Jurisdiction over the Person

International Shoe Co. v. Washington, 326 U.S. 310 (1945)

Syllabus

Activities within a State of salesmen in the employ of a foreign corporation, exhibiting samples of
merchandise and soliciting orders from prospective buyers to be accepted or rejected by the corporation
at a point outside the State, were systematic and continuous, and resulted in a large volume of interstate
business. A statute of the State requires employers to pay into the state unemployment compensation
fund a specified percentage of the wages paid for the services of employees within the State.

Held:

1. In view of 26 U.S.C. 1606(a) , providing that no person shall be relieved from compliance with a state
law requiring payments to an unemployment fund on the ground that he is engaged in interstate
commerce, the fact that the corporation is engaged in interstate commerce does not relieve it from liability
for payments to the state unemployment compensation fund. P. 326 U. S. 315.

2. The activities in behalf of the corporation render it amenable to suit in courts of the State to recover
payments due to the state unemployment compensation fund. P. 326 U. S. 320.

(a) The activities in question established between the State and the corporation sufficient contacts or ties
to make it reasonable and just, and in conformity to the due process requirements of the Fourteenth
Amendment, for the State to enforce against the corporation an obligation arising out of such activities.
P. 326 U. S. 320.

(b) In such a suit to recover payments due to the unemployment compensation fund, service of process
upon one of the corporation's salesmen within the State, and notice sent by registered mail to the
corporation at its home office, satisfies the requirements of due process. P. 326 U. S. 320.

Page 326 U. S. 311

3. The tax imposed by the state unemployment compensation statute -- construed by the state court, in its
application to the corporation, as a tax on the privilege of employing salesmen within the State -- does not
violate the due process clause of the Fourteenth Amendment. P. 326 U. S. 321.

22 Wash.2d 146, 154 P.2d 801, affirmed.

APPEAL from a judgment upholding the constitutionality of a state unemployment compensation statute
as applied to the appellant corporation.

MR. CHIEF JUSTICE STONE delivered the opinion of the Court.

The questions for decision are (1) whether, within the limitations of the due process clause of the
Fourteenth Amendment, appellant, a Delaware corporation, has, by its activities in the State of
Washington, rendered itself amenable to proceedings in the courts of that state to recover unpaid
contributions to the state unemployment compensation fund exacted by state statutes, Washington
Unemployment Compensation Act, Washington Revised Statutes, 9998-103a through 9998-123a, 1941
Supp., and (2) whether the state can exact those contributions consistently with the due process clause of
the Fourteenth Amendment.

The statutes in question set up a comprehensive scheme of unemployment compensation, the costs of
which are defrayed by contributions required to be made by employers to a state unemployment
compensation fund.

Page 326 U. S. 312

The contributions are a specified percentage of the wages payable annually by each employer for his
employees' services in the state. The assessment and collection of the contributions and the fund are
administered by appellees. Section 14(c) of the Act (Wash.Rev.Stat., 1941 Supp., 9998-114c) authorizes
appellee Commissioner to issue an order and notice of assessment of delinquent contributions upon
prescribed personal service of the notice upon the employer if found within the state, or, if not so found,
by mailing the notice to the employer by registered mail at his last known address. That section also
authorizes the Commissioner to collect the assessment by distraint if it is not paid within ten days after
service of the notice. By 14e and 6b, the order of assessment may be administratively reviewed by an
appeal tribunal within the office of unemployment upon petition of the employer, and this determination
is, by 6i, made subject to judicial review on questions of law by the state Superior Court, with further
right of appeal in the state Supreme Court, as in other civil cases.

In this case, notice of assessment for the years in question was personally served upon a sales solicitor
employed by appellant in the State of Washington, and a copy of the notice was mailed by registered mail
to appellant at its address in St. Louis, Missouri. Appellant appeared specially before the office of
unemployment, and moved to set aside the order and notice of assessment on the ground that the service
upon appellant's salesman was not proper service upon appellant; that appellant was not a corporation of
the State of Washington, and was not doing business within the state; that it had no agent within the state
upon whom service could be made; and that appellant is not an employer, and does not furnish
employment within the meaning of the statute.

The motion was heard on evidence and a stipulation of facts by the appeal tribunal, which denied the
motion

Page 326 U. S. 313

and ruled that appellee Commissioner was entitled to recover the unpaid contributions. That action was
affirmed by the Commissioner; both the Superior Court and the Supreme Court affirmed. 22 Wash.2d
146, 154 P.2d 801. Appellant in each of these courts assailed the statute as applied, as a violation of the
due process clause of the Fourteenth Amendment, and as imposing a constitutionally prohibited burden
on interstate commerce. The cause comes here on appeal under 237(a) of the Judicial Code, 28 U.S.C.
344(a), appellant assigning as error that the challenged statutes, as applied, infringe the due process
clause of the Fourteenth Amendment and the commerce clause.

The facts, as found by the appeal tribunal and accepted by the state Superior Court and Supreme Court,
are not in dispute. Appellant is a Delaware corporation, having its principal place of business in St. Louis,
Missouri, and is engaged in the manufacture and sale of shoes and other footwear. It maintains places of
business in several states other than Washington, at which its manufacturing is carried on and from
which its merchandise is distributed interstate through several sales units or branches located outside the
State of Washington.
Appellant has no office in Washington, and makes no contracts either for sale or purchase of merchandise
there. It maintains no stock of merchandise in that state, and makes there no deliveries of goods in
intrastate commerce. During the years from 1937 to 1940, now in question, appellant employed eleven to
thirteen salesmen under direct supervision and control of sales managers located in St. Louis. These
salesmen resided in Washington; their principal activities were confined to that state, and they were
compensated by commissions based upon the amount of their sales. The commissions for each year
totaled more than $31,000. Appellant supplies its salesmen with a line of samples, each consisting of one
shoe of a pair, which

Page 326 U. S. 314

they display to prospective purchasers. On occasion, they rent permanent sample rooms, for exhibiting
samples, in business buildings, or rent rooms in hotels or business buildings temporarily for that
purpose. The cost of such rentals is reimbursed by appellant.

The authority of the salesmen is limited to exhibiting their samples and soliciting orders from prospective
buyers, at prices and on terms fixed by appellant. The salesmen transmit the orders to appellant's office in
St. Louis for acceptance or rejection, and, when accepted, the merchandise for filling the orders is shipped
f.o.b. from points outside Washington to the purchasers within the state. All the merchandise shipped
into Washington is invoiced at the place of shipment, from which collections are made. No salesman has
authority to enter into contracts or to make collections.

The Supreme Court of Washington was of opinion that the regular and systematic solicitation of orders in
the state by appellant's salesmen, resulting in a continuous flow of appellant's product into the state, was
sufficient to constitute doing business in the state so as to make appellant amenable to suit in its courts.
But it was also of opinion that there were sufficient additional activities shown to bring the case within
the rule, frequently stated, that solicitation within a state by the agents of a foreign corporation plus some
additional activities there are sufficient to render the corporation amenable to suit brought in the courts
of the state to enforce an obligation arising out of its activities there. International Harvester Co. v.
Kentucky, 234 U. S. 579, 234 U. S. 587; People's Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 246 U. S.
87; Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516. The court found such additional
activities in the salesmen's display of samples sometimes in permanent display rooms, and the salesmen's
residence within the state, continued over a period of years, all resulting in a

Page 326 U. S. 315

substantial volume of merchandise regularly shipped by appellant to purchasers within the state. The
court also held that the statute, as applied, did not invade the constitutional power of Congress to
regulate interstate commerce, and did not impose a prohibited burden on such commerce.

Appellant's argument, renewed here, that the statute imposes an unconstitutional burden on interstate
commerce need not detain us. For 53 Stat. 1391, 26 U.S.C. 1606(a) provides that

"No person required under a State law to make payments to an unemployment fund shall be relieved
from compliance therewith on the ground that he is engaged in interstate or foreign commerce, or that
the State law does not distinguish between employees engaged in interstate or foreign commerce and
those engaged in intrastate commerce."

It is no longer debatable that Congress, in the exercise of the commerce power, may authorize the states,
in specified ways, to regulate interstate commerce or impose burdens upon it. Kentucky Whip & Collar Co.
v. Illinois Central R. Co., 299 U. S. 334; Perkins v. Pennsylvania, 314 U.S. 586; Standard Dredging Corp. v.
Murphy, 319 U. S. 306, 319 U. S. 308; Hooven & Allison Co. v. Evatt, 324 U. S. 652, 324 U. S. 679; Southern
Pacific Co. v. Arizona, 325 U. S. 761, 325 U. S. 769.

Appellant also insists that its activities within the state were not sufficient to manifest its "presence" there,
and that, in its absence, the state courts were without jurisdiction, that, consequently, it was a denial of
due process for the state to subject appellant to suit. It refers to those cases in which it was said that the
mere solicitation of orders for the purchase of goods within a state, to be accepted without the state and
filled by shipment of the purchased goods interstate, does not render the corporation seller amenable to
suit within the state. See Green v. Chicago, B. & Q. R. Co., 205 U. S. 530, 205 U. S. 533; International Harvester
Co. v. Kentucky, supra, 234 U. S. 586-587; Philadelphia

Page 326 U. S. 316

& Reading R. Co. v. McKibbin, 243 U. S. 264, 243 U. S. 268; People's Tobacco Co. v. American Tobacco Co.,
supra, 246 U. S. 87. And appellant further argues that, since it was not present within the state, it is a
denial of due process to subject it to taxation or other money exaction. It thus denies the power of the
state to lay the tax or to subject appellant to a suit for its collection.

Historically, the jurisdiction of courts to render judgment in personam is grounded on their de facto power
over the defendant's person. Hence, his presence within the territorial jurisdiction of a court was
prerequisite to its rendition of a judgment personally binding him. Pennoyer v. Neff, 95 U. S. 714, 95 U. S.
733. But now that the capias ad respondendum has given way to personal service of summons or other form
of notice, due process requires only that, in order to subject a defendant to a judgment in personam, if he
be not present within the territory of the forum, he have certain minimum contacts with it such that the
maintenance of the suit does not offend "traditional notions of fair play and substantial justice." Milliken v.
Meyer, 311 U. S. 457, 311 U. S. 463. See Holmes, J., in McDonald v. Mabee, 243 U. S. 90, 243 U. S. 91.Compare
Hoopeston Canning Co. v. Cullen, 318 U. S. 313, 318 U. S. 316, 318 U. S. 319. See Blackmer v. United States, 284
U. S. 421; Hess v. Pawloski, 274 U. S. 352; Young v. Masci, 289 U. S. 253. ,

Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were
a fact, Klein v. Board of Supervisors, 282 U. S. 19, 282 U. S. 24, it is clear that, unlike an individual, its
"presence" without, as well as within, the state of its origin can be manifested only by activities carried on
in its behalf by those who are authorized to act for it. To say that the corporation is so far "present" there
as to satisfy due process requirements, for purposes of taxation or the maintenance of suits against it in
the courts of the state, is to beg the question to be decided. For the terms "present" or "presence" are

Page 326 U. S. 317

used merely to symbolize those activities of the corporation's agent within the state which courts will
deem to be sufficient to satisfy the demands of due process. L. Hand, J., in Hutchinson v. Chase &
Gilbert, 45 F.2d 139, 141. Those demands may be met by such contacts of the corporation with the state of
the forum as make it reasonable, in the context of our federal system of government, to require the
corporation to defend the particular suit which is brought there. An "estimate of the inconveniences"
which would result to the corporation from a trial away from its "home" or principal place of business is
relevant in this connection. Hutchinson v. Chase & Gilbert, supra, 141.

"Presence" in the state in this sense has never been doubted when the activities of the corporation there
have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no
consent to be sued or authorization to an agent to accept service of process has been given. St. Clair v.
Cox, 106 U. S. 350, 106 U. S. 355; Connecticut Mutual Co. v. Spratley, 172 U. S. 602, 172 U. S. 610-
611; Pennsylvania Lumbermen's Ins. Co. v. Meyer, 197 U. S. 407, 197 U. S. 414-415; Commercial Mutual Co. v.
Davis, 213 U. S. 245, 213 U. S. 255-256; International Harvester Co. v. Kentucky, supra; cf. St. Louis S.W. R. Co.
v. Alexander, 227 U. S. 218. Conversely, it has been generally recognized that the casual presence of the
corporate agent, or even his conduct of single or isolated items of activities in a state in the corporation's
behalf, are not enough to subject it to suit on causes of action unconnected with the activities there. St.
Clair v. Cox, supra, 106 U. S. 359, 106 U. S. 360; Old Wayne Life Assn. v. McDonough, 204 U. S. 8, 204 U. S.
21; Frene v. Louisville Cement Co., supra, 515, and cases cited. To require the corporation in such
circumstances to defend the suit away from its home or other jurisdiction where it carries on more
substantial activities has been thought to lay too great and unreasonable a burden on the corporation to
comport with due process.

Page 326 U. S. 318

While it has been held, in cases on which appellant relies, that continuous activity of some sorts within a
state is not enough to support the demand that the corporation be amenable to suits unrelated to that
activity, Old Wayne Life Assn. v. McDonough, supra; Green v. Chicago, B. & Q. R. Co., supra; Simon v. Southern
R. Co., 236 U. S. 115; People's Tobacco Co. v. American Tobacco Co., supra; cf. Davis v. Farmers Co-operative
Co., 262 U. S. 312, 262 U. S. 317, there have been instances in which the continuous corporate operations
within a state were thought so substantial and of such a nature as to justify suit against it on causes of
action arising from dealings entirely distinct from those activities. See Missouri, K. & T. R. Co. v.
Reynolds, 255 U.S. 565; Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St. Louis S.W. R. Co. v.
Alexander, supra.

Finally, although the commission of some single or occasional acts of the corporate agent in a state
sufficient to impose an obligation or liability on the corporation has not been thought to confer upon the
state authority to enforce it, Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U. S. 516, other such acts,
because of their nature and quality and the circumstances of their commission, may be deemed sufficient
to render the corporation liable to suit. Cf. Kane v. New Jersey, 242 U. S. 160; Hess v. Pawloski, supra; Young
v. Masci, supra. True, some of the decisions holding the corporation amenable to suit have been supported
by resort to the legal fiction that it has given its consent to service and suit, consent being implied from its
presence in the state through the acts of its authorized agents. Lafayette Insurance Co. v. French, 18 How.
404, 59 U. S. 407; St. Clair v. Cox, supra, 106 U. S. 356; Commercial Mutual Co. v. Davis, supra, 213 U. S.
254; Washington v. Superior Court, 289 U. S. 361, 289 U. S. 364-365. But, more realistically, it may be said
that those authorized acts were of such a nature as to justify the fiction. Smolik v. Philadelphia &

Page 326 U. S. 319

Reading Co., 222 F. 148, 151. Henderson, The Position of Foreign Corporations in American Constitutional
Law, 94-95.

It is evident that the criteria by which we mark the boundary line between those activities which justify
the subjection of a corporation to suit and those which do not cannot be simply mechanical or
quantitative. The test is not merely, as has sometimes been suggested, whether the activity, which the
corporation has seen fit to procure through its agents in another state, is a little more or a little less. St.
Louis S.W. R. Co. v. Alexander, supra, 227 U. S. 228; International Harvester Co. v. Kentucky, supra, 234 U. S.
587. Whether due process is satisfied must depend, rather, upon the quality and nature of the activity in
relation to the fair and orderly administration of the laws which it was the purpose of the due process
clause to insure. That clause does not contemplate that a state may make binding a judgment in
personam against an individual or corporate defendant with which the state has no contacts, ties, or
relations. Cf. Pennoyer v. Neff, supra; Minnesota Commercial Assn. v. Benn, 261 U. S. 140.
But, to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys
the benefits and protection of the laws of that state. The exercise of that privilege may give rise to
obligations, and, so far as those obligations arise out of or are connected with the activities within the
state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in
most instances, hardly be said to be undue. Compare International Harvester Co. v. Kentucky, supra, with
Green v. Chicago, B. & Q. R. Co., supra, and People's Tobacco Co. v. American Tobacco Co., supra. Compare
Connecticut Mutual Co. v. Spratley, supra, 172 U. S. 619, 172 U. S. 620, and Commercial Mutual Co. v. Davis,
supra, with Old Wayne Life Assn. v. McDonough, supra. See 29 Columbia Law Review, 187-195.

Page 326 U. S. 320

Applying these standards, the activities carried on in behalf of appellant in the State of Washington were
neither irregular nor casual. They were systematic and continuous throughout the years in question. They
resulted in a large volume of interstate business, in the course of which appellant received the benefits
and protection of the laws of the state, including the right to resort to the courts for the enforcement of its
rights. The obligation which is here sued upon arose out of those very activities. It is evident that these
operations establish sufficient contacts or ties with the state of the forum to make it reasonable and just,
according to our traditional conception of fair play and substantial justice, to permit the state to enforce
the obligations which appellant has incurred there. Hence, we cannot say that the maintenance of the
present suit in the State of Washington involves an unreasonable or undue procedure.

We are likewise unable to conclude that the service of the process within the state upon an agent whose
activities establish appellant's "presence" there was not sufficient notice of the suit, or that the suit was so
unrelated to those activities as to make the agent an inappropriate vehicle for communicating the notice.
It is enough that appellant has established such contacts with the state that the particular form of
substituted service adopted there gives reasonable assurance that the notice will be actual. Connecticut
Mutual Co. v. Spratley, supra, 172 U. S. 618, 172 U. S. 619; Board of Trade v. Hammond Elevator Co., 198 U. S.
424, 198 U. S. 437-438; Commercial Mutual Co. v. Davis, supra, 213 U. S. 254-255. Cf. Riverside Mills v.
Menefee, 237 U. S. 189, 237 U. S. 194, 237 U. S. 195; See Knowles v. Gaslight & Coke Co., 19 Wall. 58, 86 U. S.
61; McDonald v. Mabee, supra; Milliken v. Meyer, supra. Nor can we say that the mailing of the notice of suit
to appellant by registered mail at its home office was not reasonably calculated to apprise appellant of the
suit. Compare Hess v. Pawloski, supra, with McDonald v. Mabee, supra,

Page 326 U. S. 321

243 U. S. 92, and Wuchter v. Pizzutti, 276 U. S. 13, 276 U. S. 19, 276 U. S. 24; cf. Becquet v. MacCarthy, 2 B. &
Ad. 951; Maubourquet v. Wyse, 1 Ir.Rep.C.L. 471. See Washington v. Superior Court, supra, 289 U. S. 365.

Only a word need be said of appellant's liability for the demanded contributions to the state
unemployment fund. The Supreme Court of Washington, construing and applying the statute, has held
that it imposes a tax on the privilege of employing appellant's salesmen within the state measured by a
percentage of the wages, here, the commissions payable to the salesmen. This construction we accept for
purposes of determining the constitutional validity of the statute. The right to employ labor has been
deemed an appropriate subject of taxation in this country and England, both before and since the
adoption of the Constitution. Steward Machine Co. v. Davis, 301 U. S. 548, 301 U. S. 579, et seq. And such a
tax imposed upon the employer for unemployment benefits is within the constitutional power of the
states. Carmichael v. Southern Coal Co., 301 U. S. 495, 301 U. S. 508, et seq.

Appellant having rendered itself amenable to suit upon obligations arising out of the activities of its
salesmen in Washington, the state may maintain the present suit in personam to collect the tax laid upon
the exercise of the privilege of employing appellant's salesmen within the state. For Washington has
made one of those activities which, taken together, establish appellant's "presence" there for purposes of
suit the taxable event by which the state brings appellant within the reach of its taxing power. The state
thus has constitutional power to lay the tax and to subject appellant to a suit to recover it. The activities
which establish its "presence" subject it alike to taxation by the state and to suit to recover the
tax. Equitable Life Society v. Pennsylvania, 238 U. S. 143, 238 U. S. 146; cf. International Harvester Co. v.
Department of Taxation, 322 U. S. 435, 322 U. S. 442, et seq.; Hoopeston Canning Co. v. Cullen,
Perkins v. Benguet Consolidated Mining Co, 342 U.S. 437, 72 S. Ct. 413 96 (1952)
This case calls for an answer to the question whether the Due Process Clause of the Fourteenth
Amendment to the Constitution of the United States precludes Ohio from subjecting a foreign
corporation to the jurisdiction of its courts in this action in personam. The corporation has been carrying
on in Ohio a continuous and systematic, but limited, part of its general business. Its president, while
engaged in doing such business in Ohio, has been served with summons in this proceeding. The cause of
action sued upon did not arise in Ohio and does not relate to the corporation's activities there. For the
reasons hereafter stated, we hold that the Fourteenth Amendment leaves Ohio free to take or decline
jurisdiction over the corporation.

After extended litigation elsewhere 1 petitioner, Idonah Slade Perkins, a nonresident of Ohio, filed two
actions in personam in the Court of Common Pleas of Clermont County, Ohio, against the several
respondents. Among those sued is the Benguet Consolidated Mining Company, here called the mining
company. It is styled a 'sociedad anonima' under the laws of the Philippine Islands, where it owns and
has operated profitable gold and silver mines. In one action petitioner seeks approximately $68,400 in
dividends claimed to be due her as a stockholder. In the other she claims $2,500,000 damages largely
because of the company's failure to issue to her certificates for 120,000 shares of its stock.
In each case the trial court sustained a motion to quash the service of summons on the mining company.
Ohio Com.Pl., 99 N.E.2d 515. The Court of Appeals of Ohio affirmed that decision, 88 Ohio App. 118, 95
N.E.2d 5, as did the Supreme Court of Ohio, 155 Ohio St. 116, 98 N.E.2d 33. The cases were consolidated
and we granted certiorari in order to pass upon the conclusion voiced within the court below that federal
due process required the result there reached. 342 U.S. 808, 72 S.Ct. 33, 96 L.Ed. -.

We start with the holding of the Supreme Court of Ohio, not contested here, that, under Ohio law, the
mining company is to be treated as a foreign corporation. 2 Actual notice of the proceeding was given to
the corporation in the instant case through regular service of summons upon its president while he was in
Ohio acting in that capacity. Accordingly, there can be no jurisdictional objection based upon a lack of
notice to a responsible representative of the corporation.

The answer to the question of whether the state courts of Ohio are open to a proceeding in personam,
against an amply notified foreign corporation, to enforce a cause of action not arising in Ohio and not
related to the business or activities of the corporation in that State rests entirely upon the law of Ohio,
unless the Due Process Clause of the Fourteenth Amendment compels a decision either way.
The suggestion that federal due process compels the State to open its courts to such a case has no
substance.
'Provisions for making foreign corporations subject to service in the state is a matter of legislative
discretion, and a failure to provide for such service is not a denial of due process. Still less is it incumbent
upon a state in furnishing such process to make the jurisdiction over the foreign corporation wide enough
to include the adjudication of transitory actions not arising in the state.' Missouri P.R. Co. v. Clarendon
Co., 257 U.S. 533, 535, 42 S.Ct. 210, 211, 66 L.Ed. 354.

Also without merit is the argument that merely because Ohio permits a complainant to maintain a
proceeding in personam in its courts against a properly served nonresident natural person to enforce a
cause of action which does not arise out of anything done in Ohio, therefore, the Constitution of the
United States compels Ohio to provide like relief against a foreign corporation.

A more serious question is presented by the claim that the Due Process Clause of the Fourteenth
Amendment prohibits Ohio from granting such relief against a foreign corporation. The syllabus in the
report of the case below, while denying the relief sought, does not indicate whether the Supreme Court of
Ohio rested its decision on Ohio law or on the Fourteenth Amendment. The first paragraph of that
syllabus is as follows:
'1. The doing of business in this state by a foreign corporation, which has not appointed a statutory agent
upon whom service of process against the corporation can be made in this state or otherwise consented to
service of summons upon it in actions brought in this state, will not make the corporation subject to
service of summons in an action in personam brought in the courts of this state to enforce a cause of
action not arising in this state and in no way related to the business or activities of the corporation in this
state.' 155 Ohio St. 116, 117, 98 N.E.2d 33, 34.

If the above statement stood alone, it might mean that the decision rested solely upon the law of Ohio. In
support of that possibility we are told that, under the rules and practice of the Supreme Court of Ohio,
only the syllabus necessarily carries the approval of that court. 3 As we understand the Ohio practice, the
syllabus of its Supreme Court constitutes the official opinion of that court but it must be read in the light
of the facts and issues of the case.
The only opinion accompanying the syllabus of the court below places the concurrence of its author
unequivocally upon the ground that the Due Process Clause of the Fourteenth Amendment prohibits the
Ohio courts from exercising jurisdiction over the respondent corporation in this proceeding. 4 That
opinion is an official part of the report of the case. The report, however, does not disclose to what extent,
if any, the other members of the court may have shared the view expressed in that opinion. Accordingly,
for us to allow the judgment to stand as it is would risk an affirmance of a decision which might have
been decided differently if the court below had felt free, under our decisions, to do so.

The cases primarily relied on by the author of the opinion accompanying the syllabus below are Old
Wayne Life Ass'n v. McDonough, 204 U.S. 8, 27 S.Ct. 236, 51 L.Ed. 345, and Simon v. Southern R. Co.,236
U.S. 115, 35 S.Ct. 255, 59 L.Ed. 492. Unlike the case at bar, no actual notice of the proceedings was
received in those cases by a responsible representative of the foreign corporation. In each case, the public
official who was served with process in an attempt to bind the foreign corporation was held to lack the
necessary authority to accept service so as to bind it in a proceeding to enforce a cause of action arising
outside of the state of the forum. See 204 U.S. at pages 2223, 27 S.Ct. at pages 240241, and 236 U.S. at
page 130, 35 S.Ct. at page 260. The necessary result was a finding of inadequate service in each case and a
conclusion that the foreign corporation was not bound by it. The same would be true today in a like
proceeding where the only service had and the only notice given was that directed to a public official
who had no authority, by statute or otherwise, to accept it in that kind of a proceeding. At the time of
rendering the above decisions this Court was aided, in reaching its conclusion as to the limited scope of
the statutory authority of the public officials, by this Court's conception that the Due Process Clause of
the Fourteenth Amendment precluded a state from giving its public officials authority to accept service in
terms broad enough to bind a foreign corporation in proceedings against it to enforce an obligation
arising outside of the state of the forum. That conception now has been modified by the rationale adopted
in later decisions and particularly in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90
L.Ed. 95.
Today if an authorized representative of a foreign corporation be physically present in the state of the
forum and be there engaged in activities appropriate to accepting service or receiving notice on its behalf,
we recognize that there is no unfairness in subjecting that corporation to the jurisdiction of the courts of
that state through such service of process upon that representative. This has been squarely held to be so
in a proceeding in personam against such a corporation, at least in relation to a cause of action arising out
of the corporation's activities within the state of the forum. 5
The essence of the issue here, at the constitutional level, is a like one of general fairness to the corporation.
Appropriate tests for that are discussed in International Shoe Co. v. Washington, supra, 326 U.S. at pages
317320, 66 S.Ct. at pages 158, 160. The amount and kind of activities which must be carried on by the
foreign corporation in the state of the forum so as to make it reasonable and just to subject the corporation
to the jurisdiction of that state are to be determined in each case. The corporate activities of a foreign
corporation which, under state statute, make it necessary for it to secure a license and to designate a
statutory agent upon whom process may be served provide a helpful but not a conclusive test. For
example, the state of the forum may by statute require a foreign mining corporation to secure a license in
order lawfully to carry on there such functional intrastate operations as those of mining or refining ore.
On the other hand, if the same corporation carries on, in that state, other continuous and systematic
corporate activities as it did hereconsisting of directors' meetings, business correspondence, banking,
stock transfers, payment of salaries, purchasing of machinery, etc.those activities are enough to make it
fair and reasonable to subject that corporation to proceedings in personam in that state, at least insofar as
the proceedings in personam seek to enforce causes of action relating to those very activities or to other
activities of the corporation within the state.

The instant case takes us one step further to a proceeding in personam to enforce a cause of action not
arising out of the corporation's activities in the state of the forum. Using the tests mentioned above we
find no requirement of federal due process that either prohibits Ohio from opening its courts to the cause
of action here presented or compels Ohio to do so. This conforms to the realistic reasoning in
International Shoe Co. v. Washington, supra, 326 U.S. at pages 318319, 66 S.Ct. at pages 159160:

'* * * there have been instances in which the continuous corporate operations within a state were thought
so substantial and of such a nature as to justify suit against it on causes of action arising from dealings
entirely distinct from those activities. See Missouri, K. & T.R. Co. v. Reynolds, 255 U.S. 565, 41 S.Ct. 446,
65 L.Ed. 788; 6 Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St. Louis S.W.R. Co. v.
Alexander, supra (227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486).

'* * * some of the decisions holding the corporation amenable to suit have been supported by resort to the
legal fiction that it has given its consent to service and suit, consent being implied from its presence in the
state through the acts of its authorized agents. Lafayette Insurance Co. v. French, 18 How. 404, 407; St.
Clair v. Cox, supra, 106 U.S. (350) 356, 1 S.Ct. (354) 359, 27 L.Ed. 222; Commercial Mutual Accident Co. v.
Davis, supra, 213 U.S. (245) 254, 29 S.Ct. (445) 447, 53 L.Ed. 782; State of Washington v. Superior
Court, 289 U.S. 361, 364, 365, 53 S.Ct. 624, 626, 627, 77 L.Ed. 1256. But more realistically it may be said that
those authorized acts were of such a nature as to justify the fiction. Smolik v. Philadelphia & Reading Co.,
D.C., 222 F. 148, 151. Henderson, The Position of Foreign Corporations in American Constitutional Law,
94, 95.
'* * * Whether due process is satisfied must depend rather upon the quality and nature of the activity in
relation to the fair and orderly administration of the laws which it was the purpose of the due process
clause to insure. That clause does not contemplate that a state may make binding a judgment in personam
against an individual or corporate defendant with which the state has no contacts, ties, or relations. Cf.
Pennoyer v. Neff, supra (95 U.S. 714, 24 L.Ed. 565); Minnesota Commercial Assn. v. Benn,261 U.S. 140, 43
S.Ct. 293, 67 L.Ed. 573.'

It remains only to consider, in more detail, the issue of whether, as a matter of federal due process, the
business done in Ohio by the respondent mining company was sufficiently substantial and of such a
nature as to permit Ohio to entertain a cause of action against a foreign corporation, where the cause of
action arose from activities entirely distinct from its activities in Ohio. See International Shoe Co. v.
Washington, supra, 326 U.S. at page 318, 66 S.Ct. at page 159.

The Ohio Court of Appeals summarized the evidence on the subject. 88 Ohio App. at pages 119125, 95
N.E.2d at pages 69. From that summary the following facts are substantially beyond controversy: The
company's mining properties were in the Philippine Islands. Its operations there were completely halted
during the occupation of the Islands by the Japanese. During that interim the president, who was also the
general manager and principal stockholder of the company, returned to his home in Clermont County,
Ohio. There he maintained an office in which he conducted his personal affairs and did many things on
behalf of the company. He kept there office files of the company. He carried on there correspondence
relating to the business of the company and to its employees. He drew and distributed there salary checks
on behalf of the company, both in his own favor as president and in favor of two company secretaries
who worked there with him. He used and maintained in Clermont County, Ohio, two active bank
accounts carrying substantial balances of company funds. A bank in Hamilton County, Ohio, acted as
transfer agent for the stock of the company. Several directors' meetings were held at his office or home in
Clermont County. From that office he supervised policies dealing with the rehabilitation of the
corporation's properties in the Philippines and he dispatched funds to cover purchases of machinery for
such rehabilitation. Thus he carried on in Ohio a continuous and systematic supervision of the necessarily
limited wartime activities of the company. He there discharged his duties as president and general
manager, both during the occupation of the company's properties by the Japanese and immediately
thereafter. While no mining properties in Ohio were owned or operated by the company, many of its
wartime activities were directed from Ohio and were being given the personal attention of its president in
that State at the time he was served with summons. Consideration of the circumstances which, under the
law of Ohio, ultimately will determine whether the courts of that State will choose to take jurisdiction
over the corporation is reserved for the courts of that State. Without reaching that issue of state policy, we
conclude that, under the circumstances above recited, it would not violate federal due process for Ohio
either to take or decline jurisdiction of the corporation in this proceeding. This relieves the Ohio courts of
the restriction relied upon in the opinion accompanying the syllabus below and which may have
influenced the judgment of the court below.

Accordingly, the judgment of the Supreme Court of Ohio is vacated and the cause is remanded to that
court for further proceedings in the light of this opinion. 7
It is so ordered.
World-Wide Volkswagen Corp vs. Woodson, 444 U.S. 286 (1980)

Syllabus

A products liability action was instituted in an Oklahoma st,ate court by respondents husband and wife
to recover for personal injuries sustained in Oklahoma in an accident involving an automobile that had
been purchased by them in New York while they were New York residents and that was being driven
through Oklahoma at the time of the accident. The defendants included the automobile retailer and its
wholesaler (petitioners), New York corporations that did no business in Oklahoma. Petitioners entered
special appearances, claiming that Oklahoma's exercise of jurisdiction over them would offend
limitations on the State's jurisdiction imposed by the Due Process Clause of the Fourteenth Amendment.
The trial court rejected petitioners' claims, and they then sought, but were denied, a writ of prohibition in
the Oklahoma Supreme Court to restrain respondent trial judge from exercising in personam jurisdiction
over them.

Held: Consistently with the Due Process Clause, the Oklahoma trial court may not exercise in
personam jurisdiction over petitioners. Pp. 444 U. S. 291-299.

(a) A state court may exercise personal jurisdiction over a nonresident defendant only so long as there
exist "minimum contacts" between the defendant and the forum State. International Shoe Co. v.
Washington, 326 U. S. 310. The defendant's contacts with the forum State must be such that maintenance
of the suit does not offend traditional notions of fair play and substantial justice, id. at 326 U. S. 316, and
the relationship between the defendant and the forum must be such that it is "reasonable . . . to require
the corporation to defend the particular suit which is brought there," id. at 326 U. S. 317. The Due Process
Clause

"does not contemplate that a state may make binding a judgment in personam against an individual or
corporate defendant with which the state has no contacts, ties, or relations."

Id. at 326 U. S. 319. Pp. 444 U. S. 291-294.

(b) Here, there is a total absence in the record of those affiliating circumstances that are a necessary
predicate to any exercise of state court jurisdiction. Petitioners carry on no activity whatsoever in
Oklahoma; they close no sales and perform no services there, avail

Page 444 U. S. 287

themselves of none of the benefits of Oklahoma law, and solicit no business there either through
salespersons or through advertising reasonably calculated to reach that State. Nor does the record show
that they regularly sell cars to Oklahoma residents, or that they indirectly, through others, serve or seek
to serve the Oklahoma market. Although it is foreseeable that automobiles sold by petitioners would
travel to Oklahoma and that the automobile here might cause injury in Oklahoma, "foreseeability" alone
is not a sufficient benchmark for personal jurisdiction under the Due Process Clause. The foreseeability
that is critical to due process analysis is not the mere likelihood that a product will find its way into the
forum State, but rather is that the defendant's conduct and connection with the forum are such that he
should reasonably anticipate being haled into court there. Nor can jurisdiction be supported on the
theory that petitioners earn substantial revenue from goods used in Oklahoma. Pp. 444 U. S. 295-299.

585 P.2d 351, reversed.

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, POWELL,
REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a dissenting opinion, post, p. 444 U. S. 299.
MARSHALL, J., filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 444 U. S. 313.
BLACKMUN, J., filed a dissenting opinion, post, p. 444 U. S. 317.

MR. JUSTICE WHITE delivered the opinion of the Court.

The issue before us is whether, consistently with the Due Process Clause of the Fourteenth Amendment,
an Oklahoma court may exercise in personam jurisdiction over a nonresident automobile retailer and its
wholesale distributor in a products liability action, when the defendants' only connection with Oklahoma
is the fact that an automobile sold in New York to New York residents became involved in an accident in
Oklahoma.

Page 444 U. S. 288

Respondents Harry and Kay Robinson purchased a new Audi automobile from petitioner Seaway
Volkswagen, Inc. (Seaway), in Massena, N.Y. in 1976. The following year, the Robinson family, who
resided in New York, left that State for a new home in Arizona. As they passed through the State of
Oklahoma, another car struck their Audi in the rear, causing a fire which severely burned Kay Robinson
and her two children. [Footnote 1]

The Robinsons [Footnote 2] subsequently brought a products liability action in the District Court for
Creek County, Okla., claiming that their injuries resulted from defective design and placement of the
Audi's gas tank and fuel system. They joined as defendants the automobile's manufacturer, Audi NSU
Auto Union Aktiengesellschaft (Audi); its importer, Volkswagen of America, Inc. (Volkswagen); its
regional distributor, petitioner World-Wide Volkswagen Corp. (World-Wide); and its retail dealer,
petitioner Seaway. Seaway and World-Wide entered special appearances, [Footnote 3] claiming that
Oklahoma's exercise of jurisdiction over them would offend the limitations on the State's jurisdiction
imposed by the Due Process Clause of the Fourteenth Amendment. [Footnote 4]

The facts presented to the District Court showed that World-Wide is incorporated and has its business
office in New

Page 444 U. S. 289

York. It distributes vehicles, parts, and accessories, under contract with Volkswagen, to retail dealers in
New York, New Jersey, and Connecticut. Seaway, one of these retail dealers, is incorporated and has its
place of business in New York. Insofar as the record reveals, Seaway and World-Wide are fully
independent corporations whose relations with each other and with Volkswagen and Audi are
contractual only. Respondents adduced no evidence that either World-Wide or Seaway does any business
in Oklahoma, ships or sells any products to or in that State, has an agent to receive process there, or
purchases advertisements in any media calculated to reach Oklahoma. In fact, as respondents' counsel
conceded at oral argument, Tr. of Oral Arg 32, there was no showing that any automobile sold by World-
Wide or Seaway has ever entered Oklahoma, with the single exception of the vehicle involved in the
present case.

Despite the apparent paucity of contacts between petitioners and Oklahoma, the District Court rejected
their constitutional claim and reaffirmed that ruling in denying petitioners' motion for reconsideration.
[Footnote 5] Petitioners then sought a writ of prohibition in the Supreme Court of Oklahoma to restrain
the District Judge, respondent Charles S. Woodson, from exercising in personam jurisdiction over them.
They renewed their contention that, because they had no "minimal contacts," App. 32, with the State of
Oklahoma, the actions of the District Judge were in violation of their rights under the Due Process Clause.

The Supreme Court of Oklahoma denied the writ, 585 P.2d 351 (1978), [Footnote 6] holding that personal
jurisdiction over petitioners was authorized by Oklahoma's "long-arm" statute,

Page 444 U. S. 290

Okla.Stat., Tit. 12, 1701.03(a)(4) (1971). [Footnote 7] Although the court noted that the proper approach
was to test jurisdiction against both statutory and constitutional standards, its analysis did not
distinguish these questions, probably because 1701.03(a)(4) has been interpreted as conferring
jurisdiction to the limits permitted by the United States Constitution. [Footnote 8] The court's rationale
was contained in the following paragraph, 585 P.2d at 354:

"In the case before us, the product being sold and distributed by the petitioners is, by its very design and
purpose, so mobile that petitioners can foresee its possible use in Oklahoma. This is especially true of the
distributor, who has the exclusive right to distribute such automobile in New York, New Jersey and
Connecticut. The evidence presented below demonstrated that goods sold and distributed by the
petitioners were used in the State of Oklahoma, and, under the facts, we believe it reasonable to infer,
given the retail value of the automobile, that the petitioners derive substantial income from automobiles
which from time to time are used in the State of Oklahoma. This being the case, we hold that, under the
facts presented, the trial court was justified in concluding

Page 444 U. S. 291

that the petitioners derive substantial revenue from goods used or consumed in this State."

We granted certiorari, 440 U.S. 907 (1979), to consider an important constitutional question with respect
to state court jurisdiction and to resolve a conflict between the Supreme Court of Oklahoma and the
highest courts of at least four other States. [Footnote 9] We reverse.

II

The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid
personal judgment against a nonresident defendant. Kulko v. California Superior Court, 436 U. S. 84, 436 U.
S. 91 (1978). A judgment rendered in violation of due process is void in the rendering State and is not
entitled to full faith and credit elsewhere.Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 732-733 (1878). Due
process requires that the defendant be given adequate notice of the suit, Mullane v. Central Hanover Trust
Co., 339 U. S. 306, 339 U. S. 313-314 (1950), and be subject to the personal jurisdiction of the
court, International Shoe Co. v. Washington, 326 U. S. 310 (1945). In the present case, it is not contended that
notice was inadequate; the only question is whether these particular petitioners were subject to the
jurisdiction of the Oklahoma courts.

As has long been settled, and as we reaffirm today, a state court may exercise personal jurisdiction over a
nonresident defendant only so long as there exist "minimum contacts" between the defendant and the
forum State. International Shoe Co. v. Washington, supra at 326 U. S. 316. The concept of minimum contacts,
in turn, can be seen to perform two related, but
Page 444 U. S. 292

distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or
inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond
the limits imposed on them by their status as coequal sovereigns in a federal system.

The protection against inconvenient litigation is typically described in terms of "reasonableness" or

"fairness." We have said that the defendant's contacts with the forum State must be such that maintenance
of the suit "does not offend traditional notions of fair play and substantial justice.'" International Shoe Co. v.
Washington, supra at 326 U. S. 316, quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). The
relationship between the defendant and the forum must be such that it is "reasonable . . . to require the corporation
to defend the particular suit which is brought there." 326 U.S. at 326 U. S. 317. Implicit in this emphasis on
reasonableness is the understanding that the burden on the defendant, while always a primary concern, will in an
appropriate case be considered in light of other relevant factors, including the forum State's interest in adjudicating
the dispute, see McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223 (1957); the plaintiff's interest in
obtaining convenient and effective relief, see Kulko v. California Superior Court, supra at 436 U. S. 92, at least
when that interest is not adequately protected by the plaintiff's power to choose the forum, cf. Shaffer v. Heitner, 433
U. S. 186, 433 U. S. 211, n. 37 (1977); the interstate judicial system's interest in obtaining the most efficient
resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social
policies, see Kulko v. California Superior Court, supra at 436 U. S. 93, 436 U. S. 98.

The limits imposed on state jurisdiction by the Due Process Clause, in its role as a guarantor against
inconvenient litigation, have been substantially relaxed over the years. As we noted in McGee v.
International Life Ins. Co., supra at 355 U. S. 222-223,

Page 444 U. S. 293

this trend is largely attributable to a fundamental transformation in the American economy:

"Today many commercial transactions touch two or more States, and may involve parties separated by
the full continent. With this increasing nationalization of commerce has come a great increase in the
amount of business conducted by mail across state lines. At the same time, modern transportation and
communication have made it much less burdensome for a party sued to defend himself in a State where
he engages in economic activity."

The historical developments noted in McGee, of course, have only accelerated in the generation since that
case was decided.

Nevertheless, we have never accepted the proposition that state lines are irrelevant for jurisdictional
purposes, nor could we and remain faithful to the principles of interstate federalism embodied in the
Constitution. The economic interdependence of the States was foreseen and desired by the Framers. In
the Commerce Clause, they provided that the Nation was to be a common market, a "free trade unit" in
which the States are debarred from acting as separable economic entities. H. P. Hood Sons, Inc. v. Du
Mond, 336 U. S. 525, 336 U. S. 538 (1949). But the Framers also intended that the States retain many
essential attributes of sovereignty, including, in particular, the sovereign power to try causes in their
courts. The sovereignty of each State, in turn, implied a limitation on the sovereignty of all of its sister
States -- a limitation express or implicit in both the original scheme of the Constitution and the Fourteenth
Amendment.

Hence, even while abandoning the shibboleth that "[t]he authority of every tribunal is necessarily
restricted by the territorial limits of the State in which it is established," Pennoyer v. Neff, supra, at 95 U. S.
720, we emphasized that the reasonableness of asserting jurisdiction over the defendant must be assessed
"in the context of our federal system of government,"

Page 444 U. S. 294

International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 317, and stressed that the Due Process Clause
ensures not only fairness, but also the "orderly administration of the laws," id. at 326 U. S. 319. As we
noted in Hanson v. Denckla, 357 U. S. 235, 357 U. S. 250-251 (1958):

"As technological progress has increased the flow of commerce between the States, the need for
jurisdiction over nonresidents has undergone a similar increase. At the same time, progress in
communications and transportation has made the defense of a suit in a foreign tribunal less burdensome.
In response to these changes, the requirements for personal jurisdiction over nonresidents have evolved
from the rigid rule of Pennoyer v. Neff, 95 U. S. 714, to the flexible standard of International Shoe Co. v.
Washington, 326 U. S. 310. But it is a mistake to assume that this trend heralds the eventual demise of all
restrictions on the personal jurisdiction of state courts. [Citation omitted.] Those restrictions are more
than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of
territorial limitations on the power of the respective States."

Thus, the Due Process Clause

"does not contemplate that a state may make binding a judgment in personam against an individual or
corporate defendant with which the state has no contacts, ties, or relations."

International Shoe Co. v. Washington, supra at 326 U. S. 319. Even if the defendant would suffer minimal or
no inconvenience from being forced to litigate before the tribunals of another State; even if the forum
State has a strong interest in applying its law to the controversy; even if the forum State is the most
convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism,
may sometimes act to divest the State of its power to render a valid judgment. Hanson v. Denckla,
supra at 357 U. S. 251, 357 U. S. 254.

Page 444 U. S. 295

III

Applying these principles to the case at hand, [Footnote 10] we find in the record before us a total absence
of those affiliating circumstances that are a necessary predicate to any exercise of state court jurisdiction.
Petitioners carry on no activity whatsoever in Oklahoma. They close no sales and perform no services
there. They avail themselves of none of the privileges and benefits of Oklahoma law. They solicit no
business there either through salespersons or through advertising reasonably calculated to reach the
State. Nor does the record show that they regularly sell cars at wholesale or retail to Oklahoma customers
or residents, or that they indirectly, through others, serve or seek to serve the Oklahoma market. In short,
respondents seek to base jurisdiction on one, isolated occurrence and whatever inferences can be drawn
therefrom: the fortuitous circumstance that a single Audi automobile, sold in New York to New York
residents, happened to suffer an accident while passing through Oklahoma.

It is argued, however, that, because an automobile is mobile by its very design and purpose, it was
"foreseeable" that the Robinsons' Audi would cause injury in Oklahoma. Yet "foreseeability" alone has
never been a sufficient benchmark for personal jurisdiction under the Due Process Clause. In Hanson v.
Denckla, supra, it was no doubt foreseeable that the settlor of a Delaware trust would subsequently move
to Florida and seek to exercise a power of appointment there; yet we held that Florida courts could not
constitutionally

Page 444 U. S. 296

exercise jurisdiction over a Delaware trustee that had no other contacts with the forum State. In Kulko v.
California Superior Court, 436 U. S. 84 (1978), it was surely "foreseeable" that a divorced wife would move
to California from New York, the domicile of the marriage, and that a minor daughter would live with
the mother. Yet we held that California could not exercise jurisdiction in a child support action over the
former husband, who had remained in New York.

If foreseeability were the criterion, a local California tire retailer could be forced to defend in
Pennsylvania when a blowout occurs there, see Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502,
507 (CA4 1956); a Wisconsin seller of a defective automobile jack could be haled before a distant court for
damage caused in New Jersey, Reilly v. Phil Tolkan Pontiac, Inc., 372 F.Supp. 1205 (NJ 1974); or a Florida
soft-drink concessionaire could be summoned to Alaska to account for injuries happening there, see
Uppgren v. Executive Aviation Services, Inc., 304 F.Supp. 165, 170-171 (Minn.1969). Every seller of chattels
would, in effect, appoint the chattel his agent for service of process. His amenability to suit would travel
with the chattel. We recently abandoned the outworn rule of Harris v. Balk, 198 U. S. 215 (1905), that the
interest of a creditor in a debt could be extinguished or otherwise affected by any State having transitory
jurisdiction over the debtor.Shaffer v. Heitner, 433 U. S. 186 (1977). Having interred the mechanical rule
that a creditor's amenability to a quasi in rem action travels with his debtor, we are unwilling to endorse
an analogous principle in the present case. [Footnote 11]

Page 444 U. S. 297

This is not to say, of course, that foreseeability is wholly irrelevant. But the foreseeability that is critical to
due process analysis is not the mere likelihood that a product will find its way into the forum State.
Rather, it is that the defendant's conduct and connection with the forum State are such that he should
reasonably anticipate being haled into court there.See Kulko v. California Superior Court, supra at 436 U. S.
97-98; Shaffer v. Heitner, 433 U.S. at 433 U. S. 216; and see id. at 433 U. S. 217-219 (STEVENS, J., concurring
in judgment). The Due Process Clause, by ensuring the "orderly administration of the laws," International
Shoe Co. v. Washington, 326 U.S. at 326 U. S. 319, gives a degree of predictability to the legal system that
allows potential defendants to structure their primary conduct with some minimum assurance as to
where that conduct will and will not render them liable to suit.

When a corporation "purposefully avails itself of the privilege of conducting activities within the forum
State," Hanson v. Denckla, 357 U.S. at 357 U. S. 253, it has clear notice that it is subject to suit there, and can
act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to
customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a
product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated
occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly,
the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if
its allegedly defective merchandise has there been the source of injury to its owner or to others. The
forum State does not

Page 444 U. S. 298

exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that
delivers its products into the stream of commerce with the expectation that they will be purchased by
consumers in the forum State.Cf. Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176
N.E.2d 761 (1961).

But there is no such or similar basis for Oklahoma jurisdiction over World-Wide or Seaway in this case.
Seaway's sales are made in Massena, N. Y. World-Wide's market, although substantially larger, is limited
to dealers in New York, New Jersey, and Connecticut. There is no evidence of record that any
automobiles distributed by World-Wide are sold to retail customers outside this tristate area. It is
foreseeable that the purchasers of automobiles sold by World-Wide and Seaway may take them to
Oklahoma. But the mere "unilateral activity of those who claim some relationship with a nonresident
defendant cannot satisfy the requirement of contact with the forum State." Hanson v. Denckla, supra, at 357
U. S. 253.

In a variant on the previous argument, it is contended that jurisdiction can be supported by the fact that
petitioners earn substantial revenue from goods used in Oklahoma. The Oklahoma Supreme Court so
found, 585 P.2d at 354-355, drawing the inference that, because one automobile sold by petitioners had
been used in Oklahoma, others might have been used there also. While this inference seems less than
compelling on the facts of the instant case, we need not question the court's factual findings in order to
reject its reasoning.

This argument seems to make the point that the purchase of automobiles in New York, from which the
petitioners earn substantial revenue, would not occur but for the fact that the automobiles are capable of
use in distant States like Oklahoma. Respondents observe that the very purpose of an automobile is to
travel, and that travel of automobiles sold by petitioners is facilitated by an extensive chain of
Volkswagen service centers throughout the country, including some in Oklahoma. [Footnote 12]

Page 444 U. S. 299

However, financial benefits accruing to the defendant from a collateral relation to the forum State will not
support jurisdiction if they do not stem from a constitutionally cognizable contact with that State. See
Kulko v. California Superior Court, 436 U.S. at 436 U. S. 94-95. In our view, whatever marginal revenues
petitioners may receive by virtue of the fact that their products are capable of use in Oklahoma is far too
attenuated a contact to justify that State's exercise of in personam jurisdiction over them.

Because we find that petitioners have no "contacts, ties, or relations" with the State of
Oklahoma, International Shoe Co. v. Washington, supra, at 326 U. S. 319, the judgment of the Supreme Court
of Oklahoma is

Reversed.
Calder v. Jones, 465 U.S. 783 (1984)

Syllabus

Respondent, a professional entertainer who lives and works in California and whose television career
was centered there, brought suit in California Superior Court, claiming that she had been libeled in an
article written and edited by petitioners in Florida and published in the National Enquirer, a national
magazine having its largest circulation in California. Petitioners, both residents of Florida, were served
with process by mail in Florida, and, on special appearances, moved to quash the service of process for
lack of personal jurisdiction. The Superior Court granted the motion on the ground that First Amendment
concerns weighed against an assertion of jurisdiction otherwise proper under the Due Process Clause of
the Fourteenth Amendment. The California Court of Appeal reversed, holding that a valid basis for
jurisdiction existed on the theory that petitioners intended to, and did, cause tortious injury to respondent
in California.

Held:

1. Jurisdiction by appeal does not lie in this Court, but under 28 U.S.C. 2103 the jurisdictional statement
will be treated as a petition for certiorari, which is hereby granted. Pp. 465 U. S. 787-788.

2. Jurisdiction over petitioners in California is proper because of their intentional conduct in Florida
allegedly calculated to cause injury to respondent in California. Pp. 465 U. S. 788-791.

(a) The Due Process Clause permits personal jurisdiction over a defendant in any State with which the
defendant has

"certain minimum contacts . . . such that the maintenance of the suit does not offend 'traditional notions
of fair play and substantial justice.'"

International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316. In judging minimum contacts, a court
properly focuses on "the relationship among the defendant, the forum, and the litigation." Shaffer v.
Heitner, 433 U. S. 186, 433 U. S. 204. P. 465 U. S. 788.

(b) Here, California is the focal point both of the allegedly libelous article and of the harm suffered.
Jurisdiction over petitioners is therefore proper in California based on the "effects" of their Florida
conduct in California. Pp. 465 U. S. 788-789.

(c) Petitioners are not charged with mere untargeted negligence, but rather, their intentional, and
allegedly tortious, actions were expressly aimed at California. They wrote and edited an article that they

Page 465 U. S. 784

knew would have a potentially devastating impact upon respondent, and they knew that the brunt of
that injury would be felt by respondent in the State in which she lives and works and in which the
magazine has its largest circulation. Under these circumstances, petitioners must "reasonably anticipate
being haled into court there" to answer for the truth of the statements made in the article. Pp. 465 U. S.
789-790.
(d) While petitioners' contacts with California are not to be judged according to their employer's activities
there, their status as employees does not insulate them from jurisdiction, since each defendant's contact
with the forum State must be assessed individually. P. 465 U. S. 790.

(e) First Amendment concerns do not enter into the jurisdictional analysis. Such concerns would
needlessly complicate an already imprecise inquiry. Moreover, the potential chill on protected First
Amendment activity stemming from defamation actions is already taken into account in the
constitutional limitations on the substantive law governing such actions. Pp.465 U. S. 790-791.

138 Cal.App.3d 128, 187 Cal.Rptr. 825, affirmed.

REHNQUIST, J., delivered the opinion for a unanimous Court.

JUSTICE REHNQUIST delivered the opinion of the Court.

Respondent Shirley Jones brought suit in California Superior Court claiming that she had been libeled in
an article written and edited by petitioners in Florida. The article was published in a national magazine
with a large circulation in California. Petitioners were served with process by mail in Florida and caused
special appearances to be entered on their behalf, moving to quash the service of process for lack of
personal

Page 465 U. S. 785

jurisdiction. The Superior Court granted the motion on the ground that First Amendment concerns
weighed against an assertion of jurisdiction otherwise proper under the Due Process Clause. The
California Court of Appeal reversed, rejecting the suggestion that First Amendment considerations enter
into the jurisdictional analysis. We now affirm.

Respondent lives and works in California. She and her husband brought this suit against the National
Enquirer, Inc., its local distributing company, and petitioners for libel, invasion of privacy, and
intentional infliction of emotional harm. [Footnote 1] The Enquirer is a Florida corporation with its
principal place of business in Florida. It publishes a national weekly newspaper with a total circulation of
over 5 million. About 600,000 of those copies, almost twice the level of the next highest State, are sold in
California. [Footnote 2] Respondent's and her husband's claims were based on an article that appeared in
the Enquirer's October 9, 1979, issue. Both the Enquirer and the distributing company answered the
complaint and made no objection to the jurisdiction of the California court.

Petitioner South is a reporter employed by the Enquirer. He is a resident of Florida, though he frequently
travels to California on business. [Footnote 3] South wrote the first draft of the challenged article, and his
byline appeared on it. He did most of his research in Florida, relying on phone calls to sources in
California for the information contained in the article. [Footnote 4] Shortly before publication, South
called respondent's

Page 465 U. S. 786

home and read to her husband a draft of the article so as to elicit his comments upon it. Aside from his
frequent trips and phone calls, South has no other relevant contacts with California.

Petitioner Calder is also a Florida resident. He has been to California only twice -- once, on a pleasure
trip, prior to the publication of the article and once after to testify in an unrelated trial. Calder is president
and editor of the Enquirer. He "oversee[s] just about every function of the Enquirer." App. 24. He
reviewed and approved the initial evaluation of the subject of the article and edited it in its final form. He
also declined to print a retraction requested by respondent. Calder has no other relevant contacts with
California.

In considering petitioners' motion to quash service of process, the Superior Court surmised that the
actions of petitioners in Florida, causing injury to respondent in California, would ordinarily be sufficient
to support an assertion of jurisdiction over them in California. [Footnote 5] But the court felt that special
solicitude was necessary because of the potential "chilling effect" on reporters and editors which would
result from requiring them to appear in remote jurisdictions to answer for the content of articles upon
which they worked. The court also noted that respondent's rights could be "fully satisfied" in her suit
against the publisher without requiring petitioners to appear as parties. The Superior Court, therefore,
granted the motion.

The California Court of Appeal reversed. 138 Cal.App.3d 128, 187 Cal.Rptr. 825 (1982). The court agreed
that neither petitioner's contacts with California would be sufficient

Page 465 U. S. 787

for an assertion of jurisdiction on a cause of action unrelated to those contacts. See Perkins v. Benguet
Mining Co., 342 U. S. 437 (1952) (permitting general jurisdiction where defendant's contacts with the
forum were "continuous and systematic"). But the court concluded that a valid basis for jurisdiction
existed on the theory that petitioners intended to, and did, cause tortious injury to respondent in
California. The fact that the actions causing the effects in California were performed outside the State did
not prevent the State from asserting jurisdiction over a cause of action arising out of those effects.
[Footnote 6] The court rejected the Superior Court's conclusion that First Amendment considerations
must be weighed in the scale against jurisdiction.

A timely petition for hearing was denied by the Supreme Court of California. App. 122. On petitioners'
appeal to this Court, probable jurisdiction was postponed. 460 U.S. 1080 (1983). We conclude that
jurisdiction by appeal does not lie.Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 90, and n. 4
(1978). [Footnote 7] Treating the jurisdictional statement as

Page 465 U. S. 788

a petition for writ of certiorari, as we are authorized to do, 28 U.S.C. 2103, we hereby grant the petition.
[Footnote 8]

The Due Process Clause of the Fourteenth Amendment to the United States Constitution permits personal
jurisdiction over a defendant in any State with which the defendant has

"certain minimum contacts . . . such that the maintenance of the suit does not offend 'traditional notions
of fair play and substantial justice.' Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463."

International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945). In judging minimum contacts, a
court properly focuses on "the relationship among the defendant, the forum, and the litigation." Shaffer v.
Heitner, 433 U. S. 186, 433 U. S. 204 (1977). See also Rush v. Savchuk, 444 U. S. 320, 444 U. S. 332 (1980). The
plaintiff's lack of "contacts" will not defeat otherwise proper jurisdiction, see Keeton v. Hustler Magazine,
Inc., ante at 465 U. S. 779-781, but they may be so manifold as to permit jurisdiction when it would not
exist in their absence. Here, the plaintiff is the focus of the activities of the defendants out of which the
suit arises. See McGee v. International Life Ins. Co., 355 U. S. 220 (1957).

The allegedly libelous story concerned the California activities of a California resident. It impugned the
professionalism of an entertainer whose television career was centered in California. [Footnote 9] The
article was drawn from California sources,

Page 465 U. S. 789

and the brunt of the harm, in terms both of respondent's emotional distress and the injury to her
professional reputation, was suffered in California. In sum, California is the focal point both of the story
and of the harm suffered. Jurisdiction over petitioners is therefore proper in California based on the
"effects" of their Florida conduct in California. World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 444
U. S. 297-298 (1980); Restatement (Second) of Conflict of Laws 37 (1971).

Petitioners argue that they are not responsible for the circulation of the article in California. A reporter
and an editor, they claim, have no direct economic stake in their employer's sales in a distant State. Nor
are ordinary employees able to control their employer's marketing activity. The mere fact that they can
"foresee" that the article will be circulated and have an effect in California is not sufficient for an assertion
of jurisdiction. World-Wide Volkswagen Corp. v. Woodson, supra, at 444 U. S. 295; Rush v. Savchuk,
supra, at 444 U. S. 328-329. They do not "in effect appoint the [article their] agent for service of
process." World-Wide Volkswagen Corp. v. Woodson, supra, at 444 U. S. 296. Petitioners liken themselves to a
welder employed in Florida who works on a boiler which subsequently explodes in California. Cases
which hold that jurisdiction will be proper over the manufacturer, Buckeye Boiler Co. v. Superior Court, 71
Cal.2d 893, 458 P.2d 57 (1969); Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176
N.E.2d 761 (1961), should not be applied to the welder who has no control over and derives no direct
benefit from his employer's sales in that distant State.

Petitioners' analogy does not wash. Whatever the status of their hypothetical welder, petitioners are not
charged with mere untargeted negligence. Rather, their intentional, and allegedly tortious, actions were
expressly aimed at California. Petitioner South wrote and petitioner Calder edited an article that they
knew would have a potentially devastating impact upon respondent. And they knew that the brunt of

Page 465 U. S. 790

that injury would be felt by respondent in the State in which she lives and works and in which the
National Enquirer has its largest circulation. Under the circumstances, petitioners must "reasonably
anticipate being haled into court there" to answer for the truth of the statements made in their
article. World-Wide Volkswagen Corp. v. Woodson, supra, at 444 U. S. 297; Kulko v. California Superior Court,
supra, at 436 U. S. 97-98; Shaffer v. Heitner, supra, at 433 U. S. 216. An individual injured in California need
not go to Florida to seek redress from persons who, though remaining in Florida, knowingly cause the
injury in California.

Petitioners are correct that their contacts with California are not to be judged according to their
employer's activities there. On the other hand, their status as employees does not somehow insulate them
from jurisdiction. Each defendant's contacts with the forum State must be assessed individually. See Rush
v. Savchuk, supra, at 444 U. S. 332 ("The requirements of International Shoe . . . must be met as to each
defendant over whom a state court exercises jurisdiction"). In this case, petitioners are primary
participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over
them is proper on that basis.
We also reject the suggestion that First Amendment concerns enter into the jurisdictional analysis. The
infusion of such considerations would needlessly complicate an already imprecise inquiry. Estin v.
Estin, 334 U. S. 541, 334 U. S. 545 (1948). Moreover, the potential chill on protected First Amendment
activity stemming from libel and defamation actions is already taken into account in the constitutional
limitations on the substantive law governing such suits. See New York Times Co. v. Sullivan, 376 U. S.
254 (1964); Gertz v. Robert Welch, Inc., 418 U. S. 323 (1974). To reintroduce those concerns at the
jurisdictional stage would be a form of double counting. We have already declined in other contexts to
grant special procedural protections to defendants in libel and defamation actions in addition to the
constitutional protections

Page 465 U. S. 791

embodied in the substantive laws. See, e.g., Herbert v. Lando, 441 U. S. 153 (1979) (no First Amendment
privilege bars inquiry into editorial process). See also Hutchinson v. Proxmire, 443 U. S. 111, 443 U. S. 120, n.
9 (1979) (implying that no special rules apply for summary judgment).

We hold that jurisdiction over petitioners in California is proper because of their intentional conduct in
Florida calculated to cause injury to respondent in California. The judgment of the California Court of
Appeal is

Affirmed.
Philsec Investment et al v. Court of Appeals, G.R. No. 103493 (June 19, 1997)
his case presents for determination the conclusiveness of a foreign judgment upon the rights of the
parties under the same cause of action asserted in a case in our local court.Petitioners brought this case in
the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign
action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non
conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners
Ayala International Finance Limited (hereafter called AYALA) [1] and Philsec Investment Corporation
(hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat
with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private respondent
1488, Inc., through its president, private respondent Drago Daic, assumed Ducats obligation under an
Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by
which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris
County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in
the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was
to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently,
upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered
by the note became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of
US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by petitioners
in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the
Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District,
where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United
States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint,
reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim,
impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly appraised the
property, was later dropped as counterdefendant. ATHONA sought the recovery of damages and excess
payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the property. For
their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their
person, but, as their motion was denied, they later filed a joint answer with counterclaim against private
respondents and Edgardo V. Guevarra, PHILSECs own former president, for the rescission of the sale on
the ground that the property had been overvalued. On March 13, 1990, the United States District Court
for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the ground
that it was frivolous and [was] brought against him simply to humiliate and embarrass him. For this
reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them to
pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed
a complaint For Sum of Money with Damages and Writ of Preliminary Attachment against private
respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The
complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-
86-440 of the United States District Court of Southern Texas that private respondents committed fraud by
selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners claimed
that, as a result of private respondents fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA
were induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed that
private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay
damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and
personal properties of private respondents.[2]
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis
pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non
conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended
that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not
PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend
financial accommodation to ATHONA under a separate loan agreement. On the other hand, private
respondents 1488, Inc. and its president Daic filed a joint Special Appearance and Qualified Motion to
Dismiss, contending that the action being in personam, extraterritorial service of summons by publication
was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducats motion to dismiss, stating that the evidentiary
requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the
U.S., under the principle in private international law of forum non conveniens, even as it noted that Ducat
was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daics motion to dismiss. On March 9,
1988, the trial court[3] granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis
pendentia considering that

the main factual element of the cause of action in this case which is the validity of the sale of real
property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter
of the pending case in the United States District Court which, under the doctrine of forum non
conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the
assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas,
U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial
court)

The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-
residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of
summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued
against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the
principle of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction over the
defendants, despite the previous attachment of shares of stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals[4] affirmed the dismissal of Civil Case No. 16563 against
Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:

The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the
Ayala International Finance Ltd. (BPI-IFLs former name) and the Athona Holdings, NV. The case at bar
involves the same parties. The transaction sued upon by the parties, in both cases is the Warranty Deed
executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the
promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants,
on the marketability of Ducats securities given in exchange for the Texas property. The recovery of a sum
of money and damages, for fraud purportedly committed by appellees, in overpricing the Texas land,
constitute the action before the Philippine court, which likewise stems from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a
sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial
court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the
ground of forum non conveniens was likewise affirmed by the Court of Appeals on the ground that the case
can be better tried and decided by the U.S. court:

The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to
wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-
resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does
not claim to be doing business in the Philippines, is wholly owned by Philsec, a domestic corporation,
Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was
executed in Texas, U.S.A.

In their present appeal, petitioners contend that:

1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES
FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF
APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE CIVIL ACTION IS
NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT
OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL
ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED
IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION,
NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL
JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT
AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR
CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS)
INFLICTED UPON THEM HERE IN THE PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was
pending in the Court of Appeals, the United States District Court for the Southern District of Texas
rendered judgment[5] in the case before it. The judgment, which was in favor of private respondents, was
affirmed on appeal by the Circuit Court of Appeals.[6] Thus, the principal issue to be resolved in this case
is whether Civil Case No. 16536 is barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment
admitting the foreign decision is not necessary. On the other hand, petitioners argue that the foreign
judgment cannot be given the effect of res judicata without giving them an opportunity to impeach it on
grounds stated in Rule 39, 50 of the Rules of Court, to wit: want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.
Petitioners contention is meritorious. While this Court has given the effect of res judicata to foreign
judgments in several cases,[7] it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law. [8] It is not necessary for this purpose to
initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that
there is opportunity to challenge the foreign judgment, in order for the court to properly determine its
efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from
actions in rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a
party and, as such, is subject to proof to the contrary.[9] Rule 39, 50 provides:
SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of a foreign country, having
jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;

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

Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton,
Ltd.,[10] which private respondents invoke for claiming conclusive effect for the foreign judgment in their
favor, the foreign judgment was considered res judicata because this Court found from the evidence as
well as from appellants own pleadings[11] that the foreign court did not make a clear mistake of law or
fact or that its judgment was void for want of jurisdiction or because of fraud or collusion by the
defendants. Trial had been previously held in the lower court and only afterward was a decision
rendered, declaring the judgment of the Supreme Court of the State of Washington to have the effect
of res judicata in the case before the lower court. In the same vein, in Philippine International Shipping Corp.
v. Court of Appeals,[12] this Court held that the foreign judgment was valid and enforceable in the
Philippines there being no showing that it was vitiated by want of notice to the party, collusion, fraud or
clear mistake of law or fact. The prima facie presumption under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the
judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate
court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented
thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court were
exactly the issues raised in this case such that the judgment that might be rendered would constitute res
judicata. As the trial court stated in its disputed order dated March 9, 1988:

On the plaintiffs claim in its Opposition that the causes of action of this case and the pending case
in the United States are not identical, precisely the Order of January 26, 1988 never found that the
causes of action of this case and the case pending before the USA Court, were identical.
(emphasis added)

It was error therefore for the Court of Appeals to summarily rule that petitioners action is barred by the
principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons,
but their claim was brushed aside by both the trial court and the Court of Appeals. [13]
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No.
92-1070 and assigned to Branch 134, although the proceedings were suspended because of the pendency
of this case. To sustain the appellate courts ruling that the foreign judgment constitutes res judicata and is
a bar to the claim of petitioners would effectively preclude petitioners from repelling the judgment in the
case for enforcement. An absurdity could then arise: a foreign judgment is not subject to challenge by the
plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed
by the defendant if the foreign judgment is sought to be enforced against him in a separate
proceeding. This is plainly untenable. It has been held therefore that:

[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative
relief is being sought. Hence, in the interest of justice, the complaint should be considered as a petition for
the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in order
that the defendant, private respondent herein, may present evidence of lack of jurisdiction, notice,
collusion, fraud or clear mistake of fact and law, if applicable. [14]

Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070
should be consolidated.[15] After all, the two have been filed in the Regional Trial Court of Makati, albeit
in different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case
No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong.In such proceedings, petitioners should
have the burden of impeaching the foreign judgment and only in the event they succeed in doing so may
they proceed with their action against private respondents.
Second. Nor is the trial courts refusal to take cognizance of the case justifiable under the principle
of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does
not include forum non conveniens.[16] The propriety of dismissing a case based on this principle requires a
factual determination, hence, it is more properly considered a matter of defense. Second, while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only
after vital facts are established, to determine whether special circumstances require the courts
desistance.[17]
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed
by private respondents in connection with the motion to dismiss. It failed to consider that one of the
plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino,
and that it was the extinguishment of the latters debt which was the object of the transaction under
litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in
the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over
1488, Inc. and Daic could not be obtained because this is an action in personam and summons were served
by extraterritorial service. Rule 14, 17 on extraterritorial service provides that service of summons on a
non-resident defendant may be effected out of the Philippines by leave of Court where, among others, the
property of the defendant has been attached within the Philippines.[18] It is not disputed that the
properties, real and personal, of the private respondents had been attached prior to service of summons
under the Order of the trial court dated April 20, 1987. [19]
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the
proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11
sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be
enforced is severable from the main judgment under consideration in Civil Case No. 16563. The
separability of Guevarras claim is not only admitted by petitioners, [20] it appears from the pleadings that
petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563. [21] Hence, the TRO
should be lifted and Civil Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is
REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for
further proceedings in accordance with this decision. The temporary restraining order issued on June 29,
1994 is hereby LIFTED.
SO ORDERED.
Pantaleon v. Asuncion, 1105 Phil. 761 (1959)

This is an appeal, taken by defendant Honorato Asuncion from an order denying a petition for relief from
an order declaring him in default and a judgment by default.

On June 12, 1953, plaintiff, Vicenta Pantaleon, instituted this action, in the Court of First Instance of
Nueva Ecija, to recover from said Asuncion, the sum of P2,000.00, with interest thereon, in addition to
attorney's fees. The summons originally issued was returned by the sheriff of Nueva Ecija unserved, with
the statement that, according to reliable information, Asuncion was residing in B-24 Tala Estate,
Caloocan, Rizal. An alias summons was issued, therefore, for service in the place last mentioned.
However, the provincial sheriff of Rizal returned it unserved, with information that Asuncion had left the
Tala Estate since February 18, 1952, and that diligent efforts to locate him proved to no avail. On
plaintiff's motion, the court ordered, on March 9, 1955, that defendant be summoned by publication, and
the summons was published on March 21 and 28, and April 4, 1955, in the "Examiner", said to be a
newspaper of general circulation in Nueva Ecija. Having failed to appear or answer the complaint within
the period stated in the summons, defendant was, by an order dated July 12, 1955, declared in default.
Subsequently, or on September 8, 1955, after a hearing held in the absence of the defendant and without
notice to him, the court rendered judgment for the plaintiff and against said defendant, for the sum of
P2,300.00, with interest thereon at the legal rate, from October 28, 1948, and costs.

About forty-six (46) days later, or on October 24, 1955, the defendant filed a petition for relief from said
order of July 12, 1955, and from said judgment, dated September 8, 1955, and upon the ground of mistake
and excusable negligence. Annexed to said petition were defendant's affidavit and his verified answer. In
the affidavit, Asuncion stated that, on September 26, 1955, at 34 Pitimine Street, San Francisco del Monte
Quezon City, which is his residence, he received notice of a registered letter at the Post Office in San Jose,
Nueva Ecija, his old family residence; that he proceeded immediately to the latter municipality to claim
said letter, which he received on September 28, 1955; that the letter contained copy of said order of July
12, 1955, and of the judgment of September 8, 1955, much to his surprise, for he had not been summoned
or notified of the hearing of this case; that had copy of the summons and of the order for its publication
been sent to him by mail, as provided in Rule 7, section 21, of the Rules of Court said summons and order
would have reached him, "as the judgment herein had"; and that his failure to appear before the court is
excusable it being due to the mistake of the authorities concerned in not complying with the provisions of
said section. Upon denial of said petition for relief, defendant perfected his present appeal, which is
predicated upon the theory that the aforementioned summons by publication had not been made in
conformity with the Rules of Court.

More specifically, defendant maintains that copy of the summons and of the order for the publication
thereof were not deposited "in the post office, postage prepaid, directed to the defendant by ordinary
mail to his last known address", in violation of Rule 7, section 21, of the Rules of Court, and that, had this
provision been complied with, said summons and order of publication would have reached him, as had
the decision appealed from. Said section 21 reads:

If the service has been made by publication, service may be proved by the affidavit of the printer,
his foreman or principal clerk, or of the editor, business or advertising manager, to which
affidavit a copy of the publication shall be attached, and by an affidavit showing the deposit of a copy
of the summons and order for publication in the post office, postage prepaid, directed to the defendant by
ordinary mail to his last known address. (Emphasis supplied.).

Plaintiff alleges, however, that the provision applicable to the case at bar is not this section 21, but section
16, of Rule 7, of the Rules of Court, which provides:
 Whenever the defendant is designated as an unknown owner, or the like, or whenever the
address of a defendant is unknown and cannot be ascertained by diligent inquiry, service may,
by leave of court, be effect upon him by publication in such places and for such times as the court
may order.

It is, moreover, urged by the plaintiff that the requirement, in said section 21, of an affidavit showing that
copy of the summons and of the order for its publication had been sent by mail to defendant's last known
address, refers to the extraterritorial service of summons, provided for in section 17 of said Rule 7,
pursuant to which:

When the defendant does not reside and is not found in the Philippines and the action affects the
personal status of the plaintiff or relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in
which the relief demanded consists, wholly or in part, in excluding the defendant from any
interest therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service as under
section 7; or by registered mail; or by publication in such places and for such time as the court
may order, in which case a copy of the summons and order of the court shall be sent by ordinary
mail to the last known address of the defendant; or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must answer.

Said section 21, however, is unqualified. It prescribes the "proof of service by publication", regardless of
whether the defendant is a resident of the Philippines or not. Section 16 must be read in relation to section
21, which complements it. Then, too, we conceive of no reason, and plaintiff has suggested none, why
copy of the summons and of the order for its publication should be mailed to non-resident defendants,
but not to resident defendants. We can not even say that defendant herein, who, according to the return
of the Sheriff of Nueva Ecija, was reportedly residing in Rizal where he, in fact (San Francisco del
Monte and Quezon City used to be part of Rizal), was residing could reasonably be expected to read
the summons published in a newspaper said to be a general circulation in Nueva Ecija.

Considering that strict compliance with the terms of the statute is necessary to confer jurisdiction through
service by publication (Bachrach Garage and Taxi Co. vs. Hotchkiss and Co., 34 Phil., 506; Banco Espaol-
Filipino vs. Palanca, 37 Phil., 921; Mills vs. Smiley, 9 Idaho 317, 325, 76 Pac. 785; Charles vs. Marrow, 99
Mo. 638; Sunderland, Cases on Procedure, Annotated, Trial Practice, p. 51), the conclusion is inescapable
that the lower court had no authority whatsoever to issue the order of July 12, 1955, declaring the
defendant in default and to render the decision of September 8, 1955, and that both are null and void ad
initio.

Apart from the foregoing, it is a well-settled principle of Constitutional Law that, in an action strictly in
personam, like the one at bar, personal service of summons, within the forum, is essential to the acquisition
of jurisdiction over the person of the defendant, who does not voluntarily submit himself to the authority
of the court. In other words, summons by publication cannot consistently with the due process clause
in the Bill of Rights confer upon the court jurisdiction over said defendant.

Due process of law requires personal service to support a personal judgment, and, when the
proceeding is strictly in personam brought to determine the personal rights and obligations of the
parties, personal service within the state or a voluntary appearance in the case is essential to the
acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process.
...
 Although a state legislature has more control over the form of service on its own residents than
nonresidents, it has been held that in action in personam . . . service by publication on resident
defendants, who are personally within the state and can be found therein is not "due process of law",
and a statute allowing it is unconstitutional. (16A C.J.S., pp. 786, 789; Emphasis ours.)

Lastly, from the viewpoint of substantial justice and equity, we are of the opinion that defendant's
petition for relief should have been granted. To begin with, it was filed well within the periods provided
in the Rules of Court. Secondly, and, this is more important, defendant's verified answer, which was
attached to said petition, contains allegations which, if true, constitute a good defense. Thus, for instance,
in paragraph (2) of the "special denials" therein, he alleged:

That it is not true that he failed to pay the said indebtedness of his said wife, as alleged in
paragraph 3 of the complaint, for as a matter of fact, plaintiff and defendant agreed upon a
settlement of the said indebtedness of the latter's deceased wife on December 5, 1948, whereby
defendant was allowed to pay it out of his monthly salary by instalment of P10.00 monthly
beginning January, 1949, and in accordance therewith, defendant paid unto plaintiff the
following sums:

Instalment for January-February, 1948

March 1949 P30.00 paid personally

April 2, 1949 10.00 by money order 7488
May 11, 1949 10.00 by money order 7921
June 10, 1949 10.00 by money order 8230
July 11, 1949 10.00 by money order 8595
August 10, 1949 10.00 by money order 8943
September 1949 10.00 paid personally
October 1949 10.00 paid personally
November 14, 1949 10.00 by money order 9776
December 13, 1949 10.00 by money order 0076
January 10, 1950 10.00 by money order 0445
February 9, 1950 10.00 by money order 0731
March 10, 1950 10.00 by money order 1149
April 10, 1950 10.00 by money order 1387
May 11, 1950 10.00 by money order 1990
June 12, 1950 10.00 by money order 1055
July 11, 1950 10.00 by money order 8850
August 11, 1950 10.00 by money order 9293
September 6, 1950 10.00 by money order 9618
October 10, 1950 10.00 by money order 0008
November 8, 1950 10.00 by money order 0369
December 1950 10.00 paid personally
January 2, 1951 10.00 paid personally
February 10, 1951 10.00 paid personally
March 12, 1951 10.00 paid personally
April 1951 10.00 paid personally
May 1951 10.00 paid personally
June 1951 10.00 paid personally
July 1951 10.00 paid personally
August 1951 10.00 paid personally
September 1951 10.00 paid personally
 November 1951 10.00 paid personally
December 1951 10.00 paid personally
September 1952 30.00 paid personally
December 1952 20.00 paid personally
January 1953 10.00 paid personally
February 1953 10.00 paid personally
March 1953 10.00 paid personally
April 1953 10.00 paid personally
May 1953 10.00
Total paid P460.00

The specification of the dates of payment, of the amounts paid each time, of the manner in which each
payment was made, and of the number of the money orders in which eighteen (18) payments had been
effected, constitutes a strong indication of the probable veracity of said allegation, fully justifying the
grant of an opportunity to prove the same.

Wherefore, said order of July 12, 1955, and the aforementioned decision of September 8, 1955, are hereby
set aside and annulled, and let the record of this case be remanded to the lower court for further
proceedings with costs against plaintiff-appellee. It is so ordered.
Santos v. PNOC, G.R. No. 170943 (23 September 2008).
PEDRO T. SANTOS, JR., G.R. No. 170943
Petitioner,
Present:

PUNO, C.J., Chairperson,

CARPIO,
- v e r s u s - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:
September 23, 2008

x---------------------------------------------------x

DECISION
CORONA, J.:

This is a petition for review[1] of the September 22, 2005 decision[2] and December 29, 2005

resolution[3] of the Court of Appeals in CA-G.R. SP No. 82482.

On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum of

money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167. The

complaint, docketed as Civil Case No. 69262, sought to collect the amount of P698,502.10 representing

petitioners unpaid balance of the car loan[4] advanced to him by respondent when he was still a member

of its board of directors.

Personal service of summons to petitioner failed because he could not be located in his last known

address despite earnest efforts to do so. Subsequently, on respondents motion, the trial court allowed

service of summons by publication.

Respondent caused the publication of the summons in Remate, a newspaper of general circulation in the

Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of publication of the
advertising manager of Remate[5] and an affidavit of service of respondents employee [6] to the effect that

he sent a copy of the summons by registered mail to petitioners last known address.

When petitioner failed to file his answer within the prescribed period, respondent moved that the case be

set for the reception of its evidence ex parte. The trial court granted the motion in an order dated

September 11, 2003.

Respondent proceeded with the ex parte presentation and formal offer of its evidence. Thereafter,

the case was deemed submitted for decision on October 15, 2003.

On October 28, 2003, petitioner filed an Omnibus Motion for Reconsideration and to Admit Attached

Answer. He sought reconsideration of the September 11, 2003 order, alleging that the affidavit of service

submitted by respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it was not

executed by the clerk of court. He also claimed that he was denied due process as he was not notified of

the September 11, 2003 order. He prayed that respondents evidence ex parte be stricken off the records

and that his answer be admitted.

Respondent naturally opposed the motion. It insisted that it complied with the rules on service by

publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed in

default for failure to file an answer within the prescribed period.

In an order dated February 6, 2004, the trial court denied petitioners motion for reconsideration of the

September 11, 2003 order. It held that the rules did not require the affidavit of complementary service by

registered mail to be executed by the clerk of court. It also ruled that due process was observed as a copy

of the September 11, 2003 order was actually mailed to petitioner at his last known address. It also denied

the motion to admit petitioners answer because the same was filed way beyond the reglementary period.

Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court in the

Court of Appeals via a petition for certiorari. He contended that the orders were issued with grave abuse
of discretion. He imputed the following errors to the trial court: taking cognizance of the case despite lack

of jurisdiction due to improper service of summons; failing to furnish him with copies of its orders and

processes, particularly the September 11, 2003 order, and upholding technicality over equity and justice.

During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in Civil

Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of suit.[7]

Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision [8] sustaining the September

11, 2003 and February 6, 2004 orders of the trial court and dismissing the petition. It denied

reconsideration.[9] Thus, this petition.

Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of jurisdiction

over his person due to improper service of summons, failure of the trial court to furnish him with copies

of its orders and processes including the September 11, 2003 order and preference for technicality rather

than justice and equity. In particular, he claims that the rule on service by publication under Section 14,

Rule 14 of the Rules of Court applies only to actions in rem, not actions in personam like a complaint for a

sum of money. He also contends that the affidavit of service of a copy of the summons should have been

prepared by the clerk of court, not respondents messenger.

The petition lacks merit.

PROPRIETYOF
SERVICE BY PUBLICATION

Section 14, Rule 14 (on Summons) of the Rules of Court provides:

SEC. 14. Service upon defendant whose identity or whereabouts are unknown. In any
action where the defendant is designated as an unknown owner, or the like, or whenever
his whereabouts are unknown and cannot be ascertained by diligent inquiry, service
may, by leave of court, be effected upon him by publication in a newspaper of general
circulationand in such places and for such times as the court may order. (emphasis
supplied)
 Since petitioner could not be personally served with summons despite diligent efforts to locate

his whereabouts, respondent sought and was granted leave of court to effect service of summons upon

him by publication in a newspaper of general circulation. Thus, petitioner was properly served with

summons by publication.

Petitioner invokes the distinction between an action in rem and an action in personam and claims that

substituted service may be availed of only in an action in rem. Petitioner is wrong. The in rem/in

personam distinction was significant under the old rule because it was silent as to the kind of action to

which the rule was applicable.[10] Because of this silence, the Court limited the application of the old rule

to in rem actions only.[11]

This has been changed. The present rule expressly states that it applies [i]n any action where the defendant

is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot

be ascertained by diligent inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi

in rem.[12]

Regarding the matter of the affidavit of service, the relevant portion of Section 19, [13] Rule 14 of

the Rules of Court simply speaks of the following:

an affidavit showing the deposit of a copy of the summons and order for publication in
the post office, postage prepaid, directed to the defendant by registered mail to his last
known address.

Service of summons by publication is proved by the affidavit of the printer, his foreman or

principal clerk, or of the editor, business or advertising manager of the newspaper which published the

summons. The service of summons by publication is complemented by service of summons by registered

mail to the defendants last known address. This complementary service is evidenced by an affidavit

showing the deposit of a copy of the summons and order for publication in the post office, postage

prepaid, directed to the defendant by registered mail to his last known address.
 The rules, however, do not require that the affidavit of complementary service be executed by the

clerk of court. While the trial court ordinarily does the mailing of copies of its orders and processes, the

duty to make the complementary service by registered mail is imposed on the party who resorts to

service by publication.

Moreover, even assuming that the service of summons was defective, the trial court acquired

jurisdiction over the person of petitioner by his own voluntary appearance in the action against him. In

this connection, Section 20, Rule 14 of the Rules of Court states:

SEC. 20. Voluntary appearance. The defendants voluntary appearance in the

action shall be equivalent to service of summons. The inclusion in a motion to dismiss
of other grounds aside from lack of jurisdiction over the person of the defendant shall not
be deemed a voluntary appearance. (emphasis supplied)

Petitioner voluntarily appeared in the action when he filed the Omnibus Motion for Reconsideration and

to Admit Attached Answer.[14] This was equivalent to service of summons and vested the trial court with

jurisdiction over the person of petitioner.

ENTITLEMENTTO
NOTICE OF PROCEEDINGS

The trial court allowed respondent to present its evidence ex parte on account of petitioners

failure to file his answer within the prescribed period. Petitioner assails this action on the part of the trial

court as well as the said courts failure to furnish him with copies of orders and processes issued in the

course of the proceedings.

The effects of a defendants failure to file an answer within the time allowed therefor are governed

by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of Court:

SEC. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefor, the court shall, upon motion of the claiming party with notice
to the defending party, and proof of such failure, declare the defending party in
default. Thereupon, the court shall proceed to render judgment granting the claimant
such relief as his pleading may warrant, unless the court in its discretion requires the
 claimant to submit evidence. Such reception of evidence may be delegated to the clerk of
court.

SEC. 4. Effect of order of default. A party in default shall be entitled to notice of

subsequent proceedings but not to take part in the trial. (emphasis supplied)

If the defendant fails to file his answer on time, he may be declared in default upon motion of the plaintiff

with notice to the said defendant. In case he is declared in default, the court shall proceed to render

judgment granting the plaintiff such relief as his pleading may warrant, unless the court in its discretion

requires the plaintiff to submit evidence. The defaulting defendant may not take part in the trial but shall

be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his answer on time. That

was in fact why he had to file an Omnibus Motion for Reconsideration and to Admit Attached Answer.

But respondent moved only for the ex parte presentation of evidence, not for the declaration of petitioner

in default. In its February 6, 2004 order, the trial court stated:

The disputed Order of September 11, 2003 allowing the presentation of evidence
ex-parte precisely ordered that despite and notwithstanding service of summons by
publication, no answer has been filed with the Court within the required period and/or
forthcoming.[] Effectively[,] that was a finding that the defendant [that is, herein
petitioner] was in default for failure to file an answer or any responsive pleading
within the period fixed in the publication as precisely the defendant [could not] be
found and for which reason, service of summons by publication was ordered. It is simply
illogical to notify the defendant of the Order of September 11, 2003 simply on account of
the reality that he was no longer residing and/or found on his last known address and
his whereabouts unknown thus the publication of the summons. In other words, it was
reasonable to expect that the defendant will not receive any notice or order in his last
known address. Hence, [it was] impractical to send any notice or order to
him. Nonetheless, the record[s] will bear out that a copy of the order of September 11,
2003 was mailed to the defendant at his last known address but it was not claimed.
(emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent to

present its evidence ex parte but in effect issued an order of default. But the trial court could not validly

do that as an order of default can be made only upon motion of the claiming party.[15] Since no motion to

declare petitioner in default was filed, no default order should have been issued.
To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of

subsequent proceedings, all the more should a party who has not been declared in default be entitled to

such notice. But what happens if the residence or whereabouts of the defending party is not known or he

cannot be located? In such a case, there is obviously no way notice can be sent to him and the notice

requirement cannot apply to him. The law does not require that the impossible be done.[16] Nemo tenetur

ad impossibile. The law obliges no one to perform an impossibility. [17] Laws and rules must be interpreted

in a way that they are in accordance with logic, common sense, reason and practicality. [18]

Hence, even if petitioner was not validly declared in default, he could not reasonably demand

that copies of orders and processes be furnished him. Be that as it may, a copy of the September 11, 2003

order was nonetheless still mailed to petitioner at his last known address but it was unclaimed.

CORRECTNESSOF
NON-ADMISSION OF ANSWER

Petitioner failed to file his answer within the required period. Indeed, he would not have moved

for the admission of his answer had he filed it on time. Considering that the answer was belatedly filed,

the trial court did not abuse its discretion in denying its admission.

Petitioners plea for equity must fail in the face of the clear and express language of the rules of

procedure and of the September 11, 2003 order regarding the period for filing the answer. Equity is

available only in the absence of law, not as its replacement. [19] Equity may be applied only in the absence

of rules of procedure, never in contravention thereof.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.
Jurisdiction over the Res
El Banco-Espanol-Filipino v. Palanca, 37 Phil. 921 (1918)

EL BANCO ESPAOL-FILIPINO, plaintiff-appellant,

vs.
VICENTE PALANCA, administrator of the estate of Engracio Palanca Tanquinyeng, defendant-
appellant.

Aitken and DeSelms for appellant.

Hartigan and Welch for appellee.

STREET, J.:

This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a mortgage
upon various parcels of real property situated in the city of Manila. The mortgage in question is dated
June 16, 1906, and was executed by the original defendant herein, Engracio Palanca Tanquinyeng y
Limquingco, as security for a debt owing by him to the bank. Upon March 31, 1906, the debt amounted to
P218,294.10 and was drawing interest at the rate of 8 per centum per annum, payable at the end of each
quarter. It appears that the parties to this mortgage at that time estimated the value of the property in
question at P292,558, which was about P75,000 in excess of the indebtedness. After the execution of this
instrument by the mortgagor, he returned to China which appears to have been his native country; and
he there died, upon January 29, 1810, without again returning to the Philippine Islands.

As the defendant was a nonresident at the time of the institution of the present action, it was necessary
for the plaintiff in the foreclosure proceeding to give notice to the defendant by publication pursuant to
section 399 of the Code of Civil Procedure. An order for publication was accordingly obtained from the
court, and publication was made in due form in a newspaper of the city of Manila. At the same time that
the order of the court should deposit in the post office in a stamped envelope a copy of the summons and
complaint directed to the defendant at his last place of residence, to wit, the city of Amoy, in the Empire
of China. This order was made pursuant to the following provision contained in section 399 of the Code
of Civil Procedure:

In case of publication, where the residence of a nonresident or absent defendant is known, the
judge must direct a copy of the summons and complaint to be forthwith deposited by the clerk in
the post-office, postage prepaid, directed to the person to be served, at his place of residence

Whether the clerk complied with this order does not affirmatively appear. There is, however, among the
papers pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo Chan y Garcia, an
employee of the attorneys of the bank, showing that upon that date he had deposited in the Manila post-
office a registered letter, addressed to Engracio Palanca Tanquinyeng, at Manila, containing copies of the
complaint, the plaintiff's affidavit, the summons, and the order of the court directing publication as
aforesaid. It appears from the postmaster's receipt that Bernardo probably used an envelope obtained
from the clerk's office, as the receipt purports to show that the letter emanated from the office.

The cause proceeded in usual course in the Court of First Instance; and the defendant not having
appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a decision
was rendered in favor of the plaintiff. In this decision it was recited that publication had been properly
made in a periodical, but nothing was said about this notice having been given mail. The court, upon this
occasion, found that the indebtedness of the defendant amounted to P249,355. 32, with interest from
March 31, 1908. Accordingly it was ordered that the defendant should, on or before July 6, 1908, deliver
said amount to the clerk of the court to be applied to the satisfaction of the judgment, and it was declared
that in case of the failure of the defendant to satisfy the judgment within such period, the mortgage
property located in the city of Manila should be exposed to public sale. The payment contemplated in
said order was never made; and upon July 8, 1908, the court ordered the sale of the property. The sale
took place upon July 30, 1908, and the property was bought in by the bank for the sum of P110,200. Upon
August 7, 1908, this sale was confirmed by the court.

About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a motion was
made in this cause by Vicente Palanca, as administrator of the estate of the original defendant, Engracio
Palanca Tanquinyeng y Limquingco, wherein the applicant requested the court to set aside the order of
default of July 2, 1908, and the judgment rendered upon July 3, 1908, and to vacate all the proceedings
subsequent thereto. The basis of this application, as set forth in the motion itself, was that the order of
default and the judgment rendered thereon were void because the court had never acquired jurisdiction
over the defendant or over the subject of the action.

At the hearing in the court below the application to vacate the judgment was denied, and from this action
of the court Vicente Planca, as administrator of the estate of the original defendant, has appealed. No
other feature of the case is here under consideration than such as related to the action of the court upon
said motion.

The case presents several questions of importance, which will be discussed in what appears to be the
sequence of most convenient development. In the first part of this opinion we shall, for the purpose of
argument, assume that the clerk of the Court of First Instance did not obey the order of the court in the
matter of mailing the papers which he was directed to send to the defendant in Amoy; and in this
connection we shall consider, first, whether the court acquired the necessary jurisdiction to enable it to
proceed with the foreclosure of the mortgage and, secondly, whether those proceedings were conducted
in such manner as to constitute due process of law.

The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several different,
though related, senses since it may have reference (1) to the authority of the court to entertain a particular
kind of action or to administer a particular kind of relief, or it may refer to the power of the court over the
parties, or (2) over the property which is the subject to the litigation.

The sovereign authority which organizes a court determines the nature and extent of its powers in
general and thus fixes its competency or jurisdiction with reference to the actions which it may entertain
and the relief it may grant.

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

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

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

In speaking of the proceeding to foreclose a mortgage the author of a well known treaties, has said:

Though nominally against person, such suits are to vindicate liens; they proceed upon seizure;
they treat property as primarily indebted; and, with the qualification above-mentioned, they are
substantially property actions. In the civil law, they are styled hypothecary actions, and their sole
object is the enforcement of the lien against the res; in the common law, they would be different in
chancery did not treat the conditional conveyance as a mere hypothecation, and the creditor's
right ass an equitable lien; so, in both, the suit is real action so far as it is against property, and
seeks the judicial recognition of a property debt, and an order for the sale of the res. (Waples,
Proceedings In Rem. sec. 607.)

It is true that in proceedings of this character, if the defendant for whom publication is made appears, the
action becomes as to him a personal action and is conducted as such. This, however, does not affect the
proposition that where the defendant fails to appear the action is quasi in rem; and it should therefore be
considered with reference to the principles governing actions in rem.

There is an instructive analogy between the foreclosure proceeding and an action of attachment,
concerning which the Supreme Court of the United States has used the following language:

If the defendant appears, the cause becomes mainly a suit in personam, with the added incident,
that the property attached remains liable, under the control of the court, to answer to any
demand which may be established against the defendant by the final judgment of the court. But,
if there is no appearance of the defendant, and no service of process on him, the case becomes, in
its essential nature, a proceeding in rem, the only effect of which is to subject the property
attached to the payment of the defendant which the court may find to be due to the plaintiff.
(Cooper vs. Reynolds, 10 Wall., 308.)

In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure
is to, be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the
property is acquired by the seizure; and the purpose of the proceedings is to subject the property to that
lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is
not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as
though the property had been seized upon attachment. (Roller vs. Holly, 176 U. S., 398, 405; 44 L. ed.,
520.) It results that the mere circumstance that in an attachment the property may be seized at the
inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the time
comes for the sale, does not materially affect the fundamental principle involved in both cases, which is
that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in
rem.

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

We may then, from what has been stated, formulated the following proposition relative to the foreclosure
proceeding against the property of a nonresident mortgagor who fails to come in and submit himself
personally to the jurisdiction of the court: (I) That the jurisdiction of the court is derived from the power
which it possesses over the property; (II) that jurisdiction over the person is not acquired and is
nonessential; (III) that the relief granted by the court must be limited to such as can be enforced against
the property itself.

It is important that the bearing of these propositions be clearly apprehended, for there are many
expressions in the American reports from which it might be inferred that the court acquires personal
jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth
the proposition that jurisdiction over the person of a nonresident cannot be acquired by publication and
notice was never clearly understood even in the American courts until after the decision had been
rendered by the Supreme Court of the United States in the leading case of Pennoyer vs. Neff (95 U. S. 714;
24 L. ed., 565). In the light of that decision, and of other decisions which have subsequently been rendered
in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by
publication and notice is no longer open to question; and it is now fully established that a personal
judgment upon constructive or substituted service against a nonresident who does not appear is wholly
invalid. This doctrine applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is rendered; and the
only exception seems to be found in the case where the nonresident defendant has expressly or impliedly
consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A.,
585; 35 L. R. A. [N. S.], 312

The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process from the
tribunals of one State cannot run into other States or countries and that due process of law requires that
the defendant shall be brought under the power of the court by service of process within the State, or by
his voluntary appearance, in order to authorize the court to pass upon the question of his personal
liability. The doctrine established by the Supreme Court of the United States on this point, being based
upon the constitutional conception of due process of law, is binding upon the courts of the Philippine
Islands. Involved in this decision is the principle that in proceedings in rem or quasi in rem against a
nonresident who is not served personally within the state, and who does not appear, the relief must be
confined to the res, and the court cannot lawfully render a personal judgment against him. (Dewey vs.
Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed.,
729.) Therefore in an action to foreclose a mortgage against a nonresident, upon whom service has been
effected exclusively by publication, no personal judgment for the deficiency can be entered. (Latta vs.
Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.)

It is suggested in the brief of the appellant that the judgment entered in the court below offends against
the principle just stated and that this judgment is void because the court in fact entered a personal
judgment against the absent debtor for the full amount of the indebtedness secured by the mortgage. We
do not so interpret the judgment.

In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all cases of
foreclosure, to ascertain the amount due, as prescribed in section 256 of the Code of Civil Procedure, and
to make an order requiring the defendant to pay the money into court. This step is a necessary precursor
of the order of sale. In the present case the judgment which was entered contains the following words:

Because it is declared that the said defendant Engracio Palanca Tanquinyeng y Limquingco, is
indebted in the amount of P249,355.32, plus the interest, to the 'Banco Espanol-Filipino' . . .
therefore said appellant is ordered to deliver the above amount etc., etc.

This is not the language of a personal judgment. Instead it is clearly intended merely as a compliance
with the requirement that the amount due shall be ascertained and that the evidence of this it may be
observed that according to the Code of Civil Procedure a personal judgment against the debtor for the
deficiency is not to be rendered until after the property has been sold and the proceeds applied to the
mortgage debt. (sec. 260).

The conclusion upon this phase of the case is that whatever may be the effect in other respects of the
failure of the clerk of the Court of First Instance to mail the proper papers to the defendant in Amoy,
China, such irregularity could in no wise impair or defeat the jurisdiction of the court, for in our opinion
that jurisdiction rest upon a basis much more secure than would be supplied by any form of notice that
could be given to a resident of a foreign country.

Before leaving this branch of the case, we wish to observe that we are fully aware that many reported
cases can be cited in which it is assumed that the question of the sufficiency of publication or notice in a
case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to
acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally adopted
by the court because of the analogy between service by the publication and personal service of process
upon the defendant; and, as has already been suggested, prior to the decision of Pennoyer vs. Neff
(supra) the difference between the legal effects of the two forms of service was obscure. It is accordingly
not surprising that the modes of expression which had already been molded into legal tradition before
that case was decided have been brought down to the present day. But it is clear that the legal principle
here involved is not effected by the peculiar language in which the courts have expounded their ideas.

We now proceed to a discussion of the question whether the supposed irregularity in the proceedings
was of such gravity as to amount to a denial of that "due process of law" which was secured by the Act of
Congress in force in these Islands at the time this mortgage was foreclosed. (Act of July 1, 1902, sec. 5.) In
dealing with questions involving the application of the constitutional provisions relating to due process
of law the Supreme Court of the United States has refrained from attempting to define with precision the
meaning of that expression, the reason being that the idea expressed therein is applicable under so many
diverse conditions as to make any attempt ay precise definition hazardous and unprofitable. As applied
to a judicial proceeding, however, it may be laid down with certainty that the requirement of due process
is satisfied if the following conditions are present, namely; (1) There must be a court or tribunal clothed
with judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully acquired
over the person of the defendant or over the property which is the subject of the proceeding; (3) the
defendant must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful
hearing.

Passing at once to the requisite that the defendant shall have an opportunity to be heard, we observe that
in a foreclosure case some notification of the proceedings to the nonresident owner, prescribing the time
within which appearance must be made, is everywhere recognized as essential. To answer this necessity
the statutes generally provide for publication, and usually in addition thereto, for the mailing of notice to
the defendant, if his residence is known. Though commonly called constructive, or substituted service of
process in any true sense. It is merely a means provided by law whereby the owner may be admonished
that his property is the subject of judicial proceedings and that it is incumbent upon him to take such
steps as he sees fit to protect it. In speaking of notice of this character a distinguish master of
constitutional law has used the following language:

. . . if the owners are named in the proceedings, and personal notice is provided for, it is rather
from tenderness to their interests, and in order to make sure that the opportunity for a hearing
shall not be lost to them, than from any necessity that the case shall assume that form. (Cooley on
Taxation [2d. ed.], 527, quoted in Leigh vs. Green, 193 U. S., 79, 80.)

It will be observed that this mode of notification does not involve any absolute assurance that the absent
owner shall thereby receive actual notice. The periodical containing the publication may never in fact
come to his hands, and the chances that he should discover the notice may often be very slight. Even
where notice is sent by mail the probability of his receiving it, though much increased, is dependent upon
the correctness of the address to which it is forwarded as well as upon the regularity and security of the
mail service. It will be noted, furthermore, that the provision of our law relative to the mailing of notice
does not absolutely require the mailing of notice unconditionally and in every event, but only in the case
where the defendant's residence is known. In the light of all these facts, it is evident that actual notice to
the defendant in cases of this kind is not, under the law, to be considered absolutely necessary.

The idea upon which the law proceeds in recognizing the efficacy of a means of notification which may
fall short of actual notice is apparently this: Property is always assumed to be in the possession of its
owner, in person or by agent; and he may be safely held, under certain conditions, to be affected with
knowledge that proceedings have been instituted for its condemnation and sale.

It is the duty of the owner of real estate, who is a nonresident, to take measures that in some way
he shall be represented when his property is called into requisition, and if he fails to do this, and
fails to get notice by the ordinary publications which have usually been required in such cases, it
is his misfortune, and he must abide the consequences. (6 R. C. L., sec. 445 [p. 450]).

It has been well said by an American court:

If property of a nonresident cannot be reached by legal process upon the constructive notice, then
our statutes were passed in vain, and are mere empty legislative declarations, without either
force, or meaning; for if the person is not within the jurisdiction of the court, no personal
judgment can be rendered, and if the judgment cannot operate upon the property, then no
effective judgment at all can be rendered, so that the result would be that the courts would be
 powerless to assist a citizen against a nonresident. Such a result would be a deplorable one.
(Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662, 667.)

It is, of course universally recognized that the statutory provisions relative to publication or other form of
notice against a nonresident owner should be complied with; and in respect to the publication of notice in
the newspaper it may be stated that strict compliance with the requirements of the law has been held to
be essential. In Guaranty Trust etc. Co. vs. Green Cove etc., Railroad Co. (139 U. S., 137, 138), it was held
that where newspaper publication was made for 19 weeks, when the statute required 20, the publication
was insufficient.

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

The observations which have just been made lead to the conclusion that the failure of the clerk to mail the
notice, if in fact he did so fail in his duty, is not such an irregularity, as amounts to a denial of due process
of law; and hence in our opinion that irregularity, if proved, would not avoid the judgment in this case.
Notice was given by publication in a newspaper and this is the only form of notice which the law
unconditionally requires. This in our opinion is all that was absolutely necessary to sustain the
proceedings.

It will be observed that in considering the effect of this irregularity, it makes a difference whether it be
viewed as a question involving jurisdiction or as a question involving due process of law. In the matter of
jurisdiction there can be no distinction between the much and the little. The court either has jurisdiction
or it has not; and if the requirement as to the mailing of notice should be considered as a step antecedent
to the acquiring of jurisdiction, there could be no escape from the conclusion that the failure to take that
step was fatal to the validity of the judgment. In the application of the idea of due process of law, on the
other hand, it is clearly unnecessary to be so rigorous. The jurisdiction being once established, all that due
process of law thereafter requires is an opportunity for the defendant to be heard; and as publication was
duly made in the newspaper, it would seem highly unreasonable to hold that failure to mail the notice
was fatal. We think that in applying the requirement of due process of law, it is permissible to reflect
upon the purposes of the provision which is supposed to have been violated and the principle underlying
the exercise of judicial power in these proceedings. Judge in the light of these conceptions, we think that
the provision of Act of Congress declaring that no person shall be deprived of his property without due
process of law has not been infringed.

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

An application to open or vacate a judgment because of an irregularity or defect in the proceedings is

usually required to be supported by an affidavit showing the grounds on which the relief is sought, and
in addition to this showing also a meritorious defense to the action. It is held that a general statement that
a party has a good defense to the action is insufficient. The necessary facts must be averred. Of course if a
judgment is void upon its face a showing of the existence of a meritorious defense is not necessary. (10 R.
C. L., 718.)

The lapse of time is also a circumstance deeply affecting this aspect of the case. In this connection we
quote the following passage from the encyclopedic treatise now in course of publication:

Where, however, the judgment is not void on its face, and may therefore be enforced if permitted
to stand on the record, courts in many instances refuse to exercise their quasi equitable powers to
vacate a judgement after the lapse of the term ay which it was entered, except in clear cases, to
promote the ends of justice, and where it appears that the party making the application is himself
without fault and has acted in good faith and with ordinary diligence. Laches on the part of the
applicant, if unexplained, is deemed sufficient ground for refusing the relief to which he might
otherwise be entitled. Something is due to the finality of judgments, and acquiescence or
unnecessary delay is fatal to motions of this character, since courts are always reluctant to
interfere with judgments, and especially where they have been executed or satisfied. The moving
party has the burden of showing diligence, and unless it is shown affirmatively the court will not
ordinarily exercise its discretion in his favor. (15 R. C. L., 694, 695.)

It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco, died January
29, 1910. The mortgage under which the property was sold was executed far back in 1906; and the
proceedings in the foreclosure were closed by the order of court confirming the sale dated August 7, 1908.
It passes the rational bounds of human credulity to suppose that a man who had placed a mortgage upon
property worth nearly P300,000 and had then gone away from the scene of his life activities to end his
days in the city of Amoy, China, should have long remained in ignorance of the fact that the mortgage
had been foreclosed and the property sold, even supposing that he had no knowledge of those
proceedings while they were being conducted. It is more in keeping with the ordinary course of things
that he should have acquired information as to what was transpiring in his affairs at Manila; and upon
the basis of this rational assumption we are authorized, in the absence of proof to the contrary, to
presume that he did have, or soon acquired, information as to the sale of his property.

The Code of Civil Procedure, indeed, expressly declares that there is a presumption that things have
happened according to the ordinary habits of life (sec. 334 [26]); and we cannot conceive of a situation
more appropriate than this for applying the presumption thus defined by the lawgiver. In support of this
presumption, as applied to the present case, it is permissible to consider the probability that the
defendant may have received actual notice of these proceedings from the unofficial notice addressed to
him in Manila which was mailed by an employee of the bank's attorneys. Adopting almost the exact
words used by the Supreme Court of the United States in Grannis vs. Ordeans (234 U. S., 385; 58 L. ed.,
1363), we may say that in view of the well-known skill of postal officials and employees in making proper
delivery of letters defectively addressed, we think the presumption is clear and strong that this notice
reached the defendant, there being no proof that it was ever returned by the postal officials as
undelivered. And if it was delivered in Manila, instead of being forwarded to Amoy, China, there is a
probability that the recipient was a person sufficiently interested in his affairs to send it or communicate
its contents to him.

Of course if the jurisdiction of the court or the sufficiency of the process of law depended upon the
mailing of the notice by the clerk, the reflections in which we are now indulging would be idle and
frivolous; but the considerations mentioned are introduced in order to show the propriety of applying to
this situation the legal presumption to which allusion has been made. Upon that presumption, supported
by the circumstances of this case, ,we do not hesitate to found the conclusion that the defendant
voluntarily abandoned all thought of saving his property from the obligation which he had placed upon
it; that knowledge of the proceedings should be imputed to him; and that he acquiesced in the
consequences of those proceedings after they had been accomplished. Under these circumstances it is
clear that the merit of this motion is, as we have already stated, adversely affected in a high degree by the
delay in asking for relief. Nor is it an adequate reply to say that the proponent of this motion is an
administrator who only qualified a few months before this motion was made. No disability on the part of
the defendant himself existed from the time when the foreclosure was effected until his death; and we
believe that the delay in the appointment of the administrator and institution of this action is a
circumstance which is imputable to the parties in interest whoever they may have been. Of course if the
minor heirs had instituted an action in their own right to recover the property, it would have been
different.

It is, however, argued that the defendant has suffered prejudice by reason of the fact that the bank
became the purchaser of the property at the foreclosure sale for a price greatly below that which had been
agreed upon in the mortgage as the upset price of the property. In this connection, it appears that in
article nine of the mortgage which was the subject of this foreclosure, as amended by the notarial
document of July 19, 1906, the parties to this mortgage made a stipulation to the effect that the value
therein placed upon the mortgaged properties should serve as a basis of sale in case the debt should
remain unpaid and the bank should proceed to a foreclosure. The upset price stated in that stipulation for
all the parcels involved in this foreclosure was P286,000. It is said in behalf of the appellant that when the
bank bought in the property for the sum of P110,200 it violated that stipulation.

It has been held by this court that a clause in a mortgage providing for a tipo, or upset price, does not
prevent a foreclosure, nor affect the validity of a sale made in the foreclosure proceedings. (Yangco vs.
Cruz Herrera and Wy Piaco, 11 Phil. Rep., 402; Banco-Espaol Filipino vs. Donaldson, Sim and Co., 5
Phil. Rep., 418.) In both the cases here cited the property was purchased at the foreclosure sale, not by the
creditor or mortgagee, but by a third party. Whether the same rule should be applied in a case where the
mortgagee himself becomes the purchaser has apparently not been decided by this court in any reported
decision, and this question need not here be considered, since it is evident that if any liability was
incurred by the bank by purchasing for a price below that fixed in the stipulation, its liability was a
personal liability derived from the contract of mortgage; and as we have already demonstrated such a
liability could not be the subject of adjudication in an action where the court had no jurisdiction over the
person of the defendant. If the plaintiff bank became liable to account for the difference between the upset
price and the price at which in bought in the property, that liability remains unaffected by the disposition
which the court made of this case; and the fact that the bank may have violated such an obligation can in
no wise affect the validity of the judgment entered in the Court of First Instance.

In connection with the entire failure of the motion to show either a meritorious defense to the action or
that the defendant had suffered any prejudice of which the law can take notice, we may be permitted to
add that in our opinion a motion of this kind, which proposes to unsettle judicial proceedings long ago
closed, can not be considered with favor, unless based upon grounds which appeal to the conscience of
the court. Public policy requires that judicial proceedings be upheld. The maximum here applicable is
non quieta movere. As was once said by Judge Brewer, afterwards a member of the Supreme Court of the
United States:

Public policy requires that judicial proceedings be upheld, and that titles obtained in those
proceedings be safe from the ruthless hand of collateral attack. If technical defects are adjudged
potent to destroy such titles, a judicial sale will never realize that value of the property, for no
prudent man will risk his money in bidding for and buying that title which he has reason to fear
may years thereafter be swept away through some occult and not readily discoverable defect.
(Martin vs. Pond, 30 Fed., 15.)

In the case where that language was used an attempt was made to annul certain foreclosure proceedings
on the ground that the affidavit upon which the order of publication was based erroneously stated that
the State of Kansas, when he was in fact residing in another State. It was held that this mistake did not
affect the validity of the proceedings.

In the preceding discussion we have assumed that the clerk failed to send the notice by post as required
by the order of the court. We now proceed to consider whether this is a proper assumption; and the
proposition which we propose to establish is that there is a legal presumption that the clerk performed
his duty as the ministerial officer of the court, which presumption is not overcome by any other facts
appearing in the cause.

In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a presumption
"that official duty has been regularly performed;" and in subsection 18 it is declared that there is a
presumption "that the ordinary course of business has been followed." These presumptions are of course
in no sense novelties, as they express ideas which have always been recognized. Omnia presumuntur rite
et solemniter esse acta donec probetur in contrarium. There is therefore clearly a legal presumption that
the clerk performed his duty about mailing this notice; and we think that strong considerations of policy
require that this presumption should be allowed to operate with full force under the circumstances of this
case. A party to an action has no control over the clerk of the court; and has no right to meddle unduly
with the business of the clerk in the performance of his duties. Having no control over this officer, the
litigant must depend upon the court to see that the duties imposed on the clerk are performed.

Other considerations no less potent contribute to strengthen the conclusion just stated. There is no
principle of law better settled than that after jurisdiction has once been required, every act of a court of
general jurisdiction shall be presumed to have been rightly done. This rule is applied to every judgment
or decree rendered in the various stages of the proceedings from their initiation to their completion
(Voorhees vs. United States Bank, 10 Pet., 314; 35 U. S., 449); and if the record is silent with respect to any
fact which must have been established before the court could have rightly acted, it will be presumed that
such fact was properly brought to its knowledge. (The Lessee of Grignon vs. Astor, 2 How., 319; 11 L. ed.,
283.)

In making the order of sale [of the real state of a decedent] the court are presumed to have
adjudged every question necessary to justify such order or decree, viz: The death of the owners;
that the petitioners were his administrators; that the personal estate was insufficient to pay the
debts of the deceased; that the private acts of Assembly, as to the manner of sale, were within the
constitutional power of the Legislature, and that all the provisions of the law as to notices which
are directory to the administrators have been complied with. . . . The court is not bound to enter
upon the record the evidence on which any fact was decided. (Florentine vs. Barton, 2 Wall., 210;
17 L. ed., 785.) Especially does all this apply after long lapse of time.
Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive discussion
in a case analogous to that which is now before us. It there appeared that in order to foreclose a mortgage
in the State of Kentucky against a nonresident debtor it was necessary that publication should be made in
a newspaper for a specified period of time, also be posted at the front door of the court house and be
published on some Sunday, immediately after divine service, in such church as the court should direct. In
a certain action judgment had been entered against a nonresident, after publication in pursuance of these
provisions. Many years later the validity of the proceedings was called in question in another action. It
was proved from the files of an ancient periodical that publication had been made in its columns as
required by law; but no proof was offered to show the publication of the order at the church, or the
posting of it at the front door of the court-house. It was insisted by one of the parties that the judgment of
the court was void for lack of jurisdiction. But the Supreme Court of the United States said:

The court which made the decree . . . was a court of general jurisdiction. Therefore every
presumption not inconsistent with the record is to be indulged in favor of its jurisdiction. . . . It is
to be presumed that the court before making its decree took care of to see that its order for
constructive service, on which its right to make the decree depended, had been obeyed.

It is true that in this case the former judgment was the subject of collateral , or indirect attack, while in the
case at bar the motion to vacate the judgment is direct proceeding for relief against it. The same general
presumption, however, is indulged in favor of the judgment of a court of general jurisdiction, whether it
is the subject of direct or indirect attack the only difference being that in case of indirect attack the
judgment is conclusively presumed to be valid unless the record affirmatively shows it to be void, while
in case of direct attack the presumption in favor of its validity may in certain cases be overcome by proof
extrinsic to the record.

The presumption that the clerk performed his duty and that the court made its decree with the
knowledge that the requirements of law had been complied with appear to be amply sufficient to support
the conclusion that the notice was sent by the clerk as required by the order. It is true that there ought to
be found among the papers on file in this cause an affidavit, as required by section 400 of the Code of
Civil Procedure, showing that the order was in fact so sent by the clerk; and no such affidavit appears.
The record is therefore silent where it ought to speak. But the very purpose of the law in recognizing
these presumptions is to enable the court to sustain a prior judgment in the face of such an omission. If
we were to hold that the judgment in this case is void because the proper affidavit is not present in the
file of papers which we call the record, the result would be that in the future every title in the Islands
resting upon a judgment like that now before us would depend, for its continued security, upon the
presence of such affidavit among the papers and would be liable at any moment to be destroyed by the
disappearance of that piece of paper. We think that no court, with a proper regard for the security of
judicial proceedings and for the interests which have by law been confided to the courts, would incline to
favor such a conclusion. In our opinion the proper course in a case of this kind is to hold that the legal
presumption that the clerk performed his duty still maintains notwithstanding the absence from the
record of the proper proof of that fact.

In this connection it is important to bear in mind that under the practice prevailing in the Philippine
Islands the word "record" is used in a loose and broad sense, as indicating the collective mass of papers
which contain the history of all the successive steps taken in a case and which are finally deposited in the
archives of the clerk's office as a memorial of the litigation. It is a matter of general information that no
judgment roll, or book of final record, is commonly kept in our courts for the purpose of recording the
pleadings and principal proceedings in actions which have been terminated; and in particular, no such
record is kept in the Court of First Instance of the city of Manila. There is, indeed, a section of the Code of
Civil Procedure which directs that such a book of final record shall be kept; but this provision has, as a
matter of common knowledge, been generally ignored. The result is that in the present case we do not
have the assistance of the recitals of such a record to enable us to pass upon the validity of this judgment
and as already stated the question must be determined by examining the papers contained in the entire
file.

But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia showing that
upon April 4, 1908, he sent a notification through the mail addressed to the defendant at Manila,
Philippine Islands, should be accepted as affirmative proof that the clerk of the court failed in his duty
and that, instead of himself sending the requisite notice through the mail, he relied upon Bernardo to
send it for him. We do not think that this is by any means a necessary inference. Of course if it had
affirmatively appeared that the clerk himself had attempted to comply with this order and had directed
the notification to Manila when he should have directed it to Amoy, this would be conclusive that he had
failed to comply with the exact terms of the order; but such is not this case. That the clerk of the attorneys
for the plaintiff erroneously sent a notification to the defendant at a mistaken address affords in our
opinion very slight basis for supposing that the clerk may not have sent notice to the right address.

There is undoubtedly good authority to support the position that when the record states the evidence or
makes an averment with reference to a jurisdictional fact, it will not be presumed that there was other or
different evidence respecting the fact, or that the fact was otherwise than stated. If, to give an illustration,
it appears from the return of the officer that the summons was served at a particular place or in a
particular manner, it will not be presumed that service was also made at another place or in a different
manner; or if it appears that service was made upon a person other than the defendant, it will not be
presumed, in the silence of the record, that it was made upon the defendant also (Galpin vs. Page, 18
Wall., 350, 366; Settlemier vs. Sullivan, 97 U. S., 444, 449). While we believe that these propositions are
entirely correct as applied to the case where the person making the return is the officer who is by law
required to make the return, we do not think that it is properly applicable where, as in the present case,
the affidavit was made by a person who, so far as the provisions of law are concerned, was a mere
intermeddler.

The last question of importance which we propose to consider is whether a motion in the cause is
admissible as a proceeding to obtain relief in such a case as this. If the motion prevails the judgment of
July 2, 1908, and all subsequent proceedings will be set aside, and the litigation will be renewed,
proceeding again from the date mentioned as if the progress of the action had not been interrupted. The
proponent of the motion does not ask the favor of being permitted to interpose a defense. His purpose is
merely to annul the effective judgment of the court, to the end that the litigation may again resume its
regular course.

There is only one section of the Code of Civil Procedure which expressly recognizes the authority of a
Court of First Instance to set aside a final judgment and permit a renewal of the litigation in the same
cause. This is as follows:

SEC. 113. Upon such terms as may be just the court may relieve a party or legal representative
from the judgment, order, or other proceeding taken against him through his mistake,
inadvertence, surprise, or excusable neglect; Provided, That application thereof be made within a
reasonable time, but in no case exceeding six months after such judgment, order, or proceeding
was taken.

An additional remedy by petition to the Supreme Court is supplied by section 513 of the same Code. The
first paragraph of this section, in so far as pertinent to this discussion, provides as follows:

When a judgment is rendered by a Court of First Instance upon default, and a party thereto is
unjustly deprived of a hearing by fraud, accident, mistake or excusable negligence, and the Court
 of First Instance which rendered the judgment has finally adjourned so that no adequate remedy
exists in that court, the party so deprived of a hearing may present his petition to the Supreme
Court within sixty days after he first learns of the rendition of such judgment, and not thereafter,
setting forth the facts and praying to have judgment set aside. . . .

It is evident that the proceeding contemplated in this section is intended to supplement the remedy
provided by section 113; and we believe the conclusion irresistible that there is no other means
recognized by law whereby a defeated party can, by a proceeding in the same cause, procure a judgment
to be set aside, with a view to the renewal of the litigation.

The Code of Civil Procedure purports to be a complete system of practice in civil causes, and it contains
provisions describing with much fullness the various steps to be taken in the conduct of such
proceedings. To this end it defines with precision the method of beginning, conducting, and concluding
the civil action of whatever species; and by section 795 of the same Code it is declared that the procedure
in all civil action shall be in accordance with the provisions of this Code. We are therefore of the opinion
that the remedies prescribed in sections 113 and 513 are exclusive of all others, so far as relates to the
opening and continuation of a litigation which has been once concluded.

The motion in the present case does not conform to the requirements of either of these provisions; and the
consequence is that in our opinion the action of the Court of First Instance in dismissing the motion was
proper.

If the question were admittedly one relating merely to an irregularity of procedure, we cannot suppose
that this proceeding would have taken the form of a motion in the cause, since it is clear that, if based on
such an error, the came to late for relief in the Court of First Instance. But as we have already seen, the
motion attacks the judgment of the court as void for want of jurisdiction over the defendant. The idea
underlying the motion therefore is that inasmuch as the judgment is a nullity it can be attacked in any
way and at any time. If the judgment were in fact void upon its face, that is, if it were shown to be a
nullity by virtue of its own recitals, there might possibly be something in this. Where a judgment or
judicial order is void in this sense it may be said to be a lawless thing, which can be treated as an outlaw
and slain at sight, or ignored wherever and whenever it exhibits its head.

But the judgment in question is not void in any such sense. It is entirely regular in form, and the alleged
defect is one which is not apparent upon its face. It follows that even if the judgment could be shown to
be void for want of jurisdiction, or for lack of due process of law, the party aggrieved thereby is bound to
resort to some appropriate proceeding to obtain relief. Under accepted principles of law and practice,
long recognized in American courts, a proper remedy in such case, after the time for appeal or review has
passed, is for the aggrieved party to bring an action to enjoin the judgment, if not already carried into
effect; or if the property has already been disposed of he may institute suit to recover it. In every situation
of this character an appropriate remedy is at hand; and if property has been taken without due process,
the law concedes due process to recover it. We accordingly old that, assuming the judgment to have been
void as alleged by the proponent of this motion, the proper remedy was by an original proceeding and
not by motion in the cause. As we have already seen our Code of Civil Procedure defines the conditions
under which relief against a judgment may be productive of conclusion for this court to recognize such a
proceeding as proper under conditions different from those defined by law. Upon the point of procedure
here involved, we refer to the case of People vs. Harrison (84 Cal., 607) wherein it was held that a motion
will not lie to vacate a judgment after the lapse of the time limited by statute if the judgment is not void
on its face; and in all cases, after the lapse of the time limited by statute if the judgment is not void on its
face; and all cases, after the lapse of such time, when an attempt is made to vacate the judgment by a
proceeding in court for that purpose an action regularly brought is preferable, and should be required. It
will be noted taken verbatim from the California Code (sec. 473).
The conclusions stated in this opinion indicate that the judgment appealed from is without error, and the
same is accordingly affirmed, with costs. So ordered.

Arellano, C.J., Torres, Carson, and Avancea, JJ., concur.

Perkins v. Dizon, 69 Phil. 186 (1939)

IDONAH SLADE PERKINS, petitioner,

vs.
ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and
BENGUET CONSOLIDATED MINING COMPANY, respondents.

Alva J. Hill for petitioner.

Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated Mining Company.
DeWitt, Perkins & Ponce Enrile for respondent Perkins.

MORAN, J.:

On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of
Manila against the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on
52,874 shares of stock registered in his name, payment of which was being withheld by the company;
and, for the recognition of his right to the control and disposal of said shares, to the exclusion of all
others. To the complaint, the company filed its answer alleging, by way of defense, that the withholding
of such dividends and the non-recognition of plaintiff's right to the disposal and control of the shares
were due to certain demands made with respect to said shares by the petitioner herein, Idonah Slade
Perkins, and by one George H. Engelhard. The answer prays that the adverse claimants be made parties
to the action and served with notice thereof by publication, and that thereafter all such parties be required
to interplead and settle the rights among themselves. On September 5, 1938, the trial court ordered
respondent Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah
Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in addition to the
relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade
Perkins and George Engelhard be adjudged without interest in the shares of stock in question and
excluded from any claim they assert thereon. Thereafter, summons by publication were served upon the
non-resident defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the
trial court. On December 9, 1938, Engelhard filed his answer to the amended complaint, and on December
10, 1938, petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled "objection to venue,
motion to quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower court
over her person. Petitioner's objection, motion and demurrer having been overruled as well as her motion
for reconsideration of the order of denial, she now brought the present petition for certiorari, praying that
the summons by publication issued against her be declared null and void, and that, with respect to her,
respondent Judge be permanently prohibited from taking any action on the case.

The controlling issue here involved is whether or not the Court of First Instance of Manila has acquired
jurisdiction over the person of the present petitioner as a non-resident defendant, or, notwithstanding the
want of such jurisdiction, whether or not said court may validly try the case. The parties have filed
lengthy memorandums relying on numerous authorities, but the principles governing the question are
well settled in this jurisdiction.

Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in the
Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or
personal property within the Philippines in which said defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from
any interest therein, service of summons maybe made by publication.
We have fully explained the meaning of this provision in El Banco Espaol Filipino vs. Palanca, 37 Phil., 921,
wherein we laid down the following rules:

(1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter
and over the persons of the parties. Jurisdiction over the subject-matter is acquired by concession
of the sovereign authority which organizes a court and determines the nature and extent of its
powers in general and thus fixes its jurisdiction with reference to actions which it may entertain
and the relief it may grant. Jurisdiction over the persons of the parties is acquired by their
voluntary appearance in court and their submission to its authority, or by the coercive power of
legal process exerted over their persons.

(2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot
acquire jurisdiction over his person even if the summons be served by publication, for he is
beyond the reach of judicial process. No tribunal established by one State can extend its process
beyond its territory so as to subject to its decisions either persons or property located in another
State. "There are many expressions in the American reports from which it might be inferred that
the court acquires personal jurisdiction over the person of the defendant by publication and
notice; but such is not the case. In truth, the proposition that jurisdiction over the person of a non-
resident cannot be acquired by publication and notice was never clearly understood even in the
American courts until after the decision had been rendered by the Supreme Court of the United
States in the leading case of Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the light of that
decisions which have subsequently been rendered in that and other courts, the proposition that
jurisdiction over the person cannot be thus acquired by publication and notice is no longer open
to question; and it is now fully established that a personal judgment upon constructive or
substituted service against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by publication and
personal service outside of the jurisdiction in which the judgment is rendered; and the only
exception seems to be found in the case where the non-resident defendant has expressly or
impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see
also L.R.A. 585; 35 L.R.A. [N.S.], 312.)

(3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a
Philippine court. Where, however, the action is in rem or quasi in rem in connection with property
located in the Philippines, the court acquires jurisdiction over the res, and its jurisdiction over the
person of the non-resident is non-essential. In order that the court may exercise power over
the res, it is not necessary that the court should take actual custody of the property, potential
custody thereof being sufficient. There is potential custody when, from the nature of the action
brought, the power of the court over the property is impliedly recognized by law. "An illustration
of what we term potential jurisdiction over the res, is found in the proceeding to register the title
of land under our system for the registration of land. Here the court, without taking actual
physical control over the property , assumes, at the instance of some person claiming to be
owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the
petitioner against all the world."

(4) As before stated, in an action in rem or quasi in rem against a non-resident defendant,
jurisdiction over his person is non-essential, and if the law requires in such case that the
summons upon the defendant be served by publication, it is merely to satisfy the constitutional
requirement of due process. If any be said, in this connection, that "may reported cases can be
cited in which it is assumed that the question of the sufficiency of publication or notice in the case
of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to
acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally
 adopted by the court because of the analogy between service by publication and personal service
of process upon the defendant; and, as has already been suggested, prior to the decision
of Pennoyer v. Neff (supra), the difference between the legal effects of the two forms of service was
obscure. It is accordingly not surprising that the modes of expression which had already been
moulded into legal tradition before that case was decided have been brought down to the present
day. But it is clear that the legal principle here involved is not affected by the peculiar languages
in which the courts have expounded their ideas."lawphi1.net

The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-
resident, as laid down by the Supreme Court of the United States in Pennoyer v. Neff, supra, may be found
in a recognized principle of public law to the effect that "no State can exercise direct jurisdiction and
authority over persons or property without its territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2.
The several States are of equal dignity and authority, and the independence of one implies the exclusion
of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one
State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal
established by it can extend its process beyond that territory so as to subject either persons or property to
its decisions. "Any exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and
incapable of binding such persons or property in any other tribunals." Story, Confl. L., sec. 539."
(Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.).

When, however, the action relates to property located in the Philippines, the Philippine courts may
validly try the case, upon the principle that a "State, through its tribunals, may subject property situated
within its limits owned by non-residents to the payment of the demand of its own citizens against them;
and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the
owners are domiciled. Every State owes protection to its citizens; and, when non-residents deal with
them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by such
non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property
of the non-resident situated within its limits that its tribunals can inquire into the non-resident's
obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control
the disposition of the property. If the non-resident has no property in the State, there is nothing upon
which the tribunals can adjudicate." (Pennoyer v. Neff, supra.)

In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his
amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest in
a property located in the Philippines. That property consists in certain shares of stocks of the Benguet
Consolidated Mining Company, a sociedad anonima, organized in the Philippines under the provisions of
the Spanish Code of Commerce, with its principal office in the City of Manila and which conducts its
mining activities therein. The situs of the shares is in the jurisdiction where the corporation is created,
whether the certificated evidencing the ownership of those shares are within or without that jurisdiction.
(Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold
that the action thus brought is quasi in rem, for while the judgement that may be rendered therein is not
strictly a judgment in rem, "it fixes and settles the title to the property in controversy and to that extent
partakes of the nature of the judgment in rem." (50 C.J., p 503). As held by the Supreme Court of the
United States in Pennoyer v. Neff (supra);

It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has
for its object the disposition of the property, without reference to the title of individual claimants;
but , in a large and more general sense, the terms are applied to actions between parties, where
the direct object is to reach and dispose of property owned by them, or of some interest therein.
The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of
the non-resident. In order to satisfy the constitutional requirement of due process, summons has been
served upon her by publication. There is no question as to the adequacy of publication made nor as to the
mailing of the order of publication to the petitioner's last known place of residence in the United States.
But, of course, the action being quasi in rem and notice having be made by publication, the relief that may
be granted by the Philippine court must be confined to the res, it having no jurisdiction to render a
personal judgment against the non-resident. In the amended complaint filed by Eugene Arthur Perkins,
no money judgment or other relief in personam is prayed for against the petitioner. The only relief sought
therein is that she be declared to be without any interest in the shares in controversy and that she be
excluded from any claim thereto.

Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an
action in personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims
are or may be made upon a person for or relating to personal property, or the performance of an
obligation or any portion thereof, so that he may be made subject to several actions by different persons,
such person may bring an action against the conflicting claimants, disclaiming personal interest in the
controversy, and the court may order them to interplead with one another and litigate their several
claims among themselves, there upon proceed to determine their several claims. Here, The Benguet
Consolidated Mining Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred
that in connection with the shares of stock in question, conflicting claims were being made upon it by said
plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard,
and prayed that these last two be made parties to the action and served with summons by publication, so
that the three claimants may litigate their conflicting claims and settle their rights among themselves. The
court has not issued an order compelling the conflicting claimants to interplead with one another and
litigate their several claims among themselves, but instead ordered the plaintiff to amend his complaint
including the other two claimants as parties defendant. The plaintiff did so, praying that the new
defendants thus joined be excluded fro any interest in the shares in question, and it is upon this amended
complaint that the court ordered the service of the summons by publication. It is therefore, clear that the
publication of the summons was ordered not in virtue of an interpleading, but upon the filing of the
amended complaint wherein an action quasi in rem is alleged.

Had not the complaint been amended, including the herein petitioner as an additional defendant, and
had the court, upon the filing of the answer of the Benguet Consolidated Mining Company, issued an
order under section 120 of the Code of Civil Procedure, calling the conflicting claimants into court and
compelling them to interplead with one another, such order could not perhaps have validly been served
by publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the proceeding would
be purely one of interpleading. Such proceeding is a personal action, for it merely seeks to call conflicting
claimants into court so that they may interplead and litigate their several claims among themselves, and
no specific relief is prayed for against them, as the interpleader have appeared in court, one of them
pleads ownership of the personal property located in the Philippines and seeks to exclude a non-resident
claimant from any interest therein, is a question which we do not decide not. Suffice it to say that here the
service of the summons by publication was ordered by the lower court by virtue of an action quasi in
rem against the non-resident defendant.

Respondents contend that, as the petitioner in the lower court has pleaded over the subject-matter, she
has submitted herself to its jurisdiction. We have noticed, however, that these pleas have been made not
as independent grounds for relief, but merely as additional arguments in support of her contention that
the lower court had no jurisdiction over the person. In other words, she claimed that the lower court had
no jurisdiction over her person not only because she is a non-resident, but also because the court had no
jurisdiction over the subject-matter of the action and that the issues therein involved have already been
decided by the New York court and are being relitigated in the California court. Although this argument
is obviously erroneous, as neither jurisdiction over the subject-matter nor res adjudicata nor lis pendens has
anything to do with the question of jurisdiction over her person, we believe and so hold that the
petitioner has not, by such erroneous argument, submitted herself to the jurisdiction of the court.
Voluntary appearance cannot be implied from either a mistaken or superflous reasoning but from the
nature of the relief prayed for.

For all the foregoing, petition is hereby denied, with costs against petitioner.
Travelers Health Assn. vs. Virginia, 339 U.S. 643 (1950)

Syllabus

In a proceeding under 6 of the Virginia "Blue Sky Law," the State Corporation Commission ordered an
Association, located in Nebraska and engaged in the mail order health insurance business, and its
treasurer (appellants here) to cease and desist from further offerings or sales of certificates of insurance to
Virginia residents until the Association had complied with the Act by furnishing information as to its
financial condition, consenting to suit against it by service of process on the Secretary of the
Commonwealth, and obtaining a permit. Notice of the proceeding was served on appellants by registered
mail, as authorized by 6 when other forms of service are unavailable. They appeared specially,
challenged the jurisdiction of the State, and moved to quash the service of summons. On
recommendations from Virginia members, the Association for many years had been issuing insurance
certificates to residents of Virginia, and it had approximately 800 members there. It had caused claims for
losses to be investigated, and the Virginia courts were open to it for the enforcement of obligations of
certificate holders.

Held:

1. The State has power to issue a cease and desist order to enforce at least the requirement that the
Association consent to suit against it by service of process on the Secretary of the Commonwealth. Pp. 339
U. S. 646-647.

2. The contacts and ties of appellants with Virginia residents, together with that State's interest in faithful
observance of the certificate obligations, justify subjecting appellants to cease and desist proceedings
under 6. Pp. 339 U. S. 647-648.

3. Virginia's subjection of the Association to the jurisdiction of the State Commission in a 6 proceeding is
consistent with fair play and substantial justice, and is not offensive to the Due Process Clause of the
Fourteenth Amendment. P. 339 U. S. 649.

4. The power of the State to subject the Association to the jurisdiction of the State Commission and to
authorize a cease and

Page 339 U. S. 644

desist order under 6 is not vitiated by the fact that business activities carried on outside of the State are
affected. P. 339 U. S. 650.

5. Service of process on appellants by registered mail did not violate the requirements of due process.
Pp. 339 U. S. 650-651.

188 Va. 877, 51 S.E.2d 263, affirmed.

An order of the Virginia Corporation Commission requiring appellants to cease and desist from offering
and issuing, without a permit, certificates of insurance to residents of the State, was affirmed by the
Supreme Court of Appeals. 188 Va. 877, 51 S.E.2d 263. On appeal to this Court, affirmed, p. 339 U. S. 651.

MR. JUSTICE BLACK delivered the opinion of the Court.

In an effort to protect its citizens from "unfairness, imposition and fraud" in sales of certificates of
insurance and other forms of securities, the Virginia "Blue Sky Law" requires those selling or offering
such securities to obtain a permit from the State Corporation Commission. [Footnote 1] Applicants for
permits must meet comprehensive conditions: they must, for example, provide detailed information

Page 339 U. S. 645

concerning their solvency, and must agree that suits can be filed against them in Virginia by service of
process on the Secretary of the Commonwealth. [Footnote 2]

While violation of the Act is a misdemeanor punishable by criminal sanctions, 6 provides another
method for enforcement. After notice and a hearing "on the merits," the State Corporation Commission is
authorized to issue a cease and desist order restraining violations of the Act. The section also provides for
service by registered mail where other types of service are unavailable

"because the offering is by advertisement and/or solicitation through periodicals, mail, telephone,
telegraph, radio, or other means of communication from beyond the limits of the State. . . ."

The highest court of Virginia rejected contentions that this section violates constitutional requirements of
due process, and the case is properly here on appeal under 28 U.S.C. 1257(2).

In this case, cease and desist proceedings under 6 were instituted by the State Corporation Commission
against Travelers Health Association and against R. E. Pratt, as treasurer of the Association and in his
personal capacity. Having received notice by registered mail only, they appeared "specially" for

"the sole purpose of objecting to the alleged jurisdiction of the Virginia and of its State Corporation
Commission, and of moving to set aside and quash service of summons. . . ."

The agreed stipulation of facts and certain exhibits offered by the state can be summarized as follows:

The appellant Travelers Health Association was incorporated in Nebraska as a nonprofit membership
association in 1904. Since that time, its only office has been located in Omaha, from which it has
conducted a mail order health insurance business. New members pay an initiation fee and obligate
themselves to pay periodic

Page 339 U. S. 646

assessments at the Omaha office. The funds so collected are used for operating expenses and sick benefits
to members. The Association has no paid agents; its new members are usually obtained through the
unpaid activities of those already members, who are encouraged to recommend the Association to friends
and submit their names to the home office. The appellant Pratt in Omaha mails solicitations to these
prospects. He encloses blank applications which, if signed and returned to the home office with the
required fee, usually result in election of applicants as members. Certificates are then mailed, subject to
return within 10 days "if not satisfactory." Travelers has solicited Virginia members in this manner since
1904, and has caused many sick benefit claims to be investigated. When these proceedings were
instituted, it had approximately 800 Virginia members.

The Commission, holding that the foregoing facts supported the state's power to act in 6 proceedings,
overruled appellants' objection to jurisdiction and their motion to quash service. The Association and its
treasurer were ordered to cease and desist from further solicitations or sales of certificates to Virginia
residents

"through medium of any advertisement from within or from without the state, and/or through the mails
or otherwise, by intra- or interstate communication, . . . unless and until"

it obtained authority in accordance with the "Blue Sky Law." This order was affirmed by the Virginia
Court of Appeals. 188 Va. 877, 882, 51 S.E.2d 263, 271.

Appellants do not question the validity of the Virginia law

"to the extent that it provides that individual and corporate residents of other states shall not come into
the State for the purpose of doing business there without first submitting to the regulatory authority of
the State."

As to such state power see, e.g., Hall v. Geiger-Jones Co., 242 U. S. 539. Their basic contention is that all their
activities take place in Nebraska, and that consequently

Page 339 U. S. 647

Virginia has no power to reach them in cease and desist proceedings to enforce any part of its regulatory
law. We cannot agree with this general due process objection, for we think the state has power to issue a
"cease and desist order" enforcing at least that regulatory provision requiring the Association to accept
service of process by Virginia claimants on the Secretary of the Commonwealth.

Appellants' chief reliance for the due process contention is on Minnesota Commercial Men's Assn. v.
Benn, 261 U. S. 140. There, a Minnesota association obtained members in Montana by the same mail
solicitation process used by Travelers to get Virginia members. The certificates issued to Montana
members also reserved the right to investigate claims, although the Court pointed out that Benn's claim
had not been investigated. This Court held that, since the contracts were "executed and to be performed"
in Minnesota, the Association was not "doing business" in Montana, and therefore could not be sued in
Montana courts unless "consent" to Montana suits could be implied. The Court found the circumstances
under which the insurance transactions took place insufficient to support such an implication.

But where business activities reach out beyond one state and create continuing relationships and
obligations with citizens of another state, courts need not resort to a fictional "consent" in order to sustain
the jurisdiction of regulatory agencies in the latter state. And, in considering what constitutes "doing
business" sufficiently to justify regulation in the state where the effects of the "business" are felt, the
narrow grounds relied on by the Court in the Benn case cannot be deemed controlling.

In Osborn v. Ozlin, 310 U. S. 53, 310 U. S. 62, we recognized that a state has a legitimate interest in all
insurance policies protecting its residents against risks, an interest which the state can protect even
though the "state action may have repercussions beyond state lines. . . ." And in Hoopeston

Page 339 U. S. 648

Canning Co. v. Cullen, 318 U. S. 313, 318 U. S. 316, we rejected the contention, based on the Benn case,
among others, that a state's power to regulate must be determined by a "conceptualistic discussion of
theories of the place of contracting or of performance." Instead, we accorded "great weight" to the
"consequences" of the contractual obligations in the state where the insured resided and the "degree of
interest" that state had in seeing that those obligations were faithfully carried out. And in International
Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316, this Court, after reviewing past cases, concluded:

"due process requires only that, in order to subject a defendant to a judgment in personam, if he be not
present within the territory of the forum, he have certain minimum contacts with it such that the
maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'"

Measured by the principles of the Osborn, Hoopeston, and International Shoe cases, the contacts and ties of
appellants with Virginia residents, together with that state's interest in faithful observance of the
certificate obligations, justify subjecting appellants to cease and desist proceedings under 6. The
Association did not engage in mere isolated or short-lived transactions. Its insurance certificates,
systematically and widely delivered in Virginia following solicitation based on recommendations of
Virginians, create continuing obligations between the Association and each of the many certificate
holders in the state. Appellants have caused claims for losses to be investigated, and the Virginia courts
were available to them in seeking to enforce obligations created by the group of certificates. See
International Shoe Co. v. Washington, supra, at 326 U. S. 320.

Moreover, if Virginia is without power to require this Association to accept service of process on the
Secretary of the Commonwealth, the only forum for injured certificate holders might be Nebraska. Health
benefit

Page 339 U. S. 649

claims are seldom so large that Virginia policyholders could afford the expense and trouble of a Nebraska
law suit. In addition, suits on alleged losses can be more conveniently tried in Virginia, where witnesses
would most likely live and where claims for losses would presumably be investigated. Such factors have
been given great weight in applying the doctrine of forum non conveniens. See Gulf Oil Corp. v. Gilbert, 330
U. S. 501, 330 U. S. 508. And prior decisions of this Court have referred to the unwisdom, unfairness, and
injustice of permitting policyholders to seek redress only in some distant state where the insurer is
incorporated. [Footnote 3] The Due Process Clause does not forbid a state to protect its citizens from such
injustice.

There is, of course, one method by which claimants could recover from appellants in Virginia courts
without the aid of substituted service of process: certificate holders in Virginia could all be garnished to
the extent of their obligations to the Association. See Huron Holding Corporation v. Lincoln Mine Operating
Co., 312 U. S. 183, 312 U. S. 193. While such an indirect procedure would undeniably be more troublesome
to claimants than the plan adopted by the state in its "Blue Sky Law," it would clearly be even more
harassing to the Association and its Virginia members. Metaphysical concepts of "implied consent" and
"presence" in a state should not be solidified into a constitutional barrier against Virginia's simple, direct,
and fair plan for service of process on the Secretary of the Commonwealth.

We hold that Virginia's subjection of this Association to the jurisdiction of that state's Corporation
Commission in a 6 proceeding is consistent with "fair play and substantial justice," and is not offensive
to the Due Process Clause.

Page 339 U. S. 650

Appellants also contend that 6 as here applied violates due process because the Commission order
attempts to "destroy or impair" their right to make contracts in Nebraska with Virginia residents. Insofar
as this contention can be raised in a special appearance merely to contest jurisdiction, it is essentially the
same as the due process issue discussed above. For reasons just given, Virginia has power to subject
Travelers to the jurisdiction of its Corporation Commission, and its cease and desist provisions designed
to accomplish this purpose "cannot be attacked merely because they affect business activities which are
carried on outside the state." Hoopeston Canning Co. v. Cullen, supra, at 318 U. S. 320-321. See also Osborn v.
Ozlin, 310 U. S. 53, 310 U. S. 62. These two opinions make clear that Allgeyer v. Louisiana, 165 U. S. 578,
requires no different result.

Appellants concede that, in the Osborn and Hoopeston cases, we sustained state laws providing protective
standards for policyholders in those states, even though compliance with those standards by the
insurance companies could have repercussions on similar out-of-state contracts. It is argued, however,
that those cases are distinguishable because they both involved companies which were "licensed to do
business in the state of the forum and were actually doing business within the state. . . ." But, while
Hoopeston Canning Co. had done business in New York under an old law, it brought the case here to
challenge certain provisions of a new licensing law with which it had to comply if it was to do business
there in the future. Thus, it was seeking the same kind of relief that appellants seek here, and for the same
general purpose. What we there said as to New York's power is equally applicable to Virginia's power
here.

It is also suggested that service of process on appellants by registered mail does not meet due process
requirements.

Page 339 U. S. 651

What we have said answers this contention insofar as it alleges a lack of state jurisdiction because
appellants were served outside Virginia. If service by mail is challenged as not providing adequate and
reasonable notice, the contention has been answered by International Shoe Co. v. Washington, supra, at 326
U. S. 320-321. See also Mullane v. Central Hanover Bank, 339 U. S. 306.

The due process questions we have already discussed are the only alleged errors relied on in appellants'
brief, [Footnote 4] and appellants' special appearance only challenged state jurisdiction and the service of
process. We therefore have no occasion to discuss the scope of the Commission's order, or the methods by
which the state might attempt to enforce it. [Footnote 5]

Affirmed.
Kiobel v. Royal Dutch, 133 S. Ct. 1659, 185 L. Ed. 2d 671, 81 U.S.L.W. 4241 (2013)

Petitioners, a group of Nigerian nationals residing in the United States, filed suit in federal court against
certain Dutch, British, and Nigerian corporations. Petitioners sued under the Alien Tort Statute, 28 U.S.C.
1350, alleging that the corporations aided and abetted the Nigerian Government in committing
violations of the law of nations in Nigeria. The question presented is whether and under what
circumstances courts may recognize a cause of action under the Alien Tort Statute, for violations of the
law of nations occurring within the territory of a sovereign other than the United States.

Petitioners were residents of Ogoniland, an area of 250 square miles located in the Niger delta area of
Nigeria and populated by roughly half a million people. When the complaint was filed, respondents
Royal Dutch Petroleum Company and Shell Transport and Trading Company, p.l.c., were holding
companies incorporated in the Netherlands and England, respectively. Their joint subsidiary, respondent
Shell Petroleum Development Company of Nigeria, Ltd. (SPDC), was incorporated in Nigeria, and
engaged in oil exploration and production in Ogoniland. According to the complaint, after concerned
residents of Ogoniland began protesting the environmental effects of SPDC's practices, respondents
enlisted the Nigerian Government to violently suppress the burgeoning demonstrations. Throughout the
early 1990's, the complaint alleges, Nigerian military and police forces attacked Ogoni villages, beating,
raping, killing, and arresting residents and destroying or looting property. Petitioners further allege that
respondents aided and abetted these atrocities by, among other things, providing the 1663*1663 Nigerian
forces with food, transportation, and compensation, as well as by allowing the Nigerian military to use
respondents' property as a staging ground for attacks.

Following the alleged atrocities, petitioners moved to the United States where they have been granted
political asylum and now reside as legal residents. See Supp. Brief for Petitioners 3, and n. 2. They filed
suit in the United States District Court for the Southern District of New York, alleging jurisdiction under
the Alien Tort Statute and requesting relief under customary international law. The ATS provides, in full,
that "[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only,
committed in violation of the law of nations or a treaty of the United States." 28 U.S.C. 1350. According
to petitioners, respondents violated the law of nations by aiding and abetting the Nigerian Government
in committing (1) extrajudicial killings; (2) crimes against humanity; (3) torture and cruel treatment; (4)
arbitrary arrest and detention; (5) violations of the rights to life, liberty, security, and association; (6)
forced exile; and (7) property destruction. The District Court dismissed the first, fifth, sixth, and seventh
claims, reasoning that the facts alleged to support those claims did not give rise to a violation of the law
of nations. The court denied respondents' motion to dismiss with respect to the remaining claims, but
certified its order for interlocutory appeal pursuant to 1292(b).

The Second Circuit dismissed the entire complaint, reasoning that the law of nations does not recognize
corporate liability. 621 F.3d 111 (2010). We granted certiorari to consider that question. 565 U.S. ___, 132
S.Ct. 472, 181 L.Ed.2d 292 (2011). After oral argument, we directed the parties to file supplemental briefs
addressing an additional question: "Whether and under what circumstances the [ATS] allows courts to
recognize a cause of action for violations of the law of nations occurring within the territory of a
sovereign other than the United States." 565 U.S. ___, 132 S.Ct. 1738, 182 L.Ed.2d 270 (2012). We heard oral
argument again and now affirm the judgment below, based on our answer to the second question.
II

Passed as part of the Judiciary Act of 1789, the ATS was invoked twice in the late 18th century, but then
only once more over the next 167 years. Act of Sept. 24, 1789, 9, 1 Stat. 77; see Moxon v. The Fanny, 17 F.
Cas. 942 (No. 9,895) (D.C.Pa. 1793); Bolchos v. Darrel, 3 F. Cas. 810 (No. 1,607) (D.C.S.C.1795); O'Reilly de
Camara v. Brooke, 209 U.S. 45, 28 S.Ct. 439, 52 L.Ed. 676 (1908); Khedivial Line, S.A.E. v. Seafarers' Int'l
Union, 278 F.2d 49, 51-52 (C.A.2 1960) (per curiam). The statute provides district courts with jurisdiction to
hear certain claims, but does not expressly provide any causes of action. We held in Sosa v. Alvarez-
Machain, 542 U.S. 692, 714, 124 S.Ct. 2739, 159 L.Ed.2d 718 (2004), however, that the First Congress did not
intend the provision to be "stillborn." The grant of jurisdiction is instead "best read as having been
enacted on the understanding that the common law would provide a cause of action for [a] modest
number of international law violations." Id., at 724, 124 S.Ct. 2739. We thus held that federal courts may
"recognize private claims [for such violations] under federal common law." Id., at 732, 124 S.Ct. 2739. The
Court in Sosa rejected the plaintiff's claim in that case for "arbitrary arrest and detention," on the ground
that it failed to state a violation of the law of nations with the requisite "definite content and acceptance
among civilized nations." Id., at 699, 732, 124 S.Ct. 2739.

1664*1664 The question here is not whether petitioners have stated a proper claim under the ATS, but
whether a claim may reach conduct occurring in the territory of a foreign sovereign. Respondents
contend that claims under the ATS do not, relying primarily on a canon of statutory interpretation known
as the presumption against extraterritorial application. That canon provides that "[w]hen a statute gives
no clear indication of an extraterritorial application, it has none," Morrison v. National Australia Bank
Ltd., 561 U.S. ___, ___, 130 S.Ct. 2869, 2878, 177 L.Ed.2d 535 (2010), and reflects the "presumption that
United States law governs domestically but does not rule the world," Microsoft Corp. v. AT & T Corp., 550
U.S. 437, 454, 127 S.Ct. 1746, 167 L.Ed.2d 737 (2007).

This presumption "serves to protect against unintended clashes between our laws and those of other
nations which could result in international discord." EEOC v. Arabian American Oil Co., 499 U.S. 244, 248,
111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) (Aramco). As this Court has explained:

"For us to run interference in ... a delicate field of international relations there must be present the
affirmative intention of the Congress clearly expressed. It alone has the facilities necessary to make fairly
such an important policy decision where the possibilities of international discord are so evident and
retaliative action so certain." Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 147 [77 S.Ct. 699, 1
L.Ed.2d 709] (1957). The presumption against extraterritorial application helps ensure that the Judiciary
does not erroneously adopt an interpretation of U.S. law that carries foreign policy consequences not
clearly intended by the political branches.

We typically apply the presumption to discern whether an Act of Congress regulating conduct applies
abroad. See, e.g., Aramco, supra, at 246, 111 S.Ct. 1227 ("These cases present the issue whether Title VII
applies extraterritorially to regulate the employment practices of United States employers who employ
United States citizens abroad"); Morrison, supra, at ___, 130 S.Ct., at 2876-2877 (noting that the question of
extraterritorial application was a "merits question," not a question of jurisdiction). The ATS, on the other
hand, is "strictly jurisdictional." Sosa, 542 U.S., at 713, 124 S.Ct. 2739. It does not directly regulate conduct
or afford relief. It instead allows federal courts to recognize certain causes of action based on sufficiently
definite norms of international law. But we think the principles underlying the canon of interpretation
similarly constrain courts considering causes of action that may be brought under the ATS.

Indeed, the danger of unwarranted judicial interference in the conduct of foreign policy is magnified in
the context of the ATS, because the question is not what Congress has done but instead what courts may
do. This Court in Sosa repeatedly stressed the need for judicial caution in considering which claims could
be brought under the ATS, in light of foreign policy concerns. As the Court explained, "the potential
[foreign policy] implications ... of recognizing.... causes [under the ATS] should make courts particularly
wary of impinging on the discretion of the Legislative and Executive Branches in managing foreign
affairs." Id., at 727, 124 S.Ct. 2739; see also id., at 727-728, 124 S.Ct. 2739 ("Since many attempts by federal
courts to craft remedies for the violation of new norms of international law would raise risks of adverse
foreign policy consequences, they should be undertaken, if at all, with great caution"); id., at
727, 124 1665*1665 S.Ct. 2739 ("[T]he possible collateral consequences of making international rules
privately actionable argue for judicial caution"). These concerns, which are implicated in any case arising
under the ATS, are all the more pressing when the question is whether a cause of action under the ATS
reaches conduct within the territory of another sovereign.

These concerns are not diminished by the fact that Sosa limited federal courts to recognizing causes of
action only for alleged violations of international law norms that are "`specific, universal, and
obligatory.'" Id., at 732, 124 S.Ct. 2739 (quoting In re Estate of Marcos, Human Rights Litigation, 25 F.3d 1467,
1475 (C.A.9 1994)). As demonstrated by Congress's enactment of the Torture Victim Protection Act of
1991, 106 Stat. 73, note following 28 U.S.C. 1350, identifying such a norm is only the beginning of
defining a cause of action. See id., 3 (providing detailed definitions for extrajudicial killing and
torture); id., 2 (specifying who may be liable, creating a rule of exhaustion, and establishing a statute of
limitations). Each of these decisions carries with it significant foreign policy implications.

The principles underlying the presumption against extraterritoriality thus constrain courts exercising
their power under the ATS.

III

Petitioners contend that even if the presumption applies, the text, history, and purposes of the ATS rebut
it for causes of action brought under that statute. It is true that Congress, even in a jurisdictional
provision, can indicate that it intends federal law to apply to conduct occurring abroad. See, e.g., 18 U.S.C.
1091(e) (2006 ed., Supp. V) (providing jurisdiction over the offense of genocide "regardless of where the
offense is committed" if the alleged offender is, among other things, "present in the United States"). But to
rebut the presumption, the ATS would need to evince a "clear indication of
extraterritoriality." Morrison, 561 U.S., at ___, 130 S.Ct., at 2883. It does not.

To begin, nothing in the text of the statute suggests that Congress intended causes of action recognized
under it to have extraterritorial reach. The ATS covers actions by aliens for violations of the law of
nations, but that does not imply extraterritorial reach such violations affecting aliens can occur either
within or outside the United States. Nor does the fact that the text reaches "any civil action" suggest
application to torts committed abroad; it is well established that generic terms like "any" or "every" do not
rebut the presumption against extraterritoriality. See, e.g., id., at ___, 130 S.Ct., at 2881-2882; Small v.
United States, 544 U.S. 385, 388, 125 S.Ct. 1752, 161 L.Ed.2d 651 (2005); Aramco, 499 U.S., at 248-250, 111
S.Ct. 1227; Foley Bros., Inc. v. Filardo, 336 U.S. 281, 287, 69 S.Ct. 575, 93 L.Ed. 680 (1949).

Petitioners make much of the fact that the ATS provides jurisdiction over civil actions for "torts" in
violation of the law of nations. They claim that in using that word, the First Congress "necessarily meant
to provide for jurisdiction over extraterritorial transitory torts that could arise on foreign soil." Supp. Brief
for Petitioners 18. For support, they cite the common-law doctrine that allowed courts to assume
jurisdiction over such "transitory torts," including actions for personal injury, arising abroad. See Mostyn
v. Fabrigas, 1 Cowp. 161, 177, 98 Eng. Rep. 1021, 1030 (1774) (Mansfield, L.) ("[A]ll actions of a transitory
nature that arise abroad may be laid as happening in an English county"); Dennick v. Railroad Co., 103 U.S.
11, 18, 26 L.Ed. 439 (1881)1666*1666 ("Wherever, by either the common law or the statute law of a State, a
right of action has become fixed and a legal liability incurred, that liability may be enforced and the right
of action pursued in any court which has jurisdiction of such matters and can obtain jurisdiction of the
parties").

Under the transitory torts doctrine, however, "the only justification for allowing a party to recover when
the cause of action arose in another civilized jurisdiction is a well founded belief that it was a cause of
action in that place." Cuba R. Co. v. Crosby, 222 U.S. 473, 479, 32 S.Ct. 132, 56 L.Ed. 274 (1912) (majority
opinion of Holmes, J.). The question under Sosa is not whether a federal court has jurisdiction to entertain
a cause of action provided by foreign or even international law. The question is instead whether the court
has authority to recognize a cause of action under U.S. law to enforce a norm of international law. The
reference to "tort" does not demonstrate that the First Congress "necessarily meant" for those causes of
action to reach conduct in the territory of a foreign sovereign. In the end, nothing in the text of the ATS
evinces the requisite clear indication of extraterritoriality.

Nor does the historical background against which the ATS was enacted overcome the presumption
against application to conduct in the territory of another sovereign. See Morrison, supra, at ___, 130 S.Ct.,
at 2883 (noting that "[a]ssuredly context can be consulted" in determining whether a cause of action
applies abroad). We explained in Sosa that when Congress passed the ATS, "three principal offenses
against the law of nations" had been identified by Blackstone: violation of safe conducts, infringement of
the rights of ambassadors, and piracy. 542 U.S., at 723, 724, 124 S.Ct. 2739; see 4 W. Blackstone,
Commentaries on the Laws of England 68 (1769). The first two offenses have no necessary extraterritorial
application. Indeed, Blackstone in describing them did so in terms of conduct occurring within the
forum nation. See ibid. (describing the right of safe conducts for those "who are here"); 1 id., at 251 (1765)
(explaining that safe conducts grant a member of one society "a right to intrude into another"); id., at 245-
248 (recognizing the king's power to "receiv[e] ambassadors at home" and detailing their rights in the
state "wherein they are appointed to reside"); see also E. De Vattel, Law of Nations 465 (J. Chitty et al.
transl. and ed. 1883) ("[O]n his entering the country to which he is sent, and making himself known, [the
ambassador] is under the protection of the law of nations...").

Two notorious episodes involving violations of the law of nations occurred in the United States shortly
before passage of the ATS. Each concerned the rights of ambassadors, and each involved conduct within
the Union. In 1784, a French adventurer verbally and physically assaulted Francis Barbe Marbois the
Secretary of the French Legion in Philadelphia. The assault led the French Minister Plenipotentiary to
lodge a formal protest with the Continental Congress and threaten to leave the country unless an
adequate remedy were provided. Respublica v. De Longchamps, 1 Dall. 111, 1 L.Ed. 59
(O.T.Phila.1784); Sosa, supra, at 716-717, and n. 11, 124 S.Ct. 2739. And in 1787, a New York constable
entered the Dutch Ambassador's house and arrested one of his domestic servants. See Casto, The Federal
Courts' Protective Jurisdiction over Torts Committed in Violation of the Law of Nations, 18 Conn. L.Rev.
467, 494 (1986). At the request of Secretary of Foreign Affairs John Jay, the Mayor of New York City
arrested the constable in turn, but cautioned that because "`neither Congress nor our [State] Legislature
have 1667*1667 yet passed any act respecting a breach of the privileges of Ambassadors,'" the extent of
any available relief would depend on the common law. See Bradley, The Alien Tort Statute and Article
III, 42 Va. J. Int'l L. 587, 641-642 (2002) (quoting 3 Dept. of State, The Diplomatic Correspondence of the
United States of America 447 (1837)). The two cases in which the ATS was invoked shortly after its
passage also concerned conduct within the territory of the United States. See Bolchos, 3 F. Cas.
810(wrongful seizure of slaves from a vessel while in port in the United States); Moxon,17 F. Cas.
942 (wrongful seizure in United States territorial waters).

These prominent contemporary examples immediately before and after passage of the ATS provide
no support for the proposition that Congress expected causes of action to be brought under the statute for
violations of the law of nations occurring abroad.
The third example of a violation of the law of nations familiar to the Congress that enacted the ATS was
piracy. Piracy typically occurs on the high seas, beyond the territorial jurisdiction of the United States or
any other country. See 4 Blackstone, supra, at 72 ("The offence of piracy, by common law, consists of
committing those acts of robbery and depredation upon the high seas, which, if committed upon land,
would have amounted to felony there"). This Court has generally treated the high seas the same as
foreign soil for purposes of the presumption against extraterritorial application. See, e.g., Sale v. Haitian
Centers Council, Inc., 509 U.S. 155, 173-174, 113 S.Ct. 2549, 125 L.Ed.2d 128 (1993) (declining to apply a
provision of the Immigration and Nationality Act to conduct occurring on the high seas); Argentine
Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 440, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989) (declining
to apply a provision of the Foreign Sovereign Immunities Act of 1976 to the high seas). Petitioners
contend that because Congress surely intended the ATS to provide jurisdiction for actions against pirates,
it necessarily anticipated the statute would apply to conduct occurring abroad.

Applying U.S. law to pirates, however, does not typically impose the sovereign will of the United States
onto conduct occurring within the territorial jurisdiction of another sovereign, and therefore carries less
direct foreign policy consequences. Pirates were fair game wherever found, by any nation, because they
generally did not operate within any jurisdiction. See 4 Blackstone, supra, at 71. We do not think that the
existence of a cause of action against them is a sufficient basis for concluding that other causes of action
under the ATS reach conduct that does occur within the territory of another sovereign; pirates may well
be a category unto themselves. See Morrison, 561 U.S., at ___, 130 S.Ct., at 2883 ("[W]hen a statute
provides for some extraterritorial application, the presumption against extraterritoriality operates to limit
that provision to its terms"); see also Microsoft Corp., 550 U.S., at 455-456, 127 S.Ct. 1746.

Petitioners also point to a 1795 opinion authored by Attorney General William Bradford. See Breach of
Neutrality, 1 Op. Atty. Gen. 57. In 1794, in the midst of war between France and Great Britain, and
notwithstanding the American official policy of neutrality, several U.S. citizens joined a French privateer
fleet and attacked and plundered the British colony of Sierra Leone. In response to a protest from the
British Ambassador, Attorney General Bradford responded as follows:

So far ... as the transactions complained of originated or took place in a foreign country, they are not
within the cognizance of our courts; nor can the 1668*1668 actors be legally prosecuted or punished for
them by the United States. But crimes committed on the high seas are within the jurisdiction of the ...
courts of the United States; and, so far as the offence was committed thereon, I am inclined to think that it
may be legally prosecuted in ... those courts.... But some doubt rests on this point, in consequence of the
terms in which the [applicable criminal law] is expressed. But there can be no doubt that the company or
individuals who have been injured by these acts of hostility have a remedy by a civil suit in the courts of
the United States; jurisdiction being expressly given to these courts in all cases where an alien sues for a
tort only, in violation of the laws of nations, or a treaty of the United States...." Id., at 58-59.

Petitioners read the last sentence as confirming that "the Founding generation understood the ATS to
apply to law of nations violations committed on the territory of a foreign sovereign." Supp. Brief for
Petitioners 33. Respondents counter that when Attorney General Bradford referred to "these acts of
hostility," he meant the acts only insofar as they took place on the high seas, and even if his conclusion
were broader, it was only because the applicable treaty had extraterritorial reach. See Supp. Brief for
Respondents 28-30. The Solicitor General, having once read the opinion to stand for the proposition that
an "ATS suit could be brought against American citizens for breaching neutrality with Britain only if acts
did not take place in a foreign country," Supp. Brief for United States as Amicus Curiae 8, n. 1 (internal
quotation marks and brackets omitted), now suggests the opinion "could have been meant to encompass
... conduct [occurring within the foreign territory]," id., at 8.
Attorney General Bradford's opinion defies a definitive reading and we need not adopt one here.
Whatever its precise meaning, it deals with U.S. citizens who, by participating in an attack taking place
both on the high seas and on a foreign shore, violated a treaty between the United States and Great
Britain. The opinion hardly suffices to counter the weighty concerns underlying the presumption against
extraterritoriality.

Finally, there is no indication that the ATS was passed to make the United States a uniquely hospitable
forum for the enforcement of international norms. As Justice Story put it, "No nation has ever yet
pretended to be the custos morum of the whole world...." United States v. The La Jeune Eugenie, 26 F. Cas.
832, 847 (No. 15,551) (C.C.Mass.1822). It is implausible to suppose that the First Congress wanted their
fledgling Republic struggling to receive international recognition to be the first. Indeed, the parties
offer no evidence that any nation, meek or mighty, presumed to do such a thing.

The United States was, however, embarrassed by its potential inability to provide judicial relief to foreign
officials injured in the United States. Bradley, 42 Va. J. Int'l L., at 641. Such offenses against ambassadors
violated the law of nations, "and if not adequately redressed could rise to an issue of war." Sosa, 542 U.S.,
at 715, 124 S.Ct. 2739; cf. The Federalist No. 80, p. 536 (J. Cooke ed. 1961) (A. Hamilton) ("As the denial or
perversion of justice ... is with reason classed among the just causes of war, it will follow that the federal
judiciary ought to have cognizance of all causes in which the citizens of other countries are concerned").
The ATS ensured that the United States could provide a forum for adjudicating such incidents. See Sosa,
supra, at 715-718, and n. 11, 124 S.Ct. 2739. Nothing about this historical context suggests that Congress
also intended federal common law under the ATS 1669*1669 to provide a cause of action for conduct
occurring in the territory of another sovereign.

Indeed, far from avoiding diplomatic strife, providing such a cause of action could have generated it.
Recent experience bears this out. See Doe v. Exxon Mobil Corp., 654 F.3d 11, 77-78 (C.A.D.C. 2011)
(Kavanaugh, J., dissenting in part) (listing recent objections to extraterritorial applications of the ATS by
Canada, Germany, Indonesia, Papua New Guinea, South Africa, Switzerland, and the United Kingdom).
Moreover, accepting petitioners' view would imply that other nations, also applying the law of nations,
could hale our citizens into their courts for alleged violations of the law of nations occurring in the United
States, or anywhere else in the world. The presumption against extraterritoriality guards against our
courts triggering such serious foreign policy consequences, and instead defers such decisions, quite
appropriately, to the political branches.

We therefore conclude that the presumption against extraterritoriality applies to claims under the ATS,
and that nothing in the statute rebuts that presumption. "[T]here is no clear indication of
extraterritoriality here," Morrison, 561 U.S., at ___, 130 S.Ct., at 2883, and petitioners' case seeking relief for
violations of the law of nations occurring outside the United States is barred.

IV

On these facts, all the relevant conduct took place outside the United States. And even where the claims
touch and concern the territory of the United States, they must do so with sufficient force to displace the
presumption against extraterritorial application. See Morrison, 561 U.S. ___, 130 S.Ct., at 2883-2888.
Corporations are often present in many countries, and it would reach too far to say that mere corporate
presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be
required.

The judgment of the Court of Appeals is affirmed.

It is so ordered.
Act of State Doctrine
French vs. Banco National de Cuba, 295 NY 2d, 422-423 (1968)

On this appeal from a judgment in favor of the plaintiff in an action for a breach of contract, two
questions were originally briefed and argued first, whether the defendant is entitled to sovereign
immunity and, second, whether the defendant may invoke the "act of state" doctrine. We ordered
reargument, requesting the parties to address themselves to further questions, the primary one being
whether the Hickenlooper Amendment to the Federal Foreign Assistance Act of 1961 (hereafter referred
to as the Hickenlooper Amendment)1 covers this case and bars application of the act of state doctrine.

[23 N.Y.2d 50]

The case stems from a regulation of the Cuban Government adopted after Fidel Castro's accession to
power in January of 1959 which, in effect, prevented American and other foreign investors from
receiving currency other than Cuban pesos on their Cuban investments. The investor here involved was
the plaintiff's assignor, Alexander Ritter, an American citizen, now living in Florida, who resided in Cuba
at the time of the events from which this lawsuit arises. In 1957, some two years before the events in
question, he invested about $350,000 in a Cuban farm. At that time, the Cuban Government permitted
foreign investors to turn the proceeds from their enterprises into American dollars, or other foreign
currency, and exempted such proceeds from Cuba's tax on the exportation of money. To this end, the
Currency Stabilization Fund of the Cuban Government was authorized to issue "certificates of tax
exemption." In June, 1959, six months after the inception of the Castro regime, Ritter acquired eight such
certificates, aggregating $150,000.2

Each certificate recites that

ALEXANDER S. RITTER or a member Bank of the System, as endorsee hereof, will receive from Banco
Nacional de Cuba [defendant herein] against delivery to said Bank of $ ____ Cuban Pesos and surrender
of this Certificate, a check on New York for an equal amount of United States Dollars, exempt from the
Tax on Exportation of Money.This Certificate is issued and delivered inasmuch as the importation and
investment in Cuba of the said funds have been duly accredited in accordance with the provisions of
Law-Decree No. 548 of November 20, 1952 and its Regulations.

Although the certificates state that their owner "will receive from [defendant bank]" the appropriate
"amount" of American dollars, they are signed by both the defendant and the Cuban Government's
Currency Stabilization Fund.

[23 N.Y.2d 51]

On July 15, 1959, the Currency Stabilization Fund issued "Decision No. 346." Aimed at stopping the flow
of foreign currency from Cuba and thereby preventing a situation "very dangerous" to that country, the
Decision suspended "for the time being processing of" tax exemption certificates "until reorganization of
the system of exemptions". The redemption of such outstanding certificates, according to the president of
defendant bank, would have wiped out Cuba's dollar reserves. When, in December of 1959, Ritter
tendered his certificates for redemption, together with the appropriate number of pesos, payment in
American dollars was refused under the mandate of the Decision.
The plaintiff, Ritter's assignee, brought the present action, late in 1960, in Supreme Court, New York
County, and obtained a judgment against defendant bank in the amount of $150,000, with interest. 3 A
closely divided Appellate Division affirmed, rejecting the defendant's claims (1) that it was entitled to
sovereign immunity from suit as an agency of the Cuban Government and (2) that the Decision in
question "had the force of law" and was an act of the sovereign Government of Cuba to which our courts
will not deny legal effect.

On the first of these questions, that of sovereign immunity, the entire court is in agreement with the
Appellate Division, and we dispose of the point very quickly. In view of the State Department's
conclusion (set forth in a note not included in the record) that the activities out of which the present
action arose "were of a jure gestionis [commercial] * * * nature" and its position that immunity should not
be granted in such cases, we must decline to accord the defendant sovereign immunity from suit. It is
"not for the courts to allow immunity" on grounds "which the government has not seen fit to recognize."
(Republic of Mexico v. Hoffman, 324 U.S. 30, 35; see, also, National Bank v. Republic of China, 348 U.S. 356,
360; Victory Transp. v. Comisaria General, 336 F.2d 354, 360, cert. den. 381 U.S. 934.)

This brings us to the second question presented, namely, whether the act of state doctrine bars the
plaintiff's claim.

[23 N.Y.2d 52]

It has long been settled,4 and recently reaffirmed by the Supreme Court in Banco Nacional de Cuba v.
Sabbatino (376 U.S. 398, 416 et seq.), that the courts in the United States will not inquire into the validity of
the acts of a foreign government done within its own territory. As the Supreme Court stated in Underhill
v. Hernandez (168 U.S. 250, 252) quoted in Sabbatino (376 U. S., at p. 416) "[e]very sovereign State is
bound to respect the independence of every other sovereign State, and the courts of one country will not
sit in judgment on the acts of the government of another done within its own territory. Redress of
grievances by reason of such acts must be obtained through the means open to be availed of by sovereign
powers as between themselves."

Our courts will not examine a foreign law to determine whether it was adopted in conformity with the
internal procedures and requirements of the enacting state. The act of state doctrine, it has been well said,
is not limited to situations in which "the foreign act is committed in a manner `colorably valid' under
foreign law. It should make no difference whether the foreign act is, under local law, partially or wholly,
technically or fundamentally, illegal. * * * So long as the act is the act of the foreign sovereign, it matters
not how grossly the sovereign has transgressed its own laws." (Banco de Espana v. Federal Reserve Bank, 114 F.2d
438, 444; emphasis supplied.) The opinion in Sabbatino itself is unequivocal on this point. "The courts
below", the Supreme Court wrote (376 U. S., at p. 415, n. 17), "properly declined to determine if issuance
of the expropriation decree complied with the formal requisites of Cuban law. * * * If no institution of
legal authority would refuse to effectuate the decree, its `formal' status here its argued invalidity if not
properly published in the Official Gazette in Cuba is irrelevant. It has

[23 N.Y.2d 53]

not been seriously contended that the judicial institutions of Cuba would declare the decree invalid." Nor,
it should be noted, does the plaintiff before us make any such claim.

Consequently, there is no basis whatever for the plaintiff's contention that the action dishonoring and
repudiating the certificates held by Ritter was not an "act of state." Regardless of whether or not Decision
No. 346 was published in the Official Gazette or otherwise complied with internal Cuban standards of
regularity, it was issued by the Currency Stabilization Fund, an official instrumentality of the Cuban
Government. Moreover, in compliance with that Decision or even if only in purported compliance
Banco Nacional, also an agency of the Cuban Government, refused and continues to refuse to exchange
pesos for dollars as the certificates had required. These undisputed facts establish, as matter of law, that
the breach of contract, of which the plaintiff complains, resulted from, and, indeed, itself constitutes, an
act of state.5

On this analysis, there is no issue of burden of proof. Rather, the question is, what need be proved. The
defendant introduced evidence showing that Decision No. 346 had been issued by the Currency
Stabilization Fund, that it was adopted as a measure to control currency and foreign exchange and that
defendant bank had regarded the Decision as binding upon it and as prohibiting performance of the
agreement in the tax exemption certificates. The plaintiff adduced evidence to the effect that the Decision
did not conform to Cuba's fundamental law and that it had not been published in the "Official Gazette."
But that was insufficient, as matter of law, to establish that the action dishonoring and repudiating the
certificates was not an act of state. It was incumbent on the plaintiff to prove that the Cuban authorities
themselves would deem Decision No. 346 invalid and would disregard it. This she was obviously unable
to do.

Since it is thus apparent that there was an act of state, it follows unless the Hickenlooper Amendment
requires the

[23 N.Y.2d 54]

court not to apply the act of state doctrine (infra, pp. 57-62) that we are barred from all further inquiry
in this case concerning Cuba's action and, in particular, from any inquiry that would test such action by
the standards of international law or the public policy of this forum.

In Sabbatino, where the Supreme Court most recently considered the act of state doctrine, it was
confronted with a complete and outright expropriation of American property, a quantity of sugar, by
Cuba. Nevertheless, taking into consideration the "fluidity of present world conditions" and the division
of opinion upon the "limitations on a state's power to expropriate the property of aliens", the court was of
the opinion that, whether or not an "international standard in this area" might be discerned, the "matter is
not meet for adjudication by domestic tribunals" (376 U. S., at pp. 428, 429, 434). Accordingly, and having
in view the particular facts of the case before it, the Supreme Court said (376 U. S., at p. 428):

Therefore, rather than laying down or reaffirming an inflexible and all-encompassing rule in this case, we
decide only that the Judicial Branch will not examine the validity of a taking of property within its own
territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in
the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the
complaint alleges that the taking violates customary international law.6

Indeed, if the act of state doctrine was decisive in the situation presented in the Sabbatino case, then, it
must surely be so here again, unless the Hickenlooper Amendment requires a different result. In the
present case, although there are circumstances which undoubtedly imposed serious losses upon the

[23 N.Y.2d 55]

plaintiff's assignor, manifestly, they do not reach the level of an outright "taking" or "expropriation" with
which the court was confronted in Sabbatino.

The Government of Cuba, by its Decision No. 346, has actually done nothing more than enact an
exchange control regulation similar to regulations enacted or promulgated by many other countries,
including our own. (See, infra, pp. 63-64.) A currency regulation which alters either the value or character
of the money to be paid in satisfaction of contracts is not a "confiscation" or "taking." (Cf. Norman v. B. &
O. R. R. Co., 294 U.S. 240, Nortz v. United States, 294 U.S. 317, and Perry v. United States, 294 U.S. 330 [Gold
Clause Cases].) As one authoritative writer in the field has stated (Mann, Money in Public International
Law, 96 Recueil Des Cours [1959] 1, 90), "A legislator who reduces rates of interest or renders agreements
invalid or incapable of being performed or prohibits exports, or renders performance more expensive by
the imposition of taxes or tariffs does not take property. Nor does he take property if he depreciates
currency or prohibits payment in foreign currency or abrogates gold clauses. Expectations relating to the
continuing intrinsic value of all currency or contractual terms such as the gold clause are, like favorable
business conditions and good will, `transient circumstances, subject to changes', and suffer from
`congenital infirmity' that they may be changed by the competent legislator. They are not property, their
change is not deprivation." (See, also, 1 Hyde, International Law Chiefly as Interpreted and Applied by
the United States [2d rev. ed., 1945], pp. 690-691.)

In the light of Sabbatino, we must recognize that the currency regulations of a foreign state at least
when presented in a context such as this one are not appropriate subjects for evaluation by state courts
applying local conceptions of public policy. The "continuing vitality" of the act of state doctrine, the
Supreme Court wrote in Sabbatino (376 U. S., at pp. 427-428), "depends on its capacity to reflect the proper
distribution of functions between the judicial and political branches of the Government on matters
bearing upon foreign affairs." As Mr. Justice HARLAN observed (p. 432), "Piecemeal dispositions" by
courts which refuse to accord validity to the acts of a foreign

[23 N.Y.2d 56]

sovereign within its borders "could seriously interfere with negotiations being carried on by the Executive
Branch and might prevent or render less favorable the terms of an agreement that could otherwise be
reached." (See, also, Zschernig v. Miller, 389 U.S. 429, rehearing den. 390 U.S. 974.)

In an area of international law where, for instance, there is a wide divergence "between the national
interests of capital importing and capital exporting nations and between the social ideologies of those
countries that favor state control of a considerable portion of the means of production and those that
adhere to a free enterprise system", judicial restraint is surely indicated (376 U. S., at p. 430): "It is difficult
to imagine the courts of this country embarking on adjudication in an area which touches more
sensitively the practical and ideological goals of the various members of the community of nations." Even
if, therefore, we were to assume that the decision of the Cuban instrumentality here involved was
contrary to our public policy, such considerations would not affect our determination. As the Supreme
Court observed in the far harsher context of Sabbatino (pp. 436-437), "However offensive to the public
policy of this country and its constituent States an expropriation of this kind may be, we conclude that
both the national interest and progress toward the goal of establishing the rule of law among nations are
best served by maintaining intact the act of state doctrine in this realm of its application."

We might properly conclude at this point. The parties themselves raised no other issues in the courts
below or on the original argument of this appeal. However, in deference to the views of some of the
members of this court, we directed reargument and, as noted above (p. 49), requested the parties to
address themselves, in essence, to the further question whether the Hickenlooper Amendment covers this
case and bars the court from applying the act of state doctrine. 7

[23 N.Y.2d 57]

In our view, the Hickenlooper Amendment is inapplicable. The statute was enacted to "reverse in part"
the decision in Sabbatino (S. Rep. No. 1188, Pt. I, 88th Cong., 2d Sess., p. 24 [1964]). So far as relevant, the
amendment declares that "no court in the United States shall decline on the ground of the federal act of
state doctrine to make a determination on the merits giving effect to the principles of international law in
a case in which a claim of title or other right to property is asserted by any party including a foreign state * *
* based upon (or traced through) a confiscation or other taking * * * by an act of that state in violation of the
principles of international law". (Emphasis supplied.)8

It is plain enough upon the face of the statute and abundantly clear from its legislative history that
Congress was not attempting to assure a remedy in American courts for every kind of monetary loss
resulting from actions, even unjust actions,
[23 N.Y.2d 58]
of foreign governments. The law is restricted, manifestly, to the kind of problem exemplified by
the Sabbatino case itself, a claim of title or other right to specific property which had been expropriated
abroad. (See Henkin, Act of State Today: Recollections in Tranquility, 6 Colum. J. of Transnatl. L. 175, 185,
186.)

The basic terms of the statute to come directly to its wording simply cannot be made to fit the
present case. The amendment applies only if there is a "claim of title or other right to property" and that
claim is "based upon (or traced through) a confiscation or other taking" of such property.9

We must thus attempt to identify the "property" or the proceeds of such property which was
allegedly "confiscated or taken" from Ritter by the action of the Cuban Government. It is quite evident
that, before the issuance of Decision No. 346, Ritter had only two things that are relevant to this action

[23 N.Y.2d 59]

(1) some 150,000 pesos or the means of obtaining them and (2) a contract made in Cuba, to be performed
in Cuba (by delivery there of a check), and subject, from its inception and at all times since, to the laws of
Cuba.10 He did not, it must be emphasized, have any fund of dollars with which this action is concerned
nor did he have rights to any specific fund of dollars in the possession of any other party. What, then, was
"taken"?

Ritter's loss is due not to a taking of property but, rather, to the breach of a promise upon which he had
relied. What had happened and undoubtedly to Ritter's financial loss was that the Cuban law which
governed the contract had been changed by the adoption of a government regulation which "suspended,"
perhaps permanently, the conversion of pesos into dollars. In the strictest sense, and within the terms of
the statute we are construing, just as no one has "taken" the pesos from Ritter, so no one has "taken" the
contract from him; it is still his or his assignee's to enforce, or attempt to enforce, as the present action
bears witness. No other party claims to be possessed of the contract rights that Ritter had acquired. It is
not as though the Cuban Government had assumed title to a contract right or other chose in action that
had belonged to Ritter and had then sought to enforce it against the obligor. Indeed, as will shortly
appear (infra, p. 61), even if a true, outright confiscation of this kind had occurred that is, an actual
divesting of ownership of a contract right it would still be outside the compass of the Hickenlooper
Amendment.

If there could be any doubt that the amendment is inapplicable to claims for breach of contract, that
doubt is dispelled by reference to the legislative history, both of the original enactment in 1964 and the
change in wording adopted in 1965.

Throughout the committee hearings and proceedings in Congress, the supporters of the bill and those
who commented upon it were quite explicit about the intended purpose of the proposal. That purpose
was simply to permit an adjudication "on the merits", despite the holding in Sabbatino, in those cases in
which a party asserts "a claim of title or other right" to property which has been confiscated or taken and
such property

[23 N.Y.2d 60]

becomes the subject of a lawsuit in the United States. Indeed, Senator Hickenlooper himself expressly
declared, at one point, that the purpose of his proposal was to require our American courts to apply
international law "whenever expropriated property comes within the territorial jurisdiction of the United States",
noting that, unless his proposal was accepted and the Sabbatino decision overruled, this country might
become "an international `thieves market'" (110 Cong. Rec. 19548). 11

The words "confiscation" and "taking", the debates and committee hearings established, were used
synonymously with "expropriation" and "nationalization." (See, e.g., Hearings Before Senate Committee
on Foreign Relations on S. Bill 2659, 2660, 2662, 88th Cong., 2d Sess. [1964], p. 619; S. Rep. No. 1188, Pt. I,
88th Cong., 2d Sess. [1964], p. 24; 110 Cong. Rec. 19548, 19557-19559, 23680, 24076-24077.) Nothing in the
lengthy record of the congressional proceedings suggests that the amendment was designed to cover
claims of breach of contracts by a foreign government such as the one in this case. Nor was there any
intimation that Congress had in view the highly complex problems of exchange control regulations,
repudiation of debts or depreciation of currency. Conspicuously absent from the hearings was the kind of
expert testimony on international monetary problems which surely would have been sought if the
Congress had been addressing itself to problems of that nature.

Further proof of the limited scope intended for the exemption from the act of state doctrine is found in
the Senate's refusal to enact Senator Hickenlooper's original, broadly worded, draft of the amendment
which would have made the act of state doctrine

[23 N.Y.2d 61]

inapplicable to any case "in which an act of a foreign state occurring after January 1, 1959 is alleged to be
contrary to international law".12 The statute, as actually adopted in 1964, contained the far more restrictive
wording which we have already discussed.

In point of fact, to eliminate any possibility that the original language, adopted in 1964, might be
construed to cover or encompass ordinary contract rights, or anything other than specific and identifiable
and "traceable" property, Congress amended the statute in 1965. In its original form, the amendment
referred to cases in which "a claim of title or other right is asserted * * * based upon (or traced through) a
confiscation or other taking." By the 1965 modification, the words, "to property", were inserted after the
words "other right", so that the clarified provision now reads, as already noted, "a claim of title or other
right to property". As the Senate Report explains, the words were inserted "to make it clear that the law
does not prevent banks, insurance companies and other financial institutions from using the act of state
as a defense to multiple liability upon any contract, deposit or insurance policy in any case where such
liability [sic] has been taken over or expropriated by a foreign state." (S. Rep. No. 170 on S. 1837, 89th
Cong., 1st Sess. [1965], p. 19; emphasis supplied.) Thus, not even contract rights which are taken over and
are sought to be enforced in this country are covered by the Hickenlooper Amendment, much less claims
for breach of a contract in a suit between the original parties to the agreement.

We may not ignore, or leave unexplained as Judge KEATING does the fact that, when Congress, in
1965, wished to assure the preservation of the act of state defense for the benefit of American insurance
companies and banks who were sued on contract claims, it chose to do so not by adding a carefully
limited exception, but as noted in the text above by inserting the words, "to property", after the
words, "claim of title or other right" (see supra, p. 61). The use of these unqualified words can only signify
that Congress decided to eliminate all contract

[23 N.Y.2d 62]

claims from the statute rather than attempt the more subtle task of distinguishing between contract cases
in which the act of state defense might be asserted and those in which it might not. Judge KEATING may
disapprove of Congress' choice of a method for accomplishing its purpose, but that choice by the plain
evidence of the 1965 amendment and of the accompanying Senate Report is the one that was made,
and it is binding upon us.

In short, although, as Judge KEATING observes, the statute may be "inexpertly drafted" or "inarticulately
expressed" (opn., pp. 80, 85), it does not follow, as he intimates, that the court is relieved of the necessity
of reading the language of the statute closely or of drawing plain inferences from its legislative history.
Despite its evident defects of draftsmanship, we must treat the Hickenlooper Amendment as nothing less
than a serious attempt by Congress to define what it did mean and what it did not mean in a complex
and important area of law.

From all that has been said, it is apparent that the Hickenlooper Amendment has no application to the
present case. The present lawsuit does not involve the assertion of a claim of title to property and, just as
clearly, the Cuban Government's action did not involve a confiscation or taking of property. Certainly, it
is not a case in which title or other right to a specific res (or its proceeds) confiscated by a foreign
government is disputed on a claim either asserted by the original owner and defended by the
government or asserted by the government and defended by the original owner.

It follows that the Hickenlooper Amendment is not applicable, that the act of state doctrine is decisive
and that the defendant must prevail. This being so, it is not necessary to reach the further question
whether the action of the Cuban Government offended principles of international law. Since, however,
our dissenting brethren have concluded that such action did constitute a taking of property to which a
claim of title or other right is asserted and have gone on to urge that it violated international law, we treat
that question of international law briefly.13

[23 N.Y.2d 63]

This is not an era, surely, in which there is anything novel or internationally reprehensible about even the
most stringent regulation of national currencies and the flow of foreign exchange. Such practices have
been followed, as the exigencies of international economics have required and despite resulting losses
to individuals by capitalist countries and communist countries alike, by the United States and its allies
as well as by those with whom our country has had profound differences. They are practices which are
not even of recent origin but which have been recognized as a normal measure of government for
hundreds of years, if not, indeed, as long as currency has been used as the medium of international
exchange. (See Winkler, Foreign Bonds, an Autopsy A Study of Defaults and Repudiations of
Government Obligations [1933], p. 21; Mann, The Legal Aspects of Money [2d ed., 1953], p. 337.)

In short, the control of national currency and of foreign exchange is an essential governmental function;
the state which coins money has "power to prevent its outflow" (Ling Su Fan v. United States, 218 U.S. 302,
311; see, also, Nortz v. United States, 294 U.S. 317, 330, supra); and, as the court observed in Perry v. United
States (294 U.S. 330, 356, supra), "[t]he same reasoning is applicable to the imposition of restraints upon
transactions in foreign exchange." (See, also, Restatement, 2d, Foreign Relations Law of the United States,
198, Comment b.)14 The Restatement finds no violation of international law in such a currency measure
"if it is reasonably necessary in order to control the value of the currency or to protect the foreign
exchange resources of the state" ( 198). The Restatement goes on to recite that "the application to an alien
of a requirement that foreign funds held within the territory of the state be surrendered against payment
in local currency at the official rate of exchange is not wrongful under international law, even though the
local currency is less valuable on the free market than the foreign funds surrendered." Thus, if the Cuban
Government could, under the example cited, have properly required

[23 N.Y.2d 64]

an alien within its borders to surrender American dollars "against payment" in pesos, as a measure
"reasonably necessary * * * to protect the foreign exchange resources of the state" (Restatement, 2d,
Foreign Relations Law of the United States, 198), the present refusal of the Cuban Government to
surrender American dollars in order to protect its dollar reserves, though harsh in its effect, would also
seem to be within the limits of international legality.

In the case before us whatever other economic measures the Cuban Government may have taken (and
they are not reflected by evidence in the record) there is no question that the actions complained of
were aimed at protecting Cuba's scarce "foreign exchange resources." The testimony of the defendant's
president that these actions were essential to prevent the wiping out of Cuba's foreign currency reserves
is uncontradicted. Accordingly, that country's refusal to exchange Ritter's pesos for dollars, though it may
be deplored, may not be characterized as so unreasonable or unjust as to outrage current international
standards of governmental conduct. Even if the present case, then, involved "a claim of title or other right
to property" within the meaning of the Hickenlooper Amendment, the amendment would not permit us
to disregard the act of state doctrine since the Cuban action did not violate international law.

In sum, then, it is our conclusion that the actions complained of constituted an act of state; that, under the
rule announced in Sabbatino, we are required to give effect to that act of state; and that, since the record
before us establishes that there was no taking of property to which a claim of title or other right is
asserted, the Hickenlooper Amendment does not apply to require us to disregard the act of state doctrine.
Consequently, the plaintiff or her assignor may seek a remedy in this country only through diplomatic
efforts by the United States and arrangements established by Congress for the protection of the interests
of all American claimants against Cuba.

The order of the Appellate Division should be reversed, with costs, and the complaint dismissed.
In Re: Philippine National Bank v. United States District Court for the District of Hawaii, No. 04-71843, D.C.
No. MDL-00840-MLR
Before: GOODWIN, CANBY, and TALLMAN, Circuit Judges.Jay R. Ziegler, Buchalter, Nemer, Fields &
Younger, Los Angeles, CA, for the petitioner. Robert A. Swift, Kohn, Swift & Graf, PC, Philadelphia, PA;
John J. Bartko, William I. Edlund, Bartko, Zankel, Tarrant & Miller, San Francisco, CA; for real parties in
interest.
The Philippine National Bank petitions this court for a writ of mandamus to prevent the district court
from pursuing contempt and discovery proceedings against the Bank because of the Bank's transfer of
funds to the Republic of the Philippines pursuant to a judgment of the Philippine Supreme Court.1 We
conclude that the district court's orders violated the act of state doctrine, and we accordingly issue the
writ.

BACKGROUND

This mandamus petition represents one more chapter in a long-running dispute over the right to the
assets of the estate of former Philippine President Ferdinand E. Marcos. On one side is a class of
plaintiffs who obtained a large judgment in the federal district court in Hawaii against the Marcos estate
for human rights violations by the Marcos regime. The judgment included an injunction restraining the
estate and its agents or aiders and abettors from transferring any of the estate's assets. 2 On the other side
is the Republic of the Philippines, which independently has sought forfeiture of the Marcos estate's assets
on the ground that they were stolen by Marcos from the Philippine government and its people.

In an earlier case, we dealt with the attempt of class plaintiffs to reach assets of the Marcos estate located
in Swiss banks. Credit Suisse v. U.S. Dist. Ct. for the Cent. Dist. of Cal., 130 F.3d 1342, 1347-48 (9th
Cir.1997). The Swiss assets had been frozen by the Swiss government at the request of the Republic,
which was seeking to recover them. The class plaintiffs obtained an injunction from the district court
requiring the Swiss banks to hold the assets for the benefit of the class plaintiffs. We held that the
injunction violated the act of state doctrine, which precludes our courts from declaring invalid a
foreign sovereign's official act-in this case the freeze order of the Swiss government. Id. We accordingly
granted a writ of mandamus directing dismissal of the district court's order, and ordering the district
court:

to refrain from taking any further action in [this] action or any other case involving any or all of the [class
plaintiffs] and any assets of the Estate of Ferdinand E. Marcos held or claimed to be held by the Banks.

Id. at 1348.3

Thereafter, the Swiss government released the funds frozen in Switzerland for transfer to the Philippine
National Bank in escrow pending a determination of proper disposal by a competent court in the
Philippines. The Philippine National Bank deposited the funds in Singapore. The Philippine Supreme
Court subsequently held that the assets were forfeited to the Republic of the Philippines.

The district court then issued the orders that precipitated the present petition for mandamus. The
district court ruled that the Philippine Supreme Court had violated due process by any standard and
that its judgment was entitled to no deference. It ordered reinstatement of an earlier settlement
agreement in the district court litigation that had been rejected when the Philippine courts refused to
approve it and the Republic failed to give its consent to the agreement. 4 The district court further stated
in an Order Directing Compliance:

The Court's Special Master has brought to the Court's attention that there is an imminent threat that the
monies transferred from Swiss banks to Singapore, pursuant to a certain escrow agreement[,] may be
released by the banking officials pursuant to claims filed by the Philippine Commission on Good
Government.

* * *

IT IS HEREBY ORDERED that any such transfer, without first appearing and showing cause in this court
as to how such transfer might occur without violating the Court's injunction shall be considered contempt
of the Court's earlier order. Any and all persons and banking institutions participating in such transfers
are hereby notified that such transfer would be considered in contempt of this Court's injunction[.]

The district court then issued an Order to Show Cause against the Philippine Bank, which was not a party
to the litigation in the district court, requiring the Bank to show why it should not be held in contempt for
violating the court's injunction against transfer of assets by the estate. A hearing on the Order to Show
Cause was held, but not concluded because the district court ruled that a Bank officer's declaration could
not be considered unless the officer was deposed. The district court set a time and place for the
deposition.

The Bank then filed the present petition for mandamus in this court, seeking to restrain the district court
from enforcing its Order to Show Cause and from pursuing discovery against the Bank officer. The
Bank asserts that it has transferred nearly all of the funds in issue to the Republic pursuant to the
judgment of the Philippine courts.5 The Bank contends that the officer's deposition would violate
Philippine bank secrecy laws. More important, the Bank contends that the entire proceeding against the
Bank for its transfer of funds violated the act of state doctrine. We stayed the proceedings in district
court pending our ruling on the mandamus petition.

DISCUSSION

1. The act of state doctrine.

[1] Every sovereign state is bound to respect the independence of every other sovereign state, and the
courts of one country will not sit in judgment on the acts of the government of another, done within its
own territory. Redress of grievances by reason of such acts must be obtained through the means open to
be availed of by sovereign powers as between themselves.

Underhill v. Hernandez, 168 U.S. 250, 252, 18 S.Ct. 83, 42 L.Ed. 456 (1897). The act of state doctrine
originally was deemed to arise from international law, but more recently has been viewed as a function of
our constitutional separation of powers. W.S. Kirkpatrick & Co. v. Envtl. Tectonics Corp., Int'l, 493 U.S.
400, 404, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990). So viewed, the doctrine reflects the strong sense of the
Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may
hinder the conduct of foreign affairs. Id. (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398,
423, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964)).

The district court's orders in issue violated this principle. In order to obtain assets from the Philippine
Bank, or to hold the Bank in contempt for the transfer of those assets to the Republic, the district court
necessarily (and expressly) held invalid the forfeiture judgment of the Philippine Supreme Court. We
conclude that this action of the district court violated the act of state doctrine.

The class plaintiffs in the district court argue that the act of state doctrine is directed at the executive
and legislative branches of foreign governments, and does not apply to judicial decisions. Although the
act of state doctrine is normally inapplicable to court judgments arising from private litigation, there is no
inflexible rule preventing a judgment sought by a foreign government from qualifying as an act of state.
See Liu v. Republic of China, 892 F.2d 1419, 1433-34 & n. 2 (9th Cir.1989) (citing RESTATEMENT
(SECOND) OF FOREIGN RELATIONS OF THE UNITED STATES 41 cmt. d (1965)) (A judgment of a
court may be an act of state.). There is no question that the judgment of the Philippine Supreme Court
gave effect to the public interest of the Philippine government. The forfeiture action was not a mere
dispute between private parties; it was an action initiated by the Philippine government pursuant to its
statutory mandate to recover property allegedly stolen from the treasury.6 In re Estate of Ferdinand
Marcos Human Rights Litig., 94 F.3d at 546. We have earlier characterized the collection efforts of the
Republic to be governmental. Id. The subject matter of the forfeiture action thus qualifies for treatment
as an act of state.

The class plaintiffs next argue that the act of state doctrine is inapplicable because the judgment of the
Philippine Supreme Court did not concern matters within its own territory. Generally, the act of state
doctrine applies to official acts of foreign sovereigns performed within [their] own territory. Credit
Suisse, 130 F.3d at 1346 (internal quotations omitted). The act of the Philippine Supreme Court was not
wholly external, however. Its judgment, which the district court declared invalid, was issued in the
Philippines and much of its force upon the Philippine Bank arose from the fact that the Bank is a
Philippine corporation. It is also arguable whether the bank accounts have a specific locus in Singapore,
although they apparently were carried on the books of bank branches there. 7 See Callejo v. Bancomer,
S.A, 764 F.2d 1101, 1121-25 (5th Cir.1985) (discussing differing theories of situs of intangibles). Even if
we assume for purposes of decision that the assets were located in Singapore, we conclude that this fact
does not preclude treatment of the Philippine judgment as an act of state in the extraordinary
circumstances of this case. [T]he [act of state] doctrine is to be applied pragmatically and flexibly, with
reference to its underlying considerations. Tchacosh Co. v. Rockwell Int'l Corp., 766 F.2d 1333, 1337
(9th Cir.1985). Thus, even when an act of a foreign state affects property outside of its territory, the
considerations underlying the act of state doctrine may still be present. Callejo, 764 F.2d at 1121 n. 29.
Because the Republic's interest in the [enforcement of its laws does not] end at its borders, id., the fact
that the escrow funds were deposited in Singapore does not preclude the application of the act of state
doctrine. The underlying governmental interest of the Republic supports treatment of the judgment as
an act of state.

It is most important to keep in mind that the Republic did not simply intrude into Singapore in exercising
its forfeiture jurisdiction. The presence of the assets in Singapore was a direct result of events that were
the subject of our decision in Credit Suisse. There we upheld as an act of state a freeze order by the
Swiss government, enacted in anticipation of the request of the Philippine government, to preserve the
Philippine government's claims against the very assets in issue today. Credit Suisse, 130 F.3d at 1346-47.
Indeed, the Philippine National Bank argues that the district court's orders violated our mandate in
Credit Suisse directing the district court to refrain from taking any further action with regard to assets
of the Marcos estate held or claimed to be held by the [Swiss] Banks. Id. at 1348. The district court
held that our mandate did not apply to the assets once they left the hands of the Swiss banks. We need
not decide the correctness of that ruling because we conclude that, in these circumstances, the Philippine
forfeiture judgment is an act of state. The Swiss government did not repudiate its freeze order, and the
Swiss banks did not transfer the funds in the ordinary course of business. They delivered the funds into
escrow with the approval of the Swiss courts in order to permit the very adjudication of the Philippine
courts that the district court considered invalid. To permit the district court to frustrate the procedure
chosen by the Swiss and Philippine governments to adjudicate the entitlement of the Republic to these
assets would largely nullify the effect of our decision in Credit Suisse. In these unusual circumstances,
we do not view the choice of a Singapore locus for the escrow of funds to be fatal to the treatment of the
Philippine Supreme Court's judgment as an act of state.

2. The mandamus remedy.

We also conclude that the district court's error qualifies for correction by a writ of mandamus. In so
ruling, we consider the factors set forth in Bauman v. U.S. Dist. Ct., 557 F.2d 650 (9th Cir.1977):
(1) The party seeking the writ has no other adequate means, such as a direct appeal, to attain the relief he
or she desires. (2) The petitioner will be damaged or prejudiced in a way not correctable on appeal.
(This guideline is closely related to the first.) (3) The district court's order is clearly erroneous as a matter
of law. (4) The district court's order is an oft-repeated error, or manifests a persistent disregard of the
federal rules. (5) The district court's order raises new and important problems, or issues of law of first
impression.

Id. at 654-55. None of these guidelines is determinative and all five guidelines need not be satisfied at
once for a writ to issue. Credit Suisse, 130 F.3d at 1345. Rarely will all five guidelines point in the
same direction or even be relevant to the particular inquiry. See id.

With regard to the first two factors, we conclude that the district court's error is not sufficiently
correctable on appeal. No appeal will lie unless a contempt order is issued and sanctions have been
imposed. See Estate of Domingo v. Republic of the Philippines, 808 F.2d 1349, 1350(9th Cir.1987). The
Bank has made a sufficient showing that subjecting its officer to cross-examination will place the officer
and the Bank in danger of violating Philippine bank secrecy laws. Requiring the Bank to choose
between being in contempt of court and violating [Philippine] law clearly constitutes severe prejudice
that could not be remedied on direct appeal. Credit Suisse, 130 F.3d at 1346.

As for the third Bauman factor, our discussion of the act of state doctrine makes clear that the district
court's orders are erroneous as a matter of law. In addition, the district court is attempting to apply its
injunction against transfer of assets to the Philippine National Bank as an aider and abettor or agent of the
estate of Marcos. But the Bank can hardly have been acting as an aider and abettor or agent of the estate
when it transferred assets to the Republic pursuant to the forfeiture judgment of the Philippine Supreme
Court, entered over the opposition of the Marcos estate. The error in the district court's orders is
apparent.

With regard to the fourth Bauman factor, we cannot say that the district court's error is oft-repeated.
The fifth factor, however, favors mandamus because the district court's ruling raises new and important
problems regarding the act of state doctrine.

Four of the five Bauman factors thus favor issuance of the writ. We therefore grant the Bank's petition.
The district court's order, dated February 25, 2004, to the Philippine National Bank to show cause, and its
order, dated April 8, 2004, to the Bank to produce its employee, Rogel L. Zenarosa, for a deposition are
vacated. The district court is directed to refrain from any further action against the Philippine National
Bank in this action or any other action involving any of the funds that were the subject of the decision of
the Philippine Supreme Court dated July 15, 2003. This court retains jurisdiction over the district court
litigation, MDL No. 840, to the extent that it involves any action against the Philippine National Bank.

WRIT OF MANDAMUS ISSUED.

Republic v. Marcos, 862 F.2d 1355, 1361 (9th Cir. 1988) (en banc), cert. denied, 490 U.S. 1035, 109 S.Ct. 1933,
104 L.Ed.2d 404 (1989)
he Republic of the Philippines (the Republic) brought a civil suit against its former president, Ferdinand
Marcos, and his wife Imelda (the Marcoses), asserting claims under the Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. 1961 et seq., and other applicable law. The district court on June
25, 1986 entered a preliminary injunction enjoining the Marcoses from disposing of any of their assets
save for the payment of attorney fees and normal living expenses. The Marcoses appealed. A panel of this
court reversed, 2-1. 818 F.2d 1473 (9th Cir. 1987). We took the case en banc and now affirm the district
court.

Federal Jurisdiction
The Republic alleges that the Marcoses engaged in mail fraud, wire fraud, and the transportation of
stolen property in the foreign or interstate commerce of the United States. The acts alleged are crimes
under 18 U.S.C. 1341, 1343, and 2315. The Republic alleges that the acts were repeated, forming a
pattern of predicate acts under RICO, 18 U.S.C. 1961, and thereby giving rise to civil liability under
RICO, 18 U.S.C. 1964.
Contrary to the contention of the Marcoses, the Republic as a governmental body is a person within the
meaning of 18 U.S.C. 1961(3). Illinois Department of Revenue v. Phillips, 771 F.2d 312 (7th Cir. 1985).
The foreign nature of the Republic does not deprive it of statutory personhood. Cf. Pfizer, Inc. v.
Government of India, 434 U.S. 308, 98 S. Ct. 584, 54 L. Ed. 2d 563 (1978). Accordingly the Republic has
standing to assert the RICO claims.
Contrary to the contention of the Marcoses, the complaint, as interpreted by the district court, sufficiently
alleges a RICO offense. The Republic alleges that the Marcoses and the other defendants arranged for the
investment in real estate in Beverly Hills, California of $4 million fraudulently obtained by the Marcoses;
that the Marcoses arranged for the creation of two bank accounts in the name of Imelda Marcos at Lloyds
Bank of California totaling over $800,000 also fraudulently obtained by the Marcoses; and that the
Marcoses transported into Hawaii money, jewels, and other property worth over $7 million also
fraudulently obtained by them. Criminal conduct under RICO "forms a pattern if it embraces criminal
acts that have the same or similar purposes, results, participants, victims, or methods of commission, or
otherwise are interrelated by distinguishing characteristics and are not isolated events." Sedima, S.P.R.L.
v. Imrex Co., Inc., 473 U.S. 479, 496 n. 14, 105 S. Ct. 3275, 3285, n. 14, 87 L. Ed. 2d 346 (quoting 18 U.S.C.
3575(e)). The purposes of the acts here alleged are the same--to invest and to conceal fraudulently-
obtained booty. The results are the same--the investment of the booty. The principals are the same--the
Marcoses. The victim is the same--the Republic. The episodes are not isolated events. They represent a
plan and a practice of getting the fruits of fraud out of the Philippines and into the assumed safety of the
United States. If proved, the allegations show acts that form a pattern.
Contrary to the contention of the Marcoses, the complaint as read by the district court also alleges a RICO
enterprise. A RICO enterprise has been found to consist of "a group of individuals associated in fact for
the purpose of illegally trafficking in narcotics ..., utilizing the United States mail to defraud ..., and
corruptly influencing ... the outcome of state court proceedings." United States v. Turkette, 452 U.S. 576,
579, 101 S. Ct. 2524, 2526, 69 L. Ed. 2d 246 (1981). Here there is alleged to be a group of individuals
associated in fact for the purpose of illegally investing the fruits of fraud and illegally using the mails and
wire and illegally transporting in interstate commerce the fruits of the fraud.
The effect on the commerce of the United States of engaging in mail or wire fraud or bringing stolen
property into the country is palpable. The Marcoses are mistaken in arguing that such criminal acts have
no consequences for commerce to or in this country. The criminal enterprise which they are charged with
conducting consisted in operations taking place within the United States. These operations had multiple
effects on the domestic and foreign commerce of this country. If the operations were criminal, the
operators incurred criminal liability under our law. United States v. Stratton, 649 F.2d 1066, 1075 (5th Cir.
1981) (appearance of out-of-state litigants before court that was a criminal RICO enterprise); United States
v. Altomare, 625 F.2d 5 (4th Cir. 1980) (interstate telephone calls perpetuating RICO enterprise affected
interstate commerce). The Republic's allegations are sufficient to establish federal jurisdiction. 18 U.S.C.
1964.

Pendent Jurisdiction
The gravamen of the Republic's entire case is the allegation that the Marcoses stole public money:
During his twenty years as President of the Philippines, Mr. Marcos used his position of power and
authority to convert and cause to be converted, to his use and that of his friends, family, and associates,
money, funds, and property belonging to the Philippines and its people. Complaint, p 12 (emphasis
added).
This common allegation supports not only plaintiff's RICO claims but also the eight claims for
conversion, fraud and deceit, constructive fraud, constructive trust, breach of implied contract, quiet title,
accounting, and subrogation. The claims for a constructive trust, to quiet title, an accounting, and
subrogation merely set forth different forms of relief for the same underlying wrongs.
The Republic's strategy of bringing suit in a number of other jurisdictions is not decisive of the question
whether the claims are such that they would ordinarily be tried in one judicial proceeding. The present
location of the sought-for funds in banks in various countries is not determinative as to the underlying
wrongs alleged in the complaint. The claims brought in this suit would ordinarily be tried in a single case.
In both the RICO and non-RICO claims, the Republic alleges that the Marcoses converted public funds
while in office. The district court concluded:
This Court has pendent jurisdiction over plaintiff's other claims under state and foreign law in that such
claims arise from a common nucleus of operative fact and are so intertwined with other matters pending
before the court as to make the exercise of such jurisdiction over these claims appropriate.
The district court was correct in asserting pendent jurisdiction over these claims. They derive from "a
common nucleus of operative fact" and are such that a plaintiff "would ordinarily be expected to try them
all in one judicial proceeding." United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 1138, 16 L.
Ed. 2d 218 (1966). The power of a federal court to decide pendent claims is "wide-ranging." See Carnegie-
Mellon Univ. v. Cohill, --- U.S. ----, 108 S. Ct. 614, 618, 98 L. Ed. 2d 720 (1988). The exercise of the power is
discretionary but ordinarily the power if it exists is exercised; only exceptionally is the power not
employed. See C. Wright, A. Miller & E. Cooper 13B Federal Practice and Procedure Sec. 3567.1 (1984 and
1988 Supp.).
The common nucleus of operative facts that binds the RICO and non-RICO claims together is pleaded in
paragraph 12, which is incorporated by reference into each claim for relief. To prove the predicates for
RICO that allegedly occurred in this country, the Republic will have to prove theft, the acceptance of
bribes, extortion, conspiracy, and similar acts in the Marcoses' conduct of the government in the
Philippines. For example, to prove that stolen money was unlawfully transported in the United States, the
Republic will have to prove theft in the Philippines. The operative facts necessary as part of the proof of
the RICO claim are also the facts necessary to prove the theft. The RICO claims cannot be proved without
getting deeply into the pendent claims and proving some or all of them. Because the acts charged, if
proved, support both the RICO and the non-RICO claims, the district court has subject matter jurisdiction
over all claims in the Republic's complaint.
True, the pendent claims may involve more property than that which entered into or affected the foreign
or domestic commerce of the United States. The dissent appears to assume that jurisdiction over the
pendent claims cannot extend beyond this property. But that is not the law. Properly pendent claims need
not be for the identical property involved in the federal cause of action. The pendent claims remain
within the court's jurisdiction if the vital facts that must be proved as predicates of the RICO claims are
the same as those that must be proved to establish the extortion, bribery, theft, fraud, and conversions
alleged by the pendent claims.
At "every stage of the proceeding" the district court must exercise discretion as to the pendent claims. See
Carnegie-Mellon Univ. v. Cohill, 108 S. Ct. at 618. In light of a more fully developed record than that now
before this court, the district judge may conclude that some or all of the pendent claims should be
dismissed notwithstanding our holding that the district court has the power to assert jurisdiction over
those claims. Gibbs, 383 U.S. at 727, 86 S. Ct. at 1139. See also 3A J. Moore, W. Taggert & J. Wicker,
Moore's Federal Practice p 18.07 [1.-3] at 18-36-37 (2d ed. 1987). As of the record now before us, pendent
jurisdiction exists and supports an injunction based on the pendent claims.

Act of State and Political Question

Before determining whether issuance of an injunction was appropriate we consider two defenses which,
if accepted, would block trial of the case: the Marcoses maintain, first, that their acts are insulated because
they were acts of state not reviewable by our courts; and second, that any adjudication of these acts
would involve the investigation of political questions beyond our courts' competence.
Acts of State. The classification of certain acts as "acts of state" with the consequence that their validity
will be treated as beyond judicial review is a pragmatic device, not required by the nature of sovereign
authority and inconsistently applied in international law. Banco Nacional de Cuba v. Sabbatino, 376 U.S.
398, 421-22, 84 S. Ct. 923, 936-37, 11 L. Ed. 2d 804 (1964). The purpose of the device is to keep the judiciary
from embroiling the courts and the country in the affairs of the foreign nation whose acts are challenged.
Minimally viewed, the classification keeps a court from making pronouncements on matters over which
it has no power; maximally interpreted, the classification prevents the embarrassment of a court
offending a foreign government that is "extant at the time of suit." Id. at 428, 84 S. Ct. at 940.
The "continuing vitality" of the doctrine depends on "its capacity to reflect the proper distribution of
functions between the judicial and political branches of the Government on matters bearing upon foreign
relations." Id. at 427-28, 84 S. Ct. at 939-40. Consequently, there are "constitutional underpinnings" to the
classification. Id. at 423, 84 S. Ct. at 938. A court that passes on the validity of an "act of state" intrudes
into the domain of the political branches. The proper application of the doctrine is illustrated by
Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F. Supp. 92 (C.D. Cal. 1971), aff'd per curiam, 461
F.2d 1261 (9th Cir.), cert. denied, 409 U.S. 950, 93 S. Ct. 272, 34 L. Ed. 2d 221 (1972).
As a practical tool for keeping the judicial branch out of the conduct of foreign affairs, the classification of
"act of state" is not a promise to the ruler of any foreign country that his conduct, if challenged by his own
country after his fall, may not become the subject of scrutiny in our courts. No estoppel exists insulating a
deposed dictator from accounting. No guarantee has been granted that immunity may be acquired by an
ex-chief magistrate invoking the magic words "act of state" to cover his or her past performance.
The classification might, it may be supposed, be used to prevent judicial challenge in our courts to many
deeds of a dictator in power, at least when it is apparent that sustaining such challenge would bring our
country into a hostile confrontation with the dictator. Once deposed, the dictator will find it difficult to
deploy the defense successfully. The "balance of considerations" is shifted. Sabbatino, 376 U.S. at 428, 84 S.
Ct. at 940. A fortiori, when a ruler's former domain has turned against him and seeks the recovery of
what it claims he has stolen, the classification has little or no applicability. The act of state doctrine is
supple, flexible, ad hoc. The doctrine is meant to facilitate the foreign relations of the United States, not to
furnish the equivalent of sovereign immunity to a deposed leader.
In the instant case the Marcoses offered no evidence whatsoever to support the classification of their acts
as acts of state. The burden of proving acts of state rested upon them. Alfred Dunhill of London, Inc. v.
Republic of Cuba, 425 U.S. 682, 695, 96 S. Ct. 1854, 1861, 48 L. Ed. 2d 301 (1976). They did not even
undertake the proof. The United States, invited by the court to address this matter as an amicus, assures
us that the Executive does not at present see the applicability of this defense. Brief of the United States of
America as Amicus Curiae, p. 11. The act of state doctrine, the Executive declares, has "no bearing" on
this case as it stands. As the doctrine is a pragmatic one, we cannot exclude the possibility that, at some
later point in the development of this litigation, the Marcoses might produce evidence that would
warrant its application. On the present record, the defense does not apply.
Political Questions. Bribetaking, theft, embezzlement, extortion, fraud, and conspiracy to do these things
are all acts susceptible of concrete proofs that need not involve political questions. The court, it is true,
may have to determine questions of Philippine law in determining whether a given act was legal or
illegal. But questions of foreign law are not beyond the capacity of our courts. See Zschernig v. Miller, 389
U.S. 429, 461, 88 S. Ct. 664, 681, 19 L. Ed. 2d 683 (1968) (Harlan, J. concurring); Fed. R. Civ. P. 44.1
(allowing consideration of foreign law materials). The court will be examining the acts of the president of
a country whose immediate political heritage is from our own. Although sometimes criticized as a ruler
and at times invested with extraordinary powers, Ferdinand Marcos does not appear to have had the
authority of an absolute autocrat. He was not the state, but the head of the state, bound by the laws that
applied to him. Our courts have had no difficulty in distinguishing the legal acts of a deposed ruler from
his acts for personal profit that lack a basis in law. As in the case of the deposed Venezuelan ruler, Marcos
Perez Jimenez, the latter acts are as adjudicable and redressable as would be a dictator's act of rape.
Jimenez v. Aristeguieta, 311 F.2d 547 (5th Cir. 1962).

The Convenience of the Forum

The Marcoses maintain that the Republic's action should have been dismissed, even if the district court
had jurisdiction, on the ground of forum non conveniens. They point to the foreign character of the
plaintiff, the nature of the Republic's claims about the Marcoses' conduct in office, and the fact that the
court will be called upon to decide questions of Philippine law. The inconvenience of the forum was
argued by the Marcoses to the district court. But the court did not address the argument. On the present
record the district court did not abuse its discretion in refusing to dismiss the Republic's action on forum
non conveniens grounds before issuing the preliminary injunction.

Injunction Rather Than Attachment

Fed. R. Civ. P. 64 makes available all remedies for the seizure of property "in the manner provided by the
law of the state in which the district court is held." The Marcoses argue that the freeze of their assets is an
attachment and that California law permits attachment only in connection with a claim based upon a
contract. Cal.Civ.Proc.Code Sec. 483.010(c). The Marcoses are mistaken. While a freeze of assets has the
effect of an attachment, it is not an attachment. F.T.C. v. H.N. Singer, Inc., 668 F.2d 1107, 1112 (9th Cir.
1982). The court has power to preserve the status quo by equitable means. A preliminary injunction is
such a means. F.T.C., 668 F.2d at 1112.

The Standard for Issuance of the Injunction

The issuance of the preliminary injunction was not an abuse of discretion by the district court if that court
properly concluded that the Republic had shown the probability of success on the merits of its pendent
claims and the possibility of irreparable injury, or that the pendent claims raised serious questions and
the balance of hardships tipped sharply in favor of the Republic. Hoopa Valley Tribe v. Christie, 812 F.2d
1097, 1102 (9th Cir. 1987). "These are not two distinct tests, but rather the opposite ends of a single
'continuum in which the required showing of harm varies inversely with the required showing of
meritoriousness.' " Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987) (quoting
San Diego Committee Against Registration and the Draft v. Governing Board of the Grossmont Union
High School Dist., 790 F.2d 1471, 1473 n. 3 (9th Cir. 1986)). "The critical element in determining the test to
be applied is the relative hardship to the parties. If the balance of harm tips decidedly toward the
plaintiff, then the plaintiff need not show as robust a likelihood of success on the merits as when the
balance tips less decidedly." Benda v. Grand Lodge of Int'l Assoc. of Machinists & Aerospace Workers,
584 F.2d 308, 315 (9th Cir. 1978), cert. dismissed, 441 U.S. 937, 99 S. Ct. 2065, 60 L. Ed. 2d 667 (1979)
(citation omitted).
For the purposes of injunctive relief, "serious questions" refers to questions which cannot be resolved one
way or the other at the hearing on the injunction and as to which the court perceives a need to preserve
the status quo lest one side prevent resolution of the questions or execution of any judgment by altering
the status quo. Serious questions are "substantial, difficult and doubtful, as to make them a fair ground
for litigation and thus for more deliberative investigation." Hamilton Watch Co. v. Benrus Watch Co., 206
F.2d 738, 740 (2d Cir. 1952) (Frank, J.). Serious questions need not promise a certainty of success, nor even
present a probability of success, but must involve a "fair chance of success on the merits." National
Wildlife Fed'n v. Coston, 773 F.2d 1513, 1517 (9th Cir. 1985) (Duniway, J.). Applying these principles and
definitions to this case, we conclude that the district court did not abuse its discretion in granting the
preliminary injunction.
The district court stated orally that "the hardship is clearly on the side of the plaintiff." The district court
also made the written finding that there was more than a mere possibility of irreparable harm; in fact, it
concluded that the Republic "would be irreparably injured if [the injunction] were not issued." (emphasis
added). The Marcoses have offered no evidence of any hardship they would suffer if the injunction were
issued. Indeed, the district court stipulated in the injunction that the Marcoses may use their assets to
cover normal living expenses and legal fees. Irreparable injury was weighed against zero evidence of
hardship. On this record, the balance of hardships tipped decidedly in the Republic's favor.
The district court also concluded that the Republic had a "substantial likelihood" of prevailing on the
merits. Although we do not read this as a finding of probability of success, we do believe that it
represents a finding that the Republic has at least a fair chance of success, which is all that is required. See
Benda, 584 F.2d at 315. We agree with the district court that the Republic has at least a fair chance of
prevailing on the merits, including on the merits of its constructive trust claim.
The Republic presented evidence that in February 1986 the Marcoses had transported from the
Philippines to Hawaii $8.2 million worth of cash, negotiable instruments, jewelry, and other property,
allegedly derived from the Marcoses' wrongdoing in the Philippines. Ferdinand Marcos swore by
affidavit that it had not been his intention to go to Hawaii and that he had been taken there involuntarily
by the government of the United States. But as he sought to recover from United States Customs all of
these items he clearly intended to introduce them into the United States. He used the United States mail
and telephone services for this purpose.
The Republic also presented evidence that since at least 1968 the Marcoses had a checking account at a
bank in Beverly Hills, California and that this account was used to make payments of $200,000 to
"William Saunders" and $100,000 to "Jane Ryan." The Republic introduced evidence that these names
were aliases under which Ferdinand Marcos and Imelda Marcos acted. The Republic presented evidence
of the creation by the Marcoses in 1970 of a Lichtenstein entity entitled the "Sandy Foundation," which in
effect was a trust to make investments for the benefit of the Marcoses and their children, Imelda,
Ferdinand, and Irene, and which was funded by the Marcoses with an initial capital of 100,000 Swiss
francs. The Republic presented evidence that "Jane Ryan" and "William Saunders" transferred their
accounts to this trust and that Credit Suisse, a Zurich bank, was "the administering bank" of the trust. The
Republic presented evidence of correspondence by the Marcoses as customers of that bank and the use by
Imelda Marcos of the alias of Jane Ryan in dealing with that bank.
According to the Republic's evidence, a code was worked out for contacts between the Marcoses and the
trust. According to a copy of a memorandum signed by Ferdinand Marcos, if he cabled "Happy Birthday"
to the bank, its Hong Kong representative, Ralph Klein, would proceed to Manila and "contact him
through Col. Fabian C. Ver." (Colonel Ver is now General Ver, associated with the Marcoses in power and
in their flight from the Philippines.)
In addition to this evidence of secretive dealings in substantial sums of money in the course of which the
Marcoses used a bank in California, the Republic submitted a statement by the Minister of the Budget of
the Philippines as to the total salaries authorized to be paid Ferdinand Marcos as president from 1966 to
1985 and Imelda Marcos as a minister of government from 1976 to 1985. The total authorized amount is P
2,288,750, in dollars less than $800,000. The Republic submitted what purports to be a balance sheet
signed by Ferdinand Marcos as part of a tax return stating his assets as of December 31, 1966 as P 150,000,
in dollars less than $60,000. The Republic submitted the sworn deposition, executed June 16, 1986, of
Rafael Fernando, Representative and Coordinator on the West Coast of the United States of the
Presidential Commission on Good Government of the Republic of the Philippines. Fernando declares that
Swiss bank authorities have documented to the government of the Republic the existence of bank
accounts owned by Ferdinand Marcos in the amount of $200 million and have reported to the Republic
the existence of other accounts held for or on behalf of him in the amount of approximately $1.3 billion.
The Marcoses' clandestine dealings with Credit Suisse and the Lichtenstein trust and the discrepancy
between the purported balance sheet of 1966 and the reported assets of 1986, coupled with the reported
authorized salaries of the Marcoses as members of the government of the Republic, give rise to the
inference that very large sums of money were amassed by the Marcoses by the unlawful means alleged
by the Republic. The inference depends in part on the hearsay statements of Fernando. It was within the
discretion of the district court to accept this hearsay for purposes of deciding whether to issue the
preliminary injunction. Flynt Distrib. Co., Inc. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984) ("The urgency
of obtaining a preliminary injunction necessitates a prompt determination and makes it difficult to obtain
affidavits from persons who would be competent to testify at trial. The trial court may give even
inadmissible evidence some weight, when to do so serves the purpose of preventing irreparable harm
before trial."); see also K-2 Ski Co. v. Head Ski Co., 467 F.2d 1087, 1088 (9th Cir. 1972) (trial court may
consider allegations in verified complaint in issuing preliminary injunction). No affidavits countering the
inference were presented by the Marcoses. See K-2 Ski Co., 467 F.2d at 1089. The Republic's case remains
to be proved. The Republic has put forward enough to show a fair chance of succeeding with its proof.

The Scope of the Injunction

The injunction is directed against individuals, not against property; it enjoins the Marcoses and their
associates from transferring certain assets wherever they are located. Because the injunction operates in
personam, not in rem, there is no reason to be concerned about its territorial reach. See, e.g., Steele v.
Bulova Watch Co., 344 U.S. 280, 289, 73 S. Ct. 252, 257, 97 L. Ed. 319 (1952) (district court "in exercising its
equity powers may command persons properly before it to cease to perform acts outside its territorial
jurisdiction") (citations omitted).
A court has the power to issue a preliminary injunction to prevent a defendant from dissipating assets in
order to preserve the possibility of equitable remedies. See, e.g., F.T.C. v. H.N. Singer, Inc., 668 F.2d 1107,
1112 (9th Cir. 1982) (preliminary injunction appropriate to preserve the possibility of equitable remedies).
The injunction here enjoins the defendants from secreting those assets necessary to preserve the
possibility of equitable relief.
Although the gravamen of the complaint is that the Marcoses converted public property to their own use,
the seventh claim for relief, which alleges a constructive trust, states an equitable cause of action and
seeks equitable relief: " [The Marcoses], by virtue of their position as President of the Philippines and
Governor of Manila, respectively, occupied positions of trust as to the Philippines and its people. [The
Marcoses] violated said trust by their numerous acts of conversion, fraud, deceit, constructive fraud, civil
conspiracy, acts of racketeering, and other unlawful acts." As the result of these asserted violations of
trust, the Marcoses acquired specific funds and real property, including the accounts with Lloyds Bank,
the real property in Beverly Hills, the deposits with the Swiss banks and the property brought into
Hawaii. Complaint, paragraphs 62-67. In granting the preliminary injunction, the district court
specifically found "that the Philippines will be entitled to an accounting for, and to impose a constructive
trust upon, the property subject to this Order." The district court found the preliminary injunction
necessary to preserve the possibility of equitable relief. On this record, the district court did not abuse its
discretion in entering an injunction of this scope.
The district court remains free to modify or dissolve the preliminary injunction if warranted by
developments in this case subsequent to the noticing of this appeal. Lyng v. Northwest Indian Cemetery
Protective Assoc., --- U.S. ----, 108 S. Ct. 1319, 1330, 99 L. Ed. 2d 534 (1988). See also 7 J. Moore, W. Taggert
& J. Wicker, Moore's Federal Practice p 65.07 at 65-114 (2d ed. 1987).
In Summation. Jurisdiction to hear the Republic's claims and to enter the preliminary injunction exists. A
serious question of liability has been presented and the Republic has a fair chance of success on the merits
of its case. The Marcoses have not presented any preclusive defense. The scope of the injunction is
justified. It was imperative for the district court to preserve the status quo lest the defendants prevent
resolution of the case by putting their property beyond the reach of the court. Hardship to the Republic
would have been great and irreparable if the district court had not taken its prudent, amply justified
action to keep the Marcoses' assets from disappearing.
AFFIRMED.