295 SCRA 469 – Conflict of Laws – Private International Law – Service of Summons to a Non Resident Processual Presumptions

In 1984, a Hong Kong court ordered Antonio Heras to pay US$1.8 million or its equivalent, with interest, to Asiavest Ltd. Apparently, Heras guaranteed a certain loan in Hong Kong and the debtor in said loan defaulted hence, the creditor, Asiavest, ran after Heras. But before said judgment was issued and even during trial, Heras already left for good Hong Kong and he returned to the Philippines. So when in 1987, when Asiavest filed a complaint in court seeking to enforce the foreign judgment against Heras, the latter claim that he never received any summons, not in Hong Kong and not in the Philippines. He also claimed that he never received a copy of the foreign judgment. Asiavest however contends that Heras was actually given service of summons when a messenger from the Sycip Salazar Law Firm served said summons by leaving a copy to one Dionisio Lopez who was Heras’ son in law.

ISSUE: Whether or not the foreign judgment can be enforced against Heras in the Philippines.

HELD: No. Although the foreign judgment was duly authenticated (Asiavest was able to adduce evidence in support thereto) and Heras was never able to overcome the validity of it, it cannot be enforced against Heras here in the Philippines because Heras was not properly served summons. Hence, as far as Philippine law is concerned, the Hong Kong court has never acquired jurisdiction over Heras. This means then that Philippine courts cannot act to enforce the said foreign judgment.

The action against Heras is an action in personam and as far as Hong Kong is concerned, Heras is a non resident. He is a non resident because prior to the judgment, he already abandoned Hong Kong. The Hong Kong law on service of summons in in personam cases against non residents was never presented in court hence processual presumption is applied where it is now presumed that Hong Kong law in as far as this case is concerned is the same as Philippine laws. And under our laws, in an action in personam wherein the defendant is a non-resident who does not voluntarily submit himself to the authority of the court, personal service of summons within the state is essential to the acquisition of jurisdiction over her person.  This method of service is possible if such defendant is physically present in the country. If he is not found therein, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him. Without a personal service of summons, the Hong Kong court never acquired jurisdiction. Needless to say, the summons tendered to Lopez was an invalid service because the same does not satisfy the requirement of personal service.

297 SCRA 469 – Conflict of Laws – Private International Law – Situs – Locus Actus 

Milagros Morada was working as a stewardess for Saudia Arabian Airlines. In 1990, while she and some co-workers were in a lay-over in Jakarta, Indonesia, an Arab co-worker tried to rape her in a hotel room. Fortunately, a roomboy heard her cry for help and two of her Arab co-workers were arrested and detained in Indonesia. Later, Saudia Airlines re-assigned her to work in their Manila office. While working in Manila, Saudia Airlines advised her to meet with a Saudia Airlines officer in Saudi. She did but to her surprise, she was brought to a Saudi court where she was interrogated and eventually sentenced to 5 months imprisonment and 289 lashes; she allegedly violated Muslim customs by partying with males. The Prince of Makkah got wind of her conviction and the Prince determined that she was wrongfully convicted hence the Prince absolved her and sent her back to the Philippines. Saudia Airlines later on dismissed Morada. Morada then sued Saudia Airlines for damages under Article 19 and 21 of the Civil Code. Saudia Airlines filed a motion to dismiss on the ground that the RTC has no jurisdiction over the case because the applicable law should be the law of Saudi Arabia. Saudia Airlines also prayed for other reliefs under the premises.

ISSUE: Whether or not Saudia Airlines’ contention is correct.

HELD: No. Firstly, the RTC has acquired jurisdiction over Saudia Airlines when the latter filed a motion to dismiss with petition for other reliefs. The asking for other reliefs effectively asked the court to make a determination of Saudia Airlines’s rights hence a submission to the court’s jurisdiction.

Secondly, the RTC has acquired jurisdiction over the case because as alleged in the complaint of Morada, she is bringing the suit for damages under the provisions of our Civil Law and not of the Arabian Law. Morada then has the right to file it in the QC RTC because under the Rules of Court, a plaintiff may elect whether to file an action in personam (case at bar) in the place where she resides or where the defendant resides. Obviously, it is well within her right to file the case here because if she’ll file it in Saudi Arabia, it will be very disadvantageous for her (and of course, again, Philippine Civil Law is the law invoked).

Thirdly, one important test factor to determine where to file a case, if there is a foreign element involved, is the so called “locus actus” or where an act has been done. In the case at bar, Morada was already working in Manila when she was summoned by her superior to go to Saudi Arabia to meet with a Saudia Airlines officer. She was not informed that she was going to appear in a court trial. Clearly, she was defrauded into appearing before a court trial which led to her wrongful conviction. The act of defrauding, which is tortuous, was committed in Manila and this led to her humiliation, misery, and suffering. And applying the torts principle in a conflicts case, the SC finds that the Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took place).

 

333 SCRA 545 – Conflict of Laws – Private International Law – Service of Summons in In Personam Cases

In 1989, Cesar Urbino, Sr. sued Poro Point Shipping Services for damages the former incurred when one of the latter’s ship ran aground causing losses to Urbino. Urbino impleaded Banco Do Brasil (BDB), a foreign corporation not engaged in business in the Philippines nor does it have any office here or any agent. BDB was impleaded simply because it has a claim over the sunken ship. BDB however failed to appear multiple times. Eventually, a judgment was rendered and BDB was adjudged to pay $300,000.00 in damages in favor of Urbino for BDB being a nuisance defendant.

BDB assailed the said decision as it argued that there was no valid service of summons because the summons was issued to the ambassador of Brazil. Further, the other summons which were made through publication is not applicable to BDB as it alleged that the action against them is  in personam.

ISSUE: Whether or not the court acquired jurisdiction over Banco Do Brasil.

HELD: No. Banco Do Brasil is correct. Although the suit is originally in rem as it was BDB’s claim on the sunken ship which was used as the basis for it being impleaded, the action nevertheless became an in personam one when Urbino asked for damages in the said amount. As such, only a personal service of summons would have vested the court jurisdiction over BDB. Where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him.

538 SCRA 261 – Conflict of Laws – Private International Law – Jurisdiction – Lex Loci Celebrationis – Lex Loci Solutionis – State of the Most Significant Relationship – Forum Non

Conveniens 

In March 1999, Nippon Engineering Consultants Co., Ltd, a Japanese firm, was contracted by the Department of Public Works and Highways (DPWH) to supervise the construction of the Southern Tagalog Access Road. In April 1999, Nippon entered into an independent contractor

agreement (ICA) with Minoru Kitamura for the latter to head the said project. The ICA was entered into in Japan and is effective for a period of 1 year (so until April 2000). In January 2000, DPWH awarded the Bongabon-Baler Road project to Nippon. Nippon subsequently assigned Kitamura to head the road project. But in February 2000, Kazuhiro Hasegawa, the general manager of Nippon informed Kitamura that they are pre-terminating his contract. Kitamura sought Nippon to reconsider but Nippon refused to negotiate. Kitamura then filed a complaint for specific performance and damages against Nippon in the RTC of Lipa.

Hasegawa filed a motion to dismiss on the ground that the contract was entered in Japan hence, applying the principle of lex loci celebracionis, cases arising from the contract should be cognizable only by Japanese courts. The trial court denied the motion. Eventually, Nippon filed a petition for certiorari with the Supreme Court.

Hasegawa, on appeal significantly changed its theory, this time invoking forum non conveniens; that the RTC is an inconvenient forum because the parties are Japanese nationals who entered into a contract in Japan. Kitamura on the other hand invokes the trial court’s ruling which states that matters connected with the performance of contracts are regulated by the law prevailing at the place of performance, so since the obligations in the ICA are executed in the Philippines, courts here have jurisdiction.

ISSUE: Whether or not the complaint against Nippon should be dismissed.

HELD: No. The trial court did the proper thing in taking cognizance of it.

In the first place, the case filed by Kitamura is a complaint for specific performance and damages. Such case is incapable of pecuniary estimation; such cases are within the jurisdiction of the regional trial court.

Hasegawa filed his motion to dismiss on the ground of forum non conveniens. However, such ground is not one of those provided for by the Rules as a ground for dismissing a civil case.

The Supreme Court also emphasized that the contention that Japanese laws should apply is premature. In conflicts cases, there are three phases and each next phase commences when one is settled, to wit:

1. Jurisdiction – Where should litigation be initiated? Court must have jurisdiction over the subject matter, the parties, the issues, the property, the res. Also considers, whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a substantive law which will determine the merits of the case is fair to both parties.

2. Choice of Law – Which law will the court apply? Once a local court takes cognizance, it does not mean that the local laws must automatically apply. The court must determine which substantive law when applied to the merits will be fair to both parties.

3. Recognition and Enforcement of Judgment – Where can the resulting judgment be enforced?

This case is not yet in the second phase because upon the RTC’s taking cognizance of the case, Hasegawa immediately filed a motion to dismiss, which was denied. He filed a motion for reconsideration, which was also denied. Then he bypassed the proper procedure by immediately filing a petition for certiorari. The question of which law should be applied should have been settled in the trial court had Hasegawa not improperly appealed the interlocutory order denying his MFR.

 

537 SCRA 277 – Conflict of Laws – Private International Law – Service of Summons – Personal Action – Real Action – Extraterritorial Service

Cynthia Logarta and Teresa Tormis were the daughters of Luis Regner in his first marriage with Anicita Regner. Victoria Regner is the second wife of Luis.

In 1999, Victoria alleged that Cynthia and Teresa with the help of another sibling defrauded Luis, who was then very ill and was unable to write, into placing his thumbmark into a Deed of Donation. In said Deed, Luis purportedly donated a Proprietary Ownership Certificate pertaining to membership shares in the Cebu Country Club. Victoria alleged that said Deed is void because the placing of thumbmark by Luis was done without the latter’s free will and voluntariness considering his physical state; that it was done without Luis’s lawyer; that the ratification made by Luis before he died is likewise void because of similar circumstances.

In the same year, Victoria filed a complaint to annul said deed with the RTC of Cebu. The sheriff could not deliver the summonses against Cynthia and Teresa because apparently, although they are Filipinos, they are not residing here; they are residing in California. It was only in the year 2000 that one of the summonses was served to one of the sisters, Teresa, when she came back to the Philippines.

Teresa immediately filed a motion to dismiss on the ground that Victoria failed to prosecute her case for an unreasonable length of time. Naturally, Victoria opposed the MTD. Teresa, in her rejoinder, alleged that the case should be dismissed because Cynthia, who is an indispensable party, was not issued any summons, hence, since an indispensable party is not served with summons, without her who has such an interest in the controversy or subject matter there can be no proper determination of the case. The trial court ruled in favor of Teresa; this was affirmed by the Court of Appeals.

ISSUE: Whether or not the dismissal of Victoria’s complaint is correct.

HELD: Yes. The Supreme Court agreed with the arguments presented by Teresa. The Supreme Court also emphasized:

There are generally two types of actions: actions in rem and actions in personam. An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person.

The certificate, subject of the donation, is a personal property. The action filed by Victoria is therefore a personal action. So in order for the court to acquire jurisdiction over the respondents, summons must be served upon them. Further, the certificate is indivisible, Cynthia’s and Teresa’s interests thereto can only be determined if both are summoned in court.

In personal actions, if the respondents are residents of the Philippines, they may be served summons in the following order:

1. Personal Service;2. If (1) is not possible, Substituted Service;3. If respondent can’t be found because he is abroad but still a resident of the Philippines, by

publication with leave of court.

In personal actions still, if the respondents are non-residents, they may be served summons in the following manner:

1. Personal service through the Philippine embassy;2. By publication in a newspaper of general circulation in such places and for such time as the court

may order, in which case a copy of the summons and order of the court should be sent by registered mail to the last known address of the defendant; or

3. in any other manner which the court may deem sufficient.

The above must be with leave of court.

In the case at bar, Cynthia was never served any summons in any of the manners authorized by the Rules of Court. The summons served to Teresa cannot bind Cynthia. It is incumbent upon Victoria to compel the court to authorize the extraterritorial service of summons against Cynthia. Her failure to do so for a long period of time constitutes a failure to prosecute on her part.

What if the petition is an action in rem? What are the applicable rules?

If the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in the following instances:

1. when the action affects the personal status of the plaintiff;

2. when the action relates to, or the subject of which is property within the Philippines, on which the defendant claims a lien or an interest, actual or contingent;

3. when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and

4. when the defendant non-resident’s property has been attached within the Philippines.

In the above instances, summons may be effected by:

1. personal service out of the country, with leave of court;2. publication, also with leave of court; or3. any other manner the court may deem sufficient.

First Philippine International Bank vs CA

252 SCRA 259 – Conflict of Laws – Private International Law – Origin of Forum Non Conveniens

Producers Bank (now called First Philippine International Bank), which has been under conservatorship since 1984, is the owner of 6 parcels of land. The Bank had an agreement with Demetrio Demetria and Jose Janolo for the two to purchase the parcels of land for a purchase price of P5.5 million pesos. The said agreement was made by Demetria and Janolo with the Bank’s manager, Mercurio Rivera. Later however, the Bank, through its conservator, Leonida Encarnacion, sought the repudiation of the agreement as it alleged that Rivera was not authorized to enter into such an agreement, hence there was no valid contract of sale. Subsequently, Demetria and Janolo sued Producers Bank. The regional trial court ruled in favor of Demetria et al. The Bank filed an appeal with the Court of Appeals.

Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for intervention with the trial court. The trial court denied the motion since the trial has been concluded already and the case is now pending appeal. Subsequently, Co, assisted by ACCRA law office, filed a separate civil case against Carlos Ejercito as successor-in-interest (assignee) of Demetria and Janolo seeking to have the purported contract of sale be declared unenforceable against the Bank. Ejercito et al argued that the second case constitutes forum shopping.

ISSUE: Whether or not there is forum shopping.

HELD: Yes. There is forum shopping because there is identity of interest and parties between the first case and the second case. There is identity of interest because both cases sought to have the agreement, which involves the same property, be declared unenforceable as against the Bank. There is identity of parties even though the first case is in the name of the bank as defendant, and

the second case is in the name of Henry Co as plaintiff. There is still forum shopping here because Henry Co essentially represents the bank. Both cases aim to have the bank escape liability from the agreement it entered into with Demetria et al.

The Supreme Court also discussed that to combat forum shopping, which originated as a concept in international law, the principle of forum non conveniens was developed. The doctrine of forum non conveniens provides that a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most “convenient” or available forum and the parties are not precluded from seeking remedies elsewhere.

 

**Forum Shopping: “occurs when a party attempts to have his action tried in a particular court or jurisdiction where he feels he will receive the most favorable judgment or verdict.”

 

Manila Hotel Corporation vs National Labor Relations Commission

343 SCRA 1 – Private International Law – Forum Non Conveniens 

In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace Hotel in Beijing, China. Due to higher pay and benefits, Santos agreed to the hotel’s job offer and so he started working there in November 1988. The employment contract between him and Palace Hotel was however without the intervention of the Philippine Overseas Employment Administration (POEA). In August 1989, Palace Hotel notified Santos that he will be laid off due to business reverses. In September 1989, he was officially terminated.

In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC) and Manila Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were served upon it. MHC is a government owned and controlled corporation. It owns 50% of MHIL, a foreign corporation (Hong Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who handled the case ruled in favor of Santos. The National Labor Relations Commission (NLRC) affirmed the labor arbiter.

ISSUE: Whether or not the NLRC has jurisdiction over the case.

HELD: No. The NLRC is a very inconvenient forum for the following reasons:

1. The only link that the Philippines has in this case is the fact that Santos is a Filipino;2. However, the Palace Hotel and MHIL are foreign corporations – MHC cannot be held liable

because it merely owns 50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of corporate fiction can’t be pierced because it was not shown that MHC is directly managing the affairs of MHIL. Hence, they are separate entities.

3. Santos’ contract with the Palace Hotel was not entered into in the Philippines;4. Santos’ contract was entered into without the intervention of the POEA (had POEA intervened,

NLRC still does not have jurisdiction because it will be the POEA which will hear the case);5. MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not

residents of the Philippines;

Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It is not competent to determine the facts because the acts complained of happened outside our jurisdiction. It cannot determine which law is applicable. And in case a judgment is rendered, it cannot be enforced against the Palace Hotel (in the first place, it was not served any summons).

The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses to do so provided:

(1) that the Philippine court is one to which the parties may conveniently resort to;

(2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and

(3) that the Philippine court has or is likely to have power to enforce its decision.

None of the above conditions are apparent in the case at bar.