisfied that the Commission had, and the Legislature now has, full
constitutional power to enact laws for the regulation of commerce between
foreign countries and the ports of the Philippine Islands, and that Act No. 55,
as amended by Act No. 275, is valid.
3. Whether a certain method of handling cattle is suitable within the meaning
of the Act can not be left to the judgment of the master of the ship. It is a
question which must be determined by the court from the evidence. On
December 2, 1908, the defendant Bull brought into and disembarked in the
port and city of Manila certain cattle, which came from the port of Ampieng,
Formosa, without providing suitable means for securing said animals while in
transit, so as to avoid cruelty and unnecessary suffering to said animals,
contrary to the provisions of section 1 of Act No. 55, as amended by section 1
of Act No. 275. The trial court found the following facts, all of which are fully
sustained by the evidence:

50

That the defendant, H. N. Bull, as captain and master of the

Norwegian steamer known as the Standard, for a period of six
months or thereabouts prior to the 2d day of December, 1908, was
engaged in the transportation of cattle and carabaos from Chines and
Japanese ports to and into the city of Manila, Philippine Islands.
That on the 2d day of December, 1908, the defendant, as such
master and captain as aforesaid, brought into the city of Manila,
aboard said ship, a large number of cattle, which ship was anchored,
under the directions of the said defendant, behind the breakwaters in
front of the city of Manila, in Manila Bay, and within the jurisdiction of
this court; and that fifteen of said cattle then and there had broken
legs and three others of said cattle were dead, having broken legs;
and also that said cattle were transported and carried upon said ship
as aforesaid by the defendant, upon the deck and in the hold of said
ship, without suitable precaution and care for the transportation of
said animals, and to avoid danger and risk to their lives and security;
and further that said cattle were so transported abroad said ship by
the defendant and brought into the said bay, and into the city of
Manila, without any provisions being made whatever upon said decks
of said ship and in the hold thereof to maintain said cattle in a
suitable condition and position for such transportation.
That a suitable and practicable manner in which to transport cattle
abroad steamship coming into Manila Bay and unloading in the city of
Manila is by way of individual stalls for such cattle, providing
partitions between the cattle and supports at the front sides, and rear
thereof, and cross-cleats upon the floor on which they stand and are
transported, of that in case of storms, which are common in this
community at sea, such cattle may be able to stand without slipping
and pitching and falling, individually or collectively, and to avoid the
production of panics and hazard to the animals on account or cattle
were transported in this case. Captain Summerville of the
steamship Taming, a very intelligent and experienced seaman, has
testified, as a witness in behalf of the Government, and stated
positively that since the introduction in the ships with which he is
acquainted of the stall system for the transportation of animals and
cattle he has suffered no loss whatever during the last year. The
defendant has testified, as a witness in his own behalf, that according
to his experience the system of carrying cattle loose upon the decks
and in the hold is preferable and more secure to the life and comfort
of the animals, but this theory of the case is not maintainable, either
by the proofs or common reason. It can not be urged with logic that,
for instance, three hundred cattle supports for the feet and without
stalls or any other protection for them individually can safely and
suitably carried in times of storm upon the decks and in the holds of
ships; such a theory is against the law of nature. One animal falling or
pitching, if he is untied or unprotected, might produce a serious panic
and the wounding of half the animals upon the ship if transported in
the manner found in this case.

The defendant was found guilty, and sentenced to pay a fine of two hundred
and fifty pesos, with subsidiary imprisonment in case of insolvency, and to
pay the costs. The sentence and judgment is affirmed. So ordered.

14. Pp vs. Tulin

MELO, J.:
This is one of the older cases which unfortunately has remained in docket of
the Court for sometime. It was reassigned, together with other similar cases,
to undersigned ponente in pursuance of A.M. No. 00-9-03-SC dated February
27, 2001.
In the evening of March 2, 1991, "M/T Tabangao," a cargo vessel owned by
the PNOC Shipping and Transport Corporation, loaded with 2,000 barrels of
kerosene, 2,600 barrels of regular gasoline, and 40,000 barrels of diesel oil,
with a total value of P40,426,793,87, was sailing off the coast of Mindoro near
Silonay Island.

On March 30, 1991, "M/T Tabangao" returned to the same area and
completed the transfer of cargo to "Navi Pride."
On April 8, 1991, "M/T Tabangao" arrived at Calatagan, Batangas, but the
vessel remained at sea. On April 10, 1991, the members of the crew were
released in three batches with the stern warning not to report the incident to
government authorities for a period of two days or until April 12, 1991,
otherwise they would be killed. The first batch was fetched from the shoreline
by a newly painted passenger jeep driven by accused-appellant Cecilio
Changco, brother of Emilio Changco, who brought them to Imus, Cavite and
gave P20,000.00 to Captain Libo-on for fare of the crew in proceeding to their
respective homes. The second batch was fetched by accused-appellant
Changco at midnight of April 10, 1991 and were brought to different places in
Metro Manila.
On April 12, 1991, the Chief Engineer, accompanied by the members of the
crew, called the PNOC Shipping and Transport Corporation office to report the
incident. The crew members were brought to the Coast Guard Office for
investigation. The incident was also reported to the National Bureau of
Investigation where the officers and members of the crew executed sworn
statements regarding the incident.
A series of arrests was thereafter effected as follows:

The vessel, manned by 21 crew members, including Captain Edilberto Liboon, Second Mate Christian Torralba, and Operator Isaias Ervas, was suddenly
boarded, with the use of an aluminum ladder, by seven fully armed pirates
led by Emilio Changco, older brother of accused-appellant Cecilio Changco.
The pirates, including accused-appellants Tulin, Loyola, and Infante, Jr. were
armed with M-16 rifles, .45 and .38 caliber handguns, and bolos. They
detained the crew and took complete control of the vessel. Thereafter,
accused-appellant Loyola ordered three crew members to paint over, using
black paint, the name "M/T Tabangao" on the front and rear portions of the
vessel, as well as the PNOC logo on the chimney of the vessel. The vessel
was then painted with the name "Galilee," with registry at San Lorenzo,
Honduras. The crew was forced to sail to Singapore, all the while sending
misleading radio messages to PNOC that the ship was undergoing repairs.

a. On May 19, 1991, the NBI received verified information that the pirates
were present at U.K. Beach, Balibago, Calatagan, Batangas. After three days
of surveillance, accused-appellant Tulin was arrested and brought to the NBI
headquarters in Manila.

PNOC, after losing radio contact with the vessel, reported the disappearance
of the vessel to the Philippine Coast Guard and secured the assistance of the
Philippine Air Force and the Philippine Navy. However, search and rescue
operations yielded negative results. On March 9, 1991, the ship arrived in the
vicinity of Singapore and cruised around the area presumably to await
another vessel which, however, failed to arrive. The pirates were thus forced
to return to the Philippines on March 14, 1991, arriving at Calatagan,
Batangas on March 20, 1991 where it remained at sea.

The undersigned State Prosecutor accuses ROGER P. TULIN, VIRGILIO

I. LOYOLA, CECILIO O. CHANGCO, ANDRES C. INFANTE, and CHEONG
SAN HIONG, and nine (9) other JOHN DOES of qualified piracy
(Violation of P.D. No. 532), committed as follows:

On March 28, 1991, the "M/T Tabangao" again sailed to and anchored about
10 to 18 nautical miles from Singapore's shoreline where another vessel
called "Navi Pride" anchored beside it. Emilio Changco ordered the crew of
"M/T Tabangao" to transfer the vessel's cargo to the hold of "Navi Pride".
Accused-appellant Cheong San Hiong supervised the crew of "Navi Pride" in
receiving the cargo. The transfer, after an interruption, with both vessels
leaving the area, was completed on March 30, 1991.

51

b. Accused-appellants Infante, Jr. and Loyola were arrested by chance at

Aguinaldo Hi-way by NBI agents as the latter were pursuing the mastermind,
who managed to evade arrest.
c. On May 20, 1991, accused-appellants Hiong and Changco were arrested at
the lobby of Alpha Hotel in Batangas City.
On October 24, 1991, an Information charging qualified piracy or violation of
Presidential Decree No. 532 (Piracy in Philippine Waters) was filed against
accused-appellants, as follows:

That on or about and during the period from March 2 to April

10, 1991, both dates inclusive, and for sometime prior and
subsequent thereto, and within the jurisdiction of this
Honorable Court, the said accused, then manning a motor
launch and armed with high powered guns, conspiring and
confederating together and mutually helping one another, did
then and there, wilfully, unlawfully and feloniously fire upon,
board and seize while in the Philippine waters M/T PNOC
TABANGCO loaded with petroleum products, together with
the complement and crew members, employing violence
against or intimidation of persons or force upon things, then

direct the vessel to proceed to Singapore where the cargoes

were unloaded and thereafter returned to the Philippines on
April 10, 1991, in violation of the aforesaid law.
CONTRARY TO LAW.
(pp. 119-20, Rollo.)
This was docketed as Criminal Case No. 91-94896 before Branch 49 of the
Regional Trial Court of the National Capital Judicial Region stationed in Manila.
Upon arraignment, accused-appellants pleaded not guilty to the charge. Trial
thereupon ensued.
Accused-appellants Tulin, Infante, Jr., and Loyola, notwithstanding some
inconsistencies in their testimony as to where they were on March 1, 1991,
maintained the defense of denial, and disputed the charge, as well as the
transfer of any cargo from "M/T Tabangao" to the "Navi Pride." All of them
claimed having their own respective sources of livelihood. Their story is to the
effect that on March 2, 1991, while they were conversing by the beach, a red
speedboat with Captain Edilberto Liboon and Second Mate Christian Torralba
on board, approached the seashore. Captain Liboon inquired from the three if
they wanted to work in a vessel. They were told that the work was light and
that each worker was to be paid P3,000.00 a month with additional
compensation if they worked beyond that period. They agreed even though
they had no sea-going experience. On board, they cooked, cleaned the
vessel, prepared coffee, and ran errands for the officers. They denied having
gone to Singapore, claiming that the vessel only went to Batangas. Upon
arrival thereat in the morning of March 21, 1991, they were paid P1,000.00
each as salary for nineteen days of work, and were told that the balance
would be remitted to their addresses. There was neither receipt nor contracts
of employment signed by the parties.
Accused-appellant Changco categorically denied the charge, averring that he
was at home sleeping on April 10, 1991. He testified that he is the younger
brother of Emilio Changco, Jr.
Accused-appellant Cheong San Hiong, also known as Ramzan Ali, adduced
evidence that he studied in Sydney, Australia, obtaining the "Certificate" as
Chief Officer, and later completed the course as a "Master" of a vessel,
working as such for two years on board a vessel. He was employed at Navi
Marine Services, Pte., Ltd. as Port Captain. The company was engaged in the
business of trading petroleum, including shipoil, bunker lube oil, and
petroleum to domestic and international markets. It owned four vessels, one
of which was "Navi Pride."
On March 2, 1991, the day before "M/T Tabangao" was seized by Emilio
Changco and his cohorts, Hiong's name was listed in the company's letter to
the Mercantile Section of the Maritime Department of the Singapore
government as the radio telephone operator on board the vessel "Ching Ma."
The company was then dealing for the first time with Paul Gan, a Singaporean
broker, who offered to sell to the former bunker oil for the amount of
300,000.00 Singapore dollars. After the company paid over one-half of the
aforesaid amount to Paul Gan, the latter, together with Joseph Ng, Operations

52

Superintendent of the firm, proceeded to the high seas on board "Navi Pride"
but failed to locate the contact vessel.
The transaction with Paul Gan finally pushed through on March 27, 1991.
Hiong, upon his return on board the vessel "Ching Ma," was assigned to
supervise a ship-to-ship transfer of diesel oil off the port of Singapore, the
contact vessel to be designated by Paul Gan. Hiong was ordered to ascertain
the quantity and quality of the oil and was given the amount of 300,000.00
Singapore Dollars for the purchase. Hiong, together with Paul Gan, and the
surveyor William Yao, on board "Navi Pride" sailed toward a vessel called "M/T
Galilee". Hiong was told that "M/T Galilee" would be making the transfer.
Although no inspection of "Navi Pride" was made by the port authorities
before departure, Navi Marine Services, Pte., Ltd. was able to procure a port
clearance upon submission of General Declaration and crew list. Hiong, Paul
Gan, and the brokers were not in the crew list submitted and did not pass
through the immigration. The General Declaration falsely reflected that the
vessel carried 11,900 tons.
On March 28, 1991, "Navi Pride" reached the location of "M/T Galilee". The
brokers then told the Captain of the vessel to ship-side with "M/T Galilee" and
then transfer of the oil transpired. Hiong and the surveyor William Yao met
the Captain of "M/T Galilee," called "Captain Bobby" (who later turned out to
be Emilio Changco). Hiong claimed that he did not ask for the full name of
Changco nor did he ask for the latter's personal card.
Upon completion of the transfer, Hiong took the soundings of the tanks in the
"Navi Pride" and took samples of the cargo. The surveyor prepared the
survey report which "Captain Bobby" signed under the name "Roberto
Castillo." Hiong then handed the payment to Paul Gan and William Yao. Upon
arrival at Singapore in the morning of March 29, 1991, Hiong reported the
quantity and quality of the cargo to the company.
Thereafter, Hiong was again asked to supervise another transfer of oil
purchased by the firm " from "M/T Galilee" to "Navi Pride." The same
procedure as in the first transfer was observed. This time, Hiong was told that
that there were food and drinks, including beer, purchased by the company
for the crew of "M/T Galilee. The transfer took ten hours and was completed
on March 30, 1991. Paul Gan was paid in full for the transfer.
On April 29 or 30, 1991, Emilio Changco intimated to Hiong that he had four
vessels and wanted to offer its cargo to cargo operators. Hiong was asked to
act as a broker or ship agent for the sale of the cargo in Singapore. Hiong
went to the Philippines to discuss the matter with Emilio Changco, who laid
out the details of the new transfer, this time with "M/T Polaris" as contact
vessel. Hiong was told that the vessel was scheduled to arrive at the port of
Batangas that weekend. After being billeted at Alpha Hotel in Batangas City,
where Hiong checked in under the name "SONNY CSH." A person by the
name of "KEVIN OCAMPO," who later turned out to be Emilio Changco
himself, also checked in at Alpha Hotel. From accused-appellant Cecilio
Changco, Hiong found out that the vessel was not arriving. Hiong was
thereafter arrested by NBI agents.
After trial, a 95-page decision was rendered convicting accused-appellants of
the crime charged. The dispositive portion of said decision reads:

WHEREFORE, in the light of the foregoing considerations, judgment is

hereby rendered by this Court finding the accused Roger Tulin, Virgilio
Loyola, Andres Infante, Jr. and Cecilio Changco guilty beyond
reasonable doubt, as principals, of the crime of piracy in Philippine
Waters defined in Section 2(d) of Presidential Decree No. 532 and the
accused Cheong San Hiong, as accomplice, to said crime. Under
Section 3(a) of the said law, the penalty for the principals of said
crime is mandatory death. However, considering that, under the 1987
Constitution, the Court cannot impose the death penalty, the accused
Roger Tulin, Virgilio Loyola, Andres Infante, Jr., and Cecilio Changco
are hereby each meted the penalty of RECLUSION PERPETUA, with all
the accessory penalties of the law. The accused Cheong San Hiong is
hereby meted the penalty of RECLUSION PERPETUA, pursuant to
Article 52 of the Revised Penal Code in relation to Section 5 of PD
532. The accused Roger Tulin, Virgilio Loyola, Andres Infante, Jr. and
Cecilio Changco are hereby ordered to return to the PNOC Shipping
and Transport Corporation the "M/T Tabangao" or if the accused can
no longer return the same, the said accused are hereby ordered to
remit, jointly and severally, to said corporation the value thereof in
the amount of P11,240,000.00, Philippine Currency, with interests
thereon, at the rate of 6% per annum from March 2, 1991 until the
said amount is paid in full. All the accused including Cheong San
Hiong are hereby ordered to return to the Caltex Philippines, Inc. the
cargo of the "M/T Tabangao", or if the accused can no longer return
the said cargo to said corporation, all the accused are hereby
condemned to pay, jointly and severally, to the Caltex Refinery, Inc.,
the value of said cargo in the amount of P40,426,793.87, Philippine
Currency plus interests until said amount is paid in full. After the
accused Cheong San Hiong has served his sentence, he shall be
deported to Singapore.
All the accused shall be credited for the full period of their detention
at the National Bureau of Investigation and the City Jail of Manila
during the pendency of this case provided that they agreed in writing
to abide by and comply strictly with the rules and regulations of the
City Jail of Manila and the National Bureau of Investigation. With costs
against all the accused.
SO ORDERED.
(pp. 149-150, Rollo.)
The matter was then elevated to this Court. The arguments of accusedappellants may be summarized as follows:
Roger P. Tulin, Virgilio I. Loyola, Andres C. Infante, Jr., and Cecilio O. Changco
Accused-appellants Tulin, Loyola, Infante, Jr., and Cecilio Changco assert that
the trial court erred in allowing them to adopt the proceedings taken during
the time they were being represented by Mr. Tomas Posadas, a non-lawyer,
thereby depriving them of their constitutional right to procedural due
process.

In this regard, said accused-appellants narrate that Mr. Posadas entered his
appearance as counsel for all of them. However, in the course of the
proceedings, or on February 11, 1992, the trial court discovered that Mr.
Posadas was not a member of the Philippine Bar. This was after Mr. Posadas
had presented and examined seven witnesses for the accused.
Further, accused-appellants Tulin, Loyola, Infante, Cecilio, Changco uniformly
contend that during the custodial investigation, they were subjected to
physical violence; were forced to sign statements without being given the
opportunity to read the contents of the same; were denied assistance of
counsel, and were not informed of their rights, in violation of their
constitutional rights.
Said accused-appellants also argue that the trial court erred in finding that
the prosecution proved beyond reasonable doubt that they committed the
crime of qualified piracy. They allege that the pirates were outnumbered by
the crew who totaled 22 and who were not guarded at all times. The crew, so
these accused-appellants conclude, could have overpowered the alleged
pirates.
Cheong San Hiong
In his brief, Cheong argues that: (1) Republic Act No. 7659 in effect
obliterated the crime committed by him; (2) the trial court erred in declaring
that the burden is lodged on him to prove by clear and convincing evidence
that he had no knowledge that Emilio Changco and his cohorts attacked and
seized the "M/T Tabangao" and/or that the cargo of the vessel was stolen or
the subject of theft or robbery or piracy; (3) the trial court erred in finding
him guilty as an accomplice to the crime of qualified piracy under Section 4
of Presidential Decree No. 532 (Anti-Piracy and Anti-Robbery Law of 1974); (4)
the trial court erred in convicting and punishing him as an accomplice when
the acts allegedly committed by him were done or executed outside of
Philippine waters and territory, stripping the Philippine courts of jurisdiction
to hold him for trial, to convict, and sentence; (5) the trial court erred in
making factual conclusions without evidence on record to prove the same
and which in fact are contrary to the evidence adduced during trial; (6) the
trial court erred in convicting him as an accomplice under Section 4 of
Presidential Decree No. 532 when he was charged as a principal by direct
participation under said decree, thus violating his constitutional right to be
informed of the nature and cause of the accusation against him.
Cheong also posits that the evidence against the other accused-appellants do
not prove any participation on his part in the commission of the crime of
qualified piracy. He further argues that he had not in any way participated in
the seajacking of "M/T Tabangao" and in committing the crime of qualified
piracy, and that he was not aware that the vessel and its cargo were pirated.
As legal basis for his appeal, he explains that he was charged under the
information with qualified piracy as principal under Section 2 of Presidential
Decree No. 532 which refers to Philippine waters. In the case at bar, he
argues that he was convicted for acts done outside Philippine waters or
territory. For the State to have criminal jurisdiction, the act must have been
committed within its territory.
We affirm the conviction of all the accused-appellants.

53

The issues of the instant case may be summarized as follows: (1) what are
the legal effects and implications of the fact that a non-lawyer represented
accused-appellants during the trial?; (2) what are the legal effects and
implications of the absence of counsel during the custodial investigation?; (3)
did the trial court err in finding that the prosecution was able to prove beyond
reasonable doubt that accused-appellants committed the crime of qualified
piracy?; (4) did Republic Act No. 7659 obliterate the crime committed by
accused-appellant Cheong?; and (5) can accused-appellant Cheong be
convicted as accomplice when he was not charged as such and when the acts
allegedly committed by him were done or executed outside Philippine waters
and territory?
On the first issue, the record reveals that a manifestation (Exhibit "20",
Record) was executed by accused-appellants Tulin, Loyola, Changco, and
Infante, Jr. on February 11, 1991, stating that they were adopting the
evidence adduced when they were represented by a non-lawyer. Such waiver
of the right to sufficient representation during the trial as covered by the due
process clause shall only be valid if made with the full assistance of a bona
fide lawyer. During the trial, accused-appellants, as represented by Atty.
Abdul Basar, made a categorical manifestation that said accused-appellants
were apprised of the nature and legal consequences of the subject
manifestation, and that they voluntarily and intelligently executed the same.
They also affirmed the truthfulness of its contents when asked in open court
(tsn, February 11, 1992, pp. 7-59).
It is true that an accused person shall be entitled to be present and to defend
himself in person and by counsel at every stage of the proceedings, from
arraignment to promulgation of judgment (Section 1, Rule 115, Revised Rules
of Criminal Procedure). This is hinged on the fact that a layman is not versed
on the technicalities of trial. However, it is also provided by law that "[r]ights
may be waived, unless the waiver is contrary to law, public order, public
policy, morals, or good customs or prejudicial to a third person with right
recognized by law." (Article 6, Civil Code of the Philippines). Thus, the same
section of Rule 115 adds that "[u]pon motion, the accused may be allowed to
defend himself in person when it sufficiently appears to the court that he can
properly protect his rights without the assistance of counsel." By analogy, but
without prejudice to the sanctions imposed by law for the illegal practice of
law, it is amply shown that the rights of accused-appellants were sufficiently
and properly protected by the appearance of Mr. Tomas Posadas. An
examination of the record will show that he knew the technical rules of
procedure. Hence, we rule that there was a valid waiver of the right to
sufficient representation during the trial, considering that it was
unequivocally, knowingly, and intelligently made and with the full assistance
of a bona fide lawyer, Atty. Abdul Basar. Accordingly, denial of due process
cannot be successfully invoked where a valid waiver of rights has been made
(People vs. Serzo, 274 SCRA 553 [1997]; Sayson vs. People, 166 SCRA 680
[1988]).
However, we must quickly add that the right to counsel during custodial
investigation may not be waived except in writing and in the presence of
counsel.
Section 12, Article III of the Constitution reads:

54

SECTION 12. (1) Any person under investigation for the commission
of an offense shall have the right to be informed of his right to remain
silent and to have competent and independent counsel preferably of
his own choice. If the person cannot afford the services of counsel, he
must be provided with one. These rights cannot be waived except in
writing and in the presence of counsel.
(2) No torture, force, violence, threat, intimidation, or any other
means which vitiate the free will shall be used against him. Secret
detention places, solitary, incommunicado, or other similar forms of
detention are prohibited.
(3) Any confession or admission obtained in violation of this or
Section 17 hereof shall be inadmissible in evidence against him.
(4) The law shall provide for penal and civil sanctions for violations of
this section as well as compensation to and rehabilitation of victims
of torture or similar practices, and their families.
Such rights originated from Miranda v. Arizona (384 U.S. 436 [1966]) which
gave birth to the so-called Miranda doctrine which is to the effect that prior to
any questioning during custodial investigation, the person must be warned
that he has a right to remain silent, that any statement he gives may be used
as evidence against him, and that he has the right to the presence of an
attorney, either retained or appointed. The defendant may waive effectuation
of these rights, provided the waiver is made voluntarily, knowingly, and
intelligently. The Constitution even adds the more stringent requirement that
the waiver must be in writing and made in the presence of counsel.
Saliently, the absence of counsel during the execution of the so-called
confessions of the accused-appellants make them invalid. In fact, the very
basic reading of the Miranda rights was not even shown in the case at bar.
Paragraph [3] of the aforestated Section 12 sets forth the so-called "fruit from
the poisonous tree doctrine," a phrase minted by Mr. Justice Felix Frankfurter
in the celebrated case of Nardone vs. United States (308 U.S. 388 [1939]).
According to this rule, once the primary source (the "tree") is shown to have
been unlawfully obtained, any secondary or derivative evidence (the "fruit")
derived from it is also inadmissible. The rule is based on the principle that
evidence illegally obtained by the State should not be used to gain other
evidence because the originally illegally obtained evidence taints all evidence
subsequently obtained (People vs. Alicando, 251 SCRA 293 [1995]). Thus, in
this case, the uncounselled extrajudicial confessions of accused-appellants,
without a valid waiver of the right to counsel, are inadmissible and whatever
information is derived therefrom shall be regarded as likewise inadmissible in
evidence against them.
However, regardless of the inadmissibility of the subject confessions, there is
sufficient evidence to convict accused-appellants with moral certainty. We
agree with the sound deduction of the trial court that indeed, Emilio Changco
(Exhibits "U" and "UU") and accused-appellants Tulin, Loyola, and Infante, Jr.
did conspire and confederate to commit the crime charged. In the words of
then trial judge, now Justice Romeo J. Callejo of the Court of Appeals
. . . The Prosecution presented to the Court an array of witnesses,
officers and members of the crew of the "M/T Tabangao" no less, who

identified and pointed to the said Accused as among those who

attacked and seized, the "M/T Tabangao" on March 2, 1991, at about
6:30 o'clock in the afternoon, off Lubang Island, Mindoro, with its
cargo, and brought the said vessel, with its cargo, and the officers
and crew of the vessel, in the vicinity of Horsebough Lighthouse,
about sixty-six nautical miles off the shoreline of Singapore and sold
its cargo to the Accused Cheong San Hiong upon which the cargo was
discharged from the "M/T Tabangao" to the "Navi Pride" for the price
of about $500,000.00 (American Dollars) on March 29, and 30,
1991. . .
xxx

xxx

xxx

The Master, the officers and members of the crew of the "M/T
Tabangao" were on board the vessel with the Accused and their
cohorts from March 2, 1991 up to April 10, 1991 or for more than one
(1) month. There can be no scintilla of doubt in the mind of the Court
that the officers and crew of the vessel could and did see and identify
the seajackers and their leader. In fact, immediately after the
Accused were taken into custody by the operatives of the National
Bureau of Investigation, Benjamin Suyo, Norberto Senosa, Christian
Torralba and Isaias Wervas executed their "Joint Affidavit" (Exhibit
"B") and pointed to and identified the said Accused as some of the
pirates.
xxx

xxx

xxx

Indeed, when they testified before this Court on their defense, the
three (3) Accused admitted to the Court that they, in fact, boarded
the said vessel in the evening of March 2, 1991 and remained on
board when the vessel sailed to its destination, which turned out to
be off the port of Singapore.
(pp. 106-112, Rollo.)
We also agree with the trial court's finding that accused-appellants' defense
of denial is not supported by any hard evidence but their bare testimony.
Greater weight is given to the categorical identification of the accused by the
prosecution witnesses than to the accused's plain denial of participation in
the commission of the crime (People v. Baccay, 284 SCRA 296 [1998]).
Instead, accused-appellants Tulin, Loyola, and Infante, Jr. narrated a patently
desperate tale that they were hired by three complete strangers (allegedly
Captain Edilberto Liboon, Second Mate Christian Torralba, and their
companion) while said accused-appellants were conversing with one another
along the seashore at Aplaya, Balibago, Calatagan, Batangas, to work on
board the "M/T Tabangao" which was then anchored off-shore. And readily,
said accused-appellants agreed to work as cooks and handymen for an
indefinite period of time without even saying goodbye to their families,
without even knowing their destination or the details of their voyage, without
the personal effects needed for a long voyage at sea. Such evidence is
incredible and clearly not in accord with human experience. As pointed out by
the trial court, it is incredible that Captain Liboon, Second Mate Torralba, and
their companion "had to leave the vessel at 9:30 o'clock in the evening and

55

venture in a completely unfamiliar place merely to recruit five (5) cooks or

handymen (p. 113, Rollo)."
Anent accused-appellant Changco's defense of denial with the alibi that on
May 14 and 17, he was at his place of work and that on April 10, 1991, he
was in his house in Bacoor, Cavite, sleeping, suffice it to state that alibi is
fundamentally and inherently a weak defense, much more so when
uncorroborated by other witnesses (People v. Adora, 275 SCRA 441 [1997])
considering that it is easy to fabricate and concoct, and difficult to disprove.
Accused-appellant must adduce clear and convincing evidence that, at about
midnight on April 10, 1991, it was physically impossible for him to have been
in Calatagan, Batangas. Changco not only failed to do this, he was likewise
unable to prove that he was in his place of work on the dates aforestated.
It is doctrinal that the trial court's evaluation of the credibility of a testimony
is accorded the highest respect, for trial courts have an untrammeled
opportunity to observe directly the demeanor of witnesses and, thus, to
determine whether a certain witness is telling the truth (People v. Obello, 284
SCRA 79 [1998]).
We likewise uphold the trial court's finding of conspiracy. A conspiracy exists
when two or more persons come to an agreement concerning the commission
of a felony and decide to commit it (Article 8, Revised Penal Code). To be a
conspirator, one need not participate in every detail of execution; he need
not even take part in every act or need not even know the exact part to be
performed by the others in the execution of the conspiracy. As noted by the
trial court, there are times when conspirators are assigned separate and
different tasks which may appear unrelated to one another, but in fact,
constitute a whole and collective effort to achieve a common criminal design.
We affirm the trial court's finding that Emilio Changco, accused-appellants
Tulin, Loyola, and Infante, Jr. and others, were the ones assigned to attack
and seize the "M/T Tabangao" off Lubang, Mindoro, while accused-appellant
Cecilio Changco was to fetch the master and the members of the crew from
the shoreline of Calatagan, Batangas after the transfer, and bring them to
Imus, Cavite, and to provide the crew and the officers of the vessel with
money for their fare and food provisions on their way home. These acts had
to be well-coordinated. Accused-appellant Cecilio Changco need not be
present at the time of the attack and seizure of "M/T Tabangao" since he
performed his task in view of an objective common to all other accusedappellants.
Of notable importance is the connection of accused-appellants to one
another. Accused-appellant Cecilio Changco is the younger brother of Emilio
Changco (aka Captain Bobby/Captain Roberto Castillo/Kevin Ocampo), owner
of Phil-Asia Shipping Lines. Cecilio worked for his brother in said corporation.
Their residences are approximately six or seven kilometers away from each
other. Their families are close. Accused-appellant Tulin, on the other hand,
has known Cecilio since their parents were neighbors in Aplaya, Balibago,
Calatagan, Batangas. Accused-appellant Loyola's wife is a relative of the
Changco brothers by affinity. Besides, Loyola and Emilio Changco had both
been accused in a seajacking case regarding "M/T Isla Luzon" and its cargo of
steel coils and plates off Cebu and Bohol in 1989. Emilio Changco (aka Kevin

Ocampo) was convicted of the crime while Loyola at that time remained at
large.

considered as pirates and punished as hereinafter provided (Italics

supplied).

As for accused-appellant Hiong, he ratiocinates that he can no longer be

convicted of piracy in Philippine waters as defined and penalized in Sections
2[d] and 3[a], respectively of Presidential Decree No. 532 because Republic
Act No. 7659 (effective January 1, 1994), which amended Article 122 of the
Revised Penal Code, has impliedly superseded Presidential Decree No. 532.
He reasons out that Presidential Decree No. 532 has been rendered
"superfluous or duplicitous" because both Article 122 of the Revised Penal
Code, as amended, and Presidential Decree No. 532 punish piracy committed
in Philippine waters. He maintains that in order to reconcile the two laws, the
word "any person" mentioned in Section 1 [d] of Presidential Decree No. 532
must be omitted such that Presidential Decree No. 532 shall only apply to
offenders who are members of the complement or to passengers of the
vessel, whereas Republic Act No. 7659 shall apply to offenders who are
neither members of the complement or passengers of the vessel, hence,
excluding him from the coverage of the law.

To summarize, Article 122 of the Revised Penal Code, before its amendment,
provided that piracy must be committed on the high seas by any person not
a member of its complement nor a passenger thereof. Upon its amendment
by Republic Act No. 7659, the coverage of the pertinent provision was
widened to include offenses committed "in Philippine waters." On the other
hand, under Presidential Decree No. 532 (issued in 1974), the coverage of the
law on piracy embraces any person including "a passenger or member of the
complement of said vessel in Philippine waters." Hence, passenger or not, a
member of the complement or not, any person is covered by the law.

Article 122 of the Revised Penal Code, used to provide:

ARTICLE 122. Piracy in general and mutiny on the high seas. The
penalty of reclusion temporal shall be inflicted upon any person who,
on the high seas, shall attack or seize a vessel or, not being a
member of its complement nor a passenger, shall seize the whole or
part of the cargo of said vessel, its equipment, or personal belongings
of its complement or passengers.
(Italics supplied.)
Article 122, as amended by Republic Act No. 7659 (January 1, 1994), reads:
ARTICLE 122. Piracy in general and mutiny on the high seas or in
Philippine waters. The penalty ofreclusion perpetua shall be
inflicted upon any person who, on the high seas, or in Philippine
waters, shall attack or seize a vessel or, not being a member of its
complement nor a passenger, shall seize the whole or part of the
cargo of said vessel, its equipment, or personal belongings of its
complement or passengers.
(Italics ours)
On the other hand, Section 2 of Presidential Decree No. 532 provides:
SECTION 2. Definition of Terms. The following shall mean and be
understood, as follows:
d. Piracy. Any attack upon or seizure of any vessel or the taking
away of the whole or part thereof or its cargo, equipment, or the
personal belongings of its complement or passengers, irrespective of
the value thereof, by means of violence against or intimidation of
persons or force upon things, committed by any person, including a
passenger or member of the complement of said vessel in Philippine
waters, shall be considered as piracy. The offenders shall be

56

Republic Act No. 7659 neither superseded nor amended the provisions on
piracy under Presidential Decree No. 532. There is no contradiction between
the two laws. There is likewise no ambiguity and hence, there is no need to
construe or interpret the law. All the presidential decree did was to widen the
coverage of the law, in keeping with the intent to protect the citizenry as well
as neighboring states from crimes against the law of nations. As expressed in
one of the "whereas" clauses of Presidential Decree No. 532, piracy is "among
the highest forms of lawlessness condemned by the penal statutes of all
countries." For this reason, piracy under the Article 122, as amended, and
piracy under Presidential Decree No. 532 exist harmoniously as separate
laws.
As regards the contention that the trial court did not acquire jurisdiction over
the person of accused-appellant Hiong since the crime was committed
outside Philippine waters, suffice it to state that unquestionably, the attack
on and seizure of "M/T Tabangao" (renamed "M/T Galilee" by the pirates) and
its cargo were committed in Philippine waters, although the captive vessel
was later brought by the pirates to Singapore where its cargo was off-loaded,
transferred, and sold. And such transfer was done under accused-appellant
Hiong's direct supervision. Although Presidential Decree No. 532 requires that
the attack and seizure of the vessel and its cargo be committed in Philippine
waters, the disposition by the pirates of the vessel and its cargo is still
deemed part of the act of piracy, hence, the same need not be committed in
Philippine waters.
Moreover, piracy falls under Title One of Book Two of the Revised Penal Code.
As such, it is an exception to the rule on territoriality in criminal law. The
same principle applies even if Hiong, in the instant case, were charged, not
with a violation of qualified piracy under the penal code but under a special
law, Presidential Decree No. 532 which penalizes piracy in Philippine waters.
Verily, Presidential Decree No. 532 should be applied with more force here
since its purpose is precisely to discourage and prevent piracy in Philippine
waters (People v. Catantan, 278 SCRA 761 [1997]). It is likewise, well-settled
that regardless of the law penalizing the same, piracy is a reprehensible
crime against the whole world (People v. Lol-lo, 43 Phil. 19 [1922]).
However, does this constitute a violation of accused-appellant's constitutional
right to be informed of the nature and cause of the accusation against him on
the ground that he was convicted as an accomplice under Section 4 of
Presidential Decree No. 532 even though he was charged as a principal by
direct participation under Section 2 of said law?

The trial court found that there was insufficiency of evidence showing:
(a) that accused-appellant Hiong directly participated in the attack and
seizure of "M/T Tabangao" and its cargo; (b) that he induced Emilio Changco
and his group in the attack and seizure of "M/T Tabangao" and its cargo; (c)
and that his act was indispensable in the attack on and seizure of "M/T
Tabangao" and its cargo. Nevertheless, the trial court found that accusedappellant Hiong's participation was indisputably one which aided or abetted
Emilio Changco and his band of pirates in the disposition of the stolen cargo
under Section 4 of Presidential Decree No. 532 which provides:
SECTION 4. Aiding pirates or highway robbers/brigands or abetting
piracy or highway robbery brigandage. Any person who knowingly
and in any manner aids or protects pirates or highway
robbers/brigands, such as giving them information about the
movement of police or other peace officers of the government, or
acquires or receives property taken by such pirates or brigands or in
any manner derives any benefit therefrom; or any person who
directly or indirectly abets the commission of piracy or highway
robbery or brigandage, shall be considered as an accomplice of the
principal officers and be punished in accordance with Rules
prescribed by the Revised Penal Code.
It shall be presumed that any person who does any of the acts
provided in this Section has performed them knowingly, unless the
contrary is proven.
The ruling of the trial court is within well-settled jurisprudence that if there is
lack of complete evidence of conspiracy, the liability is that of an accomplice
and not as principal (People v. Tolentino, 40 SCRA 514 [1971]). Any doubt as
to the participation of an individual in the commission of the crime is always
resolved in favor of lesser responsibility (People v. Corbes, 270 SCRA 465
[1997]; People vs. Elfano, Jr., 125 SCRA 792 [1983];People v. Pastores, 40
SCRA 498 [1971]).
Emphasis must also be placed on the last paragraph of Section 4 of
Presidential Decree No. 532 which presumes that any person who does any of
the acts provided in said section has performed them knowingly, unless the
contrary is proven. In the case at bar, accused-appellant Hiong had failed to
overcome the legal presumption that he knowingly abetted or aided in the
commission of piracy, received property taken by such pirates and derived
benefit therefrom.
The record discloses that accused-appellant Hiong aided the pirates in
disposing of the stolen cargo by personally directing its transfer from "M/T
Galilee" to "M/T Navi Pride". He profited therefrom by buying the hijacked
cargo for Navi Marine Services, Pte., Ltd. (tsn, June 3, 1992, pp. 15-23). He
even tested the quality and verified the quantity of the petroleum products,
connived with Navi Marine Services personnel in falsifying the General
Declarations and Crew List to ensure that the illegal transfer went through,
undetected by Singapore Port Authorities, and supplied, the pirates with food,
beer, and other provisions for their maintenance while in port (tsn, June 3,
1992, pp. 133-134).

57

We believe that the falsification of the General Declaration (Arrival and

Departure) and Crew List was accomplished and utilized by accusedappellant Hiong and Navi Marine Services personnel in the execution of their
scheme to avert detection by Singapore Port Authorities. Hence, had
accused-appellant Hiong not falsified said entries, the Singapore Port
Authorities could have easily discovered the illegal activities that took place
and this would have resulted in his arrest and prosecution in Singapore.
Moreover, the transfer of the stolen cargo from "M/T Galilee" to "Navi Pride"
could not have been effected.
We completely uphold the factual findings of the trial court showing in detail
accused-appellant Hiong's role in the disposition of the pirated goods
summarized as follows: that on March 27, 1991, Hiong with Captain Biddy
Santos boarded the "Navi Pride," one of the vessels of the Navi Marine, to
rendezvous with the "M/T Galilee"; that the firm submitted the crew list of the
vessel (Exhibit "8-CSH", Record) to the port authorities, excluding the name
of Hiong; that the "General Declaration" (for departure) of the "Navi Pride" for
its voyage off port of Singapore (Exhibits "HH" and "8-A CSH", Record) falsely
stated that the vessel was scheduled to depart at 2200 (10 o'clock in the
evening), that there were no passengers on board, and the purpose of the
voyage was for "cargo operation" and that the vessel was to unload and
transfer 1,900 tons of cargo; that after the transfer of the fuel from "M/T
Galilee" with Emilio Changco a. k. a. Captain Bobby a. k. a. Roberto Castillo at
the helm, the surveyor prepared the "Quantity Certificate" (Exhibit "11-C
CSH, Record) stating that the cargo transferred to the "Navi Pride" was 2,406
gross cubic meters; that although Hiong was not the Master of the vessel, he
affixed his signature on the "Certificate" above the word "Master" (Exhibit
"11-C-2 CSH", Record); that he then paid P150,000.00 but did not require any
receipt for the amount; that Emilio Changco also did not issue one; and that
in the requisite "General Declaration" upon its arrival at Singapore on March
29, 1991, at 7 o'clock in the evening, (Exhibits "JJ" and "13-A CSH", Record), it
was made to falsely appear that the "Navi Pride" unloaded 1,700 tons of
cargo on the high seas during said voyage when in fact it acquired from the
"M/T Galilee" 2,000 metric tons of diesel oil. The second transfer transpired
with the same irregularities as discussed above. It was likewise supervised by
accused-appellant Cheong from his end while Emilio Changco supervised the
transfer from his end.
Accused-appellant Hiong maintains that he was merely following the orders
of his superiors and that he has no knowledge of the illegality of the source of
the cargo.
First and foremost, accused-appellant Hiong cannot deny knowledge of the
source and nature of the cargo since he himself received the same from "M/T
Tabangao". Second, considering that he is a highly educated mariner, he
should have avoided any participation in the cargo transfer given the very
suspicious circumstances under which it was acquired. He failed to show a
single piece of deed or bill of sale or even a purchase order or any contract of
sale for the purchase by the firm; he never bothered to ask for and scrutinize
the papers and documentation relative to the "M/T Galilee"; he did not even
verify the identity of Captain Robert Castillo whom he met for the first time
nor did he check the source of the cargo; he knew that the transfer took
place 66 nautical miles off Singapore in the dead of the night which a marine

vessel of his firm did not ordinarily do; it was also the first time Navi Marine
transacted with Paul Gan involving a large sum of money without any receipt
issued therefor; he was not even aware if Paul Gan was a Singaporean
national and thus safe to deal with. It should also be noted that the value of
the cargo was P40,426,793.87 or roughly more than US$1,000,000.00
(computed at P30.00 to $1, the exchange rate at that time). Manifestly, the
cargo was sold for less than one-half of its value. Accused-appellant Hiong
should have been aware of this irregularity. Nobody in his right mind would go
to far away Singapore, spend much time and money for transportation
only to sell at the aforestated price if it were legitimate sale involved. This, in
addition to the act of falsifying records, clearly shows that accused-appellant
Hiong was well aware that the cargo that his firm was acquiring was
purloined.
Lastly, it cannot be correctly said that accused-appellant was "merely
following the orders of his superiors." An individual is justified in performing
an act in obedience to an order issued by a superior if such order, is for some
lawful purpose and that the means used by the subordinate to carry out said
order is lawful (Reyes, Revised Penal Code, Vol. 1, 1981 ed., p. 212). Notably,
the alleged order of Hiong's superior Chua Kim Leng Timothy, is a patent
violation not only of Philippine, but of international law. Such violation was
committed on board a Philippine-operated vessel. Moreover, the means used
by Hiong in carrying out said order was equally unlawful. He misled port and
immigration authorities, falsified records, using a mere clerk, Frankie Loh, to
consummate said acts. During the trial, Hiong presented himself, and the trial
court was convinced, that he was an intelligent and articulate Port Captain.
These circumstances show that he must have realized the nature and the
implications of the order of Chua Kim Leng Timothy. Thereafter, he could have
refused to follow orders to conclude the deal and to effect the transfer of the
cargo to the "Navi Pride." He did not do so, for which reason, he must now
suffer the consequences of his actions.
WHEREFORE, finding the conviction of accused-appellants justified by the
evidence on record, the Court hereby AFFIRMS the judgment of the trial
court in toto.
SO ORDERED.

58

15. Liang vs. Pp

YNARES-SANTIAGO, J.:
Petitioner is an economist working with the Asian Development Bank (ADB).
Sometime in 1994, for allegedly uttering defamatory words against fellow
ADB worker Joyce Cabal, he was charged before the Metropolitan Trial Court
(MeTC) of Mandaluyong City with two counts of grave oral defamation
docketed as Criminal Cases Nos. 53170 and 53171. Petitioner was arrested
by virtue of a warrant issued by the MeTC. After fixing petitioner's bail at
P2,400.00 per criminal charge, the MeTC released him to the custody of the
Security Officer of ADB. The next day, the MeTC judge received an "office of
protocol" from the Department of Foreign Affairs (DFA) stating that petitioner
is covered by immunity from legal process under Section 45 of the
Agreement between the ADB and the Philippine Government regarding the
Headquarters of the ADB (hereinafter Agreement) in the country. Based on
the said protocol communication that petitioner is immune from suit, the
MeTC judge without notice to the prosecution dismissed the two criminal
cases. The latter filed a motion for reconsideration which was opposed by the
DFA. When its motion was denied, the prosecution filed a petition
for certiorari and mandamus with the Regional Trial Court (RTC) of Pasig City
which set aside the MeTC rulings and ordered the latter court to enforce the
warrant of arrest it earlier issued. After the motion for reconsideration was
denied, petitioner elevated the case to this Court via a petition for review
arguing that he is covered by immunity under the Agreement and that no

preliminary investigation was held before the criminal cases were filed in
court.1wphi1.nt
The petition is not impressed with merit.
First, courts cannot blindly adhere and take on its face the communication
from the DFA that petitioner is covered by any immunity. The DFA's
determination that a certain person is covered by immunity is only
preliminary which has no binding effect in courts. In receiving ex-parte the
DFA's advice and in motu propio dismissing the two criminal cases without
notice to the prosecution, the latter's right to due process was violated. It
should be noted that due process is a right of the accused as much as it is of
the prosecution. The needed inquiry in what capacity petitioner was acting at
the time of the alleged utterances requires for its resolution evidentiary basis
that has yet to be presented at the proper time. 1 At any rate, it has been
ruled that the mere invocation of the immunity clause does not ipso
facto result in the dropping of the charges. 2

no preliminary investigation is required in cases falling within the jurisdiction

of the MeTC.8 Besides the absence of preliminary investigation does not
affect the court's jurisdiction nor does it impair the validity of the information
or otherwise render it defective. 9
WHEREFORE, the petition is DENIED.
SO ORDERED.1wphi1.nt

Second, under Section 45 of the Agreement which provides:

Officers and staff of the Bank including for the purpose of this Article experts
and consultants performing missions for the Bank shall enjoy the following
privileges and immunities:
a.) immunity from legal process with respect to acts performed by them in
their official capacity except when the Bank waives the immunity.
the immunity mentioned therein is not absolute, but subject to the exception
that the acts was done in "official capacity." It is therefore necessary to
determine if petitioner's case falls within the ambit of Section 45(a). Thus, the
prosecution should have been given the chance to rebut the DFA protocol and
it must be accorded the opportunity to present its controverting evidence,
should it so desire.
Third, slandering a person could not possibly be covered by the immunity
agreement because our laws do not allow the commission of a crime, such as
defamation, in the name of official duty.3 The imputation of theft is ultra
vires and cannot be part of official functions. It is well-settled principle of law
that a public official may be liable in his personal private capacity for
whatever damage he may have caused by his act done with malice or in bad
faith or beyond the scope of his authority or jurisdiction. 4 It appears that even
the government's chief legal counsel, the Solicitor General, does not support
the stand taken by petitioner and that of the DFA.
Fourth, under the Vienna Convention on Diplomatic Relations, a diplomatic
agent, assuming petitioner is such, enjoys immunity from criminal jurisdiction
of the receiving state except in the case of an action relating to any
professional or commercial activity exercised by the diplomatic agent in the
receiving state outside his official functions. 5 As already mentioned above,
the commission of a crime is not part of official duty.
Finally, on the contention that there was no preliminary investigation
conducted, suffice it to say that preliminary investigation is not a matter of
right in cases cognizable by the MeTC such as the one at bar. 6 Being purely a
statutory right, preliminary investigation may be invoked only when
specifically granted by law.7 The rule on the criminal procedure is clear that

59

16. U.S. vs. Fowler

TORRES, J.:
The two defendants have been accused of the theft of sixteen bottles of
champagne of the value of $20, on the 12th August, 1901, while on board the
transport Lawton, then navigating the high seas, which said bottles of
champagne formed part of the cargo of the said vessel and were the property
of Julian Lindsay, and which were taken lucri causa, and with the intent to
appropriate the same, without violence or intimidation, and without the
consent of the owner, against the statute in the case made and provided.
The accused having been brought before the court, the prosecuting attorney
being present on behalf of the Government, counsel for the defendants

presented a demurrer, alleging that the Court of First Instance was without
jurisdiction to try the crime charged, inasmuch as it appeared from the
information that the crime was committed on the high seas, and not in the
city of Manila, or within the territory comprising the Bay of Manila, or upon
the seas within the 3-mile limit to which the jurisdiction of the court extends,
and asked, upon these grounds, that the case be dismissed.
This contention was opposed by the prosecuting attorney, who alleged that
the court has original jurisdiction in all criminal cases in which the penalty
exceeds six month's imprisonment, or a fine of over $100; that, in
accordance with the orders of the Military Governor and the Civil Commission
admiralty jurisdiction over all crimes committed on board vessel flying the
flag of the United States has been vested in the Court of First Instance of the
city of Manila. Among other laws and orders he cited the order of August 14,
1898, and Acts Nos. 76 and 186 of the United States Civil Commission. He
argued that the President of the United States had unquestionable authority
to authorize the commanding general and the Civil Commission to establish a
judicial system with authority to take cognizance of maritime and admiralty
causes, citing a decision of the Supreme Court of the United States in support
of this doctrine, which was applicable to this Archipelago, which is now
analogous to the status of some of the States of the Union during the
Mexican war and the war of secession.
The judge, however, by an order of the 14th of September, 1901, held that
the court was without jurisdiction to try the accused for the theft alleged to
have been committed on the high seas, sustained the demurrer, and ordered
the discharge of the defendants, with the costs to the Government. Against
this order the prosecuting attorney appealed, and the case was brought
before this court.
This case deals with a theft committed on board a transport while navigating
the high seas. Act No. 136 of the organic law, as well as Act No. 186 passed
by the Civil Commission, and which repealed the former law, Act No. 76, do
not expressly confer jurisdiction or authority upon this court to take
cognizance of all crimes committed on board vessels on the high seas. While
the provisions of the law are clear and precise with respect to civil admiralty
or maritime cases, this is not true with respect to criminal cases. If any doubt
could arise concerning the true meaning of the law applicable to the case, Act
No. 400 effectively dissipates such doubts.
This law, which is an addition to Act No. 136, by which the courts of justice of
the Philippine Islands were organized, in article 1 adds to article 56,
consisting of seven paragraphs, another paragraph numbered 8, which reads
as follows: "Of all crimes and offenses committed on the high seas or beyond
the jurisdiction of any country, or within any of the navigable waters of the
Philippine Archipelago, on board a ship or water craft of any kind registered
or licensed in the Philippine Islands in accordance with the laws thereof." The
purpose of this law was to define the jurisdiction of the courts of First
Instance in criminal cases for crimes committed on board vessels registered
or licensed in the Philippine Islands. The transport Lawton not being a vessel
of this class, our courts are without jurisdiction to take cognizance of a crime
committed on board the same.

60

Upon these grounds we consider that the order appealed should be affirmed,
with the costs de oficio. So ordered.

17. Eastern Shipping Lines, Inc. vs. IAC

MELENCIO-HERRERA, J.:
These two cases, both for the recovery of the value of cargo insurance, arose
from the same incident, the sinking of the M/S ASIATICA when it caught fire,
resulting in the total loss of ship and cargo.
The basic facts are not in controversy:
In G.R. No. 69044, sometime in or prior to June, 1977, the M/S ASIATICA, a
vessel operated by petitioner Eastern Shipping Lines, Inc., (referred to
hereinafter as Petitioner Carrier) loaded at Kobe, Japan for transportation to
Manila, 5,000 pieces of calorized lance pipes in 28 packages valued at
P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7 cases of
spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. Both
sets of goods were insured against marine risk for their stated value with
respondent Development Insurance and Surety Corporation.
In G.R. No. 71478, during the same period, the same vessel took on board
128 cartons of garment fabrics and accessories, in two (2) containers,
consigned to Mariveles Apparel Corporation, and two cases of surveying
instruments consigned to Aman Enterprises and General Merchandise. The
128 cartons were insured for their stated value by respondent Nisshin Fire &
Marine Insurance Co., for US $46,583.00, and the 2 cases by respondent
Dowa Fire & Marine Insurance Co., Ltd., for US $11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting
in the total loss of ship and cargo. The respective respondent Insurers paid
the corresponding marine insurance values to the consignees concerned and
were thus subrogated unto the rights of the latter as the insured.
G.R. NO. 69044
On May 11, 1978, respondent Development Insurance & Surety Corporation
(Development Insurance, for short), having been subrogated unto the rights
of the two insured companies, filed suit against petitioner Carrier for the
recovery of the amounts it had paid to the insured before the then Court of
First instance of Manila, Branch XXX (Civil Case No. 6087).
Petitioner-Carrier denied liability mainly on the ground that the loss was due
to an extraordinary fortuitous event, hence, it is not liable under the law.
On August 31, 1979, the Trial Court rendered judgment in favor of
Development Insurance in the amounts of P256,039.00 and P92,361.75,
respectively, with legal interest, plus P35,000.00 as attorney's fees and costs.
Petitioner Carrier took an appeal to the then Court of Appeals which, on
August 14, 1984, affirmed.
Petitioner Carrier is now before us on a Petition for Review on Certiorari.
G.R. NO. 71478
On June 16, 1978, respondents Nisshin Fire & Marine Insurance Co. NISSHIN
for short), and Dowa Fire & Marine Insurance Co., Ltd. (DOWA, for brevity), as
subrogees of the insured, filed suit against Petitioner Carrier for the recovery
of the insured value of the cargo lost with the then Court of First Instance of
Manila, Branch 11 (Civil Case No. 116151), imputing unseaworthiness of the
ship and non-observance of extraordinary diligence by petitioner Carrier.

61

Petitioner Carrier denied liability on the principal grounds that the fire which
caused the sinking of the ship is an exempting circumstance under Section
4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss
of fire is established, the burden of proving negligence of the vessel is shifted
to the cargo shipper.
On September 15, 1980, the Trial Court rendered judgment in favor of
NISSHIN and DOWA in the amounts of US $46,583.00 and US $11,385.00,
respectively, with legal interest, plus attorney's fees of P5,000.00 and costs.
On appeal by petitioner, the then Court of Appeals on September 10, 1984,
affirmed with modification the Trial Court's judgment by decreasing the
amount recoverable by DOWA to US $1,000.00 because of $500 per package
limitation of liability under the COGSA.
Hence, this Petition for Review on certiorari by Petitioner Carrier.
Both Petitions were initially denied for lack of merit. G.R. No. 69044 on
January 16, 1985 by the First Division, and G. R. No. 71478 on September 25,
1985 by the Second Division. Upon Petitioner Carrier's Motion for
Reconsideration, however, G.R. No. 69044 was given due course on March
25, 1985, and the parties were required to submit their respective
Memoranda, which they have done.
On the other hand, in G.R. No. 71478, Petitioner Carrier sought
reconsideration of the Resolution denying the Petition for Review and moved
for its consolidation with G.R. No. 69044, the lower-numbered case, which
was then pending resolution with the First Division. The same was granted;
the Resolution of the Second Division of September 25, 1985 was set aside
and the Petition was given due course.
At the outset, we reject Petitioner Carrier's claim that it is not the operator of
the M/S Asiatica but merely a charterer thereof. We note that in G.R. No.
69044, Petitioner Carrier stated in its Petition:
There are about 22 cases of the "ASIATICA" pending in various courts where
various plaintiffs are represented by various counsel representing various
consignees or insurance companies. The common defendant in these cases is
petitioner herein, being the operator of said vessel. ... 1
Petitioner Carrier should be held bound to said admission. As a general rule,
the facts alleged in a party's pleading are deemed admissions of that party
and binding upon it. 2 And an admission in one pleading in one action may be
received in evidence against the pleader or his successor-in-interest on the
trial of another action to which he is a party, in favor of a party to the latter
action. 3
The threshold issues in both cases are: (1) which law should govern the
Civil Code provisions on Common carriers or the Carriage of Goods by Sea
Act? and (2) who has the burden of proof to show negligence of the carrier?
On the Law Applicable
The law of the country to which the goods are to be transported governs the
liability of the common carrier in case of their loss, destruction or
deterioration. 4 As the cargoes in question were transported from Japan to the
Philippines, the liability of Petitioner Carrier is governed primarily by the Civil
Code. 5 However, in all matters not regulated by said Code, the rights and

obligations of common carrier shall be governed by the Code of Commerce

and by special laws. 6 Thus, the Carriage of Goods by Sea Act, a special law,
is suppletory to the provisions of the Civil Code. 7
On the Burden of Proof
Under the Civil Code, common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence in
the vigilance over goods, according to all the circumstances of each
case. 8 Common carriers are responsible for the loss, destruction, or
deterioration of the goods unless the same is due to any of the following
causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
xxx xxx xxx

Petitioner Carrier claims that the loss of the vessel by fire exempts it from
liability under the phrase "natural disaster or calamity. " However, we are of
the opinion that fire may not be considered a natural disaster or calamity.
This must be so as it arises almost invariably from some act of man or by
human means. 10 It does not fall within the category of an act of God unless
caused by lightning 11 or by other natural disaster or calamity. 12 It may
even be caused by the actual fault or privity of the carrier. 13

not likewise show he amount of diligence made by the crew, on orders, in the
care of the cargoes. What appears is that after the cargoes were stored in the
hatches, no regular inspection was made as to their condition during the
voyage. Consequently, the crew could not have even explain what could have
caused the fire. The defendant, in the Court's mind, failed to satisfactorily
show that extraordinary vigilance and care had been made by the crew to
prevent the occurrence of the fire. The defendant, as a common carrier, is
liable to the consignees for said lack of deligence required of it under Article
1733 of the Civil Code. 15
Having failed to discharge the burden of proving that it had exercised the
extraordinary diligence required by law, Petitioner Carrier cannot escape
liability for the loss of the cargo.
And even if fire were to be considered a "natural disaster" within the meaning
of Article 1734 of the Civil Code, it is required under Article 1739 of the same
Code that the "natural disaster" must have been the "proximate and only
cause of the loss," and that the carrier has "exercised due diligence to
prevent or minimize the loss before, during or after the occurrence of the
disaster. " This Petitioner Carrier has also failed to establish satisfactorily.
Nor may Petitioner Carrier seek refuge from liability under the Carriage of
Goods by Sea Act, It is provided therein that:

Article 1680 of the Civil Code, which considers fire as an extraordinary

fortuitous event refers to leases of rural lands where a reduction of the rent is
allowed when more than one-half of the fruits have been lost due to such
event, considering that the law adopts a protection policy towards
agriculture. 14

Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss or
damage arising or resulting from

As the peril of the fire is not comprehended within the exception in Article
1734, supra, Article 1735 of the Civil Code provides that all cases than those
mention in Article 1734, the common carrier shall be presumed to have been
at fault or to have acted negligently, unless it proves that it has observed the
extraordinary deligence required by law.

In this case, both the Trial Court and the Appellate Court, in effect, found, as a
fact, that there was "actual fault" of the carrier shown by "lack of diligence"
in that "when the smoke was noticed, the fire was already big; that the fire
must have started twenty-four (24) hours before the same was noticed; " and
that "after the cargoes were stored in the hatches, no regular inspection was
made as to their condition during the voyage." The foregoing suffices to show
that the circumstances under which the fire originated and spread are such
as to show that Petitioner Carrier or its servants were negligent in connection
therewith. Consequently, the complete defense afforded by the COGSA when
loss results from fire is unavailing to Petitioner Carrier.

In this case, the respective Insurers. as subrogees of the cargo shippers, have
proven that the transported goods have been lost. Petitioner Carrier has also
proved that the loss was caused by fire. The burden then is upon Petitioner
Carrier to proved that it has exercised the extraordinary diligence required by
law. In this regard, the Trial Court, concurred in by the Appellate Court, made
the following Finding of fact:
The cargoes in question were, according to the witnesses defendant placed in
hatches No, 2 and 3 cf the vessel, Boatswain Ernesto Pastrana noticed that
smoke was coming out from hatch No. 2 and hatch No. 3; that where the
smoke was noticed, the fire was already big; that the fire must have started
twenty-four 24) our the same was noticed; that carbon dioxide was ordered
released and the crew was ordered to open the hatch covers of No, 2 tor
commencement of fire fighting by sea water: that all of these effort were not
enough to control the fire.
Pursuant to Article 1733, common carriers are bound to extraordinary
diligence in the vigilance over the goods. The evidence of the defendant did
not show that extraordinary vigilance was observed by the vessel to prevent
the occurrence of fire at hatches numbers 2 and 3. Defendant's evidence did

62

(b) Fire, unless caused by the actual fault or privity of the carrier.
xxx xxx xxx

On the US $500 Per Package Limitation:

Petitioner Carrier avers that its liability if any, should not exceed US $500 per
package as provided in section 4(5) of the COGSA, which reads:
(5) Neither the carrier nor the ship shall in any event be or become liable for
any loss or damage to or in connection with the transportation of goods in an
amount exceeding $500 per package lawful money of the United States, or in
case of goods not shipped in packages, per customary freight unit, or the
equivalent of that sum in other currency, unless the nature and value of such
goods have been declared by the shipper before shipment and inserted in bill
of lading. This declaration if embodied in the bill of lading shall be prima facie
evidence, but all be conclusive on the carrier.

By agreement between the carrier, master or agent of the carrier, and the
shipper another maximum amount than that mentioned in this paragraph
may be fixed: Provided, That such maximum shall not be less than the figure
above named. In no event shall the carrier be Liable for more than the
amount of damage actually sustained.
xxx xxx xxx
Article 1749 of the New Civil Code also allows the limitations of liability in this
wise:
Art. 1749. A stipulation that the common carrier's liability as limited to the
value of the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
It is to be noted that the Civil Code does not of itself limit the liability of the
common carrier to a fixed amount per package although the Code expressly
permits a stipulation limiting such liability. Thus, the COGSA which is
suppletory to the provisions of the Civil Code, steps in and supplements the
Code by establishing a statutory provision limiting the carrier's liability in the
absence of a declaration of a higher value of the goods by the shipper in the
bill of lading. The provisions of the Carriage of Goods by.Sea Act on limited
liability are as much a part of a bill of lading as though physically in it and as
much a part thereof as though placed therein by agreement of the
parties. 16
In G.R. No. 69044, there is no stipulation in the respective Bills of Lading
(Exhibits "C-2" and "I-3") 1 7 limiting the carrier's liability for the loss or
destruction of the goods. Nor is there a declaration of a higher value of the
goods. Hence, Petitioner Carrier's liability should not exceed US $500 per
package, or its peso equivalent, at the time of payment of the value of the
goods lost, but in no case "more than the amount of damage actually
sustained."
The actual total loss for the 5,000 pieces of calorized lance pipes was
P256,039 (Exhibit "C"), which was exactly the amount of the insurance
coverage by Development Insurance (Exhibit "A"), and the amount affirmed
to be paid by respondent Court. The goods were shipped in 28 packages
(Exhibit "C-2") Multiplying 28 packages by $500 would result in a product of
$14,000 which, at the current exchange rate of P20.44 to US $1, would be
P286,160, or "more than the amount of damage actually sustained."
Consequently, the aforestated amount of P256,039 should be upheld.
With respect to the seven (7) cases of spare parts (Exhibit "I-3"), their actual
value was P92,361.75 (Exhibit "I"), which is likewise the insured value of the
cargo (Exhibit "H") and amount was affirmed to be paid by respondent Court.
however, multiplying seven (7) cases by $500 per package at the present
prevailing rate of P20.44 to US $1 (US $3,500 x P20.44) would yield P71,540
only, which is the amount that should be paid by Petitioner Carrier for those
spare parts, and not P92,361.75.
In G.R. No. 71478, in so far as the two (2) cases of surveying instruments are
concerned, the amount awarded to DOWA which was already reduced to
$1,000 by the Appellate Court following the statutory $500 liability per
package, is in order.

63

In respect of the shipment of 128 cartons of garment fabrics in two (2)

containers and insured with NISSHIN, the Appellate Court also limited
Petitioner Carrier's liability to $500 per package and affirmed the award of
$46,583 to NISSHIN. it multiplied 128 cartons (considered as COGSA
packages) by $500 to arrive at the figure of $64,000, and explained that
"since this amount is more than the insured value of the goods, that is
$46,583, the Trial Court was correct in awarding said amount only for the 128
cartons, which amount is less than the maximum limitation of the carrier's
liability."
We find no reversible error. The 128 cartons and not the two (2) containers
should be considered as the shipping unit.
In Mitsui & Co., Ltd. vs. American Export Lines, Inc. 636 F 2d 807 (1981), the
consignees of tin ingots and the shipper of floor covering brought action
against the vessel owner and operator to recover for loss of ingots and floor
covering, which had been shipped in vessel supplied containers. The U.S.
District Court for the Southern District of New York rendered judgment for the
plaintiffs, and the defendant appealed. The United States Court of Appeals,
Second Division, modified and affirmed holding that:
When what would ordinarily be considered packages are shipped in a
container supplied by the carrier and the number of such units is disclosed in
the shipping documents, each of those units and not the container
constitutes the "package" referred to in liability limitation provision of
Carriage of Goods by Sea Act. Carriage of Goods by Sea Act, 4(5), 46
U.S.C.A.& 1304(5).
Even if language and purposes of Carriage of Goods by Sea Act left doubt as
to whether carrier-furnished containers whose contents are disclosed should
be treated as packages, the interest in securing international uniformity
would suggest that they should not be so treated. Carriage of Goods by Sea
Act, 4(5), 46 U.S.C.A. 1304(5).
... After quoting the statement in Leather's Best, supra, 451 F 2d at 815, that
treating a container as a package is inconsistent with the congressional
purpose of establishing a reasonable minimum level of liability, Judge Beeks
wrote, 414 F. Supp. at 907 (footnotes omitted):
Although this approach has not completely escaped criticism, there is,
nonetheless, much to commend it. It gives needed recognition to the
responsibility of the courts to construe and apply the statute as enacted,
however great might be the temptation to "modernize" or reconstitute it by
artful judicial gloss. If COGSA's package limitation scheme suffers from
internal illness, Congress alone must undertake the surgery. There is, in this
regard, obvious wisdom in the Ninth Circuit's conclusion in Hartford that
technological advancements, whether or not forseeable by the COGSA
promulgators, do not warrant a distortion or artificial construction of the
statutory term "package." A ruling that these large reusable metal pieces of
transport equipment qualify as COGSA packages at least where, as here,
they were carrier owned and supplied would amount to just such a
distortion.
Certainly, if the individual crates or cartons prepared by the shipper and
containing his goods can rightly be considered "packages" standing by

themselves, they do not suddenly lose that character upon being stowed in a
carrier's container. I would liken these containers to detachable stowage
compartments of the ship. They simply serve to divide the ship's overall
cargo stowage space into smaller, more serviceable loci. Shippers' packages
are quite literally "stowed" in the containers utilizing stevedoring practices
and materials analogous to those employed in traditional on board stowage.
In Yeramex International v. S.S. Tando,, 1977 A.M.C. 1807 (E.D. Va.) rev'd on
other grounds, 595 F 2nd 943 (4 Cir. 1979), another district with many
maritime cases followed Judge Beeks' reasoning in Matsushita and similarly
rejected the functional economics test. Judge Kellam held that when rolls of
polyester goods are packed into cardboard cartons which are then placed in
containers, the cartons and not the containers are the packages.
xxx xxx xxx
The case of Smithgreyhound v. M/V Eurygenes, 18 followed the Mitsui test:
Eurygenes concerned a shipment of stereo equipment packaged by the
shipper into cartons which were then placed by the shipper into a carrierfurnished container. The number of cartons was disclosed to the carrier in the
bill of lading. Eurygenes followed the Mitsui test and treated the cartons, not
the container, as the COGSA packages. However, Eurygenes indicated that a
carrier could limit its liability to $500 per container if the bill of lading failed
to disclose the number of cartons or units within the container, or if the
parties indicated, in clear and unambiguous language, an agreement to treat
the container as the package.
(Admiralty Litigation in Perpetuum: The Continuing Saga of Package
Limitations and Third World Delivery Problems by Chester D. Hooper & Keith
L. Flicker, published in Fordham International Law Journal, Vol. 6, 1982-83,
Number 1) (Emphasis supplied)
In this case, the Bill of Lading (Exhibit "A") disclosed the following data:
2 Containers
(128) Cartons)
Men's Garments Fabrics and Accessories Freight Prepaid
Say: Two (2) Containers Only.
Considering, therefore, that the Bill of Lading clearly disclosed the contents of
the containers, the number of cartons or units, as well as the nature of the
goods, and applying the ruling in the Mitsui and Eurygenes cases it is clear
that the 128 cartons, not the two (2) containers should be considered as the
shipping unit subject to the $500 limitation of liability.
True, the evidence does not disclose whether the containers involved herein
were carrier-furnished or not. Usually, however, containers are provided by
the carrier. 19 In this case, the probability is that they were so furnished for
Petitioner Carrier was at liberty to pack and carry the goods in containers if
they were not so packed. Thus, at the dorsal side of the Bill of Lading (Exhibit
"A") appears the following stipulation in fine print:
11. (Use of Container) Where the goods receipt of which is acknowledged on
the face of this Bill of Lading are not already packed into container(s) at the

64

time of receipt, the Carrier shall be at liberty to pack and carry them in any
type of container(s).
The foregoing would explain the use of the estimate "Say: Two (2) Containers
Only" in the Bill of Lading, meaning that the goods could probably fit in two
(2) containers only. It cannot mean that the shipper had furnished the
containers for if so, "Two (2) Containers" appearing as the first entry would
have sufficed. and if there is any ambiguity in the Bill of Lading, it is a
cardinal principle in the construction of contracts that the interpretation of
obscure words or stipulations in a contract shall not favor the party who
caused the obscurity. 20 This applies with even greater force in a contract of
adhesion where a contract is already prepared and the other party merely
adheres to it, like the Bill of Lading in this case, which is draw. up by the
carrier. 21
On Alleged Denial of Opportunity to Present Deposition of Its Witnesses: (in
G.R. No. 69044 only)
Petitioner Carrier claims that the Trial Court did not give it sufficient time to
take the depositions of its witnesses in Japan by written interrogatories.
We do not agree. petitioner Carrier was given- full opportunity to present its
evidence but it failed to do so. On this point, the Trial Court found:
xxx xxx xxx
Indeed, since after November 6, 1978, to August 27, 1979, not to mention
the time from June 27, 1978, when its answer was prepared and filed in
Court, until September 26, 1978, when the pre-trial conference was
conducted for the last time, the defendant had more than nine months to
prepare its evidence. Its belated notice to take deposition on written
interrogatories of its witnesses in Japan, served upon the plaintiff on August
25th, just two days before the hearing set for August 27th, knowing fully well
that it was its undertaking on July 11 the that the deposition of the witnesses
would be dispensed with if by next time it had not yet been obtained, only
proves the lack of merit of the defendant's motion for postponement, for
which reason it deserves no sympathy from the Court in that regard. The
defendant has told the Court since February 16, 1979, that it was going to
take the deposition of its witnesses in Japan. Why did it take until August 25,
1979, or more than six months, to prepare its written interrogatories. Only
the defendant itself is to blame for its failure to adduce evidence in support
of its defenses.
xxx xxx xxx

22

Petitioner Carrier was afforded ample time to present its side of the case. 23 It
cannot complain now that it was denied due process when the Trial Court
rendered its Decision on the basis of the evidence adduced. What due
process abhors is absolute lack of opportunity to be heard. 24
On the Award of Attorney's Fees:
Petitioner Carrier questions the award of attorney's fees. In both cases,
respondent Court affirmed the award by the Trial Court of attorney's fees of
P35,000.00 in favor of Development Insurance in G.R. No. 69044, and
P5,000.00 in favor of NISSHIN and DOWA in G.R. No. 71478.

Courts being vested with discretion in fixing the amount of attorney's fees, it
is believed that the amount of P5,000.00 would be more reasonable in G.R.
No. 69044. The award of P5,000.00 in G.R. No. 71478 is affirmed.

May 2008 in Quezon City, Philippines. Maekara brought Marinay to Japan.

However, Marinay allegedly suffered physical abuse from Maekara. She left
Maekara and started to contact Fujiki.3

WHEREFORE, 1) in G.R. No. 69044, the judgment is modified in that petitioner

Eastern Shipping Lines shall pay the Development Insurance and Surety
Corporation the amount of P256,039 for the twenty-eight (28) packages of
calorized lance pipes, and P71,540 for the seven (7) cases of spare parts,
with interest at the legal rate from the date of the filing of the complaint on
June 13, 1978, plus P5,000 as attorney's fees, and the costs.

Fujiki and Marinay met in Japan and they were able to reestablish their
relationship. In 2010, Fujiki helped Marinay obtain a judgment from a family
court in Japan which declared the marriage between Marinay and Maekara
void on the ground of bigamy. 4 On 14 January 2011, Fujiki filed a petition in
the RTC entitled: "Judicial Recognition of Foreign Judgment (or Decree of
Absolute Nullity of Marriage)." Fujiki prayed that (1) the Japanese Family
Court judgment be recognized; (2) that the bigamous marriage between
Marinay and Maekara be declared void ab initio under Articles 35(4) and 41 of
the Family Code of the Philippines; 5 and (3) for the RTC to direct the Local
Civil Registrar of Quezon City to annotate the Japanese Family Court
judgment on the Certificate of Marriage between Marinay and Maekara and to
endorse such annotation to the Office of the Administrator and Civil Registrar
General in the National Statistics Office (NSO). 6

2) In G.R.No.71478,the judgment is hereby affirmed.

SO ORDERED.

The Ruling of the Regional Trial Court

A few days after the filing of the petition, the RTC immediately issued an
Order dismissing the petition and withdrawing the case from its active civil
docket.7 The RTC cited the following provisions of the Rule on Declaration of
Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M.
No. 02-11-10-SC):
Sec. 2. Petition for declaration of absolute nullity of void marriages.
(a) Who may file. A petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife.
18. Fujiki vs. Marinay
CARPIO, J.:
The Case
This is a direct recourse to this Court from the Regional Trial Court (RTC),
Branch 107, Quezon City, through a petition for review on certiorari under
Rule 45 of the Rules of Court on a pure question of law. The petition assails
the Order1 dated 31 January 2011 of the RTC in Civil Case No. Q-11-68582
and its Resolution dated 2 March 2011 denying petitioners Motion for
Reconsideration. The RTC dismissed the petition for "Judicial Recognition of
Foreign Judgment (or Decree of Absolute Nullity of Marriage)" based on
improper venue and the lack of personality of petitioner, Minoru Fujiki, to file
the petition.
The Facts
Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent
Maria Paz Galela Marinay (Marinay) in the Philippines 2 on 23 January 2004.
The marriage did not sit well with petitioners parents. Thus, Fujiki could not
bring his wife to Japan where he resides. Eventually, they lost contact with
each other.
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without
the first marriage being dissolved, Marinay and Maekara were married on 15

65

xxxx
Sec. 4. Venue. The petition shall be filed in the Family Court of the province
or city where the petitioner or the respondent has been residing for at least
six months prior to the date of filing, or in the case of a non-resident
respondent, where he may be found in the Philippines, at the election of the
petitioner. x x x
The RTC ruled, without further explanation, that the petition was in "gross
violation" of the above provisions. The trial court based its dismissal on
Section 5(4) of A.M. No. 02-11-10-SC which provides that "[f]ailure to comply
with any of the preceding requirements may be a ground for immediate
dismissal of the petition." 8 Apparently, the RTC took the view that only "the
husband or the wife," in this case either Maekara or Marinay, can file the
petition to declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-1110-SC contemplated ordinary civil actions for declaration of nullity and
annulment of marriage. Thus, A.M. No. 02-11-10-SC does not apply. A petition
for recognition of foreign judgment is a special proceeding, which "seeks to
establish a status, a right or a particular fact," 9 and not a civil action which is
"for the enforcement or protection of a right, or the prevention or redress of a
wrong."10 In other words, the petition in the RTC sought to establish (1) the
status and concomitant rights of Fujiki and Marinay as husband and wife and
(2) the fact of the rendition of the Japanese Family Court judgment declaring

the marriage between Marinay and Maekara as void on the ground of bigamy.
The petitioner contended that the Japanese judgment was consistent with
Article 35(4) of the Family Code of the Philippines 11on bigamy and was
therefore entitled to recognition by Philippine courts. 12
In any case, it was also Fujikis view that A.M. No. 02-11-10-SC applied only to
void marriages under Article 36 of the Family Code on the ground of
psychological incapacity.13 Thus, Section 2(a) of A.M. No. 02-11-10-SC
provides that "a petition for declaration of absolute nullity of void marriages
may be filed solely by the husband or the wife." To apply Section 2(a) in
bigamy would be absurd because only the guilty parties would be permitted
to sue. In the words of Fujiki, "[i]t is not, of course, difficult to realize that the
party interested in having a bigamous marriage declared a nullity would be
the husband in the prior, pre-existing marriage." 14 Fujiki had material interest
and therefore the personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil
Registry) of the Rules of Court is applicable. Rule 108 is the "procedural
implementation" of the Civil Register Law (Act No. 3753) 15 in relation to
Article 413 of the Civil Code.16 The Civil Register Law imposes a duty on the
"successful petitioner for divorce or annulment of marriage to send a copy of
the final decree of the court to the local registrar of the municipality where
the dissolved or annulled marriage was solemnized." 17 Section 2 of Rule 108
provides that entries in the civil registry relating to "marriages," "judgments
of annulments of marriage" and "judgments declaring marriages void from
the beginning" are subject to cancellation or correction. 18 The petition in the
RTC sought (among others) to annotate the judgment of the Japanese Family
Court on the certificate of marriage between Marinay and Maekara.
Fujikis motion for reconsideration in the RTC also asserted that the trial court
"gravely erred" when, on its own, it dismissed the petition based on improper
venue. Fujiki stated that the RTC may be confusing the concept of venue with
the concept of jurisdiction, because it is lack of jurisdiction which allows a
court to dismiss a case on its own. Fujiki cited Dacoycoy v. Intermediate
Appellate Court19 which held that the "trial court cannot pre-empt the
defendants prerogative to object to the improper laying of the venue by
motu proprio dismissing the case." 20Moreover, petitioner alleged that the trial
court should not have "immediately dismissed" the petition under Section 5
of A.M. No. 02-11-10-SC because he substantially complied with the
provision.
On 2 March 2011, the RTC resolved to deny petitioners motion for
reconsideration. In its Resolution, the RTC stated that A.M. No. 02-11-10-SC
applies because the petitioner, in effect, prays for a decree of absolute nullity
of marriage.21 The trial court reiterated its two grounds for dismissal, i.e. lack
of personality to sue and improper venue under Sections 2(a) and 4 of A.M.
No. 02-11-10-SC. The RTC considered Fujiki as a "third person" 22 in the
proceeding because he "is not the husband in the decree of divorce issued by
the Japanese Family Court, which he now seeks to be judicially recognized, x
x x."23 On the other hand, the RTC did not explain its ground of impropriety of
venue. It only said that "[a]lthough the Court cited Sec. 4 (Venue) x x x as a
ground for dismissal of this case[,] it should be taken together with the other
ground cited by the Court x x x which is Sec. 2(a) x x x."24

66

The RTC further justified its motu proprio dismissal of the petition based
on Braza v. The City Civil Registrar of Himamaylan City, Negros
Occidental.25 The Court in Braza ruled that "[i]n a special proceeding for
correction of entry under Rule 108 (Cancellation or Correction of Entries in
the Original Registry), the trial court has no jurisdiction to nullify marriages x
x x."26 Braza emphasized that the "validity of marriages as well as legitimacy
and filiation can be questioned only in a direct action seasonably filed by the
proper party, and not through a collateral attack such as [a] petition [for
correction of entry] x x x."27
The RTC considered the petition as a collateral attack on the validity of
marriage between Marinay and Maekara. The trial court held that this is a
"jurisdictional ground" to dismiss the petition. 28 Moreover, the verification and
certification against forum shopping of the petition was not authenticated as
required under Section 529 of A.M. No. 02-11-10-SC. Hence, this also
warranted the "immediate dismissal" of the petition under the same
provision.
The Manifestation and Motion of the Office of the Solicitor General
and the Letters of Marinay and Maekara
On 30 May 2011, the Court required respondents to file their comment on the
petition for review.30 The public respondents, the Local Civil Registrar of
Quezon City and the Administrator and Civil Registrar General of the NSO,
participated through the Office of the Solicitor General. Instead of a
comment, the Solicitor General filed a Manifestation and Motion. 31
The Solicitor General agreed with the petition. He prayed that the RTCs
"pronouncement that the petitioner failed to comply with x x x A.M. No. 0211-10-SC x x x be set aside" and that the case be reinstated in the trial court
for further proceedings.32 The Solicitor General argued that Fujiki, as the
spouse of the first marriage, is an injured party who can sue to declare the
bigamous marriage between Marinay and Maekara void. The Solicitor General
cited Juliano-Llave v. Republic33 which held that Section 2(a) of A.M. No. 0211-10-SC does not apply in cases of bigamy. In Juliano-Llave, this Court
explained:
[t]he subsequent spouse may only be expected to take action if he or she
had only discovered during the connubial period that the marriage was
bigamous, and especially if the conjugal bliss had already vanished. Should
parties in a subsequent marriage benefit from the bigamous marriage, it
would not be expected that they would file an action to declare the marriage
void and thus, in such circumstance, the "injured spouse" who should be
given a legal remedy is the one in a subsisting previous marriage. The latter
is clearly the aggrieved party as the bigamous marriage not only threatens
the financial and the property ownership aspect of the prior marriage but
most of all, it causes an emotional burden to the prior spouse. The
subsequent marriage will always be a reminder of the infidelity of the spouse
and the disregard of the prior marriage which sanctity is protected by the
Constitution.34
The Solicitor General contended that the petition to recognize the Japanese
Family Court judgment may be made in a Rule 108 proceeding. 35 In Corpuz v.
Santo Tomas,36 this Court held that "[t]he recognition of the foreign divorce
decree may be made in a Rule 108 proceeding itself, as the object of special

proceedings (such as that in Rule 108 of the Rules of Court) is precisely to

establish
the
status
or
right
of
a
party
or
a
particular
fact."37 WhileCorpuz concerned a foreign divorce decree, in the present case
the Japanese Family Court judgment also affected the civil status of the
parties, especially Marinay, who is a Filipino citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court is the
procedure to record "[a]cts, events and judicial decrees concerning the civil
status of persons" in the civil registry as required by Article 407 of the Civil
Code. In other words, "[t]he law requires the entry in the civil registry of
judicial decrees that produce legal consequences upon a persons legal
capacity and status x x x."38 The Japanese Family Court judgment directly
bears on the civil status of a Filipino citizen and should therefore be proven as
a fact in a Rule 108 proceeding.
Moreover, the Solicitor General argued that there is no jurisdictional infirmity
in assailing a void marriage under Rule 108, citing De Castro v. De
Castro39 and Nial v. Bayadog40 which declared that "[t]he validity of a void
marriage may be collaterally attacked." 41
Marinay and Maekara individually sent letters to the Court to comply with the
directive for them to comment on the petition. 42 Maekara wrote that Marinay
concealed from him the fact that she was previously married to
Fujiki.43Maekara also denied that he inflicted any form of violence on
Marinay.44 On the other hand, Marinay wrote that she had no reason to
oppose the petition.45 She would like to maintain her silence for fear that
anything she say might cause misunderstanding between her and Fujiki. 46
The Issues
Petitioner raises the following legal issues:
(1) Whether the Rule on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10SC) is applicable.
(2) Whether a husband or wife of a prior marriage can file a petition
to recognize a foreign judgment nullifying the subsequent marriage
between his or her spouse and a foreign citizen on the ground of
bigamy.
(3) Whether the Regional Trial Court can recognize the foreign
judgment in a proceeding for cancellation or correction of entries in
the Civil Registry under Rule 108 of the Rules of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment
of Voidable Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to
recognize a foreign judgment relating to the status of a marriage where one
of the parties is a citizen of a foreign country. Moreover, in Juliano-Llave v.
Republic,47 this Court held that the rule in A.M. No. 02-11-10-SC that only the
husband or wife can file a declaration of nullity or annulment of marriage
"does not apply if the reason behind the petition is bigamy."48
I.

67

For Philippine courts to recognize a foreign judgment relating to the status of

a marriage where one of the parties is a citizen of a foreign country, the
petitioner only needs to prove the foreign judgment as a fact under the Rules
of Court. To be more specific, a copy of the foreign judgment may be
admitted in evidence and proven as a fact under Rule 132, Sections 24 and
25, in relation to Rule 39, Section 48(b) of the Rules of Court. 49 Petitioner may
prove the Japanese Family Court judgment through (1) an official publication
or (2) a certification or copy attested by the officer who has custody of the
judgment. If the office which has custody is in a foreign country such as
Japan, the certification may be made by the proper diplomatic or consular
officer of the Philippine foreign service in Japan and authenticated by the seal
of office.50
To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of
foreign judgment would mean that the trial court and the parties should
follow its provisions, including the form and contents of the petition, 51 the
service of summons,52 the investigation of the public prosecutor, 53 the setting
of pre-trial,54 the trial55 and the judgment of the trial court. 56 This is absurd
because it will litigate the case anew. It will defeat the purpose of recognizing
foreign judgments, which is "to limit repetitive litigation on claims and
issues."57 The interpretation of the RTC is tantamount to relitigating the case
on the merits. In Mijares v. Raada,58 this Court explained that "[i]f every
judgment of a foreign court were reviewable on the merits, the plaintiff would
be forced back on his/her original cause of action, rendering immaterial the
previously concluded litigation."59
A foreign judgment relating to the status of a marriage affects the civil status,
condition and legal capacity of its parties. However, the effect of a foreign
judgment is not automatic. To extend the effect of a foreign judgment in the
Philippines, Philippine courts must determine if the foreign judgment is
consistent with domestic public policy and other mandatory laws. 60 Article 15
of the Civil Code provides that "[l]aws 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." This is the rule of lex
nationalii in private international law. Thus, the Philippine State may require,
for effectivity in the Philippines, recognition by Philippine courts of a foreign
judgment affecting its citizen, over whom it exercises personal jurisdiction
relating to the status, condition and legal capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void does not
require relitigation under a Philippine court of the case as if it were a new
petition for declaration of nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which the foreign judgment was
rendered. They cannot substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the jurisdiction of another
state. Thus, Philippine courts can only recognize the foreign judgment as a
fact according to the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment
or final order against a person creates a "presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title."
Moreover, Section 48 of the Rules of Court states that "the judgment or final
order may be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact." Thus, Philippine

courts exercise limited review on foreign judgments. Courts are not allowed
to delve into the merits of a foreign judgment. Once a foreign judgment is
admitted and proven in a Philippine court, it can only be repelled on grounds
external to its merits, i.e. , "want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact." The rule on limited review
embodies the policy of efficiency and the protection of party
expectations,61 as well as respecting the jurisdiction of other states. 62
Since 1922 in Adong v. Cheong Seng Gee, 63 Philippine courts have recognized
foreign divorce decrees between a Filipino and a foreign citizen if they are
successfully proven under the rules of evidence. 64 Divorce involves the
dissolution of a marriage, but the recognition of a foreign divorce decree does
not involve the extended procedure under A.M. No. 02-11-10-SC or the rules
of ordinary trial. While the Philippines does not have a divorce law, Philippine
courts may, however, recognize a foreign divorce decree under the second
paragraph of Article 26 of the Family Code, to capacitate a Filipino citizen to
remarry when his or her foreign spouse obtained a divorce decree abroad. 65
There is therefore no reason to disallow Fujiki to simply prove as a fact the
Japanese Family Court judgment nullifying the marriage between Marinay and
Maekara on the ground of bigamy. While the Philippines has no divorce law,
the Japanese Family Court judgment is fully consistent with Philippine public
policy, as bigamous marriages are declared void from the beginning under
Article 35(4) of the Family Code. Bigamy is a crime under Article 349 of the
Revised Penal Code. Thus, Fujiki can prove the existence of the Japanese
Family Court judgment in accordance with Rule 132, Sections 24 and 25, in
relation to Rule 39, Section 48(b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only requires proof of fact of the
judgment, it may be made in a special proceeding for cancellation or
correction of entries in the civil registry under Rule 108 of the Rules of Court.
Rule 1, Section 3 of the Rules of Court provides that "[a] special proceeding is
a remedy by which a party seeks to establish a status, a right, or a particular
fact." Rule 108 creates a remedy to rectify facts of a persons life which are
recorded by the State pursuant to the Civil Register Law or Act No. 3753.
These are facts of public consequence such as birth, death or
marriage,66 which the State has an interest in recording. As noted by the
Solicitor General, in Corpuz v. Sto. Tomas this Court declared that "[t]he
recognition of the foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such as that in Rule
108 of the Rules of Court) is precisely to establish the status or right of a
party or a particular fact."67
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. Any person interested in any act, event,
order or decree concerning the civil status of persons which has been
recorded in the civil register, may file a verified petition for the
cancellation or correction of any entry relating thereto, with the Regional Trial
Court of the province where the corresponding civil registry is located.
(Emphasis supplied)

68

Fujiki has the personality to file a petition to recognize the Japanese Family
Court judgment nullifying the marriage between Marinay and Maekara on the
ground of bigamy because the judgment concerns his civil status as married
to Marinay. For the same reason he has the personality to file a petition under
Rule 108 to cancel the entry of marriage between Marinay and Maekara in
the civil registry on the basis of the decree of the Japanese Family Court.
There is no doubt that the prior spouse has a personal and material interest
in maintaining the integrity of the marriage he contracted and the property
relations arising from it. There is also no doubt that he is interested in the
cancellation of an entry of a bigamous marriage in the civil registry, which
compromises the public record of his marriage. The interest derives from the
substantive right of the spouse not only to preserve (or dissolve, in limited
instances68) his most intimate human relation, but also to protect his property
interests that arise by operation of law the moment he contracts
marriage.69 These property interests in marriage include the right to be
supported "in keeping with the financial capacity of the family" 70 and
preserving the property regime of the marriage.71
Property rights are already substantive rights protected by the
Constitution,72 but a spouses right in a marriage extends further to relational
rights recognized under Title III ("Rights and Obligations between Husband
and Wife") of the Family Code.73 A.M. No. 02-11-10-SC cannot "diminish,
increase, or modify" the substantive right of the spouse to maintain the
integrity of his marriage. 74 In any case, Section 2(a) of A.M. No. 02-11-10-SC
preserves this substantive right by limiting the personality to sue to the
husband or the wife of the union recognized by law.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a
subsisting marriage to question the validity of a subsequent marriage on the
ground of bigamy. On the contrary, when Section 2(a) states that "[a] petition
for declaration of absolute nullity of void marriage may be filed solely by
the husband or the wife"75it refers to the husband or the wife of the
subsisting marriage. Under Article 35(4) of the Family Code, bigamous
marriages are void from the beginning. Thus, the parties in a bigamous
marriage are neither the husband nor the wife under the law. The husband or
the wife of the prior subsisting marriage is the one who has the personality to
file a petition for declaration of absolute nullity of void marriage under
Section 2(a) of A.M. No. 02-11-10-SC.
Article 35(4) of the Family Code, which declares bigamous marriages void
from the beginning, is the civil aspect of Article 349 of the Revised Penal
Code,76 which penalizes bigamy. Bigamy is a public crime. Thus, anyone can
initiate prosecution for bigamy because any citizen has an interest in the
prosecution and prevention of crimes. 77If anyone can file a criminal action
which leads to the declaration of nullity of a bigamous marriage, 78 there is
more reason to confer personality to sue on the husband or the wife of a
subsisting marriage. The prior spouse does not only share in the public
interest of prosecuting and preventing crimes, he is also personally interested
in the purely civil aspect of protecting his marriage.
When the right of the spouse to protect his marriage is violated, the spouse is
clearly an injured party and is therefore interested in the judgment of the
suit.79 Juliano-Llave ruled that the prior spouse "is clearly the aggrieved party

as the bigamous marriage not only threatens the financial and the property
ownership aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse."80 Being a real party in interest, the prior spouse
is entitled to sue in order to declare a bigamous marriage void. For this
purpose, he can petition a court to recognize a foreign judgment nullifying
the bigamous marriage and judicially declare as a fact that such judgment is
effective in the Philippines. Once established, there should be no more
impediment to cancel the entry of the bigamous marriage in the civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental,
this Court held that a "trial court has no jurisdiction to nullify marriages" in a
special proceeding for cancellation or correction of entry under Rule 108 of
the Rules of Court.81 Thus, the "validity of marriage[] x x x can be questioned
only in a direct action" to nullify the marriage. 82 The RTC relied on Braza in
dismissing the petition for recognition of foreign judgment as a collateral
attack on the marriage between Marinay and Maekara.
Braza is not applicable because Braza does not involve a recognition of a
foreign judgment nullifying a bigamous marriage where one of the parties is a
citizen of the foreign country.
To be sure, a petition for correction or cancellation of an entry in the civil
registry cannot substitute for an action to invalidate a marriage. A direct
action is necessary to prevent circumvention of the substantive and
procedural safeguards of marriage under the Family Code, A.M. No. 02-11-10SC and other related laws. Among these safeguards are the requirement of
proving
the
limited
grounds
for
the
dissolution
of
marriage,83 support pendente lite of the spouses and children, 84 the
liquidation, partition and distribution of the properties of the spouses, 85 and
the investigation of the public prosecutor to determine collusion. 86 A direct
action for declaration of nullity or annulment of marriage is also necessary to
prevent circumvention of the jurisdiction of the Family Courts under the
Family Courts Act of 1997 (Republic Act No. 8369), as a petition for
cancellation or correction of entries in the civil registry may be filed in the
Regional Trial Court "where the corresponding civil registry is located." 87 In
other words, a Filipino citizen cannot dissolve his marriage by the mere
expedient of changing his entry of marriage in the civil registry.
However, this does not apply in a petition for correction or cancellation of a
civil registry entry based on the recognition of a foreign judgment annulling a
marriage where one of the parties is a citizen of the foreign country. There is
neither circumvention of the substantive and procedural safeguards of
marriage under Philippine law, nor of the jurisdiction of Family Courts under
R.A. No. 8369. A recognition of a foreign judgment is not an action to nullify a
marriage. It is an action for Philippine courts to recognize the effectivity of a
foreign judgment, which presupposes a case which was already tried
and decided under foreign law. The procedure in A.M. No. 02-11-10-SC
does not apply in a petition to recognize a foreign judgment annulling a
bigamous marriage where one of the parties is a citizen of the foreign
country. Neither can R.A. No. 8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to
extend the effect of a foreign divorce decree to a Filipino spouse without

69

undergoing trial to determine the validity of the dissolution of the marriage.

The second paragraph of Article 26 of the Family Code provides that "[w]here
a marriage between a Filipino citizen and a foreigner is validly celebrated and
a divorce is thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall have capacity to
remarry under Philippine law." InRepublic v. Orbecido,88 this Court recognized
the legislative intent of the second paragraph of Article 26 which is "to avoid
the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino
spouse"89 under the laws of his or her country. The second paragraph of
Article 26 of the Family Code only authorizes Philippine courts to adopt the
effects of a foreign divorce decree precisely because the Philippines does not
allow divorce. Philippine courts cannot try the case on the merits because it
is tantamount to trying a case for divorce.
The second paragraph of Article 26 is only a corrective measure to address
the anomaly that results from a marriage between a Filipino, whose laws do
not allow divorce, and a foreign citizen, whose laws allow divorce. The
anomaly consists in the Filipino spouse being tied to the marriage while the
foreign spouse is free to marry under the laws of his or her country. The
correction is made by extending in the Philippines the effect of the foreign
divorce decree, which is already effective in the country where it was
rendered. The second paragraph of Article 26 of the Family Code is based on
this Courts decision in Van Dorn v. Romillo90 which declared that the Filipino
spouse "should not be discriminated against in her own country if the ends of
justice are to be served."91
The principle in Article 26 of the Family Code applies in a marriage between a
Filipino and a foreign citizen who obtains a foreign judgment nullifying the
marriage on the ground of bigamy. The Filipino spouse may file a petition
abroad to declare the marriage void on the ground of bigamy. The principle in
the second paragraph of Article 26 of the Family Code applies because the
foreign spouse, after the foreign judgment nullifying the marriage, is
capacitated to remarry under the laws of his or her country. If the foreign
judgment is not recognized in the Philippines, the Filipino spouse will be
discriminatedthe foreign spouse can remarry while the Filipino spouse
cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine
courts are empowered to correct a situation where the Filipino spouse is still
tied to the marriage while the foreign spouse is free to marry. Moreover,
notwithstanding Article 26 of the Family Code, Philippine courts already have
jurisdiction to extend the effect of a foreign judgment in the Philippines to the
extent that the foreign judgment does not contravene domestic public policy.
A critical difference between the case of a foreign divorce decree and a
foreign judgment nullifying a bigamous marriage is that bigamy, as a ground
for the nullity of marriage, is fully consistent with Philippine public policy as
expressed in Article 35(4) of the Family Code and Article 349 of the Revised
Penal Code. The Filipino spouse has the option to undergo full trial by filing a
petition for declaration of nullity of marriage under A.M. No. 02-11-10-SC, but
this is not the only remedy available to him or her. Philippine courts have
jurisdiction to recognize a foreign judgment nullifying a bigamous marriage,
without prejudice to a criminal prosecution for bigamy.

In the recognition of foreign judgments, Philippine courts are incompetent to

substitute their judgment on how a case was decided under foreign law. They
cannot decide on the "family rights and duties, or on the status, condition
and legal capacity" of the foreign citizen who is a party to the foreign
judgment. Thus, Philippine courts are limited to the question of whether to
extend the effect of a foreign judgment in the Philippines. In a foreign
judgment relating to the status of a marriage involving a citizen of a foreign
country, Philippine courts only decide whether to extend its effect to the
Filipino party, under the rule of lex nationalii expressed in Article 15 of the
Civil Code.
For this purpose, Philippine courts will only determine (1) whether the foreign
judgment is inconsistent with an overriding public policy in the Philippines;
and (2) whether any alleging party is able to prove an extrinsic ground to
repel the foreign judgment, i.e. want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. If there is neither
inconsistency with public policy nor adequate proof to repel the judgment,
Philippine courts should, by default, recognize the foreign judgment as part of
the comity of nations. Section 48(b), Rule 39 of the Rules of Court states that
the foreign judgment is already "presumptive evidence of a right between the
parties." Upon recognition of the foreign judgment, this right becomes
conclusive and the judgment serves as the basis for the correction or
cancellation of entry in the civil registry. The recognition of the foreign
judgment nullifying a bigamous marriage is a subsequent event that
establishes a new status, right and fact 92 that needs to be reflected in the
civil registry. Otherwise, there will be an inconsistency between the
recognition of the effectivity of the foreign judgment and the public records in
the Philippines.1wphi1
However, the recognition of a foreign judgment nullifying a bigamous
marriage is without prejudice to prosecution for bigamy under Article 349 of
the Revised Penal Code.93 The recognition of a foreign judgment nullifying a
bigamous marriage is not a ground for extinction of criminal liability under
Articles 89 and 94 of the Revised Penal Code. Moreover, under Article 91 of
the Revised Penal Code, "[t]he term of prescription [of the crime of bigamy]
shall not run when the offender is absent from the Philippine archipelago."
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need
to address the questions on venue and the contents and form of the petition
under Sections 4 and 5, respectively, of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and
the Resolution dated 2 March 2011 of the Regional Trial Court, Branch 107,
Quezon City, in Civil Case No. Q-11-68582 are REVERSED andSET ASIDE.
The Regional Trial Court is ORDERED to REINSTATE the petition for further
proceedings in accordance with this Decision.
SO ORDERED.

70

19. Corpuz v. Tirol

DECISION
BRION, J.:
Before the Court is a direct appeal from the decision 1 of the Regional Trial
Court (RTC) of Laoag City, Branch 11, elevated via a petition for review on
certiorari2 under Rule 45 of the Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired
Canadian citizenship through naturalization on November 29, 2000. 3 On
January 18, 2005, Gerbert married respondent Daisylyn T. Sto. Tomas, a
Filipina, in Pasig City.4 Due to work and other professional commitments,
Gerbert left for Canada soon after the wedding. He returned to the Philippines
sometime in April 2005 to surprise Daisylyn, but was shocked to discover that
his wife was having an affair with another man. Hurt and disappointed,
Gerbert returned to Canada and filed a petition for divorce. The Superior
Court of Justice, Windsor, Ontario, Canada granted Gerberts petition for
divorce on December 8, 2005. The divorce decree took effect a month later,
on January 8, 2006.5
Two years after the divorce, Gerbert has moved on and has found another
Filipina to love. Desirous of marrying his new Filipina fiance in the
Philippines, Gerbert went to the Pasig City Civil Registry Office and registered
the Canadian divorce decree on his and Daisylyns marriage certificate.
Despite the registration of the divorce decree, an official of the National
Statistics Office (NSO) informed Gerbert that the marriage between him and
Daisylyn still subsists under Philippine law; to be enforceable, the foreign
divorce decree must first be judicially recognized by a competent Philippine
court, pursuant to NSO Circular No. 4, series of 1982. 6
Accordingly, Gerbert filed a petition for judicial recognition of foreign divorce
and/or declaration of marriage as dissolved (petition) with the RTC. Although
summoned, Daisylyn did not file any responsive pleading but submitted
instead a notarized letter/manifestation to the trial court. She offered no
opposition to Gerberts petition and, in fact, alleged her desire to file a similar
case herself but was prevented by financial and personal circumstances. She,

thus, requested that she be considered as a party-in-interest with a similar

prayer to Gerberts.

The resolution of the issue requires a review of the legislative history and
intent behind the second paragraph of Article 26 of the Family Code.

In its October 30, 2008 decision, 7 the RTC denied Gerberts petition. The RTC
concluded that Gerbert was not the proper party to institute the action for
judicial recognition of the foreign divorce decree as he is a naturalized
Canadian citizen. It ruled that only the Filipino spouse can avail of the
remedy, under the second paragraph of Article 26 of the Family Code, 8 in
order for him or her to be able to remarry under Philippine law. 9 Article 26 of
the Family Code reads:

The Family Code recognizes only two types of defective marriages

void15 and voidable16 marriages. In both cases, the basis for the judicial
declaration of absolute nullity or annulment of the marriage exists before or
at the time of the marriage. Divorce, on the other hand, contemplates the
dissolution of the lawful union for cause arising after the marriage. 17 Our
family laws do not recognize absolute divorce between Filipino citizens. 18

Art. 26. All marriages solemnized outside the Philippines, in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.

Recognizing the reality that divorce is a possibility in marriages between a

Filipino and an alien, President Corazon C. Aquino, in the exercise of her
legislative powers under the Freedom Constitution, 19 enacted Executive Order
No. (EO) 227, amending Article 26 of the Family Code to its present wording,
as follows:

Where a marriage between a Filipino citizen and a foreigner is validly

celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall likewise
have capacity to remarry under Philippine law.

Art. 26. All marriages solemnized outside the Philippines, in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.

This conclusion, the RTC stated, is consistent with the legislative intent
behind the enactment of the second paragraph of Article 26 of the Family
Code, as determined by the Court in Republic v. Orbecido III;10 the provision
was enacted to "avoid the absurd situation where the Filipino spouse remains
married to the alien spouse who, after obtaining a divorce, is no longer
married to the Filipino spouse."11

Where a marriage between a Filipino citizen and a foreigner is validly

celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall likewise
have capacity to remarry under Philippine law.

THE PETITION
From the RTCs ruling,12 Gerbert filed the present petition. 13
Gerbert asserts that his petition before the RTC is essentially for declaratory
relief, similar to that filed in Orbecido; he, thus, similarly asks for a
determination of his rights under the second paragraph of Article 26 of the
Family Code. Taking into account the rationale behind the second paragraph
of Article 26 of the Family Code, he contends that the provision applies as
well to the benefit of the alien spouse. He claims that the RTC ruling unduly
stretched the doctrine in Orbecido by limiting the standing to file the petition
only to the Filipino spouse an interpretation he claims to be contrary to the
essence of the second paragraph of Article 26 of the Family Code. He
considers himself as a proper party, vested with sufficient legal interest, to
institute the case, as there is a possibility that he might be prosecuted for
bigamy if he marries his Filipina fiance in the Philippines since two marriage
certificates, involving him, would be on file with the Civil Registry Office. The
Office of the Solicitor General and Daisylyn, in their respective
Comments,14 both support Gerberts position.
Essentially, the petition raises the issue of whether the second paragraph of
Article 26 of the Family Code extends to aliens the right to petition a court of
this jurisdiction for the recognition of a foreign divorce decree.
THE COURTS RULING
The alien spouse can claim no right under the second paragraph of Article 26
of the Family Code as the substantive right it establishes is in favor of the
Filipino spouse

71

Through the second paragraph of Article 26 of the Family Code, EO 227

effectively incorporated into the law this Courts holding in Van Dorn v.
Romillo, Jr.20 and Pilapil v. Ibay-Somera.21 In both cases, the Court refused to
acknowledge the alien spouses assertion of marital rights after a foreign
courts divorce decree between the alien and the Filipino. The Court, thus,
recognized that the foreign divorce had already severed the marital bond
between the spouses. The Court reasoned in Van Dorn v. Romillo that:
To maintain x x x that, under our laws, [the Filipino spouse] has to be
considered still married to [the alien spouse] and still subject to a wife's
obligations x x x cannot be just. [The Filipino spouse] should not be obliged to
live together with, observe respect and fidelity, and render support to [the
alien spouse]. The latter should not continue to be one of her heirs with
possible rights to conjugal property. She should not be discriminated against
in her own country if the ends of justice are to be served. 22
As the RTC correctly stated, the provision was included in the law "to avoid
the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino
spouse."23 The legislative intent is for the benefit of the Filipino spouse, by
clarifying his or her marital status, settling the doubts created by the divorce
decree. Essentially, the second paragraph of Article 26 of the Family Code
provided the Filipino spouse a substantive right to have his or her marriage to
the alien spouse considered as dissolved, capacitating him or her to
remarry.24 Without the second paragraph of Article 26 of the Family Code, the
judicial recognition of the foreign decree of divorce, whether in a proceeding
instituted precisely for that purpose or as a related issue in another
proceeding, would be of no significance to the Filipino spouse since our laws
do not recognize divorce as a mode of severing the marital bond; 25 Article 17

of the Civil Code provides that the policy against absolute divorces cannot be
subverted by judgments promulgated in a foreign country. The inclusion of
the second paragraph in Article 26 of the Family Code provides the direct
exception to this rule and serves as basis for recognizing the dissolution of
the marriage between the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of the
Family Code is not limited to the recognition of the foreign divorce decree. If
the court finds that the decree capacitated the alien spouse to remarry, the
courts can declare that the Filipino spouse is likewise capacitated to contract
another marriage. No court in this jurisdiction, however, can make a similar
declaration for the alien spouse (other than that already established by the
decree), whose status and legal capacity are generally governed by his
national law.26
Given the rationale and intent behind the enactment, and the purpose of the
second paragraph of Article 26 of the Family Code, the RTC was correct in
limiting the applicability of the provision for the benefit of the Filipino spouse.
In other words, only the Filipino spouse can invoke the second paragraph of
Article 26 of the Family Code; the alien spouse can claim no right under this
provision.
The foreign divorce decree is presumptive evidence of a right that clothes the
party with legal interest to petition for its recognition in this jurisdiction
We qualify our above conclusion i.e., that the second paragraph of Article
26 of the Family Code bestows no rights in favor of aliens with the
complementary statement that this conclusion is not sufficient basis to
dismiss Gerberts petition before the RTC. In other words, the unavailability of
the second paragraph of Article 26 of the Family Code to aliens does not
necessarily strip Gerbert of legal interest to petition the RTC for the
recognition of his foreign divorce decree. The foreign divorce decree itself,
after its authenticity and conformity with the aliens national law have been
duly proven according to our rules of evidence, serves as a presumptive
evidence of right in favor of Gerbert, pursuant to Section 48, Rule 39 of the
Rules of Court which provides for the effect of foreign judgments. This Section
states:
SEC. 48. Effect of foreign judgments or final orders.The effect of a judgment
or final order of a tribunal of a foreign country, having jurisdiction to render
the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the
judgment or final order is conclusive upon the title of the thing; and
(b) In case of a judgment or final order against a person, the
judgment or final order is presumptive evidence of a right as between
the parties and their successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
To our mind, direct involvement or being the subject of the foreign judgment
is sufficient to clothe a party with the requisite interest to institute an action
before our courts for the recognition of the foreign judgment. In a divorce

72

situation, we have declared, no less, that the divorce obtained by an alien

abroad may be recognized in the Philippines, provided the divorce is valid
according to his or her national law.27
The starting point in any recognition of a foreign divorce judgment is the
acknowledgment that our courts do not take judicial notice of foreign
judgments and laws. Justice Herrera explained that, as a rule, "no sovereign
is bound to give effect within its dominion to a judgment rendered by a
tribunal of another country."28 This means that the foreign judgment and its
authenticity must be proven as facts under our rules on evidence, together
with the aliens applicable national law to show the effect of the judgment on
the alien himself or herself.29 The recognition may be made in an action
instituted specifically for the purpose or in another action where a party
invokes the foreign decree as an integral aspect of his claim or defense.
In Gerberts case, since both the foreign divorce decree and the national law
of the alien, recognizing his or her capacity to obtain a divorce, purport to be
official acts of a sovereign authority, Section 24, Rule 132 of the Rules of
Court comes into play. This Section requires proof, either by (1) official
publications or (2) copies attested by the officer having legal custody of the
documents. If the copies of official records are not kept in the Philippines,
these must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by the seal
of his office.
The records show that Gerbert attached to his petition a copy of the divorce
decree, as well as the required certificates proving its authenticity, 30 but
failed to include a copy of the Canadian law on divorce. 31 Under this situation,
we can, at this point, simply dismiss the petition for insufficiency of
supporting evidence, unless we deem it more appropriate to remand the case
to the RTC to determine whether the divorce decree is consistent with the
Canadian divorce law.
We deem it more appropriate to take this latter course of action, given the
Article 26 interests that will be served and the Filipina wifes (Daisylyns)
obvious conformity with the petition. A remand, at the same time, will allow
other interested parties to oppose the foreign judgment and overcome a
petitioners presumptive evidence of a right by proving want of jurisdiction,
want of notice to a party, collusion, fraud, or clear mistake of law or fact.
Needless to state, every precaution must be taken to ensure conformity with
our laws before a recognition is made, as the foreign judgment, once
recognized, shall have the effect of res judicata 32 between the parties, as
provided in Section 48, Rule 39 of the Rules of Court. 33
In fact, more than the principle of comity that is served by the practice of
reciprocal recognition of foreign judgments between nations, the res judicata
effect of the foreign judgments of divorce serves as the deeper basis for
extending judicial recognition and for considering the alien spouse bound by
its terms. This same effect, as discussed above, will not obtain for the Filipino
spouse were it not for the substantive rule that the second paragraph of
Article 26 of the Family Code provides.
Considerations beyond the recognition of the foreign divorce decree

As a matter of "housekeeping" concern, we note that the Pasig City Civil

Registry Office has already recorded the divorce decree on Gerbert and
Daisylyns marriage certificate based on the mere presentation of the
decree.34We consider the recording to be legally improper; hence, the need to
draw attention of the bench and the bar to what had been done.
Article 407 of the Civil Code states that "[a]cts, events and judicial decrees
concerning the civil status of persons shall be recorded in the civil register."
The law requires the entry in the civil registry of judicial decrees that produce
legal consequences touching upon a persons legal capacity and status, i.e.,
those affecting "all his personal qualities and relations, more or less
permanent in nature, not ordinarily terminable at his own will, such as his
being legitimate or illegitimate, or his being married or not."35
A judgment of divorce is a judicial decree, although a foreign one, affecting a
persons legal capacity and status that must be recorded. In fact, Act No.
3753 or the Law on Registry of Civil Status specifically requires the
registration of divorce decrees in the civil registry:
Sec. 1. Civil Register. A civil register is established for recording the civil
status of persons, in which shall be entered:
(a) births;
(b) deaths;
(c) marriages;
(d) annulments of marriages;
(e) divorces;
(f) legitimations;
(g) adoptions;
(h) acknowledgment of natural children;
(i) naturalization; and
(j) changes of name.
xxxx
Sec. 4. Civil Register Books. The local registrars shall keep and preserve in
their offices the following books, in which they shall, respectively make the
proper entries concerning the civil status of persons:
(1) Birth and death register;
(2) Marriage register, in which shall be entered not only the
marriages solemnized but also divorces and dissolved marriages.
(3) Legitimation, acknowledgment, adoption, change of name and
naturalization register.
But while the law requires the entry of the divorce decree in the civil registry,
the law and the submission of the decree by themselves do not ipso facto
authorize the decrees registration. The law should be read in relation with
the requirement of a judicial recognition of the foreign judgment before it can
be given res judicata effect. In the context of the present case, no judicial
order as yet exists recognizing the foreign divorce decree. Thus, the Pasig

73

City Civil Registry Office acted totally out of turn and without authority of law
when it annotated the Canadian divorce decree on Gerbert and Daisylyns
marriage certificate, on the strength alone of the foreign decree presented by
Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement of
a court recognition, as it cited NSO Circular No. 4, series of 1982, 36 and
Department of Justice Opinion No. 181, series of 1982 37 both of which
required a final order from a competent Philippine court before a foreign
judgment, dissolving a marriage, can be registered in the civil registry, but it,
nonetheless, allowed the registration of the decree. For being contrary to law,
the registration of the foreign divorce decree without the requisite judicial
recognition is patently void and cannot produce any legal effect.1avvphi1
Another point we wish to draw attention to is that the recognition that the
RTC may extend to the Canadian divorce decree does not, by itself, authorize
the cancellation of the entry in the civil registry. A petition for recognition of a
foreign judgment is not the proper proceeding, contemplated under the Rules
of Court, for the cancellation of entries in the civil registry.
Article 412 of the Civil Code declares that "no entry in a civil register shall be
changed or corrected, without judicial order." The Rules of Court supplements
Article 412 of the Civil Code by specifically providing for a special remedial
proceeding by which entries in the civil registry may be judicially cancelled or
corrected. Rule 108 of the Rules of Court sets in detail the jurisdictional and
procedural requirements that must be complied with before a judgment,
authorizing the cancellation or correction, may be annotated in the civil
registry. It also requires, among others, that the verified petition must be filed
with the RTC of the province where the corresponding civil registry is
located;38 that the civil registrar and all persons who have or claim any
interest must be made parties to the proceedings; 39 and that the time and
place for hearing must be published in a newspaper of general
circulation. 40 As these basic jurisdictional requirements have not been met in
the present case, we cannot consider the petition Gerbert filed with the RTC
as one filed under Rule 108 of the Rules of Court.
We hasten to point out, however, that this ruling should not be construed as
requiring two separate proceedings for the registration of a foreign divorce
decree in the civil registry one for recognition of the foreign decree and
another specifically for cancellation of the entry under Rule 108 of the Rules
of Court. The recognition of the foreign divorce decree may be made in a Rule
108 proceeding itself, as the object of special proceedings (such as that in
Rule 108 of the Rules of Court) is precisely to establish the status or right of a
party or a particular fact. Moreover, Rule 108 of the Rules of Court can serve
as the appropriate adversarial proceeding 41 by which the applicability of the
foreign judgment can be measured and tested in terms of jurisdictional
infirmities, want of notice to the party, collusion, fraud, or clear mistake of
law or fact.
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE
the October 30, 2008 decision of the Regional Trial Court of Laoag City,
Branch 11, as well as its February 17, 2009 order. We order the REMAND of
the case to the trial court for further proceedings in accordance with our

ruling above. Let a copy of this Decision be furnished the Civil Registrar
General. No costs.
SO ORDERED.

of the fair-minded, yet the dispensation of the appropriate relief due them
cannot be extended through the same caprice or whim that characterized the
ill-wind of martial rule. The damage done was not merely personal but
institutional, and the proper rebuke to the iniquitous past has to involve the
award of reparations due within the confines of the restored rule of law.
The petitioners in this case are prominent victims of human rights
violations1 who, deprived of the opportunity to directly confront the man who
once held absolute rule over this country, have chosen to do battle instead
with the earthly representative, his estate. The clash has been for now
interrupted by a trial court ruling, seemingly comported to legal logic, that
required the petitioners to pay a whopping filing fee of over Four Hundred
Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to
enforce a judgment awarded them by a foreign court. There is an
understandable temptation to cast the struggle within the simplistic confines
of a morality tale, and to employ short-cuts to arrive at what might seem the
desirable solution. But easy, reflexive resort to the equity principle all too
often leads to a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case will
comfort those who maintain that our substantive and procedural laws, for all
their perceived ambiguity and susceptibility to myriad interpretations, are
inherently fair and just. The relief sought by the petitioners is expressly
mandated by our laws and conforms to established legal principles. The
granting of this petition for certiorari is warranted in order to correct the
legally infirm and unabashedly unjust ruling of the respondent judge.

20. Mijaresvs Hon. Ranada

DECISION
TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to
finish weeding out its bitter crop. While the restoration of freedom and the
fundamental structures and processes of democracy have been much lauded,
according to a significant number, the changes, however, have not
sufficiently healed the colossal damage wrought under the oppressive
conditions of the martial law period. The cries of justice for the tortured, the
murdered, and the desaparecidos arouse outrage and sympathy in the hearts

74

The essential facts bear little elaboration. On 9 May 1991, a complaint was
filed with the United States District Court (US District Court), District of
Hawaii, against the Estate of former Philippine President Ferdinand E. Marcos
(Marcos Estate). The action was brought forth by ten Filipino citizens 2 who
each alleged having suffered human rights abuses such as arbitrary
detention, torture and rape in the hands of police or military forces during the
Marcos regime.3 The Alien Tort Act was invoked as basis for the US District
Court's jurisdiction over the complaint, as it involved a suit by aliens for
tortious violations of international law. 4 These plaintiffs brought the action on
their own behalf and on behalf of a class of similarly situated individuals,
particularly consisting of all current civilian citizens of the Philippines, their
heirs and beneficiaries, who between 1972 and 1987 were tortured,
summarily executed or had disappeared while in the custody of military or
paramilitary groups. Plaintiffs alleged that the class consisted of
approximately ten thousand (10,000) members; hence, joinder of all these
persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)
(1)(B) of the US Federal Rules of Civil Procedure, the provisions of which were
invoked by the plaintiffs. Subsequently, the US District Court certified the
case as a class action and created three (3) sub-classes of torture, summary
execution and disappearance victims. 5 Trial ensued, and subsequently a jury
rendered a verdict and an award of compensatory and exemplary damages in
favor of the plaintiff class. Then, on 3 February 1995, the US District Court,
presided by Judge Manuel L. Real, rendered a Final Judgment (Final
Judgment) awarding the plaintiff class a total of One Billion Nine Hundred
Sixty Four Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety

Cents ($1,964,005,859.90). The Final Judgment was eventually affirmed by

the US Court of Appeals for the Ninth Circuit, in a decision rendered on 17
December 1996.6
On 20 May 1997, the present petitioners filed Complaint with the Regional
Trial Court, City of Makati (Makati RTC) for the enforcement of the Final
Judgment. They alleged that they are members of the plaintiff class in whose
favor the US District Court awarded damages. 7 They argued that since the
Marcos Estate failed to file a petition for certiorari with the US Supreme Court
after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the
decision of the US District Court had become final and executory, and hence
should be recognized and enforced in the Philippines, pursuant to Section 50,
Rule 39 of the Rules of Court then in force.8
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising,
among others, the non-payment of the correct filing fees. It alleged that
petitioners had only paid Four Hundred Ten Pesos (P410.00) as docket and
filing fees, notwithstanding the fact that they sought to enforce a monetary
amount of damages in the amount of over Two and a Quarter Billion US
Dollars (US$2.25 Billion). The Marcos Estate cited Supreme Court Circular No.
7, pertaining to the proper computation and payment of docket fees. In
response, the petitioners claimed that an action for the enforcement of a
foreign judgment is not capable of pecuniary estimation; hence, a filing fee of
only Four Hundred Ten Pesos (P410.00) was proper, pursuant to Section 7(c)
of Rule 141.9
On 9 September 1998, respondent Judge Santiago Javier Ranada 10 of the
Makati RTC issued the subject Orderdismissing the complaint without
prejudice. Respondent judge opined that contrary to the petitioners'
submission, the subject matter of the complaint was indeed capable of
pecuniary estimation, as it involved a judgment rendered by a foreign court
ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment. On that score, Section
7(a) of Rule 141 of the Rules of Civil Procedure would find application, and the
RTC estimated the proper amount of filing fees was approximately Four
Hundred Seventy Two Million Pesos, which obviously had not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge
Ranada denied in an Order dated 28 July 1999. From this denial, petitioners
filed a Petition for Certiorari under Rule 65 assailing the twin orders of
respondent judge.11 They prayed for the annulment of the questioned orders,
and an order directing the reinstatement of Civil Case No. 97-1052 and the
conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as
the subject matter of the suit is the enforcement of a foreign judgment, and
not an action for the collection of a sum of money or recovery of damages.
They also point out that to require the class plaintiffs to pay Four Hundred
Seventy Two Million Pesos (P472,000,000.00) in filing fees would negate and
render inutile the liberal construction ordained by the Rules of Court, as
required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the
inexpensive disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the
Constitution, which provides that "Free access to the courts and quasi-judicial

75

bodies and adequate legal assistance shall not be denied to any person by
reason of poverty," a mandate which is essentially defeated by the required
exorbitant filing fee. The adjudicated amount of the filing fee, as arrived at by
the RTC, was characterized as indisputably unfair, inequitable, and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this
case.12 It urged that the petition be granted and a judgment rendered,
ordering the enforcement and execution of the District Court judgment in
accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For
the CHR, the Makati RTC erred in interpreting the action for the execution of a
foreign judgment as a new case, in violation of the principle that once a case
has been decided between the same parties in one country on the same
issue with finality, it can no longer be relitigated again in another
country.13 The CHR likewise invokes the principle of comity, and of vested
rights.
The Court's disposition on the issue of filing fees will prove a useful
jurisprudential guidepost for courts confronted with actions enforcing foreign
judgments, particularly those lodged against an estate. There is no basis for
the issuance a limited pro hac vice ruling based on the special circumstances
of the petitioners as victims of martial law, or on the emotionally-charged
allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the
respondent judge ignored the clear letter of the law when he concluded that
the filing fee be computed based on the total sum claimed or the stated
value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule
141 as basis for the computation of the filing fee of over P472 Million. The
provision states:
SEC. 7. Clerk of Regional Trial Court.(a) For filing an action or a permissive counterclaim or
money claim against an estate not based on judgment,
or for filing with leave of court a third-party, fourth-party,
etc., complaint, or a complaint in intervention, and for all
clerical services in the same time, if the total sum claimed,
exclusive of interest, or the started value of the property in
litigation, is:
1. Less than P 100,00.00
2. P 100,000.00 or more but less than P 150,000.00
3. P 150,000.00 or more but less than P 200,000.00
4. P 200,000.00 or more but less than P 250,000.00

5. P 250,000.00 or more but less than P 300,00.00

6. P 300,000.00 or more but not more than P 400,000.00

involving property

---

P 600.00

In a real action, the assessed value of the property, or if there is none, the
estimated value, thereof shall be alleged by the claimant and shall be the
basis in computing the fees.

It is worth noting that the provision also provides that in real actions, the
assessed value or estimated value of the property shall be alleged by the
7. P 350,000.00 or more but not more than P400,000.00 claimant and shall be the basis in computing the fees. Yet again, this
provision does not apply in the case at bar. A real action is one where the
plaintiff seeks the recovery of real property or an action affecting title to or
8. For each P 1,000.00 in excess of P 400,000.00
recovery of possession of real property. 16 Neither the complaint nor the award
of damages adjudicated by the US District Court involves any real property of
the Marcos Estate.
(Emphasis supplied)
Obviously, the above-quoted provision covers, on one hand, ordinary actions,
permissive counterclaims, third-party, etc. complaints and complaints-ininterventions, and on the other, money claims against estates which are not
based on judgment. Thus, the relevant question for purposes of the present
petition is whether the action filed with the lower court is a "money claim
against an estate not based on judgment."
Petitioners' complaint may have been lodged against an estate, but it is
clearly based on a judgment, the Final Judgment of the US District Court. The
provision does not make any distinction between a local judgment and a
foreign judgment, and where the law does not distinguish, we shall not
distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the
filing fee is computed on the basis of the amount of the relief sought, or on
the value of the property in litigation. The filing fee for requests for
extrajudicial foreclosure of mortgage is based on the amount of indebtedness
or the mortgagee's claim.14 In special proceedings involving properties such
as for the allowance of wills, the filing fee is again based on the value of the
property.15 The aforecited rules evidently have no application to petitioners'
complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the
value of the subject matter cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court.(b) For filing
1.

cannot be estimated

---

P 600.00

Special civil actions except

shall be governed by

3.

76

All other actions not

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. 17 This principle
was prominently affirmed in the leading American case of Hilton v.
Guyot18 and expressly recognized in our jurisprudence beginning
withIngenholl v. Walter E. Olsen & Co.19 The conditions required by the
Philippines for recognition and enforcement of a foreign judgment were
originally contained in Section 311 of the Code of Civil Procedure, which was
taken from the California Code of Civil Procedure which, in turn, was derived
from the California Act of March 11, 1872. 20 Remarkably, the procedural rule
now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has
remained unchanged down to the last word in nearly a century. Section 48
states:
SEC. 48.
Effect of foreign judgments. The effect of a
judgment of a tribunal of a foreign country, having jurisdiction to
pronounce the judgment is as follows:

(b) In case of a judgment against a person, the judgment is

presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title;
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.

judicial foreclosure which

paragraph (a) above

To resolve this question, a proper understanding is required on the nature and

effects of a foreign judgment in this jurisdiction.

(a) In case of a judgment upon a specific thing, the judgment

is conclusive upon the title to the thing;

Actions where the value

of the subject matter

2.

Thus, respondent judge was in clear and serious error when he concluded
that the filing fees should be computed on the basis of the schematic table of
Section 7(a), as the action involved pertains to a claim against an estate
based on judgment. What provision, if any, then should apply in determining
the filing fees for an action to enforce a foreign judgment?

---

P 600.00

There is an evident distinction between a foreign judgment in an action in

rem and one in personam. For an action in rem, the foreign judgment is
deemed conclusive upon the title to the thing, while in an

action inpersonam, the foreign judgment is presumptive, and not conclusive,

of a right as between the parties and their successors in interest by a
subsequent title.21 However, in both cases, the foreign judgment is
susceptible to impeachment in our local courts on the grounds of want of
jurisdiction or notice to the party, 22 collusion, fraud,23or clear mistake of law
or fact.24 Thus, the party aggrieved by the foreign judgment is entitled to
defend against the enforcement of such decision in the local forum. It is
essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its
efficacy.25

review is in consonance with a strong and pervasive policy in all legal

systems to limit repetitive litigation on claims and issues. 32 Otherwise known
as the policy of preclusion, it seeks to protect party expectations resulting
from previous litigation, to safeguard against the harassment of defendants,
to insure that the task of courts not be increased by never-ending litigation of
the same disputes, and in a larger sense to promote what Lord Coke in
the Ferrer's Case of 1599 stated to be the goal of all law: "rest and
quietness."33 If every judgment of a foreign court were reviewable on the
merits, the plaintiff would be forced back on his/her original cause of action,
rendering immaterial the previously concluded litigation. 34

It is clear then that it is usually necessary for an action to be filed in order to

enforce a foreign judgment 26, even if such judgment has conclusive effect as
in the case of in rem actions, if only for the purpose of allowing the losing
party an opportunity to challenge the foreign judgment, and in order for the
court to properly determine its efficacy. 27 Consequently, the party attacking a
foreign judgment has the burden of overcoming the presumption of its
validity.28

is incapable of pecuniary estimation. Admittedly the proposition, as it applies

in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all
practical intents and purposes, the matter at hand is capable of pecuniary
estimation, down to the last cent. In the assailedthe enforcement of a
foreign judgmentPetitioners appreciate this distinction, and rely upon it to
support the proposition that the subject matter of the complaintOrder, the
respondent judge pounced upon this point without equivocation:

The rules are silent as to what initiatory procedure must be undertaken in

order to enforce a foreign judgment in the Philippines. But there is no
question that the filing of a civil complaint is an appropriate measure for such
purpose. A civil action is one by which a party sues another for the
enforcement or protection of a right, 29 and clearly an action to enforce a
foreign judgment is in essence a vindication of a right prescinding either from
a "conclusive judgment upon title" or the "presumptive evidence of a
right."30 Absent perhaps a statutory grant of jurisdiction to a quasi-judicial
body, the claim for enforcement of judgment must be brought before the
regular courts.31

The Rules use the term "where the value of the subject matter cannot
be estimated." The subject matter of the present case is the
judgment rendered by the foreign court ordering defendant to pay
plaintiffs definite sums of money, as and for compensatory damages.
The Court finds that the value of the foreign judgment can be
estimated; indeed, it can even be easily determined. The Court is not
minded to distinguish between the enforcement of a judgment and
the amount of said judgment, and separate the two, for purposes of
determining the correct filing fees. Similarly, a plaintiff suing on
promissory note for P1 million cannot be allowed to pay only P400
filing fees (sic), on the reasoning that the subject matter of his suit is
not the P1 million, but the enforcement of the promissory note, and
that the value of such "enforcement" cannot be estimated. 35

There are distinctions, nuanced but discernible, between the cause of action
arising from the enforcement of a foreign judgment, and that arising from the
facts or allegations that occasioned the foreign judgment. They may pertain
to the same set of facts, but there is an essential difference in the right-duty
correlatives that are sought to be vindicated. For example, in a complaint for
damages against a tortfeasor, the cause of action emanates from the
violation of the right of the complainant through the act or omission of the
respondent. On the other hand, in a complaint for the enforcement of a
foreign judgment awarding damages from the same tortfeasor, for the
violation of the same right through the same manner of action, the cause of
action derives not from the tortious act but from the foreign judgment itself.
More importantly, the matters for proof are different. Using the above
example, the complainant will have to establish before the court the tortious
act or omission committed by the tortfeasor, who in turn is allowed to rebut
these factual allegations or prove extenuating circumstances. Extensive
litigation is thus conducted on the facts, and from there the right to and
amount of damages are assessed. On the other hand, in an action to enforce
a foreign judgment, the matter left for proof is the foreign judgment itself,
and not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally
restricted to a review of jurisdiction of the foreign court, the service of
personal notice, collusion, fraud, or mistake of fact or law. The limitations on

77

The jurisprudential standard in gauging whether the subject matter of an

action is capable of pecuniary estimation is well-entrenched. The Marcos
Estate cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals,
which ruled:
[I]n determining whether an action is one the subject matter of which
is not capable of pecuniary estimation this Court has adopted the
criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic
issue is something other than the right to recover a sum of money,
where the money claim is purely incidental to, or a consequence of,
the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in
terms of money, and are cognizable exclusively by courts of first
instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes
in Lapitan
v.
Scandia,36 from
which
the
rule

in Singsong and Raymundo actually derives, but which incorporates this

additional nuance omitted in the latter cases:

causes of action, irrespective of whether the causes of action arose

out of the same or different transactions;

xxx However, where the basic issue is something other than the right
to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought, like in
suits to have the defendant perform his part of the contract
(specific performance) and in actions for support, or for
annulment of judgment or to foreclose a mortgage, this Court
has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are
cognizable exclusively by courts of first instance. 37

(2) Exclusive original jurisdiction over cases of forcible entry and

unlawful detainer: Provided, That when, in such cases, the defendant
raises the question of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of
ownership, the issue of ownership shall be resolved only to determine
the issue of possession.

Petitioners go on to add that among the actions the Court has recognized as
being incapable of pecuniary estimation include legality of conveyances and
money deposits,38 validity of a mortgage,39 the right to support,40validity of
documents,41 rescission of contracts,42 specific performance,43 and validity or
annulment of judgments.44 It is urged that an action for enforcement of a
foreign judgment belongs to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the
subject matter of the action is undoubtedly the enforcement of a foreign
judgment, the effect of a providential award would be the adjudication of a
sum of money. Perhaps in theory, such an action is primarily for "the
enforcement of the foreign judgment," but there is a certain obtuseness to
that sort of argument since there is no denying that the enforcement of the
foreign judgment will necessarily result in the award of a definite sum of
money.
But before we insist upon this conclusion past beyond the point of reckoning,
we must examine its possible ramifications. Petitioners raise the point that a
declaration that an action for enforcement of foreign judgment may be
capable of pecuniary estimation might lead to an instance wherein a first
level court such as the Municipal Trial Court would have jurisdiction to enforce
a foreign judgment. But under the statute defining the jurisdiction of first
level courts, B.P. 129, such courts are not vested with jurisdiction over actions
for the enforcement of foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in civil cases. Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts
shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate
proceedings, testate and intestate, including the grant of provisional
remedies in proper cases, where the value of the personal property,
estate, or amount of the demand does not exceed One hundred
thousand pesos (P100,000.00) or, in Metro Manila where such
personal property, estate, or amount of the demand does not exceed
Two hundred thousand pesos (P200,000.00) exclusive of interest
damages of whatever kind, attorney's fees, litigation expenses, and
costs, the amount of which must be specifically alleged: Provided,
That where there are several claims or causes of action between the
same or different parties, embodied in the same complaint, the
amount of the demand shall be the totality of the claims in all the

78

(3) Exclusive original jurisdiction in all civil actions which involve title
to, or possession of, real property, or any interest therein where the
assessed value of the property or interest therein does not exceed
Twenty thousand pesos (P20,000.00) or, in civil actions in Metro
Manila, where such assessed value does not exceed Fifty thousand
pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: Provided, That value of
such property shall be determined by the assessed value of the
adjacent lots.45
Section 33 of B.P. 129 refers to instances wherein the cause of action or
subject matter pertains to an assertion of rights and interests over property
or a sum of money. But as earlier pointed out, the subject matter of an action
to enforce a foreign judgment is the foreign judgment itself, and the cause of
action arising from the adjudication of such judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint
for enforcement of a foreign judgment, even if capable of pecuniary
estimation, would fall under the jurisdiction of the Regional Trial Courts, thus
negating the fears of the petitioners. Indeed, an examination of the provision
indicates that it can be relied upon as jurisdictional basis with respect to
actions for enforcement of foreign judgments, provided that no other court or
office is vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising jurisdiction or any court, tribunal,
person or body exercising judicial or quasi-judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to
enforce the US District Court judgment is one capable of pecuniary
estimation. But at the same time, it is also an action based on judgment
against an estate, thus placing it beyond the ambit of Section 7(a) of Rule
141. What provision then governs the proper computation of the filing fees
over the instant complaint? For this case and other similarly situated
instances, we find that it is covered by Section 7(b)(3), involving as it does,
"other actions not involving property."
Notably, the amount paid as docket fees by the petitioners on the premise
that it was an action incapable of pecuniary estimation corresponds to the
same amount required for "other actions not involving property." The
petitioners thus paid the correct amount of filing fees, and it was a grave

abuse of discretion for respondent judge to have applied instead a clearly

inapplicable rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one which
should disabuse the notion that the doctrine affirmed in this decision is
grounded solely on the letter of the procedural rule. We earlier adverted to
the the internationally recognized policy of preclusion, 46 as well as the
principles of comity, utility and convenience of nations 47 as the basis for the
evolution of the rule calling for the recognition and enforcement of foreign
judgments. The US Supreme Court in Hilton v. Guyot48 relied heavily on the
concept of comity, as especially derived from the landmark treatise of Justice
Story in his Commentaries on the Conflict of Laws of 1834. 49 Yet the notion of
"comity" has since been criticized as one "of dim contours" 50 or suffering from
a number of fallacies.51Other conceptual bases for the recognition of foreign
judgments have evolved such as the vested rights theory or the modern
doctrine of obligation.52
There have been attempts to codify through treaties or multilateral
agreements the standards for the recognition and enforcement of foreign
judgments, but these have not borne fruition. The members of the European
Common Market accede to the Judgments Convention, signed in 1978, which
eliminates as to participating countries all of such obstacles to recognition
such as reciprocity and rvision au fond.53 The most ambitious of these
attempts is the Convention on the Recognition and Enforcement of Foreign
Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague
Conference of International Law.54 While it has not received the ratifications
needed to have it take effect, 55 it is recognized as representing current
scholarly thought on the topic. 56 Neither the Philippines nor the United States
are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the
recognition and enforcement of foreign judgments or a universal treaty
rendering it obligatory force, there is consensus that the viability of such
recognition and enforcement is essential. Steiner and Vagts note:
. . . The notion of unconnected bodies of national law on private
international law, each following a quite separate path, is not one
conducive to the growth of a transnational community encouraging
travel and commerce among its members. There is a contemporary
resurgence of writing stressing the identity or similarity of the values
that systems of public and private international law seek to further
a community interest in common, or at least reasonable, rules on
these matters in national legal systems. And such generic principles
as reciprocity play an important role in both fields. 57
Salonga, whose treatise on private international law is of worldwide renown,
points out:
Whatever be the theory as to the basis for recognizing foreign
judgments, there can be little dispute that the end is to protect the
reasonable expectations and demands of the parties. Where the
parties have submitted a matter for adjudication in the court of one
state, and proceedings there are not tainted with irregularity, they
may fairly be expected to submit, within the state or elsewhere, to
the enforcement of the judgment issued by the court.58

79

There is also consensus as to the requisites for recognition of a foreign

judgment and the defenses against the enforcement thereof. As earlier
discussed, the exceptions enumerated in Section 48, Rule 39 have remain
unchanged since the time they were adapted in this jurisdiction from long
standing American rules. The requisites and exceptions as delineated under
Section 48 are but a restatement of generally accepted principles of
international law. Section 98 of The Restatement, Second, Conflict of Laws,
states that "a valid judgment rendered in a foreign nation after a fair trial in a
contested proceeding will be recognized in the United States," and on its
face, the term "valid" brings into play requirements such notions as valid
jurisdiction over the subject matter and parties. 59 Similarly, the notion that
fraud or collusion may preclude the enforcement of a foreign judgment finds
affirmation with foreign jurisprudence and commentators, 60 as well as the
doctrine that the foreign judgment must not constitute "a clear mistake of
law or fact."61 And finally, it has been recognized that "public policy" as a
defense to the recognition of judgments serves as an umbrella for a variety of
concerns in international practice which may lead to a denial of recognition. 62
The viability of the public policy defense against the enforcement of a foreign
judgment has been recognized in this jurisdiction. 63 This defense allows for
the application of local standards in reviewing the foreign judgment,
especially when such judgment creates only a presumptive right, as it does in
cases wherein the judgment is against a person. 64 The defense is also
recognized within the international sphere, as many civil law nations adhere
to a broad public policy exception which may result in a denial of recognition
when the foreign court, in the light of the choice-of-law rules of the
recognizing court, applied the wrong law to the case. 65 The public policy
defense can safeguard against possible abuses to the easy resort to offshore
litigation if it can be demonstrated that the original claim is noxious to our
constitutional values.
There is no obligatory rule derived from treaties or conventions that requires
the Philippines to recognize foreign judgments, or allow a procedure for the
enforcement thereof. However, generally accepted principles of international
law, by virtue of the incorporation clause of the Constitution, form part of the
laws of the land even if they do not derive from treaty obligations. 66 The
classical formulation in international law sees those customary rules
accepted as binding result from the combination two elements: the
established, widespread, and consistent practice on the part of States; and a
psychological element known as the opinion juris sive necessitates (opinion
as to law or necessity). Implicit in the latter element is a belief that the
practice in question is rendered obligatory by the existence of a rule of law
requiring it.67
While the definite conceptual parameters of the recognition and enforcement
of foreign judgments have not been authoritatively established, the Court can
assert with certainty that such an undertaking is among those generally
accepted principles of international law. 68 As earlier demonstrated, there is a
widespread practice among states accepting in principle the need for such
recognition and enforcement, albeit subject to limitations of varying degrees.
The fact that there is no binding universal treaty governing the practice is not
indicative of a widespread rejection of the principle, but only a disagreement

as to the imposable specific rules governing the procedure for recognition

and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether
statutory or jurisprudential, adopted in various foreign jurisdictions. In the
Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules of
Court which has existed in its current form since the early 1900s. Certainly,
the Philippine legal system has long ago accepted into its jurisprudence and
procedural rules the viability of an action for enforcement of foreign
judgment, as well as the requisites for such valid enforcement, as derived
from internationally accepted doctrines. Again, there may be distinctions as
to the rules adopted by each particular state, 69 but they all prescind from the
premise that there is a rule of law obliging states to allow for, however
generally, the recognition and enforcement of a foreign judgment. The bare
principle, to our mind, has attained the status of opinio juris in international
practice.
This is a significant proposition, as it acknowledges that the procedure and
requisites outlined in Section 48, Rule 39 derive their efficacy not merely
from the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme
Court,70 and could very well be abrogated or revised by the high court itself.
Yet the Supreme Court is obliged, as are all State components, to obey the
laws of the land, including generally accepted principles of international law
which form part thereof, such as those ensuring the qualified recognition and
enforcement of foreign judgments.71
Thus, relative to the enforcement of foreign judgments in the Philippines, it
emerges that there is a general right recognized within our body of laws, and
affirmed by the Constitution, to seek recognition and enforcement of foreign
judgments, as well as a right to defend against such enforcement on the
grounds of want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this
country merely due to an exhorbitant assessment of docket fees is alien to
generally accepted practices and principles in international law. Indeed, there
are grave concerns in conditioning the amount of the filing fee on the
pecuniary award or the value of the property subject of the foreign decision.
Such pecuniary award will almost certainly be in foreign denomination,
computed in accordance with the applicable laws and standards of the
forum.72 The vagaries of inflation, as well as the relative low-income capacity
of the Filipino, to date may very well translate into an award virtually
unenforceable in this country, despite its integral validity, if the docket fees
for the enforcement thereof were predicated on the amount of the award
sought to be enforced. The theory adopted by respondent judge and the
Marcos Estate may even lead to absurdities, such as if applied to an award
involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very
well require that the filing fee be computed based on the value of the foreign
property as determined by the standards of the country where it is located.

80

As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness,

as it recognizes that the subject matter of an action for enforcement of a
foreign judgment is the foreign judgment itself, and not the right-duty
correlatives that resulted in the foreign judgment. In this particular
circumstance, given that the complaint is lodged against an estate and is
based on the US District Court's Final Judgment, this foreign judgment may,
for purposes of classification under the governing procedural rule, be deemed
as subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of "all
other actions not involving property." Thus, only the blanket filing fee of
minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which
states that "[F]ree access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any person by reason of
poverty." Since the provision is among the guarantees ensured by the Bill of
Rights, it certainly gives rise to a demandable right. However, now is not the
occasion to elaborate on the parameters of this constitutional right. Given our
preceding discussion, it is not necessary to utilize this provision in order to
grant the relief sought by the petitioners. It is axiomatic that the
constitutionality of an act will not be resolved by the courts if the controversy
can be settled on other grounds 73 or unless the resolution thereof is
indispensable for the determination of the case.74
One more word. It bears noting that Section 48, Rule 39 acknowledges that
the Final Judgment is not conclusive yet, but presumptive evidence of a right
of the petitioners against the Marcos Estate. Moreover, the Marcos Estate is
not precluded to present evidence, if any, of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. This
ruling, decisive as it is on the question of filing fees and no other, does not
render verdict on the enforceability of the Final Judgment before the courts
under the jurisdiction of the Philippines, or for that matter any other issue
which may legitimately be presented before the trial court. Such issues are
to be litigated before the trial court, but within the confines of the matters for
proof as laid down in Section 48, Rule 39. On the other hand, the speedy
resolution of this claim by the trial court is encouraged, and contumacious
delay of the decision on the merits will not be brooked by this
Court.WHEREFORE, the petition is GRANTED. The assailed orders are
NULLIFIED and SET ASIDE, and a new order REINSTATING Civil Case No. 971052 is hereby issued. No cost SO ORDERED.